Systems Thinking Meets Platform Strategy and Social Media via Nike+

March 3, 2012 By Leave a Comment

While I admit to being one of those people who views the idea of running as much more attractive than the actual running part (thus far, I’ve been satisfied to pass runners on my Specialized Road Bike, thank you), I’m blown away by Nike’s strategy with their Digital Plus business and specifically, their Nike+ program for runners.

It’s low tech (the shoe) meets media (Apple devices) meets social networking (the Nike+ community) meets platform strategy for Nike and potentially, marketing nirvana, based on the data and insights gained about their most passionate customers.  (Check out the Nike+ site to tune into the scale and scope of this initiative.)

There are strategy and marketing lessons here for all of us.

In the recent Fortune article, Nike’s New Marketing Mojo, the firm’s CEO, Mark Parker, describes a visual he had created awhile ago, depicting a dozen video game “Pac Men” consuming the Nike swoosh, as an indicator of how easily the company could be overtaken by competitors. A good many purveyors of commodity-like products are struggling to find differentiation in this world. Nike’s example offers an approach with massive dividends.

Digital Sport (the business unit) and its biggest hit, Nike+ is described in Fortune as, “not just about creating must-have sports gadgets. Getting so close to its consumers’ data holds exceptional promise for one of the world’s greatest marketers: It means it can follow them, build an online community for them, and forge a tighter relationship with them than ever before.”

The stats filled website offering indications of total miles run, calories consumed, steps taken and something called Nike Fuel earned, is a fascinating testament to how much engagement they’ve created. Fortune reports that 5 million runners now log onto Nike+ to check their status, set new goals, compete with friends and engage….all in the Nike ecosystem.

Watch for a rapid expansion in new offerings (complements) to support this platform strategy.

Questions and Thought Prompters for the Rest of Us:

  • Systems and platform thinking can have a profound impact on a commodity business. What’s your potential play?
  • The integration solves an interesting problem that few probably could have articulated. It connects like minded enthusiasts with each other and gives them tools that are useful and fun.  And it afforded Nike massive differentiation in a crowded market without resorting to the potentially most destructive of all tools, price-cutting.
  • The shoes and the ipod integration is interesting, the social media, data gathering power and the dialogue created in the Nike ecosystem is priceless. What is it about your customers and ecosystem that might lend itself to a rich dialogue and connectivity?
  • How might this strategy change your marketing approaches? If you are anything like Nike, it has meant a wholesale shift in marketing tactics. (Note: that doesn’t mean a reduction in marketing expenditures…just a shift in where they are spending.)

The Bottom-Line for Now:

I’m  a big fan of analogic reasoning and using one example to stimulate creativity in completely different environments. How might Nike’s example be adapted or extended to serve your purposes?

And, I confess that I might give the road bike a rest this Spring and join the Nike+ community. I’ll be slow moving dot on the Nike map!

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Art Petty is a Chicago-based management consultant focusing on strategy and leadership development. Art regularly speaks on innovation in management and leadership, and his work is reflected in two books, including the recent, Leadership Caffeine-Ideas to Energize Your Professional Development.  Art publishes regularly at The Management Excellence blog at http://artpetty.com

Prior to his solo career, Art spent 20+ years leading marketing sales and business units in systems and software organizations around the globe. You can follow Art on twitter: @artpetty and he can be reached via e-mail at art.petty@artpetty.com

 

Filed Under: Marketing, Strategy Tagged With: , , , ,

Leaders, Tattoo this Causal Relationship on Your Forearms

February 22, 2012 By 6 Comments

I’ve been mildly surprised that the book, Beyond Performance-How Great Organizations Build Competitive Advantage by Scott Keller and Colin Price, hasn’t commanded more attention in mainstream business circles. Perhaps we’ve grown numb to the almost endless number of books purporting to show us the way to sustained success. However, don’t let the existence of 25,000 or so books published on managing change during the past two decades, blind you to some of the important and data-backed conclusions of Beyond Performance.

