Leadership & Business

Diversity, Complexity, Information Overload, Supply Chains & Conculsions

7. Diversity.  A particular subset of human capital planning is found so often in our research that it is worth its own mention. Diversity brings many challenges, as it makes it far more likely that people do not agree, and the lack of agreement makes execution very difficult. At the same time, the lack of diversity among many large company leadership teams leads to a narrow view of an ever-changing and diverse world—contributing to groupthink, stale culture and a tendency to live with the status quo for too long.  The problem to be solved is to first define what diversity really means in your company, then foster the expansion of differing ideas and viewpoints while ensuring cohesion and teamwork.
 
8. Complexity.  There’s no doubt that life and business have gotten more complex even as certain tasks and activities have become easier due to information technology. The pace of change is quickening. The global economy is becoming more connected, creating a much larger and more diverse population of customers and suppliers. Manufacturing and services are increasingly targeted at smaller, specialized markets due to the flexibility that IT provides in these areas. We know from our knowledge of the patterns of evolution that, in reality, systems tend to become more complex as they evolve, then become simplified again. The problem is how to develop better systems-thinking capability so you can design your business models, processes, products and services in a way that minimizes complexity.
 
9. Information Overload. It is said that the only true constant is change, and in today’s world nothing is changing more, or growing faster than information.  A March, 2010 estimate put global Internet traffic at 21 exabytes—21 million terabytes. It is estimated that 988 new exabytes of data will be created in 2010. That’s compared to only 161 exabytes of new data creation in 2006. The ability of companies, much less individuals, to consume and make sense of the information that is available (and necessary) to make good decisions is becoming a nearly insurmountable challenge.  The problem to be solved is to deal with this mountain of information with both technology and human knowhow, then to convert this information into valuable knowledge.
 
10. Supply Chains.  Because of uncertainty in demand and the need to stay lean, companies are carrying smaller inventories.  At the same time, uncertainty in supply, driven by wildly changing commodity prices, an apparent increase in weather-related disruptions, and increasing competition for raw materials from the BRIC countries makes materials planning more challenging than ever.  Smaller suppliers that can no longer get the credit they need to keep up with their larger customers’ demand exacerbates an already unwieldy situation.  The problem to be solved is to develop a supply-chain strategy that not only ensures the lowest costs, but that also minimizes the risk of crippling supply-chain disruptions.
 
Conclusion  While the first nine biggest problems faced by business are a direct result of research, the tenth is really BMGI’s own conclusion based on the prior nine.  The lack of a sophisticated problem-solving competency among today’s business leaders is limiting their ability to adequately deal with the first nine problems.  This is why corporate managers tend to jump from one fire to another, depending on which one their executives are trying to put out, and in many cases the fast-changing ; the fast-changing business environment is what ignites these fires. So what is the problem to be solved? We believe, to do well into the future, companies must resolve that problem-solving is the key to business, then develop a robust problem-solving capability at all levels.

The Next 3...Regulation, Technology & People

Continuing from The Top 10 Problems Challenging Today's Businesses - The First 3

4. Regulation.  A changing regulatory environmental is always of concern in certain industries, but uncertain energy, environmental and financial policy is wreaking havoc for nearly all companies today. Whether a demand from customers or shareholders to become more “green,” or the threat of increased costs due to new carbon taxes, environmental considerations are among the biggest challenges business face today.  We don’t need to give too much press to the current issue of financial reform and regulation, although we do have some opinions about how to prepare for that if you’re a bank or a brokerage house. The problems to be solved are to understand the meaning of regulation in your industry, its implications for your business, and to develop the skills necessary to deal with it.
 
5. Technology.  The pace of technological improvement is running at an exponentially increasing rate.  While this has been true for several decades, the pace today makes capital investment in technology as much an asset as a handicap because a competitor can wait for the next-generation technology, which may only be a year away, then use it to achieve an advantage.  Similarly, the ability for even the best of technologists to stay informed about emerging technology is in conflict with the need to master a company’s current technology.  The problem to be solved is to develop a long-term technology strategy while remaining flexible enough to take advantage of unforeseen technology developments.
 
6. People.  There are two opposing schools of thought when it comes to human capital today. The first says develop your people, while the second suggests that there is no longer time to invest in people and that, instead, companies must hire people with the skills they need, when they need them, in a more temporary or virtual way.  The problem to be solved is to develop a human capital strategy that provides competitive advantage—and to stick with it.

Next...Diversity, Complexity, Information Overload, Supply Chains & My Conclusions

The Top 10 Problems Challenging Today's Businesses - The First 3

In anticipation of the launch of our newly redesigned website, BMGI.com, I wanted to share with you the top ten problems that BMGI’s research suggests are challenging today’s businesses. These ten issues stem from research my company conducted while redesigning our website which not only will represents a new look and feel, it also represents a complete redesign of our business including new ideas, new explanations of old ideas, and our thoughts for the future. I hope you find this research as interesting as I did.

