What’s the business value of democracy?
Finally, the real value of Twitter revealed>>
“We’ve been struck by the amount of video and eyewitness testimony,” said Jon Williams, the BBC world news editor. “The days when regimes can control the flow of information are over.”
Intel and Wind River: Shaping Strategy for the Future of the Consumer Experience
The acquisition of Wind River by Intel should not come as a surprise for anyone who has been paying attention to the rapid evolution of the online experience. We know for example that the future of electronics is collaboration, sharing, and access – anytime, anywhere, on any device..
Companies that build a vision around the future and then work to make that future a reality using their business ecosystems will win the next round of competition after we emerge from the recession. Intel’s shaping strategy, as my friend John Hagel would call it, is nothing short of brilliant.
Let’s see why.
In the automobile “infotainment” world, Intel has been quietly working with Wind River and BMW (and others) to build a shared platform for devices based on open source standards. The ecosystem partners comprise the Genivi Alliance and are in competition with another, smaller ecosystem of partners driven by Microsoft. The difference is that Microsoft’s infotainment stack is not open. Ford’s Sync and Fiat’s Blue & Me products are based on this competing platform. (How long before they switch?)
The ultimate irony – both platforms are built on Intel. And in this case, Intel knows something that Microsoft doesn’t – that open systems are the future.
The Wind River platform is not limited to automobiles. They’re doing the same across a variety of marketspaces, like the Open Handset Alliance Android – another open source platform.
The Wind River acquisition also helps include “Intel Inside” on all the devices which cloud computing will bring. Intel is making sure that the Telcos, IT hosting providers, hardware and software vendors – everyone gets to use Intel as the foundation of their future business.
Shaping Strategy 101: Intel gets it.
Customer-Driven Innovation: Interview with Gaurav Bhalla
Here’s my “Customer-Driven Innovation interview” with Gaurav Bhalla for the Emory Marketing Institute.
According to Bhalla, the key building blocks of value co-creation are:
Listening: learning about consumers’ experiences; their angst, frustrations, desires, and aspirations
Sustaining value co-creation conversations: meaningful conversations that yield the raw material for co-creation
Experimenting and rapid prototyping: to manage risk, improvise, and enable speedy value co-creation
Execution: only when co-created value is delivered can the next round of value co-creation be initiated
Read all about it >>
The Heretical Views of Freeman Dyson
Global warming greatly exaggerated?
What’s wrong with Freeman Dyson?
Maybe the climate models he’s criticizing are off – but perhaps he hasn’t seen the pine beetle destruction across North America – all the way from British Columbia to New Mexico. Perhaps he hasn’t seen the dry, hot weather across California. Perhaps he hasn’t seen the melting Glaciers in Glacier National Park. Perhaps he hasn’t seen the mild winters in the Rockies. Perhaps he hasn’t gotten out of his air-conditioned office…
This is what happens when you get too smart. I agree with his principal point – that PhDs are, for the most part, a bunch of nerds who are too busy examining parts of the elephant to see the animal itself. I even agree that we are not spending enough time working on poverty, infectious diseases, public education and public health. But to say that global warming is somehow less important misses the entire point. Of course they are all related. Of course we have to become radically more serious about sustainable development. But too say something this absurd? Really.
Here’s where I do find myself agreeing with him:
I say the United States has less than a century left of its turn as top nation. Since the modern nation-state was invented, about the year 1500, a succession of countries have taken turns as top nation. First it was Spain, then France, then and Britain, than America. Each term lasted about 150 years. Ours began in 1920 so it should end about 2070.
I agree with his analysis as well:
The reason why each top nation’s term comes to an end is that the top nation becomes overextended militarily, economically and politically. Greater and greater efforts are required to maintain the number one position. Finally, the overextension becomes so extreme that the whole structure collapses. Already we can see in the American posture today some clear symptoms of overextension.
But here’s where he’s missed the boat: the two are connected. If the United States decides to re-invent itself as a sustainable economy, it will lead for another 200 years, period. That is what Obama and Gore have figured out already, but somehow, this smart heretic has not connected the dots.
Byron Katie: Challenging Your Assumptions
The Work of Byron Katie can be used as a tool to challenge business assumptions.
Here, on Byron Katie’s blog we find the following business inquiry: “Having More Customers Means Having More Profits” in which a biz-dev manager starts questioning his team’s belief that “more customers equals more profit.”
The process is described as business inquiry.
Here are the manager’s conclusions:
“Having fewer customers means having more profit.”
“One, we could focus on the customers that have the strongest cash positions, the ones who are most likely to weather the recession.
“Two, we could stop wasting time on difficult customers, the ones that keep changing their orders. They’re very high maintenance, but we keep them because we think we need them to meet our numbers.
“And three, we could stop serving customers that don’t pay in a timely manner, the ones with poor payment history.”
More at Byron Katie’s blog >>
Swine Flu Updates: How Twitter Makes a Difference (UPDATED)
UPDATED: HealthMap from Google.org and the CDC >>
I have to say I’m not impressed by the swine-flu coverage in the traditional media.
What’s interesting is that one company – Veratect – has done a better job of identifying, elevating, and monitoring this crisis.
