by Adam Hartung | Nov 9, 2009 | Current Affairs, Defend & Extend, General, In the Swamp, Innovation, Leadership, Lock-in
Leadership
Why The Pursuit Of Innovation Usually Fails
Adam Hartung,
11.09.09, 04:11 PM EST
It's not what we're trained for as leaders or how our businesses are set up to work.
Forbes published today "Why the Pursuit of Innovation Usually Fails." "Most companies everywhere are struggling to grow right now. With their
revenues flat to down, they're cutting costs to raise profits. But
cutting costs faster than revenues decline is no prescription for
long-term success….."
The article goes on to discuss how from Gary Hamel to Jim Collins to Michael Tracy and Fred Wiersema to Malcolm Gladwell to Tom Peters — managers have been taught to identify their "core" and "focus" upon it. Whatever that core may happen to be, the gurus have said that all you need to do is focus on it and practice and in the end – you'll win.
But unfortunately we all know a lot of very hard working business leaders that focused on their core, working the midnight hours, sacrificed pay and bonuses, and kept trying to make that core successful — only to end up with a smaller, less profitable, possibly acquired (at a low price) or failed business. While the best practices make sense when looking at past winners, reality is that they were followed by a lot of people that didn't succeed. Their best practices give no great insight to being successful. They are of no more value than saying "treat people well, be honest, don't lie to customers, don't break the law, don't get caught if you do, show up at work." Nice things to do, but they don't really tell you anything about how to succeed.
The mantra today is for innovation, but thirty years of these "best practices" now stand as a roadblocks to doing anything more than defend & extend the current business. Only by understanding the objective to defend & extend what already exists can you explain how can one of the world's largest consumer product companies can call Tide Basic an innovation.
Enjoy the read, and please comment!
by Adam Hartung | Oct 27, 2009 | Current Affairs, Defend & Extend, General, In the Swamp, Innovation, Leadership, Lock-in, Web/Tech
"IBM authorizes another $5Billion for share buybacks" is the Marketwatch.com headline. This brings the amount available for buying the stock to $9.2billion – or enough to buy about 73.6million shares. But it begs the question, what value will this bring anyone?
"The U.S. Workplace: A Horror Story" is the CIOZone.com headline. A survey by Monster.com and The Human Capital Institute of more than 700 companies (over 5,000 workers) discovered that by and large, employees are mad at their employers. They don't trust business leaders, and think those leaders are exploiting the recession for their own purposes (and gains). 79% of workers would like to find a better employer – to switch – but only 20% of employers have a clue how many workers have become disillusioned.
Simultaneously, "Many vanished jobs might be gone for good" is the Courier-Journal.com headline. Historically, increases in manufacturing (usually led by autos) and construction (primarily housing) caused recessions to diminish. But nobody expects either of those sectors to do well any time soon. Manufacturing is showing no signs of improving, in any sector, as we realize that all the outsourcing and offshoring has permanently reduced demand for American labor. And quite simply, very few investments are being made by business leaders that will create any new jobs.
"ALL BUSINESS: Innovation Needed Even in a Recession" is the Washington Post headline. The article points out that almost all recent improvement in profitability – boosting the stock market – has been through cost cutting. But that has done nothing to help companies improve revenues, or improve competitiveness. It's done nothing to bring new solutions to market that will increase demand. Quoting the former Intel CEO Gordon Moore – "you can't save your way out of a recession" – the article cites several consultants who point out that companies which earn superior rates of return use recessions to invest in new technologies and innovations that create new demand. And eventually new jobs. But today's CEOs aren't making those investments. Instead, they are taking short-term actions that dress up the bottom line while doing nothing about the top line.
Which brings me back to IBM. Who benefits from $9.2billion being spent by IBM on its own stock? Only the top managers who have bonuses and options linked to the stock price. The shareholders will benefit more if IBM invests in new products and services that will increase revenues and drive up long-term equity. Employees and vendors will benefit from creating new solutions that generate demand for workers and components. Almost nobody benefits from a stock buyback – except a small percentage of leaders that have most of their compensation tied to short-term stock price.
What new innovations and revenues could be developed if IBM put that $9.2billion to work (a) at its own R&D, product development labs or innovation centers, or (b) at some young companies with new ideas that desperately need capital in this market where no bank will make a loan, or (c) with vendors that have new product ideas that could meet shifting markets?
