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Archive for the ‘Organizational Change’ Category

Times | Flickr - Photo Sharing!It can be argued that businesses were traditionally built to be predictable, consistent and stable. Processes were designed to ensure consistent output and to control employee behavior to produce efficient outcomes. I would argue that in recent years the great recession, technological change and other factors have transformed business as we used to know it, into a more dynamic environment characterized by a faster speed of change than ever seen before.

Here are my 5 success strategies organizations can leverage to survive and thrive in today’s dynamic business environment:

1. Accept that Constant and Fast Change is the New Normal

In recent years the business environment has under gone a transformative shift where a heightened pace of change has become the new normal. As David Burstein author of the Fast Future argues:

The future is coming at us faster and faster, the rate of change is increasing and the amount of change that takes place in a given year is skyrocketing as well. So much change has taken place so fast that our governments, businesses, and other large institutions haven’t always had enough time to fully catch up.”

We are living in a time where anyone has the potential to make an impact. Start-ups can transform technology capabilities and anyone can share a message with the world through social platforms. While change can be daunting, executives need to embrace change and accept that the future is harder to predict than ever before.

2. Leverage the Possibilities of Big Data

Most organizations sit on a mountain of data. Today large, complex data sets can be analyzed to obtain greater business intelligence and statistical information than ever before. This data can be leveraged to improve the customer experience, product/service, logistics, customer segmentation, pricing, customer retention, inventory management and many other factors. David Court, McKinsey Director argues that regardless of whether or not you are a data based company, all businesses can leverage data and analytics to make stronger data-supported predictions and optimize performance by obtaining a broader view of operations. It is important organizations ensure data doesn’t become siloed, so they can fully optimize and take advantage of advanced analytics. Information may not be valuable for long so it’s important businesses exploit it and get utility out of it, to strengthen their competitive position.

3. Constant Innovation

Given the dynamic environment a constant focus on innovation is fundamental. It is important executives recognize that innovations can come from anywhere in the organization. Communication channels need to be open to allow for the free flow of information throughout all levels of the hierarchy. Employees need to be empowered to innovate everyday and share knowledge. To facilitate this change in organizational thinking, employee performance systems will need to be adapted to award innovative thinking as opposed to following corporate created guidelines.

4. Agility

Traditional bureaucratic organizational structures are slow to change and thus not adaptable enough for today’s innovative business environment. Organizations need to be redesigned to be more agile; to adjust in real-time as change occurs.

5. Face Disruption Head On

Almost 50% of the companies in 1999’s FT 500 were no longer in the FT 500 by 2009. It can be argued that while businesses are focused on constant improvement, they don’t always change in the right ways. If we take the case of Tower Records, the former music store peaked and had their most success year ever in 1999. In the years that followed Tower Records continued to improve their operations and efficiency, however they failed to recognize that customer demand could be met better in a new way: through online music; to the detriment of the survival of their business. It is important that companies continually scan the environment in which they operate and constantly research new ways in which they can better meet their customers’ needs.

What other strategies do you think organizations can leverage to survive and thrive in today’s dynamic business environment? Share your thoughts in the comments section below. 

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In this blog I’ve written extensively about organization and industry change. I recently read a paper in the McKinsey Quarterly entitled “Developing better change leaders” and wanted to share 4 tips, I learned from this paper and other research on leading transformational change.

  1. Collaborate: Collaboration across departmental and hierarchical boundaries can help organizations to achieve transformational change. The key to getting employees to buy into change is dialogue not dictation. Through dialogue, employees’ concerns can be addressed and ideally eliminated, so they can start to learn how the proposed change will be better. As people become more open, the organization becomes more transparent and trust is fostered, enabling collective solution building and idea sharing to occur.
  2. Map out the change process: While some adaptability will be necessary, by having the change process mapped out and communicating it, expectations can be shaped of what will happen, what could happen and when it may happen.
  3. Find the courage to be honest when having difficult conversations: When addressing the negative impacts change will bring such as layoffs, be honest with employees as soon as it is feasibly possible to do so. Work with employees who will face layoffs to help them find new jobs either within the company or with another company. Provide training, mentoring and support to empathetically engage with the displaced employees.
  4. Use your experience to train and mentor others: Leaders who have experience in transformational change can play a pivotal role in training and advising lower level managers. Such leaders can share their experiences of what worked well and not so well in previous change initiatives. They can then help subordinates to develop the skills necessary to move the organization forward.

While different companies will have different change situations, the above tips offer some generalized guidance. But what do you think? Feel free to add your own tips on leading transformational change in the comments section below.

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A week ago I moved to Reno, NV and am now 15 – 20 minutes walking distance from downtown’s river walk district.  I am already enjoying being able to walk to restaurants, a movie theater and other nearby entertainment options, as this is what I was used to growing up in Europe.  According to a recent issue of BusinessWeek for the first time in twenty years there is a US nationwide trend of cities growing faster than suburbs.  Many people are choosing to move into cities, a reversal of the 1960’s urban exodus.  One company looking to take advantage of this trend is big box retailer Target, who are experimenting with smaller stores in city centers.

