by Adam Hartung | Oct 8, 2009 | Current Affairs, General, Innovation, Leadership, Lock-in, Web/Tech, Weblogs
"Companies Say No to Friending or Tweeting at Work" is the headline in The National Law Journal. According to the article, somewhere between 54% (according to a Robert Half survey) and 76% (according to a ScanSafe survey) of companies block employees from connecting to social networking sites like Facebook, Twitter, Linked-In, Plaxo, etc. The reasons sound so traditional – starting with lost productivity and moving on to fear of data theft.
And of course, there's the bogeyman to worry about too.
In the 1940s and 1950s success was all about mass production. Show up for work on time, don't be late, don't be absent, and do your job. We had assembly lines to operate. Making stuff meant we needed to get people into the plant, and have them do their job. The more efficient people were, the more things a plant could make – be it cars or washers or televisions. So control everything the employee did on the job to make sure each minute is spent welding, typing, adding, inspecting or whatever their task. Fredrick Taylor became a business guru, running around with stopwatches calculating how to get more work out the door by controlling everything workers did.
Have people noticed that its 2009? Today, there are places where such focus on task implementation is important. But most of those places aren't in the USA. Those kinds of jobs have moved elsewhere. Even in America's manufacturing plants (and in most plants in the developed world) it is more important that an employee be thinking about their work. More gains are made by intelligent application – new ideas for processes or activities – than from Tayler-ist style efforts to whip people into working harder and more efficiently. Would you rather have a drone employee (a human robot) or a smart employee thinking about how to be more productive and successful? Sweat shop behavior doesn't make more money in a world where intelligence and insight are worth a lot more than hours in the chair.
Yet Lock-in to old efficiency notions still remain. In the 1930s there was a movement to ban adding machines for fear the tapes (the old white tape that ran out the top) would be stolen by employees. Better to stick with humans doing the adding – less risky. When PCs came along practically all IT departments wanted to ban them – saying that they posed an inherent risk to productivity (people might use them for things besides work) and employees would capture data on them and leak it to competitors. When the internet emerged in the 1990s huge numbers of employers banned access because they didn't know what people would do on the web and they feared everyone would be shopping all day, or emailing their friends. And who knew what kind of information they would leak about the company! In each instance, a tool that dramatically improved business performance was met with "this will hurt productivity. And don't you think this poses a serious risk?"
For those who aren't looking for the bogeyman, this presents an opportunity. Those who first adopted adding machines quickly improved performance – and those who adopted PCs improved productivity (spreadsheets and word processing gave early adopters huge advantages) – and those who adopted the internet rapidly sold more to new customers while finding more low cost suppliers and automated lots of business processes in their supply chain taking down operating costs. These innovations created Challenges to old ways of doing things, but they also created huge opportunities for those willing to Disrupt old patterns and use White Space to see how they could improve their business.
Every day millions of people are starting to use – and millions more are increasing their use of – social networks. You can get an incredible sense of the pulse of many communities. You find out what's going on with customers, potential customers and colleagues incredibly fast. These networks help sift through billions of megabytes of data and bring critical items of importance to you (and your business) remarkably fast. They act as a new distribution system for information – think of them as a water cooler on steroids taken to the "nth" power. These are not on-line solitaire environments, these are places where people exchange information and learn. Really fast.
Today, having informed employees who can take action separates winners from losers. Those who want to be in the forefront of competition are already thinking about how these environments connect them with critical information. Help them connect to customer and vendor communities. Help them improve productivity by increasing the pace of information exchange. If you aren't afraid of the bogeyman then you have an opportunity to get a leg up on the fearful by not only accepting, but encouraging the use of social networks. The faster you "get it" the better off you'll be. It's likely to introduce ideas for Disrupting your business during this downturn and opening White Space to get you growing again!
Postscript –
An article in the recent New Yorker Magazine "Not So Fast" takes a deep look at Fredrick Taylor and the history of "scientific management." According to the article, Taylor and his colleagues often made up their data, and their conclusions, and the results they promised were almost never achieved. Interesting reading on how the myth was created, and became legend. Perhaps sending most of what was taught for decades as "business best practice" at leading business schools in a seriously misguided direction. Well worth a read for those with time to pick up a little history – and some insights to how business myths are developed and promulgated.
by Adam Hartung | Oct 7, 2009 | Current Affairs, Disruptions, General, In the Rapids, Innovation, Leadership, Web/Tech
"Amazon Cuts Kindle Price to $259" is the USAToday headline. This $40 whack is the second price cut this year. Sony is selling its ePocket for $199. Of course Kindle is pushing that it has more content available and easier wireless access than Sony,- even internationally. Expectations are for 3 million e-Readers to be sold in 2009 (about 1 million around the holidays.) Obviously, if you aren't paying attention this is a big deal. It is changing publishing (books, magazines and newspapers.) But the impact goes far beyond publishing.
