June 28, 2011
Strategy Consultant and Author Stephen Wunker on “How to Build a Winning Fast-Follower Strategy”
The allure of a fast follower strategy is clear – learn from others’ mistakes and enter a market inexpensively. Yet for many companies a fast follower strategy translates into too little, too late… Too often these businesses end up ceding the most promising ground in a new market to more ambitious upstarts. Common? Yes. Inevitable? No. Read on as strategy consultant Steven Wunker, author Capturing New Markets: How Smart Companies Create Opportunities Others Don’t reveals several key essentials that can greatly improve your odds of success:
Typically, early movers will beat fast followers if the pioneers can:
• Create barriers to later market entrants. Zipcar has 80% of the U.S. market for by-the-hour car rentals, despite eventual competition from Hertz, because it locked up assets such as patents, key rental locations, and desirable customers. Hertz may have scale economies in vehicle purchasing, but Zipcar’s advantages look unassailable.
• Build resources and competencies that larger firms would prefer to acquire than to build themselves. New business models often daunt market incumbents (much more so than new technologies), and so the only feasible path for a fast follower with a new business model may be to buy the early mover. That makes market entry costly for those who sit out an industry’s formative years. Ask Abbott, the U.S. drug firm that has recently spent over $3 billion to acquire pharmaceutical firms in India.
• Avoid becoming locked in to inappropriate business models or technologies before the market is understood. New technologies often involve many misplaced bets, and one-time darlings of an industry can rapidly lose their leader status. CompuServe, founded in 1969, was America’s first Internet Service Provider, but it became wedded to quirky offerings that the nimble America Online avoided. AOL ended up buying CompuServe in 1998.
• Avoid incurring large up-front costs because it is early to market. Many biotech firms have pioneered new markets, but at enormous expense. Followers in these markets have sometimes leveraged the scientific insights of the early movers to create drugs with similar efficacy, but at substantially lower risk and cost.
If at least 2 or 3 of the above conditions do not apply to an industry, a fast follower stands a chance. A fast follower strategy can succeed if it can:
• Exploit powerful competitive advantages. A grocery store can copy successful experiments by grocers in other cities because grocery shopping is such a local business.
• Develop strong competency in “open innovation,” sourcing ideas broadly and rapidly trialing them in a low-cost way.
• Choose a niche to dominate. In the ultra-competitive market for tablet computers, Japan’s Sharp has staked its claim on handling Asian characters and leveraging its in-house 3D display technologies for purposes such as gaming.
• Ride a different horse. Microsoft was a late entrant to the spreadsheet business, but because Excel was tightly integrated with Windows it rapidly drove early leaders from the market.
• Leverage the network. Bank of America introduced its first credit card in 1958, almost a decade after Diners Club created the card industry, but B of A had an advantage that Diners and American Express lacked – a huge base of depositors who frequented its branches. Moreover, as a California institution it posed little threat to banks in other states, so it could license its “BankAmericard” operations to other institutions. The resulting network of banks was ultimately called Visa, and it had advantages that the industry’s pioneers simply couldn’t match.
• Actually be fast. For many firms, “fast” is a nice way of saying “late.”
Many companies attempting fast follower strategies have simply missed the boat. Through creating a discipline of asking questions such as the ones above, firms can vastly improve their selection of when they must be early and when profits will come through patience.
About the Author
Stephen Wunker is the Author of Capturing New Markets: How Smart Companies Create Opportunities Others Don’t (McGraw-Hill, June 2011).
June 23, 2011
Bestselling author Joseph Michelli on “Leading to Serve”
My first job as a manager felt a lot like my first months as a parent. I had all the requisite “book knowledge” but something was fundamentally missing. How was I going to approach the daunting responsibility of helping people grow their gifts and talents? How could I take a disparate group of people and rally them behind a compelling cause while vigilantly celebrating their victories and attentively holding them accountable for results on key performance indicators?
Thirty years later, I still face those questions but with much greater peace-of-mind. For me, most of the answers to difficult leadership questions become clearer when I shift my focus off of me and onto the people I am entrusted to serve.
In my most recent McGraw-Hill book titled Prescription for Excellence – Leadership Lessons for Creating a World Class Customer Experience from UCLA Health System, CEO David Feinberg M.D. sets out to shift the focus of an entire health care system (hospitals, research facilities, clinics and medical school). Having inherited one of the top-tier medical facilities in the world, he tasked his people with bringing the patient experience up to the level of UCLA’s amazing clinical, research, and training outcomes. While UCLA was delivering revolutionary medical breakthroughs and treatment, their customers were rating satisfaction with the overall experience at or near the 30th percentile.