Their swine-flu Twitter feed is here. Judge for yourself. >>
Other good sources include the CDC and Google News, and the Flu Wiki…
Photos here >>
Background: the politics of health >>
Knowledge Kinetics: Customer Value Innovation
Gaurav Bhalla‘s latest company Knowledge Kinetics is all about getting your customers involved in value creation.
Their “Listen, Engage, Respond” solution methodology shows you how to transform your marketing (and your company).
And don’t forget to check out Gaurav Bhalla’s blog.
Backlash: How Early Adopters React When the Mass Market Embraces a New Brand
David Reibstein‘s theory holds true online as well. Let’s look at an example of how this works with online communities, knowledge – based communities in particular. Let’s say we build an online community around a specific topic. When the site starts up, we attract the early adopters – some of them thought leaders in their fields. The posts, articles, and debates are generally led by a handful of these thinkers, and they attract a following. The newbies, as they engage with the community start off by learning, asking questions, sometimes just lurking. The quality of these early debates is typically high and participation intense and invigorating.
So what happens when the community suddenly experiences growth – massive numbers of the hoi-pollloi descend on the site and suddenly the quality of discussions takes on a Twitter-like feel – stupid and stupider. The old school rebels, first through silence, and second by disengaging. This takeover by the wisdom of the masses can be avoided, through ruthless editorial direction and skilled moderators. And every once in while, the new participants challenge assumptions that deserve to be challenged, and are given their space in the sun.
So how do we manage this growth and stay true to the community’s intent?
Three options come to my mind:
1) Manage membership – simply keep the community at growing in a measured way – firing the “bottom” 10% each year, and bringing in a fresh crop of participants at 20%… This is the surest way to sustainable growth.
2) Create a merit-based aristocacy – with tiered membership based on the value of the participant’s contributions.
3) Create a feeder community which is built for the masses and an elite community for the thought leaders and their followers. Moderate the interaction between these groups with the possibility of upward migration based on peer-based invitations.
You’ll notice I am not advocating open communities where everyone has an equal voice. That’s because I’m not talking about social communities, but communities of practice where respect is reserved for the competent.
Axel Springer: Thriving in a Dying Industry – Newspapers!
While newspapers and print outfits are losing their shirts all around us, the German company Axel Springer recently reported its “highest net income since the company was founded” 62 years ago.
How is this possible?
What are they doing that our friends at the NY Times aren’t?
From the NYTimes:
Axel Springer generates 14 percent of its revenue online, more than most American newspapers, even though the markets in which it operates — primarily Germany and Eastern Europe — are less digitally developed than the United States.
One reason, Mr. Döpfner said, is that Axel Springer has dared to compete with itself. Instead of trying to protect existing publications, it acquired or created new ones, some of which distribute the same content to different audiences.
At one newsroom in Berlin, for example, journalists produce content for six publications: the national newspaper Die Welt, its Sunday edition and a tabloid version aimed at younger readers; a local paper called Berliner Morgenpost, and two Web sites.
Though advertising has slumped in Germany, Axel Springer has been able to offset the shortfall by raising the price of publications like Bild, which sells more than three million copies. Now Axel Springer is looking for “undervalued assets” to buy.
Mr. Döpfner said the company would even have a look in the United States “if a meaningful position arises in a significant market.”
OK. So what are newspapers in this country going to do? Stay tuned.
How to Use YouTube for Market Research
Have you ever used YouTube‘s “Insights: Statistics and Data” feature?
It’s a remarkable tool for effective market research in real time.
Let me walk you through how I use it to:
– test new product ideas
– learn what customers like right now
– deduce where events should be held
– learn exactly which portion of a video clip grabs audience attention
– see which topics get customers engaged and why
– learn the exact demographic profile for each product
The first thing to do is create a separate video for each product or idea you are interested in selling. If you’re selling an information product – like a video or an audio, simply use a short excerpt. Keep it under five minutes. Three minutes is optimal. Upload your clips, make them visible to the public, and watch the fun begin.
In a few days or when you get to over a thousand views, it’s time to check your YouTube Insights.
Here’s what YouTube gives you:
This summary of your results:
(1) Tells you how many views your videos are getting. This will tell you if you’re getting any attention at all.
(2) Shows you which video is getting the most attention. Now you know what your prospects like – and the margin between what’s getting attention and what’s not.
(3) Expose your real demographics. Not too fancy, but you get to see the age range your product resonates with. Every now and then I’m surprised.
(4) Identifies the regions where you are getting traction. Again, results do vary by geographic location, so you can decide if you want to spend some money to gain exposure in a particular country or state, for that matter, or if you want to focus on your natural geography – the places in which you’re getting organic attention.
Now let’s go further:
(1) View your traffic over time – days, months, a year.
(2) Sort video popularity by region – again, a handy guide to what the reaction is to your message… country by country.
(3) Details on which videos are winners and which are not. Based on this you can decide which product merits backing, and which ones need more work.
(1), (2) and (3) Which videos are getting the most traffic and from where…
(1), (2) and (3) Which countries (or states) are most receptive to your work!
(1) gives you the age breakdown for your products. Is it senior women or adolescent boys?
(1), (2) and (3) tell you which products get the most response from your prospects – positive or negative. Let’s you know early on if you need to go back to the drawing board. A quick measure of engagement.
