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Kenichi Ohmae: Irrational Strategy

Kenichi Ohmae is notable as the first internationally-known Japanese corporate strategy thinker, for fresh thinking on how corporate strategy thinking should be conducted, for the essential concerns of a corporate strategy, and for one of the first people to do some serious thinking about the strategies that need to arise from modern globalisation of commerce.

He has an awesome intellect, and holds a PhD (like Karen Stephenson, whom we met recently) not in business, but in another topic: in Ohmae’s case, in Nuclear Engineering.  Like me, he is a physical scientist at heart, but if you think that makes him a pure rationalist, you’d be wrong.

Kenichi Ohmae

In Ohmae’s best known book, The Mind of the Strategist, he sets out how Japanese business went about creating corporate strategy, arguing that the strategy creation process should not be a rigid, linear process, but instead needs to involve creative and intuitive thinking, flowing from a structured analysis. His book is filled with powerful tools to help us do this analysis, some of which were familiar from earlier works. What was new was the way he set out that Japanese companies go about the process, placing the customer at the centre of their thinking. Central to his approach is ‘The Strategic Triangle’ – or the three C’s.

Kenichi Ohmae's Strategic Three C's

Brief Biography

Kenichi Ohmae was born on the southernmost Japanese island of Kyushu, in 1943.  He studied chemistry as an undergraduate and then nuclear physics at the Tokyo Institute of Technology, before moving to US to earn his doctorate in nuclear engineering at MIT. His first job was a brief one, at Hitachi, but he quickly found his natural milieu, moving two years later to McKinsey & Company in 1972.  He stayed there for 23 years before stepping down to run for public office as Governor of Tokyo. When he was beaten, he moved into academic life and private consulting. His first book, The Mind of the Strategist, was written in 1975 and his other particularly influential book, on globalisation, The Borderless World, came out in 1990. In total, he has written eight books and contributed to others.

His Ideas

Central to Ohmae’s early work is the strategic triangle of corporation, customers, and competition, and his injunction that we place customer focus at the heart of our strategic thinking. Another key point of his, against which many global corporations have swung in recent years, is the criticality of strategic business units. These are quasi autonomous businesses within a large corporation, capable of serving a discrete customer set with products or services that they need. He argued that this is where the corporation is closest to its customers, so it must give these SBUs freedom to operate as they see fit, in service of their customers. The role of the strategist in this is to match the capabilities of the corporation to the needs of the market. Sadly many of the global corporations I work with now see fit to centralise so many functional decisions that SBUs are no longer able to serve their customers as they would like.

Ohmae identified four sources of competitive advantage:

  1. Concentrate resources on the business’s key factors for success
  2. Exploit the difference between your business and that of competitors to harness relative superiority
  3. Develop a disruptive strategy to shake up the status quo with an aggressive initiative
  4. Innovate to create change in your marketplace and exploit these strategic degrees of freedom

Ohmae’s later work, starting with The Borderless World, focused on the effects of globalisation. He advocates two more C’s: Country (nation states) and Currency (the impact of exchange rates and volatility). These become ever-more important considerations in a corporation’s strategy. It is the attempts to leaven the risks and harness the opportunities of these factors that have lead major corporations to subordinate Strategic Business Units to global-level corporate strategies and business planning.

 


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Ingvar Kamprad: Resilience, Thrift and Buns

Ingvar Kamprad is not a familiar name… but his initials, and those of the farm and village where he grew up, are. Ingvar Kamprad grew upon  the family farm, Elmtaryd, near the  village of Agunnaryd. And in 1943, the company he started at the age of 17, which sold a random mixture of goods by local delivery and, later, by mail order, was called IKEA.

Ingvar Kamprad

 

The story of how Kamprad went from pens and picture frames moving around locally on a milk van, to one of the richest people on the planet is instructive: not just for entrepreneurs, but for anyone who manages a part of an organisation.

Quick Biography

Kamprad was born on the family farm in 1926, in the southern Swedish province of Småland. His first retail goods were matches, which he resold to his neighbours when he was five. He moved on to catching local fish and picking local lingonberries, and sending them by bus to his buyer. He founded IKEA in 1943 while working at a full time job, and it was only in 1946, when he completed his national service, that he saw the opportunity to move IKEA towards being solely a furniture retailer.

