by Adam Hartung | Oct 16, 2009 | Current Affairs, Defend & Extend, General, Innovation, Leadership, Openness
"Everyone talks about the need for innovation these days, but they especially talk about why businesses are so bad at it." That's the opening line from my newest column "The Myth of Efficiency" at Forbes.com. Today businesses seem to be struggling with innovation – preferring instead to cut costs and pursue efficiency. But we now know that the foundation for cost cutting as a route to better returns is based on faulty – in fact mythical – claims by Frederick Taylor and his devotees of "scientific management." Read this article if you ever wondered about the value of cost cutting compared to innovation – and learn why so many people "default" to actions that never make things better.
My column cites a great New Yorker article entitled "Not So Fast" on the faulty foundations upon which scientific management – and subsequently much of business education – is based. For an even deeper read into the mythical bases of Taylor and his crew pick up a copy of The Management Myth: Why the Experts Keep Getting it Wrong by Matthew Stewart (2009 W.W. Norton) available via the link at Amazon.com.
This is timely, because "Defining talent needs, managing costs central to workforce planning in 2010" is the headline from Mercer's own website about it's recent survey showing that the #1 factor in planning for human capital next year is managing cost!! How are we to grow out of this recession when people are cost obsessed? Especially now that we know cost cutting has no foundation as a basis for improving or sustaining returns? Certainly we now have good reason to challenge conventional wisdom as espoused in books like Cut Costs + Grow Stronger recently published by HBS Press.
If you are confronted with picking between cost cutting or innovating read this article, because your "gut" just might have been developed on faulty assumptions – leading you to make the wrong decision.
by Adam Hartung | Oct 14, 2009 | Current Affairs, In the Rapids, Innovation, Leadership, Openness, Web/Tech
"Samsung Seeks Some iPhone Magic" is the Wall Street Journal headline. Hand it to the Korean company to demonstrate how to make money out of market shifts. Not only is Samsung looking to add more capability to its mobile handsets – the obvious Defend & Extend action – but the company is developing applications for all its products to get into new, emerging markets. It is now adding internet capability into almost all the devices it designs, makes and sells.
Recognizing the market Challenge, in 2008 Samsung set up a White Space project with permission to explore just how it could coordinate software and content for cell phones. But quickly the team recognized this charter was not sufficient permission. They went back and asked to extend their opportunity development to everything Samsung makes (or considers making.) By making sure it had the right permission to really think broadly about the opportunities, this White Space team made sure it could really accomplish the greatest gains.
Kudos to the company for resourcing this effectively. Samsung did not reach into the different business lines and ask each one to devote "some" resource onto this project. That approach usually ends up getting almost no attention until year end when people remember this was on the checklist for bonuses. Instead Samsung dedicated resources – money and people. And Samsung made this into a business unit which is intended to make a profit!! This isn't just an experiment – a lab – it's White Space that is intended to figure out new opportunities, as well as the business model which would make these new innovations profitable.
Samsung is a company historically known for manufacturing skills, supply chain management and lower cost. Yet, it is showing that regardless of size (Samsung is one of the largest companies in Korea and one of the world's largest electronics companies) or history any company can establish White Space to connect with market shifts and introduce innovation.
Do you have White Space in your company? Or are you relying on your old Success Formula to return you to previous growth rates and profitability? What are you doing to take advantage of market shifts – like what's happening with iPhones, Kindles, Tablet devices and other innovations? You might want to take a tip from Samsung and set up some White Space with permission and resources to investigate how you could participate in market shifts to make more money!
by Adam Hartung | Oct 11, 2009 | Current Affairs, General, Innovation, Leadership
Saturday I had the good fortune to attend a presentation by President Bill Clinton. He spoke at the Indian Institute of Technology alumni conference – an event I attended as a speaker myself.
President Clinton must have used the word profit 100 times. In today's divided political climate with words like "socialism" bandied about you might be surprised. But his talk focused on the importance of making a profit as businesses meet customer needs.
The 42nd President discussed how new fish farms in Haiti were important to improving the devastated economy – because they allowed everyone involved to make a profit. He discussed how forests devastated for charcoal were being replaced by a new business that converted used paper and sawdust into a charcoal replacement for 75% less cost to the user — and yet created over 100 good paying jobs and produced a profit. His point was simple, you can't fix a down-and-out country's economy unless there is a profit in it. And he was seeing, through his foundations, multiple profit opportunities.
