Simple rules: Common mistakes with simple rules

In this review Donald Sull is talking about five types of pitfalls that can arise which may overrule the simple rules of the organisation. He says that pitfall can arise in many ways and that can derail all the rules built. One of the pitfalls he talks first is that simple rules are too broad, organisation try do a lot of process by thinking that they are concentrating only on single process as such. You should always think about only a single process that can be brainstorming, acquisition, new product development where you are clear about the process. Second pitfall he talks about is that rules are too detailed and sometimes it becomes too overwhelming and confusing to handle. Third way that simple rule may go bad is that they are too vague, here they mean that even if they more focus on a particular process but they too little opportunities because of poor guidance in the working. Fourth pitfall can be having rules that are too mindless; organisation has rules that are simple but revolves around without any proper thinking process going into development of the rules. Fifth rule can be letting the simple rules going beyond the sell by date ie rules that becomes irrelevant after some years of the working of the organisation.

Simple rules: Strategy as simple rules

What are simple rules for strategy and how you are going to make them work in your organisations and most of the managers try to focus on opportunity strategy but you should know how to implement this strategy in a large complex organisation. He talks about how to put strategy in simple rules and to implement in your large organisation. One of the strategies of simple rule is choosing a process for doing things that make your organisation into a flow of opportunities, selecting small no of simple rules so that you can capture the opportunities that you are looking. There are five simple rules for organisation to capture opportunities that is available which make others not to pass by. First one is choosing what are the opportunities available for the organisation, second set of rules is privatisation ie which project should be concentrated first  and what should be done last. Third set of rule is about process of how you pursue a project. Fourth rule is pacing how you determine the timing of new product development. Five is pulling up or deciding when to get out of opportunity ie how to get out of some work when it is already done. Strategy of following simple rules allows the organisation to strengthen their chances of sustaining in the market and controlling the threats that may come.

The main advantages of simple rule is that it create a balance between too much structure in the organisation and the confusion that can happen due to complicated rules which had prevailed for long time. These rules if it clear and well-articulated that can be circulated through the organisation, these simple rules also makes it explicit.at the end he talked about pitfalls that can happen even if you follow the simple rules perfectly.

Simple rules: three logics of value creation

As simple rules Donald Sull, Associate Professor of Management Practice in Strategic and International Management talks about three logics of value creation. He is explaining about dealing with the complexity of the world with simple strategies. He gave the definition of strategy in three simple words, ie strategy is to create capture and sustain. First approach of strategy is value creation through position, identify the attractive market, stake out a position in that market built high barriers to entry so that your competitors are kept away and try to create value he gave an example of military strategy ie to find a high hill and build a fortress around it and keep all the equipment’s ready for use. Second is resource approach to value creation, it is about having our own resources and these resources should be rare, valuable because people pay more for any premium products and your product should be difficult to imitate. If you have such a resources that has all these values as mentioned above, it is very difficult for your competitor to grab the value of the resources you have. Third is opportunity logic of value creation here it is seeing a gap in the world market and identifying the customers and assemble all the resources to remove the gap in the world market here you are not keeping any resources but you are managing the uncertainty of the gap filling the gap. You take only what is left over after paying out for all the resources. This approach of opportunity is very interesting for many managers who are underdogs who have not resources left over, it bring about and is the best approach for volatile and fats moving market.

Steve Jobs - Real Leadership Lessons

A visionary by nature, Steve Jobs believed in creating products that instilled a need among consumers. The title “father of revolution” is apt for him as Apple designed some of the unique products and left their legacy for the other companies to follow. The journey of Apple was a roller-coaster one. It is only after Steve Jobs became the CEO of Apple in 1995 that Apple saw its way up in the market of PCs and consumer electronics. Steve Jobs prided Apple as a vertically integrated company. The hub and spoke model of Apple with hardware (Mac) as hub and software (iTunes software) as spoke helped in creating a niche for Apple.
The exemplary leadership of Steve Jobs took Apple to great heights. His ideology made the Apple innovative, stylish and premium class. Some of the ideologies of Steve that are learning lessons for other are:

