Archive for October, 2007

Business Intelligence and Pattern Recognition

Monday, October 29th, 2007

Opalku

In the hyper-competitive reality of today’s business environment much is riding on effective pattern recognition. Business intelligence, and how we use it, has become the identification of business “patterns” or trends with the fewest possible facts, and this identification needs to occur quickly, accurately and efficiently as opportunities come and go with increasing rapidity. Execution on these opportunities needs to also happen quickly as the changing environment can make a late response irrelevant, and ensure that your competitors are responding to the same opportunity. Effective use of business intelligence is the best methodology for sustaining successful pattern recognition and identifying opportunity for your company. This is both data intensive, and incredibly dynamic. As you scan the competitive horizon for opportunities, you must give consideration to:

  • Challenges of finding order in chaotic and conflicting inputs of info and data
  • The ability to quickly refine options to the best opportunities
  • Know when you have enough information to make an effective decision
  • Knowing that effectiveness is directly related to your ability to overlap intelligence
  • Development of a concept of the pattern, or opportunity, that you are looking for
  • Being neutral about the data… optimism defeats the purpose of intelligence
  • Don’t be risk averse, mistakes are a learning experience and help you to improve

We’re surrounded by companies that are doing this incredibly well. Think about the pace of change in consumer electronics or the real estate market. Think about the fluid environment of international diplomacy and economics. The business intelligence teams at organizations like Google, Apple, investment banks, insurance companies, large real estate developers, the Chinese government and the CIA devote tremendous resources to the accumulation, analysis, and refining of huge and complex data with the soul purpose of identifying patterns that signify opportunity. By and large all of those organizations also execute on that opportunity with expediency. So should we. This is not to say that we should vacuum vast amounts of information into super computer managed data bases. We should take the intelligence we gather, though, and systematically analyze it for the indication of change, of patterns of change, that signal opportunity for our organizations. This can begin with a simple and ongoing analysis of:

  • How have your clients changed in the last year?
  • Which client businesses are experiencing growth, and which are challenged?
  • How has the economic environment affected the markets you operate in?
  • What has changed in the competitive environment?
  • What new capabilities/products/services are competitors introducing and why?
  • What is happening in related businesses and markets?

Thanks to for the conversation and sharing his thoughts on this.

Overthrowing Successful Companies

Sunday, October 28th, 2007

viva la revolution

That might sound threatening, but really… it’s not. I had the opportunity to meet and hear , the co-author of , last week at a luncheon event sponsored by and . It was an excellent event. Polly spoke about the main theme of her book, that in industry after industry business as usual is not working anymore and that businesses that were once dismissed as “mavericks” are the ones that are now growing fast. The mavericks are the success stories. This is because they stand for something original, and continue to innovate on their business model. She also offered and expanded on a couple important concepts. The one that really resonated with me was the idea of “overthrowing successful companies.” This is not a bad thing, but speaks more to the challenges of creating an environment of creativity, innovation and change in companies that have been historically performing just fine. Her point is that “just fine” is not reflective of the realities of changing markets, customer demands, and operational challenges… not to mention hypercompetiton. In essence, for many companies it is required that they be taken over by new ways of thinking, by a focus on executing on new opportunity. Overthrowing a company means rethinking the logic of how business gets done, and IMPROVING on that logic.

This is not something to take lightly and it is a concept that has revolutionary undertones for a reason. This is because, like nations, organizations resist change and this is in large part due to the difference between those who have power and those who do not. Those who wield power in business are often much more concerned with perpetuating the status quo then with reinventing the business model. Reinvention is hard work, it requires an open mind and a fresh approach. When you are already successful, that is a tough option. The point, really, is that success is fleeting. Those organizations that figure this out and continue to change and evolve stand to sustain and maximize successes. They stand to succeed in the face of innumerable challenges by offering a better way to lead and a better way to compete. A better way to do things. So many businesses are defined by models that were developed decades ago, isn’t it time that we shake those models up and explore better alternatives?

Solar Update

Sunday, October 28th, 2007

The Sun

It’s the weekend and that means I have set aside the hammer and the bullhorn, if only for now, and seek the distraction of cosmology and astrophysics. Good times. This is not so much an update as more the sharing of sun facts recently found in the latest issue of magazine. If you don’t read Good, you should. Good is really, really good. One of the things that Good does in each issue is provide informational graphics on a number of interesting topics. In the latest issue they offered up some detail on our very own sun, which I add to my post on the sun of some weeks ago:

  • - In 1 second the sun produces energy to meet the needs of our planet for 500,000 years
  • - It takes eight minutes for light from the sun to reach the Earth
  • - Solar energy hitting the Earth every second is equivalent to 4 trillion 100 watt light bulbs
  • - Solar energy hitting one square mile each year is equivalent to 4 million barrels of oil
  • - Only 1% of the electricity generated in the United States is from solar power… 1%!

