The Intelligent Organization: process

Showing posts with label process. Show all posts

Friday, December 13, 2013

How Good Are Your Marketplace Insight Capabilities?

Since posting Insight is Where the Game is Won and Lost, many have asked "how can we assess our insights capabilities to identify where to focus?" Building on both internal work I did in the early 2000s, and an article published independently by Herring and Leavitt in 2011,* here is a framework you can use to quickly evaluate your organization's insights capabilities. There are five dimensions to rate your organization on (directions at the bottom):

Insights culture
Sources used to generate the information base to help create insights
Marketplace focus
Personnel
Early warning of emerging threats and opportunities

The organization's culture sets the tone for insights creation, which can address markets, customers, technology or competition. Initially reactive (Level 1), executives ask for data and task available personnel to gather information for a presentation or meeting, invariably sourced from easy-to-access published data, such as annual reports, existing market research or industry analyses. The initial focus is on traditional markets, customers, technology and competitors.

Soon, a frustrated executive or ambitious analyst determines that standardized profiles, newsletters and databases will improve organization awareness. Dedicated, often part-time individuals (becoming full-time as demand increases) standardize outputs, create delivery schedules and expand the fact base to include subscriptions to specialized industry publications, and start to focus on partnerships and alliances which impact growth and the ability to compete (Level 2).

Success begets more challenging questions, such as what does this data mean? how will the trends play out? and what emerging customers, technologies and competitors should we be concerned about? Improving capability requires teams of skilled analysts under a functional manager (Level 3). Since the answers are rarely contained in published data, analysts must incorporate validated opinion and observations from individuals who don't have the time to write it all down - customers, channel partners, R&D and sales personnel, their own executives, and industry observers and experts.

The expanding organizational knowledge base generates new requirements: what are the implications of these projections? what options do we have? what should we do about them? how might customers or competitors react? how feasible is a new technology? Mature organizations assign or recruit a senior leader to answer these, using increasingly sophisticated research and analysis techniques and a well-nurtured source network. And the organization expands its focus to better understand the interactions within the industry value chain and how these will play out (Level 4).

Finally, a radical shift occurs, from an emphasis on producing reports to facilitating dialog: the organization structures insights-driven strategic decision-making sessions (Level 5). Key executives interact directly with well-prepared internal and external experts, to determine how to best position the enterprise for future success. Topics might include identifying and evaluating the strategic risks of potential new initiatives, untapped sources of customer value, the next generation of customers, emerging competitive threats (frequently through business wargames) and new growth opportunities.

The importance of early warning.

The organization's ability to avoid surprises - a major executive concern - increases with the sophistication of its insights capabilities. Fledgling operations frequently start by looking at any of a variety of "megatrends" (example here), "boiling the ocean" to try to find a something the organization can act on. They progress to tracking studies, targeted assessments of specific marketplace issues and systematic monitoring of the periphery (emerging customers, competitors and technologies). But real breakthroughs occur when organizations form heavyweight teams, consisting of both internal and external experts, to address critical emerging issues through innovation and new business models.

How good is your organization's insight capability? Identify where it is in each category, sum the associated levels, and divide by five. If it is:

below 2.0, it is drowning, with little chance of a lifeline in the next round of budget cuts
between 2.0 - 3.0, it is treading water, with increasing odds of getting a lifeline
between 3.0 - 4.0, the shore is in sight, but beware of undercurrents
above 4.0, the beachhead is secured and the insights function is capable of making a real difference

Now ask what will it take to improve? And, importantly, what will be the impact on the business?

* Herring, Jan and Judith Leavitt, "The Roadmap to a World-Class Intelligence Program," Competitive Intelligence, January - March, 2011

Tuesday, August 14, 2012

Dreaming of sushi

Jiro Dreams of Sushi is a must-see documentary about the world's greatest sushi chef, 86-year-old Jiro Ono, the only sushi chef to receive 3 stars from the Guide Michelin. The restaurant, located in a subway station in the Ginza, has 10 seats. A 20-minute meal STARTS at $370, and diners often reserve a year in advance.

Jiro has been perfecting his craft for over 75 YEARS (his alcoholic father abandoned the family when Jiro was 7 and when he left home at 9, he was told he had no home to come back to), yet says "even at my age, in my work, I haven't reached perfection."

Why market research fails - don't start with the customer!

How many times have you seen quality research shot down because a decision-maker said it didn't match what they knew? And despite the reams of data and the quality of the analysis, the nay-sayer simply wouldn't budge.

Marketing and strategy professionals do their best to gather data through a variety of quantitative and qualitative techniques. Despite these efforts, many are frustrated when decisions are made seemingly in spite of the data. And then they double down and do more research, or try a new technique, with the same result.

Branding overload

Last week I wrote about the brander's paradise that is South Beach. This week, I spent some time in Manhattan, which most would think of as a brander's paradise.

But right now I only feel fatigue. And I'm not just talking about Times Square.

Manhattan, everywhere, overloads the senses.

Organizing for the coming boom

Listening to more doom and gloom from the financial pundits this morning risks becoming depressing; I'm going to try to focus on what's next. Not only more cheerful, but if we're lucky and can pool some good thinking, we might collectively prosper. This entry centers on organization structure; while technologies and offerings clearly will drive an economic renaissance, their creation requires organizing individuals and teams.