Across the board, the President reminded listeners that they can maintain the profit motive and solve big problems if they think about the business differently. American competitiveness is seriously challenged by rising health care costs. Yet Pennsylvania has shown it can contain costs by reporting cost and outcome statistics – a practice not shared in the other 49 states. Switzerland has a private health care system, and it incorporates wellness programs, but it spends only 11% of GDP on health care. The U.S. spends 17%. The U.S. needs to rethink how health care is sold and administered first – and if it does that private enterprise can continue to lead. But it takes a shift on the part of the health care insurers and providers.
After many years as the country with the highest percentage of college graduates in the 25 to 34 age group, in the last 8 years America has fallen to 10th. America has priced college out of the range of too many students, while other countries have modifed their approach and improved completion rates. To improve competitiveness requires an educated society. It takes different thinking if America is to regain strength as an educated country. Now that American competitiveness is being challenged (the theme of this meeting) the former President challenged whether that competitiveness can be regained if we don't think differently about how we provide education.
Of all his comments, I most enjoyed his discussion about how much . Americans love zero sum games. He and then pointed out that almost all games (football, soccer, etc.) have been modified to allow for overtimes so somebody wins. He brought up an Arkansas football game that went to 7 overtimes! Americans hate non-zero sum situations, where multiple people can win, or where it's possible to win by doing things differently. But he pointed out that in life, almost nothing is a zero sum game. That is limited to the sports field. Even in battles, it's often not clear who the winner is – for both sides will declare victory. He commented "all economic systems carry the seeds of their own destruction." And when it comes to succeeding in business you don't need to create a zero sum game. You can succeed by doing things differently.
Far too many business gurus discuss business like it is zero sum. For example, Jim Collins' BHAG and his love of fighting for a "hedgehog" concept is all about viewing business as a zero-sum game that you have to win. But today most growing, high return businesses intentionally avoid zero-sum games. Those lead to price wars and declining returns. Instead they (like Google) employ innovation, like the folks making charcoal from recycled paper, to develop new solutions that are superior and earn higher returns.
by Adam Hartung | Oct 8, 2009 | Current Affairs, General, Innovation, Leadership, Lock-in, Web/Tech, Weblogs
"Companies Say No to Friending or Tweeting at Work" is the headline in The National Law Journal. According to the article, somewhere between 54% (according to a Robert Half survey) and 76% (according to a ScanSafe survey) of companies block employees from connecting to social networking sites like Facebook, Twitter, Linked-In, Plaxo, etc. The reasons sound so traditional – starting with lost productivity and moving on to fear of data theft.
And of course, there's the bogeyman to worry about too.
In the 1940s and 1950s success was all about mass production. Show up for work on time, don't be late, don't be absent, and do your job. We had assembly lines to operate. Making stuff meant we needed to get people into the plant, and have them do their job. The more efficient people were, the more things a plant could make – be it cars or washers or televisions. So control everything the employee did on the job to make sure each minute is spent welding, typing, adding, inspecting or whatever their task. Fredrick Taylor became a business guru, running around with stopwatches calculating how to get more work out the door by controlling everything workers did.
Have people noticed that its 2009? Today, there are places where such focus on task implementation is important. But most of those places aren't in the USA. Those kinds of jobs have moved elsewhere. Even in America's manufacturing plants (and in most plants in the developed world) it is more important that an employee be thinking about their work. More gains are made by intelligent application – new ideas for processes or activities – than from Tayler-ist style efforts to whip people into working harder and more efficiently. Would you rather have a drone employee (a human robot) or a smart employee thinking about how to be more productive and successful? Sweat shop behavior doesn't make more money in a world where intelligence and insight are worth a lot more than hours in the chair.
Yet Lock-in to old efficiency notions still remain. In the 1930s there was a movement to ban adding machines for fear the tapes (the old white tape that ran out the top) would be stolen by employees. Better to stick with humans doing the adding – less risky. When PCs came along practically all IT departments wanted to ban them – saying that they posed an inherent risk to productivity (people might use them for things besides work) and employees would capture data on them and leak it to competitors. When the internet emerged in the 1990s huge numbers of employers banned access because they didn't know what people would do on the web and they feared everyone would be shopping all day, or emailing their friends. And who knew what kind of information they would leak about the company! In each instance, a tool that dramatically improved business performance was met with "this will hurt productivity. And don't you think this poses a serious risk?"