Simultaneously, The Wall Street Journal reports "Just a Touch Away, the Elusive Tablet PC." According to this article, new devices are being tested that will allow you to do everything from classic PC applications to web interconnection to watch movies – or read books – on a keyboard-less new tablet. Something that is a cross between an iPhone/iTouch (with a bigger screen) and a PC. As iPhone users are learning (quickly) you don't need a keyboard or mouse to have an interface to your machine and the world.
So what will be the future solution? Will it be one of these, or yet something different? I don't know. Do you have a crystal ball? But the answer to that question really doesn't matter to us today. We don't need to know that sort of specific to begin growing our businesses.
Not being widget nuts, or platform forecasters, should not stop us from planning for a different sort of future and changing our approach today. Scenarios for 2013 (you do have scenario plans for 2013, don't you?) should be planning on practically everybody having one of these devices. And perhaps these devices being so cheap they could be included with sales of every major appliance (like a car, or refrigerator). If that sounds silly, just look at how cheap a flash (or thumb) drive is now. Remember when we thought floppy disks were expensive? Now people exchange flash drives that have more capacity than a 2004 laptop without thinking about cost. These made tapes, floppy drives, zip drives and a lot of other technology obsolete in a hurry.
How can your business take advantage of this shift? Can you replace paper manuals, maybe even user instructions with a tablet? Or a tablet app? Can you use an interactive device that grabs input from your appliance to do diagnostics, recommend maintenance, report on failures? Would this help customers pop for the new frig – say if it helped lower electric bills? Or could it encourage that new washer by helping set the cycles to lower water cost? Could you build it right into the console on a washer or dryer? Or could you encourage someone to buy a new car by telling them to forget about maintenance logs and just track the car's performance on a tablet?
If you provide content – are you planning for this? Recently The Economist sent me an email (I've registered on their web site) telling me they were going to start charging for web content. I've heard News Corp. properties, like the Wall Street Journal, intend to do the same. I guess they haven't noticed the world is moving in a direction that makes such a plan – well, impossible. In a recent Harris poll (reported on Silicon Alley Insider "People Won't Pay for News Online") 74% of web users said they'd simply switch sites before paying. With one of these eReader/Tablets in hand, why would they ever pay for content when another provider is a finger streak away? As access becomes easier and easier, the willingness to pay will go down and down. Publishers had better start figuring out how to get paid a different way than subscriptions!
Now is about when executives like to say "so I want to know which format will win before I start doing this. I only want to do this once." That old cry for efficiency. Unfortunately, while waiting for a winner to emerge, the waiter becomes the laggard. The early adopter, that recognizes the value provided to consumers, gets out there and starts using these innovations to drive better customer value. And to capture more sales. When you are part of making the market – like Apple in music – you gain huge advantages. You don't have to know all the answers to compete. You just have to be willing to Disrupt old notions and use White Space to experiment and learn.
I have drawers filled with obsolete electronics. How many obsolete cell phones do you own? How many big old monitors are you recycling to replace with flat screens? Do you still have a fax machine? I have an old keyboard that used something called "sideband technology" to allow me to interact with people and get news and sports info years before the internet was popular – and before wireless internet was available. Obsolete now, that device taught me how valuable the internet was going to be when Congress made it available for commercial use. Fear of throwing away a few products or software – maybe a betamax machine or copy of visicalc – is no reason not to get into the market and learn!
Markets are marvelous things. As these articles discuss, nobody knows how we will be using technology in the future. Not exactly. It will be some combination of eReader – computer – music player – television – telephone. But we do know the broad theme. And if you want to get out of this recession, you can start playing to this market shift now. You'll never grow if you sit on the sidelines watching and waiting. Get in the market. Participate. Use this technology to create new solutions! There are countless applications (as the expanding iPhone app base is proving.) Want to get into the Rapids of growth? You'll never succeed if you don't become part of the marketplace. Nothing creates learning like doing!
by Adam Hartung | Oct 5, 2009 | Current Affairs, Defend & Extend, Disruptions, In the Whirlpool, Leadership, Lifecycle, Lock-in
"Saturn Done in Four Months" is the Autoweek.com headline. The next time somebody brings up the short life cycle of tech products, remember Saturn. GM started the company, grew it, and now is shutting it down on a timeline that roughly corresponds with the life of Sun Microsystems. Clearly manufacturing companies can do just as poorly as techs.
When Penske lost itsmanufacturing deal, the purchase of Saturn fell through. And GM leadership can't wait to clear out inventory. Production has already stopped. Soon, the products and dealers will disappear. Along with the brand name. Another experiment that failed. So it is very important our post-mortem teaches us the right lessons from Saturn.
