Want to succeed? Avoid these 9 traps

Posted on October 7, 2007

Want to succeed? Avoid these 9 traps
Robert J Herbold

Success leads to the damaging behaviors of a lack of urgency, a proud and protective attitude, and entitlement thinking. This leads to the tendency to institutionalize legacy thinking and practices. Essentially, you believe that what enabled you to become successful will enable you to be successful forever.

After reviewing this problem in many companies, I believe there are nine dangerous traps into which successful people and organizations often stumble.

Trap 1: NEGLECT
Sticking with Yesterday’s Business Model

By business model, I mean what you do and how you do it. It includes such issues as deciding what industry you will be competing in and what approaches you will use in carrying out all the processes necessary to compete in that industry. Will we manufacture something or contract it out? How will we sell our products or services?

Do we go through retail channels? How should we organize our sales force? Which segments of the industry do we want to ignore, and which do we want to compete in? What is the structure of our support staff? Which parts of the organization do we out source? What are our approaches to distribution and inventory management? What are the cost targets of the various components of the organization, like information technology costs and human resources costs? Does our model leave us satisfied with our gross margins, profit margins, and other such figures?

Organizations should be consistently reviewing all aspects of their business model, looking for areas that are weak and need to be overhauled. By weak, we mean out of date, too costly, too slow, or not flexible. In which areas of the business model are you at parity? In those areas, are there any bright ideas on how to achieve a competitive advantage?

TRAP 2: PRIDE

Allowing Your Products to Become Outdated

You may be super proud of your product or service today, but you have to assume that it is going to become inferior to the competition very soon. You need to hustle ad beat your competition to that better mousetrap, and you need to do it over and over.

The amazing thing about success is that it leads to a subconscious entitlement mentality that cause you to believe that you no longer need to do all the dirty work of getting out and studying consumer behavior in details, analyzing different sales approaches, jumping on the latest technology to generate improved products, and everything else that is required to stay ahead. The attitude is often one of believing that you have done all of that and have figured it out, and now things are going to be fine.

Until the early 1970s, typewriters were used to prepare documents. The IBM Selectric model was the standard. Then along came Wang Laboratories’ word processor in 1976, providing a completely new approach. It displayed text on a cathode ray tube (CRT) screen that was connected to a central processing unit (CPU). In fact, you could connect many such screens to that CPU in order to handle many different users. Wang’s device incorporated virtually every fundamental characteristic of word processors as we know them today, and the phrase word processor rapidly came to refer to CRT-based Wang machines. Then, in the early to mid-1980s, the personal computer emerged. Wang saw it coming but made no attempt to modify its software for a personal computer. PC-based word processors like WordPerfect and Microsoft Word became the rage, and Wang died. Wang fell into the trap of not updating its products, even though it basically invented the word processor industry.

We saw this behavior very clearly with the General Motors example. Its cars, while highly distinctive back in the 1970s, were allowed over time to look more and more alike, and the excitement factor for the customer disappeared.

TRAP 3: BOREDOM

Clinging to Your Once-Successful Branding after It Becomes Stale and Dull

Constantly achieving uniquencss and distinctiveness for a brand and also keeping it fresh and contemporary is hard work. Once a brand achieves some success, the tendency is to sit back and pat yourself on the back, allowing your brand to become dull and ordinary.

The Plymouth automobile was introduced by Chrysler for the 1928 model year as a direct competitor to Ford and Chevrolet. It was a sturdy and durable car that attracted a legion of loyal owners. Plymouth became one of the low-priced three from Detroit and was usually number three in sales, just behind Ford and Chevrolet. For almost two decades, Plymouth sold almost 750,000 cars per year and had a solid brand reputation in the low price range of being reliable but having a bit more flair than Chevrolet or Ford. Older readers may remember the 1957 Plymouth with the huge fins, as well as its Road Runner (beep beep!) model. Plymouth had a very clear brand positioning.

