Opening up the online business model for new and emerging opportunity 3: blue ocean strategies and business models 1
This is my third installment to a series on new and emerging online business models and on developing best practices for finding and creating new and novel online business opportunity (see Part 1: outlining some of the basic issues and challenges and Part 2: online target demographics oriented marketing.)
I wrote Part 1 of this series with two goals in mind: to set up a basic foundation for a more detailed discussion to follow, and to raise some basic and still open questions that have to be addressed, and that do not have simple, standard, algorithmically applicable answers. I began addressing them with Part 2, where I wrote about group marketing demographics in a globally reaching online context. And I continue that here in this posting where I address some explicitly identified open questions, beginning here with this:
• When is pursuit of a true blue ocean strategy and business model realistic and how might a new business’ chances be improved for succeeding there in an online context?
There is a reason why I started this overall discussion of open issues in Part 2 with a discussion on defining and understanding group demographics and using that insight in marketing more effectively in a geographically and culturally open online context. Any valid answer to the above question on blue ocean strategies has to be at least partly grounded in how you address that set of issues. So I begin addressing this question of blue ocean strategy and opportunity in terms of marketing demographics and from the fundamentals about both: blue ocean strategies and businesses and the development and offering of the disruptively novel, and the demographic groups that you would have to reach to make that work.
• When you think and plan and develop a business with a blue ocean strategy and performance goal, you do so with an objective of offering something to the overall marketplace that is disruptively new and that breaks away from what is already out there and also from consumer expectations as to what is out there for them to choose from. That is what blue ocean means – if you pursue this goal of moving past and away from any current competition, that calls for coming up with and successfully offering something that no one else provides or can provide, at least now and through the near-term future and that no one has provided before. (As a basic reference on blue ocean strategies and businesses see:
Kim, WC and Mauborgne, R. (2005) Blue Ocean Strategy: how to create uncontested market space and make the competition irrelevant. Harvard Business School Press.)
• And this means you are going to be building into uncertainty. That includes uncertainty as to what precise marketing demographic to market to and uncertainty as to how best to present and represent your new product or service even where you do have a clear idea as to who to market to. And I add the people you would want to reach also start out unaware of the existence of what you would offer them or the possible value to themselves from what you would offer them.
I have written a number of times in this blog about the issues of that last bullet point and about adaptor curves and finding and bringing in involvement and interest among pioneer and early adaptors. I have also written about the role of social networking and viral marketing there, so my goal in this posting is not to simply recapitulate what I have already written on these issues. The question that I would address here is actually a core risk management issue.
If you offer a completely novel and disruptively new product or service to the marketplace, you might or might not succeed in bringing it to market and generating revenue flow and profit from it.
• A novel product for example, might or might not cost-effectively scale up for production and with sufficient quality control for you to want to ship your new products out the door.
• Assume you can build your new offering at a commercially viable scale and cost-effectively and with good, solid, consistent quality control. You might or might not actually know what your best target market is, and who would, by demographic characteristics, be your best marketing audience and most reliable customers. Experience shows that truly novel offerings tend to attract unexpected primary buyers and markets.
• Assume you do have a clear idea as to who you should market this offering to. You would have to be able to effectively reach these prospective buyers with a marketing message and a sales opportunity, but simply offering a new idea or product on the internet in general, and even with carefully selected and targeted pay per click and similar marketing might or might not cost-effectively work.
• The issue that I write of here can all be reduced to burn rate challenges, where you need to develop a business out of a new offering and with all of the expenses that involves before you run out of the funds you have available to commit to this – before you run out of liquidity for this venture (see my series: Understanding and Navigating Burn Rate at Startups and Early Stage Businesses, postings 67-78.)
• So the question that I noted towards the top of this posting is about what else you can and should do that might not offer as much prospect as a successful blue ocean venture, but that is fairly certain to bring in a steady stream of revenue that can among other things help bankroll that blue ocean attempt.
And this brings me to what can perhaps be seen as a fundamental paradox:
• Established businesses can approach blue ocean novelty opportunities from a position of having significant cash reserves, and having successful if more standard business lines that can serve as sources of new venture support. But an established business might not be as nimble in what it could consider doing, in taking a blue ocean strategy risk. And their business-as-usual systems might thwart the innovative exploration of new possibilities that would make their trying to develop a blue ocean venture possible. Established businesses can become set in their ways and anything but agile in having an ability to conceive or pursue new.
• Startups might start out with less organization and strategic rigidity and with more openness to the possibility of developing and offering something dramatically new, but they generally lack the cash reserves and the supporting, stable business lines that an established business could tap into in support of innovative advancement.
I am going to continue this discussion in a next series installment where I will address this paradox where:
• The businesses most able to support innovation financially, can be the least able to do so strategically and organizationally, and those most able to do so strategically and organizationally can be least able to do so from a firmly supportive financial base.
And the goal of any such discussion is to explore and present approaches for combining sources of necessary strength so “able” and “willing” can come together in support of innovative excellence.
Meanwhile, you can find this and other related postings at Startups and Early Stage Businesses. You can also find related material at Business Strategy and Operations and at its continuation page: Business Strategy and Operations – 2.
Career changes, career transitions 7: facing the challenge of being typecast professionally and breaking out of old molds – 2
This is my seventh posting to a series on careers, career development and career transitions, and on looking at work and the work experience from a wider perspective than that of the here and now job or job search (see my Guide to Effective Job Search and Career Development – 2, postings 285-290 for Parts 1-6.) I began a discussion of career typecasting and the challenge of breaking out of old career paths and even career dead-ends, to create and realize the career path best for you in Part 6. And I wrote Part 6 orienting the discussion in at least significant part towards the types of situations that lead would-be entrepreneurs to break away from working for others to start their own businesses, or to work independently as consultants. See:
• My posting directory: Startups and Early Stage Businesses and
• My series: Consulting Assignment Life Cycle at Guide to Effective Job Search and Career Development – 2, postings 225-249
for further material on startups and on consulting as career path options.