These facts are nothing new, and yet we still struggle to create momentum behind solar energy in this country. Old habits die hard.

F**K Service…

Friday, October 26th, 2007

vive le revolution

I hope that you are seeing a theme developing here on schneiderism. If not, you’re either new to the blog, or an idiot. Either way, let me quickly recap:

- Creative enterprise of all sorts face a range of new strategic risks

- Business models and business practices demand investigation and innovation

- Many have lost the priority of the relationships between innovation, strategy, and execution

- We’re our own worst enemy, and actively devalue the work we perform

- Design is about value creation, not about providing a service

Last evening I received an article from a colleague who shares my perspective on the state of creative enterprise. Basically, we’re at war. We find ourselves embroiled in the challenges of navigating the mess, risks, and threats before us and orienting organizations in the proper direction. It’s exciting. The email with the article that he sent had this as the subject… “F**K Service…” Well, that definitely got my attention, so I thought it appropriate to headline this piece. But, what did he mean by that?

He meant that creative enterprise is not a service industry. It does not exist to service its clients. It exists to create value for its clients. The mindset of a service business is to operate at the whim of the client. This not only devalues our work, it prevents a creative business from having a relationship with clients that is truly compatible with effective design. You’re too busy reacting to be creative. You’re too busy producing. It is a rock you will never be able to push to the top of the hill. As a service provider you have inverted the value proposition. You may as well be a lawyer or an accountant (note that I have nothing against lawyers or accountants, I just don’t want to be one…).

The article sent is entitled Read it. It is from a few years ago but still meaningful.. which only means that we’ve been thinking and talking about this for a long time. And doing precious little about it. The article relates specifically to architecture design professional service firms and their inability to adapt and embrace change. Really, though, it could apply to any number of creative businesses. A terrific quote:

“Those who do not like change will like irrelevance even less.”

James P. Cramer

Cramer points out that design firms, and the environment in which they operate, are changing. Some are evolving. Some are specializing. Some are dominating their markets. Some are struggling with being relevant and are in decline. His article is a call for intervention. I would like to think that it is the clarion call of revolution for creative businesses, and we know that he is most definitely not a lone voice in this call. But what are we going to do about it?

 

Creating A Culture Of Innovation

Friday, October 26th, 2007

hammer and anvil

Thinking a lot about how you practically go about creating and fostering a culture of innovation. Discussed this in earnest in a previous post, and threw down some Gary Hamel. In that post it was discussed that an innovation culture must begin at the top. That, and in order to achieve this an organization has to wholesale eschew legacy, arcane management and control methodologies. That is an incredibly tall order for most cultures. They exist to exist, not much more beyond that.

There is obviously a lot more to how you create a culture of innovation. I tried a little experiment, and want to share the results with you. I posted a question regarding how you create such a culture to my , and received a broad range of answers. Below is the question put out there, and the answers received to date:

How can a company create a culture of innovation?

We hear it all of the time… “we need to create a culture of innovation!” Sounds good. But, where do you start? How do you go about creating that? How do you ensure it has longevity?

Would like your insights and to hear your experiences.

~~~~~

“Man of action never speak. Creativity creates marvels. They don’t need guidence. It is inborn. Can u force somebody to draw or paint?”

Mamta Narang

~~~~~

“Step 1: First you would need to understand your organization culture, evaluating its approach to change…innovation in fact generally implies deep changes, in culture , in perspective, in the day by day apporach to problems, even in the way information are shared and in the way people communicate.

If you realize that your organization is already “transparent” to above mentioned issues, you move to step 2 , otherwise you need first to implement a Change Management Dpt. , leading the people side of change.

Step 2 : you need to encourage your people toward whati is called “lateral thinking”, organizing a rewarding “Best Ideas ” …people need to feel they work in a challenging enviroment.

Step 3: give your best worker time enough to study and to share their toughts”

Private

~~~~~

” There are plenty of corporate examples, like IBM and 3M.
Employees are given time each week for creative exploration of concepts and ideas, as well as the resources (people, material and money) to pursue them.

You have to AND you can structure in innovation.”

Ray Miller

~~~~~

“Flexibility is key. There are few things more guaranteed to stifle innovation than a rigid inflexible business process that must be obeyed at all costs. Another vital ingredient is the acceptance that not every idea can be a roaring commercial success. Often, budget is needed to test an idea, simply to find out that it’s actually not that good. It’s money well spent.”

