Tag Archive for new business model

A Tale of Two Decision-Makers, or How Self-Reflection Leads to Self-Preservation

Among factors influencing the decision-making of a leader are the people and groups involved in the process and their levels of influence on the final decision.

You may have worked in organizations where decision-making is well-and-truly top-down. I’ve done work for two of them, both in need of transformation for various reasons (including rapid, technological changes in their industries and a need for succession planning).

The way the patriarchal leaders of these two organizations reflect on their decision-making vis-à-vis their advisors and staff will play a big part in their ability to transform their organizations.

In Organization 1—a publishing company—decisions come from the leader alone, with some information and suggestions provided by a small, trusted advisory group or sometimes just one lieutenant—workers are expected to accept the decision or leave. In Organization 2—a logistics company—the chief executive also makes autocratic decisions, but tellingly he struggles with whether or not his ideas will be accepted by his staff.

Incidentally, the Vroom/Yetton Normative Decision Model is often used to define the alternatives available for a leader when making decisions:

• A leader may make simple decisions with no assistance, using whatever information is available.

• He or she may obtain information from staff or consultants. (The leader may also decide not to reveal the reason for requesting information, and the information supplier may or may not have influence over the decisions.)

• Or the leader may decide to involve a group in the process, delegate the decision, and so on.

Decision quality often is affected by impersonal aspects (I’m paraphrasing management theorist NF Maier here) and is driven by three types of outcomes: 1) quality/rationality; 2) acceptance or commitment by individuals and teams; and, 3) the amount of time available to make the decision.

Any time a decision can be made without involving others is ideal; however, consideration must be made as to whether the organization supports the approach.

In Organization 2, when the chief executive attempts to make even the simplest decisions without consulting his team, he is often met with resistance. The reason for this brings up possibilities for managerial improvement—the executive rarely communicates clearly with his organization, and he is not aware of, or sensitive to, his staff’s ability to execute his decisions.

The logistics industry, you see, is one where workers typically are only trained on specific tasks, and often they do not know how to perform outside them. Although the chief is somewhat aware of this, he still allows his staff to think outside their tasks. Unfortunately, they have no training along these lines, and failures to properly execute diminish their trust in their leader and their willingness to commit to more of his decisions.

Organization 1 is solely led by its chairman’s decisions alone, or with input from a very small group of executives who are not involved in production. In this case, workers are freely told how the chairman makes decisions and that they are expected to execute them without resistance. The organization is very polite about all this, although resistance to decisions is not tolerated and resistors are removed.

Helpfully, the human resources manager has an open-door policy. In this office concerns and ideas can be shared, although this openness is a method to identify resistors. While this type of organization may not appeal to many professionals, it has been successful in achieving its goals, partly by strictly controlling its decisions.

In recent years the firm has had to grow by acquisition to maintain the same revenue base. Despite these acquisitions the chairman has successfully maintained his strategy because the creativity that comes with open participation, devil’s advocacy, and autonomous teams is not to be found.

The company acknowledges that creative individuals will not tolerate the atmosphere, but its planned approach maintains equilibrium and steady revenue generation. Creative talents have ideas that can lead to risk and the company is risk adverse. Additionally, the company makes money on labor hours, and “steady grunts” billing by the hour are more profitable.

However, Organization 1’s chairman, his second-in-command, and members of the board are aging, and there is no apparent succession planning in place. The organization therefore needs to aggressively plan its future strategy in order to remain relevant. In fact, more pressingly than succession planning, the firm must address how to innovate in the rapidly changing publishing world. Since there is little creativity in-house, strategic re-orientation may have to come from outside, a prospect that may be difficult to accept.

Reviewing both cases as a consultant, the greater opportunity for transformation lies with Organization 2.

That’s because its chief executive realizes his business environment has become too complex to manage autocratically. Importantly, he’s seeking assistance to determine what the organization needs to look like in order to get decisions accepted and to learn how to innovate in order to remain relevant in a virtual economy. Such honesty and self-reflection has yet to be found in Organization 1!

I have recommended the culture change theories of John Kotter to the chief executive of Organization 2. In fact, he knows Kotter’s theories, and although he is suspicious of theories in general, he appears to accept Kotter due to his consulting background.

Furthermore, Kotter’s steps are easy to understand and use as a framework. The primary ways to create a culture change, according to Kotter, is to speed up decision-making and reduce bureaucracy, while empowering workers to make more decisions.

 

David Beats Goliath with a Rock (Solid Approach to Market Entry)

I recently received some great feedback on my University of Maryland Doctorate of Management paper on “Globalization and the Small-to-Medium Enterprise (SME).”

