The periscopic media tour

Citation

Henry, C. (2006), "The periscopic media tour", Strategy & Leadership, Vol. 34 No. 2. https://doi.org/10.1108/sl.2006.26134baf.001

The periscopic media tour

The periscopic media tour

Andy Grove: role model

Normally, our society observes a division of labor. Musicians don’t critique, and critics don’t compose. Quarterbacks decide on Sunday, and fans deride on Monday. It is the singular ability to inhabit both roles at once – subject and object, actor and audience, master and student – that sets Grove apart. And it’s why, for everything that has been written by and about him, we have yet to appreciate his biggest legacy. Andy Grove is America’s greatest student and teacher of business.

By analyzing the decisions he made on the road to becoming a great leader, you can learn to hone your own leadership skills. Because there’s no gain in being able to recruit great employees, handle a board, dazzle Wall Street, or rally your cavalry for a glorious charge at dawn’s early light if you haven’t figured out which way to point the horses.

Grove’s output as a teacher of management has been prodigious. He has taught from the lectern, in the op-ed pages, in his famous (sometimes feared) one-on-one sessions, and with his books, including 1983’s High Output Management and 1996’s Only the Paranoid Survive, whose title entered the lexicon along with its phrase “strategic inflection point,” which Grove defines as “a time in the life of a business when its fundamentals are about to change.” His teaching would have been an impressive career in itself. Yet it is one thing to search for truth in the ivory tower and quite another to take those lessons, however wrenching, and apply them to a living, breathing business like Intel. Grove’s most powerful lessons have been in the doing.

What can others learn from Grove’s odyssey? As we face a future where change is not only constant but accelerating, reality will transform itself more swiftly than most humans-or most companies-are hard-wired to handle. Even startups that overturn one reality are easily overturned by the next big change. Grove has escaped natural selection by doing the evolving himself. Forcibly adapting himself to a succession of new realities, he has left a trail of discarded assumptions in his wake. When reality has changed, he has found the will to let go and embrace the new.

It’s a performance as remarkable as his life story. There will not be another CEO who survived both the Nazis and the communists before becoming a naturalized capitalist. And yet Grove is the best model we’ve got for doing business in the twenty-first century. If you hope to thrive in an environment of rapid change, it is this outlier-his strengths forged in a distant and vanished world – that you should follow. Begin your lesson in leadership the same way Andy Grove attacks a problem: by setting aside everything you know.

As a historian whose subjects have been, until now, no longer living, I found it a jolt to face a very alive Andy Grove. When he gets to a particularly intense point in a conversation, Grove leans forward and fixes you directly with his eyes, which are a startling blue. “That is not the right question,” he will say, briefly taking over the duties of the interviewer. It’s not personal. It’s about an invisible third party: the truth. The truth is so precious and so hard to coax into view-surrounded by its bodyguard of politics and half-truths-that there is simply no time for fuzzy thinking.

“Becoming Andy Grove,” Fortune, December 12, 2005.

Welch on strategy

Obviously, everyone cares about strategy. You have to. But most managers I know see strategy as I do-an approximate course of action that you frequently revisit and redefine, according to shifting market conditions. It is an iterative process and not nearly as theoretical or life-and-death as some would have you believe.

Given this view, you may be wondering what I’m going to say in this chapter.

The answer is, nothing that’s going to get me tenure!

Instead, I’m going to describe how to do strategy in three steps. Over my career, this approach worked incredibly well across varied business and industries, in upturns and downturns, and in competitive situations from Mexico to Japan. Who knows – maybe its simplicity was part of its success.

The steps are:

First, come up with a big aha for your business – a smart, realistic, relatively fast way to gain sustainable competitive advantage. I don’t know any better way to come up with this big aha than by answering a set of questions I have long billed the Five Slides, because each set fits roughly onto one page. This assessment process should take a group of informed people somewhere between a couple of days and a month.

Second, put the right people in the right jobs to drive the big aha forward. This may sound generic; it’s not. To drive your big aha forward, you need to match certain kinds of people with commodity businesses and a different type entirely with high-value-added businesses. I don’t like to pigeonhole, but the fact is, you get a lot more bang for your buck when strategy and skills fit.

