New Year’s Resolutions: Think Bold or Go Bust
The late Heinz Pagels, tragically killed by a fall while hiking this summer, was one of our most imaginative physicists. His last book was The Dreams of Reason: The Computer and the Rise of the Sciences of Complexity. A chapter on business, titled "The Quick Buck Becomes Quicker," includes this story: "Already, effective international telecommunications and computations have destroyed the arbitrage market that makes money on small differences in currency exchange rates. The only advantage of having a local computer near the market is the 100 milliseconds or so that it takes light to travel between continents. But that is a significant advantage if one has a fast algorithm. I recently spoke to a mathematician newly employed at a New York investment house who was developing sophisticated algorithms to determine buy-sell options. Why? So that his institution could get their orders in a millisecond ahead of their competitors."
As we engage the last year of this crazy decade, get used to the idea of pursuing a millisecond's advantage. To start your creative juices flowing, consider these New Year's resolutions.
ORGANIZATION. Bid fond farewell to bricks, mortar, metes and bounds, and comfy organizational compartments. Formal company borders must be eliminated and new, seamless relations formed with suppliers and distributors so as to slash, for example, order lead times by 99 percent or more. In 1989, firms of every description should be well along the way to hooking up electronically with all members of their fast-extending family, from vendor to franchisee and end user. Virtually every decision, about marketing or a new internal accounting system, should pass first through a filter that determines: How will this move increase my suppliers', distributors', and customers' profitability?
As well, fill your hallways and most secret strategic councils with suppliers, distributors, and customers. These outsiders' views also should be explicitly considered in performance appraisals, for virtually everyone.
"Networks" of firms (yours, vendors', etc.), linked up from stem to stern, are fast replacing the isolated hierarchical organization as the basis for penetrating any market. So shift your sights decisively toward the distribution system as a whole when seeking sustainable competitive advantage. Wasted time, for instance, must be pursued and pruned mercilessly from every step in every process, inside the firm and out.
Get on with experiments in the reduction of hierarchy, on a small (facility or function) or grand (the organization as a whole) scale. Consider this recent, run-of-the-mill BusinessWeek story on the 1.5 million member, 7,000-office, $6 billion-asset Aid Association for Lutherans. The insurer reorganized in late 1987, aiming to markedly increase speed and service. At noon on August 14, all 500 headquarters people were moved out of their familiar, specialized jobs into several groups of four teams of 20 to 30 persons each. In the shift from "five stop shopping" (for the customer) to "one-team processing," each group of teams had to learn 167 tasks. Three layers of hierarchy and 55 managerial jobs were excised; 25 top managers (almost the whole lot) couldn't cope with the shift and were transferred.
Such extreme alternative forms of organization must be considered—now. One important first step: Become a "strategic visitor." Every manager, and teams of front-line people and managers, should visit in 1989 at least six of our wild and woolly experiments, from the Aid Association for Lutherans to AMOT Control of Richmond, Calif., cited in my recent "Most Valuable Players" column.
PEOPLE. Pencil in tests with new training approaches on the 1989 calendar: A working knowledge of computers, accounting, statistics, economics, problem-solving, and team-leadership skills must become the near-term goal for everyone, starting with the janitorial staff. Team configurations and total information availability for everyone also are essential.
The bottom line: Embrace the idea of competitive advantage a "world-class work force." Does your approach to people—to skill enhancement and involvement processes—meet that challenge?
PRODUCTS. "Smart" shopping carts are here. They display the location of items in the store, read out the current specials while you wait in line, allow you to play trivia games, or show local news and weather. "Smart" vending machines change menus automatically throughout the day and grind coffee beans one cup at a time. Most any day brings more such news: A late December Wall Street Journal column describes Japan's growing array of "smart" products, such as Daiwa-Seiko's $410 fishing reel, which displays the depth of the hook at any time. After a fish is caught, the reel "remembers" and on the next cast returns the hook to the same level.
Business and economics commentator Paul Hawken contends "The single most important trend to understand is the changing ratio between mass and information in goods and services." Products, from steel to fishing reels, are quickly acquiring intelligence. This reinvention of every product is as profound as the reinvention of organizations described above. Once more, I urge you to deal posthaste with this change.
Robert's Rules of Order for commerce have been erased and the rewriting effort is gathering momentum. Are your structures people and products prepared for the Age of the Millisecond Advantage?
Happy New Year, good luck!
(c) 1988 TPG Communications.
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