Daily Updates

  Idea 50 - What business are you really in? Every once in a corporate blue moon a truly revolutionary idea comes along, one that makes every thinking company look at what it is doing through a new pair of spectacles. And a vision corrective was exactly what Theodore Levitt offered managers with his scornful, provocative and hugely influential article 'Marketing myopia', when it appeared in the Harvard Business Review in 1960. Its subject may have been marketing but, as much as anything, it was about strategy.   There is surely not a business in the developed world that doesn't 'focus on the customer', or at least claim to. So it may be hard to remember, or conceive of, a time when that simply wasn't so. But that's just how it was at the start Of the 1960s, when Levitt chose to shake US industry by the scruff of its collective neck. He began by pointing out that every major industry was once a growth industry. Some still were, but had the spectre of ...

  Idea 49 - Web 2.0 With a few far-sighted exceptions, business is slow to wake up to the new. When it does, however, it devours it. A handful of early movers turn a new idea into a competitive advantage until everyone else catches up. Then the new becomes the norm and the field is levelled once again. That is as true for communications technology as for anything else, perhaps more so - business turned the telegraph, telephone, telex and fax machine to its purposes. Now comes the Internet and all that flows from it. But some believe (the most dangerous four words in the business vocabulary, others say) that 'this time it's different'.     Ideas about the communications possibilities of packet-switching and networking surfaced at MIT in the early 1960s, and the first network with computers communicating over a phone line was built in 1965. But it was the 1980s before business began to scent possibilities, and the first Interop trade fair showcasing the Internet was...

  Idea 48 - War & Strategy The idea that business could be warfare by another name took hold of many business leaders during the 1980s. It was not that they wanted to destroy the enemy - though some of them undoubtedly did - but that they believed they should strategize like successful generals.   Though it's no longer fashionable to admit it, many leaders of big businesses have felt an affinity with famous generals. They recognize them as the doers of their time, in an age when 'trade' was not a respectable calling. Born later, the kind of men who rose to generalship might well have opted for industry instead. They would have found themselves doing much the same job, planning, organizing resources and motivating large groups of people to reach a defined objective.   Jack Welch, General Electric's reforming ex-CEO, made no secret of his admiration for Carl von Clausewitz, whose writings were said to have 'distilled Napoleon into theory'. He was the...

  Idea 47 - Value chain Michael Porter, who has given management more big ideas than anyone since Peter Drucker, is unyielding on the subject of being competitive. If a company wants competitive advantage, he insists, it must examine every little thing it does through the prism of competitiveness. His five forces model was a tool for assessing the strength of competition outside the factory gate. To help analyse a firm's internal· competitiveness, he developed his concept of the value chain.     Porter saw all the interrelated activities that create a product or a service as links in a rather complex chain. Each has a cost, and each adds value to the end product. The firm wants to sell the end product to the customer at a price - an aggregated level of value - that exceeds the sum of the costs. The difference will be its profit margin. To maximize that difference, Porter urged companies to analyse the competitiveness of each link in the chain. He divided the firm'...

  Idea 46 - Total quality management If management is a science, as some have argued, it is an imprecise one and one which encourages an endless flow of management ideas that surface and then, as often as not, sink. Where there has been truly impressive progress is in the realm of quality, where science and maths feel quite at home. Much of the science has come from Americans. But there has been a lot of human insight too, and that has often come from Japan.   This powerful combination first reached many Western companies during the early 1980s in the form of 'total quality management' (TQM). This was a synthesis of different ideas and tools that had evolved in Japan since the Second World War. One of its principal architects was a former US census statistician called W. Edwards Deming, who was summoned to Japan in 1947 by the Supreme Command of the Allied occupying powers. They wanted him to do something about the poor levels of Japanese quality - all too apparent in th...

Idea 45 - Tipping point   The combative former US Secretary of Defense Donald Rumsfeld famously used the term 'tipping point' to describe the position that the Iraq war had not yet reached. On his and many, many other lips, 'tipping point' has passed its own tipping point, and business has leapt aboard the bandwagon.   A quick dance around the Web reveals the term - usually prefaced by 'Have we reached the .. .' - applied to the Iraq war, opinion on the Iraq war, the Afghanistan war, online media, oil, various proprietary brands of software, online advertising, online video and autism. It also shows that a surprising number of businesses have hijacked it as a trading name, including advertising agencies, marketing agencies, training companies and, bizarrely, an IT security business.   It was coined by US political scientist Morton the late 1950s. He found that white families would stay for a while after the first few black families moved in, but the ...

 Idea 44 - Theories X & Y (and Theory Z) Management's ideas about motivating employees have changed a bit since scientific management first considered how to make workers more efficient. Today, most managers would at least pay lip service to the idea that employees are human beings, with human needs and aspirations, and that you need to recognize this to get the best from them. This may seem obvious today, but as a management precept it owes much to Douglas McGregor and his Theory X and Theory Y. Theory X and Theory Yare a double act - a Mr Nasty and Mr Nice of human resource management - that leave you in no doubt as to which McGregor prefers, even though he insists that the optimal management style should draw from both. McGregor believed that the way a company was managed reflected its managers' view of human nature. His theories look at how satisfying the needs of employees can be used to motivate them, though each makes very dif(erent assumptions about what those needs...