For those who aren't looking for the bogeyman, this presents an opportunity. Those who first adopted adding machines quickly improved performance – and those who adopted PCs improved productivity (spreadsheets and word processing gave early adopters huge advantages) – and those who adopted the internet rapidly sold more to new customers while finding more low cost suppliers and automated lots of business processes in their supply chain taking down operating costs. These innovations created Challenges to old ways of doing things, but they also created huge opportunities for those willing to Disrupt old patterns and use White Space to see how they could improve their business.
Every day millions of people are starting to use – and millions more are increasing their use of – social networks. You can get an incredible sense of the pulse of many communities. You find out what's going on with customers, potential customers and colleagues incredibly fast. These networks help sift through billions of megabytes of data and bring critical items of importance to you (and your business) remarkably fast. They act as a new distribution system for information – think of them as a water cooler on steroids taken to the "nth" power. These are not on-line solitaire environments, these are places where people exchange information and learn. Really fast.
Today, having informed employees who can take action separates winners from losers. Those who want to be in the forefront of competition are already thinking about how these environments connect them with critical information. Help them connect to customer and vendor communities. Help them improve productivity by increasing the pace of information exchange. If you aren't afraid of the bogeyman then you have an opportunity to get a leg up on the fearful by not only accepting, but encouraging the use of social networks. The faster you "get it" the better off you'll be. It's likely to introduce ideas for Disrupting your business during this downturn and opening White Space to get you growing again!
Postscript –
An article in the recent New Yorker Magazine "Not So Fast" takes a deep look at Fredrick Taylor and the history of "scientific management." According to the article, Taylor and his colleagues often made up their data, and their conclusions, and the results they promised were almost never achieved. Interesting reading on how the myth was created, and became legend. Perhaps sending most of what was taught for decades as "business best practice" at leading business schools in a seriously misguided direction. Well worth a read for those with time to pick up a little history – and some insights to how business myths are developed and promulgated.
by Adam Hartung | Oct 7, 2009 | Current Affairs, Disruptions, General, In the Rapids, Innovation, Leadership, Web/Tech
"Amazon Cuts Kindle Price to $259" is the USAToday headline. This $40 whack is the second price cut this year. Sony is selling its ePocket for $199. Of course Kindle is pushing that it has more content available and easier wireless access than Sony,- even internationally. Expectations are for 3 million e-Readers to be sold in 2009 (about 1 million around the holidays.) Obviously, if you aren't paying attention this is a big deal. It is changing publishing (books, magazines and newspapers.) But the impact goes far beyond publishing.
Simultaneously, The Wall Street Journal reports "Just a Touch Away, the Elusive Tablet PC." According to this article, new devices are being tested that will allow you to do everything from classic PC applications to web interconnection to watch movies – or read books – on a keyboard-less new tablet. Something that is a cross between an iPhone/iTouch (with a bigger screen) and a PC. As iPhone users are learning (quickly) you don't need a keyboard or mouse to have an interface to your machine and the world.
So what will be the future solution? Will it be one of these, or yet something different? I don't know. Do you have a crystal ball? But the answer to that question really doesn't matter to us today. We don't need to know that sort of specific to begin growing our businesses.
Not being widget nuts, or platform forecasters, should not stop us from planning for a different sort of future and changing our approach today. Scenarios for 2013 (you do have scenario plans for 2013, don't you?) should be planning on practically everybody having one of these devices. And perhaps these devices being so cheap they could be included with sales of every major appliance (like a car, or refrigerator). If that sounds silly, just look at how cheap a flash (or thumb) drive is now. Remember when we thought floppy disks were expensive? Now people exchange flash drives that have more capacity than a 2004 laptop without thinking about cost. These made tapes, floppy drives, zip drives and a lot of other technology obsolete in a hurry.
How can your business take advantage of this shift? Can you replace paper manuals, maybe even user instructions with a tablet? Or a tablet app? Can you use an interactive device that grabs input from your appliance to do diagnostics, recommend maintenance, report on failures? Would this help customers pop for the new frig – say if it helped lower electric bills? Or could it encourage that new washer by helping set the cycles to lower water cost? Could you build it right into the console on a washer or dryer? Or could you encourage someone to buy a new car by telling them to forget about maintenance logs and just track the car's performance on a tablet?