I freely acknowledge that career dead-ending within larger organizations and perceived workplace stultification are extremes as to what can develop out of the ongoing pressures to meet here and now performance needs. But the basic principles expressed in my Part 6 series installment apply more generally too, where pressures to fit in and perform can and do limit opportunity – and even when we do not feel those pressures as an immediate and significant factor in shaping our careers and career opportunities in our here and now.
• Complacency and simply going with the flow and settling into work and career ruts is the enemy of our actually taking ownership of our careers, and of our creating opportunity to find and pursue the career path that would long-term be most fulfilling to us.
So I still offer Part 6 and its discussion as at least touching upon more widely significant issues and for all of us, and even if we find working within larger organizations as our best true paths. With those clarifying and discussion expanding points in mind, I note as a beginning point for this posting’s discussion that I finished Part 6 with what amounts to a career challenge:
• How do we effectively pursue a wider vision of what is possible for us as our best career path, and still remain stably employed, productive and appreciated by our managers and employers for being great team players?
One perhaps obvious place to begin addressing that is with negotiations skills, and in that regard I cite some general reference works that I have found very helpful, and that I have recommended when mentoring others:
• Ury, William. (1991) Getting to Yes: negotiating agreement without giving in. Penguin Books.
• Ury, William. (1993) Getting Past No: negotiating in difficult situations. Bantam Books.
• Ury, William. (1997) The Power of Positive No: how to say no and still get to yes. Random House.
These are all short books and written to be easily and quickly read but they all offer invaluable insight into the negotiations process. But rather than simply leaving you with some book recommendations on how to negotiate, I round out this set of issues by noting some crucial details that you would specifically have to prepare for, going into any negotiations related to championing your own career path and professional development. And I summarize what I would say here in advance by stating that this is a situation where your pre-meeting preparation is everything. Before you go into a negotiation with a current manager as to what you can work on and on what time schedule, in developing your own best next step skills and experience:
• Think through and know as clearly as possible what you actually want to do next, and why. And think this through in terms of long-term goals and objectives. This is not just about taking on some immediate and short-term task X, outside of your current work area, but of thinking through what you would learn from working on it and what you would specifically gain in credentials from this that would help you promote your achieving your own best career path.
• That means really thinking through where you are now and where you seek to go professionally, and what you would need to do to get there. And this is all about knowing and understanding your priorities and where you should hold fast and where you can yield on issues. I keep coming back to that exercise that I noted in Part 1: “Think of where you would like to be and what you would like to be doing in five years. Now what could you do today, that in however small a way might help you reach that?”
• Now once you have thought out your own needs and your own current position and articulated them at least to yourself and with some clarity, mentally move to sit on the other side of the negotiations table. If you are going to meet with your manager and possibly others to present the case as to how and why you should work in new areas and take on new responsibilities, think through the issues and challenges involved from their perspective first, and think through the pressures and constraints they face.
• What are their priorities and concerns, where your current full time work addresses their needs? This is a question of how your taking time and effort from what you do now to work in other areas and on other tasks, might at least seem to be in conflict with their overall goals and priorities. And this is about thinking through how your reaching your goals could be carried through upon in ways that help your managers and other stakeholders to reach their goals too.
• Look for ways to develop congruence of need. Are there, for example, goals and priories that your manager would like to address but that they cannot readily complete now because that would require skills and experience not currently available in their team? Are their tasks that need to be done where current employees are resistant to taking them on? An example that comes immediately to mind for me here, is where no one wants to move for some perhaps open-ended period of time to a satellite office that has been displaying real dysfunction and that has had real problems – but where taking on that challenge and resolving those problems would offer opportunity to both learn and exercise new skills and also help you to gain credentials for moving forward. Few are willing to step into what they know up-front to be a real challenge and certainly where a failure to resolve it would be seen as a career black mark. Those who take on such challenges and succeed can find themselves in the best position for career advancement and desired career change.
As a final thought here for this posting, I have been writing this from the perspective of working within larger organizations and for others. That can mean working for large corporations or it can mean working for smaller businesses with limited headcounts, but in either case it means working on teams and reporting to others and entirely within the constraints of the one business worked for at any given time. I cited the possibilities of breaking away to build our own paths at the top of this posting when I mentioned the possibilities of entrepreneurship and building your own business, and consulting as career options and even overall career paths. I am going to at least begin more explicitly explore those options in my next series installment. Meanwhile, you can find this posting and series at my Guide to Effective Job Search and Career Development – 2. I have also posted extensively on jobs and careers-related topics in my first Guide directory page on Job Search and Career Development.
Onboarding new employees 101 – 12: cultural diversity and awareness, and avoiding discrimination pitfalls
This is my twelfth posting to a series on the onboarding process and on bringing new employees in and up to speed working at a business (see HR and Personnel, postings 119 and following for Parts 1-11.) And up to here I have been discussing the onboarding process in general terms that would apply regardless of issues such as cultural diversity, or differences in religious belief or sexual orientation.
• Onboarding as a standard, consistent approach and as implemented in standard processes and practices should strive to treat everyone equally and fairly and regardless of individual or group affiliation differences.
• Still, in an increasingly global and diverse workplace, an awareness of these differences can be essential. And this can mean both understanding and accommodation as well.
My goal in this posting is to at least start a discussion of the issues that arise, when seeking simultaneously to be consistent and standardized in how employees are managed and treated, and still recognize differences and individual needs. And as a part of that, discrimination and harassment and their potential complications have to be taken into account as important and even vital due diligence challenges. And of course, my focus here is in how this plays out in the specific context of onboarding and bringing new employees in.
