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jerryking : risk-avoidance   4

The path to enlightenment and profit starts inside the office
(Feb. 2, 2016): The Financial Times | John Thornhill.

Competition used to be easy. That is in theory, if not always in practice. Until recently, most competent companies had a clear idea of who their rivals were, how to compete and on what field to fight.

One of the starkest - and scariest - declarations of competitive intent came from Komatsu, the Japanese construction equipment manufacturer, in the 1970s. As employees trooped into work they would walk over doormats exhorting: "Kill Caterpillar!". Companies benchmarked their operations and market share against their competitors to see where they stood.

But that strategic clarity has blurred in so many industries today to the point of near-invisibility thanks to the digital revolution and globalisation. Flying blind, companies seem happier to cut costs and buy back their shares than to invest purposefully for the future. Take the European telecommunications sector. Not long ago most telecoms companies were national monopolies with little, or no, competition. Today, it is hard to predict where the next threat is going to erupt.

WhatsApp, the California-based messaging service, was founded in 2009 and only registered in most companies' consciousness when it was acquired by Facebook for more than $19bn in 2014. Yet in its short life WhatsApp has taken huge bites out of the lucrative text messaging markets. Today, WhatsApp has close to 1bn users sending 30bn messages a day. The global SMS text messaging market is just 20bn a day.

Car manufacturers are rapidly wising up to the threat posed by new generation tech firms, such as Tesla, Google and Uber, all intent on developing "apps on wheels". Chinese and Indian companies, little heard of a few years ago, are bouncing out of their own markets to emerge as bold global competitors.

As the driving force of capitalism , competition gives companies a purpose, a mission and a sense of direction. But how can companies compete in such a shape-shifting environment? There are perhaps two (partial) answers.

The first is to do everything to understand the technological changes that are transforming the world, to identify the threats and opportunities early.

Gavin Patterson , chief executive of BT, the British telecoms group, says one of the functions of corporate leaders is to scan the horizon as never before. "As a CEO you have to be on the bridge looking outwards, looking for signs that something is happening, trying to anticipate it before it becomes a danger."

To that end, BT has opened innovation "scouting teams" in Silicon Valley and Israel, and tech partnerships with universities in China, the US, Abu Dhabi, India and the UK.

But even if you foresee the danger, it does not mean you can deal with it. After all, Kodak invented the first digital camera but failed to exploit the technology. The incentive structures of many companies are to minimise risk rather than maximise opportunity. Innovation is often a young company's game.

The second answer is that companies must look as intensively inwards as they do outwards (e.g. opposing actions). Well-managed companies enjoy many advantages: strong brands, masses of consumer data, valuable historic data sets, networks of smart people and easy access to capital. But what is often lacking is the ambition that marks out the new tech companies, their ability to innovate rapidly and their extraordinary connection with consumers. In that sense, the main competition of so many established companies lies within their own organisations.

Larry Page, co-founder of Google, constantly urges his employees to keep being radical. In his Founders' Letter of 2013, he warned that companies tend to grow comfortable doing what they have always done and only ever make incremental change. "This . . . leads to irrelevance over time," he wrote.

Google operates a 70/20/10 rule where employees are encouraged to spend 70 per cent of their time on their core business, 20 per cent on working with another team and 10 per cent on moonshots. How many traditional companies focus so much on radical ventures?

Vishal Sikka, chief executive of the Indian IT group Infosys, says that internal constraints can often be far more damaging than external threats. "The traditional definition of competition is irrelevant. We are increasingly competing against ourselves," he says.

Quoting Siddhartha by the German writer Hermann Hesse, Mr Sikka argues that companies remain the masters of their own salvation whatever the market pressures: "Knowledge can be communicated. Wisdom cannot." He adds: "Every company has to find its own unique wisdom." [This wisdom reference is reminiscent of Paul Graham's advice to do things that don't scale].

john.thornhill@ft.com
ambitions  brands  breakthroughs  BT  bureaucracies  competition  complacency  constraints  Fortune_500  incentives  incrementalism  Infosys  innovation  introspection  irrelevance  large_companies  LBMA  messaging  mission-driven  Mondelez  moonshots  opposing_actions  organizational_culture  outward_looking  Paul_Graham  peripheral_vision  radical  risk-avoidance  scouting  smart_people  start_ups  staying_hungry  tacit_knowledge  technological_change  threats  uniqueness  unscalability  weaknesses  WhatsApp  wisdom  digital_cameras  digital_revolution  historical_data 
april 2016 by jerryking
China will keep spying. Canada must respond with skill, not rhetoric - The Globe and Mail
DAVID MULRONEY
Contributed to The Globe and Mail
Published Thursday, Jul. 31 2014

China uses its long reach for objectives other than espionage. It feels free to confront any Canadian who shows undue interest in “sensitive” topics. Members of Parliaments, mayors, academics and community leaders have been bullied for displaying interest in the Dalai Lama, conditions in China’s restive Xinjiang region, or the plight of Falun Gong practitioners.

