Sunday, December 17, 2006
Is there any other kind of change than lasting change? Change initiatives that do not lead to lasting change are just a waste of time. If organizations initiate change processes they are surely intended to last, at least until the next change process. I have heard people say that as long as one of our change agents is involved in the project things move along well but when we pull out the change initiative falters or even stops. This is a common problem when people with special competence like consultants or internal change agents are involved in change.
Fundamentally, change in organizations is about changing behaviour. We want individual human beings to do things differently than they have done in the past. No change will ever be long-lasting without changing the behaviour of people doing the work of the organization. If this assertion is true then to create lasting change we must focus on the drivers of human behaviour.
Template for Success!
Most change initiatives fail because they do not successfully address the underlying behaviours that are to be changed. Below is a simple template that might be helpful in addressing the real elements of organizational change. In the first column I have listed a breakdown of the elements of Competence. Across the top I have listed elements of change processes as described by Mats Lundeberg in his book “Handling Change”. (Mats is a professor at the Stockholm School of Economics)
Fill in each field as needed with a few of both the group and the individual. Remember, it is individuals within the group that need to change. Individuals have different competencies and desires, therefore you may need to answer many of these questions at an individual level to insure the success of you change process.
Remember that behavioural change takes time. A rule of thumb is that significant changes in individual behaviours take 21 days of consistent effort. How often do each individual in our organizations get 21 consecutive days with training, coaching and follow-up to secure the new behaviours. In many cases they get a training course, a kick-off and a t-shirt and are expected to “just do it”!
I have filled in the columns “Current State” and “Future State” with some questions to help you get started. Good luck!
Click here to view the template! (Its not pretty but it works!)
Tuesday, November 14, 2006
When commercial television was finally allowed in Sweden nobody in the advertising industry knew what to do with it. Swedish advertising and media agencies where all about print! This opened a niche for small specialized consulting companies who could advise customers and their agencies on how to use TV. A buddy of mine was very successful in this business and his main qualifications where that he was very smart and he grew up watching commercial TV in the states. With time the advertising community became savvy to TV but it was amazing how long it took for many agencies to seriously include TV as a real part of the media mix.
Some years later commercial radio started up in Sweden and the same process was repeated. Traditional ad and media agencies had no expertise in radio. Specialized “radio” consultancies thrived for years until the advertising environment had adapted to this new media. (I still think radio is highly misunderstood, poorly used and undervalued in Sweden.)
As the internet entered our lives we have seen the same type of conservative approach from the advertising environment. Most agencies still don’t understand the real value of the internet and have little or no in-house competence. If they do have internet competence they typically treat it as a special channel and it is an exception to see campaigns in which the internet is fully integrated.
Now the mobile telephone is lurking on the horizon as the next great new media environment. The question is how long it will take advertising agencies to embrace the opportunities created by the mobile telephone. The mobile phone makes it possible to present the right message, adapted to the customer's situation (place, time, interests, etc) combined with the perfect payment solution. The mobile phone interacts easily with all other media and can turn static two dimensional media like print and billboards into interactive media. Imagine getting customers to run all over town taking photos of billboards in various locations in order to win a backstage pass or a trip to the Bahamas.
The end result will be more cost effective campaigns that target the right customers with the right info at the right time and place which will both increase customer’s satisfaction with the advertiser (and advertising in general) and increase sales.
Monday, November 06, 2006
Now it is happening again! This year the mobile phone celebrates its 50th anniversary. (I am proud to say that my employer played a key role in the creation of the mobile phone). During the past 50 years the mobile phone has revolutionized voice communication as well as the telecom industry. It is fitting then that this youthful 50 year-old stands poised once again to radically change our lifestyle and our industry.
This time the change is taking place in the world of data communication and like before this revolution will have its losers and its heroes. In order to understand the magnitude of this new change you could start by imagining that everything we do on the internet today will be moved into the mobile telephone. That in itself may not seem like such a big deal and in some ways may even be perceived as a weaker version of the internet. After all, who wants to surf the internet on such a little screen and with lower speed than most people have at home or at work. But anyone voicing opinions like this needs to think again!
First of all far from everyone has easy affordable access to the internet. Large parts of the world have little or no access to the internet. The mobile internet will make a powerful contribution to the welfare and quality of life for many people in the world.
In the parts of the world where a large part of the population has easy, affordable access to the internet there are still enormous opportunities that a mobile internet will create. Imagine all the strengths of the internet enhanced by a few key benefits of the mobile phone: Mobility, Positioning, Interactivity and Payment!
Even if the mobile phone can give you internet access where ever you are it is still highly reactive. Users need to go in and search for the pertinent information they are looking for. One advantage of the mobile phone is that it can provide key information to content providers that will help them give users information they want or need before they actually seek it. Drivers can be provided with information about road conditions as they travel down a highway. Spectators can sit in the stadium watching their home team playing football while at the same time viewing highlights on their phones of other matches going on at other places. The alternatives are endless.
Mobile phones can easily turn all kinds of inanimate objects like billboards, beer cans, or newspaper ads into interactive media. Imagine getting customers to run all over town taking pictures with their telephones of the same posters on billboards at various locations in order to win back stage passes or a trip to the Bahamas. Or customers sending in pictures taken with their telephones of a coke can. With today’s picture recognition technology advertisers can cost-effectively identify pictures of one individual poster or coke can without bar codes making it possible to activate brands in exciting new ways.
The mobile phone has the potential to replace the credit card as we know it. The mobile phone could become the primary payment tool in a large part of the world. But if you connect mobile payment together with all the other benefits of mobility, interactivity and positioning, you begin to understand the real power of the mobile phone. The mobile phone makes it easier to target the right customer segments with the right message, to involve the customer in an interactive dialog and finally to execute the transaction.
Imagine the following transaction process:
You receive a video message from your favourite music artist asking if you would like to win tickets to his/her next concert!
Then receiving a free track from the artist’s next album.
Then being offered to purchase the entire album at a special price.
Then being offered free music from similar up and coming artists within the same genre as your favourite artist.
The process can go on for a long time!
Here is another scenario:
Imagine sitting at home watching a James Bond movie on a DVD or via Cable TV. We all know that at some point in time James is going to give the camera a great view of his Omega watch or his SonyEricsson mobile phone. You push a button on your mobile phone and James turns towards you and says “I see you are interested in my watch. This is the new Omega etc, etc, etc! For those of you watching this movie you can get a 10% discount on the watch and it will be delivered to your door tomorrow.” You push another button on your phone and the watch is charged to your telephone bill and you continue watching the movie. The next day you get your watch!
To paraphrase Kotler: Customers who get the right product for the right price, when and where they want it are satisfied! The mobile phone makes this easier than it has ever been!
Tuesday, October 24, 2006
There is another story told by a professor (I don’t remember who, sorry!) who said that ant’s have a very low intelligence as individuals but very high intelligence as a group. People on the other hand have high intelligence as individuals and low intelligence as a group. I think anyone who has worked in very large organizations recognizes this problem. I am frequently amazed at what sound views many people in large organizations have about the problems facing their companies and what actions need to be taken to improve the situation. When all of these clever individuals get together the end result often turns out much worse than it would have if just one person had done the thinking.
