Strategy. Innovation. Brand.
Strategy: Who’s Number 2?
Can we be part of the strategy?
The CEO is clearly the most important executive when it comes to creating and implementing organizational strategy. Who’s the second most important executive for strategy?
The standard answer is probably the Chief Operation Officer — especially in terms of carrying out the strategy. But I’m starting to think that the COO is only the third or fourth most important strategic officer. So, who’s number 2? I’m leaning towards the head of Human Resources. Let’s call him or her the Chief Human Resources Officer or CHRO.
I’m leaning toward the CHRO because I’ve always believed that the soft stuff is hard. It’s not easy to get your culture right or to motivate employees for the long haul. It is all too easy to get your strategy crosswise with your culture. As I’ve noted before , when it’s culture versus strategy, culture always wins.
Similarly, I’ve never seen a company falter because they couldn’t find enough “numbers guys”. Our B-schools just keep churning them out. On the other hand, I have seen companies falter because they couldn’t find good communicators and motivators. Understanding human behavior is much more difficult than understanding the numbers. While we can teach people the “soft arts,” it doesn’t seem to be a popular specialty at university.
What’s really pushing me toward the CHRO as strategy leader is Scott Keller and Colin Price’s book, Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage. (Click here for the book or here for a white paper). Keller and Price argue that too many companies pay close attention to performance (“the numbers”) but not nearly enough attention to organizational health. Their “…central message is that focusing on organizational health — the ability of your organization to align, execute, and renew itself faster than the competition — is just as important as focusing on the traditional drivers of business performance.” This has everything to do with the “people-oriented aspects of leading an organization.” In my mind, that means the CHRO better be intimately involved.
Keller and Price present a lot of statistical evidence to buttress their case. (They are McKinsey guys, after all). There is a distinct correlation between organizational health and organizational performance. They also present five “frames” for viewing both health and performance during transformation change: 1) Aspire; 2) Assess; 3) Architect; 4) Act; 5) Advance. I’ll write more about these in the future but the bottom line is that you need to use these frames to view both performance and health to develop a sustainable, high performance organization.
While I think the CRHO could and should be a strategy leader, in my experience, it doesn’t happen very often. I’ve seen HR organizations launch very interesting programs but, too often, the programs exist in their own right rather than as strategic enablers. They don’t impede the strategy but they don’t help it either. I also see the numbers guys set the strategy and then turn to the CHRO and say, in effect, “OK, here’s the strategy, now get us the people we need.” (In technology, this happens to CIOs all the time). To be effective, the CHRO really needs to be at the strategy table.
Why wouldn’t the CHRO be invited to the strategy table? Perhaps because they understand the soft stuff but not the business. I’ve seen CHROs (and CIOs) make naive comments in strategy meetings, showing that they clearly don’t understand the business. The result is a bunch of numbers guys rolling their eyeballs and looking vaguely embarrassed. Numbers guys need to learn more about the soft stuff. By the same token, CHROs (and their staffs) need to learn more about the performance side of the business. Perhaps then, they can truly become strategy leaders.
Round the Clock Healthcare — for Free?
This won’t hurt a bit.
When I go on a long bike ride, I usually wear a heart monitor. I like to know how hard my ticker is tocking. I also carry a smartphone with GPS in it. I like to know where I am … and where the nearest hospital is.
Let’s do a little mashup thinking. What if my heart monitor were connected to the phone and GPS? Here’s a scenario: the heart monitor notices that my heart is going haywire. It sends a signal to the phone. The phone uses GPS to locate the nearest hospital, sends an emergency call (perhaps using Amcom Mobile Connect*), along with my location. The hospital dispatches an ambulance to my GPS location to pick me up. It could save my life. And it’s all based on currently available technologies. All we have to do is mash them up.
A few weeks ago I wrote a post about how a strategist might think about healthcare costs. All the experts say that healthcare costs are bound to go up. In my experience, when all the experts point in one direction, it’s always useful to look in the other direction — just to make sure.
Several of my friends let me know that I was wrong — healthcare costs will continue to rise, if for no other reason than the government is involved. That wasn’t really my point. I was merely trying to illustrate strategic thinking. But now I am thinking about healthcare costs and I wonder if new technologies won’t have a huge impact. By and large, many of those technologies are already available. We just need to mash them up.
Here’s a simple example — the HAPIfork, which was introduced at this year’s Consumer Electronic Show (CES). The HAPIfork mashes up a fork, a timer, and (perhaps) an accelerometer to keep track of how fast you’re eating. HAPIfork measures the number of “fork servings per minute” and loads the data to a dashboard on your smartphone. You can keep track of how fast you’re eating. Apparently, eating slowly is better for you. You can adjust your behavior to be healthier.
