Management Ideas

Hi Sandeep,

Some of these I am very familiar with, some I am not.

SWOT (already defined ) is one of my favorite tools, although seldom used well. The basis is to take a complete and honest look at one's own organization, admitting all. (we are often good at 'beating our chest' about what we do well, however few will ever take an honest assessment of what their not very good at.) This net of this study is just informational, but it does (again, if the information gatherer is honest) allow sometimes a clearer picture of the state of the organization, and therefore allowing for a strategy to 'improve' the situation. SWOT can work for any individual, group, department, division, or company.

The Pareto Principal (well defined at http://en.wikipedia.org/wiki/Pareto_principle ) was an economists observation of what we call the "80-20 Rule", which is remarkably true, give or take a few percentage points. However, there is also a process by the same name that can overcome some of the emotional obstacles of change. Psychologically, if there an overwhelming number of tasks to perform, often nothing is started, because all that is seen is the total. However if one lists the tasks, sorting by something significant (financial impact, time impact, etc.) and sorts the list, then the picture is more clear and direction is easier to realize. For instance, let's say there are 100 new ideas for products you want to develop. Where to begin? By following this process, it is possible to identify the "top 3" (that's the recommended number), and if there is focus on those, the objective becomes clearer and easier to motivate (yourself or others) toward completion. Once those three are done, you work on the next 3, then the next 3. Chances are the list will continue to change, often the lower priority items will never get done I (and indeed it may not matter), but the bottom line it can help to cure stagnation.

Genchi Gebutsu is new to me, but it sounds like a philosophy reported once of the president of Mars Candy in the US. He was said to use a style he referred to as MBWA ... Management By Walking Around. It's a painful truth, that too many of us manage only from our desks, and only with input from others. Sad since most of us didn't get "here" that way, and sadder still because when we rely only on others to 'feed' us information, truly we only get a part of the story. Of course the attitude of MBWA can be either negative or positive ... if the goal is to only find what is 'wrong', that's all one will find, but if one truly keeps an open eye, it can also allow for the realization of what is 'right'. Balance is important, and increased accountability and better information can often be the result.

Skunkworks isn't quite as bad as it sounds. It refers to the process of running a 'business within a business', often with operations and results being a secret from the rest of the company. It's fundamental were issues of security are concerned, such as with government or military contractors, however there are many instances where a similar operation was effective in bringing a large change in an organization. Apple computer was pretty much a me-too company until Steve Jobs sequestered himself with a few associates in a 'secret' place to develop what would become the Macintosh computer, and regardless of the success of Mac's in the market, there is no doubt the computer world will never be the same because of that effort. Another example may be in my own company, if I can pull it off. Some companies (like mine, like Apple was) become too ingrained in the "that's the way we've always done it" philosophy, and change on a grand scale is nearly impossible. For me, I want to create a "company within a company", not to be secretive, but to 'raise the bar' with a smaller team, serve a different market, and hopefully, eventually, see this improved capability 'trickle down' to the rest of the company.

Well, that's my 2-cents (used to be worth more ).

Thanks for the post, Sandeep. I am anxious to see the other responses to your list.

Kind regards ...

Active Inertia

The best way to undertand active inertia is something Michael Eisner said to me about ABC in one of my past lives: "In broadcasting, the surest sign you're about to fail is success."

What he meant, I think, was that when a network had a winning line-up, they spent their creativity and resources simply milking that line-up for all it's worth (remember "Who Wants To Be A Millionaire" on five nights a week? 20/20 on four nights a week? How about some version of CSI on every hour of every day?). All the real creativity and innovation comes from the networks in last place desperate to find an audience. After a while, the audience moves on and the winning network is stuck with a losing lineup while the losing networks have shows better suited to the changes in audience taste.

Companies and organizations are truly excellent at actively and efficiently reproducing the success of the past, even while the world changes around them. That's active inertia. But customers, like the world, are in constant flux. That's why active inertia is a recipe for eventual failure. Unless you're in line for a government bailout.

Disruptive Technology

This is self-explanatory: disruptive technology is a.) unexpected and b.) totally changes the rules of the game for a technology, market, or entire industry. Disruptive technologies are not revolutionary, say, like HD in the telelvision market or digital in telephony. Instead, they are a totally new take on consumers' needs.

The best example I can think of off-hand was Iomega's Zip drive. They took an existing technology, Bernoulli large-storage drives, and produced a game-changer that was smaller, cheaper (about 1/10th cheaper), and more attractive. In two years, every other Bernoulli drive was extinct.

Or the USB Flash drive. Totally new technology in which there were almost no consumers whatsoever. The technology created its own market and seriously eroded the market of other storage technologies.

