Five tips from Larry

I read a good list of tips for entrepreneurs from Larry Page, Google’s co-founder, in the very cool website ecorner. I like number three a lot!

Tip 1: Just don’t settle. Especially with employees, it is very important to find great people you are compatible with.
Tip 2: There is a benefit from being real experts. Experience pays off.
Tip 3: Have a healthy disregard for the impossible. Stretch your goals.
Tip 4: It is OK to solve a hard problem. Solving hard problems is where you will get the biggest leverage.
Tip 5: Don’t pay attention to the VC bandwagon. Don’t start a company just because you can. Instead, have a really good idea that is good regardless of the funding situation.

Porter’s Five Forces Analysis: Revise the Classics

Michael E. Porter of Harvard Business School developed Porter’s Five Forces Analysis in 1979 as a framework for industry analysis and strategic development. The goal of the model is to derive the five forces that determine the competitive intensity and, thus, the attractiveness of a market. If profitability is high across the market, it’s attractive; if the combination of forces drives profitability of the market or industry down, it is deemed “unattractive”.

Porter refers to these forces as micro environmental, as they are forces close to the company and which affect it’s ability to serve its customers and make a profit. In the model, should a change occur in any of the forces, the company must re-evaluate the marketplace. Also, it is important to note that the overall industry attractiveness does not mean all companies in it will yield the same profitability, as specific business models within them might allow individual companies to deliver above average profitability.

The model is nice to assess the attractiveness of a market we’re in or planning to enter by stating under each epigraph the reality of the micro environment. The model’s graphic representation is as follows:

What Russian Workers Want

According to a survey made by the company Kelly Services, about 65% of Russian office workers are ready to change their job. 84% would be glad to accept an offer to work with another employer since they “do not like the tense atmosphere at their company and the unstable position of their employer”.

1/15 office workers have quit their jobs on their own accord as a result of bad relations with colleagues and top managers. About 41% of workers are ready to find new jobs due to their company’s instability. During the crisis, the work load of 72% of office employees changed; about 38% started to work less and 44% more.

According to the survey:

• over 50% of Russians would like to work at “an international company”
• 22,5% at a “young developing international company”
• 10,3% at a “Russian company with high potential”
• 8,1% at a “Russian state-run company”, and
• 7,7% at a “Russian private company”

A total of 2.400 office employees all over Russia were polled. This news item comes from Trud, edition of 22th June 2009.

In the picture, Metro Moscow escalators by Sansculotte licensed under Creative Commons Attribution Sharealike 3.0

Transformer. Change Agent. Leader

I follow an interesting blog on marketing and strategy and came across some fine insight about XXIC business transformation needs. Basically the author states that in these times, we need to think way bigger than we used to. The era of large corporations making incremental changes is giving way to the era of small ones making huge predicaments. Of course one would argue that business transformation comes from aligning stakeholders with a shared sense of purpose into new ways of doing business, setting processes or entering a market.

But, in fact, it’s just people (as in individuals, the human subject matter of the mix) who can actually make or break this. And, according to this author, in order to make them tick, you need to maximize purpose, maintain a bifocal focus, and make change safe.

• Maximise purpose: do you see the value and virtue of “co-creating purposes”? If not, get with it!
• Maintain a bifocal view: watch the horizon and keep your eye on the small footsteps – at all times, see both
• Make change safe: nothing matters more to your organisations’ survival, yet nothing scares people more than change. So be aware of what freaks your people out and make sure you address it, making a safer environment for them to take risks and embrace change. “Understand the organisations’ specific fears”; reward change agents.

If you like what you read here, go for the full original post from Idris Mootee to get more insights into this approach to organisational transformation.

Concern – Dissonance – Change

Just came across a great sentence on change: “The first step needed to produce lasting change is profound concern (or dissonance) that the path we are on is no longer working”. This is in the book The Change Masters, by Rosabeth Moss Kanter

Systems thinking

A system is not just the sum of its parts, but the product of their interactions. So, the best parts do not necessarily make the best system. Rather, the ability of a system to achieve it’s purpose depends on how the parts manage to work together, not just how they perform individually. If you apply it to people or teams, the model is a clear exponent of the value of collaborative action and coordination.

Systems thinking looks at organisations as systems and analyses how the parts interrelate and how the organisation as a whole performs overtime. A good example to describe this is Lance Armstrong’s Tour de France victories between 1999 and 2003, where he won each year, but never won more than a few of the daily stages (below see daily stages won each year out of total stages).

1999: 4/21; 2000: 1/21; 2001: 4/21; 2002: 4/21; 2003: 1/21

More on systems thinking from systems dynamics guru Jay Forrester. Also read more on Theory of Constraints, Limits to Growth, Shifting the Burden, Five Whys

Segundamano closes all print business in Spain

I recently read in the blog of the ex-IT Manager of Anuntis Segundamano (the Spanish operation of Schibsted Classified Media) that – as of November 2008 – all print publications of the company in Spain are closing.

