by Adam Hartung | Dec 15, 2009 | General, In the Swamp, Leadership, Web/Tech
In a tough year like 2009, many business leaders want to jump in a foxhole and focus on survival. The goal becomes maintain, and then try to grow again sometime in the future – when the economy gets better. They cut marketing and sales costs, stop new product development/introduction, and literally plan to do nothing new until "the business" improves. Unfortunately, that sets a business up for failure.
In today's fast moving competitive world, it's impossible to stand still. Your business either grows, or it falls behind. Think about Yahoo!. The company hoped to maintain it's search business at it entered a "turnaround." Unfortunately, the competition isn't willing to give Yahoo! any time at all. Microsoft grabs off 10% of the market with its Bing introduction, and Google just keeps taking share. Take a look at Yahoo's performance:
source: Silicon Alley Insider
Or consider AOL. AOL was the undoubted leader in bringing people to the internet. But over the last decade AOL has tried to maintain its customers without offering any new products. It has saved investment dollars, but lost its relevancy. Now Facebook has more unique visitors than AOL – a clear sign AOL (which recently went public) is well on the way to disappearing:
source: Silicon Alley Insider
Blockbuster was the clear market leader for video/movie rentals. The company even had a college football bowl game named after it! The CEO bought a baseball team, and made it into a World Series winner! Blockbuster was THE store for obtaining entertainment for many years. But the company saved its dimes, tried to defend its market position, and didn't develop new solutions. Now it is being overwhelmed by competitor Netflix:
source: Silicon Alley Insider
Too many business leaders believe in "The Myth of the Flats" (from Create Marketplace Disruption.) They think that you can build a business, and then ride a market position. When business is bad they depend upon living on past brand position. They think they can wait for a better market to come along before they use White Space to introduce new solutions that meet emerging needs. And the competitors, who don't slow down, use market downturns to introduce new solutions and overtake the former market leader.
Smart companies don't rest on their laurels. They don't wait for a better market. They keep using White Space to develop new solutions. And even in a bad overall economy, like 2009, they sell more and make more profits. Just look at Amazon, achieving record market valuation in 2009:
source: Silicon Alley Insider
If you want 2010 to be a great year, it starts with recognizing that you can't stand still. You can't wait for "a better market." You have to create that better market by pushing forward with White Space to introduce new solutions that meet emerging market needs.
by Adam Hartung | Dec 14, 2009 | Current Affairs, In the Rapids, Innovation, Leadership, Web/Tech
"The Google Phone, Unlocked" is a Seeking Alpha article detailing the early release of a Google phone planned for market introduction in 2010. Will this be successful or not? Legitimate question – given the success of Apple's iPhone. And the answer to that really has nothing to do with cell phone technology. It has everything to do with the downloadable applications. The market for phones has shifted to where applications are rapidly becoming more important than the phones themselves.
Which is why "Android to become eWallet" on MediaPost is an important article. Mpayy is offering an app that supersedes both credit cars and debit cards. It's Paypal on steroids. This app allows users who want to buy something to use their phone to instantaneously pay for something. Users can perform an eBay style transaction with immediate payment. And they can do this buying products in the Burger King, or Starbucks, or Target.
Two things are emerging that represent significant market shifts to which all businesses must react. Firstly, mobile devices are much more than phones. They are more than laptops. They allow people to do a lot more things than they previously could, and these activities can be immediate. From reading a CAT scan, to finding the closest pizzeria and downloading a coupon, to paying for a Pepsi at the convenience store. This represents substantially different use of technology. Those who remain Locked-in to old fashioned credit card/debit card technology – or internet transaction technology – will be left behind as users move quickly to mobile phone payment.
And, secondly, those who rapidly incorporate these opportunities will have advantages. If you're making your business more internet friendly you are likely fighting the last war. To be successful in 2012 it will be important you are able to offer real-time transactions buyers can access from their mobile device. People will want to find you, find your discounts, and pay you from the device in their hands. They will want to complete their business seamlessly using their mobile device – without a call, without a browser transaction. Those who make life easy for customers will increasingly win – and making life easy will mean access via the mobile device
It is increasingly ineffective to build future plans based upon completing projects started last year – or the previous year – or a few years ago. Customers don't care about your enterprise system implementation that is X years into implementation. Customers are running fast – really fast – toward using new, low cost and easily usable technology. This is a substantial market shift. And your scenario plans must incorporate these shifts, expect them, and use them to move beyond Locked-in competitors by implementing these shifts fast and effectively. That allows you to Create Marketplace Disruptions which create superior rates of return.
