Globalisation and management

Updated 9.12.12

Globalisation is an interesting word for me as being British, I spell it with an ‘S’ and Americans spell it with a ‘Z’. Proof that even languages, such as English (currently, the global language for business) have become affected by globalisation. I also find it fascinating that in the land of my fore fathers (historically known as the Indo/Pak sub continent –currently, India, Pakistan and Bangladesh), the word, ‘anyway’ is always spoken as, ‘anyways’. These permutations of language also affect how we trade, live and interact as a global society.

Globalization or globalisation as we know it was termed, in 1983, by Theodore Levitt, a former Harvard Business Review editor who used the term for an article about the emergence of standardised, low- priced consumer products. Globalisation has been fuelled within the last 10-15 years by IT. That includes hardware (HW), software (SW), connectivity (falling costs of HW, SW, ever larger pipes globally and VOIP solutions), cheaper travelling costs and a truly global workforce. As a result, CEOs and boards have used successful globalisation case studies to convince their businesses that it would lead to profitability and competitive advantage. For example, a software problem submitted at close of play (COP) today could be solved by the time America wakes up the following day (arguably saving costs and solving problems while sleeping).

The decisions that need to be explored in great detail are the reasons for deciding to go beyond your own border with a view of going global. I would categorise the reasons as one of the following:

  1. International opportunity
  2. Saving costs
  3. Skills shortage
  4. Legislative requirements
  5. Social and Corporate responsibility (CSR)
  6. IT Challenges

1. International opportunity:

This decision is usually taken when management realise that there is a demand for their product in another part of the world or that a demand for their product can be created. There are many examples of this such as Coca Cola. Coke as it is also known as is a trendsetter as it firstly; created a demand for their product (Did our grandparents know they needed to drink Coke?). This was followed by then satisfying the international demand. Recent success stories are led by Apple and the iPhone.

2. Saving costs:

Arguably, many would argue that this is an opportunity. I will discuss this later but for now let’s take it as it is. I would term this as ‘cost savings’ that can be realised through leveraging access to cheaper materials, labour or anything else that costs less than the local equivalent within a business’s own borders. Again, there are many examples of this such as Nike and Primark who outsource manufacturing facilities to countries such as India, Pakistan and South Africa etc.

3. Skills shortage:

Many businesses need to take this step and it is particularly true for IT led businesses, such as, software. Sometimes due to, for example, a skills shortage  a business may be forced to go beyond its borders. In my Indian software example (Para 2 above), it is recognised that another reason/advantage to outsource was the time difference.

4. Legislative requirements:

Countries allow international trade but will, for example, place a restriction on the amount of a product that can be imported by legislating import tariffs etc. For example, Toyota got around that problem in the early eighties by opening manufacturing plants in the US.

A business that wants to take advantage of this global reach has to consider the social and corporate responsibilities of globalisation and the IT challenges.

5. Social and corporate responsibility:

Anita Roddick of the body shop set the standard for being one of the first to prove that ethical business could be done globally. She pioneered the ‘green movement’ as we know it today by including only natural ingredients in her products, sourced globally at fair trade prices while protecting the local workforce, both at Littlehampton where she was born and bred and internationally where her products were used, sourced and produced. Businesses also need to ensure that a balance is struck between moving jobs abroad just to save costs against investing in the local workforce. Arguably, all businesses need to save costs and the rule to apply in these situations is that if a business is commercially profitable (for example, in millions of dollars) is to appreciate the effect of moving jobs abroad (in many cases referred to as outsourcing) against training workforces locally and producing a skilled workforce for the future.

In the short term that may translate to fewer profits but in the long term the business will benefit from a truly dedicated workforce and an investment in people that transcends the short term skills shortage. Globalisation should not be at the expense of a lack of investment in local people and infrastructure. Short term competitive advantage ( in a situation where saving costs is the primary driver) is usually lost to the outsourced country in the long term.

6. IT Challenges:

Connectivity costs within IT are falling daily and newer areas of the globe are becoming easier to connect. IT challenges still remain and businesses need to involve Chief Information Officers (CIOs) in the decision making process when they start to think globally. The earlier the business involves the CIO, the quicker the eventual deployment of IT enabled business becomes. In an earlier post on competitive advantage, I have emphasised the importance of the direct connection between the CEO and the CIO and that has to continue when businesses have global aspirations.