Alison Coulson

~~~~~

“You have to make it worth while and beneficial for people to share knowledge within the organisation. Most employees with a traditional mindset think they are undermining their own position by sharing their knowledge. As a result no innovations will take place, because in a culture of innovation the lone genious is replaced by inter disciplinary teams. You have to change the cultural environment to stimulate new behaviours.”

Morten Lindholm

~~~~~

“The value system in the company needs to support that culture. Examine the systems, processes, corporate communications and rewards and figure out what the values really are (not what they are stated to be). Often times the heroes are firefighters and systems and processes are about removing variation – attributes that are very much about not innovating. What are the real values that all of your systems, processes, rewards and communications really need to support? It is very likely that each of them must evolve to support a more innovative culture.

That may sound insurmountable, but you can start by determining the most likely areas where innovation would be helpful to the business. Are you most interested in innovative new products, innovative processes or an innovative business model? The answer helps drive what the first moves are. Even when trying to start, adjustments must be made in congruence across all aspects of that part of your systems, processes, rewards and communications.”

Bob Becker

~~~~~

“Check out Phil McKinney’s podcast, Killer Innovations, for some ideas.”

Kore Peterson

~~~~~

“It MUST come from the very top of the organization, define what innovation means to you and your organization, develop problems for your people to start thinking about, reward systems must be changed to drive toward the creative and innovative behaviors you are seeking, constant and consistent communication of the need and desire to innovate, demonstrated increased tolerance for risk and failure, mandate time for thinking, tinkering and collaboration, increase opportunities for horizontal communications, and finally, implement a few of those promising ideas!!!”

Paul Williams

~~~~~

“In my (our company’s) view from working with innovation for more than 20 years is that the innovation capability (innovativeness) of a company consists of three elements:

1) Steering fo innovation
2) Atmosphere of the organisation
3) Channels

The steering has to do with the fact that in order to generate new ideas, one needs to have some direction, guidance on what the ideas should be about. The atmosphere has greatly to do with the management style in the company (in all levels), how line managers take in new ideas and improvements. The third part has to do with how well the comapny is able to gather the often rough ideas from the people and foster them into readymade innovations. Good ideas are only a start, they need to be implemented well.

First thing you need is a good understanding of the current situation. Without knowing where you are and where the biggest challenges are you can not aim in the right direction. This can be obtained through a number of ways from surveys to consultative analysis. Key is to start at the top, but make sure to go all the way (vertically and horizontally) to the different parts of the organisation. Innovation needs to be built all around, naturally in different ways in different places. The activities may vary from training of innovation methods, building processes and systems, starting up innovation organisations of many sorts, having idea competitions, etc. This depends on what the problems are – this can only be analysed with enough information. ”

Olli Kuismanen

~~~~~

“Actions will create more innovation than any words you can speak. If you seek to create a culture of innovation it must be more than lip service and must begin at the top.”

Eileen Bonfiglio

~~~~~

“There is an inherent creativity in everyone – specially when we talk about the subject area of work of people. For modern workplaces, innovation cannot come only with creativity but also require core knowledge about the subject.

I also believe that people are NOT a problem – most people do want to contribute and want to bring their best ideas (unless you are talking about some hopeless crowed where this question anyway doesn’t apply!)

The issue, however, really is that no new idea can succeed without sever effort and keeping faith in it. Unless the management (who determines the resource allocation), support this activity, and if he management is inherently not risk taking in nature, most efforts to create innovations will become a failure.

The ultimate key to organizational innovation i believe an open, transparent and risk taking culture and the real competence of the people. People is the only thing really matters! ”

Diphan Mehta

~~~~~

Thanks to everyone for taking the time to offer their perspective on creating a culture of innovation. I think the differences and similarities in the answers is indicative of both how seriously we take this question, and how complicated the issue really is.

Quote of The Moment

Monday, October 22nd, 2007

Buckminster Fuller

“Humanity is acquiring all the right technology for all the wrong reasons.”

R. Buckminster Fuller

“The Ruins of The Unsustainable are the 21st Century’s Frontier”

Monday, October 22nd, 2007

idea in the future

That’s a quote from Bruce Sterling’s presentation last week at . I am going to try to quickly tie together three prescient ideas for you, and is the rope I will use. His talk last week covered two paradigmatic concepts, that of , and “the internet of things.” There is much discussion around the concept of “connectedness” and “interconnectedness,” and the realization that in a complex intertwining of relationships, everything really is connected to everything else. These two ideas, spimes and the internet of things, take interconnectedness to an entirely new level. The concept of spimes was initially introduced by at Los Angeles in 2004. A spime is a still theoretical object that can be tracked through space and time for its entire lifetime. There are six existing technologies whose convergence will allow a spime to happen:

1. Small means of remotely and uniquely identifying objects over short ranges, like radio-frequency identification.

2. A mechanism to precisely fix object location, such as a GPS.

3. The ability to mine large amounts of data that match criteria, like internet search engines.

4. Tools, such as computer-aided design, that enable the virtual construction of nearly any kind of object.

5. The rapid prototyping of virtual objects into real ones by means of sophisticated, automated fabrication of a specification for an object, through 3D printers.