If you provide content – are you planning for this? Recently The Economist sent me an email (I've registered on their web site) telling me they were going to start charging for web content. I've heard News Corp. properties, like the Wall Street Journal, intend to do the same. I guess they haven't noticed the world is moving in a direction that makes such a plan – well, impossible. In a recent Harris poll (reported on Silicon Alley Insider "People Won't Pay for News Online") 74% of web users said they'd simply switch sites before paying. With one of these eReader/Tablets in hand, why would they ever pay for content when another provider is a finger streak away? As access becomes easier and easier, the willingness to pay will go down and down. Publishers had better start figuring out how to get paid a different way than subscriptions!
Now is about when executives like to say "so I want to know which format will win before I start doing this. I only want to do this once." That old cry for efficiency. Unfortunately, while waiting for a winner to emerge, the waiter becomes the laggard. The early adopter, that recognizes the value provided to consumers, gets out there and starts using these innovations to drive better customer value. And to capture more sales. When you are part of making the market – like Apple in music – you gain huge advantages. You don't have to know all the answers to compete. You just have to be willing to Disrupt old notions and use White Space to experiment and learn.
I have drawers filled with obsolete electronics. How many obsolete cell phones do you own? How many big old monitors are you recycling to replace with flat screens? Do you still have a fax machine? I have an old keyboard that used something called "sideband technology" to allow me to interact with people and get news and sports info years before the internet was popular – and before wireless internet was available. Obsolete now, that device taught me how valuable the internet was going to be when Congress made it available for commercial use. Fear of throwing away a few products or software – maybe a betamax machine or copy of visicalc – is no reason not to get into the market and learn!
Markets are marvelous things. As these articles discuss, nobody knows how we will be using technology in the future. Not exactly. It will be some combination of eReader – computer – music player – television – telephone. But we do know the broad theme. And if you want to get out of this recession, you can start playing to this market shift now. You'll never grow if you sit on the sidelines watching and waiting. Get in the market. Participate. Use this technology to create new solutions! There are countless applications (as the expanding iPhone app base is proving.) Want to get into the Rapids of growth? You'll never succeed if you don't become part of the marketplace. Nothing creates learning like doing!
by Adam Hartung | Oct 5, 2009 | Current Affairs, Defend & Extend, Disruptions, In the Whirlpool, Leadership, Lifecycle, Lock-in
"Saturn Done in Four Months" is the Autoweek.com headline. The next time somebody brings up the short life cycle of tech products, remember Saturn. GM started the company, grew it, and now is shutting it down on a timeline that roughly corresponds with the life of Sun Microsystems. Clearly manufacturing companies can do just as poorly as techs.
When Penske lost itsmanufacturing deal, the purchase of Saturn fell through. And GM leadership can't wait to clear out inventory. Production has already stopped. Soon, the products and dealers will disappear. Along with the brand name. Another experiment that failed. So it is very important our post-mortem teaches us the right lessons from Saturn.
I was appalled when Harvard Business School Publishing posted "Why Saturn Was Destined to Fail." According to the author, Saturn was an anchor that drug down a hurt GM!!!! Reporting that the successful Saturn launch came at the loss of $3,000 per car sold (a new factoid I've never before heard), he claims that GM should have been more focused on fixing its old business. The implication is that GM wasn't trying to fix its old business, instead being diverted by the very successful operations at Saturn! Pretty illogical. GM was doing everything it could to compete, but improving its old Success Formula simply wasn't enough given the market shifts already in place. To meet changing market requirements GM needed to develop a new Success Formula, and that was the purpose of Saturn!
Saturn was the best chance GM had to succeed! The Success Formula at Chevrolet and the other GM divisions had been created in the 1950s when GM dominated the industry. But by 1980 the market had shifted dramatically. Design cycles had dropped, customer tastes had changed, production methods had moved from long assembly lines to just-in-time, quality requirements were redefined and rising, and impressions of auto dealers had tanked. Saturn was established to teach GM how to compete differently.
The reason Saturn lost money had everything to do with accounting. GM forced all kinds of costs onto GM – which were not representative of a normal start-up. Without those costs, Saturn would have been much leaner and profitable. Further, after Saturn proved it could move faster and outsell expectations, GM quickly moved to force Saturn to act like other GM divisions. Forced sharing of components severely hampered the design cycle and flexibility. Union contract consistency pushed Saturn into old employee agreements which the union had previously agreed to wave. And forcing Saturn to allow traditional GM dealers to sell the Saturn brand tarnished the changed customer relationship Saturn worked hard to create.
