by Adam Hartung | Sep 2, 2007 | Defend & Extend, General, In the Swamp, Leadership, Lifecycle, Lock-in, Openness
A few weeks ago this blog talked about the mistake Ford (see chart here) was making by selling off its most profitable group (Jaguar and Land Rover) in order to generate cash to Defend & Extend the broken Success Formula in traditional Ford business. Ford is selling it’s White Space for cash to defend in its old business. Just the opposite action Ford should take to turn itself around.
And one very savvy competitor has seen the opportunity. Tata Group of India is not well known outside its home country (see website for Tata here). It’s best known business is TCS (Tata Consultancy Services) which provides IT services globally. But inside India Tata is known for everything from electricity generation to automobile manufacturing. While Tata makes a complete line of vehicles, from large trucks to very small cars, in India (see website here) these are not known outside it’s domestic marketplace. The company has recently made a splash by developing a quality automobile that it will sell for only $2,000, and potentially taking this new vehicle global (see article here.)
While Tata Motors is not yet regarded on the world stage, the company is very serious about learning how to compete. And the commonly held view is that Tata should produce a cheap car, which is not expected to be very good, and eventually try to migrate up market. This slow approach is what the Japanese auto companies did, and more recently the Korean auto competitors. But Tata Group is very astute. And they recognized an opportunity to take a very different approach.
It has been reported that Tata is considering buying Jaguar and Land Rover (see article here.) And this sort of Phoenix Principle thinking is why Tata has become a very successful, high growth and extremely profitable company. This acquisition would give Tata a fast growing and very profitable auto company operating across the globe. Tata already knows how to make inexpensive high volume automobiles. These companies would give Tata global market access, and two very positively positioned brands. Tata could then migrate its business toward the global marketplace, learning what will work from its acquisition, while developing new skills and capabilities in its very large, domestic business. These acquisitions will provide the White Space that can help Tata Motors continue its rapid growth by developing a new Success Formula which can meet future market needs and help Tata become a world -class competitor.
Ford should have migrated its Success Formula forward with the White Space it has in its premier auto gruop. By selling these businesses it effectively hands over its White Space, probably its most valuable assets, to an emerging competitor very willing, eager and capable of learning from these businesses to accelerate its growth. In effect, Ford will create a new global competitor that may well help accelerate the demise of Ford itself.
Tata has been brillliant in its efforts to expand its information services business globally. It is one of the world’s largest suppliers. And while TCS results are not reported, it is well known in the industry that TCS’s performance is right up there with Infosys (see chart here) – the fastest growing and most profitable competitor on earth. Now, Tata is looking to move forward similarly with its auto business. And Ford is handing the knowledge keys to Tata for some money to short-term protect its badly outdated traditional business. When the fox comes home to eat the eggs, Ford will only have itself to blame.
by Adam Hartung | May 21, 2007 | General, In the Rapids, Leadership, Openness
In January of this year I blogged about the White Space prevalent in the highly Disruptive Virgin culture. Sir Richard Branson has built an empire from small beginnings by constantly Disrupting his organization and creating White Space. Many high paying jobs have been created, and lots of money made for investors, due to this Phoenix Principle culture.
But there can be a definite downside if a Phoenix Principle culture is not managed well. Disruptions and White Space can be opportunities to overspend, and overinvest, leading to losses and failure. White Space is not child’s play. It is where new Success Formulas are formed via the crucible of competition. It is critical that managers in these environments have their "feet held to the fire" to produce results. Otherwise, cash flow is negative and profits never materialize. That’s bad news.
All businesses need a mix of Explorers and Stabilizers. Explorers usually become in short supply in Locked-in cultures, because optimization of the old Success Formula says that these kinds of managers are unnecessary. So Locked-in companies have to recruit Explorers to identify and create Disruptions, and then to have the skills for managing the creation of a new Success Formula.
White Space companies, and projects, need Stabilizers as well. Activities need to be disciplined and directed toward managing for cash flow and profit in the Rapids. As we saw all too well in the 1990s internet boom, too many Explorers make short shrift of these requirements, and their businesses simply flame out.
