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connected company 0.2

summary of dave grays awesome book "connected company" http://www.davegrayinfo.com/
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Gerold (cactus) Kathan

on 15 July 2013

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Transcript of connected company 0.2

The future
is
podular
Customers are connecting, forming networked communities that allow them to rapidly share information and self-organize into powerful interest groups. Companies will have to be more responsive to customer needs and demands, if they want to survive.
Everything is a
service
Dave Gray (2012)
How companies loose touch
Services are
complex
Complexity changes the game
The complexity of the new networked, interdependent economy creates an ambiguous, uncertain, competitive landscape. Companies must be flexible enough to rapidly respond to changes in their environments, or risk extinction.
The connected
customer
If you make customers unhappy in the physical world, they might each tell six friends. If you make customers unhappy on the Internet, they can each tell 6.000 friends.
The service
economy
Industrialization is a phase, and in developed nations this phase is ending. Growth in developed economies will increasingly come from services.
services are co-created
a process is not a service
service networks
customers introduce complexity and variability into operations
service promise vs. delivery
customers resist standardization
customer support
Structural change is necessary
over expansion
blind spots
risk avoidance cultures
get in touch with customers
Connected companies learn
We are accustomed to thinking of companies as machines. But machines can't learn, and therefore can't adapt. Learning is a property of organisms.
Connected companies have a purpose
Learning happens in the context of a goal, an attempt to do something or to make something happen. Without a purpose to drive learning, it is haphazard - not much more useful than blind flailing about. The purpose of a company is to do something for customers while making a profit.
Connected companies get customer feedback
Learning requires feedback in order for performance to improve. The most important judge of service quality is the customer. Therefore, the most important feedback is the customer feedback
The more you engage with customers, the clearer things become, and the easier it is to determine what you should be doing.
Connected
companies experiment
When the environment is variable with many unknowns, it is impossible to know in advance what kind of performance will be needed or what kind of of learning will occur. If people are to learn, they must be free to experiment and try new things.
Wrangling
complexity
The good news is that many of the problems of addressing complexity and change have already been solved by the very people who started the complexity problems in the first place: technologists. The solved these problems because they had to.
Connected companies are not hierarchies, fractured into unthinking, functional parts, but holarchies: complex system in which each part is also a fully-functional whole in its own right. A holarchy is a different kind of template than the modern, multidivisional organization. It's podular.
The core building block of a podular organization is the pod: a small, autonomous unit that is authorized to represent the company and deliver results to customers. Pods are flexible, fast, scalable, and resilient
Pods have control
of their own fate
A podular organization requires support structures that network the pods together so they can coordinate their activities, share learning, and increase the company's overall effectiveness. Platforms are support structures that increase the effectiveness of a community.
Connected companies grow and learn over time. Like all life forms and complex systems, their growth is governed by natural rhythms and patterns. As individuals and teams learn, they must find ways to share their knowledge with the larger community. As communities learn, platforms must learn how to support them.
Power and
control in networks
- Jeff Bezos, Founder & CEO of Amazon.com
- Alan Greenspan, former Federal Reserve Chairman
wake up call at starbucks
dell hell
How do you lead a connected company ?
How do you get there from here ?
How does a connected company work ?
Why change ?
Our mission statement about treating people with respect and dignity is not just words, but a creed we live by every day. You can't expect your employees to exceed the expectations of your customers if you don't exceed the employee's expectation of management.
- Howard Schultz, Founder & CEO, Starbucks Coffee
Most corporate systems were not built with customer delight in mind.
- Fred Reichheld, Fellow, Bain & Company
Your most unhappy customers are your greatest source of learning,
- Bill Gates, Cofounder & Chairman, Microsoft
If change is happening on the outside faster than in the inside the end is in sight.
- Jack Welsh, former CEO, GE
Everything that we are making, we are making more and more complex.
- Kevin Kelly, Cofounder, Wired Magazine
dave carroll - united breaks guitars
What is a
connected company ?
united breaks guitars
Everything that we are making, we are making more and more complex.