I was appalled when Harvard Business School Publishing posted "Why Saturn Was Destined to Fail." According to the author, Saturn was an anchor that drug down a hurt GM!!!! Reporting that the successful Saturn launch came at the loss of $3,000 per car sold (a new factoid I've never before heard), he claims that GM should have been more focused on fixing its old business. The implication is that GM wasn't trying to fix its old business, instead being diverted by the very successful operations at Saturn! Pretty illogical. GM was doing everything it could to compete, but improving its old Success Formula simply wasn't enough given the market shifts already in place. To meet changing market requirements GM needed to develop a new Success Formula, and that was the purpose of Saturn!
Saturn was the best chance GM had to succeed! The Success Formula at Chevrolet and the other GM divisions had been created in the 1950s when GM dominated the industry. But by 1980 the market had shifted dramatically. Design cycles had dropped, customer tastes had changed, production methods had moved from long assembly lines to just-in-time, quality requirements were redefined and rising, and impressions of auto dealers had tanked. Saturn was established to teach GM how to compete differently.
The reason Saturn lost money had everything to do with accounting. GM forced all kinds of costs onto GM – which were not representative of a normal start-up. Without those costs, Saturn would have been much leaner and profitable. Further, after Saturn proved it could move faster and outsell expectations, GM quickly moved to force Saturn to act like other GM divisions. Forced sharing of components severely hampered the design cycle and flexibility. Union contract consistency pushed Saturn into old employee agreements which the union had previously agreed to wave. And forcing Saturn to allow traditional GM dealers to sell the Saturn brand tarnished the changed customer relationship Saturn worked hard to create.
When Roger Smith created GM he set it up seperately. His scenario of the future demanded GM figure out a new way to compete. Saturn, was a White Space project with permission and resources to figure out that new way. But Chairman Smith did not Disrupt the old GM auto management. He did not replace the Division presidents with leaders from EDS or Hughes (businesses he had acquired) who were willing to move in a new direction. He did not change the resource allocation system to give Saturn more clout over its own decisions and those at other divisions. Thus, when he left the larger divisions moved fast to change Saturn into their mold – rather than vice-versa. Instead of Chevrolet learning from Saturn, Saturn managers were forced to adopt Chevrolet practices.
Saturn proved that even a stodgy, Locked-in company can use White Space to develop new solutions. And it also proved that if you aren't willing to Disrupt the old Success Formula – if you aren't willing to attack old Lock-ins – White Space (regardless of its success) is unlikely to convert the company into a better competitor. The lesson of Saturn is NOT that it diverted GM's attention, but rather that GM was unwilling to Disrupt its Success Formula to learn from Saturn.
As investors, the question is pretty easy. Would you rather own Saturn, Pontiac and Hummer – the divisions of GM that had loyal customers and some reputation for innovation, quality and customer satisfaction – or Cadillac, Buick and Chevrolet? Would you rather have businesses that are looking forward with early plans for hybrids, and exciting cars like the G8, or a high volume business in cars that most people find ho-hum, at best? Do you want designers that take chances and bring out cars quickly, or that move slowly seeking the "lowest common denominator" in design? If you were an entrepreneur, would you rather be given pemission to lead Saturn, or Chevrolet?
Learning the right lessons from Saturn is important, or else our business leaders are doomed to repeat the GM mistakes. If you don't challenge your Success Formula, White Space project will be met with great resistance by the organization. They will be saddled with unnecessary costs and requirements that strip them of permission to do what the market demands. And they will not achieve the goals which they established to accomplish, including acting as a beacon for migrating a business forward.
For a deeper treatment of this topic please download the free ebook "The Fall of GM: What Went Wrong and How To Avoid Its Mistakes."
by Adam Hartung | Oct 1, 2009 | Current Affairs, Defend & Extend, In the Swamp, Leadership, Lock-in, Web/Tech
In "Why Apple Can't Sell Business Laptops" Forbes gives the case to be pro-Dell. The author points out that Dell has 32% of the computer market within companies that have more than 500 employees. He then explains this happens because Dell makes machines that are constantly the next generation beyond the previous laptop – a little better, a little faster, a little cheaper. Comparing the new Lenovo Z to the Mac Air, the author concludes that anyone who sits in a corporate office, with a lot of corporate IT requirements, who wants the next small laptop would find it easiest to fit the Dell product into their work.
He's right. Which is why investors, employees, suppliers and customers should worry.
Everything described is Lock-in. Dell has focused on big IT departments, and sells products which cater to them. Dell is listening to its dominant customers. Each quarter Dell gets more dependent upon these customers – and walks further out on the PC gangplank when servicing their needs.
But, large corporations are laying off more workers than any other part of the economy. Both in absolute numbers and as a percentage of employment. They are not the "growth engine" or the companies that will lead us out of this recession. And while Dell caters to these customers, Dell is missing major shifts that are happening in how people use computers. Shifts that are already demonstrating the market for traditional laptop technology is waning.
