The Economy of Things

The Economy of Things: Extracting Value from the Internet of Things. Veena Pureswaran and Robin Lougee PhD. IBM Institute for Business Value. June, 2015

In Economics 101 we assume away all market realities that could impede the free flow understanding of supply and demand. As we progress through the field of study, we add them back in to the point where we are juggling complex “reality” modeling. The Internet of Things (IoT) in some respects removes so many impediments (proximity, accessibility, real time data, etc.) that it is creating an Economy of Things that can profit from this “frictionalessness”.

Opportunities will not be across the board. Certain types of markets (those requiring information and interaction only available in the physical world) will be less impacted. While our friends at IBM only did a deep dive in three segments (commercial real estate, small and medium business loans and farming) the lessons are fairly clear and available to transpose to your sphere.

And for my model loving (the economic type) colleagues, you can geek out with a zip file of various case study scenarios where you can play around with the inputs. Hooty Hoo!

Click for "IBM Institute Report 2015"

Embracing the “trouble makers”

Fearless Change: Patterns for Introducing Effective New Ideas. Mary Lynn Manns PhD and Linda Rising PhD. Addison-Wesley

I recently had the opportunity to take a certificate program in Change Management through Cornell. As part of the reading list, we were introduced to Fearless Change: Patterns for Introducing Effective New Ideas (detailed bibliography below). The authors studied and identified proven “ patterns” that leaders can use to more effectively deliver on change initiatives. Brief summaries of these patterns are listed in the article below.

A long term project I was involved in had reoccurring issues with a “trouble maker”. This individual disrupted meetings and would divide / conquer amongst the various multi-company stakeholders. But at the root of his arguments, there was always a kernel of truth. It was just getting lost in the delivery. Using the thinking learned in Fearless Change, I engaged this person as our official “Champion Skeptic”. It was risky because it gave power to a person we had previously tried to contain and sideline. But it worked. As this person felt heard and respected, he took greater care in how he delivered his messages. He no longer just took pot shots. He felt more invested and ultimately became a champion of our efforts.

Consider some of these tried and true methods the next time you are charged with change.

Click on link for additional information about these patterns for leading change

Global Connectedness

DHL Global Connectedness Index 2012, Pankaj Ghemawat with Steven A. Altman

First of all, kudos to Deutsche Post DHL for conducting this study and sharing it with the rest of us. Granting that the data is slightly dated (understandable given the study's breadth), it is a huge gift for those of us who are data geeks and understand how challenging it can be to gather this type of information.

Key takeaways: global connectedness has declined (since their first study in 2007). "Potential gains from boosting global connectedness can reach the trillions of dollars...increasing global connectedness can generate growth." Even in the most connected countries (Netherlands is at the top), there are considerable opportunities for advancement.

To bring this home, as you think of the inefficiencies in your supply chain, in your customer value delivery, between your global regional offices, perhaps view it from the lens on connectivity. Can your systems communicate? Can anyone/everyone on a project team clearly articulate what the client is trying to accomplish with this effort? Can your internal people communicate (Does the sales team ever speak to the delivery team? Has the Mumbai team ever even met the Houston team?). This is where the next generation of productivity and profitability improvements reside.

Click for "DHL Global Connectedness Index 2012"

Enabling….the good kind

“First, Let’s Fire All the Managers”. Gary Hamel. HBR, December, 2011

The “Big Idea” here is that “management is the least efficient activity in your organization”. Considering that most of my readers are in fact in some level of management, let me quickly suggest that you not take this personally.

This is instead an opportunity to ask “what if”. Hamel shares the case study of the second largest global tomato processor, Morning Star. For over two decades this company has been successful with no management, no titles and peer-based compensation. Just let the reality of that sink in for a moment! Everyone is a manager. Everyone is responsible for obtaining the tools needed to be effective.

The results include lower costs, greater initiative and loyalty, better decisions and increased flexibility.

Before you completely dismiss this as egalitarian hooey, next time you know you’ll be spending some time at 35,000’, give yourself the gift of reading this article. Then look out the window and see if you don’t think, “hmmm.”