- Kevin Kelly, Cofounder, Wired Magazine
If you can run the company a bit more collaboratively, you get better results, because you have more bandwidth and checking, and balancing going on
- Larry Page, Cofounder, Google
Maximizing shareholder value is the dumbest idea in the world.
- Jack Welsh, former CEO, GE
the company as machine
closed and open systems
complex adaptive systems
the long lived company
design by division vs. connection
Hierarchy
Division of labor
Specialization
Stable
Predictable in
stable environment
Holarchy
Fractal work units
Autonomy
Flexible
Adaptive in uncertain
environments
- John Russel, former Vice President, Harley Davidson
purpose accelerates and focuses learning
what is the purpose of a company ?
how profits can destroy your company ?
purpose sets the context for organizations to learn
purpose is a moving target
performance is how well you are doing
the one judge of service quality
balancing promise, purpose, and performance
service quality is a moving target
promoters and detractors
building long term relationships with customers
the net promoter score
net promoter at apple
net promoter at logitech
We want to be a company that is constantly renewing itself, shedding the past, adapting to change.
- Jack Welsh, former CEO, GE
moments of truth
the problem with procedures
the frontline is not a production line
the law of requisite variety
reducing variety
absorbing variety
freedom to experiment
Agility means that you are faster than your competition. Agile time frames are measured in weeks and months, not years
- Michael Hugos, CIO, Center for Systems Innovation.
the complexity issue
agile development
service orientation
organizing for agility
most companies are not built for agility
Big companies are inevitably slow and cumbersome; small companies are quick and responsive. Therefore, break big companies into the smallest pieces possible.
- Lou Gerstner, former CEO, IBM
the parable of the watchmakers
podular organization
morning star self organizing marketplace
the nordstrom way
self organizing teams at rationale
democratic management at semco
can your company go podular ?
pod
= model designed to be flexible and resilient, as opposed to predictable and efficient
= podular design is a kind of franchise model
To adopt, companies must operate not as machines but as learning organisms, purposefully interacting with their own environment and continuously improving, based on experiments and feedback.
Customers are adopting disruptive technologies faster than companies can adapt
A connected company learns and adapts by distributing control to the points of interaction with customers, where semi-autonomous pods pursue a common purpose supported by platforms that help them organize and coordinate their activities.
What we need to do is learn to work in the system, by which i mean that everybody, every team, every platform, every division, every component is there not for individual competitive profit or recognition, but for contribution to the system as a whole on a win-win basis.
- W. Edwards Deming, statistician & educator
The strength of the team is is each individual member. The strength of each member is the team.
- Phil Jackson, former NBA coach
You can't make a recipe for something as complicated as surgery. Instead you can make a recipe for how to have a team that's prepared for the unexpected.
- Atul Gawande, physician & journalist
An organization's data is found in its computer systems, but a company's intelligence is found in its biological and social systems.
- Valdis Krebs, researcher & management consultant
Pods need
platforms
How connected companies learn
Connected companies are networks that live within other networks. To be effective in a networked world requires different ways of thinking and acting. It's less about predictability and control, and more about awareness, influence, and compatibility.
Connected companies are living, learning networks that live within larger networks. Power in networks comes from awareness and influence, not control. Leaders must create an environment of clarity, trust, and shared purpose, while management focuses on designing and tuning the system that supports learning and performance.
Strategy as a pool
of experiments
The best executive is the one who has sense enough to pick good men to do what he wants done, and self restraint to keep from meddling with them while they do it
- Theodorde Roosevelt, 26th US president
strategies don't last forever
let a thousand flowers bloom
a portfolio of experiments
be connectable to everything
strategy by discovery
emergent strategy is not strategy by predicition, it's strategy by discovery
Managing the connected company
Life is like riding a bicycle - in order to keep your balance, you must keep moving.
- Albert Einstein
management is a support system
the job of managers
Leading the connected company
The primary task of leadership is to communicate the vision and the values of an organization. Second, leaders must win support for the vision and the values they articulate. And third, leaders have to reinforce the vision and the values.
