|
|
8 April 2008 Process Excellence Can Inject New Vitality into Ailing Manufacturers
 Picture this: you are the CEO of a venerable manufacturer that has been besieged by price pressure, increased imports and high capital costs. Revenue has been barely edging up, and profits have been negative three of the last five years. You have had to lay off a significant portion of manufacturing personnel, many of whom had been with you more than a generation.Your ship is still taking on water despite best efforts, and you do not know where to turn.
This was precisely the situation of several U.S. firms that took the unusual route of selling themselves to Indian firms that turned the companies around very quickly by applying sophisticated process and management expertise. In many cases, local employment increased because the companies became much more competitive. Here are two examples:
Continue reading Noodle VI: New from the Unorthodox Exit Strategy Department—Acquisition by an Asian Firm
22 March 2008 Dennis Howlett, writing in the Irregular Enterprise on 19 March, made the case that enterprise IT just didn’t get social networking and start-ups were going to make some serious hay by bypassing IT and selling right into the business. He had also included a YouTube video in which CIOs commented on the question, “Is Enterprise 2.0 hype or happening?” which provided some light-hearted snippets about a profound subject. There was some valuable information in the post, but I found that it was approaching the issue from within the old paradigm (“battle on two fronts”), and therefore largely left money of the table. I’ll peel the onion here, so get ready to well up.
3 November 2007
Three CIOs Share Vision and Techniques for Creating the Networked Enterprise—Facebook and Tagging Creep In
|
|
 After James Owens’ luncheon address, the Executives’ Club of Chicago’s 2007-08 Technology Conference series opened with the CIO of the Year Award and a sneak preview of the 2008 Chicago Technology Outlook Survey.
Then a diverse panel of executives took the stage to discuss the role of the CIO in the “networked economy 2.0.” Bahman Koohestani, Senior Vice President & Chief Information Officer, Orbitz Worldwide, Paul Mankiewich, Chief Technology Officer, Alcatel-Lucent and Karenann Terrell, Chief Information Officer, Baxter International, shared their visions for the evolving role of the CIO and IT. John Gentry, Partner and Managing Director, CSC Consulting, moderated the panel discussion with aplomb. The Club’s quarterly Technology Conference took place October 16 at the Chicago Hilton.
Although the panel represented such diverse businesses as pharmaceutical giant Baxter, global network equipment provider Alcatel-Lucent and travel sensation Orbitz, all were very focused on how CIOs needed to enable a new level of innovation by fostering a new level of trust and adopting a networked model—for everything. That means shared risk taking and trusting people.
Although their remarks had an appropriate enterprise focus, in Analysis and Conclusions, I will take the argument into the customer arena: only by extending their trust to customers will enterprises realize sustainable innovation in the long term.
1 October 2007
Adoption Weakened by Compliance Risk and “So Obvious It’s Invisible” Value Proposition
|
|
 The Global Human Capital Journal’s coverage of Financial Markets World’s Web 2.0 in the Capital Markets Industry conference continues. In this session, Dion Hinchcliffe, a leading writer and consultant in Web 2.0 and Enterprise 2.0, described how capital markets firms were adopting Enterprise 2.0. After some general points on enterprise 2.0 adoption, he referenced early work of Dresdner Kleinwort, AOL, T. Rowe Price, Wells Fargo and JP Morgan. As usual, I’ll summarize his remarks before sharing my analysis and conclusions.
Dion has collaborated repeatedly with O’Reilly, the folks who officially coined the term “Web 2.0″ and hold one of its most well attended conferences. He began his presentation with the definition of Web 2.0: (using) “networked applications that explicitly leverage network effects.” In my view, that means purposely leveraging P2P (peer to peer) technology. They scale exceptionally quickly because they are easy to use, people who like to use them do so on their own time and for their own passion, they leverage the Internet and the cost to use them is negligible.
Enterprise 2.0 Adoption Factors
- In general, the enterprise is moving away from “central production” to “peer production” and from an internal focus to an external one. YouTube receives 65,000 videos per day.
