Business Fiction

Posted in Business by Administrator on the October 28th, 2005

Toby Hecht taught me that businesses don’t exist. He was speaking about this from the standpoint of trying to talk to IBM. Toby says, “Try it sometime. Call and ask to talk to IBM.” While I recognized this as profound at the time, it took me a while to figure out where I was going to apply this insight. Where could I have this thinking show up more powerfully for me?

Ultimately something occurred to me. I noticed people were speaking to me about situations they were in or situations that they were trying to produce (such as getting an appointment for a sales call) and they would say, “I had a sales call at IBM today” or “IBM isn’t interested in our product right now” (I’m just using IBM as an example). And I realized how ineffective this speaking can be. It’s not very rigorous nor professional because–as Mr. Hecht had pointed out–IBM doesn’t exist!

I would have to ask, who did you meet with at IBM? Who isn’t interested in our product right now? If we began talking about the people involved, focusing on them, our conversations would be a lot more effective. From this insight I resolved never to speak like that except when doing so thoughtfully. Similarly, I’m going to encourage the people that I’m working with to do the same.

Now that you’ve read this post you may begin to notice people speaking about interacting with things that don’t exist. Most importantly, you may find yourself speaking this way. Depending on how you want to show up in business you may want to catch yourself and correct it. We can’t sell to, coordinate, cooperate, communicate, partner, team or do anything with something that doesn’t exist. We do these things with people.

Slam Dunk

Posted in Business by Administrator on the October 27th, 2005
OK, business is not a slam dunk, but don’t you wish it was? I couldn’t resist using this for the title of this post. I learned about William Dunk through an interview he did with the Ubiquity publication from the ACM. You can find it here

One of the most important things I’ve learned about business is that it’s not as important to have the answers as it is to always be asking yourself the right questions. William Dunk Partners advises CEOs on their strategies and on his website shares “some of the questions we always have to ask”:

a. Can we state the strategy simply in fifteen words or less?

b. What kinds of people will we need to put the strategy in place?

c. Will the strategy truly grow the company? For years, strategists and consultants have focused much too much on reducing costs, not increasing revenues.

d. Does the strategy figure out what alliances will create enough leverage for us to achieve superior performance?

e. Does the strategy swim upstream against the prevailing tide? The real money will be made by finding a way of not doing things the way they are today.

f. Will the strategy remedy some big hole in the economy? Will lives really be different if the strategy gets implemented?

g. Does the strategy look for niches where there’s no competition?

Questions like these are helpful in triggering my thinking, particularly when coming from accomplished business practitioners. Increasingly, I’ll collect and keep questions from accomplished people more than settling on any particular answers. As the world changes, I find the answers less valuable than the fundamental questions.

The Future of Work In A Changing World

Posted in Uncategorized by Administrator on the October 27th, 2005

Charles Handy is Visiting Professor at the London Business School, writer, and broadcaster. Those of us who are continuing to develop our Reading The World skills will note that in this interview Handy cites economics, demographics, and technology as the forces of change ending what he calls “the employee society”.

You’ll want to read this interview if you want to know more about these claims:

– Organizations are changing, with three types emerging in the future.

– “Leadership” is beginning to replace “management”.

– Education for tomorrow will go on all the time.

– People will have to learn the skills of selling.

Danger Signs

Posted in Uncategorized by Administrator on the October 23rd, 2005

In Into Thin Air author John Krakauer recounts an ill-fated expedition on Mt. Everest in which 4 out of the 6 climbers died. One of the tales of that disaster includes the story of an airplane pilot who had reached Everest’s summit earlier that day. He later told Krackauer that he had recognized dangerous cloud formations and saw the early signs of an impending storm that would claim the lives of 4 climbers. Krackauer recalls “…he told me that he recognized these innocent-looking puffs of water vapor to be the crowns of robust thunderheads immediately after reaching the top. ‘When you see a thunderhead in an airplane,’ he explained, ‘your first reaction is to get the f**k out of there. So that’s what I did.’ ”

This story has haunted me since I first read it several years ago, not just because of the disaster itself, but as a potential business lesson. This airplane pilot was a unique observer. He saw imminent danger when others only saw “innocent-looking puffs of water vapor”. This story has spurred me to ask, What are the equivalent warning signs for a business disaster? Would I recognize them and more importantly would I recognize them in time to get out? I’ll share some danger signs I’ve experienced in future posts. What are your danger signs?

