Transformation

On The Everything Store

I recently finished reading The Everything Store – Jeff Bezos and the Age of Amazon – by Brad Stone.

Below are key excerpts from the book that I found particularly insightful:

There is so much stuff that has yet to he invented. There’s so much new that’s going to happen. People don’t have any idea yet how impactful the Internet is going to be and that this is still Day 1 in such a big way.

“If you want to get to the truth about what makes us different, it’s this,” Bezos says, veering into a familiar Jeffism: “We are genuinely customer-centric, we are genuinely long-term oriented and we genuinely like to invent. Most companies are not those things. They are focused on the competitor, rather than the customer. They want to work on things that will pay dividends in two or three years, and if they don’t work in two or three years they will move on to something else. And they prefer to be close-followers rather than inventors, because it’s safer. So if you want to capture the truth about Amazon, that is why we are different. Very few companies have all of those three elements.

So looking back on life’s important junctures was on Bezos’s mind when he came up with what he calls “the regret-minimization framework” to decide the next step to take at this juncture in his career.

We believe that a fundamental measure of our success will be the shareholder value we create over the long term. This value will be a direct result of our ability to extend and solidify our current market leadership position. The stronger our market leadership, the more powerful our economic model. Market leadership can translate direct! to higher revenue, higher profitability, greater capital velocity, and correspondingly stronger returns on invested capital. Our decisions have consistently reflected this focus. We first measure ourselves in terms of the metrics most indicative of our market leadership: customer and revenue growth, the degree to which our customers continue to purchase from us on a repeat basis, and the strength of our brand. We have invested and will continue to invest aggressively to expand and leverage our customer base, brand, and infrastructure as we move to establish an enduring franchise.

Jeff Bezos embodied the qualities Sam Walton wrote about. He was constitutionally unwilling to watch Amazon succumb to any kind of institutional torpor, and he generated a nonstop flood of ideas on how to improve the experience of the website, make it more compelling for customers, and keep it one step ahead of rivals.

Bezos was obsessed with the customer experience, and anyone who didn’t have the same single-minded focus or who he felt wasn’t demonstrating a capacity for thinking big bore the brunt of his considerable temper.

“My approach has always been that value trumps everything,” Sinegal continued. “The reason people are prepared to come to our strange places to shop is that we have value. We deliver on that value constantly. There are no annuities in this business.” A decade later and finally preparing to retire, Sinegal remembers that conversation well. “I think Jeff looked at it and thought that was something that would apply to his business as well,” he says.

“I understand what you’re saying, but you are completely wrong,’ he said. “Communication is a sign of dysfunction. It means people aren’t working together in a close, organic way. We should be trying to figure out a way for teams to communicate less with each other. not more.”

That was a typical interaction with Jeff. He had this unbelievable ability to be incredibly intelligent about things he had nothing to do with, and he was totally ruthless about communicating it.

If Amazon wanted to stimulate creativity among its developers, it shouldn’t try to guess what kind of services they might want; such guesses would be based on patterns of the past. Instead, it should be creating primitives—the building blocks of computing—and then getting out of the way. In other words, it needed to break its infrastructure down into the smallest, simplest atomic components and allow developers to freely access them with as much flexibility as possible.

‘Jeff does a couple of things better than anyone I’ve ever worked for,” Dalzell says. “He embraces the truth. A lot of people talk about the truth, but they don’t engage their decision-making around the best truth at the time. “The second thing is that he is not tethered by conventional thinking. What is amazing to me is that he is bound only by the laws of physics. He can’t change those. Everything else he views as open to discussion.”

On a closing note:

Amazon may be the most beguiling company that ever existed. and it is just getting started. It is both missionary and mercenary. and throughout the history of business and other human affairs, that has always been a potent combination. “We don’t have a single big advantage,” he once told an old adversary, publisher Tim O’Reilly, back when they were arguing over Amazon protecting its patented 1-Click ordering method from rivals like Barnes & Noble. “So we have to weave a rope of many small advantages.” Amazon is still weaving that rope. That is its future, to keep weaving and growing, manifesting the constitutional relentlessness of its founder and his vision. And it will continue to expand until either Jeff Bezos exits the scene or no one is left to stand in his way.

A recommended read in the areas of technology and corporate history.

On The Future Of Work

I recently finished reading The Future of Work – Attract New Talent, Build Better Leaders, and Create a Competitive Organization – by Jacob Morgan. As the author summarizes in his opening: “Many organizations around the world today are in trouble. The world of work is changing around them while they remain stagnant. The larger the gap grows the greater the chance becomes that these organizations will not survive. However, organizations shouldn’t just want to survive they must want to thrive and be competitive in a new rapidly changing world. To do this requires pioneering change, not waiting for tragedy or for a crisis to force change. The future workforce is bringing new attitudes and ways of work to which managers must adapt. This means that organizations must adapt to both employees and managers and, as of now, this is happening at a snail’s pace, if at all. This is a book about adapting to that change.”

On the five trends shaping the future of work:

1. New behaviors 2. Technology 3. Millennials 4. Mobility 5. Globalization

On the seven principles of the future employee:

• Have a flexible work environment where they can work anytime and anywhere. • Be able to shape and define their own career paths instead of having them predefined for them. • Share information internally in an open and transparent way in real-time. • Have the opportunity to become leaders without having to be managers. • Collaborate and communicate in new ways. • Shift from being knowledge workers to learning workers. • Learn and teach at-will.

From knowledge worker to learner worker:

The world is changing so quickly that by the time new college students graduate, much of what they have learned is far less relevant and in many cases just obsolete. This means knowledge and experience are no longer the primary commodity. Instead, what is far more valuable is to have the ability to learn and to apply those learnings into new and unique scenarios. It’s no longer about what you know, it’s about how you can learn and adapt.

On vital qualities for future employees:

Self-Direction and Autonomy, Filter and Focus, Embrace Change, Amazing Communication Skills, Learning to Learn

On the Ten Principles of the future manager:

Must be a leader. Follow from the front. Understand technology. Lead by example. Embrace vulnerability. Believe in sharing and collective intelligence. Challenge convention and be a fire starter. Practice real-time recognition and feedback. Be conscious of personal boundaries. Adapt to the future employee.

On many people still want structure:

An article published by Susan H. Greenberg on the Stanford Graduate School of Businessblog on August 1, 2012 called, “Building Organizations That Work”2 summarized the findings of the report: Hierarchies are easier for people to grasp than egalitarian relationships because their asymmetries create “end points’ that facilitate memorization; they are predictable; and they are familiar, beginning with our very first social interaction—the parent-child relationship.

On fourteen principles of the future organization:

• Have employees work in globally distributed yet smaller teams. • Become intrapreneurial. • Create a connected workforce. • Operate like a smaller company. • Focus on creating a place of “want” instead of a place of “need.’ • Adapt to change faster. • Innovate anywhere, all the time. • Build ecosystems. • Run in the cloud. • See more women in senior management roles. • Be “flatter.’ • Tell stories. • Democratize learning. • Shift from profit to prosperity. • Adapt to the future employee and the future manager. • Become globally distributed with smaller teams.

On competitor-driven innovation:

The extent of knowledge and innovation used to depend on the organization itself, or more specifically, a few people within the organization. This is no longer enough to maintain a competitive advantage. The future organization must build knowledge ecosystems in the five groups mentioned earlier in order to thrive. Each group can bring a unique perspective and value proposition.

On the 12 habits of highly collaborative organizations:

1. Focus on individual value before corporate value. 2. Strategy always comes before technology. 3. Learn to get out of the way. 4. Lead by example. 5. Listen to the voice of the employee. 6. Integrate into the flow of work. 7. Create a supportive environment. 8. Measure what matters. 9. Be persistent. 10. Adapt and evolve. 11. Understand that employee collaboration also benefits the customer. 12. Accept that collaboration makes the world a better place.

On the six-step process for adapting to the future of work:

1. Challenge assumptions. 2. Create a team to help lead the effort. 3. Define your “future of work.’ 4. Communicate your “future of work. 5. Experiment and empower employees to take action. 6. Implement broad-based change.

A recommended read in the area of organizational management.

American Icon

American Icon: Alan Mulally and the Fight to Save Ford Motor Company by Bryce G. Hoffman has been on my reading list for quite some time, particularly for the high rating this book had received and my interest in cars. I finally had a chance to read it and despite the high expectations I had of this book, it exceeded them both in terms of content and delivery.

Below are the highlights from this book.