That's the beauty of an open market system, it supposedly funnels resources to the highest rate of return opportunities. But this doesn't work if managers only cut costs, then use the money to prop up stock prices short term. It's a management admission of failure when it buys its own stock. An admission that there is nothing management can find worth investing in, so it will use the money to artificially manipulate the short-term stock price. For capitalism to work resources need to go to those new business opportunities that generate new sales. Money needs to flow toward new health care products and new technologies – not toward keeping open money-losing auto companies and failed banks that won't make loans.
If we want to get out of this recession, we have to invest in new solutions that will increase demand. We have to seek out innovations and fund them. We cannot simply try to Defend & Extend Success Formulas that are demonstrating their inability to create more revenues and profits. Laid off workers do not buy more stuff. We must put the money to work in White Space projects where we can learn what customers need, and fulfill that need. That in turn will generate jobs. And only by investing in new opportunity development will workers begin to trust employers again. IBM, and most of the other corporate leaders, need to "get it."
by Adam Hartung | Oct 23, 2009 | Current Affairs, Defend & Extend, eBooks, In the Swamp, Leadership, Lock-in, Music
If you try standing in the way of a market shift you are going to get treated like the poor cowboy who stands in front of a cattle stampede. The outcome isn't pretty. Yet, we still have lots of leaders trying to Defend & Extend their business with techniques that are detrimental to customers. And likely to have the same impact on customers as the cowpoke shooting a pistol over the head of the herd.
Book publishers have a lot to worry about. Honestly, when did you last read a book? Every year the demand for books declines as people switch reading habits to shorter formats. And book readership becomes more concentrated in the small percentage of folks that read a LOT of books. And those folks are moving faster and faster to Kindle type digital e-book devices. So the market shift is pretty clear.
Yet according to the Wall Street Journal Scribner (division of Simon & Schuster) is delaying the release of Stephen King's latest book in e-format ("Publisher Delays Stephen King eBook"). They want to sell more printed books, so they hope to force the market to buy more paper copies by delaying the ebook for 6 weeks. They think that people will want to give this book as a gift, so they'll buy the paper copy because the ebook won't be out until 12/24.
So what will happen? Kindle readers I know don't want a paper book. They wait. Giving them a paper copy would create a reaction like "Oh, you shouldn't have. I mean, really, you shouldn't have." So the idea that this gets more printed books to e-reader owners is faulty. That also means that the several thousand copies which would get sold for e-readers don't. So you end up with lots of paper inventory, and unsatisfactory sales of both formats. That's called "lose-lose." And that's the kind of outcome you can expect when trying to Defend & Extend an outdated Success Formula.
Simultaneously, as book sales become fewer and more concentrated a higher percent of volume falls onto fewer titles. And that is exactly where WalMart, Target and Amazon compete. High volume, and for 2 of the 3 companies, limited selection. This gives the reseller more negotiating clout against the publisher. So as the big retailers look for ways to get people in the store, they are willing to sell books at below cost – loss leaders.
So now publishers are joining with the American Booksellers Association to seek an anti-trust case against the big retailers according to the Wall Street Journal again in "Are Amazon, WalMart and Target acting like Predators?" . Publishers want to try Defending their old pricing models, and as that crumbles in the face of market shifts they try using lawyers to stop the shift. That will probably work just as well as the lawsuits music publishers tried using to stop the distribution of MP3 tunes. Those lawsuits ended up making no difference at all in the shift to digital music consumption and distribution.
"Movie Fans Might Have to Wait To Rent New DVD Releases" is the Los Angeles Times headline. The studios like 20th Century Fox, Universal and Warner Brothers want individuals to buy more DVDs. So their plan is to refuse to sell DVDs to rental outfits like Netflix, Redbox and Blockbuster. Just like Scribner with its Stephen King book, they are hoping that people won't wait for the rental opportunity and will feel forced to go buy a copy. Like that's the direction the market is heading – right?
If they wanted to make a lot of money, the studios would be working hard to find a way to deliver digital format movies as fast as possible to people's PCs – the equivalent of iTunes for movies – not trying to limit distribution! That the market is shifting away from DVD sales is just like the shift away from music CD sales, and will not be fixed by making it harder to rent movies. Although it might increase the amount of piracy – just like similar actions backfired on the music studios 8 years ago.