By the 1970s, IKEA had stores across Europe, and by the end of the century, it was in 30 countries, with a mailing list for its famous fat catalogue, of 100 million. Now retired and a tax exile in Switzerland, Kamprad eats modestly, flies economy, and haggles with market traders.

It would be wrong to ignore what Kamprad has described as “The Greatest Mistake of My Life” – his early association with Swedish pro-Nazi fascists. The extent of his involvement and the degree of his remorse is something for historians and Kamprad to consider. In 2001, IKEA opened for business in Israel.

Five Defining Ideas

In reading a story of Kamprad’s life, I have spotted five defining ideas that seem to me to have made all of the difference. None of them is exclusive to the retail industry, much less to the furniture trade. If only my father (a near contemporary of Kamprad’s and also in the furniture trade)… But then, we are who we are, and I wouldn’t swap for a moment.

Principle 1: Customer’s Shoes

IKEA is famous, among other things, for its cafes. On the first day of opening his first furniture warehouse, Kamprad promised every customer coffee and a bun. To get there, they would have to travel a long way, in harsh, cold weather conditions. When he opened the door on that morning, there were over 1,000 people patiently waiting.

Principle 2: Thrift

IKEA is also famous for self-assembly, self-service, and minimal packaging. Each of these is designed to reduce costs to IKEA and so to their customers. Kamprad was always, and still remains, conscious of every last Krona, Euro, Pound or Swiss Franc.

Principle 3: Resilience

In the 1950s, Kamprad’s competitors became jealous of IKEA’s growing success. They struck back with unsavoury tactics that would have crushed a less determined person. They pressured suppliers to not serve IKEA, and they got the company banned from trade fairs. Kamprad’s resilience and ingenuity turned these potentially fatal setbacks into triumphs: he started to design and build his own furniture, owning the whole supply chain, and he bought his own exhibition centres.

Principle 4: Brand Identity

It is easy to think of the distinctive blue and yellow colours and block capital font of the IKEA logo as its brand. Kamprad did not. He said that the product range was the company’s identity. And I think he was right. Whether it is the distinctive simplicity of the Billy bookcase or the cutesy accessories like the Spöka nightlight, we recognise IKEA products whenever we go visiting.

Principle 5: Innovation

IKEA has not stood still. Not only is their product range frequently refreshed and the showrooms re-dressed often, but IKEA has constantly innovated in the way it goes to market and delivers its services.

 

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Karen Stephenson: Social Network Analysis

The Social Network was a hugely successful movie about the founders of Facebook. For a real understanding of social networks, we need to deploy some powerful mathematics, implemented by sophisticated software. Don’t worry, there will be no maths in this blog, but we will look at the founder of the field, corporate anthropologist, Dr Karen Stephenson.

Karen Stephenson

 

Stephenson’s work takes the early history of social networks to a new, modern, scientific level. Her methodology for analysing the networks within and between groups (who may be within and among organisations) leads her to be able to identify points of resilience and points of weakness. Stephenson asserts that social network analysis can help strengthen organisational learning, plan and develop leadership succession, enhance creativity and innovation, and facilitate change.  These capabilities flow from the trusting relationships that networks represent, and those relationships offer the single greatest route, Stephenson would say, to organisational success… or failure.  She describes this as her ‘Quantum Theory of Trust’, about which she has written a book of the same name.

Brief Biography

Karen Stephenson is a polymath, with first degrees in fine art and chemistry, and a doctoral degree in anthropology. She acts as an independent consultant, runs her company, Netform, which conducts social network analysis, and is an academic, currently lecturing at Rotterdam School of Management at Erasmus University. This was preceded by five years at the Harvard School of Design and ten at the UCLA Anderson Graduate School of Management. Her ability to analyse networks made her a valued consultant to the US Government, following the terror attacks in 2001, whom she helped analyse terrorist networks and how they could be weakened.

