Thursday, May 31, 2012

From Co-Workers to Team Members


By Drew Eisenbeis

This week I am going to focus this blog posting around the article, “What Happens Next? 5 Crucibles of Innovation That Will Shape the Coming Decade” from McKinsey & Company. Out of the 5 crucibles the article discussed (rebalancing, productivity, global interconnections, worldwide pricing, and market state), I most related to the discussion on productivity.
            In the productivity section of the article, it was mentioned that some companies are learning that, “work is not a place where you go, but a rather something you do.”  That line made me do a double take, as I thought back to the several jobs that worked in the past. Places where it was very shift-oriented. ‘be at the desk from 9-5 regardless’ in my experience, had the worst working environment as employee moral and creativity was non-existent. Working in a strict environment, the main focus was on the ‘time commitment’ and the hours till ‘freedom’. Whereas, in environments where the hours have been flexible and the jobs have been project and assignment based, my coworkers and working environment have been the exact opposite. In the project and assignment based jobs, the working environment allowed people to excitedly collaborate about the tasks at hand – often working at odd hours and times because of the excitement around the project. This worker freedom – or empowerment – seems to allow the worker to focus on what they were hired to do and apply their specialty in their own way. It also allows the team to work when they feel they can best apply themselves at the tasks at hand.
            In the article, it talks about the successes Best Buy, IBM and Cisco have had with this strategy, and I, from my personal experiences, would have to agree.  It is a risk to ‘trust’ and employee with freedom, but with a results based work environment there is quite incentive for the worker to know their tasks and do them well. In fact, the McKinsey & Company article caused me to search out more information on results-based management and I stumbled upon an article (linked below) that discusses ten reasons why results oriented management matters. Number one on the list was, Goals. Employees and employers will strive to have clearly defined goals and deliverables to ensure everyone knows what is expected.
            In the same article, 10 Reasons Results-Based Management Matters To Small Business, it was interesting to read how far reaching a results-based management approach will drive an organization. Talent is easier to retain, budgets are easier to figure out, weaknesses and inefficiencies are quickly exposed and dealt with. It seems to me, in my opinion, that the results-based environment turns people from ‘just co-workers’ to team of motivated people – similar to a sports team.
As companies struggle through tough times, down economies, or changes in general as the world alters, it seems to me that adapting the working environment from a ‘just co-workers’ environment to one that acts like a tightknit team will have greater chances for a successful outcome - as people will be more invested in their goals, the company and each other. Most importantly, mentioned in the 10 reasons article, "It really is the results that count" so if everyone is motivated and working like a tightknit team, the team will be motivated and focused on the results - like a sports team winning the game.


10 Reasons Results-Based Management Matters To Small Business

Tuesday, May 29, 2012

"New Starbucks Opens in Rest Room of Exisiting Starbucks"

A satirical article from The Onion on the "prevalence" of Starbucks. It's an oldie but a goody--wanted to share based on our discussion tonight. Enjoy!

Development of IT Security Strategy


In today’s world, the use of Internet, essential for organizational development carries considerable risk to confidential business information. The article on ‘IT- Security Strategy’ describes how security strategy must be flexible enough to protect an organization when large amount of data is added or removed from the organization. Interestingly, IT security is compared to a sealed glass box which contains a green liquid that represents corporate data. The author then explains how the ‘lid’ of the glass-box can be removed to provide flexibility to incorporate the demands of employees and customers. Further, Importance of categorizing data into different components, developing pathways to move the information to other business groups and allowing secure access of data is emphasized.
It can be inferred that the following important security measures should be included in the IT security strategy:
1.       Access Control: It refers to security features which control who can access resources in an organization. This can be modeled into a multi-level hierarchy and is represented by a security matrix. In this article, the author provides the analogy of users pouring different colored liquid in the glass box and fixing the position of the liquid at specific places in the box.Again, different spigots can be used to remove the right liquid.
2.       Change Control and Configuration Management (CM): In the IT standpoint, this can be denoted by different versions of the software maintained in a database. Further, several instances of the configuration items can be maintained for development and quality assurance purposes respectively. Browser s and Operating Systems should be regularly updated and should implement good patch management practices. The article describes that the CM process defines when the spigot of the glass box can be opened.
3.       Internet Usage Policy: This policy defines the type of websites that can be accessed by the employee for completing his/her tasks. Some organizations can also limit the bandwidth of data that can be uploaded and downloaded by an employee. Educating employees on the current security threats will help a lot in reducing the risk of a malware attack.
4.       Grouping of Data: Corporate data can be divided into different sensitivity levels, criticality levels and on access frequency levels. Depending on these measures, Internet Monitoring software could be implemented to enforce security strategy and to encrypt confidential data.
It is worth noting that, no single measure can completely eliminate the risk of a malware attack, but a well thought out security strategy will go a long way in minimizing the frequency of these attacks.