In the 1960s, the Plymouth brand began to lose its uniqueness. Chrysler decided to reposition the Dodge, reducing its price so that it was quite close to Plymouth’s. Chrysler came out with low-priced compact and intermediate-size models under both the Plymouth trademark and the Dodge trademark. By 1982, Dodge, was outselling Plymouth. Throughout the late 1980s and the 1990s, Plymouth offered nothing unique. Sales continued to decline, while Dodge was quite healthy. In 1999 Chrysler announced that the Plymouth brand would be discontinued. The lesson is simple: when you allow brands to get stale, they die.

TRAP 4: COMPLEXITY

Ignoring Your Business Processes as They Become Cumbersome and Complicated

Successful organizations often reward themselves by adding more and more people and allowing processes to become fragmented and nonstandardized. This is often done under banner of refining the management of the business. It is also caused by business units and subsidiaries seeking more autonomy, which leads them to develop their own processes and staff resources. Before you know it, getting any kind of change made is very complicated.

Over and over again you read stories about organizations experiencing weak financial results, then finally coming to grips with the problem, laying off thousands of people and simplifying the organization.

We saw in our Toyota case study how aggressive that company is at constantly improving each and every process. Keeping that mindset of constant improvement is very difficult. Success usually leads to a decrease in the intensity with which you tackle such challenges. Also, success leads to a belief that since we are doing so well, we probably need to reward the people in the organization who are asking for their own building and lots of extra people to get them to the next level. Importunely, all those extra costs often lead to bloated processes and further fragmentation of how work gets done.

TRAP 5: BLOAT

Rationalizing Your Loss of Speed and Agility

Successful organisations and individuals tend to crate complexity. They hire a lot of extra people, since clearly things are going well, and those people find things to do, often creating layers of bureaucracy, duplicating capabilities that already exist in the organization, and making it very hard to react quickly to change.

Getting an organization to constantly think about retaining simplicity and flexibility is not easy. The account given in the previous chapter of Toyota’s Global Body Line is a good example of doing it right. Toyota thought about agility ahead of time, and when it came time to build a brand-new car, such as the Prius, it didn’t have to build a new plant or a new line. This enabled Toyota to get to market fast and save tens of millions of dollars compared with traditional approaches.

TRAP 6: MEDIOCRITY

Condoning Poor Performance and Letting Your Star Employees Languish

When organizations are successful, they have a tendency to stop doing the hard things, and dealing with poor performance is a really hard thing. It also becomes hard to move new people into existing jobs, because there is the burden of getting the new person up to speed and the perception that you are losing valuable expertise. Also, the really strong performers and to get ignored. Consequently, what happens in many successful organizations is that people are left in their jobs too long and poor performance is not dealt with as crisply as it should be. Unfortunately, this also leads to strong players not being constantly challenged.

Successful organizations are especially vulnerable to this trap, since companies that achieve success often have high morale and pride. And who wants to spoil the fun by dealing with the tough personnel issues, which is an onerous task for most managers? Any excuse to put it aside will be embraced.

TRAP 7: LETHARGY

Getting Lulled into a Culture of Comfort, Casualness, and Confidence

Success, and the resulting tendency to become complacent, often leads organizations and individuals to believe that they are very talented, have figured things out, have the answers to all the questions, and no longer need to get their hands dirty in the trenches. They lose their sense of urgency � the feeling that trouble might be just around the corner.

Considering our case studies on GM and Toyota, the contrast between their cultures is really striking. GM seems to exude pride and an attitude of “we are the real pro in the industry,” while Toyota has a more humble personality that is all about constant improvement.

The leader of a group really sets the tone on this cultural complacency issue. The tendency is to become very proud of your success and protective of the approaches that got you there. It is those very tendencies that lead to an insular, confidence culture that makes people believe that they are on the wining team, while in reality, the world is probably passing them by.