And that risk is now at Virgin Media. Using clever planning and intense hard work, Virgin Media has built itself into a large and powerful company that delivers mobile phone service, land-line service, internet service and satellite television service across Europe and other parts of the world. The company has made several growth-oriented acquisitions in the process, and those acquisitions have saddled the company with a huge debt load (see article here). This is big trouble for a business in the media game, because assets are not long-lived. So the debt payments go on after the technology needs to change – sucking up cash that should be used for changes and growth. Virgin Media is now losing money, and forced to make debt payments, while its primary competitors (the Murdoch-controlled Sky and British Telecom) are in far healthier financial shape. This is a risky situation, that may require someone buy out Virgin Media or it risks a precipitous decline that will be bad for Virgin as well as its investors, suppliers, employees and customers.
In the headlong rush to grow at Virgin Media, the managers may have been short a sufficient number of Stabilizers. The Explorers, which are sure to be popular in the Virgin culture, have been allowed to push the company growth. But now the entire Virgin Media organization is at risk. If there had been a more balanced management, with more Stabilizers, it is very likely the company would be in better financial shape and more competitive.
Everyone loves a party. And we all want to have a good time. But, if someone gets drunk the party can come to a crashing, unpleasant end. White Space can not be run like a party. It is a business. And if there aren’t Stabilizers around to control the consumption of resources, then the White Space business can find itself crashing.
by Adam Hartung | Apr 26, 2007 | Disruptions, In the Rapids, Leadership, Openness
Lately I’ve been pretty hard on companies in this blog, so today I’m taking time to highlight two examples of companies following The Phoenix Principle on the road to long-term evergreen success.
Firstly is Motorola (see chart here). As previously blogged, Motorola is under attack by corporate raider Carl Icahn who would like to borrow a lot of money and pay it, as well as existing cash, out in a special dividend to investors. In other words, do to Motorola what Sam Zell is doing to Tribune Company. In the face of this effort, Motorola announced Tuesday it is buying Terayon Communications Systems to gain more capability (specifically software for delivering video) to it’s television set-top box business (see article here). Keep in mind, in 2009 the television system switches from analog to digital and the demand for set-top boxes to go with all the existing analog TVs is sure to grow – possibly exponentially. This acquisition is a great example of continuing to fund the White Space in a market that is in the early stages of the Rapids. Now that’s a great use of corporate cash – and will provide a real return to Motorola investors. If Motorola leadership and investors can keep the shark away.
Secondly is J.P. Morgan Chase (see chart here.) J.P. Morgan Chase is run by Jamie Dimon. Mr. Dimon is a very colorful character well known for short patience. When Jack Welch institutionalized White Space he was nicknamed Neutron Jack. Mr. Dimon may someday get a similar monicker for his willingness to Disrupt his own people and organization. And this week J.P. Morgan announced the acquisition of technology company Xign (see article here). Xign has been a pioneering company in developing the e-payments system for automated commercial (or busineess-to-business) transactions. This is projected to become a $1.7 billion market by 2010, even though you may never have heard of Dynamic Discount Management (DDM for short). Here we see a Disruptive leader investing in a new business opportunity at the front end of very high growth – exactly the kind of White Space that should excite investors. Compare this with the actions taken by J.P. Morgan’s primary competitor – Citigroup – last week when they laid off 5% of their work force and starting shutting offices and centralizing decision-making in order to protect their faltering old Success Formula.
Far too many leaders use Defend & Extend Management and kill the growth of their company. They manage for protection of the old Success Formula and wipe out all capabilities to Disrupt. They refuse to invest in White Space in favor of trying to prop up the old Success Formula. But there are reasons to be optimistic. There are companies using The Phoenix Principle and positioning themselves to migrate their Success Formulas forward to meet new Market Challenges. You just have to keep your eyes open and look.
by Adam Hartung | Apr 17, 2007 | Defend & Extend, General, Lock-in, Openness
Will Rogers once said "All I know is what i read in the newspapers." While many have heard that phrase, few know that the back half was "and of course I’m the most ignorant man alive!" It was his joke that newspapers often obscured important bits of information.