- Blogs have developed into a platform; it is now very easy for most users to add widgets to their blogs (incorporating video and audio content). To have cred, they must have comments.
- Adoption of Web 2.0 is sometimes spontaneous, and we still have little insight into what form it will eventually take. Within days of Hurricane Katrina in 2005, 100,000 people had used blogs (and social network sites) to report on their whereabouts, as other forms of communication were unavailable. The enterprise lacks imagination about how to use these technologies. The tools must be simple to encourage adoption.
- Is social networking part of Web 2.0? O’Reilly has not addressed this, and the two must be reconciled. Facebook is definitely for business (even though it did not start that way).
- Consumers are way ahead of the enterprise, which is generally in the pre-definition phase. Consumers are emergent. One example is tagging (emergent) vs. defined taxonomies and analysis paralysis (enterprise).
How Is Enterprise 2.0 Different?
 It is an order of magnitude easier to use. Hinchcliffe calls it SLATES:
- Search- being able to find content and people very easily
- Link- automated features for connecting content according to personal preference
- Authoring- creating content as (or often more) easy than using a word processing program
- Tag- one-click functionality for identifying and sharing content
- Extensions- adding features very easily, extending functionality of your space (blog, wiki)
- Signals- automated distribution; chiefly refers to RSS, Atom
He contrasted Enterprise 2.0 with conference calls, many of which have dozens of people participate. However, this is largely wasteful since only one person is able to speak at once. The tools are getting increasingly sophisticated. For example, wikis and blogs can display different content depending on reader permissions. This is emerging functionality.
Pioneering Uses of Enterprise 2.0 in Financial Services
- Dresdner Kleinwort—Then led by the indefatigable JP Rangaswami, DrKW launched its first wiki in 1997, and it has scores of wikis in use today.
- T. Rowe Price—during tax season, 1,200 call center representatives began using a wiki to manage the knowledge base that they used when servicing clients. It features tagging and comments, and permissions enable experts to change content, while all representatives can log comments and tag. This has enabled the knowledge base to “learn” very quickly. The company credits it with saving an average of two minutes per call.
- Wells Fargo—the bank has an impressive series of firsts, led by Steve Ellis, EVP of its Wholesale Solutions Group. It was the first bank with a business banking blog, the first on MySpace and the first in Second Life. It has an active customer-facing blogging program.
- JP Morgan—is using innovative applications of Web 2.0 technology such as AJAX to quickly build new mash-up solutions for the bank’s traders.
Parting Shots
- Putting on his CTO hat, Dion’s mentioned that Microsoft SharePoint 2007 was missing several key features and may lack scalability for certain applications. (Be prepared to be behind the curve when using it).
- Firms do not have to develop an enterprise 2.0 strategy. Make the tools available, and people will build the ecosystem. Approach it as a “perpetual beta” endeavor.
 Analysis and Conclusions: So Obvious It’s Invisible
- One of enterprise 2.0′s main problems is SLATES. Looking at the list, there’s nothing that is obviously different, that suggests discontinuous change and a big upside. This fact gives enterprise 2.0 its challenge and opportunity. It looks like continuous change, a matter of degree. I’ll risk sounding cliché here, but the way that SLATES combine delivers a tipping point for widespread collaboration. The tools are easier to use, and they deliver one-click features for identifying and sharing content, which will cause people to share much more, more often. Overlay Gen Y’s penchant for collaborating as well as the tools’ native handling of metadata, and the whole thing resonates. This will catch most executives off guard.
- Investment banks, as illustrated earlier in the day by the compliance panel, have clear reasons to hesitate before adopting enterprise 2.0 and they don’t yet see a value proposition that compels them to face the compliance risk. Another twist: everyone’s experimenting, but it’s under the radar. They don’t know what their competitors are doing and how they stack up. It’s wait and see.
