by Adam Hartung | Jul 6, 2010 | Defend & Extend, In the Swamp, Innovation, Leadership, Lock-in
All organizations must move into new markets with new customers buying new solutions. It’s inevitable. Over time, all product markets shift to new solutions. Given this inevitability, isn’t it amazing how few make the shift?
BloggingInnovation.com published a GREAT article “20 Phrases That Kill Ideas and Innovation.” What I like is that we’ve all heard these 20!!!! Here we go with “That’s a good idea, but…”
- It’s against company policy
- It’s not practical
- It’s not necessary
- We don’t have the resources
- It will cost too much
- We’ve never done it that way
- Our customers (or vendors) won’t like it
- It needs more study
- It’s not part of your job
- Let’s make a survey first
- Let’s sit on it for a while
- That’s not our problem
- The boss won’t go for it
- The old timers won’t use it
- It’s too hard to administer
- Why hasn’t someone else suggested it before?
- Let’s form a committee
- We should wait until the economy improves
- Who else has tried it?
- Is it best practice?
Really! I bet you’ve heard all of these. Defend & Extend Management becomes so embedded in the culture managers don’t even realize they’ve turned off to new markets and fallen into focusing solely on trying to protect the old. And as markets shift these phrases never go away – they just maintain Lock-in!
The next time somebody brings you an idea – an innovation – I want you to gauge your reaction. Before you speak, see if your mind brings you one of these 20. If so, you’re more dedicated to Lock-in than growth. You’re stuck in D&E Management. And that means you need a healthy dose of The Phoenix Principle. Time to do some scenario planning, dig deeply into competitors, Disrupt those Lock-ins and set up a White Space team to explore new opportunities! Overcome these objections before they stop you – cold!
by Adam Hartung | Jul 4, 2010 | Current Affairs, Leadership, Web/Tech
Hi Readers, I’m delighted today to send you a guest blog from a colleague of mine, Tom LaPlante. His contact info is below. I hope you enjoy his insights as much as I did!
Recently I attended the Austin Tech Fair, which was hosted and planned by Matt Genovee’s Door 64 and Austin Technology Council. Excellent gathering of central Texas technology companies and individuals. The main topic of the panel discussions centered around Social Media — in terms of hiring, what it means for a company’s policies, the legal issues (many of which are yet to even be identified) and how employees are using various types of social media (Facebook, Twitter, Linked-in, etc.) at and during work hours.
The last panel session of the day was “Today’s Technology Tools and Social Media to Growing Business.” This session was supposed to last 50 minutes, however after almost 2 hours many attendees were still having a “Q & A” with the panel members — highlighting the importance, confusion and multitude of issues facing corporations in how these companies are in many cases NOT dealing with social media in the workplace.
The most alarming piece of information given by one of the panel members was, “fully 40% of companies surveyed do not have and do not yet plan to publish any internal policies or guidelines” on social media usage within their company. It almost seemed that many leaders (including CIO’s) didn’t want to be “bothered” by this latest trend — Social Media — and maybe, just maybe, think this is a fad that will go away.
This attitude and approach reminds me of the early days of the internet explosion and email adoption. Many executives didn’t want to “get in front” and lead the way, but wanted to control or even suppress these “new fangled toys”. Just further examples of the Defend and Extend mentality that company leaders oftentimes take. Some thought that the internet and email would distract employees, lower productivity and weren’t sure how it would help their business. Those that led and “got in front” of these new tools did realize productivity gains and developed new markets and channels because of them. Seems silly looking back now that corporations actually tried to suppress the use of these two examples.
Granted, I’m sure there were cases of misuse by employees and that some individuals did have lower productivity in certain cases. But those companies that created and communicated clear guidelines on proper and effective use of the internet and email were better enterprises than those that did not. Any new technology, tool, or process requires leadership and communication from management of what’s to be expected as appropriate usage/behavior. This is an opportunity for leaders to engage their workforce, see what makes sense, determine policies that are appropriate and create a more streamlined work environment. However, it doesn’t just happen, leaders must actually lead and engage to make the most effective use of this and anything else new.
So what’s going to be YOUR approach in regards to Social Media in the workplace? Are you going to try to limit it, control it or suppress it altogether? Guess what? This approach will not work in today’s marketplace and workplace. Whether you’re a fan of Facebook or not, Facebook appears that it’s here to stay. Even if Facebook were to be displaced by another platform, social media is NOT going away.
