Friday, November 30, 2007

Is there a health-care crisis in the US? The averages may say no... but the stories say yes

I've been drawn to write about the health-care situation in the US for some time. There have been very powerful proposals, such as this one by Michael Porter and Elizabeth Teisberg a few years ago, that I thought deserved advocating (link - $$).

In addition, for the past year I have bought my own health insurance (instead of having it provided by an employer) and with my wife managed the resulting insurer/caregiver/patient relationships. And, let me tell you, doing it yourself opens up a whole new window onto the health-care world. Buying your own insurance and managing your own care allows you to see deep into the sausage factory that is today's US health-care ecosystem.

Nonetheless, I held back. Perhaps our situation and experience were unique. Perhaps struggles and issues we had were due to our own mistakes. (We made some, perhaps many.) I also resisted the overheated rhetoric and drastic solutions proposed by some politicians. In addition, economists like Greg Mankiw provided analysis showing public concern about the issue is overblown.

The I read the front-page story in yesterday's Wall Street Journal by John Carreyrou (link - $$). It was horrifying to read about the gentleman who, despite better-than-average health-care coverage, ended up owing more than $1 million to hospitals, doctors, etc. And while the dollar figure was astonishing, more intriguing to me were the problems and issues he and his wife ran into while trying to understand and manage the bills. These problems and issues were very similar (though larger, of course) than issues my wife and I have run into in trying to manage health-care for our healthy family.

Typical issues include:

  1. Difficulty in getting billing and reimbursement details from caregivers and insurers
  2. Coding of invoices to maximize caregiver insurance reimbursement--not always accurately reflecting what was done
  3. Frequent rejection of charges by insurers, causing the patient to intervene to try to not pay more than is appropriate (a difficult task--see issue #1)
  4. Onerous collections procedures (at my former company, we used more care and respect in trying to collect a $10 phone bill than many caregivers and hospitals use in trying to collect bills amounting to hundreds or thousands of dollars--bills which are usually in dispute)
  5. 200-300% price differences between insurer-negotiated prices and those consumers must pay for the same product or service
In the Journal article, there is a happy ending--sort of.
Earlier this week, Mrs. Dawson was contacted by a CPMC official with surprising news. The hospital said Mr. Dawson had qualified for financial assistance under its charity-care policy and wrote off his entire bill. Asked why the Dawsons hadn't been told they could qualify for charity care before a reporter contacted the hospital, CPMC said Mrs. Dawson never gave it the opportunity to explain its policy to her.
Of course, blame the customer. That is an old strategy which my wife and I have encountered often in working with the health-care system.

So while I can't argue with Prof. Mankiw's math, his figures reflect broad averages which bleach out the real pain and injustice suffered by many. (Prof. Mankiw has been fortunate enough to have two of the world's great health-insurance providers--the Federal Government and Harvard University--as employers.) And, I would wager, given that companies are pulling back more and more on their health-insurance benefits, more people are becoming responsible for management of their own health care--meaning an increasing number of people will get to experience that pain and injustice, unless the system gets some real reform. (Politicians, please read the Porter/Teisberg paper!)

The averages say the situation is fine. The stories paint a very different picture.

We expect from the health-care system compassion, fairness, respect and dignity. Often, in the doctor's office or the hospital, we get them. Once the subject shifts to money and payment, however, they vanish into the air like smoke.

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Thursday, November 29, 2007

Religion and science both require faith

I've been thinking all week about a New York Times Op-Ed article from Saturday, by the cosmologist Paul Davies of Arizona State University, which stated that if you're a scientist you have to have faith--faith in there being an order in the universe sufficient to support the laws of physics, chemistry, biology, etc. Beneath every testable theory we've developed, there is a point at which the greatest scientists say, "It is that way just because." or "We take that as a given."

Writes Davies,

Clearly, then, both religion and science are founded on faith — namely, on belief in the existence of something outside the universe, like an unexplained God or an unexplained set of physical laws, maybe even a huge ensemble of unseen universes, too. For that reason, both monotheistic religion and orthodox science fail to provide a complete account of physical existence.