The backdrop of the american car industry in late 20th century:

Ford may have been the company that put the world on wheels, invented the moving assembly line, and created the industrial middle class, but its glory days were long past. Together with General Motors Corporation and Chrysler Corporation, it had been a powerful engine of prosperity in postwar America…That era of easy profit created a culture of entitlement in Detroit that afflicted management and labor alike – inflating salaries, wages, and benefits until they became the envy of the world. Success was viewed as a birthright, not something that had to be fought for and won. As the Big Three’s share of the market had shrunk, they had not. At least not fast enough. They all had too many factories, too many workers, and too many dealers. Generous union contracts negotiated in better times had created enormous legacy costs that their foreign rivals did not have to bear. And none of the American companies had the stomach for the radical reforms that were now necessary just to stay in business. Wall Street had begun a deathwatch, waiting to see which of the Big Three would fail first. Most of the money was on Ford, which had become infamous for lackluster designs, poor quality, and managerial infighting.

Ford itself had some additional challenges of its own:

While many of Ford Motor Company’s problems were shared by the rest of Detroit, the Dearborn automaker also faced some challenges all its own. Ford’s woes had not begun with of the Japanese in the 1960s or the oil crises of the 1970s. The company had been struggling with itself since Henry Ford started it on June 16,1903. It invested massively in game-changing products, and then did nothing to keep them competitive. It allowed cults of personality to form around larger-than-life leaders, but drove away the talent needed to support them. And it allowed a caustic corporate culture to eat away at the company from the inside. These were birth defects that could be traced back to the automaker’s earliest days. Henry Ford liked to boast that he had created the modern world. In many ways, he had. But he also created a company that was its own worst enemy.

Bill Ford who was CEO knew it was time for a big change in leadership of the company was to be saved:

Hockaday commended Ford for having the self-awareness and the lack of ego to admit that, but he gently suggested that Ford needed something more than a new COO. Bill agreed: The time had come to find a CEO who could save Ford from itself…Though he knew it was coming, Hockaday thought Bill Ford’s speech to the directors was one of the most moving he had ever heard in a boardroom. No one ascends to the top of a major corporation without a healthy ego, but those in the automobile industry we’re oversized even by Fortune 500 standards. It took a big man to admit that he could not save his company, particularly when his name was on the side of the building. In other rooms in Detroit, other CEOs were adamantly refusing? to admit defeat. They would stubbornly cling to power and take their companies down with them. Bill Ford cared too much about Ford to let that happen in Dearborn.

Alan Mulally was the man that was chosen for the task:

The Seattle Times called him “Mr. Nice Guy.” Mulally’s lack of pre-tension was evident in his dealings with other people. At formal events, he showed little interest in the rich and powerful, preferring to mingle with those less interested in comparing resumes or other measurables. He asked more questions than he answered and seemed genuinely interested in what people had to say, be they world leader or waitresses. Mulally made a point of remembering something about everyone he met and would often astonish underlings by recalling some scrap of information about their lives they had shared with him months or years before. He was also big on hugs, and had even been known to plant pecks on the cheeks of both men and women when he was in a particularly exuberant mood. All of this made Mulally adored by subordinates. It also kept his rivals off balance. They could never quite figure out how much of it was an act. And Mulally liked to keep it that way.

Despite being and unconventional choice:

The conventional wisdom in Detroit held that outsiders were incapable of understanding the complexities of the automobile business. Bill Ford’s decision to hire an aeronautical engineer to save his car company spawned plenty of jokes during those early weeks. There was a lot of snickering about flying cars and the return of tail fins. “He has no idea how we do things in Detroit” was the common refrain at Ford’s crosstown rivals, as well as within Ford itself And Mulally knew it. They’re right. I don’t know how they do things in Detroit, he thought. But I do know it doesn’t work.

Mulally had a unique management style that he shared and communicated with his team from the beginning:

Mulally called their attention to a list of rules posted on the wall. There were ten of them: • People first • Everyone is included • Compelling vision • Clear performance goals • One plan • Facts and data • Propose a plan, “find-a-way” attitude • Respect, listen, help, and appreciate each other • Emotional resilience … trust the process • Have fun … enjoy the journey and each other

Listening was a key part of his philosophy, even from his competitors:

As he was leaving, Mulally told Wagoner he would like to be able to call him in the future if he had more questions. He was just trying to be polite, but Wagoner took it as another sign of weakness. He would later claim publicly that Mulally had sought his help as he e struggled to understand the industry in those early days. The truth was, Wagoner had been played so well he did not even notice.

He had a clear vision, even for what Ford would look like after he leaves – his legacy:

The Plan…Mulally also looked to Ford’s past for inspiration…Alan Legacy: • Clear, compelling vision going forward •Survive the perfect Storm—commodities, oil, credit, CO2, safety, UAW • Develop a profitable growth plan, global products and product Strategy • A skilled and motivated team • Reliable ongoing BPR process • A leader and leadership team with “One Ford” vision implementation tenacity

An example of, luck favors the prepared mind:

Did Ford see the credit crisis coming? Certainly not the full magnitude of it. But it is clear that Ford knew the game was changing and had the foresight to get as much cash as it could before it was too late. Other automakers would not prove so prescient. In the end, they would have to borrow their money not from the big Wall Street banks, but from the American people. Ford’s financing deal would allow it to survive without a government bailout. If Bill Ford had not convinced his family to stake everything, the Fords likely would have lost control of the company entirely. A few months later, such a deal would have been impossible for any American automaker. A year later, even the most profitable companies in the world would have been unable to borrow half that amount.

Alan never lost touch with what the business was really about – engaging with customers and making a difference in their lives through vehicles:

It would not be the last time Mulally played at being a car sales man. This was a way for him to see firsthand how Ford’s customers approached its cars and trucks. But it also generated a huge amount of goodwill for the company. Everybody who met Mulally walked away an ambassador for Ford. He had that effect on people.

He knew that a successful relationship with the Union of Automotive Workers was paramount to success and worked hard on nurturing it:

Even in the face of this increasing animosity between the UAW and Detroit’s Big Three, Ford managed to maintain a better relationship with the union. Ford family members often dealt directly with UAW officials, even during the period when there was no Ford in the chairman’s seat. None of the company’s factories had been struck since 1976. But even Ford could not get the concessions it needed to be competitive with the growing number of foreign transplants setting up factories of their own in the southern United States…Mulally took a step toward Gettelfinger and looked him in the eye. “We want to prove that we can do this in America,” he said solemnly. “Ron, will you hold hands with me.? We’ll do this together, and we’ll go out there and say we did this together. We’re going to be able to make products in America and make them profitably and successfully. Or, we’ll just go out there and tell everybody it was too hard. We just couldn’t do it. It’s up to you.” Gettelfinger did not hesitate.

Alan kept refining his vision and rallying the company around it:

Beneath the first, Mulally spelled out his vision for the company: People working together as a lean, global enterprise for automotive leadership, as measured by: Customer, Employee, Dealer, Investor, Supplier, Union/Council, and Community Satisfaction

During the crisis, it was not just about being defensive, it was about the offense – accelerating the transformation with the new product lines:

Accelerating Kuzak’s product time line would require a heroic effort on the part of Ford’s designers and engineers. It would also require other departments to cut deeper. It was a testament to how much Mulally had changed the culture inside the Glass House that they were willing to do so. Fields expressed this new spirit in a speech to his troops that summer “I know this is really a kick in the teeth, but this is not Ford Motor Company not delivering—this is the external environment. This is an egalitarian knock to the industry, and what’s going to separate the winners from the losers is how those companies approach this setback,” he said. “It’s easy to be a victim. It’s harder to say we’re going to take this and we’re going to make lemonade out of lemons.”

While Ford was in a better position than some of its competitors during the financial crisis their were some inter-dependencies within the industry that it had to actively manage with them and with the government:

Both Toyota and Honda were just as concerned as Ford about the impact that the failure of CM or Chrysler could have on their suppliers, as well as about the growing number of parts producers who were already in trouble. When they heard about Ford’s effort to support its suppliers, they wanted in. So Brown forged a tripartite alliance with Ford’s archrivals to prevent a cascading collapse of the entire automobile industry.

Ford was now engaged in a delicate balancing act, trying to convince consumers and investors that it was in better shape than its crosstown competitors while at the same time trying to persuade Washington that it was just as deserving of help. When Mulally was asked why Ford needed taxpayer assistance if it was not in dire financial straits, he said Ford would need help if either GM or Chrysler failed. “It’s just prudent to be prepared together. There’s a lot of issues that we’re all dealing with,” he said. “We are very interdependent, and we’re all dependent on the U.S. economy. If any one of us gets in trouble in a big way, then that’s going to have major ramifications for the entire value stream for the suppliers, for the (automakers), for the dealers.”