Today’s economy and marketplace shifts are happening at an ever faster pace. Technology trends seem to “suddenly” popup out of nowhere. Your employees and customers are going to utilize this “new stuff”. Now the choice is yours. Do you get in front of this and lead your companies policies on appropriate and effective social media usage or do you wait to see the dust clear? We recommend that company leaders start now to publish company guidelines if you don’t have any, review and update the ones you do have, and re-visit these at least semi-annually to gauge the relevancy of your social media Policy. If you don’t then your employees will develop their de-facto policies.
Great stuff Tom. Connect with Tom via Twitter – find him @ Tomlap. Or connect with him on Facebook Tom Laplante. or look for him on Linked-in Tom LaPlante.
If any readers would like to guest blog, just let me know. I’m always interested in new insights – and enjoy hearing from colleagues who want to help businesses grow!
by Adam Hartung | Jul 2, 2010 | Current Affairs, Defend & Extend, In the Swamp, Innovation, Leadership, Web/Tech
(Note: See more about my globally syndicated radio X Zone Radio interview with Rod McConnell in postscript below)
Today the Harvard Business Review blog got to the topic of my early May Forbes article (Microsoft's Dismal Future) with "Microsoft and the Innovator's Paradox." Unfortunately, painting Microsoft as facing a difficult paradox gives Ballmer and the management team too much credit. It implies that Defend & Extend behavior is a good tradeoff compared to investing in growth markets. This isn't really a trade-off because good companies pursue both courses, growing the existing business as long as possible AND investing in new growth markets simultaneously. Like Google investing in search and ad placement while investing in Android. Positioning Microsoft as facing a dilemma may sound politically attractive, but is inaccurate. Microsoft simply needed to do more in growth markets – a problem shared by too many companies. Instead it spent way too much in sustaining developments – and now is in big trouble.
HBR did not offer much of a solution for Microsoft. Instead, leaving the impression that it's reasonable to expect "mature" organizations to do more sustaining innovation. The truncated S curve displayed HBR article ignores the reality that "mature" companies don't extend forever – but rather simply fall into the Swamp of poor returns and eventually disappear into the Whirlpool as growth slows. And further ignores the horrific cost of sustaining innovation, as we detailed in Microsoft's exorbitant 2009 R&D spending as the company kept pushing Windows 7 and Office 2010 development. Microsoft really hasn't faced a "paradox" for investing for many years – leadership made a bad decision to keep investing in old markets rather than pursue new ones.
Contrarily, Mediapost.com's Marketing Health column ran a description of how pharmaceutical companies could use iPads to improve the performance of their physician customers and simultaneously market their own products in "Tap Into iPad's Marketing Power." Using these low cost devices (including Kindle and Cisco's new Cius [Cnet.com "Cisco Introduces New Cius Android Tablet PC"]) is not a "paradox" in investing for growth. It's additive. As readers of this blog know, for over a year I've promoted marketers and designers become more proactive in using these new mobile devices. Only by viewing the new development as a trade-off from doing more of the old marketing does it slow investment in a high growth opportunity. By looking at the new opportunity as something that takes away from doing more of the old creates an artificial paradox – not a real one. Companies simply aren't doing enough of what will help them grow – too often choosing the low-return route of doing more of what they know in old markets simply because they understand it better.
PS – Check out my radio interview with Rod McConnel of X Zone Radio about BPs management crisis, and how it
applies to all businesses. Recorded by X-Zone in Canada the show is being syndicated
this weekend across the world to various radio stations. You can find the timing of play, or the podcast version, at the
X-Zone web site. Download On Apple iTunes here. Download as Podcast here. Or listen on X Zone jukebox here.
PPS – Thanks to Gary Woodill at Brandon-Hall.com for picking up my comments on his Workplace Learning page – "It's the One You Don't See That'll Kill You." He trumpets replacing traditional strategic planning with more scenario planning to better prepare companies for success. Great article!
To Everyone in America – Happy Independence Day!
by Adam Hartung | Jul 1, 2010 | Current Affairs, Defend & Extend, In the Swamp, Leadership, Lock-in, Web/Tech
"Stay the Course" is a popular phrase. It sounds all macho, and committed to a destiny, to proclaim you must "stay the course." However, as bnet.com pointed out there are times when "Stay the Course is a Recipe for Disaster." The article calls it "Stay The Course-Itis" (or STCI) for leaders that don't know when it's time to change direction. We can now see that BP simply drilled one too many deep-water holes in the Gulf – just as Exxon let one too many tipsy captains steer oil vessels before the Valdez crashed. Staying the course may sound good, but too often the course isn't right. And a bad course can lead you into disaster.