Target has traditionally focused on suburban communities to drive revenue growth.  However, shifting demographics and the current economy has led to smaller revenue growth.  Indeed, before the recession hit Target added 22 new stores on average each quarter, a figure that has fallen over time, as evident by only one new store being added in the first quarter of 2011.  Target hope to drive revenue growth through exploring a smaller city center store concept and by embarking on international expansion into Canada.  The company’s goal behind these endeavors is to increase revenue by 40%, to $100 billion by 2017.

Target’s smaller store concept has been named  “CityTarget.”  The stores will be about two-thirds of the size of a regular Target box store at most; some may even be smaller.  Target Executive Vice President John Griffith, believes many city dwellers currently traipse to their suburban locations to take advantage of their low price designer lines:

“It’s like we’ve been dating long distance…  Now we’re going to be right in their backyard.”

A preview of the Chicago CityTarget one month prior to opening

The new CityTarget stores will have a redesigned layout to appeal to city dwellers.  Product selection will also be different, there will be smaller packaged goods options to target customers shopping without cars, a fresh foods section and some product lines such as outdoor furniture will not be available.

The first CityTarget store will open in Chicago in late July, with other planned locations in Los Angeles, San Francisco and Seattle expected to open later in the year.  The company hopes to create a “cooler” version of a Target store that is differentiated from department stores.  Target are pursuing a slow growth model for the concept, with less than ten stores planned for the next year.

I believe the CityTarget concept has the potential to be a success, as it’s an affordable store with appealing products, but what do you think?  Share your thoughts in the comments section below. 

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CrowdSourcing is a collaborative open call approach to problem solving and idea creation.  One such example is Google’s Project Glass, which involved the company sharing an idea for future technology and requesting feedback from the public to create consumer driven products.  Recently I read a research paper from McKinsey Quarterly by Arne Gast and Michele Zanini on the idea of crowdsourcing corporate strategy, which I will discuss in this blog post.

Why consider this approach?

So often an organization’s strategy suffers from a lack of diverse perspectives and lack of leader understanding of the operational challenges their employees face.  As a result strategies are often created that sound great in the boardroom but have the opposite impact in practice.  Leaders that fail to consider the implications of their strategic decisions on front line employees, may experience implementation challenges from employees who do not support the organization’s strategic vision.

Benefits of this approach

By incorporating perspectives from front line employees, strategies are less likely to be flawed relative to those created in isolation.  Crowdsourced strategies have the potential to be more insightful and actionable.  Employees are likely to become more engaged as they learn that their opinions are encouraged and can make a difference.  As a result of greater employee involvement, implementation is easier and employees are more likely to support the company’s strategic direction.

CrowdSourcing strategy in practice

Companies that have adopted this approach range from the obvious: Wikimedia to companies that were not founded on collaborative content creation such as 3M, HCL Technologies and Rite-Solutions.  HCL Technologies rethought their business-planning process to create greater transparency and to generate more diverse feedback and insights on their business plans.  In 2009 the company launched an online platform called My Blueprint and invited more than 8,000 employees to view 300 posted business plans.  Interested individuals gave detailed, actionable feedback on the plans and quality insights were obtained. By including others in the process, opportunities for cross-unit collaboration were more easily identified.  Overall crowdsourcing enabled the company to gain fresh perspectives to greater analyze their business plans and focus on specific actions to take to achieve desired results.

While the concept of crowdsourcing strategy is a very new idea, this concept has great potential to improve decision-making, avoid group think, eliminate ideas that would not work well in practice and to create visions that are more meaningful to lower level employees.  What do you think? Would your organization be open to crowdsourcing their strategy? Share your thoughts in the comments section below. 

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http://commons.wikimedia.org/wiki/File%3ABest_Buy_20070222.jpg

Earlier this month, one time successful big-box retail store Best Buy posted a $1.7 billion quarterly loss and announced the closure of 50 stores nationwide. Following the news Best Buy’s CEO Brian Dunn resigned due to what the company referred to as “an unspecified personal conduct issue.” This news made many question if Best Buy has a future as a 21st century retailer.

Here are 5 reasons why Best buy is stuck at a crossroad:

1. Changing business environment: Best Buy’s business has stagnated due to changing macro-economic forces, accompanied by a shift in consumer preferences.

2. Not enough choice: Shoppers today can typically find more choices online from Amazon and other online retailers than they can find at Best Buy. Frequently the online retailers have lower prices too.

3. Jack-of-all-trades, master of none: When it comes to tech products Best Buy essentially offers a little of everything. Given this strategy, the store’s sales representatives struggle to gain specialized knowledge on products sold. If you want to buy a cell phone it is likely that you could get your questions answered in more detail from a cell phone provider’s store sales representatives than you could at Best Buy.

4. The rise of mobile technology is transforming comparison-shopping: Years ago shoppers would go from store to store comparing prices. Giving their size the big-box stores typically won. Today people can compare prices far faster and easier online at any time in any place.