by Adam Hartung | Dec 11, 2009 | Current Affairs, Defend & Extend, Food and Drink, In the Rapids, In the Swamp, Leadership, Television
If you can't sell products, I guess you sell the business to generate revenue. That seems to be the approach employed by Sara Lee's CEO – who has been destroying shareholder value, jobs, vendor profits and customer expectations for several years. Crain's Chicago Business reports "Sara Lee to sell air care business for $469M" to Proctor & Gamble. This is after accepting a binding offer from Unilever to purchase Sara Lee's European body care and detergent businesses. These sales continue Ms. Barnes long string of asset sales, making Sara Lee smaller and smaller. Stuck in the Swamp, Ms. Barnes is trying to avoid the Whirlpool by selling assets – but what will she do when the assets are gone? For how long will investors, and the Board, accept her claim that "these sales make Sara Lee more focused on its core business" when the business keeps shrinking? The corporate share price has declined from $30/share to about $12 (chart here) And shareholders have received none of the money from these sales. Eventually there will be no more Sara Lee.
Look at Motorola, a darling in the early part of this decade – the company CEO, Ed Zander, was named CEO of the year by Marketwatch as he launched RAZR and slashed prices to drive unit volume:
Chart supplied by Silicon Alley Insider
Motorola lost it's growth in mobile handsets, and now is practically irrelevant. Motorola has less than 5% share, about like Apple, but the company is going south – not north. When growth escapes your business it doesn't take long before the value is gone. Since losing it's growth Motorola share values have dropped from over $30 to around $8 (chart here).
And so now we need to worry about GE, while being excited about Comcast. GE got into trouble under new Chairman & CEO Jeffrey Immelt because he kept investing in the finance unit as it went further out the risk curve extending its business. Now that business has crashed, and to raise cash he is divesting assets (not unlike Brenda Barnes at Sara Lee). Mr. Immelt is selling a high growth business, with rising margins, in order to save a terrible business – his finance unit. This is bad for GE's growth prospects and future value (a company I've longed supported – but turning decidedly more negative given this recent action):
Chart supplied by Silicon Alley Insider
Meanwhile, as the acquirer Comcast is making one heck of a deal. It is buying NBC/Universal which is growing at 16.5% compounded rate with rising margins. That is something which suppliers of programming, employees, customers and investors should really enjoy.
Revenue growth is a really big deal. You can't have profit growth without revenue growth. When a CEO starts selling businesses to raise cash, be very concerned. Instead they should use scenario planning, competitive analysis, disruptions and White Space to grow the business. And those same activities prepare an organization to make an acquisition when a good opportunity comes along.
(Note: The President of Comcast, Steven Burke, endorsed Create Marketplace Disruption and that endorsement appears on the jacket cover.)
by Adam Hartung | Dec 8, 2009 | Current Affairs, General, Leadership
In "Uptick Catches Entrepreneurs by Surprise" the Wall Street Journal points out that defensively-minded entrepreneurs are unprepared to undertake hiring or business expansion. Simultaneously, the Washington Post reports "Obama Preparing New Push to Add Jobs". What's clear is that there are incentives to undertake hiring, and with productivity at record highs it appears hiring needs are increasing. Yet, because they were looking in the rear view mirror many small business leaders are not prepared to participate and grow.
In "A Key To A Successful Business Plan" Forbes has just published my latest column, detailing why scenario planning is the first step for any business to overcome inertia and grow successfully. Instead of planning by looking to the past, we need to spend a lot more time looking at the future. Building scenarios that help us figure out where we want to be, successfully, in 2 to 5 years – rather than trying to replay the last inning over and over. Look at how well it worked at Apple the last decade!
"Now is absolutely the best time for your business to succeed. As the
collapse of Dubai World just demonstrated, enormous market changes keep
happening. Laggards and the unwise are failing, and businesses that
position themselves smartly to take advantage of market shifts are
winning big gains. Look at Google. There's never been a better
time to move ahead by developing plans for leading your business to
dramatic growth in revenue and profits." (read more of the article here)
My previous Forbes columns focused on the many current maladies of management. Insufficient innovation caused by Lock-in and obsession with outdated best practices has far too many companies performing far too poorly today. But followers of The Phoenix Principle know that it is possible to break out of this "doom loop" and be successful at growth through innovation implementation. Scenario planning is the first step, and a powerful replacement for traditional planning which wastes far too many cycles trying to review the past.
by Adam Hartung | Dec 6, 2009 | Defend & Extend, In the Swamp, Innovation, Leadership, Web/Tech
My last blog highlighted a new book describing the need for White Space if a business is to implement innovation and grow. But lots of people still have questions about what White Space is, and how to get it working.