Dow Jones (see chart here) just announced earnings. But, be careful what you read. The headline boasted "a 63% drop in quarterly profit due to a year-earlier gain." (Obtain full article here.) Pretty clear Defend & Extend language telling investors to ignore the decline because the past and current aren’t really comparable. Further on we real lots of D&E obfuscation as we learn revenue is up, but then again they bought half of Factiva not previously included in revenues. And tax benefits positively affected resuls – which is code for "real tax payments and GAAP reported payments don’t match so we manipulate a bit year-to-year in GAAP to suit our needs." These financial machinations are common in D&E management trying to sustain an old Success Formula nd make it look better than it is.
So you wold conclude that I think Dow Jones, like I’ve previously blogged on Tribune Company, is in dire straits. Not so!
Read on in the article and we learn that Dow Jones is not just The Wall Street Journal and Barron’s. It is also MarketWatch (a great website from which I get substantial business news), WSJ on-line and Barron’s on-line. WSJ on-line paid subscriptions rose 20% last quarter, and ad revenue at the on-line Journal and Marketwatch climbed 30%! And, in the on-line business units of the 8 daily and 15 weekly local newspapers owned by Dow Jones revenue jumped 66%! Meanwhile the Index business grew 5.2% even after honestly comparing the business pre-Factiva and post-Factiva acquisition.
Yes, ad revenues at the print WSJ dropped 1.8% on a 3.1% volume decline. And the local papers saw revenue fall 3.5% on a 4.6% volume decline. But Dow Jones management should quit apologizing for this, such as stating that a small decline "is not really bad in this environment." Dow Jones’ future is not about print products, it’s about the on-line world. The world Tribune and other media companies has not effectively addressed. Dow Jones is clearly in the market with their products and doing some good things growing readers and advertisers.
Get beyond the headlines. Look if there is White Space inside the company. No matter what management leads with, the winners will be those who play the game for the long-term market. Dow Jones is clearly one of the old-media companies that at least has its eye on the market and some effective White Spce producing positive results that the company appears to be migrating towards.
by Adam Hartung | Apr 4, 2007 | General, In the Swamp, Innovation, Lifecycle, Openness
I’ve lived in Chicago many years. And anyone who’s ever worked in the Loop (that’s the downtown area) is familiar with the guys running around in the brightly colored sport coats. You see them on the street every week day, impervious to hot, cold and rain, usually (it seemed) with a cigarette. These were the floor traders from the Board of Trade. "Heart attack job," most of us would think, and say to our colleagues, as we watched these runners dealing with customers and their orders.
But these folks are disappearing quickly. Computer trading has practically replaced the pits for a preponderence of trading volume. And the rug was pulled out from under people who practiced what was a very skilled, but very limited, occupation. What do you do when you have a highly specialized Success Formula and suddenly there’s no need for it?
You can read about what some of these former traders are now doing here. Market Challenges don’t just affect companies and industries. Technology and new competitors don’t just hit businesses. Individuals, and their personal Success Formulas are impacted by Challenges as well. And when that happens, what’s critical is that we use personal Disruptions to find White Space for our future.
Very few of these old traders have turned into "screen traders." The skills for success are very different trading on a computer versus a pit. And for most of these people, their identity was tied to more than a title – it was tied to the strategies and tactics used in the activity of being a pit trader. Their Success Formula suddenly had a lot less value. For some, this signaled retirement – the personal equivalent of shutting down operations. Others have taken up screen trading, but at far lower volumes and with less satisfaction (monetarily and personally.) They are trying to find a way to Defend & Extend their old Success Formula – but it isn’t going too well (as we might expect). And others have Disrupted themselves and moved on to roles as salespeople and restauranteurs. It’s this latter group that is now finding the most fulfillment in their lives, because they have moved themselves into personal White Space and are developing a new Success Formula.