Defending & Extending a business only works when it is in the Rapids of market growth. When growth slows, the market is moving on. Trying to somehow stop that shift never works. Only an arrogant internally-focused manager would think that the company can keep markets from shifting in a globally connected digital world. Consumers will move fast to what they want, and if they see a block they just run right over it – or go where you least want them to go (like to pirates out of China or Korea.)
They only way to deal with market shifts is to get on board. "Skate to where the puck will be" is the over-used Wayne Gretzsky quote. Be first to get there, and you can create a new Success Formula that captures value of new growth markets. And that's a lot more fun than getting trampled under a herd of shifting customers that you simply cannot control.
by Adam Hartung | Oct 21, 2009 | Defend & Extend, In the Swamp, Lifecycle, Lock-in
Boeing is the world's largest aircraft manufacturer. But the Crain's headline "Boeing Loses $1.6B, slashes 2009 profit estimate" should get your attention. Revenues in 2008 dropped some 10% – which the company blamed on a strike. Of course, management always has some bogeyman to blame for poor performance. But revenues have not yet recovered to 2007 levels. Much, much worse is the fact that its newest product launch, the 787 Dreamliner, is some 2 years behind schedule, leaving industry experts skeptical of when it will get out the door.
The reason to really be wary of Boeing isn't just this one plane. Instead, look at the market shift happening in all transportation – including aircraft. It's unclear that the marketplace has much interest in the Dreamliner. Boeing's Success Formula has long been to develop really big projects, billions in investment, and make bigger and bigger aircraft. And the Dreamliner is the latest in Defending & Extending this Success Formula. Even though the product is way over budget, really late and will be a big aircraft when it's unclear that's what people want.
From cars to buses to planes, we're seeing people change to smaller and more efficient products. The last time you flew, were you on a big aircraft? Or did you find yourself on a small plane from Bombardier (of Canada) or Embraer (of Brazil)? Airlines need to keep planes fairly full if they have any hope of making a profit. Couple that with customer desires for convenience – meaning several flights to a city daily, and you can quickly see why smaller airplanes make sense. As a result, the leader (Embraer) in small commercial planes is growing at over 20%/year!
Meanwhile, people are getting less and less excited about flying commercial airlines every year. TSA hassles, flight delays, extra charges for bags, there's a long list of reasons business people are looking for alternatives. And that's where the Jet Taxi business comes in. Whether you buy a fractional interest in an aircraft, or simply rent a plane for a single trip, businesses are figuring out that small aircraft from Beechcraft, Cessna, Lear Jets and even the new Honda jet are providing a very affordable option to commercial flying when even a few people are traveling – and with a lot more convenience. The largest manager of this option is NetJets owned by Berkshire Hathaway – who's lead investor is Warren Buffet.
Add on top of this webinars and video conferencing. Increasingly, people are using digital technologies to communicate without flying at all. Again, with hassles up – and terrorism threats more real than 10 years ago – people are turning to really low cost, and ultra convenient, alternatives to traveling at all.
So are you really optimistic about the future demand for big jet aircraft that take more than a decade to develop and get approved? And built by a company that competes with a government subsidized player supported as a matter of national defense in Europe (Airbus)? It's really hard to be optimistic about the future for Boeing – and the Dreamliner delays seem to just be the early warning signs of a Success Formula very long in the tooth. Boeing is definitely stuck in the Swamp, and it's unclear the company has any effort underway to develop new options.
by Adam Hartung | Oct 8, 2009 | Current Affairs, General, Innovation, Leadership, Lock-in, Web/Tech, Weblogs
"Companies Say No to Friending or Tweeting at Work" is the headline in The National Law Journal. According to the article, somewhere between 54% (according to a Robert Half survey) and 76% (according to a ScanSafe survey) of companies block employees from connecting to social networking sites like Facebook, Twitter, Linked-In, Plaxo, etc. The reasons sound so traditional – starting with lost productivity and moving on to fear of data theft.
And of course, there's the bogeyman to worry about too.
In the 1940s and 1950s success was all about mass production. Show up for work on time, don't be late, don't be absent, and do your job. We had assembly lines to operate. Making stuff meant we needed to get people into the plant, and have them do their job. The more efficient people were, the more things a plant could make – be it cars or washers or televisions. So control everything the employee did on the job to make sure each minute is spent welding, typing, adding, inspecting or whatever their task. Fredrick Taylor became a business guru, running around with stopwatches calculating how to get more work out the door by controlling everything workers did.