6. “Cradle-to-cradle” life-spans for objects when combined with cheap, effective recycling.

The second concept, referred to as “the internet of things,” is the expansion of the internet to encompass real objects as they exist in space and time. This “” is the success of the internet in tagging, searching and relating information in the virtual world applied to the real world. The internet of things will be made possible by the creation of spimes, one begets the other, and this is where things begin to get really, really interesting.

The third concept, the one that makes the relationship between spimes and the internet of things really sing… is sustainability. When everything can be tracked at every point in its life cycle, you begin to understand patterns of material flow, manufacturing, material use, object use, object termination, and ultimately object material recycling and reuse. The whole thing starts over again. Knowing that you can track the material and process of object creation, that you can track that object’s life, and track the harvesting of the materials used to make it… you’re tracking everything, and the ability to reclaim that material means that you can find a use for all of it. That’s very powerful, and ultimately led to the quote that is the title for this post. When you have an ability to understand and monitor the context of materials and resources you have the potential to see patterns of use and patterns of need. Sustainability aligns those two and completes the circle. As Bruce Sterling put it last week, sustainability is the killer app.

Original story via

We Can Do Better Than That: Thoughts On Innovation

Saturday, October 20th, 2007

This won’t do.

We hesitate to even utter the word anymore, it is so over-used and abused, but innovation remains part of most company ’s “strategy” and in the motivational speeches of CEO’s everywhere. This, despite the fact that few can really define not only what innovation means, but what it means for their business or their business model. We push through this fog, though, hoping that the presence of innovation in executive job descriptions and on the whiteboards of meeting rooms is enough to get us where we need to go. In many ways, innovation comes and goes in cycles within a company… typically driven by financial and economic realities and the “need to be innovative” to counter poor financial performance or operating inefficiencies. This is reaction, not strategy.

So, innovation talk is seemingly everywhere again… but things are a bit different now. Yes, you will find features in most monthly business periodicals just like five years ago. Yes, the business section at the bookstore is full of “new” perspectives on innovation in business. But as you survey the content, you find that the vernacular has changed a little and there is much more discussion around the practical matters around innovation management. As companies discuss the need to innovate, they find that the managing of innovation is the biggest challenge, the biggest obstacle to actually accomplishing anything.

The reality is that companies need to come up with new ideas and rethink their models, but to do this effectively and meaningfully they also need to develop and support a culture that consistently encourages and rewards innovation. A culture that is defined by the value of bringing new ideas, and executing on those determined to be of the most value. I wrote a post on strategic risk management and the importance of business model innovation in moving companies from stasis to growth. A survey of the last ten years yields abundant contrasts between the companies that managed to pull this off, changing their culture and reinventing their business, and those that did not. The failures are in the news every day, whether they be in consumer electronics or industrial machinery, packaged food products or franchise restaurants. Typically, the companies whose challenges are highlighted in the news are the same companies that, years ago, were dominating their category. The difference, instead of using that momentum and competitive advantage to further develop markets and foster innovation, they focused on exploiting their success, arrogantly thinking that would sustain success in perpetuity. It obviously did not.

The companies that got it, though, are the ones that started with their culture and made endemic the drive to innovate. We also see these companies highlighted every day in the news. Some companies have so deeply ingrained a culture of innovation, and have so effectively managed that innovation, that their business model defies definition in the traditional sense. Look at Toyota. Look at Samsung. In categories rife with competition and low margins, they are successful. How is this possible? Effective innovation management, clear vision, and a determination to execute successfully.

Knowing that your company faces a diversity of risks and challenges to a successful future, and knowing that effectively navigating this situation depends on bringing forth new ideas and setting in motion a cycle of reinvention, it is confusing to know where to even begin. Do you hire innovative people? Do you acquire an innovative company? Do you create an innovation task team? Those may be options, and shorter term in their value, but what about ten years from now? You need to begin with the management culture.

There is a terrific by that is excerpted from his new book He posits that legacy management thinking, a focus on efficiency over excellence, has thoroughly undermined the development of innovation cultures in business and that to ultimately be successful, the change needs to start at the top:

“The sooner your company starts sloughing off its legacy management beliefs, the sooner it’s going to become truly fit for the future. As we’ve seen, a few companies are already traveling light, having left a lot of their outdated management baggage back there in the 20th century. In the end, there’s really not much of a choice: You can either wait for tomorrow’s management heretics to beat the orthodoxies out of your company, or you can start coaxing them out right now.”