The strategy of forgoing the bailout paid off for Ford:

Sales remained depressed, but Ford continued to outperform the market and gain share…The board was pleased. The directors had hoped that Ford would get credit for forgoing a bailout, but none of them expected the decision to generate as much goodwill for the company as it did…The decision to pass on a bailout was a big part of that, but it would have mattered little if the company’s showrooms were still filled with the same old boring products. Fortunately for Ford, transports stacked with new vehicles like the redesigned Fusion and Fusion Hybrid were pulling into dealer lots just as customers decided that the company was worth another look. Once again. Ford’s timing was perfect.

Alan throughout this entire period ensured the team maintained focus on improving Ford’s financials:

Mulally’s focus was now on improving Ford’s balance sheet and beginning the long, slow march out of junk bond territory. The terms of Ford’s massive 2006 financing deal stipulated that all the assets it had pledged to secure those loans would be released once its revolving line of credit was paid off and two of the three major agencies restored the company’s credit rating to investment grade.

For those who down-play Ford’s come back:

There are some who will point to the loans Ford received from the U.S. Department of Energy and the money it borrowed from the U.S. Federal Reserve and say the company did take taxpayer dollars. This is true, but in this sense, so did the rest of the major automakers —and not just the American companies. Japanese and German manufacturers benefited from these programs as well, in addition to receiving support from their own governments. But these were loan programs set up to address systemic problems beyond these companies’ control.

And Alan’s key role in that:

While many of the pieces of Ford’s turnaround were already in place, the company’s own culture was preventing them from being implemented with the speed and scope necessary to effect real change…But Ford would have run out of time and money before it got to where it needed to be if Mulally had not been there to put the pedal to the metal…Mulally ripped off the bandage, cauterized the wound, and cured the disease. Only an outsider could do that. But not just any outsider: It had to be someone who understood the complexities of global manufacturing, labor relations, and heavily engineered products…His disciplined approach cut through the company’s caustic culture and forced everyone to march in the same direction…He taught the other executives how to make decisions based on data instead of boardroom politics. And once he had, most of the decisions that saved Ford were made by the team as a whole.

The keys to Alan’s success in his words:

“What I have learned is the power of a compelling vision, a comprehensive strategy, a relentless implementation process, and talented people working together based on those commitments,” he told me during our last interview for this book, in May 2011. “We laid out a plan, and for four and a half years, we have been relentlessly implementing that plan.”…”You’ve got to trust the process. You need to trust and nurture your emotional resilience,”

Another key, was Bill’s – the chairman – unwavering support:

It was not just Bill Ford’s willingness to step aside and make way for Mulally that helped save the company. It was also his unceasing effort to give him the time, the space, and the resources he needed for his revolution to succeed. Without that, Mulally may well have become just another victim of a company and a culture that seemed impervious to change.

A reminder though that a true test of great leadership is the ability of an organization to sustain itself after the leader leaves:

The ultimate test of Mulally’s revolution will be its ability to endure his absence. Boeing has suffered major setbacks since Mulally left Seattle in 2006. Insiders say that is because his successors have failed to maintain the processes Mulally put in place to guarantee success. When asked if the same thing could happen at Ford, Mulally says simply that he has given Ford the tools it needs to prosper. What the company does with them after he retires is beyond his control. Ford’s history is a long list of stunning successes followed by epic failures, of against-all-odds comebacks that turn into retreats back into mediocrity and mismanagement. But there are important differences this time that augur well for Ford’s future.

On a concluding note:

Henry Ford once said, “A business that makes nothing but money is a poor kind of business.” Ford Motor Company has certainly made a great deal of money since Alan Mulally started there in 2006. But it has also made people believe that the highest principles of American enterprise —ingenuity, innovation, and integrity—have not deserted us entirely. In an economic era marked by avarice and greed, Mulally’s Ford has demonstrated that a company can still succeed by building a good product and selling it at a fair price. As the big Wall Street banks tried to hide their mounting failures, Mulally was exposing Ford’s shortcomings and challenging his company to overcome them. Wall Street’s obfuscation and trickery would ultimately drag the entire world into the Great Recession. With Mulally’s relentless determination to succeed. Ford would defy that downturn and once again become an engine of prosperity. From the day he arrived in Dearborn, Mulally said he was fighting for the soul of American manufacturing. If Ford had failed, a little bit of America would have died, too. But Ford did not fail. Under Mulally’s leadership, it showed the entire world that at least one American automaker could pick itself up, shake off the rust, compete with the best in the business, and win.

A highly compelling, highly valuable and recommended read on leadership, management and corporate transformation as well as on the automotive industry.

On Confessions Of A Successful CIO

This week, I have the pleasure to review Confessions Of A Successful CIO – How the Best CIOs Tackle Their Toughest Business Challenges, the latest work by my colleagues Dan Roberts and Brian P. Watson. Dan first told me about this book on an earlier call in March, and since then I was intrigued and looking forward to reading it and hearing about the stories to be shared within it.

This book retells the stories of nine exceptional CIOs as they navigated their organizations through business transformations. While the story of each CIO varied, five common themes did emerge:

Bet the farm. These leaders are not afraid to take on the big risks. They’re not afraid to pitch the big ideas, because they know they can speak the language and justify the investment.

Answer the call. These leaders stepped up when they were called to action—oftentimes to help save their companies’ futures. This requires a confidence in their abilities, and in their own experiences, that not every leader has.

People come first. These leaders understand the value their people bring to their organization. They don’t treat them like a number or an interchangeable part.

Decisiveness makes all the difference. Despite their human side, these leaders understand that they need to make tough decisions that affect not only their people but also their company’s health.

Results matter. These leaders don’t do pie-in-the-sky research and development or implement the latest bright, shiny objects without knowing the business case and the long-term business value. They’re more focused on enabling and improving the business and on driving the all-important metrics that do that.

Here are some key lessons that I wanted to share from the CIO passages:

THE ANTICIPATOR: FILIPPO PASSERINl

On turning bad situations into opportunities:

He turned a bad situation into a positive one, and now he drills that ethic into the heads of everyone in his GBS organization. “It’s more than fixing the issue. It’s not about playing an even game. If you are 1-0, to use soccer language, it’s not only about how to get to 1-1, but how can you win the game?” Passerini said. “When we have an issue, we always think not just how to fix it, but how to turn a negative perception of a system problem or change management into a success story. This is another element, from a cultural standpoint, that is so critical.”

On transparency:

“Tough love is important. I learned it’s so crucial to give people full transparency about what is happening,” Passerini said. “There is always a dilemma about how much you tell employees when you have a new idea, early on, because it may generate more questions and concerns than benefits. We have come to the conclusion that we share everything immediately … things may not always materialize, but we want our people to know that if it doesn’t work, we will change again and do something different.”

Three inquisitive questions to ask before undertaking a major initiative:

Passerini—adapting guidelines Lafley established for P&G executives in his “playing to win” philosophy—asks three major questions of his team before undertaking a major initiative. The first is, what right does the organization have to win?…The second is, what needs to happen for the initiative to generate that business value?…The third is the most important: What can go wrong?

On the importance of humility:

To Passerini, relevance needs to come with a certain degree of humility. He emphasizes to his team to not act like know-it-all, but to also have the confidence to accept more responsibility and the self-assurance to propose innovative ideas to the business.

THE ROCKET SCIENTIST: REBECCA RHOADS 

On the importance of alignment:

“We started with the commitment around company-wide common processes,” Rhoads said. “Rather than going out into the company as an IT function and selling it as the IT solution, we were all aligned from a business perspective first. That allowed the IT organization to partner with every function and every aspect—all of which were also going through transformation.” All of this was taking place with the very active sponsorship of CEO Swanson, she explained. The vision was to build a business model that was not only immediately rewarding but also enduring. The vision was to take the long view.

On the importance of embracing a shared vision:

“You need to have a team that shares your vision. But then the team has to make your vision theirs’ Rhoads said. “And when they make your vision their vision, now you’re off and running. If that’s not happening, then the change isn’t happening.” Still, when Rhoads was asked if the change management or culture clash was akin to a wall, she paused—but what she said next neatly embodies her leadership style and her way of viewing challenges. “I’m not sure it always looked like a wall,” she said. “Maybe that’s it—I just don’t see it that way, so I don’t approach it that way.”