Third, relentlessly seek out the best practices to achieve your big aha, whether inside or out, adapt them, and continually improve them. Strategy is unleashed when you have a learning organization where people thirst to do everything better every day. They draw on best practices from anywhere, and push them to ever-higher levels of effectiveness. You can have the best big aha in the world, but without this learning culture in place, any sustainable competitive advantage will not last.

Strategy, then, is simply finding the big aha and setting a broad direction, putting the right people behind it, and then executing with an unyielding emphasis on continual improvement.

I couldn’t make it more complicated than that if I tried.

The Five Slides:

1. 1.

   What does the playing field look like now?

2. 2.

   What has the competition been up to?

3. 3.

   What have you been up to?

4. 4.

   What’s around the corner?

5. 5.

   What’s you winning move?

Winning, by Jack Welch with Suzy Welch (HarperBusiness, 2005).

Doing marketing right

Thus the prevailing methods of segmentation that budding managers learn in business schools and then practice in the marketing departments of good companies are actually a key reason that new product innovation has become a gamble in which the odds of winning are horrifyingly low.

There is a better way to think about market segmentation and new product innovation. The structure of a market, seen from the customers’ point of view, is very simple: They just need to get things done, as Ted Levitt said. When people find themselves needing to get a job done, they essentially hire products to do that Job for them. The marketer’s task is therefore to understand what jobs periodically arise in customers’ lives for which they might hire products the company could make. If a marketer can understand the job, design a product and associated experiences in purchase and use to do that job, and deliver it in a way that reinforces its intended use, then when customers find themselves needing to get that job done, they will hire that product.

Since most new-product developers don’t think in those terms, they’ve become much too good at creating products that don’t help customers do the jobs they need to get done. Here’s an all-too-typical example. In the mid-1990s, Scott Cook presided over the launch of a software product called the Quicken Financial Planner, which helped customers create a retirement plan. It flopped. Though it captured over 90 percent of retail sales in its product category, annual revenue never surpassed $2 million, and it was eventually pulled from the market.

What happened? Was the $49 price too high? Did the product need to be easier to use? Maybe. A more likely explanation, however, is that while the demographics suggested that lots of families needed a financial plan, constructing one actually wasn’t a job that most people were looking to do. The fact that they should have a financial plan, or even that they said they should have a plan, didn’t matter. In hindsight, the fact that the design team had had trouble finding enough “planners” to fill a focus group should have tipped Cook off. Making it easier and cheaper for customers to do things that they are not trying to do rarely leads to success.

“Marketing malpractice: the cause and the cure,” Clayton M. Christensen, Scott Cook, and Taddy Hall, Harvard Business Review, December 2005.

Break things apart to build success

“Taking things apart” is a nice expression, but it doesn’t really give the exact flavor of the process, so I use the term disaggregation to explain the idea. Here’s the explanation.

Often a particular technology, or a business of technology, seems to be made up of one solid piece; but if we inspect it carefully we can see that it’s really made out of individual pieces – pieces we can take apart if we’re careful. The business of telephone service is an excellent example. In the United States until 1984, and aside from a few small competitors, AT&T did everything: it provided long-distance service and local service, installed and owned the wires on the city streets, installed the wires in homes and businesses, and even installed and owned the telephones in people’s homes. There was no technical reason why it had to be that way – the electric company didn’t insist on owning and installing everyone’s electrical appliances –but through social and legal conventions, all these functions were aggregated, that is, stuck together, into one entity.

How do I describe taking AT&T apart? I don’t want to use words like destroyed or smashed because it was a very careful processes. Nothing was destroyed; all the equipment remained in place – in some buildings, the workers painted white lines on the floor to show that AT&T’s equipment was “here” while the local telephone company’s equipment was “there.” Telephone service wasn’t disrupted – calls continued without any interruption. The best way to describe taking apart AT&T is to look at the results. The various pieces of phone service are no longer aggregated into one solid mass – they are disaggregated into separate entities. The pieces are no longer bound together with the social glue. Disaggregate is the word I’ll use throughout this book to describe this process of taking things apart, of breaking connections, and of dismantling the infrastructure of technology and its businesses.

