archive: October, 2009

No Lights, No Signs . . . No Deaths

Monday, October 26th, 2009

A Business Lesson from the Dutch

traffic1

The Dutch town of Drachten removed most of their traffic lights and traffic signs with remarkable results.  Intersections previously adorn with traffic lights and directional signs have been replaced with round-abouts (traffic circles) and all signage removed.  Deaths related to traffic accidents zero since the program started seven years ago.  Residents claim that now it is much quicker and much easier to get around town.  The stopping and starting at traffic lights no longer exists and drivers are now fully engaged and more aware.

I encountered a similar phenomenon in Bali last year while on vacation with my family.  There are a few traffic signs and lanes painted on the roadways, but largely they are ignored.  The roadways are littered with mopeds carrying anywhere from 1 to 5 passengers, creating up to 15 lanes at a time.  Infants are carried in their mother’s laps as they sit sidesaddle behind their husband who is driving with another youngster in front of him.  At first glance you would call it chaos and certainly dangerous.  Not surprisingly, I immediately cancelled the car I was planning on renting as soon as the driver dropped us off from the airport.  After a while, though, you realize that it is a very orchestrated dance, with motorists essentially creating their own rules of the road on the fly.  Horns are used strictly in a positive sense to warn other drives that you are coming by.  Not once did I see an angry, put all of your force behind the heel of your hand, make an ugly face and stick out your tongue horn blow.  Nor, did I see an accident in the 2 weeks that I was there.  Were the rules followed, it would be a lot less efficient.

Why do you suppose that traffic without mandated bureaucratic rules is so successful and apparently much safer?  It is simple really, and it directly applies to business too.  THE MORE RULES ENFORCED, THE LESS PEOPLE THINK.  It’s an automatic response.  When we are forced to follow someone else’s rules, there is no reason to think about the best way to get something done.  It becomes easier to simply follow the rules.  We’ve all had that boss who gave us an assignment and then proceeded to tell us each and every step to getting it done.  And generally, the boss will get exactly what was requested, never anything more, and occasionally a little less.  Never will they enjoy the full potential of their employees.

Now, consider that truth, and compare it to your workplace and its management strategy.  Does your company ask for creativity, collaboration, and innovation while simultaneously providing a rule, process, or procedure for every conceivable scenario that could possibly occur?  Most likely there is an alignment issue between the desired outcomes and the environment designed to promote those outcomes.  This is the most common ailment for corporations today, and one that will largely determine their success in the future.  The trouble is that it is difficult to self-diagnose.  Not because those looking for ways to promote success are daft, but because the diagnosis and the cure fly in the face of everything we’ve ever been taught about organizing and managing a business.  It won’t fit in any box, or even outside a box.  Also, once acknowledged, the cure will bring a landslide of change that seems daunting, overwhelming, and downright scary.  Therefore, it is easier to rationalize that the management strategy is fine, but more training in leadership and innovation is what is really needed.  This is the very situation that many CLOs (Chief Learning Officers) are faced with today.  I met many CLOs of Fortune 500 companies last week at a CLO Summit put on by Marcus Evans, and I have to say they are some of the brightest and most determined individuals I have ever met.  Most are astute enough to know what the real issues are but are guided by leadership teams that do not.  I commend them for their ability to persevere despite their circumstances.  They all chuckled each time one of the presenters joked that, “The key to successful corporate learning is picking the right CEO”.

When considering such ideas, don’t forget to consider the consequences of choosing the status quo.  Companies embracing this new perspective are enjoying phenomenal results.  Companies like Patagonia report thousands of resumes for every job opening and ivy league MBA graduates applying for shipping jobs just to get a foot in the door with a company that believes in valuing their employees, customers, and the environment more than anything.   Dutch Brothers Coffee is opening stores, while Starbucks is closing them, simply because they focus on relationships and it is shining through to their bottom line.

Over time, as more and more companies adopt a 21st century management model that is aligned with desired outcomes, as well as employee and customer values, a shift of the best and the brightest employees will follow.  As the next business cycle heats up, the effects of this shift will become more noticeable.  If you are waiting for a clear sign that you are loosing your best talent because your management strategy is left over from the last century before making a change, it will be too late.  Unfortunately, we are likely to see a few iconic companies get left behind.