On the importance of maintaining self-confidence during the journey:

The people who put you in that job had all the confidence in the world in you. They’re asking you to take on a lot,” Rhoads said. “Maybe they’re stretching you in the role, but they’re not losing confidence, and you just have to recognize that it’s going to be difficult, it’s going to be messy—the stuff in the foxhole is not what you expected. But the last thing you need to do is start to get weak-kneed and lose confidence in your ability.”

THE FIXER: STEVE BANDROWCZAK 

On the struggle against mediocrity and the fight for mastery:

And he reasserts his intolerance for mediocrity every chance he gets. Every day he tells his team they need to be better than their competitors. If they stack themselves up against the competition—in everything from quoting cycle times to receivables to capital returns—and see that they’re lacking, as Bandrowczak says, a change opportunity presents itself. And if they can master those areas and beat the other industry players, his team gets better by default.

On the delivery trifecta:

Bandrowczak also takes issue with CIOs and business leaders griping about the difficulties in prioritizing key projects. For him, it comes back to a few simple elements: the right portfolio, the right staff, and the right resources. If you don’t have those things—or can’t figure out how to understand them or access them—you’re in trouble.

THE CONDUCTOR: LYNDEN TENNISON

On strategies for combating team fatigue during multi-year initiatives:

After tackling the fear and uncertainty existing in the legacy team. Tennison also had to watch another potential issue: fatigue. Every veteran IT professional knows the stress and exhaustion that comes with working on multiyear, multiphase projects. You’ll see progress, but after a while, it just feels like running on a treadmill. So Tennison focused on two remedies. The first was a time-tested management tactic. He rotated people—including his direct reports— in and out of different positions, both inside the IT organization and out. “We gave them some new air to breathe,” he said. The second went to his core strategy for Net Control—and one that many CIOs play very differently. Tennison kept the team focused on the discrete deliverables they mapped for the fill project, not on one big-bang initiative.

THE DECIDER: WAYNE SHURTS

On the importance of learning from failure:

Right after the sales project went south, Shurts began taking stock of what went wrong. And that was one of the first and most important lessons he learned. Instead of focusing on what’s right in your plan, Shurts said, you have to be “relentless” in determining what’s wrong, and what might not work. Things will go wrong on any project—the key is to pay close attention to detail and understand that the plan you put on paper will likely be different than what’s really going to work in the field.

On the constant need for validating commercial sponsorship of projects:

Superfusion had devolved into just an IT project—not a business transformation initiative. There were chronic delays with no end in sight. Few thought it would work…In his second week as CIO, Shurts went around the room, asking the company’s senior leaders why they were still doing Superfusion. No one could give him a credible answer. In his sixth week, he pulled the plug.

On the dangers of aiming for perfection:

“Rather than designing for the rule and accommodating the exception, they were designing everything to be perfect, perfect. perfect,” he said. “So we came out and said, ‘Something better today— especially at Supervalu—was worth far more than something perfect a year from now.'”

THE REALIST: DON IMHOLZ

Guidance on outsourcing:

“The right way to do it is first, strategy, then financial analysis, and then pick your partner. If you do that, I think things will work fine,” Imholz said. “I’m not all-in one way or the other—I’m not all-in saying everything should be inside, or that you should outsource the majority of it.” Regardless, companies will continue to face challenges. And they’ll make mistakes. One of the biggest mistakes Imholz sees companies make is “to try to outsource a problem”—in other words, farming out an under-performing element of the IT operation. “That’s the wrong way to go about it,” he said. “If you can’t manage something reasonably well, then you’re not going to do terribly well outsourcing it, because management responsibility doesn’t go away.” If you’re going to outsource a problem, Imholz said, fix it first.

THE INNOVATOR: GREG SCHWARTZ

On the need for innovation to be executed to deliver true value:

When he talks to budding CIOs, he gets a lot of questions about innovation. His take: innovation for innovation’s sake doesn’t mean much if the operational discipline isn’t there. It’s all about executing.

On the role of IT as an enabler of The Business Strategy:

Schwartz is emphatic about his organization’s role as an enabler of the business. “IT doesn’t own the strategy—that falls to our business partners,” Schwartz said. “But if you’re an enabler, you can influence and guide and show what’s possible and be effective change agents.”

 

I will conclude this post with the brilliant reminder by Susan Cramm, from the forward of the book:

Leading with technology is, first and foremost, about leadership. While there is no one-size-fits-all road to success, great leaders, like the ones profiled within this book, are marked by a unique set of qualities: passion and drive to make a positive difference, the ability to engage others to chart the future and define the path, and the paradoxical ability to maintain optimism and perseverance through difficult circumstances. With courageous and disciplined leadership as the foundation, the other factor that distinguishes these leaders is a level of technology smarts that is only born from experience. Technology-smart leaders know how to identify fin the words of one of the CIOs profiled here) the “art of the possible” amid the complex assortment of desired outcomes, existing capabilities and complexities, and various resources—technical and organizational—that can be applied to the transformational journey.

A recommended read for any IT leader.

 

The Shipping Container Revolution

In late December 2013, Bill Gates posted a list of his Best Books of 2013, and featured The Box by Marc Levinson as one of his selections:

You might think you don’t want to read a whole book about shipping containers. And Levinson is pretty self-aware about what an unusual topic he chose. But he makes a good case that the move to containerized shipping had an enormous impact on the global economy and changed the way the world does business. And he turns it into a very readable narrative. I won’t look at a cargo ship in quite the same way again.

His recommendation intrigued me to order this book, read it and share with you.

As with any innovation, the ascent of containerization was faced with fierce opposition:

Powerful labor leaders pulled out all the stops to block its ascent, triggering strikes in dozens of harbors. Some ports spent heavily to promote it, while others spent huge sums for traditional piers and warehouses in the vain hope that the container would prove a passing fad. Governments reacted with confusion, trying to figure out how to capture its benefits without disturbing the profits, jobs, and social arrangements that were tied to the status quo. Even seemingly simple matters, such as the design of the steel fitting that allows almost any crane in any port to lift almost any container, were settled only after years of contention. In the end, it took a major war, the United States’ painful campaign in Vietnam, to prove the merit of this revolutionary approach to moving freight.

The impact of containerization was not merely one of more economic transport, it had deeper reaching impact on logistics and enabled other innovations such as just-in-time manufacturing:

Transport efficiencies, though, hardly begin to capture the economic impact of containerization. The container not only lowered freight bills, it saved time. Quicker handling and less time in storage translated to faster transit from manufacturer to customer, reducing the cost of financing inventories sitting unproductively on railway sidings or in pierside warehouses awaiting a ship. The container, combined with the computer, made it practical for companies like Toyota and Honda to develop just-in-time manufacturing, in which a supplier makes the goods its customer wants only as the customer needs them and then ships them, in containers, to arrive at a specified time. Such precision, unimaginable before the container, has led to massive reductions in manufacturers’ inventories and correspondingly huge cost savings. Retailers have applied those same lessons, using careful logistics management to squeeze out billions of dollars of costs.

Containerization also developed a strong feedback loop with global trade growth. The more efficient transport became, the more the volume of international trade rose.

Some scholars have argued that reductions in transport costs are at best marginal improvements that have had negligible effects on trade flows. This book disputes that view. In the decade after the container first came into international use, in 1966, the volume of international trade in manufactured goods grew more than twice as fast as the volume of global manufacturing production, and two and a half times as fast as global economic output. Something was accelerating the growth of trade even though the economic expansion that normally stimulates trade was weak. Something was driving a vast increase in international commerce in manufactured goods even though oil shocks were making the world economy sluggish. While attributing the vast changes in the world economy to a single cause would be foolhardy, we should not dismiss out of hand the possibility that the extremely sharp drop in freight costs played a major role in increasing the integration of the global economy.

Another consequence of containerization and perhaps the deepest reaching, is as an enabler of globalization – more specifically decoupling of economic activity from national boundaries:

The third intellectual stream feeding into this book is the connection between transportation costs and economic geography, the question of who makes what where…Globalization, the diffusion of economic activity without regard for national boundaries, is the logical end point of this process. As transport costs fall to extremely low levels, producers move from high-wage to low-wage countries, eventually causing wage levels in all countries to converge. These geographic shifts can occur quickly and suddenly, leaving long-standing industrial infrastructure underutilized or abandoned as economic activity moves on.

