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May

2012

Dear GE: You Can Do Better!

"Despite all the wonderful things in the second paragraph of his letter that Mr. Sheffer says about GE, Wall Street has had persistently negative view of the firm: GE’s share price has declined by 35 percent over the past ten years. GE is one of three firms in the list (along with Wal-Mart and Johnson & Johnson) that is doing markedly worse than the S&P 500, which is at +32 percent over the ten-year period.

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www.forbes.com/...dear-ge-you-can-do-better

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GE radicalmanagement casestudies marketvalue innovation outcomes ouputs creativeeconomy

Instead of pursuing maximizing shareholder value as most of the Hay “leaders”, like GE, are doing, these firms are focused on delighting customers with continuous innovation. Paradoxically, it turns out that a tight focus on delighting customers makes more money than a tight focus on making money.
It’s about understanding the principles of radical management that are needed to succeed in the customer-driven world of the 21^st Century marketplace.
2 more annotation(s)...
- We know that the 20^th Century industrial-style management isn’t adapted to the emerging Creative Economy, in which the driving force is continuous innovation and customer delight. The Creative Economy is an economy in which organizations are agile and continually offering new value to customers and delivering it sooner. The Creative Economy is an economy in which firms focus less on short-term financial returns and more on creating long-term customer value based on trust.
- The new bottom line of business is: is the customer delighted? It’s a fundamental shift from outputs to outcomes. It’s about, not just finding fast-growing sectors, but rather creating them. Creating fast growing sectors is much more profitable than finding them.

Mar

2012

Is The US In A Phase Change To The Creative Economy?

"In a stunning article in Vanity Fair, Nobel Prize-winning economist Joe Stiglitz asks the critical question: is the US economy going through a fundamental shift in the nature of the economy? Is the US economy is undergoing a phase change—a shift from one fundamental economic state to another?"

www.forbes.com/...change-to-the-creative-economy

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economy creativeeconomy

Bringing the economy back to ‘where it was’ did nothing to address the underlying problems
The financial meltdown of 1933 was the consequence not the cause of the Great Depression. The joblessness of the times was a sign of the economic phase change already well under way.
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- Stiglitz sees today’s problems of the banking sector, though bad enough, as a red herring in our search for real solutions. The real solutions are “rooted in the kinds of jobs we have, the kind we need, and the kind we’re losing, and rooted as well in the kind of workers we want and the kind we don’t know what to do with
- If the phase change in the Great Depression was a transition from agriculture to manufacturing, what is the transition to today? Stiglitz sees it as a transition from manufacturing to a service economy.
- Instead the needed transition is from a factory economy to the Creative Economy. The Creative Economy is one in which both manufacturing and services play a role.
- The Creative Economy is an economy in which firms focus not on short-term financial returns but rather on creating long-term customer value based on trust
- This way of managing is unable to mobilize the full creative talents of their employees. As noted above, the rate of return on assets and invested capital has been in steady decline for decades.
- So long as these firms adhere to the goal of maximizing shareholder returns—which even Jack Welch says is “the dumbest idea in the world”—they will have great difficulty in operating effectively in The Creative Economy.
- We must shift the focus of companies back to the customer and away from shareholder value
- companies should place customers at the center of the firm and focus on delighting them, while earning an acceptable return for shareholders.”
- To delight customers, a radically different kind of management needs to be in place, with a different role for the managers, a different way of coordinating work, a different set of values and a different way of communicating.
- The Creative Economy will also be partly built on manufacturing. This is not about a shift out of manufacturing into services.

Nov

2011

Gary Hamel on “Hacking Management 2.0″

"Over the last decade, the Internet has had a profound impact on business. It has spawned a slew of new business models and has helped make operating models vastly more efficient. By contrast, the Web’s impact on management models has been relatively modest."

www.saba.com/blogs

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management management2.0 web2.0 socialbusiness enterprise2.0 garyhamel knowledgeeconomy creativeeconomy

These include a rapidly accelerating pace of change, a growing swarm of unconventional rivals, crumbling entry barriers, a rapid transition from the “knowledge economy” to the “creative economy,” intensifying competition for talent and a profusion of new stakeholder demands.
organizations will need to become far more adaptable, innovative, inspiring and accountable than they are right now.
3 more annotation(s)...
- Before the Web, it was hard to imagine alternatives to management orthodoxy. But the Internet has spawned a Cambrian explosion of new organizational life forms–where coordination occurs without centralization, where power is the product of contribution rather than position, where the wisdom of the many trumps the authority of the few, where novel viewpoints get amplified rather than squelched, where communities form spontaneously around shared interests, where opportunities to “opt-in” blur the line between vocation and hobby, where titles and credentials count for less than value-added, where performance is judged by your peers, and where influence comes from sharing information, not from hoarding it.
- And complex coordination tasks, like those involved in the design of a new aircraft, still require a dense matrix of “strong ties” among critical contributors, rather than the “weak ties” that are typical of web-based communities
- If we can find ways of transplanting the Internet’s DNA into our organizations—the interwoven values of transparency, collaboration, meritocracy, openness, community and self-determination—we may have the chance, at last, to overcome the design limits of Management 1.0