Providing IT internationally always has challenges and I would suggest that for globalisation to be successful, the CIO needs to be a visionary, businessman and a leader. The CIO will have to deal with issues where the IT capability may have to be imported, sourced locally (as importing IT may be too costly), have to deal with poor infrastructure, connectivity (in many parts of Africa) and have to deal with local legislation. Successful global CIOs will be the ones that can provide ‘out of the box’ solutions, have created great teams locally and globally, stay connected with their global staff, understand the different cultural variations and their impact to the business and have a network of advisors within and outside the business. CIOs have a great overview of how IT works and how it can assist the business but CIOs will never know everything, so they need to have access to peers, other CIOs and a network they can turn to and learn from without reinventing the wheel. If a CIO doesn’t have global exposure prior to a business going global it can sometimes be an advantage as it’s a clean slate and the CIO can utilise their own experience gained in various other industries.

To conclude, as the Coke slogan says, “Think globally, act locally?” Do you agree?

How Toyota became the Werewolf

Akio Toyoda, President of Toyota Motor Corpora...

Image via Wikipedia

Akio Toyoda to testify in Washington: maybe he’s finally waking up to the fact that he runs a global company and has to behave that way. – Tweet by Michael Schuman, Correspondent Time magazine – 18/2/10

As most of us know (If you follow movies), there is some lead time involved before ‘The man’, turns into a Werewolf (only when there is a full moon). Well, Toyota (the werewolf) had known about the complaints ranging from unintended acceleration to brake failure in 2002 (US regulators informed 2004). Even Steve Wozniak, mentioned his Prius problems and indicated that the problem was software based in an interview in early February. The transitional phase had started for Toyota to become a werewolf. All Toyota had to wait for was nightfall. The dreaded night for the werewolf came in January and by the end of that night, the werewolf had killed an estimated 19 people in the US alone, recalled 8.5 million cars, sales had fallen by 16% in January alone and an inquiry launched into Toyota Corolla’s power steering problems. The Toyota that had won the Japanese quality award for 1980 had been consumed by the powerful werewolf that was now the largest car maker in the world since 2008.

The damage had been done! The werewolf awoke the following morning and realised that it had to remedy the situation. As we know, the remedies for werewolves are painful (not mentioning the silver bullet). As Japan sped up its car recall system, the US knew it could not live with a werewolf amongst its midst and congressman Edolphus Towns, told Toyoda in a letter that American drivers were “unsure as to what exactly the problem is, whether it is safe to drive their cars, or what they should do about it.” The latest news is that the werewolf’s representative (the boss himself) has agreed to attend the Congress hearing.

The werewolf is trying hard to fix its problems, including the infamous sticky accelerator problem – Click here – (excellent interactive graphical courtesy of the Guardian) with a brake-override system in all future models. The werewolf had hugely underestimated the problem as in the winter of 2008-09 it had reports of “stiff” pedals.

President Akio Toyoda, grandson of Toyota acknowledged on 17/2 for the first time that the firm had expanded too fast in its quest to increase profits and overtake General Motors as the world’s biggest carmaker, a feat it achieved two years ago, according to the Guardian website. He acknowledged in an opinion piece he wrote for The Washington Post recently that the company had “failed to connect the dots” between the sticky pedals in Europe, surfacing as early as December 2008, and those in the U.S. that culminated in the massive recalls. He also said, “The Company needed to improve sharing important quality and safety information across our global operations.” The werewolf believed it to be a “quality” not a “safety” issue. Steven C. McNeely. Manager, SMS , in his article, Lesson Learned from Toyota, argues that, “safety is an unspoken and unwritten quality expectation of our customers, and you cannot separate the two. You can have a quality product or service, as defined by the ISO standards, and still not have a safe product or service. Toyotas’ problem clearly accentuates this point”.

“Toyota managers did not respond to the early signals. That’s when they should have identified the root causes,” said Sharma, who teaches Toyota production methods to businesses. “If the Toyota brand no longer stands for quality, what does it stand for?” – Anand Sharma, chief executive of TBM Consulting Group, based in Durham, North Carolina, told The Associated Press

“Toyota drivers have gone from being customers of the company to being wards of the government,” says Jim Cain, senior vice president of Quell Group, a marketing-communications firm in Detroit, and a former Ford media-relations executive. ” according to Time.

