Book – Platform Revolution

platform-revolution.pngPlatform Revolution book gives an excellent analysis of the Platform as a new business model and its influence on other businesses and society in general.

Platforms, in general, “eat pipelines” – traditional organization of the business, where a product is designed, created, and later offered to the consumer.  Platforms are not limited by the constraints of creating or owning physical goods, what allows exponential growth of the business.  Platforms exist to facilitate an exchange of “value units” by providing the place for the exchange.

Value unit –  The most basic item of value that may be exchanged by users on a platform—for example, a photo on Instagram, a video on YouTube, a craft product on Etsy, or a freelance project on Upwork. When a value unit is spreadable, it can be easily distributed by users both on and off the platform, thereby helping to fuel viral growth.

Comparing to pipelines, networks have “chicken and an egg” problem – attracting consumers and producers to the network.  Network can generate value only when both parties joined the network in comparable proportion.  Platform needs to resolve curation issue to keep productive balance.  (Examples: Quora started with staff asking questions and curating conversations, what later moved to algorithm/community curation.  Dating platforms trying to attract women (men will come if women are there), and carefully match profiles to assure that the most attractive women do not receive too many unsuitable requests and leave).

Networks need to manage 4 types of relationships:

  • Consumer to Consumer
  • Producer to Producer
  • Consumer to Produces
  • Producer to Consumer

Network effects can be positive and negative.  Positive (typical understanding of network effect – the more participants are involved into the network, the more value for each participant).  Negative network effects can be an excessive possibility of an undesirable interaction  – in the example of dating networks,  too many poorly matched inquiries resulting in too high rejection rate.

Platforms would not be subject to classic Porter competitive forces approach.

Porter-5.png

As buyers and suppliers become platform participants, a coopetition  is a likely outcome.

Coopetition.png

However, network owners need to assure that producers do not create platform extensions limiting innovation of other producers.  Platform owners also try to prevent “multihoming” to discourage simultaneous use of competing platforms.

Multihoming – The phenomenon of users engaging in similar types of interaction on more than one platform. A freelance professional who presents his credentials on two or more service marketing platforms, a music fan who downloads, stores, and shares tunes on more than one music site, and a driver who solicits rides through both Uber and Lyft all illustrate the phenomenon of multihoming. Platform businesses seek to discourage multihoming, since it facilitates switching—the abandonment by users of one platform in favor of another.

Interesting – authors suggest that in platform business marketing needs to be baked into the product.  Traditional pipelines could create a product completely independently from marketing.  It makes sense, but wouldn’t any product benefit from “baked-in marketing?”  😉

Book – Winners Dream

Winners-Dream.pngLooking for some paper at work, I saw a line of books on the cabinet with a note “take one.”  Ah, a business book by the CEO of SAP, signed by the author?  I took two!  One for myself and one for a coworker 🙂

Yes, I can be easily tempted by a free business book (much more than a free t-shirt), but this book was a pleasure!  A very inspirational story with lively characters and colorful stories takes the reader through the life and career of Bill McDermott, CEO of SAP.

SAP.pngBill’s remarkable understanding of people, extended to understanding of customers, most likely, was one of key components of his success.  This perspective matched with constantly changing world: customers’ needs changed – so should the company’s offering. The book ended with the author’s desire to share the insight and help new generations of leaders to take their businesses further.

The most thought-provoking point of the book, I thought, was ASP’s ability to develop a deep understanding of business benefits of the product, selling it successfully based on these business benefits, and not using it internally.

The irony was that, despite knowing the value of our own CRM software, we weren’t even using it.  Seriously.  People were tracking their sales status on paper…  It would have been funny – if it weren’t so unproductive.

Hm…  What is it I am “selling” and not using?

