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jerryking : cultural_change   10

Strategy or Culture: Which Is More Important?
“Culture eats strategy for breakfast.” These words, often attributed to Peter Drucker, are frequently quoted by people who see culture at the heart of all great companies. Those same folks like to cite the likes of Southwest Airlines, Nordstrom, and Zappos, whose leaders point to their companies’ cultures as the secret of their success.

The argument goes something like this: “Strategy is on paper whereas culture determines how things get done. Anyone can come up with a fancy strategy, but it’s much harder to build a winning culture. Moreover, a brilliant strategy without a great culture is ‘all hat and no cattle,’ while a company with a winning culture can succeed even if its strategy is mediocre. Plus, it’s much easier to change strategy than culture.” The argument’s inevitable conclusion is that strategy is mere ham and eggs for culture.

But this misses a big opportunity to enhance the power of both culture and strategy. As I see it, the two most fundamental strategy questions are:

1. For the company, what businesses should you be in?

2. And for each of those businesses, what value proposition should you go to market with?

A company’s specific cultural strengths must be central to answering that first question. For example, high-margin, premium-product companies that serve wealthy customers do not belong in businesses where penny-pinching is a source of great pride and celebrated behavior. Southwest has chosen not to enter a NetJets-like business, and that’s a sound decision.

Likewise, companies whose identity and worth are based on discovery and innovation do not belong in low-margin, price-competitive businesses. For example, pharmaceutical companies that traditionally compete by discovering novel, patentable drugs and therapies will struggle to add value to businesses competing in generics. The cultural requirements are just too different. This is why universal banks struggle to win in both commercial and investment banking. Whatever synergies they might enjoy (for instance, from common customers and complementary capital needs) are more than offset by the cultural chasm between these two businesses: the value commercial bankers put on containing risk and knowing the customer, versus the value investment bankers have for taking risk and selling innovative financial products.

Maintaining cultural coherence across a company’s portfolio should be an essential factor when determining a corporate strategy. No culture, however strong, can overcome poor choices when it comes to corporate strategy. For example, GE has one of the most productive cultures in the world, and its former leader, Jack Welch, concedes that his acquisition of Kidder Peabody was a failure because its cultural needs did not fit GE’s cultural strengths. The impact of culture on a company’s success is only as good as its strategy is sound.

No culture, however strong, can overcome poor choices when it comes to corporate strategy.

Culture also looms large in answering the second question above. In most businesses, customers consider more than concrete features and benefits when choosing between alternative providers; they also consider “the intangibles.” In fact, these often become the tiebreaker when tangible differences are difficult to discern. For example, most wealthy individuals choose financial advisors more for their personal chemistry or connections than their particular range of mutual funds. Virgin Airlines tries to attract passengers who like its offbeat, non-establishment attitude in how it operates. Culture experts are right to point out Southwest, Nordstrom, and Zappos because these companies have instilled norms of behavior that are essential features of their winning value propositions: from offering consistently low-price, high-quality service in Southwest’s case, to consistently delivering surprising staff service at Nordstrom and leading customer satisfaction at Zappos. What these companies really demonstrate is how culture is an essential variable—much like your product offering, pricing policy, and distribution channels—that should be considered when choosing strategies for your individual businesses. This is especially so when the behavior of your people, and particularly your frontline staff, can give you an edge with your customers.

Strategy must be rooted in the cultural strengths you have and the cultural needs of your businesses. If culture is hard to change, which it is, then strategy is too. Both take years to build; both take years to change. This is one of the many reasons that established companies struggle with big disruptions in their markets. For example, all the major credit card companies are seeking to transition from traditional payments to digital commerce. This shift in strategy will be difficult to pull off. It not only requires a cultural change, but also a change in companies’ target customer, value propositions, and essential capabilities—the three most fundamental choices a business strategy comprises!

Consigning strategy to just a morning meal for culture does injustice to both. Confining culture to the narrow role of “enabling” strategy prevents it from strengthening strategy by being part of it. It also weakens the power of strategy to turn your company’s cultural strengths into a source of enduring advantage.

Don’t let culture eat strategy for breakfast. Have them feed each other.
cultural_clash  cultural_change  intangibles  management  organizational_culture  Peter_Drucker  questions  quotes  strategy  synergies  value_propositions  via:enochko  unscalability 
march 2019 by jerryking
Everything still to play for with AI in its infancy
February 14, 2019 | Financial Times | by Richard Waters.

the future of AI in business up for grabs--this is a clearly a time for big bets.

