Driving Organic Growth and Innovation

2012-01-23T08:00:00.000-05:00

The Rise of the New Groupthink
By SUSAN CAIN
NYT

http://www.nytimes.com/2012/01/15/opinion/sunday/the-rise-of-the-new-groupthink.html?_r=1

This article is very thought provoking and really challenges recent orthodoxies on the best corporate climate for innovation.

"SOLITUDE is out of fashion. Our companies, our schools and our culture are in thrall to an idea I call the New Groupthink, which holds that creativity and achievement come from an oddly gregarious place. Most of us now work in teams, in offices without walls, for managers who prize people skills above all. Lone geniuses are out. Collaboration is in.
But there’s a problem with this view. Research strongly suggests that people are more creative when they enjoy privacy and freedom from interruption. And the most spectacularly creative people in many fields are often introverted, according to studies by the psychologists Mihaly Csikszentmihalyi and Gregory Feist. They’re extroverted enough to exchange and advance ideas, but see themselves as independent and individualistic. They’re not joiners by nature......
....Virtually all American workers now spend time on teams and some 70 percent inhabit open-plan offices, in which no one has “a room of one’s own.” During the last decades, the average amount of space allotted to each employee shrank 300 square feet, from 500 square feet in the 1970s to 200 square feet in 2010.....
...SOME teamwork is fine and offers a fun, stimulating, useful way to exchange ideas, manage information and build trust.
But it’s one thing to associate with a group in which each member works autonomously on his piece of the puzzle; it’s another to be corralled into endless meetings or conference calls conducted in offices that afford no respite from the noise and gaze of co-workers. Studies show that open-plan offices make workers hostile, insecure and distracted. They’re also more likely to suffer from high blood pressure, stress, the flu and exhaustion. And people whose work is interrupted make 50 percent more mistakes and take twice as long to finish it....
....Privacy also makes us productive. In a fascinating study known as the Coding War Games, consultants Tom DeMarco and Timothy Lister compared the work of more than 600 computer programmers at 92 companies. They found that people from the same companies performed at roughly the same level — but that there was an enormous performance gap between organizations. What distinguished programmers at the top-performing companies wasn’t greater experience or better pay. It was how much privacy, personal workspace and freedom from interruption they enjoyed. Sixty-two percent of the best performers said their workspace was sufficiently private compared with only 19 percent of the worst performers. Seventy-six percent of the worst programmers but only 38 percent of the best said that they were often interrupted needlessly."

2012-01-17T10:11:00.000-05:00

Even Giants Can Learn To Run

In our previous posting -- http://marketdrivengrowth.blogspot.com/2012/01/even-giant-can-learn-to-run-by-steve.html--I highlighted how IBM turned towards its current course by using a set of simple but very powerful strategic Decision Criteria. I asked our audience to establish a set of “Operating Decision Criteria” for their first strategic issue based on what was in the article:

“Why would someone spend their money with you — so what is unique about you?”

The following three criteria resulted for how IBM would decide where and how to compete:

Does the market opportunity present much opportunity for innovation and therefore can we do unique things and get some premium for that?

Does this opportunity enable us to help our potential customers use our technology to solve their business challenges in marketing, procurement and manufacturing?

In this marketspace, can IBM create a unique market position and use the value of I.B.M.’s integration?

These three “Operating Decision Criteria” could help actualize the strategic thrust. All new opportunities would be filtered through these criteria to meet the strategic thrust of the comanpy. I suggest reading these criteria and then reread the last post.

2012-01-10T11:42:00.000-05:00

Even a Giant Can Learn to Run

By STEVE LOHR

http://www.nytimes.com/2012/01/01/business/how-samuel-palmisano-of-ibm-stayed-a-step-ahead-unboxed.html

Inherent in our Market Driven Growth process is the important role of leadership to set direction. The simplest and most power tool we found is for leaders to establish a set of strategic decision criteria generally in the form of simple but profound questions. Once set, they MUST be actually used in the decision process to drive strategic investment. I think their four strategic questions created and implemented by Palmisano served IBM well!!

As a little exercise for our blog community, after reading the article, try to establish a set of more operational decision criteria based on what IBM actually did that the new CEO could use as a guide if she wishes to pursue the past strategy. Consider that these operational issues would expand the first strategic criteria—“why would someone (customers) spend their money with you?"

"BECAUSE it has become so consistently successful, I.B.M. is almost boring. This is a company so predictable that its financial forecast is packaged as a “five-year road map,” as if it were some sort of state planning exercise.

Yet behind I.B.M.’s relentless progress over the last decade is a game plan that has been anything but conservative. The company shed multibillion-dollar businesses. It chose higher profit margins over corporate size, and expanded aggressively overseas, seeking sales, low-cost engineering talent and quicker organizational reflexes.
Investors, however, haven’t been bored. The company’s stock price has surged.

In November, Warren E. Buffett, who typically shuns technology stocks, announced he had accumulated $10 billion of I.B.M. shares, a stake of more than 5 percent.
All of that didn’t just happen.

A large portion of the credit goes to Samuel J. Palmisano, who steps down on Sunday after nearly a decade as chief executive. During his tenure, I.B.M. has been a textbook case of how to drive change in a big company — when so much of the study of business innovation focuses on start-ups and entrepreneurs.
This column is a glimpse of the thinking behind some of the major steps I.B.M. has taken under Mr. Palmisano’s leadership, based on two recent interviews with him.

He says his guiding framework boils down to four questions:
• “Why would someone spend their money with you — so what is unique about you?”
• “Why would somebody work for you?”
• “Why would society allow you to operate in their defined geography — their country?”
• “And why would somebody invest their money with you?”

Mr. Palmisano formulated those questions in the months after he became C.E.O. in March 2002 His predecessor, Louis V. Gerstner Jr., recruited to I.B.M. in 1993, had already pulled the company out of a financial tailspin, first reducing the size of the work force and cutting costs, and then leading a remarkable recovery.
In meetings after he took over, Mr. Palmisano told colleagues that I.B.M. was still good, but that it wasn’t the standard-setting corporation that it had been when he joined in 1973. (A history major at Johns Hopkins and a star offensive lineman on the football team, he turned down a tryout with the Oakland Raiders of the N.F.L. for a sales job at the company.)

The four questions, he explains, were a way to focus thinking and prod the company beyond its comfort zone and to make I.B.M. pre-eminent again. He presented the four-question framework to the company’s top 300 managers at a meeting in early 2003 in Boca Raton, Fla.

“This needs to be our mission and goal, to make I.B.M. a great company,” he said, according to executives who attended the gathering.

THE pursuit of excellence in those four dimensions shaped the strategy. To focus on doing unique work, with its higher profits, meant getting out of low-margin businesses that were fading. I.B.M.’s long-range technology assessment in 2002 concluded that the personal computer business would no longer present much opportunity for innovation, at least not in the corporate market.

The hub of innovation would shift to services and software, often delivered over the Internet from data centers, connecting to all kinds of devices, including PCs. Today, that is called cloud computing; when I.B.M. started promoting the concept several years ago the company called it on-demand computing.

So Mr. Palmisano led a lengthy strategic review of the PC business, deciding to sell while it was still profitable. Internal arguments against a sell-off were intense: PCs pulled in sales of other I.B.M. products in corporate accounts, the cost of electronic parts for its larger computers would jump without the purchasing power of its big PC division, and the corporate brand and its reputation would suffer without PCs, the one I.B.M. product touched by millions of people.

Lately, Hewlett-Packard has engaged in a similar debate, first declaring that it was looking to sell its PC business, then backing off. “I’ve heard every one of the arguments, every one of them,” Mr. Palmisano says. “But if you decide you’re going to move to a different space, where there’s innovation and therefore you can do unique things and get some premium for that, the PC business wasn’t going to be it.”
n 2004, I.B.M. sold its PC business to Lenovo of China. Mr. Palmisano says he deflected overtures from Dell and private equity firms, preferring the sale to a company in China for strategic reasons: the Chinese government wants its corporations to expand globally, and by aiding that national goal, I.B.M. enhanced its stature in the lucrative Chinese market, where the government still steers business.
drive and other hardware businesses that Mr. Palmisano sold off generated nearly $20 billion a year in sales, if not a lot of profits.

The divestitures meant that I.B.M. was no longer the world’s largest information technology company. Hewlett-Packard took that title and took a different strategic path as well, doubling its bet on PCs by acquiring Compaq in 2001. “You see the choice that was made, and how the economics worked out,” Mr. Palmisano observes.
Today, I.B.M.’s stock market value, at $217 billion, is more than four times that of the struggling H.P.

I.B.M. invested heavily elsewhere, buying the business consulting firm PricewaterhouseCoopers Consulting, for $3.5 billion in 2002, for its expertise in specific industries. For I.B.M., the emphasis was to move up from selling customers computers and software to helping them use technology to solve business challenges in marketing, procurement and manufacturing.

Corporations and governments are drowning in a flood of data from internal systems and the Web, struggling to make sense of it. To get ahead of that challenge, I.B.M. has spent more than $14 billion since 2005 buying 25 software companies that specialize in data mining and analytics, looking for useful patterns in data in fields as varied as disease treatment, traffic management and crime detection. And it has increased its research and development budget by 20 percent under Mr. Palmisano, to about $6 billion a year.

Combining research, specialized skills and sophisticated technology is the recipe behind I.B.M.’s Smarter Planet initiative, begun in 2008. It now has more than 2,000 projects worldwide, applying computer intelligence to create more efficient systems for utility grids, traffic management, food distribution, water conservation and health care.
The idea, Mr. Palmisano explains, is to “go to a space where you’re uniquely positioned and use the value of I.B.M.’s integration.”

For him, the Smarter Planet effort is a return to I.B.M.’s roots. Shortly before he became chief executive, he dipped into corporate archives, reading speeches and memos from the founder, Thomas Watson Sr. When Mr. Palmisano was an executive assistant to John F. Akers, then the chairman, in 1989 and 1990, he had lunch with Thomas J. Watson Jr., a former chairman, once a month. The Watsons, he says, always defined I.B.M. as a company that did more than sell computers; they believed that it had an important role to play in solving societal challenges.
“It’s old-fashioned, but it’s motivational,” he says.

And it resonates with the young people I.B.M. is recruiting these days, he says. A couple of times a year, Mr. Palmisano speaks to groups of elite students whom I.B.M. is trying to woo to its research labs. The pitch, he says, is that I.B.M. is a place where you can make a difference and do deep science.
“You can change the world, and you can compete for a Nobel prize,” he says, referring to I.B.M.’s five Nobel winners.
(Eighty-seven percent of the candidates who were offered jobs by I.B.M. Research this year joined the company.)

Mr. Palmisano’s appeal to young technologists is just one example of an answer to one of his four questions. All four, he says, must be addressed. That challenge is now passed toVirginia M. Rometty, who this week becomes the ninth chief executive in the company’s 100-year history.

“The hardest thing is answering those four questions,” Mr. Palmisano says. “You’ve got to answer all four and work at answering all four to really execute with excellence.”

2011-12-21T08:00:00.001-05:00

Help Wanted

By THOMAS L. FRIEDMAN

Published: December 17, 2011

http://www.nytimes.com/2011/12/18/opinion/sunday/friedman-help-wanted.html?_r=1&ref=opinion

I rarely mix politics with business in our blog but I think this editorial opinion from Thomas Friedman of the New York Times articulates a critical trend that impacts both. I am not making a political statement but a business one.

HAPPY HOLIDAYS TO ALL OUR FRIENDS AROUND THE WORLD. REGARDLESS OF YOUR BACKGROUND, THIS MUST BE A TIME OF REFLECTION AND PEACE. I EXPERIENCED A LIFE EVENT THIS YEAR THAT I HOPE WILL ALWAYS PUT THINGS IN THE PROPER PERSPECTIVE FOR ME GOING FORWARD.