“As far as we know, Toyota is still the best manufacturing company in the world when it comes to production management,” Michael A. Cusumano, professor at the MIT Sloan School of Management, the gas pedal and floor-mat defects were design errors in supplier parts, and the faulty braking in hybrid models was caused by a software glitch. They weren’t manufacturing errors, the kinds of defects workers at plants have been trained to pick out — a piece that doesn’t fit, a crack in a part, something that diverges from the design.

“Toyota has been exemplary at surfacing problems in the factory and stopping production before a crisis was reached,” said Jeffrey Liker, professor of Industrial and Operations Engineering at the University of Michigan, who has written books on the Toyota Way.

“Failure to follow all the principles of the Toyota Way led to this crisis. Now the Toyota Way is the only way out of it,” said Liker.

CIOs and IT Management can learn from the Toyota debacle. The most important question I had to ask myself when I heard of Toyota’s woes was a simple one. Do I unlearn everything about Just In Time (JIT), lean management, Total Quality Management (TQM) and ‘The Toyota Way’ and start over? I will leave that question open, for now!

The key lessons for CIOs are:

  1. Acknowledge and fix the problem with any process, system or project as soon as it is highlighted by stakeholders. Do not allow it to spiral out of control.
  2. Listen, listen, and listen again.
  3. Isolate the issue(s) and ensure that it is not a part of a much larger problem.
  4. Everybody within the company is an ambassador for the company, including the IT department. If the IT dept spot a non IT issue that affects the company, take 100% responsibility for it and get it addressed.
  5. Use social media (SM) channels such as LinkedIn, facebook and Twitter to monitor your user community by proactively listening, anticipating problems and getting involved with these communities.
  6. Do not hide/shy away from social media (SM) and use it to create competitive advantage.
  7. Brand reputation can be enhanced or irreparably damaged on SM. Be there to get your message across

Related Article on Toyota pay the price for not connecting the dots 

Steve Jobs (CEO Apple) management style and CIOs

Image representing iPhone as depicted in Crunc...

Image via CrunchBase

UPDATED: 08/10/11 – This post is dedicated to one of my heroes and role models, Steve Jobs, 1955-2011, Thanks for the inspiration. May God bless you.

Welcome to my most successful blogpost. This post attracts so many people that the search, ‘apple management style’ will return this article as the number one post. That’s without any adwords. Please read and leave comments.

This article is an article in a series of articles where I will analyse current and past leaders to ascertain how Chief Information Officer’s (CIOs) can learn better management by applying the management practices of leadership, practiced by these leaders. I have broken down Steve Job’s style into two distinct pieces. The management style and the presentation style.

PS: CIO is a generic term and other analogous titles are Head of IT, IT Director, Director of IT etc.

The Management Style

In an interview with Fortune, Steve Job’s (SJ) opened up about his management Style (In no particular order and a few other sources utilised):

1. SWOT analysis: As soon as you join/start a company as a CIO, make a list of strengths and weaknesses of yourself and your company on a piece of paper. Don’t hesitate in throwing bad apples out of the company.

2. Spotting opportunities: SJ – “We all had cellphones. We just hated them, they were so awful to use.”

The lesson that can be learnt is that within IT we need to spot opportunities for improvement. It is not enough, however, just to spot them, the onus is to spot them and then to create an environment to leverage that opportunity and to make it happen.

3. Improve productivity: – SJ – “We figure out what we want. So you can’t go out and ask people, you know, what the next big [thing.] There’s a great quote by Henry Ford, right? He said, ‘If I’d have asked my customers what they wanted, they would have told me “A faster horse.”

As a CIO, we need to ask ourselves, what can we do that will improve our customers or our own productivity? That could entail listening to your customers, horizon scanning or simply taking action on something that you feel would help you, your team/and/or customers.

4. Business/IT Strategy: SJ – “We do no market research. We don’t hire consultants.”

Sometimes it’s best to follow your instincts and to believe in yourself to do the right thing. Paralysis by analysis is often the cause that many organisations cannot do well. It’s as Nike says, Just do it!