Drucker on Management in the 21st Century

Posted in Business by Administrator on the December 2nd, 2003
Management Challenges for the 21st Century by Peter F. Drucker  

In the last few months we’ve read and have been discussing Managing Oneself, a chapter from Peter Drucker’s latest book. In the following paper, I offer a summary of each of the other chapters from the book, my bracketed comments and an introduction to some of the many distinctions, so that you can get a sense of the context in which Managing Oneself is offered. Perhaps you’ll determine from this summary that, as with the chapter Managing Oneself, the rest of this book might contribute to your thinking about what you need to do now in anticipation of the future.

One of the recurrent themes in this book is the impact of the challenges of the 21st century for us, the knowledge workers. The knowledge worker is seen as a form of capital for an organization. The knowledge worker is mobile and when we leave an organization we can (ideally) be regarded as an asset that is no longer available. When we are thinking about our own challenges for the 21st century and the enterprises we as individuals represent, we can anticipate and work to produce the skills that will be valued in the coming century.

Drucker is clearly a world-class speaker on the management of organizations. I recognize when I read his books a great hunger on my part for the “right” answers and an implicit valuation on his part of the virtue of hard work. His thinking also seems to be grounded largely on the individual acting as an individual and misses out on the great power available in coordinated action, cooperation, and networks of help. I am, however, regularly surprised and challenged when encountering his uncommon “common sense”, for instance, his willingness to reexamine the obvious, even the obviousness that he admits helping perpetuate.

Drucker has a different common sense about instant gratification. For him, relatively quickly can mean “in two to three years”! This is an example of the wonderful wisdom he shares and a telling perspective from a man in his nineties. He is an observer of organizations in the world and helps me see things in a different light while always challenging me to act.

Chapter 1 Management’s New Paradigms

Why assumptions matter.

“..despite their importance, the assumptions are rarely analyzed, rarely studied, rarely challenged–indeed rarely even made explicit.”

In this chapter, Drucker offers a handful of fundamental assumptions about management and organization structure that have to be reexamined. He offers some basis for what he means, why these assumptions show up and how they produce thinking that won’t be effective in the future. He says he doesn’t answer questions here but raises them.

Chapter 2 Strategy – The New Certainties

[This chapter was particularly relevant for me these days as I am working with managers that are not committing to a strategy (which, in itself, is the default strategy). This is a problem as we treat all ideas and possibilities as equally valuable. We do not have a strategy against which we can evaluate these possibilities effectively.] Drucker points out that without a strategy “there is no way to tell what genuinely advances the organization toward its desired results and what is diversion and splintering of resources.”

[In the context of reading of Managing Oneself, if we think of ourselves as an enterprise, we can ask ourselves what is our strategy (or ambition)? What is the story we hold about what results we want to produce? What kind of life do we want to live? It is our thinking about these questions that can have us evaluate opportunities effectively or determine what is “diversion and splintering of resources.”]

From a global perspective, Drucker offers five certainties for the coming century. These are fundamental considerations for both our business [and personal] strategies.

1) The collapsing birthrate in the developed world

In western and central Europe and Japan the birthrate has fallen well below the rate necessary to reproduce the population. The US birthrate is declining and is only as as high as it is because of the immigrant population. Drucker points out that there is no precedent for a population of older people outnumbering younger people. For the last two hundred years all institutions of the modern world have assumed growing populations. The implications Drucker describes are (1) demographics will dominate the politics of all developed countries for the next twenty or thirty years, (2) government instability will be the norm, (3) retirement will mean something different effecting, among other things, employment relations which will become increasingly heterogeneous and flexible, (4) the productivity of all knowledge workers will have to increase rapidly or the country will risk growing poorer.

2) Shifts in the distribution of disposable income

The four growth industries of the twentieth century were Government, Healthcare, Education and Leisure. The changes in demographics ensure that Healthcare and Education will continue to be major growth sectors. [The need of healthcare is obvious as the population grows older.] Drucker predicts that the knowledge worker will take advantage of the opportunity for lifelong learning.

The present growth industries are financial services or “retail finance” and printed books dominated by non-American companies such as Bertelsmann with its book clubs in China and Murdoch.