It's humbling to think, with all the discoveries we've made, all the rules we've constructed about the universe, at the base of it is a vast, possibly infinite number of things we don't know and won't ever know. It made me think that maybe religious faith and science are more reconcilable than they might seem.

(Photo: N81 in the Small Mag from NASA's GRIN site.

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Wednesday, November 28, 2007

A Hollywood producer's master class on business storytelling

Following on to yesterday's post on political storytelling--in the December Harvard Business Review, Peter Guber, best described, I guess, as a Hollywood mogul (former head of Columbia Pictures, producer of "Batman" and "Rain Man," among others), writes about "Four Truths of the Storyteller" (link - $$).

It's an excellent article, and encapsulates in seven pages most of what it takes "Made to Stick" 200 pages to describe. Appropriately, he starts with a story, about charming Fidel Castro into allowing his team to shoot a documentary in Havana harbor. But he goes much further, to illustrate why storytelling is important in business--"for the leader, story-telling is action-oriented - a force for turning dreams into goals and then into results."

Guber's four truths are as follows:

  1. Truth to the Teller - in other words, authenticity, via candor and revealing of emotion. One of the biggest assets stories bring is the light they shine on the teller herself. (One frequent criticism I've heard in story workshops--"this reveals more about the author than the characters"--isn't all bad.)

  2. Truth to the Audience - Guber defines this as "the promise that the expectations of the listener, once aroused, will be fulfilled." As one of my writing teachers once put it, "a good ending is both surprising and inevitable."

  3. Truth to the Moment - a good story adapts to the context in which it is told. This does not mean that it is synthetic, but that it absorbs the energy and atmosphere of its surroundings. Perhaps a detail that was not important in one telling becomes vital in another. This is one way in which a good story differs from a bad story--a good story can be retold many times without becoming trite or cliched. Guber emphasizes the need for preparation--a story is like an iceberg: some information is revealed, but far more information lies beneath the surface. And the storyteller must know all of it.

  4. Truth to the Mission - finally, the story must be bigger than the storyteller. As Guber puts it, "mission is embodied in his stories, which capture and express values that he believes in and wants others to adopt as their own." He mentions as an example Nobel Laureate Muhammad Yunus, whose storytelling ability helped grow a modest idea, microfinance, into a worldwide phenomenon. (Here's a Yunus story that was particularly inspiring to me.)
In his introductory column, HBR editor Thomas Stewart wrote, "'Four Truths of the Storyteller' [is] one of the smartest leadership articles you'll have read in some time." I agree.

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Tuesday, November 27, 2007

Political storytelling and authenticity

In the business narrative/storytelling corner of the blogosphere, there's been some discussion of the role of stories in the recent Australian election. On the one hand, Shawn Callahan has discussed the value that stories had in presenting and communicating the virtues of Prime Minister-elect Kevin Rudd, and of Parliamentary candidate Maxine McKew. On the other hand, Dave Snowden dismissed most political storytelling, including Rudd's, as insincere propaganda.

My thoughts? Storytelling and narrative are powerful tools. Within them is the power to communicate deeply--and to manipulate. I view the narratives of politicians, especially those running for high office, with a great deal of cynicism. Why? Because a story of a politician deeply moved by an encounter with an ordinary citizen doesn't square with the counter-story of the politician's well-researched and market-tested "message," spin doctors, and the careful stage-managing of campaign events.

The most memorable story I recall of an American politician was President George H.W. Bush (I believe; it might have been Reagan) attending a baseball game, ordering a hot dog, and looking sheepishly to his Secret Service men to pay for it, since he never carried any money on him.

I remember another story about a Cabinet secretary whose biggest adjustment, after leaving office, was losing his chauffeur and having to drive himself around for the first time in six years.

These stories say a lot to me about how Presidents and Prime Ministers relate to the constituency. There's nothing wrong with it, per se, but the "My world is a lot different from your world" stories drown out the down-to-earth stories they tell about themselves.