Here's the chart from Create Marketplace Disruption (FT Press, available on Amazon.com) that shows how White Space is positioned to move beyond Defend & Extend Management.:
Most companies spend the vast bulk of their energy trying to Defend sales of current products to current customers. After expending 80% of the planning time, and company resource, in that cell, they then will try to see "can we sell other products to our current customers?" Or, "can we sell current products to new customers, such as by moving into a new geography?" As a result, they do almost nothing in White Space.
"Adjacent market" analysis is Extend effort. "Dartboard" approaches which look to grow by moving in concentric circles away from "core" are Extend efforts. These approaches are based on efficiency notions, that the company will get the biggest "bang" by doing very little differently and hoping to grab a big "win" with a small effort added to the Defend behavior. They hope to grow a lot by largely defending their "base" and adding a few, low resource commitment products or customers to the mix.
When you adjust for resources, the planning effort looks like this:
If you want to really grow your business, you have to change the planning effort first. Instead of putting all the resources into multiple rounds of effort about the business you know best, you need to simply do less in this area of planning. Moving from 90% accuracy on the first round to 95% after months of effort is pretty low yield. Instead, business should dramatically reduce the effort on known customers and products – and invest considerably more time developing scenarios about future markets leading them to White Space.
Extend markets almost always are disappointing. While the effort looks simple, that's only a view of "the grass looks greener across the fence." Reality is that competitors exist in those markets, and when the company tries to extend into them with limited resources they run headlong into very stiff competition. The company retreats to Defend the "core" and the Extend opportunities produce very low sales and miss profit projections dramatically. Usually, the leaders start complaining about having taken the venture, feel burned by trying to innovate, and reinforce their desire to focus on maintaining the "base" business.
To get over this, businesses have to start by realizing that entering new businesses takes more planning than the base business – not less. You have to identify the critical Permission needed to allow the White Space team to operate outside the Lock-ins. Be clear about the new approach, and the goals. And identify the resources needed – as well as the source of those resources (people and money.) This doesn't happen automatically, because it isn't part of the existing planning process. It takes a lot of effort to develop market scenarios and plans – then follow-up on the experiences to understand what works and keep evolving toward achieving goals. And that is where the planning effort really needs to focus.
White Space is critical to success. All businesses MUST evolve to new products and new customers. The idea that this can happen with little effort is misguided. Instead of planning the "base" business, success starts by putting more resources into market scenario development, developing insight to know what permissions are needed to succeed and then establishing funding so the White Space project can succeed.
Think about Apple. As long as Apple focused planning on the Macintosh the company moved further toward a small provider to niche PC markets. Only by using market scenarios to understand that growth opportunities were much better in entirely new markets were they able to change resource allocation and move aggressively into the business of iTouch, iPod, iTunes and eventually iPhones. Apple is outperforming almost everyone in this recession – and a lot of that success is due to using scenario planning to identify new market opportunities, rather than spending all the planning resources understanding previously served, traditional markets.
by Adam Hartung | Dec 3, 2009 | Books, Current Affairs, In the Swamp, Innovation, Leadership, Lock-in
Seizing the White Space is a new book being launched by HBS Press (and being pre-sold on Amazon.com.) I'm very glad to read about others who are taking up the message of Create Marketplace Disruption – which first published the critical role of White Space in successfully managing any business (published in 2008 by Financial Times Press and also available on Amazon.com).
The author, Mark Johnson, is Chairman of Innosight, a consulting firm he co-founded with Clayton Christenson who's on the Harvard Business School faculty (and author of The Innovator's Dilemma also on Amazon.com). Innosight primarily focuses on consulting businesses to identify Disruptive innovations. Now the Chairman is starting to realize that implementation is as important as identifying the implementation – and he's linked it to WHITE SPACE. Great!!!
You can read his insights to how IBM and some of his other large clients have used White Space in an Harvard Business Publishinng Blog "Is Your Company Brave Enough For Business Model Innovation?" You'll quickly see that he applies The Disruptive Opportunity Matrix from chapter 10 of Create Marketplace Disruption – which is how companies have been shown to reach new businesses using White Space. It's so gratifying to read somebody else who's applied your research and come to the same conclusions!
I'm looking forward to the book. Readers please let me know what you think of the author's blog post – and the book when it comes out.