Marc recounts the history of the shipping container, first, the environment at the time, was ripe for the picking:

Shippers wanted cheaper transport, less pilferage, less damage, and lower insurance rates. Shipowners wanted to build bigger vessels, but only if they could spend more time at sea, earning revenue, and less time in port. Truckers wanted to be able to deliver to and pick up from the docks without hour upon hour of waiting. Business interests in port cities were praying for almost anything that would boost traffic through their harbors. Yet despite all the demands for change, and despite much experimentation, most of the industry’s efforts to improve productivity centered on such timeworn ideas as making drafts heavier so that longshoremen would have to work harder. No one had found a better way to ease the gridlock on the docks.

As is the case with many innovations, this one was primarily driven by an outsider to the industry – Malcom McLean:

The solution came from an outsider who had no experience with ships…McLean reconsidered his plan. He had realized that carrying trailers on ships was inefficient: the wheels beneath each trailer would waste a lot of precious shipboard space. Pondering that problem, McLean came up with a still more radical idea. A government maritime-promotion program made leftover World War II tankers available to ship lines very cheaply. Pan-Atlantic would buy two and convert them to haul truck trailer bodies—trailers detached from their steel beds, axles, and wheels. Subtracting the frames and wheels would reduce the space occupied by each trailer by one-third. Even better, the trailer bodies could be stacked, whereas trailers with wheels could not be. As McLean envisioned it, a truck would pull the trailer alongside the ship, where the trailer body, filled with twenty tons of freight, would be detached from its steel chassis and fitted aboard ship. At the other end of the voyage, the trailer body would be lowered onto an empty chassis and hauled to its destination…The concept that became container shipping was Malcom McLean’s…McLean understood that reducing the cost of shipping goods required not just a metal box but an entire new way of handling freight. Every part of the system—ports, ships, cranes, storage facilities, trucks, trains, and the operations of the shippers themselves—would have to change. In that understanding, he was years ahead of almost everyone else in the transportation industry. His insights ushered in change so dramatic that even the experts at the International Container Bureau, people who had been pushing containers for decades, were astonished at what he had wrought. As one of that organization’s leaders confessed later, “we did not understand that at that time a revolution was taking place in the U.S.A”.

Then came the creative destruction – that is the innovation of the shipping container:

By the middle of the 1970s, the New York docks were mostly a memoryThe revolutionary changes in cargo handling had far more dire implications for off-dock workers in transportation and distribution. Between 1964 and 1976, the number of trucking and warehousing workers rose nationally, but the number in New York fell sharply after 1970. With fewer vessels calling at New York City, fewer trucks were needed to deliver and collect cargo at the piers. Transit warehouses were abandoned or put to far less labor-intensive uses, such as parking…The changes in transport costs induced by containerization hit manufacturing, too, eliminating not only factory-floor jobs but also related trucking and distribution work as plants moved out of New York…There can be no doubt, however, that containerization eliminated one of the key reasons for operating a factory in New York City: ease of shipment…The container was not the sole cause of the surprising and painful economic changes of the 1960s and 1970s, but it was an important cause. Container technology developed far more quickly and affected transportation industries far more significantly than even its most ardent proponents had imagined. New York was only the first established shipping center whose economy would be transformed in ways that were unimaginable before the container arrived on the scene.

Which left some tough questions to be answered, as far as how displaced workers should be treated/compensated:

Despite these discontents, the longshore unions’ tenacious resistance to automation appeared to establish the principle that long-term workers deserved to be treated humanely as businesses embraced innovations that would eliminate their jobs. That principle was ultimately accepted in very few parts of the American economy and was never codified in law. Years of bargaining by two very different union leaders made the longshore industry a rare exception, in which employers that profited from automation were forced to share the benefits with the individuals whose work was automated away.

For this innovation to be universally adopted, some conformity was required. It wasn’t until some standardization for containers was introduced, that international container shipping took off:

Yet after 1966, as truckers, ship lines, railroads, container manufacturers, and governments reached compromises on issue after issue, a fundamental change could be seen in the shipping world. The plethora of container shapes and sizes that had blocked the development of containerization in 1965 gave way to the standard sizes approved internationally. Leasing companies began to feel confident investing large sums in containers and moved into the field in a big way, soon owning more boxes than the ship lines themselves…Finally, it was becoming possible to fill a container with freight in Kansas City with a high degree of confidence that almost any trucks, trains, ports, and ships would be able to move it smoothly all the way to Kuala Lumpur. International container shipping could now become a reality.

On the domestic end, it was not until containers were transported by trucks or train that adoption took off:

Most big shippers had no pressing need to use coastal shipping services, whether containerized or not. They used ocean freight for exporting or importing—but only a handful of containers were being carried on international ships. Most freight shipments were domestic, going cross-country by truck or train. Not until container technology affected land-based transportation costs would the container revolution take firm hold.

As the industry matured, so did the associated costs of maintaining the required infrastructure, leading to higher concentrations on specific ports:

These two unrelated developments—the rise of New York, the neglect of Tampa and Mobile—revealed the economics that would affect seaports as container shipping grew. For ports, capturing container traffic was going to be expensive, requiring investments out of all proportion to what had come before. For ship lines, the days when vessels meandered along the coast, calling at every port in search of cargo, would soon be over. Every stop would mean tying up an expensive containership that could generate revenue and profit only when it was on the move. Only ports that could be relied upon for large amounts of freight were worth a visit, and all others would be served by truck or barge.

Eventually, and as with any rising industry, growth gave in to a bust, and to a new reality of depressed margins. This lead to further consolidation within the industry (note the modern parallel to the airline industry):

Demand, robust through it was, could not possibly keep up with this explosion of supply. The result was a new and painful experience for the shipping industry: a rate war. Overcapacity was an old story in ocean shipping. The flow of cargo had always been volatile, based on economic growth, changes in tariffs and trade restrictions, and political factors such as wars and embargoes…Far fewer independent companies were left, and they had no illusions about the future. Rate wars would obviously be a permanent feature of the container shipping industry, recurring every time the world economy turned down or ship lines expanded their fleets. Shippers would pay according to the distance their containers traveled, regardless of the weight or the nature of the contents, and in difficult times rates would dip so low that carriers would barely cover their operating costs. Ship lines would be under constant pressure to build bigger ships and faster cranes to reduce the cost of handling each container, because at some point overcapacity would return, and when rates collapsed the carrier with the lowest cost would have the best chance of survival.

The deregulation in the 80s both on land and sea, helped pave the way for further cost reductions for the consumer:

Deregulation changed everything. In two separate laws passed in 1980, Congress freed interstate truckers to carry almost anything almost anywhere at whatever rates they could negotiate. The ICC lost its role approving rail rates, except for a few commodities such as coal and chemicals…Perhaps no part of the freight industry was altered more than the container shipping. The ability to sign long-term contracts gave railroads an incentive to develop a business that had languished for two decades, with assurance that their investment would not go to waste….Rail rates fell so steeply that by 1987, more than one-third of the containers headed from Asia to the U.S. East Coast crossed the United States by rail to international trade had given way…The Shipping Act of 1984 rewrote the rules governing international shipping through U.S. ports. Shippers could now sign long-term contracts with ship lines. In return for guaranteeing a minimum amount of cargo, a shipper could negotiate a low rate and specific terms of service, such as the frequency of ships…Shippers’ newfound power put enormous downward pressure on freight rates.

Containerization played and continues to pay a significant role in changing companies’ strategies particularly as it relates to vertical integration and supply chain management:

As freight costs plummeted starting in the late 1970s and as the rapid exchange of cargo from one transportation carrier to another became routine, manufacturers discovered that they no longer needed to do everything themselves. They could contract with other companies for raw materials and components. locking in supplies, and then sign transportation contracts to assure that their inputs would arrive when needed. Integrated production yielded to disintegrated production. Each supplier, specializing in a narrow range of products, could take advantage of the latest technological developments in its industry and gain economies of scale in its particular product lines.

While the primary lesson from The Box is one on innovation, Marc also conveys another more subtle lesson in this book on the unpredictability of the impact the shipping container has had when it was first conceived:

How innovation really works is certainly one of the lessons of The Box, but for me there is another that looms even larger: the role of unintended consequences. Economists, myself included, are in the business of predicting events; we like to think that we can analyze what has happened and draw insight into what will occur in the days to come. Business school students take a similar approach, learning to apply quantitative analysis to historical data in order to draw conclusions about the future. In the business world, this way of looking at the world through a spreadsheet is treated as modern management thinking. It’s the bread and butter of some of the world’s most famous, and expensive, consulting firms. The story of containerization attests to the limits of this sort of rational analysis, for the developments recounted in The Box turned out not at all as expected…Absolutely no one anticipated that containerization would open the way to vast changes in where and how goods are manufactured, that it would provide a major impetus to transport deregulation, or that it would help integrate East Asia into a world economy that previously had centered on the North Atlantic.