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Shop Talk Podcast #4 - Tony Ulwick on Determining What Customers Really Want from New Products

The podcast is back, this time featuring Tony Ulwick, author of the book "What Customers Want" and CEO of Strategyn, a consulting firm helping companies improve their innovation processes.

We're talking about how to gather information from customers to drive innovation. Most companies have "voice of the customer" programs, but few know how to extract quality information from those programs. It takes asking the right questions, and removing ambiguity from the answers. In the podcast, Tony states that it's wrong to assume that users can't tell us what they want; instead, the problem is that "companies don't know how to listen to customers."

You can access the podcast here.

Here are links to companies, people, etc., mentioned in the podcast:

Clayton Christensen - "focus on the job the user wants to get done"
Theodore Levitt's "Customers don't want a 1/4" drill"
Strategyn White Papers

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Monday, November 26, 2007

Innovative companies must excel at partnering

There's a fascinating interview at Harvard Business School Working Knowledge with HBS professor Alan MacCormack, covering innovation and how it's moving away from Corporate R&D and into a collaborative web of partnering & alliances. (You can find a working paper on the subject here.)

According to MacCormack, there are several reasons why this is so:

  1. Products are becoming more complex, and therefore it's impossible to retain all the competencies in house to create them.
  2. Open standards and architectures help allow work to be more readily distributed to partners.
  3. The growth of developing economies means that competitive, at times distinctive work is available at lower prices.
The implications of collaborative innovation fascinate me. It means that R&D professionals will need more negotiation and management skills than technical skills, and that the ability to manage internal politics will be less important than the need to bridge corporate & geographic cultures.

I'm not aware of anything in business-school curricula to prepare the next generation of managers for this challenge. (HBS students should seek out courses by Bazerman and Malhotra, as well as MacCormack.) There certainly was nothing of this sort that I learned for my MBA--any learning was entirely OJT.

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IT Risk - platform and architecture matter

Once, in my days running sales and marketing for a software company, the VP of Technology was growing agitated with my complaints about our product's hardware and database architecture. "OK," he said in exasperation, "if you don't like [proprietary platform], what platform do you want the product to run on?"

In imitation of a Qwest ad from that time, I said, "I want it to run on any operating system, on any database, from any provider." I then glanced at him to make sure he wasn't winding up to smack me in the head. "You asked."

What I was trying to get across is that fighting the platform battle with customers is a certain loser. If they are a Unix shop, and you are trying to sell them Linux, or OS400, it's a nearly impossible task. It's better, frankly, to cut your losses and find another prospect for which your product is a good architectural fit.

Why is that so? A new book helps sort it out. "IT Risk," by George Westerman of MIT's Sloan School and Richard Hunter of the Gartner Group, discusses how companies can and should manage risk within their information-technology infrastructures.

And one of Westerman and Hunter's key points is that a company's foundation architecture must be simple and standardized. Such an architecture can be more easily protected from disaster, can adapt more quickly to changes in the business, and can limit data access to authorized parties more easily than a hodgepodge of separate systems, platforms and applications.

Like it or not, when you are trying to sell a nonconforming software product into a company that has built a simple, standardized IT foundation, you are trying to force them to accept a hodgepodge. And they won't do it.

Product managers need to manage the lifecycle of their architectures as well as the lifecycle of their functionality. It can be painful and expensive, but not as expensive as a good product that loses its market due to an outdated architecture.

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Tuesday, November 20, 2007

I like the Kindle least what I've seen of it. No, it doesn't look like Apple made it (perhaps not in itself a bad thing). But it's got lots of titles, easy ordering/buying/downloading, and an easy-to-read screen.

I also like that they bundled the network charges into the cost of a book.

I don't like... the name. It seems nobody does. Nor the purchase price--US$399. It's a lot of money for something that I can't guarantee I would use religiously. Paying for blogs is weird, never mind the small selection (you mean I can't read Shop Talk on my Kindle?). I would happily pay for single newspaper copies, though, especially when I'm traveling.