Did disaggregating AT&T make phone service better? Absolutely: top to bottom, left, right, and sideways. The first advances came in long-distance service: the quality of connections improved at the same time prices dropped. Then came new services that AT&T would never have offered, like prepaid phone cards. And look at the different styles of telephones! In the old days at AT&T, all telephones were black; today they come in every conceivable shape and color, and a few that are outright ridiculous. These benefits aretypical of disaggregation, and I’ll outline the general case in the next chapter.

AT&T exemplifies another important lesson about disaggregation and revolutions. As AT&T disaggregated into smaller companies and the technology fell in into separate hands, the bonds – interfaces – between the various pieces were carefully preserved. Local telephone companies still routed calls through the long-distance network; telephones that people purchased and installed in their own homes still were able to get dial tone from the local telephone companies. This didn’t happen by accident – it was carefully planned. Successful disaggregations in technology, and the business of technology, repeat this pattern over and again: you must provide at least the basic pre-disaggregation functions of the technology (e.g., the ability to make phone calls), and to do this requires that you pay careful attention to interfaces between the pieces left behind after disaggregation (e.g., telephones still plug into the phone network).

The Pebble and the Avalanche: How Taking Things Apart Creates Revolutions by Moshe Yudowsky (Berrett-Koehler Publishers, 2005).

More breaking things up

When the internet age dawned, the priests of this new technology spoke knowingly of “convergence,” and so convergence has come to pass.

The Treo 650 I carry in my pocket exemplifies this much-ballyhooed merging of formerly disparate media. It’s a cell phone, a music player, a sound recorder, a game player, a camera – still and video – and a means of gaining access to the Internet from anywhere. You can even watch movies on it.

So there is indeed some convergence. Less noticed is that the internet is also an anti-convergence technology. All around us, it is ushering in what may be called the unbundled age. The latest sign of this comes from Kevin J. Martin, the chairman of the Federal Communications Commission, who suggested that consumers might be better off if they could buy cable television fare channel by channel – and not wrapped into cable packages.

Although cable providers are not happy about this, Charles F. Dolan, the independent-minded chairman of Cablevision Systems, supported the idea. Broadband Internet connections and companies like Apple Computer are already making it possible for consumers to download one television show at a time. It’s hard to believe that viewers who just want to watch Yankees games, for example, will always have to pay for the basket-weaving channel as well.

In the unbundled age, we will get a clearer look at what we – and our work – are worth in the marketplace, with some social and financial implications. In the newspaper industry, news and classified ads are going their separate ways, thanks to outfits such as Craigslist.org and Monster.com. Web sites like Topix.net, meanwhile, are unbundling the news itself, culling it for any references to, say, dentistry or elephants or ZIP code 90046 and delivering the results by means of the Internet syndication system known as RSS.

Another form of unbundling is found with record albums. Sites like iTunes from Apple offer music song by song, and many users are cherry-picking their favorites. Books are being unbundled as well. Google is digitizing mountains of books and including them in its search engine, allowing users to read modest segments online. And Amazon.com says it will start selling access to some books a page at a time. Users of Amazon are already able to view a page here and there at no cost.

“Unbundles of joy,” by Daniel Akst, The New York Times, December 11, 2005.

When skeptics are a CEO’s best friends …

In February 2003, the Columbia space shuttle disintegrated while re-entering the earth’s atmosphere. In May 1996, Rob Hall and Scott Fischer, two of the world’s most accomplished mountaineers, died on the slopes of Everest along with three of their clients during the deadliest day in the mountain’s history. In April 1985, the Coca-Cola Company changed the formula of its flagship product and enraged its most loyal customers. In April 1961, a brigade of Cuban exiles invaded the Bay of Pigs with the support of the United States government, and Fidel Castro’s military captured or killed nearly the entire rebel force. Catastrophe and failure, whether in business, politics, or other walks of life, always brings forth many troubling questions. Why did NASA managers decide not to undertake corrective action when they discovered that a potentially dangerous foam debris strike had occurred during the launch of the Columbia space shuttle? Why did Hall and Fischer choose to ignore their own safety rules and procedures and push forward toward the summit of Mount Everest despite knowing that they would be forced to conduct a very dangerous nighttime descent? Why did Roberto Goizueta and his management team fail to anticipate the overwhelmingly negative public reaction to New Coke? Why did President John F. Kennedy decide to support a rebel invasion despite the existence of information that suggested an extremely low probability of success?