- Enterprise 2.0 is practical for CIOs—from people, process and technology perspectives:
- It does not call for reorganizations or implementing complex, expensive technology solutions. It overlays an emergent web of relationships onto existing enterprise systems and processes. Moreover, it is not an all-or-nothing proposition. Due to the nature of networks and the technologies, CIOs can enable open collaboration in areas that do not harbor conflicts of interest. The technology is rapidly increasing in sophistication, and it will increasingly automate access and permissions. It is an emergent proposition, not a big bang, like enterprise 1.0 (read ERP) was.
- Wikis, tagging and blogs are highly distributed, and many are built on light, evolved platforms.
- Enterprise 2.0 tools are exceedingly simple, transparent and real-time. If using proprietary enterprise software solutions is like driving a Ford Model T, Enterprise 2.0 tools are like hopping into a Ford Focus: instead of tweaking the carburetor, turning the crank and fussing with the choke, you just insert the key and go.
- Current enterprise software solutions generate extensive resistance because they impose highly structured designs and processes.
Because people think and organize thoughts differently, structured systems alienate some while accommodating others. Their training and learning costs are high.
- Enterprise 2.0 underlying technologies like Ajax are highly evolved and object-oriented; they are robust and interface easily with SOA-enabled enterprise systems. Enterprise 2.0 coexists easily with existing enterprise systems like email, document management and ERP.
- I agree with Dion that an enterprise 2.0 (big technology) strategy is not required to succeed with enterprise 2.0. Monolithic big bang IT projects (read “expensive”) were a different animal. However, my experience indicates that vision and strategy will be critical for investment banks and other hierarchial firms to succeed for a different reason: they will need to remove cultural and organizational constraints to collaboration. To be done quickly and effectively, this will require executive understanding and support. Firms that have it will, all else equal, succeed more quickly than those who let it bubble up in isolated pockets, in spite of the organization.
- Web 2.0 and social networking are dizygotic twins. Web 2.0 largely refers to technology, where social networking focuses on connecting people with each other. The technology enables the discontinuous change that is emerging, but people make it happen, and social networks are a vehicle. In a more abstract sense, online social networks make explicit the kind of networks that have been crucial to humans’ success, even predating the emergence of homo sapiens. Social networks are a medium for people to focus on using the technologies to change behavior and generate opportunity. In a sense, social networks are key customers of Web 2.0 technology.
- Picking up on Dion’s conference call example, my research shows that chat is giving conference calls a new lease on life. Participants listen to the conversation while they spin off into chat rooms to discuss nuances or related topics. Smart banks analyze the chat conversations, thereby getting a much clearer picture of what “the crowd” thinks about the topic. Prior to chat, the crowd’s thoughts were largely invisible.
7 September 2007
Just Released—CSRA Market Advisory Highlights How I-Banks are Using Web 2.0 to Drive Competitiveness
|
|
 This summer, “Enterprise 2.0″ began to get legs as the new moniker for applying Web 2.0 to the enterprise, reflecting that pragmatists are raising their eyes for an exploratory glance. The market advisory shares how global investment banks are using Enterprise 2.0, and it suggests action steps for executives to take this year and next. Here is the executive summary and a few choice concluding points:
Enterprise 2.0 Enables Executives to Digitize and Monetize Collaboration for the First Time
This is so simple that many will miss it and open themselves to disruptive competition…
- Banks increasingly use wikis, blogs and other Web 2.0 tools for mission-critical processes, as shown through the examples of Citi, DrKW, Morgan Stanley, ING and JP Morgan..
- Enterprise 2.0 is a new term that denotes corporate adoption of Web 2.0 and social software tools. It offers investment banks an unusual opportunity to reduce risk and improve their earnings and profits by increasing returns on process, human and knowledge capital.
- However, Enterprise 2.0 also confronts banks with changing some of their assumptions, approaches and sensibilities. It represents an emergent, self-organizing network of relationships, so the formalized, restrictive cultures of many banks will serve as a significant barrier to adoption.
- Enterprise 2.0 is not your father’s enterprise software. The tools are relatively open, inexpensive to deploy and manage, and an order of magnitude easier to use; however, they are also robust and secure. They enable unprecedented collaboration.