Gary Hamel


Forging a Path to Extinction

Tuesday, October 16th, 2007

Their last dance…

In an article titled for the author posits that architecture’s refusal to embrace technological innovations is ensuring irrelevancy to the audiences that have historically valued their services. More directly, architecture is on a path to extinction. He is absolutely right. Architecture struggles with a fixed, backward view and legacy thinking. Let’s just say that the world of “The Fountainhead” is alive and well inside the offices of many a prestigious architecture firm. At issue is the reality that a diversity of professions are claiming the traditional territory of the architect. Technology has efficiently removed architects from the value stream of the built environment (through their unanimous inaction and determined resolve to not evolve their industry, their practice), and empowered any number of competitors, including “furniture system designers, sustainability consultants, construction managers, and engineers.” Celento sites Martin Simpson of the rockstar engineering group Arup Associates as suggesting that architects may “eventually become unnecessary — except, perhaps, as exterior stylists.”

I can’t believe he just said that out loud. Ouch. From an engineer. Somebody get the architects a glass of water.

Honestly, David Celento has only voiced what everybody is already thinking, and what the industry as a whole is struggling with. This is a reality shared with a number of creative enterprises, and those facing this reality have nobody to blame but themselves, really. This storm has been brewing since the advent of desktop workstations in the 1980’s. Go to the business section of your local bookstore and count the books that offer a perspective on the phrase “innovate or die.” Why so many? Because the range of strategic risks facing contemporary business demands a strategy of innovation for survival and longevity. It demands business model reinvention, and architecture has not yet gotten the memo on this.

A parting shot:

“To increase its desirability and market share, architectures need to harness emerging technologies and tap more deeply into consumer desires, using both plurality and branding in product delivery methods. These efforts would be self-correcting — they provide an opportunity for architects to evaluate the success of their offspring quantitatively. Doing so would also encourage architects to move beyond “isms” geared toward revolutionizing aesthetic and social agendas every decade or so — a phenomenon that architects themselves can’t even keep up with — let alone the public at large, since architectural journals which feature these sorts of rapid-fire volleys (including this one) are rarely found nestled between The Economist and Vanity Fair at newsstands. Two decades of fanciful catalogs stuffed in mailboxes have done more to shape popular taste (and educate people about design) than the club of architectural priests that has elevated its game by preaching to the converted while leaving out the laypeople that architects ultimately need.”

David Celento

By the way, he’s an architect and this is classified as tough love.

What is Blogging’s Value?

Monday, October 15th, 2007

where is the $$$?

Blogging is not going away. It may be changing, but it is not going away. I came across the statistics below via , whose RSS Feed I subscribe to, awhile ago and am only now getting around to sharing it with you.

The reality is that business is only just beginning to understand the value and power of the conversation created with their customers through blogging. This is an honest dialog, and one that customers are increasingly demanding in order to determine the authenticity of the products and services they consider. I don’t know about you, but I subscribe to dozens of blogs that cover a range of topics… from art to marketing, from cooking to parenting. I also read tons of magazines, but that is more of a luxury. I engage with blogs daily, and try to work on my own blog daily. For me, this is of tremendous value, and after reviewing the stats below I think it is safe to say that I am very much not alone in this thinking:

  • Over 12 million American adults currently maintain a blog.
  • More than 147 million Americans use the Internet.
  • Over 57 million Americans read blogs.
  • 1.7 million American adults list making money as one of the reasons they blog.
  • 89% of companies surveyed think blogs will be more important in the next five years.
  • 9% of internet users say .
  • 6% of the entire US adult population .
  • Technorati is currently tracking over .
  • Over 120 thousand blogs are .
  • There are over 1.4 million new blog posts .
  • 22 of the 100 most popular websites in the world .
  • 37% of blog readers .
  • 51% of blog readers .
  • Blog readers average .

This list of blogging statistics is at

Thoughts on Strategy and Execution

Monday, October 15th, 2007

strategic wayfinding and such

Ed Wilms, this one’s for you.

In line with the proliferation of talk around , there is also much going on as it relates to strategy. Strategy and execution are inextricably linked, they are useless without each other. Without a focus on execution and performance, strategy is a purely academic pursuit. Without a strategic foundation, execution is a “car without a steering wheel” (or any number of fitting clichés). Strategy is one of those things that seemingly everyone talks about, but few actually practice. It is something that is typically top-of-mind as companies think about the imminent new year, but once that new year commences it is quickly forgotten about, and rarely followed through. This plays out everywhere. We have all seen it in one form or another. The same can be said for execution. At the heart of this is determining how an organization is going to get where it needs to go, how it is going to navigate the range of strategic risks before it.

The linking of strategy with execution, and understanding the importance of the relationship between the two, has been gaining important attention. The Harvard Business Review just published an article discussing the rise and importance of the . There are a number of reasons that companies are creating and assigning this position, the most common of which is most likely that CEO’s now find their attention diverted to an increasing range of priority issues, and the nurturing and development of strategy suffers. The CSO’s entire purpose is around developing and executing on a range of strategies, and ensuring that decision making supports these strategies and aligns with the company vision.