3) Defining performance

Since the late 1920’s it was a fuzzy notion that a business should be run to serve a balance of interests among its employees, customers and shareholders. The emerging American approach is that the business is run for the short-term interests of the shareholder. Drucker proposes that we’ll “have to learn to develop new concepts of what performance means in an enterprise. As performance is no longer obvious and simple, work will have to be made meaningful for the knowledge worker. New strategies will have to take into consideration new definitions of performance.”

4) Global competitiveness

Any institution has to measure itself against the standards set by each industry’s leaders anyplace in the world. [Where we see this in our business is the opportunity, amidst the great technical labor shortage of the San Francisco Bay Area during the dot-com bubble, to “import” India’s programming talent to supplement our own more expensive and difficult to retain programmers. Similarly, the Internet based technology and content we broadcast is wide open to being plagiarized by foreign businesses that do not share Western values of proprietary intellectual property or copyright protection.]

5) Growing incongruence between economic globalization and political splintering.

National economies and boundaries are increasingly irrelevant as defining the scope of businesses. Businesses have to deal with and perform in three overlapping spheres, the global economy, regional economies and national and local realities. Another implication is that businesses will have to manage their currency exposure. Strategy has to be based on the assumption that currencies will continue to be volatile and unstable.

[It is interesting here to compare Drucker’s thinking with Russell Redenbaugh’s three major forces in the world; Demographics, Technology and The March to Freedom. While demographics is represented in Drucker’s thinking as well as the March to Freedom, it’s less clear to me is where technology fits in Drucker’s thinking. Perhaps technology is incorporated into his concerns for shifts in disposable income and defining performance. Changes in technology change realities of scarcity and abundance and is a contributing force in shifting disposable income.] Drucker points out that the 60-hour workweek and 51 weeks a year (3000 hours annually) was the norm in 1900. In the last century that has dropped in half to 1500 hours in Germany and 1850 hours in the US contributing to the 20th century growth of the leisure industry.

[The impact of technology in travel, communication and information systems has contributed to the march to freedom, the resulting global economy and need for global competitiveness.]

Chapter 3 The Change Leader

Drucker proposes that unless the task of an organization is to lead change it will not survive. He contrasts this with the thinking prevalent ten or fifteen years ago about “overcoming resistance to change”. Being a change leader is a central challenge for management in the 21st century requiring:

1) Policies to make the future.

2) Systematic methods to look for and to anticipate change.

3) The right way to introduce change, both within and outside the organization.

4) Policies to balance change and continuity.

[This is a particularly challenging chapter when we apply this thinking to ourselves as enterprises. We have the challenge of maintaining some stability in our lives while at the same time examining our current practices to determine if they are relevant to our concerns and whether they are effective. As Toby Hecht points out, we recognize change when we acknowledge that today’s practices are no longer effective. Where in our lives do we need to introduce change and adopt policies to be change leaders? Are the strengths we identify in feedback analysis sufficient to produce the futures we want? Where are we introducing innovation in our practices?

Drucker provides some interesting thinking here about the budget allocation to sustaining operations and expenditures for the future whether in good times or bad. Rather than reducing expenditures across the board when the business down cycle occurs and missing out on the future, Drucker suggests that a budget for the future whether in good times or bad remain at a steady 10 to 12 percent. Applied to the individual we might look to our practices for continuous improvement or lifelong learning when times get tough. Is this the first place we look to cut from our budgets?]

Chapter 4 Information Challenges

Drucker says that the information revolution for the coming century represents a focus on the “I” in Information Technology. The question will be, “What is the MEANING of information and its PURPOSE? And this is leading rapidly to redefining the tasks to be done with information and, with it, to redefining the institutions that do these tasks.

[What will continue to be abundant will be information, what will remain scarce is access to timely and relevant information that is meaningful and allows an organization to act with purpose.]

Drucker points out that enterprises are paid to create wealth and that requires four sets of diagnostic tools:

1) Foundation Information

This information is the oldest and most widely used set of diagnostic tools, such as cash flow or sales. If they are normal they do not tell us much, if they are abnormal they indicate a problem to be identified and addressed.

2) Productivity information

This information deals with the productivity of key resources. Economic Value Added Analysis (EVA) is popular because it measures, in effect, the productivity of all factors of production. With benchmarking, comparing one’s performance with the best performance in the industry, EVA provides tools to measure and manage total factor productivity.

3) Competence Information

Companies are developing the methodology to measure and manage core competencies. Every organization needs one core competence: innovation.