- Technology is giving collaboration new teeth. Everyone has always praised teamwork, but when communication and administrative processes were so inefficient, monetizing collaboration was excessively difficult. Enterprise 2.0 is a discontinuous change for the better.
- Jaded executives will muse that Enterprise 2.0 is another technology buzzword in search of a home. However, they should ask their CIOs about the transformation of enterprise software, and they will answer that technology is steadily emerging from its legacy cage. Service-oriented architecture and Web services are enabling more responsive IT, while virtualization offers a quantum leap in flexibility. Enterprise 2.0 technologies natively enable people and process to adjust to changing requirements. People who do not recognize this distinction will regret it later.
- The adoption of Enterprise 2.0 will unfold over the next four years, but may well be faster due to the technologies’ and processes’ relative ease of use, affordability and interoperability. The term began to get traction this summer, and more case studies are emerging every week.
- Enterprise 2.0 adoption will likely produce some disruption in the market. As a group, global enterprises tend to be fast followers. If one/more competitors adopt more quickly, it could have a disruptive impact on your business.
- Think about Cisco’s results with the WebEx acquisition. We can assume that investment banks would, at a minimum, achieve a fraction of Cisco’s results. Now multiply that by how many acquisitions the bank does. Obviously, results would be similar in many other bank transactions and services that require discussions among far-flung team members, extensive information exchange and negotiation with myriad parties.
- Read the pdf here.
- By the way, I’ll be speaking about this at Financial Markets World’s Web 2.0/Enterprise 2.0 in the Capital Markets Industry conference in New York on September 17. Hope to see you there!
31 May 2007
IBM’s CEO Articulates Prescient Vision for the Enterprise—Adapting to the Knowledge Economy
|
|
 Samuel J. Palmisano, Chairman, President and Chief Executive Officer of IBM Corporation, outlined a new version of the enterprise at a lunch honoring him with the Executives’ Club of Chicago’s Thirteenth Annual International Executive of the Year Award April 12, 2007 at the Chicago Hilton. Entitled “Leadership, Trust and the Globally Integrated Enterprise,” his speech emphasized key points from his Summer 2006 article of the same name in Foreign Affairs. He was especially interesting to hear due to his experience with leading one of the world’s foremost global enterprises as well as his insight from serving global enterprises in every industry.
Yesterday’s model for the global enterprise, the multinational corporation (MNC), looks increasingly outdated due to widespread adoption of standards-based technology, increasingly standardized work processes and a liberalizing regulatory environment. Today, knowledge-based resources are available globally, and the enterprise’s means to create value is choosing how and where to tap the resources to best execute business processes. Moreover, the shift to the globally integrated enterprise means a profound culture shift and outlook, which we will address here.
Continue reading Leadership, Trust and the Globally Integrated Enterprise
25 April 2006 Accelerating Forces Buffet the Enterprise
Volatility of customer wants and diversity of markets around the world will increasingly demand that enterprises innovate if they want to remain relevant because their current product introduction and innovation processes are woefully insufficient. In addition, several “structural enablers” are driving down the cost of collaboration—globalization, enterprise software maturation, e-collaboration tools and BPM solutions. I think it’s beyond dispute that “emerging” markets around the world look at India as a model, and there will be a cascading wave of new outsourcing providers entering the market in the years ahead, keeping downward pressure on supplier prices and forcing increased innovation across the supplier value chain. For example, many educated young people in these markets are native with e-collaboration tools, which should lead to new models of collaboration. SOA and Web services are increasingly ingrained in enterprise software, opening up legacy and new solutions to web-based, granular sharing of information. BPM, because it digitizes an increasing spectrum of the business process, is an enabler of outsourcing.
