Tag Archives: Management

The Innovator’s Dilemma

Innovator's Dilemma

This is a book that I’ve recently read for my latest MBA course on Managing Innovation. It’s kind of one of those ‘must-read’ books for business/technology types and aspiring super-nerds like me. Without giving it all away, the crux of it is, when it comes to certain types of innovations (“Disruptive” Innovations), engaging in smart business practices may be the last thing you’ll want to do.

Intrigued?

It is a bit of mind bender, but Clayton Christensen goes into a fair bit of detail (don’t say I didn’t warn you) – using predominately the computer disk drive industry as his testing ground – to outline how doing things like listening to their customers, investing in the highest ROI opportunities and allocating resources to continue to innovate and improve on products and processes has actually lead to the demise of many organizations.

As I said, it’s a bit of mind bender.

If you’re interested in learning more about how doing these seemingly ‘right things’ can in some cases end up being the ‘wrong things’ (hence the dilemma),  I’d recommend checking out this book. Alternatively, if you want the Cole’s notes version, along with some of my insights on how I think that the Internet is “disrupting” the education industry, continue reading to check out a short paper that I recently submitted for the class.

Abstract

This is a book review on ‘The Innovators Dilemma’ by Clayton Christensen, being prepared and submitted for MBA 7351 – Managing Innovations, at the University of New Brunswick, Saint John. It will begin with a summary of disruptive technologies and innovations, as outlined in the book, to demonstrate an understanding of the concepts. It will be followed by a discussion on how the internet has and will continue to disrupt the education industry. The paper will then end with a brief conclusion.

A Summary of Disruptive Technology & Innovations

In ‘The Innovator’s Dilemma’, Clayton Christensen does a deep dive into the paradox of how, when it comes to dealing with ‘disruptive’ technologies, following good management practices can – and often does – lead to poor results. He focuses predominately on the computer disk drive industry as the focus of his research for the book, since as is still largely the case; it is an industry that moves at a staggering pace making it an easy target for research of an evolutionary (or in this case, revolutionary) nature.

Since ‘The Innovator’s Dilemma’ was first published some ten years ago, the term ‘disruptive’ has become somewhat ubiquitous, but as is often the case, it is used loosely and often incorrectly. As such, before proceeding any further, it will be helpful to first define what exactly a ‘disruptive’ technology is, as defined by Christensen.

Technologies and innovations can fall into one of two categories. The first is what Christensen calls ‘sustaining’ technologies, which are the most common. These are the types of advances that improve on existing products or services. They can be incremental in nature but they can also be radical. This is important to note, as sometimes radical, sustaining technologies are mistaken for disruptive technologies. Sustaining technologies, whether incremental or radical, are in fact the types that, “foster improved performance of established products along dimensions of performance that mainstream customers in major markets have historically valued” (Christensen, page xviii). As Christensen outlines, using examples from the disk drive industry, as well as others such as the excavator and motorcycle industries, sustaining innovations progress along the same performance trajectories whereas disruptive technologies redefine performance trajectories.

Disruptive innovations, unlike sustaining innovations which continue to advance existing technologies and products, often – at least in the short term – offer worse performance than is currently in the market. As such, when they first emerge they are of little, if any, interest to the mainstream market. And why should they be? A fundamental tenant of business is to seek out innovation as a way to create and maintain a competitive advantage in the market place. Another is to listen to your customers and to give them what they want. Yet another is to invest funds and allocate resources where you can get the highest returns. Understanding all of this – as good companies (companies not unlike the organizations featured in the book including IBM, Seatgate, Quantum and others) do – that is how businesses are typically managed. They seek out innovation (most often sustaining in nature); they listen to their customers; they astutely invest and allocate resources based on their expert knowledge, industry research and best practices. Yet, despite all of this, many wind up losing their industry leadership positions and eventually fail. Why does this happen? This is, in part, the “Innovator’s Dilemma”.

As Christensen illustrates throughout the book, the undoing of these otherwise well managed firms comes from their inability to make strategic decisions to embrace disruptive technologies; or at least while there is still time to do so. What has happened time after time and in industry after industry, is a disruptive technology will emerge onto the scene, and true to the earlier noted disruptive attributes of being a worse, not better performer by traditionally held standards, will be met with little fan fair from organizations trying to continually one-up the competition with the latest sustaining advancement. As a result of the inability to break into traditional markets, the disruptive innovations have to figure out an entirely new value proposition for a new, often smaller market. In doing so, what happens in these new, often fringe markets, is the disruptive innovation gets momentum and advances – through advancements in sustaining innovations on this new performance trajectory – until it can move ‘up-market’ to serve the very industries that weren’t initially interested. This then gets the attention of the often larger, established firms who will sometimes scramble to try and get on the bandwagon, but often it’s too little too late. It’s particularly interesting, and perplexing, how the when it comes to disruptive technologies, the attributes that make them “unattractive to mainstream markets are the attributes on which the new markets will be built”. (Christensen, page 267).