When Roger Smith created GM he set it up seperately. His scenario of the future demanded GM figure out a new way to compete. Saturn, was a White Space project with permission and resources to figure out that new way. But Chairman Smith did not Disrupt the old GM auto management. He did not replace the Division presidents with leaders from EDS or Hughes (businesses he had acquired) who were willing to move in a new direction. He did not change the resource allocation system to give Saturn more clout over its own decisions and those at other divisions. Thus, when he left the larger divisions moved fast to change Saturn into their mold – rather than vice-versa. Instead of Chevrolet learning from Saturn, Saturn managers were forced to adopt Chevrolet practices.
Saturn proved that even a stodgy, Locked-in company can use White Space to develop new solutions. And it also proved that if you aren't willing to Disrupt the old Success Formula – if you aren't willing to attack old Lock-ins – White Space (regardless of its success) is unlikely to convert the company into a better competitor. The lesson of Saturn is NOT that it diverted GM's attention, but rather that GM was unwilling to Disrupt its Success Formula to learn from Saturn.
As investors, the question is pretty easy. Would you rather own Saturn, Pontiac and Hummer – the divisions of GM that had loyal customers and some reputation for innovation, quality and customer satisfaction – or Cadillac, Buick and Chevrolet? Would you rather have businesses that are looking forward with early plans for hybrids, and exciting cars like the G8, or a high volume business in cars that most people find ho-hum, at best? Do you want designers that take chances and bring out cars quickly, or that move slowly seeking the "lowest common denominator" in design? If you were an entrepreneur, would you rather be given pemission to lead Saturn, or Chevrolet?
Learning the right lessons from Saturn is important, or else our business leaders are doomed to repeat the GM mistakes. If you don't challenge your Success Formula, White Space project will be met with great resistance by the organization. They will be saddled with unnecessary costs and requirements that strip them of permission to do what the market demands. And they will not achieve the goals which they established to accomplish, including acting as a beacon for migrating a business forward.
For a deeper treatment of this topic please download the free ebook "The Fall of GM: What Went Wrong and How To Avoid Its Mistakes."
by Adam Hartung | Oct 1, 2009 | Current Affairs, Defend & Extend, In the Swamp, Leadership, Lock-in, Web/Tech
In "Why Apple Can't Sell Business Laptops" Forbes gives the case to be pro-Dell. The author points out that Dell has 32% of the computer market within companies that have more than 500 employees. He then explains this happens because Dell makes machines that are constantly the next generation beyond the previous laptop – a little better, a little faster, a little cheaper. Comparing the new Lenovo Z to the Mac Air, the author concludes that anyone who sits in a corporate office, with a lot of corporate IT requirements, who wants the next small laptop would find it easiest to fit the Dell product into their work.
He's right. Which is why investors, employees, suppliers and customers should worry.
Everything described is Lock-in. Dell has focused on big IT departments, and sells products which cater to them. Dell is listening to its dominant customers. Each quarter Dell gets more dependent upon these customers – and walks further out on the PC gangplank when servicing their needs.
But, large corporations are laying off more workers than any other part of the economy. Both in absolute numbers and as a percentage of employment. They are not the "growth engine" or the companies that will lead us out of this recession. And while Dell caters to these customers, Dell is missing major shifts that are happening in how people use computers. Shifts that are already demonstrating the market for traditional laptop technology is waning.
In PC technology, people are moving away from laptops and toward netbooks. By far, netbooks have overtaken laptops as users shift how they access the web and get work done. Additionally, people are moving away from traditional computing platforms for lots of things, like email and web browsing (to name 2 big ones), and using instead mobile devices like Blackberry and iPhone. Apple appears to be very careful to not chase the netbook curve, instead appearing to advance the mobile device curve with future iPhones and a possible Tablet product.
As Dell keeps getting closer and closer to its "core" customers, its customer and technology (traditional PC) Lock-ins are making it increasingly vulnerable. When users simply stop carrying laptops, what will Dell sell them? When corporations move applications to cloud computing, and users no longer need their "heavy" laptop, where will that leave Dell?
The Forbes writer made the big mistake of measuring Dell by looking at its past – and glorifying its focus. But this points out that Dell is really very vulnerable. Technology is shifting, as are a lot of users. The author, and Dell, should spend more time looking at the competition — including solutions that aren't laptops. And they should spend more time building scenarios for 2015 to 2020 — which would surely show that having a better "corporate laptop" today is not a good predictor of future competitiveness for changing user needs.