References:
IT Security Strategy: Thinking Inside and Outside the Glass Box

The importance of the strategic planning process


 I am very interested at the article of “The Real Value of Strategic Planning”. In this article, the author mentioned how to build prepared minds that are able to make sound strategic decisions. The author said the actual goal of a strategic planning process is not to make strategy but to build minds for useful strategic decisions. The point of view like this is new paradigm for me, so I am very interested this article.

 He indicated various concrete methods for creating prepared minds, who should attend, how long should be reviewed, where we should hold, what we should discuss, and so on. These methods are very clear to understand for me. Especially, his saying that companies whose processes look more like tribal rituals may leave corporate leaders unprepared when inevitable moments of truth arise is very impressive. In fact, the globalization has been progressed rapidly, so, the environment of many companies has been changed dramatically. In such situation, the company whose members of strategic planning plan almost the same process of making strategy each year like tribal rituals would not be able to survive. For example, in Japan, there were a terrible earthquake in east side of Japan, and a lot of companies had been suffered, so many of them lost their profits first. However, after one year has passed, some companies have been able to survive but some companies have continued to lose their profits. Of course, there are various factors of this situation, but I can say the difference of the companies’ process of making strategy is one of the most important factors whether they have survived or not.

 In this way, I can know the importance of the strategic planning process, however, I would also like to know about the application method for huge company or group. In fact, I work at NTT group which is the biggest telephone and internet service providing company in Japan and our group has a bunch of hierarchal structure and also has a lot of group companies. Therefore, there are also a lot of strategic department. In such environment, how should we apply the author’s proposition for our group? This means our group companies cannot plan strategy separately, they have to plan their strategies after the controlling had decided our group’s strategic plan, so it takes very long term to plan strategy if all of strategic department in our group companies apply the method. In fact, the author said strategic members should devote long term to review strategies. How do you think?

Strategies for Startups?

In seeking out specific topics regarding planning, budgeting, and forecasting particularly as it pertains to strategy development, and because budgeting, and forecasting lay the foundation for any effective business planning, I picked an article titled "What Comes Before The Business Plan? Everything" that is largely targeted at entrepreneurs, but that nonetheless goes to the core of the difficulty in generalizing a definition for strategy that will be broadly applicable to the diverse business entities in the economy. What is more salient about the article is that it clearly expresses the understanding that strategic planning requires perspective. Perspective that is usually a result of history.

In this article, they argue "that one reason startups fail is due to the allure of a good plan, a solid strategy, and thorough market research." It "hints that corporate strategic planning led us to the conundrum that if planning works for the greatest corporations in the world, then it must be good for startups too, [but it also notes that] planning and forecasting are only accurate when based on a long, stable operating history and a relatively static environment. Startups have neither.” Further, it argues that for a nascent entrepreneur, the development of a business plan and a corresponding strategy is discouraging largely due to the absence of the information needed to competently develop and write one.

However, the lack of information does not bar startups from adopting brilliant ideas that  demonstrates preparedness and can portend success in the marketplace. Take for example the   article written by Mark W. Johnson, Clayton M. Christensen, and Henning Kagermann, titled "Reinventing Your Business Model" where the authors proffer ideas that a startup could adopt to illustrate its plan for success. The "Reinventing Your Business Model" article described business model as consisting "of four interlocking elements that, taken together, create and deliver value." They describe first element as the Customer value proposition (CVP), which a startup has to have in order to be able to create value for customers. Absent, a CVP, a startup need not start.

Second, the article describes profit formula where the startup will have create value for itself while providing value to the customer. The third elements termed as the 'key resources' required to be able to deliver the value proposition, and fourth, key processes, that the article describes as the "operational and managerial processes that allow the [startup] to deliver value in a way they can successfully repeat and increase in scale."