To illustrate these points using an example from the book, we’ll look at the disk drive industry where Christensen takes the readers through the progression of disk drives from being 14 inches (diameter) to 8 inches, to 5.25 inches, to 3.5 inches, to 2.5 inches and eventually to 1.8 inches. Initially the 14 inch drives, for use in mainframe computers, were the industry norm. In 1974 their average storage capacity was 130 MB (megabytes). Through sustaining innovations, disk drive makers were able to keep their customers happy by increasing capacities at levels the customers had come to expect. By the early 1980’s several entrant firms had emerged, producing smaller 8 inch drives with much lower capacities – from 10 to 40MB – nowhere near the requirement for a mainframe computer. As such, the mainframe computer users weren’t interested in these drives, despite the fact that they were smaller. Size wasn’t a factor for mainframe users, capacity was. So in order to survive, the smaller drive makers (Shugart Associates, Micropolis, Priam and Quantum) started selling to firms in a newer, smaller market than mainframes: minicomputers.

As the 8 inch drives gained momentum in the minicomputer market, developing sustaining innovations (at a faster rate of the established firms in the mainframe market) on this new performance trajectory, they were eventually able to begin serving the mainframe market, thus pushing out the established incumbents. Christensen goes on to walk readers though how this cycle repeats for all of the different drive sizes from 14 down to 1.8 inches.

In examining how disruptive technologies have lead to the demise of organizations that were once atop their industries, Christensen ensures that his readers understand that it wasn’t in these organizations’ lack of technical capability. He outlines how, in some cases, the industry leading organizations had working prototypes of the disruptive innovations ready to be taken to market. The reasons for their failures were largely related to what Christensen calls ‘value networks’ and their related cost structures. Essentially, large organizations in large markets are organized internally and within their supply chain to serve large markets. In the same vein, large companies require large markets to meet their growth targets and the smaller, fringe markets opportunities presented in the early days of disruptive innovations are generally not attractive propositions.

Similarly, he goes to great lengths to ensure that his readers understand that it wasn’t their inability to diligently manage their organizations. In fact, the diligent management of their organizations was the reason for their demise. They were innovative. They invested wisely. They listened to their customers. But what did their customers want? Better performance or worse performance? What made sense to invest in? Established markets with high returns, or fringe markets with low returns and little or no market research data?

With disruptive technologies, “doing the right thing is the wrong thing” (Christensen, page xxxiv). This is the “Innovator’s Dilemma”.

Impact of Disruptive Technology/Innovations on the Education Industry

At the risk of stating the obvious, the internet has and continues to have a profound effect on many industries. It has been a driver of both sustaining innovations as well as disruptive innovations.

Some of the more prevalent and talked about industries impacted by disruptive innovations tend to be the music (iTunes vs. brick and mortar music stores), video (Netflix vs. Blockbuster), and print media (Online news, Google, blogs, Twitter and others vs. traditional newspapers) industries as a result of the major changes that have already, and are continuing to take place.

There are other industries that are still in the very early days of what may become disruptions, some of which include the electric car (i.e. Tesla) and P2P currency (i.e. Bitcoin) – each, among others, were strong candidates for further exploration in this paper.

An industry that is somewhere in the middle is the education industry, which will be explored in more detail in this section. This industry is an interesting one in that it is being impacted by the internet for both sustaining innovations and disruptive innovations. Further, within areas that can be defined as disruptive, there are areas of similarity of those explored in “The Innovator’s Dilemma” as well as areas of difference making it a good candidate for inclusion here since certain aspects of the internet’s impact – and if they are truly disruptive in nature – may still be subject to some debate.

Leveraging the internet to provide learning opportunities has been around since almost as long as the internet itself has been around – or at least the internet as we know it today (post Windows 95 era). While generations past – including my own – used to have learn things the ‘old fashioned way’ (i.e. buying and reading a physical book, or setting foot in a physical classroom), now it is often as simple as a performing a Google search for an insightful blog or YouTube video to find the knowledge that you seek. Similarly, universities and educational institutions have been leveraging the power of the internet to extend learning capabilities to its students through such things as learning portals, such as the ‘Desire to learn’ portal currently deployed with the University of New Brunswick, Saint John. When the internet is used in this fashion, these are sustaining types of innovations. They further improve on an existing service. They add value – incrementally or radically – in ways that users have come to expect.