Have people noticed that its 2009? Today, there are places where such focus on task implementation is important. But most of those places aren't in the USA. Those kinds of jobs have moved elsewhere. Even in America's manufacturing plants (and in most plants in the developed world) it is more important that an employee be thinking about their work. More gains are made by intelligent application – new ideas for processes or activities – than from Tayler-ist style efforts to whip people into working harder and more efficiently. Would you rather have a drone employee (a human robot) or a smart employee thinking about how to be more productive and successful? Sweat shop behavior doesn't make more money in a world where intelligence and insight are worth a lot more than hours in the chair.
Yet Lock-in to old efficiency notions still remain. In the 1930s there was a movement to ban adding machines for fear the tapes (the old white tape that ran out the top) would be stolen by employees. Better to stick with humans doing the adding – less risky. When PCs came along practically all IT departments wanted to ban them – saying that they posed an inherent risk to productivity (people might use them for things besides work) and employees would capture data on them and leak it to competitors. When the internet emerged in the 1990s huge numbers of employers banned access because they didn't know what people would do on the web and they feared everyone would be shopping all day, or emailing their friends. And who knew what kind of information they would leak about the company! In each instance, a tool that dramatically improved business performance was met with "this will hurt productivity. And don't you think this poses a serious risk?"
For those who aren't looking for the bogeyman, this presents an opportunity. Those who first adopted adding machines quickly improved performance – and those who adopted PCs improved productivity (spreadsheets and word processing gave early adopters huge advantages) – and those who adopted the internet rapidly sold more to new customers while finding more low cost suppliers and automated lots of business processes in their supply chain taking down operating costs. These innovations created Challenges to old ways of doing things, but they also created huge opportunities for those willing to Disrupt old patterns and use White Space to see how they could improve their business.
Every day millions of people are starting to use – and millions more are increasing their use of – social networks. You can get an incredible sense of the pulse of many communities. You find out what's going on with customers, potential customers and colleagues incredibly fast. These networks help sift through billions of megabytes of data and bring critical items of importance to you (and your business) remarkably fast. They act as a new distribution system for information – think of them as a water cooler on steroids taken to the "nth" power. These are not on-line solitaire environments, these are places where people exchange information and learn. Really fast.
Today, having informed employees who can take action separates winners from losers. Those who want to be in the forefront of competition are already thinking about how these environments connect them with critical information. Help them connect to customer and vendor communities. Help them improve productivity by increasing the pace of information exchange. If you aren't afraid of the bogeyman then you have an opportunity to get a leg up on the fearful by not only accepting, but encouraging the use of social networks. The faster you "get it" the better off you'll be. It's likely to introduce ideas for Disrupting your business during this downturn and opening White Space to get you growing again!
Postscript –
An article in the recent New Yorker Magazine "Not So Fast" takes a deep look at Fredrick Taylor and the history of "scientific management." According to the article, Taylor and his colleagues often made up their data, and their conclusions, and the results they promised were almost never achieved. Interesting reading on how the myth was created, and became legend. Perhaps sending most of what was taught for decades as "business best practice" at leading business schools in a seriously misguided direction. Well worth a read for those with time to pick up a little history – and some insights to how business myths are developed and promulgated.
by Adam Hartung | Oct 5, 2009 | Current Affairs, Defend & Extend, Disruptions, In the Whirlpool, Leadership, Lifecycle, Lock-in
"Saturn Done in Four Months" is the Autoweek.com headline. The next time somebody brings up the short life cycle of tech products, remember Saturn. GM started the company, grew it, and now is shutting it down on a timeline that roughly corresponds with the life of Sun Microsystems. Clearly manufacturing companies can do just as poorly as techs.
When Penske lost itsmanufacturing deal, the purchase of Saturn fell through. And GM leadership can't wait to clear out inventory. Production has already stopped. Soon, the products and dealers will disappear. Along with the brand name. Another experiment that failed. So it is very important our post-mortem teaches us the right lessons from Saturn.