David’s consistent and gentle persistence in starting meetings with patient care stories, exemplifying compassionate listening, requiring leaders to depart the safety of their offices and round with their people and customers essentially set into motion a service culture transformation that catapulted UCLA Health System into the stratosphere of customer satisfaction scores (well-above the 95th percentile and earning UCLA a place atop all other medical training facilities).
The lessons learned from David Feinberg and his UCLA team are timeless and they fundamentally cross all business sectors. In a nutshell, leaders listen, serve well, and champion service as part of a higher calling. In return, their people follow, believe, and achieve great things. All of that, results in engaged and loyal customers. What lesson is in there for you?
About the Author
Joseph Michelli is the bestselling author of Prescription for Excellence, The Starbucks Experience, and The New Gold Standard.
June 16, 2011
Bestselling author Jeffrey Liker and Timothy Ogden on “The Aftermath of 3 Crises: The Power of The Toyota Way”
The greatest recession since World War II followed by one of the largest recall crises in automotive history followed by the worst earthquake of the century in Japan—not a fun 3 years by any standards. One would think Toyota has been seriously weakened, perhaps permanently. Certainly it is bruised, but by no means down for the count. By the fall of this year we expect Toyota to be firing on all cylinders poised for further innovation and growth.
The reason is simple. As we documented in Toyota Under Fire, the company has used crises as opportunities for investment and improvement rather than retrenchment. Instead of cutting its losses, it has invested in its most valuable asset: highly trained team members from the shop floor to the top of the engineering ranks.
For instance, rather than reacting to dramatically lower demand by cutting thousands of employees, Toyota used the recession as an opportunity to do needed training and improvement activities after years of running full throttle. Even though the facts ultimately absolved Toyota of all serious claims of runaway, unstoppable cars, (not only the NHTSA/NASA report, but by the fall of 2010 Toyota led virtually all objective quality surveys like Consumer Reports and J.D. Power) the company made major investments to improve engineering processes and become more responsive to customers. The earthquake didn’t have much direct effect on Toyota plants or their immediate suppliers, which are in the Nagoya area of southern Japan, but basic inputs like rubber parts, paint chemicals, and microprocessors were ultimately sourced from plants in the north that were badly damaged and in some cases shut down. Toyota sent hundreds of engineers out on field visits to make sure that each and every damaged plant got a first-hand assessment. These engineers also got their hands dirty, working with plant managers wherever they could to get the plants back up and running. Toyota expects to return to full production by the end of 2011, but considerable progress has already been made. Only 25 parts remain in short supply and North America by June (two months earlier than thought) will be at 100% normal production of eight of the 12 models manufactured in the region while Europe will be at full production for all models. As in the recession, rather than layoff idle workers, the company took advantage of plant downtime when they lacked parts to do more training and kaizen so quality, productivity, and employee safety will be even higher than before the slowdown.
Toyota has defied conventional wisdom in the ways it has responded to crises over the last five years—and that’s going to help defy the conventional wisdom on how weakened the company must be. The company has continued to invest in a culture of committed and engaged employees in every department, at all levels, that will enable them to continue turning crisis into opportunity and emerge stronger.
About the Authors
Jeffrey K. Liker is the author of the bestselling The Toyota Way. He is a professor of industrial and operational engineering at the University of Michigan and co-owner the lean consulting firm Optiprise, Inc. His Shingo award-winning work has appeared in such publications as Harvard Business Review and Sloan Management Review.
Timothy Ogden is an executive partner at the communications firm Sona Partners. He has written for Harvard Business Review, Miller-McCune magazine, and Alliance magazine and is frequently quoted in The New York Times, Chronicle of Philanthropy, The Wall Street Journal, and Financial Times.
June 14, 2011
SHRM 2011 McGraw-Hill Author Signings
Attending SHRM 2011? Make sure you mark down these author signings in your calendar. Looking forward to meeting you there we are at booth 1119!
Sunday, June 26
4:00 p.m. to 6:00 p.m.
Free one-on-one HR Coaching with Anne Bruce, Brenda Hampel, and Erika Lamont, authors of Solving Employee Performance Problems
5:15 p.m. to 6:00 p.m.
Book Giveaway: Perfect Phrases
6:00 p.m. to 7:00 p.m.
Author Signing: Anne Bruce, Brenda Hampel, and Erika Lamont – Solving Employee Performance Problems
Monday, June 27
9:30 a.m. to 10:45 a.m.