Probably the most powerful piece of information, this tells you the level of attention – the peaks and valleys – for your work. Use it to optimize your messaging. Now you too can be a Frank Luntz (just don’t go over to the dark side).
All of this information costs nothing. And from my experience, the quality of results can’t be matched easily, not even by expensive focus groups!
The Tata Nano: The Rise of Ascetic Engineering
Is Ratan Tata the re-incarnation of Henry Ford?
Suddenly, innovation takes a front seat in the automotive world. And it happens to be led by an Indian engineering sensibility: frugal enough to do the job. This is the type of value-engineering that shifts the mindset of an entire industry:
13 iPod Nanos = 1 Tata Nano. Which Nano do you want?
Congratulations, Ratan Tata and the Tata Motors team of engineers. Brilliant!
King Hussein Leadership Prize 2008: Bob Freling
Queen Noor today presented the 2008 King Hussein Leadership Prize to my friend Bob Freling, the executive director of the Solar Electric Light Fund (SELF), at the Aspen Institute Energy and Environment Awards in Aspen, Colo.
Past winners of the award include Archbishop Desmond Tutu and Medecins Sans Frontieres (Doctors Without Borders) and Muhammad Yunus, founder and creator of the Grameen Bank.
Bob Freling is one of those people who go about making the world a better place without any fanfare.
Under his quiet leadership, SELF has pioneered innovative applications of solar power such as for drip irrigation in Benin, telemedicine in the Amazon rainforest, vaccine refrigeration in Rwanda, online distance learning in South Africa, and microenterprise development in Nigeria. These successful pilot projects culminated in SELF’s whole-village approach, or Solar Integrated Development model. Since 1990, SELF has completed projects in 18 countries, making it a leader among non-governmental organizations in realizing practical and cost-effective alternative energy solutions for rural villagers.
Congratulations, Bob!
Maybe the folks at the Bill & Melinda Gates Foundation will pay attention to Bob now.
Videos here >>
Cloning Your Milk (Why the FDA is Out to Lunch)
I was stunned to see this ad today:
At first, I thought it was joke, but then, after seeing this site I wasn’t so sure:
It seemed like a spoof – note the “Clone Zone” with the “Fun Facts on Cloning.”
My hilarity turned sour when I realized they were serious.
Now I’m asking you, do you really believe the FDA when they tell you it’s safe?
Not these crooks.
Obama needs to weed out the Bush appointees, quickly.
Who knows what they’ll approve next? And the worst thing, they aren’t even required to label cloned products.
Let’s hope they’re not cloning mad cows.
And who is Linda?
Killing Creativity at Google
Goodbye Google, says Douglas Bowman.
Apparently the engineers at Google have killed his creativity.
Is this the triumph of data-driven decision-making?
In my view, and I do like data, this is a minor symptom of Google losing its soul. When petty data kills the poet, you know its time to hit the eject button.
Head for the hills, Douglas!
Sidenote: this reminds me of a Peter Drucker story. Drucker insisted, during one of those waste/cost-cutting-witch-hunting exercises, that the consultants should not go after every last penny. Doing so, in his mind, would destroy the soul of the company. Sure there’s a little waste, but you still have an engaged workforce.
Another way to say this is: “Detroititis.”
The nerds at Google still have a lot to learn.
Cloud Storage Strategy
The Cloud will change the way you live. Everything as a service: your computing, your desktop, your life.
One of the things I like about my job is I learn about cutting edge stuff, like customer-driven innovation, intuitive intelligence, and now cloud storage strategy.
We launched the cloud storage strategy site a few days ago, and now it’s simply a matter of keeping up with ideas. The Economist for example, in their global entrepreneurship survey, tells us that:
The development of “cloud computing” is giving small outfits yet more opportunity to enjoy the advantages of big organisations with none of the sunk costs. People running small businesses, whether they are in their own offices or in a hotel half-way round the world, can use personal computers or laptops to gain access to sophisticated business services.
Now that’s what we’re talking about!
World of Ends: Another Manifesto from Doc Searls and David Weinberger
The Cluetrain posse continues their journey:
1. The Internet isn’t complicated
2. The Internet isn’t a thing. It’s an agreement.
3. The Internet is stupid.
4. Adding value to the Internet lowers its value.
5. All the Internet’s value grows on its edges.
6. Money moves to the suburbs.
7. The end of the world? Nah, the world of ends.
8. The Internet’s three virtues:
a. No one owns it
b. Everyone can use it
c. Anyone can improve it
9. If the Internet is so simple, why have so many been so boneheaded about it?
10. Some mistakes we can stop making already
Details >>
Pricing in a Recession: Customer Segmentation based on Decision-Making Attributes
Now that we’ve learned that customer segmentation is important on your website, let’s look at customer segmentation and pricing. When companies make sweeping, “across the board” cuts in pricing, they basically shoot themselves in the head. A smarter approach is to segment your customers by understanding their decision-making attributes, and then price accordingly.
Here, Oliver Wyman tells us how “market pricing” is done:
On the flip side, I wonder if companies do the same thing with employee pay – i.e. segment their employees based on performance and individualized intrinsic motivations and then give them what encourages them the most.
And of course, it’s not all about money. Unless you’re at AIG.