It’s personally rough when your Success Formula needs changing. But we are no more immune to the impacts of a dynamic world, and the affect it has on labor, than are businesses. Succeeding in this dynamic world increasingly requires that we keep our eyes scanning for Challenges, that we practice Disrupting our lives to make sure we don’t become too "comfortable and cozy," and finding ways to insert White Space in our lives. Places to experiment with new ideas that we can potentially use to keep our careers, and lives, in our control and flourishing – instead of waking up wondering "Where’s the Rug"?
When was the last time you took a college class? The last time you explored how to turn your hobby into a job? Interviewed someone who walked away from a job to something totally different for insights on how she did it? Discussed with your spouse squirreling away significant funds as "walk away money"? Checked on the value of your house not to get more spending money, but to finance a career change? Attended a networking meeting not looking for a job, but just to hear about what other people do? Where’s the White Space in your life?
by Adam Hartung | Mar 26, 2007 | General, In the Rapids, Leadership, Lifecycle, Openness
You probably never heard of Glunz. Profiled recently in The Chicago Tribune (see article here), Glunz is a beer distributor. What makes the company interesting is how this 120 year old family owned-and-operated business has succeeded despite severe market Challenges. And it’s due to keeping White Space alive continuously, not just looking for solutions when problems develop.
Founded in 1888, Glunz has overcome a series of market Challenges. Just imagine facing these:
– in 1930 their business was outlawed by the passage of prohibition in the 13th ammendment to the Constitution. Rather than giving up, the company found opportunities in medicinal alcohol, sacramental wine and home brewing kits.
– After building a business as the national distributor of Schlitz, that brand collapsed in the 1970s due to a raft of articles on production errors and bad quality. But the company had already started distributing Stroh’s – a local beer out of Wisconsin – and they expanded Stroh’s in Schlitz place.
– But then Stroh’s was bought out, and disappeared. Yet again, years of effort had already been put in place to develop a relationship with Coors to distribute their beer and Glunz was ready to move when the Challenge came.
– But then Coors, being a big company, decided one day to drop Glunz and predicted the company would be dead within 6 months. Only Louis Glunz had already begun preparing for such a scenario and he had developed a relationship with Rolling Rock, a Pennsylvania beer with east coast cache but no market in the midwest. And so Glunz rolled out Rolling Rock to great success in stores and bars.
– Only to have Rolling Rock acquired by Annheuser-Busch last year – yet another Challenge. But again, Glunz had already started looking at beer imports they could grow as a replacement for Rolling Rock. Now Glunz distributes Stiegl, Stella Artois, Becks and Tecate.
2007 sales are expected to reach $30M, more than double sales of $13M in 1992 when Coors yanked their beer from Glunz distribution.
Any one of these market Challenges could have been a compeny-ending act. But Glunz has thrived because the leadership constantly maintains White Space. Instead of putting all their "focus" on the business at hand, and putting everything at risk on that one business, Glunz constantly maintains openness to new opportunities. Each of these might have grown Glunz into a much bigger business had the setbacks not occurred. But instead, they allowed Glunz to thrive very nicely despite horrific Challenges.
Business of all sizes and ages get Locked-in to their Success Formula. The Lock-in creates blinders have them moving too late when Challenges develop. Glunz is an example that even very old companies with tremendous heritage, and small companies that aren’t sitting on billions in resources, can be open to new opportunities. These small and older companies can, in fact, seek out new opportunites on a constant basis so as to be prepared no matter how the market shifts and turns. By keeping White Space constantly alive your chances for success greatly improve.
by Adam Hartung | Mar 24, 2007 | Defend & Extend, General, In the Rapids, In the Swamp, Leadership, Lock-in, Openness
Readers of this blog know I’ve been a real fan of Motorola. I’ve waxed eloquently about the Disruptions implemented by the new CEO when he came to the company in 2004. And likewise I’ve been an endorser of the multiple White Space projects he implemented (see previous blogs on Motorola for details.) But this week, lots went the wrong direction at Motorola.