Post-script to yesterday's blog about the CEO of GM:
"Cat's Owens, Deere's Lane on short list of CEO candidates" is the AP article appearing on Crain's Chicago Business about the search for a new leader at GM. As I predicted yesterday, recruiters seem to think the ideal candidate for the job needs to be from another big industrial company. And preferably, an auto company "to understand the industry complexities." Not only is there no incentive for these highly paid executives to take a similar job, at a lot less pay, in a government funded organization — but investors shouldn't want it! GM needs change. And more change than trying to make GM into John Deere, or CAT.
John Deere has had weak results for decades. The company has been wedged between other equipment manufacturers so badly that most of its profits now come from yard tractors homeowner's buy from Home Depot. Just because the company is big, and one of the few left making equipment for which there is declining demand, is no reason to want the CEO at a turnaround like GM. Likewise, CAT is under intense competition from Komatsu, Volvo and other manufacturers who are squeezing it from all sides – jeapardizing revenues and profits. Only acquistions have kept CAT growing the last 10 years, and margins have plummeted. That leadership is not what's needed at GM either.
When will somebody speak up for the investors and start a search in the right direction? GM needs leadership that thinks entirely differently. Unwilling to accept old-fashioned industrial notions about how to lead a company. Like I recommended, go somewhere entirely different. Maybe recruit somebody from Dell or HP or Cisco that understands rapid design cycles. Or someone from Wal-Mart or Target that understands how to sell things – cheaply. Or someone from Oracle or Mozilla or Google that understands the value of software – and that the product is a lot more than the iron – so you can capture the right value. It's so disappointing to read how the "recruiting industry" is just as Locked-in as GM.
If one of you readers knows somebody on the GM Board, maybe you should send them this blog (and yesterday's) to see if they can consider searching in the right place for new leadership!
Don't miss the recent ebook, "The Fall of GM" for a
quick read on how easily any company (even the nation's largest employer) can be
easily upset by market shifts. And learn what GM could have done to avoid
bankruptcy – lessons that can help your business grow! http://tinyurl.com/mp5lrm
by Adam Hartung | Dec 2, 2009 | Current Affairs, Defend & Extend, In the Swamp, In the Whirlpool, Leadership
"Henderson Never Fit In At GM Helm" is the Detroit Free Press headline. Imagine that – the CEO of GM has been asked to leave. Industry sales are down about 24%, and GM is down 32%. Meanwhile, Mr. Henderson had proposed selling 4 divisions (Saab, Opel, Hummer and Saturn) – which were the most interesting divisions in the company – and none of those deals have closed. In fact, 3 have fallen apart completely. Only the Hummer sale to a Chinese firm is potentially going to happen. In fact, it's hard to find anything good that's happened at GM since Mr. Henderson took over. Including closing Pontiac.
When the government invested in GM this year the existing Chairman/CEO, Rick Waggoner, was forced to resign. Imagine that, after puting several bilion in a company the investor's transition team replaced the CEO who got the company into bankruptcy, almost out of cash, with no plan for recovery. Also, the Board, which had allowed GM to get into such a mess without even raising tough questions, was replaced. All seems remarkably sensible given the sorry state of the company.
The goverment led transition team, which rocketed GM through bankruptcy, cleaned the ceiling, but then selected Mr. Waggoner's hand-picked successor (Mr. Henderson) to replace him. The claim was they'd need 6 months to search for somebody new and didn't want to take the time. And they put in a lifetime monopolist, Mr. Whiteacre of AT&T, as Chairman. And a 40+ year industry veteran was made head of marketing (Mr. Lutz.) And a 40+ year company employee was kept as CFO. And we're supposed to be surprised that things aren't going well?
The Chairman and replacement CEO says of the company says "Whiteacre: GM On the Right Path," also in the Detroit Free Press. But do you believe him? What does he know about competing successfully against intense foreign led competitors who move fast? The AT&T that trained him early in his career failed horribly, never succeeding in any market outside the U.S. and getting cleaned by offshore competitors in hardware and mobile telephony. And as head of Southwestern Bell, all he did was rebuild the old "Bell system" of land-line companies – without effectively taking a leading position in any new telephony business. Or any other business. Broadband, mobile phones, digital television – can you think of any market where today's AT&T is a technology, product development, innovation or other market leader? He may have bought up a bunch of the old spun out businesses, but those are on their last legs as people give up land lines and transition to a different sort of connected future.