Competitive advantages in the near future will come more from revolutionary changes in management strategy than they will from other more traditional sources such as efficiency and cost control, population growth, and increases in standard of living.

Posted in business, leadership, management, strategy | 1 Comment »

From Linear to Exponential: A Lesson from the World Business Forum

Tuesday, October 20th, 2009

Exponential_2

One of the most important lessons from this year’s World Business Forum in NY, is the need to update our business models for the 21st century. Believe it or not, most of today’s business models are based on how the military and large industrial companies were managed over 100 years ago.  Gary Hamel’s presentation, in my opinion, was brilliant in presenting why we need new models and what they might look like and how to get there. The best quote I jotted down was “How do we build an organization that can change as fast as change itself?”

Don’t worry; you don’t need a degree in calculus to get the jest of this post.  But when you’ve finished reading it, you will understand the point.  In the graph above, the red line is linear, the blue cubed, and the green exponential.  Image the vertical axis is the rate of change, and the horizontal one time.  The point being that as time progresses, the change we see in our lives, society, technology, etc is increasing at an increasing rate.  A couple hundred years ago, change was very linear and much slower.  Now we are in a time of exponential change, where many of the new technologies and new insights allow things to change on the fly.  In other words, the reality of rapid change is already built in.  Think about the iPhone, even if you purchased the first model, you still get many of the great upgrades because they put new features in the software instead of the hardware. The question then becomes, are today’s business models equipped for such a world.  My answer is a resounding NO!  The good news is, we can get there fairly quickly.

Even the military recognized the need for a new model.  Commander’s Intent, or Miliary 2.0 Thinking involves the realization that there is great value in today’s soldiers’ ability to see and thus communicate things that their leaders cannot.  Thus today’s soldiers often operate under the Commander’s Intent as a guiding concept rather than absolute orders.1

The primary goal of large-scale manufacturing companies during the industrial revolution was to get people to do the same job day in and day out without complaining while paying the least amount possible in wages.  The great production innovations created millions of un-fulfilling jobs.   In 1913, the year of the first moving assembly, large groups of workers at Ford began to leave with turnover peaking at 380%.  Ford finally ended up offering workers $5 per day (twice the minimum wage) and reduced the workday from 9 to 8 hours.  Thus the traditional relationship between employer and employee was born, dictating that employees would do as they were told by their superiors in return for more money and time off.2 It was a trade most were willing to make because they desperately wanted a better quality of life.  It solved the issue it was aiming to resolve, but I would argue that it masked the root cause of an unfulfilling job.  This foundation still today, underlies many modern companies . . . and we wonder why so many workers, and even executives, are unhappy and dispassionate about their jobs.

The issues today’s companies face are quite different.  For starters, they want people to think, and collaborate, and innovate especially as we come out of this recession.  However, most companies are not aligned with any of those outcomes.  They are aligned with rule followers, and people who are afraid to even consider revolutionizing anything.   Sure, there are some industries, or departments, or companies that have figured out how to promote creativity and passion in the workplace, but most have not.  Command and control methods of management won’t work in a world where people want to feel valued, care if the company they work for is a good steward of the earth, and want to be challenged and grow as human beings.  Fifty years ago, very few believed that kind of job was possible.  Today, most people know that they do exist and there are more examples every year of companies with enough courageous to challenge the status quo.  That courage will pay off and provide the first movers with a tremendous competitive advantage.

The rate of change that occurs today in society, technology, infrastructure, and knowledge is far greater than it was 200, 100, or even 50 years ago.  Traditional business models are very linear in nature, which generally worked in the past because for a long time the rate of change was relatively low.  You could decide on a business plan and it would work quite well for a decent amount of time.  When a crisis hit, it was time to try something new.  Today’s business models need to handle change occurring at an exponential rate.  The 21st century requires a business model that is fed by change.  Where crisis will hit if you stop changing, updating, and improving, not when it’s too late.  This is where competitive advantages will be born in the near future.  Is your firm ready?