Click for "Let's Fire all of the Managers"

Transforming Data Analytics into Action

“Analytics: The New Path to Value”. LaValle, Hopkins, Lesser, Shockley, and Kruschwitz. MIT Sloan Management Review in collaboration with IBM Institute for Business Value.

How the smartest organizations are embedding analytics to transform insights into action.

IBM Global Business Services in collaboration with MIT Sloan Management Review. 3,000 global executives and analysts share their best practices to achieve long-term advantages from data analytics (that we are awash in).This article reinforces what we are seeing: we tend to get lost in the fact that we can build these sophisticated data generating engines. What is getting lost is how to effectively utilize that data to tell or story or provide strategic insights.

Based on data from the survey, case studies and interviews with experts, the authors have identified a five-point methodology for successfully implementing analytics-driven management and for rapidly creating value.

• Focus on the biggest opportunities first. Attack one big important problem that can demonstrate value and catalyze the organization toward action.

• Start with questions, not data. Understand the problem — and the insights needed to solve it — before working on the data that will yield the insights.

• Embed insights to drive action. Ensure end-result impact by making information come to life, articulating use cases and expressing data-driven insights in ways that even nonexperts can understand and act upon.

• Keep existing capabilities while adding new ones. Even as centralized analytics oversight grows, keep distributed, localized capabilities in place.

• Build the analytics foundation according to an information agenda. Opportunistic application of analytics can create value fast, but it must be part of an enterprise-wide information-and-analytics plan.

Click for "The New Path to Value"

Who has time to think???

Distracted. Maggie Jackson. Prometheus Books

According to the research in this book, the average office worker switches tasks or is interrupted every three minutes. (If you are in management, it is even more frequent.) We spend on average two hours a day “recovering” from unnecessary interruptions.

The other trend that is impacting us is the deluge of data. Ignorance used to be defined as the lack of access to information. It is now being defined as the inability to effectively use the information we have.

So with our constant interruptions and the mountains of data, research indicates that companies are having difficulty getting beyond the surface of information in order to understand the impact on larger issues.

That got us thinking about a common element in most of the projects we have been engaged in over the past several years: the importance of an independent thinker in being able to uplevel data and analyze it in the context of broader, more strategic implications.

And that led us to thinking about our background brand messaging. The way Optimum Results is able to “accelerate success with strategy and focus” is that we have the luxury of not being interrupted, of not slogging around on a daily basis in ground level data. We have the luxury of thinking – about your customers, about your competitors, about you.

So at your next leadership team meeting ask the question: who among you has had time to really think this week? If the answer is not what you’d hope for, give us a call. We’ll save some bandwidth for you.

Click for "Maggie Jackson Interview"

On uncontested growth

Blue Ocean Strategy. E. Chan Kim and Renee Mauborgne. Harvard Business School Press

We were introduced to this book by our long-time client, Hal Bouknight, and have since used it and shared it with many others. Maybe it’s because we live in Southern California and are regulars at the beach that this concept is so profound for us.

What we love about Blue Ocean thinking is that it absolutely forces us to think about how the marketplace buys vs. how we want to sell and deliver. And if we can really get outside our corporate walls to that place, then we have a chance of looking beyond the turbulence of the waves (where we often fight it out on price) out to the wide open Blue Ocean. That is where the order of magnitude growth is. That is where long-term customer satisfaction resides.

Try it out by creating a Blue Ocean Strategy Canvas. Go out and ask a cross section of customers (and perhaps some of your competitor’s customers as well) for their top 10-12 most important buying criteria and why. Plot out the commonalities that fall out on a horizontal base line. Then plot (low to high moving up) how you and your competitors rank in terms of delivering. You should have the foundation for a much more powerful conversation at your next leadership team meeting.

OK, no more freebies – go buy the book.

It’s the CUSTOMER, stupid!

Remember the old United Airlines commercial?

Ok, so I’m dating myself but for those of you of a certain vintage, you know exactly what I’m talking about. The scene is a corporate conference room. You infer they’ve just lost some really big deal. The head honcho goes around the room passing out airline tickets and tells his team to go reconnect with their customers. What a concept!

