No One Asked My Opinion…But $100 Billion for What?
Filed under: Management Education, Social Commentary, Strategy
As of this writing, the world is abuzz with the expected Facebook IPO. The number $100 billion is being floated and passed around (probably by those who stand to benefit from a big IPO), and whether real or wild speculation, that’s a number that gives one cause to pause.
This is beginning to feel like Déjà vu all over again (thanks, Yogi Berra), much like that fascinating period in the late ‘90’s when stratospheric valuations were applied to firms that had no products, no earnings and sometimes no revenues. That was a heady time, when the laws of nature, physics and finance were seemingly supplanted by the value of eyeballs and business models that had no substance or staying power.
Unlike many of the great dot-com flameouts, Facebook has a lot going for it, including near world-domination of the social media scene and reportedly, good and growing revenues for advertising. Throw in some alleged profits and it certainly sounds like the law of gravity has not been eliminated…just eased a bit.
I’m certain I will raise the ire of the many who now view Facebook as an important part of their lives (disclosure: I’m a Facebook misanthrope), however, I can’t quite comprehend the valuation for the value proposition.
The proliferation of this medium is fascinating and not to be ignored, but it doesn’t fundamentally change much of anything as it relates to how companies run their businesses. It does offer incremental opportunities for communication, connecting and monitoring, but I don’t think most firms in most industries are rethinking their business models and value chain activities based on Facebook.
While my crystal ball is notoriously cloudy when it comes to prognosticating on stocks, I know enough to steer clear of numbers where a reasonable person cannot connect the fundamentals to the price. Of course, many years ago, I met a guy named Howard and had a strong cup of coffee and failed to see that this would ever catch on. After all, good coffee at the time was weak and cheap.
For a more cogent view of why this doesn’t makes sense, be sure and check out the article on Forbes: Four Reasons Why Facebook’s IPO is Irrelevant.
And for those who have a strong defense of the game-changing, we should all rethink our business models impact of Facebook, I’m looking forward to your thoughts.
Steve Jobs-Walking With Giants
Twentieth Century Industrialist and the founder of Panasonic, Konosuke Matsushita, established a garden outside of the firm’s modest headquarters in Osaka, Japan. In this garden, he commissioned and placed statues of his heroes. Fittingly, a giant statue of Thomas Edison is at the center of this collection of remarkable Western and Asian inventors and thinkers. A few of the recognizable names beyond Edison, include: Anton Phillips, Ampere, Marconi and Ohm. In my mind, Steve Jobs is now strolling in his traditional garb in this garden, talking and debating with Matsushita, Edison and the other great thinkers and doers that have defined our age of technology.
Safe travels, Steve and thanks for your contributions to our world.
Escaping the Gravitational Pull of the Past
If you work in a firm struggling to redefine itself and maintain its relevance in this changing world, you’re not alone. You’re also involved in a battle for your firm’s life.
There’s a great article at HBR Blogs by Judith Hurwitz on the topical and timely example of this change battle being waged in front of our eyes at HP. In her post, “Can HP Change Its DNA?” Hurwitz explores the challenges that hardware firms have in adopting software thinking and business models. The post is filled with relevant questions and ideas for anyone dealing with this Herculean challenge.
A Road Strewn with Wrecks:
Certainly, the corporate history books are filled with great names of firms who failed to adapt and change with the times. For every Apple/Jobs, IBM/Gerstner and GE/Welch story, there are dozens of firms with formerly great household names that are no longer great or even good. Many are gone or on their way out.
I suspect there were more than a few smart people in those firms, yet through some combination of factors…poor leadership, the gravitational pull of an old, strong culture, pride and arrogance, dominant logic, management systems and technologies optimized for another era, etc. these firms failed to change and so, they failed.
Experience Breeds Respect for the Magnitude & Complexity of Organizational Transformation:
I’ve lived through this transformation three times as an employee…and learned something every time.
The first one failed. I recall sitting in the conference room as a young product manager, when the management team explained why we would never pursue the low-margin, low-end of the market when we were so dominant at the top end. It felt horribly wrong then and it’s painful to recall now. Perhaps a young Clay Christensen was listening in, because we had our butts disrupted right out of the marketplace.