Author Signing: Anne Bruce – Perfect Phrases for Employee Development Plans
Brenda Hampel, and Erika Lamont – Perfect Phrases for New Employee Orientation and Onboarding
10:45 a.m. to 12:00 p.m.
Author Signing: Gonzague Dufour – Managing Your Manager
1:00 p.m. to 2:00 p.m.
Free one-on-one HR Coaching with Anne Bruce, Brenda Hampel, and Erika Lamont, authors of Solving Employee Performance Problems
2:30 p.m. to 3: 30 p.m.
Book Giveaway: Perfect Phrases
Tuesday, June 28
9:30 a.m. to 10:45 a.m.
Author Signing: David Clemons and Michael Kroth - Managing the Mobile Workforce
10:45 a.m. to 11:45 a.m.
Book Giveaway: Perfect Phrases
Grand Prize Drawing—Win an iPad!
11:45 a.m. to 1:30 p.m.
Author Signing: Mary Scannell, author of Big Book of Conflict Resolution Games
June 13, 2011
Huffington Post Editor and Columnist Russell Bishop on “How Determination Breeds Success”
Commitment and determination enabled Thomas Edison to keep moving forward in the face of “adversity.” However, it is also important to note that he began with a working vision of success. With the end in mind, and a reasonable expectation of success, his determination allowed him to keep moving forward in the face of adversity.Commitment and determination are often cited as key components to success, whether in business, sport or personal life. Merriam-Webster defines determination as a “firm or fixed intention to achieve a desired end.” Indeed, a clear focus or intention to achieve a desired outcome is the first requirement in any successful workaround situation. A clear focus on the desired outcome and a burning desire to succeed help breed the determination and commitment to do the work necessary and can help support you through the challenges you may encounter along the way.
The story of Thomas Edison and the light bulb is a classic example of the commitment and determination required to achieve an outcome. In 1878, Edison attended a scientific exhibition where he witnessed an invention called the arc lamp. A simple but inefficient invention, the arc lamp produced a bright, glowing light lasting but a few seconds before the thin copper wire burned up.
However, those few moments of glowing copper caused Edison to imagine a longer lasting light bulb and he committed himself to the outcome. After months of experimenting and testing, on October 21, 1879, Edison demonstrated the carbon filament lamp, the predecessor to today’s tungsten light bulb.
Once the light bulb became widely available, he was interviewed by the science editor for a major New York publication. Edison had experimented with thousands of combinations of filament and gas before he arrived at the carbon filament lamp, which led the editor to ask how it felt to have failed so many times. While the transcript is long sense lost, oral history tells us that an incredulous Edison replied, “Fail? I give you light bulb!” The editor persisted, “but look at all your failures along the way!” To which Edison simply pointed out, “Had I thought of these steps along the way as failures, we would be having this discussion by candlelight. The light bulb required thousands of steps and when I started, I just didn’t know how many steps it would take. However, I was committed to the outcome, determined to succeed, and undaunted by the process.”
Commitment and determination enabled Edison to keep moving forward in the face of “adversity.” However, it is also important to note that he began with a working vision of success (the arc lamp) that sparked a larger vision; with the end in mind, and a reasonable expectation of success, his determination allowed him to keep taking micro steps, learning along the way. Much like the story of Michelangelo creating the David by simply chipping away all the marble that didn’t look like David, Edison simply plowed through the combinations that didn’t work until he found the ones that would.
To the Edison’s of the world, determination means three key things:
- Staying resolutely focused on the outcome
- Being mindful of obstacles and feedback
- Choosing to keep moving forward in the face of apparent setbacks
Whereas this may seem simple, it clearly isn’t easy. The tricky part is being able to tell the difference between progress and a dead end. Now what if you’re only 500 steps from the next light bulb?
About the Author
Russell Bishop is the author of Workarounds That Work (Published December 2010) and an internationally regarded speaker, educator, coach and consultant. His corporate clients include Fortune 500 executives in aerospace, healthcare, information technology, and telecommunications. He is also an editor and frequent columnist for the Living section of The Huffington Post. A recognized expert in personal and organization transformation, Russell has coached thousands of individuals around the world, helping them to create balance and success in their personal and professional lives.
June 10, 2011
Top Executive Consultant Dirk Schlimm on the “Five Crucial Rules to Building Key Influencing Skills”
How do you engage a powerhouse leader in a way that produces the best possible outcome while remaining true to yourself? Author Dirk Schlimm has the answers.
In my executive career and subsequent coaching work with managers from around the world I have learned that making an intentional effort to relate better to bosses, peers, direct reports and clients – all while accepting their priorities, perspectives and personalities – is a direct pathway to achieving better results and improving career prospects.