Reposition Outsourcing as Iterative Transformation
Outsourcing in 2006 is where e-business was in 1998, when the Internet was a tech playground in the mid-late 90s. The mission of “e-business strategy” was repositioning the Internet in the C-suite, explaining the vision, helping to create a future state and working with clients on their adoption processes. A similar repositioning needs to be done with outsourcing in the next 2-4 years, and early adopters will begin now. Outsourcing is not currently practiced at the enterprise level as a transformational activity. There is an opportunity to reposition it for the CEO agenda. Outsourcing can be an iterative approach to achieving agility by harnessing the drivers listed above to increase innovation, efficiency and responsiveness.
Missing Gold Pieces
The missing pieces are golden opportunities—if core represents 50% of an enterprise’s activities (methinks this is on the high side, but some companies claim theirs is), that means theoretically much of the rest could be outsourced, even allowing for Sarbox and other regulatory constraints. However, using current practices, companies can’t even come close to the potential because they can’t effectively manage the vendors they already have, let alone increase the number and diversity of vendors. Some “missing piece” opportunities are:
- Transform vendor management by borrowing from best practices in developing distributed systems (with outsourcing, the enterprise’s processes will become more distributed).
- Build business architecture to manage the increasing distributed nature of the enterprise. Apply best practices from distributed systems to business structures. IBM has some brilliant insight into this: it’s called Component Business Models (CBM).
- Grow knowledge-based practices and culture. The fundamental tie between high-performing collaborative partners is actionable knowledge exchange. Most companies are ineffective at this now. The industrial enterprise is, in general, a poor collaborator because command/control is a deeply ingrained management impulse.
The Two-fold Value Proposition
There is a rare opportunity to offer a fantastic value proposition: the “traditional” outsourcing value (save money, increased efficiency) plus the “missing pieces” in a continuous, iterative process that can deliver tactical cost and efficiency savings while building strategic adaptiveness to drive competitiveness for the long term.
9 April 2006 The emerging knowledge economy will reconfigure the role of discovery in innovation in some surprising ways. First, a couple corollaries:
- For most of the history of mankind, information has been scarce, and an important way that people innovated was through discovery. In agrarian and industrial economies, it was extremely important to discover new ways to transform raw materials in order to create new products. Since people lived in relative isolation compared to today, there was significant duplication of discovery efforts in pockets around the world.
- The pervasive TCP/IP network (i.e. Internet), combined with accelerating adoption of modern architectural approaches (i.e. service-oriented architecture) and messaging (Web services and XML) is unlocking the world’s data/information as a dizzying pace. It’s a cliché that we have too much information, and this trend shows no sign of abating. Moreover, software tools for automating the management of information are improving all the time. Of course, this development gives people an unprecedented ability to collaborate—on everything.
In the knowledge economy, discovery gets leveraged, pervasively and instantaneously. Discovery will remain extremely important to creating value, but I’m going to argue that it will play a cameo role in the hyper-innovation knowledge economy: crucial but supporting.
Anyone attending innovation conferences and seminars will tell you about a persistent refrain emanating from enterprises with world renowned laboratories: they roll out patents at a torrid pace, but commercialization of the discoveries remains a consistent frustration. Very few of their patents create business value. This is true irrespective of industry or country.
The commercialization process will be the innovation mother lode, from electronic gadgets, to pharmaceuticals to space lichens. Commercialization means making a new discovery relevant to customers and creating a process to fabricate (if product), service and introduce it to customers, in an efficient way. These are all areas in which groups of inter-connected knowledge workers, collaborating at an unprecedented level, can achieve a quantum leap in value creation.
But there’s a catch. Companies must reorganize themselves, in structure, attitude and habit. Large industrial enterprises have traditionally managed risk by controlling variables. Because they have large tightly coupled structures, they must constrain change within the limits that their structures can accept. Structural realities and limitations have imprinted employees with formal processes and methodologies.
Does this sound like fast-moving, dynamic spontaneous energy that can be focused on fulfilling customers’ whims? Exactly.
