Innovate or Perish
Use of Technology
Recruiting and retaining the best…
Information and Decision-making
Continuous Change and Business Agility
“Even if you are on the right track, you’ll get run over if you just sit there.”
— Will Rogers
It was Joe Tiller, the famous football coach, who said “It’s always a chess game, and you’re trying to stay one move ahead of the competition.” Tiller’s words are as applicable to businesses as it is to football. To survive and thrive in today’s brutally competitive business environment, businesses must find ways to continuously move forward and stay ahead of the competition to survive and thrive in today’s brutally competitive business environment. As the Internet and WWW are changing the way business is done by providing a level playground for small companies to effectively and efficiently compete with large conglomerates, no one is safe as their positions could be taken by smart, agile, and new competitors.
Even though, running an efficient organization that delivers high-quality products and services at reasonable prices is essential for business success, it is no longer sufficient to ensure survival. Even though the factors like customer satisfaction, productivity improvement, elimination of waste, automation of business processes, faster order processing, etc. are essential for survival, these are not the factors that act as the key differentiators in today’s global Web economy. In this article we will see the factors that differentiate the best from the rest, the winners from the losers, and the leaders from the followers.
INNOVATE OR PERISH
According to the findings by many research firms and industrial analysts, the only way for companies to compete is to constantly innovate. According to them the avenues for improving the bottom line has been exhausted and the only way to move forward is to sustain top line growth and increasing profits. So the CEOs and the top management must change their focus from the operational issues and concentrate on growth and innovation. According to Rosabeth Kanter, “to stay ahead, you must have your next idea waiting in the wings.”
The last few decades show the rise of companies that constantly innovated—created new products, developed new marketing strategies, improved and revamped existing products, developed new business and sales models—cutting into the market share of organizations that were maintaining status quo. Some of the well-known examples are Dell (which revolutionized the PC market), McDonald’s (which redefined the fast food market), and of course Apple. Apple is one company that thrives on innovation. If you look at the number of new products that Apple has brought out in the recent years—iMac, iBook, iCube, eMac, iPod, iTunes, iPod Mini, Mac Book Pro, Mac Book, Mac Pro, iPod Shuffle, iPod Nano, Apple TV, iPhone, iPod Touch, and so on—you will realize why other companies are always playing the catching up game with Apple and yet never succeeding in even that.
Innovation will not happen automatically. The organization should create an environment that is conducive for innovation. For example, at Google, employees can spend 20% of their time to explore and develop their ideas. Some of the best Google applications and products are results of such projects. Organizations must not only stimulate innovation, but also prevent innovation stoppers and idea killers from killing the innovative spirit of the employees. In his book “The Myths of Innovation,” Scott Berkun defines an innovation stopper as “a person with power and motivation to kill new ideas.” He also gives reasons why these people are afraid of innovation. Idea killers are thought inhibitors like “we have tried it before”, “we don’t have time”, “we don’t have budget”, “not interesting”, etc. So organizations should be aware of and remove innovation stoppers and idea killers and must encourage the employees to constantly innovate.
When asked how FedEx always stayed ahead of competition, Fred Smith, the founder and CEO said, “We hammer home that not to change is to be in the process of dying, of not meeting the market as it is. We applaud people who instigate change. We don’t hang people who try something new that doesn’t work out, because that’s the easiest way to ossify an organization—to crucify the people who are trying to innovate.” So the organizations should encourage the employees to try out new things, think of new ideas and always innovate without fear of failure.
According to Apple CEO Steve Jobs “innovation distinguishes between a follower and a leader.” Today, innovation is no longer a luxury; it is the key to survival.
Kaizen or continuous improvement is one of the best ways of improving the efficiency and effectiveness of an organization. Even though it is a Japanese concept, it can be applied anywhere. Kaizen strategy requires never-ending efforts for improvement involving everyone in the organization.
