Midsize Companies Must Prioritize Ruthlessly
by Robert Sher  |   8:00 AM March 27, 2014

http://blogs.hbr.org/2014/03/midsize-companies-must-prioritize-ruthlessly/

Some important lessons for all companies but particularly  for small to mid-size companies

"The world is littered with the hollowed-out shells of firms that tried to do too much and spent too big trying to grow too fast. Many of those firms were midsize companies; they didn’t have the resources of the big firms to sustain setbacks, nor were they scrappy like most small companies, making do with the resources they had…. 

….While poor time management hurts large and small firms as well, it’s especially pernicious at midsize companies. The reason is that they must still move quickly to fend off smaller competitors but must tackle big projects to support growth, deliver enterprise-class service to large customers, and compete with large competitors. All this on a midsized company budget.  Every second counts.... 

...Being neither big nor small forces midsize firms to prioritize ruthlessly. To survive downturns and stay focused during upturns, these firms must plan their high-priority initiatives meticulously. And as they do, they need to understand that time is never on their side…. 

….Time, not money, is the most important resource for midsize firms. In order to create a culture which treats time as a valuable commodity in short supply, leadership must believe this…. 

1. Ruthlessly cut projects until only a handful of critical ones remain. Often midsize companies have the resources to manage only one key initiative at a time
2. Expose the status of core projects, warts and all. The status of crucial projects must be made naked to the entire management team – especially when progress slips. In midsize companies, core projects by definition affect every department since the core of the business isn't that big.
3. Promote your best time-managers. CEOs and senior leaders must explain the personal rewards for critical projects executed well and on-time. Well-planned and executed initiatives ought to fuel individual career growth, as well as company growth"

Disruptive entrepreneurs: An interview with Eric Ries
Companies are all too aware of the disruptive power of technology. The author of The Lean Startup argues that the competitive reaction of many organizations remains fatally flawed.

http://www.mckinsey.com/Insights/High_Tech_Telecoms_Internet/Disruptive_entrepreneurs_An_interview_with_Eric_Ries?cid=other-eml-alt-mgi-mck-oth-1404

Interesting insights

Digital technology has enabled the creation of new industries and upended many more….. 

Renting the means of production--(This is consistent with the concept of access vs. ownership of resources)
… anyone with a credit card (source of capital)  can rent the means of production and compete with you on a first-class basis in their market. And so you’re not dealing with one potential competitor but with thousands or millions. Are you really geared up for innovation at that pace?” …. It’s like putting Karl Marx on his head. Anybody can rent the means of production, which means entrepreneurship is becoming truly democratized, which means nobody is safe. 

Productive failure
All of our process diagrams [in major corporations] are linear, boxed diagrams that go one way. But entrepreneurship is fundamentally iterative. So our diagrams need to be in circles. We have to be willing to be wrong and to fail. But modern management says, “Failure means you get dinged.”…. “
…..Put on your employees’ performance evaluation a concept we call productive failure: ‘How many productive failures did you have this year?’ If someone comes to you and claims that they didn't fail this year, you know one of two things: they’re either lying to your face or they were incredibly, unbelievably conservative.”……
…..Executive sponsorship of a start-up is about learning and supporting the team and going on the journey with them. It’s not about reviews and evaluation and go-kill decisions. It’s a really different change required at the executive level, at the middle-manager level, and at the line-manager level to do this thing.

Scale Your Innovation Initiatives

Five ways to boost the impact of new endeavors without adding bureaucracy or cost.
by Robert C. Wolcott and Jørn Bang Andersen

http://www.strategy-business.com/article/00233?pg=all

I believe this is an important perspective on scaling growth initiatives—in context of the Driving Organic Growth through Innovation class, this is a way to enable “climbing the Growth Staircase”

 First, many innovation initiatives cannot be scaled in a linear fashion. Adding more people often adds complexity and bureaucracy, and often impairs the communication and creativity of the original successful innovation initiative. 

The second challenge is that although leaders want more innovation, they are often unwilling to provide sufficient funding—even for those initiatives that have already proved successful. Defending non-core innovation budgets is always difficult. 

Over the past decade of exploring innovation initiatives across many industries, we have seen numerous promising initiatives falter in the face of one or both of these obstacles.
How, then, can you take successful models for innovating, typically tested at a smaller scale within special-purpose teams, and expand their impact? How can you do so with limited additional personnel and funds? Over the past few years, we've discovered five reliable ways to overcome this challenge: 

1. Replicate proven models:  If you decide to replicate an initiative, define a model based on core principles and ensure that leadership and mentorship are readily available. 

2. Invest in areas with broad potential that provide options. When considering where to invest, leaders should ask, If my core hypothesis fails, does this investment still provide other paths? To how wide a range of industries or applications might this investment apply? What new capabilities does this investment create for the company, and to what else can they be applied? 