We ask these questions because we hope to learn from others’ mistakes, and we do not wish to repeat them. Often, however, a few misconceptions about the nature of organizational decision-making cloud our judgment and make it difficult to draw the appropriate lessons from these failures. Many of us have an image of how these failures transpire. We envision a chief executive, or a management team, sitting in a room one day making a fateful decision. We rush to find fault with the analysis that they conducted, wonder about their business acumen, and perhaps even question their motives. When others falter, we often search for flaws in others’ intellect or personality. Yet, differences in mental horsepower seldom distinguish success from failure when it comes to strategic decision making in complex organizations.

What do I mean by strategic decision making? Strategic choices occur when the stakes are high, ambiguity and novelty characterize the situation, and the decision represents a substantial commitment of financial, physical, and/or human resources. By definition, these choices occur rather infrequently, and they have a potentially significant impact on an organization’s future performance. They differ from routine or tactical choices that managers make each and every day, in which the problem is well-defined, the alternatives are clear, and the impact on the overall organization is rather minimal.

Strategic decision making in a business enterprise or public sector institution is a dynamic process that unfolds over time, moves in fits and starts, and flows across multiple levels of an organization. Social, political, and emotional forces play an enormous role. Whereas the cognitive task of decision-making may prove challenging for many leaders, the socio-emotional component often proves to be a manager’s Achilles’ heel. Moreover, leaders not only must select the appropriate course of action, they need to mobilize and motivate the organization to implement it effectively. As Noel Tichy and Dave Ulrich write, “CEOs tend to overlook the lesson Moses learned several thousand years ago – namely, getting the ten commandments written down and communicated is the easy part; getting them implemented is the challenge.” Thus, decision-making success is a function of both decision quality and implementation effectiveness. Decision quality means that managers choose the course of action that enables the organization to achieve its objectives more efficiently than all other plausible alternatives. Implementation effectiveness means that the organization successfully carries out the selected course of action, thereby meeting the objectives established during the decision-making process. A central premise of this book is that a leader’s ability to navigate his or her way through the personality clashes, politics, and social pressures of the decision process often determines whether managers will select the appropriate alternative and implementation will proceed smoothly.

Many executives can run the numbers or analyze the economic structure of an industry; a precious few can master the social and political dynamic of decision-making. Consider the nature and quality of dialogue within many organizations. Candor, conflict, and debate appear conspicuously absent during their decision-making processes. Managers feel uncomfortable expressing dissent, groups converge quickly on a particular solution, and individuals assume that unanimity exists when, in fact, it does not. As a result, critical assumptions remain untested, and creative alternatives do not surface or receive adequate attention. In all too many cases, the problem begins with the person directing the process, as their words and deeds discourage a vigorous exchange of views. Powerful, popular, and highly successful leaders hear “yes” much too often, or they simply hear nothing when people really mean “no.” In those situations, organizations may not only make poor choices, but they may find that unethical choices remain unchallenged. As Business Week declared in its 2002 special issue on corporate governance, “The best insurance against crossing the ethical divide is a roomful of skeptics...By advocating dissent, top executives can create a climate where wrongdoing will not go unchallenged.”

Why Great Leaders Don’t Take Yes for an Answer: The Leadership Challenge by Michael Roberto (Wharton School Publishing, 2005).

… but the devil’s advocates are the enemy

We’ve all been there: the pivotal meeting in which you push forward a new idea or proposal you’re passionate about. A fast-paced discussion leads to an upwelling of support that seems about to reach critical mass. And then in one disastrous moment, your hopes are dashed when someone weighs in with those fateful words: “Let me just play devil’s advocate for a minute … ”.