Over the past century, technology advancement, globalization and capital market innovation have dramatically increased the speed of doing business and raised the standard of excellence in business performance. Alfred Chandler, in his classic Strategy and Structure developed the theme that new structures were required to mobilize capital and organize workers in larger physical plants than the world had ever seen. Increasing need for specialization required managerial coordination of clearly-defined roles and largely self-contained processes (production, accounting, sales) through a series of hand-offs.

The first great advance was the functional structure, which relied on tabulator technology to control diverse operations and whose attributes include functional accountability, command-and-control decision making and, ultimately, management by objectives.

: Tabulator era

Henry Ford's River Rouge plant, which became the world's largest integrated factory on completion in 1928, is a prime example of a vertically-integrated functional organization. Eventually employing over 100,000 workers, initially a seemingly-impossible organizing task, the plant was able to turn raw materials into running vehicles within a single complex. It had its own docks, 100 miles (160 km) of interior railroad track, its own electricity plant and ore processing.

However, while Ford focused on reducing cost, GM President Alfred Sloan's new methods of managing a complex worldwide organization, focused on customer segments, propelled GM to industry sales leadership by the early 1930s, a position it retained for over 70 years. He established a structure to prevent product lines (from lowest- to highest-priced) Chevrolet, Pontiac, Oldsmobile, Buick and Cadillac from competing with each other, and keep buyers in the GM "family" as their buying power and preferences changed as they aged. And, thanks to consumer financing via another organizational innovation, GMAC (founded 1919), easy monthly payments allowed far more people to buy GM cars, while Ford was moralistically opposed to credit. GM under Sloan became famous for managing diverse operations with financial statistics such as return on investment, adapted from DuPont, which at the time owned 43% of GM.

Yet, however successful Sloan's GM organization was, the major difference between Ford and GM was that GM had five self-contained functional divisions v. Ford's one.

: Mainframe era

IBM's announcement on April 7, 1964, of the model 360 - the 'mainframe' - portended the next great advance in organization - process and team orientation. As companies increased their information processing capability by orders of magnitude, they were increasingly able to extend processes beyond individual operations through increased managerial span of control. This was facilitated by scientific approaches to job design, first tested in the WW II Office of Price Administration.

Eventually, this resulted in significant management delayering - including at IBM in the early 1990s - as process coordination improved work flow across functions, geographies and industry sectors, something previously provided by hierarchies of middle managers. It also paved the way for early matrix structures.

: Client-server era

This set the stage for the next phase: technology- led organization deconstruction, heralded in 1993 by Champy and Hammer's massively successful (2.5 million copies - for a business book!) Reengineering the corporation. This launched the Business Process Reengineering movement, enabled by the distribution of processing power through the rise of client-server computing. Add in new Enterprise Resource Planning software, and the increasing quality and reach of the build out of the early internet (Web 1.0), and now processes could realistically be performed without direct line-of-sight, independent of location, either a very good or very bad thing, depending on where you sit. The first great experiment was the outsourcing of Y2K coding to India in the late 1990s, when companies in the industrialized world, unable to find enough skilled programmers to do the necessary work to prevent feared shut downs of their operations on January 1, 2000, desperately searched the globe for the necessary skills. Once the outsourced Y2K work was completed, in a modern example of Say's Law ("supply creates its own demand"), the Indian companies began moving up the business process food chain.

: Networked era

Technology, of course, never stands still, and even as firms were grappling with the possibilities to reduce costs offered by outsourcing, much like Henry Ford, new Alfred Sloans are arising, enabled by the capabilities poffered by the ever improving global infrastructure. Now, global networked eco-systems, built on 'Web 2.0' IT platforms promising varying degrees of geeky attributes like open architecture, interoperability, virtualization and standardization, extend the reach of more traditional human attributes like collaboration and socialization.

While we don't know yet how this will play out, we are already seeing some of the possibilities of this networked world, bringing to life the reality portended by Hamel and Prahalad's 1990 piece, "The Core Competence of the Corporation." Self organizing networks, aided by evolving contractual arrangements, can now bring together - sometimes for a single task - specialized organizations (and individuals), regardless of location or affiliation, to conceptualize, develop, design, manufacture, market and distribute products, eliminating industrial-age line-of-sight managerial overheads required to coordinate work flow (current models include the film and construction industries). With a relentless focus on results and productivity, as the need for a specific eco-system ends, these organizational components seek new eco-systems to join, driven by economic self-interest, and the failure to adapt to new needs has dire consequences.

While technology-led business transformation has enabled companies to respond to new challenges, the increasing demand of investors for greater accountability has more recently created significant operating tension between the financial need for control and line managers' need to respond to the market. More and more, managers are resorting to 'heroic efforts' to accomplish 'undoable' jobs caused by outdated organization structures. But individual heroic efforts are not sustainable, risking burn out, and the most significant challenges organizations face now are creating operating models to meet future demands, followed by designing doable jobs, then training leaders in the necessary competencies and finally adapting their cultures so employees can thrive.

The Intelligent Organization