Social Networks

Stephenson identified six types of knowledge network, that underpin our organisational (and private) lives.

  1. Daily network – whom we see day-to-day
  2. Wider social network – whom we actively stay in touch with
  3. Innovation network – with whom we test out new ideas
  4. Expert network – to whom we go for expertise and knowledge
  5. Strategic network – to whom we go for guidance and advice
  6. Learning network – who help us move from what we know to new knowledge and expertise

Her most widely known contribution is to identify three key roles within all of these networks:

  1. Hubs – who are central to a network of social connections
  2. Gatekeepers – who link social networks together
  3. Pulsetakers – who have strong insights into the group psychology

Social Network

 

You can learn more from a range of valuable resources on the web:

You might also like: The Working Relationships Pocketbook

…and this excellent video from .

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Henri Fayol: Planning and Administration

Henri Fayol is the daddy.

Henri FayolThere is no other way of putting it: so much of what we take for granted in the way modern organisations are run can be attributed to him.

As a highly successful business manager, he turned around the mining company for which he worked in senior roles for 36 years.

In comparison to FW Taylor, a close contemporary, his contribution was huge.  While Taylor saw managers as mere overseers, Fayol raised them to a professional status and gave them an agenda, a curriculum, and a set of guiding principles.


His ‘functional principles’ of management set out the things we take for granted today:

  • making annual and 10-year plans… and implementing them
  • Using organisation charts to communicate an orderly management structure
  • Sticking to the chain of command
  • Co-ordinating management activities through regular meetings of department heads
  • Getting recruitment and training right

‘And what departments?’ you ask.  In his writing, Fayol described six  business functions:

  1. technical – engineering and production
  2. commercial – sales and procurement
  3. financial – capital management
  4. accounting – cost accounting, stock management, reporting
  5. security – protecting people and assets
  6. management – planning, organising, co-ordinating

He also identified six functions of management:

  1. Forecasting
  2. Planning
  3. Organising
  4. Commanding
  5. Co-ordinating
    (commanding and co-ordinating are sometimes conflated to ‘leading’)
  6. Controlling

Short Biography

Born in 1841 in Istanbul (where his father was a civil engineer) to French parents, Fayol trained as a mining engineer and was employed at the French iron and steel business, Comentry-Fourchamboult-Decazeville. In 1872, he was appointed the director of a group of mines and he became managing director of the company in 1888.  He retained the post until he retired in 1918. sadly, it was only in 1949, when his 1909 book, General and Industrial Management, was published in English, that he gained the recognition he deserved.

His Big Idea

As if the three lists at the top of the blogs were not enough, Fayol’s fourteen principles of management set the tone for business administration for over 100 years, to the present day.

  1. Division of work . Work should be divided among individuals and groups to focus effort and attention on each part of a task. Specialisation allows workers to become more expert and thus more productive.
  2. Authority. Managers have the authority to give orders, but that right also implies responsibilities.
  3. Discipline. Employees must obey and respect the rules and their managers, as long as managers respect the need for sound leadership.
  4. Unity of command. A clear chain of command, in which every employee should receive orders from only one superior (oh don’t we just miss that one, in our modern matrix organisations!)
  5. Unity of direction. Every set of organizational activities needs the same objective and to be directed by one manager using one plan (nice if you can get it).
  6. Subordination of individual interests to the general interest. The good of the organisation is paramount – and then workers must work for their team (sounds like the US Marines – god, country, corps, family, self – Hooah).
  7. Remuneration. Workers must be paid a fair wage for their services.
  8. Centralisation. The degree of centralisation or decentralised should be determined for each situation.
  9. Scalar chain. The line of authority runs from top management to the workers.  this is the scalar chain, and communications should follow it. However, if following the chain creates delays, communications across the organisation should be used, providing everyone is kept informed.
  10. Order. This principle is concerned with systematic arrangement of men, machine, material etc. to minimise waste of time and duplication of stock (reminds me of the 5S methodology).
  11. Equity. Managers should be kind and fair to employees (John Stacy Adams would have approved).
  12. Stability of tenure. High employee turnover is inefficient. Management and staffing should be stable, and managers should plan to fill vacancies.
  13. Initiative. Employees who are allowed to originate and carry out plans will exert high levels of effort (this was Theory Y well ahead of McGregor… even employee empowerment and Corporate Kinetics).
  14. Esprit de corps. Promoting team spirit is a role of managers.  It builds harmony and unity within the organisation.