THE historian Walter Russell Mead recently noted that after the 1990s revolution that collapsed the Soviet Union, Russians had a saying that seems particularly apt today: “It’s easier to turn an aquarium into fish soup than to turn fish soup into an aquarium.” Indeed, from Europe to the Middle East, and maybe soon even to Russia and Asia, a lot of aquariums are being turned into fish soup all at once. But turning them back into stable societies and communities will be one of the great challenges of our time.We are present again at one of those great unravelings — just like after World War I, World War II and the cold war. But this time there was no war. All of these states have been pulled down from within — without warning. Why?The main driver, I believe, is the merger of globalization and the Information Technology revolution. Both of them achieved a critical mass in the first decade of the 21st century that has resulted in the democratization — all at once — of so many things that neither weak states nor weak companies can stand up against. We’ve seen the democratization of information, where everyone is now a publisher; the democratization of war-fighting, where individuals became superempowered (enough so, in the case of Al Qaeda, to take on a superpower); the democratization of innovation, wherein start-ups using free open-source software and “the cloud” can challenge global companies.And, finally, we’ve seen what Mark Mykleby, a retired Marine colonel and former adviser to the chairman of the Joint Chiefs of Staff, calls “the democratization of expectations” — the expectation that all individuals should be able to participate in shaping their own career, citizenship and future, and not be constricted.I’ve been struck by how similar the remarks by Russians about Prime Minister Vladimir Putin, who just basically reappointed himself president, are to those I heard from Egyptians about Hosni Mubarak, who kept reappointing himself president. The Egyptian writer Alaa al-Aswany said to me that Egyptians resented the idea that Mubarak would just hand power to his son Gamal as if the Egyptian people “were chickens,” who could be passed by a leader to his son. Last Sunday, a New York Times article from Moscow quoted the popular, imprisoned Russian blogger Aleksei Navalny as saying: “We are not cattle or slaves. We have voices and votes and the power to uphold them.”“The days of leading countries or companies via a one-way conversation are over,” says Dov Seidman, the C.E.O. of LRN and the author of the book “How.” “The old system of ‘command and control’ — using carrots and sticks — to exert power over people is fast being replaced by ‘connect and collaborate’ — to generate power through people.” Leaders and managers cannot just impose their will, adds Seidman. “Now you have to have a two-way conversation that connects deeply with your citizens or customers or employees.”Netflix had a one-way conversation about raising prices with its customers, who instantly self-organized; some 800,000 bolted, and the stock plunged. Bank of America had a one-way conversation about charging a $5 fee on debit cards, and its customers forced the global bank to reverse itself and apologize. Putin thought he had power over his people and could impose whatever he wanted and is now being forced into a conversation to justify staying in power. Coca-Cola repackaged its flagship soft drink in white cans for the holidays. But an outcry of “blasphemy” from consumers forced Coke to switch back from white cans to red cans in a week. Last year, Gap ditched its new logo after a week of online backlash by customers.A lot of C.E.O.’s will tell you that this shift has taken them by surprise, and they are finding it hard to adjust to the new power relationships with customers and employees.“As power shifts to individuals,” argues Seidman, “leadership itself must shift with it — from coercive or motivational leadership that uses sticks or carrots to extract performance and allegiance out of people to inspirational leadership that inspires commitment and innovation and hope in people.”The role of the leader now is to get the best of what is coming up from below and then meld it with a vision from above. Are you listening, Mr. Putin?This kind of leadership is especially critical today, adds Seidman, “when people are creating a lot of ‘freedom from’ things — freedom from oppression or whatever system is in their way — but have not yet scaled the values and built the institutional frameworks that enable ‘freedom to’ — freedom to build a career, a business or a meaningful life.”One can see this vividly in Egypt, where the bottom-up democracy movement was strong enough to oust Mubarak but now faces the long, arduous process of building new institutions and writing a new social contract from a democracy coalition that encompass Muslim Brothers, Christian liberals, Muslim liberals, the army and ultraconservative Muslim Salafis.Getting all those fish back and swimming together in one aquarium will be no small task — one that will take a very courageous and special leader. Help wanted.

2011-12-19T08:00:00.000-05:00

Fade or Flourish?

Rethinking the role of life science companies in the healthcare ecosystem

http://www-935.ibm.com/services/us/gbs/thoughtleadership/ibv-lifesciences-fade-flourish.html

Although this article deals with the life science industry, the lessons are profound and germane to all change marketplaces. The idea of innovating across business designs is the underpinning of our MDG process and our class at Kellogg (http://www.kellogg.northwestern.edu/execed/Programs/ORGGROW.aspx).

The life sciences industry stands at a crossroads. Its business model is broken, and the surrounding healthcare ecosystem is changing dramatically. In addition, the industry’s scientific and commercial productivity has declined, the blockbusters on which it has long relied for much of its financial prosperity have come off patent, sales forces are shrinking as physician access is restricted, and payers are increasing price pressures. Economic, social and technological forces are simultaneously reshaping the world in which the industry operates.

It’s clearly time for change. In today’s increasingly complex and fast-changing environment, business model innovation is critical to success. Yet few understand when to make a change or – more important – how to execute one. And the life sciences industry as a whole has generally resisted developing new business models. Life sciences companies could resist change and stick to the current course: consolidating, cutting costs, tinkering with adjacent market spaces, reorganizing the existing sales force and investing ever more money in searching for new medicines in crowded therapeutic areas. Or they could completely rethink how they engage with the healthcare ecosystem – i.e., all the entities, be they individuals, governments, healthcare providers, insurers or other life sciences companies, that help keep people healthy.

Those companies that resist change could face the very real possibility of fading into irrelevance or disappearing altogether. However, those that choose to rethink and reform their business model will likely flourish. They will potentially be very different entities than they are today, as they join in setting the agenda, enhancing healthcare and radically redefining the industry.Life sciences executives face a "moment of truth." How will they effectively transform in today’s rapidly changing environment? Global business leaders are expressing a view that the speed, immediacy, unpredictability and viral nature of change mean they can no longer expect to manage through this environment. Rather, success will depend on their ability to innovate through it. In essence, there is more than one way to successfully navigate today’s challenges, and each company will choose its own path. The direction of this path will determine whether it will fade or flourish.

2011-12-12T08:00:00.000-05:00

People Are Not Your Greatest Asset

11:45 AM Tuesday December 6, 2011
by Anthony J. Bradley and Mark P. McDonald

http://blogs.hbr.org/cs/2011/12/people_are_not_your_greatest_a.html

This article really hit my belief stricter really hard until I read the full article. Very provocative.

Many of us in business have heard the popular aphorism, "People are your greatest asset." Some of us may even believe it. But is this sentiment reflected in our corporate cultures and the way our leaders lead? For the most part, no — and there's a reason for that.People are not your greatest asset. Even great people are not your greatest asset. In fact, great people can be your greatest liability. If Enron wasn't enough evidence of this, the 2008 financial crisis has now given us plenty more. What about Lehman Brothers, AIG and Countrywide? Arguably, these companies employed some of the smartest business people not only in the room but in the world, and yet those same folks took their firms to ruin (or near it) and came close to causing a collapse of the U.S. economySo if it's not people, what is your greatest asset?It's how you empower your people. Think about it. What is the primary purpose of a business organization? To assemble a group of people, who previously may have had no association, and empower them to accomplish productive work toward the organization's objectives. More effective empowerment typically equals more productive work. As leaders and managers, we are familiar with empowering people. We organize them into divisions, units, groups and teams. We provide goals and incentives to motivate them. And we enable them with authority, tools, resources and processes….…we studied hundreds of social media implementations and identified a set of key mass collaboration behaviors. :

Collective Intelligence Collective intelligence is the meaningful assembly of relatively small and incremental community contributions into a larger and coherent accumulation of knowledge.

Expertise Location Expertise location involves seeking and finding specific expertise in the masses of people and the often-staggering amount of available content

Emergent Structures Emergent structures are structures such as processes, content categorization, organizational networks and hidden virtual teams that are unknown or unplanned prior to social interactions, but that form naturally as activity progresses

.Interest CultivationInterest cultivation is the forming of communities around a shared interest, with the goal of indirectly deriving enterprise value. Social media facilitates the mass sharing of interests like never before

Flash CoordinationFlash coordination involves rapidly organizing the activities of a large number of people through fast and short mass-messaging, often spread virally

Relationship Leverage Relationship leverage is the practice of effectively managing and deriving value from a prodigious number of relationships

2011-12-06T12:03:00.000-05:00

Twelve Consumer Trends for 2012

http://trendwatching.com/briefing/

Interesting stuff!!

Red Carpet

In 2012, department stores, airlines, hotels, theme parks, museums, if not entire cities and nations around the world will roll out the red carpet for the new emperors, showering Chinese visitors and customers with tailored services and perks, and in general, lavish attention and respect.

DIY Health

Expect to see consumers take advantage of new technologies and apps to discreetly and continuously track, manage and be alerted to, any changes in their personal health.

Dealer-Chic

In 2012, not only will consumers continue to hunt for deals and discounts, but they will do so with relish if not pride. Deals are now about more than just saving money: it’s the thrill, the pursuit, the control, and the perceived smartness, and thus a source of status too.

Eco-Cycology

Brands will increasingly take back all of their products for recycling (sometimes forced by new legislation), and recycle them responsibly and innovatively.

Cash-less

Will coins and notes completely disappear in 2012? No. But a cashless future is (finally) upon us, as major players such as MasterCard and Google work to build a whole new eco-system of payments, rewards and offers around new mobile technologies

Bottom of the Urban Pyramid

The majority of consumers live in cities, yet in much of the world city life is chaotic, cramped and often none too pleasant. However at the same time, the creativity and vibrancy of these aspiring consumers, means that the global opportunities for brands which cater to the hundreds of millions of lower-income CITYSUMERS are unprecedented.

Idle Sourcing

Anything that makes it downright simple- if not completely effortless- for consumers to contribute to something will be more popular than ever in 2012. Unlocked by the spread of ever smarter sensors in mobile phones, people will not only be able but increasingly willing, to broadcast information about where and what they are doing, to help improve products and services.

Flawsome

Why to consumers, brands that behave more humanly, including exposing their flaws, will be awesome.

Screen Culture

Thanks to the continued explosion of touchscreen smartphones, tablets, and the 'cloud', 2012 will see a SCREEN CULTURE that is not only more pervasive, but more personal, more immersive and more interactive than ever.

Recommerce

It’s never been easier for savvy consumers to resell or trade in past purchases, and unlock the value in their current possessions. In 2012, ‘trading in’ is the new buying.

Emerging Maturalism

While cultural differences will continue to shape consumer desires, middle-class and/or younger consumers in almost everymarket will embrace brands that push the boundaries. Expect frank, risqué or non-corporate products, services and campaigns from emerging markets to be on the rise in 2012.

Point and know

Consumers are used to being able to find out just about anything that’s online or text-based, but 2012 will see instant visualinformation gratification brought into the real and visual world with objects and even people.

2011-12-02T15:49:00.000-05:00

Making Customer Segmentation Deliver

As the ability to gather sophisticated data grows, here’s a four-step process for making segmentation drive improved performance.

by Corey Yulinsky

http://www.strategy-business.com/article/11401?pg=all

Segmentation is a critical marketing tool for both B2C and B2B businesses. I think this is a very insightful article and highly recommend reading the full text

"Few phrases have as much currency in today’s business-to-consumer (B2C) companies as the customer-centric organization. Although the particulars vary widely, most companies pursuing customer-centricity rely on some form of market segmentation. Segmentation provides insight into customer behavior, habits, and preferences, increasing the odds of success in marketing and experience management campaigns, and driving brand positioning and product development….

……This paradox — that companies with the most data about their customers find it most difficult to use it — is likely to become more widespread as the digital transformation continues. Too often, companies develop segmentations that are based on conflicting business objectives, are not broadly understood or shared, or cannot be readily acted upon. Top managers must realize that a segment-based model requires rigorous execution. It will succeed only if it is embedded in the company’s overall strategy, crosses the boundaries of all business units and functional departments, and produces clear and actionable guidance….

….We advise companies to take a four-step approach to segmentation: define the objectives of segmentation clearly, design the segmentation around those objectives, prepare a blueprint of the effects of the segmentation across the entire company’s decision processes, and carefully manage the necessary changes that segmentation will demand of the organization. The goal is to ensure that segmentation leads to well-defined processes and actions that improve performance.:

Define the objectives clearly. The most important question for each company to ask: What is the purpose of segmentation? Understanding the purpose will enable decision makers to determine whether the segmentation effort is strategic, tactical, or bothDesign around the objectives. The key to effective design is working back from the business decisions that need to be made. Once the objectives have been determined, the segmentation research itself must be rigorously designed to reflect them, and to ensure that the results will be insightful (they will tell us things we do not already know about customer behavior and needs), actionable(they will identify levers that will move behavior), and identifiable (they will be able to tag individual customers in the database with reliable segment membership). This implies that multiple dimensions — behaviors, attitudes, demographics, channel use and preferences, and profitability — must be incorporated to develop a full picture.Prepare a blueprint to operationalize the segmentation. Begin to map out the decision processes by considering these questions: How is segmentation going to be used to influence the major value levers in your business? Will it underpin a redesign of the brand and the value proposition or of frontline sales and service? Will it ultimately result in more tailored and dynamic online and direct marketing? How are the business and functional units responsible going to access the information and use it on a day-to-day basis?. Manage the implementation process. Making segmentation deliver is ultimately more of a change management challenge than a technical or marketing challenge, but this point tends to be overlooked.

2011-11-29T13:07:00.000-05:00

Finding the right place to start change

When implementing an organization-wide transformation, focus your efforts on the most connected employees to help generate momentum and accelerate impact.

NOVEMBER 2011 • Marco Gardini, Giovanni Giuliani, and Marco Marricchi

https://www.mckinseyquarterly.com/Organization/Change_Management/Finding_the_right_place_to_start_change_2890

A very insightful article to a major challenge—how to change an organization of any size in the direction the leaders want.

Changing an entire large organization is never easy; only about a third of all such transformations succeed. One problem many organizations run into as they implement a change program is faltering momentum because employees just don’t change the way they work. Sometimes they don’t want to, and sometimes the reason is a poorly structured plan that makes change harder. Our recent experience at a European retail bank shows the benefits of starting to implement change by focusing on the employees who have the most influence over the daily work that needs to change. This approach can ensure that a successful transformation happens faster and that employees remain engaged in the long term…..
….Who were those people? ….. look at three criteria:
·         Which roles have a direct, substantial impact on the desired business results?
·         Which roles are connected with a large number of different subgroups in the organization?
·         Which roles can decide how people get the relevant things done?

2011-11-14T08:00:00.000-05:00

Winning, Losing, and Collaboration

10:18 AM Monday June 13, 2011
by Teresa Amabile and Steve Kramer | Comments (19)

http://blogs.hbr.org/hbsfaculty/2011/06/winning-losing-and-collaborati.html

Extremely insightful!!!