5. Competitive advantage: SJ – “It is the intimate interaction between the operating system and the hardware that allows us to do that. That allows us to innovate at a much faster rate than if we had to wait for Microsoft, like Dell and HP and everybody else does.”

CIOs need to ask themselves how they can help the business through leveraging IT to create competitive advantage? I covered this a few weeks ago, in my post, Leveraging IT for Competitive Advantage – Myth or Reality?. Sometimes, it makes sense not to embrace open platforms, as Apple has created a significant competitive advantage, by keeping it’s hardware/software systems closed. CIOs need to make such decisions cautiously.

6. Succession planning and his reputation: SJ – “My job is to make the whole executive team good enough to be successors, so that’s what I try to do. My job is to not be easy on people. My job is to make them better. My job is to pull things together from different parts of the company and clear the ways and get the resources for the key projects.”

CIOs need to be facilitators and to bring people together working towards a common goal. It is also important to have succession planning in order that the business has continuity in the unfortunate event of a CIO not being able to provide management.

7. Focus: SJ – “People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully.”

A CIO needs to focus on the most important issues that are relevant to the business and to shy away from the issues/projects that do not add value to the business but may just be a ‘nice have’ or appear to add value. Learn to say, ‘No’.

8. Talent acquisition:They have to be really smart. But the real issue for me is, Are they going to fall in love with Apple?”

A CIO needs to trust their gut instinct, as one can only learn a certain amount in an interview. I think, the strategic fit, is a very good measure. How will a new hire fit into the culture of the company? Will they enjoy it here? Have they worked in a similar culture before? The danger is that the culture could be so alien to the new hire, that they find it difficult to adjust.

9. Know your business and innovate: SJ – “I put out an agenda — 80% is the same as it was the last week, and we just walk down it every single week.”

The CIO and the entire IT department need to know how the business operates, preferably, as intricately as possible. It is that complete overview that will allow innovative opportunities to present themselves.

10. Handling barriers and roadblocks: SJ – “And we pushed the reset button. We went through all of the zillions of models we’d made and ideas we’d had. And we ended up creating what you see here as the iPhone, which is dramatically better.”

CIOs need to know when to intervene. For example, in many cases that could mean stopping projects altogether to take stock of current situations or to change the direction. There is no shame in that as the project has to deliver the project’s core objective.

11. Customer conversion: SJ – “But if we put our store in a mall or on a street that they’re walking by, and we reduce that risk from a 20-minute drive to 20 footsteps, then they’re more likely to go in because there’s really no risk.”

CIOs need to help the businesses by utilising IT to create opportunities in attracting additional customers. They need to ask themselves, “How can we assist in taking the business to the consumer”?

12. When the going gets tough, investment in people always pays: SJ- “What I told our company was that we were just going to invest our way through the downturn, that we weren’t going to lay off people, that we’d taken a tremendous amount of effort to get them into Apple in the first place — the last thing we were going to do is lay them off.”

I covered this, under mobility of management when I covered; can IT Management failure be caused by a deadly disease? Part II. CIOs need to understand the importance of retaining and investing in people as one of the business’s most important assets is yet again confirmed by another business leader. This means that they need to stand by that conviction and avoid losing people in economic downturns.

13. Successful innovation and success in general may be built on failure: SJ -. “Will this resonate and be something that you just can’t live without and love? We’ll see. I think it’s got a shot.”

Apple has proved that failure can lead to success and continues to innovate by investing in many technologies. Some will inevitably fail while others such as the iPod and iPhone will be huge successes. Many businesses lack of innovation is due to their fear of failures.

14. Earn respect: Steve Jobs can be a hard boss to work with but Jobs’ employees remain devoted. That’s because his autocracy is balanced by his famous charisma — he can make the task of designing a power supply feel like a mission from God. CIOs need to command respect from their employees and that is something that has to be earned!

I want to conclude this part by finishing off with a quote that shows us that even with his god like innovative powers, Steve Jobs remains human. “Steve proves that it’s OK to be an asshole,” says Guy Kawasaki, Apple’s former chief evangelist. “I can’t relate to the way he does things, but it’s not his problem. It’s mine. He just has a different OS.”

As Geoffrey Moore, author of Crossing the Chasm said. “He’s at the absolute epicentre digitisation of life. He’s totally in the zone.”