What's surprising is that GM isn't doing worse. But it's unlikely Mr. Whiteacre, or Mr. Henderson's replacement, will do much better. Several candidates are from inside GM – all with the same Lock-ins that allowed Messrs. Waggoner, Henderson and Lutz to perform so abysmally – despite incredible pay packages for many years. In "Selling GM's CEO Job to be Tough Task" (Detroit Free Press) headhunters claim that the industry is so complex they'll have a hard time finding someone talented who will work for the pay. Balderdash. That's only true because they are so Locked-in to traditional thinking about who should lead GM that they keep trying to recycle already overpaid CEOs who have done little for shareholders. That's not what's needed at GM.
Give us a break. Who would want an industry veteran in the job at all? And why would a recruiter hunt for somebody with a lot of industrial-era Lock-ins. GM's investors (that's the citizens of the USA and Canada,) employees and vendors need somebody who's ready to move beyond the old industry and company Success Formulas and do something very different. Willing to develop entirely new scenarios of the future which alter the competitive playing field and then Disrupt the organization in order to start doing new things. Before Tata Motors and China's Chery auto join the other companies ready to put GM into the grave.
It's amazing how "inside the box" the people who are leading GM, and advising the company, remain. Why not try to recruit somebody from Tesla to take over? The long-delayed electric Chevy Volt might well get to market faster – and in a more desirable form – if that were to happen. Or how about an heir apparent at fast growing Cisco Systems? Those people know how to pay attention to the market and move quickly to give customers what they need – profitably.
Turning around GM requires leadership that will change the Success Formula. Not try to Defend it, or Extend it with slowly evolving variations and minimal change. The whole house needs to be cleaned. The investor representatives who led the transition pulled up short of finishing their job. Only by bringing in new managers who are willing to see a very different future, unbounded by the GM legacy, can GM's competitive position be changed – and if GM tries to keep competing the way it has Toyota, Honda, Hyundai, Kia, Tata Motors, et. all will eat GM's dinner. And only by Disrupting the old Lock-ins, using White Space teams to develop new solutions, can GM regain viability.
by Adam Hartung | Nov 29, 2009 | Current Affairs, Disruptions, In the Rapids, Leadership, Openness, Web/Tech
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 markets. Staying 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!
by Adam Hartung | Nov 27, 2009 | Current Affairs, General
So while most Americans are taking the traditional 4 day Thanksgiving holiday another debt crisis has emerged. Easy enough for most Americans to miss the news, if only because they are vacationing or shopping. But this debt crisis involves a company in a foreign land, so most Americans will say "Why should I even care? This doesn't involve my bank." That Dubai World looks to be unwilling to repay some of its debt, and will make no payments for 6 months, could be something a lot of Americans simply ignore – if for no reason than they simply can't link it to their work or life.
Dubai World is a very large real estate developer, owned by the Dubai government. The banks that loaned Dubai World billions were more European than American. Yet, we live in a global economy. When things happen elsewhere, they have an impact on U.S. businesses and citizens.
American companies depend upon international banks to make local currency loans for their offshore operations. And American companies depend upon businesses, and individuals, in foreign countries to borrow money in order to spend on American company goods. With the U.S. economy in the doldrums, companies that have robust offshore businesses selling to people in the foreign markets have done considerably better than most U.S. focused companies. But when these offshore banks don't get paid by Dubai World, they have to take write-downs. And if they don't get payments, the bank's reserves dwindle. As a result, these banks can't make loans – just like we've had happening in the USA since Bank of America, Citibank, etc. almost collapsed – due significantly to large real estate loan defaults.
Additionally, the U.S. government depends upon offshore entities – banks, businesses and individuals – to buy U.S. bonds. Without offshore buyers, the U.S. government could not fund its recurring debts. When a big corporation like Dubai World, part of a government backed with oil money, runs out of cash it causes a chain reaction of people not making loans. Not investing. And that can have a big impact on U.S. bond sales. When the government can't sell bonds it has to increase the interest rate – which spells a worse economy or inflation. So scared debt investors can have a quick impact on U.S. interest rates – because when U.S. Treasury bond rates go up all other rates, from municipal bonds to commercial loan rates to car loans, have to go up as well.
And this is why everyone needs to know about, and pay attention to, a big real estate developer in Dubai "restructuring" its debt and stopping payments. In a global economy, the impact will be felt by Americans.
- This action can further exacerbate real estate price deflation – a major cause of economic weakness and wealth destruction globally.
- If foreigners buy more stuff, Americans who sell this stuff will see lower sales – and that leads to less employment.