This is unacceptable, but here’s the hard part: we can expect more of the same. A rising but insecure China will not shrink from clandestine and downright unfriendly tactics to advance its interests.

We need to be clear-eyed in facing up to this. But we also need to recognize that our future prosperity, security and well-being depend on maintaining our own intelligently self-interested relationship with China.

So let’s start by banishing the rhetoric. China is not our best friend, any more than it is the sum of all fears. We do need to acknowledge and address the real threat China poses to our security.

Government needs to lead the way, but Canadian companies also need to step up their game. Enhanced security consciousness starts at the top. There are all too many anecdotes about security minded employees being over-ruled by senior executives who are worried about offending inquisitive Chinese visitors. That exquisite sensitivity is never reciprocated when it is the turn of the Chinese to host foreign guests....The one thing that we should avoid doing is closing doors to co-operation. Unfortunately, that’s already happening, and companies on both sides of the Pacific are paying a price. The Chinese media are portraying the U.S. technology sector as a major security threat. This makes it fair game for overly zealous regulators, and plays into the longstanding Chinese inclination to make life tougher for foreign firms. This week, investigators descended on Microsoft offices in China. Meanwhile the China operations of U.S.-based chip maker Qualcomm are also under review. Firms like Apple and Google have felt a similar chill.

Here in North America, China’s telecom giant Huawei is our bête noir, accused of being a proxy for the Chinese security apparatus. These allegations find a ready audience among a Canadian public that, as recent polling has shown, is increasingly wary of China.

It’s hard to argue against caution when it comes to China. But we’re jumping from naive acceptance to complete risk avoidance. There is an intermediate step – risk mitigation. Although its approach is not without controversy, the U.K. has opted for a partnership with Huawei that sees the Chinese company funding an inspection process in Britain designed to reduce security risks.

Complete risk avoidance, or shutting our door to China, comes at a cost that falls on consumers, on smaller companies seeking access to global markets, and on communities seeking investment....China is at the heart of changes that expose us to new levels of threat and uncertainty. We need to respond with skill, purpose and confidence. The only thing more dangerous than engaging China is not engaging it.
anecdotal  Canada  Canada-China_relations  cyberespionage  China  David_Mulroney  espionage  frenemies  Huawei  influence  influence_peddling  intimidation  inquisitiveness  purpose  risk-aversion  risk-avoidance  risk-management  risk-mitigation  security_consciousness  security_&_intelligence  self-confidence  threats  uncertainty 
july 2014 by jerryking
Playing it safe puts the economy at risk - The Globe and Mail
TODD HIRSCH

Special to The Globe and Mail

Last updated Thursday, Apr. 11 2013

Risk management is now a quasi-science, with positive and negative consequences. The positive is that companies are now better equipped to gauge the level of risk associated with any particular investment. But the negative is that, too often, risk management hampers innovation and creativity.

What should be a tool to make better decisions has sometimes led companies to make no decisions at all. Risk management should liberate companies. Instead, it has enslaved some.
risks  risk-management  innovation  economy  creativity  Todd_Hirsch  risk-aversion  risk-avoidance  playing_it_safe 
april 2013 by jerryking
Five traits of smart risk takers
March 13, 2013 | G&M | Harvey Schachter.

Review of Taking Smart Risks by Doug Sundheim. Sundheim lists five common dangers of playing it safe for too long:

• You don’t win.
• You don’t grow.
• You don’t create.
• You lose confidence as you lose momentum and start to freeze up.
• You don’t feel alive, because you aren't challenging yourself.
Harvey_Schachter  risks  risk-taking  books  book_reviews  soul-enriching  personality_types/traits  growth  cost_of_inaction  character_traits  complacency  risk-aversion  risk-avoidance  playing_it_safe 
march 2013 by jerryking

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