Archive for April, 2008

Frugality, Innovation & the Kindle

Monday, April 28th, 2008

Business Week interviews Amazon’s Jeff Bezos in their current innovation issue. The conversation entitlted, “How Frugality Drives Innovation,” is a think piece – in brief – on how to start from customer needs and then develop the capabilities necessary to meet those needs. According to Bezos, that’s how the Kindle was developed.

Here’s an excerpt:

“Q: Every company claims to be customer-focused. Why do you think so few are able to pull it off?

A: Companies get skills-focused, instead of customer-needs focused. When [companies] think about extending their business into some new area, the first question is “why should we do that—we don’t have any skills in that area.” That approach puts a finite lifetime on a company, because the world changes, and what used to be cutting-edge skills have turned into something your customers may not need anymore. A much more stable strategy is to start with “what do my customers need?” Then do an inventory of the gaps in your skills.

Kindle is a great example. If we set our strategy by what our skills happen to be rather than by what our customers need, we never would have done it. We had to go out and hire people who know how to build hardware devices and create a whole new competency for the company.”

Intrigued?  Be sure to catch Charlie Rose’s interview (11/07) with Bezos about the Kindle, and Amazon’s “recipe” for innovation.

Build a Better Smartphone

Sunday, April 27th, 2008

Don’t miss today’s NYT piece on the showdown between the smartphone heavyweights –  R.I.M.’s Blackberry and Apple’s iPhone.  The battle is pitting competing models that evolved along two different paths, and each is scrutinizing the other as the market grows and stratefies.

Both field generals – Lazaridis vs. Jobs – are brilliant strategists, but each has a unique vision and problem solving style reflected by their respective organizations and their products.

R.I.M. has long appealed to business users who demand relentless connectivity; the company shaped the category due to its combination of functionality, stability and security.  Those features were enough to give R.I.M. a critical mass of market share which has grown incrementally.

Then came the iPhone with its silky touchscreen and utter seamlessness.  It was a category killer from Day One. I’ve never met a user who wasn’t enthralled.  The user experience is the message.

What’s next is their battle for the hearts and minds of business users in the rarified 3G space.  Both companies will likely co-opt the best features of the other.  (Look for R.I.M. to come up with a niftier interface while upgrading its functionality and security in the 3G world.)

This battle couldn’t be more fascinating. I’m betting – and this is a very safe bet – that the real winner will be the consumer.

The “Learning Hub”

Thursday, April 24th, 2008

What’s next in corporate education? Our agile corporate learning programs have evolved over the past 5 years through successive approximations, i.e. experimentation. Our current framework is that of a Learning Hub (LH) which is designed to promote on-going, self-directed learning among our clients’ workers at all levels.

Why this approach—why now? Simply put, we’re seeing corporate learning increasingly move away from a traditional skills training-passive learning approach to more of a performance engineering process, and for good reason.  Traditional training doesn’t build the capabilities that today’s market leading companies need to succeed.  Moreover, it doesn’t address the needs of sophisticated learners in the Knowledge Economy.

In contrast to conventional training, our efforts are directed at improving overall organizational capabilities while stressing frontline performance — connecting performance to the desired business impact. We’re aiming at driving performance improvement through all levels of the organization.

In addition to building the skills, knowledge and talents needed to improve performance now, we help clients anticipate the skills, the knowledge, the talents necessary as consumer demands shift over the 18-24 months.

The LH isn’t a training center, or a set of dedicated classrooms. It’s conceptual — a web-enabled learning environment that provides access to a wealth of knowledge resources–both internal and external. It entails on-line learning, peer collaborations, links to outside resources, and partnerships with academic institutions, all intended to deliver knowledge that is necessary at the moment the employee needs it.

The LH enables leaders to be able to emphasize the importance of learning to the success of the organization. It enables our clients to come together around a shared educational platform. This formal approach to on-going learning enables different units to come together which is one of those key business challenges that organizations are dealing with today – that is, trying to get different work groups to collaborate.

Technology is enables access to and connectivity with resources that couldn’t otherwise be reached in person. It also allows us to do things such as simulations — a lot of things that we can practice, which we would not be able to do in the operational environment, are enabled by technology.  This is aparamount in a world where workers are distributed across continents.

And we bring technologies that simulate the work setting. The result is there’s no demarcation between the learning environment and the work setting. So, when learners move from the LH Lab to their day-to-day jobs, it’s a seamless transition.

Learners come to the LH environment expecting not only to get particular knowledge or skills but they expect to enjoy a learning experience that contribute to their ability to effectively engage customers while also feeling more confident and therefore more satisfied workers.

U.S. airline mergers re-visited

Wednesday, April 23rd, 2008

What follows the Delta-Northwest merger? United Airlines and Continental have been talking, despite Continental’s independent culture.  Whether this deal goes down or not is heard to tell.  But more mergers seem likely if not inevitable.

The forecast for airlines is gloomy and getting darker by the day. Network carriers in the U.S. are facing high costs for aircraft ownership, fuel, labor and maintenance. With rising fixed costs, no pricing power and negligible profit margins, reducing capacity to relieve pricing pressure seems to be mission imperative.  But network carriers are reluctant to reduce their inventories much further.

Due to their low credit ratings, airlines can’t borrow money at reasonable rates to invest in more fuel efficient planes and more efficient facilities.

All this means that the industry will have to consolidate – out of sheer necessity – despite the thorny challenges of integrating large, people-intensive organizations and fragmented legacy systems.

