Archive for Disruptive Behaviour

New Business model?…..Try standing for something

April 3, 2009 at 9:11 pm · Filed under Culture Vultures, Disruptive Behaviour ·Tagged

Business models aren’t today’s fundamental economic challenge. There’s nothing wrong with simple, one-sided business models. In fact, the opposite is often true: business model innovation is exactly the wrong thing to focus on. Consider finance. Securitization was a breakthrough business model innovation for banks. Everything was remixed by everyone. Yet, toxic junk was mostly what was flowing through that new business model. Business model innovation amplified value destruction. Banks who didn’t play the securitization game — and stuck to simple, one-sided deposit-taking business models — are today’s survivors.

Creating something valuable in the first place is. When we can make valuable stuff, there are a plethora of business models to choose from, some old, some new, some untested, some tried and true. When we can’t, no amount of business model innovation can save us from implosion.

“Monetizing” + “business models” = zombieconomy. The reason monetization is a dirty word is simple. It blinds us to value creation, at the expense of value capture. When we seek to monetize, we end up chasing the same old lame competitive advantage. I win, you (and you, and you) lose. Put another way: “monetizing” toxic junk — from CDOs, to Hummers, to McMansions, to Big Macs – is how we got into this mess.

It is by rediscovering how to make stuff that’s not toxic junk in the first place that we’ll get out of the mess lame, evil, brain-dead 20th century thinking has left us in. That’s the challenge of a new generation of revolutionaries. And it’s not about new business models: it’s about reconceiving authentic, deep, value creation.

Forget business models. Focus on ideals. Reconceiving value creation depends on new ideals. Ideals shape what we wish to achieve in the first place: freedom, peace, fairness, justice — all are ideals vastly more powerful than mere business models. That’s because they are what ensure the value we are creating is authentic, deep, meaningful value — not just the shabby, threadbare illusion of value.

Tomorrow’s prosperity was stolen by yesterday’s so-called leaders. In a world where people are becoming rapidly worse and worse off, there is nothing more revolutionary than an ideal.

So the next time you hear an old dude banging the business model drum, or worse, the sounding the “monetization” bullhorn, let him know the 20th century was yesterday. Today’s challenge is building a better economy — not hawking the same old mass-produced, toxic, self-destructive junk slightly differently. Challenge him with this: you’ve got a business model. But do you have any ideals? Because without the latter, the former is worth about as much as Bear Stearns, Lehman Brothers, or Detroit.

Adapted from Umair Haque in HBR

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Honest business model.. Pt2

April 3, 2009 at 8:13 pm · Filed under Case Studies, Disruptive Behaviour

  • Got a problem with employee contribution to innovation?
  • Got concerns about succession planning?
  • Got concerns about long term sustainability of the business?

The employee owned business sector in the UK is growing because co-owned companies tend to be successful, competitive, good to work for, and sustainable.

Successive Governments have promoted employee ownership because they recognise its potential contribution to the economy.

A range of factors combine to make employee owned businesses an asset to the UK economy:

  • Independent research suggests that a combination of shared ownership and employee participation delivers superior business performance.
  • Because they’re co-owners, staff in employee owned businesses tend to be more entrepreneurial and committed to the company and its success.
  • Because they’re run in an open way, employee owned businesses tend to have a strong commitment to corporate social responsibility and involvement with the communities they operate in.
  • The employee owned business sector adds to the diversity of Britain’s economy – by offering a vibrant and different model for achieving business success.
  • Because they have high employment standards, involve staff and give everyone a stake, employee owned businesses are good at recruiting and retaining talented, committed staff.
  • Employee owned companies are good at innovation because managers go out of their way to consult, share information about the company, and give staff responsibility.

Doubt the benefits ? Just look at Tullis Russell Grp.

Further info

Cooperative Development Scotland

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New business model? How about an honest one!

March 28, 2009 at 8:22 pm · Filed under Culture Vultures, Disruptive Behaviour

Stimulate, Innovate, Stimulate, Stimulate – cash, cash, cash

Apparently the solution to get us outta this place………………..or is it?

Isn’t the best innovation to come from challenging the status quo and stimulation to accelerate the change taking place. Aren’t we just saving what was poor and ineffective from before? How does that help? A recent article in HBR added some more perspective.

The real problem isn’t stimulus, it’s responsiveness. We’re trapped in a zombieconomy: one full of brain-dead organizations who are about as intelligently responsive as Homer Simpson. ( ie focussed on their proverbial do-nuts)

Want better clothes? Don’t ask the Gap. Want better software? Don’t ask Microsoft. Want better cars? Don’t ask Detroit. Want better music? Don’t ask record labels. Want better healthcare? Don’t ask big pharma. Want to hold on to your money? Don’t ask a banker. Welcome to economic Bizarro World.