 

Problem 1: Uncertainty. All human beings, but it seems business leaders in particular, find great discomfort in uncertainty. Uncertainty in the global economy and the current recovery, uncertainty in the credit markets, uncertainty in how environmental regulations will affect business.  The bottom line is that uncertainty leads to a short-term focus. Companies are shying away from long-term planning in favor of a shorter-term focus with uncertainty as the excuse.  While this might feel right, we believe that a failure to strategically plan five years into the future can end up destroying value. The problem to be solved, therefore, is to balance the need for a more reactive, short term focus with the need for informed, long-term strategies.  That’s easier said than done. There are a number of different strategies that can be employed to help us balance the short term and the long term. Here are just a few.

• A division of labor. For example, a CEO who’s focused on the long term and a COO who’s tasked with focusing on the short. Of course there will be conflicts, and the CEO always wins, but every position needs its advocate to ensure good decision making.
• A well-defined set of priorities that enables a balance.
• Trigger points. Essentially metrics that say, “hey, stop worrying about the long term—you guys need to fix this short term problem or you won’t be here long term (e.g., cash flow).

Problem 2: Globalization.In interviews conducted by BMGI, 7 of 10 Fortune 500 CEO’s cite the challenges of globalization as their top concern. Understanding foreign cultures is essential to everything from the ability to penetrate new markets with existing products and services, to designing new products and services for new customers, to recognizing emergent, disruptive competitors that only months earlier weren’t even known. The problem to be solved is to better understand international markets and cultures through better information gathering and better analysis of what it all means.

 

I have to admit I heard some pretty funny stories during my interviews. One CEO told me about a great new product his company developed for the Indian market, only to later realize households in this demographic had nowhere to plug it in.  Another talked about sending executives to study a developing market, only to come home knowing less than when they started. “Dave, the factories got spit shined. The CEOs of our vendors drove them around in their Mercedes and wined and dined them at the best restaurants. They learned nothing.”

Understanding other cultures requires more than a visit. It requires immersion. It requires the sacrifice of our creature comforts. You can’t learn by observing. You have to actually experience it yourself.

Problem 3: Innovation. Interestingly, we haven’t found that many companies are looking to create more innovative cultures.  At least not the big companies (Global 1000), though that changes some as companies get smaller. That was a big surprise.  It seems big companies are struggling with innovation, and a better innovation process is at the top of the agenda for most CEOs, but the idea of a more innovative culture appears too frightening to many. The problem to be solved is how to become more innovative while still maintaining a sense of control over the organization. While there’s a fear of too much innovation, there’s certainly a fear of too little as well. Similar to problem one, we have to strike a balance. Or perhaps better said, we have to resolve a paradox. We need to create an environment that fosters greater innovation, while also nurturing one that supports greater structure. 

 

I do have to say I was somewhat surprised at the response I got, but in hindsight I should have expected it.  I think over the next few years we’re going to see a changing of the guard at the top of many companies. We’re essentially ushering in a new generation of CEOs, which represents a step change of about minus 10 to 15 years in age. That might not be quite enough, but it’s a start.

 

Coming Up....Regulation, Technology & People

Do YOU Read?

Do you read?  Of course you can, but that’s not what I asked. I know you can read; you’re reading this.  But DO you read?  How often? What do you read?

 

Personally, I read a lot. And as a business owner I’ve struggled with the question, for many years, about how much I can and should expect my people to read.  We all have our own styles of learning.  We all have different interests and different levels of curiosity. So I felt quite judgmental to expect others to do what I do.

 

But after spending the past several years—ten, really, when I think about it—studying the subjects of innovation and strategy, I’ve come to one conclusion. If you want to be successful in business…if you want to get ahead…you’d better be a voracious reader. There’s just no other way.

 

Innovation, strategy, or just plain old good decision making demands that we—to use a cliché—“connect the dots.”

 

And while this is going to sound really simple when you hear it, it’s not.  It can’t be. Because so many people I meet don’t seem to get it. What am I talking about, you ask? I’m talking about the number one prerequisite to being able to connect the dots.  And that is that first, you have to fill your head with lots of dots.

 

Dots come from many places.  Dots come from other people and our conversations with them. Dots come from watching television. They come from observing what goes on in the factory.  But no matter how you slice it, for those with lots and lots of dots to connect, the vast majority of them come from reading.

 

Whether reading company reports, trade magazines, historical novels, or the Wall Street Journal, the fastest and most thorough way to collect dots is through reading.

So I’m going to be judgmental from now on…and I’m going to judge others by what and how much they read.

 

What do you read?