4) Resource Allocation Information

[Where are you going to apply your scarce resources? In business, Drucker says these are capital and performing people. For us as individuals, this might reasonably be our individual time. What projects are we going to undertake? This is another way we can measure our strengths and competencies. Which of our projects were successful? What results did they yield?]

“These four kinds of information tell us only about the current business. They inform and direct tactics. For strategy we need organized information about the environment.” [As individuals, this is where our skills and the need for help from people like Redenbaugh and Drucker for Reading The World apply. “In the long run, information about the outside may be the most important information executives need to do their work”.]

Drucker expects technology to lead a revolution in education. A probable consequence will be the shift to “the continuing professional education of adults during their entire working lives.”

Chapter 5 Knowledge Worker Productivity

The most important contribution of management in the 20th century was the fifty-fold increase in the productivity of the manual worker in manufacturing. The most valuable assets of a 20th century company were its production equipment. The most valuable asset of a 21st century institution will be its knowledge workers and their productivity.

After looking at the measures for manual labor productivity, Drucker offers six major factors that determine knowledge worker productivity.

1) What is the task?

Knowledge work unlike manual work does not program the worker. Work on knowledge worker productivity begins with asking the knowledge worker: What should you be expected to contribute? and What hampers you in doing your task and should be eliminated?

2) Knowledge workers have to manage themselves. They have to have autonomy.

This entails responsibility for their own contribution and accountability in terms of quality, quantity, time and cost.

3) Continuing innovation has to be part of the work, the task and the responsibility of the knowledge worker.

4) Knowledge work requires continuous learning and teaching on the part of the knowledge worker.

5) Productivity of the knowledge worker is not primarily a matter of quantity. Quality is at least as important.

Defining quality and productivity is a matter of defining a task, requiring the difficult, risk taking and controversial definition as to what “results” are. To answer it requires controversy, requires dissent.

6) Knowledge worker productivity requires that the knowledge worker is both seen and treated as an “asset” rather than a “cost”. It requires that knowledge workers want to work for the organization in preference to all other opportunities.

Knowledge workers own the means of production. “It may still not be true for all knowledge workers that the organization needs them more than they need the organization. But for most of them it is a symbiotic relationship in which they need each other in equal measure.”

Knowledge worker productivity is the biggest of the 21st century management challenges. As mentioned before, because of the demographic changes in developed countries, knowledge worker productivity is required for survival. Drucker predicts that the questions about knowledge worker productivity will, within a few decades, bring about fundamental changes in the structure of the economic system.

Chapter 6 – Managing Oneself

As the rest of the book deals with changes in society, economy, politics and technology, this chapter deals with the new demands on the individual.

Drucker coined the term “knowledge worker” thirty years ago. In this chapter, he describes a practice of feedback analysis to assess our strengths.

He sums up the drastically new demands the knowledge worker faces:

1) They have to ask: Who am I (What are my values)? What are my strengths? How do I work?

Drucker recommends concentrating on your strength. Place yourself where your strengths can produce performance and results. Secondly, work on improving your strengths. Thirdly, watch for intellectual arrogance, areas that you do not believe you need to have any knowledge or being contemptuous of knowledge outside one’s own specialty. Fourth, eliminate bad habits. Fifth, have good manners. Sixth, identify where you shouldn’t do anything and seventh, waste as little effort as possible on improving areas of low competence.

2) They have to ask: Where do I belong?

After answering the questions above, the knowledge worker can decide where they belong or where they don’t belong. Knowing the answers to the questions enables people to say to an opportunity, an offer, to an assignment: Yes, I’ll do that. But this is the way I should be doing it. This is the way it should be structured. These are the kind of results you should expect from me, and in this time frame, because this is who I am.

3) They have to ask: What is my contribution?

This question is new in human history. Traditionally, the task was given. To ask it means moving from knowledge to action. To know our strengths we can also answer this question by answering, Where and how can I have results that make a difference?

4) They have to take relationship responsibility.

[It is in this small section of the book that Drucker acknowledges “very few people work by themselves and achieve results by themselves”.] To manage oneself requires taking relationship responsibility. First, accept that others are individuals and have their own strengths. Find out how others work and adapt to the way they are effective. The second thing to become effective is to take responsibility for communication. A knowledge worker should request of people with whom they work that they adjust their behavior to the knowledge worker’s strengths and the way he works.

5) They have to plan the second half of their lives.