The difference between innovation and improvement is that innovation involves a drastic improvement in the existing process and requires large investments whereas Kaizen signifies small but continuous improvements as a result of coordinated and continuous efforts by all employees. It can be a reduction in the response time, elimination of an unnecessary process, introduction of a safer working practice, creation of a device to improve the efficiency of a worker, and so on.
Most Japanese methodologies like the Five Ss, Canon Production System (CPS), Toyota Production System (TPS), Total Quality Management (TQM), etc. have continuous improvement as their cornerstone. Organizations should evolve a culture of continuous improvement and encourage the employees to continuously and consistently improve the way in which they perform their activities.
Small and minor improvements when implemented continuously and by all the employees can have a dramatic impact on the overall performance of the company. Consider the example of AZ Technologies, that conducted touch typing training for all its employees as 95% of its employees used computers for at least 4 hours a day. The productivity improvement was dramatic—many employees were able to save hours, as their typing speed doubled or tripled. It also reduced the typing related injuries as the employees were using the correct method.
Leaning is a lifelong process. One must never stop to learn. Learning will keep the employees up-to-date with latest technological developments and help them improving their efficiency as they could use the newer and better methods, practices, tools and techniques.
In his book “The Fifth Discipline: The Art and Practice of the Learning Organization,” Peter Senge introduces the concept of the “Learning Organization” and stresses the importance on continuous learning. According to Senge learning organizations are places where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning to see the whole together.
The basis of a learning organization is the people: their knowledge, skills, creativity, diversity and learning capability. A learning organization is characterized by continuous improvements through new ideas, new knowledge, and new findings, which the organization uses to anticipate, to innovate, and to find new ways to do business.
The HRD departments of the organizations should create an environment that promotes learning and there should be ample learning opportunities for the employees. Well stocked libraries, computer based training (CBT) programs, computer assisted learning (CAL) facilities, etc. should be made available to the employees. The HRD department should have a skill inventory of all the employees and should conduct courses and training programs that fill the gaps in the employees’ skill set so that it matches with the long-term strategies of organization. For example, if an organization is planning to switch from UNIX to Windows, then the employees in the organization who are not familiar with Windows should be given training so the transition can be smooth.
Almost all top tech firms insist and create an atmosphere that promotes continuous learning. For example, continuous learning and development is the key for a successful career at IBM. According to IBM, “we need people who will focus on building their expertise continuously in line with the ever-changing business environment.” IBM has recognized the importance of continuous learning to stay ahead of competition and has developed state-of-the-art tools like job role and technical training (training on emerging technologies), academic learning assistance program (assistance for external education), Learning@IBM, IBM Global Campus, etc. so that the IBMer’s can continuously develop professional and technical skills.
There are different types of learning, each with different objectives. There are induction courses, refresher courses, soft skill courses, programs to impart new skills, inspirational and motivational programs, and so on. Ideally the organizations should provide all the above types of learning opportunities so the employees can grow and thereby help their companies to grow.
Evolution is the secret of survival. In fact, the plants and animals have continuously and constantly adapted and evolved to survive. The phrase “survival of the fittest”—one of the fundamental laws of evolution is true in the case of businesses too. Businesses that can adapt to the new environments and evolve are able to survive and thrive even during difficult times. The two aspects of evolution are strengthening the core competencies and diversification.
All businesses will have their core competencies. For example, the core competency of a car manufacturer is making cars while that of a publisher is to bring out books. The businesses should identify their core competencies and strengthen them. For example, the car manufacturer should find ways to improve the quality of cars, make them safer, more fuel efficient and comfortable, while keeping the prices as low as possible. While the car manufacturer can further improve his chances of survival by setting up an R&D unit that will help him in developing new, powerful, and fuel efficient engines, setting higher standards in passenger safety and comfort, creating aesthetically appealing and cost-effective designs, and so on. This way, the organization can always stay ahead of the competition.