The Presentation Style

For the second part, I am reproducing an article written by Carmine Gallo in BusinessWeek for his new book, The Presentation Secrets of Steve Jobs: How to Be Insanely Great in Front of Any Audience. For this book he watched hours of Jobs’ keynotes. Here he identifies the five elements of every presentation by the Apple CEO. CIOs can improve their presentations by using these five elements.

1. A headline. Steve Jobs positions every product with a headline that fits well within a 140-character Twitter post. For example, Jobs described the MacBook Air as “the world’s thinnest notebook.” That phrase appeared on his presentation slides, the Apple Web site, and Apple’s press releases at the same time. What is the one thing you want people to know about your product? This headline must be consistent in all of your marketing and presentation material.

2. A villain. In every classic story, the hero fights the villain. In 1984, the villain, according to Apple, was IBM (IBM). Before Jobs introduced the famous 1984 television ad to the Apple sales team for the first time, he told a story of how IBM was bent on dominating the computer industry. “IBM wants it all and is aiming its guns on its last obstacle to industry control: Apple.” Today, the “villain” in Apple’s narrative is played by Microsoft (MSFT). One can argue that the popular “I’m a Mac” television ads are hero/villain vignettes. This idea of conquering a shared enemy is a powerful motivator and turns customers into evangelists.

3. A simple slide. Apple products are easy to use because of the elimination of clutter. The same approach applies to the slides in a Steve Jobs presentation. They are strikingly simple, visual, and yes, devoid of bullet points. Pictures are dominant. When Jobs introduced the MacBook Air, no words could replace a photo of a hand pulling the notebook computer out of an interoffice manila envelope. Think about it this way—the average PowerPoint slide has 40 words. In some presentations, Steve Jobs has a total of seven words in 10 slides. And why are you cluttering up your slides with too many words?

4. A demo. Neuroscientists have discovered that the brain gets bored easily. Steve Jobs doesn’t give you time to lose interest. Ten minutes into a presentation he’s often demonstrating a new product or feature and having fun doing it. When he introduced the iPhone at Macworld 2007, Jobs demonstrated how Google Maps (GOOG) worked on the device. He pulled up a list of Starbucks (SBUX) stores in the local area and said, “Let’s call one.” When someone answered, Jobs said: “I’d like to order 4,000 lattes to go, please. No, just kidding.”

5. A holy smokes moment. Every Steve Jobs presentation has one moment that neuroscientists call an “emotionally charged event.” The emotionally charged event is the equivalent of a mental post-it note that tells the brain, Remember this! For example, at Macworld 2007, Jobs could have opened the presentation by telling the audience that Apple was unveiling a new mobile phone that also played music, games, and video. Instead he built up the drama. “Today, we are introducing three revolutionary products. The first one is a widescreen iPod with touch controls. The second is a revolutionary mobile phone. And the third is a breakthrough Internet communications device…an iPod, a phone, an Internet communicator…an iPod, a phone, are you getting it? These are not three devices. This is one device!” The audience erupted in cheers because it was so unexpected, and very entertaining. By the way, the holy smokes moment on Sept. 9 had nothing to do with a product. It was Steve Jobs himself appearing onstage for the first time after undergoing a liver transplant.

One more thing…sell dreams. Charismatic speakers like Steve Jobs are driven by a nearly messianic zeal to create new experiences. When he launched the iPod in 2001, Jobs said, “In our own small way we’re going to make the world a better place.” Where most people saw the iPod as a music player, Jobs recognized its potential as a tool to enrich people’s lives. Cultivate a sense of mission. Passion, emotion, and enthusiasm are grossly underestimated ingredients in professional business communications, and yet, passion and emotion will motivate others. Steve Jobs once said that his goal was not to die the richest man in the cemetery. It was to go to bed at night thinking that he and his team had done something wonderful. Do something wonderful. Make your brand stand for something meaningful.

For more of Job’s techniques, flip through this slide show. Then catch a video interview with Carmine Gallo about how he researched his book.

Back to basics Enterprise Resource Planning

Last week, my article back to basics Enterprise Resource Planning (ERP) was featured by CIO UK. The full article is reproduced below or to go direct to the CIO UK Back to basics Enterprise Resource Planning (ERP) article, click here.