Considering these two stories I have come to the conclusion that our ambition should be to be at least as smart as ants are when working in groups never losing sight of the groups overriding mission. We should at the same time be relentless in our strivings to excel in fulfilling our mission, continuously re-evaluating the situation and never letting the long shadow of history block our vision of the future.
Wednesday, September 20, 2006
Some critics have suggested that "Hard Facts" borders on common sense but it is the apparent lack of common sense in business that often amazes and shocks me. In fact, the idea of common sense is exactly the type of the strongly held belief that "Hard Facts" puts into question. As far as I can tell, all people have sense but not much of it is common! There is so much about business management that appears to be obvious to so many when reading business literature or attending conferences and yet when we get back to the office we fall back on old behaviours and entreched belief systems. "Hard Facts" truly gives the hard facts on what is one of the most significant underlying problems with business life today. Business initiatives fail because they are initiated to solve problems that aren’t fully understood and achieve goals that aren’t clearly defined with methodology that at best is ineffective and at worse destructive!
Saturday, September 02, 2006
Virtually all companies conduct some sort of planning, whether it be it the form of budgets, strategic plans, business plans or marketing plans. Despite the various problems, some of which are described below, many companies have discovered the hidden benefits of planning activities. Here I would like to emphasize the planning activity as opposed to a planning document, tool or method. It is in the activity, the action of planning that the real value is achieved. As Dwight Eisenhower said "Plans are nothing, planning is everything".
Of course the planning activity must be documented in some way, however, a planning document should be living organism, continuously adapting to new situations and new environmental requirements. Like an organism it should be continuously developing and learning. As time goes, the document should reflect the accumulated knowledge and experience of the actors in the business which it represents. Many managers have discovered the value of planning and whether one intends to reveal the "truth" in an official document or not, many valuable "truths" can be discovered during the act of planning. These "truths", in the form of facts, ideas or discoveries of correlations and relationships between variables, are beneficial in the running of the business.
Unfortunately, in many companies these planning tools are primarily seen as tedious routines which must be executed in order to satisfy requirements from top management. As soon as these plans are made and presented they are far too often filed away and never to be seen again. They may be brought out again next year to be used as a guide for the new plan.
One of the most common planning tools is the budget. Budgets are manipulated by everyone. Those responsible for creating the budgets build in buffers in order to insure that the budget can be achieved. Those who review and/or approve the budgets of others, fully aware of the manipulations which take place, regard most budgets with suspicion. This results in responses from senior management with arbitrary demands for higher sales, more margin or lower costs by amounts or percentages which, in objective terms, could only be interpreted as incompetence, either on the part of the budget maker or the evaluator. However, since everyone knows the rules, no such conclusions are drawn. In fact, a manager or director who attempts to budget "honestly" may be deemed incompetent since he will undoubtedly be judged according to the same measures as all others who are playing the budget manipulation game.
This manipulation is not limited to budgets. It is prevalent in all kinds of planning activities in many companies and organizations. For this reason one might question the validity of this type of planning tool as some companies have done and eliminated the use of budgets for example.
If these planning methods are not lost deep in a file cabinet and even if they are done with honest assumptions and good analysis they still run a risk of becoming "holy gospel". Many planning tools are mystically transformed from paper documents to stone tablets. These tablets are then followed blindly as a surrogate "Ten Commandments" and no deviations or alterations to the plan are allowed. Alternatively, these tablets are used to bash the heads of managers who have not achieved the goals set forth.
Depending on ones definition of marketing, the marketing plan could focus on everything from specific sales related activities, to virtually every aspect of the business that affects a company's competitive position in the market. This broader definition could involve relationships with suppliers for components or sub-assembly, financial institutions, production technology or anything else that could affect the strength of the company in the market place.
The following elements should be included in a marketing plan:
I. Facts and Analysis
A. Market size, in volume and value by product group
B. Average price by product and/or product group
C. Distribution channel analysis
1. Key distributors or channels
a. Description of their business or of the channel
b. Sales, and share of market
c. Sales of our products
d. Description of terms of business, (margins, logistics, etc)
D. Competition analysis
1. Brand positioning
2. Market share
3. Relationship to trade
4. Consumer image
5. Strengths and weaknesses
6. Expected reaction to our company or product
E. Our own strengths and weaknesses
1. Brand positioning
2. Market share
3. Relationship to trade
4. Consumer image
5. Strengths and weaknesses
6. Short-term product or market needs
7. Long-term product or market needs
F. Consumer Analysis
1. Buying Behavior
2. Purchase Criteria
3. Lifestyle Analysis (if possible)
II. Plan of Action
A. Define adjustments to strategy (product focus, brand positioning etc)
B. Define tactical actions
1. Attacks to competitors weaknesses
2. Target key competitors
3. Promotional Plan
a. Internal actions ( to promote products within own sales
b. Trade actions ( to promote products to distribution channels)
c. Consumer actions ( to promote products to Consumers)
d. Estimated costs
III. Financial Plan (targets/expectations for relevant period 1-5 years)
A. Market share
B. Sales targets
C. Selling Expenses
D. Returns (Net Operating Profit)
E. Market Investments
F. Cash Flow Analysis (Net Present Value)
Wednesday, August 23, 2006
Creating the right organization and control system for R&D is always a difficult task even when confined to only one geographical location. Managing numerous R&D units spread all over the world increases the complexity dramatically. How well corporations coordinate their global R&D is one of the key factors for success in many industries.
Two crucial parameters must be defined in order to understand the methods for managing global R&D:
1) The various functions filled by R&D units
2) The different types of organizations that can be applied to these units
Types of global R&D laboratories
In order to understand the functions that can be filled by R&D units the descriptions used by Ronstadt (1977) as seen in de Meyer's and Mizushima's article Global R&D management (1989) will be referred to. Ronstadt's model is based on four types of R&D activities.
1) Transfer Technology Units or units established to help certain foreign subsidiaries transfer manufacturing technology from the parent while also providing related technical services for foreign customers.
2) Indigenous Technology Units or units established to develop new and improved products expressly for the foreign market. These products were not the direct result of new technology supplied by the parent organization.
3) Global Technology Units or units established to develop new products and processes for simultaneous application in major world markets of the company.
4) Corporate Technology Units or units established to generate new technology of a long term or exploratory nature expressly for the parent.
Types of organizations
To discuss the various organizations which can be used for global R&D, the model developed by Perlmutter (1965) as described in the book Managing the Global Firm by Bartlett, Doz and Hedlund (1990) will be applied. Although Perlmutter's model was developed to describe different types of organizations for multi-national corporations, it is not unreasonable to apply the same models to the organization of global R&D units.
Perlmutter's 3 organizational structures are:
1) Ethnocentric - overseas operations are managed primarily to protect the company's competitiveness in the home market. Communication and information is top down and all strategic decisions are steered from corporate headquarters. Subsidiaries sell products designed and manufactured by parent with little or no local control.
2) Polycentric - overseas subsidiaries take more responsibility adapting designs and manufacturing product to meet local needs. Subsidiaries are managed as independent units with minimum interference from headquarters.
3) Geocentric - all units of the organization are in close communication. Global market segments are defined and technology is transferred rapidly to sell more or less the same product worldwide maximizing economies of scale both in production and R&D.
The Perlmutter/Ronstadt Matrix
The following matrix illustrates one way in which global R&D can be discussed. It is of course possible that a corporation can manage its R&D activities differently depending on the type of technology unit. For example, a transfer technology unit might be treated polycentrically while a corporate technology unit may be managed geocentrically. However for the sake of this paper the various types of technology units will be discussed individually with no significant attention paid to the communication flows between the different types of technology units.
