February 17, 2009
Economic Mess Called Biggest Opportunity Ever
Cisco chairman
and chief executive officer John Chambers definitely isn’t a glass half
empty guy. In fact, he’s not even a glass half full one. You might
say that his glass is practically filled to the brim. In a recent piece
penned in The Wall Street Journal, Mr. Chambers called the present
economic environment in the U.S., “the
biggest opportunity of our lifetime.”
For Mr. Chambers, the
current strife in business circles gives business leaders the opportunity
to go out and re-invent how they manage their companies and accomplish
goals.
One of the major changes
that Mr. Chambers has seen is a shift from the “command-and-control”
management model to one based on collaboration. He wrote, “If I had
one piece of advice to give to managers today it would be simply: ‘let
go.’ To be successful in a 24/7 global world, managers must give up
on the idea that all decision-making must run through them and must discard
the silo approach to developing and executing on strategy.”
Mr. Chambers also believes
there are enormous opportunities for reinvention that go beyond managing
businesses. He pointed to benefits of President Obama’s stimulus
package. “We can modernize healthcare by investing in IT and save
$140 billion a year by reducing duplication, bad prescriptions and improving
care. We should also invest in smart grid technologies and an energy efficient
infrastructure that will enable us to impact climate change as one united
nation. We should dramatically change the way our students learn by introducing
a more collaborative, virtual learning environment. And we should adopt
a national broadband plan that will change reach and behavior, enabling
us to achieve new levels of speed, scale and efficiency in all of these
areas.”
Discussion Questions:
Is now a good opportunity for companies to reinvent how they manage their
businesses? Will retailers be able to embrace change now or are they too
hunkered down to take advantage of it? Is the collaborative model written
about by John Chambers the right approach for retail versus the “command
and control” model?
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There are more opportunities when the economy is booming than when it’s declining. Of course, anything can be an opportunity. For some folks, jail could be an opportunity. For most retailers, the bad economy is a great time to cut costs for merchandise, labor, rent, and advertising. Another cost to cut: tickets and travel for hackneyed speeches.
ANYONE who focuses on what could be, on our infinite possibilities should get all the air time possible. I’m so tired of the whiners (many of whom work for news channels) who constantly voice how awful things are. We perpetuate what we focus on – when will ever understand that? Or as Duke Rochefoucauld said back in the mid 1600s “We perform according to our fears.”
Every obstacle and disappointment is the Universe telling us there is a better way to think, live, work, lead and prosper. Gene, Anne and Ben are dead on in their comments. We are suffering from self-inflicted wounds. We are in circumstances of our own creation and if we want different circumstances we can create those too.
As the saying goes, “Never let a good crisis go to waste.” The Chinese word for crisis is actually made up of two words: danger and opportunity. This is a terrific opportunity for all businesses to take an introspective view of how they could organize to function more effectively and efficiently.
It is a fact that our success contributed to our complacency. We need to be vigilant at all times, not just the moment of crisis. However, a crisis gives us the opportunity to act and act boldly.
“[T]he current strife in business circles gives business leaders the opportunity to go out and re-invent how they manage their companies and accomplish goals.”
It may not be exactly the interpretation Mr. Chambers intended–but one reading of the quote above could be “We have cover to ditch the skeletons in a mass economic grave. Now’s the time to cut and run and try something completely new!” But even when turned on itself a bit in jest, this isn’t necessarily a bad thing.
It is extremely difficult for a single business or leader to admit the need for change in direction when markets are running strong. What’s to say you won’t just make the situation worse, and then you are looking for your next CEO job pronto. But when the herd is headed south, a change in direction is viewed as “grabbing the bull by the horns.” And if it doesn’t work who notices? The herd was already going south anyway and you just got swept up in the stampede.
Many retailers and brand owners are managed with fixed ROI targets; that means if it “ain’t broke, don’t fix it.” As long as acceptable returns are coming in, there’s little motive to change. Change involves risk and the potential for loss of scarce resources exists, even with a good certainty of success.