Somewhat more recently, as broadband internet becomes more accessible, combined with other factors such as rising university tuition costs and a generation of people doing more and more things online (i.e. working, communicating, watching TV, listening to music), opportunities to learn online are also increasing and more people are taking advantage. According to a recent study commissioned by The Sloan Consortium – a leading professional online learning institution, “over 6.7 million students were taking at least one online course during the fall 2011 term, an increase of 570,000 students over the previous year” (2013, The Sloan Consortium).

Where things start to take on disruptive characteristics are in a couple areas. Firstly, many of the entrant firms providing these online learning platforms are not your traditional, established firms (akin to the “IBM’s” in the disk drive industry). They are smaller, start-up firms such as Coursera and Aacademicearth, both education companies that partner with top universities and organizations around the world to offer courses online for anyone to take. Another – and arguably the most important reason they stand to disrupt this industry in a big way is – the courses are free.

Recalling that when disruptive technologies arrive on the scene they are often thought as being inferior offerings, it’s not a major surprise that there is still much debate over their merits within academic circles, with many education purists insisting that there is no substitute for the value of face to face interaction and collaboration that happens in a physical classroom.

One of the findings from the earlier noted study by The Sloan Consortium, was that “only 30.2 percent of chief academic officers believe that their faculty accept the value and legitimacy of online education – a rate is lower than recorded in 2004” (2013, The Sloan Consortium). However, the same study also found some evidence to indicate that reaction is still in fact mixed, with many academic institutions continuing to ponder as to how they will continue integrating online learning into their long-term strategies.

While traditional brick and mortar institutions continue working toward figuring this out, it’s hard to deny how providing a free education from top universities – the likes of which could include MIT and Harvard – for free no less, is opening the door to an untapped market for these technologies to get the momentum they require to become a real threat.

Interestingly, two of the major institutions driving online learning agendas are in fact two of the most established brick and mortar institutions: MIT and Harvard. These two academic powerhouses recently teamed up to develop an initiative called ‘edX’, a program that builds further on MIT’s existing OpenCourseWare platform (thousands of free online courses), to provide not only a library of free, online courses but also an open-source technology platform free for use by other universities looking for follow suit.

Conclusion

It will now be interesting to see how many of the traditional brick and mortar universities react to these disruptive innovations. Will they simply pass them off as an inferior product and continue developing sustaining innovations to serve their existing, mainstream markets hoping (or not aware of) the sustaining innovations advancing in the smaller markets below them (at potentially advancing at greater rates), as we have seen in the past? Or, will they take a hard look at what steps may be necessary – within their value networks, cost structures and organizational cultures – to not let history repeat itself in yet another industry.

References

(2013) Retrieved from:  http://academicearth.org/

(2013) Retrieved from: https://www.coursera.org/about

(2013) Retrieved from: http://sloanconsortium.org/publications/survey/changing_course_2012

Christensen (2000), The Innovator’s Dilemma

Dunn (2012, May 2) Harvard and MIT Introduce edX: The Future Of Online Learning.
Retrieved from: http://www.edudemic.com/2012/05/harvard-and-mit-to-form-new-online-learning-project/

Horn (2012, April 12) Yes, University of Phoenix is Disruptive; No, That Doesn’t Make It the End-All. Retrieved from: http://www.forbes.com/sites/michaelhorn/2012/04/12/yes-university-of-phoenix-is-disruptive-no-that-doesnt-make-it-the-end-all/

Myers (2011, November 13) Clayton Christensen: Why online education is ready for disruption, now.
Retrieved from: http://thenextweb.com/insider/2011/11/13/clayton-christensen-why-online-education-is-ready-for-disruption-now/

Myers (2011, May 14) How the Internet is Revolutionizing Education.
Retrieved from: http://thenextweb.com/insider/2011/05/14/how-the-internet-is-revolutionizing-education/

Stokes (2011, April 14) Is Online Learning a Disruptive Innovation?
Retrieved from: http://hepg.org/blog/54

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Filed under Books, General, Innovation, Management, Strategy

Flip the Funnel Reflection Paper

funnel-flip

A couple of posts ago I noted that I was reading a book for my B2B Marketing course called Flip the Funnel. This is a short ‘reflection paper’ that I recently submitted that I thought I would share.