Despite many challenges, I argue that there remain some tremendous opportunities for SMEs to gain market entry in a global environment through alliances, virtual organizations, and symbiotic relationships with other companies both large and small. At the end of the paper, I included an interview with Ian Bothwell of Rover Technologies, a technology-based SME.

Here’s some of the good advice Ian passed along regarding how to launch technology-based products and services in a global marketplace.

Play the Field: Market in More Than One Segment

“The ability to market your technology to more than one segment is valuable. Multiple segments implies the potential to also scale in a larger market, while the risk of failure is reduced in any one segment. However, switching segments is usually not practical very early in the market entry process, primarily because customer acquisition and product customization costs can be prohibitive.”

Horses for Courses: Find the Right Niche

“A scaling strategy in the face of an established market is extraordinarily difficult, in terms of differentiating oneself and establishing presence and credibility. For SMEs scaling is predicated on finding useful niches and entering with an attractive price/performance and matching customer needs. In Phase Two, upsell the early adopters.”

Jack Be Nimble: Use Size to Your Advantage

“The primary advantage an SME has is its size. There is no market too small or any customer too unattractive. Its agility and willingness to take risks makes it a potent market force. For technology-based products and services, this advantage means being able to adapt to diverse customer needs without incurring significant additional development, testing, or market validation costs. This requires an inherently ‘flexible’ product that can be customized rapidly, easily, and at low ‘delta cost.’”

Pipe Dream: Rapidly Introduce New Products/Upgrades

“In order to scale in a segment, while sustaining first-in-class momentum, you must introduce product improvements in a rapid tempo, usually more than once a year. This calls for a fundamentally superior design concept and flawless execution by the product team. A useful concept here is product line architecture (PLA), which has become the rage with large enterprises in their drive to eke out efficiencies.”

Triumph of the Commons: Design for Rapid Product Evolution

“A well-designed product line embeds a superior design of sufficient abstraction and commonality that it allows for the assembly of a majority of ‘common’ elements along with a small number of unique variations—to yield rapid development of a range of product forms. R&D advances fed into the pipeline allow for variations to take advantage of these technologies first before they are incorporated into the enterprise. This provides a viable implementation framework for a large range of products prior to the market entry of even the first one! Synergistically designed software and hardware provide a powerful foundation for an affordable and efficient PLA to leverage an SME’s agility in order to make a big market impact.”

Fully Baked: Design Agnostic Hardware

“Hardware design needs to be device agnostic to allow for significant upgradeability for emerging technologies that are as yet undefined. Similarly, scalability has to be ‘baked-in’ at the outset, since the PLA supports different products with widely different scaling needs. The use of standard interfaces allows for interoperability of different classes of devices, opening the door to a variety of application concepts with the same hardware framework.”

Reading the Future: Use Services-Based Software

“Software design needs to mirror the abstraction of peripheral devices. Core software design must generalize these device constructs using a meta-framework to define and model them, to allow software to understand device types yet to be developed. A services-based software framework can encapsulate various aspects of product-related functions and allow the development of common and unique services.”

Like Ringing the Bell!

Working on an essay for my doctorate at University of Maryland University College analyzing Daniel Bell’s The Coming of the Post-Industrial Society: A Venture in Social Forecasting.

Love him or hate him, you have to admit, he was a visionary! Here’s what I say about his theory of the shift from manufacturing to technology/knowledge-based economy as applied to the printing industry.

Visit http://www.quartiermarketing.com for all this put into practice with one of Nine-A’s clients!

Jobs continue to shift away from agriculture and manufacturing toward service/knowledge industries such as government, finance, and healthcare. As technology has improved, we have seen efficiency and productivity improvements reduce or even replace manufacturing and other businesses.

For instance, online marketing has diminished the printing business significantly. As we are able to move process and products to online venues, the printing industry benefits and suffers simultaneously. Printers can use online systems to gain efficiency, yet digital marketing has reduced client printing budgets.

In order to remain competitive, companies can no longer rely on a rigid structure. With the commoditization of technology, we must now look for ways to expand business models. The print shop must now become an advisor to its clients and sell holistic business solutions such as fulfillment, warehousing, and marketing.

The staffing model has seen a significant change from the manufacturing floor to the front office. Technology has created machines that need fewer people to produce more goods. Therefore, printing companies are replacing blue-collar staff with sales, production, and marketing staff. All this, in an industry I am familiar with, is a perfect illustration of a corresponding shift in the labor force. Bell notes that this change will occur at different rates across sectors.