But what I like most is a portable, easily reloadable eBook. I think about that often, when I'm schlepping through an airport terminal with my backpack laden down with a laptop and two or three books. My shoulders ache just thinking about this.

I also think of every kid carrying a too-heavy backpack to school. Which is all of them.

So, something I can carry in my backpack, which holds hundreds of books, which I can reload anywhere (at least, most anywhere in the US), which I can read as easily as a printed book. That's a beautiful thing.

Now, Mr. Bezos. About that price tag...

(Read a summary of what other folks are saying about the Kindle here.)

(See a video demonstration of the Kindle here.)

(Kindle image courtesy of

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Monday, November 19, 2007

Greenwashing is a marketing worst practice

Following on to the posts from last week on using marketing in bad faith (here and here), today I read Joel Makower's excellent post on "Greenwashing" (a great turn of phrase)--the incomplete or untrue attribution of environmentally-friendly characteristics to products.

Joel assesses a report from TerraChoice Environmental Marketing, which analyzed marketing claims on behalf of green products. They identify six worst practices, such as "the sin of the hidden trade-off," which "suggest a product is 'green' based on a single environmental attribute (the recycled content of paper, for example) or an unreasonably narrow set of attributes without attention to other important, or perhaps more important, environmental issues." This neat trick was the most prevalent "sin," found in 57% of the claims studied.

Such misbehavior will only serve to heighten the public's cynicism toward all green claims, with the possible result that green content gets devalued, and therefore companies stop taking pains to create it.

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Friday, November 16, 2007

More on using the Cynefin framework

If you found value in Dave Snowden's and Mary Boone's recent Harvard Business Review article (discussed in an earlier post), you should read Dave's post on "safe-fail probes"--it's sort of a second chapter to that article focusing on applying the Cynefin framework.

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A salesperson's lesson on growth

A number of years ago, I was in an internal training class with some of my colleagues. One guy in particular was a salesperson I had always thought of as being a bit shallow. Anyway, during a break in the class, I got into a discussion with him about the effect of Home Depot and moving commercial development out of city centers, putting Mom and Pop hardware stores out of business. And in the discussion he was, to my surprise, against a lot of that development. I was saying, you know, wasn't it a good thing that due to these superstores things could be cheaper and that people could buy more things? And I remember him saying in response: why do things need to be cheap, why do we need more things?

It really shocked me, because my assessment of him was way wrong. I had definitely not pegged him to be such a thoughtful person. I've remembered those words for more than 10 years and as I reflect on it now, his response and his thinking had a lot of the Buddhist in them.

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Thursday, November 15, 2007

Mistake Bank #12 - Don't forget about support!

What follows is a sample of a project I've been working on called the Mistake Bank. It combines narrative, learning from mistakes, video and web2.0 in an environment that companies can use to train new employees, create a corporate history, connect workers and mentors, and bring more humanity to the workplace. Email me at if you would like to know more about the Mistake Bank.

When John Caddell began his first job as a product manager, he inherited a new product that was being sold by a large partner. And once the first sale happened, he learned that having a support strategy is not optional.

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Wednesday, November 14, 2007

Another "marketing-for-ill" practice

Promoting your product based on an ingredient it doesn't actually possess.

Marketing for good--and for ill

I can't wait for the upcoming book by Harvard Business School marketing professor John Quelch (his blog is here) and Katherine Jocz called "Greater Good"--because I am fully expecting to disagree with it.

I read the abstract last month and have been stewing over it since then. Here it is in full:

Marketing has a greater purpose, and marketers, a higher calling, than simply selling more widgets, according to John Quelch and Katherine Jocz. In "Greater Good", the authors contend that marketing performs an essential societal function--and does so democratically. They maintain that people would benefit if the realms of politics and marketing were informed by one another's best principles and practices. Quelch and Jocz lay out the six fundamental characteristics that marketing and democracy share: (1) exchange of value, such as goods, services, and promises, (2) consumption of goods and services, (3) choice in all decisions, (4) free flow of information, (5) active engagement of a majority of individuals, and (6) inclusion of as many people as possible. Without these six traits, both marketing and democracy would fail, and with them, society. Drawing on current and historical examples from economies around the world, this landmark work illuminates marketing's critical role in the development, growth, and governance of societies. It reveals how good marketing practices improve the political process and--in turn--the practice of democracy itself.

