Cutting middle management is an imperative for business as markets change quickly.
No-one can say life is comfortable at Cisco when every two years the company engages on a round of job cutting that tends to keep employees on their toes.
While this year’s job cuts are relatively mild – only 4,000 as opposed to nearly 13,000 in 2011 – it’s notable the focus on culling middle management positions.
“We just have too much in the middle of the organization,” the Wall Street Journal reports Cisco CEO John Chambers as saying.
One of the challenges for businesses is become more flexible when markets are rapidly changing. Having ranks of middle managers makes it harder for organisations to respond.
John Chambers and Cisco are reducing their middle management head count to respond to that need. Many other companies are going to have to do the same.
Developing original, unique content that stands out from the crowd will be a challenge for many marketers in coming years.
I’m moderating keynote Q and A’s at the ADMA Global Forum today. One clear message from the international speakers’ presentations is how original, unique content is one the key planks of a modern media strategy.
“Content will be king” says McKinsey’s Joshua Goff, a thought echoed by Weiden and Kennedy’s Husani Oakley.
During one of the breakout sessions, the AFL’s Sam Walch explained the sporting code’s strategy of using content to retain supporters and expand the sport.
The fascinating thing about this content strategy is how organisations are having to deal with gathering unique, compelling material.
For many businesses, getting customers to contribute material makes sense. Josh Goff showed how some businesses, even in the B2B space, were using user generated content to get a buzz happening around their sites.
Others are commissioning their own work with the AFL employing nearly fifty journalists to provide content.
What’s particularly interesting about the AFL is how this threatens broadcasters and the print media business models which increasingly rely on ‘events’ like sports. This is something I might explore on the blog over the next few days.
In the afternoon ADMA session Michael Bayle, formerly of ESPN, described how much of that content will be accessed on mobile devices. Interestingly ESPN has the greater share of mobile visitors for US Sunday football despite not owning the broadcast rights. This is both an opportunity and challenge for rights holders, sporting organisations and media disruptors.
The key take away from this morning’s ADMA sessions though is that we are going to be drowning in content marketing over the next couple of years. The challenge for those businesses engaging in those wars is to make themselves heard over the noise.
How will businesses benefit from the internet of everything?
How much opportunity does connecting all our machines to the internet really offer businesses and society?
Cisco’s Internet of Everything index released last week looks at one of the great opportunities facing today’s managers in realising business value in these new technologies .
On Cisco’s calculations, the internet of everything is worth over $14.4 trillion to the world economy and nearly half the business benefits are going wasted.
Germany and Japan lead the pack and, as discussed yesterday, Australia wallows between China and Russia.
Cisco comparison of countries
Despite German businesses being the leaders, Cisco estimates $33bn, or nearly 40% of the potential gains, isn’t being realised even in that country.
How different industries are using the internet of machines is notable as well, with Cisco claiming the biggest benefits currently being realised by the IT industry while the greatest potential lies in the service, logistics and manufacturing industries.
Internet of everything value by industry
If anything, these projections could be on the conservative side with Cisco estimating fifty billion devices connected to the net by 2020. Given the rate of smartphone being sold and everything from vending machines to clothing being online, it may well be ten or even a hundred times that number.
The real challenge for businesses in all these projections is how individual organisations can realise this value in their operations.
For some businesses, there’s plenty of existing opportunities with well established services in areas like field services and logistics tracking the locations of staff and packages. These are relatively simple to incorporate into existing operations.
In other applications, businesses will find things more complex as the connected devices will tie into analytics and Big Data plays. These won’t be simple.
One particularly important area for the workforce as a whole in business process automation where many tasks currently done by humans can be carried out by machines talking to each other.
This is already happening in fields like fast moving consumer goods and hospitality where stock levels can be automatically monitored and replacement stock ordered in without staff being involved. As the technology becomes more widespread this will threaten the roles of many previously well paid managers.
Many of those managers though will be challenged anyway unless they’re prepared to deal with the changes that internet of things is bringing to their businesses.
How do you think the internet of everything will change your business?
One striking aspect of that story that deserves further discussion is Bock’s thoughts on leadership;
We found that, for leaders, it’s important that people know you are consistent and fair in how you think about making decisions and that there’s an element of predictability. If a leader is consistent, people on their teams experience tremendous freedom, because then they know that within certain parameters, they can do whatever they want. If your manager is all over the place, you’re never going to know what you can do, and you’re going to experience it as very restrictive.
This is something that applies in all walks of life — whether you’re coaching a kids’ football team, running a corporation or leading a nation.