Introduction

This is a short reflection paper on the book ‘Flip the Funnel – How to Use Existing Customers to Gain New Ones’ by Joseph Jaffe, submitted for MBA 7384 – Business to Business Marketing, at the University of New Brunswick, Saint John. It is not intended to be a recap of the entire book, or even a recap of all of the concepts, but rather my thoughts on what I felt to be some of the more interesting aspects.

The Funnel – AIDA vs. ADIA

Marketing is ubiquitous. It’s all around us. We’ve all heard the statistics, at least anecdotally, about how many message we’re all exposed to in the run of a day, or a week, or a lifetime. It’s ridiculous. But alas, this is the process. This is what marketers do. They market. They break their necks to get our attention; to make us “Aware”. There it is; the wide end of the ‘traditional’ marketing funnel. As Jaffe, outlines for us early on in the book, the traditional marketing funnel is based on this acronym:

 funnel-diagram-powerpoint
  •   A: Awareness
  •   I: Interest
  •   D: Desire
  •   A: Action

It’s about getting our attention; getting us into the funnel. From there they really turn on the charm and try to work us through the other steps, squeezing us into the narrow end of the funnel in hopes to get us to the desired end state: the sale!

This is how it is and how it may always be; but not if Jaffe has anything to do with it. In ‘Flip the Funnel’, he makes a very compelling argument for how the marketers of the world have been doing it wrong all this time and that instead of ‘AIDA’, the process should be ‘ADIA’, which stands for:

 funnel-diagram-powerpoint2
  •   A: Acknowledgement
  •   D: Dialogue
  •   I: Incentivization
  •   A: Activation

While the changes to the acronym look subtle, the approach is anything but. Jaffe spends two hundred plus pages making his argument for how, rather than spending our organization’s resources building ‘Awareness’ to a group of potential customers, what we should be doing is taking care of the customers that we have – and leveraging these relationships as an asset to build our businesses.

Multiple Perspectives

I really liked this book. I tend to enjoy books, authors, articles – people for that matter – that challenge conventional wisdom. In addition to the topic itself, I also enjoyed his informal, free-wheeling ‘write the way I think’ kind of style.

When reading the book, I tended to interpret his ideas, concepts and examples from two different perspectives. Firstly, I’m a consumer. Like everyone else, I buy stuff so I can relate to much of the content from that perspective. Secondly, I work for an IT consulting organization so I also tended to think about how the content applied to how my organization markets its services. Have we been doing it wrong too? And how can I take what he’s putting forward – essentially flipping convention marketing wisdom its head – and apply it to help my organization (ideally without getting thrown out the door for sounding certifiably insane!)

Retention over Acquisition

Jaffe’s argument around focusing on retention over acquisition, or even retention as a tool for acquisition, is an interesting one. The first thing that came to my mind when reading it was, ‘Well, you’re going to need to get some customers first’, since by definition, before you can retain something, you need to have acquired it first. With this in mind, organizations will need to figure out for themselves at which point, and to what degree, they execute this as a strategy.

Once you have arrived at a certain point however, switching the focus from acquisition to retention may make sense. At one point in the book, he put forward an interesting idea related to, what if as an organization you put the word out that you were going to put a ‘freeze’ on taking on any new customers. Now this is a radical idea, but he certainly got my attention!

When reading this I immediately thought of my experiences as a consumer of cable/phone/internet services. It seems to be almost every other week I see an advertisement in some form or another from my current provider offering incentives for NEW customers. My first thought is always (and you can probably guess) – what about me? Do I not qualify for the same – or dare I suggest it – a better discount for my years of loyal service? Something about this commonly used tactic doesn’t seem right to me. So, back to the point of implementing a freeze on new customers to better focus on existing customers – I think this would be a great idea.

Jaffe also spends considerable time in the book making the argument for how your retention strategy can effectively be your acquisition strategy; and it’s not that complicated. How many times have you felt, essentially kicked to the curb, immediately after a transaction has taken place? Far too many times, that’s how many. But, again – going back to the opening of this paper – this is how the marketing process typically works; once the sale has been made, you’ve been ‘converted’ and its onto making the next sale. Now, this isn’t always the case, some companies do it better and Jaffe provides some examples of who and how. He notes how shoe ‘e-tailor’ Zappos has had great success with a ‘Flip the Funnel’ strategy, with such tactics as a flexible return policy – again, not rocket science – just taking care of the customers after the sale. Other tactics that Jaffe notes that can be used to include things like simple ‘acknowledgements’ (the ‘A’ in ADIA) like a thank you card or a progress report (e.g. Amazon – ‘Your order has shipped’) to let you know that even after the sale, the organization you’ve just done business with still cares about you.