Ginni Rometty,IBM CEO, describes Big Blue’s customers applications of powerful new tools, such as AI: “Random acts of digital”. They are taking a hit-and-miss approach to projects to extract business value out of their data. Customers tend to start with an isolated data set or use case — like streamlining interactions with a particular group of customers. They are not tied into a company’s deeper systems, data or workflow, limiting their impact. Andrew Moore, the new head of AI for Google’s cloud business, has a different way of describing it: “Artisanal AI”. It takes a lot of work to build AI systems that work well in particular situations. Expertise and experience to prepare a data set and “tune” the systems is vital, making the availability of specialised human brain power a key limiting factor.

The state of the art in how businesses are using artificial intelligence is just that: an art. The tools and techniques needed to build robust “production” systems for the new AI economy are still in development. To have a real effect at scale, a deeper level of standardisation and automation is needed. AI technology is at a rudimentary stage. Coming from completely different ends of the enterprise technology spectrum, the trajectories of Google and IBM highlight what is at stake — and the extent to which this field is still wide open.

Google comes from a world of “if you build it, they will come”. The rise of software as a service have brought a similar approach to business technology. However, beyond this “consumerisation” of IT, which has put easy-to-use tools into more workers’ hands, overhauling a company’s internal systems and processes takes a lot of heavy lifting. True enterprise software companies start from a different position. They try to develop a deep understanding of their customers’ problems and needs, then adapt their technology to make it useful.

IBM, by contrast, already knows a lot about its customers’ businesses, and has a huge services operation to handle complex IT implementations. It has also been working on this for a while. Its most notable attempt to push AI into the business mainstream is IBM Watson. Watson, however, turned out to be a great demonstration of a set of AI capabilities, rather than a coherent strategy for making AI usable.

IBM has been working hard recently to make up for lost time. Its latest adaptation of the technology, announced this week, is Watson Anywhere — a way to run its AI on the computing clouds of different companies such as Amazon, Microsoft and Google, meaning customers can apply it to their data wherever they are stored. 
IBM’s campaign to make itself more relevant to its customers in the cloud-first world that is emerging. Rather than compete head-on with the new super-clouds, IBM is hoping to become the digital Switzerland. 

This is a message that should resonate deeply. Big users of IT have always been wary of being locked into buying from dominant suppliers. Also, for many companies, Amazon and Google have come to look like potential competitors as they push out from the worlds of online shopping and advertising.....IBM faces searching questions about its ability to execute — as the hit-and-miss implementation of Watson demonstrates. Operating seamlessly in the new world of multi-clouds presents a deep engineering challenge.
artificial_intelligence  artisan_hobbies_&_crafts  automation  big_bets  brainpower  cloud_computing  contra-Amazon  cultural_change  data  digital_strategies  early-stage  economies_of_scale  Google  hit-and-miss  IBM  IBM_Watson  internal_systems  randomness  Richard_Waters  SaaS  standardization  value_extraction 
february 2019 by jerryking
The Evolving Automotive Ecosystem - The CIO Report - WSJ
April 6, 2015| WSJ | By IRVING WLADAWSKY-BERGER.

An issue in many other industries. Will the legacy industry leaders be able to embrace the new digital technologies, processes and culture, or will they inevitably fall behind their faster moving, more culturally adept digital-native competitors? [the great game]

(1) Find new partners and dance: “The structure of the automotive industry will likely change rapidly. Designing and producing new vehicles have become far too complex and expensive for any likely one company to manage all on its own.
(2) Become data masters: “Know your customers better than they know themselves. Use that data to curate every aspect of the customer experience from when they first learn about the car to the dealership experience and throughout the customer life cycle. Having data scientists on staff will likely be the rule, not the exception.
(3) Update your economic models: “Predicting demand was hard enough in the old days, when you did a major new product launch approximately every five years. Now, with the intensity of competition, the rapid cadence of new launches, and the mashup of consumer and automotive technology, you may need new economic models for predicting demand, capital expenditures, and vehicle profitability.
(4)Tame complexity: “It’s all about the center stack, the seamless connectivity with nomadic devices, the elegance of the Human Machine Interface.
(5) Create adaptable organizations: “It will take a combination of new hard and soft skills to build the cars and the companies of the future. For many older, established companies, that means culture change, bringing in new talent, and rethinking every aspect of process and people management.
Apple  automotive_industry  autonomous_vehicles  ecosystems  Google  know_your_customer  adaptability  CIOs  layer_mastery  competitive_landscape  competitive_strategy  connected_devices  telematics  data  data_driven  data_scientists  customer_experience  curation  structural_change  accelerated_lifecycles  UX  complexity  legacy_players  business_development  modelling  Irving_Wladawsky-Berger  SMAC_stack  cultural_change  digitalization  connected_cars  the_great_game 
april 2015 by jerryking
Culture Shock - WSJ.com
NOVEMBER 13, 2006 | Wall Street Journal | by CHRISTINA CHEDDAR BERK.
Second_Acts  entrepreneur  cultural_change 
june 2009 by jerryking
Crovitz: In Finance, Too, Learning Entails Risk - WSJ.com
APRIL 20, 2009 |Wall Street Journal | by L. GORDON CROVITZ