Sadly in many of these fields we’re lacking the consistent leadership Laszlo Bock describes. That could turn out to be one of the greatest challenges for the 21st Century.
Geason, who is Group Managing Director for the company’s Enterprise and Government division, was speaking on some of the findings from Telstra’s Clever Australian program along with some of the technology trends he’s encountered in big business and public organisations.
The bulk of Geason’s presentation I reported in an article for Comms Day, and much of his observations about enterprise technology trends wouldn’t surprise keen observers of the industry or regular readers of this blog.
What did stand out though were his comments on how social media is changing management behaviour at Telstra where over 25,000 registered users of the company’s Yammer platform have direct access to the company’s CEO, David Thodey.
Social media is just going crazy. Within Telstra now we have over 25,000 of our staff registered on Yammer. It has been a phenomenon. It’s playing this really interesting role of breaking down the hierarchy in our organisation.
Which is not just because of the technology but it’s also got something to do with our CEO.
He is on Yammer just about every single day of the week. There is not an issue that hits that site that he won’t pick up and direct to the right place to get it to the right place and have it dealt with.
Our people love it, they would never have imagined they could get that level of access and input and intervention from the CEO.
There’s a certain transparency that has come to our organisation that didn’t exist previously which is really great for the levels of engagement of our people and very challenging for us as leaders in having to deal with that level of visibility that was not there before.
I think it’s really changing how organistations are operating.
Paul Geason’s comments are a good example of changing management structures. Not only does it bring accountability to executives, it also means organisations can respond quickly to changing marketplaces – something covered in the Future of Teamwork presentation back in 2010.
A few years ago, no-one would have thought of Telstra as being an open, collaborative organisation yet today it’s gone quite a way down the path to becoming one.
The key though to this is having senior management buying into the process. Without that leadership many companies might be facing a tough future.
Qantas Airlines learns the hard way that social media doesn’t sleep, unlike its marketing department.
One of the truths of social media is it gives idiots an opportunity to expose themselves for what they are.
For businesses using social media idiots posting stupid or offensive content on the company’s site or Facebook page can do a lot of damage to their brand and reputation.
This is the problem Australian airline Qantas faced last week when some fool posted a pornographic image to one of the company’s promotions pages.
As the Sydney Morning Herald reports, the father of an eight year old reported an inappropriate post to the airline after his son found the image while visiting the Qantas Wallabies page. He was allegedly told by the company’s social media staff “there was nothing we can do about it.”
The father points out correctly that both the airline and Facebook are 24 hour operations so claiming a post that is put up at midnight – one assumes Eastern Australian time – is out of hours seems to be disingenuous.
Until recently, businesses had given social media responsibilities over to the intern or the youngest person in the office. While organisations like Qantas have moved on from that, they largely leave these tasks with the marketing department.
While marketing is a valid place for social media responsibility – it’s probably the most obvious area to establish a return on the functions – it leaves organisations vulnerable to out of hours customer service and public relations problems.
Social media doesn’t knock off at 5pm and spend the evening a bar like the marketing department, it’s on all the time and customers are using it to complain about problems while twits and trolls are gleefully posting things to embarrass businesses.
For those businesses who do operate on a 24 hour basis, and probably all big corporations, it’s no longer good enough for the social media team to just operate during office hours.
Smaller businesses have a different problem – most don’t have the resources to keep a 24 hour watch on their Facebook page but the effects of a social media disaster could be proportionally far greater – so they shouldn’t be overlooking regular checks on what people have posted to their business sites.
What’s happening in social media is part of a broader trend in the global economy that’s been going on for thirty years as the pace of business has accelerated. It’s something that all managers, entrepreneurs and company owners need to understand.
Google surveys its staff twice a year on how they think their managers are performing in a Upward Feedback Survey that pulls together between twelve and eighteen different factors which the company then uses to measure how their leaders are performing.
That bottom-up, data driven approach has proved to be successful as Bock told the New York Times.
We’ve actually made it harder to be a bad manager. If you go back to somebody and say, “Look, you’re an eighth-percentile people manager at Google. This is what people say.” They might say, “Well, you know, I’m actually better than that.” And then I’ll say, “That’s how you feel. But these are the facts that people are reporting about how they experience you.”
You don’t actually have to do that much more. Because for most people, just knowing that information causes them to change their conduct. One of the applications of Big Data is giving people the facts, and getting them to understand that their own decision-making is not perfect. And that in itself causes them to change their behavior.
Accountability matters – who’d have thought?