It is the fourth element that most startups will find difficult to credibly articulate in a plan since there is a requirement for some substantive history of applicable operational and managerial processes. Nonetheless, the assertion that startups should forgo business plan writing and the development of strategy all together is a false choice. In the short and long run, developing a business model that explicates the four elements previously discussed is a vehicle to introducing new product to market and has reshaped entire industries and redistributed billions of dollars of value. Startups usually fall in tot he category of businesses that seek to reshaped aspects industries with novel products or services, so it would be prudent for startups to adopt such business models.


References:
[1] Heidi Neck, Contributor. What Comes Before The Business Plan? Everything.
<http://www.forbes.com/sites/babson/2012/05/21/what-comes-before-the-business-plan-everything/>

[2] Reinvesting Your Business Model (assigned case)
Mark W. Johnson, Clayton M. Christensen, and Henning Kagermann, Harvard Business Review.

The Apple iPhone: A Reinvented Product or Marketing Strategy?

In this week’s reading article “Reinventing your Business Model” by Johnson, Christenson, and Kagermann, the first and arguably the most important principle highlighted was Customer Value Proposition (CVP), which was described as a “model that helps customers perform a specific ‘job’ that alternative offerings don’t address”. According to the authors, a successfully reinvented business model revolves around a good product that answers to the needs and desire of customers. Such a product will undoubtedly sell well, albeit at the appropriate price point. Of course, whether or not it will generate the desired amounts of profits for the company depends on its profit formula. In addition, there is another important aspect – key resources and processes – that defines if the product can meet supply demands with a certain level of product quality.

The Apple iPhone needs no product introduction. Before we even drill down to the details, it is undeniable that the iPhone is widely accepted by many analysts as a successfully reinvented product based simply on the revenue and sales figures alone. Yet, if one bothers to dig deeper into the issue, one would begin to ponder if the iPhone’s success was owed indeed to a superior product or an expensive but effective marketing strategy by Apple?

According to Apple’s first official iPhone press release on Jan 9, 2007, the iPhone’s killer features are:

1.                 Big touchscreen for greater usability.
2.                 Widescreen iPod for enhanced multimedia functions.
3.                 Wi-Fi and Edge capabilities for ready Internet access.
4.                 Accelerometer that automatically customize user experience and extend battery life.
5.                 2MP Camera for photo-taking capabilities.
6.                 Good pricing and availability.

In terms of CVP, the iPhone was not the only product to offer these features. In fact, the Eten Glofiish X500 smartphone, which was introduced a year earlier than the iPhone, had mostly similar and even some better features such as GPS support! As such, it would be inconclusive to state that iPhone fulfilled this principle. The only areas where the iPhone were significantly better than its competitors were in the area of storage capacity and integration with its music retail service – iTunes.

In the area of pricing and availability, the iPhone was priced rather well in the smartphone category. It was not the cheapest, but neither was it the most expensive. As a result of Apple’s good pricing strategy, sale volumes were higher than expected. In fact, Apple had great difficulties meeting the level of demands for its iPhone, iPhone 3G and iPhone 3GS models. The key problems were shortage of parts such as CPUs. Thus, while Apple has done well in its profit formula, the same could not be said for its key resources and processes.

Having analyzed the four principles of the reading article, we have seen that Apple truly succeeded in only one of them – profit formula. Yet, why do people still pursue such a technologically-average product with long stock-out periods? Clearly, it was due to Apple’s strong marketing efforts. The iPhone was perceived by the general public to be a technologically superior product, even though it was not. In fact, it had a short one-day battery life, and there was no way to remove and pop in a standby battery! It was merely able to contain more songs and videos, and was linked to their iTunes media library. At that time, the iPhone App Store was still premature, with limited useful apps and games available. Yet, people were willing to bear the wait for it.

The true potential of the iPhone was unleashed when the apps scene took off. In this respect, Apple foresaw this and poured in large amounts of capital to jumpstart this new engine. In fact, the Apps Store was the real invention; not the iPhone itself. Thus, by integrating and marketing the various components (i.e. iPhone, iTunes and App Store) together, Apple was able to achieve overall success. Would the iPhone succeed if it was marketed by itself? I highly doubt so.
 

