Monday, January 18, 2010

Google in China

The current discussion about Google China fascinates me. I was in Shanghai just before the end of the year speaking on Innovation and Change. I had links in my presentation to YouTube videos. The links didn't work because about a year ago the Chinese government stopped YouTube because of viewings of a dissident.

When you go to Google in China you're actually on Google.China . This is a limited version of the search engine we use everyday. Google is thinking of shutting down Google.China. Google says it's too restrictive; but maybe it's just that Google isn't making money. It has 35% market share against China's homegrown search engine, Baidu.

Television programming is filtered as well. I was in China during the Copenhagen conference on the environment. What I heard about events and results on Chinese TV doesn't square with what I've been learning since I returned.

What strikes me is that these restrictions on information do not align with the economy and the people I worked with.

I worked with entrepreneurs. People who understood capitalism as well as we do. They have ideas, they know how to find investments, and they are winners. Sooner, rather than later, the restrictions on information are going to come up against these vibrant business people.

It will be interesting to see how China responds. Will the politics of information give way to global economics?

Saturday, January 9, 2010

How Companies Succeed - Work on the Right Things with the Right People

Jim Collins' book Why the Mighty Fail has caused a lot of discussion with my clients; particularly since Akio Toyada the head of Toyota has stated that his company has passed through the first three steps on the way to decline:

  1. Hubris born of success,
  2. Undisciplined pursuit of more,
  3. Denial of risk and peril,
  4. Grasping for salvation, and
  5. Capitulation to irrelevance or death.
I think this is a good framework; however, for my part I boil failure down to two things:

Working on the Wrong Thing.
Organizations forget who they are. They ignore their DNA. They want to escape from the basic strategy that made them what they are. They want to become something else. Something greater because others say they should. Others like Blue Ocean and Black Swan strategists.

I'm all in favor of the Blue Ocean and Black Swan sentiment that we have to constantly monitor our environment to understand discontinuities that might alter or kill our business. But I'm not in favor of the implication that if we are under threat we have to vault to a new future that is not rooted in our DNA - those competencies that are ingrained in us and have made us successful.

Often we aggrandize the positive culture at Southwest Airlines that was built by its venerate founder Herb Kelleher. How long would it take to drive this positive culture out of Southwest? I suspect a long time. And during that time initiatives that resist this culture will fail!

Working with the Wrong People.
Today's business world is too complex to have everyone on the same page. Sure, we need agreement on a mission and some broad strategies, but that leaves a lot of room to interpret implementation details.

Implementation will cause conflict with leaders. People will always have different models, data, and understandings of what's going on in the market and the capabilities of the business to meet the challenges. Conflict on content is good. It's how leaders make sense out of chaos so they can choose a path that keeps the organization healthy, relevant, and profitable.

Conflict at a personal level is not good - it subverts conflict on content. Personal conflict is rooted in ESP: Ego, Status, and Power. These political objectives create a lack of trust and lack of openness within leaders. Quickly the organization loses its future.

So if you want to succeed the bottom line is: ... work on the right things with the right people.

Sunday, January 3, 2010

2010 Leadership Forecast: Cloudy with a Chance of Clearing

2009 is in the rear-view mirror. For most of us that’s a good thing. Many businesses suffered. The strategy of the day was: cut costs, conserve cash, and strengthen the balance sheet. Growth was rarely on the radar screen.

And, things seemed to work out. 2009 was a banner year in the stock market. The DOW was up 18.8%; the NASDAQ 43.9%; and the S&P rose 23.5%. All is good in the world of business, right?

Well, maybe not. The strength of the stock market could be masking the hard work that has to be done. The 2009 fight for survival has devastated our organizations; they are no longer healthy and relevant to their customers. Here are a few scary research findings:
  • A survey by the Centre for Work-Life Policy, an American consultancy, found that between June 2007 and December 2008 the proportion of employees who professed loyalty to their employers slumped from 95% to 39%. The number voicing trust in their employers fell from 79% to 22%.
  • The lack of trust is confirmed in the 2010 January-February issue of the Harvard Business Review which reports that on a five point scale: employees have a general trust of 3.7; trust in a their firm is 3.0; and trust in their boss is 2.7.
  • Another American consultancy, DDI (Development Dimensions International) recently found that more than half of survey respondents described their job as “stagnant”; and half of these planned to look for another job as soon as the economy improved. This is taking a toll on short-term productivity and long-term competitiveness: the people most likely to move when things look up are high-flyers who feel that their talents are being ignored
  • And, the Brand Asset Valuator used by the marketing and communications company, Young & Rubicam tells us that trust in brands has fallen dramatically. Trust was running at about 52% in 1997, while it hovers around 20% today.

Well what can we take from these research trends? The conclusion is that customers are hostile and employees are disengaged. Great! Just at a time when we need our customers and employees most they are sitting on the sidelines. We have told customers that they are secondary to shareholder profits; and we have told employees that they are secondary to cost cutting.

So our leaders have to feel buoyant that the economy has survived as evidenced by the stock market; but they also have to feel angst about how to win back customers and employees; how to make their companies healthy and relevant again. What should they do?

The first thing they have to realize is that what got them here won’t get them to where they need to go. The last several years has been dominated by left brained, cause and effect, management thinking. The next several years will need to re-engage left brained, inspirational, leadership thinking.

The focus has to get back on our customers. We need to know what they know and we need to drive organization change from their perspective. So, what do they know?

1. Value for money. Firstly, they know they want value for money in products and services. When they put out money they want to be satisfied with the transaction. The 2009 recession has taught them how to buy differently. They know:
  • they can buy down, or bargain for better prices;
  • o that simple products and services trump “bells and whistles”; and
  • o they can defer or spread out purchases.
Consumers know they can save. They know that unlimited credit does not mean that it has to be used.

2. Sustainability. Secondly, they know they want to deal with companies that “look and act just like them.” They want to buy from brands that will be around for the long term. They know they want to buy from firms that exhibit three characteristics:
  • Moral Leadership: It’s not hard. We all know right from wrong – that standard doesn’t change just because “it’s business.” We all know when our actions feel wrong – that is the test on morality. CEO’s would never steal from the cash box – so how is backdating stock options any different? It isn’t. You can’t justify it to your mother.
  • Social Responsibility. This comes down to being a good corporate citizen. It comes down to a commitment to “green” for the good of our world, and a commitment to our communities for the good of our friends. Green has to be exhibited in our products and services and we have to demand it from our suppliers. We need to sustain the communities that surround us by buying and hiring locally and giving back with financial support to businesses and time to community causes.
  • Employee Commitment. Customers have had enough of companies who don’t treat their employees with respect. We have pay policies that do not adequately share profits; we have people in authority who abuse their staff; and we have severance policies that are disrespectful. Employees no longer work for companies; they work for customers. Employees who are disrespected will treat their customers in kind. If your not committed to your employees, your customers won’t be committed to you.
This concept of sustainability has been proven beyond small green companies our community niche companies like Whole Foods. There are great success stories like: Johnson & Johnson who puts “customer” at the top of its priorities and used this to recover from the great Tylenol scare; then there’s Research In Motion (RIM) who are so focused on the long term customer relationships that leaders are admonished for discussing quarterly financials in public.

2010 will be a great challenge for our business leaders. They have an opportunity to advance the value of their organizations. They can build organizations with a greater purpose than simply maximizing shareholder returns. They can give us organizations that sustain customers, employees and communities.

Our spirit and creativity are indomitable. Now is the time to clear away the clouds.