The HBR article does a nice job discussing the importance of linking strategy to execution and lists three critical strategy implementation tasks:

  • - Engendering commitment to strategic plans. Articulate a clear definition of your company’s strategy and explain how each person’s work relates to it. This clarity enables the building of the federation necessary to put strategic plans into action.
  • - Drive immediate change. Facilitate the change initiatives required to execute the strategy.
  • - Promote decision making that sustains change. Ensure that strategic decisions don’t get watered down or ignored as they’re translated throughout the organization. Communicate with managers at all levels to determine whether decisions being made over time continue to be aligned with the strategy.

Now, the role of the CSO is most likely not a reality for many organizations, but the value of this approach is inherent. What this article effectively describes is the role and importance of strategy and implementation for organizations of all types and sizes. This is serious stuff, and with the complexity and speed with which markets change is also potentially the only way to effectively navigate this complexity, stay on track, and begin to anticipate risk.

Excellence of Execution

Friday, October 12th, 2007

power plant control station

The mantra of execution is heavy on the minds of everybody these days. Actually, that would be accountability AND execution. Seems that we all need a little primer in business 101 as without a culture based on both… all is lost. Or, at least all is at risk. It turns out that execution is also a top concern with CEO’s around the world. Actually, according to a , execution is their number one concern, ranking above profit and top-line growth.

“This year’s overall top challenge shows that CEOs from around the world are realizing that strong execution is a critical factor in driving profits and revenues. These executives are also becoming increasingly aware of the crucial role that people play in growing their companies.”

Jonathan Spector, President and CEO of The Conference Board

As a part of this survey, 769 CEOs from 40 nations were asked to rate their greatest concerns from among 121 challenges. “Excellence of execution” was selected as the top concern with “keeping consistent execution of strategy by top management” the third-greatest concern. Of particular note is that “sustained and steady top-line growth”, which led the list last year, now ranks second, with profit growth fourth, and finding qualified managerial talent fifth. I believe that this indicates a shift in the concept of performance within many organizations, and that the inception of performance is execution. This is being driven by the myriad of strategic risks we face in our industries, and by the ethereal nature of success that is today’s reality.

Of note is that the survey uncovers some interesting regional differences. The European CEOs surveyed expressed greater concern with speed, flexibility and adaptability to change as it relates to getting new, more responsive ideas out sooner. This was a dominant theme in Europe (third place), while in Asia it tied for eighth and the U.S. was back in 10th place.

Creative Business Environment… It is Fluid

Thursday, October 11th, 2007

changed priorites

I do not think that anybody can question or doubt the realities that most creative businesses face. The business environment for creative organizations is changing rapidly and presenting unique challenges to those charged with leading successfully. Specifically, our firms face issues of technology use and integration, team organization, process development, leadership and leadership transition, intense competitive realities (and increasingly global), and the commoditization and devaluing of our work. Many of these specific challenges have been discussed on Schneiderism already. I speak the obvious when I say that determination of success in the future is dependent not on navigating one or two of these challenges successfully, but all of them.

I had the opportunity to recently attend a presentation by , the author of ““, at an event for . It was especially good, and prescient regarding the challenges that many organizations face, but it seemed especially relevant to creative businesses (design, marketing, advertising, architecture). At a high level everything comes down to innovation, being innovative, and how you innovate. Easy to say, hard to do. But beyond those relative truisms, there was one all encompassing concept that I loved hearing about:

STRATEGIC RISK MANAGEMENT

The presentation began with the concept of business model design and that business models that remain static are destined for failure. The environments in which we all operate are changing and evolving in ways that were not possible 10, 15 and 20 years ago. This demands reinvestigation, in an ongoing manner, of a company’s business model and introduces the opportunity for business design innovation. Most industries have seen dramatic change, and those of us who anticipate change and evolve our companies as our markets change will be around to talk about. Adrian Slywotzky not only aligns with this thinking, he takes it much, much further.

“Our greatest growth opportunities are our greatest risks – reversed.”

Adrian Slywotzky

The strategic risk management piece is important in several ways. Obviously, this is hugely informative as we investigate the threats and opportunities of a given business model, and the proper identification and understanding of strategic risk is what ultimately determines a course of action. Elements of this is knowing the reality of where your center of gravity resides with respect to your customers and clients. To ensure prolonged success, that center of gravity needs to reside at the heart of your company, at the core of what you do and the value you create. Inevitably, though, it resides with the customers who have a range of relatively equal options from which to choose. The challenge is in retaking that center of gravity and subsequently reversing or inverting the value chain. A traditional value chain begins with assets and ends with a customer, inverting it creates a business model around the customer that results in assets. Think about that for a second and get back to me.

