What to do when a business is in danger?

Business Network Transformation

Philip Lay and Geoffrey Moore are managing directors in TCG Advisors, a prominent strategy consulting firm that seeks to shape and act on the CEO’s agenda within leading technology-based companies. Moore is also the author of several bestselling business books that include Inside the Tornado, Crossing the Chasm, and Dealing with Darwin. They have identified “Seven Early Warning Signs” that an organization and/or its business network is under attack, encountering serious disruption, and in imminent danger:

(1) Someone’s eating your lunch, but you’re not sure who, (2) New players are entering your marketplace and capturing business with your customers, (3) Even your established trading partners are becoming competitors, (4) You have lost touch with your supply chain and do not become aware of some developments until it is too late, (5) You cannot see what’s happening in your demand chain, (6) Others’ business model innovations have become a serious threat, and (7) Power is migrating to new roles in your business network.

What to do?

Lay and Moore acknowledge two different types of business networks: the collaborative network (i.e. has a peer-to-peer structure in which each member of the network has direct access to every other member) and the coordinated network (i.e. has a back-to-front structure that it inherits from an earlier instantiation of this model as a value chain). Each type has different “sweet spots.”

Collaborative Network: Target next-generation green field market opportunities to develop new markets and exploit high-value umbrellas; drive standards and interfaces to enable modular development in parallel with downstream systems integration; pursue market-specific solutions to increase customer value, reduce market risk, and decrease complexity to reduce integration risk; and meanwhile struggle to accept commoditization and move on, entrusting to partners non-core processes that are mission-critical.

Coordinated Network: Target low end of mature complex systems market to enter new markets and exploit high-price umbrellas; drive commoditization to lower base prices to drive down overall cost of offer and grow volume operations to scale; pursue mass customization to recapture margin and retain low-cost efficiencies; and struggle to collaborate to enter new markets and get downstream visibility in existing networks.

Those who wish to learn more about these and other issues are urged to check out Business Network Transformation: Strategies to Reconfigure Your Business Relationships for Competitive Advantage, edited by Jeffrey Word. Lay and Moore contributed one of the eleven articles.

Seven symptoms that a business is in danger

Philip Lay

As globalization initiatives continue to increase in both scope and number, there is a corresponding increase of importance of business networks of relationships with suppliers, customers, strategic allies, government officials and their agencies, etc.

Philip Lay and Geoffrey Moore are managing directors in TCG Advisors, a prominent strategy consulting firm that seeks to shape and act on the CEO’s agenda within leading technology-based companies. Moore is also the author of several bestselling business books that include Inside the Tornado, Crossing the Chasm, and Dealing with Darwin.

Geoffrey Moore

Lay and Moore have identified “Seven Early Warning Signs” that an organization and/or its business network is under attack, encountering serious disruption, and in imminent danger:

1. Someone’s eating your lunch, but you’re not sure who.

2. New players are entering your marketplace and capturing business with your customers.

3. Even your established trading partners are becoming competitors.

4. You have lost touch with your supply chain and do not become aware of some developments until it is too late.

5. You cannot see what’s happening in your demand chain.

6. Others’ business model innovations have become a serious threat.

7. Power is migrating to new roles in your business network.

What to do?

In another post, I will provide some valuable advice provided by Philip Lay and Geoffrey Moore.

A Swift response to pollution

Gustavus Swift (1839-1903)

Here is a brief excerpt from American Entrepreneur: The Fascinating Stories of the People Who Defined Business in the United States in which Larry Schweikart and Lynne Pierson Doti focus on Gustavus Swift who was alarmed by fat content in Chicago’s Bubbly Creek into which the remains of animal carcasses were discarded after processing within his slaughterhouse.

“Swift was convinced that any fat in the water meant that too much of the animal carcass was discarded. Thus, for economic, and not environmental, motivations, Swift cleaned up the water by finding ways to use virtually all parts of beef and pig carcasses. He developed a series of by-products that included glue, soap, fertilizers, beef extract, and bone products, joining the many uses for other [parts of the animals – leather shows, gloves, baseball covers, even red paint made from animal blood – already in place.

“A century later, the process that Swift started reached almost 100 percent efficiency, but even during his time Swift accurately could boast that ‘we use all of the hog but the grunt.’”

Are Social Media Worth Your Time?

Morten Hansen

Here is an article written by Morten Hansen. To check out other articles and resources and sign up for a free subscription to Harvard Business Daily Alerts, please visit dailyalert@email.harvardbusiness.org.