Jaffe argues that engaging in these types of activities make smart business sense, since they result in things like repeat purchases – and why wouldn’t you want your customers to be customers again and again? As we all know that it costs more to acquire a new customer than to retain an existing one, this only makes economic sense. Further to this, every happy customer you have is one more person who helps you with your advertising efforts, as word of mouth advertising and referrals have and continue to be powerful tools.

Happy Employees = Happy Customers

As I noted earlier, I’m a consumer (being marketed to) and I’m an employee (that ‘markets’ – if you will). The chapter titled, ‘How Employees Help Flip the Funnel’ was one that I particularly enjoyed. I found the section that referenced the Alexander Kjerulf blog post titled, “Top 5 Reasons Why ‘the Customer Is Always Right’ Is Wrong” to be particularly interesting. [Editorial note for blog readers – check out my thoughts on this post here.]

In this section Jaffe paraphrased the original blog post while adding his own spin on some of the things that organizations do in an effort to retain customers – customers that in some cases take a disproportionate amount of the organization’s time and resources and may not be worth the return on investment – at the peril of their employees.

The original blog post provided a comical example of a CEO that was tasked with dealing with a difficult customer with a bad reputation for never being satisfied with his company’s services, going through great lengths to make the service staff aware of her ‘issues’. Understanding the strain being put on his staff – and the negative implications that they could have in their ability to service other customers – he bluntly, yet politely ‘fired the customer’. Interesting approach!

Let’s get Social

The blog post noted above with the CEO firing the customer was originally posted in July of 2006. This was just around the time when Twitter was coming into existence. I make note of these two, seemingly unrelated items, only to point out that had this happened a few months later, this may have been a riskier move. It’s not that social media wasn’t in play in 2006, because it was. Facebook had launched a couple of years prior, however; at this point in time people were still mostly sharing pictures of their cats and brands were still in the very initial stages of figuring out if they needed to care about this whole social media thing. Things are different now (though many would argue that there is still a lot of cat picture share going on AND brands are still figuring out social media). This leads us into the next topic of the book that I found to be quite interesting: social media.

You can close your eyes and pretend it doesn’t exist or you can get on board. As Jaffe discusses, and makes you painfully aware through some great “good examples” (e.g. Obama’s presidential campaign) as well as some great “bad examples” (e.g. Motrin’s Babywearing debacle), social media is no longer simply an optional component of your marketing strategy. In fact, it goes further than marketing – or at least it should – social media can be a customer service tool and even a revenue generator. Since the advent of Twitter, the communication between companies and consumers is 2-way; it’s a dialogue (the ‘D’ from Jaffe’s revised marketing funnel acronym). It opens – and significantly speeds up – the lines of the communications between companies and customers. It also provides the customer with a captive audience to talk about your brand. If you do it right, you can leverage this channel as opposed to fearing it (which might be your first inclination). It won’t always be a happy story. Odds are you will take your lumps. If you don’t get it right, your customers will let you – and their legions of followers (and their follower’s followers and on and on) know about it. The key is to be in the game and listening.

Similarly, being on top of social media allows you to also provide your happy customers with an equal opportunity to spread the word, as Jaffe discussed in various areas of the book including the “Transforming Mouths into Megaphones” chapter.

Technology as a Game Changer

Similar to the social media phenomenon, technology can be an asset or a liability; it just depends on your view point as well as how you execute your strategy based on how you’ve opted to categorize it. In fact, just having a strategy is a good start. Jaffe goes to the commonly used ATM example for how technology has made our lives easier; by making a service that was once only available during “banker’s hours”, available 24/7. The advent of technology in this example has allowed banks to automate a once manual, human-performed service, to add value for their customers. The automation of processes is one way that technology can be used, but it shouldn’t be the only way. Organizations that ‘get it’ are the ones that use technology more intelligently, figuring out to what degree technology should be used  since just because you can do something, doesn’t mean you necessarily should. Organizations need to ensure that they’re taking a holistic view of their delivery and customer service strategies – a complete ‘customer experience’ approach – and understand that while an automated process may save you money in the short term, in the longer term it may not be the best approach.

