Three Forces Shaping Business and Management "Technology"

Gary Hamel Offers Unique Perspective on Business Environment

Writing on his new thinking, Hamel shares some new ideas worthy of consideration for business managers and executives on "the technology of management."

"today, the overriding problem for every organization is how to change, deeply and continually, at an accelerating pace."

The three pressures that he elucidates:

1. We're facing a hypercompetitive environment and "relentless pressure on margins."
2. Workers are better equipped, than ever before, to collaborate due to social networks.
3. 20-somethings are more interested in performance than rank; they want to be recognized and compensated based on performance and contribution not credentials

How will these forces transform your management methods, style? Or, will it be a resister?

Gary Hamel, a consultant and educator, has been ranked as the #1 most influential business thinker in the world by the Wall Street Journal. For the whole piece, see the link below:


http://whatmatters.mckinseydigital.com/organization/three-forces-that-will-transform-management

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Three Forces Shaping Business and Management "Technology"

Gary Hamel Offers Unique Perspective on Business Environment

Writing on his new thinking, Hamel shares some new ideas worthy of consideration for business managers and executives on "the technology of management."

"today, the overriding problem for every organization is how to change, deeply and continually, at an accelerating pace."

The three pressures that he elucidates:

1. We're facing a hypercompetitive environment and "relentless pressure on margins."
2. Workers are better equipped, than ever before, to collaborate due to social networks.
3. 20-somethings are more interested in performance than rank; they want to be recognized and compensated based on performance and contribution not credentials

How will these forces transform your management methods, style? Or, will it be a resister?

Gary Hamel, a consultant and educator, has been ranked as the #1 most influential business thinker in the world by the Wall Street Journal. For the whole piece, see the link below:


http://whatmatters.mckinseydigital.com/organization/three-forces-that-will-transform-management

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The Fallout From AIG's Bonusgate

Outrage Over Bonuses Makes Sense: Looks Like Old Times

"Stone her...she's an adulteress."  In some cultures, these words are still used today although we could reasonably expect this exhortation, easily, two thousand years ago as a sort of norm.  Groups of people dispensed justice.

Group behavior.  In my guess, that is partly what got AIG into trouble: following without being an effective follower.  (Effective followers are the ones who support effective leaders.)  The market wanted safe, high returns.  The elusive golden calf.  AIG delivered just what their customers wanted.  Without asking enough questions, obviously.

Now, the criticism of the bonuses paid out looks more like a stoning than anything else I've seen.  In response to EVP Jake DeSantis' resignation that was posted online, there are more than 875 comments, and counting.  Each comment is generating one hundred or more recommendations.  (You can find it on the NYTimes website.)

From Blogger Pictures

I don't know much but...it's pretty clear to me that people are angry and confused.  In January 2009, another article described US workers as "jittery and compliant."  Not the
kind of risk-oriented or trusting attitude that breeds innovation or would allow these $700K, after tax, bonuses to get paid without a comment. 

I have nothing to offer, no advice.  It's pretty clear, to me, that this infuriating event looks more like an "electronic stoning" than, perhaps, anything else we've seen so far. 

There is no logic with which to dissect, analyze and understand this situation.  People are scared and understandably so: the species likes stability and predictability.  And, we don't seem to have either.  It is a worrisome situation when so many are scared and a few are making some big money. We have each other, though.  Good thing, huh?  Might be all we can hang on to. 

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Google: The Behemoth That Creates

Walking Directions in Beta

I am continuously impressed by the areas in which Google finds some opportunity to exploit, some service to provide.

I just went to Google Maps this morning for some idea on directions to a location I don't visit often. There it is: a little walking icon. And, a caution:


It's hard for me to imagine how a company so large and that has grown so quickly could continue to drive income and innovation simultaneously. Sort of mind boggling, isn't it? I mean, they dominate in many areas that they choose to serve and generate cash flow while supporting a high share price -- still hovering at around 330.

I think it's a good thing to wonder about companies like these from time to time. While we might be inclined to ask "how do they do it?", I think a more important question would be "why do they do it?" It reminds of the answer that Peter Block gave to a questioner years ago: "If you focus on the 'why,' the 'how' will take care of itself." That's a discipline I have incorporated into my life. For good value.

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Managing Expectations: Understanding the Two Dimensions

Airport Bus Company: The Basis for a Case Study

Customers have expectations in two dimensions: 1) Process, and; 2) Outcome. Last Thursday, March 12th, I got to the airport just fine. In time. Outcome OK. Process? Failing grades. Why?

In an effort to deal with the economic downturn and loss of airlines and passengers at Oakland Airport, the service that runs coach buses from Sonoma County to SF and Oakland has created a new program: take the big bus to San Rafael and, then, get on a smaller bus to Oakland.