Masao Nemoto: Is Your Culture Hurting Competitiveness?
A former senior managing director of Toyota Motor Corporation and renowned leader of their famous manufacturing system, Masao Nemoto is known throughout the world as a leader in quality control and process optimization. In a sense, he is one of the principal architects of the “Toyota Way.”
What we learn from Nemoto is far more than quality management. His ideas on leadership have been documented, and reveal the profound knowledge Nemoto infused into the day-to-day operations at Toyota.
One particular aspect of Nemoto’s thinking has been largely ignored by western companies to their own detriment: coordination between business units.
Nemoto insisted on a culture of shared responsibility. Here’s what Nemoto says:
“One of the most important functions of a division manager is to improve coordination between his own division and other divisions. If you cannot handle this task, please go to work for an American company.” (see his 10 leadership principles below)
Nemoto believed that critical tasks could not be left to a single business unit, but rather should be a collective responsibility.
What has this got to do with leadership?
Nemoto’s point of view says that leaders must lead across the company, not just their own fiefdom. It is ironic, to say the least, that the democratization of business happened first not in the West, but in Japan, at companies like Toyota. Or in Brazil, with Semco.
Note: OK, there are a few American companies in this camp as well: Zappos and W. L. Gore & Associates…
Nemoto’s thinking went all the down to the individual worker on the assembly line. Everyone speaks, insists Nemoto, not just management. A direct result of this view is the work principle: problems must be solved at the lowest possible level. All employees take responsibility for problem solving, instead of pushing the issue upwards. Every worker in a process can be stop the work flow, without waiting for a supervisor to make the decision. It is this transparency which drives out defects and makes quality job one. Now wasn’t that a slogan we heard somewhere before?
Next time you bring your business unit heads around the conference table, ask yourself: “Are we competing against each other or against the competition?”
For reference, here are Nemoto’s 10 leadership principles:
1. Improvement after improvement. Managers should look continually for ways to improve the work of their employees. Advance is a gradual, incremental process. They should create all atmosphere conducive to improvements by others.
2. Coordinate between divisions. Managers of individual divisions, departments, or subsidiaries must share responsibility. Nemoto offers this advice to his managers:
One of the most important functions of a division manager is to improve coordination between his own division and other divisions. If you cannot handle this task, please go to work for an American company. A corollary of this is that upper management should not assign important
tasks to only one division.
3. Everyone speaks. This rule guides supervisors of quality circles at Toyota, ensuring participation and learning by all members. It has also been generalized to all meetings and the annual planning process. By hearing everyone’s view, upper management can create realistic plans that have the support of those who must implement them–an essential element in quality programs.
4. Do not scold. An alien concept to most managers. At Toyota the policy is for superiors to avoid giving criticism and threatening punitive measures when mistakes are made. This is the only way to ensure that mistakes will be reported immediately and fully so that the root causes (in policies and processes) can be identified and amended. Assigning blame to the reporter clearly discourages reporting of mistakes and makes it harder to find the underlying cause of a mistake, but it is difficult to train managers to take this approach.
5. Make sure others understand your work. An emphasis on teaching and presentation skills is important because of the need for collaboration. At Toyota, managers are expected to develop their presentation skills and to teach associates about their work so that collaborations will be fuller and more effective.
6. Send the best employees out for rotation. Toyota has a rotation policy to
train employees. There is a strong tendency for managers to keep their best employees from rotation. But the company benefits most in the long run by training its best employees.
7. A command without a deadline is not a command. This rule is used to
ensure that managers always give a deadline or schedule for work. Employees are instructed to ignore requests that are not accompanied by a deadline. The rationale is that without a deadline, tasks are far less likely to be completed.
8. Rehearsal is an ideal occasion for training. Managers and supervisors give numerous presentations and reports. In a QC program there are frequent progress reports. Mr. Nemoto encourages managers to focus on the rehearsal of reports and presentations, and to require that they be rehearsed. Rehearsal time is used to teach presentation skills and to explore problems or lack of understanding of the topic. Because it is informal, rehearsal time is better for learning.
9. Inspection is a failure unless top management takes action. The idea
behind this is that management must prescribe specific remedies whenever a problem is observed or reported. Delegating this task (i.e., by saving “shape up” or “do your best to solve this problem”) is ineffective. So is failing to take any action once a problem is defined.
10. Ask subordinates, “What can I do for you?” At Toyota this is called “creating an opportunity to be heard at the top.” In the first year of a quality-control program, managers hold meetings in which employees brief them about progress.
Three rules guide these informal meetings:
1. Do not postpone the meetings or subordinates will think their project is not taken seriously.
2. Listen to the process, not just the results, since QCs focus in on the process.
3. Ask the presenters whether you can do anything for them. If they ask for help, be sure to act on the request.
This philosophy can be generalized. If top management is perceived as willing to help with problems, employees are more optimistic about tackling the problems and will take management’s goals more seriously.
While reading these principles of Nemoto, I couldn’t help but be reminded of good old Deming.
Google in the White House? Will Vivek Kundra transform the Federalist CIO Bureaucracy?
The White House announced this morning that Vivek Kundra will be the administration’s Chief Information Officer.
It won’t be easy, since our government IT is basically a patchwork of competing departments (fiefdoms) and vendors (mercenaries) and CIOs (the entrenched aristocracy).
