Wednesday, November 16, 2011

What Do Customers Want?-- Strategic agility and the role of leadership in figuring it all out

The McKinsey article “Competing Through Organizational Agility” defines three types of methods of organization agility that can be leveraged to help a company succeed during turbulent times. These strategies include strategic, portfolio, and operational agility. In the article, Sull stated, “given the unpredictable nature and uneven distribution of golden opportunities, a combination of patience and boldness is crucial.” This golden opportunity can be critical to the success of the organization and part of organizational agility is being able to seize these opportunities. In the McKinsey article ,“Do you have the right leaders for your growth strategies?” the author emphasize the importance of leaders to have the ability to have market insight and understand customer needs during times of uncertainty. From both of these articles, I took away the importance of having management that can predict the changes in the market, shift resources, and then adapt to take advantage of new opportunities.

When I think about many of the successful start-up companies today like Google, Facebook or even Teach for America, I realize that many of these ventures were started at ages younger than my current age today. Wendy Kopp started TFA out of a senior paper at Princeton and of course we all have seen and heard mark Zuckerberg story. Did the leadership of these leaders make these ventures more successful than other entrepreneurship, was strategic planning something incorporated once people latched on to the idea, or did was there a mix of being in the right place and the right time and seizing opportunities in the market? Were these organizations successful because of a golden opportunity?

To try to break down some of these questions, I started by doing some brief background research on Facebook and how it became successful, since the company provides a good I am familiar with and use almost every day. Facebook was not the first application in the social media phenomena. Most of the early Facebook users can probably remember the time when MySpace was the most popular Web 2.0 application. People projected the growth of MySpace, how they would create revenue, and how much the organization would be worth. During all of the buzz, News Corporation purchased by News Corporation for 580 million dollars in 2005.[1] The acquisition of MySpace by was supposed to be a great strategic move for the MySpace brand. News Corporation was a “powerhouse media company” [2] and had additional resources (or as Sull stated in his article an access to a “war chest of cash”). Yet, we all know how the MySpace vs. Facebook battle played out. Facebook did not have the dream team of strategists but still managed to become the major social media tool with the company valuation reaching around 80-100 billion dollars at the time of the IPO. After reading about organizational agility I could not help but think about Facebook as a company that utilized this to be successful. In a Forbes Magazine editorial[3], Adam Hartung describes why Facebook was so successful. In his opinion piece, Hartung states

“ the brilliance of Mark Zuckerberg was his willingness to allow Facebook to go wherever the market wanted it. “And that’s the nature of White Space management. No rules. Not really any plans. No forecasting markets. Or foretelling uses. No trying to be smarter than the users to determine what they shouldn’t do. Not prejudging ideas so as to limit capability and focus the business toward a projected conclusion. To the contrary, it was about adding, adding, adding and doing whatever would allow the marketplace to flourish. Permission to do whatever it takes to keep growing. And resource it as best you can – without prejudice as to what might work well, or even best. Keep after all of it. What doesn’t work stop resourcing, what does work do more.”

This strategy of “white space management” sounds like it could apply to Google or even to a company like Netflix. However, it is more than just being adaptable to customer needs as stated in McKinsey article. It is trying to get rid of the guessing work to determine customer needs and letting customers take the lead in driving demand. As discussed in our reading, companies like Zara are successful from their ability to quickly predict and adapt to customer demands.

Yet Facebook isn’t predicting demands because customers are actually driving this process. This is how these companies determine what sticks. As I began to think about more organizations and I did a little more research, I realized Web 2.0 organizations are not the only one that are becoming driven by customer demands or “white space management.” In fact, many corporates are adding a science behind this concept know as predictive markets. In predictive markets employees, customers, or experts are participants in using current market prices and buying and selling to predict behavior.

Many companies that would be considered “more traditional” have started using predictive markets including Best Buy, Motorola, Qualcom, Microsoft, Google, and GE. How influential are such market predictions in determining customer demands? If successful, the big question is how does this play into strategy and does it take away from relying on “leaders” and relying more on science as a method to improve strategy agility for companies. In the future, will entrepreneurship ventures be successful because of being in the right place at the right time (or patience and having ideal timing), because of leaders with vision and ability to develop strategy, or based on a science that takes could possibly reduce the uncertainty about customer needs?


[2] Hartung, Adam. “How Facebook Beat MySpace”. Jauuary 1, 2011. Editorial.


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1 comment:

  1. I just want to add that I did this blog before we had the discussion about whether or not Facebook was just lucky in class!



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