"Innovation is CREATIVITY that ships" (Steve Jobs). Not a PowerPoint slidedeck.

Archive for February, 2013

The Throughput Operating Strategy of a Carrier: A Case Study

Icebreaker

“There is always some tension between our values as individuals and the compromises that we must make for our organizations. Being “professional” requires that we learn to reconcile these tensions. But when does the willingness to go along go too far?”
Elizabeth Doty. Strategy+Business, Booz-Allen & Hamilton, 2007.

After considerable reflection, I am realizing that I really want to “play the bigger game” by insisting with unmistakable conviction on walking the ethical leadership talk. As a worker bee, I have seen my peers engage in navigating organizational conundrums such as the devil’s bargain (a mixed message or contradiction that is undiscussable and whose undiscussability is undiscussable).

For purposes of this case study, the role that I play is that of a revenue-paying customer and attempt to reach out and have a social conversation with the brand.

As a loyal revenue-paying customer of T-Mobile for over 10 years, since the early days of Voicestream Wireless, I strongly feel that I haven’t been heard by the brand. As a revenue-paying customer, the ride has been bumpy and sometimes frustrating while interacting with the brand across the various channels (web, telesales, customer care). Consequently my perception of the brand association has been somewhat tenuous. Putting a finger on the pulse of what seems to be missing, I wonder if the brand association has been unidirectional perhaps driven solely by advertising. That said, the good news is that I have never switched carriers.

Preview

ASK: Is there a critical business issue confronting the brand?
The JD Power scorecard for 2013 U.S. Wireless Full-Service Purchase Experience and Customer Care Study provides a powerful impetutus for T-Mobile to retrench and focus on improving operational excellence, customer intimacy and shareholder value.

The objective of this strategic briefing is to provide an artistic sketch of an unsolicited idea from a revenue-paying customer for orchestrating a successful turnaround of T-Mobile, improve its bottomline profitability, increase top line revenue growth and its competitive position. While there is no cookie cutter recipe for turning around an underperforming asset, seasoned turnaround professionals adopt a combination of efficiency-oriented actions and enterpreneurial-oriented actions in an attempt to move the needle of the company’s balanced scorecard and its associated Z-score in the non-bankruptcy zone. However, very few turnarounds have an excruciating focus on helping the organization recover from the trauma of repeated downsizing and build a collaborative culture of cemented connections that are people smart.

Despite being an underdog, the brand needs to create a powerful organizational appetite to win by increasing the anxiety to recover lost ground and capitalize on discovering the secret sauce to turn the T-Mobile brand into a verb. Staying energetic and walking in T-Mobile’s shoes, I wondered how can T-Mobile reverse this trend and enhance brand authenticity.

What is a Turnaround?

As an objective observer, it is vital to X-ray “how we do things” (like a COO) and orchestrate a disciplined focus on reliable and responsive processes. Andy Grove, the former chairman of Intel, championed and incorporated the belief system in Intel that it is the job of every middle manager to monitor and align actions with intent and minimize strategic dissonance. Returning to T-Mobile, the corporate renewal agenda (turnaround) hinges on precisely answering the following probing questions on an ongoing basis:

  • Is there evidence of imbalance or excess, either in the company or in the industry around it?
  • Are the perceptions held by the senior executives of the company aligned or contrary?
  • What is the level of accountability among the employees?
  • Has the leadership set accountability guidelines and expectations for employees, and does it monitor performance?

what is a turnaround

The Activist Turnaround Manager (ATM) plays the role as trusted advisor to assist the C-suite “stick together” (in an authentic manner) and collaborate outside their traditional spectrum in order to establish an activist agenda which include, but is not limited to, the following:

  • Making difficult decisions that others will not make in an effort to restore a company to financial health
  • Bringing the best thinking on any business issue, regardless of traditional silos, to derive the best conclusion
  • Increasing workforce creativity and guiding them through strategic change

Anecdote Time

Optimizing a business requires a passion for customer value co-creation as well as borrowing a page from other successful turnarounds such as Apple. Building a brand that resonates is a relentless campaign.

Shareholder Value Destruction

A Booz-Allen Hamilton study has found that among 103 companies that were studied, strategic blunders were the primary culprit of a remarkable 81% of the time. The study recommends that enterprises need to anchor a boundary spanning scope of enterprise risk management by implementing the following strategic actions to the strategic decision-making process.
shareholder value destruction

Insights from Apple

Steve Jobs founded Apple and accomplished the unparalleled turnaround of Apple with a DNA that “innovation is creativity that ships.” When Tim Cook originally came aboard Apple, its DNA was enhanced as follows: “Innovation is creativity, in tandem with Operational Excellence and Transformation by Design, that ships.” I believe that Apple is not only in the business of delivering amazing products and services but they also have an inherent knack for turning nouns into verbs (tipping point), resulting in the venturesome consumption of technology innovations.

tim_cook_values

Customer Intimacy as a Value Discipline

Customers are generator assets that give the firm its intrinsic value and generates and sustains cash flow.