The book is the outcome of a massive McKinsey research initiative that suggests that the ability of an organization to gain and sustain success is a function of a focus on traditional performance tools and measures AND something they describe as Organizational Health. 

Organizational Health is defined as, “the ability of your organization to align, execute and renew itself faster than your competitors.”  

The authors backed by research that encompasses 600,000 survey respondents from more than 500 organizations; surveys and interviews with 6,800 CEO’s and an exhaustive literature review, put forth a powerful claim “On the strength of our research and analysis, we assert that the link between (organizational) health is more than a correlation, and is in fact causal.”

We’ve moved beyond correlation to a place where most of the 25,000 aforementioned books never go. The authors are stepping out on the statistical limb (a fairly sturdy, data-supported limb) in suggesting a causal relationship between performance and Organizational Health.

They take their conclusion one step further: “We argue that the numbers show that at least 50 percent of your organization’s success in the long term is driven by its health.”

What’s Organizational Health?

The short form: Organizational Health is described by three key components:  internal alignment on direction, quality of execution and capacity for renewal.

These three break down into 9 elements:

  1. Direction
  2. Leadership
  3. Culture and Climate
  4. Accountability
  5. Coordination and Control
  6. Capabilities
  7. Motivation
  8. External Orientation
  9. Innovation and Learning

The 9 further subdivide into 37 distinct management practices that can be measured, monitored and evaluated.  The 37 practices comprise the Organizational Health Index (OHI) survey, “a tool for measuring the health in rigorous and comprehensive manner.”

My Quick Takes:

Invest the time and read the book.  The book, the data, the OHI and the inherent management practices merit our time and attention!

There are practical implications for you and your firm now. Often, big  research studies seem to come back and confirm the obvious. There’s a little of that here, but the data backing of the conclusions allows us to move from conjecture about these practices to confidence that we need to focus our energies around promoting organizational health.  Anyone reading this or any other leadership and management blog will intuitively get that the 9-elements (and 37 practices) are essential. The book offers few epiphanies from an intellectual perspective. From a practical perspective, it clubs us over the head and reminds us that we tend to ignore much of the softer stuff (beyond performance activities and measures). Translation, too many business and leaders suck at cultivating organizational health.

It’s broader than employee engagement.  The OHI is comprehensive enough to bypass my gag reflex on employee engagement surveys serving as proxies for organizational health. If I see one more question asking me whether I have friends at work or whether I have the tools to do my job, the gag reflex will fail!

See also the last decade. Ignoring organizational health has in large part contributed to the creation of the lost decade we’ve just lived through. This past decade guarantees heartburn many years into the future.

Reminds you of your priorities. The authors and their concept of Organizational Health speak to the pieces we all intuitively know are essential for survival in this world…alignment on direction, focus on getting great people supporting execution, and promoting a culture that learns and adapts. The encouragement to work on the practices that beget health is an important reminder for all of us.

The Bottom-Line for Now:

No magical answers, but strong support for what the best leaders and managers have long known…the soft stuff of culture, climate and environment and all the inherent management practices are critical. Organizational health begets performance. Is it time for a check-up?

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Don’t miss the next Leadership Caffeine-Newsletter! Register here.

Art Petty is a Chicago-based management consultant focusing on strategy and leadership development. Art regularly speaks on innovation in management and leadership, and his work is reflected in two books, including the recent, Leadership Caffeine-Ideas to Energize Your Professional Development.  Art publishes regularly at The Management Excellence blog at http://artpetty.com

Prior to his solo career, Art spent 20+ years leading marketing sales and business units in systems and software organizations around the globe. You can follow Art on twitter: @artpetty and he can be reached via e-mail at art.petty@artpetty.com

Filed Under: Leadership, Leading Change, Management Innovation, Strategy Tagged With: , , ,

Lessons in Management Innovation from Main Street

February 8, 2012 By 4 Comments

In their July, 2011 Harvard Business Review Article, Adaptability: The New Competitive Advantage (great article, worth the $ IMO), Martin Reeves and Mike Deimler make a solid case for our need to cultivate critical soft organizational skills to survive and prosper in today’s turbulent business environment.

