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Publishing Keynote, JP Eggers

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JP Eggers

on 26 September 2012

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Transcript of Publishing Keynote, JP Eggers

Conclusions Thus, the key question is about how to deal with radical, competence-destroying change
How to recognize that your existing competences are being destroyed
How to build new competences
How to build an organization that allows for a more flexible transition from one set of competences to another A plan for this talk... This offers a plan for the entire talk:
What makes dealing with technological change so hard, and what can you do about it?
How can you build capabilities for being "proactive", and identify tools for dealing with uncertainty and risk in a more structured way?
Conclusions on value creation & capture What makes technological disruption so ... disruptive? Technological change happens all the time
Tower Records went from LPs to tapes to CDs
Kodak went from one film type to another
DEC was a leader in generations of mainframe and minicomputers What typically gets in the way of adaptation to a new technology? Issues around identity Issues around decision making & incentives Issues around people & skills Typical source of identity issues:
New business model conflicts with the old business model
Polaroid's obsession with "razors & blades" model of digital photography
Focused only on projects that capitalized on instant printing knowledge & model
Screened out important new projects in digital space What you need to be aware of:
Business models and technologies are often tightly intertwined
Statements like, "That's how we do things around here" can stop push to experiment
Identity should be built on fundamental value added of organization, not on delivery
e.g., Don't be a "book company", but be a "content identification, development & distribution" company Most radical new projects entail taking on more risk than traditional projects:
Hierarchical structures avoid risk
Though also avoid investing in bad projects
Organizations typically structure incentives to avoid risk, consciously or subconsciously
Outcome bias (evaluating decision based on outcome, not quality of decision)
Capital budgeting process typically focuses on processes for low-risk projects
99% of proposals are straightforward and incremental, therefore process optimizes on these How can you be more flexible and proactive in the future? Technological Change: The Good, the Bad, and the Challenging Radical versus Incremental Change
Some changes build more clearly on existing skills, and incumbent firms typically adapt well to these


Some changes require new skills and new processes to capitalize on them What you need to be aware of:
Think about decision-making processes -- when do you need more hierarchy to cut risk of pursuing bad projects, versus when do you need more delegation to avoid missing good projects?
Think about the messages sent to employees by promotions & evaluations -- do they systematically discourage risk taking?
Think about whether all projects being considered belong in the same approval process -- which projects might need to be considered versus a different set of criteria? Radical new projects typically involve abandoning certain skills and integrating new ones:
Not just patching new skills/functions into existing structure, but rebuilding structure around new core
e.g., Just adding a "digital distribution" arm to an existing structure may:
Signal that this new activity isn't in the core of the business
Place political barriers between old and new employees
Perpetuate mentality of old (flawed) business model
Consider the new strategy entirely and see if there needs to be a new structure to match
New skills are needed, so what can be taught versus what requires new employees
Re-educating allows you to (a) maintain trust and (b) retain other important skills, but it is costly and time-consuming
Correct tradeoff might depend on pace of needed change and importance of complementary skills
Hiring people with new skills is challenging
Individuals are generally attracted to people like themselves (homophily), which makes hiring new types of people difficult
Skills can also be acquired through M&A, alliances, etc. Sizable layoffs present specific challenges, primarily because layoffs decrease morale, which makes:
Retaining employees more difficult (and those that stay are the ones that you need)
Hiring new people more difficult (especially important when needing new skills)
Motivating people more difficult (and motivation is a big driver of creativity and willingness to "go beyond" job description) What you need to be aware of:
Identify a clear and coherent strategy, build a cohesive senior team, and stabilize key people
Establish and preserve key lines of communication, especially about vision/strategy and rationale
Invest in key personnel, both to build new skills and to re-establish trust Typical practice for evaluating projects is to:
Predict what the we think will happen
Calculate an expected return based on prediction





But there are fundamental flaws with this approach:
The "average" doesn't occur often
We ignore the cost of doing nothing
"Expected" is complicated Be more analytical about uncertainty Build for flexibility Average...
and the least likely outcome Flexibility requires:
Sensing &
Seizing Sensing is about getting new information into the firm and recognizing its value
Accept dissent and build a culture of open thinkers
Welcome different perspectives
Preserve variety in thought
Recognize that exploration is different from exploitation
Efficiency-focus often limits exploration
Structural separation
Be willing to make investments to explore unlikely but potentially attractive options Seizing is about flexibility and responsiveness
Build flexibility into organizational design
Modular, team-based structures
Regular retasking & restructuring
Delegate authority and increase discretion
Autonomy increases local responsiveness
Hierarchy slows decisions
Use within limits, though How can your organization create value? Consumers still want books and have a willingness to pay for them
But the publishing business is no longer about printing or relationships with book sellers
Embrace the new skills and the potential of the new medium How can your organization capture value? Focus on the uniqueness that your organization provides
Content
Interactivity
Data & consumer relationship
Create more value -- for your segment(s) -- than other organizations How can your organization plan for the future? Reimagine your business and be willing to build around that new vision
Create your organization and its processes for flexibility and uncertainty J.P. Eggers
Assistant Professor of Management & Organizations
NYU Stern School of Business
jeggers@stern.nyu.edu Technological Change:
The Good, the Bad &
the Challenging Balanced needs of traditional and Internet channels
Favored Internet as growth area, but did not compromise on needs of existing distribution
Build out exceptionally interactive and engaging channels
Reorganized the business around ownership of fan interaction with baseball content
Aggressively built new skills
Full transcript