Motorola reported that it would have a loss for the first quarter of 2007 (see article here.) That means the clock is now ticking on what might be a growth stall. As previously written here, companies that hit growth stalls have only a 7% chance of really ever growing again. Motorola stalled badly in the late 1990s and early 2000s, and they were rebounding when this loss hit. The risks are great here – and there should be no doubt about it. If the company posts another down quarter next, the odds are getting slim on success.
What went wrong at MOT (see chart here)? Firstly, White Space must be managed toward success. While the company implemented a lot of White Space, and the impact showed in a dramatic turnaround from the situation in 1999, management did not hold White Space accountable for results. White Space is not an excuse to let results falter. Rather, management should have been aware of the precarious predicament in the large mobile phone business and PUSHING White Space to produce rapid results. As recently as this week, the very week that the bad results were reported, Motorola was expected to be announcing plans to buy PALM in yet another expansion of White Space to grow the company. But this looks much less likely now, because leadership opened White Space but did not manage it effectively.
Secondly, Ed Zander failed to Disrupt himself while Disrupting Motorola. When arriving at Motorola he moved fast to Disrupt. Of course, Disruption was "normal" at Sun Micrososystems where he used to work. Chronic Disruptions were part of the Success Formula at Sun, and became part of his Success Formula. But Sun got into big trouble when it became overly committed to a single market in network servers. Unfortunately, Motorola was allowed to be too committed to a dependence on mobile phones. What we now see is that while Mr. Zander was OK with Disrupting and opening White Space, he did not actually Disrupt his personal Success Formula and change the way he believed a business should be managed.
Once confronted with the threat posed by Mr. Icahn, Mr. Zander approved a quick $4.5billion stock buyback. And now he’s agreed to an even larger $7.5 billion buyback (see article here) – representing 75% of Motorola’s cash reserves. And he’s put in place a President and COO from inside the company – a sign of creating distance from the Disruptions and White Space he implemented (see article here) .
These are not good signs. I’ve had high hopes for the White Space at Motorola. If we recognize where the company was just 3 years ago, it has traveled a very successful road. The question now will be does leadership have the will to continue its road of Disruption and White Space to create a more successful Motorola? Will it follow through on the acquisition of PALM, given the current Challenges? If it does, and management holds the White Space leaders to business demands for results, Motorola can become again a great company. If it keeps following its recent trends – retrenching to Defending and Extending its mobile phone business and acting to protect management – then recent gains will be quickly unwound.
by Adam Hartung | Mar 4, 2007 | In the Rapids, Innovation, Leadership, Lifecycle, Openness
About 6 months ago I blogged on White Space at Anheuser-Busch (see Surprising Juxtaposition here.) This last American-owned large brewer has had its stock go nowhere for the last few years (see chart here) as it has battled fierce competition in a consolidating and changing marketplace. Anheuser-Busch found it had slipped into a price war for volume. But more recently the compaqny has turned toward White Space to improve performance.
Anheuser-Busch has just taken another stepped up its White Space efforts by deciding to enter the beer market in India (see article here.) An important White Space project for several reasons:
- Moving offshore gives Anheuser-Busch more diversity of competition. The company will learn from new competitors about everything from product options to distribution and pricing alternatives.
- India, in particular is a great markt to learn. Competition is FIERCE. Prices are universally low, the currency is low (giving no break to mistakes), distribution is highly fragmented and much of the demand comes from poor people who have severe limits on what they can spend. Ninety percent of shampoo sales are made in single service sachetes which sell for less than $.01 each at thousands of small retailers. In consumer goods it’s been said "if you can sell at a profit in India you can make a profit anywhere." Now that’s a great place to learn.
- India is the fastest growign middle class in the world. While the American middle class is growing at 2-3%/year, rising economic prosperity in India is creating a growth rate exceeding 10%/year. And this is augmented by the fact that over half the population is under 30 years old, creating an expanding market for Anheuser-Busch products.
- In India beer = Kingfisher. Many of us who travel to India avoid all drinks with ice or from a fountain because of sanitary concerns and poor water quality. So the universal call for fluid refreshment, in a country that is constantly hot, is "give me a Kingfisher." Thus, India provides a great market in need of competition against a dominant product.