Having invoked the awesome protective power of that seemingly innocuous phrase, the speaker now feels entirely free to take potshots at your idea and does so with impunity. Because he’s not really your harshest critic. Instead, he’s essentially saying, “The devil made me do it.” Devil’s advocates remove themselves from the equation and sidestep individual responsibility for the verbal attack. But before they’re done, they’ve torched your fledgling concept.

The devil’s-advocate gambit is extraordinary but certainly not uncommon since it strikes so regularly in the project rooms and boardrooms of corporate America. What’s truly astonishing is how much punch is packed into that simple phrase. In fact, the devil’s advocate may be the biggest innovation killer in America today. What makes this negative persona so dangerous is that it is such a subtle threat. Every day, thousands of great new ideas, concepts, and plans are nipped in the bud by devil’s advocates.

Why is this persona so damning? Because a devil’s advocate encourages idea wreckers to assume the most negative possible perspective, one that sees only the downside, the problems, the disasters-in-waiting. Once those floodgates open, they can drown a new initiative in negativity.

Why should you care? And why do I believe this problem is so important? Because innovation is the lifeblood of all organizations, and the devil’s advocate is toxic to your cause. This is no trivial matter. There is no longer any serious debate about the primacy of innovation in the health and future strength of an organization.

As the general manager of Ideo, I have worked with clients from Singapore to San Francisco to São Paulo, and witnessed firsthand how innovation has become recognized as a pivotal management tool across virtually all industries and market segments. And while we at Ideo used to spend the majority of our time in the world of product-based innovation, we have more recently come around to seeing innovation as a tool for transforming the entire culture of organizations. Sure, a great product can be one important element in the formula for business success, but companies that want to succeed today need much more. They need innovation at every point of the compass, in all aspects of the business, and in every team member.

The Ten Faces of Innovation, by Tom Kelley with Jonathan Littman (Currency Books, 2005).

How to win big

Winners had four qualities that led to their success. First, they were in a “sweet spot.” This is a position that is so unique that they had virtually no competition. Winners occupied a space that few other firms occupy. If you are in this position, you are better able to control the classic five industry forces – suppliers, competitors, customers, new entrants, and substitutes – that impact the success of your business. If your company is in such a position, it is essentially a category of one, or nearly so. If your company remains as such for a considerable period, it is better able to achieve sustained competitive advantage. It offers customers something rare, hard to imitate, valuable, and non-substitutable. It gives them something of great value that few other firms provide.

The claim that is sometimes made is that just four good spots are worth occupying. A company can be a narrow or broad cost leader or a narrow or broad differentiator. The conventional wisdom has been to occupy one of these four positions and avoid the middle. The middle is supposed to be a compromised position, where a firm’s products or services are in no way distinct.

But many companies today have moved to the middle. The position they occupy is one of best value. They combine low cost and differentiation in attractive, value-for-the-money packages. Among the examples of firms that have moved in this direction, Toyota is still one of the best. It sells inexpensive cars like the Corolla that don’t have the maintenance and safety problems of earlier US counterparts, such as the Corvair and Pinto. Along with other Japanese manufacturers, Toyota has demonstrated that inexpensive cars can be built well, be safe to drive, and last for years. Similarly IKEA, the Swedish retailer, has a business model based on the concept of “democratic design” – furniture that is not only inexpensive but also attractive, high quality, and extremely functional.

Finding and exploiting a sweet spot means combining low cost and differentiation in striking packages that bring together exceptional value. But companies that achieve sustained competitive advantage do not just occupy sweet spots. Three other attributes are necessary for companies to be long-term winners. They must be agile, disciplined, and focused. They combine position, movement, hard-to-imitate capabilities, and concentration in hard-to-imitate packages. Agility brings these companies to sweet spots, discipline allows them to protect and defend these spots, and focus enables them to exploit the spots. The companies that miss the mark, in contrast, migrate to or are stuck in contested or sour spots. These companies are rigid about not abandoning these spots, inept in defending and protecting them, and too diffuse to fully exploit them.