"...how does performance affect collaboration? In sports, it is a truism that winning can temporarily overcome various problems between teammates. For instance, the relationship between Kobe Bryant and Shaquille O'Neal was strained while they were teammates with the Los Angeles Lakers, even during their three consecutive NBA championship seasons. However, when the team was winning, the tension dissipated and the pair got along better — at least when they were working together on the court. In fact, during the 2000 championship series, Shaq referred to Kobe as "The Big Little Brother" when Kobe led the team to a win after Shaq had fouled out.
But when the Lakers were losing, the animosity between the two superstars mushroomed. They lost trust in each other, and before long, the whole team was infected with suspicion. Without trust, the team was unable to work together and win another championship.........All the bad things, the warts, are much more apparent in a losing streak or a bad streak and the flaws are not as apparent when you're winning a few games...
....Breakdowns in performance can lead to diminished collaboration inside business organizations, too. We have found that setbacks in the work can have a profoundly negative impact on inner work life — the continuous stream of emotions, perceptions, and motivations that occur during the work day. Perceptions are especially relevant here, since they include how people judge their work, their colleagues, and the organization. Especially in close collaborative situations, setbacks can lead workers to see their colleagues as incompetent or untrustworthy. When this happens, they will become less supportive of those colleagues, less openly communicative, and less likely to coordinate smoothly; collaboration will begin to break down.So, not only is collaboration critical to high performance, but maintaining high performance can be important to keeping collaboration going. Previously, we have talked about the importance of small wins — modest but meaningful successes along the pathway to achieving a major goal — in maintaining high performance and subjective well-being. They can also help workers maintain effective collaboration. When organizations support and celebrate small wins, employees feel like winners; the mistrust and conflict that can accompany losing will be avoided. Without those interpersonal problems, it will be much easier to achieve consistent and effective collaboration. "

2011-11-07T08:00:00.000-05:00

Remapping your strategic mind-set

Pankaj Ghemawat

McKinsey Quarterly, 2011 Number 3

This is an extremely interesting perspective on creating global strategies.

Executives can shake up their thinking, identify hidden opportunities, and spot lurking threats by looking at a novel type of map that depicts the world from the perspective of a particular country, industry, or company.Senior executives need better mental maps to navigate our unevenly globalized world. Although a wide variety of metrics show that just 10 to 25 percent of economic activity is truly global, executives disproportionately embrace visions of unbounded opportunities in a borderless world, where distances and differences no longer matter....
...I want to focus on the potential for a special kind of map—one I call a “rooted map”—to help leaders enhance their intuition about the opportunities and threats inherent in our semiglobalized world.Rooted maps correct a misperception reinforced by conventional ones: that the world looks the same regardless of the viewer’s vantage point or purpose. In the real world, though, geographic distance and differences in culture and policy matter. To better reflect this reality, rooted maps depict the world from a specific perspective and with a particular purpose in mind....
....depiction of the world as seen from New York City¹ is a humorous example, but more data-driven versions—particularly those drawn at the industry or company levels—have serious business applications.

2011-10-31T09:00:00.000-05:00

Apple Fights On Without Its Muse

By DON CLARK and IAN SHERR

http://online.wsj.com/article/SB10001424052970204294504576615353634776110.html

In our work with MDG, we define the Business Design as:

Most companies tend to spend most of their time on deciding who the target customers are and what Value Propositions they want to create for these customers to establish competitive separation. Companies tend to spend less time on defining how they capture value as a competitive tool.

The essence of this article is understanding the potential power of clearly defining how you capture value on the impact on establishing competitive separation.

…."IPhone is the number one smartphone in the world and continues to be number one in customer satisfaction," an Apple spokeswoman said in response to questions about the competition. As for the Kindle Fire, she noted others have introduced tablets with seven-inch screens and a limited number of apps, and "none of them have gained significant traction against iPad's incredible momentum."....
...Amazon and Google pose particular problems for Apple because of their sharply different (Value Capture) strategies. Apple makes most of its money from hardware. Google gives away its software in hopes of reaping profits from search advertising. Amazon expects to benefit from sales of digital content; its chief, Jeff Bezos, even characterized the Kindle Fire as more of a service than a device….

2011-10-24T08:00:00.001-05:00

Coke Bottle Lights Up Filipino's Lives - It is just Amazing WOW!!!!

http://www.youtube.com/watch?v=Q0_4qFrxw_4

This is a must watch video on innovation. Steve Jobs and his work at Apple are synonymous with innovation. Here is an example of innovation at the other extreme of the technology spectrum.

It would be great to share with us your learning’s from this video on what innovation means.

2011-10-11T14:17:00.001-05:00

Inorganic Growth

This is a great summary of the banking industry consolidation over the past 20 years. It is a classic example of inorganic growth for the banks that were the consolidators. Four key questions:

1. Was the overall size of the market/pie increased by this activity?

2. Was the competitive separation of the consolidating banks increased by their actions?

3. If the answer to 2 was no, how can the short term growth in earnings from the consolidation be sustained?

4. Is this overall strategy sustainable?

2011-10-03T08:00:00.001-05:00

Old Ketchup Packet Heads for Trash

Heinz 'Dip and Squeeze' Container Aims to Conquer a Major Frustration of Chowing Down in Transi

By SARAH NASSAUER

http://online.wsj.com/article/SB10001424053111904194604576578691502178606.html?mod=WSJ_hpp_MIDDLE_Video_second#printMode

This is a simple but a potentially powerful outcome from gaining a deep customer insight from observing the user which we believe is the essential starting point in offering development

Some people rip off the corner of the packet with their teeth. Others, while driving, squirt the ketchup directly into their mouth, then add fries. Some forgo fries at the drive-through all together to keep from creating a mess in the car.After observing these and other "compensating behaviors," H. J. Heinz Co. says it spent three years developing a better ketchup packet....

.

...As the name promises, "Dip and Squeeze" ketchup can be squeezed out through one end or the lid can be peeled back for dipping. The red, bottle-shaped packets hold three times the ketchup as traditional packets. The new containers are more expensive than the old sleeves, but Heinz hopes customers learn not to grab more than one or two.......Heinz believes traditional ketchup packets are so annoying that they stop people from ordering fries at drive-thrus. "Fry inclusion orders" at drive-thrus "have been going down for years," says John Bennett, vice president of food-service ketchup, condiments and sauces for Heinz.

2011-09-26T08:00:00.001-05:00

The Brand Story

Lynda Resnick, Vice Chairman of Roll Global (a relatively little known, $3B consumer company driven by brand strategies), describes what it takes to lead global brands such as POM Wonderful, Teleflora, and FIJI Water - and how important a "brand story" is to the success of your business.

This is a worthwhile 14 minute video with powerful insights on creating strong brands and strong leadership.

http://www.anderson.ucla.edu/leaders.xml

2011-09-23T08:00:00.000-05:00

IBM at 100: How to Outlast Depression, War, and Competition

12:25 PM Monday August 8, 2011
by Nancy Koehn

http://blogs.hbr.org/hbsfaculty/2011/08/ibm-at-100-how-to-outlast-depr.html

It is hard to ignore a century of success particularly after returning from a near death experience in the early 90’s

At its 100-year milestone, IBM shows us what it takes to outlast depression, war, and intense competition in order to remain a market leader in the midst of ongoing technological innovation. Here are several lessons worth sharing.

Be nimble and quick to adapt in a world of disruptive change(some early history) When the Social Security Act of 1935 created a huge demand for record keeping, IBM was ready, landing an enormous government contract to keep employment records on 26 million people. World War II then brought additional information-processing needs, as the U.S. military began using IBM cards to keep track of supplies, personnel and casualties. During this period, company sales grew from $40 million in 1939 to $142 million in 1945

Know your customers intimately Newly appointed CEO Lou Gerstner logged thousands of hours visiting customers, industry experts and analysts. He then set about transforming the company to rekindle IBM's historic commitment to customer intimacy, to make the organization much more integrated, and to streamline operations. The overarching strategic goal was to create an enterprise that could understand its customers wide-ranging IT needs (in some cases before they did on their own) and to deliver on these demands more effectively than any rivals. By 2000, IBM's Global Services had become the world's largest IT consulting and web services organization, providing almost 30% of the company's revenue. Nine years later, IT services accounted for 42% of IBM's $95 billion in sales.

Cultivate collective responsibility based on "systems knowledge"From IBM's early days, Thomas Watson Sr. believed you had to take good care of consumers by learning to think as they did

Stay committed to your core values, no matter whatDespite IBM's ability to adapt and change, the company's core values have remained at the center of what the organization does (and is). Shaping IBM's values and forward-facing vision, Thomas Watson, Sr. baked his driving ambition, respect for his people, faith in effective sales and distribution methods, commitment to customer intimacy and appetite for ongoing reinvention into the company's DNA

2011-09-20T08:00:00.001-05:00

Build Brands Apple's Way

9:37 AM Monday July 25, 2011
by Jeffrey F. Rayport

http://blogs.hbr.org/cs/2011/07/build_your_brand_apples_way.html

Very interesting discussion on branding

The value of Apple brand was $153 billion, up 84 percent year on year. Yes, Apple spends lavishly on promoting its brand, but the study attributed the spike in brand valuation to the impact of two products — the iPad and, to a lesser extent, the iPhone. There's a lesson in this for every marketer. Want to build a powerful brand? Ask yourself if your products (or services) could serve as ambassadors for your brand. There are four ways to make what you sell an ambassador for your brand. While not every company can pull this off, it's worth considering how you might position your offerings as.

...Branded Utilities: Until recently, Google hadn't spent a dime on advertising. At a valuation of $111 billion, Google's brand is predicated on the ubiquity of its services.. Google is an information utility. Rather than deliver water, electricity, or natural gas, Google delivers answers. Similarly, while Amazon has the established the gold standard for online commerce, it has spent sparingly to bulk up its brand. Rather, it's reallocated marketing budgets to building a better product: Prime shipping, one-click ordering, often lowest prices, and smart recommendations. Amazon has created the ultimate shopping utility...Social Connectors: Facebook's brand rose to 35th in the latest rankings with a valuation of $19 billion. It's a utility of a different kind. Its benefit for users, of course, is connection to other users, an experience enriched by dozens of features and hundreds of thousands of third-party apps, many varieties of messaging, sharing, and, now, a deal with Skype....Performance Systems: BMW connected long ago its well-known brand mantra — "the ultimate driving machine" — to the reality of its products. Yes, maintaining brand awareness matters when you want to sell cars at scale. But what keeps people coming back to BMW are vehicles that deliver on the claim...Objects of Affection: Though every one of Apple's products is, in fact, "just" a computer in a small envelope, each elicits a strong emotional response easily confused with affection and even love.

2011-09-14T08:50:00.000-05:00

Want to Lead? Ask Tennyson and Shakespeare

By ADAM BRYANT

Published NYT: September 3, 2011

http://www.nytimes.com/2011/09/04/business/symantecs-enrique-salem-on-leadership-advice.html?emc=eta1

Some important reflections for leaders in training

This interview with Enrique Salem, president and C.E.O. of Symantec, the computer security company, was conducted and condensed by Adam Bryant.

Key lessons from the interview:

… “Check your ego and your title at the door.” I learned that very early on. One of the things that my first manager said to me was: “Look, a lot of times you don’t lead by your position. You lead by how you influence other people’s thinking.” And so I absolutely believe that if it’s about you, you’re not going to do a great job. It can’t be about your success. It has to be about what you are trying to accomplish. So that’s No. 1. No. 2 came from Tennyson, his poem “Ulysses.” If you read the poem, there’s one little phrase that says, “I am a part of all that I have met.” I absolutely believe you learn from everybody you interact with.
Another one is from Colin Powell: “Positive attitude is a force multiplier.” I think that you’ve got to stay positive about things because when you go the other way, it’s de-motivating to everybody around you and you’re unlikely to be successful……….There’s a verse from William Shakespeare’s “Measure for Measure,” which is, “Our doubts are traitors, and make us lose the good we oft might win, by fearing to attempt.” I have this presentation that I give to our advanced leadership class, and the title is, “Lessons I’ve Learned Along the Way.” One of the slides has that quote, because if you think about that quote, it really is how I want our company to be. You’ve got to take some chances. You’ve got to take some risks, and sometimes things don’t work out, but you’ve got to go for it….….One time the coach called a defensive play and I changed it, and after having some success with that I said, “Oh, this isn’t so hard.” But then another player runs on the field and replaces me, and I run to the bench and the coach says, “When you want to call what I’m calling, you can go back in the game.” So I sat on the bench for a play or two and then went over and said: “O.K., Coach. I got it. I’m sorry.” And he put me back in the game. I really learned this notion that whoever’s making the calls, you’ve got to listen to that person.
And he pulled me aside after the game and we talked about it, and he said: “I know you love the game. I know you study the game. But you’ve got to realize that when I make calls, I’m setting something up. I’m looking at something that’s happening, and you can’t be out there second-guessing me on this.” I still remember that story. In business, somebody has to make the call. I learned that pretty early on.

2011-09-06T14:01:00.000-05:00

The Cross-Channel Customer Experience Must and How to Achieve It

J-P DE CLERCK on AUGUST 4, 2011

http://www.conversionation.net/2011/08/the-cross-channel-customer-experience-must-and-how-to-achieve-it/

Fascinating discussion and strongly urge you to read the article. The following diagram is explained:

2011-08-25T08:08:00.000-05:00

What is a culture of innovation anyway?

Jeffrey Phillips

http://www.innovationexcellence.com/blog/2011/08/13/what-is-a-culture-of-innovation-anyway/

Great overall discussion!!