Focus: Focus is important for any business to sustain and survive. As quoted by Steve Jobs, “deciding what not to do is as important as deciding what to do”.  The companies should filter out all the distractions that prevent from achieving the goal.
Simplify: Steve Jobs believed in simplifying things for customers. Simplicity is conquering and not ignoring complexities.
Take responsibility end to end: leaders should take responsibility for all the aspects of business.
When behind, leapfrog: innovation is not only about new ideas first; it also looks for a jump when left behind the competition. Apple was left behind in the market of CDs. It did a leapfrog by introducing iPods, iTunes, which would take the other companied somea time to catch up.
Put products before profits: leaders should never run after the profit; if your product is innovative and unique; profits would follow. Don’t be a slave to focus groups: leaders need to intuitive besides being intellect.
Bend reality: leaders should push the limits of the employees and make them believe that there is nothing impossible for them.
Impute: A good idea always is an advantage; but the presentation of the same is very important to leave your trail.
Engage face to face: leaders should promote more meetings in person than through electronic media. It helps in better coordination and communication.
Know both the big picture & details: leader should be able to perceive things at an organisational level as well as at the level of product.
Stay hungry, stay foolish: leaders should always look out for more opportunities and be ready to exploit those.

Case: Apple A

At the present scenario apple is one of largest vendors of personal computers in the world with record revenue of US 46.33 billion. Apple always followed a vertical integrated model for the last few decades which integrate hardware and software together; this is the main success factor of apple when compared to other PC makers who does the other way round by outsourcing some of its work to others.

At the beginning, when apple was launched it was the idea of Steve to follow vertical integration strategy for the company because he did not trust any outside party for product development. Apple was doing well at the beginning but treat of IBM was growing in the early eighties and the failure apple 3 made apple to loss its hand in the PC market. Steve jobs realized that IBM PC was mainly designed for corporate customers and Mac was designed for consumer market and for the same reason there was disagreement with sculley who believed in traditional distributor system and want Mac as a business tool. Due to this disagreement Steve was thrown out of apple which results in the collapse of the whole company later.

When Steve was called back to apple after a decade he was very methodical in allocating his resources , like he cut down the R&D spending and also removes all the product line to focus only on PC’s and laptops.

In the early 2000 apple was focusing its innovation in two areas ie hubs and spokes and was successful up to a great extent. iTunes was another innovative idea from apple which almost changed the concept of hearing music.

Steve has a different concept of retailing when he started the first apple store in Virginia, Steve felt that his products should be sold in separate outlet rather that with his competitors products which was actually a different concept all together. There was a halo effect prevailing the market after the launch of apple iPod and Steve always gave importance to products rather that profit and was successful up to a great extent.

Is Sony Turning Around?

The year 2009 saw the pioneer of the world’s consumer electronics, Sony group reporting its first operating loss in 14 years. They prided themselves in their unique innovative technology and focus on high quality. Yet their premium-priced products did not accommodate the changing needs of the consumers for more innovative cost-effective ideas adopted by their competitors. Isolation from the technology of the rest of the world and insistence on their own Sony technology led to the isolation from the rest of the world, or galaponi-zation as referred by the Japanese. The re-structuring efforts of the company while maintaining its tradition is a challenging task ahead.

The journey of Sony from the year 1946 to year 2009 has been a study of its own. The internal resistance to the change played a big role in shaping the future of the Sony. The different business divisions and the concept of “company within company” under Norio Ohga worked well for improving the margins of the respective divisions but failed in realizing the goals of the company in the long-run. Its stringent technology measures to support their own technology in every product and service made them inflexible in the eyes of consumers. For e.g. the sony mp3 required conversion of the media files; downloading of the music  from the contract websites only; slow in catching up with the LCD technology are a few examples of  Sony’s excessive pride in their own technology. The insider system is also another major hurdle to the re-structural efforts of the company. The company has a long history of all Japanese CEOs and the too-many board members prohibited company’s move from growth and efficiency.

