Tuesday, February 27, 2007

The Right Tension

A couple of issues ago (December 2006), the Harvard Business Review published a very interesting article (Managing the Right Tension) by Dominic Dodd and Ken Favaro, who argue that many of the trade-offs and decisions of usual managerial practice fail to take into account that a company does often need to balance opposed concepts. So it is not that much about making a trade-off between short-term and long-term as it is about finding the right tension between short-term and long-term perspectives by integrating those seemingly opposed imperatives by asking a "simple" question: "how do we achieve sustainable revenues and earnings?" Although the approach may seem simplistic and I bet some people will even go as far as to say that it encourages managers not to make hard decisions, I do believe there is considerable value in shifting the perspective of managers from an "either / or" mindset to one of integration that takes several dimensions into account in an attempt to find the right balance for a company. It's a much more holistic way of managing a business and I think it's really worth considering. In fact, the article of Dodd and Favaro gave me a couple of interesting inspirations for one of my customers who is facing explosive growth and is required to seriously manage growth and profitability, another of those strange pairs of business concepts.

Saturday, February 24, 2007

(Re)thinking your business: where psychology meets business

Over the past couple of weeks I have been involved in work to help customers approach their business from a fresh perspective and in discussions with a friend who sees innovation opportunities in the way a traditional business is operated right now in Europe. There are challenges and perils in (re)thinking a business both for insiders and for outsiders, and these are not the "usual suspects" (strategy, marketing, sales, finance...) as the next frontier of business performance seems to be what is going on inside our psyche.

In a recent project, I noticed how difficult it is for people who have been running a business for a long time to step back and reconsider their fundamental assumptions about the business; for me as a facilitator it takes a lot of focus just to create an environment in which it is safe to question some of the fundamentals of a business, i.e. precisely what makes a business owner feel secure in a company that may not be an explosive success but that does manage to generate fairly decent profits. Helping someone approach their business from a fresh perspective is much more a psychological than a business endeavor: it's about guiding an entrepreneur with all his hopes, his dreams, his fears, his  ego, his desire to be loved / admired / accepted and his representations of complex equivalents of specific values... That's quite a fascinating job to perform and definitely one that completely confirms my strong belief that the next frontier of business performance lies in the proper management of people and of their potential.
At the same time, in very stark contrast, outsiders who see an opportunity to do things differently in established industries seem to be able to access relevant statistical data supporting their views very rapidly indeed. Thus, asymmetry of  information, one of the most important historical barriers to new entrants, seems to be rapidly collapsing as content of good-enough quality is made accessible in the open environment of the Internet. This has profound implications on the impact of the free flow of knowledge on the intensity of competition and on business strategy. People who run their businesses according to the good old methods of scientific labor organization and fail to go one step beyond to take the information age into account, will slowly but very surely become extinct. I think this is also supported by Mavericks at Work, a book I am currently listening when I'm in my car. Again, the disruptive potential is no longer prevented from expressing itself simply because mere access to information is impossible. And that disruptive potential becomes effective disruption when actual people manage to overcome their internal barriers and limitations to make a credible commitment to a fresh vision of an entire industry and lead the way. Again, the endeavor is largely a matter of psychology.
In a way, the Information Age may be characterized by the disappearance of "impossibilities" and objective barriers to entry (at least those based on mere access to information) that could be analyzed and almost quantified. And perhaps that is precisely what reveals the next frontier of business performance: man's internal barriers and limitations, which require a peculiar mix of skills to be removed or transformed into creative energy. A mix of skills applied to help individuals evolve, express and achieve goals and find meaning in a holistic approach to the individual person whose life requires her to play many different and increasingly interrelated social roles.

Friday, February 9, 2007

The death of the Gaussian curve

I had a very interesting, entertaining and stimulating lunch today with a curious, smart and witty entrepreneur. We had a fairly long exchange (although I did not see the time fly) about the dramatic changes now taking place in the media, entertainment and marketing & communication space. The challenges are indeed momentous for established players and one of my friend's point was to say that it is not so much the change in itself that is a problem but rather the fact that incumbents are in denial because they have to deal with the constraints of their traditional business and organizational models. He went on to describe how what is now happening is actually increasing the level of complexity and fragmenting the "mass" market to the point of making it almost meaningless to be thinking along the lines of the Gaussian curve: we live at times when individuals do have an influence and and impact because the world is increasingly interactive and therefore the very nature of uncertainty is changing. He and I agree that the Gaussian curve is slowly and surely becoming less relevant.

Another thing my friend made me realize (again) is that evolution and innovation cycles are not binary in their outcomes: traditional media will remain relevant, people will still need some form of print and television will not suddenly disappear, even though new ways are emerging and the traditional ones are being reshaped by the power of electronics / digital / computing / always-on / networking... And a number of new players will perish simply because of their illusion of absolute power. The war between Madison Avenue and Media 2.0 will cause many casualties on both sides and like with "brick & mortar", the winners are likely to be those businesses that manage to combine new technologies and traditional activities in a harmonious way.