Take for example Dell. As reported by The New York Times, and picked up by CNBC.com, "in Suit Over Computers, Window into Dell's Fall," we learn that Dell went just a bit too far in its effort to be a low cost industry supplier. Hoping desperately to maintain a slight lead in lowering costs, Defending & Extending Dell's long-term Success Formula as industry supply chain leader, Dell simply bought bad parts. It then replaced bad product with more bad product. Refused to admit to itself that it had gone "too cheap" in its effort to be cheap. Things went from bad to worse as the Lock-in to keep costs low led to multiple customer disasters – even at the law firm defending Dell in court! And Michael Dell is being accused of financial irregularities in his effort to make Dell's results possibly look better than they were. Both corporately and personally leadership made some big mistakes – not unlike BP – in the effort for Dell to "Stay the Course."
Microsoft certainly isn't without it's STCI as CEO Steve Ballmer keeps dropping new projects to funnel money and other resources into old desktop/laptop products. The Wall Street Journal reported "Microsoft Kills Kin Mobile Less Than Two Months After Launch." Kin was a product targeted at the hot market for youthful cell phone users. A double-digit growth market. But Microsoft is backing out, despite its ballyhooed launch – including announcements to take the product to China very soon. Microsoft can't seem to do much but "Stay the Course" supporting old products.
Both tech companies have had no improvement in their market value the last decade. And BP has watched its value drop more than 50% since the spill started. Some now actively wonder if BP could disappear as SeekingAlpha.com discussed in "How Likely is a BP Takeover bid?" Staying the course in the Gulf, drilling for more oil in deeper water and taking on more risk, could cost BP its existence if another company buys up the discounted equity. Of course, there is still reason to think BP could get wiped out from the costs of the disaster without a takeover.
Companies can get over SCTI if they follow advice given at ABCNews.com "Reboot Your Small Business by Reinventing." The article applies to all size businesses, however. When you see your business doing poorly, especially relative to competitors, it's time to attack sacred cows and do some things differently. Instead of "doubling down" on the old Success Formula, do new things!
You don't want to end up like BP, Dell or Microsoft today. Once great companies that are floundering now – struggling to find growth as they continue spending so much energy trying to "Stay the Course." When the seas are too calm to sail, leaving you stranded with no growth, or the waves are crashing too heavily, as competition is derailing your efforts, why not set a new course? One that can lead you to better growth? There's no harm, or shame, in heading where the market is going, using Disruptions and White Space to develop new solutions. Don't let your ego, pride, or history/legacy push you to "stay the course" when better results can be found in new markets, new customers and new solutions.
PS – Yesterday SmartBrief on Leadership newsletter ran ""For Real Innovation, Pick Up the Phone" linking to the BloggingInnovation.com repost of "It's the One You Don't See That Kills You." Compliments to Braden Kelley for a great web site, and getting the word out about how important it is to apply innovation! I enjoyed how the newsletter grabbed the conclusion, that businesses need to obtain more outsider input, and ran with it as the title. better than my title, to be honest!
PPS – PRLog.org just picked up my blog on "Journalism in 2020." Great to see the media enjoying my comments about their industry, and passing them along through this communication site!
by Adam Hartung | Jun 29, 2010 | Current Affairs, Defend & Extend, In the Swamp, Leadership, Lock-in, Science
I weighed in late on the Gulf Coast disaster – and my impressions of British Petroleum. I wanted to be thoughtful, as the ramifications of this will be with us for decades. Compared to the hurricane that wrecked New Orleans this situation is far worse. Many more businesses are being shut down, the ecological disaster is far worse, and the clean-up will take much longer – even though New Orleans is far from a full recovery from hurricane Katrina. And there was lots (lots) of finger-pointing going around. It is going to take a lot of money and energy to deal with this mess – and lots of blame-laying (lawsuits) are inevitable
But I'm always the guy looking forward, and that's why my Forbes article, "BP's Only Hope for Its Future," focused on what BP needs to do now to recapture the more than $100B of lost value its investors have suffered – not to mention out-of-pocket cash costs still rolling up.
There is a raging debate about what investors can expect, as typified by the SeekingAlpha.com article "Where is BP Headed: $70 or $0?" Unfortunately, most of these articles focus on 2 factors: (a) what are the estimates of cash out to fix the mess and legal battles compared to historical cash inflows from revenues, and (b) contrarians typically think no situation is ever as bad as it initially looks so surely BP is worth more than it's currently depressed value.
Addressing the latter first, I'd recommend investors look at GM, Chrysler, Lehman Brothers and Circuit City. Things definitely can get worse. Problems created across years of sticking to an outdated Success Formula, remaining Locked-in to following historical best practices, wiped out their investors. Things can definitely get worse for BP. It will not be acceptable for the company to remain focused on "business as usual" hoping to "weather the storm" and allow "things to get back to normal." That scenario is a death sentence. We haven't yet seen what new regulations, taxes and restrictions – nor the eventual cost of 20 years of dead seas charged to BP and its industry brethren – will cost. BP has to make changes if it wants to regain growth – and most likely if it wants to survive.
