How “Best Practices” kill productivity, innovation and growth – Start using Facebook, Twitter, Linked-in!


How much access do your employees have to Facebook, Twitter, Linked-in, GroupOn, FourSquare, and texting in their daily work, on their daily technology devices?  Do you encourage use, or do you in fact block access, in the search for greater security, and on the belief that you achieve higher productivity by killing access to these “work cycle stealers?”  Do you implement policies keeping employees from using their own technology tools (smartphone or tablet) on the job?

In 1984 the PC revolution was still quite young.  Pizza Hut was then a division of PepsiCo (now part of Yum Brands,) and the company was fully committed to a set of mainframe applications from IBM.  Mainframe applications, accessed via a “green screen” terminal were used for all document creation, financial analysis, and even all printing.  The CIO was very proud of his IBM mainframe data center, and his tight control over the application base and users. 

In what seemed like an almost overnight series of events, headquarters employees started bringing small PC’s to work in order to build spreadsheets, create documents and print miscellaneous memos.  They found the new technology so much easier to use, and purchase cost so cheap, that their productivity soared and they were able to please their bosses while leaving work on time.  A good trade-off.

The CIO went ballistic.  “These PCs are popping up like popcorn around here – and we have to kill this trend before it gains any additional momentum!” he decried in an executive meeting.  PCs were “toys” that lacked the “robustness” of his mainframe applications.  If users wanted higher productivity, then they simply needed to spend more time in training. 

Additionally, if he didn’t control access to computing cycles, and activities like printing, employees would go berserk using unnecessary resources on projects they probably should never undertake.  He was servicing the corporation by keeping people on a narrow tool set – and it gave the company control over what employees could do as well as how they could do it making sure nothing frivolous was happening.  For all these reasons, plus the fact that he could assure security on his mainframe, he felt it important that the CEO and executive team commit with him that PCs would not be allowed in Pizza Hut.

Retrospectively, he looks foolish (and his efforts were unsuccessful.)  PCs unleashed a wave of personal productivity that benefitted all early adopters.  They not only let employees do their work faster, but it allowed employees to develop innovative solutions to problems – often dramatically lowering overhead costs for many management tasks.  PCs, of course, swept through the workplace and in only a decade most mainframes, and their high cost, air conditioned data centers, were gone. 

Yet, to this day companies continue to use “best practices” as a tool to stop technology, and productivity improvement, adoption.  Managers will say:

  1. We need to control employee access to information
  2. We need to keep employees focused on their job, without distractions
  3. We must control how employees do their jobs so we minimize errors and improve quality
  4. We need to control employee access externally for security reasons
  5. We need consistency in our tool set and how it is used
  6. We made a big investment in how we do things, and we need to leverage that [sunk cost] by forcing greater use
  7. We need to remember that management are the experts, and it is our job to tell people how to do their jobs.  We don’t want the patients running the hospital!

It all sounds quite logical, and good management practice.  Yet, it is exactly the road to productivity reduction, innovation assassination and limited growth!  Only by allowing employees to apply their skills and best thinking can any company hope to continuously improve its productivity and competitiveness.

But, moving from history and theoretical to today’s behavior, what is happening in your company?  Do you have a clunky, hard to use, expensive ERP, CRM, accounting, HR, production, billing, vendor management, procurement or other system (or factory, distribution center or headquarters site) that you still expect people to use?  Do you demand people use it – largely for some selection of the 7 items above? Do you require they carry a company PC or Blackberry to access company systems, even as the employee carries their own Android smartphone or iPad with them 24×7?

Recently, technology provider IFS Corporation did a survey on ERP users (Does ERP Mean Excel Runs Production?) Their surprising results showed that new employees (especially under age 40) were very unlikely to take a job with a company if they had to use a complex (usually vendor supplied) interface to a legacy application.  In fact, 75% of today’s users are actively seeking – and using – cloud based apps or home grown spreadsheets to manage the business rather than the expensive applications the corporation supplied!  Additionally, between 1/3 and 2/3 of employees (depending upon age) were actively seeking to quit and take another job simply because they found the technology of their company hard to use! (CIO Magazine: Employees Refusing to Use Clunky Enterprise Software.)

Unlike managers invested in historical decisions, and legacy assets, employees understand that without productivity their long-term employment is at risk.  They recognize that constantly shifting markets, with global competitors, requires the flexibility to apply novel thinking and test new solutions constantly.  To succeed, the workforce – all the workforce – needs to be informed, interacting with potential new solutions, thinking and applying their best thoughts to creating new solutions that advance the company’s competitiveness.