Along the same lines, hindsight is 20/20, but at the time it was nearly impossible to predict the colossal impact the shipping container has had on modern economy:

The history of the shipping container is humbling. Careful planning and thorough analysis have their place, but they provide little guidance in the face of abrupt changes that alter an industry’s very fundamentals. Flexibility is a virtue in such a situation. Resistance can be a vice, but so can a rush to action. In this kind of situation “expect the unexpected” may be as good a motto as any…That simple metal box was what we today label a disruptive technology. Even now, more than half a century after it came into use, it continues to affect our world in unexpected ways.

On a closing note:

Perhaps the most remarkable fact about the remarkable history of the box is that time and again, even the most knowledgeable experts misjudged the course of events. The container proved to be such a dynamic force that almost nothing it touched was left unchanged, and those changes often were not as predicted.

The Box is a must read in the areas of innovation, logistics and trade. Looking back it is astounding to learn how the shipping container has and continues to have such an impact on driving our modern economy. Within the container’s history, there are numerous innovation lessons that are transferable and just as applicable in today’s setting across the various industries.

On Unleashing The Power Of IT

I just finished reading the book Unleashing The Power Of IT – Bringing People, Business, and Technology Together by my colleague Dan Roberts at Ouellette and Associates. Dan had generously and graciously offered me a copy of this book.

Below are key excerpts from the books that I found to be particularly insightful:

1) “But still, I firmly believe that IT organizations can be well positioned to compete as their companies’ value-added provider of choice—if and only //they’re ready to take a hard look at themselves and make some changes, both in regard to how they approach their work and the personal skill set they consider essential to tackling the demands of an ever-changing business environment. The bottom line is that the IT professional of the past won’t cut it in today’s corporate world.”

2) “Five Critical Success Factors That Enable IT Organizational Excellence…Leadership: Positively Influence and Inspire Others…Strategy: Establish the Right Game Plan for Your Organization…People: Hire and Professionally Develop Your Winning Team…Best Practices: Select and Customize Them to Fit Your Organization…Execution: Translate Your Strategy, Goals, and Initiatives into Specific Action Plans That Deliver Measurable Results.”

3) “In summary, leaders need to do the following in hiring and professional development: -Instill leadership competencies and behaviors. -Select people with the right skills and experiences that align with the position qualifications to execute the technology strategy. -Build leadership bench strength. -Embrace performance measurement and best practice methodologies that shape behaviors into desired results. -Learn how to select the right employees the first time. -Identify professional development programs that deliver sustainable results through phased-in learning, accountability mechanisms, and coaching. -Recognize that employee interpersonal competency and skill development is mandatory.”

4) “The Commitment Component of Change: ♦ Compliance vs. Commitment ♦ Changing Minds ♦ Understanding Resistance ♦ Emotional Cycles of Change…The Community Component of Change: ♦ Change Leadership ♦ Key Roles in the Change Process ♦ Transition Structures ♦ Network of Resources…The Clarity Component of Change ♦ Case for Change ♦ Urgency for Change ♦Capacity for Change ♦ Readiness Assessment ♦ Impact of Change…The Communication Component of Change: ♦ Mission and Vision ♦ Rich, Detailed Pictures ♦ Levels and Outcomes ♦ Build Your Tool Kit ♦ Communication Plan”

5) “Whether or not your staff believes it, the best way to build client loyalty is not by proving IT’s technology prowess but by building a service strategy that enables internal IT to be seen as a top provider of service. In fact, a well-developed and well-communicated service strategy is critical in today’s IT organizations. Clients demand service to be immediate and proactive, and if they don’t get it internally, they’ll find it elsewhere, by hiring either their own staff or external vendors. Indeed, good service is no longer just something that’s nice to have; it’s the make-or-break factor that determines whether clients choose internal IT or someone else to deliver the solutions they need.”

6) “IT leaders need to help all members of the IT staff develop a new mind-set 50 foster the transition of their organizations into a service-oriented culture. Here are three skills I teach in my workshops to evolve the participants’ mind-set toward a service-oriented culture. Developing a “We” Mentality…Learning to Love Complaints…1. Thank the client for making the complaint…2. Gather more information…3. Apologize for the circumstances…4. Ask how you can help…Making Every Interaction Count.”

7) “If you map out all the moments of truth that clients experience with the IT organization and assess what their experience is like through those interactions, you’ll have a good idea of your organization’s level of service and where it needs to improve. This can range from voice tone and body language to a grander scale, like revamping all your forms or streamlining your web site interface.”

8) “The big secret to managing expectations is the ability to understand what the client’s expectation is in the first place. That might sound really obvious, but IT organizations are often afraid to ask this question because they are concerned they won’t meet it. However, it’s impossible to meet an expectation that’s unknown. After understanding the client’s expectations, the next step is to stop focusing on what you can’t do and gear your mind to what you can do…There seems to be an awkwardness (almost an embarrassment) when IT manages expectations. However, I like to remind people I work with that clients are very used to this behavior from external vendors.”

9) “Here are the general characteristics that clients expect to see in a consultant: ■ Confidence in his or her own capabilities without arrogance ■ Enthusiasm and complete engagement during the project ■ Accessibility and responsiveness ■Knowledge about the client’s line of business and a willingness to learn more ■ Dedication to the client’s best interests”

10) “The more empathetic you are, the more you demonstrate to the client that you understand his or her reality. That creates the confidence that you’ll be able to work through future issues constructively…But being an effective consultant isn’t about the right answer. If other’s can’t hear what you have to say because of how you deliver the message. you have lost your ability to influence. Delivery is everything. If I have an important point to make, the other person is much more likely to hear me if I have been equally interested in his or her perspective. How I demonstrate that respect is empathy. In most conversations, that can be a simple paraphrase or acknowledgment of the other person’s idea first, before I add my two cents.”

11) “It’s my belief that to succeed in the IT profession today, all of IT—including IT leaders and the people who report to them—must get past their aversion to negotiating and learn how to manage the conflict that’s an inevitable part of their everyday lives. The good news is that good negotiators aren’t born; they’re taught. In fact, for a long time, I’ve strongly believed that IT professionals could do a better job negotiating if they learned about interest negotiations rather than better job negotiating if they learned about interest negotiations rather than using position negotiations.”

12) “Positions limit negotiations because there’s not a lot to negotiate over, and they create linear situations, with the participants starting at extreme endpoints and then moving along the continuum to some point at which both agree to agree…By talking about interests, the scope of potential negotiating possibilities increases dramatically. The two of them now can generate a list of options based on the different interests they have just stated…That’s because interests define each party’s real needs, wants, or concern. Interests are broader than and can be very different from stated positions. When you understand your own interests as well as those of the other party, you can spend your time developing possible options, not fighting over small concessions about one item.”

13) “Becoming politically savvy doesn’t come naturally. IT leaders need to develop skills—both personally and among their staffs—that will increase political awareness and make the IT organization successful at navigating through politically churned-up waters. Here are some of the key skills required. Creativity…Interpersonal…Effectiveness…Communication…Focus…Interests…Flexibility…Trust …Support…Conflict Management.”

14) “I purposely use the word lead rather than manage or control. Leadership extends both the client’s and the project manager’s sphere of influence beyond the mere administration of a project. Leadership by the client enables the project’s objective. It raises the stakes, legitimizes the need, and changes the effort from a game to a cause. One of the most powerful motivators for IT professionals is the opportunity to make a real difference in the business. It’s truly regrettable that so few business clients take advantage of this powerful secret to project success. Leadership by the project manager emboldens the actions of the team. Project teams thrive on being allowed (or empowered) to be creative, to experience the excitement of discovery, to enjoy a sense of real accomplishment, and to have fun while doing great things. A good project manager can lead a project team to places it could never be driven to…One final point about motivation: It is not something a project manager does to the team members. Rather, it’s something the team members do for themselves. Motivation is a door that is locked from the inside. The best a project manager can do is create a climate that enables and encourages good work. The vast majority of IT professionals I’ve met in my career want to do a good job. It’s truly unfortunate that too many of them are forced into situations that discourage, inhibit, and occasionally even penalize their best efforts. The key is to manipulate the environment, not the people.”