Transforming how the employees of a global enterprise interact to create value is a daunting task, but it’s eminently doable. Some of the secrets are encapsulation, delegation, collaboration and abstraction. In brief, encapsulation enables activity to be differentiated and organized within “pods,” which operate without external micro-management. Pods have specialized competencies and are responsible for producing something, but the approach they take is up to them, which gives them the freedom (and responsibility) to create and innovate. Of course, pods collaborate with other pods to get something done. This structure is very flexible. Pods can exist anywhere in the world, inside or outside the company.
Delegation is a concept that everyone’s familiar with, but it bears mention that, when one pod asks for a service to be performed, it specifies what it needs and when it needs it, and relevant pods respond and organize themselves to get it done. Delegation does not focus on specifying how the job is to be performed because the how is encapsulated within the pod that said that it could provide the service.
Management needs to become a brain.
Now, abstraction. In command/control environments, management typically gives literal (that is, not abstract) direction for what gets done—and often how things get done. This approach can theoretically be workable in relatively static environments in which change is slow. In the hyper-dynamic knowledge economy (and I postulate that we’re still in the initial stages of acceleration), management can’t know the optimal process to get something done because capabilities and conditions are changing too fast. In the self-organizing world, requests are made in standardized formats, and pods respond in standardized formats, so that communication is pervasive and consistent. Pods know what their specialties are and what services they perform. They only respond to appropriate requests.
It bears mention that this is roughly how the human body is organized: the brain doesn’t instruct lymph nodes on how to fight a disease or muscle cells how to deal with lactic acid. It just receives and sends messages, and only cells that are relevant to that particular message respond. This is a way that enables the body to excel in a tremendous range of activities and circumstances. The brain would be overwhelmed if it had to micro-manage all the body’s systems and how they did their work.
Having been closely involved with enterprise transformations for years, I realize that this proposition will be difficult for enterprises, but the rewards will be many (they include survival ,^). Moreover, the journey can be iterative—it need not be a big bang—the new can coexist with the old as it replaces it.
24 January 2006 Last night I attended TiE Chicago’s “The Great Chicago Tech Debate,” which turned out to be a rousing panel discussion (no, that’s not necessarily an oxymoron ;-) replete with insights. As it was my first TiE (The Indus Entrepreneur) event, I enjoyed taking an informal survey of members afterwards, and everyone I spoke with found it extremely valuable (not awfully surprising, but still..). TiE, which was founded in The Valley and has chapters globally, is a network to support entrepreneurs. As its name suggests, many of its leaders originally hail from India, and many have founded, led or helped to launch successful start-ups that have leveraged offshore partners in India.
Although the setting of this tale is Chicago, its lessons will apply to many other cities, provinces or countries that find themselves in a global knowledge economy, with the need to form a vision to galvanize their citizens to make changes in order to succeed in the new environment. Two of the main challenges are: making the shift from the industrial economy to the knowledge economy and the need to differentiate to compete. “Technology” plays a supporting role, which we’ll discuss more in a minute. After some observations on the debate, I will offer what I think we have to do differently and how Chicago, and other industrial economy regions, will blossom again.
21 December 2005 The current revolution in enterprise software is only a preview of a much larger, more pervasive shift that will transform the global economy within the next decade. Service-oriented architecture and Web services are two of the more well-known elements of the maturation of distributed computing, which is changing the rules of the vaunted software development life cycle.
In short, we are on the way to becoming a real-time market for global human capital whose ascendancy will increase with the growth of the knowledge economy and global standards for work processes. If we classify economic value according to knowledge/information, manufacturing and agricultural products and services, the knowledge portion has been steadily increasing its share of the value chain, and this trend is accelerating. Of course, information technology facilitates the creation, distribution and sharing of knowledge.
What does this mean for outsourcing and offshoring? By understanding how standards-based technologies have combined to transform enterprise software, we can learn how the coming standardization of work processes will drive explosive demand for an always-on market for knowledge workers and real-time value chains.
Read a longer version of the article published in the Technology Executives Club Journal. Forthcoming next month, my point of view will explain in more detail how we can apply learnings from e-business adoption and software transformation to pervasive outsourcing. This article is an hors d’oeuvre.
|
Social Business Resources
|