Getting into more detail about strategic risk management… it is the perpetual survey of your landscape for those things which will make you irrelevant, those things which can damage your business design. Things like:

  • Misreading your customers
  • Damaged reputation
  • Commoditization of your product or service
  • Technology
  • Ownership/leadership transitions
  • Global politics
  • Currency fluctuations
  • Supplier changes
  • Factor of costs
  • Talent deficits
  • Changing customer demographics

Now, that list is by no means comprehensive and is pretty high level. So, stop for a second and reflect on your own business. What would your list look like? Can any of these strategic risks be turned into opportunities? To be successful, the answer needs to be a committed “Yes.” We live in an age of volatility and our lives, our businesses, are subjected to a diverse and evolving range of generators and catalysts of this volatility. What we do about this is also evolve our businesses in advance of these risks and in answer to the volatility. When these risks are unmanaged they will affect even the very best teams and the very best business models. No one is immune, and we are seeing this play out seemingly everywhere. There are innumerable case studies of companies not managing this risk:

  • Contrast the S&P High-to-Low Quality ratio of A-ranked stocks to C-ranked stocks over the last 25 years. The A-ranked stocks have decreased from 31% to 14% of total value while C-ranked stocks have increased from 12% to 30%
  • Why has Procter & Gamble taken 5 years to recover from the 2000 market value drop? Why did they suffer the drop in the first place?
  • Other blue chips face the same fate… look at McDonald’s, Siemens, Merck and Deutsche Bank. Their performance lines are nearly identical.
  • More specifically, why has Coca Cola lost market value while Pepsi has gained market value over the same time?
  • Sony has lost while Samsung has won, Johnson & Johnson is winning while Merck is losing, and Maytag tanks while Whirlpool takes off. Each example, two companies in the same industry. One wins, the other is losing.

What is going on here? The winners sited properly assessed risk and realized that the time of maximum value is the time of maximum risk. This is really tough for most companies, but especially difficult for historically successful companies to address. Legacy thinking persists. This can be scary, and sometimes is not something anybody really wants to talk about or bring up in a meeting. Even worse, it just is not what management wants to hear… they can’t handle the truth. The reality is that strategic risk is the killer of business models. It is killing the US automotive industry, it is working its way through consumer electronics, and (getting back to the beginning) it is challenging creative enterprise.

Knowing this, and anticipating risk at this level begins to tell you how to protect and grow your business. For creative enterprise it entails a concerted effort to identify what the true value is in the work we do. Really, do our clients VALUE the work that we provide on their behalf? Do we create value at all? Who in our space is being successful and why? What are they doing differently and what is setting them apart from the rest of the firms around them? This starts with shrewd competitive analysis, but it cannot stop there. What are the technology risks that we face and what are the event horizons for these risks? Where are we allocating capital to activities that give us no differentiation? Ultimately, after answering all of these questions (and many, many more) what are the business designs that take advantage of the fact that all of our competitors face the same questions, challenges and realities?

How do we turn our problems into our competitor’s problems?

A summary of the risks we face, and that successfully navigated will inform your business model design:

  • Technology shift
  • Industry economic squeeze
  • Brand investment mix (advertising, design, PR, training, information…)
  • Project risk
  • Customer shift
  • Stagnation risk

Massively Armed Robot 2.0

Tuesday, October 9th, 2007

killbot maximus

Weeks ago I posted about the first deployment of armed robots into urban combat in Iraq with the goal of actually replacing their human counterparts in the worst of situations. These modularly armed robots, dubbed SWORDS, represent both a tactical and technological paradigmatic shift for the US military. Tactical in that the Pentagon did not seem so keen on robot warriors not so long ago, and technological insofar as once the Pentagon, with the foresight of , suddenly discovered the value of robotic soldiers they began assigning generous budgets, contracts, and programs to move things along expeditiously. SWORDS was deployed around three months ago, maybe as long as six, and we are already seeing the platform “improved” upon. Naturally, with robotics technology the Pentagon would be remiss to not employ continuous improvement… and so we already have the next generation (pictured above and below) of semi-autonomous, modularly armed robotic soldiers ready for deployment.

killbot II

Improvements on this military platform, from , include enhanced friendly fire avoidance and more powerful weaponry. From the , it also seems to have more fluid and precise motion coupled with improved speed. All of this to say, as we continue to discuss the state of robotics here on Schneiderism, we are consistently seeing the gravity of innovation move from research institutions and industry to the military. This compresses the improvement and advancement cycle for robotics technology, as the Pentagon controls significant budgets and resources to maximize any given technology. The upside is that we will see exponential developments in robotics, especially as it relates to autonomy, over the next few years. The downside is that these developments will be biased toward military aims for the foreseeable future. Honestly, it would be irresponsible to predict how this shift in innovation focus will play out, but I think it is safe to say that five years from now we will be looking at a dramatically different range of tactical options for the US military than we would have thought to be such an imminent reality seven years ago.