Ethnocentric Transfer Technology Units (ETTU)
ETTU's assume that the subsidiary does some manufacturing for the local market. In an ethnocentric company the transfer of technology from the parent to subsidiary is based on the transfer of a finished design to be implemented in local production. This design was originally created to meet the needs of the parent company's home market and is transferred to the subsidiary in an opportunistic fashion. A positive reaction to this product from the market might be considered "good luck" because no real consideration was taken to local market need by the parent company. These R&D units could be located anywhere in the world, however, their responsibility is limited to adaption of the design from headquarters to the local manufacturing facility.
Ethnocentric Indigenous Technology Units (EITU)
The indigenous technology unit cannot exist by definition in an ethnocentric corporation since the local subsidiary would not be allowed the freedom to develop and manufacture product specifically for the local market. This type of operation could represent a transitory position from ethnocentric to polycentric.
Ethnocentric Global Technology Units (EGTU)
In the strictest sense EGTU's cannot exist since in an ethnocentric organization a global technology unit is based at the headquarters and although simultaneous introduction of new technology may occur to capitalize on global scale, the product is primarily designed to meet the needs of the home market.
Ethnocentric Corporate Technology Units (ECTU)
Corporate Technology units are quite compatible with ethnocentric organizations. The ECTU is located in the headquarters and is focused on securing the long-term development of new technology or evaluating applicability of alternative technologies and processes for the parent corporation.
Polycentric Transfer Technology Units (PTTU)
If the polycentric corporation maintains transfer technology units, they will be located in the headquarters and used to transfer product designs or manufacturing technology to the subsidiary to then be adapted by the local organization. If a subsidiary were to develop a technology or design that is applicable to another market, the transfer would take place via the PTTU at the headquarters since there is no mechanism for communication between subsidiaries.
Polycentric Indigenous Technology Units (PITU)
The indigenous technology unit fits best in a polycentric organization. The freedom that the polycentric organization allows is an excellent environment for the development and manufacturing of products specifically for the local market.
Polycentric Global Technology Units (PGTU)
To operate global technology units in a polycentric organization would be very difficult since the various local organizations are accustomed to making adaptations to fit their local markets. If, for example, a PGTU, were to develop a product to be applied simultaneously around the world, the design would need to be so flexible as to allow for local adaption and additional time must be allocated, not only for product adaptation, but also for internally selling the concept to the relatively independent polycentric subsidiaries.
Polycentric Corporate Technology Units (PCTU)
Corporate technology units in polycentric companies operate as suppliers to the local subsidiaries. Probably located at the headquarters, the PCTU would "sell" to or take assignments from the local R&D units to evaluate new technologies or materials. The PCTU functions as an advanced research laboratory for a number of more application oriented units in the subsidiaries.
Geocentric Transfer Technology Units (GTTU)
The transfer technology unit is extremely important if the geocentric organization is going to function successfully. Transfer technology units can be located anywhere and have the responsibility for surveying best practices or new innovations throughout the company and implementing them or cross fertilizing wherever applicable. The GTTU can be either a formal organization or an informal function of all R&D units.
Geocentric Indigenous Technology Units (GITU)
Although indigenous technology units could exist in a geocentric corporation, it is contra the fundamental goal of that type of organization. In a properly functioning geocentric R&D unit, no new product would be developed in a subsidiary without striving to incorporate the needs of the global market. It could occur that a market segment were defined in a local market that was not evident in any other market and that this segment was deemed important enough to justify a specific product being developed. In this case the development might be executed in the local development organization or in some other subsidiary where a special competence was maintained, thus the concept represented by the GITU is not truly applicable.
Geocentric Global Technology Units (GGTU)
Global technology units capitalize on the open communication between subsidiaries around the world to maximize global scales in R&D, manufacturing, and marketing. Although global technology units can function well even in ethnocentric organizations the geocentric corporation's ability to leverage a global base of technical know-how and human resources gives a clear competitive advantage.
Geocentric Corporate Technology Units (GCTU)
In a geocentric organization, corporate technology can be located in a single unit anywhere in the world or it may be comprised of several different units carrying the responsibility for different areas of technology. The corporate technology function may also be divided between a number of R&D units with specific product responsibility (i.e. global technology units) which manage a segment of the corporate technology function based on their unique competencies. For example a global technology unit that is primarily focused on developing a product that requires special heat resistant plastics may also be responsible for the corporate technology unit for all heat resistant plastics for the entire company.
It should be noted that this Perlmutter/Ronstadt matrix would require more in depth analysis in order to confirm its viability as an evaluation tool. In this brief analysis some general conclusions can be drawn.
The first and maybe most obvious conclusion is that ethnocentric R&D organisations are not functional on a global scale. This does not mean that a company with ethnocentric R&D is not a global competitor. A company may be a global leader in their industry, however this would imply an industry in which the product is a relatively unimportant element of the marketing mix. This could be true of such products as Coca Cola or Chanel perfume. Another alternative is that the company has created a temporary monopoly for example with patents as in the case Astra and Losec.
As regards polycentric and geocentric organisations it could be concluded that both are equally functional for global R&D but the choice of organisation styles depends greatly on the nature of the industry.
Polycentric organisations are particularly applicable to industries in which there are large variations in the needs of the market. The food industry is a good example where companies like Unilever and Nestlé must develop products that meet the local tastes of consumers around the world.
The key to the polycentric R&D organisation is the indigenous technology unit which carries the responsibility for creating products that secure the company's success in the local market. The transfer technology units work to avoid simultaneous development of products in different markets and to cross-fertilize best practices or to transfer new knowledge from the corporate technology units.
The corporate technology units fill a secondary, but important role to the indigenous technology units. The corporate technology unit is not under the pressures of supplying the market with new products and can therfore fill the role of technology consultants looking ahead, evaluating and developing fundamental technology that will be fed to the more operative R&D units locally.
A geocentric organization is advantageous for industries in which market needs can be defined or segmented globally with little or no variations from country to country. In fast pace industries with short product lifecycles, a geocentric organisation for R&D gives the benefit of developing a large number of competitive products for immediate global introduction. The geocentric R&D organisation is a child of modern times, completely dependent on high speed telecommunication, jet travel and computers.
The driver in this type of organisation is the global technology unit. These units must be well coordinated to avoid overlapping, however, properly managed the geocentric global technology units operate as one R&D department with a number of complimentary projects being executed simultaneously. Although inconvenienced by geographical distance, the project teams are in constant communication. The corporate technology units in a geocentric organisation are crucial and although they can be located anywhere in the world they should be clearly separated from the global technology units. This will ensure that the corporate technology units are focused on long term technology development which will secure the future of the corporation.
Saturday, July 22, 2006
When your product has reached the end of its lifecycle you will know it! No one will want to buy your product or the products of your competitors. It won’t be a question of how to upgrade the product but how to replace it. In Sweden there is a classic example of a product that reached the end of its lifecycle the classic case of FACIT. FACIT manufactured the “adding machines” and realized far too late that electronic calculators would turn adding machines into one of the dinosaurs of the office. The adding machine truly reached the end of its product lifecycle. Most of us work with products and services that are not at the end of their lifecycles. If you begin to think your product is, it is probably just time for the next version.