In PC technology, people are moving away from laptops and toward netbooks. By far, netbooks have overtaken laptops as users shift how they access the web and get work done. Additionally, people are moving away from traditional computing platforms for lots of things, like email and web browsing (to name 2 big ones), and using instead mobile devices like Blackberry and iPhone. Apple appears to be very careful to not chase the netbook curve, instead appearing to advance the mobile device curve with future iPhones and a possible Tablet product.
As Dell keeps getting closer and closer to its "core" customers, its customer and technology (traditional PC) Lock-ins are making it increasingly vulnerable. When users simply stop carrying laptops, what will Dell sell them? When corporations move applications to cloud computing, and users no longer need their "heavy" laptop, where will that leave Dell?
The Forbes writer made the big mistake of measuring Dell by looking at its past – and glorifying its focus. But this points out that Dell is really very vulnerable. Technology is shifting, as are a lot of users. The author, and Dell, should spend more time looking at the competition — including solutions that aren't laptops. And they should spend more time building scenarios for 2015 to 2020 — which would surely show that having a better "corporate laptop" today is not a good predictor of future competitiveness for changing user needs.
Apple keeps looking better and smarter. Instead of going "head-to-head" with the PC makers, Apple is helping users migrate to mobile computing via different sorts of devices with better connectivity (the mobile network) and lighter interfaces. They are providing applications that support a wider variety of user needs, like GPS as a simple example, which make their devices addictive. They are pulling people toward the future, rather than trying to hold on to historical computing structures. As the shift continues, eventually we'll see corporate IT departments make this shift – just as they shifted to PCs from mainframes and minicomputers throwing IBM and DEC into the lurch. As this shift progresses, the winners will be those with the solutions for where customers are headed. And Dell doesn't have anything out there today.
by Adam Hartung | Sep 29, 2009 | Current Affairs, Defend & Extend, Disruptions, General, In the Swamp, Leadership, Lock-in, Web/Tech
Last week was big news for technology. Hewlett Packard announced it was killing the EDS brand name, pushing to make HP more of an integrated solutions company (like IBM). And Dell bought Perot Systems to launch itsfirst push into services. According to Washington Technology "HP, Dell Know They Have to Change or Die." The article talks about the dramatically shifting marketplace (love that language!), and how these two hardware oriented companies are trying to avoid the Sun Microsystems finality by getting into services. The author says the companies must "adapt or die," and "there's no sitting still." He goes on to say "it may take years," but he thinks they will transition and eventually be successful. His success forecast hinges on his belief that they must change to survive – and that will be sufficient motivation.
I love the awareness of shifting markets, and the recognition that shifts are demanding changes in these former leaders. But I don't agree with the conclusion that future success is highly likely. Because even with big acquisitions and name changes – HP and Dell haven't laid the groundwork to change. They have taken some rifle shots, but they haven't followed The Phoenix Principle and that means the odds are less than 10% they will successfully transition.
Lots of companies have tried to transition via acquisition. Heck, GM once bought EDS (and Hughes Electronics) – and look what it did for them. Just because a company buys something doesn't mean they'll change. McDonald's bought Chipotle, and then sold it despite double digit growth to fund acquisition of additional McDonald's. Just because a company needs to change its Success Formula to succeed – or even survive – is a long way from proving they will do it.
Neither HP or Dell show they are building a company for the future. Unfortunately, they look to be chasing a model built by IBM in the 1990s. Taking action in 2009 to recreate "best practices" of 15 – 20 years ago is far from creating a company positioned for success. There is no discussion of future scenario planning from either company – about technology use or changing business practices. No description of their scenarios for 2015 and 2020 – scenarios that would demonstrate very high growth and payoff from their action. To the contrary, all the discussion seems to be defensive. They are getting into services – finally – because they realize their growth has slowed and profits are declining. It's not really about the future, it's action taken by studying the rear view mirror.
Additionally, there is no discussion of any Disruptions at either company. To change organizations must attack old Lock-ins. Embedded processes – from hiring and reviews to product development and resource allocation – all exist to Defend & Extend past behavior. If these aren't attacked head-on then organizations quickly conform any potential change into something like the past. In the case of these companies, lacking a clear view of what future markets should look like, they have opted to forgo Disruptions. Mr. Gerstner attacked the sacred cows around IBM viciously in his effort to transition the company into more services. But the CEOs at HP and Dell are far less courageous.
And there's no White Space here for developing a new Success Formula aligned with market needs as they are emerging. Instead of creating an environment in which new leaders can compete in new ways, these businesses are being instructed on how to behave – according to some plan designed by someone who clearly thinks they are smarter than the marketplace. Without White Space, "the plan" is going to struggle to meet with markets that will continue to shift every bit as fast the next 2 years as they did the last year.
