Book – Under New Management

new-management.pngAn insightful book encouraging us to challenge established management practices and traditional conventions.  The analogy at the end of the book was particularly interesting: an efficiency of a typical internal combustion engine is about 30%.  We know that the engine is reliable and widely used, but finding a method to increase the efficiency above 30% would create a significant benefit.  As our organizations are a combination of resources and people, increasing engagement of the people with non-traditional management approaches might make significant difference in success of these organizations.

The book mentions several already popular approaches, including sabbaticals and careful hiring, and some of new approaches are better analyzed to question conventional wisdom.

The author  references Service-Profit Chain, which is gaining more attention in recent publications.chain.png

The author also refers to “Employees First, Customers Second,” a book that would seem revolutionary a decade or two ago.  It is a pleasure to see how this approach becoming more main stream.

Interesting concept of “pre-hiring” vacation: an arrangement when the company gives two weeks of paid vacation to a new hire before the start day to assure that the new person enters the company well-rested and eager to learn.

A perspective where “sunk costs” can actually be beneficial: as companies offer “quitting bonuses” to encourage unsatisfied employees to leave, the idea of not taking the offer has an additional benefit.  As people who did not leave the company “lost” the money, they consider the amount an investment into current job and “sunk costs” that are psychologically difficult to ignore.  “If I did not take these money…  I must really like that job…”

Research in office email and productivity – Some Companiess Are Banning Email and Getting More Done.

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The company has reduced overall email by 60 percent, going from an average of 100 email messages per week per employee to less than 40. Atos’s operating margin increased from 6.5 percent to 7.5 percent in 2013, earnings per share rose by more than 50 percent, and administrative costs declined from 13 percent to 10 percent. Obviously, not all of these improvements were the result of banning email, but the correlation is certainly strong. So is a growing body of research on the effects of email.

Research suggests that just limiting checking of email to certain time during the day would be helpful.

Another new point of view on a popular approach was a chapter on open office.  Based on research, the main benefit of the open office is real estate cost saving.  That is it.  Open office has its own shortcomings, including noise, what may actually reduce creativity and productivity rather than encourage it.  Open office can be as effective as a traditional one if employees have enough control (and enough space) to use the environment.  Interestingly enough, information of success of open office experiments is more widely known than failures, resulting in return of the company to a more traditional office environment.

Excellent book to ponder “rules of business” that might not be as effective as we believe they are.

Book – The Analytical Marketer

Analytical-marketer.pngAn insightful book describes the process many companies in the industry undertake in some form – marketing transformation.  The book illustrates some aspects that many marketers observed in their organizations and some other changes that marketers expect to see in the future.

It was the first publication that discussed relationship between marketing and IT before discussing an infamous challenge of relationship between marketing and sales.  Our industry truly changed 🙂

The book suggests that modern business requires ‘fundamental shifts in the marketing organization itself: specifically, changes in the marketing mind-set, marketing structure, marketing telnet, and marketing leadership.”

An interesting aspect: customer journey includes acquisition and retention as equal parts.  Very often marketing view on buyer’s journey does not even include retention, or includes it as a little “box” on the right – an afterthought.  Another aspect of the journey – it is relatively simple.  Hopefully, we, as an industry, are moving away from a dozen of steps buyer’s journey that might contribute to over-complication of marketing initiatives.

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SAS had a traditional marketing organization – by channel.  The organization encouraged silos and channel-specific efforts, what was not effective. “There are even times when you can draw the wrong conclusions when you look at the performance of a channel independently.”

SAS reorganized to encourage collaboration between channels and created a new function of “orchestrator” who is “orchestrating” campaigns across all channels – digital, traditional, and emerging.

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New positions were created to help formalize partnership between marketing and IT, and also to strengthen the connection between marketing ans sales.

SAS is hiring more analytically-minded marketers in general.  By doing it, “you are not killing creativity or innovation, just seeking naturally curious employees with updated skills.”

An HBR interview and book overview – webinar.

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A few insights from the book:

  • Segmentation insight: SAS discovered that SMB targets responded better to general messages, rather than specific message for the segment.  Results improved when the SMB-specific campaign was closed and SMB segment added to the enterprise campaign.
  • Based on data (conversion and sales) one of long-standing PPC campaigns targeting expensive keywords was discontinued.
  • “Too often, organizations start chasing the next shiny object like social media before they have optimized everything they already have..”
  • “Data without use is overhead.”
  • “Make data quality everybody’s job.”
  • CXA – customer experience analytics (new for me term)
  • Interesting: in SAS shared services Nurturing is included into “Data Strategy” together with segmentation.