And this leads to item (a). Nobody knows the long-term costs chargeable to BP. Nor do we know what the future cash inflows will look like. We don't know the brand impact. Nor do we know how changes in regulations or industry practices will hurt cash flowing in the door. It's the inability of the past to predict the future that makes efforts at cash flow planning mute. Lots of number crunching isn't the answer – it's understanding that the assumptions could well be seriously changing. There are more unknown variables than known right now. Which makes it all the more important BP realize it must change it's Success Formula to make sure it not only avoids another disaster, but finds a way to profitably grow in the aftermath of this event and its changes on the industry.
Many are calling for firing the CEO, as 24×7 Wall Street does in "BP Can Deny CEO Departure Story; But Fate Already Set." I call this the hero and goat syndrome. Americans like to think that the CEO should be lionized as a hero when results are good, and blamed as a goat when results are bad. Unfortunately companies rely on lots more than CEOs (despite their pay) for results. The problems at BP are with the Success Formula – now some 100 years old – and the inability of the total management team to attack old Lock-ins in order to develop something new. As my last blog pointed out, even HBR doubted there was any reality in the "Beyond Petroleum" headline.
BP must attack its historical ways of doing business. This isn't just a short-term crisis. The Gulf disaster is the result of pushing an old Success Formula too far. Of going into deeper and deeper water, at greater and greater risk, for less and less yield in order to keep finding oil. Unfortunately BP seems to be viewing this not as an example of what happens when marginal economics keeps you doing the same thing, over and over, even as returns decline. Too bad, because this is the kind of event that highlights a serious change is needed in BP's future direction.
I was impressed with a Harvard Business School Working Knowledge survey result in "How Do You Weigh Strategy, Execution and Culture in An Organization's Success?" Respondents overwhelming voted that success requires managing "culture." And that is largely what BP now needs to do. The Beyond Petroleum strategy was clearly enunciated, but execution remained focused on the old direction because the culture did not change. And that's what attacking Lock-ins and implementing White Space is designed to do – move an organization's culture forward by addressing behaviors, decision-making structures and old cost models.
When I was a boy I'd see a tree show foliage problems and my father would say "we might as well cut it down, that tree is dead." I'd be shocked, the tree looked fine. But my father, a farmer, knew that the roots had been damaged. We were just seeing the slow process of death, that might take a year or two. Fortunately, BP isn't a tree. And although its Success Formula roots are in trouble, unlike a tree they can be changed. Let's hope the Board takes action to make changes quickly so BP's future doesn't remain completely imperiled.
For more on using Disruptions to address problems listen to my radio Interview "Disrupt to Win." Or listen to a short podcast on how to "Drive Innovation by Disrupting the Status Quo." Or read my CIOMagazine column on how to "Use Disruptions to Move Beyond Legacy" in thinking and planning.
by Adam Hartung | Jun 25, 2010 | Current Affairs, Defend & Extend, In the Swamp, Leadership, Lock-in
Leadership
BP's Only Hope For Its Future
It must throw out its formula for success.
"Beyond Petroleum?" BP looks anything but that now. How could a
company that spent so much money trying to make us think it was
something else remain so tied to, and now so damaged by, that product?
Was it just trying to fool us with those ads? Or is there something more
fundamentally wrong here? Perhaps something wrong in the management
system used not only by BP but by almost all companies today?
That's the first paragraph in my latest column on Forbes.com (Read BP's Only Hope For Its Future here). British Petroleum's situation was avoidable – if the company hadn't simply remained so dedicated to "Defend & Extend Management" – the practice of doing more of the same because it's what the company does best. Unfortunately too many companies follow this "best practice," sticking to their "core," and don't use White Space to find new opportunities for growth. All the way into disaster!
The Harvard Business Review web site describes the mismatch between BP's claim of heading in a new direction versus company reality in "The BP Brand's Avoidable Fall." British Petroleum's campaign is now a decade old, trying to convince everyone they weren't just an oil company. Looking back HBR recalls that authors then claimed about BP's campaign "this [strategy] seems to be at variance with organizational reality
and the [firm's] actual identity….[BP's] stated corporate aim of
being green-oriented…is an aspiration which to us bears arguably
questionable resemblance to near-term reality. At the time,
environmentalists estimated that only one percent of BP's activities
came from sustainable sources…Now, the stark contrast between BP's image and reality has substantially
weakened its reputation."