The other thing that Bock and Google’s HR team have learned from their measuring management performance is just how effective consistency can be.
We found that, for leaders, it’s important that people know you are consistent and fair in how you think about making decisions and that there’s an element of predictability. If a leader is consistent, people on their teams experience tremendous freedom, because then they know that within certain parameters, they can do whatever they want. If your manager is all over the place, you’re never going to know what you can do, and you’re going to experience it as very restrictive.
Sometimes we make things too complex – and Google’s experience with managers shows that simple accountability and consistency are far more effective than complicated KPIs.
The ten commandments of cloud computing show a refreshingly mature attitude to risk.
Early this week I attended the media launch of Data Sovereignty and the Cloud – a white paper from the University of New South Wales’ Cyberspace Law and Policy centre.
One thing that stood out in the presentation was the Ten Commandments of Cloud Computing which are a good guide to what businesses owners, directors and executives need to consider when looking at online services.
Another refreshing aspect of the UNSW launch was the mature attitude towards risk – the overwhelming view of the panel, which included insurers, lawyers and academics, was that all technologies have an element of business risk and it’s a matter of identifying and managing those hazards.
Hopefully, we’ve moved on from the 1980s management view that risk is something to be eliminated at all costs. The result of that philosophy was just to shift risks into other, unforeseen areas.
The UNSW report on cloud risks is a weighty read, but it’s worthwhile if you want to get a realistic handle on exactly what the hazards are in moving to the cloud.
After all, if you don’t know what the risks are then you can’t identify, understand or manage them.
Graham’s point is Venture Capital firms are finding their equity stakes eroding as it becomes easier and cheaper for founders to fund their business, as a result VC terms are steadily becoming less demanding.
An interesting observation from Graham is how the attitude of graduates towards starting up businesses has changed.
When I graduated from college in 1986, there were essentially two options: get a job or go to grad school. Now there’s a third: start your own company. That’s a big change. In principle it was possible to start your own company in 1986 too, but it didn’t seem like a real possibility. It seemed possible to start a consulting company, or a niche product company, but it didn’t seem possible to start a company that would become big.
That isn’t true – people like Michael Dell, Bill Gates and Steve Jobs were creating companies that were already successes by 1986 – the difference was that startup companies in the 1980s were founded by college dropouts, not graduates of Cornell or Harvard.
In the current dot com mania, it’s now acceptable for graduates of mainstream universities to look at starting up business. For this we can probably thank Sergey Brin and Larry Page for showing how graduates can create a massive success with Google.
One wonders though how long this will last, for many of the twenty and early thirty somethings taking a punt on some start ups the option of going back to work for a consulting firm is always there. Get in your late 30s or early 40s and suddenly options start running out if you haven’t hit that big home run and found a greater fool.
Where Graham is spot on though is that the 19th and 20th Century methods of industrial organisation are evolving into something else as technology breaks down silos and conglomerates. This is something that current executives, and those at university hoping to be the next generation of managers, should keep in mind.
Google’s evolution in hiring practices and HR policies describes the risks of relying on gut feelings and the importance of workplace accountability.
Over the years Google has attracted attention for its employment practices, particularly for its quirky interview questions which challenged many a genius.
It turns out those brainteasers have proved to be less than effective, as has the interminable interview process that saw job candidates endure dozens of meetings before being offered a role at the company.
A recent New York Times interview with Laszlo Bock, senior vice president of people operations at Google, discusses some of the company’s employment experiences along with some of the ways the organisation manages staff.
What’s notable is Bock’s findings on Google’s gruelling interview process with its brain teaser questions;
We looked at tens of thousands of interviews, and everyone who had done the interviews and what they scored the candidate, and how that person ultimately performed in their job. We found zero relationship.
The New York Times interview is particularly interesting as it reveals much of Google’s legendary employment criteria – particularly that of hiring only graduates with high university marks – turned out to be effectively useless.
Most telling though is what Bock found about managers and leadership;
We’ve actually made it harder to be a bad manager. If you go back to somebody and say, “Look, you’re an eighth-percentile people manager at Google. This is what people say.” They might say, “Well, you know, I’m actually better than that.” And then I’ll say, “That’s how you feel. But these are the facts that people are reporting about how they experience you.”
You don’t actually have to do that much more. Because for most people, just knowing that information causes them to change their conduct.
Who would have thought that accountability would make people behave better and more effectively?
In the Silicon Valley view of the world founders and coders deserve to be generously paid but artists, musicians and writers should be thankful for the exposure they get and the odd dime thrown their way.