A few more interesting points from the book:

  • “A good strategy had to be easy to understand.  Some people, I believed, confused complexity with a great strategy and equated volume with intelligence.”
  • “…I had always embraced simplicity as a leader.  Not because I feared or could not grasp complexity, but because it was so easy for other people to walk away from complexity.”
  • Bill saw the opportunities to emphasize value of his product or service instead of discounts, based on customer knowledge.  As a young person running a store, he added delivery or credit, if it helped the categories of customers he observed (even trust – by treating teenagers coming to the store with respect).  He shifted conversations “from a piece of technology to productivity” at Xerox and later recognized the need of interface design to make SAP products easier to use.
  • How a technology can improve business outcome?  Xerox first color copier could not compete on quality of the color image.  It was positioned as a copier for business needs and offered to business customers “You are an investment baker preparing a big presentation…Make your argument more enticing in color… and for a lot less than competitors’ extravagant copiers.”
  • Turning around under-performing district started from realizing that people were not lacking work ethic and energy, they lacked hope.  Giving the hope (and support) moved the lowest-performing district to the top rank. “The more powerful, lasting motivator was the idea that we were all working together toward a crazy miracle.”
  • Change management:
    • “The people in our district did not fear change.  What they feared was what most people feared, which was change without well-defined expectations, change without a plan, and change without a goal.  Ambiguous change, what’s what turned people off.”
    • “People are most likely to change their minds when the world they once knew no longer exists.  A leader’s challenge, then, is to explain why the old world went away, show people what the new world looks like, and get them excited to be a part of it.”
    • SAP challenges: “…SAP salespeople were telling a technology story when we needed to be telling a business story.”  A new team was created to evaluate the company and give recommendations on its business improvement, not the technology objectives.
    • “The world is littered with a lot of companies that, when they were strong, decided not to change.  We’re not going to be one of those companies.”
  • Communication: “Anything worth communicating is almost always under-communicated.” “As much as I loved technology, especially the mobile movement, an inescapable truth was that too many people were out of practice communicating with one anther in person.  There’s no replacement for human interaction.”

Excellent book – highly recommend!

Book – Managing Diversity

Diversity-bookAs the composition of the workforce is changing, many companies are faced with a challenge and an opportunity.  I remember reading an excellent article about diverse teams a few years ago as part of an MBA course.  Diverse teams might be less productive if they try to avoid conflict in the discussion and do not contribute unique perspectives of each team member to the problem solving.  The team might feel good about their work as a group of people who agree with each other, but the main advantage of unique expertise of the team members is lost.

I guess, general aspect of the workforce diversity is similar: it can give companies competitive advantage, but the road to this advantage is not intuitive, and may be uncomfortable.  The book Managing Diversity: Toward a Globally Inclusive Workplace is an excellent source for understanding the topic.

The book highlights the process of moving from homogeneous to a more heterogeneous workforce.  As birth rate in developed countries declined, immigration is contributing to this trend.  Change in status of women in many developing countries and intergenerational groups of people working on the same project also becoming more common.

continentsThe most significant problem in the diverse workforce is the exclusion – both overt and perceived.  “Individuals and groups are implicitly or explicitly excluded from job opportunities, information networks, team membership, human resource investments, and the decision making process because of their actual or employer-perceived membership in a minority or disfavored identity group.”

The inclusive workplace:

  • Values and utilizes individual and intergroup differences within its workforce
  • Cooperates with, and contributes to, its surrounding community
  • Alleviates the needs of disadvantaged groups in its wider environment
  • Collaborates with individuals, groups , and organizations across national and cultural boundaries

And – what might be counterintuitive – companies that practice inclusion benefit financially from this approach!  The mechanism is probably similar to the work of diverse teams – unique individual contributions are beneficial for the success of the project or the company, and simple agreement with the dominant idea puts the company at the competitive disadvantage.

Definition of diversity was also surprising to me – it was more broad than international and cultural differences; and I observed companies struggle even with obvious diversity issues.

Workforce diversity refers to the division of the workforce into distinct categories that (a) have a perceived commonality within a given cultural or national context and that (b) impact potentially harmful or beneficial employment outcomes such as job opportunities, treatment  in the workplace, and promotion prospects – irrespective of job-related skills and qualifications.