Reeves and Deimler suggest that leaders and firms shift their focus away from the traditional approach to strategy (creating an enduring and relatively static competitive advantage through price, positioning or differentiation), and instead focus on cultivating four critical capabilities:

  1. The ability to read and act on signals of change,
  2. The ability to experiment rapidly and frequently-not only with products and services but also with business models, processes and strategies.
  3. The ability to manage complex and interconnected systems of multiple stakeholders.
  4. The ability to motivate employees and partners.

On a grand scale, these four read like the playbooks in use at Apple, Google, Amazon and other Masters of the Universe who seemingly morph their businesses and business models at a torrid pace, capturing more of our attention and more of our consumption along the way.

On a more local and relevant for the rest of us scale, these organizational capabilities are nothing more or less than the outcomes of effective leadership coupled with an entrepreneurial spirit.

Most start-ups rely on their skills in all four of those areas, almost by instinct. Their business agility is keen due to resource limitations and because they are driven to experiment with their ideas and approaches until something sticks and they move beyond survival towards success.

Local Lessons In Winning Approaches to Business Strategy:

During the past few years, I’ve marveled at the start-ups and small to mid-sized businesses in my community who didn’t need an army of consultants or MBAs to teach them the very relevant and important lessons that Reeves and Deimler share in their article.

They live in a world where agility is survival. They understand, experiment, learn and iterate. They know to seize upon what works and build it out while the building is good. And they get that they need to continuously be looking for new approaches to innovate based on failures and successes and the inevitable copycats and disruptions.

  • There’s the wildly successful local Coffee Roaster, where the founders tackled the daunting task of starting a coffee business in the era of Starbucks, and have succeeded. They continue to morph their business model and strategy…and they experiment like fiends with new approaches to serving their clientele and shifting their business through licensing and distribution.
  • And then there’s the Hair Salon that was the dream of a group of young professional women that has become the go-to place in the county. From start-up to juggernaut. Now, growth is the problem and appointments are hard to come by. I continue to get all 311 remaining hairs on my head cut at a ridiculous price premium here because the culture rocks, the senior partner is the smartest business person I know to not have a business degree, and I leave there every time feeling great and with three new ideas to write about based on their management, hiring, marketing and customer-service approaches.
  • Someone I admire tremendously runs a growing manufacturing concern focused on an offering into the display side of the retail industry. They make products you wouldn’t think twice about, yet to tour the factory is to be amazed at the thought and investment in innovation. To meet and work with the people is to know that there’s something special in the leadership and the culture.

3 Critical Common Characteristics of these Main Street Successes: 

1. Leadership that gets it. They are led by individuals who view the top and bottom lines as outcomes of doing the right things for and with their employees and customers.

2. Change is embraced. They intuitively get the guidance offered by Reeves and Deimler on building strength and they live it every day. Instead of fearing change, they find ways to leverage and promote it.

3. They are big thinkers looking to harness big ideas in small ways. They are born strategists who think beyond the here and now and take their cues not only from their customers but from observing and anticipating what some of these macro-changes in our world mean for their businesses.

The Bottom-Line for Now:

The lessons from the big firms in the news are visible and exciting. However, don’t discount the lessons in management innovation that are being taught on and around Main Street. The sharpest small business owners that I know have long understood the secrets that the rest of us in the corporate world are now discovering.

 

 

Filed Under: Leadership, Strategy Tagged With: , , ,

No One Asked My Opinion…But $100 Billion for What?

February 1, 2012 By 4 Comments

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.

Filed Under: Strategy Tagged With: , ,

Strategy-Towards Hypotheses, Experiments, Involvement & Learning

January 25, 2012 By 6 Comments

Few would argue that a nimble, quick-to-learn and quick-to-adapt organization is a bad thing. Given the rate of change in our world, those characteristics are increasingly table-stakes for survival and success.

Why then has the approach to strategy and the notion of “strategic planning” in so many organizations remained mired in a 1960’s kind of static, top-down event-focused model?