Enterprise resource planning (ERP) software attempts to link all internal business processes into a common set of applications that share a common database. It is the common database that allows an ERP system to serve as a source for a robust data warehouse that can support sophisticated decision support and analysis. Top suppliers include SAP, Oracle and Microsoft Dynamics.

Data warehouse design can also involve a process of extract, transform and load (ETL) that allows business intelligence software to perform its queries and predictive analysis of your organisation’s data.

Business intelligence (BI) systems have the ability to sit on top of a data warehouse and perform intelligent querying of data through data mining, online analytical processing (OLAP) and business performance management (BPM). In particular, it is the BPM aspect that MDs/CEOs utilise the most as it becomes a decision support system, providing dashboards for all sorts of performance indicators allowing management quick synopsis of any given situation, allowing quicker decision making.

Market trends: Current Consolidation, who owns who and how it will affect the future of ERP

The IT market is undergoing significant reshuffle and consolidation. This has led to a great deal of confusion on who owns who, especially if your CEO does not actively follow the IT industry. ERP system supplier consolidation has meant that Microsoft has bought Navision and Great Plains. SAP now owns BI vendor Business Objects . Oracle is the supplier that is the most influential as far as acquisitions are concerned as it has bought, Sun Microsystems, PeopleSoft, which already owned JD Edwards, Siebel, Primavera and Hyperion. Also IBM bought Cognos as it is software for BI.

Lessons learnt that allow future successful implementations

Project leadership can mitigate ERP implementation risks with a strong plan that remains focused on the organisation’s goals and objectives. A spirit of cooperation between the vendor and buyer for mutual benefit is often quoted as the single most important factor for success. It is interesting that on average an ERP implementation takes approx 20 months and that only seven per cent of projects finish on time while 68 per cent took “much longer” than expected.

A new ERP implementation is best done by splitting the project into three discrete areas: Planning, Change and Review. The areas below will on occasion be conducted in parallel.

Planning:
The business needs to appoint a steering committee to conduct a thorough SWOT and STEP (PEST) analysis with a view to setting up an ERP capability. It can then be used to identify gaps that need to be addressed. For example, if the STEP analysis highlights that politically, many departments aren’t interested or do not know about the new ERP implementation, it needs to be addressed. It also needs to be recorded in the SWOT analysis as a threat. This will highlight how prepared the business is for the required change and the next step can take these findings and ensure:

1. A senior Executive is appointed to ensure the project is top driven (Senior exec – CEO etc) and not bottom up (IT driven)
2. Business strategy is clearly defined.
3. ERP system fits within that strategy.
4. Definition of goals/objectives of introducing the ERP system Ensure questions such as what do we hope to achieve at the end? How will we know that we have arrived? – are answered, i.e. clearly define business requirements in detail and set realistic business benefits to manage expectations better.
5. Processes in 6, 7 and 8 need to be aligned to the overall business/IT strategy by involvement from both senior managers of functions and experienced users who understand the processes.
6. Processes are analysed for alignment to business vision and business/IT strategy and fixed accordingly.
7. Processes that are not captured by existing systems are captured.
8. Processed are improved.
9. Resources both human and technical – ensure miscalculation of time/effort is minimised, manage delivery timeframe expectations.
10. The above steps have been completed and a realistic budget is assigned.
11. ERP package selection is according to business requirements/process mapping.
12. ERP software is aligned to user procedures (May require new procedures)

Change:
1. Ensure that all interested parties are engaged and feel involved (business buy in) and that resistance to change is reduced and addressed accordingly. (This can be accomplished by creating a steering committee that has reps from both senior management from every function involved; and a super user who understands current processes. The super user needs to have taken the time to create his/her steering committee to analyse current processes and suggest improvements (See item 5 under planning).
2. How do we communicate that this change is required? – On going communications with all stakeholders.
3. How will training elements be addressed? What is the current process (Manual/IT based system and if it is an IT system, are there any problems in the way that the system is used?
4. Reviews, for example, Gateway Reviews should be conducted to deliver a “peer review” where independent practitioners from outside the programme/project use their experience and expertise to examine the progress and likelihood of successful delivery of the programme or project.

Review:
Once the project has been delivered successfully, a yearly review should be conducted to enhance or improve the system allowing for continuous improvement. Minor modifications, tweaks and fixes can be performed as business as usual.