They are leaders in the Spanish online market in Jobs (Infojobs and Laboris), General Merchandise (Segundamano), Real Estate (Fotocasa) and Automotive (Coches.net). Segundamano newspaper in Spain has been for 30 years a kind of transactional ‘institution’ for used goods. I think in Madrid almost 100% of the population over 30 knows it as the ‘free ads paper’ and has used it at some point or another to sell a house, get a job or find a car.

By now print was an irrelevant part of the company’s profit (they were issuing only 14 print titles now, versus +160 in summer of 2004). However, they had managed to keep the overall growth by aggressive online positions and pricing and closures of loss-making and non-strategic print titles. According to Juan Carlos’s blog, the flagship title “was not loss making at this time”, but the strategic decision was to close and re-structure accordingly.

Schibsted revealed in it’s interim report of Q3 2008 that Schibsted Classified Media had Q3 operating revenues of EUR 38,4M – 19% less than in Q3 2007. According to the report, “the decline is primarily due to the negative trend of the print publications in Spain”. Operating revenues from online grew 13% to EUR 27,5M in the same period. Online contributed 72% of operating revenues vs 52% in the previous period. Internet made an operating profit of EUR 8,4M vs an operating loss of EUR 1,2M for print.

Classifieds in print are, indeed, on a sliding scale. The general trend in media, according to enduragement’s interesting post, is another relevant signal.

Sahlman on entrepreneurs

Reading an old classic about business planning I came across this quote:

entrepreneurs constantly seek the right mixture of people, opportunity, context, and deal. They anticipate what can go wrong, what can go right, and they try to balance risk and reward

It’s a great comment from William A. Sahlman, one of the greatest lecturers of entrepreneurial management. Just wanted to throw that out there for anyone who wants to pursue his work further.

Collaborative creativity

Charles Leadbeater, who used to advice Tony Blair, is considered a leading authority on innovation and creativity and considered one of the top management thinkers on Earth. He recently spoke at Picnic Amsterdam on collaborative creativity (which is the subject of his book, We Think) and put forth 5 key elements of this phenomenon:

1. Diversity is king, participants need to think differently and have different knowledge.
2. Give people ways to contribute. They need really simple ways to add their piece of information.
3. Connect people with each other by using the most suitable technology
4. The most important one: participants must have a shared sense of purpose and an individual sense of pay-off. Use a mascot or something.
5. Communities need to have some element of structure to make decisions.

He of course also pointed out how the media environment has changed (mainstream media vs Youtube, WordPress and Twitter kind of thing) as well as how it’s now commonly understood that creativity is not the product of one brilliant mind, but “most creative ideas come from people blending and mixing things”. He also reminded us that not all collaboration leads to creativity and can become boring from excess consensus or lead to nothing if there’s too much chaos in the group.

Images courtesy of www.charlesleadbeater.net

What Sun Tzu and Eisenhower share (but we’re deaf to)

I was thinking today of the treatise The Art of War, written in the 6th Century BC by Sun Tzu and considered the most relevant tome on military strategy and tactics in history. Actually, if you look at the 13 chapters that conform it, you quickly understand how the structure and items proposed have been used more than any in military planning (in East and in West). They have also extended in recent decades to business strategy and planning. Find an ultra-short briefing of these 13 chapters here

There is a very famous quote of this book I came across the other day in Jordan Bortz’s blog which goes like this:

Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.

The reason this caught my attention was a recent debate I witnessed inside my organisation on waterfall versus agile methodologies for software development, whereby some considered waterfall (sequential software development model) as a purely strategic method whereas they claimed agile was purely tactical. I think this is a limitation and narrowing of both methodologies that’s not fair to either.

I believe you can use agile in a full fledged strategic manner as long as you manage agile actions and scrum teams in the context of a clearly visible and well communicated strategic endeavour. Probably managing this obeys a different order and formal logic than a waterfall project, but I am certain agile can be used in a mid or long term strategic context and at the same time respect it’s governing principles.

However, I still hold truth some basic notions, one of which would go something like this, as Dwight D. Eisenhower said:

In preparing for battle I have always found that plans are useless, but planning is indispensable

More also from Damon Poole, who has a bit of a fight on the topic with the above mentioned Jordan.