Big Winners and Big Losers: The 4 Secrets of Long-Term Business Success and Failure by Alfred A. Marcus (Wharton School Publishing, 2005).

Applying Rudy’s methods to business

[Rudy] Giuliani, speaking to the Conference of Mayors in May 2000, added to that sentiment: “New York City during the 1960s, ’70s, ’80s and into the early ’90s served as a symbol of decline. I keep a national magazine cover describing New York City in 1990 as ‘the Rotting Apple,’ a city in decline. And at that time, people in the City of New York accepted it. They accepted the idea that this was our lot in life: that we were an old city that had seen our greatest days … the perception was that things were never going to be as good as they used to be.”

Notice that the “perception” of the city’s population is what is being mentioned here. The more people saw their city as a place with a glorious past and a mediocre present, the more it became the truth. It wasn’t until the little details, the minor infractions, were dealt with that the quality of day-to-day life for citizens of the city showed noticeable improvement, and at that point, real change could be achieved.

Now, how does this apply to business?

The broken windows theory is all about the unmistakable power of perception, about what people see and the conclusions they draw from it. It doesn’t claim that cracking down on graffiti will lead to fewer murders; in fact, crime rates overall are not necessarily affected by the theory being put into practice, as Wilson himself acknowledged. What is important is that as the quality of life in these areas improved, even on a scale that might seem insignificant, the population began feeling better about its surroundings, and that led to significant change: People spent more time out of their homes, participating in events and patronizing local businesses.

In business, perception is even more critical. The way a customer (or potential customer) perceives your business is a crucial element in your success or failure. Make one mistake, have one rude employee, let that customer walk away with a negative experience one time, and you are inviting disaster.

Broken Windows, Broken Business: How the Smallest Remedies Reap the Biggest Rewards by Michael Levine (Warner Business Books, 2005).

Challenges of buying innovation

By examining the challenges of the innovation-through-acquisition strategy in detail, Chaudhuri’s work offers suggestions to managers on what kinds of target companies are worth pursuing and what strategies should be used to integrate those companies once they have been bought.

Innovation acquisitions, according to Chaudhuri, present four major challenges at the product, organization, and market levels: integrative complexity due to technological incompatibilities, integrative complexity due to the “maturity” of a target company, the unpredictability of a product’s performance trajectory (“technical uncertainty”) and the unpredictability of that product’s market (“market uncertainty”). Different target companies present different degrees of these variables, he says, and so each acquisition presents its own benefits and drawbacks.

For instance, by buying a company whose products are based on a different technological platform, a purchasing company can gain new technological functionalities and capabilities. But such a deal would also pose a significant integration challenge because the platform disparity would have to be resolved. Chaudhuri points to Microsoft’s purchase of Hotmail as an example. At the time of the deal, Microsoft was based on Windows, Hotmail on UNIX. “It took a few years to integrate those functionalities seamlessly,” he says.

Similarly, acquiring an older, more mature firm can offer stocks of proven competencies as well as optimized processes, but poses greater integration challenges due to entrenched work routines and cultures and more cumbersome task reallocations. Microsoft’s acquisition of Great Plains to link front-end applications with enterprise resource planning (ERP) applications is a case in point, Chaudhuri notes. “The idea behind the deal is to have seamless integration between the back-end ERP applications – like manufacturing planning, supply chain management, HR management and financial accounting – and front-end Windows and Office applications. But since Great Plains’ relationship-based consulting approach, supporting processes and IT systems are very different from Microsoft’s infrastructure (which is geared towards selling packaged software), these differences are naturally taking time to be reconciled.”

The important takeaway from these deals is not the difficulty Microsoft had in overcoming the integration complexity, says Chaudhuri, but rather the fact that the problems could be, in fact, overcome. Through detailed planning and piecemeal execution, Microsoft has been working through the product and organizational differences.

While “complexity” challenges in innovation acquisitions are real, visible and significant, it is the “uncertainty” variables – the unpredictability of markets and product success – that present the larger challenge for purchasing firms. According to Chaudhuri’s research, technical incompatibilities between two merging companies slowed the time it takes to get a product on the market, but did not hurt financial performance; target maturity was positively correlated with performance. Technical and market uncertainty, however, were shown to both slow the time to market and result in diminished financial returns.