However, when the business is lost, the rules are rewritten, and new thinking is desperately required. At these moments, reinvention is possible for some companies. Innovative companies know constant reevaluation and the ongoing search for better solutions will help maintain and expand position–before all is lost.
Mr. Chambers is correct, the opportunities are enormous. But, the opportunities for change in management style have always been there. The Collaborative Model has always been deemed more effective than the Command and Control model. Perhaps the destruction of the businesses will force some rethinking for those who understand that they can not continue to operate the same old way.
However, one of the problems faced is that ingrained culture, even in the Collaborative Model, will produce nothing more than what has existed under Command and Control. Think General Motors.
Collaboration is easier said than done, especially when the numbers are bad. For retailers the message from Chambers is more about opportunity. Competitors are most likely going out of business or at the very least focused on short-term survival. If retailers can use this downturn to strengthen cross-channel marketing, in-store technology and customer experience elements, they will be ahead of the pack when this thing turns around.
Reading Chambers’ comments, one is tempted to substitute a vulgarity for the term “opportunity.”
But he’s generally correct, one person’s disaster is another’s opportunity. We are indeed positioned for some creative destruction in the present teetering economy. It’s time to break down some of the economic fortresses that have blocked progress for the past 50 years and substitute more progressive pursuits that can empower the next era of prosperity.
We need to ask, as a nation, “What business are we in? No more carbon-fiber buggy whips in the transportation industry. No more bald-faced fictions about “clean coal” (carbon is carbon–even if the smokestack looks clear). No more financial legerdemain dressed up as wealth creation. No more government policies that protect the status quo for a few outmoded business sectors at the expense of future generations.
Yes the opportunities are vast–in new energy systems, transportation, broadband communications, infrastructure, health care, and education. American know-how in these areas is already formidable. It can be developed further and exported to the rest of the world with great positive economic impact.
One final thought: Large, entrenched and powerful industries, by nature, will tend to want to preserve the status quo. This makes incremental advances difficult, because business leaders face strong imperatives against change. Barring crisis, only government can shift the balance, by changing the underlying rules just enough to rebalance the equation, then stepping out of the way and letting the profit motive and American ingenuity do their work.
While I completely agree with everything that has been said so far about the existence of opportunity and the wisdom of using it, I have my doubts about how many people have the knowledge and skills to actually implement change. The will may be there but do enough people know how to find the way?
As a small independent retailer, my concern is the “new” mandates from our lovely federal government, coming out in the next year. While I agree that opportunity exists, all of us must face the economic reality of universal healthcare, new and ridiculous taxes, surcharges, and fee increases from broken states, and lack of capital to move forward in any significant way.
This is not whining but until the government gets off our back, it is tough to plan for great things into the future. I’m investing all of my profits into new technologies, i.e. refrigerated cases with LED lighting and low energy compressors, but my larger concern is the universal mandates that our new administration wants to implement.
If small business is forced to pay for health care for part-time and full time employees, look out! Many of us will spend all of our profits paying for that, plus our state has cost-of-living built into the minimum wage each year. The reality is, many of us will not be around to see the benefits of our new and improved social experiment, which could be called quasi-capitalism. Either way, it’s another great topic to ponder and discuss.
The current situation is an “opportunity” for change and reorganization, however, I am observing that most companies are making knee jerk changes that are geared strictly for cutting cost.
John Chambers’ observation is correct, to a degree. Unfortunately, the investment in resources required to do this often places other key structures and employees at risk, which may cause an organization to increase their risk, lose focus on their core competency and try to look for other returns instead of improving their returns within their own organization. In a world which is dominated by short term profits (quarterly) and shareholder perceptions, a longer range view like this is often difficult to implement. Perhaps the most difficult part of this is recognizing the true value that this may hold in a world permeated by bad news and recessionary forecasts.
