Tag: management

When does a digital strategy matter?

Some businesses are obsessing too much about their digital strategy, a UK based business professor believes.

Should a business spend a lot of time on its digital strategy? A recent article in the Harvard Business Review suggests many businesses, and consultants, are focusing too much on the technology.

Freek Vermeulen, an Associate Professor of Strategy and Entrepreneurship at the London Business School, describes how strategists may be making a mistake in responding to digital disruption. He argues many industries are learning the wrong lessons from disruptors like Amazon, Uber and Google.

In Vermeulan’s view, the world is not a globalised as we’d like to think and the network effects that work so well in internet based industries don’t necessarily translate to other sectors.

As a consequence, businesses that work on the assumption their industries will be affect the same way as, say, the taxi industry with Uber or newspapers by Google and Facebook may well be making their own strategic mistakes.

Digital is changing the nature of competitive advantage in many businesses – just like major technological developments have done before. However, the change will not be uniform across all industries. Digital technology is affecting and will affect different businesses in different ways. Miss these nuances and your strategic decisions could lead you seriously astray.

That’s certainly true and how technology or a rapidly changing economy affects each industry, or business, is far from uniform.

One of the case studies Vermeulan uses is that of a consulting firm that has largely eschewed digital platforms and focused on its human assets – primarily the skills and connections of its associates and staff.

While that’s undoubtedly true of all consulting businesses to some degree, the use of digital tools and marketing is changing that industry dramatically as well.

Vermeulan is right in that some industries may want to respond more slowly than others to digital or economic changes, however a business that disregards them or reacts too slowly may not know what hit it.

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Having a culture of yes

Key to fostering a company wide culture of innovation is management’s willingness to say ‘yes’ says AWS CEO Andy Jassy

One of the biggest impressions from the AWS Re:Invent conference is the company’s rapid innovation with the firm’s executives boasting how they have offered over a thousand features on their services this year.

That sort of rapid change requires a fairly tolerant attitude towards new ideas and risk, which was something AWS CEO Andy Jassy explained at the media briefing.

“In a lot of companies as they get bigger, the senior people walk into a room looking for ways to say ‘no’. Most large organisations are centrally organised as opposed to decentralised so it’s harder to do many things at once,” he observed.

“The senior people at Amazon are looking at ways to say ‘yes’. We don’t say ‘yes’ to every idea, we rigorously assess each on its merits, but we are problem solving and collaborating with the people proposing the idea so we say ‘yes’ a lot more often than others.”

“If you want to invent at a rapid rate and you want to push the envelope of innovation, you have to be unafraid to fail,” he continued. “We talk a lot inside the company that we’re working on several of our next big failures. Most of the things we do aren’t going to be failures but if you’re innovating enough there will be things that don’t work but that’s okay.”

While Amazon’s management should be lauded for that attitude, they are in a position of having tolerant investors who for the last twenty years haven’t been too fussed about the company’s profits. Leaders of companies with less indulgent shareholders probably can’t afford the same attitude towards risk.

There’s also the nature of the industry that AWS operates which is still in its early days, sectors that are far more mature or in declines – such as banking or media respectively – don’t have the luxury of saying ‘yes’ to as many ideas as possible.

Jassy’s view about encouraging ideas in the business is worth considering for all organisations though. With the world changing rapidly, having a workforce empowered to think about new ideas is critical for a business’ survival.

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Why Cyber matters

‘Cyber’ has become a buzzword, but it does have some serious meanings for managers and business owners

This is the unedited version of an article that appeared two weeks ago in The Australian.

Cybersecurity is becoming an important responsibility for executives and directors. Often shortened to ‘cyber’, it’s easy to dismiss cybersecurity as just being the latest IT industry buzzword however ensuring information systems are secure is now firmly a management issue.

Information breaches have become embarrassingly common in recent times with events ranging from Target exposing forty million of its customers’ records in 2013, a breach which cost the company $162 million dollars, through to national security embarrassments like the Snowden revelations.

Exacerbating the risks to businesses is the dependency upon information systems to normal operations and the damage from denial of service attacks such as the outage across much of the US last weekend can be debilitating and costly. The recent Australian census saga that cost taxpayers thirty million dollars, is an illustration of how costly poorly planned responses to service interruptions and security breaches can be.