As general references for the basic issues addressed here, I would cite as a starting point on the issues of discrimination and harassment, my posting series: Confronting Workplace Discrimination (see HR and Personnel, postings 57-60), and references cited there. I also recommend:
• Steers, R.M., C.J. Sanchez-Runde and L. Nardon. (2010) Management Across Cultures. Cambridge University Press.
And I begin this with the fundamentals, and with two points that when explicitly stated may seem obvious, but that are too often not consistently addressed:
• You need to develop, document and enforce clear policies on how your organization maintains a workplace that acknowledges cultural diversity needs. And consistent with that your policy should be one that holds zero tolerance for workplace discrimination or for harassment, and with a clearly framed statement as to what that means.
• And more than simply developing a policy, you need to develop ways to implement this in day to day practice. And this means understanding what types of diversity you workforce actually holds, and educating managers in the issues and differences they face.
And it is the little details that can create the biggest problems in a workforce, and precisely because they are the places where disconnects can develop between policy proudly proclaimed and actual practice. As a very real-world case in point, a manager might really like pizza with sausage and mushrooms – so every week when they hold a lunch meeting for their team they bring in sodas and pizza and it is always pizza that their Jewish and Muslim employees cannot eat too, as the sausage included is made with pork – and these pizzas mix meat and dairy anyway. Providing food as a gesture of appreciation for a manager’s team members is very nice but providing a more including offering is important here too. Employees who see too many situations and circumstances where they are left out and excluded, come to see their workplace as not accepting of them for who they are. So this is not just a matter of meeting specific non-discrimination standards as specified by law. It is a matter of thinking this through with goal of creating a pleasant and friendly, and accepting workplace and for both employees and customers.
I remember working with a large retail business once, helping them reorganize their Information Technology services. As part of this I attended their weekly Sales staff meetings as I was working closely with that department. They did not have a problem with exclusionary food always being offered, but the basic pattern at these meetings, starting with the behavior displayed by the executive level managers, was that it was acceptable to share off-color and discriminatory jokes and to add discriminatory language into their banter. These senior managers saw that as a way to keep everything relaxed and assumed this would facilitate easier, freer discussion. That was not in practice, what came of this and both at these meetings and as this language drifted into the show room and in front of customers too.
• From an onboarding perspective, new hires just entering a workplace and its day-to-day practice would only see what is happening in the moment and not know any back story as to whether discriminatory language is or is not taken seriously. So they would take it as significant and would be more likely to find it threatening and certainly if it is consistently and repeatedly displayed.
• New employees still working under the shadow of going through a probationary period might also feel vulnerable in the face of this. They would wonder, among other things if challenging or even just speaking up about this type of behavior would threaten their employment and cost them their jobs. I note here that even employees who upon completion of a probationary period, would receive significant union protection, are likely not going to be covered by that while still new and in their initial probationary period. New hires really can be vulnerable, and they can generally be let go without stated reason as proof of that.
It is very important and both as basic business due diligence and risk remediation, and as Human Resources best practices, to:
• Actively train managers on the issues involved here and on what is and is not acceptable,
• Actively add training into the onboarding process for informing new hires as to their rights and options if they experience challenges here. And they do need real options and access to real advocates who will be on their side and supportive of their needs.
And as I noted above, it is the little details that can create the greatest challenges – though I add that “big” and “little” are in the eyes of the beholder. Allowing a few minutes several times a day to allow for prayer might seem a little but annoying interruption for a manager who does not understand that this is a very big and important issue for a more devout Muslim employee.
• Make open acceptance of employee diversity, and I add customer and community diversity too, a core part of the business culture and as a set of values adhered to throughout the organization and at all times.
• Build this into basic Human Resources policy as a specific and even explicit case in point and into all of its basic systems and processes, onboarding definitely included.
I am going to bring together the threads of discussion that I have been pursuing up to here in this series, in my next installment where I will discuss issues of lessons learned from ongoing practice, and completing the cycle. Meanwhile, you can find this and related postings at HR and Personnel.
Telecommuting and the marketplace transition to the telecompany 4 – defining the business model in a telecompany and virtual business context 3
This is my fourth posting to a series in which I outline and discuss a new and emerging business approach that is coming to have tremendous impact, and both on marketplaces and economies and on how we do business, and on individual employees as they plan for and carry out careers (see Outsourcing and Globalization, postings 48-50 for Parts 1-3.)
I have conceptually and functionally divided telecompanies as fitting at least two fundamentally distinct business models in Part 2:
• The costs constraint telecompany model, with its focus on limiting fixed operating expenses, and
• The shifting opportunities-oriented telecompany model.
And I began a more detailed discussion of the costs constraint model in Part 3. My goal in this installment is to outline in corresponding detail the shifting opportunities-oriented telecompany model. Looking ahead, I will follow this with an installment in which I will discuss incorporation of elements of these two approaches into more standard business models, and hybrid business models. But for now, as with Part 3, I will restrict discussion to pure play businesses that pursue a strictly telecompany business model approach, and of one or the other of these two basic types.
The shifting opportunities-oriented telecompany model: If the costs constraint telecompany model is largely a child of economic downturn, risk and uncertainty, the shifting opportunities-oriented telecompany model is a child of expanding and increasingly fast-paced globalized opportunity. And in a fundamental sense, I began laying the groundwork for this posting when I first began posting to this blog, and with my earliest installments to my directory Ubiquitous Computing and Communications – everywhere all the time.
• One of the emerging realities coming from our increasingly interconnected capabilities to communicate and interact real-time and ubiquitously is that we are witnessing our once local marketplaces coalesce into a single global marketplace.