- The debt collapse in America is causing huge problems for small and medium-sized companies to stay in business. European banks trimming their loans will have similar negative impact on smaller businesses in many countries rolling-up to substantially larger population than America.
- Higher interest rates further dampen any American recovery.
- This could lead to less money available for lending in the USA, and a lot of additional lost jobs.
Scenario planning is not about predicting a collapse of Dubai World. It's impossible to forecast such specific events with any accuracy. But that doesn't mean U.S. companies shouldn't be spending a lot more energy thinking about global impacts on their business. What happens by central banks, big companies and even real estate developers around the globe is important. In prior years, when these collapses happened (Mexico, Korea, Japan) the USA stepped in to stop the collapse from cascading. But the U.S. government is no longer in position to thwart future declines.
It's important all companies undertake scenario plans that consider the impact of higher international interest rates, changes in currency valuations, import/export restrictions or tariffs and country-by-country unemployment rates. Our businesses are increasingly dependent upon offshore companies as our suppliers, customers and investors. If your scenario plans aren't considering the impact of global changes, like the disaster now happening to European banks, you may well find yourself wondering what hit you in 2, 4 or 6 months when the impact hits home.
by Adam Hartung | Nov 22, 2009 | Defend & Extend, General, Openness
There's no doubt that many more people are looking for jobs than there are those hiring. As a result, organizations offering jobs can find themselves flooded with applicants. Several are complaining about how hard it is to find "the right person." Reality is most companies have been struggling to find "the right person" for a long time. It just wasn't as obvious.
According to The Wall Street Journal "To Find Best Hires, Firms Become Creative." Yet, these creative ideas are largely about finding new ways to restrict the number of people getting into the hiring funnel. Increasingly, asking potential employees to carry more cost of the hiring process. And often putting employees through a longer (sometimes days) battery of interviews. Yet, it is unclear that these new hurdles are helping organizations hire "the right person" any more often.
In today's changing marketplace, "the right" people are often those who can help the organization adapt. They think laterally about what is happening in the market, and how to develop creative solutions. They rely less on their historical experience, and more on their scenarios about the future. They pay a lot of attention to competitors, and push for decisions that leapfrog competitive actions. And they aren't afraid to Disrupt historical ways of behaving and recommend white space projects where new things can be tried. They don't try to Defend & Extend the company's Success Formula. Instead they seek improved results.
But that is not how hiring processes are designed. They focus on developing tight requirements. With so many applicants now, the focus is on making very, very tight requirements so resumes can be sifted efficiently for specific experiences. But this approach means hiring requirements are based on what history has dictated was needed. They reflect what the company used to do, how it used to hire, what previous employees did that supported the old Success Formula. Job requirements rarely look forward, instead they try to find homogeneous individuals who are like people that succeeded in the past. Usually by reinforcing the old Success Formula. They are out to find candidates who want to Defend & Extend the Success Formula, not evolve it to better results.
Most hiring organizations even have an "ideal prototype candidate." This goes down to specifying the type of degree, and the university attended. It may well include specifying a geography where the candidate was raised. Common certifications. A preferred set of previous jobs that are like what others have been through. These approaches are all about yielding candidates that look alike – not different. In most companies, an employee from Google. Amazon or Apple – very successful companies – could not get through the first round.
Then the prolonged interviews. These simply force candidates to be like the people doing the interviews. Rafts of studies have been done on interviewing, and they always return the result that interviewers like people who are like themselves. The interviewer has a sense of what they think made them successful – education, experience and problem solving approach. And they simply look to see if the candidate is like them. If the interviewing goes on for days, they even look to see if the candidate orders food like them, drinks like them, has the same approach to mornings or working late. The long interview approach merely ensures that candidates are more likely to be just like existing employees.
These approaches are about finding candidates that have a good "initial fit." But if the organization is in need of adapting to changing market conditions, is that the employee you really need? All the people at the old AT&T were much alike – but that company still didn't survive deregulation. The people at most airlines are much alike, yet outside of Southwest the airlines don't make any money. GM had an "ideal employee profile" yet the people leading the company could not deal with market shifts that sent the organization into bankruptcy.
Today your organization might well need new employees who are not like previous employees. They may well need different education. Different experiences. Work in different industries. And different approaches to problem solving. With so many available candidates, is your approach to hiring helping you find people who can help your company grow, or is it trying to find the kind of people who reinforced the old Success Formula? Are you hiring for the future, or searching for people like you hired in the past?
