Friday, October 24, 2014

Warfare, Software, and Industrial Design
The benefits of an organic, more iterative approach to product development. See also “Lessons in Product Design from Modern Warfare—In Pictures.”
by Al Kent

An interesting perspective

Industrial companies are often perceived as lumbering giants that have difficulty responding to competitive pressures and capitalizing on market trends. Design cycles can last years—not just for developing new products but also for upgrades to the existing portfolio. 
Why are many industrial manufacturers so sluggish? In my experience, these companies have traditionally relied on a top-down, linear process that moves projects through design gates, also called stage gates. For senior management, it’s a comfortable way of doing things, making it easy to track progress and maintain control. However, this approach has significant downsides. It is often slow and bureaucratic, and its mechanical nature can stifle creativity. And at its best, innovation is an organic process; too much planning and control may lead to sub-optimal solutions. 
Fortunately, there’s a better way. When industrial companies need to make changes in product cost or design more rapidly than traditional methods will allow, they can take a page from the fast-moving world of software design and adopt a sprint-and-scrum approach. This iterative process relies on short cycles involving rapid design evolution and revision. The sprint is a period of concentrated effort, such as engineering or coding a module, by individuals or small teams. At the end of each sprint, stakeholders from the key functions come together for the scrum, where they review progress and clarify goals for the next sprint. The intense nature helps to bring the organization together toward a common goal, and avoids the tedium that can set in with a long stage-gate process.

Wednesday, October 22, 2014

Lou Gerstner on corporate reinvention and values

The former IBM CEO offers his thoughts on the principles and strategies that sustain a company in the long run.

This is an excerpt from a long interview with Lou Gerstner who steered the reinvention of IBM during the industry change from mainframes to PC’s. With what is going on now at IBM—the transition to cloud computing— many of the lessons he learned and we discussed in our Driving Org Growth class at Kellogg are again more than pertinent.

The Quarterly: Is there something in the DNA of those firms that have endured—perhaps a willingness to respond to a change of direction—that enables them to survive? 
Lou Gerstner: In anything other than a protected industry, longevity is the capacity to change, not to stay with what you've got. Too many companies build up an internal commitment to their existing businesses, and there’s the problem: it’s very, very difficult to “eat your seed corn,” go into other activities, or radically change something fundamental about what you've been doing, like the pricing structure or distribution system. Rather than changing, they find it easier to just keep doing the same things that brought them success. They codify why they’re successful. They write guidebooks. They create teaching manuals. They create whole cultures around sustaining the model. That’s great until the model gets threatened by external change; then, all too often, the adjustment is discontinuous. It requires a wrench, often from an outside force. Andy Grove put it well when he said “only the paranoid survive.” 
Remember that the enduring companies we see are not really companies that have lasted for 100 years. They've changed 25 times or 5 times or 4 times over that 100 years, and they aren't the same companies as they were. If they hadn't changed, they wouldn't have survived. If you could take a snapshot of the values and processes of most companies 50 years ago—and did the same with a surviving company in 2014—you would say it’s a different company other than, perhaps, its name and maybe its purpose and maybe its industry. The leadership that really counts is the leadership that keeps a company changing in an incremental, continuous fashion. It’s constantly focusing on the outside, on what’s going on in the marketplace, what’s changing there, noticing what competitors are doing.

Monday, October 06, 2014

Are You Ready to Get Creative?

Fascinating article that I strongly recommend you read

What makes companies ready for successful innovation? We know it’s not the size of their R&D budgets, even relative to their revenues. Since 2005, the annual Strategy& Innovation 1000 studies have examined which companies spend the most on R&D and which firms have the most success with it. The conclusion, year after year, has been the same: There is no correlation between innovation spend and business performance…. 
…..If it isn’t spending that leads to success, there must be other qualities that distinguish truly innovative companies… 
…Five factors, in particular, seem to make a difference. They have emerged, over the years, as common to a series of analyses, case studies, and research projects… 
Strategic alignment. The most successful innovators can articulate a clear group of R&D priorities that are “fit for purpose”: aligned to the company’s overall business agendaInnovative capabilities. These are the everyday activities within your R&D department that you follow along the path from customer engagement, to generating ideas, to commercializing them, to executing the launch.External networks and partnerships. Successful innovators are proficient at building and maintaining productive relationships with outside suppliers, distributors, educational institutions, and service providers. Organization and processes. Organizational design is natural to successful innovators. They make sure the right incentives, decision rights, and information flows are in place to drive innovation performance.Cultural alignment. These companies foster thinking and conversation that promotes innovation. Their cultural attributes and behaviors lay a foundation for risk-taking, and they also support the innovation strategy

Friday, October 03, 2014

GE Moves Further Away From Consumers With Sale of Appliances Unit
Deal Leaves Conglomerate Almost Entirely Focused on Finance and Industrial Equipmen

Those who took our Kellogg Organic Growth through Innovation executive education class remembers that leaders must define the growth domain/targets for the business/company. The following was the vision by Jack Welsh: Services, High Technology, and Core:

Clearly, Immelt is driving the business to just the Service and High Technology sector

The sale will leave the U.S. conglomerate almost entirely focused on finance and big-ticket industrial equipment like power turbines and aircraft engines. 
The shift is the work of Chief Executive Jeff Immelt, who in his 14th year as CEO is adjusting to competitive pressures and trying to boost a long-sluggish stock price by focusing on the question: What is GE? 
The answer isn't insurance, plastics, media, consumer finance or appliances—businesses Mr. Immelt has been shedding. Increasingly, the company founded by Thomas Edison is again an energy company. 
Mr. Immelt has spent around $14 billion buying oil-and-gas service companies over the past several years. Energy and related activities last year accounted for about one-third of the company's revenue and more than 40% of operating profit.The company also remains a big bank, with GE Capital accounting for about one-third of its revenue and around half its profit. It is also a leading maker of aircraft engines and medical devices like CT scanners.