I have very limited expectations that these actions will increase the performance of either company. I predict organic growth will slow, as "integration" issues mount and "synergy" activities take more time than growth initiatives. They will not see a big improvement in profits, because competition is extremely severe and there is no sign these companies are introducing any kind of innovation that will leapfrog existing competitors – remember, mere size is not enough to succeed in today's marketplace. They will largely be somewhat bigger, but no more successful.
It's easy to get excited when a company makes an acquisition off the beaten path. But you must look closely at their actions and plans before setting expectations. These companies could make big changes. But that would require a lot more scenario planning, a lot more focus on emerging competitors (not the existing, well known behemoths), much more Disruption to knock back the Lock-in and White Space for building a new Success Formula. Without those actions this is going to be another acquisition followed by missed expectations, cost cutting and discussions about size that cover up declining organic growth.
by Adam Hartung | Sep 28, 2009 | Current Affairs, Defend & Extend, General, Leadership, Lock-in, Television, Web/Tech, Weblogs
Lock-in causes us to keep moving in the same direction, to continue behaving the same way, even when competition and market shifts makes it a surety that the direction we're heading will produce poorer returns. Blacksmiths who ignore the shift to automobiles. Printers who ignore the shift to photocopiers. As I often point out, unless something attacks the Lock-in, we are amazingly able to keep right on going the same direction – blithely ignoring the inevitable problems.
"I read Playboy for the articles" is a Harvard Business School Working Knowledge article which outlines just how far we all will go to avoid dealing with internal conflicts caused by undertaking behavior we know is unjustifiable. (Download full pdf text of White Paper here.) According to the article:
- Because people do not want to be perceived as (or feel) unethical or
immoral, they make excuses for their behavior—even to
themselves.
- People cope with their own questionable actions in a number of ways by rationalizing, justifying, and
forgetting—a remarkable range of strategies allowing them to maintain a
clear conscience even under dubious circumstances.
Which leads me to the #1 excuse I hear. "I don't get it." I bring up to people – especially those who are over 35 – the power of modern technology tools. For example, ask a 40 year old why two 20 year old girls sitting across a table will text each other and the answer is "I don't get it." Tell them you know teenagers who spend more time at the computer monitor on-line than watching TV and the answer is "I don't get it." Hear someone say "my cell phone is more important than my car" and you hear "I don't get it.' And the biggest one of all, tell this person they need to open up accounts and go everyday to Facebook, Linked-in, Twitter, MySpace and Plaxo and you hear "you're kidding – right? Why anyone spends time on those – I don't get it."
Every time I hear "I don't get it" I wince. Because that person just admitted "I'm willing to get out of step with the market, and risk having my skills become obsolete. I'm happy doing what I do, and I don't see why I need to doing something new and different. I'm sure the world is not evolving away from me, and I've chosen to remain Locked-in to where I've been rather than learn what's going on with these new solutions." See what I mean? When you read my interpretation makes you wince, doesn't it?
Our parents used to tell us when we talked on the telephone "Why don't you just go to their house, I don't get it." When we listened to rock-and-roll "Your music makes no sense, I don't get it." When we thought everybody needed a car they'd say "We always walked, why do you need a car? I don't get it."
"I don't get it" is the proverbial excuse justifying Lock-in. It allows us to walk away from a shift that's right in front of us, and remain stuck. It allows us to feel like we're OK to remain – well — ignorant.
So, the next time you hear yourself saying "I don't get it" it's time to stop, Disrupt yourself, and find some time to get it. It's time to review your willingness to remain Locked-in, and invest some resources in trying new stuff instead of Defending & Extending. Because if you do create some White Space you can learn – and the first who "get it" will be the ones who do best in the market, getting the best results.
PART 2 – a personal extension for those with time to read.
When my son died last week, at age 21, he left a brother age 20 and a brother age 18. He also left hundreds of friends his own age. These people shared what all of us shared at that age – a deep desire to talk to each other, to communicate, to cry in groups, to grieve, to find things in the past that made them happy. To capture time in a bottle by reflecting on Alex's life. And they also shared the simple fact that they have almost no money, precious little time, and a host of responsibilities to school, family and work.
30 years ago my generation would have made a few phone calls. Maybe a few of us gotten together for an hour. But our talks would have been mostly a small group, and for a short time.
The last week I've been living on Facebook, Linked-in, Twitter, et.al. I have used all these tools for at least several months, and in some cases years. But I used these through the filters of my history. I saw them as extensions (D&E) of old ways I communicated. Finally, now, I get it. These communities are an entirely different way of communicating. I different way of building a community. And in many ways, it is MORE vibrant and more honest than anything ever before. LIkewise, it is real time. And it is open to everyone. It is extraordinarily effective. And it is unbelievably healthy.