“Customer service that never wins the a J.D. Powers Award  drives many of those with little cash flow generators to exit.”

Lowell C. Wallace. The Role of the Customer in Turnarounds. Journal of Private Equity, Summer 2009.

In order to improve earnings and grow the business, it is vital to operationalize the following proven, interconnected and interdependent, pathways to growth across a customer base consisting of positive, neutral and vulnerable loyalty segments:

  • Path 1: Find more customers by gaining an intricate understanding of their needs and wants.
  • Path 2: Sell customers more by introducing a series of innovative new products.
  • Path 3: Make a greater profit on what you sell them by trading up to the high-priced and higher profit end of the continuum.

Loyal customers typically constitute 20% of the base who generate 80% of the revenue. Neutral customers are somewhat brand-neutral and may oscillate between becoming loyal or vulnerable. Vulnerable customers have a tenuous relationship with the brand and search for the best deal.

The strategy for turning around the brand requires project execution using principles in the agile manifesto and adopting the parameters of throughput accounting in a resource-lean environment. Operational Excellence by Design has to become the corporate mantra and innovation should not be viewed as an operational expense (OpEx). The mindset has to change where the notion of OpEx is deprecated (using an analogy from software engineering).

Fitting In and Standing Out (FISO)

The Kellogg School of Management’s approach to corporate renewal is anchored in the Collaboration Economy (TM) “rooted in an emerging human culture of access, openness and trust.” Inculcating a culture of trust creates positive reciprocity.

In the org trenches, I have experienced that multiple email threads is an inefficient holding environment for achieving shared understanding on an issue and achieving commitment. When issues linger around without resolution, it is like having “all the notes without a clean sheet of music.” At the end of the day, what is complicated is rarely important and what is important is rarely complicated.

Pankaj Ghemawat has astutely pointed out that although the world has been declared to be “flat,” the reality is that in the real-world differences still matter and companies should manage differences across four dimensions: cultural, administrative, geographic and administrative (CAGE). Consequently, viewing the world only through the flat screen monitor can certainly cause blindsides and it is vital to cross the aisle so that one can walk in another stakeholder’s shoes in order to build boundary spanning relationships across organizational silos and build a resilient organization.

Building a cohesive corporate culture with one-firm identity while navigating CAGE differences across the workforce will generate productive friction and a certain level of tension. This improvisation is both a ying and yang, spanning integration and transformation, which results in a multipolar and cosmopolitan world view. This dialogue is the essence of Fitting In and Standing Out (FISO). The FISO model supports (1) detecting and correcting error (single loop learning) as well as (2) modification of underlying norms, policies and objectives (double loop learning).

FISO Factor for TMO

Across many good firms and great firms, managers may sometimes be driven by the belief that they are already trusted and sometimes take trust for granted. Such a managerial trap can easily cause myopia and a trust deficit and impact individual and team morale at a grassroots level. A brand is no longer what a company says to its customers. It is what customers and prospects say to each other. Social media is a 2 way channel with no moderator or gatekeeper. The corporate renewal calls for a honest, transparent and attitudinal shift in conversation without deflecting and evading probing questions from the bottom of the pyramid as well as “discussing the undiscussable” to cause a visible change in priorities. The new way of thinking about customers requires a new lens that recognizes CAGE distances in a non-flat world which is cosmopolitan (and not a one-size-fits-all).

Proposition: An analysis of 74 publicly listed companies (or previously listed) on the NYSE, NASDAQ, TSX from the years 1992 to 2007 has shown that the impact of dialogue-driven engagement has a favorable impact on Return on Net Assets in years 1 and 2 compared to the initial turnaround year.

From a balance sheet risk analysis perspective, in order to become a “great by choice” company the following financial ratios need to be on an upward trajectory:

  • Current Ratio
  • Cash to Total Assets
  • Cash to Current Liabilities
  • Total Debt to Equity
  • Long Term Debt to Equity
  • Short Term Debt to Equity

“He [Daly] had the right partner in Jim Donini, as Daly had always chosen his partners with great care, knowing that the ultimate hedge against danger and uncertainty is whom you have on the mountain with you.”

Jim Collins and Morten Hansen. Great by Choice.

A mere financial focus with a lacklustre attention span on the other non-financial dimensions of the FISO factor will not necessarily increase the organization’s Return on Luck.

return on luck

Throughput Operating Strategy for T-Mobile

Constraints Management (annotated)

Although the best selling business books have ralled around the notion that “bricks and mortar are dead,” from a global commerce standpoint, it makes business sense to do a reset and refresh the existence of the BRICs and Clicks mental model. This calibration will enable us become sensitive to CAGE differences in cultures that span across Brazil, Russia, India, China and the rest of the world.

Clicks and BRIC Strategy (rapid growth)

Viewed through the lens of throughput operating strategy, using the twin strategies of Adaptation and Arbitrage (2 A’s) will enable T-Mobile compete more effectively for the future.