I was appalled when Harvard Business School Publishing posted "Why Saturn Was Destined to Fail." According to the author, Saturn was an anchor that drug down a hurt GM!!!! Reporting that the successful Saturn launch came at the loss of $3,000 per car sold (a new factoid I've never before heard), he claims that GM should have been more focused on fixing its old business. The implication is that GM wasn't trying to fix its old business, instead being diverted by the very successful operations at Saturn! Pretty illogical. GM was doing everything it could to compete, but improving its old Success Formula simply wasn't enough given the market shifts already in place. To meet changing market requirements GM needed to develop a new Success Formula, and that was the purpose of Saturn!
Saturn was the best chance GM had to succeed! The Success Formula at Chevrolet and the other GM divisions had been created in the 1950s when GM dominated the industry. But by 1980 the market had shifted dramatically. Design cycles had dropped, customer tastes had changed, production methods had moved from long assembly lines to just-in-time, quality requirements were redefined and rising, and impressions of auto dealers had tanked. Saturn was established to teach GM how to compete differently.
The reason Saturn lost money had everything to do with accounting. GM forced all kinds of costs onto GM – which were not representative of a normal start-up. Without those costs, Saturn would have been much leaner and profitable. Further, after Saturn proved it could move faster and outsell expectations, GM quickly moved to force Saturn to act like other GM divisions. Forced sharing of components severely hampered the design cycle and flexibility. Union contract consistency pushed Saturn into old employee agreements which the union had previously agreed to wave. And forcing Saturn to allow traditional GM dealers to sell the Saturn brand tarnished the changed customer relationship Saturn worked hard to create.
When Roger Smith created GM he set it up seperately. His scenario of the future demanded GM figure out a new way to compete. Saturn, was a White Space project with permission and resources to figure out that new way. But Chairman Smith did not Disrupt the old GM auto management. He did not replace the Division presidents with leaders from EDS or Hughes (businesses he had acquired) who were willing to move in a new direction. He did not change the resource allocation system to give Saturn more clout over its own decisions and those at other divisions. Thus, when he left the larger divisions moved fast to change Saturn into their mold – rather than vice-versa. Instead of Chevrolet learning from Saturn, Saturn managers were forced to adopt Chevrolet practices.
Saturn proved that even a stodgy, Locked-in company can use White Space to develop new solutions. And it also proved that if you aren't willing to Disrupt the old Success Formula – if you aren't willing to attack old Lock-ins – White Space (regardless of its success) is unlikely to convert the company into a better competitor. The lesson of Saturn is NOT that it diverted GM's attention, but rather that GM was unwilling to Disrupt its Success Formula to learn from Saturn.
As investors, the question is pretty easy. Would you rather own Saturn, Pontiac and Hummer – the divisions of GM that had loyal customers and some reputation for innovation, quality and customer satisfaction – or Cadillac, Buick and Chevrolet? Would you rather have businesses that are looking forward with early plans for hybrids, and exciting cars like the G8, or a high volume business in cars that most people find ho-hum, at best? Do you want designers that take chances and bring out cars quickly, or that move slowly seeking the "lowest common denominator" in design? If you were an entrepreneur, would you rather be given pemission to lead Saturn, or Chevrolet?
Learning the right lessons from Saturn is important, or else our business leaders are doomed to repeat the GM mistakes. If you don't challenge your Success Formula, White Space project will be met with great resistance by the organization. They will be saddled with unnecessary costs and requirements that strip them of permission to do what the market demands. And they will not achieve the goals which they established to accomplish, including acting as a beacon for migrating a business forward.
For a deeper treatment of this topic please download the free ebook "The Fall of GM: What Went Wrong and How To Avoid Its Mistakes."
by Adam Hartung | Oct 1, 2009 | Current Affairs, Defend & Extend, In the Swamp, Leadership, Lock-in, Web/Tech
In "Why Apple Can't Sell Business Laptops" Forbes gives the case to be pro-Dell. The author points out that Dell has 32% of the computer market within companies that have more than 500 employees. He then explains this happens because Dell makes machines that are constantly the next generation beyond the previous laptop – a little better, a little faster, a little cheaper. Comparing the new Lenovo Z to the Mac Air, the author concludes that anyone who sits in a corporate office, with a lot of corporate IT requirements, who wants the next small laptop would find it easiest to fit the Dell product into their work.
He's right. Which is why investors, employees, suppliers and customers should worry.