Here’s Kundra talking about his previous position:
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Steve Ballmer‘s probably having a fit over at MS right now. Here’s his Howard Dean moment.
So what can we expect from Kundra? Three things to look for:
1) Transparency: of costs and just as important, procurement processes
2) Lower costs: through the use of open apps like Google Apps
3) Virtualization: everything in the cloud…
And who is Obama going to bring in as Chief Technology Officer (CTO)? I’d like to see JSB, but I’m getting this “Google in the White House” feeling, i.e. Eric Schmidt…
The Corporate Memo – Lessons Learned from P&G
In the history of business, Procter and Gamble will be remembered for many things- its products, its branding acumen, and its memos.
Memos? Those boring treatises that no one reads, you ask.
Wrong.
An account executive who worked closely with P&G had this to say about the importance of the memo at the company:
“P&G seems to have figured out that if you structure information certain ways, people will readily understand it, good ideas will emerge, and bad ideas will be exposed. I really think that is what has made them so successful. They make fewer mistakes because they find mistakes before they happen.”
In a book which is still relevant today – Winning With the P&G 99
Think about how effective this is. In most companies, the quality of communications depends on the writer. Every department, every individual speaks and writes in their own language. At P&G, the language and style is the same everywhere. What is original is the idea in the memo.
Dr. Andrew Abela tells us (on his blog) that when he joined P&G twenty years ago, the one page memo discipline was in full force. He shows us the format:
1.The Idea. What are you proposing? This is typically one sentence.
2. Background. What conditions have arisen that led you to this recommendation? Only include information that everyone agrees upon in the Background – this is the basis for discussion, so it needs to be non-debatable.
3. How it Works. The details. In addition to How, also What, Who, When, Where.
4. Key Benefits. This is the “Why?” There are usually three benefits: the recommended action is on strategy, already proven (e.g. in test market or in another business unit), and will be profitable. You can think of these three in terms of the old Total Quality mantra of “doing right things right.” The first (on strategy) means you’re doing the right thing. The second and third mean you’re doing things the right way, because you’re being effective (proven to work) and efficient (profitable).
5. Next Steps. Who has to do what and by when for this to happen?
Simple enough. So why don’t you adopt this for your company? And better still, why not use this format for all your company meetings as well.
Looking back, it’s easy to see that P&G made memo writing a critical knowledge management process, or even more importantly, a decision-making process.
The process itself has created a framework for critical thinking, for decision-making and ultimately for strategic advantage.
The Business Value of Bedtime Stories
Once upon a time, my pet lion (who lived in the attic) started practicing customer-driven innovation. But then he began to challenge his assumptions and now he won’t listen to anything I say.
My 8-year old daughter told me this story last night before she fell asleep.
I’ve really got to start going down to the office when I take those work calls…
Coming Soon: My Ecosystem Strategy Book
I think I spend too much time doodling and not enough writing.
I hereby resolve to get this book thing done once and for all.
GlobeSchooling.com: Education Through Travel
When I started my own consulting company back in 2004, my wife and I gradually realized that we didn’t have to keep sitting in Houston for the rest of our lives. We decided that we would travel as a family, visit the places we wanted to learn about, and spend some time in each of these places – learning about the history, geography, literature, culture and, of course, the people. Instead of teaching high school and college kids, my wife would now teach us.
We became globeschoolers: homeschooling on the road. Now we’re in our fifth year of travel. Our base-camp is still Texas, but we get to work, travel, and learn as we go about this country and the world.
My wife’s just started her globeschooling blog, which will explain what we’ve been doing. Really what she’s been doing to educate the kids (and us). I just tag along and learn a few things despite myself!
I’ve been bothering her to get blogging for a while, but apparently it took the Obamas and Earth Wind and Fire, to get her started…
Gary Hamel: Moonlight Madness or Management Moonshots?
Gary Hamel‘s at it again.
This time he’s got 25 moonshots for management:
1. Ensure that management’s work serves a higher purpose. Management, both in theory and practice, must orient itself to the achievement of noble, socially significant goals.
2. Fully embed the ideas of community and citizenship in management systems. There’s a need for processes and practices that reflect the interdependence of all stakeholder groups.
3. Reconstruct management’s philosophical foundations. To build organizations that are more than merely efficient, we will need to draw lessons from such fields as biology and theology, and from such concepts as democracies and markets.
4. Eliminate the pathologies of formal hierarchy. There are advantages to natural hierarchies, where power flows up from the bottom and leaders emerge instead of being appointed.
5. Reduce fear and increase trust. Mistrust and fear are toxic to innovation and engagement and must be wrung out of tomorrow’s management systems.
6. Reinvent the means of control. To transcend the discipline-versus-freedom trade-off, control systems will have to encourage control from within rather than constraints from without.
7. Redefine the work of leadership. The notion of the leader as a heroic decision maker is untenable. Leaders must be recast as social-systems architects who enable innovation and collaboration.
8. Expand and exploit diversity. We must create a management system that values diversity, disagreement, and divergence as much as conformance, consensus, and cohesion.
9. Reinvent strategy-making as an emergent process. In a turbulent world, strategy making must reflect the biological principles of variety, selection, and retention.