References:

2.         Apple Unveils iPhone

The Value of Real-Time Strategic Thinking at the American Red Cross


Kaplan and Beinhocker‘s "The Real Value of Strategic Planning" asserts that “real strategy is made in real time,” and thereby creating winning strategy requires an organization to be nimble yet prepared in order to make sound, strategic decisions.  This philosophy was evidenced in a situation I encountered while working for the National Headquarters of the American Red Cross (ARC) during the 2004 Indian Ocean Tsunami disaster.  Our organization was overwhelmed with millions of donations at one time, from millions of new donors to the organization.  The existing human and technological systems were not capable of handling the sudden increased giving and new donors.  I found myself managing a crisis situation, in which my team, in cooperation with divisional leadership, had to quickly develop new strategies and systems that would successfully accommodate this increased, unprecedented activity. The details of how we managed through this “crisis” are insignificant, but the most profound lessons learned in dealing with the situation were reflective of the article's themes.
Namely, the ability to re-think and implement our strategy quickly and effectively were a direct result of the common knowledge and understanding that my colleagues and I shared of each others' responsibilities, processes and execution of work products (“prepared minds and sharing a common fact base”); the involvement of both Divisional leadership and business-unit managers in crafting strategy (including essential participants in the planning process and not only senior leadership); and the strategy resulted informally from “real-time developments” which allowed for creativity and urgency to be used in developing solutions.  While this situation is one very small example of the ARC’s larger strategic planning model, it produced effective results.

6 habits of True Strategic Thinkers


As I read over the class material I not only considered the definitions and components of strategy and vision, but also thought about the character qualities needed by an executive in order to establish a strong and viable strategy.  I believe, much like leadership, some aspects can be learned, while other characteristics are natural dispositions of the individual and both combined with the surrounding environment.  This article highlights some of the necessary characteristics needed by leaders to develop and implement a strong and sustainable strategy. 

6 Habits of True Strategic Thinkers

You're the boss, but you still spend too much time on the day-to-day. Here's how to become the strategic leader your company needs.
By Paul J. H. Schoemaker | Mar 20, 2012
In the beginning, there was just you and your partners. You did every job. You coded, you met with investors, you emptied the trash and phoned in the midnight pizza. Now you have others to do all that and it's time for you to "be strategic."
Whatever that means.
If you find yourself resisting "being strategic," because it sounds like a fast track to irrelevance, or vaguely like an excuse to slack off, you're not alone. Every leader's temptation is to deal with what's directly in front, because it always seems more urgent and concrete. Unfortunately, if you do that, you put your company at risk. While you concentrate on steering around potholes, you'll miss windfall opportunities, not to mention any signals that the road you're on is leading off a cliff.
This is a tough job, make no mistake. "We need strategic leaders!” is a pretty constant refrain at every company, large and small. One reason the job is so tough: no one really understands what it entails. It's hard to be a strategic leader if you don't know what strategic leaders are supposed to do.
After two decades of advising organizations large and small, my colleagues and I have formed a clear idea of what's required of you in this role. Adaptive strategic leaders — the kind who thrive in today’s uncertain environment – do six things well:

Anticipate 

Most of the focus at most companies is on what’s directly ahead. The leaders lack “peripheral vision.” This can leave your company vulnerable to rivals who detect and act on ambiguous signals. To anticipate well, you must:
  • Look for game-changing information at the periphery of your industry
  • Search beyond the current boundaries of your business
  • Build wide external networks to help you scan the horizon better

Think Critically

“Conventional wisdom” opens you to fewer raised eyebrows and second guessing. But if you swallow every management fad, herdlike belief, and safe opinion at face value, your company loses all competitive advantage. Critical thinkers question everything. To master this skill you must force yourself to:
  • Reframe problems to get to the bottom of things, in terms of root causes
  • Challenge current beliefs and mindsets, including your own
  • Uncover hypocrisy, manipulation, and bias in organizational decisions

Interpret 

Ambiguity is unsettling. Faced with it, the temptation is to reach for a fast (and potentially wrongheaded) solution.  A good strategic leader holds steady, synthesizing information from many sources before developing a viewpoint. To get good at this, you have to:
  • Seek patterns in multiple sources of data
  • Encourage others to do the same
  • Question prevailing assumptions and test multiple hypotheses simultaneously

Decide

Many leaders fall prey to “analysis paralysis.” You have to develop processes and enforce them, so that you arrive at a “good enough” position. To do that well, you have to:
  • Carefully frame the decision to get to the crux of the matter
  • Balance speed, rigor, quality and agility. Leave perfection to higher powers
  • Take a stand even with incomplete information and amid diverse views