Sometimes our team needs to engage in shameless self-promotion.  We need to tell stories about the interesting things and projects the team is involved in to ensure that the rest of the organization understands our value.  We have to deliberately build credibility for marketing.

Book – Big Data

big-data.pngThe book gives a good general introduction into the concept of Big Data and illustrates it with very interesting examples.  The examples show new business approaches possible in the world of Big Data, and how they are different from the traditional strategies.

Example 1: car manufacturer found an improperly working fuel gauge.  Normally, this discovery would start from a request to the gauge producer to solve the problem, what could affect new production.  car.pngHowever, the car manufacturer armed with data did not immediately informed the gauge producer, but created a software patch to correct the problem and sold it to the gauge producer.

Example 2: organizations use data tools to evaluate potential employees.  One organization discovered that graduates from top schools do not perform better than graduates from less prestigious educational institutions, as a result, personnel costs could be reduced with expectation of increased performance. In some jobs, employees with prior criminal record actually outperformed coworkers without criminal record.  Employees who used a non-standard browser were found more likely to take independent initiatives.

Important point: all data activities need to start from the strategy based on business need.  An average company won’t be able to understand and analyze all existing data – and it is not needed to run a successful business.  Only data relevant to a specific goal is required.

The SMART model — start with strategy, measure metrics and data, apply analytics, report results, transform your business — allows you to cut through the chaos.

Instead of starting with the data, start with your business objectives and what you are specifically trying to achieve. This will automatically point you towards questions that you need to answer, which will narrow data requirements into manageable areas.

Once you know what you are trying to achieve and you are clear on what SMART questions need to be answered, then work out how you can access that information so you can measure metrics and data.

The next step is to apply analytics, extracting useful insights from the data that can help you answer strategic questions. The data themselves are meaningless unless they help you to execute your strategy and improve performance.

Example 3: fashion retailer needed to understand who were its best customers.  The retailer measured foot traffic passing the store (mobile phone sensor), then combined this information with number of people coming into the store (the same sensor), and then combined it with actual purchases.  Result: window display could be optimized more effectively and one store was closed due to insufficient traffic.

Example 4: data aggregated from wearable devices became more valuable than the device itself.  Wearable device manufacturer re-imagined its business and became a data company, while still producing the device to collect data.

Important point: analytics and data visualization are part of the same task.  An idea that first data is analyzed, then visualized by a different group, and then presented to a decision maker would not provide the most value.  Analysis and visualization need to work together and the decision maker should not be expected to use visualization tools – but to receive the insight generated by the analysis.

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An interesting site mentioned in the book Information is Beautiful – the site highlights data visualization examples.

Book – The Business Blockchain

blockchain.pngThe book is a good introduction to the industry concepts.  Blockchain often perceived as a technology only without understanding of other aspects of the phenomenon.

What is the blockchain?

Blockchains are new technology layers that rewire the Internet and threaten to side-step older legacy constructs and centrally served businesses. At its core, a blockchain injects trust into the network, cutting off some intermediaries from serving that function and creatively disrupting how they operate.

Blockchain has technology, business, and legal aspect.  It is a mechanism that allows transactions (and currencies) without a need of trusted central authority.

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As blockchain has three different aspects, it can potentially bring change and innovation into technology, business, and also legal establishment.  From another side, blockchain faces obstacles to overcome in all three fields (technical nuances, business processes, and local laws).  It will be interesting to watch how blockchain will evolve and which aspects will be more critical for wider adoption.

Book – Matchmakers: The New Economics of Multisided Platforms

matchmakers.pngYes, it is completely correct, I do not remember anything related to multi-sided platforms in business school curriculum several years ago. The book gives an excellent explanation of business principles behind the phenomenon.

Though the discussion of platform externalities and negative network effects are common, and the Book – Platform Revolution has an Glossary.pngexcellent description, Matchmakers emphasizes the economic reality of the multi-sided platforms.  Book site includes a convenient glossary of industry terms.

Interesting: a platform relaying on advertisement has three sides (producers, consumers, and advertisers).  Microsoft Windows is a platform that connects computer manufacturers, app creators, and app users, where Microsoft Office is the most popular apps.  However, when Microsoft tried to find producers for X-box console, the search was unsuccessful as game console is the subsidy side of the platform.

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opentable.PNGOpen Table initially tried to attract “eye balls” in general, and the strategy was unsuccessful.  The company signed up many restaurants, but not enough in one market to become attractive for the consumer.  The company changed its approach, and concentrated on specific markets to generate enough restaurants to be attractive for the potential diners.

BrightCove was conceived as a platform, but the approach was unsuccessful, and company changed its strategy.

Multi-sided platforms need to be designed to encourage participation from different sides.  For example, money-sending platform would charge more for sending money to a person who was not signed up than to a person who was signed up.