Wednesday, June 28, 2006
I have heard people in many different industries say “we are a commodity industry”. Very early in my career I worked as an export sales manager for a small Swedish company that manufactured welding wire (basically just steel wire for those who don’t know). In that job I could argue for hours about why our product was better that the competitors and worth a small but very important premium. A great many customers paid that premium in order to improve the quality of their own products and manufacturing processes.
Some years later I spent 10 years with Whirlpool, the American whitegoods company, in various marketing and sales positions and let me tell you that people in that industry work very hard to differentiate their products. I don’t know how many times I’ve heard people say that a refrigerator is a refrigerator but the reality is that there is a great variety of appliances on the market and it is not the case that it is only the cheapest ones that sell. Even within what might be called a low-price segment competitors strive to differentiate their products.
Today, it is not uncommon to hear people talking about the commoditization of the telecom industry. On the surface it may appear that everyone is offering more or less the same thing: “A phone call is a phone call!” but nothing could be farther from the truth!
The other day I was talking to someone on the telephone. I was at my office but he was driving through the Swedish countryside in his car. He had a very bad connection and several times the call got cut off and he had to call me again. Finally, I asked him if he was a customer of my company (TeliaSonera). He admitted that he was not. He had recently switched from us to another operator because they offered him a slightly cheaper price-plan. My reply to him was that their price plan still seemed to be very expensive since their phone service was so poor. He laughed and we continued our conversation. A few days later he called and told me that he had changed back to my company. He had been thinking about what I had said and come to the realization that for a small difference in price he received much better quality of service from us. He said “I want to have a cell-phone so that I can make calls wherever I am and if it doesn’t work when I need it to I might as well not have one.” (In reality he probably paid more to the other operator with a poorer network since many price plans are more expensive to open a new call than to continue and old one.)
My point is that although many people talk about their business as if it were a commodity there are very few industries that truly are commodity industries. If you think you are working in a true “commodity industry” ask yourself why your company stays in business? What is your company’s competitive advantage? I think you will discover that although there may be great similarity between the products and services you and your competitors sell the actual offering you make to your customers may vary greatly. Your company may be perceived as being more reliable, giving better service or maybe just more likeable than your competitors. Whatever the differentiators are they are valuable and must be developed and managed. Customers don’t buy products they buy an offer that satisfies their needs. Even if your product truly is a commodity your offer to the customer which includes the commodity may very well be unique.
Sunday, June 25, 2006
Prices do not erode! What erodes is a company’s ability to be more successful than their competitors at satisfying customers. So called price erosion doesn’t happen to individual companies, it happens to entire industries. When an industry experiences price erosion it is really an expression of the fact the players in the industry are achieving less and less diversification between themselves. When everyone offers what appear to be more or less the same products and services prices fall. Price erosion is only a symptom or evidence of the lack of innovation within an industry. Managers will sometimes justify lower revenue and weaker margins by proclaiming that they are victims of price erosion. You never hear them say prices are down to due their lack of ability to outpace their competitors!
Continuous improvement in value creation is hard. Lowering prices is easy! Most companies find themselves in situations where they are compelled to lower prices in order to maintain their customer base from time to time. Short-term profit margins can be maintained by reducing costs but long-term, the only way to earn more money is by creating more value for your customers. At some point in time you will reach a level of efficiency where cost reductions erode the value of the customer offer and only lead to further price reductions without additional margin. Many companies discover that although their margins are the same as a percentage they have declined drastically in real money.
If you feel compelled to talk about price erosion, make sure you keep in mind that it is only a symptom. If putting a label on the symptom helps you better understand the illness then power to you but don’t neglect the reality that your prices are eroding because your business is losing its competitive edge.
Monday, June 12, 2006
I won't comment on whether or not my old boss was born with, or ever developed any leadership qualities. One thing he did, however, seem to have been born without was good common sense. This weakness seems to afflict many top managers and politicians. I am never really surprised that people get crazy thoughts in their heads. I know I often have absolutely ridiculous nonsense gallivanting around the corridors of my mind. What surprises me is that many people lack the judgment to keep these absurd notions for themselves! If my boss really believed he was the greatest thing to happen to leadership since Napoleon you would have thought he would also have realized that this revelation would sound a bit farfetched for his employees who were only moderately gifted.
This blog entry skirts the issue of whether or not leaders are born or created. It is highly likely that some people may be born with more of certain qualities that give them a head start at becoming a good leader but there seems to be very little agreement in management literature about what these qualities are. In fact about the only thing that everyone seems to agree on is that there are many different successful leadership styles. Another factor that seems to be common in all successful leadership styles is empathy. The ability to understand the wants and desires of others seems to be a success factor for all types of leaders including those who use their leadership solely for their own benefit and the oppression of others. Machiavellistic leaders as well as altruistic leaders have great advantage of a highly developed empathy.
The short of it is that no one really knows how great leaders are made. We know only slightly more about what traits are characteristic of great leaders. My suggestion is that if little voices in your head are telling you that you were born to lead, ignore them!
Wednesday, June 07, 2006
Many years later I was asked to speak to a group of employees who were going to be representing our company at a large trade show. The organizers asked me to talk about how to meet customers and give them good service. It occurred to me that it might help to remind these colleagues of just how important the work we do at our company really is and I decided to write a new Kleine Credo expressing my own opinions about the Telecom industry. Since then I have shown this for groups of people in all industries. If you cannot see how your industry is contributing to making the world a better place my recommendation is to change industry! What do you believe?
I believe that global competition promotes world peace.
I believe the telecom industry contributes significantly to world trade creating better opportunities to improve the quality of life for people around the world.
I believe the telecom industry facilitates better communication and greater understanding between people around the world.
I believe that we are all important members of a large group of people from around the world who have decided to cooperate in order to create these values, to create better world!
Friday, June 02, 2006
"A marketer should live the life of their product" or "embody their product", "personify their product"…something like that…
In highly competitive industries marketing decisions must often be made very quickly. There will not be time to do in depth analysis on every issue but a marketer who is immersed in their product and who understands the industry dynamics of their business will make the right intuitive decisions when the time comes.
Monday, May 29, 2006
If you are a dyed in the wool marketeer working in a truly marketing driven organization you will have nothing to learn from this blog entry. If you are a marketing novice or a true marketeer working in a technology driven company you might want to keep reading.
Marketing has nothing to do with organization. Companies choose to organize the work of marketing in many different ways. Some companies gather all of Kotler's Ps (Product, Price, Place, Promotion) in the same organization while other companies have a marketing department managing advertising and the rest of the Ps are distributed throughout the organization. (Some companies don't even have a marketing department.)
Marketing describes how companies understand customer needs and satisfy them for a profit. To paraphrase Kotler marketing is all about what product to sell …to which customer…at what price….how will the customer find out about the product, buy it and get it delivered? (And what will the competitors do about it?) All companies do marketing. Whether it be done poorly or well, consciously or unconsciously marketing cannot be escaped. No matter how your particular organization organizes the work of marketing success depends on your ability to manage the balance and/or trade offs between the 4 Ps (the marketing mix).
Imagine a company where a market research department works with customer insight to identify customer needs, a product development department creates new products, a pricing manager sets the prices for the products, a market communications department does the advertising and the sales department defines a distribution strategy. So far so good?