Many firms practice a style of strategic planning that might have worked in a different time and place, but today, fast-to-try, fast-to- fail and fast-to-learn are essential for survival and success.

Give Me an Epiphany, Darn-It!

Rarely does just the act of thinking through circumstances, opportunities and strategies yield the epiphany that allows a firm to carve out a competitive advantage.

In my experience, the management teams who have pursued the “strategy as event’ approach with the annual or semi-annual meeting(s) serving as the time to talk strategy and decide, are often frustrated with the time investment and disappointing outcomes. Few epiphanies…a lot of time…a lot of bickering and ambiguous outcomes with no clear next steps. Sounds like fun, doesn’t it?

Hypotheses and Informed Experiments, Please!

The best outcome of the front end of any strategy process is one or more (a limited number, please) of ideas…hypotheses, that can quickly be turned into and managed as experiments.

True value in the form of learning accrues to the organization from working through the strategic experiment, assessing outcomes and refining the ideas. Because these workplace and marketplace experiments require people to implement, manage, and assess them, the act of engaging the employee population creates understanding, involvement, excitement and importantly idea sharing.  

It Feels So Good When We Stop!

I’ve worked with teams who were accustomed to and frustrated by the “event” orientation of planning. When refocused on assessment, analysis and importantly, hypothesis generation, the unreasonable expectation of finding the magical answer was replaced by high quality dialogue around generating ideas for better serving customers and beating competitors. After a series of these discussions over time, and with some focused facilitation, the teams were able to zero in on one or two strategic hypotheses to invest in and learn from.

The Project Management Art of Building out Strategic Experiments:

While I frequently reference this phase as the Execution phase, I prefer Experiment…both because it doesn’t sound so fatal…and it implies Doing, Measuring, Learning and Refining (DMLR).  In my estimation, its in the DMLR cycle where the real work…and the real “Ah Ha” moments of strategy occur.

Six Ideas for Implementing an Effective Doing, Learning, Measuring, Refining Program:

1. Treat each strategic experiment like a project. Assign a Project Manager and use Best Practices PM to charter, scope, engage stakeholders, define the work, assess the risks, plan and estimate the work, implement the work, monitor and communicate. Yeah, that’s a mouthful. Your Project Manager in this case is priceless.

2. Ensure that there’s a strong sponsor in place for every experiment. Yes, best practices project management again. If this is important enough to be betting your strategic future on, it’s important enough to provide a Supportive Sponsor with heft and teeth.

3. Explain, Engage and Listen! People work in compliance under orders, they work with their hearts and minds when they are part of something big. Getting them involved is good. Arming them with context on why, and what and importance is critical. Listening to their feedback is priceless. Since many strategic initiatives involve doing new things or doing things differently, this holistic approach to engagement is essential.

4. Create Learning and Sharing Forums with Teeth. It’s good to pre and post-mortems…it’s better to create ample opportunities for idea sharing, lessons learned and adjustments to experiments on the move. Hey, I’m probably violating several tenets of The Scientific Method with the adjustment statement, but timeliness is critical and your Project Manager will help you manage changes in the plan.

By the way, by this time, you may want to give your PM a big fat raise!

5. The Truth is Always in the Field…Sometimes You Just Have to Look Carefully. The best strategic experiments involve customers and partners. Invite them in…make them part of the process and of course observe and listen carefully. And then act.

6. Do Something with the Outcomes-Plan to Change or Move Forward. After a period of time and armed with the insights and feedback of employees, customers and partners, there’s a vetting and decision-making process that those in charge have to prosecute. From kill to change to go to what’s next, you and your team are on the hook for returning to the process and assessing and deciding.

The Bottom-Line for Now:

There are at least two “dirty little secrets” in what I’ve described above. It’s a nefarious plan for involving the broader organization in strategy and execution, and it not so secretly “operationalizes” the work of strategy. While there’s no magic and I would be misleading if I didn’t highlight that the process is filled with bumps, hiccups and debates it’s darned powerful if and when managed properly.

Filed Under: Leadership, Leading Change, Project Management, Strategy Tagged With: , , , ,
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