The company hired a new non-Japanese leader, Howard Stringer for re-structuring. He is made the head of US. Stringer faced dilemma between the American vision for results and Japanese worship for tradition. He is also faced with the dilemma of improving the communication between the different business divisions and the division heads. The problem of lack of communication was so huge that it affected the relationship of Sony with other players as Dell, Toshiba. Another problem in front of Stringer was the proud veterans and engineers. There was no coordination among the employees; the senior engineers were arrogant and not gave the due credit to the leader.

The future of the Sony is very blur if they don’t adapt as Apple and Samsung. The changing needs of the customers have to be understood. The organization needs to be flexible for the employees as well for the customers. The Japanese conglomerate may be out of competition if they don’t incorporate the changes while maintaining their legacy.  The legacy may not come into a rescue unless the need to preserve it does not urge.

CULTURAL IMPLICATIONS:

As Sony fall behind the global competition, it’s time for certain serious re-structuring by Stringer. Stringer faced the dilemma of striking balance between the American and Japanese vision. As a non-Japanese leader, it was more difficult to win the confidence of the employees. The communication process was another major hurdle. While American believes in frank communication; the Japanese didn’t believe in communication at all. Stringer will face strong internal resistance from the employees. They may also perceive it as a threat to their legacy.

OVERCOME INTERNAL BARRIERS:

Stringer should focus on improving the coordination among different business divisions so that the problem of television and audio speakers mismatch does not occur again.

The communication process should be made more transparent.

The employees should be rotated from different divisions and countries to learn the cultural aspects better.

COMPETITIVE POSITION:

Stringer should define the focus of the company. The mission and the vision of the company should be revised.

Incorporate the technology around the world quicker; delay will give an advantage to other players.

 Another Japanese conglomerate around the same timeline is Toyota. Toyota is known for the distinguished culture practices at its workplace. They have been able to incorporate change elements and be flexible unlike Sony. This uniqueness made them successful globally. Although they are in different business areas; Sony can take lessons from Toyota to bring change and be adaptable.     

The way Starbucks Trains about the Customers Behaviour

Anne Morriss, managing director of the Concire Leadership Institute, explains how to get satisfaction by training customers like employees. She is the co-author of uncommon service.

 The author discussed about the customer’s role in increase the satisfaction, encourage untrained customers, Line between the customer’s and employees.

You have to manage them as we maintaining the employees.

Job design should be consider the customer perspective.

 The example where the customers also successfully trained is Starbucks. The major problem with Starbucks customers is the vocabulary that they are using to get the product in different sizes and flavors. So they developed a standard Starbucks vocabulary which helps the customers for effective communication. They created the poster with star bucks vocabulary which customers can take home to make customers more interested.

How Starbucks Trains Customers to Behave

Anne Morriss, managing director of the Concire Leadership Institute, explains how to get satisfaction by training customers like employees. She is the co-author of uncommon service.

 The author discussed about the customer’s role in increase the satisfaction, encourage untrained customers, Line between the customer’s and employees.

You have to manage them as we maintaining the employees.

Job design should be consider the customer perspective.

 The example where the customers also successfully trained is Starbucks. The major problem with Starbucks customers is the vocabulary that they are using to get the product in different sizes and flavors. So they developed a standard Starbucks vocabulary which helps the customers for effective communication. They created the poster with star bucks vocabulary which customers can take home to make customers more interested.

Value Chains versus Supply Chains

The flow how the value chains are helpful is by explaining the challenge, value chain thinking, value chain management, key success factors od the value chain analysis.

The challenges are economic, social and environmental factors.

The basic principle of value chain thinking is extending line of sight into suitable competitive advantage, making process more efficiently by recognizing specific tasks in cross functional tasks. The supply chain model is adversarial which affects the each company to each other in which information flow is very weak and transactional.