The knowledge worker, for the first time in history, can be expected to outlive the organization. There is one requirement for managing the second half of one’s life: to begin creating it long before one enters it. There are three answers: 1) start a second and different career 2) develop a parallel career 3) become a social entrepreneur, keep doing what you’ve done all along but starting another, usually a non-profit, activity.

In summary, Drucker confesses that while he has confined this book to management challenges, the changes discussed in this book “go way beyond management. They go way beyond the individual and his or her career. What this book actually dealt with is: THE FUTURE OF SOCIETY.” (more…)

Geoffery Moore’s Tornado

Posted in Business by Administrator on the June 1st, 1997

Inside the Tornado, Geoffrey Moore.

Geoffrey Moore’s Inside The Tornado offers a modified application of the value disciplines described in Treacy’s & Wiersema’s, The Discipline of Market Leaders. Treacy and Wiersema describe the benefits that arise for companies that identify and focus on a value discipline. These value disciplines include Operational Excellence, Product Leadership and Customer Intimacy. Moore’s proposition is that these value disciplines should change as a market matures. In Chapter 8, Competitive Advantage, Moore takes these value disciplines a dimension further and combines them with distinctions of the Technology Adoption Life Cycle. Moore adds his own distinctions to this life cycle. He identifies and characterizes different stages of the life cycle and describes how the value disciplines might change in different stages.

The Technology Adoption Life Cycle, invented approximately 40 years ago, describes the various stages of marketplace response to discontinuous innovations or more simply, technological change. The Life Cycle is depicted as a bell curve. Each segment or stage is represented by different market conditions and typical customers ranging from technology visionaries at the early stage, pragmatists and conservatives in the middle and skeptics in the final stage. Moore’s distinctions include different stages of the life cycle progressively labeled as:

  • The Early Market
  • The Chasm
  • The Bowling Alley
  • The Tornado
  • Main Street
  • End of Life
  • Moore asserts that the each of these stages call for different value disciplines or combinations of disciplines. This is a critical difference. Treacy & Wiersema’s proposition has a static nature. Moore suggests that value disciplines need to change as the marketplace matures.As an example, Moore asserts that the singularly most important value discipline at the earliest stage of technology adoption is product leadership. It is product leadership that the technology visionary values. The radical change a new technology offers allows previous bottlenecks or obstacles to be bypassed. Because it is still early, the product can be customized to the visionary’s idiosyncrasies.

    Getting over The Chasm, (Moore’s make or break period for a product) and into The Bowling Alley, the surviving product benefits from an emphasis on the value disciplines of Product Leadership and Customer Intimacy. The critical success factor here is providing a “whole” product. Because the product is a leader in the market it is differentiated from the status quo. The product is further differentiated as “whole” because it attends to the all of the needs of the customer in a particular market niche.

    The Tornado is the period of rapid growth; the steepest area of ascent in The Technology Adoption Life Cycle bell curve. This is the period of sweeping, mass market adoption of a product. It is in this stage that the value disciplines of Product Leadership and Operational Excellence are paramount. Product Leadership here shows up as a company’s capacity to set the product standard. Operation excellence is critical in The Tornado as a company strives to keep up with the demand for the product.

    At the pinnacle of the Technology Adoption Life Cycle or Main Street, Moore suggests that Operational Excellence and Customer Intimacy should be the predominant value disciplines. This is the first stage where the value discipline of Product Leadership is no longer critical. Main Street is a period of market development, the goal being to “flesh out” the market’s potential. The product is approaching a commodity purchase and companies seek the lower costs Operational Excellence allows. Customer Intimacy is demonstrated with added value product offerings for niche markets. An example of this might be Hewlett Packard co-marketing their computer printer with a special software package. Product Leadership as a value discipline here is a risky proposition. The maturity of the market and the competition make Product Leadership a short-lived and tenuous position.

    Geoffrey Moore shows up as an important speaker in the computer industry. After being introduced to his latest book through the Sales Professional’s Course, I have heard others reference his work. Toby Hecht has invited Geoffrey Moore to speak at the All-SPC conference this June. In the last two months, I have had my most significant customer reference Moore. Two Product Managers from separate companies, one responsible for launching an electronic bill payment system and another initiating the development of new electronic or intemet based commerce have also referenced Moore’s work recently. What I interpret from this is that Geoffrey Moore is a speaker in the world who’s thinking and distinction directly impact my world.