I don’t think HAPIfork is going to revolutionize healthcare – but it hints at things to come. As the internet of things evolves, we’ll connect more and more sensors to monitor the word around us. We’ll also monitor our health with sensors that can inform us more precisely of our own condition. Am I getting dehydrated? Is my blood pressure up? Do I need to take corrective actions? A connected sensor could also alert my physician to potential trouble. Imagine, for instance, an internet toilet that uses chemical sensors to monitor your, um, output. If something is out of whack it lets you know. If something is really out of whack it lets your physician know.
Could connected healthcare reduce our costs in the long run? The real answer is that nobody knows. But it’s a question worth asking and technology worth pursuing. It’s an “unforeseen” solution that could just prove the experts wrong.
* I consult to Amcom and, yes, this is a shameless attempt to generate publicity for one of my clients.
Sunday Shorts – 5
The next mobile app platform?
Some interesting things I spotted this week, whether they were published this week or not.
The Economist asks, will we ever again invent anything that’s as useful as the flush toilet? Is the pace of innovation accelerating or decelerating? And what should we do about it, if anything?
When we think about innovation, we often focus on ideas and creativity. How can we generate more good ideas? But what about the emotional component of innovation? For innovative companies, emotional intelligence may trump technical intelligence. Norbert Alter answers your questions from Paris.
We’re familiar with the platform wars for mobile applications. Will Apple’s iOS become the dominant platform? Or maybe it will be Android from Google? Perhaps it’s some version of Windows? But what if the next great mobile app platform is a Ford or a Chevy? (Click here).
For my friends in Sweden, here’s McKinsey’s take on the future of the Swedish economy. Things are looking up — just don’t rest on your laurels.
Where does America’s R&D money go? Here’s an infographic that shows how the Federal government has invested in research over the past 50 years.
The Greeks had lots of tricks for memorizing things. They could hold huge volumes of information in their heads. But does memory matter anymore? After all, you can always Google it, no? William Klemm writes that there are five reasons why tuning up your memory is still important. And he’s a Texas Aggie so he must be right.
Innovation and the Installed Base
How could God create the entire universe in only six days? He didn’t have to worry about an installed base.
Need to upgrade to Universe 2.0?
It’s fairly easy to innovate technically when you don’t have customers. You can adapt new technologies or new ideas without fear of alienating current users. Once you have customers, you have to pay attention to their needs. That includes the ability to upgrade seamlessly from one generation to another. Your customers feel that they’ve paid you money for a long time so their needs should dominate your planning. That may mean that you have to slow down new releases of your product to help your installed base tag along.
Think about it this way: which company is more innovative: Apple or Microsoft? Most people would say that Apple is far more innovative. But which company takes better care of its installed base? By and large, Microsoft has. When Microsoft releases a new operating system, they actually test to determine if old applications will run on the new platform. Apple is much quicker to dump the old stuff to keep the new stuff coming. The latest example is the new plug for the iPhone 5. If and when I upgrade to the iPhone 5, I’ll obsolete half a dozen perfectly good cables that no longer fit. That’s irritating but it may well get me into new technologies that work better than the old.
So do innovation and good customer care always conflict with each other? Not necessarily. Your fundamental commitment to customers is not that you’ll help them to move from release to release. Your promise is actually simpler — that you’ll stay in business to continue to serve your customers. I’m a veteran of a number of companies that no longer exist. Our customers were totally out of luck — they got nothing. Much better to give your customers something new — even if it entails ripping out the old — than it is to give them nothing at all.
When is it acceptable to ship an innovation that disrupts your installed base? I think there are two answers: 1) When a new technology emerges that allows you to provide much better solutions at a lower cost. You need to hop to a new platform to take advantage of the change. I saw this happen in the transition from host-centric to client/server software. It’s happening again today with cloud computing and mobile platforms. 2) When a competitor is shipping a solution that will disrupt your relationship with your installed base. Better to disrupt your own base than to let someone else do it for you.
And, how do build innovative new solutions while also maintaining and developing your traditional, bread-and-butter products? It’s not easy. The best answer I’ve seen is the ambidextrous organization which you can read about here.
Does your innovation make business sense?
Let’s say that you’ve come up with an innovation and now need to convince your company’s executives that it makes business sense. The first rule: beware of the Finance department. Financial analysts are great with an alphabet soup of classic financial tools: ROI, IRR, NPV, hurdle rates, and so on. Unfortunately, classic tools are good only for classic markets. That is, mature markets that are well understood and more or less predictable. With an innovation, these tools are less than useless — the market doesn’t exist. It’s like trying to measure the path of an electron using Newtonian physics. Newtonian tools are good for classic physics but will do nothing but mislead you in the subatomic space.
So how do you measure the potential impact? Well, you need new analytic tools — and so do your financial analysts. One option (no pun intended) is real options analysis. Traditionally, “options” meant the option to buy or sell something in the future. “Real options” are similar but they give you the option to do something in the future. In other words, we’re trying to put a value on the concept of keeping your options open. A good financial analyst working in an innovative company should know about real options — you can use the video to introduce it to them.
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