The second one worked on a concentrated level. This global firm had no idea how to promote systems and software..it was hardware-centric and component oriented and wanted to get into the software and systems business. We built a nice business that for a good decade dominated market segments around the globe. We also spent a hell of a lot of time justifying our existence and trying to make the square peg of a software business model fit into a company that only understood the box and component model. Ultimately long after the founding/sponsoring team members moved on to new lives elsewhere, the gravitational pull of the low-margin, box oriented mentality sans support and significant R&D investments, returned to its roots. The unit is a shadow of its former self.
The third one…a pure software firm, succeeded in large part because the only change it had to make (I use “only” very loosely here), was the market focus. The business model was clear…the challenge was facilitating a culture shift into new, emerging and adjacent markets where the capabilities were highly valued. To the credit of the professionals in this firm, it ultimately worked very well. Nonetheless, transition was a bite…with many fits and starts and a lot of resistance. It worked, but it wasn’t a day at the beach. The lessons learned along the way are enough to fill a book. (Hmmm.)
No Easy Answers and a Resource:
Instead of being prescriptive and proffering a list of easy-to-write, nearly impossible to replicate/implement suggestions, I’ll offer that helping a firm break free of the past is difficult at best and almost impossible in some circumstances. (OK, you can save the “thank you, Captain Obvious” messages.)
There must be a fierce corporate will to live…catalyzed by strong, united leadership and a workplace population dedicated to doing the messy, heavy lifting required for success in this difficult endeavor. Oh, and did I mention the courage and fortitude required to look around and say, “this all has to change,” and then to do it.
I’ve not yet found the magical answers for this (they don’t exist), however, for those involved in this effort of reinvention and revitalization, consider checking out Geoffrey Moore’s latest book, Escape Velocity-Free Your Company’s Future from the Pull of the Past. (Geoffrey is the Silicon-Valley consultant whose thinking and writings in Crossing the Chasm, Inside the Tornado and others has profoundly shaped strategy and execution in the tech sector for two decades.)
I caught up with Geoffrey last week to interview him for The Leadership Caffeine Podcast (episode to be aired soon!), and I left the conversation convinced that his latest effort offers some important and much needed tools to guide us on this difficult journey. The framework of frameworks that he offers and the approaches for rethinking the business from the outside in, will be incredibly useful along the way. More on this when I run the interview.
If you’ve lived through and succeeded in one of these endeavors, I suspect we would all like to hear your ideas on what worked and what didn’t. There are more than a few out there with a lot riding on getting this right.
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About Art Petty:
Art Petty is a Leadership & Career Coach and Strategy Consultant, helping motivated professionals of all levels achieve their potential. In addition to working with highly motivated professionals, Art frequently works with project teams in pursuit of high performance. Art’s second book (an edited, annotated collection of the most popular leadership essays), Leadership Caffeine-Ideas to Energize Your Professional Development, was released at the end of September in 2011.
Contact Art via e-mail to discuss a coaching, workshop or speaking engagement.
In Case You Didn’t Have Enough to Worry About…
Here’s my slightly serious, slightly tongue-in-cheek listing of things that are truly frightening and worth worrying about. Feel free to add your own.
20 Things that Should Make Your Skin Crawl:
1. The government promising to take care of you.
2. The government promising to fix the economy.
3. The government.
4. Politicians.
5. Anyone who says, “Trust Me”
6. People who don’t pitch in to help improve things in their own community. (We’re not going to solve our problems by watching more television!)
7. The management of the institution where you are sending your child to get educated.
8. Managers who beget managers who beget boneheaded policies in the name of the customer.
9. Office-bound bureaucrats who talk about “customers,” but haven’t ever met or visited or better yet, worked in a customer’s environment.
10. The thought of former SAP and current HP Chief Leo Apotheker running your business.
11. Marketers promoting new branding initiatives that don’t have their basis in strategy.
12. Marketers who don’t understand social media.
13. Marketers claiming social media is THE solution.
14. Commercials for prescription drugs. (Have you listened to the side effects?)
15. Anyone who claims they can help you get rich.
16. Lazy people.
17. The digitization of all humankind’s knowledge and subsequent collapse of the technical infrastructure due to cyber-warfare, leading to a thousand years of dark ages. (Bet you weren’t worried about this one until now!)