"....To me, corporate culture is the set of assumptions, beliefs, practices, formal and informal rules and attitudes about how a company operates. Corporate culture evolves over time, and is both formal and informal. Corporate culture often shifts over time as well. Young entrepreneurial firms and startups have a culture that thrives on risk, speed and change. Growth is paramount. Older, established firms have a culture more typically based on rules, hierarchy, achievement of predictable milestones. While many firms have elaborately detailed organizational hierarchies and established workflows, corporate culture is often much more informal, and more powerful than any individual, and often more powerful than senior executives appreciate or expect.In an organization with a strong corporate culture, people learn to fit in quickly, adjust their thinking to the predominant culture or are quickly ostracized. Corporate culture, more than any other factor, details how people think, what they believe is important and valuable, and dictates how work should get done. It is difficult to change, especially under duress, and often communicates much about the values and intentions of a business. For a blog post, that’s as far as I’ll go to define culture. There are plenty of other resources that, given time and space, will do a better job defining culture.......If corporate culture is as overarching and powerful as I’ve described above, if it can dictate how people think and what people do, then culture is clearly either a significant barrier to innovation or a significant enabler to innovation......A culture of innovation, therefore, indicates that an organization is at least willing to embrace many of the tools and techniques that innovation requires, but moreover is able to endure the potential outcomes. For every innovation success there are many attempts and several failures. Every innovation is potentially cannibalizing an existing product or service, and innovation forces constant change – not just to products and services, but to experiences and business models. This means that a culture of innovation is agile, nimble, constantly adapting and learning, open to experimentation and many points of view. A culture of innovation tolerates and learns from failure, incorporating the best parts of the failure into new efforts. A culture of innovation understands that innovation is a continuous, consistent process rather than an occasional effort. A culture of innovation seeks out internal and external viewpoints and perspectives that are different from what the team “wants” to hear, and works closely with customers, partners and even the disinterested to understand future needs. A culture of innovation has as much invested in understanding the future as it does in delivering value in the present. A culture of innovation constantly generates ideas but also has the ability to commercialize the best ideas and ships valuable products. A culture of innovation isn’t just an idea machine, it is a commercialization machine."

2011-08-21T10:18:00.000-05:00

What the World Needs Now: Global Brands for the Global Generation

by Scott Goodson

http://www.futurelab.net/blogs/marketing-strategy-innovation/2011/08/what_world_needs_now_global_br.html

This is an interesting provocation and discussion.

What is it about being a true global brand these days? Do we still have to think global and act local? Or has the web changed all that, bringing the world together more than ever before?...….Today the significant opportunity in brand building is to maximize one idea across the globe, to create an inspirational rallying cry for a global consumer movement….….It isn’t easy to communicate across different cultures and countries while having one overall brand that really makes an impact….….Few brands act this way. Corporate culture, cultural differences, and different usage habits have stopped many a brand from realizing their global potential. There always seems to be a reason why a brand shouldn’t have one idea around the world.
Since the Internet overtook our lives, this ‘global against local’ way of advertising is becoming increasingly difficult for brands. Like never before, people are communicating and engaging with the entire world. Borders and boundaries have ceased to exist as people tweet, blog and chat online in real-time, 24 hours a day, seven days a week with just about every country on the planet.

2011-08-14T11:00:00.001-05:00

Innovation is All About Value

Braden Kelley

http://www.innovationexcellence.com/blog/2011/08/01/innovation-is-all-about-value/

This is a great discussion on the meaningful “outcome” of innovation. I always say that innovation is not the critical outcome, growth is. This describes driving growth by truly creating and delivering value to the target customer/consumer.

Innovation transforms the useful seeds of invention into solutions valued above every existing alternative – and widely adopted…..
…Often usefulness comes from what a product or service does for you, and value comes from how it does it. If you’re looking to truly deliver innovative products and services into the marketplace, then once you succeed at the designing and developing the ‘what’, don’t forget to also focus on achieving excellence in the ‘how’.”….
….Innovation = Value Creation (x) Value Access (x) Value Translation
Now you will notice that the components are multiplicative not additive. Do one or two well and one poorly and it doesn’t necessarily add up to a positive result. Doing one poorly and two well can still doom your innovation investment to failure. Let’s look at the three equation components in brief:Value Creation is pretty self-explanatory. Your innovation investment must create incremental or completely new value large enough to overcome the switching costs of moving to your new solution from the old solution (including the ‘Do Nothing Solution’). New value can be created by making something more efficient, more effective, and possible that wasn’t possible before, or creates new psychological or emotional benefits
.
.Value Access could also be thought of as friction reduction. How easy do you make it for customers and consumers to access the value you’ve created? How well has the product or service been designed to allow people to access the value easily? How easy is it for the solution to be created? How easy is it for people to do business with you?
Value Translation is all about helping people understand the value you’ve created and how it fits into their lives. Value translation is also about understanding where on a continuum between the need for explanation and education that your solution falls. Incremental innovations can usually just be explained to people because they anchor to something they already understand, but radical or disruptive innovations inevitably require some level of education (often far in advance of the launch).

2011-08-08T11:26:00.000-05:00

The positioning of marketing

http://www.emmgroup.net/organic-growth-blog/positioning-marketing

This is a very import functional distinction for marketing that often is overlooked. We deal with the customer promise in how we –in the Market Driven Growth process—define the Business Design:

Specifically, the marketing function should lead the company in defining who the target customers are and what outcomes we hope to create for them (Needs Segmentation) and the specific Value Promise for each of these customer groups dealing with the functional, economic, and emotive components of the offering promise. Not covered in this article, is also the function of defining Value Capture, how we capture value

Peter Drucker famously commented that:

"Because the purpose of business is to create a customer, the business enterprise has two--and only two--basic functions: marketing and innovation."-

“Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business."

Why did one of the founders of modern business management make such a bold statement? Why did he attribute such an important role to marketing, and how does that relate to all the other things that a business organization does?

We believe the answer lies in the definition of marketing as two essential components:

1. Making a compelling promise to select customers--the role of marketing is to make compelling promises that we can keep and to ensure that we keep the promises we have made

2. Keeping that promise--The second, and often overlooked, role of marketing is in helping the organization keep the chosen promise to target customers

2011-07-25T08:00:00.001-05:00

Managing Major Corporate Initiatives

A five-point plan to keep steering committees on track.

Title: Supervising Projects You Don’t Understand — Do Your Major Projects Receive the Leadership They Need?

Authors: Christoph Loch (INSEAD), Magnus Mähring (Stockholm School of Economics), and Svenja Sommer (HEC Paris)

http://www.strategy-business.com/article/re00151?pg=all

Very, very important stuff.

"Major initiatives are often a cause of significant friction between the senior executives who oversee a project and the managers who are charged with implementation.

Often drawn from around the firm to sit on a supervisory steering committee, the senior executives are on the hook for a project’s success. Typically, though, steering committee members lack the time, the proximity, and the expertise to understand all the issues and details involved in a project — and many struggle to provide the right level of guidance and supervision….….This paper provides a five-point framework for giving big, complex projects the senior leadership they require — not in terms of operational management, but rather in terms of strategic direction.

1. Steering committee composition and self-management. Steering committees should include important stakeholders, create their own governance systems, and work as a team2. Goal agreement. Team members should clarify and agree on the project’s objectives, producing workable compromises3. Relationship with the project team. Committee members should decide how to evaluate and motivate those charged with executing the project4. Supervision and control. This area involves keeping the project team on track within the context of the company’s goals. Steering committees should question assumptions throughout the project and insist on translating technical jargon into business language whenever possible 5. Managing surprises and changes. The last point relates to the need to modify the project’s direction when objectives or opportunities shift — and they always will, at least to some extent…. Rather than focus on final results, steering committees should make use of “intermediate insight milestones” to keep plans flexible and moving forward. "

2011-07-18T10:46:00.000-05:00

A Brainstorming Format

http://emergic.org/2011/07/17/blog-past-a-brainstorming-format/

Nice approach to extract ideas from your teams. The questions referred to can be what McKinsey calls the “killer questions”—how can we dramatically change our business in 3 to 4 major new directions. One different approach from below is that after each team reaches their conclusions a described, they can summarize their consensus opinion on flip charts (for each question) and have the other teams rotate around the room to comment on the summary of each team. A facilitator from each team will stay with the flip chart summaries to capture the additional input from this rotation. A team selected from the group will be chartered to summarize the output from the session for each major question.

Brainstorming is very useful to get a set of opinions on different issues from a diverse group. I have tried out this format for getting ideas to bubble up from individuals and groups:§ Identity 4-5 key questions that needs to be discussed
§ Create a questionnaire which is then given to each individual to answer in about 10 minutes
§ Split people up into groups of 6-7 people at a roundtable. Depending on the number of people, work out the number of groups that will be there (call it N). Go around the room asking each person to sequentially say 1,2,3…N. Group all the people with the same number together. This is important to mix people up.
§ Ask the group to discuss each of the questions based on the individual responses and come up with a common (consensus) answer to each of the questions. This helps draw out the “wisdom of crowds.”
§ One person from each group presents to the wider audience.
§ Collect both the individual answers and the group answers.
§ After this, there can be an open-house (time permitting).
This process helps distill out both individual thinking and the collective view for each of the issues. It also ensures that each person gets an opportunity to talk (at the group-level). A structured discussion is necessary because a free-for-all format can degenerate into chaos very quickly.

2011-07-12T10:05:00.003-05:00

Finding Opportunities in Business Model Innovation

By Rita Gunther McGrath

The European Financial Review June - July 2011

As the title implies, business model innovation is a critical component to sustained growth. I strongly urge reading the paper for fabulous insights from Prof. Rita McGrath. As a teaser, below is an evaluation she developed to ascertain the strength of your current model. If you fare poorly, you may want to consider deploying the insights from this article. As always, the key is creating real competitive separation.

2011-07-07T11:09:00.000-05:00

Innovation's Nine Critical Success Factors

Note: This post was written with Mark Sebell and Jay Terwilliger, managing partners at Creative Realities, Inc., a Boston-based innovation management collaborative.

http://blogs.hbr.org/govindarajan/2011/07/innovations-9-critical-success.html

Your organization won't innovate productively unless some underlying factors are in good shape. If "10" is outstanding and "1" is poor, how do you rate your organization on each of these?

"1. A compelling case for innovation. Unless people understand why innovation is necessary, it always loses to core business or the performance engine in the battle for resources.2. An inspiring, shared vision of the future. Most companies anticipate the future based upon the past. For this process, it is best to take a 10-20-year perspective. It is not about predicting the future. It is about developing hypotheses about the future.3. A fully aligned strategic innovation agenda. Innovation is a journey into the unknown and there are many paths open to the innovator. Before starting it is essential to know things like: 1) What business are we in now and want to be in going forward? 2) What is our risk tolerance for pursuing big, game-changing ideas?4. Visible senior management involvement. Incremental innovation can be pushed down into the organization where the strategy is clear, decision metrics are understood, and management models like Stage-Gate create a level playing field. However, for game-changing innovation it's the opposite. 5. A decision-making model that fosters teamwork in support of passionate champions. Breakthroughs cannot survive without a decision-making model that is different from the one used for incremental innovation (my belief is that the decision making process can be the same but the criteria will be very different)6. A creatively resourced, multi-functional dedicated team. The best teams have three ingredients: project champions who can make decisions during working sessions and advocate for them with executive sponsors, relevant capabilities and expertise, and naïve, seemingly irrelevant diversity7. Open-minded exploration of the marketplace drivers of innovation. Organizational change is driven by marketplace factors: customers, competition, government regulation, and science and technology8. Willingness to take risk and see value in absurdity. Innovators understand that you have no choice; you must take risks, often big ones, by moving toward the absurd, the "seemingly" irrelevant, in order to create pre-emptive competitive advantage while competitors move in the "obvious" direction9. A well-defined yet flexible execution process. Companies that have been in business for a while are good at executing on small, incremental changes.(see all our postings on being an ambidextrous company on our blog site)"

2011-06-30T10:48:00.000-05:00

Absences Speak Loudly at Video Game Expo

By NICK BILTON

Published: June 12, 2011

http://www.nytimes.com/2011/06/13/business/media/13gaming.html?_r=1

This article underscores the myopic view of the future held by leaders with very successful products/systems. It builds off the last posting on: “Building a Shared Mental Model to Rekindle Collaboration”. What is the correct mental model for this business? My guess it is not those espoused by the leaders of Microsoft, Sony, and Nintendo but the opportunity potential from Apple and Facebook systems. Without recognizing the realty of the situation and aggressively pursuing alternate business designs to create a more robust portfolio in the future, my bet on sustained growth is not on the big “off-the-shelf” offerings but a rather one with a richer mix of the alternate model. What set of questions would you offer to force the CEO’s of these companies to change their corporate mindsets for this situation?

LOS ANGELES — The big names were all here last week at the Electronic Entertainment Expo, the video game industry’s annual conclave — Microsoft, with its XBox; Sony, with its PlayStation; and Nintendo, with its Wii. But they all make console games, and these days the game platforms enjoying the most explosive growth are a social network — Facebook — and a mobile device maker — Apple.(THIS IS THE CORRECT MENTAL STATE VIEW OF THE FUTURE)...
...That deadly confusion begins with a flawed mental model that fails to reflect reality but still serves as the basis for taking action. Like people in survival situations, the ability to develop an accurate mental model often separates successful companies from organizations that do not survive.So what exactly is a company's mental model? Simply put, a robust mental model eliminates internal confusion. The mental model is a framework that simplifies a potentially complicated strategy, allowing everyone in the organization to internalize the strategy and be guided by it.Great companies build and share their mental model internally in ways that enable managers and employees to independently make critical decisions day in and day out that are aligned with the strategy. Without a strong mental model strategy can become open to interpretation, decision making can become bogged down, or both can occur at once........The sales team prided itself on bringing in the biggest deals with huge volumes from these target customers. Their mental model was essentially, "Big customers, big volumes, big dollars".While this interpretation of the strategy seems valid, there was a fatal flaw: big customers with big print volumes also command big discounts........A simple, but powerful exercise for building a shared mental model brought the cross-functional teams together. Using this approach, each function separately answered a series of key questions, including:Which customers are the most profitable? How well aligned is our value proposition to their demands? What differentiates our value proposition from competition? How will we compete and win?