The ennobling of marketing--connecting it with vital societal interests--got my attention. I am a marketing professional, and I like to feel good about myself and my profession, and as such I liked the book's idea--for about five minutes, after which it lost its flavor faster than a free after-dinner mint.

What lingered was this thought: there's an awful lot of bad marketing out there (not ineffective marketing, but "marketing-for-ill"), and I'd wonder whether Quelch and Jocz would do more for society by writing about that.

Here are some fundamental principles of marketing-for-ill that I bet won't appear in Quelch's and Jocz's book: (1) bombard people with buy messages for commodity products such as credit cards, (2) use selective language to play up one's product while disparaging the competitors'--as with any Oracle ad, (3) craft deceptive messages to get people to buy something that is not in their best interests--exhibit A: low-introductory rate mortgages, (4) create multilevel marketing networks to make revenues primarily via self-consumption of the networks, (5) use complex pricing schemes to make it difficult to assess total costs before buying--e.g., "my cellphone plan."

It's unfair, of course, to judge the book without reading it. So I promise I'll read it when it comes out, and I'm pretty sure it will be a good book and unworthy of my scorn.

At minimum, it has caused me to confront a lot of what I don't like about my profession, and reflect on what I can do not to promote those ideas.

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Tuesday, November 13, 2007

With the Wii, the controller is the key

It's a good day for the Caddell parents. Our #1 Christmas task was locating and purchasing a Nintendo Wii for our 6- and 4-year-old boys. I don't know how it is where you live, but here stores receive small shipments of Wiis each week and sell them out as soon as they get them.

So today my wife got an email from GameStop letting us know they got some Wiis in. So I dutifully zipped over to the mall (in Harrisburg, most things are pretty close to each other, which is a beautiful thing at a time like this).

I got the last Wii in stock. So, at least in my own mind, I am a hero for the day. And the kid in me can't wait till the 25th. (I unwittingly spoiled my wife's Christmas gift for me--Tiger Woods PGA Tour 08--by buying my own copy from GameStop. Oops.)

But why do I want to play the Wii, when I couldn't be bothered with a Playstation 3 or Xbox 360?

It's the controller. Which is no surprise to anyone--it was Nintendo's central innovation for the Wii. But why is the controller so appealing to non-gamers?

One clue was watching my son play one of the standard consoles. Depending on the game, the buttons on the controller have completely different meanings ("If you want to speed up, press the 'A' button"). There's a joystick, and the four-way direction thing-y. And those colored buttons. What do they each do?

The learning curve for any new game is daunting...too daunting for me to bother trying. I don't have the patience for getting blasted into oblivion a hundred times before figuring out how to enable my shields.

PC games are no better. A year ago I signed up for RuneScape and spent an hour trying to walk out of the first room I plopped into--before I gave up.

But the Wii controller is more intuitive. It's one level of abstraction closer to real movement and action. There's much less need to translate what you want to do into controller language.

As such, the Wii will probably never be cool to hardcore gamers. But I don't care; if you're looking for me on December 26th, I'll be playing Pebble Beach with Tiger.

Monday, November 12, 2007

If you want to find innovation, don't look for market share

Here's a blanket generalization: market-share leaders don't innovate.

Exhibit A is the cellphone industry. The real innovation in the US mobile market is coming from T-Mobile, the fourth-largest operator. We discussed its combination WiFi/cellular package in an earlier post, and today the Wall Street Journal wrote that T-Mobile is the most enthusiastic operator partner of the Google-led Android alliance, seeing in it the opportunity to develop a distinctive user experience. And to help create innovative and better integrated services, T-Mobile is getting more involved in its handset manufacturers' design process.

One question is, why can't leaders be more innovative? The most straightforward explanation gets to the heart of the leader's paradox. Feeling they have more to lose causes leaders to become more and more conservative, settling for incremental upgrades and not seeing (or not valuing) the new and bold.