Here are the five critical rules that will help you to build your influencing skills:
- Manage (first) impressions. Powerful people make up their minds quickly and draw conclusions from things that others might consider trivial. Therefore, make sure you are on your best game at all times. Whenever possible, turn the conversation to them and their issues.
- Know what you are doing. Only an idiot or an imposter would intentionally take an assignment which they cannot perform. But it is still good to remember Peter Drucker’s advice that people perform from strength. Know yours and use them. Don’t be pushed into situations or even a whole career where you are a fish out of water.
- Practice humility. Margaret Thatcher once told her chancellor of the exchequer in a cabinet meeting to get a haircut. One could get all flustered at such a humiliating demand. Or, especially if it not a denigration of character or personality, simply take it in stride and go to the barber.
- Show appreciation. Like anyone else, powerful people crave appreciation. Once the client knows that you understand what really matters to him or her they will gain confidence in you; and a boss given to micro management will be less likely to interfere. But it is up to you to let them know!
- Guard you independence. Powerful people have tremendous charm and influence of their own. As a result, your desire to make things happen for them can easily lead you to doing things that you may regret later. Decide on what you will and will not do ahead of time and with a clear head.
Most importantly, remember one last rule: “Powerful people need people who don’t need them!”
Dirk Schlimm is an internationally recognized expert on power, politics and collaboration in organizations and the author of Influencing Powerful People (McGraw-Hill, New York 2011).
June 6, 2011
Powerful people need people who don’t need them.
June 2, 2011
Reputation Rules: The Trust Reservoir is Empty
In the last year, trust in companies has steadily deteriorated, and this may be indicative of much more than simply an annus horribilis for business. The PR firm Edelman’s 2011Trust Barometer shows that trust in business in the U.S. is now approaching levels found in Russia. The data in the rest of Europe are not much better. Only some of the other BRIC counties (China and Brazil) show slightly increased trust. Moreover, NGOs are now trusted more than companies in almost every country, even China. Business leaders and corporate boards are starting to take notice, but are unsure what to do.
In very recent memory, we’ve seen some of the world’s most recognized companies, all leaders in their industry, battling reputational crises. And now the world is looking in horror at the Fukushima disaster, which in the words of late night talk show host Jay Leno, may make us look back at the Deepwater Horizon oil spill as the good old days.
But the root causes go deeper. Trust in business has been eroding at a steady pace over the last decade and CEOs are now among the least trusted professionals. Four main factors are responsible for the increase in reputational risk.
First, media coverage, whether traditional or social, has dramatically increased globally. This increased scrutiny has made it virtually impossible for companies to hide. Transparency is expected, while companies have less control over their messages; once an issue is on the Web, it will likely stay there forever.
The second factor is an unexpected consequence of globalization. The globalization of activist organizations has matched the global reach of companies. NGOs have increasingly succeeded in forcing private regulation: the “voluntary” adoption of rules and standards that constrain certain forms of company conduct without the involvement of public agents. In many cases, the mechanism driving change is the creation of reputational crises for globally operating companies that, when effective, leave the companies with no choice but to change their business practices.
Third is a shift in expectations about corporate conduct, especially among younger population segments. Evidence for these trends can be found in the explosive growth of areas such as corporate social responsibility, sustainability, and socially responsible investing. Some critics have dismissed these trends as passing fads that lack impact, but reputational crises are increasingly being driven by moral outrage, whether over environmental concerns or executive perks.
The final factor is the rise of business models based on trust. To develop unique customer experiences and solutions, companies need to get closer to customers’ unarticulated—perhaps even unconscious—desires and needs. This requires trust. While this shift has undoubtedly created new opportunities for value creation, even the mere perception of broken trust will lead to a feeling of betrayal, a strong emotion indeed.
How have companies responded to these trends? Poorly. Most companies still view stewardship of the company’s reputation as a narrow issue best left to the PR department. For the most part, the response is an underfunded initiative greeted by nervous questions from the board. Underdeveloped capabilities in the presence of growing reputational risks will lead to an increase in reputational crises. That mismatch is untenable.
Most companies still believe that building a strong reputation is easy and only requires common sense; it is merely a natural consequence of doing right by customers, employees and business partners. This approach is flawed. Good business practices are important, even necessary, but they are not sufficient for successful reputation management. A company’s reputation needs to be actively managed by the business leaders, led by the CEO as the steward of corporate reputation. While experts such as public relations specialists may play an important role, they should not own the process. The reason is that challenges to a company’s reputation typically arise out of a specific business decision, but reputational risk awareness is not part of the decision process.