• One consequence of this is that what might have been a marginal niche market product pre-interactive internet can now reach a wide enough interested audience to be economically feasible and profitable to develop, produce and offer.
• And such offerings might hold stable, long term value and both to consumers and to the businesses that provide them. But such offerings might be seasonal or otherwise short term and fad-based, and offer transient if significant business opportunity while they last – for those businesses that can get in and develop to these transient needs and get out again and quickly and on both ends of that process.
The shifting opportunities-oriented telecompany model applies specifically to businesses that would capture transient sources of value as a route to profitability and business strength. This means bringing in a steady flow of hands-on expertise that is only going to be required short term, and in the extreme case a tipping point might be reached where it does not make sense to have a permanent base of in-house employees at all. A true, pure play shifting opportunities-oriented telecompany would have owners and executive managers (who might very well be the same) and they would bring in a dynamically changing flow of temporary and short-term hire consultants, contract workers and free agent employees.
I wrote of a comparable system at the supply chain level when discussing companies such as Li & Fung, Ltd (and see:
• Fung, VK, Fung, WK and Wind, Y. (2007) Competing In A Flat World: building enterprises for a borderless world. Wharton School Publishing
for further details concerning this company.) One of their defining strengths, as I have discussed in postings such as Moving Past Early Stage and the Challenge of Scalability 9: supply chain-ready business models is in their ability and expertise in working with partner businesses to create effective, optimized supply chains on the fly in order to capture immediately available short term opportunity in rapidly changing markets such as seasonal and fad-driven fashions and clothing. The shifting opportunities-oriented telecompany model brings this mutable dynamism into the individual business as it develops and provides for short-term, transient and fad opportunities, where it would not make sense to pursue a multiple-company supply chain approach.
And at this point I both admit do not having anything like a working crystal ball, and acknowledge that what follows might prove naively simplistic and overly limited.
• I see the shifting opportunities-oriented telecompany model working most effectively if not exclusively for small, lean, agile businesses with at most small headcounts of temporary employees, brought in for short-term specialty needs – at least for companies that only pursue this approach.
• And I suspect that a part of this lean agility is going to involve maintaining a minimum long-term physical plant, with the fixed operating expenses that carries. In Part 2 I first defined the virtual company as one based dually on both the telecompany, and the telecommuting and distant worker model.
• And I see this as being most likely in the information and knowledge development arenas, where skills transiently needed by any one organization would be reliably and steadily needed by the business community as a whole. So freelance workers would be able to find and secure steady employment in those specialties and they would be available, even if that meant moving from one short term employer to another in pursuit of best offers.
And these assumptions will all blow up as the first large company tries the shifting opportunities-oriented telecompany model, and lacking that crystal ball, I have to admit that might happen too – even if I do see it as a difficult fit.
As noted at the start of this posting, I am going to turn in my next series installment to consider hybrid business models that include elements of one or both of the telecompany business models. I add in anticipation of that, that I see combined and hybrid approaches as the primary route to telecompany development in the immediate future, with pure play telecompanies coming later and certainly for those that would pursue the shifting opportunities-oriented telecompany model approach. Meanwhile, you can find this and related postings at:
• Guide to Effective Job Search and Career Development – 2 (as a supplemental posting),
• Outsourcing and Globalization and
• Macroeconomics and Business.
“Big data” is currently one of the most popular buzz word terms in business news, and in social media discourse as well, and it is safe to assume that will continue through 2013 and beyond and for many years. There is a simple reason for that: the term “big data” represents a lot more than just passing fad or fancy. It represents an increasingly important and even compelling shift in perspective and opportunity – and of risk too and for businesses and individuals, and for society as a whole. Both governments and private organizations have been accumulating information for as long as there have been governments, businesses and other organizations to collect data.
From the earliest extant records in the form of Mesopotamian cuneiform clay tablets, Middle Eastern papyrus writings, and in the New World Andean cultures, messages recorded as patterns of knots on cords, data has been being collected as to business transactions, deals made and other business-and government related activity. And each advance in ability to collect, organize, analyze or store information has been met with a more than just matching increase in level of perceived need for it.
As a general reference as to the history of information, and its continued scaling up as a race between capability and need, I refer you to:
• Gleick, J. (2011) The Information. Pantheon Books.
And I begin this posting and series by noting two important points of consideration:
• The scale of information development and accumulation and usage has continued to increase and at a continually faster and faster rate.
• And when a quantitative change in scale and range becomes large enough, it becomes a predominantly qualitative change. And that is what has happened for information development and use and certainly for information that relates to and collectively maps out individuals and who they are and what they do and why and where and when – the increasingly fine-grained and comprehensive individual data that is being assembled about each and every one of us and from birth on.
And that is what has come to be known as big data. My goal in this series is to present a perspective on big data and:
• What it is
• How it is developing and evolving, and
• How it is impacting on all of us and changing our lives,
at least insofar as this topic connects into the ongoing threads of discussion and analysis that I have been pursuing through the course of writing to this blog.
In a fundamental sense, I began this discussion early on when first starting this blog. So, for example, I wrote about the incredible increases in scale of information that is being accumulated and everywhere in my November 12, 2009 posting: Massive Databases, Cloud Computing and the Killer Data App. Every individual, every business and every private sector organization in general, and every government is accumulating more and more personal data and in progressively larger and more comprehensive packages all of the time, and about everyone. That increasingly means data about individuals and as consumers and as potential consumers but this data accumulation is also used to track and predict voting behavior and most every other area of activity that we enter into.
As a second and much more recent citation I would add my series: Mining and Repurposing of Raw Data into New Types of Knowledge (see Ubiquitous Computing and Communications – everywhere all the time, postings 156 and loosely following for Parts 1-6.) My focus of discussion in that was the commoditization of information as a source of business value, and as this also carries at least potential business risk as well.