Apple keeps looking better and smarter. Instead of going "head-to-head" with the PC makers, Apple is helping users migrate to mobile computing via different sorts of devices with better connectivity (the mobile network) and lighter interfaces. They are providing applications that support a wider variety of user needs, like GPS as a simple example, which make their devices addictive. They are pulling people toward the future, rather than trying to hold on to historical computing structures. As the shift continues, eventually we'll see corporate IT departments make this shift – just as they shifted to PCs from mainframes and minicomputers throwing IBM and DEC into the lurch. As this shift progresses, the winners will be those with the solutions for where customers are headed. And Dell doesn't have anything out there today.
by Adam Hartung | Sep 29, 2009 | Current Affairs, Defend & Extend, Disruptions, General, In the Swamp, Leadership, Lock-in, Web/Tech
Last week was big news for technology. Hewlett Packard announced it was killing the EDS brand name, pushing to make HP more of an integrated solutions company (like IBM). And Dell bought Perot Systems to launch itsfirst push into services. According to Washington Technology "HP, Dell Know They Have to Change or Die." The article talks about the dramatically shifting marketplace (love that language!), and how these two hardware oriented companies are trying to avoid the Sun Microsystems finality by getting into services. The author says the companies must "adapt or die," and "there's no sitting still." He goes on to say "it may take years," but he thinks they will transition and eventually be successful. His success forecast hinges on his belief that they must change to survive – and that will be sufficient motivation.
I love the awareness of shifting markets, and the recognition that shifts are demanding changes in these former leaders. But I don't agree with the conclusion that future success is highly likely. Because even with big acquisitions and name changes – HP and Dell haven't laid the groundwork to change. They have taken some rifle shots, but they haven't followed The Phoenix Principle and that means the odds are less than 10% they will successfully transition.
Lots of companies have tried to transition via acquisition. Heck, GM once bought EDS (and Hughes Electronics) – and look what it did for them. Just because a company buys something doesn't mean they'll change. McDonald's bought Chipotle, and then sold it despite double digit growth to fund acquisition of additional McDonald's. Just because a company needs to change its Success Formula to succeed – or even survive – is a long way from proving they will do it.
Neither HP or Dell show they are building a company for the future. Unfortunately, they look to be chasing a model built by IBM in the 1990s. Taking action in 2009 to recreate "best practices" of 15 – 20 years ago is far from creating a company positioned for success. There is no discussion of future scenario planning from either company – about technology use or changing business practices. No description of their scenarios for 2015 and 2020 – scenarios that would demonstrate very high growth and payoff from their action. To the contrary, all the discussion seems to be defensive. They are getting into services – finally – because they realize their growth has slowed and profits are declining. It's not really about the future, it's action taken by studying the rear view mirror.
Additionally, there is no discussion of any Disruptions at either company. To change organizations must attack old Lock-ins. Embedded processes – from hiring and reviews to product development and resource allocation – all exist to Defend & Extend past behavior. If these aren't attacked head-on then organizations quickly conform any potential change into something like the past. In the case of these companies, lacking a clear view of what future markets should look like, they have opted to forgo Disruptions. Mr. Gerstner attacked the sacred cows around IBM viciously in his effort to transition the company into more services. But the CEOs at HP and Dell are far less courageous.
And there's no White Space here for developing a new Success Formula aligned with market needs as they are emerging. Instead of creating an environment in which new leaders can compete in new ways, these businesses are being instructed on how to behave – according to some plan designed by someone who clearly thinks they are smarter than the marketplace. Without White Space, "the plan" is going to struggle to meet with markets that will continue to shift every bit as fast the next 2 years as they did the last year.
I have very limited expectations that these actions will increase the performance of either company. I predict organic growth will slow, as "integration" issues mount and "synergy" activities take more time than growth initiatives. They will not see a big improvement in profits, because competition is extremely severe and there is no sign these companies are introducing any kind of innovation that will leapfrog existing competitors – remember, mere size is not enough to succeed in today's marketplace. They will largely be somewhat bigger, but no more successful.