The smaller bus, a bone-crushing truck chassis, has no Wi-Fi nor reading lights. Sitting in the way back made me feel like I was on a carnival ride whenever we'd hit some bumps or dips in the highway. (Can you tell I'm a bit dissatisfied with the service right now?)

OK, the preamble out of the way: the link to customer satisfaction? Well, they missed a critical step: managing my expectations. I figured I would get to the airport but...I didn't know that the "how" had changed. Nor was there any break on the price: a downgraded service for the same price but...no one told me why. That would have gone a long way to making me less disappointed.

Outcome is the end-product of a product or service: car repair, an easy one to translate, involves repairing my car at the estimated cost in the time promised.

Process is more fuzzy: empathy; communications; recovery service, etc. It deals more with how I feel I was treated. For example, if, in the case of car repair, you're not going to get it done on time, you call me and let me know: don't let me show up and, then, tell me. Or, offer me a loaner.

What the research suggests is that customer expectations are more weighted towards process dimensions versus outcomes. And, of course, providers are more interested in outcome than process: "What's the problem? I got your car fixed...yeah, so it was a week late..."

This is an important lesson to which you might give some attention. Or, consider having a few people inside the company take a strategic look at it in your specific business, team or work unit.

I did call the owner of the company to get educated. I have to admit he did well on that score. So, he gets high marks...after the fact. He was empathetic and candid. He was also optimistic and expressed his desire to continuous improvement despite his company's monopoly. Why don't we give some bailout money to guys like him? I don't know.

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Don't Hug the Bean Counters

Ph.D.'s Models Didn't Predict Collapse

The U.S. Treasury couldn't keep up with the complexity of the financial instruments that Wall Street was creating. As a result, they relied on the Street's risk analysis folks to tell them what the real risks were. (This is akin to having the fox guard the hen house.)

The Ph.D.'s -- theoretical physicists, physical chemists, etc. -- calculated risks based on statistics from earlier models. Models created long before sub-prime mortgages were being written in a fast-appreciating real estate market fueled by cheap money from Asia.

The Treasury Department couldn't predict the collapse because they had no roadsigns indicated there were dangers ahead -- ROAD OUT AHEAD! DANGER! FALLING ROCKS! Any one of those might have worked. But, they weren't driving and they almost weren't a passenger: they had no idea there was even a cliff on that road.

Recent information suggests that the money we (the U.S. government, that is) have been giving to A.I.G., the insurance giant, as part of the TARP bailout, has been used to pay off "mortgage insurance policies" to French, Swiss and German banks. So what. Yeah, not important.

What is important is the reality that the folks that do the numbers -- run the numbers, create the pro forma's, generate the spreadsheets -- have only been helpful to businesses as analysts who are able to look backwards. Rarely, have many of them been prescient enough to eek out a view of the future that was all that helpful, or even benign.

I love my accountant; he's a great guy and he loves his daughter. But, I'm not going to hug him; he follows the rules and, in the process, keeps me out of trouble with authorities. If I ran my life according to his views, I think my interpretation would be to stay in bed most days. Even though that wouldn't be his intent; at least I couldn't get taxed for staying in bed.

All of this discussion leads me to conclude that the people doing the numbers -- nice folks, well intentioned folks -- shouldn't be running the business. I'll give them hugs some other time.

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Air Travel: A Luxury and Novelty

My Wife Will Think I'm Nuts

My dear wife travels for her job. She hates being away from home. I miss her but it's great when she comes back; our relationship has never been stale even when neither of us has traveled for work.

Tomorrow, I head off on a cross country jet-trek via Southwest to visit an old friend who now lives in Tennessee. I look forward to the high altitudes that an airplane provides to me; it lightens up my thinking, frees my brain from earthly gravitational constrictions. (Is that really possible? I have no idea.) Anyway, I think bigger on a plane.

What does that mean? It means that I think in grandiose ways: I explore why and how I might be able to realize a recent dream of connecting people, from across the planet, to talk, to converse, to compare notes, to complain.

This economic crisis we're in, for instance, provides an enormous opportunity for us to share our common dread, our fears. Perhaps, even grieve together. And, then, dream anew. It's possible and...I'll probably think about something just like that on the plane tomorrow.

Yes, many of us our scared. But, why can't we harness the energy of that nasty four letter word -- love, yes, there: I've said it -- and use it to help each other. We all need help now even if it's just for the purpose of validating. Just to say: "I hear you, brother; I feel your pain." (Sorry, Bubba just entered the room. Clinton, you know?)