TRAP 8: TIMIDITY

Not Confronting Turf Wars, Infighting, and Obstructionists

Success often leads to the hiring of too many people and the fragmentation of the organization. Business units and subsidiaries work hard to be as independent as possible, often creating groups that duplicate central resources. Staff groups fragment as similar groups emerge in the different business units. Before long, turf wars and infighting emerge, as who is responsible for what becomes vague.

Even worse, the culture gets very insular, with an excessive focus on things like who got promoted, why am I not getting rewarded properly, and a ton of other petty issues that sap the energy of the organization.

Another source of turf wars and infighting is lack of a clear direction for the organization and slow decision making on critical issues. When these kinds of management deficiencies occur, people are left to drift and end up pulling in different directions. That often leads to tremendous amounts of wasted time as groups argue to have it their way.

TRAP 9: CONFUSION

Unwittingly Providing Schizopherenic Communications

When an organization is success or stable, its managers often fall into the trap of not making it clear where the organization is going from there. Sometimes this is because they don’t know, but they don’t admit that, and they don’t try to get the company’s direction resolved. They do everything they can to keep all option open, with no clear effort to get decisions made and a plan developed. Such behaviors lead to speculation by the troops, based on comments that they pick up over time. Often those comments are offhand remarks that the leaders have not thought through. Or the troops hear conflicting statements coming form a variety of folks in leadership positions in the organization.

When employees receive confusing and conflicting messages and don’t have a clear picture of where the organization is gong or whether progress is being made, they feel vulnerable and get very protective of their current activities. In late 1991, IBM’s CEO,John Akes, announced that in the future, IBM would look more like a holding company and that “clearly it’s not to IBM’s advantage to be 100 per cent owners of each of IBM’s product lines.”

During the next 12 months, everybody was trying to figure out what he meant. And IBM made no attempt to start publishing separate financial information by product line in preparation for possible spin-offs. IBM also ignored Wall Street’s suggestion that it create separate financial entries, with their own stock exchange symbols, for the products that were to be spun off. Employees and investors were confused. The IBM board of directors finally ended the drama in early 1993, announcing that Akers was leaving and a new CEO would be hired quickly. From 1987 to 1993, IBM shareholders lost $77 billion of market value.

Communications from the head of the organization, be it a small group or an IBM, are critical. People want to know where they are headed and how things are going. When the words and actions don’t match, confusion reigns.

In the remaining parts of this book, I will discuss these traps in detail. In each part, I will give detailed examples of companies and individuals that in some cases have been hurt and in other cases have avoided these problems. My objective in each part is to provide specific actions that people can take to avoid the particular trap, or to rid themselves of the problem.

Excerpted from:
Seduced by Success by Robert J Herbold.

Copyright 2007 by Robert Herbold. Price: Rs 495. Reprinted by permission of Tata McGraw Hill Publishing Company Limited. All rights reserved.

Robert J Herbold was hired by Bill Gates to be chief operating officer of Microsoft Corporation. During his seven years as COO of 1994 to 2001, Microsoft experienced a four-fold increase in revenue and a seven-fold increase in profits.

Why executives need to converse, through blogs

Posted on October 6, 2007

Why executives need to converse, through blogs

Ajay Jain

Biz Blogging — WORKS. It is of — MONUMENTAL IMPORTANCE.”
— Tom Peters, author of ‘In Search of Excellence’

How does a CEO engage with over 1,200 employees across 10 countries every working day? By writing to them daily. And the one person who has done this remarkably well is Rudy Karsan, chairman and CEO of Kenexa, a leading provider of employee hiring and retention solutions. And his mediums of communication are internal and external newsletters, and blogs.

And why does Mr Karsan write on his blog? “CEO stands for the only job with three bosses: Customers, Employees and Owners. One thus needs to develop a communications protocol for all three; and the larger a company becomes, the more efficient this process needs to get. When Kenexa started off 15-20 years back, I could talk to the small team anytime, anywhere. But as we grew and globalised, the number of locations and employees went up. And we realised the best way to touch them was through writing. I started a thought of the day, which could be the words of a famous person, or about what the company is doing, or my personal experiences besides other things. And these would wait on everyone’s desktops as if to say, Hello, how are you this morning?” he says.

