May 23, 2010 | Alliance management, Innovation, Leadership, Operations, Strategy
The momentum of innovation in the auto industry has picked up a notch, as a resurgent Toyota allies with Tesla to re-open the NUMMI plant closed earlier this year to produce a mass market electric car.
Toyota got the ball rolling 10 years ago with the Prius, and still leads by a mile in the eco car market, but the competition is emerging. This alliance with Tesla in the plant where Toyota allied with GM for its first plant outside Japan, demonstrating comprehensively that the quality of Japanese cars was not a function of some cultural phenomena peculiar to Japan, but simply a function of good management (a lesson GM never really got) may be just as significant.
It is reassuring to those of us who have watched Toyota transform the manufacturing mentality of the world over the last 30 years with their development and wide sharing of TPS, that after the recent stumble over quality, a stumble some predicted as the Toyota juggernaught seemed to be taking over the auto world, that they have been able to embrace the alliance, and return to the basic values that made them great.
With luck, they will be as open about the engineering and operational evolution of the JV electric car, and the lessons they learn from the alliance with Tesla, as they have been in the past. If so we will all learn a whole lot more.
May 20, 2010 | Change, Innovation, Leadership
Being successful is hard enough, sustaining that success appears even harder, as success breeds a status quo that is focused on more of the same stuff that worked last time, but not necessarily what will work in the future. Safety first, risk elimination, self interest, and hubris appear to become the norm.
This process is pretty well documented with the benefit of hindsight, but it is not always obvious as it is happening.
Microsoft was the success story of the 20th century, it transformed the way we worked and lived, it developed a virtual monopoly in a highly contested market, it remains hugely profitable, but has it dropped the ball whilst still generating those profits on the back of past success?
Microsoft missed the transformation of the music industry, tablet computing, gaming, were wiped out in search, and are losing share in their core server software markets to Linux, and now Google has a free alternative to Office, currently with microscopic share, but perhaps it is a beginning .
The slow erosion of Microsoft a business that just a decade ago was considered sufficiently powerful to attract the attention of the anti-trust laws in the US, potentially forcing a break-up as happened to previous businesses that had developed a virtual monopoly. Now, Microsoft appears to have lost all its edge, and is just trading on past success and the mountains of cash accumulated as a result.
The AT&T telephone monopoly was broken up in 1984, probably a few years before it would have happened by the mergence of new technology, Standard Oil of New Jersey broken up by the Sherman Act in 1911 would have taken a bit longer, but would certainly not have been able to maintain it monopoly after the discovery of oil in the Middle East.
Again, we see the parallels to the natural eco-systems that provide so many lessons for corporations, where sustainable success is dependent on evolution, and change at the margins, not power over the existing environment.
May 19, 2010 | Leadership, Management, Strategy
One of the best leading indicators of commercial activity I know is the level of activity at 6.30am late in the trading week at the Flemington markets in Sydney. Whilst it is entirely qualitative, and covers retail activity in a single category, fresh produce, over a long period of observation it has nevertheless been a pretty potent macro forecasting mechanism.
Over the past few weeks I have been out there on a number of occasions, in the critical early hours. The standholders are all sounding worried, their sales are down, and the competition for the sales that are there is fierce, and there is even no real problem getting a park, and wheeling around a barrow.
You can show me all the macro economic models, spreadsheets, and learned forecasts you like, but none have the immediacy, intimacy, and sensitivity as a bit of time at the coal face.
My FMFM (Flemington Markets Forecast Model) developed view, is that we are in for a really tough time. In 6 months, coincidently when we are likely to be in the agonies of another federal election campaign, I will come back to this post, and see again, if the FMFM model is better than all the gumph spin, misinformation, and hubris coming out of our “leaders” in Canberra.
May 17, 2010 | Communication, Leadership, Management, Personal Rant
I watched Q&A last night, in the ultimately vain hope of getting some intelligent debate on the Federal budget, and its foundation proposal to change the manner in which the mining industry is taxed.
Should have known better.
What passed for debate was really just a moderated annunciation of political hyperbole and PR crafted phrases intended to play to the emotions, there was little presentation of the facts. How are we to form intelligent positions on issues where all we see is the spin? Are we the electorate, expected to be so compliant and thoughtless that we just accept the nonsense from whichever side of the political divide best suits our generic position.
There are strong arguments on both sides, lets hear them in a way that enables us to make a decision on how we feel, rather than being told how we should feel on the basis of spin.
Increasingly businesses I see are making real efforts to remove the verbiage, and present facts without the gloss and polish as a means to make sensible decisions, and engage the stakeholders in the process to the extent that even if they do not agree with the outcome, they are satisfied that there was due process, and therefore they can live with the outcome.
If our two “debaters” last night were sitting around the board table of anything more significant than the local tennis club, and expecting to get support for their respective positions, the chairman would be well within his rights to send them to the corner to share the pointed cap.
May 16, 2010 | Communication, Innovation, Leadership
A while ago facilitating a two day innovation session, I became involved in two very different, but very similar conversations during various coffee breaks.
The first was with a smart young technical bloke, who expressed the view that all the nice encouraging words expressed at the session were great, but that the business was too risk averse to actually do anything daring.
The second was with the marketing director, someone with a track record of achievement, skills, and a preparedness to have a shot, to push resource allocation and strategic boundaries. He felt that those he relied on to develop the means to execute the technical end of some of the ideas were too interested in science for the sake of it, and disinterested in the commercial and market issues he had to address.
In effect, they are both seeking the same outcome, but the language of management, the functional cultural preconceptions and perceptions have got in the way of unambiguous communication.
This is not an uncommon challenge, every innovation effort must work hard to overcome the cultural and semantic barriers to be successful.
The more attention is focused on innovation, and the higher up the tree that focus emanates from, the better to turn the words into action.
May 12, 2010 | Alliance management, Demand chains, Leadership, Operations
Successful groups have great power, power to identify, understand the causes and implications of problems and opportunities, and come up with creative responses, and once moving can gather great momentum. Most workplaces are now actively seeking to harness the intellect and creative power of their employees and other stakeholders, and those that do it well create great opportunity.
The flip side is that groups also have inertia, they are much harder to get rolling than just an individual, and once rolling, have a tendency to take unpredictable excursions.
It is easy to underestimate the effort, leadership, and capacity to connect that is required to overcome this inertia, and to manage the momentum constructively, leading a group in a consistent direction, focusing on the important issues, and consistently delivering outcomes.
I bet Isaac never thought of this application of his laws.