Everything described is Lock-in. Dell has focused on big IT departments, and sells products which cater to them. Dell is listening to its dominant customers. Each quarter Dell gets more dependent upon these customers – and walks further out on the PC gangplank when servicing their needs.
But, large corporations are laying off more workers than any other part of the economy. Both in absolute numbers and as a percentage of employment. They are not the "growth engine" or the companies that will lead us out of this recession. And while Dell caters to these customers, Dell is missing major shifts that are happening in how people use computers. Shifts that are already demonstrating the market for traditional laptop technology is waning.
In PC technology, people are moving away from laptops and toward netbooks. By far, netbooks have overtaken laptops as users shift how they access the web and get work done. Additionally, people are moving away from traditional computing platforms for lots of things, like email and web browsing (to name 2 big ones), and using instead mobile devices like Blackberry and iPhone. Apple appears to be very careful to not chase the netbook curve, instead appearing to advance the mobile device curve with future iPhones and a possible Tablet product.
As Dell keeps getting closer and closer to its "core" customers, its customer and technology (traditional PC) Lock-ins are making it increasingly vulnerable. When users simply stop carrying laptops, what will Dell sell them? When corporations move applications to cloud computing, and users no longer need their "heavy" laptop, where will that leave Dell?
The Forbes writer made the big mistake of measuring Dell by looking at its past – and glorifying its focus. But this points out that Dell is really very vulnerable. Technology is shifting, as are a lot of users. The author, and Dell, should spend more time looking at the competition — including solutions that aren't laptops. And they should spend more time building scenarios for 2015 to 2020 — which would surely show that having a better "corporate laptop" today is not a good predictor of future competitiveness for changing user needs.
Apple keeps looking better and smarter. Instead of going "head-to-head" with the PC makers, Apple is helping users migrate to mobile computing via different sorts of devices with better connectivity (the mobile network) and lighter interfaces. They are providing applications that support a wider variety of user needs, like GPS as a simple example, which make their devices addictive. They are pulling people toward the future, rather than trying to hold on to historical computing structures. As the shift continues, eventually we'll see corporate IT departments make this shift – just as they shifted to PCs from mainframes and minicomputers throwing IBM and DEC into the lurch. As this shift progresses, the winners will be those with the solutions for where customers are headed. And Dell doesn't have anything out there today.
by Adam Hartung | Sep 29, 2009 | Current Affairs, Defend & Extend, Disruptions, General, In the Swamp, Leadership, Lock-in, Web/Tech
Last week was big news for technology. Hewlett Packard announced it was killing the EDS brand name, pushing to make HP more of an integrated solutions company (like IBM). And Dell bought Perot Systems to launch itsfirst push into services. According to Washington Technology "HP, Dell Know They Have to Change or Die." The article talks about the dramatically shifting marketplace (love that language!), and how these two hardware oriented companies are trying to avoid the Sun Microsystems finality by getting into services. The author says the companies must "adapt or die," and "there's no sitting still." He goes on to say "it may take years," but he thinks they will transition and eventually be successful. His success forecast hinges on his belief that they must change to survive – and that will be sufficient motivation.
I love the awareness of shifting markets, and the recognition that shifts are demanding changes in these former leaders. But I don't agree with the conclusion that future success is highly likely. Because even with big acquisitions and name changes – HP and Dell haven't laid the groundwork to change. They have taken some rifle shots, but they haven't followed The Phoenix Principle and that means the odds are less than 10% they will successfully transition.
Lots of companies have tried to transition via acquisition. Heck, GM once bought EDS (and Hughes Electronics) – and look what it did for them. Just because a company buys something doesn't mean they'll change. McDonald's bought Chipotle, and then sold it despite double digit growth to fund acquisition of additional McDonald's. Just because a company needs to change its Success Formula to succeed – or even survive – is a long way from proving they will do it.
Neither HP or Dell show they are building a company for the future. Unfortunately, they look to be chasing a model built by IBM in the 1990s. Taking action in 2009 to recreate "best practices" of 15 – 20 years ago is far from creating a company positioned for success. There is no discussion of future scenario planning from either company – about technology use or changing business practices. No description of their scenarios for 2015 and 2020 – scenarios that would demonstrate very high growth and payoff from their action. To the contrary, all the discussion seems to be defensive. They are getting into services – finally – because they realize their growth has slowed and profits are declining. It's not really about the future, it's action taken by studying the rear view mirror.