Diversification can be either horizontal or vertical. In the case of horizontal diversification, the organization enters into areas that are related to its core competency. For horizontal diversification, the company acquires or develops new products that appeals to its existing customers. For example, the car manufacturer can diversify into auto accessories, spares and so on. In vertical diversification, the company moves into the business of its suppliers. For example, the car manufacturer could diversity into steel manufacturing or tyre making so it could produce the materials required for its core business. Diversification, if done properly, gives entry to new markets, provides new business opportunities and reduces the financial risk. Diversification can be achieved through mergers, acquisitions and starting new business units. The advantages of the first two strategies are that you get a new product and set of talented people, and also eliminate a potential competitor. You must have seen companies like Microsoft, Oracle, Google, GE, ABB, TCS, Wipro, Satyam, Mittal Steel, Tata Steel, Tata Motors, Reliance Industries, and so on, acquiring competitors to grow, increase the market share, improve market reach, and consolidate their number one position.
USE OF TECHNOLOGY
Technology should be made an ally and the organizations should embrace technological developments rather than fight them. Technology can help in automating many business processes and procedures thereby improving productivity and reducing human error. Employee productivity can increase dramatically by use of technology in their day-to-day activities. For example, using a spreadsheet for data analysis, using an auto-responder for an out-of-office reply, or using videoconferencing for managing a multi-site project can save a lot of time and money.
The advanced data analysis and decision support tools that are capable of predicting the future, determining trends from historical data and give accurate forecasts and projections can help the decision-makers to take informed decisions faster and react to changes in the business environments and customer preferences before their competition. These tools like data warehouses, OLAP, data mining, etc. provide organizations the power to always stay ahead.
Companies should consider technology as a competitive weapon and should create an environment where new technologies are welcomed and used to its fullest potential. Technological obsolescence is one of the sure recipes of disaster and organizations that want to survive should avoid it at all costs.
We have seen the concept of continuous learning and learning organizations. For this to happen, the organizations should provide continuous training to its employees. We have seen that different types of training are designed to fulfill different needs. The training could be done by in-house experts or external consultants. The training can be conducted in-house, outside the organization or even at dedicated training camps.
In-house training is mainly conducted to familiarize the employees with the company culture, company values, what is acceptable and what is not and so on. It is also ideal for imparting technical skills that they employees will require to perform their day-to-day functions.
Another type of training that is vital for the employees are the soft skills. Soft skills are the people skills. They are non-technical, intangible, personality-specific skills that determine a person’s strengths as a leader, listener, and communicator. In today’s highly competitive business environment, soft skills are as important as the technical skills. Organizations should give soft skills training to employees, as they have to effectively interact with people from diverse cultures as part of their jobs. There are many organizations that provide soft skills training. These organizations help the employees improve their communication skills, learn new languages, improve their body language, and become good ambassadors of their organization. These courses also addresses the problems that can occur in a multi-cultural work environment like cultural differences, accepted social behavior and etiquette when interacting with customers or colleagues from different parts of the world. The objective of soft skills training is to develop employees who can handle their daily jobs and interact with people from different cultural and social backgrounds effectively, efficiently and with confidence. One soft skills training organization is Emmpower. Emmpower is a behavioral soft skills training institute based in Bangalore. According to Angel Papali, faculty member, “Emmpower is an organization that facilitates individuals and organizations to evolve to their highest potential through training and organization behavioral development.”
Yet another kind of training is called experiential learning where the employees undergo training by performing various tasks that are aimed at improving their self-confidence, shedding their inhibitions, promoting teamwork, developing leadership qualities and so on. Experiential learning is not a new concept. In his book “Experiential Learning: Experience as the Source of Learning and Development,” David A. Kolb explains experiential learning as the process of making meaning from direct experience. Kolb’s work can be traced back to that famous dictum of Confucius around 450 BC: “Tell me, and I will forget. Show me, and I may remember. Involve me, and I will understand.