It's easy to get excited when a company makes an acquisition off the beaten path. But you must look closely at their actions and plans before setting expectations. These companies could make big changes. But that would require a lot more scenario planning, a lot more focus on emerging competitors (not the existing, well known behemoths), much more Disruption to knock back the Lock-in and White Space for building a new Success Formula. Without those actions this is going to be another acquisition followed by missed expectations, cost cutting and discussions about size that cover up declining organic growth.
by Adam Hartung | Sep 28, 2009 | Current Affairs, Defend & Extend, General, Leadership, Lock-in, Television, Web/Tech, Weblogs
Lock-in causes us to keep moving in the same direction, to continue behaving the same way, even when competition and market shifts makes it a surety that the direction we're heading will produce poorer returns. Blacksmiths who ignore the shift to automobiles. Printers who ignore the shift to photocopiers. As I often point out, unless something attacks the Lock-in, we are amazingly able to keep right on going the same direction – blithely ignoring the inevitable problems.
"I read Playboy for the articles" is a Harvard Business School Working Knowledge article which outlines just how far we all will go to avoid dealing with internal conflicts caused by undertaking behavior we know is unjustifiable. (Download full pdf text of White Paper here.) According to the article:
- Because people do not want to be perceived as (or feel) unethical or
immoral, they make excuses for their behavior—even to
themselves.
- People cope with their own questionable actions in a number of ways by rationalizing, justifying, and
forgetting—a remarkable range of strategies allowing them to maintain a
clear conscience even under dubious circumstances.
Which leads me to the #1 excuse I hear. "I don't get it." I bring up to people – especially those who are over 35 – the power of modern technology tools. For example, ask a 40 year old why two 20 year old girls sitting across a table will text each other and the answer is "I don't get it." Tell them you know teenagers who spend more time at the computer monitor on-line than watching TV and the answer is "I don't get it." Hear someone say "my cell phone is more important than my car" and you hear "I don't get it.' And the biggest one of all, tell this person they need to open up accounts and go everyday to Facebook, Linked-in, Twitter, MySpace and Plaxo and you hear "you're kidding – right? Why anyone spends time on those – I don't get it."
Every time I hear "I don't get it" I wince. Because that person just admitted "I'm willing to get out of step with the market, and risk having my skills become obsolete. I'm happy doing what I do, and I don't see why I need to doing something new and different. I'm sure the world is not evolving away from me, and I've chosen to remain Locked-in to where I've been rather than learn what's going on with these new solutions." See what I mean? When you read my interpretation makes you wince, doesn't it?
Our parents used to tell us when we talked on the telephone "Why don't you just go to their house, I don't get it." When we listened to rock-and-roll "Your music makes no sense, I don't get it." When we thought everybody needed a car they'd say "We always walked, why do you need a car? I don't get it."
"I don't get it" is the proverbial excuse justifying Lock-in. It allows us to walk away from a shift that's right in front of us, and remain stuck. It allows us to feel like we're OK to remain – well — ignorant.
So, the next time you hear yourself saying "I don't get it" it's time to stop, Disrupt yourself, and find some time to get it. It's time to review your willingness to remain Locked-in, and invest some resources in trying new stuff instead of Defending & Extending. Because if you do create some White Space you can learn – and the first who "get it" will be the ones who do best in the market, getting the best results.
PART 2 – a personal extension for those with time to read.
When my son died last week, at age 21, he left a brother age 20 and a brother age 18. He also left hundreds of friends his own age. These people shared what all of us shared at that age – a deep desire to talk to each other, to communicate, to cry in groups, to grieve, to find things in the past that made them happy. To capture time in a bottle by reflecting on Alex's life. And they also shared the simple fact that they have almost no money, precious little time, and a host of responsibilities to school, family and work.
30 years ago my generation would have made a few phone calls. Maybe a few of us gotten together for an hour. But our talks would have been mostly a small group, and for a short time.
The last week I've been living on Facebook, Linked-in, Twitter, et.al. I have used all these tools for at least several months, and in some cases years. But I used these through the filters of my history. I saw them as extensions (D&E) of old ways I communicated. Finally, now, I get it. These communities are an entirely different way of communicating. I different way of building a community. And in many ways, it is MORE vibrant and more honest than anything ever before. LIkewise, it is real time. And it is open to everyone. It is extraordinarily effective. And it is unbelievably healthy.
For those who question their child's life on-line, you are looking from your historical reference. What happens in this environment is incredibly open – thus very informative. It is remarkably honest – in ways everyone finds very hard to be face-to-face. And it is very fast. There are no boundaries – no race, no origin questions, no location questions, no income questions. It is the most egalitarian, comprehensive method of creating a self-forming community to accomplish a goal I've ever seen. Way beyond anything I've ever seen my generation accomplish by developing plans and subsequently focusing on execution.