On the plane, I might also think about the question of "how did I get so lucky?" You know, there I'll be, flying on an airplane -- it's still a luxury to me -- thinking lofty thoughts, not concerned with my physical well being. I'll be fed, clothed and have a computer through which I can share thoughts with some wonderful people.

I will likely think: I am part of a family where I am deeply loved, respected, appreciated. Made fun of. Laughed at. How did I come to be so lucky? That will be another thought.

So, these are some of the things I will likely be contemplating on the plane. I hope there's a little piece of inspiration that some of you find from reading this. Inspiration to think big.

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Huge Opportunities for Global Connections Being Missed

Bandwith Could Afford Us A Chance to Compare Notes, Across the Globe

Warren Buffet's voice was heard on NPR yesterday.  What I remember is something about "falling off a cliff."  If I remember correctly, he was describing consumer behavior and investing. 

Yes, people are hunkered down; my free-spending neighbors tell me that's their strategy right now.  Which, for them, means they're not buying any more houses. 

Iceland, that little country whose economy fell off a cliff, is the subject of a New Yorker piece I've been reading; they aren't prosperous anymore and don't know how to deal with the lack of giddiness.  Corruption, lack of oversight, cheap money: all contributed to an over-expansion of their Banks. 

So, here's my idea: wouldn't it be a wonderful enterprise if we, somehow, we citizens of the U.S. (I don't like calling us Americans; it's disrespectful to all of the other countries in the "Americas" like Canada, Mexico, Peru, Chile, etc.) could connect with the common folks in Iceland?  To compare notes, you know.  A videoconference.  Or, teleconference.

Why not get some folks from France, Germany, China (well, maybe), Japan on the screen too?  I'm guessing what we'd find out is that they're all in trouble, financially, and afraid of the economic uncertainty facing them.  Lacking confidence in their country's government to "fix the problems." 

I know, for me, this would be a bit of a chance to validate what I'm feeling: the anxiety, the fears, the sense of helplessness.  Perhaps, it could even make me/us feel more empowered like...there is something we can do: help eachother cope.  Just an idea.

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If You Don't Ask, How Do You Know?

How Do You Know If Your Customers Are Pleased, Satisfied?

The easiest question to ask customers, if you want to enliven your business, is why they buy from you. It's also the most difficult. OK, I lied. Well, I was presenting the irony.
When I ask my clients' customers, I use almost that phrase: "Why do you buy from Pipes, Inc.?"

We call this an unstructured interview; it allows us to get information/data on a variety of subjects. Surveys, which I'm not very fond of, are for statistical correlations not qualitative information.

So, asking the question "why?" is very powerful. The tendency, when the answers start coming, is to get defensive: the wrong response. Probing further has to go on so creativity is key at this point.

In another page, I'll talk about how to organize this process for maximum benefit. I'll present a case on why the folks who normally talk with the customers should not be the ones who collect this information.  I'll also talk about what to do with the information once you've got it.

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Non-Profits Struggle During Challenging Times

California State Universities Work to Help Community

Went to a meeting at a University last week. An effort by part of their outreach function to link eco-minded community organizations with University faculty and resources. A nice idea. The last time they held a meeting like this was three years ago.

Until the folks convened, I don't think the organizers knew how they were going to run the meeting -- typical for academia? I hope not. But, it came off just fine. So much for me the Kilroy, the cynic, the naysayer. But, I told me so.

Anyway, all of these organizations whose mission was about outdoor education, sustainability, eco-commerce needed volunteers. What a way to start up a business: most of the work, at least some of the work, has to get done by folks who are doing it for the "feel good" of the exercise. Well, for some meaning, as well; we shan't forget that, shall we?

So, demand for services are up and so are the number of unemployed folks. While they can't put food on the table by volunteering, they can get some meaning, feel good, eh?

So much of what I'm thinking these days is just filled with so much uncertainty, so much that's not discernible. Overdetermined a good friend of mine called it. Overdetermined.

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Toyota Dealer: 1% in CSI Rating = $500K

Tangible Impact of Customer Satisfaction

Right now, regardless of where the dealership is located -- Dubai, England, Canada, U.S. -- sales of new cars are down. The major source of cash flow to prop up these companies comes from vehicle repair and maintenance. (Duh!)

So, my friend Jerry (not his real name, ha!) is part of a team developing and selling software into Auto Dealership Service Departments. Their program streamlines service delivery through better scheduling, more effective time management of the technicians, etc.

Most of these dealerships, especially Toyota's, are aware of the impact of Customer Satisfaction on gross revenues. The rule of thumb is this: for every change of one percent (1%) in the Customer Satisfaction Index for a given dealer, there is a $500K impact in annual revenues.

Yes, of course, this would have held true during the "good times" (which seem pretty far away right now) but the impact is still there. Customer satisfaction does impact the bottom line.

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