10. De-structure and disaggregate the organization. To become more adaptable and innovative, large entities must be disaggregated into smaller, more malleable units.
11. Dramatically reduce the pull of the past. Existing management systems often mindlessly reinforce the status quo. In the future, they must facilitate innovation and change.
12. Share the work of setting direction. To engender commitment, the responsibility for goal setting must be distributed through a process where share of voice is a function of insight, not power.
13. Develop holistic performance measures. Existing performance metrics must be recast, since they give inadequate attention to the critical human capabilities that drive success in the creative economy.
14. Stretch executive time frames and perspectives. Discover alternatives to compensation and reward systems that encourage managers to sacrifice long-term goals for short-term gains.
15. Create a democracy of information. Companies need holographic information systems that equip every employee to act in the interests of the entire enterprise.
16. Empower the renegades and disarm the reactionaries. Management systems must give more power to employees whose emotional equity is invested in the future rather than in the past.
17. Expand the scope of employee autonomy. Management systems must be redesigned to facilitate grassroots initiatives and local experimentation.
18. Create internal markets for ideas, talent, and resources. Markets are better than hierarchies at allocating resources, and companies’ resource allocation processes need to reflect this fact.
19. Depoliticize decision-making. Decision processes must be free of positional biases and should exploit the collective wisdom of the entire organization.
20. Better optimize trade-offs. Management systems tend to force either-or choices. What’s needed are hybrid systems that subtly optimize key trade-offs.
21. Further unleash human imagination. Much is known about what engenders human creativity. This knowledge must be better applied in the design of management systems.
22. Enable communities of passion. To maximize employee engagement, management systems must facilitate the formation of self-defining communities of passion.
23. Retool management for an open world. Value-creating networks often transcend the company’s boundaries and render traditional power-based management tools ineffective. New management tools are needed for building complex ecosystems.
24. Humanize the language and practice of business. Tomorrow’s management systems must give as much credence to such timeless human ideals as beauty, justice and community as they do to the traditional goals of efficiency, advantage, and profit.
25. Retrain managerial minds. Managers’ traditional deductive and analytical skills must be complemented by conceptual and systems-thinking skills.
Fine. I think I get it. The real question is how many of our bail-out CEOs will get this Capitalism 2.0?
Cut Capital Expenditures, Not People
When executives want to boost profitability, their first target is often their “most valuable asset” (ha!) – people. But a better way to find value is to bring increased discipline to the capital budgeting process for small items.
Check out Tom Copeland‘s 2000 article in HBR – Cutting Costs Without Drawing Blood.
Here’s what he says:
… a company can almost always create far more sustainable value by sensibly reducing its capital expenditures. How? Not by postponing or eliminating big spending projects, which are usually less than 20% of the budget anyway, but by conducting a rigorous, disciplined evaluation of the small-ticket items that usually get rubber-stamped. Those “little” requests often prove to be unnecessary—in some cases they duplicate other requests—or gold plated. But few managers have the time, energy, or inclination to ask about them. They should.
and:
You get more bang for the buck—or perhaps more buck for the bang—by cutting capex dollars than by cutting payroll. According to my estimates, the increased market valuation that resulted from Kodak’s $400 million payroll cuts could have been achieved by a $280 million reduction in capital spending. The reason for the difference, of course, is that a company has to make severance payments—$600 million in Kodak’s case—to people it has laid off. (There is no severance pay for capital.) The table compares recent payroll savings at Kodak and several other corporations with my estimated value-equivalent capex cuts.
Something to think about very, very carefully.
Rosabeth Moss Kanter on Simplicity
Rosabeth Moss Kanter is one of my favorite business gurus, the “female Peter Drucker,” as I tell people when I recommend they read her book Confidence: How Winning Streaks and Losing Streaks Begin and End
In her latest blog post at HBR, she tells us that the next big trend is simple: to simplify.
Among her observations:
“Companies sow the seeds of their own decline in adding too many things — product variations, business units, independent subsidiaries — without integrating them. They create complexity, which makes costs increase faster than the potential gains from the new parts.
“Just why did General Motors need 47 brands of cars? Was that responsible for its top-heavy load of managers? Or for cannibalization within the company?”
and this brilliant line:
“When everyone else suffers from over-complexity, there is a market for products and services that simplify life.”
More here >>
Business Models for Short Attention Spans
I wrote once on another blog, that no one has time to read Harvard Business Review, or listen to an entire music CD, or watch the whole movie.
Our attention span is somewhere between 3 to 5 minutes. And that’s the size your idea-bite has to be if you’re going get heard at all. See Twitter, YouTube, CNN, et. al. We’re getting dumber second by second by second.
How do you build a business model for short attention spans? I think this is the key challenge for online publications – from newspapers, to blogs, to forums. Perhaps the key is enticing readers to return over and over – let’s say twenty times a day! So online journals must be updated very often (compare HuffPost with the NYTimes) with corresponding micro-blogging on the same topics.
And the revenue will come not for selling ads, but selling products and services. And sometimes, you may just sell them the longer version of your story.
Starting a Business in a Recession
As someone who has started a business in a down economy, I have to say it is not as easy as these articles (see below) make it out to be.
For starters, this is not the time to write a business plan, as some of them would have you do. Instead, focus on finding and keeping customers.