At one point during the technology discussion, Jaffe takes the readers back to elementary school math class by using an analogy with fractions where he uses numerators and denominators as factors for the degree to which organizations choose to deploy technology in their businesses. He makes the point that smart companies think of technology not simply as a cost centre, but a way to ‘change the game’ and provides some good examples of companies that are doing just that. He notes how Apple, a company that does both technology and marketing  very well, put real people in their ‘Genius Bars’ at their Apple Stores and this is a strategy that is really working for them. He also notes IBM, and how they get it right by providing a multitude of ways for their customers to get in touch with them. When reading these sections it struck me as interesting that how something so seemingly simple ends up being considered as something so innovative.

Conclusion

‘Flip the Funnel’ was an interesting read and a welcomed change from another MBA text book. It made me think and entertained me in the process. There are many good points that I will consider and recommend for use in my current organization and further into my career.

While I think it is unlikely that too many organizations will abandon many of the traditional, tried and true, marketing strategies of old, there are many concepts in this book that are hard to argue with, including but not limited to the ones covered in this paper that included ‘retention over acquisition’, a focus on employees, embracing social media and understanding the right mix and use of technology.

References

Flip the Funnel, by Joseph Jaffe

http://positivesharing.com/2006/07/why-the-customer-is-always-right-results-in-bad-customer-service/

http://www.ericbowe.com/2010/03/making-the-purchase-funnel-fixation-personal/

http://www.free-power-point-templates.com/articles/drawing-a-funnel-diagram-in-powerpoint/

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Performance Management Wrap Up

job performance

I just wrapped up my MBA course on Performance Management this week. Before I move onto the next course, I thought I would take a minute to summarize just some of the key points from the course, both for my own purposes as well as for the reading pleasure of anyone who is interested in taking a few minutes to see what has been keeping me from having the time to update my blog for the last number of weeks.

Consistent with the name of the course – Performance Management – the course was largely about; hey you guessed it – Performance Management systems. The word system is a pretty broad word that can mean many things to many people depending on the context. As such, a Performance Management ‘system’ is going to mean something to different to every organization. Understanding this, and that there is no universal, hard-fast approach for the successful design and implementation of a Performance System, here are just some of the major points that came out of this course for me that – I would think – would be applicable to most situations:

  1. A performance management system is much more than a series of performance appraisals
  2. Should align with organizational and departmental strategic objectives and priorities
  3. Should focus on the past, present and future (employee development)
  4. Can have impacts, both positive (i.e. motivation, empowerment, productivity) and negative (i.e. cynicism, turn-over, dissatisfaction) and as such should be carefully planned and executed
  5. Should be sized and designed in accordance with the size, structure and culture of the organization (one size does not fit all)
  6. Should properly account for individual as well as team contributions and performance in alignment with how teams are utilized in the organization
  7. Should be designed and implemented in such a way as to reduce the possibility of rater biases (halo effect, error central tendency, etc.)
  8. Training on performance management for everyone, especially the ‘raters’ is imperative for success
  9. Job roles as well as performance expectations should be clearly defined and communicated (as well as specific, measurable, achievable, realistic and time-bound; SMART).
  10. Should be focused on behaviours as well as outcomes
  11. Should provide clear links between effort, resulting performance and rewards (financial or non-financial)
  12. Should understand and account for different personality types (introverts vs. extraverts) as well as different forms of motivation (intrinsic vs. extrinsic)
  13. Employees should be involved in its creation, delivery and evolution
  14. Should be an ongoing/iterative/continuous process
  15. Communication at all stages is key

In addition to the points above specifically related to performance management ‘systems’, here are a few other related subjects that were touched on during the course – each one of which could be a course on its own (and a few of which I plan on posting further on later).

  • The Four Temperaments for Peak Performance (I anticipate a blog post on this one soon)
  • Team based learning (the approach that was used for this course)
  • Case study/story board method (also used for this course)
  • 360 Review Systems
  • Coaching process
  • Giving and receiving feedback
  • Managing vs. leading
  • Personality types
  • Reward systems
  • Motivation
  • Maslow’s hierarchy of needs
  • Myers Briggs Type Indicator

In summary – despite their absence on the actual balance sheet, most organizations will say that their employees are their most valued asset. Those that truly believe this will figure out how best to create a ‘Performance Management System’ that works for their organizations and employees to drive employee development & satisfaction which will in turn, will help to drive all of the important organizational metrics.

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Rework

rework

I picked up a couple of books the other day and this was one of them. Its authors, Jason Fried and David Heinemeier Hansson are the founders of a company called 37 signals. These guys are perhaps best known for their immensely popular web based Project Management tool, Basecamp. I’m only about 40 pages into the book so far but I felt like a quick post about it was in order.

It’s Fantastic!