We tend to plan and strategize internally. We make LOTS of assumptions. Then we go out to our customers when we’re “close” and ask them for their input. By then it’s too late. The real “ahas” have already been buried in our internal process.

Case study example: Legos. Legos used classic focus group input that tended to give them feedback around the minutia: e.g. “Do you want green or red?” After dealing with ongoing declining sales its Mindstorm™ Robots team opened up design input prior to any internal development and let its broad based (and passionate) user group truly shape the product. Result is increased revenue, differentiated product, dedicated customers.

OK, so you don’t make toys. Look at GE Plastics. Look at Northrop Grumman. Look at Southwest Airlines. Look at the guy in Malaysia who custom built my son’s Ceriatone Plexi amp for half price of the big name manufacturers. Common denominator: value of customer insight early in the development process.

Different companies do this differently: Virtual user communities, Visitor’s Boards ,Customer Councils. The point is to get out there at a lot of different levels of your organization and connect with your customers. Don’t try and sell them anything. Leave your PowerPoint at the office. Just ask them what they need to do to be successful. Ask them what keeps them awake at night. Then listen.

Stop with the low price!

This builds upon our previous entry.

Recently the Financial Times and the research firm, Doremus, collaborated on a survey called "Decision Dynamics" in which 470 senior-level executives around the world were asked, "Which supplier is most likely to get work from you in tough times as compared to prosperous times?"

The top answer was not the cheapest or the supplier with the best / longest relationship or even the one that could prove ROI. The answer was the supplier most proactive in helping out.

So often we wait for a customer to tell us what they need. We have entire departments focused on doing a great job of “responding” to RFP’s. By that point we usually now have to compete for the business. And when we have to compete, price is too often the decision maker.

Our customers want us to know enough about their business that we can come to them with ideas and solutions. They, too, would like a fresh perspective. So after you’ve spent some time listening (you read the first part, right?) get a group of your really smart people in a room for a bit of time to think about how to solve the problems they told you about. (Our client / partners at Critical Path Strategies have an ideal thought process to utilize for this.) Then go discuss your ideas with the customer executive. Guess what? You’re no longer a vendor. You’re a trusted advisor. Price is no longer relevant. Now why don’t we have entire departments that do this?

Jump the curves

10 Commandments from Entrepreneurial Evangelist Guy Kawasaki

Knowledge @Wharton

Innovation is harder than just staying a little bit ahead of competitors on the same curve. "If you’re a daisy-wheel printer company, the goal is not to introduce Helvetica in another point size. The goal is to jump to the laser printer," says Kawasaki. "That's easier in some businesses than others."

Kawasaki noted how in the days before refrigeration, the ice industry consisted of harvesters in cold climates using horses, sleighs and saws to collect ice outdoors during winter. Ten million pounds of ice were shipped in 1900 that way. Then came "Ice 2.0" – factories that could freeze ice anywhere and an ice man who would deliver it to establishments and homes. Finally came "Ice 3.0": home refrigerators.

None of the ice harvesters got into the ice factory business, and none of the factories got into the refrigerator business. That's because "most organizations define themselves in terms of what they do, instead of thinking 'what benefit do we provide the customer?' ". True innovation comes when you jump curves, not when you duke it out for 10-15% better."

Napoleon on Project Management

Jerry Manas, Thomas Nelson Publishing

This book found me (literally) at the library. I was there to pick up a book my son needed for an essay on Napoleon as a tyrant and this was on top of that book on the shelving cart.

The book reinforces the need for skill sets fundamental in current corporate leadership: situational awareness, rapid prioritization and traction in chaotic environments, clear and well communicated vision, centralized command with decentralized control.

The author links Napoleons skills to current day project management discipline. To be fair, he also analyzes the negatives – Napoleon’s abandonment of many of these principles and the implications for his fall. Great quote cited from Abraham Lincoln: "Anyone can overcome adversity, but if you want to test a man, give him power."

Other resources:

A few other classics...

Reframing your Business Equation. Tim Laseter and M. Eric Johnson. Strategy + Business. Booz & Co. Summer, 2009.
Think. IBM.
The New Golden Age, Mark Stahlman. Strategy+Business. February 1, 2010