BP simply couldn't quit drilling for oil – because it was so dedicated to Defending & Extending the BP legacy. So it kept moving into more difficult fields, at higher cost, with lower yields. Now all those billions of dollars in advertising are lost, along with all the money for the clean up. Costs it will take shareholders years to recover. Even while leadership knew it had to move in a different direction – and advertised the need!
The spill costs of course move well beyond BP. For example, the network of small businesspeople that run BP refilling stations have been hurt as Crain's Chicago Business reported, "Chicago Gas Station Owners Hit By BP Spillover." Miles, and billions of dollars, removed from BP headquarters decisions, thousands of independent small businesspeople are losing revenue, due to the brand destruction created by BP taking greater and greater risks to Defend & Extend their oil business. Customers have a choice, and when a reputation is sullied many often change suppliers. Remember how Toyota car sales tanked as reports of their safety mishandling became available?
Despite the problems of Defending & Extending a business, leaders don't give up easily. The Daily Caller reports "Experts Say Obama's Drilling Plan Could Cause Another Disaster." Amidst this huge clean-up effort, there are many who want to maintain drilling activity – because short-term they want the jobs and economic benefits such drilling creates. Just the sort of marginal, Locked-in decision-making that is now hurting BP. The region is already losing fisherman, tourists and other businesses from this disaster. When will the Gulf Coast identify other ways to grow besides the economically and ecologically risky deep-water drilling activity?
BP, and the states affected by this disaster, desperately need to move "Beyond Petroleum." But doing so will require extensive use of White Space for finding and cultivating new businesses. It can be done. Yet so far, despite the horror of this disaster, there is more effort being expended to find ways to continue on the same route than disrupt old behaviors and find new sources of revenue. Not even a disaster of this magnitude disrupts those really dedicated to Defend & Extend their locked-in success formula.
As the article says, once you succumb to a Locked-in Defend & Extend strategy – like British Petroleum – management just can't help itself but to do "more of the same." Dedicated to Defend & Extend Management, no company could move "Beyond Petroleum." Are all (or most of) your resources dedicated to Defending & Extending your legacy business? Do you have White Space in your organization to move beyond your legacy? Or will it take a disaster to demonstrate how risky your strategy has become?
by Adam Hartung | Jun 24, 2010 | Current Affairs, Defend & Extend, In the Swamp, Leadership
How widely do you plan for a different future? Do you think British Petroleaum's (BP's) engineers and managers knew there was a chance of a major problem coming from deep water drilling? It seems illogical to think they didn't know the chance existed. Yet, they seemed pretty ill-prepared for the problem. As did the federal government agencies and responders – as well as all the businesses that make a living out of cleaning up water-based oil spills. Critical-Thinking.com sums up the issue pretty succinctly in the article "What is Your Company's Deepwater Horizon?" According to the article, the problem at BP is one that lots of companies have; most businesses simply don't put enough effort into planning for worst case scenarios.
Actually, the problem is worse than that. Most companies only plan for one scenario – more of the same. Planning processes rarely do more than extend past performance. In today's fast paced, global, highly competitive world it would seem that is about the least likeliest scenario. But it's the one that dominates how businesses plan. That so many businesses have been turning for the worse, or failing, is testament to how smart people are let down by planning processes that simply don't consider alternatives strongly enough. Look at the old AT&T, Tribune Corp., GM, Sears, Lehman Brothers, Silicon Graphics, Sun Microsystems, NCR, RCA, Unisys, Zenith, International Harvester, Brach's Candy…..
But planning problems are even worse than this! The first order problem is simply thinking about the potential scenarios and planning for them. Like the military does before a campaign. Even though nobody knows what will happen, by planning for a range of contingencies any business can be far better prepared. But what about the contingencies – the outcomes – you don't think about? What about scenarios you don't want to think about?
According to the New York Times there's "The Anosognosic's Dilemma: Something's Wrong but You Don't Know What It Is." Have you ever been in a meeting and someone, usually from the outside – like a vendor – said "but what about this _______" and they describe something going really, really, wrong — completely not as anticipated? And then somebody, usually somebody that's been around the company a long time and has both stature and influence says "well, if that happens then we're all dead. All bets are off." And with that, the conversation ends. It was a scenario, regardless of probability, that he simply didn't want to consider. His position was basically "hey youngster, that's crazy talk so let's not honor it with discussion."
Now we have a whole different scenario planning problem. One where we know, and will admit there are things that could happen, but we don't know what they are. Where we are so locked-in to our existing thinking that we don't even see these scenarios. We don't know what we don't know, and we're not asking what we don't know. We can't visualize an outcome that is possibly very different.