My focus for this series is going to be on the individual as citizen and community member, and as consumer and participant in the marketplace, and on the impact that big data has on us all as individuals and as family members. And I begin this from a perspective that I have touched upon many, many times: marketing and market demographics.
• I have recurringly written about target market demographics as clearly defined and analyzable groups over which business decisions can be made – in discerning and predicting marketplace interests and purchasing activity levels, and in formulating marketing campaigns to influence purchasing decisions and activity levels.
• The more comprehensive and detailed the data available for analyzing and modeling the marketplace and its members, the more detailed and precise the demographic-activity modeling is possible and the finer grained the demographic groups that can be discerned and analyzed – and influenced.
• And with big data, we all become demographics groups of one and with data aggregators holding the details of more and more of our lives.
I am going to continue this discussion in my next series installment, looking at what this increasingly comprehensive system of ubiquitous dossiers holds about us, valid or not and I will also be discussing who owns all of this data. Meanwhile, you can find this and related postings at Ubiquitous Computing and Communications – everywhere all the time and also see Business Strategy and Operations and its continuation page, Business Strategy and Operations – 2.
I write a lot in this blog about developing and maintaining best practices and sharing them across an organization. See for example:
• My series Management and Strategy by Prototype, postings 124 and loosely following at Business Strategy and Operations and
• Standardization, Efficiency and their Trade-offs, postings 301 and loosely following as posted to Business Strategy and Operations – 2.
And I could in fact site a great many other postings and series here too, that systematically develop and argue the case for that same basic approach. My point is that this represents an ongoing fundamental point to what I have been writing in this blog. So with this posting I explicitly challenge and explore the consequences of that assumption point. And I do so thinking of multinational corporations, that have offices and production and distribution facilities that reside and function in a diversity of countries and cultures.
One of the principle lessons coming out of efforts to understand management across cultures is that some of the basic parameters we all tend to take for granted, can and do differ and systematically between peoples raised in different cultures. And this shapes both private and personal life, and business and professional life and behavior too. See as a basic reference on this:
• Steers, R.M., C.J. Sanchez-Runde and L. Nardon. (2010) Management Across Cultures. Cambridge University Press.
As is noted in this and similar books, monographs and professional journal articles – and validated through day to day working experience, people raised in different cultures can and do differ for:
• Communications styles and pace and for what is said and what is left unsaid,
• And for how potentially confrontational opinions or even direct events-based knowledge are shared – if they are at all,
• How managers lead, and leadership style,
• And how their subordinates respond and both to the styles and approaches they are more familiar and comfortable with and to styles and approaches that they see as different.
• How schedules and priorities are set and met,
• And with differences in pace of work and sense of time and timing
• And on matters of authoritarianism and consensus building, and when each would and would not apply as being valid.
Any multinational business needs an overarching process and practice-based infrastructural framework that can keep its organization connected and functioning, and for business flows that are competitive, and that would best be carried out as multinational endeavors. They need common core systems and practices and a single standardized core due diligence and accountability system for managing that. But they also have to understand, account for and support these local differences too.
This posting focuses on quality improvement as a core element in that and I begin that discussion with the American statistician, W. Edwards Deming. He began with a focus on the numbers and on improving design, and went on from there to systematically rethink the entire design, production, sales and service cycle – and he is known as one of the most influential voices in shaping modern Japan’s manufacturing and business processes. And the entire concept of the quality circle was developed out of the PDCA (Plan, Do, Check, Act) circles developed by Deming (and more recently made famous through discussion of Toyota’s quality control circles.)
His approach was first picked up upon in Japan and by Japanese businesses and business leaders, and it was only late in his life that Deming ever received any real recognition in his own home country – as the palpable effectiveness of his approaches when followed in Japan became in effect, impossible to ignore here in the United States – in the 1980’s. And it was at this time that American businesses and business leaders first started really paying attention to Japanese manufacturing and business practices. I cite in keeping with that developing trend, a later entry in business-oriented book form that became a best seller:
• Liker, J.K. (2004) The Toyota Way: 14 management principles from the world’s greatest manufacturer. McGraw-Hill.
and its follow-up publication:
• Liker, J.K. and D. Meier. (2006) The Toyota Way Fieldbook: a practical guide for implementing Toyota’s 4P’s. McGraw-Hill
And with that I have set up at least a seeming disparity.
• Cultural factors, forces and influences can and do shape business practice and shape determination of what does and does not work and where and for whom.
• But differences that arise in one place and approaches that are developed there in accommodating local perceptions, expectations and practices can sometimes offer tremendous transferable worth, and even as new components to the overall business process and practice infrastructure.
• And an approach might have its origins in one place but take root and flourish and assume fully functional form elsewhere – think an American trained statistician with an interest in business, developing systems that initially come into their own in a completely different culture and context in Japan.
The seeming disparity in my above notes is that cultural differences and business differences that arise in their accommodation might be seen as more of a hindrance and a force to be worked around in keeping a multinational unified and working as a single overall business. But these same differences can also be seen as a rich test bed for developing new and widely applicable sources of competitive advantage. But even if they only provide such advantage locally, that can be quite sufficient to validate their worth, and certainly where they do offer such value.
• Should quality improvement be built out and practiced from a commonly held core set of principles? Yes, of course.
• Should local cultural differences be accommodated in setting the most effective ways to implement them? I would answer yes to that too, citing my own experience seeing how best practices and best intentions can both become derailed through cultural insensitivities and blunders.
• But as I have at least tried to argue the case for in this posting, local differences and variations on how things are done can prove of great value and even corporate-wide and through directly shared practices, as well as from the cumulative impact of local efficiencies.