Pegasus Institute of Excellence (PIE) is a pioneer in experiential learning. PIE has several training camps, all located in picturesque locations where the participants closely interact with the nature and one another to hone their skills by performing activities specially designed to bring out the best in them. According to Capt. Ravi, director of PIE, “Pegasus has reinvented the concept of learning and development by blending different learning systems in a fun filled environment thus leaving a lasting impact on the participants”
So gone are the conventional and traditional training methods, as organizations are inventing newer, more effective and enjoyable training methodologies that are more appealing to their employees, ensuing their total participation thereby producing better results. For example, the Ramoji Film City is a preferred corporate training destination as the place can be used to create any environment with special effects and other movie making techniques to provide a unique training experience.
RECRUITING AND RETAINING THE BEST…
Employees are the most valuable assets of any organization. So hiring and keeping the best talent is of utmost importance today. A highly motivated and creative workforce can help organizations to scale greater heights and stay ahead of the competition. But recruiting and retaining the best minds is not an easy task. It takes a lot of hard work and innovative and creative plans.
Google, the best company to work for, according to Fortune magazine (2007), is setting standards for other organizations. Google offers goodies such as stock options, informal work environment, free meals, swimming spa, and free on-site medical care, free transportation, hair saloons, gyms, locker rooms, massage parlors, childcare, on-site notaries, car services, and so on. Engineers can spend 20% of their time on independent projects. No wonder Google gets more than 1,300 résumés a day and no wonder it is churning out new products almost on a daily basis.
According to the 2007 Business Today study of best company to work for, Microsoft India has toppled the 2005 and 2006 winner—Infosys. The reasons behind Microsoft’s accession to the number one slot are a host of innovative strategies including leadership development programs, recognition of talent, seamless internal branch transfers, excellent compensation packages, an exemplary mentoring and buddy system, facilities to help employees in finding houses, school admissions, childcare, and other similar chores, etc.
John J. Medina (Breakthrough Ideas for 2008, Harvard Business Review, February 2008), advocates the creation of brain-friendly workplaces where board meetings are conducted on treadmills, desks are equipped with stationary bicycles, and people wear gym clothes, not suits. According to him, in a competitive climate, exercise is as close to a magic productivity bullet as you’ll get. So brain-friendly workplaces, informal work culture and happy employees are the means to continued success.
Some of the traits common to all the top employee-friendly companies are informal and flexible work environment, challenging assignments, fun filled and enjoyable work culture, comfortable, brain-friendly, and often luxurious workplaces, excellent perks, ample scope for personal and professional growth, and so on. Here the small and medium sized organizations (SMEs) have an advantage over the bigger organizations as they can make the workplace more interesting and working conditions more informal as the number of employees is less. In fact, the bigger companies like Google, Microsoft, Dr. Reddy’s Lab, Johnson and Johnson, etc. are facing more competition on the recruitment front from SMEs and startup companies than from the larger competitors.
Companies are vying with one another in offering more goodies in an attempt to woo the best and keeping them happy. So the concept of the caring organization is emerging and it is here to stay. Companies that realize the value of employees and do everything possible to keep them happy will be the market leaders as it is the employees that make or break a company.
INFORMATION AND DECISION-MAKING
This is the information age and information is a must for survival. Organizations must not only know what is happening inside but also outside. The organizations should also make the best use of its historical data. The three kinds of information—information about the day-to-day operations, historical information and information about the external environment and competitors—when combined, organized, analyzed and interpreted would give the organizations the ability to manage its operations, predict the future and learn from the past. When used effectively (using information gathering, storing and analyzing tools), and presented at the right time in the right format, the decision-makers of the organization will be able to make good decisions faster than its completion. This enables the organization to quickly adapt to the ever changing business environments and customer preferences.
Quick, faster and better decisions are an important factor that decides the survival and success of an organization. But another equally important, but often overlooked factor is the level at which an effective decision can be taken. For example, if a customer calls the customer care center with a serious grievance, it should be solved immediately. But if the customer care executive does not have the necessary authority to offer a solution and all he can say is that “We will look into the matter and then get back to you as soon as possible,” then the chances of the customer being satisfied are nil. But if the person attending the call has all the information about the customer and depending of the seriousness of the problem and the relationship with the customer can offer a suitable solution, it will go a long way in improving customer satisfaction and goodwill, and customer satisfaction is the most important requirement for business success.