5. Failure to adapt fast enough: Best Buy has made changes to react to the environment such as acquiring online music subscription service Napster in 2008 (later sold in 2011) and online movie subscription company Cinema Now in 2010. However, such changes have not been fast or successful enough to guarantee the company’s continued success. As a result Best Buy is still somewhat dependent on products that have since been digitized such as CDs and DVDs.

Another area where Best Buy has failed to adapt is their store layout of checkouts and security guards at the door. Such a layout is outdated and un-customer friendly. By contrast at Apple’s retail stores, customers can check out wherever they are in the store and can test new products if a wait is necessary.

So what do you think? How can Best Buy avoid the fate of other big-box retailers such as Borders, Linens ‘n Things and Circuit City? Share your thoughts in the comments section below.

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As anyone who has read my blog may have gathered, I love businesses that continually pursue new ideas and believe organizations need to embrace change in order to remain competitive in the long run. A few days ago I got e-mail from Bain Insights on a subtle approach to business change called Repeatability. Bain and Company have set up a website containing articles and research on this topic in support of a new book by two of their partners Chris Zook and James Allen called ‘Repeatability: Building Enduring Businesses for a World of Constant Change.’

The Idea:

The authors recognize that while 80% of high performing companies have differentiation at the heart of their corporate strategy, such differentiation can become excessively complex. As a company becomes more complex they may lose a sense of who they are and what they are good at, as they continually pursue radical change in order to stay ahead of the competition. Such an approach Zook and Allen’s strategic research suggests may not be sustainable in the long run.

The Concept:

Zook and Allen advocate a simple repeatable business model that can be applied to new products and changing markets. The concept requires an organization to constantly adapt over time building on their differentiation in a way that reinforces their strategic advantages and keeps everyone on the same page. Under this concept all employees should know what the company’s key success factors are and change is constant rather than radical and disruptive. This quote from the authors’ Harvard Business Review article sums up the repeatable business model concept:

‘Really successful companies build their strategies on a few vivid and hardy forms of differentiation that act as a system and reinforce one another. They grow in ways that exploit their core differentiators by replicating them in new contexts. And they turn the sources of differentiation into routines, behaviors and activity systems that everyone in the organization can understand and follow.’

In addition, learning systems are put in place to ensure continuous improvement can occur constantly.

Repeatability in Practice:

Organizations with repeatable business models do three things:

  1. They understand what their customers want.
  2. They translate their strategy into clear business principles that can be easily understand and adopted by employees and leaders from all levels of the hierarchy.
  3. They are wired to connect and respond to feedback, adapting accordingly to keep learning.

Lego is an example of a company with a repeatable business model in place. After years of strategic errors Lego developed clear principles and metrics in order to replicate and improve on past successes, while adapting to new markets and the changing business environment. Using their repeatable business model Lego were able to increase their profit margins by 40% creating additional value for the company, which they hope to sustain.

For more information on the repeatable business model check out Chris Zook and James Allen’s book: Repeatability: Build Enduring Businesses for a World of Constant Change.

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I am fascinated by technology and what it can do for a business’ efficiency and work environment. The other day in one of my MBA classes we learned about organizations that are social businesses both internally and externally. One example given was the Children’s Hospital Boston. In addition to their extensive external social media activities, the Children’s Hospital Boston has an internal social networking website called SPARC (social platform for accelerating resources and connections). SPARC was designed to foster communication and collaboration to further support the hospital’s innovation acceleration program. SPARC enables its members to join groups, hold conversations, broadcast announcements, and find resources and experts.

Hearing of the Children’s Hospital Boston reminded me of a Business Insider article I’d read earlier this week on another Boston organization Eagle Investment Systems’ innovative workplace. While undoubtedly very different types of organizations, both are forward thinking and adhere to the notions of social business from an internal perspective.

Eagle Investment Systems’ technology has been designed to enable employees to work together no matter where they are located. Like Children’s Hospital the company has an internal social networking website. This portal application contains an instant messaging/web conferencing tool called Jabber. Jabber has enabled employees to communicate more efficiently getting projects launched in two days versus the two weeks it previously took to organize people via e-mail. Now data, contact info, schedules, calendars etc. can be shared through this system, creating fast and effective communications. Interestingly Jabber’s instant messaging tool has replaced e-mail as the workforce’s main communication tool. Another aspect of this technology is status updates, which are displayed on monitors throughout the building enabling employees to efficiently request expertise and keep in the loop with what’s going on.

Eagle Investment Systems’ social networking system is supported by the employees having tablets, laptops and cell phones. There are no traditional desk phones at this company. The work environment is one of huddle rooms to facilitate collaboration. Video conferencing through WebEx is also greatly used and has enhanced relationships with employees in remote locations. Ultimately Eagle Investment Systems’ Head of Information Systems Mike Fitzgerald describes how:

Priorities have shifted away from employees sitting in a cube to what’s happening in the virtual world. It’s all about information flow, data, collaboration… in a dynamic, ad-hoc fashion.’

I personally am intrigued by what Eagle Investment Systems and the Children’s Hospital Boston are doing and think it could represent a vision of the workplace of the future. But what do you think? Share your thoughts in the comments section below.

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