Not just employees, CEOs and other executives may need to blog to engage with the other stakeholders in their business. These include shareholders, customers, vendors, analysts, media and regulatory authorities besides others. And this can no longer be about passive one-way communication — executives failing to be proactive risk losing out in the fiercely competitive marketplace. And this is where blogs come in. Just some examples of how blogs can be useful are:

~ Customers: Build a relationship of faith. Feedback, even if from a few customers, can serve as an early warning system.

~ Shareholders: Make them feel they are co-owners of the company. Let blogs be a direct channel of communication with the board. Benefits include saving stock prices from undergoing wild swings due to rumours or misinformation.

~ Human Resources: The most valued asset of a company, companies have to make that extra effort to attract and retain quality employees. A blog by senior management enables prospective employees understand what the company’s values and philosophy are — this message is often lost down the line of managers who may not always succeed in portraying the correct picture or with the same sincerity and passion.

~ Media: Help journalists with the latest news and insights. Blogs can also be a direct channel to stakeholders where media coverage is inadequate or incorrect. Companies like General Motors have benefited by blogs countering wrong media reports about a particular car being a flop.

~ Brand Promotion: The ‘Sunsilk Gang of Girls’ being a highly successful case, blogs have proven themselves to be a channel of creating excitement around brands.

“In today’s global economy, companies have to provide value to stakeholders around the mantra of ‘faster, cheaper, better’. As organisations strive to achieve this, they often lose sight of the smaller picture, ie, communicating with and keeping their employee base informed.

However, effective communication is a vital business tool for speeding up change and improving the quality and performance of any organisation. Handled correctly, it is a critical way of aligning, motivating and engaging employees. “I walk into any of our offices, and employees think they know me and connect with me even without ever having met me before. The writings are a reflection of the kind of organisation we are; it’s a way of showing our values. We are seen as a company with integrity and highly service focused with a culture of fun,” adds Karsan.

Some rules for successful blogging

Just creating a blog and writing on it may not be enough — one needs to adopt certain practices to make them really effective and not being seen as just a PR exercise. These include:

~ Industry leaders should not hesitate to present their views.

~ Be open, transparent and speak with passion and authority — your stakeholders will respect you for it and bond closer.

~ Allow stakeholders to comment; be open to negative comments. All comments are invaluable.

~ Counter negative comments with facts presented in a credible manner — don’t shirk away.

~ Have honest conversations; these lead to change and growth.

~ Write with discipline and consistency; stick to a schedule and don’t let the rhythm break.

All said and done

Besides the above, there are some more compelling reasons why executives need to blog. These include:

~ There is a communications revolution underway: From a controlled one-way model to an interactive one. Blogs are ideally suited to this.
~ Blogging helps build trust and relationships with stakeholders.
~ It is the cheapest communication channel available enabling companies to reach out to millions for a relatively small cost compared to other channels.
~ Blogs are easily findable on the net.
~ Relevant information spreads faster through blogs than a news service.
~ Blogs do not replace company websites!

In a time when many businesses have no exclusive patents or technical developments to offer, they need other differentiators to stay competitive. Interactive and effective communication can be the one to help companies survive.

“Blogs are enabling markets to converse again as people tell one another the truth about products and companies and their own desires” — from The Cluetrain Manifesto: The End of Business as Usual, a bestseller authored by Christopher Locke, Rick Levine, Doc Searls and David Weinberger.

This may well make the case of an executive blog.

Posted on October 6, 2007

Collaborate, not just compete

WHAT THEY DON`T TEACH YOU AT B-SCHOOL
B K Chaturvedi / New Delhi BUSINESS STANDARD October 2, 2007

While B-school education helped me realise some of my strengths as I stepped into the corporate world, I also felt somewhat inadequate.

It took some soul-searching to become aware of the areas where I was lacking. These areas had little to do with knowledge and more to do with skills and attitude.