Now imagine that none of these groups coordinate their activities with each other and in the event that they ever do meet it is not clear who really makes the decisions. These companies do exist and most often the people running the show in companies like this are the product development people. In the end they are making products with little or no input from the people with the customer insight and the rest of the organization has to do their best to try and sell them or the company will go bust. These types of companies are doing marketing (albeit poorly) whether they realize it or not. Because product development has created products that were not optimized to customer needs the company will compensate by increasing advertising expenditures and paying higher commissions to its dealers and/or with lower prices to the end users. This is managing the marketing mix.
Imagine, on the other hand, a company where the people with the customer insight (not the salespeople) are defining the requirements on new products including retail pricing, commisions and gross margin. Product development creates the defined product with the right performance and price. Promotion of this product will be very cost effective since the product so clearly meets the customers real needs at a reasonable price making the sales departments job much easier. Companies like this do exist and they are usually the leaders in their industries or they are hungry small companies de-throning the old industry leaders.
If you would like to read more of my thoughts on marketing have a look at the following:
The World's Shortest Marketing Plan
THE MARKETING PLAN: THE GOOD THE BAD AND THE UGLY
Friday, May 26, 2006
When trying to understand the fundamentals of your customer’s behaviours and attitudes regarding your products and services two key parameters should be evaluated. How interested or how engaged are they and how frequently do they use the product or service.
The diagram demonstrates the four generic behavioural/attitude (Behav-Atudes) categories that can be found in most industries. Depending on your specific product or service the size of each group will vary but you will likely be surprised to find that there is almost always a sizeable group in each category. The offerings you make to each group as well as the way you communicate to each of these groups should be adapted to their specific behaviour/attitudinal position. Identifying your customers Behav-Atudes can give you a real competitive advantage or even lead to discovering new ways to solve the customers underlying needs by substitution making your products obsolete and redefining your industries.
The Four Generic “Behave-Atudes”
( You will likely find names for the Behave-Atudes that describe your customers from your industry perspective that are much better. Feel free!)
Individuals who are actively interested and frequent users of products and services like yours could be called Professionals. Not because they necessarily use your products in their professions but because they are typical very knowledgeable and have strong opinions based on a great deal of real experience of the products or services. Insight gained from these users can contribute significantly to further product development. Branding is very important.
Enthusiasts are people who are very interested but not frequent users. Among these you will find people who have expensive kitchens but who eat most of their meals in restaurants or people that have a fully equipped carpentry workshop in their garage for hobby use. These users can be very talented and sophisticated despite having less “real” experience than the professional. Branding is important in this group.
These people will use your products and services occasionally but are really not interested in the products. As long as the product works they really don’t care very much about design, branding or extra accessories. Simplicity is key with these customers since these users will not spend time learning to use your products or services.
Rebels use your products and services often but are not at all interested in them. They may drive their car much more than the average car owner or use their cell-phone much more than other people but they view the product only as an means to an end. These users view products in the same category as commodities and are very price conscious. They seek basic functionality and ease of use. It is not uncommon to find users with negative attitudes about your products despite being frequent users. These people often feel forced into using the product or service.
Friday, May 19, 2006
It is not my ambition to condescend those activities and institutions of business life that will be discussed here. Nor is it my goal to ridicule the "traditional religions" or religious people. My goal here is to attempt to understand business life, management, and organisation from a different point of view. One that might give us better insight into the workings of the organization as well as the individuals that comprise them. Management theorie has been primarily scientific in its approach. This has led to a great number of theoretical models of organizations from more or less scientific orgins. In "Images of Organization" by Gareth Morgan the point is made that the metaphors we use in decribing an organization imply " a way of thinking and a way of seeing that prevade how we understand our world generally". Any metaphor we choose will open possibilities but also create limitations. A metaphor is by definition "like" or similar to the object of comparison. It is not the same as that object and therefore even if it may given insight as to how the organization works it will also mislead. The problem is then to ascertain which of the "insights" are correct and which are faulty. By trying to understand organizations and business life as religious expression we may find ourselves in the same perdicament, however, there is a good chance that this will not fall into the same trap as other metaphors because it may not be a metaphor. I could be that our business life is in fact a part of mans search for meaning and his attempt to fill his spiritual needs.
In an earlier blog entry i introduced the “Holy Trinity of Sustainable Growth” (Customer, Employee and Shareholder) in which I argue that over the long-term it is impossible to create value for one of these stakeholder groups without creating value for all of them. As with the “Holy Trinity of Christianity” most of us cannot credibly describe the relationship between the three entities even though we believe there is a relationship. Everyday we hear references to “the market”. There are events that happen in the market or we are told that the market has behaved in one way or the other. Has this market become our new god? A vague entity that effects all of our lifes. An entity that is omnipresent (everywhere at once) and as close to omniscient (all knowing) as anything else we know.
Business gurus are the priests of our time and weild as much power over society as the priests did hundreds or thousands of years ago. Our holy scripture might be described as a limited number of books by a few holy apostles like Maslow, Pavlov, Kotler, Porter, Kotter and Drucker. Everything else written in management literature could be seen as exergesis on these apostles fundamental themes.
In my own management experience I find that it is much easier to gain acceptance for my theories or “beliefs” than it is to get critical, analytical views. It seems to be easier to believe than to think and analyze.
We need to be alert to the fact that we humans find ourselves so easily believing. We must learn to exercise our free wills and our intellects to continuously question and analyze reality as best we can perceive it and make the best possible decisions from time to time. Companies that strive to create a common belief system risk eliminating critical thought and will surely loose their competitive edge.
Thursday, May 11, 2006
Following is my response:
All businesses are either providing a product or service which directly satisfies a “real” customer need or they are part of a value chain that in the end will satisfy that need. Nobody really wants to buy a complex managed service solution or a rock crusher. The only “rational” reason for buying either of these is that they in some way make it easier for you to satisfy your customer and your customer should never buy your product if it doesn’t in some way improve their offer to their customer and so on!. In highly competitive industries (virtually all industries) understanding the full value chain from beginning to end can give you the insight to gain a competitive advantage over others who are simply focused on their part of the value chain.
All decision makers are human and base decisions on what satisfies their needs. Decision makers in B2B environments understand what requirements need to be fulfilled in purchasing a managed service or a rock crusher. Even if the requirements are expressed in technical and economic terms the underlying motivations of the decision makers are Maslowian. They want to be perceived as talented, successful, get bigger bonuses, promotions, etc. Sellers in B2B should always be thinking about how they can make the decision makers life better!
Tuesday, May 09, 2006
The great philosopher Leibniz (born 1670) said “Reality cannot be found except in One single source, because of the interconnection of all things with one another.” Although certainly not his intention this statement rings true for the Telecom or IT industries today. In the very near future everything from our breakfast cereal to our heartbeats will be connected.
What if telephones of the future will be no larger than a dime and cost less than a dollar?
If telephones could be very small and very inexpensive would we still have only one telephone each or would we have hundreds? Would they just be laying around everywhere or would they be built in as an extra feature or component of all sorts of other products?