It would be naive to ignore the many critiques of Fayol’s writing, but it would also be churlish not to credit him with massive strides in understanding, documenting and promoting the discipline of management.  If you are a manager, you need at least to acknowledge his contribution to what you do everyday.

Will his ideas last, as we move fully into the 21st century of ad-hocracy and holacracy? Who knows; but I for one am prepared to predict that managers will be working substantially to his agenda for the rest of my working life.

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Chris Argyris: Organisational Learning

In last week’s Pocketblog, we met a thinker, Roselinde Torres, who compels leaders to ask difficult questions of themselves. Chris Argyris was another thinker – an academic this time – who demands we ask difficult questions.

Chris Argyris

 

Brief Biography

Argyris’ early academic career brought him into contact with the great psychologist, Kurt Lewin, and culminated in academic posts, first at Yale (1951-1971) and then at Harvard.  He was a behavioural scientist who devoted much of his research  to understanding organisational behaviour and learning, noting that:

‘individual learning is a necessary but insufficient condition for organisational learning’

His Ideas

His early work focused on the practice and development of T Groups; a form of training (the T of T Group) in which managers are able to learn through social interaction. These were popular in the 1960s and 70s for the success they had in shifting interpersonal behaviours of participants. However, Argyris and others became disenchanted as evidence grew that the impact of these interventions was not sustained back in the workplace.

This led Argyris to theorise that the way we behave within organisations is different from the ideas we claim to profess. He labelled the two sides of this distinction: ‘theories in use’ for what we do, and ‘espoused theories’ for what we say. Our behaviours – theories in use – are driven only partially by espoused theories, and to a greater extent by fears, pride, entrenched patterns and the need to conform. Indeed, he suggested that we don’t just behave as we do, rather than as we profess; but we are often unaware of the gap.

His most famous single contribution, articulated in his book, co-written with Donald Schön, called ‘Organisational Learning‘, was the idea of  ‘double loop learning’.

Argyris argued that reasoning needs to take pride of place as the basis for decision-making. However, the prevailing model of learning that he and Schön defined as ‘single loop learning’ is an impoverished approach.

In Single Loop learning, we look at the results of our actions and re-think the strategies we chose.

Single-loop learning

 

The flaw in this, they argued, is that our chosen approach comes from a deep seated set of interpretations, assumptions, values and models. What we should be prepared to do is to challenge those and search for better, more reliable assumptions and models. This is Double-Loop learning.

Double-loop learning

 

Argyris further pointed out that learning comes from either a match or a mis-match.  If our actions produce the desired result, then we can learn from the well-selected behaviours. If they do not, then we can learn from the mis-match either by correcting our actions (single-loop learning) or by revising the governing variables (assumptions) that led to our choice of actions (double-loop learning).

You can learn more about Argyris and Double Loop Learning on the excellent infed website.

You may also be interested in the following pocketbooks:

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Roselinde Torres: Adaptive Leadership

Roselinde Torres

Roselinde Torres is an inspirational thinker, who is actively researching and developing the field of organizational leadership.

Like many people, I first became aware of her through her ten minute TED video (which is embedded at the end of this blog).  Her ideas are simple, but thoroughly researched.

Brief Biography

Torres is currently a senior partner at the international management consulting firm BCG – formerly Boston Consulting Group; perhaps most famous for the BCG Growth Share Matrix.  At BCG, she leads their thinking and research into leadership.

Before working at BCG, Torres led internal consulting teams at Johnson & Johnson and Connecticut Mutual Life, and was also a partner at Mercer Delta Consulting.  She studied English and Spanish at college, and also gained an MS in Human Resource development.