HBR’s 10 Must Reads 2017

hbr.pngThe excellent collection overall has two interesting articles related to automation of knowledge work.  One of the articles emphasizes imperfections of algorithms and another one suggests strategies for humans when AI is able to perform some of their tasks.

(Based on my experience in marketing, marketing automation did not reduce the demand for knowledge workers, but rather expanded the “knowledge” required to be a marketer.  Though companies thought initially that they will need less marketers with the advent of automation, this assumption was incorrect.  The automation allowed more knowledgeable people to achieve better results, but the minimum number of people  and minimum amount of knowledge to realize any ROI on automation actually increased.)

Algorithms Need Managers, Too

The article suggests that however sophisticated, algorithms are literal, require very precise instruction and understanding of their limitations.  The typical example is giving the instruction to an AI to “save the Earth,” which will proceed with an attempt on elimination of humans as the most reasonable method of achieving the objective.

Example: a predictive algorithm was selecting products that can be purchased in China and re-sold in US.  The program worked well until customers started to return the products.  Long-term product satisfaction was not built into the process.

Example: algorithm can predict clicking on an add, but the required result is a sale; optimization on the click will generate more activity, but may not generate revenue.

Example: Netflix predictive algorithm for DVD rentals did not apply to video streaming.

Also remember that correlation still doesn’t mean causation. Suppose that an algorithm predicts that short tweets will get re-tweeted more often than longer ones.  This does not in any way suggests that you should shorten your tweets.  This is a prediction, not advice.  It works as a prediction because there are many other factors that correlate with sort tweets that make them effective.  This is also why it fails as advice: shortening your tweets will not necessarily change those other factors.

Beyond Automation

The article ponders the future of AI replacing some of the knowledge worker’s tasks, and what knowledge workers could do:

  • Step up (strategy)
  • Step aside (area that requires human interaction)
  • Step in (work with algorithms – what might be a default “augmentation” approach)
  • Step narrowly (area within profession that is unlikely to be automated)
  • Step forward (create next generation of AI)

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How Indra Nooyi Turned Design Thinking into Strategy (Pepsi)

The article explains very well “design thinking” on easily understandable examples of Pepsi.

Interesting: Pepsi also uses a variation of “reverse innovation” – launching a product in smaller market (outside of its home US market), where cost of failure is acceptable.

Interesting: Pepsi calls healthy products “good for you,” and products that do not fall into this category “fun for you.”

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Every morning you’ve got to wake up with a healthy fear that the wold is changing, and a convection that, to win, you have to change faster and be more agile than anyone else.

People Before Strategy

Discussion of people should come before discussion of strategy.  What are employees’ capabilities, what help might they need, and are they the very best?

Interesting… 🙂

Book – Thriving on Chaos

thriving.pngFantastic book!  The most remarkable is the applicability of many suggestions now, a couple of decades later.

The book starts with an idea that was demonstrated so true in recent times:

There are no excellent companies.  The old saw “If it ain’t broke, don’t fix it” needs revision.  I propose: “If it ain’t broke, you just haven’t looked hard enough.” Fix it anyway.

The book also has many “analog” examples of very modern concepts, examples that give a more complete view of the concept.  As now listening associated with social media, the most effective approaches to listening may not need to be online at all.

One of the most interesting points is the perception of effectiveness of automation (in manufacturing context), which is very similar to implementation of marketing technologies now.  As our industry realized that the biggest challenge of marketing technologies is the “people and the process” rather than “data and technology” itself, similar perception has been observed decades ago:

“Spending big money quickly on automation is not wise.  In the end, its effectiveness depends as much on organizational preparation as on money and technical prowess.  Major automation cannot be effectively “installed;” it must be accompanied by a way of organizational life.”

“…It turns out that the installation of integrated information technology-based systems is not primarily a matter of technology.  It is a matter of organization.  Every power relationship, inside and outside the firm, is affected by the installation of the new information technology systems…  The failure of so many elaborate new systems results from a failure to think through the bare-knuckle issues of power redistribution.”

Creating Total Customer Responsiveness 

C-1 Specialize/Create Niches/Differentiate

Interesting, the author believes that “the more the world perceives the product to be a commodity, the greater the opportunity to differentiate and create new and unexpected niches…”  The example is “shop towel” producer (rug business), which helps industrial launderers to run their business and “rent” the rugs to the end users.

C-2 Provide Top Quality, as Perceived by the Customer
C-3 Provide Superior Service/Emphasize the Intangibles
C-4 Achieve Extraordinary Responsiveness
C-5 Be an Internationalist
C-6 Create Uniqueness
C-7 Become Obsessed with Listening

One organization asked its customers to share their perspective on the industry and what they actually needed.  “Interesting that they wouldn’t give me 15 minutes to listen to me in their offices, but would allow me two hours in my hotel if I would listen to them.”

