August 16, 2010

60) Netflix (for the 3rd time)

危 wēi  danger

I love Netflix’s approach – I’ve written more blog posts about it than any other company (as you can see here).  Over the last few months a few people have pointed me to a version of the company’s strategy that is posted online as a short briefing to their job candidates – I took a look and was impressed with what I read but a little part of me wondered if it had been accidentally leaked into the public domain.  Surely making its strategy and beliefs public gave some sort of advantage to its competitors?

机 jī opportunity

To the contrary, the more I have thought about it the more I think it is another smart move from Netflix.  After all, it’s naïve to think in this technological age that a top-level company strategy can be kept a secret (I know that Apple is perhaps the counter-argument but even its broad strategy leaks into the public domain occasionally).  Broad strategies and ideas are easily copied – it’s the details in tactics, execution, capacity to learn fast and ability to change direction that differentiate the winners and losers.  With that in mind it makes complete sense to make top level strategy public if it reaps any rewards at all.

Those rewards might include:

  • Enabling the right potential employees to self-select themselves for recruitment
  • Ditto for partners
  • Clarity of goals and beliefs to the whole organization (after all, I’m amazed how many employees think that their company doesn’t actually have a clear goal)

Anyway, I’m confident that the company knows exactly what it’s doing because this is a version that was updated only 5 days ago:

How About…

  • Making your strategy entirely open (after all it’s likely to be common knowledge anyway)?

—

May 6, 2010

50) McKinsey

危 wēi  danger

In its 2009 report, the UK CIPD’s Employment Survey claims that the average cost of filling a job vacancy is between £4333 and £7750.  This is the average across all sectors and doesn’t even include legal or training costs.  For Management Consultancies this number must be far larger – the firms visit universities in the recruitment drive and often give signing on bonuses.  With this in mind surely McKinsey’s average employee stay of about 3 years is a fundamental floor to the business model?

机 jī opportunity

Far from it, McKinsey cleverly keeps its leavers close to the Firm, recognizing their potential value.  It delivers this through its alumni services – both formal events and informal networking. This dynamic network is widely understood to be a lasting benefit of a career with McKinsey, thereby improving its appeal as a recruiter. The backbone of the McKinsey network is the firm’s alumni directory which lists the details of 3,500 ex-McKinseyites and is more up-to-date than the alumni rosters at Princeton or Harvard.  The strategy of setting up its alumni to be potential future clients must be working – McKinsey has produced more CEOs than any other company and is referred to by Fortune magazine as “the best CEO launch pad”. And you can’t blame the Firm for not publicizing the fact that Enron’s Jeff Skilling was among those high-flying CEO alumni.

How About…

  • Keeping departing employees close: supporting them where possible and viewing them as potential ambassadors for your company?

—

February 2, 2010

34) Mars

Mars Logo

危 wēi  danger

In 2000, Dan Michael, then R&D director for Mars‘ M&Ms brand, and his team had the idea to make customizable M&Ms printed with a word of the customer’s choosing.  The team had experimented and found a way of printing the text but when they took the idea to senior management it was met with some concern, mainly because no marketing plan or consumer feedback existed.  They may have also feared that allowing Michael and his team to pursue the opportunity would distract them from business as usual and the proposed direct sales approach might alienate Mars’ largest retailers.

机 jī opportunity

Unperturbed, Michael’s team of 12 entered the innovation into a recently launched Mars initiative called Pioneer Week.  The concept won and the team received a modest budget with specific targets attached – building a production line within 90 days and marketing the innovation to all of Mars’ 60,000 employees (bypassing many of Mars’ conventional procedures which would have slowed the process at best).  The potential became self-evident – the team received orders for 800 pounds of custom-printed white M&Ms on the first day (the only option offered initially).  The team also solicited feedback as to why purchases had been made and used the trial to experiment with pricing.  The initiative was subsequently rolled out through a small link on the M&Ms public website (with no additional marketing) with continued success (and learning by the team).  In 2006 the trial was formally launched as Mars Direct and it is estimated that shortly thereafter ‘sales surpassed $10m and continued to accelerate’.

How about…

  • Allowing teams to initially develop ideas in Skunkworks (a small group of people given a high degree of autonomy and unhampered by bureaucracy)?
  • Inviting teams to initially market a simple version of new products and services to your own employees or your partners’ employees to assess interest and learn?
  • Adopting a ‘discovery-driven’ approach to investigating new business ideas, minimizing investment and maximizing learning?

—

Source: BusinessWeek article here

January 14, 2010

28) Shell

shell_logo

危 wēi  danger

Shell, the multinational petroleum company, was listed as the world’s largest corporation by Fortune in 2009.  Its revenues and profit in 2008 were $458bn and $26bn respectively, making it one of the most profitable companies in the world.  However, Shell is highly aware that its business is being disrupted by new energy sources and its leadership recognizes the need to innovate.  Shell’s challenge has been identifying the right ideas – in part because of its success the company is highly risk-averse and slow to change.  The Head of R&D for the Exploration and Research division wanted to devote 10% of his budget to projects with ‘game-changing potential’ but was conscious that he and his senior team were not best placed to select the ‘right’ ideas, how could he ensure that his organization didn’t revert to business as usual?

机 jī opportunity

Instead of relying on senior management, Shell harnessed some of its more creative thinkers from lower down the ranks. Shell brought together a small but eclectic group of mid-level employees who were known to be creative.  That team helped design a clear process to fund opportunities that the senior management might have rejected for being too disruptive.  Firstly, the team peer reviewed potential projects – successful ideas were then sent to an “innovation lab” where teams helped each other build out their ideas. Projects that survived the innovation lab moved into the “action lab” in which the goal was not to evaluate idea but to design an experiment to test the idea in a risk-controlled, real-world setting.   Once an approach to test the hypotheses was designed the project received seed funding, subject to results subsequent rounds of funding were available. Since the programme’s creation, about 150 ideas from a total of 1,500 have turned into successful projects – just over one a month on average – in fields as diverse as developing oil and gas wells and alternative fuels. Game Changer has also recently begun soliciting ideas from the public.

How About?

  • Creating an internal marketplace for ideas inside your company?
  • Formalising and communicating a process for seed funding ideas using peer review?
  • Designing experiments to test the ideas fast and cheap?

—

October 26, 2009

16) Arsenal

Arsenal logo

危 wēi  danger

Arsenal, the London-based football club is highly leveraged.  The Club is in the process of paying down debt on its new stadium and has been hit by the falling property market on the development of its previous stadium.  This, coupled with an increase in player costs due to high-spending foreign-owned clubs, has left Arsenal forced to limit spending on new players and therefore at risk of falling behind its competition.

机 jī opportunity

Arsenal shocked the football press by selling two of its star players for a combined £38m and spent only £10m on a new player in the summer of 2009.  Although these star players were known to have had disagreements with other team-members the press predicted Arsenal would be hugely weakened and its results would be negatively impacted.  The reverse seems to have happened, the team spirit among the remaining players appears to have been bolstered and the team has performed better.

how about…

  • asking whether your ‘stars’ are good for the overall performance of the team?
  • rewarding those that glue the team together to drive overall performance?
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