Interesting: people tend to exhibit prejudice and discrimination based on even arbitrary group categorization.  Considering that this phenomenon exist, it is not surprising that inclusiveness is so challenging.

This trait most likely had an evolutionary advantage over the history, but no longer useful (as our interest in high calorie food 😉 ).  When the environment changed, those organizations that can overcome their cravings will be fitter and more competitive.

Diversity management refers to the voluntary organizational actions that are designed to create greater inclusion of employees from various backgrounds into the formal and informal organizational structures through deliberate policies and programs.

Very interesting distinction: “The current business focus on diversity is quite different from equal rights legislation and from affirmative/positive action programs.  The latter are about trying to achieve equality of opportunities by focusing on specific groups and righting past wrongs.  Diversity efforts focus on managing and handling the diverse workforce to give the company a competitive advantage.”

diversity-table

Another interesting point: executives tend to lead in the manner consistent with their culture.  Understanding the culture can help to understand what type of leadership could be more effective in a particular environment.

Diversity programs implementation in the company can be enhances if managers bonuses are linked to diversity management performance.

Study of 127 large US companies: board of directors diversity was positively associated with both return on investment and return on assets.

Meta-analysis of 52 quantitative studies over 30 years of research indicated positive correlation between companies’ social performance and their financial performance.

chairs

Book – Employees First, Customers Second

employees-firstAs management theory is moving away from intuitive hierarchical structures of previous century, several business books and classes mentioned a more innovative approach – a business decision to put employees ahead of customers.  In this case the shareholders moved further down in the hierarchy, and short-term interests can be ignored for the sake of long-term benefits of the organization.  How “Employees First, Customers Second” can even work?  The book demonstrates that this approach can work spectacularly well in times of economic down-turn and also during business expansion.

  • Any business transformation requires innovation both in what you do and in how you do it.  As most of the business world is concentrated on “what,” paying attention on “how” can be the greatest opportunity of accelerated growth.
  • The author noticed that his customers appreciated the employees in the “value zone” – the consultants who were working with customers – rather than any other aspects of the organization. The “value zone” was the most important for the business and needed to be in the center of company.  Current organizational structure had been designed to exalt those with hierarchical power rather than those who created customer value.  The CEO started changing the structure.
  • The company opened financial information of different business units to the entire organization, (and later other business information) as a step to reach more transparency.  Though some leaks happened, the overall result was positive – well performing teams felt recognized, and it was clearer what would be needed for improvement.
  • workAnother step toward transparency: an online forum where any employee could post a question for management. Initially the system was clogged with complaints, much of which were true.  However, the trust to management increased – employees believed that management was willing to acknowledge the dirt – there were less gossip and rumors in the organization.  Employees also tried to solve problems posted by others.  “Simply by allowing questions to be asked, we had improved the likelihood that the answers would emerge.”
  • Customers were more understanding than expected.  They realized that by putting employees first, the company provided the most valued for them.
  • Managers’ 360: anyone who gave the feedback can see overall results. As it was a sensitive situation, the CEO started from posting his own 360 results for the entire organization to see, and the rest of senior managers followed.
  • An employee could choose to do a 360 evaluation of any of the managers they believed had impact on their ability to do their job (positive or negative).
  • The 360 evaluation was used for development, not for appraisals (similar approach used by Google – the objective is improvement rather than punishment).
  • Engaging “passion” – the organization created employee councils around specific areas. Employee councils dedicated to business-focussed issues generated new ideas for the business. “It is my belief that innovation especially in our business, often thrives in an unstructured process like this one.”
  • Company created “Value portal” to encourage communication between customers and employees. More than 100 customers joined, and employees generated thousands of ideas with the potential of saving hundreds of millions of dollars for customers.
  • Planning meetings transformed into recorded presentations available to a much wider audience, including the manager’s team.  “The amount of knowledge sharing outside the walls of the formal hierarchy as extraordinary.”
  • successEconomic downturn – the company decided not to do layoffs. The company asked employees for ideas – and received suggestions that became basis of several beneficial initiatives. “The ultimate impact of the initiative was less on cost-cutting initiatives than it was on increasing revenue.”  (Interesting – similar approach used by successful retailers, who invest into their employees.)  The company’s market share grew 20% year after year during the worst period of the recession. Customer satisfaction score went up by 43% during the recession.