- Frederick Smith, Founder, Chairman, CEO FedEx
leading from the edge
edge leadership
you are a learning field
influence - give meaning and moral authority to the purpose
principles trump process
it takes trust to build relationships
a company is a network of promises and commitments, and a company's performance is a function of how well people inside and outside the company trust each others promises and keep their commitments
designing the system
operating the system
tuning the system
balance the individual freedom with the common good
participation
build slack into central resources to ensure availability
rely on peer-to-peer reinforcement whenever possible
critical values in complex adaptive systems
symptom
adaptive tensions
attractors
information transparency
density
diversity
permeability
rate of flow
parameters
structural change
emergent leadership
The job of management is to design and run the systems that support the company in achieving its purpose. Managers must carefully balance individual freedoms with the common good, involve people in platform decisions, and tune the system to keep the company's metabolism at the right temperature - too cold and the company sinks into rigid bureaucracy; too hot and the company breaks apart into anarchy and chaos
A connected company is a network of loosely coupled, semi-autonomous units. So what is the role of a leader ? Leaders should focus on creating an environment of clarity, trust, and common purpose so members know what the company stands for and how it intends to fulfill its promise to customers. and leaders should get out of the way.
Strategy is usually considered the province of senior executives. But senior executives are in some ways the least qualified to envision the future, because they are the most invested in the past and the least likely to be around in the long term. In a connected company, strategy happens at all levels, across diverse groups and different time scales, generating a rich pool of experiments for senior leaders to draw from
mintzberg - emergent strategies
The risks of connectedness
History is a race between education and catastrophe.
- H. G. Wells
networks are neutral
pod failure
too much autonomy
not enough autonomy
platform failure
failure of purpose
customers first
Profits are not a purpose. They are a result. Profits accrue when a company consistently does a good job for customers, building relationships and loyalty.

Therefore, a company is healthy and sustainable when its primary purpose is creating value for customers.
The speed and flexibility of connected companies gives them clear advantages over slow-moving adversaries. But no advantage comes without associated risk. How can connected companies go wrong ? There are three ways: failure at the pod level, failure at the platform level, and failure of purpose
Starting
the journey
You can't connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something - your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.
- Steve Jobs, Cofounder & former CEO, Apple
it won't be easy
do you work at a place that ignites your passion ?
design around customers
taking steps versus crossing the chasm
how to get there from there to here
"Profits are not a purpose. They are a result. Profits accrue when a company consistently does a good job for customers, building relationships and loyalty..."
Any enterprise involves risk, and connected companies are no exceptions - they can fail, too. But in times of change and uncertainty, their ability to learn and adapt faster than their competitors gives them an edge. If you want to become a connected company, there's no reason you can't start today.
Connected companies today are the exception, not the rule. But as long as the environment is characterized by change and uncertainty, connected companies will have the advantage. There are four ways your company can start that journey today: organic growth; top-down, leader-driven change; pilot pods; and network weaving. You can take the first steps on Monday morning.
the organic path
top-down leader driven change
pilot pods
network weaving
shared purpose
autonomous pods
growth through reproduction
platforms that support rather than control
jack welsh (GE)
lou gerstner (IBM)
focus on customer
fight bureaucracy
move decisions close to the customer
foster teamwork
put people first
conclusion: a crisis may not be necessary - but a fresh perspective, and the willingness to act on it is critical
launch a pilot pod to shift to a new business model
launch a pilot pod to serve unmet customer needs
disrupt yourself before someone else does
the difference between a proof-of-concept and a pilot
"... disrupt yourself before someone else does..."
How are customer expectations changing? What are the trends in our industry? What kinds of things will we need to offer in the future, to keep our customers happy? How might we delight our customers?
1.1 The connected customer
What portion of our revenue comes from products versus services? Where do we see our growth coming from in the future? Where do we fit in a service economy?
What services do our products deliver? How can our products become more service-oriented? When we look at the job we do at our customers, what other products and services are involved? How might we imagine our offering as a truly delightful service?
What challenges will we face if, as a company, we want to become more service-oriented? What kinds of things are hard to plan for? What kinds of things make it difficult for us to keep our service promises?
What systems and processes might cause us to lose touch with customers? Why? How can we form and maintain deep, close connections with customers?