For those who question their child's life on-line, you are looking from your historical reference. What happens in this environment is incredibly open – thus very informative. It is remarkably honest – in ways everyone finds very hard to be face-to-face. And it is very fast. There are no boundaries – no race, no origin questions, no location questions, no income questions. It is the most egalitarian, comprehensive method of creating a self-forming community to accomplish a goal I've ever seen. Way beyond anything I've ever seen my generation accomplish by developing plans and subsequently focusing on execution.
Within hours, my son's friends found out he had died 500 miles away – and his Facebook page exploded. It became a central hub to exchange information of all kinds about his accident, his life, his funeral. Within hours almost his entire world new what happened – far faster than any "family call chains" we ever created. As they searched to learn more, within a day someone found a video of the accident scene and the helicopter whisking him away —- something that would have taken my generation weeks to find (if at all) and share. And the videographer was put in contact with me, able to give me first-hand info about the accident scene.
His brother created a new Facebook site dedicated to honoring Alex the next day. Within hours 200 people were hooked up. Before week end the number went to 400. This became universe central for this topic. There was no CEO. No Director of communications. Just a self-organizing activity that brought together hundreds of people who wanted to talk about Alex. Very effective discussion.
Since Alex's 22nd birthday is 9/30 – some spontenous person said a birthday party should be thrown. Within hours an event had been created, and hundreds were talking about whether they could attend or not (by the way, it's going to be on 10/2 in Chicago.) All kinds of talk about who had to work, who could come, what to bring. Again, self-organizing and spontaneous and remarkably effective.
By the time the newspaper published an article on the accident, and my son's obituary, it was so old news I don't think anybody cared. And certainly the only people who learned this way were those who were – over 40.
If you aren't using these tools – if you don't "get it" – this is one place I would recommend some personal White Space investment. If you do, the payoff is extremely high. If you don't, you're likely to find yourself as out of date as cobblers and blacksmiths faster than you think.
by Adam Hartung | Sep 18, 2009 | Current Affairs, Disruptions, In the Rapids, Innovation, Leadership, Lifecycle, Openness, Web/Tech
This week The Economist reviewed the innovation processes at Google. In "Google's Corporate Culture – Creative Tension" the magazine overviews several recent innovations, and actions senior leaders are taking regarding innovation management.
While Mr. Anthony recently chastised Google for its "immature" innovation management in a Harvard Business School blog post, and somewhat The Economist does as well, for not producing more revenue from its innovations – nobody can refute that the company released yet 3 more very important innovations this week – an updated Chrome web brower, new software that allows viewing on-line newspapers in a more natural way (Fast Flip) and Google Wave for collaborative project development. For most companies any one of these would be vaunted to market on piles of ad and PR sending. Products less significant cause Microsoft to throw their Marketing/PR machine into overdrive. But innovative launches are frequent enough at Google that you can completely miss some of them. Even when they continue to change whole industries – like Google has been doing to newspaper publishers and continues.
The best line in the article says that senior Google leadership is very actively trying to counter "the conservatism that can set in as companies mature." The good news is that even though it has 20,000 employees, Google is not "mature." Thankfully, it remains in the Rapids of growth. Size does not equal "maturity." That word is more applicable to companies that begin truncating ideas and activities to optimize their existing business. This is the direction Scott Anthony recently proposed on his HBS blog. And it gets companies into serious trouble.
Instead, Google is working hard to keep ideas from being truncated by hierarchy or people who are focused on narrow opportunities. Senior leaders are making themselves available to everyone in order to make sure ideas get attention – rather than vetted. Through this they are giving permission for ideas to be developed, even when many in the company aren't supportive. This top-level focus on granting permission to new ideas which are unconventional is a CRITICAL component of innovation success. Second, they aren't relying on a priority process for funding (something Mr. Anthony recommends). Instead they are making ample dollars available for ideas to push them to market quickly – and see if the innovation is accepted by the market or needs more work.
By personally engaging at the top levels in this process, Mr. Schmidt and his team are being Disruptive. They aren't allowing structural impediments like strategy formulation, hiring practices, tight IT systems, large historical investments or internal "experts" to Lock-in Google to its past. This is demonstrably exceptional behavior that pushes Google into new markets and growth. Then, by focusing on granting permission – even for things the "organization" may not initially support – and adding resources from outside normal resource allocation systems they are doing the 2 things necessary to keep White Space alive and thriving at Google.
Google has been growing, even in this very tough economy. More importantly, it has not slowed down its releases of innovation on the marketplace that can generate future growth. Mobile phones using its Android software are just now getting to market, and offer (along with other innovations) potentially very large revenue gains in new areas. With smart phones and Kindle-like e-readers to outsell PCs in late 2010 Google is squarely positioned to be part of the "next wave" of personal digital productivity (along with Apple.) And this can be explained by the company's willingness to remain Disruptive and push White Space projects — even with 20,000 employees.
by Adam Hartung | Sep 17, 2009 | Current Affairs, General, Leadership, Lifecycle, Openness
How many cars do you own? Odds are, it's at least 1 more than you need. There are more licensed vehicles in the USA than there are licensed drivers – so it's clear America is loaded with cars. Now it looks like a permanent shift is developing, to less auto ownership, and it will change competition significantly.