15) “You’ll know you have a high-performance, gelled team when you see the following characteristics: A shared elevating vision or goal A strong sense of team identity ■ Mutual trust ■ The interdependence of team members ■ Open and effective communication ■ A sense of autonomy ■ Low turrnover ■ Joint ownership of the product ■ A high level of obvious enjoyment”

16) “There are three primary reasons that companies look outside the internal IT organization for technology services: cost control, the desire to focus on core competencies, and supply-demand fluctuation. Very often, however, when I ask clients why they’re outsourcing, they don’t know what the goals are. And even when they do know, they’re not using metrics that tell them whether they’re meeting those goals. The vast majority of people I encounter say they’re outsourcing to control costs, yet only about half use cost as a metric. So it’s important to understand why you’re outsourcing, in the context of the corporate strategy.”

17) “The formulation of the IT organization’s image as the service provider of choice k one of the most important factors for a successful IT cultural transformation…For all these reasons, IT needs to market internally; to increase its credibility, build partnerships, and turn around any negative perceptions. This marketing is not about hype and empty promises; it’s about creating an awareness of IT’s value. It’s about changing client perceptions by presenting a clear, consistent message about the value of IT. After all, if you don’t market yourself, someone else will, and you might not like the image you end up with…So the first step is marketing to the IT organization that marketing is a good thing. This can be done in a number of ways, but the most effective is to let your IT staff know how important this is to your success and help the staff feel accountable for marketing. To elicit positive marketing behaviors from the entire IT team, IT leaders need to tie the marketing mind-set to measurements that provide incentive and reward.”

18) “How do you know when you’ve succeeded with your marketing efforts? What are the indicators of a good marketing plan? The first is to define up front what will determine success rather than waiting until the end. You need to know before you begin what you want to happen as a result of your efforts. Other indicators are the following: Your clients are requesting that IT be more involved in their business such as inviting you to business planning and strategy meetings or having you review and influence their technology decisions. ■ Your budget requests are being met without your having to constantly justify your existence and contributions. ■ Your current clients are referring others to you, or you can imagine your clients saying, “Hey, IT really helped us out,” rather than “Oh, those IT people!” ■ Requests for your assistance are becoming more focused and more in line with the products and services you actually provide. ■ You are getting unsolicited positive feedback, both formal and informal, from your clients and senior management. ■ Morale in the IT department is high. ■ IT is being included in merger and acquisition negotiations and due diligence. ■ IT is being included in meetings and sales processes with big C-level clients.”

19) “”Trust,” Davis proclaimed, “is something you receive for meeting or exceeding client expectations while being empathetic and understanding to institutional, departmental, and individual desires.””

20) “The 12 Core Competencies: 1) Influencing Others 2) Enabling Change 3) Leadership 4) Strategic Focus 5) Communication 6) Collaboration 7) Organizational Understanding 8) Problem Solving 9) Business Acumen 10) Project Management 11) Technical Understanding 12) Client Orientation ”

Regards,

Omar Halabieh

On Switch

I recently finished reading Switch – How To Change Things When Change Is Hard By Chip Heath and Dan Heath.

Below are  key excerpts from the book that I found particularly insightful:

1) “What looks like a people problem is often a situation problem.”

2) “Now you’ve had a glimpse of the basic three-part framework we will unpack in this book, one that can guide you in any situation where you need to change behavior: 1) Direct the Rider. What looks like resistance is often a lack of clarity. So provide crystal-clear direction. 2) Motivate the Elephant. What looks like laziness is often exhaustion. The Rider can’t get his way by force for very long. So it’s critical that you engage people’s emotional side—get their Elephants on the path and cooperative. 3) Shape the Path. What looks like a people problem is often a situation problem. We call the situation (including the surrounding environment) the “Path.” When you shape the Path, you make change more likely, no matter what’s happening with the Rider and Elephant.”

3) “The Miracle Question doesn’t ask you to describe the miracle itself; it asks you to identify the tangible signs that the miracle happened…Once they’ve helped patients identify specific and vivid signs of progress, they pivot to a second question, which is perhaps even more important. It’s the Exception Question: “When was the last time you saw a little bit of the miracle, even just for a short time?””

4) “Big problems are rarely solved with commensurately big solutions. Instead, they are most often solved by a sequence of small solutions, sometimes over weeks, sometimes over decades. And this asymmetry is why the Rider’s predilection for analysis can backfire so easily. When the Rider analyzes a problem, he seeks a solution that befits the scale of it. If the Rider spots a hole, he wants to fill it, and if he’s got a round hole with a 24-inch diameter, he’s gonna go looking for a 24-inch peg. But that mental model is wrong.”

5) “Ambiguity is the enemy. Any successful change requires a translation of ambiguous goals into concrete behaviors. In short, to make a switch, you need to script the critical moves.”

6) “In creating change, though, we we’re interested in goals that are closer at hand—the kinds of things that can be tackled by parents or middle managers or social activists. We want a goal that can be tackled in months or years, not decades. We want what we might call a destination postcard—a vivid picture from the near-term future that shows what could be possible.”

7) “The Rider’s strengths are substantial, and his flaws can be mitigated. When you appeal to the Rider inside yourself or inside others you are trying to influence, your game plan should be simple…First, follow the bright spots…Next, give direction to the Rider.”

8) “Kotter and Cohen observed that, in almost all successful change efforts, the sequence of change is not ANALYZE-THINK-CHANGE, but rather SEE-FEEL-CHANGE. You’re presented with evidence that makes you feel something. It might be a disturbing look at the problem, or a hopeful glimpse of the solution, or a sobering reflection of your current habits, but regardless, it’s something that hits you at the emotional level. It’s something that speaks to the Elephant.”

9) ” Most of the big problems we encounter in organizations or society are ambiguous and evolving. They don’t look like burning platform situations, where we need people to buckle down and execute a hard but well-understood game plan. To solve bigger, more ambiguous problems, we need to encourage open minds, creativity, and hope.”

10) ” In the identity model of decision making, we essentially ask ourselves three questions when we have a decision to make: Who am I? What kind of situation is this? What would someone like me do in this situation? Notice what’s missing: any calculation of costs and benefits. The identity model explains the way most people vote, which contradicts our notion of the “self-interested voter.””

11) “That’s the paradox of the growth mindset. Although it seems to draw attention to failure, and in fact encourages us to seek out failure, it is unflaggingly optimistic. We will struggle, we will fail we will be knocked down—but throughout, well get better, and we’ll succeed in the end.”

12) “Change isn’t an event; it’s a process. There is no moment when a monkey learns to skateboard; there’s a process. There is no moment when a. a child learns to walk; there’s a process. And there won’t be a moment when your community starts to invest more in its school system, or starts recycling more, or starts to beautify its public spaces; there will be a process. To lead a process requires persistence. A long journey requires lots of mango.”

Regards,

Omar Halabieh

Switch

On Blue Ocean Strategy

I recently finished reading Blue Ocean Strategy – How to Create Uncontested Market Space and Make the Competition Irrelevant by W. Chan Kim and Renee Mauborgne.

Below are key excerpts that I found particularly insightful:

1- “Blue oceans, in contrast, are defined by untapped market space, demand creation, and the opportunity for highly profitable growth. Although some blue oceans are created well beyond existing industry boundaries, most are created from within red oceans by expanding existing industry boundaries, as Cirque du Soleil did. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set.”

2- “However, there is little practical guidance on how to create them. Without analytic frameworks to create blue oceans and principles to effectively manage risk, creating blue oceans has remained wishful thinking that is seen as too risky for managers to pursue as strategy. This book provides practical frameworks and analytics for the systematic pursuit and capture of blue oceans.”

3- “Consistent with this observation, our study shows that the strategic move, and not the company or the industry, is the right unit of analysis for explaining the creation of blue oceans and sustained high performance. A strategic move is the set of managerial actions and decisions involved in making a major market-creating business offering.”

4- “The creators of blue oceans, surprisingly, didn’t use the competition as their benchmark. Instead, they followed a different strategic logic that we call value innovation. Value innovation is the cornerstone of blue ocean strategy. We call it value innovation because instead of focusing on beating the competition, you focus on making the competition irrelevant by creating a leap in value for buyers and your company, thereby opening up new and uncontested market space.”

5- “To fundamentally shift the strategy canvas of an industry, you must begin by reorienting your strategic focus from competitors to alternatives, and from customers to noncustomers of the industry.^ To pursue both value and cost, you should resist the old logic of benchmarking competitors in the existing field and choosing between differentiation and cost leadership.”

6- “To reconstruct buyer value elements in crafting a new value curve, we have developed the four actions framework…Which of the factors that the industry takes for granted should be eliminated! Which factors should be reduced well below the industry’s standard? Which factors should be raised well above the industry’s standard? Which factors should be created that the industry has never offered?”