This was many years ago, but I see B-school graduates still face such issues. It makes me feel that certain things are still not taught sufficiently at B-schools. Whether they can be taught or not is, of course, debatable. Let me share four gap areas:

Collaboration versus competition: Typically, management students are fiercely competitive and self-focused. But business organisations require a high degree of interdependence among workers.

Working in an organisation requires the willingness to help others to succeed, even without any tangible gain to oneself. However, the question “What is in it for me?” comes to most people’s minds. It took me time to get over this attitude.

Accepting uncertainties: Real life situations operate under higher uncertainty than what classroom discussions or cases can generate.

In times of uncertainty, I would look for perfect data to eliminate the uncertainty, but while I would be still searching, the situation would change, requiring new data. Such situations can be frustrating.

Often blame went to my superior for not giving me the complete picture. It was only later that I realised that business decision situations will always have uncertainties and there will be more variables around it than one can imagine, and that I need to accept them and do my best, rather than constantly fight them.

Living with ambiguities and organisational politics: Organisational politics and game-playing may sound unethical, but they are unavoidable. An “informational” organisation is always a part of a formal organisation.

Understanding informational organisation is important to influence the system. It is not sufficient to be right to get things done, it is also important to get to agreement on it, even if, at times, it means sub-optimisation. Consensus-building skills are not given much attention in B-schools.

B K Chaturvedi graduated from IIM, Ahmedabad, in 1971

If you don`t innovate, someone else will

Posted on October 6, 2007

`If you don`t innovate, someone else will`
Q&A/ Robert Tucker, President, The Innovation Resource

Govindkrishna Seshan / BUSINESS STANDARD Mumbai October 2, 2007

India is the 11th country on his agenda this year — and the diary’s still open. But Robert Tucker doesn’t find the constant travel exhausting. Instead, the corporate innovation guru uses the opportunity to study how innovation is being practised in different markets and then offers the examples as case studies.

A former professor at the University of California, Los Angeles, and now the president of California-based consulting firm The Innovation Resource, Tucker is the author of several bestselling books on the subject, including Winning the Innovation Game, Managing the Future and Driving Growth Through Innovation.

Recently in India to conduct a seminar on corporate innovation, Tucker spoke with Govindkrishna Seshan on how Indian companies need to stay ahead in the global innovation race. Excerpts:

How would you define innovation?

To me, innovation is the process of coming up with ideas and bringing them to life. Any time you come up with an idea and implement it, you have essentially innovated. Not all ideas are commercially viable but, nevertheless, they are innovations.

In business, the commercial viability of an innovation is of supreme importance. Companies don’t just need ideas, they need ideas that can make people see value. The idea you implement must make the consumer want to open his wallet and spend his money on your product.

Hence, in a corporate scenario, innovation to me is essentially of three types. Product innovations, like the i-Pod or Post-It notes. Process innovation, when you come up with a new process that reduces time or cost or makes you reach from point A to point B faster: Toyota and Tata are continuously making process innovations.

Then there’s strategy innovation, when you find a better way of serving your customer — Air Deccan, for instance. A couple of years ago it looked at low-cost airlines across the world, picked some of the best practices, and then made itself. Now, that’s an excellent example of strategy innovation.

Remember what I said about commercial viability? A couple of months ago, people in the US queued up outside stores to buy the i-Phone. Now, that’s innovation.

Does innovation have a greater role to play now?

Innovation today is ranked among the top three priorities on every CEO and manager’s list. Today, you see people working with laptops and cellphones, which, in five years, will be obsolete.

Around the world innovation is happening and it is happening fast. I was in Tel Aviv recently, where managers can operate store cameras and keep a check on their employees through their cellphones.

Similarly, a refrigeration truck can call its driver when the temperature inside starts rising. Now, these technologies can be used anywhere; there’s a global innovation race on. So innovation needs to be taken a lot more seriously.