“The innovation-through-acquisition strategy: why the pay-off isn’t always there”, Knowledge@Wharton, November 16, 2005, http://knowledge.wharton.upenn.edu/article/1311.cfm

Innovation and labor mobility

In Silicon Valley’s computer cluster, skilled employees are reported to move rapidly between competing firms. If true, this job-hopping facilitates the reallocation of resources towards firms with superior innovations, but it also creates human capital externalities that reduce incentives to invest in new knowledge. Outside of California, employers can use non-compete agreements to reduce mobility costs, but these agreements are unenforceable under California law. Until now, the claim of “hyper-mobility” of workers in Silicon has not been rigorously investigated. Using new data on labor mobility we find higher rates of job-hopping for college-educated men in Silicon Valley’s computer industry than in computer clusters located out of the state. Mobility rates in other California computer clusters are similar to Silicon Valley’s, suggesting some role for state laws restricting non-compete agreements. Outside of the computer industry, California’s mobility rates are no higher than elsewhere.

“Job-hopping in Silicon Valley: some evidence concerning the micro-foundation of a high technology cluster,” by Bruce Fallick, Charles Fleischman, and James B. Rebitzer, FEDS Paper 2005-11, www.federalreserve.gov/pubs/feds/2005/200511/200511abs.html

Recruiting: the key weapon in the war for talent

How can companies improve their recruiting efforts? To begin, chief executives who know this is a business priority must make sure managers regularly step away from their day-to-day duties to meet new talent – whether or not they have an immediate job to fill. CEOs also must make sure their human-resource managers focus less on administrative work and more on helping line managers find new talent.

That is what Mr Pilnick did at Columbia House, even though he joined the company when it was downsizing. During his five years there, the work force was cut in half to 2,000 employees. But Mr Pilnick continued to change and add new employees to “upgrade staff,” he says. He hired a freelance researcher to help him identify talented midlevel candidates with assorted skills and got additional names from recruiters.

“I gained 20 pounds wining and dining a lot of people,” says Mr Pilnick, who then introduced the best candidates to company executives. Among these: an American Express manager who ultimately joined Columbia House to oversee business analysis. “My boss [former Columbia House CEO Scott Flanders] told me he’d slap my wrists if I went over my recruiting budget, but fire me if I didn’t get the right people for key jobs,” he adds.

That meant he first built relationships with line managers to find out what they needed, spotted talent at competitors, then went to industry meetings to build contacts, he says.

Technology companies such as Dell, Cisco and Apple, which depend on innovation, do this regularly. Fast-growing Google has a staff of several hundred recruiters charged with finding new employees, especially with engineering backgrounds, to fill its offices world-wide. “We’re looking for people who have been successful in environments without a lot of structure, who have had to find their own way and are experimental, who dream big,” says Judy Gilbert, Google’s staffing program director.

Along with typical recruiting methods, such as visits to campuses and postings on its and others’ web sites, Google recently ran an online programming contest that attracted thousands of contestants. “It was a way to start a dialogue with people around the world who might not necessarily be looking for a job – but might become a future employee,” says Ms Gilbert.

“Busy executives fail to give recruiting attention it deserves”, Carol Hymowitz, The Wall Street Journal, November 21, 2005.

Hypermediation

Once upon a time – January 2000, to be exact – I wrote an article for the Harvard Business Review called “Hypermediation: Commerce as Clickstream”. In the early days of the commercial Internet, it was generally assumed that the web was a force for disintermediation, that it would allow producers and consumers to connect directly, killing off middlemen along the way.

I suggested that this view had it wrong: that while some traditional intermediaries were being cut out of the picture, myriad new ones were arising in their place:

Far from experiencing disintermediation, business is undergoing precisely the opposite phenomenon – what I’ll call hypermediation. Transactions over the web, even very small ones, routinely involve all sorts of intermediaries, not just the familiar wholesalers and retailers, but content providers, affiliate sites, search engines, portals, internet service providers, software makers, and many other entities that haven’t even been named yet. And it’s these middlemen that are positioned to capture most of the profits.