    • Adaptation – Increase T-Mobile’s local relevance while serving underserved markets to claim uncontested marketspace
    • Arbitrage – Balance supply and demand by leveraging CAGE differences between national or regional markets

Relief!

The Kellogg brand promise is that “we believe that business can be bravely led, passionately collaborative and world changing.” In going through this personal reflection, I am glad that I am challenging the devil’s advocate to stay silent and choosing to “play the higher game” of ethical leadership.

Send off

The corporate renewal of T-Mobile is a relentless campaign. Cementing together the talent pool is akin to exercising the small muscles and improvising like a conductorless orchestra. Sending a strong authenticity signal is a “must-have” for:

    • Establishing brand relevance (in a shift away from brand preference);
    • Building (sub)category-owing transformational innovations; and
    • Cementing reliable, credible and trustworthy customer connections, one customer at a time

Changing the Mind of an Institution to Achieve the Vision of the Multipolar MBA

According to Harvard Business School professor Rakesh Khurana, “U.S. business schools are fighting to be meaningful on multiple fronts.”

Rakesh Khurana. From Higher Aims to Hired Hands: The Social Transformation of American Business Schools and the Unfulfilled Promise of Management as a Profession (Princeton University Press, 2007)

Professor Khurana articulates the urgent need to transform and reinvent the MBA program in American universities so that it can be achieve relevance in a multipolar world. In the trenches, I have begun to appreciate Professor Pankaj Ghemawat’s insights that we have to operate in a world where differences matter and every interaction is a cross-border transaction (and not a one size fits all). The strategic imperative for an organization is to align intent and AAAction (choice of Adaptation, Aggregation and Arbitrage) in a cosmopolitan world. In addition, a person should avoid the tendency to become too clique-ish.

“Business schools, the most prolific generator of our future leaders and decision makers, are adding moral behavior to their curriculum. If the fall from moral grace of some of their best and brightest graduates is indicative, however, that currucula has a long way to go.”
David Kantor. Reading the Room. Jossey-Bass, 2012

Below is a mental model for changing the minds of stakeholders in any institution for accomplishing the desired transformation. This is only an individual snapshot and requires ongoing dialogue with an ensemble of cross-cultural talent consisting of movers, followers, opposers and bystanders in order to peel the onion of the multipolar MBA.

multipolar MBA tipping point

Typically organizational change occurs through reengineering, downsizing, streamlining and post merger integration. Organizations are made up of people. Frequent organizational change can be traumatic since it impacts an employee’s feelings of helplessness, inadequacy, anxiety and insecurity. In this regard, a business leader should become increasingly sensitive to the unconscious life of groups in an organization in a multipolar world (sketched below). Personal change is a pre-requisite for accomplishing successful organizational change.

unconscious_life_of_groups

References
Rakesh Khurana. From Higher Aims to Hired Hands: The Social Transformation of American Business Schools and the Unfulfilled Promise of Management as a Profession (Princeton University Press, 2007)

Howard Gardner. Changing Minds. (Harvard Business School Press, 2004)

Blythe J. McGarvie. Fitting In, Standing Out: Mastering the FISO Factor for Success in Business and Life (McGraw-Hill, 2006)

Feel free to share any feedback.

Documented by Last Mile Resource

The Co-Branding of Pioneer Coffee Roasting Company and LivingSocial

Local coffee companies need to breakaway from the traditional competitive rivalry with monopoly coffee players in the “red ocean.” It is prudent for a local coffee company to shift attention from supply to demand and reconstruct a new marketspace called the “blue ocean” where a new level of demand can be generated in a sustainable manner. I explore this idea in this blog posting.

Viewed through the crystal ball, there is a compelling opportunity for Pioneer Coffee Roasting Company, based in North Bend, WA, to Think Bravely and emerge as an everyday destination of choice for spontaneously performing as a LivingSocial Entrepreneur, over a cup of locally brewed coffee, enhancing its attachment with people in the community.

Shakespeare eloquently wrote that “life is a social drama.” I attempt to explore this sentiment by proposing a partnership between Pioneer Coffee Roasting Company and Living Social that serves to extend the brand of both the companies. From the perspective of LivingSocial, it can also be viewed as an opportunity to grow the business beyond coupon aggregation and distribution in the following manner:

  • Create a real-world “stage” (destination) for individuals in their zipcode (backyard) to perform ahead of themselves so that they bring greater optimism and energy to work after their “LivingSocial” experience.
  • Enable anyone on Main Street to become more social and cemented with their community, thus creating an operational blueprint of the “collaboration economy” (TM).

Living Social Strategy Map

Living Social Blue Ocean Strategy

The challenges facing the common man on Main Street can be overcome through engagement, dialogue and purposeful action. Performing as a LivingSocial Entrepreneur can easily promote jugaad innovation in a cost and resource constrained environment. Viewed humorously with a dash of seriousness, this perspective should resonate across all zipcodes. After all, “Living Socially” is a “No Zipcode Left Behind Act.” Let me know if you disagree 🙂

Documented by Last Mile Resource