That’s why Fast Company recently published something all younger managers know, yet shocks older ones: “Half of Young Professionals Value Facebook Access, Smartphone Options Over Salary.” It surprised a lot of people to learn that employees would actually select access over more pay!

While most older leaders and managers think this is likely because employees want to screw off on the job, and ignore company policies, the article cites a Cisco Connected World Technology Report which describs how these employees value productivity, and realize that in today’s world you can’t really be productive, innovative and generate growth if you don’t have access – and the ability to use – modern tools. 

Today’s young workers aren’t any less diligent about work than the previous generation, they are simply better informed and more technology savvy!  They think even more long-term about the company’s survivability, as well as their ability to make a difference in the company’s success.

In other words, in 2011 tools like Linked-in, Facebook, Twitter et. al. accessed via a tablet or smartphone are the equivalent of the PC 30 years ago.  They give rapid access to what customers, competitors and others in the world are doing.  They allow employees to quickly answer questions about current problems, and find new solutions.  As well as find people who have tried various options, and learn from those experiences.  And they allow the employee to connect with a company problem fast – whether at work or away – and start to solve it!  They can access those within their company, vendors, customers – anyone – rapidly in order to solve problems as quickly as possible.

At a recent conference I asked IT leaders for several major airlines if they allowed employees to access these tools.  Uniformly, the answer was no.  That may be the reason we all struggle with the behavior of airlines, I bemoaned.  It might explain why the vast majority of customers were highly sympathetic with the flight attendant that jettisoned a plane through the emergency exit with a beer in hand!   At the very least, it is a symptom of the internal focus that has kept the major airlines from pleasing 85% of their customers, while struggling to be profitable.  If nobody has external access, how can anybody make anything better?

The best practices of 1975 don’t cut it in 2012.  The world has changed.  It is more important now than ever that employees have the access to modern tools, and the freedom to use them.  Good management today is not about telling people how to do their job, but rather letting them figure out how to do the job best.  Implement that practice and productivity and innovation will show themselves, and you’re highly likely to find more growth!

New Solutions Emerge – Apple, Amazon, Netflix, YouTube, Hulu

Most people misunderstand evolution.  They think that changes happen slowly.  Imagine an animal with a 12 inch tail.  Every generation or so it's imagined that the tail gets a little shorter, then a little shorter, then a little shorter until after some very long time it simply disappears.  But that's not at all how evolution works.

Instead, most of the animals have a long tail.  Some small number of animals are born each year with very short or no tails.  For the most part, this matters little.  If the tail is valuable – say for warding off parasites – those without tails may suffer and die off quickly.  And that's the way things are, largely unchanged, for decades.  But then, something happens in the environment.  Perhaps the emergence of a predator able to catch these animals by the tail and hold them in place to let the pack kill it.  Within one generation almost all of the tailed animals are killed by the predator, and only the no-tail animals survive.  Some of these have developed an immunity to the parasite.  So then this "evolved" animal becomes dominant.  No-tail animals replace the tailed animals.  That's how evolution really works.  It happens fast, with drastic change (and this time of change is referred to as a punctuated equilibrium.)

Once we know how evolution really works, we can start to better understand business competition.  A Success Formula works for a really long time, until something changes in the marketplace.  Suddenly, the old Success Formula has far poorer results.  And a replacement takes over.

Consider newspapers.  They played a very important role in society for at least 100 years (maybe 200 or 300 hundred years.)  But with the advent of the internet, their role is no longer viable.  Printing and delivering a daily paper is too expensive for the value it can provide.  So think of newspapers as the long-tail animal.  And digital news delivery is a short-tail animal.  The internet is the attack pack that kills the newspapers.  And within short order, the world is a different place – in a new equilibrium.  And everything about the surrounding environment is shifted.  Regardless of how much you enjoyed newspapers, they simply cannot compete and new competitors are a better fit in the new marketplace.

Now consider Netflix.  Netflix played a major influence in obsoleting traditional movie rental shops – like Blockbuster.  Netflix was a winner.  But markets – new attack packs – keep emerging.  And the latest shift are products like the Kindle and Apple Tablet (as well as other tablet PCs.)  These products make Hulu and YouTube a lot more viableSuddenly, Netflix is the long-tail animal, and the short-tail animals are doing relatively better. 