Fear of cannibalization also inhibits innovative thinking at market-share leaders. The question "What's this going to do to all the people we've sold the old product to?" has probably doomed thousands of worthy innovation efforts.

While upstarts and companies who are trying to catch up are freer to act.

The leader who figures out how to instill this type of thinking in a market-leading company should win the Nobel Prize for Management.

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Friday, November 09, 2007

Luxury brand names - extensible everywhere?

For as long as there have been luxury brands, they have been trying to expand from their original niche to related - or unrelated - product areas. Remember Pierre Cardin cologne? It was a mainstay of TJ Maxx, a US discount store, back in the 1980's.

The owners of today's luxury brands will tell you they won't repeat the mistakes of the past, where licensing mania resulted in the above-mentioned cologne and plenty of other failed products. Yet as described in this Wall Street Journal article, "Like Our Sunglasses? Try Our Vodka!" by Christina Binkley (link - $$), they're at it again. Roberto Cavalli Vodka, Ferragamo watches (no, you don't wear them on your ankle), Bulgari hotels. There's no limit to what designers and their bankers will put their name on.

The designer-store trend helps to urge fashion companies to diversify. How else to fill up all those shelves and give people the opportunity to indulge in accessories to go with the outfit?

This trend, too, will peter out. The Bulgari hotels will become Hiltons, Ferragamo watches will take their rightful place on the shelves of TJ Maxx. But as long as it lasts, designers can luxuriate in seeing their names plastered over all kinds of random goods. And who wouldn't like to see her name on a fine bottle of premium vodka?

Friday bonus quiz: Which of the following items are actual designer (or designer-licensed) goods?

  1. Versace dog collar
  2. Bill Blass Lincoln Continental
  3. Fendi litter box
  4. Burberry dog collar
  5. Louis Vuitton dog collar
  6. John Varvatos aftershave
  7. Marc Jacobs pop-up tent
  8. Gucci dog collar
  9. Armani keychain

(answer: all but 1, 3, 7.)

(Photo: Marc Jacobs canvas backpack via

(Disclosure: I have just learned that the author of the WSJ article, Ms. Binkley, formerly wrote for the Wilkes-Barre Times-Leader. My wife grew up in Wilkes-Barre, PA.)

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Thursday, November 08, 2007

Authors recommend improving alliances using the soft stuff

Aren't detailed plans, firm contracts and hard metrics the best way to ensure that your alliance performs to expectations?

Maybe not. Jonathan Hughes and Jeff Weiss of Vantage Partners write in the November Harvard Business Review ("Simple Rules For Making Alliances Work" - link $$) that specific goals and contractual commitments are necessary but not sufficient for alliance success. Why? Because alliances are too complicated to manage with contracts and metrics. Write Hughes and Weiss:

Alliances, however, are not just any business arrangement. They demand a high degree of interdependence between companies that may continue to compete against each other in the marketplace. They require the ability to navigate—and often to actively leverage—significant differences between partners’ strengths and operating styles.

Hughes and Weiss go on to set out five principles for better management of alliances:
  1. Focus less on the business plan and more on how you'll work together
  2. Develop metrics pegged to alliance progress as well as alliance goals
  3. Instead of trying to eliminate differences, leverage them to create value
  4. Go beyond formal governance structures to encourage collaborative behavior
  5. Spend as much time managing internal stakeholders as on managing the relationship with your partner
These sound right to me. When I've seen alliances go south, it's when the human interactions don't live up to the strategies, or when cultural differences promote alliance-damaging behaviors, or when the rest of the business tires of the difficulties of working with an alliance partner.

It also seems that narrative techniques would be very helpful in surfacing and exploring the differences between firms. Collecting and making sense of brief anecdotes that are meaningful to one company can help the other understand the deeper strengths and culture of its partner.