Where might we be overspecialized as a company? Where do we need more flexibility in how we deal with customers? What breaks when the outside world changes? Where and when are we most flexible?
What outside factors are driving change in our industry? How are we interdependent with, and connected to, other companies in our ecosystem? How could adaptive moves by other companies help or hurt us?
What kinds of things make it hard for our company to learn and adapt to change? When is it good to be like a machine? When is it bad?
What is our company's purpose? What is the job we do for our customers? How does that purpose inform our decisions as we grow and change? If the purpose is vague, how can we strengthen it?
How do we get feedback from our customers? Where are the blind spots, the areas where we don't know what customers think and feel? Where could we introduce faster, stronger feedback loops? How might that work?
When does the company encourage people to experiment? Where could more experimentation create new opportunities? Where might experiments be a bad thing? How might we foster a spirit of experimentation?
Where are we wrestling complexity? How might we become more flexible and adaptive to a complex and changing world? What can be simplified? What cannot be simplified?
When and where does our company act less like a hierarchy and more like a network? Where is hierarchy helpful? Where is it harmful? Where would freedom and autonomy be a good thing? Where would it be a bad thing?
Services introduce customers into operations, which creates a lot of complexity and variability that is hard to plan for in advance. Companies must find ways to accommodate variety at the edge of the organization, where people and systems interact directly with customers, partners, and suppliers.
In today's world, where ideas are increasingly displacing the physical in the production of economic value, competition for reputation becomes a significant driving force, propelling our economy forward. Manufactured goods often can be evaluated before the completion of a transaction. Service providers, on the other hand, usually can offer only their reputations.
Services cannot be designed and manufactured in isolation, like products. They are co-created with customers and are interdependent with wider service networks and clusters.
Companies tend to lose touch with customers as they grow, for a variety of reasons. Companies must find ways to create, maintain, and develop deep connections as they grow.
Growth and evolution leads to increasing specialization, which limits a company's ability to adapt and evolve. If your company is at or near peak effectiveness for a particular purpose, and the environment around you is shifting, you may need to undergo fundamental structural change in order to become adaptive.
discussion questions
Do we have pods within our organization? Where are they? How do they work? Could we find ways to make it work elsewhere in the organization?
What platforms do we have to support the work we do? When do platforms help and when do they get in the way? What are the tradeoffs between efficiency and flexibility and how can we manage them?
How does our company learn and grow over time? How does individual and team learning become company learning? How do we share knowledge across the company? How might we do it better?
Which networks do you go to when you want to get things done? How do they work? Are they formal or informal? Why do you think they work so well?
How could we involve more people in the vision and strategy of the company? Are we tolerant of experiments and risk-taking? Do we invest in new ideas throughout the company? Why or why not? How easy is it to kill a new idea?
How will our leaders need to change as we move toward a more connected company? What is the profile of a connected leader? How would a connected leader fare in our current organization? What, if anything, needs to change to make it a better place for connected leaders?
How might we involve more people in platform decisions? Would that be a good thing? Why? Does our company tend to run hot, cold, is the temperature just right, or does it oscillate between the two?
What are the biggest risks in our move toward connectedness? How might our connected company go wrong? How might we avoid or mitigate those risks?
What is the first step in our to connectedness? What, if anything, is stopping us from taking the first step? What can we do on Monday morning?
1.2 The service economy
1.3 Everything is a service
1.4. Services are complex
1.5 How companies loose touch
1.6 Structural change is necessary
1.7 Complexity changes the game
2.1 A company is not a machine
2.2 Connected companies have a purpose
2.3 Connected companies get customer feedback
2.4 Connected companies experiment
3.1 Wrangling complexity
3.2 The future is podular
3.3 Pods have control of their own fate
3.4 Pod needs platforms
3.5 How connected companies learn
3.6 Power and control in networks
4.1 Strategy as pool of experiments
4.2 Leading the connected company
4.3 Managing the connected company
5.1 The risk of connectedness
5.2 Starting the journey
http://www.davegrayinfo.com/
dave gray - connected company talk
Full transcript