2011-06-14T10:47:00.000-05:00

Building a Shared Mental Model to Rekindle Collaboration

8:01 AM Tuesday June 14, 2011
by Jason Green

http://blogs.hbr.org/cs/2011/06/building_a_shared_mental_model.html

I concur that establishing what the author terms shared mental models at all levels of the corporation are essential for success. I believe it should start at the very top to establish an umbrella sense of reality that all work underneath must be consistent with. What are the set of four or five questions you would ask to set the right mental model for your business group? Be sensitive to all the appropriate functions.

"That deadly confusion begins with a flawed mental model that fails to reflect reality but still serves as the basis for taking action. Like people in survival situations, the ability to develop an accurate mental model often separates successful companies from organizations that do not survive.So what exactly is a company's mental model? Simply put, a robust mental model eliminates internal confusion. The mental model is a framework that simplifies a potentially complicated strategy, allowing everyone in the organization to internalize the strategy and be guided by it.Great companies build and share their mental model internally in ways that enable managers and employees to independently make critical decisions day in and day out that are aligned with the strategy. Without a strong mental model strategy can become open to interpretation, decision making can become bogged down, or both can occur at once............The sales team prided itself on bringing in the biggest deals with huge volumes from these target customers. Their mental model was essentially, "Big customers, big volumes, big dollars".While this interpretation of the strategy seems valid, there was a fatal flaw: big customers with big print volumes also command big discounts...
.....A simple, but powerful exercise for building a shared mental model brought the cross-functional teams together. Using this approach, each function separately answered a series of key questions, including:Which customers are the most profitable? How well aligned is our value proposition to their demands? What differentiates our value proposition from competition? How will we compete and win?......Comparing the answers to these questions, developed from the perspective of each function, quickly revealed that each function was operating from its own radically different mental model. Sales and operations had very different views of the most profitable customers, with sales focused on volume and operations focused on quality.Working together, the teams identified a previously unrecognized "sweet spot" common to their most profitable print jobs.

2011-06-03T10:56:00.000-05:00

Malcolm Gladwell Looks At Technology Innovation

http://www.npr.org/player/v2/mediaPlayer.html?action=1&t=1&islist=false&id=136368716&m=136368699

This posting was brought to my attention by Ken Petersen from Wolters Kluwer and as he noted this is an interesting twist in thinking about innovation. I recommend taking the 7 minutes required to listen to the interview.

"Innovation and originality are close cousins. We think of creative innovators as people with new ideas. But to read Malcolm Gladwell on the subject is to be reminded of a distinction: An innovator may not be the one with the new idea — but with a new take on an old idea. Robert Siegel interviews Gladwell, who wrote "Creation Myth: Xerox PARC, Apple, and the truth about innovation" in the May 16th issue of The New Yorker."

2011-05-16T14:40:00.000-05:00

Sustaining top-line growth: The real picture

A historical view shows that beating markets is tougher than most leaders believe.

MAY 2011 • Bing Cao, Bin Jiang, and Tim Koller

Source: Corporate Finance Practice

https://www.mckinseyquarterly.com/Corporate_Finance/Performance/Sustaining_top-line_growth_The_real_picture_2807

Organic top line growth is really tough. This is a sobering summary of how companies perform:

"Many leaders set unrealistic growth targets. Often, they don’t properly consider how fast their underlying markets are growing and thus how much market share must be grabbed to meet ambitious goals. Or they ignore the likelihood that their competitors are doing many of the same things to grow. They also underestimate the ongoing need to find new products to replace revenue declines from current offerings as they mature….
…The median revenue growth rate was 5.9 percent (large, non-financial companies from 1997 to 2007). About one-third of these companies increased their revenues at rates faster than 10 percent. But that one-third figure probably overestimates organic growth, since it includes the effects of acquisitions….…Over a longer time horizon (1965 to 2008), other difficulties come into view…The median was 5.4 percent a year. Although the rate fluctuated from 1 percent to 9 percent according to the economy’s health, there was no upward or downward trend and thus no rising tide to lift growth over the longer haul."

2011-05-09T14:54:00.000-05:00

Yes, Everyone Can Be Stupid for a Minute

By ADAM BRYANT

Published: May 7, 2011

This interview with Dominic Orr, president and C.E.O. of Aruba Networks, a wireless networking company, was conducted and condensed by Adam Bryant.

http://www.nytimes.com/2011/05/08/business/08corner.html?_r=1&pagewanted=all

An interesting interview with insights into the corporate culture that drives and accepts failure!

Q. What were some early lessons for you as a manager?
A. The biggest feedback I had from my people is that I didn’t give them feedback. I was running along. I had a pretty high standard for myself, and I assumed that everybody who joined my team was operating at the same level. Good work was assumed, so I let them know only when something didn’t go well. People started telling me it would be nice if I gave them a pat on the back rather than only telling them when things were not good.
Another thing I distinctly remember is that I had trouble having a difficult discussion with employees because, as a young manager, sometimes you don’t really know how to tell somebody to their face that they’re not doing a good job. I also struggled at first with this whole process of running a staff meeting. I remember bringing my H.R. person in to have her run meetings so that I wouldn’t take over, express my opinions and then everybody would sit there silently.
Q. What are some other important leadership lessons?
A. I have had a very good mentor — Wim Roelandts, who worked for H.P. for about three decades. He rose to become the No. 2 executive of H.P. under Lew Platt. He is someone who embraced the old H.P. way.
Q. What were some lessons you learned from him?
A. I would say empowering people. Basically, he would push you and give you as much as you could handle until you started failing. He would encourage you to not be afraid of failing — because when you start failing, that’s when you know where your limit is, and then you can improve around that. So he actually sometimes would reward failure because that means that you have pushed yourself.
That is an unusual approach, so people under him tended to be able to really find their limits. And once they do that, they figure out a way to overcome it, because they don’t feel that inhibition. I think that is a very big thing. The whole H.P. way of management kind of molded my approach to managing people in business.
Q. And boil that down for me. What is the H.P. way?
A. Fundamentally, the H.P. way started with the basic assumption that each employee wants to do well, and they are capable of doing well, so as a manager you have to give them that environment to flourish. When someone does not perform, the first reaction is not to get angry at them or assume that they are incompetent, but to question whether they have they been matched to the right assignment. From the background, from the skill set, have you created a productive environment for them? So the first question as a manager is, have you done something wrong?
Q. Tell me about the culture of the company you run today.
A. I use a simple principle of management based on intellectual honesty. You try to be intellectually honest with yourself, meaning that you have to forget about all the face-saving issues and so on. I tell people that if you work for me, you have to have a thick skin because there’s no time to posture.
I also tell people that everybody can be and will be momentarily stupid. I think that in many large companies, a lot of politics arise because somebody makes a statement in a meeting, and then it’s weeks of wasted time and effort because they have to dig in to defend that position, and then politics come into play because they now want to lobby for their position.
So when I interview key executives of my staff, I tell them that they need to accept that they can be, and will be, momentarily stupid. If they can accept that and be able to say, “Oh, I was momentarily stupid; let’s move on,” then you don’t waste time dealing with that.

2011-05-05T11:38:00.000-05:00

The New Voice of the CIO

Insights from the Global Chief Information Officer Study, IBM

http://public.dhe.ibm.com/common/ssi/ecm/en/cie03065usen/CIE03065USEN.PDF

Interesting insights in the changing role of the CIO

"The study demonstrated that, especially among high-growth companies,
the role of the CIO is changing. Today’s chief information officers report
spending 55 percent of their time on activities that spur innovation.

These can include: contributing to the development of business strategy;
generating corporate enthusiasm for innovative IT-enabled business
service plans; implementing new technologies; mitigating enterprise risks;
leveraging automation to improve competitiveness and reduce the costs
of business operations; and managing nontechnological issues.

CIOs also position themselves to expect the unexpected. An overwhelming 90
percent of respondents to the CIO Study expect moderate to substantial
changes for IT in the next three years,brought on through pressures
exerted by business model changes, budget constraints, macroeconomic
factors and evolving industry and regional conditions.

Respondent input shows that the CIOs of high-growth PBT companies
strive to meet three overarching objectives. These are making innovation
real, increasing the return on investment of IT and expanding the business
impact of IT. To accomplish these goals, chief information officers often
fulfill three sets of roles. These roles are:
• Insightful Visionary and Able Pragmatist
• Savvy Value Creator and Relentless Cost Cutter
• Collaborative Business Leader and Inspiring IT Manager"

2011-04-25T07:00:00.002-05:00

Is your emerging-market strategy local enough?

The diversity and dynamism of China, India, and Brazil defy any one-size-fits-all approach. But by targeting city clusters within them, companies can seize growth opportunities.

APRIL 2011 • Yuval Atsmon, Ari Kertesz, and Ireena Vittal

Source: Strategy Practice

https://www.mckinseyquarterly.com/Strategy/Growth/Is_your_emerging_market_strategy_local_enough_2790

The article highlights the importance of thinking local in formulating a global strategy. Remember, markets are local but industries that supply them can be considered global. What I mean is the final offering to any locale must be dictated by local norms and tastes. However, the development and delivery mechanism –or appropriate portions of it—can and should be globalized for leverage and efficiencies as appropriate.

Creating a powerful emerging-market strategy has moved to the top of the growth agendas of many multinational companies, and for good reason: in 15 years’ time, 57 percent of the nearly one billion households with earnings greater than $20,000 ¹ a year will live in the developing world….
…To accelerate growth in China, India, Brazil, and other large emerging markets, it isn’t enough, as many multinationals do, to develop a country-level strategy. Opportunities in these markets are also rapidly moving beyond the largest cities, often the focus of many of these companies….... To accelerate growth in China, India, Brazil, and other large emerging markets, it isn’t enough, as many multinationals do, to develop a country-level strategy. Opportunities in these markets are also rapidly moving beyond the largest cities, often the focus of many of these companies. For sure, the top cities are important: by 2030, Mumbai’s economy, for example, is expected to be larger than Malaysia’s is today. Even so, Mumbai would in that year represent only 5 percent of India’s economy and the country’s 14 largest cities, 24 percent. China has roughly 150 cities with at least one million inhabitants. Their population and income characteristics are so different and changing so rapidly that our forecasts for their consumption of a given product category, over the next five to ten years, can range from a drop in sales to growth five times the national average…
…As developing economies become increasingly diverse and competitive, multinationals will need strategic approaches to understand such variance within countries and to concentrate resources on the most promising submarkets—perhaps 20, 30, or 40 different ones within a country

2011-04-19T10:55:00.000-05:00

This article was taken from the May 2011 issue of Wired magazine

http://www.wired.co.uk/magazine/archive/2011/05/start/from-the-editor

The following was offered by Karl Krista based on my last posting of Strategies for Learning from Failure. It shows how important the underlying culture in a company or even country plays a very important role in the perception of risk/uncertainty.

Last July at TEDGlobal, I got into a late-night conversation with Mårten Mickos, who led the sale of software firm MySQL in 2008 for a neat $1 billion. The company -- set up by two Swedes and a Finn -- is celebrated alongside Skypeas an example of how Europe can build successful tech giants. So why, Mickos wondered, did so many of his new friends not want to know him when his earlier businesses had failed?

Failure, we agreed, was still too stigmatised in Europe to allow us to compete on equal terms with Silicon Valley. Outdated social attitudes were encouraging entrepreneurs to be risk-averse and limited in their ambitions, especially where bankruptcy carries heavy legal and cultural burdens (we're looking at you in particular, Berlin). If only fail…failure were more widely accepted as a standard part of an entrepreneur's journey, we declared, then Europe would take more of the leaps that would produce the next Facebooks and Apples. And so began the research that became Matt Cowan's inspiring cover story in this issue.At endless conferences since then, I've heard business founders from Reid Hoffman to Biz Stone urge European startups to be bolder in their approach. Sure, they may fail -- but if they fail fast and learn from it, they will be much more likely to win second time around. The personal experiences recounted here--from Alan Sugar, Jimmy Wales, Richard Moross and others -- are wonderfully honest, self-aware and direct. We hope they'll help change a few attitudes.

We have two cover stories this month: UK newsstand issues have a "Fail fast" theme, but overseas and subscriber copies tell the story of Badoo, the 120-million-member social network you probably don't yet know. Vote for your favourite cover in the poll below, or by downloading our new monthly iPadedition from the iTunes Store. It's not that we were indecisive -- we wanted twice as many chances to fail…..

2011-04-18T14:06:00.000-05:00

Strategies for Learning from Failure

by Amy C. Edmondson

April, 2011

This edition HBR is dedicated to “failure”. Understanding how to fail is critical for success and the underpinning of a company being ambidextrous (see our blog site for summary of postings in this category)

"The wisdom of learning from failure is incontrovertible. Yet organizations that do it well are extraordinarily rare…….Most executives I’ve talked to believe that failure is bad (of course!). They also believe that learning from it is pretty straightforward: …
…These widely held beliefs are misguided. First, failure is not always bad. In organizational life it is sometimes bad, sometimes inevitable, and sometimes even good. Second, learning from organizational failures is anything but straightforward…..
….Failure and fault are virtually inseparable in most households, organizations, and cultures. Every child learns at some point that admitting failure means taking the blame. That is why so few organizations have shifted to a culture of psychological safety in which the rewards of learning from failure can be fully realized……
…..A sophisticated understanding of failure’s causes and contexts will help to avoid the blame game and institute an effective strategy for learning from failure"

2011-04-10T21:35:00.000-05:00

Five Industries Hit the Reset Button

As a prerequisite for growth in the post-crisis environment, leading companies in the consumer products, telecommunications, industrial goods, automotive, and financial-services industries are shifting their business models and operating practices.

by the Booz & Company industry teams; introduced and edited by s+b Senior Editor Karen Henrie

http://www.strategy-business.com/article/00060?pg=all

There are great insights for these markets and beyond

... The need to respond to the residual effects of the crisis (and the other trends) is forcing many companies to hit the reset button. With renewed discipline, senior leaders are examining their product and service portfolios, business and operating models, process fitness, and cost structure — all through a lens focused more closely on what truly creates value for their companies and their customers. They are figuring out where their companies can excel, based on their distinct capabilities: the things they do better than anyone else. They are using those capabilities to go after opportunities in areas where they know they can win, and scaling back the products and services in areas where they can’t. The best of them have invested, even during their leanest times, to bolster those capabilities that can be capitalized for renewal and growth.