I’m sure the path to succes won’t be easy. In addition to the daunting distribution and competitive challenges mentioned earlier, Anheuser-Busch must learn to deal with terrible infrastructure (intermittent electric power, bad water treatment, terrible roadways, poor refrigeration), complex government bureaucracy overseeing business, hierarchical government entities that too often have corruption, strong Communist and Socialist government participants and districts, distrust of American interlopers, a vast array of advertising channels to a highly heterogenous media environment, 30+ languages in a single country, a propensity for unending negotiation as a culture and a completely dysfunctional legal system.
But the important thing is that none of this stopped Anheuser-Busch. And that’s what White Space is all about. Phoenix Principle companies identify a market opportunity and then jump in to learn. Not just for what can happen in that new market, but what it can teach the company overall. Possibly even how to develop a new and better returning Success Formula.
by Adam Hartung | Feb 12, 2007 | Disruptions, General, Innovation, Leadership, Lock-in, Openness
Is a Tattoo art? Can a tattoo style drawing sell a product? These are two questions I really never asked myself before, but now I’m asking them a lot.
Sometimes we can’t see what’s right in front of our faces. We all suffer from BIAS – Beliefs, Interpretations, Assumptions and Strategies – that we carry around in our heads. As we develop our Success Formulas, we Lock them in with our BIAS and we often start missing things. And some of these can be really big trends.
The Chicago Tribune ran an article in the Business Section (yes the Business section) about the use of tattoo art in mainstream ads (see full article here). Now, I have to admit that tattoos are not something I think about at all. But this article pointed out that they are getting to be pretty much everywhere, on everybody. And, as importantly, the artists are downright cheap compared to typical graphic artists used in ad production. That really caught my attention.
Then I started to notice, and think. The images of Anna Nicole Smith all over the TV following her untimely death showed a tattoo on her leg. Many (maybe most?) of the performer’s at this week’s Grammy award seemed to have visible tattoos. Then I realized that I see tattoos increasingly on the young people that associate with my high school and college age sons. I had "seen" these tattoos before. But my mind hadn’t "seen" them. Why, it was startling how popular tattoos are. I noticed last weekend going to run errands that I identified at least a half dozen tattoo parlors within 10 miles of my northwest suburban Chicago home. No matter what I thought, or better said what I didn’t think, about tattoos they are a lot more popular and part of popular culture than I realized.
My Success Formula had never thought about tattoos. I have held the top marketing job in a $3B manufacturing company, and worked at PepsiCo a top marketing company, and I am heavily involved in advertising graphics with clients today — and from that I had developed a Lock-in about commercial graphics. And that Lock-in left me completely BIASed to ignore tattoo art as a commercial graphics product. The Tribune article showed me a market Challenge – a new art form that is growing in popularity and cheap. And as a result I’ve had to Disrupt my Lock-in. Now I’m looking for White Space to explore the possibilities this might open up for advertisers. (As long as it doesn’t include putting ink into my 50 year old white, less than menacing forearms – lol.)
We all have Success Formulas, and we Lock them in. We develop a BIAS around them that can blind us to opportunities. That’s why it is critical that we use external stimuli to help identify market Challenges we otherwise will completely miss. Don’t become BIAS blinded to opportunities.
by Adam Hartung | Feb 8, 2007 | Disruptions, General, Innovation, Leadership, Lifecycle, Lock-in, Openness
It’s easier to recognize a problem than it is to find a solution. I’m sure you’ve noticed this. In practically everything we do we can see the need for improvement, but we often find that nothing happens to make things better. Even when a crisis happens,we often see lots of people discussing the problem – and some talk about potential solutions – but not much progress is made.