This is called the Dunning-Krueger effect, for the two psychologists who discovered it (David Dunning and Justin Krueger of Cornell.) Basically, it says we ignore options. We lose the spark to explore options that don't seem obvious. We lock-in on the way we think about the problem so strongly that potential solutions which are on a different vector – come from a different source – are simply not even considered. As if they could never exist.
And that's why all organizations need outsiders. And not just customers – who are heavily biased toward a better, faster, cheaper status quo. The Dunning-Krueger effect means that all organizations need boards, lawyers, consultants, advisors, friends that don't have their lock-in. People that can come up with scenarios that don't have their lock-in. People that can come up with scenarios that your own organization would simply never consider. Like a drilling rig blowing up in deep water and leaving a spewing hole of crude oil that has to somehow be capped —- that could shut down drilling in a major oil producing area, fishing, and all sorts of other businesses. Possibly wreck part of the ecology for decades. And wipe out the company dividend and customer goodwill while looking for a solution.
by Adam Hartung | Jun 22, 2010 | Current Affairs, Defend & Extend, In the Swamp, Leadership, Lock-in, Web/Tech
According to Reuters news service "Dell in Talks with Google over Chrome O/S." I would like to think this is a big deal for Dell, and positive, but I'm doubtful.
Eight months ago I wrote (10/20/09 – Keep an Eye on Dell – Good Things Happening) that Dell's efforts to bring a smart phone to market showed real promise for the company. Michael Dell seemed committed to shaking things up in order to launch new products. And in February I wrote (2/22/10 Looking for Winners – Dell) not to be too worried about Dell's small desktop market share losses because Dell needed to be heading into new markets – like Smart phones – seeking growth rather than over-investing in its old desktop business.
But I've since turned much more negative. The Reuter's article points out that Dell still hasn't gotten the smart phone to market in the USA. A phone was released in China last year, but sales have been minimal. There is a vague promise (no date) to release a new product in China – but none in the USA. And a potential tablet (competitor to iPad) is considered by end of 2010, but the company stresses no firm date.
Dell is moving far too slowly, and is far too uncommitted, to new businesses. The company is listening to the analysts who have traditionally followed them – the large customers who have bought Microsoft products and are still doing so – and large vendors who want to maintain the status quo. All of these folks are as locked-in as Dell.
Meanwhile Apple and Google keep selling thousands of units into these rapidly expanding new markets, growing share as well as sales at substantial profit.
This effort by Google is certainly good for its Chrome O/S. Even if Dell moves slowly, having Chrome adopted into any part of the historically monopolistic Microsoft community is a good thing. And the announcement itself shows the fragility of Microsoft in its historical market as growth slows and large distributors look to new solutions for "cloud computing" from new vendors. So this is good for Google, and another dart into the wounds of Microsoft.
The market keeps shifting toward new technology and the vendors supporting it – making the re-invention gap bigger and bigger at Dell. I don’t think Dell’s management is up to the market challenges. They had a shot at real change, but by not giving the growth projects (then or now) real permission to do what it takes to succeed, including moving much faster to market, nor sufficient resources to meet market needs, Dell is hastening its own demise. With its outdated, and now low-return, success formula firmly locked in, Dell looks likely to follow Wang, Lanier, Burroughs, DEC, Silicon Graphics and Sun Microsystems into the history books.
by Adam Hartung | Jun 17, 2010 | Current Affairs, Defend & Extend, In the Swamp, In the Whirlpool, Leadership, Web/Tech
"Google Bans Use of Microsoft Company-Wide" is the headline on HuffingtonPost.com. The reason given is that Microsoft had too many security issues. This could be easily dismissed as a competitive trick. Except for a couple of facts:
- Microsoft does have a number of security issues. It's not just Google that's worried about the problems encountered when relying on Microsoft products. While Microsoft is the gorilla, it does have problems.
- Today their are very reasonable alternatives. Fifteen years ago Scott McNeely at Sun Microsystems tried to enforce the same discipline as Google. Only there ware no good alternatives to Windows and Office. That has now changed. Significantly.
As Microsoft has lost share in all its products, it is worth noting that a leading-edge tech company is able to enforce, successfully, a ban on their products. Aided by the fact that they can offer alternatives which are easy to use and better meet many user requirements today. This is not good news for investors, employees, suppliers and customers of Microsoft. A serious shift to alternative solutions has emerged, and Microsoft has given no indication it is participating in the shift.