The companies that succeed will also work vigilantly to identify and mitigate the risks — to their supply chains, sources of capital or credit, currency strategies, reputations, regulatory compliance, and so on — that could potentially derail their path forward. And they will proceed with a new, hard-earned understanding that their fortunes — and those of their employees, customers, investors, and other stakeholders — are irrevocably linked with those in other industries and around the globe.

2011-04-10T16:18:00.000-05:00

The Global Innovation 1000: How the Top Innovators Keep Winning

Booz & Company’s annual study of the world’s biggest R&D spenders shows why highly innovative companies are able to consistently outperform. Their secret? They’re good at the right things, not at everything

http://www.strategy-business.com/article/10408?pg=all#authors

by Barry Jaruzelski and Kevin Dehoff

A definite read. Included in the posting is “a chart to wet your appetite”

Why are some companies able to consistently conceive of, create, and bring to market innovative and profitable new products and services while so many others struggle? It isn’t the amount of money they spend on research and development. After all, our annual Global Innovation 1000 study has shown time and again that there is no statistically significant relationship between financial performance and innovation spending, in terms of either total R&D dollars or R&D as a percentage of revenues.

What matters instead is the particular combination of talent, knowledge, team structures, tools, and processes — the capabilities — that successful companies put together to enable their innovation efforts, and thus create products and services they can successfully take to market

The major capabilities are:

2011-03-30T09:57:00.000-05:00

The Enterprise of the Future

IBM Global CEO study

http://public.dhe.ibm.com/common/ssi/ecm/en/gbe03035usen/GBE03035USEN.PDF

Some fascinating insights from IBM’s extensive study of CEO from around the world. Read the full article

"Organizations are bombarded by change, and many are struggling to keep up: eight out of ten Ceos see significant change ahead, and yet the gap between expected change and the ability to manage it has almost tripled since our last Global Ceo Study in 2006.
Ceos view more demanding customers not as a threat, but as an opportunity to differentiate: Ceos are spending more to attract and retain increasingly prosperous, informed and socially aware customers.
Nearly all ceos are adapting their business models—two-thirds are implementing extensive innovations. More than 40 percent are changing their enterprise models to be more collaborative.
Ceos are moving aggressively toward global business designs, deeply changing capabilities and partnering more extensively: Ceos have moved beyond the cliché of globalization, and organizations of all sizes are reconfiguring to take advantage of global integration opportunities.
Financial outperformers are making bolder plays. these companies anticipate more change, and manage it better. they are also more global in their business designs, partner more extensively and choose more disruptive forms of business model innovation"

2011-03-24T11:00:00.000-05:00

Total Shareholder Returns

This measure of business performance is the best indicator of corporate success.

by Ken Favaro and Greg Rotz

http://www.strategy-business.com/article/00068?pg=all

This very powerful summary is clearly worth looking at. You get what you measure and this article explores the critical measures and systems to optimize them.

Total shareholder return is a measure of corporate performance. But as we shall see, it is also a system of management, grounded in a set of metrics and practices for running a company to maximize its value creation, over both the short term and the long haul. ......When starting down the TSR path, it is helpful to begin with two questions: How broad or narrow should we make our focus on TSR? What issues and opportunities are we seeking to address by adopting a sharper focus on managing for TSR?Primary TSR MetricsThese are the four primary metrics to use when managing for top-tier TSR.1. Total shareholder return. This is the change in a company’s stock price for a given period, plus its free cash flow over the same period, as a percentage of the beginning stock price. For example, if a company has a stock price of US$100 at the beginning of a year, free cash flow of $3 during the year, and a stock price of $110 at the end of the year, its TSR for that year is 13 percent. TSR can be measured only for publicly traded companies because it requires observable stock prices....

...2. Free cash flow (from a shareholder perspective). This is the difference between earnings and retained earnings (sometimes called equity cash flow). At the company level, it is the portion of earnings paid out to investors...

....3. Economic profit. This is the difference between earnings and the cost of invested capital for a given period of time. A business that is earning at least its cost of capital is generating positive economic profit; a business that is earning less than its cost of capital has negative economic profit, even if its earnings are positive...

....4. Warranted value. This is the current value of a company or an operating unit based on the best estimate of its expected free cash flow (or economic profits) under a particular future strategy. This metric is sometimes called intrinsic value. Warren Buffett defines it as “the present value of the earnings power a business has over its remaining life.”...

2011-03-14T18:03:00.003-05:00

Capitalizing on Complexity--IBM

Insights from the Global Chief Executive Officer Study

This study is based on face-to-face conversations with more than 1,500 chief executive officers worldwide

http://public.dhe.ibm.com/common/ssi/ecm/en/gbe03297usen/GBE03297USEN.PDF

This series of studies by IBM are excellent and I plan to excerpt different parts of it in future postings.

"This study is the fourth edition of our biennial Global CEO Study series,
led by the IBM Institute for Business Value and IBM Strategy & Change.To better understand the challenges and goals of today’s CEOs, we met
face-to-face with the largest-known sample of these senior executives.
Between September 2009 and January 2010, we interviewed 1,541 CEOs,
general managers and senior public sector leaders who represent different
sizes of organizations in 60 countries and 33 industries

Today’s complexity is only expected to rise, and more than half
of CEOs doubt their ability to manage it. Seventy-nine percent of
CEOs anticipate even greater complexity ahead. However, one set of
organizations—we call them “Standouts”—has turned increased complexity
into financial advantage over the past five years.
Creativity is the most important leadership quality, according to
CEOs. Standouts practice and encourage experimentation and innovation
throughout their organizations. Creative leaders expect to make deeper
business model changes to realize their strategies. To succeed, they take
more calculated risks, find new ideas, and keep innovating in how they
lead and communicate.
The most successful organizations co-create products and services
with customers, and integrate customers into core processes.
They are adopting new channels to engage and stay in tune with customers.
By drawing more insight from the available data, successful CEOs make
customer intimacy their number-one priority.
Better performers manage complexity on behalf of their
organizations, customers and partners. They do so by simplifying
operations and products, and increasing dexterity to change the way
they work, access resources and enter markets around the world.
Compared to other CEOs, dexterous leaders expect 20 percent more
future revenue to come from new source"

2011-03-08T08:00:00.000-05:00

Wal-Mart Tries to Recapture Mr. Sam's Winning Formula

2/22/2011 WSJ

By MIGUEL BUSTILLO

Wal-Mart Stores Inc. is in the midst of its worst U.S. sales slump ever.

When we work with clients in helping them grow their businesses, we stress that leadership MUST first define what they are and what they are not. What strategic space do they want to compete in is the key question. Many feel initially that is this a frivolous exercise until they see its power. We use the approach of defining their Core Mission—what is the ultimate value you are creating for your customers (the Core value) and what is the underlying core competency or DNA of your company that enables you to deliver this value better than competition (the Core Process). For Wal-Mart, their Core Value was “Save money, live better” for their target customer base per their advertising slogan. Their Core Process is their incredible value chain systems they put in place with their suppliers. Wal-Mart’s recent history shows the danger of changing your Core Mission (often is search of new growth) once firmly established and successful.

"When it reports earnings on Tuesday, the retailer is widely expected to post its second straight year of declining domestic same-store sales.Wal-Mart's struggles are the result of a misstep: To jump-start lethargic growth and counter the rise of competitors such as cheap-chic rival Target Corp., executives veered away from the winning formula of late founder Sam Walton to provide "every day low prices" to the American working class. Wal-Mart, the world's biggest retailer by sales, instead raised prices on some items while promoting deals on others.
Company executives acknowledge having miscalculated and are adjusting their strategy again. The big question is how quickly the mammoth chain can turn itself around.Wal-Mart's shift from its traditional core customer manifested itself in numerous ways. A foray into organic foods didn't catch on with discount shoppers. A push to sell trendy fashions like skinny jeans bombed. And an attempt to cut clutter in stores to attract higher-income customers wound up undermining Wal-Mart's appeal to its traditional audience.The Bentonville, Ark., chain's up-market push, which began before the recession, succeeded in attracting some well-heeled customers, but at great cost. Wal-Mart lost its iron grip on U.S. households earning less than $70,000 a year—which made up 68% of its domestic business—to other discounters."The basic Wal-Mart customer didn't leave Wal-Mart. What happened is that Wal-Mart left the customer," said former Wal-Mart executive Jimmy Wright, who supervised the company's distribution networks from 1992 to 1998 before leaving to co-found consulting firm Diversified Retail Solutions.Wal-Mart has shuffled top U.S. executives in the past nine months and is going back to basics—eschewing fashionable clothes in favor of socks and sweat pants, for example—it an effort to recover market share........"Clearly, we've lost some of our focus on what I would call the core customer," Andy Barron, a Wal-Mart executive vice president, said at an investor meeting. "You might say, in short, that we were trying to be something that maybe we're not."......…So once again, Wal-Mart is back to cramming wood pallets of $8.97 boxed wine and $8 Justin Bieber CDs into the store's corridors, recreating the messy procession of discount merchandise in the main aisles that the company calls "action alley." Now analysts are concerned that, in changing direction again, Wal-Mart risks alienating whatever higher scale shoppers it had gained"

2011-03-01T08:00:00.001-05:00

Mobile Wars! Apple vs. Google vs. Those Other Guys

After Nokia's software surrender, the five-way struggle for mobile dominance heats up

By Peter Burrows

http://www.businessweek.com/magazine/content/11_09/b4217037985749.htm

This is a fascinating change that well beyond the digital world.” Eco systems” or some call “platforms” vs. products are becoming the basis of competition. All companies and businesses MUST realize this fundamental change to create and sustain competitive separation.

"It's been a big couple of weeks in mobile. Verizon Wireless finally got the iPhone. Hewlett-Packard (HPQ) unveiled the first fruits of its Palm purchase last year. Nokia (NOK), the world's biggest handset maker, abandoned its once-dominant Symbian mobile software system and demoted itself to a kind of glorified contract manufacturer of Microsoft (MSFT)-powered devices.The struggle for mobile dominance has entered a new phase. Why would Nokia throw out Symbian, with its 37 percent market share, in favor of software with less than one-seventh of that? Because recently hired Chief Executive Officer Stephen Elop is convinced that Microsoft has better odds of going up against the four other mobile powers—Apple (AAPL), Google (GOOG), Research In Motion (RIMM), and HP—and making its new Windows Phone 7 software a center of gravity for the world's programmers, manufacturers, and consumers. "The game has changed from a battle of devices to a war of ecosystems," Elop told investors at a London press conference on Feb. 11. Actually, it's the same game that created the most valuable franchises in tech history, from IBM (IBM) to Microsoft to Facebook. All successfully established themselves as "platforms," in which countless entrepreneurs and programmers developed technologies that gave value to customers and profitability to shareholders—sucking oxygen away from rivals all the while.

2011-02-23T10:00:00.000-05:00

Want breakthrough innovation? Then don't listen to your customers

By Jeffrey Baumgartner

http://www.innovationtools.com/Articles/EnterpriseDetails.asp?a=607

A subject we often talk about:

A lot has been written on customer-centric innovation and there is an arguable case for taking this approach. However, customer-centric innovation is fraught with risk if done poorly – such as asking your customers for ideas – and seldom actually leads to breakthrough innovation…...

Rather, I would like to look at why it is often best to get beyond your customers if you truly want to devise and launch a breakthrough innovation. Indeed, if we look at some of the most successful innovative products and services of recent years, we find that they are not the result of customer surveys, they are not based on suggestions submitted to crowd sourcing web sites and they are not new features added to existing products (the most typical customer-centric innovation). Rather they are radical ideas that have often made it to market as the result of the vision and drive of a determined individual.

2011-02-16T10:00:00.000-05:00

Innovators share the lessons they've learned during 2010

By Chuck Frey

http://www.innovationtools.com/Articles/EnterpriseDetails.asp?a=605

There some powerful isights in this summary that I will share with you in future postings

"Ideation vs. innovation

One of the biggest lessons I have learned this year is the misconception between ideation and innovation. Many people think that ideas are what drives innovation - and they then put a lot of focus on ideation as the 'innovation process.' A very close cousin to this misconception is thinking that creativity is innovation - and hence putting a lot of energy and focus on 'being creative' as the key part of an innovation process.

In our experience a true innovation process actually begins with strategy and strategic thinking which connects to a portfolio approach that focuses research and informs the ideation process. Ideation leads to insights which then start a whole process of turning insights into innovations that require market development and sales to complete the entire cycle. Ideation and creativity are the middle of an innovation process and not the beginning or end.

- Michael Kaufman, InnovationLabs LLC

Parallels between building your muscular core and innovation

Ideation is not innovation. The “fuzzy front end” is just that. It is easy to get excited about something “warm and fuzzy.” The “lessons learned” this year for me is the importance of process over tools to flow and grow innovation through the organizational culture. Innovation is not a “point solution” to any problem and innovation tools apart from a broader context of their purpose can lead to the “flavor of the month” syndrome for the innovation community. Intentional, strategic, process-driven innovation is like a body workout. The muscles have to go through a range of motion they are not used to resulting in some aches that go away as the muscles are strengthened and built. The innovation process similarly takes time, and the organizational change to accomplish it can be painful before you see measurable and sustainable results and, just like exercise, there is typically more talk about innovation than action."