The economy has gone catatonic. Unresponsive corporations are just the tip of the iceberg. Markets can’t allocate. Investors won’t invest. Banks can’t value, or hold onto anything of value. People don’t trust, much less consume. What’s going on? The real problem isn’t how or what we stimulate – but that almost none of our organizations could respond in the first place.

Yesterday’s institutions have left today’s organizations unable to respond to an increasingly turbulent world. Today’s organizations need a responsiveness upgrade. To that end, we need a new kind of stimulus: an institutional stimulus, not just a financial one, that makes our lame, brain-dead, zombified organizations more responsive. Gap, Detroit, Microsoft, big pharma, record labels, banks, evil corporations of the world – hello? Anyone home? We can stimulate trade from here until Doomsday – but without more responsive organizations, today’s failure to create new industries and renew old ones will simply recur at an accelerating pace.

Money, value, and wealth are an outcome of having responsive organizations in the first place. So how responsive are you?

* * *

Are you redefining the economics of ownership? Ownership has its own costs and benefits. Here’s an example of costly ownership: companies building patent portfolios purely for the purposes of deterring competition. Who can develop better kinds of ownership that create value for everyone? Advantage will flow to those economies – and companies – who can. Just have a look at Tullis Russell group who transferred ownership to employees in 1994 and are flourishing in a tough market in tough times.

Are you redefining the economics of contracts and standards? How do we know today’s contracts are inefficient? The sheer size and growth of the legal industry is an existence proof that contracting is becoming more and more costly. Whoever can invent better kinds of contracts for the 21st century will realize a tremendous advantage. Just ask Google – who redefined advertising by tying payment to action, redefining the terms of a stale contract which still based payment on sheer volume.

Are you redefining the economics of governance? Today, governance of economic organizations has devolved to cronyism, back-slapping, and glad-handing. Boards are happy to look the other way when CEOs line their pockets. CEOs are happy to look the other way when board members invite their bffs to join the board. Toxic governance has poisoned industries as disparate as autos, pharma, apparel, finance, and housing. New rules for the structure, composition, roles, and tasks of senior managers and boards will redefine the economics of governance. Advantage depends on doing so – when we can reinvent more efficient ways to manage managers, new value is created: just ask any open-source community, where everyone’s simultaneously a worker, manager, and de facto board member.

Are you redefining the economics of management? Today’s financial crisis isn’t about money: it’s about management. Bankers mismanaged our money catastrophically – because they were too busy managing their bonuses. Advantage will flow to those who can redefine the economics of management – for the simple reason that, unlike bankers, they will be able to create greater amounts of more durable, lasting value. Responsibility, accountability, and transparency aren’t just buzzwords – they’re the keys to radically altering the costs and benefits of management.

* * *

How do you score on the scorecard? If you’re redefining even a single one of the activities above, you’re hitting the ball out of the park. Most companies fail to even register a score, because they’re focused on seeking advantage through better products, services, business models, or strategies – instead of building responsiveness through better institutions.

Of course this isn’t the answer, its only part of a solution to true business differentiation, competitive advantage and genreation of wealth.

Adpated from The responsiveness scorecard in HBR

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Act Small, Think big

March 15, 2009 at 8:46 pm · Filed under Disruptive Behaviour, Simple Things

If you act small and think big, you are too small to fail. You won’t need a bailout because your business makes sense each and every day. You won’t need a bailout because your flat organization (no matter how large it is) knows about problems long before they’re too big to deal with. – Seth Godin

What does this mean in practical application

Thinking big means expecting everybody to use their creativity every day towards improving customer experience and teamwork. Acting small means trying out minor adjustments to our processes, making minor changes workplace or looking for small time-waster situations and taking steps to improve.

Thinking big means that “zero” is a reasonable expectation for defects, accidents, equipment breakdowns and excess inventory. Acting small means noticing and correcting the smallest of the chronic flaws and deviations in processes before they become larger sporadic failures.

Thinking big means imagining innovative new product and services for the markets. Acting small means going to the field and interacting with customers actually using the product or service and humbly reflecting on these lessons learned, even when it means reversing cherished decisions on technology, marketing direction or milestones on product road maps.

Act small: produce in small lots
Think big: aim for 100% on-time delivery and customer satisfaction

Act small: go to personally check out the situation
Think big: believe that perfection is worth pursuing through tenacious follow-up

Act small: give cross-functional teams of 5 to 8 people a few days to make many small process improvements rapidly
Think big: set breakthrough goals before such kaizen events and expect double digit-improvements in safety, quality, lead-time, productivity, space and inventory

Act small: ask co-workers and subordinates for ideas
Think big: make the realization of their ideas the best part of your day

There are far more small businesses in the world than big businesses. The largest of organizations are but clusters of smaller, informal groups. We have outsized challenges today that require thinking sized to match them. We can think big, but act quickly no matter how small the good of that act may be. The collective impact of our many small actions has far more impact than the big thinking of the most powerful institutions.