Can consolidation fix the ailing economics of the airline industry?

It’s too early to tell, but it probably won’t be enough.  In the end, new and innovative airline business models are needed to solve the industry’s deep, structural problems.

Airline disruptions and mergers

Tuesday, April 15th, 2008

While considering the much anticipated Delta-Northwest merger, with many more mergers on the horizon, I recalled Clayton Christensen’s book The Innovator’s Dilemma.

He pointed out how the Southwest Airlines model is “disruptive” because their low-cost strategy targeted customers who had been using trains and buses and or those who used out of the way airports.

But, Christensen believes that low cost carriers have a limited shelf life, because the incumbents can ultimately match them on the cost side, whereas the incumbents can’t climb the value chain.

I wonder what comes next in the evolution of airline service models – few of which are working well in mature markets, particularly in the U.S. and Europe.  Carriers suffer from overcapacity during down cycles like this while customers receive less than stellar service.

Just when we figured there’s nothing new and interesting in the industry comes Virgin America’s innovative business model. Their planes feature custom-designed leather seats, mood-lighting, and the best in-flight entertainment (IFE) system in the industry with on-demand TV and movies, high end games, music and even online chats with other customers.

The IFE is a great example of how the airline got it right.  As a practical matter, customers can plug their devices into USB ports.  The real genius is that the system runs on twin Linux servers–meaning an “open source” platform that is equipped to handle a range of new software and harware add-ons down the road.  This innovation occurred because the company had the wisdom to recruit forward-thinking, Silicon valley engineers – not airline entertainment vendors – to design it.

And, the airline managed all of this using a surprisingly lean, yet scalable operations model.  By allocating costs on non-perishable components that customers value, Virgin has come up with an effective airline model that will alter the way we think about flying.

While the legacy carriers fight it out using conventional warfare, Virgin America is rolling out new, novel features that today’s high value customer desires.  That’s what’s next – along with more mergers among the majors.

P.S. [April 18, 2008], Notice Time magazine’s 4-17 article, “Richard Branson’s Flight Plan”.

On “New Age of Innovation”

Tuesday, April 8th, 2008

Management guru C.K. Prahalad has an amazing knack for zeroing in on what’s salient.  Among his other big ideas, he’s introduced business practitioners to the importance of delivering services to emerging markets. In his latest book, The New Age Of  Innovation, with co-author, M.S. Krishnan, he advances the need for a new paradigm in business.

The duo discusses their book in the New Age of Innovation blog where Prahalad asserts that our industrial system has reached an inflecton point.

He writes,

“Ubiquitous connectivity (e.g. cell phones and PCs), digitization, convergence of technology and industry boundaries (e.g. consumer electronics, computing, communications), and the emergence of social networks have collectively put a turbo charge on this transformation. This transformation is affecting all industries.”

The transformation, he argues, is changing the way firms create value and, therefore, the way we all work.

He poses the following questions:

a. How are these trends playing out in your industry? Obvious impact (e.g. advertising, music industry) or subtle but significant (e.g. insurance) or weak signals for now but accelerating (e.g. shoes)?

b. Is there an emerging consensus among your colleagues on how it will transform the way you work? The way you approach your customers?

c. How will it impact the work of CIO/CTO/HR professionals? How well prepared are you for the changes needed in the basic approach to the function and the new skills needed (e.g. global project teams, flexible and resilient business processes)?

d. Will the nature of relationships between the CEO, business unit managers, and CIO/HR change? Should it?

e. Do your colleagues see IT as strategic or do they still persist in believing IT does not matter?

This transformation in business is dramatically changing the way firms will create value. How shall we adapt our business models to operate successfully in the new paradigm?

Good questions.

Cudos for “The Opposable Mind”

Monday, April 7th, 2008

I can’t remember the last time I read a business book where I was hungry for more.  That was the case with Roger Martin’s ’07 book, The Opposable Mind. This is one that I’ll propose for our upcoming Executive Book series – it’s a “must read” for all business consultants, executives or managers who want to get to the true heart of problem-solving.

Martin, who is the Dean at the University of Toronto’s innovative Rotman Business School, debunks conventional, linear thinking conducted by many business practitioners.  Instead, he advocates an unconventional, seemingly paradoxical approach to solving problems known as integrative thinking.  He maintains that successful leaders excel at integrative thinking.

According to Martin, integrative thinkers view problems “holistically”while embracing the tension between competing ideas. Integrative thinkers actually “hold two conflict ideas in constructive, almost dialectic tension.” He argues that many people find such tension uncomfortable, but not integrative thinkers.  In fact, their capacity to work in this space leads to creative solutions to complex problems.

Martin cites numerous examples of integrative thinkers and their successes including Meg Whitman of eBay, Victoria Hale of the Institute for One World Health, and Nanden Nilekani of Infosys.

Martin admits that shifting to integrative thinking isn’t easy.  But, he’s convinced that practioners can vastly improve their capacity for integrative thinking and, by doing so, can increase their effectiveness as problem-solvers.

His prescriptions include:

• Look at problems holistically, with consideration to how various parts fit together, rather than analyzing the parts in isolation.
• Consider multiple causes, as well as possible nonlinear relationships between cause and effect, rather than thinking of terms of simple linear relationships between a single cause and effect.
• Embrace the tension between opposing ideas and use that conflict to generate creative new alternatives rather than making simple either-or decisions.

Martin walks us through his argument with great clarity and elegance.  This was an informative and highly pleasurable read…