Take for example the U.S. health care situation. We now have a country where 20% to 40% of the population has no health care coverage with between 30% and 50% are significantly under-insured (ranges are offered because it depends on what study you read.) Virtually everyone agrees that this is a big problem, because the U.S. health care system is not designed to deal with the uninsured. We hear stories of people waiting for hours in hospitals for basic care that is often poorly administered. We hear about total health care costs rising because the uninsured drive up costs that are then born by insured patients. And the medicare and medicaid system we are told is nearly bankrupt, unable to meet many basic needs and not providing necessary life-sustaining assistance. Increasingly, doctors, clinics and even some hospitals refuse to take uninsured patients.
The problem has been easy to see. In America, the system has been based upon employer-provided health care. But, as employees have changed jobs they have lost insurance due to "pre-existing condition" clauses that deny coverage. And people who lost jobs to downsizings lost all coverage completely. Employment has shifted dramatically from manufacturing to services in the U.S., yet a far higher percentage of service employers offer very limited insurance, or no insurance at all. And the vast army of those who work part-time (under 40 hours per week), have no access to insurance as employers limit their hours and limit access to coverage as a cost saving measure. Employer-provided health insurance worked in the far more stable employment practices of the 1940s to 1970s, but the program simply isn’t sufficient to meet the needs of nearly half of Americans today.
Yesterday, Wal-Mart agreed with the largest service union in the USA (their bitter enemy, the Service Employees International Union) that dramatic changes were needed in health care coverage (see article here.) Obviously, Wal-Mart does not believe it can provide universal coverage to its 1.3 million employees and compete. But interestingly, the unions which have fought hard to get employees health benefits agree that far too many employers cannot be expected to offer health care and compete in a global economy. Democrats have easily joined the ranks of those asking for a different system, but interestingly now noteworthy Republicans agree – including Howard Baker former Chief of Staff to Ronald Reagan.
So, what is to be done? There is no shortage of opinions about the solution (see article here). Many people want universal coverage from the federal government – but that has many detractors as well. Some states say a universal program should be implemented state-by-state, and Massachusetts has taken this direction. The President has offered to push for universal coverage with a series of changes to taxation of health care benefits. Lots of ideas – but most of these have existed for well over a decade. So it hasn’t been a lack of ideas that has stopped progress toward a different solution.
What we have with Wal-Mart’s announcement is a Disruption inside the business community. A Disruption saying "stop, we have to do something different here. The old way won’t work. We’re Locked-in to an outdated health care solution that must change." Having the country’s largest employer, in tandem with one of the largest unions, make this admission serves as a Disruption.
But this will make no difference if we don’t find White Space to actually create, test, pilot, learn, and define a new Success Formula for health care. Politicians often say "we need a debate on the options." Debates we’ve had. What we need is to try new solutions, and see if they work. We need to begin variations of the multiple scenarios so we can see what works, and what doesn’t. Massachusetts, for example, is a great experiment in a state-implemented program. But we also need to experiment with changes to the federal systems (Medicare and Medicaid) to see what they can actually do. And we need to experiment with subsidies and tax changes in the workplace to see what private programs can be developed. In the end, only in White Space do we actually test possible answers and thereby develop a new solution to which people migrate. The best solution is not the one debated to success, but instead the solution which is proven to work – and that is the solution to which people migrate. Anyone will change when they can see a better result, and that can only happen in White Space.
This is exactly what businesses have to do as well. The Phoenix Principle has demonstrated that whether a problem needs to be solved at the macro level (like national health care coverage) at an industry level (like national access to broadband telecommunications) or at a company, or function, work team or even an individual level Disruptions must be supplemented with White Space if a solution is actually to be developed and implemented. New solutions don’t come out of the universities or other "brain trusts". They come out of White Space where new Success Formulas that include strategies and tactics are actually tested and demonstrated to work. Then these new Success Formulas don’t have to be foisted upon people, because the better results attract people to them. Of course there are laggards, but we see that migration to a better result works far better than trying to debate, design, declare and then demand change – a model that almost never gets implemented nor works well.
So, we need White Space for experiments in health care coverage. And the state programs fit as one example. Let’s hope this Disruption will lead to more experiments. And we need more White Space in our companies, our departments and our lives so that we can experiment and find ways to produce better results. In the end, we can equate long-term success with White Space – and we’ve never needed more of it than we do today.