More information at , story via

Porsche: Contrarian, Flush With Cash

Sunday, October 7th, 2007

Porsche crest

While automobile companies on this side of the Atlantic determine how best to disassemble enterprise, elsewhere things are somewhat more positive. In contrast to the hard times seen by GM, Ford and Chrysler, Porsche has had a remarkable few years. So much so, that with the strong increase in sales, and the commensurate increase in profits, the employees of Porsche will be getting a significant bonus, and one larger than their bonus last year. I posted about the changes that went down at Porsche in the mid-1990’s, and as a result of those changes the successful strategy that has transpired. It would seem that Porsche is on the right track, and continuing to expand into new markets with new products. This will not last forever, as luxury automotive products can reach saturation in a market very quickly, but for the time it is a reality to be savored. Not fifteen years ago Porsche was on the brink of insolvency.

Porsche is, and has been, the world’s most profitable car company as of late. As a result, its 8,000 workers will receive a bonus of $7,350. Their bonus last year was $4,900. The increase is due to the fact that they sold nearly 98,000 cars and as a result profits rose by 3.4 percent to $10.5 Billion. Fifteen years ago Porsche’s sales numbers were decreasing towards 10,000 units.

That’s quite a turnaround, and I applaud the success. Porsche is an amazing case study in the value of decisive leadership, clear vision, knowing how to expand the value of a recognized and iconic brand, innovation across the board, and a belief in reinvention.

via

Mercury In Retrograde

Sunday, October 7th, 2007

Mercury 1

I picked up that phrase in conversation the other day and it made me curious. I assumed that “retrograde” has its roots in the observable physical behavior of a planet or star as seen from Earth. Beyond that assumption, I did not really know what that meant. Doing a little research, it turns out that the planet Mercury will be entering retrograde on October 11th/12th (depending on your source). The word retrograde applies, in astrology, to the apparent backward motion through the zodiac of a planet. This is an observable phenomenon from Earth, and dates back to the third millennium BCE when the Sumerians made of celestial bodies appearing to move backwards. In reality, they were moving more slowly due to the relationship in their rotational axis to that of the Earth and the other observable celestial bodies, but appeared to be moving backwards. The result of these visual relationships is retrograde motion. The 1947 “” by Nicolas DeVore describes this retrograde motion as:

“like the effect of a slow-moving train as viewed from another train traveling parallel to it but at a more rapid rate, wherein the slower train appears to be moving backwards. However, in the case of the celestial bodies it is not a matter of their actual speed of travel, but of the rate at which they change their angular relationship.”

I do not subscribe to astrology, but I do believe that most of what drives astrological definition is based on the actual physical observations of the relationship between celestial bodies in the sky. All of that to say, the physics of the stars and planets could not initially be explained by humans in scientific terms, so we were left to describe this phenomena in ways that we could understand.

It turns out that exhibit retrograde motion as seen from Earth. The Sun and the Moon do not, but this is due to the rotational relationship of each to the Earth (the Earth revolving around the Sun and the Moon around the Earth). This motion be distinctly different from what is normally observed, it has been ascribed dramatic significance as it relates to our existence on Earth. Mercury has been of particular astrological significance when entering a retrograde period, as the mythology assigns the messenger of the gods influence over our terrestrial communications and commerce. Entering this retrograde period, Mercury has the potential to wreak havoc on our Earthly interactions with each other. Those who believe in astrology portend chaos for us during these periods.

Now, more about . As mentioned above, Mercury has been observed in the sky as long ago as the third millennium BCE. It came to represent the messenger of the gods due to the speed with which it moves across the sky. Mercury has only been visited once by spacecraft when, in 1974 and 1975, NASA’s did three flybys allowing the mapping of about 40-45% of its surface. We do not know a tremendous amount about the planet closest to the sun, but here is a brief survey of what we do know:

  • - It is one of four terrestrial planets in our solar system, meaning it has a rocky surface
  • - Mercury has a higher iron content than any other planet in the solar system
  • - There is an unstable atmosphere made from helium, hydrogen, oxygen, sodium, potassium and calcium
  • - The surface has the greatest temperature difference in the solar system, due to its proximity to the Sun
  • - That difference varies at its extremes by as much as 600° Kelvin
  • - Mercury takes 88 days to orbit the Sun, and has the most extreme orbit of the planets
  • - In its orbit, it will get as close as 46,000,000km and as far as 70,000,000km from the Sun
  • - A rotation of Mercury takes about 58 days
  • - Mercury is the second densest planet, after Earth, but would be first if not for gravitational compression on Earth
  • - It has a large iron core that generates a magnetic field roughly 1.1% the strength of Earth’s
  • - Sunlight on its surface is about 6.5 times that on Earth
  • - Despite the high surface temperatures, there is believed to be ice on Mercury
  • - It is believed this ice is in the deep craters and at the poles, as these are not exposed to direct sunlight.