3. Recruit and support evangelists. Given the power of social media, customer evangelists are becoming increasingly potent forces for growth. The same can be true for innovation initiatives. Evangelists can be employees who have been part of, or who have engaged with, the innovation team, or people from outside the company. 

4. Nurture internal and external ecosystems. Innovation initiatives require resources, people, and organizations in order to grow. Unfortunately, many innovation teams operate in relative isolation, removed from potentially rich environments of engaged partners. They seek input from both inside and outside the company, but they do so on an ad hoc basis. The people with whom they interact often don’t have an active interest in the team’s success. 

5. Activate broad networks. Whereas ecosystems involve relationship depth and active commitment, more general networks provide breadth of access to diverse knowledge and capabilities. Socializing your team’s objectives and challenges with broad networks enhances the potential for others to offer opportunities and solutions.

Learning to Pivot

The Harvard Business School professor on responding to shifting economic environments.

http://www.youtube.com/watch?v=rLA2Rlj5RFE

Go to the site to view the text as a video

This is an extremely important issue that is at the heart of being able to implement ongoing growth. Those who have taken our class on Driving Organic Growth through Innovation will recognize these issues that were embodied in our IBM case on how they organized to totally refocus their company:

Question: How can companies learn to shift their research and development focus? Christensen:
 I have come to rarely use the term innovation, just because it is such a broad concept that it has almost no meaning.  And so, we've identified what I think is a meaningful distinction between what we call sustaining innovations and disruptive ones.  So, sustaining innovation is anything that helps a company that is a leader in its industry to make better products that it could sell for better profits to its best customers, and you manage sustaining innovation very differently than you manage disruptive ones.  So, to get really good at sustaining innovation, you really have to have your people right out there, living with the customer, understanding what they're trying to accomplish, what are the jobs in their lives, and then reflecting that back in the properties of your next generation products.  A disruptive innovation, you will never see the opportunity if you're face to face, living with your customers.  And so, finding those opportunities is a very different process.  As we've talked about before, you've got to watch where are their people who can't afford or don't have the skill to use what the mainstream business is doing.  So, you've got to have two groups of people: one to pursue the sustaining ones, another the disruptive. 

Question: Can a company disrupt itself? Christensen:  
  A business unit inside of a corporation cannot disrupt itself.  It can only apply resources to and successfully commercializing innovation if it helps them do a better job making more money serving the customers that they serve.  If they take their eye off of that ball, the customers will either leave them or the competitors will kill them.  So, a business unit cannot disrupt itself.  It can only implement new technologies in a way that sustain its current business model (this was the underpinning of the EBO -Emerging Business Opportunity- organization setup at IBM).   

So, the only way a corporation can evolve is if it sets up a different business unit, and a great way to illustrate that is online stock trading is a disruptive technology relative to the full service, brokered system that characterized our world before the mid-1990s.  And so, the technology was available to all the stock brokers.  One of them was Charles Schwab in San Francisco and they executed trades at $79 per trade.  They had offices all over the country and in order to do it you had to call a broker on the phone or go into one of their offices and the broker would execute the trade for you.  When online trading became available, Schwab set up a different company underneath the corporate umbrella, and the employees that were going to be on the online unit, Schwab and his co-CEO, David Patrick, forced those employees to walk clear across the Golden Gate Bridge and come back again as employees of the new company, and it just took off.  Ultimately, within less than a year, so many of the customers of the original Schwab, at $79 a trade, instead opted to do it online, but they shut the old company down, folded all the rest of the customers into that, and they became what they became. 

Merrill Lynch had access to the very same technology, but rather than, they didn't want to set up a different organization, to commercialize it with a different business model, and so they gave the technology to their existing organization, and the existing organization could not use it to cut the price of executing a trade.  It just, it would ruin their profitability.  And so, they implemented online trading as a mechanism to help their full service brokers do a better job serving the needs of their high net worth clients, to bring them better information faster.  And so, they implemented the technology in a way that sustains the Merrill Lynch business versus in a way that disrupted the core business.


Question: What are the signs that you are in an industry that is about to be disrupted innovatively? Christensen:  
When you, your sales people come back into your company and you hear them curse their customers, you know, those stupid idiots!  Don't they understand that we make a product that's better than anybody else and yet they're just treating us like a commodity.  When you hear that, it's a signal that you've actually improved the product beyond the point that customers can utilize the improvement.  Now, when the product is more than good enough, it creates a vacuum underneath you for somebody to come in with a problem, with a product that is less expensive and is good enough.  And so, you set up that condition there.  That's how you know that you're vulnerable.  And then, when a company down there actually beginning to do it, then you realize that the disruption is afoot, and you better acquire that company or start one of your own.