The impact is amplified by SeekingAlpha.com's article "Apple's Growing Corporate Market Share." Like many businesses in a leading market share position, Microsoft has simply accepted that customers will keep buying their products. But their near-monopoly is increasingly threatened as organizations realize there are very real alternatives. Not just from Google, but from Apple as well as others. As companies recognize that PCs are failing faster, and as managers are displeased by Microsoft requirements that they upgrade software with new purchases, corporate customers are looking for alternatives. This can be easily dismissed as the behavior of a few "odd-balls." But increasingly such behavior is becoming mainstream. While Microsoft is busy forcing customers to upgrade, many companies are looking for greater stability and satisfaction with their information technology suppliers – including Microsoft replacements.
While Microsoft keeps struggling to maintain its customers, sales and share in its old business, Apple keeps moving forward. This week SeekingAlpha.com also reports "Apple Hits 10,000 iPad Apps, Doubling in the Past Six Weeks." Again, this might be easy to ignore for Microsoft (or status quo) fans. But as the app library keeps building Apple keeps building a bigger advantage over everyone – including Microsoft. What do we think the future holds – a world full of laptops (as we know it today) or a lot more tablets and similar smart devices? Increasingly, Microsoft is Defending its past position in the face of a tsunami of innovation for new solutions gaining adoption, and growing, very, very rapidly.
When you're the market leader it is easy to ignore competitors. To dismiss them as "fringe" with "small share" and "not important." But that is very risky. Markets can shift really fast. New competitors offer new solutions, and they allow customers to do new things. They give customers new choices, and often customers who are less than thrilled with current solutions will switch. As competitors make it easy to do new things, the customers switch even faster. Before long the unexpected can happen, and leadership can switch very quickly. Like Apple's market share in mobile devices exceeding that of Microsoft's – or Apple's cash hoard exceeding the market value of Dell (a supply chain partner of Microsoft).
Microsoft is offering a real-time lesson to business leaders. Planning your future based upon your past strengths is dangerous. Smart competitors can offer alternatives faster than you think – and create market shifts that leave you in the lurch quickly. It's a high-risk strategy to think you can succeed by Defending you past position when alternatives are on the horizon.
PS – ChannelInsider.com today published "Spotlight: 10 Things Tablet Computer Makers Must Do To Take On iPad." Item 5 is "Windows Won't Make Much Sense" Item 4 is "Chrome O/S Does Make Sense" Item 3 is "Give Android O/S Consideration". For Microsoft this is a set of recommendations that cannot sit well. The market for laptops is predicted to peak and begin declining as users shift to smaller, easier products like tablets. The market pundits, as they recommend new products, are moving away from Microsoft products. How long can Microsoft continue its focus on Defending Windows and Office?
by Adam Hartung | Jun 15, 2010 | Current Affairs, In the Swamp, Leadership, Web/Tech
There's always controversy around a politician. Some like the person, some hate the person. And that is true for Mayor Richard M. Daley in Chicago. Crain's Chicago Business decided to do an analysis of the mayor's last 20 years in office in "Mayor Daley Runs Up Big Debts Building His Global City; What About the Rest of Chicago?"
(As I write this, please keep in mind I live in Chicagoland and have done so for 20 consecutive years. This is my second time in Chicago, having first in 1982 – almost 30 years ago. It is my home, and I obviously like the area. But that doesn't mean (a) some criticisms and concerns aren't warranted and (b) that other cities and/or states aren't in equal, or worse, condition and should learn something from a look at Chicago.)
The article has a host of ways to look at. evaluate, the mayor and the city. Most of them compare one or the other to the Chicago suburbs, or to other big cities like New York, or to the situation in Chicago when he took office. In other words, relative measures. As a result, in many areas, it is possible to say Chicago is doing better than it was, or better than some comparable city. And that's the problem with relative measures – you can always say things are somewhat different. But, does it mean the city is in "good" shape, or that it is going to be prospering in 2020 – or 2050?
However, what's important isn't how a governmental leader performs in comparison to others, but absolutely. I don't care of I'm less starving than another person, I care that I'm not starving. Nor does it matter how well the leader performs on a host (15 or 20 or 30) of measures, but rather how they perform on the critical, absolute measures. I don't care how well I'm dressed, or coiffed, or energized if I'm starving.
It's also important we avoid popularity polls as a way of determining "success." The article points out that Mayor Daley is a favorite of business leaders. According to the article largely because he thinks a lot like them, talks a lot like them and enjoys associating with them. But just because he shares their personal Success Formulas, and he's a great "Happy Harry," to be around, and because he might be easier to talk to than his predecessors, or other city mayors, does not make Mayor Daley great, or the city great. It just makes him popular. Do you remember any popular students from your high school or college that simply didn't accomplish much? They were probably even very popular with the faculty in many cases. But did they make the school's reputation grow? Or help improve the test scores of students rise, or improve the success of the athletic department? Popularity is just that, but it doesn't create a long-term viable economic strategy.