Disruptive technologies tend to put actively inert companies out of business (look at what eventually happened to Iomega).

Genchi Genbutsu

Yeah, "go and see for yourself." But it doesn't really mean management by walking around. It means something closer to what a finance teacher once taught me a long time ago, "Anyone who shows you a PowerPoint is lying." If, of course, by "lying" he meant "oversimplifying."

I'd also propose as a better translation as "go and KNOW for yourself."

You as a manager live in a rarefied and abstract world; you see things as spreadsheets, charts, and forecasts that represent the real world somewhere down on the shop floor. You have to make decisions about how that shop floor runs, but you're doing so only in the empyrean of spreadsheets and reports, which means you lack most of the information you need to truly understand how the situation really works on the ground.

Genchi genbutsu means that as a manager you need to "know" the shop floor (or the actual store if you're in marketing, or the customer or client if you're in marketing or sales) by getting a real, lived sense of, well, its living reality in all its complexity and contradictions. Otherwise, all decisions you make will be inherently flawed.

Halo Effect

This is actually from psychology, but is an active principle in advertising and branding. Here's a simple example. Two people walk in for a job interview. They are both equally qualified but one looks like Candice Bergen and the other looks like Rosie O'Donnell. Now, if you asked the interviewer which of the candidates was smarter, more qualified, or had more experience, which do you think the interviewer will pick?

The halo effect is when you take a positive perception of one aspect of a person or product and apply that positive perception to other aspects of that person or product. That's why we think beautiful people are smarter and better than, well, non-beautiful people. That's why Applemaniacs think the iPhone is perfect in every way. Why advertisers put Candice Bergen's face in their ads.

In terms of management, the halo effect shows us why manifestly inept managers get promoted or hired. Even though they've shown their ineptitude in one way or another (think Carly Fiorina), people are still willing to hire or promote them because of past success or some other aspect.

Long Tail

From statistics, the "tail" of a statistical spread is/are the narrow end/ends of (what is typically) a bell curve. So, on a statistical spread of home prices in Los Angeles, you have a center around the average and two tails of low prices and high prices. The "high prices" tail, however is "long," in that it ranges from 1 million dollar homes to $40 million dollar homes. In other words, sometimes the tail tapers off to nothing quickly (like the low end of a spread of home prices) and sometimes it's a "long" tail that takes in a huge spread of results (like the high end of a spread of home prices).

"Long tail" is used in marketing to describe product distributions with a large number of low consumption products. For instance, in music, you have a huge number of people buying Taylor Swift right now. You have fewer people buying Madonna and even fewer buying Beethoven Symphony 9 recorded by Leonard Bernstein. But you have a huge number of CDs, some made at home, that are selling hundreds, dozens, or even "ones" of copies. This "long tail" of recorded music products offers huge opportunities for people who can keep down their production costs and realize profits on selling just hundreds of albums. The big music companies like Sony or BMG are in the business of the "thick" parts of consumption, the recorded music products with thousands to millions of sales. They're selling things like Beethoven's 5th symphony recorded by Leonard Bernstein or something. Some folks, like Naxos, deal in "long tail" products that only have dozens or hundreds of sales. They make their money by decreasing their production and marketing budgets and by having a large library of "long tail" products, like Glazunov string quartets or Gubaidalucci piano concertos. EMI is mass market; Naxos is "long tail."

Needless to say, e-commerce has made it possible to connect with long-tail customers far more efficiently and profitably, so long-tail marketing has skyrocketed in the last decade (compare the libraries of recorded music ten years ago with the libraries today).

Tipping Point and Thin Slicing

From Malcom Gladwell, "The Tipping Point: How Little Things Make a Big Difference" and "Blink: The Power of Thinking Without Thinking."

The tipping point is the point at which a product or idea really catches fire, i.e., starts an epidemic. The environment has to be right; the concept or product has to be "sticky"; and only a small group of people are responsible for epidemics (the Pareto Principle, i.e., the 80/20 rule that 80% of the work is done by 20% of the people involved)

"Thin slicing" happens when we make a snap decision. That is, we make a decision based on just a little bit of experience and information, a "thin slice" of experience and knowledge. Gladwell thinks that these snap decisions are often better than more considered and labored decisions. For instance, you see a trailer for a movie (about 90 seconds) and make a decision from that little bit of information whether or not that film is worth seeing. You're probably going to make a better decision than if you went out and read two dozen reviews. See "halo effect" above . . .

Triple Bottom Line

People, Planet, Profit. The standard bottom line for business success is profit (loss). Triple bottom line people believe that a business's success should also include what it does for society and the environment. TBL people are busy trying to find a way of incorporating the social and the environmental into standard accounting practices. So far, no luck.