The author argues that the “Employees First, Customers Second” approach could work in good and bad economic times and does improve company’s performance.  Hopefully, more companies will adopt similar philosophy in the future 🙂

Book – Work Rules!

Work-RulesExcellent inside view on HR in one of the most interesting companies! This insight about recruiting, training, and value of good management is fantastic.  Though some of the conclusions seem common sense (of course, transparency is beneficial for business!), they were supported with data – Google is marvelous source of data 🙂

Note on motivation and productivity

fundsThree group of employees called potential donors and asked them to donate funds to a university.  The control group did not receive any additional information, group two read stories about the benefit that this job brought to the employees, and the group three read stories how scholarships resulting from the fundraising changed people’s lives.  As a result, group three increased donations over 100%, while there was no change in the performance of other two groups.

If reading about students who received scholarships was so effective, meeting scholarship recipients for five minutes and be able to ask questions increased fundraising effectiveness over 400% for the next month.  Having workers meet people they are helping is the best motivator. 

Value of employee freedom

Two identical plants making T-shirts were managed differently.  One was tightly managed and another one allowed more freedom for the employees.  The plant with more freedom had higher productivity and lower cost per T-shirt.

Culture eats strategy for breakfast

Approach to hiring and training (very interesting – and makes total sense!)

  • Google invests more into hiring than into training.  Google is very selective and prefers to take time in finding the right candidate rather than just hire anybody.  This approach is also described in Who – The A Method for Hiring book.  The philosophy is tested by sports teams – “hiring” the best athletes for the team increases chances of winning.

Unfortunately, many other companies put hiring managers in a sad situation when if the position is not filled quickly, the hiring manager would loose the position, and, in some cases, would be blamed for lack of capacity and expertise in the team. These companies will be easily out-competed by companies with policies similar to Google’s approach 🙂

  • Google invests more resources in recruiting, and “saves” resources on training – includes only training that truly change behavior and involves talented employees in giving training to their colleagues.
  • Limitation of manager’s power on hiring decisions – hiring by a committee
  • Google had a hiring process that took too many interviews, took too much time from the company and was exhausting from the perspective of the candidates.  Google used data to determine the optimal number of interviews, and to increase experience for even rejected candidates.  As a result, the number of rejected candidates who would recommend applying to google to their friends increased dramatically.
  • Google tried and rejected some unusual ways of trying to find good candidates, such as cryptic billboard

billboard

Google did not hire anybody based on the effort.  People who could solve the puzzle (not that many), may be specialists in very narrow fields, and may not be able to work in the team environment Google requires.

Management

Google evaluated managers and determined that good managers do matter, and people are less likely to leave the company if they have good managers (moving from a good manager to a bad one and the other way around influences the employee’s happiness and propensity to leave based on manager’s quality).  Google decided to understand what good management is, and Project Oxygen gave the answers.

  1. ManagerBe a good coach.
  2. Empower; don’t micromanage.
  3. Be interested in direct reports, success and well-being.
  4. Don’t be a sissy: Be productive and results-oriented.
  5. Be a good communicator and listen to your team.
  6. Help your employees with career development.
  7. Have a clear vision and strategy for the team.
  8. Have key technical skills so you can advise the team.

Interesting point: the book highlights that technical skills are mandatory, as if the manager can not code, he or she will not be taken seriously by the team. However, the other points are more important for good managers, who already passed the technical knowledge bar.

Google does help managers to improve – managers are evaluated by their teams (wow!) as managers.  However, Google HR divorces developmental and evaluation feedback – this is necessary to assure that people won’t try to game the system and will truly be interested in feedback.

Google has a great manager award, but the condition of winning the award is training others.   🙂

Awards and recognition

The author suggests “paying unfairly” – disregarding the restrictions of pay grades and increasing compensation for more productive employees.