After decades, maybe centuries, of command-and-control behavior training from kindergarten, it will take more than a few months for people to learn how to collaborate. Remember the management adage: “Lead, be led or get out of the way”? Time to question that. I’m not suggesting that there is no further need for leaders, but Jim Collins’ Level 5 Leadership (or even a more evolved form) needs to be adopted, for true collaboration to happen. Many current management models have to be thrown out and new ones implemented, and even old ones re-discovered.
What’s more–and I might be out on a limb here–we have to possibly de-construct our whole economic model which is built on the principle of “scaling up and consolidation” in favor of fragmentation and individualization.
A very very good documentary to watch in the current times is “The Corporation,” other than digging into the host of other literature that is available.
I agree that the opportunities are huge. My challenge is staffing. Finding hard working, motivated employees is still a challenge, which is surprising to me.
Here’s the glib answer: If not now, when?
I think the sea change that’s coming is going to be a return to small–or smaller–business at the expense of the giant corporations.
I haven’t been aware of a megamerger between megacorporations that’s ever really worked the way it was supposed to. True, the combined organization got to cut some headcount costs, because they had some redundant staff functions. But are there any good examples of merged companies that then went on to become true powerhouses of innovation and growth? Where they produced game-changing new products and the stock went up to new heights? Seems to me they mostly got mired in turf battles and deciding what product lines to sell off or eliminate entirely.
Now, breaking up AT&T, I seem to remember, and opening up long-distance and various other aspects of the telecom business to competition, created a bunch of entirely new industries and made a lot of people rich. In fact, I seem to remember a time when the US led the world in internet penetration and broadband speed. Number One, I recall–not number fifteen.
Now, I’m not sure if the issue is management model–collaboration can be just as slow and hidebound as command and control if a) the main goal is still that you’re going to get more customers by cutting costs, and b) everything still has to go through legal before you put it into the marketplace.
Because I think those are the issues that hold big companies back and create opportunities for small business. Not that I really think there are no new ideas in big companies. But as several posters here have pointed out, there are risks–financial risks–in trying new things. And you’ve got to be willing to make the investment. Which means that new ideas can’t be subject to the same tight cost-containment measures that mature business units are.
And, if everything has to go through a three-month internal review process, you could easily miss your moment in the market. Because the market now moves at internet speed–even for companies that have nothing to do with technology, because as offline media dry up and blow away, and the audiences are increasingly online, our attention spans are shorter and shorter.
Here’s food for thought: yesterday I read an article suggesting that Google could soon find itself under siege–under siege, they said–from whom? Twitter search.
The question is “not if, but how” to reinvent businesses. Change is hard but necessary in today’s environment. Collaboration is what is being taught in many business schools and universities today.
The “command and control” model often led management to ignore what consumers were saying. A collaborative model encourages businesses to listen more closely to customers, and associates.
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There are more opportunities when the economy is booming than when it’s declining. Of course, anything can be an opportunity. For some folks, jail could be an opportunity. For most retailers, the bad economy is a great time to cut costs for merchandise, labor, rent, and advertising. Another cost to cut: tickets and travel for hackneyed speeches.
ANYONE who focuses on what could be, on our infinite possibilities should get all the air time possible. I’m so tired of the whiners (many of whom work for news channels) who constantly voice how awful things are. We perpetuate what we focus on – when will ever understand that? Or as Duke Rochefoucauld said back in the mid 1600s “We perform according to our fears.”
Every obstacle and disappointment is the Universe telling us there is a better way to think, live, work, lead and prosper. Gene, Anne and Ben are dead on in their comments. We are suffering from self-inflicted wounds. We are in circumstances of our own creation and if we want different circumstances we can create those too.
As the saying goes, “Never let a good crisis go to waste.” The Chinese word for crisis is actually made up of two words: danger and opportunity. This is a terrific opportunity for all businesses to take an introspective view of how they could organize to function more effectively and efficiently.