18. The thought of former SAP and current HP Chief Leo Apotheker running anything. (Hey, this guy scares me more than any leader since Chainsaw Al.)
19. Warren Buffet in a bathtub. OK, I know it sounds weird…but I’m still flossing my brain on this one. And he was the one who shared with the whole world that he was taking a bath when he decided to invest $5 billion in BofA. Perhaps it’s time to invest in tub companies!
20. The icon that Burger King will come up with to replace the creepiest corporate symbol ever, The King. Imagine topping the world’s only corporate icon likely to star in a series of horror films!
Leadership Caffeine: Fun at the Cousin’s Reunion with Luck, Hope and Hard Work
Filed under: Career, Crisis Leadership, Leadership Caffeine, Social Commentary
Luck, while nice when she smiles on you, is a fickle and elusive relative. She rarely shows up at family events and when she does, it’s all about her. She raises expectations of ridiculous things to insane levels, and then disappears after disappointing, without a word.
Hope, is much more accessible than Luck, but in some regards, she is even more frustrating to deal with. Hope is comfortable and comforting, providing us with possibilities, but most often leaving us disappointed. What Hope doesn’t tell you is that she relies on her cousin, Luck, and of course we’ve already established that Luck is undependable.
Luck and Hope hang out with a bad crowd. Their latest buddy, Silver Bullet is the one who promises quick, almost magical fixes to the toughest of problems. Unfortunately, as the rest of us have learned, Silver Bullets don’t work any better than Hope or Luck.
The quiet one in the corner at this reunion of cousins is Hard Work. HW for short, is not glamorous, but of all of the cousins, she’s the one that delivers. HW is a stern task master, demanding time, attention and practice. Her price is your time and your sweat and your genius, but the payoff is always there eventually. Yes, HW is the reliable one.
Of course, Hard Work comes from solid stock. Her mother is Dreamer and her father is Common Sense. The combination of the three is nearly unbeatable.
Of Dreams, Hard Work and Common-Sense:
For some reason, Dreams, Hard Work and Common Sense are rudely shoved to the background during times of difficulty. That’s perverse, because these are the only three that are capable of supporting us as we persevere against an endless barrage of bad news and tough choices. Dreams give us something to reach for, Common Sense guides our way and Hard Work…well, she does all of the heavy lifting.
Consider our world today:
- Economic growth is built on the backs and brains of hard working people who aspire to something more and are willing to invest and sacrifice and work to get there. Economic growth is not built on the back of government spending which offers false hopes about a magical multiplier that exists only on the pages of your hopeful and luck-driven, silver-bullet laden Keynesian economist. At best and worst, the government must create rules that incent people and capital providers and businesses to invest and work hard.
- Organizations hoping for a return to normalcy are in for a disappointment. This is the new normal and once again, Hope has disappointed.
- Senior teams looking for a silver bullet fix for their mature and declining business in this ferocious global environment might as well be searching for a mythical pot of gold at the end of the rainbow. Alternatively, they can invest in lottery tickets and let Hope and Luck guide their actions. Oh, and the products, customers and markets that helped you make it this far…don’t count on them taking you any further. It’s time for the Hard Work of business reinvention.
- Leaders who expect people and performance problems to simply disappear are bound to be disappointed. Hope strikes again.
- Leaders who expect the presence of just a job to engage and retain the best and brightest have suspended common-sense and are flirting with the rarely spoken of family member, Arrogance. It might work for a few minutes in time, but it’s a bad plan.
- To those struggling in this economy and looking for your next step in your career, working harder on solving your problem is the only way forward. No amount of luck, false hope or magical silver bullet jobs program from your friendly government is going to solve your situation. You will have to work harder than you ever have before…likely at reinventing yourself and your career. After a lifetime of working, it doesn’t seem fair, but Fair is from a different branch of the family, and he almost never shows up at this family reunion.
The Bottom-Line for Now:
Right now, grab Luck, Hope and Silver Bullet by the collective collars and throw them out into the street. Stare Hard Work in the eyes, thing long and hard about what her parents, Dreamer and Common Sense would have to say about your situation, and get going.
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