Nearshoring, outsourcing or else…

When considering nearshoring, outsourcing or other externalisation of processes, a number of strategic considerations have to be taken into account. I read a very synthetic (3 points) but spot on approach in Harvard Business Review recently on the subject which I would like to share:

1. List all your capabilities – including HR, finance, IT management, logistics distribution, product development, and packaging
2. Identify capabilities with high proprietary value. Your company executes these in ways that generate measurably more value than rivals could. And your company would suffer major strategic damage if rivals imitated them.
3. Identify capabilities with high commonality. Outside suppliers could achieve scale or other advantages by providing these to many others in your industry

An interesting note: only 6% of companies which outsource are satisfied with the practise (source: HBR).

Commonality identification illustration flow from esi.es

The smart approach to recession

If you are in as dreamy a situation as Apple, with wads of cash, a great looking balance sheet and no debt, you might as well follow Steve Jobs’ wise counsel. This is what Michael Roberto of Conversation Starter quoted him as telling in Fortune magazine (is this meta quoting…?):

“In fact we were going to up our R&D budget so that we would be ahead of our competitors when the downturn was over. And that’s exactly what we did. And it worked. And that’s exactly what we’ll do this time”

Jobs was referring to previous recessionist environments and of course, to the current one. As Roberto reflects in his post on the matter, in a recession there are a number of good actions to take, namely:

Invest in research and development for the next shinny times

Analyze and know your competitors’ Aquilles heels and act upon them in a clever way (think on the fringes; be a parallel thinker?)

Identify critical suppliers and distributors and identify the risk associated to them in the economic environment and how it could affect you

Think carefully about your talent needs and be very careful so you don’t send the most talented people to you competitor’s den

In workaholic mode

I really liked this tip list on how to save costs and other clever tricks to use when running a start up, provided by Jason Calacanis. Definitely enjoyed point 11 about seeking talented workaholics when managing a start up.

Verbatim:

“Fire people who are not workaholics.don’t love their work… come on folks, this is startup life, it’s not a game. don’t work at a startup if you’re not into it–go work at the post office or stabucks if you’re not into it you want balance in your life. For realz.“

Infact, I think it’s fair to say that also in large companies, in new projects, you need to abide by some similar set of rules in taking talent from outside or handpicking it from other divisions. It’s critical to ignite and steer certain projects within the corporation at large and if you don’t infuse innovative projects with individuals who also have a true entrepreneurial edge and a desire to outdo themselves, you may never lift to even the design phase.

Project management gone astray

You could be in one or various of the following situations: projects stuck in logjams nobody can fix; non-strategic projects consuming too many of your critical resources; delays you cannot set objective milestones to; well run project parts which were executed perfectly (as parts) but which don’t wield together as a whole… and so on.

 

Some great authors in HBR explained that the problem is that in companies “we look at projects individually and try to push them, as such, through the pipeline with speed and cost efficiency”. But who keeps an eye on the big picture? Who decides which is the right blend of projects we should be nurturing in a period of time? Who sets the pace for strategic versus maintenance? Who provides metrics and confidence to roll out mega-projects with a calm mind?

The authors suggest a few techniques:

“Achieve the right blend of project types: including breakthrough, platform and derivative products; R&D efforts; partnerships

Eliminate strategically irrelevant initiatives

Replace project management with process management: unplug the bottlenecks; smooth the workloads; increase the time to market

Build small projects into large initiatives early: to deliver fast measurable payoffs and iron out problems before they doom the effort”

I like all the principles hereby stated. They are pragmatic and propose a good high-level framework to reduce noise and achieve speed to market in a reasonable priority setting.

More reading: Why Good Projects Fail Anyway by Nadim F. Matta and Ronald N. Ashkenas

Project plan schema visualization (Gantt chart) courtesy of Ambysoft

More value, less products: the innovation radar

The Innovation Radar, first described in 2006 by professor Mohanbir Sawhney and 2 peers, tries to identify innovation beyond product development and R&D, where it is normally silo-ed in traditional analysis. For that they have built a radar which covers 4 major dimensions or business anchors:

What: Offerings a company creates
Who: Customers it serves
How: Processes it employs
Where: Points of presence it uses to take its offerings to market

It’s a nice tool for companies concerned about their capacity and depth of innovative exercise, as it broadens the spectrum beyond product delivery and into value creation.

Spread across these, a company can innovate way beyond product or technology and can also track the status of it’s innovative capacity well beyond them. Infact, from these 4 key anchors the radar provides a vision enabling companies to innovate in these 12 areas:

Offerings, platform, solutions, customers, customer experience, value capture, processes, organization, supply chain, presence, networking, brand

More on using the innovation radar to drive organic growth. Image courtesy of Enterprise Leadership

I wanna be a management booklet (or do I?)

Today I was reading one of those visionary presentations that you always wonder if the author wrote under the effects of some opiate. But I came across a slide that addresses exactly the 3 questions I was asking myself in the morning when I woke up in the same anxious anticipation that wakes me up every morning since I moved here.