Of the few topics they’ve touched on so far, it’s almost as though they’ve been able to channel some of my own thoughts. Topics like ‘Planning is guessing’, notes how plans are really, as the title denotes, just a series of guesses – strategic guesses, financial guesses etc. This isn’t to say that you shouldn’t plan. You should. However, your plans should be flexible enough to allow you to embrace current opportunities and allow you to pivot if and when a change may be needed.

They also touch on topics such as ‘growth’ in a section titled, ‘Why grow?’, where they make a case – citing their own experience at 37 signals – where sometimes a company’s ‘perfect size’ might not be big number and why growing to gargantuan proportions is often the default goal of many companies, and how this approach is often at the company’s own peril, or at least at the peril of their employees and culture.

Another interesting topic is something they refer to as ‘Workaholism’, how throwing sheer hours at problems, rather than applying innovative thinking to find efficiencies to get the work done smarter is too often the approach; and how this approach is not only accepted, its often commended and even revered.

Anyway, great stuff so far. I’m looking forward to checking out the rest of it, at which point I will likely create a follow up post on how it turned out.

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Any Road Will Get You There

chesirecat

“If you don’t know where you’re going, any road will get you there”. This is of course the famous quote by Lewis Carol from Alice in Wonderland that has been used a metaphor for business strategy (and likely other things as well) for the last 150 some odd years. (Actually, based on a couple of quick Google searches, it seems that there’s some debate around whether this was the exact quote, but this is how I’ve heard it used so I’m just going with it for the purposes of this post).

Historical accuracy aside, it does set up the strategy discussion quite nicely since strategic management is largely about asking questions like – ‘Who are we?’, ‘What do we do?’, ‘Where are we going?’ ‘How will we get there?’ Once defined, the organization can then develop its mission, vision, as well as its supporting goals and strategies for ensuring that the answers to these questions are woven into everything the organization does, cascading down from top management to all its teams and employees.

In terms of how an organization (or an individual – from a personal development perspective – for that matter) can go about defining this strategic blueprint is to perform an “environmental analysis”. This is a process whereby an organization (or a person, though let’s go with an organization so I don’t have to continue pointing out how this can be used for personal development also) performs a thorough analysis of both its external environment as well as its internal environment. Ideally this process will include involvement from the organization’s employees – not just management – both from the perspective of increasing of ‘buy-in’, as well as from the perspective of soliciting input from the employees on the ‘front lines’, as nobody understands the business as well as they do.

Integrated into this environmental analysis is a technique called a SWOT analysis. Most people with a background in business will have heard of, if not spent a fair bit of time performing, this type of analysis because – though basic – it does provide a simple framework for evaluating factors, both internal and external.

Internally, you are looking for ‘S’s and ‘W’s (strengths and weaknesses). These could include things like your organizational structure, culture, processes or technologies.

Externally you are looking for ‘O’s and ‘T’s. These could include things like economic factors, supplier relationships, customer or tech trends, or perhaps most importantly, what your competition is doing.

The next step is to then perform a “gap analysis”. (More analysis, you say? Yes, but…please read on). This is where you take your findings from the external and internal analysis and compare them in relation to each other to determine where they fit within these 4 categories, in ascending order of most competitive.

  • Opportunity + Strength = Leverage
  • Opportunity + Weakness = Constraint
  • Threat + Strength = Vulnerability
  • Threat + Weakness = Problem

Once completed (at least an iteration, as this should be an ongoing process) the next step is important: Do something about it!

Though, as the analysis leads to action something to consider will be how – potentially – different what you thought you were and where you thought you were going may not be the same as when you had started. The rest is up to you.

Reference notes:

In addition to the Wikipedia links above, combined with ten or so years in the biz, my own worldly knowledge of business strategy from previous courses, a keen eye for detail and the occasional episode of The Lang & O’Leary Exchange, the Performance Management text from my current MBA course was referenced in the creation of this post.

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The surprising truth about what motivates us

I find motivation to be an interesting topic. What motivates me, may not motivate you and vice versa. That’s interesting; well to me at least (I don’t get out that much). I feel a post about motivation coming on sometime in the not so distant future. In the meantime, since – as it happens – I’m not feeling particularly motivated to write this week, here is an interesting video on the topic of motivation. Enjoy!

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March 27, 2013 · 12:01 pm

Risky Business

In the world of Project Management, the topic of risk is HUGE. Massive. Behemoth, even. Ok, I might be getting a little carried away. The reality is though, that the amount of risk – and hence the level rigor applied to managing it – will vary with the type, size and complexity of your project.