- Don Pital, Georgia Tech Enterprise Innovation Institute

2011-02-09T10:00:00.001-05:00

Hotbeds of Innovation

U.S. multinationals are looking to small companies and startups for the next big ideas.

by William J. Holstein

http://www.strategy-business.com/article/00061?rssid=all_updates&gko=68976&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+StrategyBusiness-AllUpdates+(strategy%2Bbusiness+-+All+Updates)&utm_content=Google+Feedfetcher

Fabulous article on different approach to R&D driven innovation in our “flattening world”

"As companies in Asia and Latin America transform themselves from low-cost manufacturers to competitive innovators, many U.S. multinational corporations are confronting a strategic dilemma: Although under pressure to stay ahead of their often-flush global rivals, these multinationals are being forced to revisit their R&D budgets — a consequence of weak sales at home, where consumers are nervous about spending.

Some companies have responded by offshoring design and engineering to drive down costs. IBM, a well-known example, has invested significantly in its presence in China and India. Others have adopted open source policies that encourage collaboration, such as Procter & Gamble Company’s “Connect + Develop” platform, which lets P&G and external product and process designers share technologies and know-how. But another option is growing more popular. Called “ecosystem investing” by some innovation executives, it refers to the increasingly complex network of suppliers and innovators supporting large companies."

In this model, well-established U.S. companies are creating strategic partnerships with startups and small companies whose technologies and skills can help the large companies expand their own capabilities. Longtime ecosystem investors such as Johnson & Johnson (J&J) and Intel are driving existing ventures toward advanced breakthroughs, and companies such as General Electric, General Motors, and Google have adopted the approach in earnest in recent years.

2011-02-02T11:58:00.000-05:00

Larry Page's Google 3.0
The company co-founder and his star deputies are trying to root out bureaucracy and rediscover the nimble moves of youth

http://www.businessweek.com/magazine/content/11_06/b4214050441614.htm

Very good article on discussing the challenge of a very successful company change to maintain their growth

"Every Monday afternoon at the Googleplex in Mountain View, Calif., more than a dozen of Google's (GOOG) top executives gather in the company's boardroom….The unstated goal is to save the search giant from the ossification that can paralyze large corporations. It won't be easy, because Google is a tech conglomerate, an assemblage of parts that sometimes work at cross-purposes….

….Although Google recently reported that fourth-quarter profits jumped 29 percent over the previous year, its stock rose only 13.7 percent over the past 12 months, disappointing investors and lagging the Standard & Poor's 500-stock index. Google is being outpaced by rivals such as Facebook in social networking. In 2010, Facebook served up more display ads than either Google or Yahoo! (YHOO)—and was visited by more U.S. Internet users. And Apple (AAPL) is setting the pace in mobile computing, with beloved products that use a proprietary operating system that can be closed off to Google's services if the company so chooses.

On top of all that, there are antitrust inquiries in Washington and Europe, the defection of some top Google executives for opportunities elsewhere, and perhaps the most serious rap against the company: that its loosely organized structure is growing unwieldy and counterproductive.

The creative chaos inside Google's halls—a decentralized jungle of innovation, as one prominent venture capitalist puts it—once empowered employees to make bold moves, such as creating Gmail, the search-based e-mail system. Other than Android, the culture has recently produced a string of flops, such as Google Buzz, a Twitter clone, and Google Wave, a wonky service that let people collaborate online.

2011-01-26T07:55:00.000-05:00

Building the supply chain of the future
Getting there means ditching today’s monolithic model in favor of splintered supply chains that dismantle complexity, and using manufacturing networks to hedge uncertainty.
JANUARY 2011 • Yogesh Malik, Alex Niemeyer, and Brian Ruwadi
Source: Operations Practice
https://www.mckinseyquarterly.com/Operations/Supply_Chain_Logistics/Building_the_supply_chain_of_the_future_2729

This is an interesting twist on supply chain management recognizing the uncertainty expected in the future.

"Many global supply chains are not equipped to cope with the world we are entering. Most were engineered, some brilliantly, to manage stable, high-volume production by capitalizing on labor-arbitrage opportunities available in China and other low-cost countries. But in a future when the relative attractiveness of manufacturing locations changes quickly—along with the ability to produce large volumes economically—such standard approaches can leave companies dangerously exposed......

.....The bottom line for would-be architects of manufacturing and supply chain strategies is a greater risk of making key decisions that become uneconomic as a result of forces beyond your control.

Against this backdrop, a few pioneering supply chain organizations are preparing themselves in two ways. First, they are “splintering” their traditional supply chains into smaller, nimbler ones better prepared to manage higher levels of complexity. Second, they are treating their supply chains as hedges against uncertainty by reconfiguring their manufacturing footprints to weather a range of potential outcomes. A look at how the leaders are preparing today offers insights for other companies hoping to get more from their supply chains in the years to come."

2011-01-19T12:57:00.000-05:00

Finding Stability at the Core of Change

John Hagel

http://edgeperspectives.typepad.com/edge_perspectives/2011/01/finding-stability-at-the-core-of-change.html

Although a bit more philosophical than our usual posting, his reflections are very interesting:

"Sources of stability

....if we truly understand what is required to succeed in an ever more rapidly changing world, we will at the same time discover sources of stability that will provide us with the firm grounding that we all, even the most jaded adrenaline junkies, need to thrive....

...Tacit knowledge. ...as data proliferates, something else becomes more and more valuable and yet more difficult to access. Tacit knowledge is the knowledge deeply embedded in each of us, our relationships and our unique contexts.

...Trust-based relationships. ...At the time when we are consumed by short-term transactions, long-term, trust-based relationships acquire more and more importance....The best way to access tacit knowledge is in the context of trust-based relationships...

...Talent development...In a more rapidly changing world, our success and, in a very real sense, our survival, depends on our ability to learn faster and accelerate the development of our talent. ..

To get to the how, we need to find ways to access the tacit knowledge embedded in the people experiencing these changes. And, as we have seen, accessing tacit knowledge requires deep, trust-based relationships. This is exactly why tacit knowledge and trust-based relationships acquire increasing value as the pace of change accelerates – without them, we will never be able to develop the most valuable skills required to succeed and survive in a more rapidly changing world."

2011-01-06T10:09:00.000-05:00

The Seven Deadly Sins of Measurement

Jim Champy, coauthor, with Harry Greenspun, of Reengineering Health Care: A Manifesto for Radically Rethinking Health Care Delivery, introduces a lesson on the pitfalls of measurement from Faster, Cheaper, Better: The 9 Levers for Transforming How Work Gets Done, by Michael Hammer and Lisa W. Hershman.

http://www.strategy-business.com/article/ac00020?pg=all

Very interesting summary and I strongly suggest going to the article. Remember, you only get what you measure:

"....Vanity. One of the most widespread failings in performance measurement is to use measures whose sole purpose is to make the organization, its people, and especially its managers look good.

...Provincialism. This sin permits organizational boundaries and concerns to dictate performance metrics..

...Narcissism. This is the unpardonable offense of measuring from one’s own point of view, rather than from the customer’s perspective.

...Laziness. This is a trap into which even those who avoid narcissism often fall: assuming you know what is important to measure without giving it adequate thought or effort.

...Pettiness. Too many companies measure only a small component of what matters

...Inanity. Metrics drive behavior, but too many companies implement metrics without giving any thought to the consequences of these metrics for human behavior and consequently for enterprise performance.

...Frivolity. Not taking measurement seriously is perhaps the most grievous sin of them all"

2010-12-20T10:02:00.000-05:00

Billion-dollar Ideas: Finding Tomorrow’s Growth Engines Today

To create growth in uncertain times, use this disciplined and market-focused methodology. It can help you discover and distill attractive new ideas and build a business case for implementing the best of them.

by Greg Lavery and Chris Manning

http://www.strategy-business.com/article/00056?rssid=all_updates&gko=ef79c&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+StrategyBusiness-AllUpdates+(strategy%2Bbusiness+-+All+Updates)

Fabulous insight!!!!!!

"After several years of survival mode for many companies, growth is back on the agenda. But the requirements for success have changed. In today’s conditions — uncertain recovery, limited capital, and many new competitors — companies must find new ways to grow.

There’s no going back to the growth ideas that were bouncing around the organization before the global financial crisis. Executives need a robust framework to help them rapidly develop a long list of opportunities and then choose the very best ideas from it. The process must be comprehensive, efficient, rigorous, collaborative, and focused on “market-back” opportunities designed to meet customers’ needs. And it must be bold — the company must resist the temptation to do what has been done in the past.

Booz & Company has created a methodology for this, based on five lenses used for evaluating growth strategies. The five lenses — share of wallet, new regulations, technology and applications, distinctive capabilities, and business models — represent discrete and complementary ways to find and judge unconventional and unseen ideas. This approach has already been used successfully by companies in many industries and geographies."

2010-12-13T12:24:00.003-05:00

Deep Change: How Operational Innovation Can Transform Your Company

by Michael Hammer

Breakthrough innovations in operations—not just steady improvement—can destroy competitors and shake up industries. Such advances don’t have to be as rare as they are.

HBR.org > April 2004

We spend a lot of time in our work on driving organic growth on innovation. What does that mean? The formal definition of innovation is “the act or process of inventing or introducing something new” which is normally applied to new products or services. This article offers tremendous insight into how operational innovation can lead to substantial growth. The key is creating competitive separation, i.e., creating separation between you and your competitors in the eyes of your customers. Anecdotally, one could argue that is may be more difficult for your customers to match gains from operational innovation since it usually involves a whole system than innovating in products or services.

"In 1991, Progressive Insurance, an automobile insurer based in Mayfield Village, Ohio, had approximately $1.3 billion in sales. By 2002, that figure had grown to $9.5 billion. What fashionable strategies did Progressive employ to achieve sevenfold growth in just over a decade? Was it positioned in a high-growth industry? Hardly. Auto insurance is a mature, 100-year-old industry that grows with GDP. Did it diversify into new businesses? No, Progressive’s business was and is overwhelmingly concentrated in consumer auto insurance. Did it go global? Again, no. Progressive operates only in the United States.....
....The secret of Progressive’s success is maddeningly simple: It outoperated its competitors. By offering lower prices and better service than its rivals, it simply took their customers away. And what enabled Progressive to have better prices and service was operational innovation, the invention and deployment of new ways of doing work.

Operational innovation should not be confused with operational improvement or operational excellence. Those terms refer to achieving high performance via existing modes of operation: ensuring that work is done as it ought to be to reduce errors, costs, and delays but without fundamentally changing how that work gets accomplished. Operational innovation means coming up with entirely new ways of filling orders, developing products, providing customer service, or doing any other activity that an enterprise performs."

2010-12-09T13:15:00.003-05:00

How Learning Leads to Results
Matthew E. May, author of The Shibumi Strategy: A Powerful Way to Create Meaningful Change, introduces a passage on the critical role of a learning focus in innovation from The Other Side of Innovation: Solving the Execution Challenge, by Vijay Govindarajan and Chris Trimble.

http://www.strategy-business.com/article/ac00019?pg=all

This article is fabulous and underscores our work that the innovation process is one of constant learning and adapting.

"Learning and innovation cannot be separated. That’s why low-resolution prototyping is a critical part of the innovation process, because every savvy designer knows that before anyone can improve or innovate anything, learning must take place. In fact, there isn’t a successful design firm in the world that doesn’t elevate to gospel the “fail fast and learn” principle.
Although learning and innovation are closely linked, learning comes first. The great innovators understand that it is learnership that results in leadership....

...Learnership is all about the beta. It is an acquired capability, a teachable discipline. It requires developing a strong skill and a sound process. In this passage, Govindarajan and Trimble provide a precise and valuable definition of learning — and a reason that innovators should pay attention to it.
— Matthew E. May....

..When we speak with executives about the overriding importance of learning from experiments, we sometimes sense a degree of impatience. The overwhelming goal, in the minds of some, is not learning; it is results. Learning is a soft and squishy objective; results, on the other hand, are what business is all about.

We sympathize with that point of view. Learning, as an outcome, can sound like a consolation prize. “Sorry that the project failed, boss, but let me tell you, we learned a ton.” We get it. With innovation, however, placing primary focus on learning rather than results actually leads to better results.

We are not talking about learning in a general, feel-good sense. We are talking about a very specific type of learning. For our purposes, learning is the process of turning speculative predictions into reliable predictions"

2010-11-29T08:00:00.000-05:00

Trend watching—the growing power of emerging markets

http://www.trendwatching.com/trends/exceptionall/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+trendwatching+(trendwatching.com)&utm_content=Google+Feedfetcherr

Very interesting!!!!

"Now that virtually the entire world has joined the consumer arena, prepare for an avalanche of new brands, entrepreneurs and innovations from ‘emerging’ markets that will have global potential and appeal. From aggressive Chinese brands to Turkish creatives to Brazilian apparel, we're seeing a sharp increase in world-class companies that can and will compete for consumers’ Dollars, Reais, Euros, Pounds, Rupees, Rands, or Liras.

Sure, the expansion of global markets creates new opportunities for existing well-known brands, but the real story of the rise of these new powerhouses is the new brands that are making waves, both within their domestic markets, but increasingly outside these, competing and even beating the established, entrenched incumbents at their own game. One thing's for certain – the range of brands that consumers covet will be even more diverse in twenty, ten or even five years.