Organizations should train the employees to make good decisions and communicate effectively with clients and customers and should empower them to make decisions whenever possible. Here the soft skills training and delegation of power are important. This will free the top management from the day-to-day fire fighting and give them enough time to concentrate on strategic planning, investigate the new business trends, anticipate and counter the moves by the competition, formulate new business strategies, adapt to the changes in the environment, etc.
CONTINUOUS CHANGE AND BUSINESS AGILITY
“It is change, continuing change, inevitable change that is the dominant factor in society today. No sensible decision can be made any longer without taking into account not only the world as it is, but the world as it will be…This, in turn, means that our statesmen, our businessmen, our everyman must take on a science fictional way of thinking.”
Change is one thing that all businesses have to cope with. How well an organization manages change is one of the factors that decide its success. New technological developments are revolutionizing the way we think, work and do business. The business environment is changing with the introduction of new business models, addition of new rules and regulations, and entry of new competitors. The customer preferences are changing so fast that most new products have very short shelf-life.
In such an environment the success of an organization depends on the factors like how fast the organization can adapt and adopt and how quickly and effectively it can respond to the changes. The speed with which an organization can react to the changes determines its agility. When an organization has to adapt quickly, the responsibility of problem solving will go to its employees. Innovative and apt solutions for each new situation can be created quickly by the collective intelligence of the employees. According to Kouzes ad Posner (Management 21C, 2000), the secret of high-performing organizations is that everyone within them knows that leadership at all levels is expected and rewarded, and that individuals everywhere are responsible for making extraordinary things happen.
Jack Welch, the former CEO of General Electric, has popularized the concept of “boundaryless organizations.” These are firms that are not limited by the horizontal, vertical or external boundaries imposed by a predetermined structure and where cross-functional teams dissolve horizontal barriers, while external partnerships and collaboration overcome the firm’s boundaries. Thus, the boundaryless organization shows companies how to remove the obstacles like hierarchy, bureaucracy, unnecessary regulations, and geography to achieve outstanding business performance. These changes enable the company to respond quickly to environmental changes and to spur and stimulate innovation.
According to Couillard (Ivey Business Journal Online, July-August, 2007), boundaryless environments are typical in learning organizations, in which teams self-organize and knowledge is created and shared in the most efficient way. In the book, “The Boundaryless Organization,” Ashkenas, Jick, Ulrich, and Kerr show how leading companies are busting boundaries in all directions—vertical, horizontal, external and geographic—and achieving stellar results.
Large organizations should find ways to become agile to effectively compete with the smaller competitors as they can react to changes more quickly and effectively. Empowering employees to make decisions, creating small profit centers, dividing the organization into small divisions, etc. are some of the techniques the bigger organizations can try to improve agility. In his book “Who Says Elephants Can’t Dance?” Louis V. Gerstner Jr., the former IBM Chairman describes how he engineered one of history’s most dramatic corporate turnarounds.
James Belasco offers practical solutions to managing change and empowering employees organizations in his book “Teaching the Elephant to Dance: The Manager’s Guide to Empowering Change.” Belasco explains how to create organizational change and improve agility by selling a vision, hiring the right people, creating heroes, dealing with doubters, setting examples, and rewarding the faithful. The book makes its case by citing examples of strategies successfully used in companies such as Levi Strauss, Sony, Apple, Wal-Mart, and IBM.
Business environment is becoming highly competitive and to survive and stay ahead of the competition managements must run their organizations leaner and smarter. The factors like ability to constantly innovate and learn, continuously and consistently improve, use technology intelligently and effectively, anticipate, adopt and react to changes quickly, etc. can determine whether a company becomes an industry leader or just another one of the pack. To become globally competitive and maintain its competitive edge organizations should hire the best talent, keep them happy and make the best use of their talents. The four factors that are critical for the success of any organization are people, innovation, information and technology.