Two, get ready to answer these questions from your customers, er, prospects:
– Who are you?
– What can you do for me?
– Why should I believe you?
– How soon can you make a difference to my bottom line?
– Starting a Business in a Downturn – BusinessWeek
– Strategies: It’s a good time to start a business – USA Today
– How to Start a Business During a Recession – eHow
– Starting Up in a Down Economy – Inc.
– Five reasons why a recession is a good time to start a company – The Industry Standard
What’s a good business to start now? Something you’re good at, crazy about. Something people call you about to get free advice on. Something you want to do for the rest of your life.
Can’t think of anything yet? Here are some fun new business ideas, 999 of them to be precise…
If you already have an ongoing business, here are some things to do now >>
Indian Innovation: Distributed R&D
The points raised by Anil Gupta and Haiyan Wang in their book – Getting China and India Right: Strategies for Leveraging the World’s Fastest Growing Economies for Global Advantage are echoed in this BusinessWeek article by Gunjan Bagla and Atul Goel.
So are things slowing down with the global recession? Here’s what they say:
We believe there may be a temporary hiccup in R&D globalization, caused primarily by companies freezing in their tracks as they reassess the new financial realities. But as soon as they rebuild their product road maps, nimble companies will actually accelerate their globalization efforts, pushed harder by tight budgets and the realization that the old ways can be disastrous.
Next up: What’s up with Dubai?
How Not to Twitter
Thank goodness the Republicans have not yet mastered the art of tweeting. It’s hard to use open communications when you don’t believe in openness.
Newsweek: Shrinking to Survive?
Will Newsweek be able to compete against the Economist?
That’s what they’re betting on, apparently.
The goal is to turn Newsweek into an opinion-based “thought leader” with branded journalists like Fareed Zakaria, Christopher Hitchens, and that fossil of a conservative, George Will. So we’ll see lots more trash-talking and provocation.
While this is a step in the right direction, I think they’ll really have to worry about low-cost, online disruptors like HuffPost, DailyKos, and The Week, as well as established institutions like The Atlantic and The New Yorker.
The makeover is supposed to gain them mindshare and, ahem, walletshare. Where have we heard that before?
What they’re missing is a daily view of their ecosystem. I’ll get into that in a separate entry on ecosystemwatch.com. And as I tell my clients, thought-leaders do dominate in ecosystem competition, so the Newsweek strategy does make sense.
What I don’t see any mention of is value-co-creation with its readers. And their revenue model is still based on advertising. Even the Economist knows that to make money you’ve got to sell those country reports, the surveys, books, and conferences.
Finally, I hope they’ve thought about video – online video – as another key ingredient which makes online news attention-worthy.
The Rise of Transparency
“Sunlight is the best disinfectant; electric light the most efficient policeman”
– Supreme Court Justice Louis Brandeis
We need more light like this…
Thank you Lord, for the Internet. I can’t wait to see what develops at recovery.org.
A Design Guide for Recessionary Times
I think we’ve finally hit the wall in terms of design.
Whether you’re designing a product, a service, or a website, the designer has to make their work relevant to the buyer in ways they may not have considered before this recession. Here’s what I mean. Your offering is no longer competing for attention or even price. It is competing on usefulness and time to value.
The question you have to answer is this: Why will this product/service help me now, and how fast can I see results?
And, two – “How can I justify spending any money on this at all?”
Three: “What’s the risk for me (and my money)?”
Got it?
Pretty simple, but your survival as a company may just depend on answering those three questions properly.
So Hyundai designs a car which says, buy it, use it, and we’ll take it back – if you can’t pay because you lost your job. The policy allows people to return vehicles in the first 12 months if they can’t make payments due to job loss and Hyundai covers depreciation. In essence, Hyundai is eliminating your risk.
Consider a small business in today’s economy. Why would they spend money on anything but the essentials? So who needs MS Office when you can use Google Docs? Who needs a Mac when a netbook will help you get by? Who needs office space when you can work from home? Who needs to fly when you can Skype it in? Who needs to buy when you can rent? It’s not about how much the website costs, rather, it’s about how fast will I make money from the website? Why do press releases when you can blog?
It’s value time, period. Show me, don’t tell me.
One last thing, why should I trust you? Are you trustworthy? Is your product/service trustworthy? Maybe trust goes beyond the product/service. It lies in the concrete actions you take to actually help your customer. Have you ever thought of helping someone out who is not your customer?
Hyper-Disruption: India’s $10 Laptop
Here comes the next wave of hyper-disruption: the $10 laptop.
Are your ready Dell, HP, Apple? Are you ready Microsoft?
As we saw in Getting India and China Right, by Anil Gupta and Haiyan Wang, China and India are not going to be content simply filling out orders for low-cost products. They are also going to be springboards for innovation and disruptive products and services.
When I was growing up in India, there was a rule of thumb we followed which said that anything made in India should sell for 10 times the amount in the West and vice-versa. Looks like that rule still applies!
I’m still somewhat skeptical, but hey, it’s coming. If not tomorrow, then soon.
The point is this: every assumption we have about price limits and barriers needs to be challenged. If we don’t challenge them, Chindia will.
Book Review: “Getting India and China Right” by Anil Gupta and Haiyan Wang
The edge has become the core.