 Align

Total consensus is rare. A strategic leader must foster open dialogue, build trust and engage key stakeholders, especially when views diverge.  To pull that off, you need to:
  • Understand what drives other people's agendas, including what remains hidden
  • Bring tough issues to the surface, even when it's uncomfortable
  • Assess risk tolerance and follow through to build the necessary support

Learn

As your company grows, honest feedback is harder and harder to come by.  You have to do what you can to keep it coming. This is crucial because success and failure--especially failure--are valuable sources of organizational learning.  Here's what you need to do:
  • Encourage and exemplify honest, rigorous debriefs to extract lessons
  • Shift course quickly if you realize you're off track
  • Celebrate both success and (well-intentioned) failures that provide insight



Zipcar Goes to College


Zipcar Goes To College

Recently, Zipcar (ZIP) has been looking to trim its losses in light of a market slide since its IPO last year by attempting to rejuvenate various aspects of its strategy. An article from MSN Money details this renewed strategic focus in “Zipcar’s College Strategy Taps Target Market”. The article discusses both the importance of the “Millennials” to Zipcar’s strategy and the tactics Zipcar is using to implement its strategy.

Millennials are described as a young customer market between the ages of 18 and 34. Zipcar found through its research that these customers are “increasingly adoptive to collaborative consumption” and value Zipcar’s business model regarding car rental versus ownership. They also make up more than half of Zipcar’s current customer base and contributed to Zipcar’s phenomenal rebound in user membership and revenue over the last year. Therefore, Zipcar is employing its strategy towards the Millennials on college campuses so that it can capture increased usage both during and after their college years.

Zipcar hopes to capitalize on its first mover advantage in the car-sharing space and focuses its strategy around this market through various strategic tactics. For example, Zipcar has recently developed an increasing presence on college campuses, invested in the Peer-to-Peer car sharing company Wheelz, contracted a strategic partnership with Ford, and grew its social media foundation by launching the “Reserve a Zipcar” Facebook application. Zipcar is utilizing these tactics to grow this target user base that values car renting over car owning.

Porter’s Five Forces model would determine that Zipcar is adequately addressing the threat of new entrants by this increase in R&D expenditures. Barriers to entry are being created by Zipcar’s rapid investments and this aspect should minimize companies threating to enter into Zipcar’s space. However, the major question that should be asked is whether or not Zipcar has the long term ability to limit the threat of substitutes (owning versus renting). Time will only tell if Zipcar’s strategic focus can grow the Millennials base and continue to reach them once they are out in the workforce. Zipcar should expand its focus into delivering added value to car renting versus car owning in order to extend the Millennials’ relationship into the future.

References:
The Five Competitive Forces that Shape Strategy, by Michael Porter

When Values Challenge Profitability


Building your Company’s Vision, by James C. Collins and Jerry I. Porras, introduced us to the importance of a strong vision at the foundation of a successful organization, demonstrating how “truly great companies understand the difference between what should never chance and what should be open for change, between what is genuinely sacred and what is not.” Core values of an organization should be unwavering, even in the face of challenge.  But what happens when the core values of a chairman and founder, and his organization, are what cause it to lose customers and profitability? 

In North Carolina, Bob Page, founder and chairman of Replacements Limited, publicly opposed the effort to ban the marriage amendment in that state.  While Fortune 500 companies in the region silently stood by, Page and his organization provided financial resources and spoke out against Proposition 8.  With such a divisive issue plaguing North Carolina, should corporations participate in the debate or maintain their neutrality for the sake of business?  In the case of Replacements Limited, is losing customers and profits worth the stand they took? Core values should drive the business and when those core values are challenged, it is essential that the organization demonstrate their commitment to them.  However, in doing so, Page has risked his business, which he founded in 1981. 

In Using the Balanced Scorecard, it is important that there is not a disconnect between the organization’s values and its day to day actions. For Mr. Page, by not getting involved in the debate, he would have contradicted what was most important to his personal and professional values.  

A Company’s Stand for Gay Marriage, and Its Cost
James B. Stewart, The New York Times
http://www.nytimes.com/2012/05/26/business/replacements-limiteds-stand-for-gay-marriage-draws-repercussions.html?_r=1&ref=business