21st Century Organization

Verizon's OPEN for Business

Verizon’s leap into opening the use of their cell phone software to other companies is the result of a slow recognition of what Bill Gates’ Microsoft learned several decades ago. Gates was leapfrogging before the term came into use! Verizon saw the benefits of being open with their strategy.

They took the ritual of the industry’s slow evolution of thinking beyond the boundaries of organizational resources, product and core competence hugging plus the willingness to tolerate what appeared to be greater risk by experimenting with outsourcing and open sourcing before some of the behemoths of the industry.

There are of course always multiple factors that contribute to the kind of strategic decision Verizon has made. Certainly one factor is that it is often cheaper to buy hardware than to manufacture it given today’s manufacturing processes and low cost global labor. This is not far from the long-time practice of leasing facilities and equipment rather than buying, which leaves greater cash available for marketing, sales, research, innovation, application and service – to name a few, and of course much greater flexibility to move quickly. 

In addition, advancing technology now allows the integration of many applications into one small piece of hardware such as the cell phone. As Gate’s has proven, the opportunity cost of limiting software design and application to the hardware a company uses limits opportunity to sell what all customers want…to combine the features we think are best for our own particular use. Verizon’s decision expands their market opportunity by creating software and services that can be used by millions more customers.

It would not surprise me that a major contributor to Verizon’s decision was information they gathered through Social Network Analysis. By this decision alone, Verizon has opened their SNA opportunities to collaborate, learn, innovate, and expand their market presence, as well as reduced the constraints of hugging on to the limitations of their own equipment. Further, Verizon may now leverage and enhance their software applications based on the advanced hardware features of their new clients. Certainly an incentive to their clients will be their ability to use Verizon’s great transmission networks.

In the end, we will see more of this type of strategic decision making as the years go by, and at a much greater pace. We are just beginning to share knowledge and integrate that shared knowledge. Probably in the industrial age when things were slower and changes held static for decades it was wise not to share. However, that is a counter productive way of thinking and acting at the pace we work today. The sooner a company realizes the benefits of SNA and the advantage of being open to collaborative endeavors the sooner they will find that the risk is in not being open for business.

~ Bill Becker, Principal
Axelrod Becker Consulting

The Networked CEO

"...the Internet is an immensely powerful tool for multiplying human accomplishment—a goal that is central to the work of every manager and the design of every management system". Gary Hamel

Gary Hamel, in his recent  Moving Management Online Part One for Harvard Business Review Online admits that with all the social tools we have for collaboration, the democratizing effects of the internet and the complex demands of a globally connected economy management is still operating with much the same 20th century models - for NOW.

We have been advocating more relevant approaches for sometime yet collaborative models, which are not new have had glacial adoption.  Part of the slow uptake of these approaches is stalled by current management experts who have a vested interest in maintaining what is familiar.

Example: CEO Evolution 3.0 a recent New York Times article describes the 21st century CEO as one who "makes people feel part of a team" and "delegates", among other management 101s. Really! Feeling part of a team and acting are two different animals. The title is great but nothing new here.

Moving Management Online, on the other hand gets to the point quickly about the essence of management, especially in context of today's highly complex, uncertain and networked business environment.   

Figure 1: The Essence of Management - Hamel

At present it seems most organizations are very good at the aggregating side of the equation and less good at amplifying - just look at any talent management program or succession plan.  Generally, they are all about humans as assets and resources, inter -changeable  commodities.  Amplifying human capabilities takes deep understanding of behavior.

Enter a second dilemma for our waning management models which Hamel portrays as the "market-versus-hierarchy trade-offs".

Big bureaucracies can accomplish what markets alone can not.  Networks form the bridge between the two.

Figure 2: Markets, Hierarchies, and Networks - Hamel

<>

The social web, for those organizations courageous enough to embrace its enormous potential through networks, melds the best of both worlds.  Look at Innocentive, the  open marketplace created by Eli Lilly, a pharmaceutical giant, to create new products. Or Avaya's Customer Councils supporting executive to executive relationships to generate partnered solutions.

"Power to Convene" is the Avaya story. Mark Bonchek, CEO of the Truman Company coined this term which is the chapter title in The Firm as a Collaborative Community. For a 21st century CEO or senior leader the "power to convene" is job one. In particular, recognizing the power to convene those who have both a stake in the challenge and the knowledge to contribute, be they internal or external to an organization.

Sean Maloney, EVP and Chief Sales and Marketing Officer of Intel understands the power to convene. Starting in 2002, Maloney began an arduous task of bringing together the industry players to lay the basis for WiMAX, what will soon eclipse WiFi. The Road to WiMax story in   Business Week is a good primer for how to operate as a networked CEO.

Each of the key players he convened over five years, including Intel, has a unique business stake in seeing Wimax come to fruition.

"Intel was looking for something that would prompt consumers to buy new computers running its chips. Sprint needed an edge to set it apart from larger rivals Verizon (VZ ) and AT&T (T ). Mobile handset maker Nokia (NOK ) wanted to expand into providing communications services. And Samsung Group wanted to get into the networking equipment business. The interests of these four companies resulted in a pooling of patents and money to create the WiMAX phenomenon."[our italics for emphasis]

Leaders looking to find innovative management models need to look beyond the well lit cases, the old wine in new bottles, toward up and comers like Maloney.

Lowell Bryan, Mobilizing Minds author with Claudia Joyce (which my colleague Jenny Ambrozek reviewed) and Gary Hamel, The Future of Management were interviewed by McKinsey Quarterly to provide insight on innovative management. 

From their perspectives, tapping the collective intelligence of highly talented creative individuals is where value/competitive advantage will be created in the future.  Social technologies have already provided enormous "profit per employee" gains for the most successful companies.  However, innovative management is not yet in the DNA of most companies.  Strategy is still a top down process, and as Hamel points out " the top can hold the organizations capacity to change hostage to their own personal willingness to adapt and change."

From our own experience in working with organizations around innovation and growth, knowledge may be distributed but power distribution is not and it is reinforced through enormous disparities in compensation.  Neither Hamel or Bryan take on the issues of wealth redistribution which needs to occur if we are to adopt their metrics of performance - return on capital (ROC) or profit per employee (PPE).  Compensation and reward are two of the last sacred cows of the 20th century which need to be addressed if we are to achieve innovative management and adoption of peer to peer networks.

Hamel plans a Moving Management Online Part 2 where he may address more of the challenges toward moving to innovative models.  In the meantime some lessons learned:

• Start with a business driver - Avaya needed to provide custom solutions when traditional products and services would not meet customer demands. Intel needed to create a new market.
• Co-create - Include customers, users, stakeholders, people with knowledge and diverse views to generate solutions.
• Use the periphery - reach to the edges of your known network to find new opportunities.
• Distribute innovation - as organizations continue to flatten, lateral, bottom-up, top- down, internal and external networks need to be tapped - Innocentive.
• Reward and compensate innovation.
• Use the "power to convene" - executive to executive networks can shape an industry's future - Avaya and Intel.

21st century leaders need to keep adapting and adopting a network approach if they are to move their organizations forward - old management models will not carry them to the future.

~ Victoria G. Axelrod