According to The Wall Street Journal, in "Apple Sees New Money in Old Media" Apple is close to a deal with several newspapers to deliver their content to readers via their internet device.  They also are negotiating rights to deliver movies and television (small format) entertainment.  Simultaneously, Amazon keeps marching forward as MediaPost.com reports in "Take That Apple: Kindle Introduces Apps."  We see that there are a LOT of potential different versions of the short-tail animal.  Tablets, phones, netbooks, etc.  Which will be the biggest winners?  Not clear.  But what is clear is that the old long-tail competitors (newspapers, print magazines, network television, traditional PCs) are not going to flourish as they once did.  The market has permanently shifted.  Those competitors are in the back end of their lifecycle.

Simultaneously, this market shift causes ripple effects through the environment.  The market shift affects ALL players – not just the one most visibly being attacked.  So, as SiliconBeat.com reports in "Looks Like Netflix is Dead, Again" this change suddenly imperils Netflix which has mostly counted on postal delivery rather than digital.  And it provides a boost to short-tail players like Hulu and YouTube which could see much larger revenue given their digital-based delivery models.

And this affects you.  What do you print, or say, that could be better handled on a mobile device?  Could you deliver user instructions via an iPhone or Kindle app?  If so, why aren't you doing it?  Are you still working on traditional web pages, with embedded text in graphics that can't be seen by a mobile phone, when most people are likely to find you first on their mobile device?  Are you busy working on your web site, while ignoring having a Linked-in or Facebook account?  Are you advertising on television, or in newspapers, and ignoring Facebook ads – or YouTube links?  Do you have a YouTube channel with short clips to instruct users on your product, or how to install an upgrade, or even why to buy?  Are you still competing with a long tail, while the pack is rapidly killing off the long-tail species?

Market shifts are happening fast today.  If you don't react, you just may find yourself deep into the pack with declining results.  Or you can shift with the market to keep your business competitive.

Organize to Disrupt – and Grow – Cisco

Cisco is an admirable company.  In the high tech world, few survive half as long as Cisco.  Even fewer maintain growth and profitability.  Cisco's willingness to obsolete its own products has been a stated objective which has helped the company keep on top of new technologies and products, growing to $36B.  It's Disruptive when you are compelled to obsolete your own products.  Most companies make the mistake of trying to sell products too long, trying to extend profitability by selling the product while winding down development.  They fear launching new products which might "cannibalize" an existing product.  As a result, competitors leapfrog their products and by the company admits things are obsolete it's too late – and the business is in deep trouble.

Now Cisco is working to keep growing by utilizing a Disruptive organization model.  Headlined "Cisco's Extreme Ambition" has BusinessWeek overviewing the distribution of decision-making power to 48 different councils.  Instead of a traditional hierarchy, the councils can make decisions about products themselves, thus shortening the decision process and the time to get new products to market or make acquisitions

Cisco competes in at least 30 marketsStaying on the leading edge in that many businesses requires rethinking how to organize.  Especially when you know it is critical to keep Disrupting your organization to bring forward new products which can keep you competitive.  By distributing decision-making this organizational model overcomes traditional Lock-ins that could slow down Cisco

  • Now strategy can be developed for the markets, built on multiple scenarios (perhaps even competing scenarios), overcoming monolithic strategy processes that are too confining and do too much option narrowing
  • Hiring, including executives, won't require everybody look alike.  Different kinds of people allows for alternative thinking and different sorts of decision processes – as well as different decisions
  • The structure can form to the market needs – rather than being dictated from an insider perspective.  By organizing to the market need each council is more likely to keep close to emerging needs
  • Investments are made at a lower level, reducing the "big bang" investments that Lock-in organizations to monolithic technologies or products
  • Internal experts don't gain too much power, which often limits the technologies and markets pursued.

Maintaining its willingness to remain Disruptive is critical to the ongoing success of Cisco.  This new organization model is allowing Cisco to enter the lower margin server business, for example, which would be (and has been) escewed by a more centralized decision making.  By focusing the organization on markets, Cisco can keep finding new ways to compete — and set new metrics for measuring itself market-by-market.  And Cisco can more quickly and easily set up White Space projects to continue pursuing new market opportunities.  All it has to do is add another council!

Management illusions – Brand management and MIT

"The Illusion of Brand Control" is a great article at Harvard Business Publishing. Andrew McAfee, who is a research scientist at the MIT Sloan school Center for Digital Business, offers the insight that in today's market it's not possible for a business to "control" its brand.  "New media" like the internet and Facebook are bi-directional.  People no longer just absorb a crafted message, they are able to push back.  Bloggers and internet commenters can have more influence on a brand than traditional advertising and PR.  As a result, a business's brand becomes the result of what others say about it – not just what the owner says.