What if our customer identity moves out of the SIM-card and into our driver’s license or maybe in a “chip” implanted under the skin on our neck. (My cat has one and horses often have them.) If someone would borrow your telephone, the telephone will automatically identify them and charge whatever calls they make to their bill. While they use your phone they have access to all of there own telephone numbers, calendar and anything thing else they want to access (files, entertainment, photos, music, whatever). When you take the phone back it switches back to your identity and your content. In short, what if you have access to all of your personal content with whatever device you have access to wherever you happen to be without the limitations of the memory capacity of the device?
When I connect my customer identity to a device the size of a dime and lay that little phone on top of a TV or a PC or a screen in my car or a Palm in my pocket I can see my content. None of this is technologically farfetched, however, there is still a great deal to do on the commercial side of things to understand what products and services with which business models will generate revenue for what companies.
There is a convergence of everything to everything.
Telephones have become computers and computers have become telephones. We can watch TV on phones or over the internet! Any decent telephone contains a camera and a Mp3 player. Cameras are getting SIM-cards so they can automatically send your photos to your computer or your server supplier. Some gurus claim that this is not really convergence but divergence. To avoid getting caught up in semantics, maybe the best thing is to say that from a technology perspective things are changing rapidly.
New disruptive technologies will impact the way we work and play as individuals! They will create great opportunities for some companies and spell out doom for others. Although it is relatively easy to see these changes happening at a macro level it is enormously difficult (impossible) to say which companies will win. It is equally difficult to know exactly what technologies to bank on or which new business models will succeed.
What are the keys to success in this brand new world or maybe I should say in this new brand world? Customers and brands have always been important and I will not fall for the temptation of saying they will be more important in the future. However, the role of brands is changing as are the tools we use to build brands. TV advertising has been the most powerful tool for building strong consumer brands for 50 years. Viewers are opting out of traditional TV for other forms of entertainment or they are fast forwarding or simply hoping over commercials on digital channels. New media consumption behaviors require new marketing know-how. Consumers are becoming immune to traditional brand promises. Volvo’s promise of safety has gone from a powerful driver of the brand to being a prerequisite for any carmaker competing in that customer segment. Whatever else a BMW, Mercedes or Volvo may aspire to be in the hearts and minds of their customers they must also me safe.
This is not a paradigm shift, it is a paradigm eruption!
The expression “paradigm shift” at best creates a mental picture of one state of things that will shift to another state. What we are witnessing is more like an eruption in which there are so many parameters and so much change happening simultaneously that it can hardly be called a shift. When the dust settles many of the winners (not all) will simply have been lucky. They will have gambled on the right technologies and services. Organizations need a certain amount of stability to operate. The agenda cannot be changed completely everyday! Paradoxically, despite the fact that technology is radically changing the way we live and work, our fundamental human needs remain the same. Here we find the underlying stability we need to run our businesses. Fundamental human needs change very slowly, if at all. I am sure that a traveling business man in Roman times would have wanted to call home to his wife and his office if he could have. The need was there but the technical solution was not. As technology advances we find better ways to satisfy our needs. Our behaviors change but the needs that drive these behaviors do not.
Maslow will move from the marketing department to the boardroom
Companies who build their visions and strategies around satisfying these fundamental needs by means of whatever technologies best happen to suit them at the time will succeed. Companies who entrench themselves in technologies and then look for commercially viable applications will falter. Maslow will reign supreme and move from the marketing department to the boardroom.
Tips for success in this “New Brand World”!
Focus on fundamental human needs
-Shift from acquisition to retention (Anyone can win a customer, winners keep them)
Be open minded
-Don’t defend old technical solutions or business models (Kill your darlings)
-Accept that you don’t know what tomorrow holds
-Failures are inevitable! Expect, Accept, Celebrate and Learn from them!
Be fearless in the face of change. It’s a great business!
Thursday, May 04, 2006
My short template got some attention on my blog and then I got an email from Guy Kawasaki, one of the true business blog gurus. Guy suggested that we adapt my template with a new version of the 4Ps created by another blogger named John Sviokla. John’s 5Ps do a great job bringing Kotler into the digital universe. His blog is well worth the read!
In short Guy improved the content of Kelly’s blog by adapting it with content from John’s blog.
Following is the new hybrid! Let me know what you think and do take a look at Guy and John’s blogs!
To view a word document version click here.
Some years ago I took a course to get a hunting license. One of the things we had to do to qualify for the license was to shoot a paper target shaped like a moose moving back and forth on a track at a distance of 80 meters. The target area on the moose was about the size of a basketball. Having had very little prior experience with weapons it came as a great surprise to me that in order to hit the target area I had to aim at a place where the moose wasn’t. It didn’t take very long to learn how to aim just far enough ahead of the target so that the paper moose would run into the bullet. On a shooting range there are very few parameters to keep in mind when shooting the paper moose. The moose travels in a straight line in one direction at a constant speed. (I have since learned that moose do not do this in real life.)
The problems we face in business are normally much more complex with many different parameters to consider and each of these parameters is itself mutating, developing and changing over time.
“You can’t step into the same river once”
About 2500 years ago Heraclytus wrote that ”You cannot step into the same river twice!”and Cratylus, one of his disciples, went a bit further by saying “You can’t even step into the same river once!”. This pretty well sums up my day to day working life.
As managers we continually confront various problems (or issues and opportunities to be politically correct). We define the current situation, identify the ideal future state, evaluate various alternatives and finally develop and implement an action plan. This model more or less describes the common steps in all change and/or development models. Everyone who has worked with change initiatives knows how challenging they can be. Unfortunately, many changes initiatives are doomed from the very beginning for at least a couple of key reasons.
Lots of small errors can make on hell of a mess!
Much of our analysis is based on assumptions, educated guesses and sometimes wild fantasies. Don’t get me wrong, I would rather have a best guess from a competent colleague than no information at all but none the less many of the problems we face in business are so complex that even small errors in a number of basic assumptions multiply into significant deviations in the final analysis.
If you ever get anything right it was probably a mistake.
We forget that we are shooting at moving targets. We define the problem based on our knowledge (or perceptions) in current state but by the time we have completed our analysis and defined our actions the problem has already evolved into a new state. Most change initiatives take time to implement and by the time the actions are in place the problem the changes were designed to resolve is so different that our changes may at best have no effect at all and at worse might have put us into an even worse position than if we had done nothing at all. In extremely dynamic environments you might say that if you ever actually get anything right it was probably a mistake.
Sunday, April 30, 2006
If you work in a Business to Business industry your customers are only interested in what you sell if it helps them satisfy underlying needs with their customers. Basically, it all boils down to Maslow! In order to be successful you have to understand how your product or service contributes to individual people’s lives at least at some level of Maslow.
This is in no way news for good marketers but to judge from many companies advertising messages what really excites their customers is the number of number of gigabytes in the memory.
The classic “rule of thumb” was never mention the product feature without also stating the benefit for the customer. Therefore, you find laundry detergents with a special ingredient “X” (feature) that makes your socks whiter (benefit). Then you get new improved detergent with extra-powerful ingredient “X” to get your socks even whiter. The result of this type of marketing is that customers first become sceptical end up cynical! What customers really want is to be healthy and safe, loved and admired and terribly successful. No doubt a good laundry detergent can contribute to several of these “psychological” benefits and the better marketers understand the connection the more successful they become.
When an industry focuses on product features instead of the underlying “psychological” benefits commoditization and price erosion is just around the corner!