Compounding the risks for Australian executives are the breach disclosure laws tabled in Federal Parliament last week which threaten 340,000 dollars fines for individuals and 1.7 million dollars for corporations that fail to act quickly on data privacy failures.

In such a high risk environment business leaders need to be proactive says Leonard Kleinman, the Asia Pacific and Japan Chief Cyber Security Advisor for security software firm RSA, “the legislation is aimed at organisations that I’d call ‘wilfully blind’ or like to employ the concept of ‘plausible deniability’.”

As that period of ‘wilful blindness’ and ‘plausable deniability’ comes to an end, executives and directors have to start taking their responsibilities in protecting data far more seriously. The challenge lies in understanding the risks.

“What a lot organisations – both private and public – haven’t done well is their ‘Crown Jewels assessment,” says Glenn Maiden, Principal Security Consultant at Canberra’s ?Shearwater Solutions. “It has to be contextualised. My crown jewels might be credit card numbers but for that may not be the interest for foreign intelligence agencies.” Then understand where the risks are for those critical data and processes.

In understanding what those ‘crown jewels’ are, it’s important to consider what is valuable within the organisation. While to the marketing team the most valuable information may be customer data, to the COO it may be ensuring continuity of service while to external parties it could be pricing details or legal correspondence.

“The things I’ve suggested in the conversations I’ve had with organisations is simple stuff; review things like your instant response strategies – can you start an investigation quickly,” says RSA’s Kleinman. “It’s probably good to review your contracts. If you have a cloud services providers that experiences a breach, how are they going to go about doing the notification?”

In a world where subcontracting and outsourcing is normal business practice, the risk from third party vendors is real and goes beyond cloud providers. The disastrous Target hack being due to an air conditioning contractor’s compromised system and Edward Snowden himself wasn’t a direct government employee.

Privacy and security breach notifications are only part of the broader cybersecurity picture though and the field is becoming more complex. Last weekend’s massive denial of service attack that compromised many US based online services was caused by the Mirai botnet, that exploits vulnerabilities in cheap internet of things devices.

With business processes becoming increasingly connected and automated, management concerns are extending to the security, integrity and reliability of devices being used in their organisation. Even if the business critical sensors being officially purchased are of high quality, everything from smartphones to connected kettles being bought into the staff tearoom could be a potential risk to the corporate network and a business’ reputation.

It would be a mistake however to think cybersecurity is purely a technology problem however. “Ultimately insider threats are about people,” says Senior Vice President of Nuix’s threat intelligence and analysis, Keith Lowry. “These are all people who used tools or technology to do what they did and they got away with it because others were focused on the technology rather than focused on the people.”

As the business world becomes more dependent upon data and connected systems, the governance of networks and their security is going to be increasingly the responsibility of business leaders.

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Enshrining business stupidity

A book by two London academics looks at how organisations enshrine stupidity

“In a world where stupidity dominates, looking good is more important than being right,” writes Professor André Spicer of London’s City University in Aeon Magazine.

Spicer and his fellow author Mats Alvesson described their results of studying dozens of organisations for their book The Stupidity Paradox.

What they found is the smartest don’t get ahead in most organisations, but those who conform with the prevailing culture which usually sets a low bar.

We started out thinking it is likely to be the smartest who got ahead. But we discovered this wasn’t the case.

Organisations hire smart people, but then positively encourage them not to use their intelligence. Asking difficult questions or thinking in greater depth is seen as a dangerous waste. Talented employees quickly learn to use their significant intellectual gifts only in the most narrow and myopic ways.

The tragedy is these organisations squander the talent of those working for them. In many respects management is destroying value rather than adding to it.

Probably the most dangerous type of organisation though are those run by managers who want to be leaders.

They see their role as not just running their business but also transforming their followers. They talk about ‘vision’, ‘belief’ and ‘authenticity’ with great verve. All this sounds like our office buildings are brimming with would-be Nelson Mandelas. However, when you take a closer look at what these self-declared leaders spend their days doing, the story is quite different.