7- “The first principle of blue ocean strategy is to reconstruct market boundaries to break from the competition and create blue oceans…Path 1: Look Across Alternative Industries…Path 2: Look Across Strategic Groups Within Industries…Path 3: Look Across the Chain of Buyers…Path 4: Look Across Complementary Product and Service Offerings…Path 5: Look Across Functional or Emotional Appeal to Buyers…Path 6: Look Across Time.”

8- “To maximize the size of their blue oceans, companies need to take a reverse course. Instead of concentrating on customers, they need to look to noncustomers. And instead of focusing on customer differences, they need to build on powerful commonalities in what buyers value. That allows companies to reach beyond existing demand to unlock a new mass of customers that did not exist before.”

9- “Companies need to build their blue ocean strategy in the sequence of buyer utility, price, cost, and adoption.”

10- “Companies, like individuals, often have a tough time translating thought into action whether in red or blue oceans. But compared with red ocean strategy, blue ocean strategy represents a significant departure from the status quo. It hinges on a shift from convergence to divergence in value curves at lower costs. That raises the execution bar. Managers have assured us that the challenge is steep. They face four hurdles. One is cognitive: waking employees up to the need for a strategic shift. Red oceans may not be the paths to future profitable growth, but they feel comfortable to people and may have even served an organization well until now, so why rock the boat? The second hurdle is limited resources. The greater the shift in strategy, the greater it is assumed are the resources needed to execute it. But resources were being cut, and not raised, in many of the organizations we studied. Third is motivation. How do you motivate key players to move fast and tenaciously to carry out a break from the status quo? That will take years, and managers don’t have that kind of time. The final hurdle is politics. As one manager put it, “In our organization you get shot down before you stand up.””

11- “Key to winning over your detractors or devils is knowing all their likely angles of attack and building up counterarguments backed by irrefutable facts and reason.”

12- “To change the mass it focuses on transforming the extremes: the people, acts, and activities that exercise a disproportionate influence on performance. By transforming the extremes, tipping point leaders are able to change the core fast and at low cost to execute their new strategy.”

13- “Because blue and red oceans have always coexisted however, practical reality demands that companies succeed in both oceans and master the strategies for both. But because companies already understand how to compete in red oceans, what they need to 1 learn is how to make the competition irrelevant. This book aims too help balance the scales so that formulating and executing blue ocean strategy can become as systematic and actionable as competing in the red oceans of known market space.”

Regards,

Omar Halabieh

Blue Ocean Strategy

On Blind Spot

I recently finished reading Blind Spot – A Leader’s Guide To IT-Enabled Business Transformation by Charlie Feld.

Charlie defines the title as: ” A blind spot can be described as a subject that is obscure or unintelligible to otherwise sharp and intelligent people.  Information technology (IT), unfortunately is that kind of subject to many business leaders. I say “unfortunately” because IT can either enable or disable an enterprise to sustain vibrancy and success in the 21st century. ” He then goes on to introduce the main premise of the book: ” This book describes a framework that I have developed and improved over the last 30 years with a variety of organizations, including Frito-Lay, Burlington Northern Santa Fe, Delta Air Lines, Home Depot, and Southwest Airlines. This framework consists of four planks that form a platform for change and five phases that pace the execution over several years. Together they create a journey. The beauty of this framework is that it demystifies technology to the non-experts among us, is simple, and—like most principle-based approaches—is durable through the eras and across industries.”

Below are key excerpts from the book that I found particularly insightful:

1- “My belief is that information technology should not be viewed as a complex functional area. It is an integrating discipline that enables the other functions to operate as a seamless, well-run business.”

2- “The impetus to start making big changes in the midst of turbulent times like these may seem counterintuitive. However, right now you have what may constitute a once-in-a-lifetime license to make dramatic change. The economic downturn has created a global referendum for change, and you hold the keys to change in your organization.”

3- “I realized then that the HOW alone will never drive change in an organization. The WHY and the WHAT must also be powerful and compelling.”

4- “The WHY change (WHY do anything?). This plank gives the platform durability. It more than anything else will enable the organization to mobilize, make investments, set priorities,take risks, and sustain the effort throughout the transformation. It is the business imperative that must be articulated by the executive team, or there is no point in launching a major transformation. Crafting the WHY is the responsibility of the executive leadership team (including the CIO).”

5- “Successful modern enterprises have created a new competitive model that deals with the “and” versus the “either/or.” These enterprises are simultaneously centralized for leverage. operational excellence, and global consistency—and decentralized for insightful decision-making, innovation, and speed.”

6- “It may seem counterintuitive, but the more standardized your systems and processes are, the more flexible you can be.”

7- “Many IT investments fail or fall short because they are positioned as IT projects, when in reality they are business-change initiatives that require IT enablement. This is particularly true when you are defining the WHY change and WHAT your business architecture should be.”

8- “Plan big and implement in small chunks. That, when combined, will dramatically change the customer experience and productivity end to end. Watch for this pattern because it is the best formula for sustainable success, absorption. and affordability.”

9- “The HOW to change (HOW will we do it?). This is the pathway Tom your current model to your future model, and it is where the heavy lifting comes in for both the business and the IT organization. To be successful, the following three principles within the HOW (discussed in detail in this chapter) must be adhered to; HOW Principle I: Define and design a business, application, and technology blueprint and architecture before you begin investment and construction. HOW Principle II: Enforce a “Common Way” for development and quality engineering. HOW Principle III: Be disciplined in your approach to program and project management.”

10- “It helps you understand what you are buying, your investment risk tolerance, the level of quality you consider to be good enough, the timeline and sequencing you require—how you will phase it, where you will start, and more. You just cannot simply leave it to the electricians and the plumbers to make these decisions for you.”

11- “The most successful answer from top-performing IT organizations is to build a culture of delivery. In a delivery culture, hands-on managers lead their teams. Project administrators. human resource generalists, and financial analysts support the teams during the lifecycle of a project. They do not control the agenda, nor are they accountable for the outcomes. Top-tier technicians, architects, and leaders participate in the tollgate sessions and project reviews. These are meant to be productive, working meetings that are non-punitive and owned by the leaders of the organization.”

12- “The WHO (WHO will lead and manage the change?) This is the last plank in the platform. You will see my personal bias revealed in this chapter because, although I believe all of the planks are important, the human aspect makes the real difference! This chapter outlines the key human-resource principles required for sustained successes, including: WHO Principle I: Organization Matters WHO Principle II: Leadership Matters • WHO Principle III: Culture Matters WHO Principle IV: Performance Matters Ml of these human-resource principles matter whether you outsource, smartsource, or go it alone.”

13- “If there’s one thing I’ve learned over the years, it’s that spending most of your time as a leader on the talent dimension is the difference between winning and losing at this sport. Every organization that gets IT right is good at this dimension.”

14- “The first skill required for great leadership is pattern recognition. In essence, this is the ability to see underlying relationships and get at the meaning beneath the surface. Leaders with this skill can distinguish the important factors in a situation from the noise. demonstrate this insight to their colleagues through discussions and decisions, and craft a compelling story of the organizations challenges and opportunities…Having set the agenda, you have to sell your ideas and have the credibility that you can pull it off. Over the years, I have debated with management-development professionals about the difference between skills, competencies, qualities, and other such labels. My reaction has been to not care so much about classifications, but to instead focus on describing what a leader is and why leadership is critical. Character has been the most elusive—it’s hard to explain, but you know it when it is there. Leaders must show personal character. This means doing and saying what’s right, not just what is expedient or what others want to hear—even if it’s at substantial personal risk…The final leadership skill within this category is influence and persuasion. I am convinced that in the next few years, the importance of influence and persuasion skills for leaders will only grow…Only by persuading others to support your course can you move the organization in the right direction on a sustained basis…All of the above—building the agenda and the foundation— are critical pregame activities because the goal of every leader should be to have an impact. However, even teams with great skills and high levels of dedication can fail to have an impact because of their inability to form successful partnerships with their stakeholders, act decisively, or stay focused.”

15- “However, once you have set a course, leaders need to be resilient and solutions oriented. When there are problems—as there inevitably are—leaders will need to emphasize solutions rather than hurdles. When you are engaged in game-changing initiatives, you’re the one who needs to develop new approaches to work over, around. and through obstacles and setbacks. No matter how—or how much—you plan, in the end most great things are accomplished by resilient organizations.”

16- “A high-performing team needs trust, hope, enjoyment, and opportunity.”

Regards,

Omar Halabieh

Blind Spot