But whereas value chain model is power on shift with simple in principle transforming supply chain vehicle into a smooth vehicle. It is managed by consumer of product or service.

The value chain helps to reduce the cost by removing the uncertainties, helps to gain the competitive advantage faster by providing the common foot print.

Success factors:

Ø  Impact of smooth chains in operations helps in decision making

Ø  Trust is also one fundamental factor for success and then interdependence, commitment.

Ø  Identify Change consumer behavior, change the attitudes and make them switch from their brand

Ø  Consistent delivery of product or service

Ø  Effective communication

Ø  Identifying what people want, need and they do

The Core competence of the Corporations

The growth of the company depends on the ability of it to maximize the advantage of core competency. The corporation should clearly identify the core competency, develop an appropriate strategy to cultivate them and establish good platform in that field.

The diversified organization finds tough to establish itself and grow continuously because they have several business units to be taken care of. The market being dynamic the targets and the boundaries change very frequently.

The corporation can sustain itself in the market by introducing innovative product which has very essential features for the buyers to neglect or to develop a new need for them which the customers haven’t thought of. This is easy to say but it requires very huge change within the organization. The management should understand the external environment well and create a strategy which is flexible. The principles of management have to be reformed since the most of the activities are just concentrated on the immediate result.

The corporation has to identify the fields which are complementary and inter-related to the core competency. This is important in the sense that while developing the strategy the expertise in inter- related fields will help to improve the quality of the product.

The organizations can go for collaboration with the experts of the field related to its core competency so they can learn about the field make themselves expert in it.

The corporation’s structure is also very important for the growth. There may be lot of smaller units within the organization but they must be centralized so as to achieve the goal of the company.

The success of the company on the longer run is highly due to the talent to build a new product at higher quality, lower cost and in a faster way. They also should be able to fit and upgrade themselves according to the changing environment.

The core competency for an organization is like the foundation of the building. The longevity of the building depends on the foundation and so is the success of the organization.

The collective learning in synchronizing diverse production skills and mix various streams together is known as core competency.

The core competency enhances on continuous use. It has to be raised and protected and continuously used to get the expertise in the field.

The company should concentrate on the process especially related to its core competency. This is to get an edge over the competitors.

Implementing core competency doesn’t mean that that lot of research and development has to be done. The core competency should be unique to an organization and cannot be followed by the competitors easily. It helps the company to enter various markets and to provide significant contribution towards the benefits to the customers.

The opportunity that arises has to be utilized properly. This will improve the company’s core competency. The organization shouldn’t lose its core competency while they are in the collaboration.

The company to achieve leadership in the core competency tends to increase their productivity and capture more market share worldwide. The control in the core products helps the company to lead the way in the future developments of similar products.

When the company fails to increase its potential by imprisoning its competency and diversifying its business tends to lose its position on the market. The employees with the competency also tend to develop new innovative products and lose their skills and knowledge slowly.

It is quite important for the top management to develop its own map to the success on the basis of core competency and it’s constituent. This will give clear picture to the employees about the company’s new targets and help them in achieving the necessary skills. It will also help in allocating the resource appropriately. 

Is Sony Turning Around?

The year 2009 saw the pioneer of the world’s consumer electronics, Sony group reporting its first operating loss in 14 years. They prided themselves in their unique innovative technology and focus on high quality. Yet their premium-priced products did not accommodate the changing needs of the consumers for more innovative cost-effective ideas adopted by their competitors. Isolation from the technology of the rest of the world and insistence on their own Sony technology led to the isolation from the rest of the world, or galaponi-zation as referred by the Japanese. The re-structuring efforts of the company while maintaining its tradition is a challenging task ahead.