Calls coming to the service center: asking customers for their ideas during the calls and report what they heard to top management directly. 

“In fact, we’d be much better off if we could pretend that our customers are foreigners who do not speak our language.”

Walmart:  “…each of top executives picks out an item of store merchandise that he or she will directly sponsor throughout the year.  The most beneficial aspect of the program is simply that it keeps senior management’s hand in the business in a very direct way.” 

C-8 Turn Manufacturing into a Marketing Weapon
C-9 Make Sales and Service Forces into Heroes

Innovative approach of a government agency to recognition: “Baltimore’s transit boss… wanted to reward good performance from bus drivers.  Not fazed by the public sector’s inability to give tangible rewards, he figured that downtown merchants benefited from good transit service.  So he solicited gifts from them to give to top drivers (such as free meals and movie tickets) in return for free advertising space on the buses.”

C-10 Launch a Customer Revolution

Pursuing Fast-Paced Innovation 

I-1 Invest in Applications-Oriented Small Starts
I-2 Pursue Team Product/Service Development
I-3 Encourage Pilots of Everything

“We don’t need proposals. Or, rather, we need a new form of proposal.  The most useful proposal aimed at an executive committee is one that has been thoroughly presold to everyone on the basis of hard evidence signed by and contributed to by each key executive’s own field people.” 

I-4 Practice “Creative Swiping”
I-5 Make Word-of-Mouth Marketing Systematic
I-6 Support Committed Champions
I-7 “Model” Innovation/Practice Purposeful Impatience
I-8 Support Fast Failures
I-9 Set Quantitative Innovation Goals
I-10 Create a Corporate Capacity for Innovation

Achieving Flexibility by Empowering People

P-1 Involve Everyone in Everything
P-2 Use Self-Managing Teams
P-3 Listen/Celebrate/Recognize
P-4 Spend Time Lavishly on Recruiting
P-5 Train and Retraincomplexity.png
P-6 Provide Incentive Pay for Everyone
P-7 Provide an Employment Guarantee
P-8
Simplify/Reduce Structure
P-9 Reconceive the Middle Manager’s Role
P-10 Eliminate Bureaucratic Rules and Humiliating Conditions

Learning to Love Change: A New View of Leadership at All Levels

L-1 Master Paradox

“Success will steam from more love of the product – and less attachment to it.”  

“The core paradox, then, that all leaders at all levels must contend with is fostering (creating) internal stability in order to encourage the pursuit of constant change.” 

L-2 Develop an Inspiring Vision

“Effective visions are aimed at empowering our own people first, customers second.”  Very interesting – and decades before Employees First – Customers Second movement. 

L-3 Manage by Example

“Lead, as never before, by personal example – in particular, calling attention to the new by means of our primary leadership tool: our calendars; that is, the way we spend our time.”

“Modify your calendar by 15% in the next six weeks to call attention quantitatively to your top priority.”

L-4 Practice Visible Management
L-5 Pay Attention! (More Listening)

“You must have the guts to ask dumb questions.”  (Illustration is a senior consultant unfamiliar to the specific industry unafraid to ask the business to explain industry terms, while junior consultants were afraid that they were expected to know the terms and did not dare to ask questions.

“Eat your way through the medical staff.”  A brilliant approach used by a hospital administrator to connect with medical staff, who was considered as “don’t want to cooperate.”  “I simply declared that I was going to be in my office on the same morning each week, with coffee and Danish, and I’d be pleased if any of the medical staff would drop by and join me toward no particular end.  It was slow to catch on, I’s be the first to admit it.  There were a lot of lonely breakfasts, but now it’s the most important and real “Staff meeting” of the week.” 

L-6 Defer to the Front Line
L-7 Delegate
L-8 Pursue “Horizontal” Management by Bashing Bureaucracy
L-9 Evaluate Everyone on His or Her Love of Change
L-10 Create a Sense of Urgency

Building Systems for a World Turned Upside Down

S-1 Measure What’s Importanttraining
S-2 Revamp the Chief Control Tools

“… Numbers too often focus on highly abstract outcomes.  We need, instead, to emphasize capability building – developing the skills that will give us strategic advantage over the long haul.  We need to talk about “building sales-force capability and support systems,” “achieving flexibility,” and “cutting product development time” more than about achieving “15% earnings-per-share growth.”  The later target may be admirable, but is not much related to the skill enhancement necessary for adjusting to the changing world.”

S-3 Decentralize Information, Authority, and Strategic Planning
S-4 Set Conservative Goals
S-5 Demand Total Integrity