Additionally, there is no discussion of any Disruptions at either company. To change organizations must attack old Lock-ins. Embedded processes – from hiring and reviews to product development and resource allocation – all exist to Defend & Extend past behavior. If these aren't attacked head-on then organizations quickly conform any potential change into something like the past. In the case of these companies, lacking a clear view of what future markets should look like, they have opted to forgo Disruptions. Mr. Gerstner attacked the sacred cows around IBM viciously in his effort to transition the company into more services. But the CEOs at HP and Dell are far less courageous.
And there's no White Space here for developing a new Success Formula aligned with market needs as they are emerging. Instead of creating an environment in which new leaders can compete in new ways, these businesses are being instructed on how to behave – according to some plan designed by someone who clearly thinks they are smarter than the marketplace. Without White Space, "the plan" is going to struggle to meet with markets that will continue to shift every bit as fast the next 2 years as they did the last year.
I have very limited expectations that these actions will increase the performance of either company. I predict organic growth will slow, as "integration" issues mount and "synergy" activities take more time than growth initiatives. They will not see a big improvement in profits, because competition is extremely severe and there is no sign these companies are introducing any kind of innovation that will leapfrog existing competitors – remember, mere size is not enough to succeed in today's marketplace. They will largely be somewhat bigger, but no more successful.
It's easy to get excited when a company makes an acquisition off the beaten path. But you must look closely at their actions and plans before setting expectations. These companies could make big changes. But that would require a lot more scenario planning, a lot more focus on emerging competitors (not the existing, well known behemoths), much more Disruption to knock back the Lock-in and White Space for building a new Success Formula. Without those actions this is going to be another acquisition followed by missed expectations, cost cutting and discussions about size that cover up declining organic growth.
by Adam Hartung | Sep 28, 2009 | Current Affairs, Defend & Extend, General, Leadership, Lock-in, Television, Web/Tech, Weblogs
Lock-in causes us to keep moving in the same direction, to continue behaving the same way, even when competition and market shifts makes it a surety that the direction we're heading will produce poorer returns. Blacksmiths who ignore the shift to automobiles. Printers who ignore the shift to photocopiers. As I often point out, unless something attacks the Lock-in, we are amazingly able to keep right on going the same direction – blithely ignoring the inevitable problems.
"I read Playboy for the articles" is a Harvard Business School Working Knowledge article which outlines just how far we all will go to avoid dealing with internal conflicts caused by undertaking behavior we know is unjustifiable. (Download full pdf text of White Paper here.) According to the article:
- Because people do not want to be perceived as (or feel) unethical or
immoral, they make excuses for their behavior—even to
themselves.
- People cope with their own questionable actions in a number of ways by rationalizing, justifying, and
forgetting—a remarkable range of strategies allowing them to maintain a
clear conscience even under dubious circumstances.
Which leads me to the #1 excuse I hear. "I don't get it." I bring up to people – especially those who are over 35 – the power of modern technology tools. For example, ask a 40 year old why two 20 year old girls sitting across a table will text each other and the answer is "I don't get it." Tell them you know teenagers who spend more time at the computer monitor on-line than watching TV and the answer is "I don't get it." Hear someone say "my cell phone is more important than my car" and you hear "I don't get it.' And the biggest one of all, tell this person they need to open up accounts and go everyday to Facebook, Linked-in, Twitter, MySpace and Plaxo and you hear "you're kidding – right? Why anyone spends time on those – I don't get it."
Every time I hear "I don't get it" I wince. Because that person just admitted "I'm willing to get out of step with the market, and risk having my skills become obsolete. I'm happy doing what I do, and I don't see why I need to doing something new and different. I'm sure the world is not evolving away from me, and I've chosen to remain Locked-in to where I've been rather than learn what's going on with these new solutions." See what I mean? When you read my interpretation makes you wince, doesn't it?
Our parents used to tell us when we talked on the telephone "Why don't you just go to their house, I don't get it." When we listened to rock-and-roll "Your music makes no sense, I don't get it." When we thought everybody needed a car they'd say "We always walked, why do you need a car? I don't get it."
"I don't get it" is the proverbial excuse justifying Lock-in. It allows us to walk away from a shift that's right in front of us, and remain stuck. It allows us to feel like we're OK to remain – well — ignorant.