The journey of Sony from the year 1946 to year 2009 has been a study of its own. The internal resistance to the change played a big role in shaping the future of the Sony. The different business divisions and the concept of “company within company” under Norio Ohga worked well for improving the margins of the respective divisions but failed in realizing the goals of the company in the long-run. Its stringent technology measures to support their own technology in every product and service made them inflexible in the eyes of consumers. For e.g. the sony mp3 required conversion of the media files; downloading of the music  from the contract websites only; slow in catching up with the LCD technology are a few examples of  Sony’s excessive pride in their own technology. The insider system is also another major hurdle to the re-structural efforts of the company. The company has a long history of all Japanese CEOs and the too-many board members prohibited company’s move from growth and efficiency.

The company hired a new non-Japanese leader, Howard Stringer for re-structuring. He is made the head of US. Stringer faced dilemma between the American vision for results and Japanese worship for tradition. He is also faced with the dilemma of improving the communication between the different business divisions and the division heads. The problem of lack of communication was so huge that it affected the relationship of Sony with other players as Dell, Toshiba. Another problem in front of Stringer was the proud veterans and engineers. There was no coordination among the employees; the senior engineers were arrogant and not gave the due credit to the leader.

The future of the Sony is very blur if they don’t adapt as Apple and Samsung. The changing needs of the customers have to be understood. The organization needs to be flexible for the employees as well for the customers. The Japanese conglomerate may be out of competition if they don’t incorporate the changes while maintaining their legacy.  The legacy may not come into a rescue unless the need to preserve it does not urge.

CULTURAL IMPLICATIONS:

As Sony fall behind the global competition, it’s time for certain serious re-structuring by Stringer. Stringer faced the dilemma of striking balance between the American and Japanese vision. As a non-Japanese leader, it was more difficult to win the confidence of the employees. The communication process was another major hurdle. While American believes in frank communication; the Japanese didn’t believe in communication at all. Stringer will face strong internal resistance from the employees. They may also perceive it as a threat to their legacy.

OVERCOME INTERNAL BARRIERS:

Stringer should focus on improving the coordination among different business divisions so that the problem of television and audio speakers mismatch does not occur again.

The communication process should be made more transparent.

The employees should be rotated from different divisions and countries to learn the cultural aspects better.

COMPETITIVE POSITION:

Stringer should define the focus of the company. The mission and the vision of the company should be revised.

Incorporate the technology around the world quicker; delay will give an advantage to other players.

 Another Japanese conglomerate around the same timeline is Toyota. Toyota is known for the distinguished culture practices at its workplace. They have been able to incorporate change elements and be flexible unlike Sony. This uniqueness made them successful globally. Although they are in different business areas; Sony can take lessons from Toyota to bring change and be adaptable.  

Apple Inc.

At the present scenario apple is one of largest vendors of personal computers in the world with record revenue of US 46.33 billion. Apple always followed a vertical integrated model for the last few decades which integrate hardware and software together; this is the main success factor of apple when compared to other PC makers who does the other way round by outsourcing some of its work to others.

At the beginning, when apple was launched it was the idea of Steve to follow vertical integration strategy for the company because he did not trust any outside party for product development. Apple was doing well at the beginning but treat of IBM was growing in the early eighties and the failure apple 3 made apple to loss its hand in the PC market. Steve jobs realized that IBM PC was mainly designed for corporate customers and Mac was designed for consumer market and for the same reason there was disagreement with sculley who believed in traditional distributor system and want Mac as a business tool. Due to this disagreement Steve was thrown out of apple which results in the collapse of the whole company later.

When Steve was called back to apple after a decade he was very methodical in allocating his resources , like he cut down the R&D spending and also removes all the product line to focus only on PC’s and laptops.

In the early 2000 apple was focusing its innovation in two areas ie hubs and spokes and was successful up to a great extent. iTunes was another innovative idea from apple which almost changed the concept of hearing music.

Steve has a different concept of retailing when he started the first apple store in Virginia, Steve felt that his products should be sold in separate outlet rather that with his competitors products which was actually a different concept all together. There was a halo effect prevailing the market after the launch of apple iPod and Steve always gave importance to products rather that profit and was successful up to a great extent.