Tuesday, April 25, 2006
Most groups have about 2/3 who feel that their bosses have on the whole not lived up to expectations. Occasionally, I will meet a group where about 2/3 feel their bosses have been satisfactory but this is an exception. Nonetheless at least 1/3 (and maybe as much as 2/3) of all managers do not meet their employee’s expectations (this is corraborated in a number of more reliable surveys that mine). This alone represents a significant problem for organizations. You won’t find many CEO’s or HR VPs saying that 30% or 50% of their managers are not good leaders and yet the truth seems to be just that!
But what if the problem wasn’t with our managers but rather with our employees? What if we as employees have the wrong expectations of our leaders? Could that at least be a partial explanation for our dissatisfaction with our superiors? We often have higher expectations of our leaders than we do of ourselves or our colleagues and some of these expectations might be justifiable. The reality is, however, that managers are just normal people whose job it is to manage and like everyone else they have strengths and weaknesses. Managers exhibit the same moral behaviour as everyone else. They have the same intellectual, physical and emotional competence as the rest of the human race. They get divorced, fall ill and make mistakes in judgement like the rest of us.
In a many cultures there is an underlying expectation that the boss is smarter, works harder and has higher ethical standards than her employees. Intellectually we all know this is not true but emotionally we still expect our superiors to be superhuman.
If one of my neighbours had an affair with a younger woman I might feel sorry for his wife and family but I probably wouldn’t spend a great deal of time thinking about it. But if someone with a high position of leadership did the same thing I might be very concerned. When Bill Clinton was unfaithful it was one of the hottest news items in the world. I live in Sweden and I remember people sitting around with coffee cups in hand involved in dynamic discussions about this. Why would Swedes even care about the sexual habits of a leader of another country? Whatever the reason the reality is that they do care and a big part of the explanation is that we expect our leaders to be better at walking the talk than we are!
Saturday, April 15, 2006
There seems to be a never ending supply of new marketing plan templates. A google search gave 215,000,000 hits on “marketing plan”. The problem most marketing plan templates is that they are just to long. Marketing plan templates often look like a table of contents which you then fill up with substance about your own company and business environment. I have worked with templates that were in themselves over 30 pages long and before you actually start filling them with content. If you followed such a template and answered all the questions you would have a marketing plan of several hundred pages. I was recently visited by a large consulting company who suggested that we should use their template which was a mere 70 pages. Needless to say, I decided not to use their template. Don’t get me wrong, the content of most of these “long” templates is very good and if used as a shopping list over what might be done and not a list of what should be done they can be very useful.
The marketing plan is a communication tool used to give direction to the company. It is not a checklist actions or a demonstration of the marketers analytical prowess. You might think of the marketing plan as a menu describing the food that will be served at a fancy party. This description tells you what will be served and in what order. It does not give you a recipe for every dish, a description of all the various dishes that were considered but not chosen or a deep analysis of why the items on the menu where selected. Naturally someone has to create the menu and a great deal of analysis might be behind every selection but this does not need to be reflected in the menu.
Similarly, strong marketing plans are the result lots of analysis. It may well be that you want to keep all of this analysis together in one place for future reference but the marketing plan is not the right place. The marketing plan should describe target/goals and how they will be achieved during a given planning horizon (typically 1 year) in order to reach the company’s vision. Although marketers can be deeply involved in creating the vision it is typically the CEO’s responsibility. The marketer comes in to describe what underlying customer needs will be addressed with which products or services and to which customers , how will they be packaged, communicated, priced, bundled and distributed.
Some time ago I was asked to speak to a group of MBA students at the Stockholm school of economics about marketing plans. I realized that I was not at all satisfied with the templates we used or any template I had ever used for that matter for the simple reason that they were too long to be used for effective communication.
Below is a template that I created for that presentation and it has been adapted in used in several companies since then with good success. Try to answer each square in the template with no more that one page including diagrams and pictures. This will result in a marketing plan of no more than 24 pages!
Click here to view or download the template.
If you are interested in reading more of my thoughts on marketing follow this link:
THE MARKETING PLAN: THE GOOD THE BAD AND THE UGLY
Thursday, April 13, 2006
Subject: What should I do?
Thank you for a great speech at the ……… conference. I went away inspired and stayed that way for several days but then reality caught up with me. I wanted to ask you what you thought about the following situation at my office.
I was selected together with several other people in our company to be evaluated for a place in our “High potential” group. We were sent through rigorous testing that lasted several days and included IQ tests, 360 degree evaluations, personality tests, group work and much more. To make a long story short, I received top scores on everything and was told by the consultants doing the testing that I would be at the top of their recommendation list. Shortly thereafter I overheard one of my colleagues openly complaining about the terrible evaluation she had gotten from the consultants. Imagine my surprise when the following day it was announced that she was the only one from our department selected for the Hypo group!
I immediately called the consultant that had evaluated me and asked what had happened. I told the consultant what I had overheard and wondered why I hadn’t been recommended. The consultant assured me that I had been their strongest recommendation and also confided that my colleague had not been recommended by them.
What do you think I should do?
Unfortunately, the situation described in this email is not unusual! Companies spend lots of time and money using sophisticated analysis tools and then ignore the results if they don’t like them. Logically, you might think that managers who are going to follow their intuitions at all cost could save the money they spend on the analysis. The problem with the story in this email is that the individuals involved get such mixed messages become de-motivated or simply leave the company.
Typically, the people who are selected for these types of deep evaluations are already identified as top performers. If management initiates such an evaluation process they must also commit to following the final recommendations. If they don’t, as in the example above, people who are clearly some of your very best will become disillusioned and will probably end up leaving the company. In fact my advice to this individual was to discuss it with their boss and if they weren’t satisfied with the answer they should send the evaluation document they had been given to some recruiting firms along with their C/V. I can only imagine all the politics that must have gone on behind the scenes in this company but the end result will be a company with the wrong people in leadership positions and all the good people working for their competitors!
Tuesday, April 11, 2006
Everyone agrees with Gallups study showing the connection between employee satisfaction and business unit performance or Pfeffers "Seven Practices of Successful Organizations". Even more provacative concepts like Tom Peter's statement "(1)the two most important factors in business today are inconsistency and unpredictability; and (2)we desperately need more traitors inside the corporate moat!" are widely accepted. I have spoken to many other public speakers and authors and they all express feelings of humility about actually getting paid for delivering messages that are largely common sense.
Why is it then that we seem to be intellectually prepared to accept these concepts as reasonable and valid and yet have such difficulty in implementation? Following are at least some of my reflections and certainly not a complete list.
Doing things right in an environment that has lulled itself into mediocrity takes guts. Treating employees with respect in an environment that views people as interchangeable resources requires an understanding of your own values and the conviction to follow them. Really putting the customer in the center of your business (not just the center of your powerpoint presentations) can lead to breaking rules, tradition and culture.
We are paid to create value not follow orders!
It is a common misconception that employees are paid to execute fixed behaviours which have been defined by management. Simply stated, employees are paid to do what their bosses tell them to do.
The reality is that, at best, a manager can point in a general direction and usually has no better understanding than any other employee about how to reach the target. All employees are paid to use their minds to understand what steps and behaviours will best contribute to creating value.
Getting fired is not the worst that can happen!
If employees and managers are courageous about their convictions and accept the responsibility for creating value not following orders, there is always a chance that they might get fired. This is one of the most frequent comments I get from my audiences. I have to agree that some organizations or some managers might not tolerate people who actually walk the talk! Another way of getting fired is not delivering results.