Successful reputation management is difficult. It requires a high level of strategic sophistication and mental agility that sometimes runs counter to day-to-day business decisions. A company’s reputation is shaped not just by its direct business partners, customers, and suppliers, but also by external constituencies. Frequently, constituencies that have lain dormant for many years can suddenly spring into action, particularly in the case of reputational crises. Companies need to have a process to identify such risks.
A company’s reputation consists of what others are saying about the company, and not just its business partners and customers. It is essentially public. This necessitates the ability to assume external actors’ perspectives and viewpoints, especially when they are critical or even hostile towards the company. This requires a strategic rather than defensive approach by business leaders. Anger or self-pity are not helpful.
A strategic approach requires the emotional fortitude to treat reputational difficulties as understandable — and even predictable — challenges that one should expect in today’s business environment. As a result, companies should handle reputational crises like any other major business challenge: based on principled leadership and supported by sophisticated processes and capabilities that are integrated with the company’s business strategy and culture.
About the Author:
Daniel Diermeier , Ph.D., is the author of Reputation Rules: Strategies for Building Your Company’s Most Valuable Asset. He is also the IBM Professor of Regulation and Competitive Practice and director of the Ford Motor Company Center for Global Citizenship at the Kellogg School of Management, Northwestern University. He has served as an advisor to leading companies, including Accenture, Cargill, Johnson & Johnson, Kraft, McDonald’s, and Shell. He is also a senior advisor to the FBI. In 2007, Dr. Diermeier won the Faculty Pioneer Award from the Aspen Institute, named the “Oscar of Business Schools” by the Financial Times.
June 1, 2011
When a manager makes a bad decision, he or she must admit it right away and correct it as swiftly as possible.
What is Innovation?
A friend was in New Mexico where she happened on a small diner at lunchtime. Sitting down at the counter, the waitress asked if she wanted a Coke or coffee. Not much of a caffeine drinker she asked if that was all they had. “Other than water,” the waitress said, “that’s, it—Coke or coffee.” This was confusing since there was a full soda fountain behind the counter. Finally our friend got it. In that part of the country the generic word for every kind of soda (or soft drink or pop) is “coke.”
Too often in the world of innovation we’re like the waitress in the diner, thinking everyone agrees on what the word innovation means, when the fact is, we don’t. When we were doing research for Breaking Away, we interviewed 51 top executives and got 50 different definitions! It’s no wonder, really. Over time innovation has come to be used as an umbrella term for everything from breakthroughs like the hybrid car, or cloud computing, to modified product features or processes. Some think of it as new revenue streams. Some define it as any improvement on the past, while others simply define it as progress. All of these are part of innovation, but they don’t really get to the heart of the matter.
When we strip away all the confusing language, true innovation boils down to this: it has to be one-of-a-kind unique, it has to truly be of value to the consumer or customer who will be using it, and it has to be commercially viable—or worthy of exchange. If it doesn’t have these three essential elements, then it’s not innovation.
Think about it. Many consider Benjamin Franklin’s discovery of electricity as a great innovation. But was it really? It certainly was an important discovery that led to inventions. But electricity didn’t become a part of innovation until much later when Thomas Edison’s incandescent lightbulb brought real value to people’s lives, making it worth buying. In fact it was so commercially viable that it spawned entire new industries for decades to come.
As you evaluate current and future offerings, hold them against this litmus test, and see how innovative they really are.
- Is it really one-of-a-kind? Why? How does it compare with what is already out there?
- Does it bring real value to the intended market? Why?
- Will people buy it more than once? If so, will they be able to pay enough to make it worth the effort of creating it?
When everyone, sees, thinks and talks about innovation from this perspective, that’s when real innovation will flourish. Using a common language everyone—leaders, employees, boards and analysts—will not only know what they’re looking, for, they’ll know how to judge whether or not they’re getting it. It’s as simple as that.
About the Authors
Jane Stevenson & Bilal Kaafaraniare the authors of Breaking Away: How Great Leaders Create Innovation that Drives Sustainable Growth—and Why Others Fail.
Jane Edison Stevenson is Vice Chairman, Board and CEO Services at Korn/Ferry International, the world’s leading C-suite talent management firm, and has spent 25 years assessing and recruiting the world’s top innovation leaders.
Bilal Kaafarani is Senior VP, Global Research and Innovation officer of The Coca-Cola Company. He has held leadership roles with Frito Lay Tropicana, Proctor & Gamble, and Kraft, where he developed the technology resulting in the successful “Kraft Free” products. He holds several patents for breakthrough technologies in the food sector.