Why Now:
• Both consumers and brands in emerging markets are rapidly getting wealthier, more sophisticated, more mobile, and more educated. Side effect: an abundance of confidence, enthusiasm, creativity, and entrepreneurialism.
• Many emerging markets (minus China) have younger populations, and will not be confronted with ageing populations for a long time to come, meaning an endless source of young entrepreneurs as well.
• Brands from emerging markets are well positioned to cater to other booming emerging markets, while they may be perceived around the world as less arrogant, too. On top of that, they are less hindered by too many legacy systems and thinking.
• Emerging markets will soon boast the biggest markets for everything, from cars and beers, to detergents and mobile internet: not a bad environment for innovation to take root

Some obligatory numbers and stats

• Developing economies "have accounted for nearly 70 percent of world growth over the past five years". (Source: Carnegie, 2010.)
• The GDP of Emerging and Developing Economies accounted for 20% of world GDP in 2000, 34% in 2010, and an estimated 39% by 2015. (Source: IMF, 2010.)
• The global emerging middle class now stands at two billion people who spend USD 6.9 trillion a year, a figure which is expected to rise to USD 20 trillion - twice current US consumption - by 2020. (Source: McKinsey, July 2010.)
• Developing countries will account for two thirds of world trade in 2050. (Source: Carnegie, 2010.)
• The GDP of emerging markets will grow to be about 1.3 times the size of advanced economies in 2050. China will be approximately twice the size of the United States in purchasing power parity (PPP) terms. (Source: Carnegie, 2010.)
• India now has more rich households than poor, with 46.7 million high income households as compared to 41 million in the low income category. 62 per cent of Indian households belong to the middle class (Source: National Council of Applied Economic Research, August 2010.)
• 700 million people will start using the Internet in Asia in the next 5 years (Source: McKinsey; September 2010)"

2010-11-22T08:00:00.000-05:00

The Global Innovation 1000: How the Top Innovators Keep Winning
Booz & Company’s annual study of the world’s biggest R&D spenders shows why highly innovative companies are able to consistently outperform. Their secret? They’re good at the right things, not at everything.
by Barry Jaruzelski and Kevin Dehoff

http://www.strategy-business.com/article/10408?pg=all

The insights embodied in the complete article is a must read!! The following is intended to wet your appetite to read the full paper

"Why are some companies able to consistently conceive of, create, and bring to market innovative and profitable new products and services while so many others struggle? It isn’t the amount of money they spend on research and development. After all, our annual Global Innovation 1000 study has shown time and again that there is no statistically significant relationship between financial performance and innovation spending, in terms of either total R&D dollars or R&D as a percentage of revenues.

What matters instead is the particular combination of talent, knowledge, team structures, tools, and processes — the capabilities — that successful companies put together to enable their innovation efforts, and thus create products and services they can successfully take to market…..
…… Our goal this year is to examine the capabilities needed to maximize the impact of a company’s innovation efforts in good times and bad, and to highlight the benefits both of focusing on the short list of capabilities that generate differential advantage, and of clearly linking the specific decisions within innovation to the company’s overall capabilities system and strategy.

Strategies and Capabilities
Three years ago, in 2007, we focused our annual innovation study on how companies use distinct innovation strategies to create their products and take them to market. Nearly every company, we found, followed one of three fundamental innovation strategies:

Need Seekers actively and directly engage current and potential customers to shape new products and services based on superior end-user understanding, and strive to be the first to market with those new offerings.

Market Readers watch their customers and competitors carefully, focusing largely on creating value through incremental change and by capitalizing on proven market trends.

Technology Drivers follow the direction suggested by their technological capabilities, leveraging their investment in research and development to drive both breakthrough innovation and incremental change, often seeking to solve the unarticulated needs of their customers via new technology.

It is important to note that we found that none of these three strategies were any better than the others at producing sustained superior financial results, although of course individual companies outperform others within each strategic group. The success of each of the strategies depends on how closely companies, in pursuing innovation, align their innovation strategy with their business strategy and how much effort they devote to directly understanding the needs of end-users.

This year we set out to answer two new questions: Which sets of capabilities are the most critical for the success of each of the three strategies? And do companies that focus on those critical capabilities see improved overall financial results? Our hypothesis: Companies that can craft a tightly focused set of innovation capabilities in line with their particular innovation strategy — and then align them with other enterprise-wide capabilities and their overall business strategy — will get a better return on the resources they invest in innovation".

2010-11-17T13:55:00.003-05:00

Innovation: It Isn’t a Matter of Left or Right
By STEVEN JOHNSON

http://www.nytimes.com/2010/10/31/business/31every.html?_r=1&emc=eta1&pagewanted=print

I found this article to be incredibly thought provoking to the degree that I immediately ordered his book (“Where Good Ideas Come From: The Natural History of Innovation”). The title implies implications for politics but it is much broader than that. How companies drive their ideation can be greatly influenced by the learnings of history. The usual model of companies driving innovation for profit is challenged.

A note. Many of you helped in defining the source for the last posting. It is: The Web Is Dead. Long Live the Internet, Wired September, 2010 By Chris Anderson and Michael Wolff

http://www.wired.com/magazine/2010/08/ff_webrip/

"In my research, I analyzed 300 of the most influential innovations in science, commerce and technology — from the discovery of vacuums to the vacuum tube to the vacuum cleaner — and put the innovators of each breakthrough into one of four quadrants.

First, there is the classic solo entrepreneur, protecting innovations in order to benefit from them financially; then the amateur individual, exploring and inventing for the love of it. Then there are the private corporations collaborating on ideas while simultaneously competing with one another. And then there is what I call the “fourth quadrant”: the space of collaborative, nonproprietary innovation, exemplified in recent years by the Internet and the Web, two groundbreaking innovations not owned by anyone.

The conventional wisdom, of course, is that market forces drive innovation, with businesses propelled to new ideas by the promise of financial reward. And yet even in the heyday of industrial and consumer capitalism over the last two centuries, the fourth quadrant turns out to have generated more world-changing ideas than the competitive sphere of the marketplace. Batteries, bifocals, neonatal incubators, birth control pills — all originated either in amateur labs or in academic environments.

Now-ubiquitous technology like GPS was created by public-sector agencies for its original military use. And most of the building-block innovations that make GPS possible — satellites themselves, or the atomic clocks that let them coordinate their signals so precisely — were first conceived in nonmarket environments.

The fourth quadrant, however, is not locked in a zero-sum conflict with markets. As in the case of GPS, this fourth space creates new platforms, which then support commercial ventures"

2010-11-16T00:00:00.000-05:00

Always Pushing Beyond the Envelope
By DAMON DARLIN
NYT, 8/8/2010

http://www.nytimes.com/2010/08/08/business/08every.html?_r=1&scp=1&sq=Always%20pushing%20beyond%20the%20envelope&st=cse

This is a great article about two companies, Blockbuster and Netflix. Both pioneered delivery of movie DVD’s to consumers: Blockbuster via mass selling of DVD’s in ubiquitous stores while Netflix via U.S. Mail. The big difference between the two is that Blockbuster never really planned beyond their original business design while Netflix panned for “creative destruction” of their initially innovative business design breakthrough. One just delisted from the S&P 500 while the other is soaring. Guess which is which.

"For Blockbuster, the advent of DVDs in the mail was a disruptive technology. The chain relied initially on bulky videotapes and late fees to generate a fat revenue stream, and its scale was huge; smaller, independent stores gradually left the market. Netflix opened a new battlefront, mailing thin DVDs and letting customers keep a disc as long as they wanted.

Blockbuster saw the change coming. It even took action, setting up its own mail service. But seeds of destruction had been sown, and Blockbuster is now financially troubled. Netflix, meanwhile, is already embracing technology shifts that will make those red envelopes a quaint memory

.
Creative destruction has such a cataclysmic sound. But the term, coined by the Austrian economist Joseph Schumpeter to show how capitalism destroys companies as more innovative ones succeed, describes a process that is more like a slow-motion train wreck.

Established companies’ historical inability to change is what makes Netflix’s maneuvers so fascinating. It foresaw its possible demise at the moment of its own creation.

Netflix was formed in 1997 with the idea of sending movie DVDs, then a new technology, through the mail. But Reed Hastings, the founder and chief executive, and early employees, recognized that delivery of movies over the Internet would replace the mail carrier soon. They named the company Netflix, not Mailflix or DVDs by Mail. ….

……It is happening again, this time to Netflix. It was only last year, more than a decade after its founding, that streaming movies started to take off. But it was Netflix pushing people to do it, even though it meant that the company might rent fewer discs by mail.

Since January 2007, it had been offering a small selection of movies for streaming from the Netflix.com site to a customer’s personal computer. Then it began streaming to TV-connected devices so that the movies could be displayed on a larger screen, the way customers have always watched movies at home.

…. Netflix, meanwhile, keeps cutting deals with movie studios to get more films and television shows online. Now a movie aficionado paying $8.99 a month, for example, gets one DVD in the mail at a time — but can also watch movies online to his heart’s content. At one movie a day, the cost of the habit drops to less than 30 cents a film. Mail-only subscriptions are still available…..

..There is no way that a store with racks of movies can sell its wares for as little. Blockbuster’s same-store sales have declined steadily, even when including sales from its mail service and kiosks. It is closing hundreds of stores. Delisted from the New York Stock Exchange in July, the company’s stock is trading for around 17 cents on the pink sheets, down from $30 in May 2002, which is about when Netflix stock began publicly trading at $7.53."

2010-11-01T08:00:00.000-05:00

A Powerful Shift in Digital Business Model

Unfortunately, I lost the quote and site for this posting but the insight is so profound I wanted to share it with you

"You wake up and check your email on your bedside iPad — that’s one app. During breakfast you browse Facebook, Twitter, and The New York Times — three more apps. On the way to the office, you listen to a podcast on your smartphone. Another app. At work, you scroll through RSS feeds in a reader and have Skype and IM conversations. More apps. At the end of the day, you come home, make dinner while listening to Pandora, play some games on Xbox Live, and watch a movie on Netflix’s streaming service.
You’ve spent the day on the Internet — but not on the Web. And you are not alone.
This is not a trivial distinction. Over the past few years, one of the most important shifts in the digital world has been the move from the wide-open Web to semiclosed platforms that use the Internet for transport but not the browser for display. It’s driven primarily by the rise of the iPhone model of mobile computing, and it’s a world Google can’t crawl, one where HTML doesn’t rule. And it’s the world that consumers are increasingly choosing, not because they’re rejecting the idea of the Web but because these dedicated platforms often just work better or fit better into their lives (the screen comes to them, they don’t have to go to the screen). The fact that it’s easier for companies to make money on these platforms only cements the trend. Producers and consumers agree: The Web is not the culmination of the digital revolution.
A decade ago, the ascent of the Web browser as the center of the computing world appeared inevitable. It seemed just a matter of time before the Web replaced PC application software and reduced operating systems to a “poorly debugged set of device drivers,” as Netscape cofounder Marc Andreessen famously said. First Java, then Flash, then Ajax, then HTML5 — increasingly interactive online code — promised to put all apps in the cloud and replace the desktop with the webtop. Open, free, and out of control."

2010-10-30T08:00:00.000-05:00

The Thought Leader Interview: Vineet Nayar
The CEO of HCL Technologies describes how he focused his company on growth by engaging staff in unprecedented ways.
by Art Kleiner and Vikas Sehgal

http://www.strategy-business.com/article/10410?pg=all

This is an exceptional article on how leadership focus can define the nature of a company to drive growth. I included a few abstracts to encourage you to go to the original article.

"The idea of putting employees first and customers second might seem counterintuitive, especially when it is advocated by the CEO of a large global high-tech enterprise. But to Vineet Nayar, customers and employees are more directly linked than conventional wisdom would suggest. Nayar is the chief executive of HCL Technologies, a US$2.6 billion business and information technology services company based near New Delhi, India, with operations in 26 countries. (HCL originally stood for Hindustan Computers Ltd.) He argues that the aptitude, ingenuity, and enthusiasm of HCL’s more than 65,000 employees leads directly to greater value for customers, and thus to better performance. This is, of course, common management rhetoric, but Nayar is one of the few chief executives who has built a major company by putting it into practice....
...For example, detailed financial performance data broken out by business unit is delivered regularly to employees’ desktops. This has stimulated employees to ask more questions, volunteer more ideas, and challenge their managers more often. In turn, everyone is making better decisions — the kind of decisions that directly affect the customer’s experience. Nayar calls the customer–employee interface the “value zone.” Similarly, in a bold twist on the 360-degree employee appraisal tool, all appraisals are posted on the company’s intranet, and anyone at any level can give feedback on anybody else, including the CEO. As Nayar says, “Good or bad, we all learn from the results.”...
...The idea of engaging employees resonates with the company’s innovation strategy as well. HCL is a behind-the-scenes technology-services company with a brand that appears on few nameplates, but it profits when its customers’ devices succeed. Thus, much of Nayar’s attention is focused on meeting the challenges of convergence: figuring out what types of innovation will be necessary as content producers, telecom companies, and device manufacturers move into their next phase of interdependent business models. HCL’s revenue-sharing approach, and its ongoing efforts to learn from customers and other outsiders as well as from employees, represents an ingrained awareness that the most important insights can come from anywhere — if you know how to recognize and absorb them....
....We also discovered that technology development needs intellect more than it needs investment in dollars. But marketing needs dollars more than intellect. We are a very engineering-oriented company; our core competence is on the technology side. We have never been good at marketing. We still aren’t today. That’s why being a product company was the wrong positioning for us.
So we developed a different business model, involving revenue sharing: We co-designed products with our customers, then shared the revenue with them. Over time, we used this approach more and more, instead of more conventional fee-based and cost-based contracts. In effect, just as our customers use our technological knowledge for their expansion, we use their marketing talent and branding to help fuel our growth. Everybody shares."