Many years ago I was involved in a project in which in order to succeed we realized we would have to break many rules (not laws) and take a great deal of personal risk. My working group came to the conclusion that we would rather get fired for breaking rules than be run off for not delivering the results. (In the end we delivered excellent results and no one ever complained about the rest.) In short, I just can't imagine seeing it as anything but a merit if you got fired for doing the right thing! Spending a lifetime sucking up and kissing ass seems a lot worse!
Doing things right is difficult and does not always come naturally. Like anything else in life excellence comes to those who strive for it. World records don't get broken without dedication, committment and sweat! Mediocre companies can only become great companies by the same means.
The only way to dig up the kind of motivation required to succeed is to have a true passion for what you are doing. The only way to have that kind of passion is through starvation or fascination. Most of us are not desperate people in desperate situations! Our daily survival is not at risk. Therefore, the vast majority of us will find our passion for success by focusing on something we truly love.
The next time you are in the audience listening to a speaker and you find yourself thinking that this guy is just kicking in open doors. Why not stop watching all these open doors and start walking through them!
Monday, April 10, 2006
The Holy Trinity of Sustainable Growth
Among these three groups the shareholders needs are usually the easiest to understand since they want the best possible return on investment. It is much more difficult to identify the real underlying needs of the customer or the drivers of employee behaviour. It is even harder to align the various needs and desires of the employees and customers. In most of western society it is fair to say that from a Maslovian perspective both the customer and the employee have climbed so high on Maslov’s hierarchy that to succeed in satisfying or stimulating their needs we must focus on the purely existential needs. From this perspective almost all products and services are necessary evils. Since most of us are very secure with regard to our fundamental needs for survival such as a roof over our heads and food in our stomachs we spend most of our time striving to reach further up the path of self-actualization.
It is not unusual that companies create high-flying visions of the future for the company only to forget to address the real hopes and desires of the customer and the employee. "What’s in it for me" is a realistic and honest question of each employee to ask (as well as the customer). Expecting that the employees will strive to achieve the vision because it is their job is delusional and unrealistic. Equally, it is growth cannot be attained until the company truly understands that customers do not want what we sell, they want the benefit that our products and services create for them.
Successful companies strive to understand their customers psyscho-existential needs. How do our products and services contribute to our customers individual identity and values. Questions like "Who am I?", "Why am I here?" and "Where do I fit in?" must be addressed almost at an individual level. The answers to these questions impact product developement, packaging, branding, market communication and much more.
Thursday, March 30, 2006
Sun Tzu on the Art of War The Oldest Military Treatise in the World
The Naked Ape by Desmond Morris
The Tipping Point: How Little Things Can Make a Big Difference by Malcolm Gladwell
Leading with Soul-An Uncommon Journey of Spirit by Lee G. Bolman and Terrence E. Deal
Leading Change by John P. Kotter
The No.1 Ladies' Detective Agency by Alexander McCall Smith (Read the whole series of 6 books)
Dilbert by Scott Adams (Anyone who is truly serious about management has to read Dilbert to keep their feet on the ground.)
Getting to Yes-Negotiating Agreement Without Giving In by Roger Fisher and William Ury
Getting Past No-Negotiating Your Way from Confrontation to Cooperation by William Ury
Wednesday, March 29, 2006
Many years ago I was asked by a Vice-President of the company I was working for to lead a difficult and important project in addition to my normal line manager job. After about 9 months we concluded that the project would not succeed and the project was closed down.
The Vice President then asked me to give an internal presentation with my reflections about why the project had failed and what we as a company should learn from the experience. I was both surprised and nervous when I found out that he had booked an auditorium and about 100 people were to attend the presentation of my failure. Before I started my presentation the VP went up on the stage and thanked me and my project team for accepting such a difficult and risky project and for working so diligently. He then presented me with a gift certificate worth $1000 from our travel agency as a token of appreciation for my effort. This is a great example of celebrating failure. In a very simple way he demonstrated to me and everyone else that not reaching difficult goals could be deemed a success if lessons where learned.
Several months later the project was restarted and within a year was successfully completed. Everyone involved agreed that the learning gained from our previous "failures" played a significant role in the successful outcome.
Tuesday, March 28, 2006
In order to create growth we must view organizations as groups of people who cooperate with one another of their own free will to achieve common goals. People use resources in processes to achieve results. although we often speak of employees as resources they are not infact resourses they are the value creators who use and manage resources. If we accept this description of organizations then it follows naturally that we should focus our management attention on the behavior of the people in the processes much more than on the end results.
Companies have always focused on growth even if the factors that drive growth have changed over time. Long-term growth has always been about being in phase with the world around you and a step ahead of your competitors.
There was a time when owning production resources was the key to success. If you owned a factory producing almost anything the supply was greater than the demand. Growth was driven to a great extent by your ability to develop and manage your production resources. In that environment, competition was often local and the end-users alternatives were limited.
Today growth comes to those companies who win in competition with the best companies in the world and there is an overcapacity in production for almost all products and services. . As a result of the easy access of information created by the internet, even industries that are not yet confronted with a well developed global competition find themselves forced to meet expectations of end-users as if the best companies in the world existed in their home market.
Consumers that enter a home electronics store are often more knowledgeable about the product they seek that the people working in the store. A patient can have a deeper understanding of the details of their particular illness than a general practitioner (or at least believe they do). In this environment victory comes to those companies that best understand and manage the customer relationship. Owning the customer relationship becomes much more important than owning the factory.
Companies that successfully win and keep customers will find solutions to manufacture their products and services but companies who excel at production but lack the skills required to retain their customers will inevitably fail.
This message is difficult to accept for companies that have built their success over many years based on manufacturing or technical superiority and this message is equally true for both product and service oriented companies. Many companies have placed their faith in their technical capabilities and believe that if your product is good enough then the customers will come to you. Unfortunately, this is only true for a select few companies. Most companies compete against competitors with similar products and services where operational excellence and customer intimacy are the deciding factors not product quality and features.
Friday, March 17, 2006
Managers find that they are perceived as successful by their superiors even if they miss so called "soft" targets as long as they reach or exceed their financial targets. The opposite, however is frequently not the case! Line managers who achieve good results on non-financial targets like processes, or employee and customer satisfaction but miss short-term financial targets are typically not as well thought of.
Profit is the result of successful business. But these profits are the result of people managing processes to create goods or services which satisfy customer needs. It is logical then that to increase profits managers must focus on the behaviours, processes and customer needs that create outstanding financial returns not the returns in themselves. One major problem with this way of thinking is that managers have very little knowledge in the behavioural sciences and therefore find it very difficult if not impossible to define which key customer needs to focus on and what employee behaviours will satisfy those needs.
Many companies spend large sums of money researching customer and employee satisfaction but many researchers admit that the real value of the research seldom reaches line management. Managers may have targets in their balanced scorecards to improve customer and employee satisfaction but they get little or no help in defining the changes necessary for reaching these goals. Instead managers do what they know best; cut costs, eliminate risk, focus on technology and lower prices to gain new customers or retain old ones.
Cost cutting is justifiable when changes in the environment make it possible to satisfy customers as well, or better than before with less cost. Managers have difficulty knowing how cost-cutting will impact customer satisfaction and often find out the hard way after the fact.