Google’s struggles with Zagats also exposes another problem with the tech industry’s hiring practices – that of ‘permatemps’ who never get on the payroll and have few benefits and no security. For years this was a problem at Microsoft and it remains a common practice today.
The story of Google’s evolution in hiring practices and HR policies is something all managers should read as it describes the risks of relying on gut feelings and the importance of workplace accountability.
Ballmer is dealing with massive changes in Microsoft’s core business as PC sales decline with customers moving to smartphones, tablet computers and cloud computing so finding new markets is a priority for the company’s board and senior management.
In Dell’s case the company’s looking at becoming “an Enterprise Solutions and Services (ESS) focused business” – essentially copying what IBM did a decade ago in moving from hardware and focusing on consulting and services to large corporations.
Microsoft on the other hand sees the future in devices and cloud computing with Ballmer telling shareholders last year that becoming a “devices and services company” is the future.
It’s important to recognize a fundamental shift underway in our business and the areas of technology that we believe will drive the greatest opportunity in the future.
In Ballmer’s view those opportunities lie in cloud computing services and devices like the Windows Surface tablet computer and the smartphones, products which Dell struggled with during the 2000s.
These are two very different directions and it illustrates just how the major players in the PC industry are searching for new business models as the old one collapses.
How many of them successfully make the transition will be for history to examine; it’s easy to see Microsoft surviving given its massive financial reserves and market power, although nothing can be taken for granted as we could have said the same about Kodak twenty years ago.
Dell on the other hand is far weaker being smaller with a narrower product base and currently has the management distraction of competing buyout offers. Dell’s survival is far from certain.
Others, like HP, seem to be slipping into obscurity as management flip-flops from one scheme to another. The takeover of EDS as part of HP’s move into enterprise consulting does not seem to have gone well and the company is wallowing.
What we’re seeing is the rapid disruption of an industry that itself was the disruptor not so long ago. It reminds us that even the corporated giants of today are as vulnerable as the stagecoach companies of yesteryear in the face of rapid change.
The Rationale for a Private Dell states some stark truths about the PC manufacturing industry and global management in general
Michael Dell continues to press on with his buy out bid for the computer manufacturing giant he created with a presentation to shareholders stating his case why Dell Computers would have a better future as a private company.
Dell’s assertion is the company has to move from being a PC manufacturer to a Enterprise Solutions and Services business (ESS) as computer manufacturing margins collapse in the face of a changing market and more nimble, low cost, competitors.
What’s telling in Dell’s presentation is just how fast these changes have happened, here’s some key bullet points from the slide deck.
Dell’s transformation from a PC-focused business to an Enterprise Solutions and Services (ESS) -focused business is critical to its future success, especially as the PC market is changing faster than anticipated.
The transition to the “New Dell” is highly dependent on challenged “Core Dell”performance.
The speed of transformation is critical, yet “Core Dell” operating income is declining faster than the growth of “New Dell” operating income.
Dell’s rate of transformation is being outpaced by the rapid market shift to cloud.
The market is shifting quickly against Dell’s core PC manufacturing and sales business and the company’s founder is under no illusions just how serious the problem is.
Should Michael Dell succeed, the challenge in transforming his business is going to be immense – Dell Computing was one of the 1990s businesses that reinvented both the PC industry and the vast, precise logistics chain that supports it.
It was PC companies like Dell and Gateway who showed the dot com industry how to deliver goods quickly and profitably to customers around the world. Businesses like Amazon built their models upon the sophisticated logistics systems and relationships the computer manufacturers created.
A lesson though for all of those companies that followed Dell and Gateway is that those supply chains may turn around and bite you in the future, as Michael says in his presentation;
Within the PC market, Dell faces increasingly aggressive competition from low cost competitors around the world and shifts in product demand to segments where Dell has historically been weaker.
Those low cost competitors were many of Dell’s suppliers as over time the company’s Chinese manufacturers, Filipino call centres and Malaysian assemblers have developed the management skills to compete with the US retailers rather than just be their contractors.
Something that’s being missed in the debate about globalisation at present is that its not just low value work that can be done offshore – increasingly sales, marketing and legal are moving offshore along with programmers and engineers. Now the same thing is happening with management.
The same thing is also happening with corporations as Asian giants like Samsung, Huawei, Wipro and others displace US and European incumbents.
Dell Computing has been a much a victim of that move as it has been of the decline in the PC market which means its more than one battle Michael Dell has to fight.
It may well be that Dell can survive, but we shouldn’t underestimate just how great the challenge is as the company faces major changes to its markets and the global economy.