Are Social Media Worth Your Time?
Morten Hansen

In the latest issue of BusinessWeek, Stephen Baker’s article “Beware Social Media Snake Oil” makes a provocative argument. He claims that all the hype around social networks, wikis, and blogs for business neglects the potential risks and time wasted. While I think he is overstating the argument, he is bringing up a vital question all managers and employees need to ask: What’s the business value of using social media? In my view, there has to be a crystal clear business impact for using these tools.

Consider collaboration inside companies (which differs from using these tools for marketing and PR). The promise of social media, or “enterprise 2.0″ as it is often called, is that employees can become much better at finding information and working together if they use blogs, wikis, social networking, document sharing, Facebook pages, and the like. But are these new activities valuable for a company? Well, that depends. The first obvious issue is that you can spend an awful lot of time on this, and that’s time not spent doing other things, such as finishing your job for the day. So it’s only valuable if the result (e.g., finding good information) justifies the effort (all the hours put into social media). That’s focusing on outputs, not inputs.

Some people miss this point: They think of adoption success in a company as the number of wikis, blogs, tweets, and Facebook pages that people have created and used. In other words, they measure success as the activity level. But that’s the same as saying, “in our company, we have lots of meetings so we must be doing something right.” As enterprise 2.0 expert Oliver Marks told me, “random Twitter and online dialog can be an even more disastrous use of time than endless unfocused meetings.” More is not necessarily better.

There is a bigger problem, however. Social media tools are only useful for some problems. Managers need to ask, do social media tools solve my key challenges? Consider again collaboration inside companies. Why are people in your company not collaborating better? There are potentially many different reasons for this. As I show in my book Collaboration, some barriers to collaboration are motivational — people are unwilling to share information and look for help, perhaps because they see colleagues as rivals or only care about their own performance. Social media tools are just not going to be good at fixing these motivational problems. You need other solutions for this, such as changing the incentive system so that people are rewarded for helping others.

If you blindly focus on investing in social network tools, wikis, and blogs in your company, without solving these motivational problems first, you have just committed a great managerial sin. You have applied the wrong solution to your problems. You have prescribed cough medicine for a broken leg.

We need to be precise and honest about where these new social media tools have great impact, and where they don’t. Then they will be seen as great tools, and we won’t hear the snake oil label anymore.

* * *

Morten T. Hansen is the author of Collaboration: How Leaders Avoid the Traps, Create Unity, and Reap Big Results (Harvard Business Press, 2009). He is a professor at the University of California, Berkeley, and at INSEAD.

To check out other articles and resources, and sign up for a free subscription to Harvard Business Daily Alerts, please visit dailyalert@email.harvardbusiness.org.

We Really Don’t Like Hassles — So, our Agenda: Create “Hassle Free”

Hassle:  “a spot of bother”

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We really don’t want any hassles.  Any.  Ever.  Not from customer service reps in stores, not from our bosses, not from our colleagues.  Life is too busy, pressures are too many, we have too much to worry about (we also want no worries, but that’s another discussion…), so we don’t want any hassles at all.  Ever.

This is one of the key findings of Frank Luntz in his book, What Americans REALLY WANT…REALLY: The Truth about our Hopes, Dreams, and Fears. Yes, we already knew this.  But Luntz found out that we really, really don’t want any hassles.

And we especially don’t want any hassles in any customer service interactions.  In addition, we don’t like automated phone systems, and foreign accents on the other end of the phone.  But this is because we don’t want any hassles, and automated phone systems and long hold times and foreign accents can put us over our hassle quotient…

In customer service, this is what we really want:
1)            Someone who knows what he/she is doing
2)            Someone who will actually listen and genuinely pay attention – to me.
3)            Someone who cares about me and my problem.

(Those are my rewordings of his findings.  Here is how Luntz put it:
Three attributes Americans really want from customer-service personnel:
1)    to be knowledgeable, well-trained, reliable
2)    someone who listens as they explain their problem.
3)    In a word:  empathy.)

So – here is your agenda.  In your interactions with your customers, in your interactions with colleagues, in your interactions with family members and friends and fellow church members, and…  find any hassles and every hassle in your system.  Anywhere and everywhere.  Now – get rid of them. And be on the lookout for new hassles.  Then, get rid of them.  Aim for hassle free.

Because people really don’t like hassles.

(and, yes, this needs to be my agenda too).