Spicer’s article is well worth a read, if only to nod in agreement with many of the organisations and managers you’ve had to deal with in the past.

It’s worth reflecting how organisations are changing in an information rich age. While it’s tempting to think better access to data will improve their collective intelligence, it may be that algorithms only further entrench poor management practices.

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Connecting 400 points of voter data

US political parties are showing how organisations can use data in a targeted, sophisticated way

As the 2016 US Presidential race enters its final stages, it’s interesting to see how data is being used by American political candidates and what this means for business.

During last week’s Oracle Open World in San Francisco a panel hosted by the company’s Political Action Committee featured Stephanie Cutter, who worked on Obama’s 2008 and 2012 campaigns, and Mike Murphy, a Republican operative whose most recently worked on Jeb Bush’s primary effort against Donald Trump.

While the discussion mainly focused on the politics – “Crazy times seem to require crazy candidates” says Murphy – it was the technology aspect of modern elections that was notable.

Setting the data standard

The Obama campaign of 2008 set the standard for how modern political campaigns used social media and information, “we revolutionized how data analytics helps predict how people will vote and how they will persuade voters to turn out.” Cutter said.

“We put a big investment into it and Republicans have caught up,” she continued. “The key though was we relied on our own data and nothing that was out in the public domain. We didn’t rely on one piece of data, we had multiple sources. We had an analytics program where we were making 9,000 calls a night where we were predicting the votes.”

Murphy agreed with the political campaigns using data, “the kind of polling you see in the media has kind of vanished in campaigns where they have money to spend on research.” He said, “we don’t do telephone polling any more because we have so much data we can collect.”

Capturing everything

“We capture everything. We have about four hundred data points on the American voter and we’ll have five hundred in the next two years. We’ll be able to build massive data models without phone polling,” Murphy pointed out. “We’re waiting for the tech folk to get ahead on AI so we can predict what voters are going to do in two weeks.”

Despite the amount data collected by US political parties, the real key to success is the candidate’s organisation and management. Cutter made a strong point about the strength of Obama’s campaign team in both the 2008 and 2012 campaigns.

How the US political parties use data points to how businesses will be managing data in the future. Increasingly using information well is going to be the measure of successful organisations in both politics and industry.

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Automating the back office

Walmart’s streamlining of back office processes is a warning to middle managers everywhere

US retail giant is to slash 7,000 back office jobs reports The Wall Street Journal as the company looks to focus on customer service. The process that’s seeing those jobs lost are part of a bigger shift in management.

The automation of office jobs isn’t new – functions like accounts payable have been steadily computerised since the early days of computers – but now we’re seeing an acceleration of white collar and middle management roles.

As increasingly sophisticated automation and artificial intelligence increasingly affects middle management roles, we can expect further changes to organisations’ management structures.

The opportunity to streamline and flatten management will be something company boards will have to focus on if they want to keep their enterprises competitive and responsive in rapidly changes markets.

For managers, there’s a lot more disruption to come for their roles. Those stuck in 1980s or 90s ways of doing things are very much at risk.

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Digital businesses’ lost tribe of managers

Business leaders are struggling to understand their digital strategies, Forrester reports.

Are senior executives lost when discussing their company’s digital strategy?

At the Huawei Connect conference this morning in Shanghai, Nigel Fenwick, a Vice President and principle analyst of Forrester Consulting, released his company’s study titled Business and Technology Leadership in a Post Digital Era.

Forrester surveyed 212 IT and business managers across selected markets in North America, Europe and the Asia-Pacific for the survey and found only four percent of business leaders were confident they understood their companies’ digital strategy.

Even more worryingly less than ten percent of business IT leaders claimed they understood their organisation’s digital strategies.

The reason for this, Fenwick believes, is the pace of change in the technology sector as managers struggle to put digital innovations into the context of the business.

Exacerbating this lack of understanding is how companies are ‘bolting on’ digital strategies to their existing business models rather than thinking about how their industries, products and markets are being transformed, Fenwick says.

There’s little new or surprising in Forrester’s report and the small and selective data set doesn’t inspire confidence in the survey’s results. It is however a good reminder of the challenges facing today’s boards and executives in understanding the consequences of a rapidly changing economy on their businesses.

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