Act small: do what you can do today.
Think big: dream of what you can do with all of your todays

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10 habits of a highly desirable leader

March 6, 2009 at 11:20 pm · Filed under Disruptive Behaviour, When the going gets tough

What practices are going to ensure that you lead your busienss through these tough times? Here are a few suggestions.

1. Listen to the Cry for Accountability

Leadership is accountable to investors, shareholders, regulators – but most significantly we are accountable to our customers and our people. 

2. Get into the trenches

Break down the walls of hierarchy, flatten your structure, walk the floor get amoungst your people.

3. Get emotional

Let people know what matters, you have passion and you are looking for passionate behaviour

4. Chase the rainbow

As everyone else cuts, slashes and burns, their horizon is the here and now. The horizon is an invitation however close it appears, and there are opportunities.

5. From Me to We

The power of an oragnisation is in its people, Harness it, ask for solutions and acknowledge the source of them.

6. Nimble feet

Agility, speed of response, fail frequently-fail cheaply. Say no more

7. Keep it Simple

Always best if you want others to understand what you are doing, especially your customers.

8. Ask the right questions

Know what you want to achieve, ask the questions that will deliver it.

9. Adapt to the new work order

Think global, act local.

10. Yes we can

Of course we can.

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Low Cost–Me too??…Read this

February 21, 2009 at 9:04 pm · Filed under Disruptive Behaviour, Favorites

 

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When a company talks about trading off pure performance in the name of lower prices, disruptive alarm bells start ringing. After all, companies like Dell Computer, Southwest Airlines, Wal-Mart and Nucor have prospered by following this kind of low-cost disruptive strategy.

It’s reasonable to predict that we’ll see an increasing number of similar low-cost strategies as economic woes continue and start-up companies seek to find the opportunity in economic turmoil. Therefore, it’s natural to ask: How can you tell if a low-cost disruptor is going to succeed?

Analysis of companies that have successfully and unsuccessfully followed low-cost disruptive strategies suggest that to succeed, you must be able to answer yes to three key questions:

  1. Does it cross the “good enough” threshold? Stripping out performance to lower costs is not that difficult. But stripping out too much performance can leave a company with a product that actually under-delivers against a customer’s needs. Consider a free, but inaudible, mobile phone, or a $200 laptop computer with 5 minutes of battery life. You must cross acceptable performance thresholds before price even enters into the equation.
  2. Does the company’s product / performance bundle run counter to the market leader’s natural improvement trajectory? Staking out a low cost position isn’t all that meaningful if a powerful competitor quickly crashes your party. If the competition has been quite clear in its desire to lower its price points to appeal to broader market groups and if natural product improvements lead to the introduction of a similarly featured, similarly priced product, you will be in trouble.
  3. Does the company have a sustainable cost advantage? Lower input costs do not immediately translate into market success. Rather, low-cost disruptors have the greatest chance of success when they change the model in a way that makes incumbent success difficult. For example, Nucor didn’t just offer lower priced steel. It used a completely different production technology (minimills) that allowed it to earn attractive profits at low price points. These kinds of production or business model advantages are much more difficult to replicate than particular features or functionality bundles.

Of course, potentially massive markets could support multiple players. But if you dont meet the three conditions detailed above, chances of long-term success are quite low.

 

The orginal article appeared in Scott Anthonys blog on HBR

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More with Less??

February 21, 2009 at 8:43 pm · Filed under Bottom line, Disruptive Behaviour

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Facing the tough challenge of figuring out what to cut as demand dwindles??

After decades of continuous improvement programs, most companies don’t have much fat to trim.

It’s the “more with less” problem. It’s easy to say that tough times demand doing more with less, but its hard to figure out exactly what that means. Far too often doing more with less involves slashing the biggest line item on a budget, or spreading cuts across the board.

The critical message is that you can’t do more with less until you figure out exactly what “more” means. This means any cost-cutting effort must start with a deep understanding of the customer, the job they are trying to get done, and the metrics by which they measure performance.

By separating customers seeking high service from those looking for “just the basics” can help spot opportunities to spend less and deliver more value.  What does this mean? Instead of providing a one-size-fits-none solution,  distinct offerings for each segment can result in each segment becoming larger and more profitable. That’s more with less!

The trick of many disruptive companies is to intentionally trade off pure performance in the name of simplicity or affordability. 

This notion applies to internal efforts to cut costs as well. For example, maybe young employees don’t actually care about comprehensive health care plans, and would happily accept a basic plan that met their needs with the option to invest in a more comprehensive plan.

Without a clear understanding of the customer and the problems they are trying to solve, “more with less” really translates into “less with less.” 

A smart approach to cost cutting can actually open up new markets by delivering better value — in the customer’s eyes.

 

The original article appeared in Scott Anthonys Blog on HBR

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