Within hours, my son's friends found out he had died 500 miles away – and his Facebook page exploded. It became a central hub to exchange information of all kinds about his accident, his life, his funeral. Within hours almost his entire world new what happened – far faster than any "family call chains" we ever created. As they searched to learn more, within a day someone found a video of the accident scene and the helicopter whisking him away —- something that would have taken my generation weeks to find (if at all) and share. And the videographer was put in contact with me, able to give me first-hand info about the accident scene.
His brother created a new Facebook site dedicated to honoring Alex the next day. Within hours 200 people were hooked up. Before week end the number went to 400. This became universe central for this topic. There was no CEO. No Director of communications. Just a self-organizing activity that brought together hundreds of people who wanted to talk about Alex. Very effective discussion.
Since Alex's 22nd birthday is 9/30 – some spontenous person said a birthday party should be thrown. Within hours an event had been created, and hundreds were talking about whether they could attend or not (by the way, it's going to be on 10/2 in Chicago.) All kinds of talk about who had to work, who could come, what to bring. Again, self-organizing and spontaneous and remarkably effective.
By the time the newspaper published an article on the accident, and my son's obituary, it was so old news I don't think anybody cared. And certainly the only people who learned this way were those who were – over 40.
If you aren't using these tools – if you don't "get it" – this is one place I would recommend some personal White Space investment. If you do, the payoff is extremely high. If you don't, you're likely to find yourself as out of date as cobblers and blacksmiths faster than you think.
by Adam Hartung | Sep 18, 2009 | Current Affairs, Disruptions, In the Rapids, Innovation, Leadership, Lifecycle, Openness, Web/Tech
This week The Economist reviewed the innovation processes at Google. In "Google's Corporate Culture – Creative Tension" the magazine overviews several recent innovations, and actions senior leaders are taking regarding innovation management.
While Mr. Anthony recently chastised Google for its "immature" innovation management in a Harvard Business School blog post, and somewhat The Economist does as well, for not producing more revenue from its innovations – nobody can refute that the company released yet 3 more very important innovations this week – an updated Chrome web brower, new software that allows viewing on-line newspapers in a more natural way (Fast Flip) and Google Wave for collaborative project development. For most companies any one of these would be vaunted to market on piles of ad and PR sending. Products less significant cause Microsoft to throw their Marketing/PR machine into overdrive. But innovative launches are frequent enough at Google that you can completely miss some of them. Even when they continue to change whole industries – like Google has been doing to newspaper publishers and continues.
The best line in the article says that senior Google leadership is very actively trying to counter "the conservatism that can set in as companies mature." The good news is that even though it has 20,000 employees, Google is not "mature." Thankfully, it remains in the Rapids of growth. Size does not equal "maturity." That word is more applicable to companies that begin truncating ideas and activities to optimize their existing business. This is the direction Scott Anthony recently proposed on his HBS blog. And it gets companies into serious trouble.
Instead, Google is working hard to keep ideas from being truncated by hierarchy or people who are focused on narrow opportunities. Senior leaders are making themselves available to everyone in order to make sure ideas get attention – rather than vetted. Through this they are giving permission for ideas to be developed, even when many in the company aren't supportive. This top-level focus on granting permission to new ideas which are unconventional is a CRITICAL component of innovation success. Second, they aren't relying on a priority process for funding (something Mr. Anthony recommends). Instead they are making ample dollars available for ideas to push them to market quickly – and see if the innovation is accepted by the market or needs more work.
By personally engaging at the top levels in this process, Mr. Schmidt and his team are being Disruptive. They aren't allowing structural impediments like strategy formulation, hiring practices, tight IT systems, large historical investments or internal "experts" to Lock-in Google to its past. This is demonstrably exceptional behavior that pushes Google into new markets and growth. Then, by focusing on granting permission – even for things the "organization" may not initially support – and adding resources from outside normal resource allocation systems they are doing the 2 things necessary to keep White Space alive and thriving at Google.
Google has been growing, even in this very tough economy. More importantly, it has not slowed down its releases of innovation on the marketplace that can generate future growth. Mobile phones using its Android software are just now getting to market, and offer (along with other innovations) potentially very large revenue gains in new areas. With smart phones and Kindle-like e-readers to outsell PCs in late 2010 Google is squarely positioned to be part of the "next wave" of personal digital productivity (along with Apple.) And this can be explained by the company's willingness to remain Disruptive and push White Space projects — even with 20,000 employees.