It is a fact that our success contributed to our complacency. We need to be vigilant at all times, not just the moment of crisis. However, a crisis gives us the opportunity to act and act boldly.
“[T]he current strife in business circles gives business leaders the opportunity to go out and re-invent how they manage their companies and accomplish goals.”
It may not be exactly the interpretation Mr. Chambers intended–but one reading of the quote above could be “We have cover to ditch the skeletons in a mass economic grave. Now’s the time to cut and run and try something completely new!” But even when turned on itself a bit in jest, this isn’t necessarily a bad thing.
It is extremely difficult for a single business or leader to admit the need for change in direction when markets are running strong. What’s to say you won’t just make the situation worse, and then you are looking for your next CEO job pronto. But when the herd is headed south, a change in direction is viewed as “grabbing the bull by the horns.” And if it doesn’t work who notices? The herd was already going south anyway and you just got swept up in the stampede.
Many retailers and brand owners are managed with fixed ROI targets; that means if it “ain’t broke, don’t fix it.” As long as acceptable returns are coming in, there’s little motive to change. Change involves risk and the potential for loss of scarce resources exists, even with a good certainty of success.
However, when the business is lost, the rules are rewritten, and new thinking is desperately required. At these moments, reinvention is possible for some companies. Innovative companies know constant reevaluation and the ongoing search for better solutions will help maintain and expand position–before all is lost.
Mr. Chambers is correct, the opportunities are enormous. But, the opportunities for change in management style have always been there. The Collaborative Model has always been deemed more effective than the Command and Control model. Perhaps the destruction of the businesses will force some rethinking for those who understand that they can not continue to operate the same old way.
However, one of the problems faced is that ingrained culture, even in the Collaborative Model, will produce nothing more than what has existed under Command and Control. Think General Motors.
Collaboration is easier said than done, especially when the numbers are bad. For retailers the message from Chambers is more about opportunity. Competitors are most likely going out of business or at the very least focused on short-term survival. If retailers can use this downturn to strengthen cross-channel marketing, in-store technology and customer experience elements, they will be ahead of the pack when this thing turns around.
Reading Chambers’ comments, one is tempted to substitute a vulgarity for the term “opportunity.”
But he’s generally correct, one person’s disaster is another’s opportunity. We are indeed positioned for some creative destruction in the present teetering economy. It’s time to break down some of the economic fortresses that have blocked progress for the past 50 years and substitute more progressive pursuits that can empower the next era of prosperity.
We need to ask, as a nation, “What business are we in? No more carbon-fiber buggy whips in the transportation industry. No more bald-faced fictions about “clean coal” (carbon is carbon–even if the smokestack looks clear). No more financial legerdemain dressed up as wealth creation. No more government policies that protect the status quo for a few outmoded business sectors at the expense of future generations.
Yes the opportunities are vast–in new energy systems, transportation, broadband communications, infrastructure, health care, and education. American know-how in these areas is already formidable. It can be developed further and exported to the rest of the world with great positive economic impact.
One final thought: Large, entrenched and powerful industries, by nature, will tend to want to preserve the status quo. This makes incremental advances difficult, because business leaders face strong imperatives against change. Barring crisis, only government can shift the balance, by changing the underlying rules just enough to rebalance the equation, then stepping out of the way and letting the profit motive and American ingenuity do their work.
While I completely agree with everything that has been said so far about the existence of opportunity and the wisdom of using it, I have my doubts about how many people have the knowledge and skills to actually implement change. The will may be there but do enough people know how to find the way?
As a small independent retailer, my concern is the “new” mandates from our lovely federal government, coming out in the next year. While I agree that opportunity exists, all of us must face the economic reality of universal healthcare, new and ridiculous taxes, surcharges, and fee increases from broken states, and lack of capital to move forward in any significant way.