That the mayor has brought a few corporate headquarters to Chicago, such as Boeing and Miller/Coors, is no doubt. And retained United Airlines. This shows the mayor is good at talking to CEOs. And it has some "celebrity" and "symbolic" benefit. Unfortunately, headquarters locations do not produce many jobs.
In the case of Chicago and mayor Daley, there are really 2 critical variables. And they aren't how well he removes snow, or how many flights go through O'Hare airport. Rather, it's debt and jobs.
Debt can be used to help growth, otherwise it's bad. If you can earn 7%, and borrow at 5%, then debt helps you grow. But if you borrow at 5% and invest in something that has no growth, well then you're just losing money faster.
Which gets us to jobs. Debt incurred by a municipality should have the impact of creating growth. It should create jobs. But, looking at Crain's "Chicago Economic Indicators" we see that between 1989, Daley's first year in the job, and 2009 jobs shrunk by 150,000 (from 1.33million to 1.18million,) or negative 11.25%. So the debt did not help Chicago grow – the only viable reason for incurring debt. In the 20 years debt (including long-term capital leases), adjusted for inflation, grew 263%. Fully 74% more than the property tax base. Or, when compared to jobs, the inflation adjusted debt per job grew by 85% (almost doubled!) in the last 20 years! What we can see is that those who are working now have one heck of a lot of debt to repay for the expenditures made by "city hall" the last 20 years! Adjusted for inflation, twice what they had to pay back when I came to Chicago!
And this is AFTER the mayor sold off the city's parking meters and other sources of income! He took one-time payments in order to keep the debt down, but gave up future income that used to be available to repay debt. Throwing even more of the debt repayment load onto each job than existed when he took office. And this hasn't factored in unfunded pension liabilities and anticipated escalating costs for infrastructure, education, public transit, etc. which will require some form of tax – or economic growth.
There is no doubt that even though he has detractors, Mayor Daley is a popular mayor. From what I've heard, he's a charismatic individual. He is obviously smart, and has great leadership skills. And masterful political skills. He also seems, from watching him on the news, to be a genuinely caring person who wants the best for all people in Chicago – and wants Chicago to be a great city for the next century. But much of what's happened during his tenure has garnered him votes, while leaving Chicago with more debt and fewer jobs to pay for that debt.
If you live in Chicago, or any other major city, it is worth spending time not getting lost in the beauty. Thirty years ago Detroit was full of glee about its investments in the Renaissance Center and other civic programs. Didn't do any good when they couldn't keep jobs in the city – or region. Pretty buildings surrounded by blight has been the result. Civic leaders need to be paying attention to the debt per job – and realize that without growth – more jobs – its tough for any city to remain "a great place to live and work."
So what should mayor Daley do? I'm offering up one idea, one article, from MedCityNews.com "I-Q Corridor is Stuff of Dreamers." This article discusses how some well placed funds, and not all that much given the overall budgets of the states and cities involved, could make a huge difference. The notion is to invest in creating a "health care corridor" from Minneapolis, MN through Madison, WI and Milwaukee, WI into Chicago, IL. This would bring together the resources of s
everal of the top engineering and health care schools in the USA, with several of the premier facilities (nearby Minneapolis area Mayo Clinic, Marshfield Clinic in WI, and Rehabilitation Institute of Chicago just to name 3 of many). This kind of investing is the kind of thing that could create a LOT of jobs in a growing industry. And probably for less than the cost of the proposed O'Hare expansion.
For 2 years I listened to the mayor trumpet the need for Chicago to seek being an Olympic venue. He roused up many corporate leaders to support him. And he spent millions of dollars. Even though it was never clear that the Olympics could even break even. And far less clear it would create even one job post-Olympics. So why not view the I-Q Corridor as a White Space project for Chicago? Why not use it to Disrupt old Lock-ins about the "rust belt" of manufacturing, and figure out how to generate high job growth? It is just one idea, but I can get a lot more excited about spending money on creating some sort of "corridor of job growth" than putting on the Olympics.
(PS – I recently met the City of Chicago CIO at the CIOMagazine Perspectives event in Chicago. He led a great panel with leading industry CIOs from the city. It was a great conference, well attended, with a number of thoughtful people. The event demonstrated what a great city Chicago is for business. You can read a flattering review I've my presentation written by Steven Stern at SternData.com "Innovate – Don't get Locked-In." I'll be updating that presentation which you can register to attend at the CIO 100 Conference August 22-24 near Los Angeles, CA.)