The good news, however, is that several Indian companies are responding well to this challenge. And this has helped India achieve greater prominence on the global economic stage. Companies like Mahindra & Mahindra, the Tata group and Ranbaxy, in particular, have done well. When I last visited India, in 2003, the Tata group was valued at $12 billion, I read today that its net worth now is $63 billion.

What are these companies doing differently? How important is innovation in India?

India is a very young country. Youngsters are open to trying new products and are ready to spend. They demand new and improved products that enhance their lifestyles. Hence, companies here need to be innovative to survive.

What Indian companies have done right is… First, these companies are thinking globally: they don’t want to be the best in the market or best in the country; they want to be the best globally.

Second, they are speaking to their consumers in a more organised fashion. And last, the leadership in these organisations is very serious about building a culture of innovation. How does an organisation build a culture of innovation?

A company is the result of its ideas. When the leadership shows serious intent for innovation, it percolates to all levels and you build a culture of innovation. Behaviour that gets rewarded gets repeated.

So your managers need to reward people who are taking risks, people who are experimenting with ideas, people who are being creative and are attempting to do things better. When you reward such behaviour you are sure to create a culture of innovation.

People by nature are creative, but you as an organisation need to be able to tap it. Employees are either being creative at their work place or are going home to their sports, passions, interests and spending their creativity there.

Companies need to ask people to be creative, and praise employees who try things differently, irrespective of the outcome. I spend most of my day asking managers to stroke their chin and ask their teams politely if there is a better way to do what they are doing. Most managers never ask this question, or they ask it in a very confrontational manner.

Innovation seems to be restricted to technology and IT companies. Do consumer goods companies also need to innovate?

FMCG, too, has seen its innovation but large companies here are fighting for shares rather than creating markets. Also, many companies are facing strategic convergence, making their strategies similar and, hence, difficult for consumers to differentiate.

But that does not stop innovation: if you don’t innovate, somebody else will. Take Coca-Cola and Pepsi. While these companies fought on marketshare, somebody else went ahead and launched Red Bull and Gatorade. Both were extremely innovative products that quickly made huge markets for themselves.

What is the lifecycle of an innovation? Does it cease to be innovative once others copy it?

The microwave and the computer are still relevant innovations. But yes, the day it is copied, a company loses the competitive edge an innovation provides. So the time between your implementing an idea and it being copied by competitors is the real life span of an innovation.

But companies cannot sit idle after completing an innovation because then they will let others catch up. The idea is to keep moving and keep innovating so that by the time others copy plan A you have already moved to plan B.

If there are “good” innovations, there must be bad ones as well…

Ideas can be implemented badly or they may be not be commercially viable, but there is nothing called “bad” innovation. Many times, an idea may be just ahead of its time.

For instance, DuPont invented Kevlar, which is 10 times stronger than steel, many, many years ago. At the time tyre manufacturers, who were approached with the product, were not very keen. The product was not used for many years, until the company found new uses for it.

Today, Kevlar is used by people who work with glass, oyster-opening gloves are made of Kevlar, armies and police personnel around the world use Kevlar vests, embassies of many nations have Kevlar curtains draped on their walls… So Kevlar was not a bad innovation. It was just not used correctly.

Reliance Innovation Leadership Centre opened in Pune

Posted on October 6, 2007

Reliance Innovation Leadership Centre opened in Pune
5 Oct, 2007, 2240 hrs IST, PTI

MUMBAI: Reliance Industries (RIL) on Friday inaugurated an innovation centre in Pune which would drive the company’s “innovation agenda”.

Reliance Innovation Leadership Centre, inaugurated by RIL’s Chairman and Managing Director Mukesh Ambani, would be guided by an innovation council chaired by RIL board member R A Mashelkar.

The council would have global thinkers in the field of sicence, technology and innovation practioners as its members, RIL said in a statement.

The company also plans to set up a corporate research and technology centre in Navi Mumbai that would act as a hub for research centres operating at various manufacturing locations, it said.