This is not whining but until the government gets off our back, it is tough to plan for great things into the future. I’m investing all of my profits into new technologies, i.e. refrigerated cases with LED lighting and low energy compressors, but my larger concern is the universal mandates that our new administration wants to implement.
If small business is forced to pay for health care for part-time and full time employees, look out! Many of us will spend all of our profits paying for that, plus our state has cost-of-living built into the minimum wage each year. The reality is, many of us will not be around to see the benefits of our new and improved social experiment, which could be called quasi-capitalism. Either way, it’s another great topic to ponder and discuss.
The current situation is an “opportunity” for change and reorganization, however, I am observing that most companies are making knee jerk changes that are geared strictly for cutting cost.
John Chambers’ observation is correct, to a degree. Unfortunately, the investment in resources required to do this often places other key structures and employees at risk, which may cause an organization to increase their risk, lose focus on their core competency and try to look for other returns instead of improving their returns within their own organization. In a world which is dominated by short term profits (quarterly) and shareholder perceptions, a longer range view like this is often difficult to implement. Perhaps the most difficult part of this is recognizing the true value that this may hold in a world permeated by bad news and recessionary forecasts.
After decades, maybe centuries, of command-and-control behavior training from kindergarten, it will take more than a few months for people to learn how to collaborate. Remember the management adage: “Lead, be led or get out of the way”? Time to question that. I’m not suggesting that there is no further need for leaders, but Jim Collins’ Level 5 Leadership (or even a more evolved form) needs to be adopted, for true collaboration to happen. Many current management models have to be thrown out and new ones implemented, and even old ones re-discovered.
What’s more–and I might be out on a limb here–we have to possibly de-construct our whole economic model which is built on the principle of “scaling up and consolidation” in favor of fragmentation and individualization.
A very very good documentary to watch in the current times is “The Corporation,” other than digging into the host of other literature that is available.
I agree that the opportunities are huge. My challenge is staffing. Finding hard working, motivated employees is still a challenge, which is surprising to me.
Here’s the glib answer: If not now, when?
I think the sea change that’s coming is going to be a return to small–or smaller–business at the expense of the giant corporations.
I haven’t been aware of a megamerger between megacorporations that’s ever really worked the way it was supposed to. True, the combined organization got to cut some headcount costs, because they had some redundant staff functions. But are there any good examples of merged companies that then went on to become true powerhouses of innovation and growth? Where they produced game-changing new products and the stock went up to new heights? Seems to me they mostly got mired in turf battles and deciding what product lines to sell off or eliminate entirely.
Now, breaking up AT&T, I seem to remember, and opening up long-distance and various other aspects of the telecom business to competition, created a bunch of entirely new industries and made a lot of people rich. In fact, I seem to remember a time when the US led the world in internet penetration and broadband speed. Number One, I recall–not number fifteen.
Now, I’m not sure if the issue is management model–collaboration can be just as slow and hidebound as command and control if a) the main goal is still that you’re going to get more customers by cutting costs, and b) everything still has to go through legal before you put it into the marketplace.
Because I think those are the issues that hold big companies back and create opportunities for small business. Not that I really think there are no new ideas in big companies. But as several posters here have pointed out, there are risks–financial risks–in trying new things. And you’ve got to be willing to make the investment. Which means that new ideas can’t be subject to the same tight cost-containment measures that mature business units are.
And, if everything has to go through a three-month internal review process, you could easily miss your moment in the market. Because the market now moves at internet speed–even for companies that have nothing to do with technology, because as offline media dry up and blow away, and the audiences are increasingly online, our attention spans are shorter and shorter.
Here’s food for thought: yesterday I read an article suggesting that Google could soon find itself under siege–under siege, they said–from whom? Twitter search.
The question is “not if, but how” to reinvent businesses. Change is hard but necessary in today’s environment. Collaboration is what is being taught in many business schools and universities today.
The “command and control” model often led management to ignore what consumers were saying. A collaborative model encourages businesses to listen more closely to customers, and associates.