I am certain that I will be coming back to the issues of local and global practices and approaches in future postings. Meanwhile, you can find this and related postings at Outsourcing and Globalization. And I also post on related issues at Business Strategy and Operations and at its continuation page: Business Strategy and Operations – 2.
This is my seventh installment in a series on the strategic process and on strategic decision making per se (see Business Strategy and Operations – 2, postings 314 and loosely following for parts 1-6.) So far I have been actively discussing basic strategic process and some of the core conceptual tools that go into planning, implementing, and performance benchmarking and reviewing results of strategy. And I have at least briefly discussed strategy in the face of change, starting with Part 4: planning for and through the unexpected and continuing with Part 6: processes for managing change and the unexpected.
I am going to continue this series here with a discussion of business agility and flexible responsiveness, and of keeping a business strategically young. And I begin with some perhaps cautionary notes:
• Businesses need to be able to learn from their ongoing experience and from the experience of others, and certainly as this is visible in the actions of their competitors and the consequences of those actions. Best of breed businesses often also look for best practices that have been successfully applied in different markets and for different types of business, and ways to apply them productive to their own business models and marketplace contexts. This all leads to development of standardized systems and processes and that can be very good, and certainly as businesses seek to function as organized entities with all branches and divisions working together coordinately.
• But at the same time, and with time an established best practices approach can lead to regimentation and stasis, and a “that is not how we do things here” approach to any proposed change. And with time this can lead to conceptual regimentation and the narrowing of vision. And when that develops as a basic approach to how a business functions and how it addresses its marketplaces and their needs, that leads to operational and strategic sclerosis and obsolescence.
• Not all businesses follow that downward and inward spiral; those that do end up needing the more drastic course correction of full-blown change management and with all of its remedial operational and strategic dislocations.
• Effective ongoing strategy and operational follow-through, developed and executed with wide-ranging vision and a willingness to accept and even embrace change, keeps that business more effective and connected in its ongoing efforts, and when working with and serving the needs of its markets. And this is all about keeping that business strategically young.
No one knows everything. And even proven and experientially validated truths can with time drift into inaccuracy and irrelevance. Develop and follow best practices but always question them too, as to whether they are still “best” – look for circumstances where modifications or even entirely new alternatives might make sense, and look for drift where what you have done and what you are doing now might not be as effectively connecting you to your customers as you would like, and as past experience would show as possible. Here, my focus in that is on strategic and higher level planning and on building the vision and understanding that operational processes can be developed and tuned to fulfill.
• This is obviously important for rapidly changing industries and marketplaces, and where competing products and services are emerging and evolving very rapidly – and ways to present and provide them to the marketplace are too.
• But this is at least as important for businesses that see their competition settling into set patterns and their industry and marketplaces maturing. If you settle for maturity and a settled and even static approach, and for your products and services, and through your operational processes, and with your strategy – you set yourself up for eventual and inevitable decline and failure.
I am going to finish this posting with one final thought and with some popular, well-researched and written, and effective business books in mind. And by way of example, though only as that, I cite the specific works of Jim Collins and his colleagues:
• Collins, J. (2001) Good to Great. Harper Business.
• Collins, J. and Porras, J.I. (2002) Built to Last. Collins Business Essentials.
When you go back to revisit the businesses highlighted in best practices books, and after even just a few years (e.g. five or so) you find that some have slipped and even badly and some are in all likelihood no longer even around anymore. That definitely happens if you return to reexamine those same book-highlighted businesses after ten years or more. What happened, and to businesses that have already established themselves as effective and well-run, and as measured by meaningful criteria?
I picked on the Collins books here, citing them as examples of where vision going forward is less than perfect, at least in part because he has in fact written extensively on the challenges of continuity of excellence too, with:
• Collins, Jim. (2009) How the Mighty Fall (and why some companies never give up). HarperCollins.
And that book highlights and discusses a number of key factors that correlate with continued success, or with decline depending on how they are managed. But aside from failures stemming from catastrophic and completely unpredictable events, I would argue that when a business slips into decline or failure that ultimately can be traced back to the single root cause of fragility that develops when strategic vision, planning and follow-through are not kept young.
So I would argue that long-term, sustainable success requires a dynamic and questioning approach to strategy and to understanding and envisioning the business – and its context. Effective strategy is, as such, all about finding and maintaining that shifting best balance point between stability and continuity, and doubt, questioning and change. And this can break down and for even long-term successful businesses with change in leadership or for any number of other reasons of a cause and effect process level that are discussed in books like How the Mighty Fall. And with that observation I end this posting, and at least for now this series too.
You can find this and related postings at Business Strategy and Operations – 2 (and also see Business Strategy and Operations.) And I also discuss strategy and how it point-by-point connects to operations at Startups and Early Stage Businesses too.
This is my ninth installment in a series on building a business for scalability and long-term success (see Startups and Early Stage Businesses, postings 96 and following for Parts 1-8.) In Part 8: web 2.0 business models, I began explicit discussion of business models in a range of new and emerging contexts that all businesses increasingly have to acknowledge and succeed in, going into the 21st century. As noted in Part 8, understanding and connecting into the increasingly global real-time conversation of social media and the interactive online have become essential, and for effective participation in most industries and business sectors and for essentially all marketplaces.
I turn in this installment to consider business models and the optimization of entry into and participation in supply chain systems and similar business to business collaborations. As markets and business systems become more closely and directly interconnected and dependent on each other for long term sustainable success, effective collaborative participation becomes a more and more essential component to the basic business model, and failure to get this right can easily lead to challenges in scalability, and even to significant failure of opportunity on a short time scale.