Google had a significant cash award system for remarkable projects…  what made everybody unhappy.

  • some non-engineering functions could not possibly be included
  • some projects would be unlikely to be included (not critical projects)
  • some awards were rather small – people were disappointed
  • some people participated in the multi-year projects partially, and could be included or excluded from the award arbitrarily
  • even winners of significant awards were not happy  – they realized that their group would not be eligible for the award next time and tried to switch teams

awardGoogle also experimented with determining which types of awards would give employees more “happiness.”  If asked, majority of employees preferred cash.  However, “experience” awards, such as a trip for the team to Hawaii, generated more “happiness” even months later, and, in some cases, the perception of the award were even more positive months after the award was given.

Transparency

Google opens more information to its employees than other companies to achieve business benefits and suffers about one leak per year.  However, the cost of leaks is smaller than the openness all enjoy.

Treating your people well is the mean to the end and an end in itself

Book – Lead with a Story

storyLead with a Story: A Guide to Crafting Business Narratives That Captivate, Convince, and Inspire  – excellent book!

The book highlights the benefit of stories in business environment – to make a point, to introduce yourself, to inspire a team, or to promote an idea.  The book is full of excellent stories that are a pleasure to listen.

The author also explains the structure for the most effective story and gives several examples how it is different from “typical” business communication. Storytelling road map is available for download.

  • Context: 
    • Where and when?
    • Relatable Subject? (relatable hero)
    • What do they want? (worthy treasure)
    • Who/what’s in the way? (relevant obstacle)
  • Action:
    • Did the hero battle the villain? Ups, downs and setbacks along the way
    • C.A.R. in the right order?
  • Result: 
    • How did it end? Is the result clear?
    • Right lesson you wanted to teach
    • Why you told the story (Does it compel audience to do what you wanted?)

 

story-2Popular book title: “100 ways how not to do [your topic]”

Best place to look for a solution is outside of your industry – find an industry that already solved this problem.  (This advice seem to be everywhere, but it is rather difficult to follow… and even keep attention of colleagues on any industry except their exact industry).

Each company that has a sales team has a purchasing department…  Connecting sales with purchasing can help sales reps to hear stories that will be very valuable for their job.

Introduction to a new team is better done with a story.  Why?  Because people evaluate their trust to those who are known at 70%, but the trust to those who are not known at 30%.  The new person can become “better known” through a story.

Introduction stories:

  • I am not who you think I am (an introduction of a new American manager presumed to enforce his usual approaches to a German company –  the manager tells a story explaining that he experienced differences in approaches in different parts of US and he understands that in this situation he will need to learn how the business is done in Germany)
  • A little about me (a story allows the new team to get to know you personally to move the new person from the 30% trust of somebody “unknown” to 70% trust of somebody “known”
  • “Why I work here” story – passion of the person

General recommendation is to collect stories and use them.  It can be done by a company and by an individual 🙂

Coursera – What Managers Can Learn from Great Philosophers

LucThis course, though interesting in general, gave me one idea that… dramatically changed my perception 😉  The idea that there are two phases of change – change in reality and change in perception – explained instantly quite a few puzzles in my life.

Box-1

Box-2

Box-3

Box-4

 

Another major concept is moving from “thinking outside of the box” to the realization that our thinking is constrained into boxes and to achieve “freedom” from the original box, we need to created different boxes and concentrate on thinking within those boxes.

Box-5

Box-6

Box-7

The Champagne example above is particularly interesting.  The company that produced Champagne was asked to describe its business without top 5 industry and company key words.  Struggling with the task, the executives concentrated on the fact that Champagne is an important part of a party.  As a result, a new box was created, inside which the company now could concentrate its thinking.  One of the results is a book (think content marketing 😉 ) that gave people an advice on how to give a good toast.

Box-8

Box-Hopefully

 

I also enjoyed professor’s book Thinking in New Boxes – highly recommend both: a book and a class.