One of the things Jeff and I say to our colleagues and followers is "The rules have changed." We see that to perform effectively, strategically and competitively in today's highly competitive and rapidly changing global marketplace we must be continuously learning strategic knowledge to better design and execute offers, practices and strategies that provide the best value we're capable of to our customers, employees, colleagues and networks.
I recently read Seth Godin's Survival is Not Enough: Zooming, Evolution and the Future of Your Company. Seth's writing, in his blog posts and books I've read, often provokes my thinking about refining enterprise design for increased effectiveness in our fast-changing world. We have prepared a book review that's a more complete description. If you are intrigued, I recommend you buy the book and read it. It offers fundamental thinking that's as sound today as when it was published in 2001.
In our reading and dialogue on Survival we focused on culture and capital assets as the two key domains in which to learn and increase our capabilities for acting with our enterprises.
Work to build a culture that's nimble, that's prepared to deal with the unexpected, that tolerates failure. Design projects and plans so that failures that do occur happen at non-catestrophic levels of investment. Increase the organizational learning that occurs between individuals in the same roles, such as your sales people, and between different functional units of the company, such as engineering and sales.
In not one of the presentations [for VC investment] has the entrepreneur walked in and said: "We've got really smart people, an excellent attitude and an organization that's designed to evolve and change. We're not sure what the future brings, but we are sure that we've got the fast feedback loops and bias to evolve that we'll need to stay ahead of the competition."
Practice fast feedback and refinement. Continuously test, measure and implement. Launch new offers, practices and strategies with velocity and with just enough design, crafting and preparation. Don't work to have perfection in the plan, but rather start executing as soon as you're sufficiently prepared to not break trust. Design and refine more frequently to increase and sustain competitive advantages.
So what separated Sam Walton from the thousands of other people who opened little hardware stores in overlooked towns all over the country? One principle. Sam was obsessed with testing, measuring and implementing. He organized to evolve. Every day (sometimes every hour) Sam would try something new. He'd gather every bit of data he could about the test and then test something else. By testing and measuring, Sam discovered a pricing strategy that still works. By testing and measuring, Sam discovered a store location strategy that still works. Walmart now has a database with more than a billion [this was 2001] items of information in it. They've used it, for example, to discover that people who buy bananas frequently buy milk. By putting a display of high-profit bananas near the milk, they dramatically increased banana sales (and profit). For twenty years, Sam Walton tested and measured (then implemented) every principle he could. He built open systems that let his suppliers do the same thing. More than 98 percent of the items in a Walmart never see the inside of a Walmart warehouse. They go straight from the manufacturer to the store.
We see that our criteria and standards for making new capital expenditures must be nimble. There are many new offers in the marketplace for elements of design, for production, etc. We're becoming aware of resources we can utilize at far lower costs that internal investments.
Do we still need factories? Of course we do. How else are we going to make all this stuff. My point is that while the world still needs factories, that doesn't mean you have to own them. Owning a factory will probably become a profitable niche business, a way to make a nice living. But fast-moving, high-growth, zooming companies don't need to own them. Because factories are no longer local, because the ultimate provider is no longer the manufacturer, the model that was factory-centric is dead. Being factory-centric doesn't increase your profits, it decreases them. Being factory-centric doesn't decrease your time to market, it increases it.
Let me know what new actions you take. We accumulate new capacities to think and act in action, not by merely reading.
Image: Flickr User/emmma peel