So, the next time you hear yourself saying "I don't get it" it's time to stop, Disrupt yourself, and find some time to get it. It's time to review your willingness to remain Locked-in, and invest some resources in trying new stuff instead of Defending & Extending. Because if you do create some White Space you can learn – and the first who "get it" will be the ones who do best in the market, getting the best results.
PART 2 – a personal extension for those with time to read.
When my son died last week, at age 21, he left a brother age 20 and a brother age 18. He also left hundreds of friends his own age. These people shared what all of us shared at that age – a deep desire to talk to each other, to communicate, to cry in groups, to grieve, to find things in the past that made them happy. To capture time in a bottle by reflecting on Alex's life. And they also shared the simple fact that they have almost no money, precious little time, and a host of responsibilities to school, family and work.
30 years ago my generation would have made a few phone calls. Maybe a few of us gotten together for an hour. But our talks would have been mostly a small group, and for a short time.
The last week I've been living on Facebook, Linked-in, Twitter, et.al. I have used all these tools for at least several months, and in some cases years. But I used these through the filters of my history. I saw them as extensions (D&E) of old ways I communicated. Finally, now, I get it. These communities are an entirely different way of communicating. I different way of building a community. And in many ways, it is MORE vibrant and more honest than anything ever before. LIkewise, it is real time. And it is open to everyone. It is extraordinarily effective. And it is unbelievably healthy.
For those who question their child's life on-line, you are looking from your historical reference. What happens in this environment is incredibly open – thus very informative. It is remarkably honest – in ways everyone finds very hard to be face-to-face. And it is very fast. There are no boundaries – no race, no origin questions, no location questions, no income questions. It is the most egalitarian, comprehensive method of creating a self-forming community to accomplish a goal I've ever seen. Way beyond anything I've ever seen my generation accomplish by developing plans and subsequently focusing on execution.
Within hours, my son's friends found out he had died 500 miles away – and his Facebook page exploded. It became a central hub to exchange information of all kinds about his accident, his life, his funeral. Within hours almost his entire world new what happened – far faster than any "family call chains" we ever created. As they searched to learn more, within a day someone found a video of the accident scene and the helicopter whisking him away —- something that would have taken my generation weeks to find (if at all) and share. And the videographer was put in contact with me, able to give me first-hand info about the accident scene.
His brother created a new Facebook site dedicated to honoring Alex the next day. Within hours 200 people were hooked up. Before week end the number went to 400. This became universe central for this topic. There was no CEO. No Director of communications. Just a self-organizing activity that brought together hundreds of people who wanted to talk about Alex. Very effective discussion.
Since Alex's 22nd birthday is 9/30 – some spontenous person said a birthday party should be thrown. Within hours an event had been created, and hundreds were talking about whether they could attend or not (by the way, it's going to be on 10/2 in Chicago.) All kinds of talk about who had to work, who could come, what to bring. Again, self-organizing and spontaneous and remarkably effective.
By the time the newspaper published an article on the accident, and my son's obituary, it was so old news I don't think anybody cared. And certainly the only people who learned this way were those who were – over 40.
If you aren't using these tools – if you don't "get it" – this is one place I would recommend some personal White Space investment. If you do, the payoff is extremely high. If you don't, you're likely to find yourself as out of date as cobblers and blacksmiths faster than you think.
by Adam Hartung | Sep 15, 2009 | Current Affairs, General, In the Whirlpool, Leadership, Lock-in
The Real Blindness Behind The Collapse
Adam Hartung,
09.14.09, 05:00 PM EDT
The exact same failing brought down Wall Street, Detroit and Main Street's real estate speculators.
"Too big to fail" is a new phrase in the American lexicon, born in the economic crisis that gave us a bankrupt Lehman Brothers and the shotgun marriage of Merrill Lynch with Bank of America.
Nobody really knows what it means, except that somehow in the banking
world, central bankers can decide that some institutions–like AIG, Citigroup, JPMorgan Chase and BofA–are so big they simply have to be kept alive.
This is the first paragraph in my latest column for Forbes. There is much EVERY business leader can learn from the collapse of Lehman. Learn about risk, and about how to succeed in a shifting marketplace. Please give the Forbes article a read – and put on a comment! Everybody enjoys reading what others think!