Her ideas

As regular readers of this blog will know, I am easily seduced by a good model, and I very much like Torres’ model of Adaptive Leadership.  Adaptive leaders operate effectively in a modern uncertain and ambiguous environment, by creating the conditions to enable dynamic networks of stakeholders to work together, towards common goals.

Torres argues that adaptive leaders need to build and enhance their abilities in four dimension – which she describes as new, but I think that is a touch hyperbolic.

What makes the model a little more clever than some is how she finds language to chart the four dimensions onto compass points north, east, south and west.  Adaptive Leaders need to:

Navigate

Navigate a VUCA (volatile, uncertain, complex, ambiguous) business environment, by embracing all of those subtleties, rather than by trying to over-simplify them or ignore them.  For this, Torres argues, they need to cultivate a wide diversity of perspectives and share their leadership responsibilities.

Empathy

Empathise with the people they lead, seeing the world through multiple perspectives, and drawing people together.

Self-Correction

Follow a cycle of trial and learning.  Adaptive leaders are not afraid to conduct experiments before committing the whole organization to a strategy.  This means learning from failures, but also seizing successes.  It can lead to greater agility combined with higher certainty of success.

Win-Win

Create sustainable success for all stakeholders, by developing lasting assets like networks of collaborators, and influence into the wider social setting of the organization.

Roselinde Torres: Adaptive Leadership

In her TED video, below, Torres picks up on some of these themes and emphasizes three questions leaders need to ask, which I shall paraphrase.  Do watch this ten-minute video, though.  Torres is clear, eloquent and persuasive.

  1. Where are you putting your attention, so you can anticipate the next changes?
  2. How diverse is your personal and professional network?
  3. Are you courageous enough to abandon practices that have made you successful in the past?

These are fabulous and thought-provoking questions.

[ted id=1930]

This talk is available on the TED website.

You can read much more about the Adaptive Leadership model in two splendid articles on the BCG website:

An interview with Roselinde Torres on How to Cultivate the Next Generation of Leaders.

Management Pocketbooks on Leadership: The Leadership Pocketbook.

 

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The DUCK Creativity Model

Any thoughts that readers may have that all management models originate in the US or the UK – or the wider Anglophone world – can be put to one side. I have discovered a marvellously powerful method for creative innovation, emerging from France.

The French model can be translated into the English acronym DUCK and it gives us the four stages of radical innovation.

D – Drop
– abandon wholly your old ways of doing things

U – Upend
– turn the old ways entirely on their head

C – Create
– build a new process, system, toolkit or idea from the inverted ideas of the past

K – Kindle
– ignite the sparks of your creative thinking with bold execution of your new ideas

DUCK Methodology

What I love about the DUCK method is its gutsy Gallic determination to stimulate creation. From now on, whenever I am in need of new ideas, I will doggedly DUCK the issue.


By the way, on a curious note, the French word for duck is canard, which the English dictionary defines as ‘a false report, rumour or hoax’.

How can that be?

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Look forward to 2014

Tomorrow, it is 2014 and the Pocket Correspondence course resumes with Volume 3: Organisational Management. It will cover operations, strategy and project management in the first quarter, and business services, finance, sales and marketing in quarter 2.

So, some of the topics you can look forward to are:

  • Procurement
  • Supply Chain
  • Lean Management
  • Process Mapping
  • Porter’s models of competitive advantage
  • Project Management
  • Stakeholder engagement
  • Finance for Managers
  • Sales
  • Customer Services
  • Marketing Strategy
  • Complaints handling

And, keep an eye open for a special announcement…

We’ll say no more at this stage.

If you are reading this:

Happy New Year

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Look Back on 2013

At the start of this year, The Management Pocketblog started an experiment: The Pocket Correspondence Course – a series of blogs designed to form a wide-ranging management course, covering all areas of management. We are not finished yet.

If you have been following, you may have noticed a bit of a pattern:

The course is divided into three volumes: each one covering half a year:

  1. Volume 1: Personal Skills
    … covered personal effectiveness at work, managing yourself, your work and your emotional states, and personal development in the first quarter, before moving on to look at a wide range of communication skills in quarter 2.
  2. Volume 2: People Management
    … covered managing and motivating your people in quarter 3, and leading teams, dealing with change, and handling tough situations in the final quarter of the year.
  3. Volume 3: Organisational Management
    … will cover operations, strategy and project management in the first quarter of 2014, and business services, finance, sales and marketing in quarter 2.