In places as far ranging as Detroit/Ann Arbor, Chicago and San Francisco increasingly people are opting for a new approach to transportation. Take the bus and train – yes. Take a cab – sometimes. And for a lot of folks they are joining car-sharing companies. According to Freep.com, "Service Lets Users Borrow a Car Whenevery they want." Pay a flat annual fee, as low as $30 to $150, then you rent a car in your neighborhood for as little as $8.00/hour. Right. No monthly insurance fee, no gas charge, no parking bills. You rent cars when you need them, and only as long as you need them.
To those of us, mostly older, this may seem heretical. How can you give up your car? It's long been a status symbol. What you drive is supposed to say something about who you are. But this is getting turned upside down. People, lots of people, are renting by the hour and they want something very cheap and easy to park. Cars have a place, but not in your personal parking spot at an enormous cost.
Implications are powerful. Firstly, recognize that the USA is increasingly an urban country. Every election we are reminded that while most the people live in cities, the electoral map is by state. Thus, a President can be elected while losing the popular vote! Just like the tendency across the globe, as agriculture makes less and less importance to the economy people gravitate to major urban centers. Likewise, as manufacturing jobs move offshore from America, people shift to office work which is more centralized in urban areas than the former "factory towns." These demographic trends have been developing for over 30 years, and show every sign of accelerating – not decreasing.
Thus, watching what the "early movers" are doing in urban areas is really important. We have to develop our scenarios about the future, and we can see that what happens in cities is becoming even more important than it was just a couple of decades ago. And in cities, people are opting not to buy cars. Nor even rent them for a day or two. Nor are they relying on ever more costly taxis. They are going for hourly rentals they can preschedule.
GM, Chrysler and Ford are getting very little of this business because the renters, 80%, prefer small hybrids. Hertz and other big rental car companies were being shut out, because their model was the daily rental — largely from an airport location for a traveling business person or vacationer.
In a real way, this shows all the signs of a classic Clayton Chrstensen "Disruptive Innovation." An unserved, or underserved, customer who cannot obtain personal transportation is able to get it. An unconventional solution, perhaps, but it's working. What does that tell us? As the business grows expect the leaders to develop better and better solutions, leading to more and more people accessing the solution. This is how we get to a very large market shift – not from the people currently served suddenly changing, but rather from the underserved market creating a new solution which gets improved and refined until it meets the needs of the majority of customers – who shift much later – but cut the legs out from under old Success Formulas. Meaning we could get back to families having one car (circa 1948) and when a second is needed they rent by the hour – even in the suburbs!! With insurance costs often topping $100/month for a second car, plus the cost to license and maintain it, it's less clear that multi-car ownership is as beneficial as it once was. If a viable new solution comes along – well it just might work!
This, of course, is not a good thing for auto companies dependent on a demand rebound to fix their recent woes. Their "good case" scenarios have people returning to adding to their personal fleets, while also returning to new car acquisition every 2 or 3 years. If instead buyers go the direction of less ownership and less frequent purchases it will be impossible for these companies to repay the government loans.
Markets shift. Often quickly and violently. Far too oten, we ignore these shifts. Because they look so different, so odd, that we believe it must be a short term phenomenon. We expect that things will soon get "back to normal." We have future scenarios – they are extensions of the past. But in the post-millenial global economy people are starting to do a lot of things differently. They aren't trying to return to old patterns. They are developing new ones. And if you want to compete, it's becoming crystal clear you have to change your assumptions about the future, your scenarios of the future and your approach to markets. Before you get left so far behind you fail.
by Adam Hartung | Sep 16, 2009 | Current Affairs, Defend & Extend, In the Rapids, Innovation, Leadership, Openness
Is Google a company who's growth and innovation worry you? Not me. Which is why I was disturbed by a recent blog at Harvard Business School Publishing's web site "Google Grows Up." In this article Scott Anthony, a consultant and writer for HBS, says that he thinks Google has been immature about its innovation management, and he thinks the company needs to change it's approach to innovation. Unfortunately, his comments replay the core of outdated management approaches which lead companies into lower returns.
No doubt Google's revenues are highly skewed toward on-line ad placement. But with the market growing at more than 2x/year, and Google maintaining (or growing) share it's not surprising that such high revenues would dwarf other projects. Google created, and has remained, in the Rapids of growth by leading the market. From its Disruptive innovation, offering advertising through products like Google AdWords to people who previously couldn't afford it or manage it, allowed Google to lead a market shift for advertising. And ever since Google has implemented sustaining innovations to maintain its leadership position. That's great management. No reason to worry about a lot of revenue in ad placement today, with the market growing. Not as long as Google keeps breeding lots of new, big ideas to help grow in the future.