The hypermediation phenomenon is continuing in the Web 2.0 world of online media. We’re seeing the emergence of another new set of diverse intermediaries focused on content rather than commerce: blog subscription services like Bloglines, headline aggregators like Memeorandum, blog search engines like Technorati, ping servers like Weblogs.com, community platforms like MySpace and TagWorld, tag aggregators like tRuTag, podcast distributors like iTunes, and of course blogs of blogs like Boing Boing. (Many of the most popular blogs in fact play more of a content-mediation role than a content-generation one.)

Despite the again common feeling that the web is a force for disintermediation in media, connecting content providers and consumers directly, the reality is that the internet continues to be a rich platform for intermediation strategies, and it’s the intermediaries who stand to skim up most of the profits to be made from Web 2.0.

Nicholas Carr, Rough Type Blog, November 28, 2005, http://www.roughtype.com/archives/2005/11/hypermediation.php

Wikis will change how we work

No one understands the wiki, the poor cousin of the blog. But the wiki may end up having a deeper impact on how we do our work. A wiki is a group blog that can be edited by its readers (as opposed to a regular blog, which one person writes and everyone else reads). Wikis are more like conversations. The few well-known wikis include Wikipedia (the online encyclopedia where anyone can submit an article or edit an existing one), Wiki Travel (an amazingly comprehensive travel guide written by travelers), and Wikibooks (textbooks written collaboratively). But most wikis are limited to private groups and are used to manage corporate projects or to collaborate in a quick and dirty way with colleagues.

Although the name sounds like a pathetic woodland creature, “wiki” actually is the Hawaiian word for “quick.” (The wiki creator was in search of a name for his new project and found his inspiration while waiting at the Honolulu airport for the airport shuttle bus called the Wiki-Wiki.) A wiki is usually started by someone in charge of a project who is looking for collaborative feedback on his or her idea. Startups like Socialtext and JotSpot provide hosted wikis for as little as $9 a month (free in some cases). Even major companies like Nokia and investment bank Dresdner Kleinwort Wasserstein are adopting wikis. (Dresdner is gradually replacing parts of its intranet with them.)

Instead of drafts of contracts, marketing materials, or lists of potential hires being distributed as e-mail attachments, the information can more simply be posted to a wiki. There, other people on the team, who are all invited to the wiki and have passwords to access it, can read it, add to it, and make corrections if necessary. As chaotic as this may sound, there are built-in safeguards: Every version is saved, and every change can be tracked back to who made it.

“What we are doing is blurring the distinction between reading and writing,” says Socialtext CEO Ross Mayfield. As users become more familiar with wikis, their usage patterns start to evolve.

At first the ratio of inactive to active users is 10 to 1 – basically, the project manager does all the work, and the rest of the team goes there to keep up on the project. But that ratio quickly shifts to something closer to 2 to 1 as more and more readers start to become writers themselves. “The beauty of a wiki,” Mayfield says, “is that it starts like a webpage, then people discover that they can edit it like a Word document.”

But that’s just the beginning. “It gets interesting,” he says, “when people realize they can add Web links to the wiki.” The ability to link to other webpages is what makes the wiki itself a social document (interacting with other documents). This social context simply does not exist with Microsoft Word.

Although it’s hard to get an accurate count, Mayfield estimates that there are more than 1 million wikis out there, many behind corporate firewalls. “Today every significant enterprise has a wiki deep inside the bowels of its organization. The market is growing at over 200 percent per year, accelerating as wikis get simpler and easier to use, just as blogging did.”

“What the heck Is a Wiki?” by Erick Schonfeld, Business 2.0, October 17, 2005, www.business2.com/b2/web/articles/0,17863,1119112,00.html

Craig HenryStrategy & Leadership’s intrepid media adventurer collected these sightings of strategic management in action around the world. Craig Henry is a marketing and strategy consultant based in Carlisle, Pennsylvania (Craighenry@aol.com). He welcomes your contributions and suggestions.