That’s the central idea presented by Anil Gupta and Haiyan Wang in their new book – Getting China and India Right: Strategies for Leveraging the World’s Fastest Growing Economies for Global Advantage
It’s not enough to merely be present in India and China, argue the authors.
Their thesis: “…any Fortune 1000 company that is not busy figuring out how to leverage the rise of China and India to transform the entire company runs a serious risk of not being around as an independent entity within ten to fifteen years…”
China and India are different from all other countries in that they present four “stories” or opportunities rolled into one:
1) Mega Markets: they provide growth opportunities for every product and service
2) Cost Efficiency Platforms: with low wage rates, they can help reduce your global cost structure
3) Innovation Platforms: the talent pool of engineers and scientists can boost your firm’s technical and innovation capabilities
4) Launching Pads for New Global Competitors: your next global competitors are likely to emerge from here
So what are you supposed to do?
The book guides you, chapter by chapter, to explore the following imperatives:
1) Compete in India and China simultaneously. Why? Four reasons: i) the growth trajectory for both countries places them as the world’s top 4 and 5 markets for every product and service imaginable; ii) India and China offer (for the time being) complementary strengths in services and manufacturing respectively; iii) there are also remarkable similarities which help your company transfer learning from China to India and vice-versa, accelerating your success in both countries; and finally, iv) an integrated China and India strategy helps you reduce your political, economic, and intellectual property risks inherent in operating in just India or China.
2) Compete for mega market dominance through micro-customers. The authors show you how to compete at the top, middle and bottom of the pyramid in India and China. What I found especially interesting was the authors’ insistence that innovation opportunities abound at the bottom of the pyramid and that companies should use this segment as a “learning laboratory” for the discovery of new business models!
3) Leverage China and India for global dominance. There are three opportunities: cost arbitrage, intellectual arbitrage, and business model innovation – each of which can help you build a global platform for competitive advantage.
4) Compete with the locals – the dragons and tigers. The authors show you how to defend yourself and compete against the emerging titans in India and China using three key strategic initiatives: i) attack these emerging titans on their own turf; ii) neutralize their supply-chain advantages by tapping into the cost effective and innovation opportunities available in both countries; and iii) pursue an integrated India plus China strategy which, oddly enough, is more difficult for the emerging players in both countries.
5) Compete for local talent. You must project a positive and visible presence in the local media and local academic institutions. You can offer better global career opportunities for employees outside of India and China. Finally, by being sensitive to cultural and social mores, your company can build strong emotional ties to employee families – spouses, and yes, parents! The authors also suggest you hire in second and third tier cities to achieve lower salary scales and reduced turnover rates. (Wuxi is calling!)
6) Rethink what it means to be a global enterprise. The authors give us four areas to rethink – global strategy, innovation, organization, and lastly, our very mindsets. They warn us to stay slightly ahead of the changes in each of these areas, lest we get left behind on the road to global competition.
This is not a light read, but it is an essential one for every manager or leader with global vision. What I haven’t mentioned in this blog post is the detailed case studies and business examples the authors present to make their case.
Ignore the timely warnings and insightful lessons in this book
For more info, see Wang’s blog here and this article in the Wall Street Journal>>
Here Comes the Tech Greenwave: Asus’ Bamboo PC
The Asus Bamboo PC
Asus is advertising it, even linking to Amazon, where it seems like they’re not quite ready for it.
My cynical side sees this is the latest in the greenwashing movement in the high-tech industry. If they’re serious, however, I applaud them.
Here’s how ASUS puts it:
ASUS has created a strategy dubbed the “4 Green Home Runs” to deliver greener products for the consumer. The “Green Home Runs” are Green Design, Green Manufacturing, Green Procurement and Green Service and Marketing.
OK, let’s do it – a green value-chain! I just hope we don’t learn later that they’re clearing Giant Panda habitat to make PC covers.
Geek info: ASUS U6V-V1-Bamboo 12.1-Inch Laptop (2.53 GHz Intel T9400 Processor, 4 GB RAM, 320 GB Hard Drive, Nvidia 9300M GS Graphics, Vista Business)
BTW, Bamboo is pretty nifty and is definitely one of those “sustainable products for our future.”
Video: Semco’s Ricardo Semler
Brilliant as usual! More on Ricardo Semler here >>
The Two Sides of Google
Even as Jeff Jarvis‘ What Would Google Do?
Michael Arrington has posted a thread from former-Google employees talking about why they left. Sure, disgruntled employees are not always fair and balanced, but it’s interesting to learn that Google does have issues with management, bureaucracy, low pay, poor mentoring, and all the other foibles of corporate stupidity.
So what will Google do about it? Let’s watch.
War as a Catalyst for Innovation
One of the spin-offs from war is technology which leads to new products in the private sector. This is not a new phenomenon, simply the way it is.
For example, “a scientific method that has been used to track the source of illegal drugs, explosives, counterfeit bills and biological warfare agents may have some new uses: detecting rapidly growing cancers and studying obesity and eating disorders.” See story >>
But this story stopped me in my tracks.
The future of war is R2RC – Robot to Robot Combat.
Are you ready for this?
The result? War becomes even more abstracted, more marketable, and more tempting.