• By definition, effective supply chain collaborations create collective value and increased competitive strength for all partner members, helping them to more cost-effectively produce and provide value and at competitive cost.
• And effective supply chains help them to do so as rapidly and efficiently as possible in the race to be first and best to their particular target markets.
• So, competition and creation of competitive value can be defined as taking place at both the level of the individual businesses involved in these collaborations, and also at the level of these collaborative networks as a whole too.
• Supply chains compete as single aggregate business entities with other supply chains in the marketplace for offering greater combined value to consumers and end users.
As a working example for the type of business model that these systems demand, I cite a groundbreaking example of supply chain excellence: Li & Fung, as discussed in detail in:
• Fung, VK, Fung, WK and Wind, Y. (2007) Competing In A Flat World: building enterprises for a borderless world. Wharton School Publishing
Li & Fung is quintessentially a supply chain company, and it succeeds by working with partner businesses to create effective, optimized supply chains on the fly in order to capture immediately available short term opportunity in rapidly changing markets such as seasonal and fad-driven fashions and clothing. As needs and opportunities change, Li & Fung works with those partner businesses to re-tune their current supply chain collaborations. Or it moves on, working with new combinations of businesses that it has already formed such relationships with for capturing those next new opportunities through new on-the-fly collaborative networks. And through all of this, Li & Fung has developed a large collection of close trust-based relationships with businesses in production and assembly of a wide variety of types and in numerous locations, and in shipping and distribution and marketing and sales. And its ongoing success and capacity to organize collaborative and mutually beneficial success has made working with them an attractive opportunity for all of these other businesses. Ultimately, Li & Fung succeeds because its partners do, and by tapping into the collective returns on investments it makes possible for all businesses involved.
In this, Li & Fung has created a special niche for itself and can be seen as a perhaps extreme case that few other businesses would seek to precisely follow. But its success highlights the value, opportunity and importance of working in a business to business context and with supply chain partners for many other types of business too – and for businesses that primarily operate business to business but also for business to consumer oriented operations. I note here that many if not most of the business opportunities that Li & Fung explicitly organizes and develops are themselves business to consumer oriented going to market.
And with that, and the first part of this posting and the message of Part 8 of this series in mind, I note a trend that in a fundamental sense first began soon after World War II. The basic business model pre-war in its multiple variations was almost always built around an explicit assumption that expertise and capability needed to create and maintain a business’ competitive edge had to be developed and maintained entirely in-house and that in-house was and had to be the only source of expertise for those areas that went into defining and building its market capturing value propositions.
• Supply chain systems and particularly the types of collaborative systems that arose in response to the war and its materials development and production requirements, were replicated into the more peaceful post-war of consumer production. And businesses increasingly had to work with partners to mutual benefit if they were to remain competitive for what they themselves specifically offered.
• One consequence of the advent of the internet as an increasingly global force, was that the old model of businesses holding all value in-house became fully obsolete and for most businesses, and even when they based much of their value on closely held trade secrets. They still needed to secure raw materials and they still needed to distribute and sell what they produced. And when their marketplaces changed to include online channels that their customers and would-be customers preferred, they had to respond and be there too. So businesses increasingly could not operate and plan as if they were knowledge and resource oases surrounded by deserts. And their basic business models had to change accordingly.
• Web 2.0 and the interactive web have simply taken this to a next step – and for connecting to the marketplace as discussed in Part 8 and for leveraging the value creating potential of business to business as noted here.
And getting all of this right, and from the business model and operational and strategic practices coming from it, is essential for business scalability and growth and for long-term success.
I am going to step back to consider business models and business scalability in the larger context of overall business and marketplace ecologies in my next series installment. Meanwhile, you can find this and related postings at Startups and Early Stage Businesses. You can also find related material at Business Strategy and Operations and at its continuation page: Business Strategy and Operations – 2.
I have written a number of times about corporate culture in the course of assembling this blog, and I come back to this topic area here, with a very specific point of focus.
• An awareness of corporate culture and of what it does, can and should encompass, can be crucial to making any business work and thrive in an international and multicultural context – and in a ubiquitously interactively online world every business needs to begin seeing itself as working in such a context.
Beginning here with the fundamentals:
• A corporate culture can perhaps best be seen as a set of basic shared, largely automatically assumed understandings, approaches and values that members of a business community collectively hold.
• Participating in a corporate culture means that even when colleagues disagree on specific business decisions or even on interpersonal issues, they at least do so arriving at their respective points of contention from a shared basic framework of understanding as to what the business they work at stands for, and how its priorities should be set.
• So a consistent corporate culture can often help to reduce friction in working together, and at the very least help to more quickly achieve consensus and agreement where differences and disagreements do occur. And the pressures of shared corporate culture can help to contain disagreements to the specific issues at hand.
• And to reiterate a crucial detail from the top bullet point of this listing: corporate cultures, like nationally, religiously and ethnically-based cultures tend to be invisible to those adhering to them, as basic assumptions automatically taken – until the norms they define are in some way challenged, questioned or violated.
• And that tends to be responded to as a real challenge and precisely because the norms and values, and the automatic decisions laid out in a culture are simply taken for granted and assumed to be right and even best.
Think of the implications of corporate culture when essentially everyone in a workforce from entry level line workers through the most senior executive and board members all speak the same native language, live in the same communities in the same country and are native to the same overall community culture with its set of shared values. There, a corporate culture in most cases is going to be distinctive more as a local-context elaboration of and extension of the shared beliefs and values that everyone brings to work with them, more than a challenge or an alternative to the surrounding community culture. And the corporate culture per se might only encompass areas and issues that would only arise in the business itself and from its dealings and be pretty circumscribed as such.