But Mr. Anthony flogs Google for its "unrestrained" approach to innovation. He recommends the company push hard to implement a process for innovation management – and he uses Proctor & Gamble as his role model – in order to curtail so many innovations and funnel resources to "the right" innovations. Even though he's obviously flogging his consulting, and pushing that all "good management" requires some significant stage gate management of innovation – he couldn't be more wrong.
Firstly, P&G is far from a role model for innovation. As recently discussed in this blog, the company recently said one of its major innovations was cutting prices on Tide while introducing less a less-good formulation. As commenters said loudly, this is not innovation. It's merely price cutting – taking another step on the demand/supply curve of price vs. performance. It doesn't change the shape of the curve – it doesn't help people get a far superior return – nor does it bring in new customers who's needs were not previously met.
In a Wall Street Journal article "P&G Plots Course To Turn Lackluster Tide," the CEO freely admits the company has had insufficient organic growth. Additionally, his big future opportunities are to "reposition Tide," to cut the price of Cheer by another 13% and to use Defend & Extend practices to try pushing the P&G Success Formula into other countries. Like people in China, India and elsewhere are in need of 1.5 gallon containers of laundry detergent sold through enormous stores which have big parking lots for all those cars to lug stuff home. None of these ideas have helped P&G grow, nor helped the company achieve above-average returns, nor demonstrate the company is going to be a leader for the next 10 years in new products, new distribution systems or new business models for the developed or developing world.
This urge to "grow up" is a huge downfall of business thinking. It smacks of arrogance and superiority by those who say it – like they somehow are "in the know" while everyone else is incapable of making smart resource allocation decisions. In "Create Marketplace Disruption" I provide a long discussion about how introducing "professional management' causes companies to enter growth stalls. The very act of saying "gee, we could be more efficient about how we manage innovation" immediately applies braking power well beyond what was imagined. If Mr. Anthony were worried about Google managers leaving to start new companies in the past (like Twitter) he should be apoplectic at the rate they'll now leave – when it's harder to get management attention and funding for new potentially disruptive innovations.
Google is doing a great job of innovating. Largely because it doesn't try to manage innovation. It maintains robust pipelines of both disruptive, and sustaining, innovations. Google allows everybody in the company to work at innovation – providing wide permission to try new things and ample resources to test ideas. Then Google lets the market determine what goes forward. It lets the innovators use supply chain partners, customers, emerging customers, lost customers and anybody who can provide market input guide where the innovation processes go. As a result, the company has developed several new products — such as new network applications that replace over-sized desktop apps, and a new, slimmer mobile operating system that expands the capabilities of mobile devices —- and we can well imagine that it may be coming close to additional revenue breakthroughs.
Unfortunately, Mr. Anthony would like readers, and his clients, to believe they are better at managing innovation than the marketplace. However, all research points in the opposite direction. When managers start guessing at the future their Lock-ins to historical processes, products and market views consistently causes them to guess wrong. They over-invest in things that don't work out well, and investing for really good ideas dries up. All resource allocation approaches use things like technology risk, market risk, cost risk and revenue risk to downplay breakthrough ideas. Management cannot help but "extend the past" and in doing so over-invest in what's known, rather than let ideas get to market so real customers can say what is valuable.
Google is doing great. In a recession that has put several companies out of business (Silicon Graphics and Sun Microsystems are two neighbors) and challenged the returns of several stalwarts (Microsoft and Dell just 2 examples) Google has grown and seen its value rise dramatically. To think that hierarchy and managers can apply better decision-making about innovation is – well – absurd. It's always best to get the idea surfaced, push for permission to do things that might appear crazy at first, and get them to market as fast as possible so the real decision-makers can react, and give input, to innovation.
by Adam Hartung | Sep 15, 2009 | Current Affairs, General, In the Whirlpool, Leadership, Lock-in
The Real Blindness Behind The Collapse
Adam Hartung,
09.14.09, 05:00 PM EDT
The exact same failing brought down Wall Street, Detroit and Main Street's real estate speculators.
"Too big to fail" is a new phrase in the American lexicon, born in the economic crisis that gave us a bankrupt Lehman Brothers and the shotgun marriage of Merrill Lynch with Bank of America.
Nobody really knows what it means, except that somehow in the banking
world, central bankers can decide that some institutions–like AIG, Citigroup, JPMorgan Chase and BofA–are so big they simply have to be kept alive.
This is the first paragraph in my latest column for Forbes. There is much EVERY business leader can learn from the collapse of Lehman. Learn about risk, and about how to succeed in a shifting marketplace. Please give the Forbes article a read – and put on a comment! Everybody enjoys reading what others think!