The other benefit I see working with the Hughes & Weiss prescription is the ability to create new value and innovation through the leveraging of differences. Going into an alliance, the joint value proposition is only a paper document--and each party's limited understanding of the other constrains what it can be. Once true collaboration is allowed to happen, the possibilities expand dramatically.

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Wednesday, November 07, 2007

Toyota manages suppliers for the long run

Among the many accolades that Toyota receives, little mention is made of their supplier management. It's strange, given how frequently the press mentions supplier issues at other auto companies--usually in the context of extracting price concessions.

Toyota is very different. As profiled in a recent paper from the Boston Consulting Group, "Getting to Win-Win," Toyota takes the long view with suppliers. For example:

  • It spends 3-5 years evaluating a new supplier before awarding an initial contract.
  • It understands its suppliers' costs structures in detail and agrees to prices that allow suppliers to make profit. Price concessions must be accompanied by explanations of related supplier cost improvements.
  • While it attempts to have more than one source for components, Toyota is willing to give 100% of its business for a part to one company if only that company can meet Toyota's expectations for quality and delivery.
  • It carefully tracks supplier issues and gets involved in root-cause analysis and resolution of problems--and expects suppliers to learn from mistakes as eagerly as it does. A Toyota supplier is quoted in the BCG report: "Toyota accepts the fact that mistakes do happen. What we need to show is that we have learned from our mistakes and that we will not make the same mistake a second time. Toyota rewards you for that."
One hallmark is openness and transparency. And a willingness to invest in a relationship far in advance of an actual purchase. For example, if a company is not awarded business with Toyota, the company will provide "feedback that highlights the areas the supplier should work on to improve its cost, quality and support of Toyota."

In other words, Toyota provides information to losing bidders so that their future bids can have a greater chance of success. Which should be a lesson to all us who sell--don't be afraid to ask why we lost and what we can do to provide better bids in the future.

If it can help Toyota, and its suppliers, it can help our customers and us, as well.

(Thanks to the Economist for the pointer.)

(Photo: a 1981 Toyota Celica by allenp via stock.xchng)

Tuesday, November 06, 2007

When things get tough, you need to negotiate face-to-face

There is a moment early in the movie "Local Hero" where MacIntyre, the executive who is being dispatched to Scotland to negotiate a land purchase for an oil company, complains to a colleague about the trip. "I don't need to travel there; I'm more of a Telex man." Yet he goes anyway, and finds the Scots extremely challenging (and shrewd) negotiators. The deal wouldn't have gotten done via Telex.

I was thinking of this while reflecting on the experience I had negotiating with a client was dragging their feet on signing the contract. Our general manager requested that I travel to New York and try and get the contract closed myself and I protested and said we can get it done on a conference call. He said, "Sometimes you have to go there in person." And so I did. Here's what happened...

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Monday, November 05, 2007

How enterprise 2.0 adds value to the connections between workers

Andrew McAfee, the Harvard Business School professor and formulator of the term Enterprise 2.0, shows us that there's more than one way to create a great blog. He doesn't post every day, or every week, even. It's been a month since his last post. But when he does post, it's the Web 2.0 equivalent of a scholarly paper. Detailed, well-reasoned, and complete.

Call his blog the anti-Twitter.

I write this because his new post is significant. Those of us who regularly work with Web 2.0 tools take it as a given that they can help businesses. Who could argue that more sharing and collaboration is harmful, we think? Unfortunately, this type of reasoning, or lack thereof, can't convince a skeptic to install Enterprise 2.0 tools in his data center and let them loose with the employee base--especially given the threat they pose to the information hegemony of senior management and the IT department.

Luckily, McAfee has been thinking about the "why" question. And in his latest post, he describes the value to businesses of Enterprise 2.0, by aligning its tools to the ties between workers--strong ties, weak ties, potential ties, and even no ties.

For example, wikis allow teammates (workers with strong ties) to collaborate on a deliverable. On the other end of the spectrum, prediction markets allow workers with no ties at all to contribute to answering a question or predicting a future result.

In sum, Enterprise 2.0 allows businesses to enhance value from the ties between workers. McAfee presents this conclusion in a very simple table.