We know a lot about risk, information and probabilities, but not enough.
risk-taking  risk-management  L._Gordon_Crovtiz  cultural_change 
april 2009 by jerryking
Peggy Noonan: Dynamism Isn't Dead - WSJ.com
FEBRUARY 20, 2009 | Wall Street Journal | by PEGGY NOONAN

Remembering the Dawn of the Age of Abundance: Times are hard, but dynamism isn't dead.
local  crisis  innovation  entrepreneurship  future  hard_times  inspiration  collapse-anxiety  cultural_change  regeneration_&_recovery  Peggy_Noonan  economic_dynamism 
february 2009 by jerryking
Without Restraint Tides of confusion have washed up Mark Foley, Wonder Land - WSJ.com
Friday, October 6, 2006 WSJ columnist by DANIEL HENNINGER.
Clipped because there is an interesting paragraph on clarity of thought.

As a result, we live now in an era awash in cultural confusions. The tides bring in weird phenomena, like the Mark Foley story, leave them on the beach overnight, then drag them back out to sea before there's time to make much sense of what we saw. As often as not, we don't even try. The Web and digital technology have ramped up the cultural velocity to warp speed. MySpace, YouTube -- the once-bright line between the private and public spheres has evaporated.

This has had an effect on the way we think, or don't. Clarity -- thinking clearly -- is harder than ever to achieve, because clarity assumes a degree of general social agreement about things. For instance, time was that most people would agree that putting a crucifix in urine and calling it art doesn't qualify as anything but bad thinking. But no, we had to have a big argument over that. At the end of her current stage act, Madonna makes herself the central figure in a crucifixion scene. No problem. Most reviewers simply describe it, and move on.

Challenge over the past 40 years became a more powerful social value than clarity. One of the byproducts of challenge is that you don't have to think very much -- about the point or the consequences. Just do it. The act of challenge is its own justification. And one of the byproducts of constant challenge is aggressive confusion.
op_ed  Daniel_Henninger  WONDER_LAND  social_media  Madonna  clarity  cultural_change  revenge_effects  controversies  warp_speed  social_challenge 
february 2009 by jerryking
Those were the days;
06-25-2004 G & M RoB Magazine article by Doug Steiner on
the behaviour changes occurring in Bay Street among the brokerages.

First Marathon--led by Lawrence Bloomberg--and Gordon Capital, Connacher's secretive institutional boutique, were the Street's two toughest and savviest firms. First Marathon helped pioneer the discount brokerage concept in the early 1980s with Marathon Brown (which TD Bank bought in 1993). Bloomberg also perfected the "eat what you kill" compensation plan of fat bonuses for partners and employees who put together lucrative deals. It changed the payouts of almost every trader and investment banker on Bay Street, Howe Street and Ren Lvesque Boulevard....By 1995, the internet was changing trading forever. Disnat, E*TRADE Canada and other on-line dealers pushed the banks into flat-fee trading. Within three years, commissions for small trades tumbled 70%.

Yet Canada still had five stock exchanges: Vancouver, Alberta, Winnipeg, Toronto and Montreal. TSE president Rowland Fleming urged the exchanges to modernize, and the TSE closed its trading floor in 1997. His pugnacious leadership style helped persuade the dealers to remove both him and their own duplication of costs by consolidating the exchanges.

The culture was changing as well. Watering holes in Toronto, Montreal and Vancouver lost customers. Alcohol was no longer greasing the wheels of fortune. It was being replaced by MBAs, CFAs and hard work.
'80s  Bay_Street  behavioral_change  bourses  brokerage_houses  cultural_change  culture  Doug_Steiner  eat_what_you_kill  Gordon_Capital  hard_work  reminiscing  stockmarkets 
january 2009 by jerryking

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