It is imperative to start challenging long held beliefs about how businesses can and should be managed.  It starts with a commitment to change and a willingness to be brutally honest with yourself and your team about what works and what doesn’t.  If you have those two things, you will be amazed at what you can create, and you will be even more amazed by what your team can create once you give them the freedom to succeed.

This is a tremendously exciting time in business, and the ones that are more creative, have the courage to challenge old beliefs, and want to have a bit of fun along the way will WIN.

1  Smartsourcing by Tom Koulopoulos

2 The Support Economy by Shoshana Zuboff and James Maxmin

Posted in business, economy, global, management, strategy | 2 Comments »

Thinking Without the Box

Monday, October 12th, 2009

WBF09-convert-2

QUESTIONS FROM THE WORLD BUSINESS FORUM 2009

Questions are so much more intriguing than answers!

We can’t create a new business model that will be effective in the 21st century, accounting for its unique set of challenges, by “thinking outside of the box”.  It’s high time to obliterate the box!  As long as the box continues to exist, some form of the current outdated business model that has changed little in the last 150 years, will remain.  That was my biggest take-away from this year’s World Business Forum 2009 held in New York City last week.

The program was impeccably executed with a tremendous variety of speakers all with very timely messages.  And, Radio City Music Hall . . . well, it’s just hard to beat.  Rich in history and character and perfectly suited for this event.  If you missed the conference this year, be sure and sign up for next year, World Business Forum 2010.

So how do you go about getting rid of the proverbial box?  It is hard enough just to get people to think outside of the box, how can we possible get rid of the box?  The reality is, that the box is the very thing that is holding us back.  The box is a framework that is often hard to look past when it is staring you in the face.  We are stuck in a business model born 150 years ago during the Industrial Revolution, and it simply no longer provides what is needed for businesses to continue to flourish.  It felt to me as if the World Business Form was challenging us . . . challenging us to have enough courage to ask the following question, and the creativity to experiment with the answers.

Is there a better model for business success that provides an environment where creativity and connectivity flourish and capitalism can better align with the innate well being of humans such that its full potential can be realized?

Let’s explore a new era of capitalism and what a new and emerging business model might look like.  One that focuses on alignment and the inherent values and desires of human beings to not only be economically successful but also to be compassionate, responsible, and create connections to others in the world.  Through such alignment we will actually become better capitalists because we will have exploited its full potential.  When we realize that not using known medical technology to vaccinate children in third world countries against life threatening diseases because they cannot afford to pay full price is actually a choice, and not a permanent side effect of capitalism, then we are free to make a different choice.

Traditional business must adapt or it will perish.  It can either embrace the change and garner all the goodness that comes with it, or it can go down fighting.  Either way, a shift is in the making, and the corporate world will never be the same.  And do we really want it to be the same?  In fact, we’ll discover how a change in our mindset about business and capitalism is precisely what is required for the next wave of growth.

Without these changes, the next cycle of growth will be more like a small hill rather than the mountain we all hope it will be.  We can all do better and learn together, because the reality is that we are all locked into a global economy whether we like it or not.  An increase in productivity may be the only way to grow in the future for many industries, and we are not going to get there by any of the traditional methods.  In the past we have been able to rely on finding cheaper inputs, dramatic increases in consumerism, and population explosions.  In the twenty-first century it will take engaging an otherwise half engaged workforce who is secretly longing for the inspiration to put the pedal to the medal.  It will also require engaging your customers and the communities in which we all reside.

The world is made up of evolving societies.  As the desires and dreams of the individuals that make up those societies change, so must the businesses and economic systems designed to meet them.  At the moment there is a bit of a disconnect.  It is no longer about more stuff, but about deeper, stronger, and even emotional connections.  Population trends, the evolution of human psychology, and passing the peak of consumerism will dictate this new direction.

What will drive the next big movement in the world of capitalism?  What will create the next wave of competitive advantage in the market place?  What will the next Microsoft do better than everyone else?  What seems awkward now but will seem a no-brainer 20 years from now?  What will make going to work an adventure instead of a chore?  What will expand capitalism such that its benefits are more than we can currently contemplate?

An obliteration of the BUSINESS BOX and THE POWER OF CONNECTION!

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