And this mirrors what is happening across business today.  As we've moved from the industrial to the information economy, success is no longer about amassing and controlling assets.  Scale advantages have disappeared, with scale accessible to anyone who has a browser and a credit card.  Where the business leader of 1965 likely felt success required controlling everything from employees and facilities to the brand message, in 2015 success is about adapting to rapidly shifting market requirements.

If you want your brand, and your business, to grow and be profitable, you have to realize the dramatic limits of "command and control. That approach works in very static, clearly defined environments.  Like the military.  Businesses today no longer operate in slow moving static environments with high levels of regulation and rigid business limits and significant entry barriers.  Businesses today operate in complex, highly adaptive systems.  Competitors can move fluidly, quickly, globally to offer new solutions and react to changes. 

Today's leaders have to recognize that many of the most important impacts on their business (or brand) come from outside their organization.  Completely out of management's control.  Being Locked-in on what you know how to do has less and less value when you might well have to react very quickly to an external event in an entirely new way in order to maintain product position and growth.  Just ask the leaders at Circuity City, who could not adapt quickly enough and saw their company fail.  Adaptability to shifting market requirements becomes key to sustaining growth.  Competitive advantage is not created by seeking entry barriers.  Rather, competitive advantage now comes from understanding market shifts, and moving rapidly to position yourself in the right place – over and over and over.

Executives who feel like they have "control" of their business are under an illusion in 2009.  And that has been demonstrated time and time again as this recession has driven home a plethora of market shifts.  There are many things managers can control.  But many of the most important things to success are completely out of management's hands.  Thus, the ones who succeed aren't trying to control their brand, or business.  Instead they are building organizations that have great market sensing and are quick to react.  Just compare GM to Google and you'll see the gap between what worked in 1965, and what works 45 years later.

Skating to where the puck will be – Apple and advertising

I was intrigued to read about Apple proposing to rebuild a mass transit stop in Chicago in exchange for naming rights to the stop, as well as permission to advertise in the stop (Crain's Chicago Business – "Doors will open on the right at Apple stop.")  Most people would ask "why?"  And it's because Apple is moving toward a very different advertising future.

Most people think of advertising as the ads in newspapers and magazines, as well as on the radio, or television, or possibly billboards.  Only we know that newspapers and magazines are failing because fewer people read them every month.  Advertising in print media has limited value if there aren't any readers.

Likewise, people under 30 are watching a LOT less TV than the older generation.  Whereas I grew up with my eyes on the "boob tube," increasingly I watch a lot less TV as I spend more time on the web.  But my web use is nothing compared to people 17 to 34, who have almost abandoned television. They go to the web for entertainment.  And they increasingly only watch TV shows and movies when they can download them – or possibly watch via DVD.

And Apple is at the forefront of killing the radio businessWith iPods and digital music now cheap and plentiful, why listen to somebody else's programming?  When you can program your own music, radio becomes less interesting.  And if you want news there's the iPhone, Blackberry or similar mobile device to access the web – so why listen to talk radio? 

Advertising as it was is gone.  Coke, Pepsi, Procter & Gamble, Kraft, etc. built huge companies via media advertising.  But media usage is declining sharply.  So how do you get the message out to people who increasingly get their entertainment without using most of the traditional media?

And that's where Apple's move makes sense.  By rebuilding a train station, they help promote their brand.  It reminds me of when Hooters offered to fill the potholes in Chicago (a big problem) if they could put their company logo over them.  This week I noticed that in the Newark, NJ airport the jetways had big billboards on the outside.  And the TSA bins (for shoes, coats, laptops, etc.) had ads printed on the bottom.  It's getting harder and harder to reach customers when they don't need traditional media.  

So if you have historically been a big user of traditional media advertising, you'd better be rethinking that strategy.  What worked in the past isn't going to work in 2015. Staying Locked-in to old ad budgets, and approaches, is going to keep producing declining returns.  Traditional advertising won't even maintain current positions – much less work for new product launches.  As ad costs go up, they are less effective.  To reach customers requires shifting with the market.

If your new business plas is to use advertising as a way to grow your business, think again.  While advertising isn't gone – it is a lot less effective than it was when traditional media was widely the source of information and entertainment.  If you want to get people to recognize your brand, you have to start being a lot more clever.  You have to find new ways to get in front of customers.  You have to use your scenarios of the future to help you find the best way to promote your product.  Because the old channels, and the ad firms that used to supply them, increasingly are an ineffective answer.