Those 3 questions where masterfully articulated by the author as follows:

Strategic decisions: what business are we in and where are new opportunities for growth?

Operational decisions: how do we structure our business units to most effectively compete for and win market share?

Tactical decisions: which customers are available to us and how can we convince them to chose us over any and all functional equivalents?

Nicely put. Now I continue to rake my mind and scrutinise my peers to answer these questions in the most value adding manner for the business ;-)

More information in AuroraWDC and also in ReconG2

Illustration courtesy of Pay Attention or Pay

The advertising dollar dance (worse than ADD)

A great guy by the name of Peter Würtenberger, who happens to be the CEO of Axel Springer’s Die Welt as well as Berliner Morgenpost (and who before managed Yahoo! Germany), presented some very interesting numbers the other day in Istanbul at the Dogan Yayin Holding Forum 2008.

As I mentioned in a previous post on online ad spend a few days ago, the loss of newspapers to Internet is the most significant and painstaking one around. I mean, really, in the period 2004 – 2007 loss is at an annual 890$ million in the US from printed newspapers to advertising dollars spent online.

My question is, is this loss to other-than-newspaper online resources or does it also include gain (that’s what I call negative gain ;-) in online newspaper bottom-lines…?

In any case, here’s a very interesting (public) presentation on how they at Mr. Würtenberger’s company go about dealing with this issue.

Source: eMarketer/Citigroup Investment Research

Marching orders for your company

The balanced scorecard is a strategic planning and management system used(*) to align business activities to the vision and strategy of the organization, improve internal and external communications and monitor organization performance against strategic goals.

The balanced scorecard suggests we view 4 critical perspectives of our business:

Learning & growth: includes training, learning, corporate culture and attitudes, self growth. Individuals are the main repository of knowledge of an organisation and the critical resource. Communication among workers is key, as is avoiding brain drain.

Business process: Metrics based on internal business processes allow management to monitor how well the business is running and wether it’s products/services are well accepted by clients.

Customer: Indicators on customer satisfaction and tools to improve and monitor customer relations are critical

Financial: Timely and accurate financial data is still a key to manage the business. Data should be centralised and of fast and easy access, but financial data should not be the only indicator, thus the original intention of the word “balanced”.

It was ideated and first detailed by Robert Kaplan and David Norton. Image courtesy of Metrus
(*) Used in business and industry, government, and non-profits worldwide

Fostering Creative Thought Inc.

I recently read an interesting post about where innovation occurs in organisations. I have to say the post by Bo Harald is fascinating in that it addresses the critical issue of the formal lines of authority versus the informal communication lines.

I have nothing against formal communication and organisational charts, but I also believe there proliferation of distributed tools and myriad operation models should prompt large organisations even more to revise traditional communication lines.

Harald mentions in his post the discovery by social cartography pioneer Valdis Krebs that innovation happens in intersections of the organisation. The kind where ideas meet that are not visible in the formal organisation charts. This means people there are excellent individuals (the best positioned) to revise how things are done or could be done and drive innovation.

Interestingly enough, he supports that the messiness of the social interaction patterns of an organisation is often correlated to the innovation capacity it exercises.

Just to ratify the probability of the assertion, I read a very interesting study about using social graphs to uncloak terrorist networks by Krebs which also raised my interest on the issue. In any case, it’s application to the social graph of my current organisation is, for the moment, what most interests me. Now trying to think how to apply, adapt, learn… ;-)

In the image the social graph of the 2001 September 11th folks from Valdis Krebs study

Market share is… never enough?

 

I was just looking over our competitive monthly report in a number of markets and giving faces and situations to diverse points in the monthly outlook of 2007. After a lot of musing about what really matters in business development you always somehow reach the conclusion that what matters is market share. We spend so much time speaking of it, looking for it, defining metrics to measure it, increase it, benchmark it… But let’s see what it really is.

It’s the percentage of the total sales of given type of product or service attributable to a given company, they say.

This means that your market share = Your company sales of Product X / Total market sales of Product X

Clear. Now, what cool stuff can make us move towards more market share? And I do not mean just predatory pricing, for those incumbents reading (if any)!

As far as I know market share is associated with profitability and normally we seek to increase it to achieve economies of scale and bargaining power, sales growth (especially in stagnant industries), to improve reputation…

Tools to increase it? I have recently seen a checklist where they mention the following as key actions:

1. Share of preference: product pricing, promotions
2. Share of voice: advertising and promotional share
3. Share of distribution: improved and increased channels

But I am missing something here… In a market of web applications, where does product quality stand in terms of driving organic share growth?

In the image a graph of free versus paid newspaper market-shares in Europe from Newspaperinnovation.com. Look at Iceland!!! Looks like the age of copy sales has passed already…