If you have a small project with a well-defined set of requirements, a familiar technology, a long-time customer, the proper equipment and resources, your project is probably low risk so an informal process to manage your risk may be ok. If however, you’re staring down a project with, basically the opposite of any of the above noted items, you will likely want a more robust process for managing your project risk.

Before we go any further, we should probably take a quick step back to define what a risk actually is. The Project Management Body of Knowledge (PMBOK) – Fourth Edition, defines risk as: “Risk is an uncertain event or condition that, if it occurs, has an effect on at least one project objective. Objectives can include scope, schedule, cost and quality.”

Two things jump out at me with this definition, (1) it’s something that is uncertain, that may or may not happen and (2) it has an ‘effect’ on the project – though it doesn’t state specifically that it will be a negative effect. We’ll come back to these a bit later.

As there are so many facets of risk management, I suspect this will be a topic that I’ll post about often – rather than trying to cover it all in one ridiculously long, excruciatingly boring (hey, who said that?) post. For this post I thought I would touch on the topic of risk responses. Basically, what are you going to do about these pesky risks that you have identified?

Before I get into the various available responses, I’ll note that the impetus for this post – in addition to providing some exciting reading – is how the term ‘mitigate’ has become something of a ‘catch-all’ term when it comes to talking about risk. Mitigating risk is great, but it’s not the only thing you can do with it.

See below for a few additional strategies, as well as some notes on risk mitigation, based on the teachings of the Project Management Body of Knowledge (PMBOK) – Fourth Edition, and the world according to Evan.

Risk responses for negative risks (threats)

Avoid

Why mitigate a risk when you can avoid it altogether? One strategy to avoid risks is to shut down the project; but that’s a bit drastic. Other strategies to avoid risks are to make adjustments to the project plans, be it schedule changes, requirements clarifications, updates to assumptions or what have you so that the threat can be eliminated altogether. These options aren’t always available, but when they are, keep risk avoidance on your radar as a tactic for managing your risks.

Transfer

That’s not my risk; that’s your risk. Another strategy is to look at options for transferring the risk to a 3rd party. The example often given for this is in the insurance industry, where for the cost of an insurance premium, you transfer the risk to this 3rd party. Another way to handle this in a project related context might be from a contract types and terms perspective – e.g. Fixed price billing versus Time & Materials billing as each billing type has different levels of risk for the buyer and seller. (A topic for another day).

Mitigate

Risks tend to be evaluated on (1) probability – how likely is each risk event is to occur and (2) impact – if a risk does occur, how big will the impact be. Risk mitigation is about reducing one or the other, or both. Tools are available such as the aptly named ‘Probability/Impact’ matrix where risks can be evaluated on the basis of their probability and impact, and mitigation strategies can developed for each risk. Pro-tip: Risks that are high probability AND high impact; deal with these ones first!

Accept

For the risks you aren’t able to identify a suitable strategy for, or for ones where the cost of the mitigation strategy is higher than the cost of its potential impact, the strategy here is acceptance. Acceptance can be ‘passive’ – do nothing and deal with them if they occur or ‘active’ – establish a contingency reserve (money, time, resources etc.) to be better equipped to deal with them if they arrive.

Risk responses for positive risks (opportunities)

Intuitively, most of us think of risks as being threats, but this isn’t always the case, since where there are risks, there are opportunities (said some optimist somewhere). Here are a few strategies for turning risks on their head for the good of your project.

Enhance

The enhance strategy is one whereby project teams take actions to try and realize an opportunity by taking measures to increase the probability, impact or both. A common example is where project scheduling techniques such as crashing (adding resources) or fast-tracking (performing tasks in parallel) are used in order to finish a project ahead of schedule.

Exploit

Exploiting a risk, turned opportunity is a bit like the enhance strategy, except – as Yoda would say – “there is no try; only do!” Exploiting is all about making SURE that you are taking advantage of an opportunity that has presented itself. Using a similar scheduling example, some projects will have financial incentives for finishing early so project teams give top priority to exploiting this sort of opportunity any way they can.

Share

Similar to how project teams will want to transfer the negative risks, they will sometimes want to share the positive ones. An example might include joining with another team or organization to deliver a project, each agreeing on their respective scope of work and how risks and rewards can be allocated.

Accept

Again, much like with negative risks sometimes the best strategy is to accept the risk. Related to opportunities, this strategy simply means being ready to take advantage of an opportunity if it comes along, but not taking steps to actively pursue it.

Well, so much for this NOT being a ridiculously long, excruciatingly boring (hey – it wasn’t that bad!) post. If you made it this far, I commend and thank you.

Be careful out there.

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