So, we have our explanation. It's time to open up the data center. Who's with me?

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Friday, November 02, 2007

Describe your strategy in a simple picture

Remember Venn diagrams? Those intersecting circles we learned about in elementary-school mathematics? (It was interesting that I didn't see those again until advanced college math--what a surprise that was!)

In the November Harvard Business Review ("Strategic Insight In Three Circles" - free link), Joel Urbany and James Davis of the University of Notre Dame use three intersecting circles (illustrated below) to simply describe a company's strategy. One circle identifies what value your company provides through its products and services. The second is what customers perceive about your company's value, and the third represents what customers perceive about your competitors' value.

The strategic goal, of course, would be to increase competitive advantage, decrease disadvantage, eliminate non-value and capture much of the white space. (Easier said than done!) Identifying and scrutinizing the attributes in each of those areas is a very useful exercise.

But be careful. It's important to be brutally candid with yourself when doing this type of evaluation. And you must truly look at things through the eyes of the customer, instead of how you'd wish them to see you and your competitor.

It's very easy to self-delude. In many cases, companies will come up with a self-congratulatory diagram like this:

When perhaps their true strategic situation is this (write Urbany and Davis, "The biggest surprise is often that [the advantage area], envisioned to be huge by the company, turns out to be minuscule in the eyes of the customer"):

So, it's important that this tool be used for genuine inquiry and candid appraisal, not to justify the current thinking or to make people feel good about themselves. If your company can use it properly, the three circles can clearly and vibrantly tell you where you are and where you should head.

(Illustrations adapted from Urbany and Davis, "Strategic Insight In Three Circles.")

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Thursday, November 01, 2007

HBR article demonstrates that leaders need to manage complexity

"We need to document our processes!"

I heard this again and again at various companies I worked at over the years. And that's a fine goal, to document processes. But the thinking--that if processes are documented then we will be able to perform high-quality work and be successful--is flat-out wrong in many circumstances.

Why? Because many (and many of the most important) business problems can't be reduced to a repeatable process. This view is described in an article in the November Harvard Business Review, "A Leader's Framework for Decision-Making," by Dave Snowden and Mary Boone (link - $$). (Prior references to Dave Snowden's work can be found here: 1, 2, 3.)

In it, Snowden and Boone describe the Cynefin framework, a model that helps put business situations into a context that guides how they should be addressed. The framework has four primary segments:

Simple - repeatable processes that can be described by best practices (e.g., how to determine whether a mortgage applicant is qualified)

Complicated - "the domain of experts," according to Snowden and Boone; where complete data is available, and issues can be solved with analysis (e.g., finding underground oil deposits)

Complex - where multiple variables interact unpredictably - "the realm of 'unknown unknowns,' ...the domain to which much of contemporary business has shifted."

Chaotic - where no manageable patterns exist, "the realm of unknowables" --e.g., September 11, 2001. In this case, the best response is to do something and assess what happens.

So, back to documenting processes. Simple processes and their best practice should be documented and followed. Complicated processes, too, can benefit from discipline, though there is value in dissent and dialogue. Documenting complex processes doesn't do much of value--repeatability is impossible and in fact counterproductive to attempt.

Here are some business processes that would fall into the complex domain:
  • new product development (how people learn about and use products can have a significant effect on how the product evolves)
  • entering a new market or geography
  • making an organizational change
  • a B2B sales pursuit
So how to manage these if they can't be boiled down to a cookbook? Boone and Snowden recommend involving more people in decisionmaking (sounds a bit democratic); setting some rules or guidelines to channel behavior (i.e., in a sales pursuit, we will never respond to a tender that we didn't know was coming); encouraging dissent; creating an environment where good things can emerge, and nurturing those things.

In my experience, managers are still trying to shoehorn all their business problems into the simple or complicated domains. The more quickly they accept the complexity of many critical areas, and manage them appropriately, the sooner we'll stop wasting human resources and start achieving better business results.

And that'll be something worth documenting.

(graphic: the Cynefin framework from Cognitive Edge via Wikipedia)

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