Now consider a business that spans cultures and expectations, and value systems. And to bring this into focus, put yourself in the shoes of a project manager who is working with a globally distributed team, with members drawn from half a dozen countries, each with a very distinctive language and culture. Whose culture should be more respected in any given decision, if any? This can be important where cultural differences can translate directly into communications styles, and in how the members of a team would raise questions, offer insights or opinions, raise objections and/or make decisions. What in one culture and from one team member’s innate and culturally defined perspective would be rude and dismissive of necessary discussion and consensus building might be considered normal and preferred by another; what might be seen as considerate and respectful to one might be seen as obstructionist, unfocused and delaying by another. And this just considers pace of conversation and the decision making process.
I would argue that as a business becomes more and more international and multicultural ( and for that half even just within-country), the more comprehensive the corporate culture needs to be, in limiting friction and facilitating agreement and buy-in and where employee community cultural differences could easily derail matters.
One approach to this would be to train managers how to work more effectively across cultures, and that is a very valid one. As a basic reference for that approach, I highly recommend:
• Steers, R.M., C.J. Sanchez-Runde and L. Nardon. (2010) Management Across Cultures. Cambridge University Press.
The alternative is to actively promote more comprehensive corporate culture. This is not something that a manager or even a business leader can effectively do proactively, but this is something that can be worked on through development of best practices that for their underlying lessons become internalized into the culture – best practices that arise reactively as lessons learned that culture-collision mistakes not be repeated.
Actively reach out to managers and employees with management potential to instill a multi-cultural and cross-cultural awareness as per the first approach, and certainly for when they reach out to work with members of an increasingly diverse and multicultural marketplace and surrounding community on behalf of the business. But look for learnable lessons and for ways to incorporate lessons learned into ongoing business practices and processes too, and from there into the underlying corporate culture in place. And in this, look specifically for culturally based differences in the operational fundamentals such as communications practices and skills and differences on how consensus and decision making are arrived at. Look to support flexibility in them where possible and where that would be more effective, but set a standard where final deadline-driven decisions and communications have to be made. And as a final thought here, promote and institute change with a goal of reducing friction.
And I come back one more time to that crucial starting point. Corporate cultures, like community cultures are pretty much invisible to those who live them, much I add like water is invisible to the fish who swim in it – until that is changed and a fish is pulled out into the air. When cultural expectations and values, or culturally defined standards of the normal and acceptable collide in a business and that creates friction and discord, define a Band-Aid process for future prevention that those involved can see as non-discriminatory and that is designed to provide smoother, less challenging process alternatives. And let the corporate culture grow out organically from its incorporation of the principles behind those new practices.
You can find this posting at Outsourcing and Globalization.
This is my sixth installment in a series on building a business for scalability and long-term success (see Startups and Early Stage Businesses, postings 96 and following for Parts 1-5.) I have been discussing business scalability per se and analytical tools that would be used to help to strategically balance a business so as to facilitate growth and scalability. In Part 4 of this series I briefly discussed Osterwalder’s business model canvas and in Part 5 I outlined a number of features and functionalities that would go into a business strategist’s wish list for what they would want in a tool set when planning and executing for business scalability. My goal in this posting is to at least briefly discuss each of a set of alternatives to the business model canvas, as used by businesses and business consultants.
For three standard alternative approaches to the basic business model canvas paradigm, I would cite:
• The business reference model is a reference model approach that focuses on the functional and organizational systems of the core business of an organization. One source of value here in determining scalability and in managing change so as to promote it, is the absolute focus on a business’ fundamentals, and on what has to be scalable for the business to grow and with ongoing and improving competitive strength.
• The component business model is a building block model approach that was initially developed by IBM. This approach is designed to help identify strategic gaps and systems and process duplications, with the inefficiencies that both create, and one of the key virtues of this toolset is that its findings can be represented in a single snapshot view that is easy to follow, and building block by building block, or as a whole.
• The industrialization of services business model is an approach designed to move a business from ad hoc and one-off processes and events, to taking a more systematic and replicable operational approach. The basic theory and practice behind this dates back to the early 1970’s and efforts to systematize and improve the efficiency of assembly line systems, and through optimized standardization. That approach can also be key to creating sustainable scalability and particularly where key operational processes are either undefined or only loosely followed in practice, with this inconsistency creating barriers to further growth.
As one of my core objectives throughout this blog is to discuss business and business processes as they are evolving to meet the challenges and opportunities of the 21st century, any tools set listing of the type offered above has to be expanded, so as to explicitly include accommodation of the interactive online, and its impact on business models and scalability. Scalability increasingly has be to established in both how the organization is built and run internally, and at the same time in how it connects with its marketplace and external community contexts. For a reference on how this might be developed, I would cite:
• Chen, Te. Fu. 2009. Building a platform of Business Model 2.0 to creating real business value with Web 2.0 for web information services industry. International Journal of Electronic Business Management 7 (3) 168-180.
though I add that Chen primarily focuses on business-to-customer transactions, and on service industry businesses and organizations. Clearly, the same issues arise in a business-to-business context too, and as organizations connect both internally through intranet 2.0 capabilities and with partner businesses and supply chain partners. Ubiquitous computing and communications, and the interactive online context have become major factors shaping and reshaping businesses and marketplaces, and requirements for effective scalability everywhere – and certainly wherever the interactive web and related channels would play a role in creating and sustaining sources of competitive advantage.
As a final thought for this posting that will lead me towards my next series installment, interactive online and its impact on marketplace expectations and activities have led to entirely new types of business models, and to business models whose defining features would not be addressed or even recognized by some of the older business model tools. I am going to discuss business model analytical tools in my next series installment, with this in mind. Meanwhile, you can find this and related postings at Startups and Early Stage Businesses. You can also find related material at Business Strategy and Operations and at its continuation page: Business Strategy and Operations – 2.