It has been a real challenge to balance a deep desire to create something comprehensive with the need to keep it easy to read and quick to assimilate. Likewise, I have also tried to balance a strong dollop of theory with a vivid sense of practicality. I hope I have succeeded. If you have followed the course to any degree, please do use the comments to let me know what you have thought.

Tomorrow (as this blog gets published) is Christmas Day: Merry Christmas. So I am aware that few will be reading this. For those hardy souls that are, here are my personal favourites from a year of blogging.

  1. Self Confidence – because it was the first
  2. Career Development – because it is full of practical exercises
  3. Being Organised – because this is who I am
  4. The Interview Process – because I remember working particularly hard on this one
  5. Report and Proposal Writing Still Matters – because writing is important
  6. The Worst form of Communication – because we need to get better at emails
  7. How to Manage a Challenging Conversation – because most of us have so much to learn here
  8. Coaching: a Manager’s Best Tool – because… with a title like that, you should know why
  9. Appraisal Time: A Polemic – because of its simplicity
  10. What Motivates your Team Members? – because I am a big fan of Herzberg’s model
  11. Team Building – because this is the most creative of the series to date – I build a model just for this blog
  12. Handling Conflict – because it finished a year of blogs

Merry Christmas,

one and all.

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Creativity

The Management Pocketbooks Pocket Correspondence Course

This is part of an extended management course. You can dip into it, or follow the course from the start. If you do that, you may want a course notebook, for the exercises and any notes you want to make.


In last week’s Pocket Correspondence Course module, we looked at problem solving, using the Synectics process. The problem with all problem solving processes is the black hole in the middle:

Problem Solving Process

That black hole is where a brilliant, innovative, creative idea happens.

Many, Many Approaches to Creativity

There are many approaches to stimulating this sort of creative idea, from bisociation to nyaka, from the Eureka method to Merlin. You will find all of these and more in The Creative Manager’s Pocketbook.

But there are two ‘master techniques’ that will serve a busy manager magnificently well. Let’s try them out. To do so, think of one or two problems for which you want to find a creative solution. Write them down in your notebook in the form:

‘I would like to discover how to…’

This is your ‘problem definition’.

Exercise 1: Sleep on it

Most creativity methods implicitly recognise that creativity happens while we are not looking. Given a problem, our brains will work on it at any time they have spare capacity. So the master technique creates that space by taking your mind off actively considering the problem – or anything else. Go for a walk, go out with friends or, better yet, take a nap. Best of all, write down your problem definition before you go to sleep at night.

The second stage to the process recognises that, when our brains are busy, ideas can’t find the room to get out. They tend to emerge either when something in our environment triggers them to emerge, because it bears some form of similarity, so the barrier is lowered, or in the spaces when our minds are still, like in the shower, walking to the bus stop, or drinking a coffee.

Since you cannot arrange the trigger event that lowers the barriers momentarily, create the quietening conditions that will let your idea emerge. Spend some time doing nothing that requires deliberate thought. Daydream, jot random thoughts onto a page, or sip a coffee or a tea, looking out of the window.

Constructive idleness is one of the two master techniques for creativity.

Exercise 2: Up and Down

Many creativity techniques are about breaking the mental constraints that we impose on our own thinking and finding a new way to look at the problem: so called ‘thinking outside the box’. Here, ‘the box’ represents your mental constraints.

The master technique for doing this is to start with your problem definition: ‘how to…’ and ask your self:

‘What is my reason for wanting to…?’

Keep asking this question of each answer (akin to the 5 Whys Technique) until the answer is both fundamental and self-evidently true. This is your ultimate purpose. Having gone ‘up’, now come back down, with the question:

‘How else can I achieve this purpose?’

Keep asking this to generate creative new options.

Further Reading 

  1. The Problem Solving Pocketbook
  2. The Creative Manager’s Pocketbook
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