Wrapping up the Program - Part I

As of 1pm, barring any last minute disasters (not sure what they would be), my journey through the WFU Executive MBA program is complete. Our final grades were posted today. All that's left now is to receive my diploma at a ceremony in January.

As the last group to ever go through the Executive Program, the ending is somewhat bittersweet (the format was canceled in Fall 2009 due to strategic changes by the WFU Schools of Business). Being EOL brought us closer together as a group, but unfortunately we won't have subsequent classes to build the alumni base. The Executive program was started over 25 years, and was the original MBA program offered by Wake Forest.

Instead of just waving good-bye to this blog, I thought I'd finish it with a series of posts recapping some of the most important things I learned over the last 18 months.

Breadth of Knowledge Matters

Whether you're faced with a Strategy problem, a Marketing problem, a Finance problem or an Organization problem, no decision can be made in a vacuum. Having a fundamental understanding of a breadth of subjects, learned across a wide range of industries (through case studies, classmate experiences, etc.) is invaluable in making executive level decisions. Today's markets move much too fast to build companies that operate in silos, so bringing a breadth of knowledge to daily decisions will make the difference between survival and failure in the 21st century.

The World is Global...and Semi-Global...and Regional...and Local

While the Thomas Friedman's of the world grab many headlines, not every problem today is global. It is invaluable to have the experience of visiting and working in international markets (which we experienced), but knowing when strategy needs to be global is even more valuable. You must be ABLE to step out of your CAGE and see where it makes sense to bring ADDING solutions to market expansion. You must think globally, but act locally.

Create True and Lasting Value

As we saw from the financial crisis of 2008, and in numerous other examples, it is incredibly easy to financially engineer the books or manipulate markets in the short-run in return for near-term profits. But the 21st century, with it's hypermedia cycles, will quickly destroy companies that are not competitive and do not create true value for customers or partners. NOTE: "Lasting" is a relative term. It may only be 3-5yrs, but it's a mindset that should be infected into every company that strives to be competitive and differentiate themselves by creating tremendous value with their products and services.

Think like a CEO

All too often we tend to get caught up in the value of our functional area or market, and fail to see the bigger picture in front of us. Without the correct strategies, financial models and product portfolios aligned to solve customer problems, many ideas are just a set of random details.

Think like a Baby

At times, we plug all the data into our fancy MBA models and answers emerge. But do they always make sense? Have they taken into consideration local factors, or basic inter-dependencies? Have we thought through the simplest of details, asked the simplest of questions? For parents, we're often amazed at the way children are able to ask the most direct questions for complex topics. That type of questioning is valuable for executives as well.

Build Your Personal Brand

The personalization of media and the ubiquity of the Internet allows each of us to be our own Marketing/PR/Ad agency. Companies will come and go, but your personal brand is the one element over which you can have direct control. This blog was created for alternative learning purposes, but it eventually became a foundational aspect of me beginning a journey to better understand how a personal brand is built, cultivated and expanded.

The Final Semester Approaches

While it's still four months away, there is beginning to flicker a small light at the end of this tunnel. This last semester will take us into December, completely the last leg of this 18 month journey. The final semester is a mix of foundational studies, advanced strategic studies, and a deep look at one of the biggest challenges facing our world as a whole.

Here's the line-up for the fall semester:

Global Strategy II - Dr. Ram Baliga expands upon the strategic framework created last semester to explore the next layers of corporate strategy, mergers & acquisitions, and the global thinking required for the 21st century.

Business Law - I don't know much about this course (no syllabus yet), other than it will be taught by Miki Felsenburg from the Babcock Law School. I know the text book should not be dropped on my toes (about 5" thick).

Leading Change - Dr. Dan Fogel will explore how to take all these brilliant ideas people have and get them implemented in small, medium and large corporations.

Entrepreneurial Essentials - Dr. Stan Mandel will provide us the framework for starting new ventures, fostering great ideas and thinking like an entrepreneur whether we're starting a new business or trapped within a larger corporation. I'm hoping he also proves my previous comments about Entrepreneurship in EMBA programs to be badly misrepresented.

Management Practicum - No academic program would be complete without throwing in a couple of $0.25 words like "practicum", so here we go. Our final practicum will be focused on Green Technologies and ways that they can be applied to improve our companies and our world. I'll talk more about my team's project in a later post. Providing us "20% more Dan", Dr. Dan Fogel will be mentoring these projects and bringing his passion for Sustainability to the classroom as we wrap up the program in December.

The workload for this semester is quite heavy, discouraging senioritis from all angles. It should foster some very interesting learning and discussions, especially with the intersection of Global Strategy, Leading Changes, Entrepreneurship and Green Technologies. I know my classmate Gregg Lewis will have much to teach us from his hands-on experience in the Sustainability field.

The Internet will "Change" your Business &/or Industry

Following up on our discussion about Gary Hamel's innovation video, I made a comment in class that apparently bothered some of my classmates. It was rather terse, so I can understand the reaction to the tone, but it was needed to simplify the concept. The comment was made in response to a number of people not understanding how to get their company to adopt an innovation culture and seeming to be stuck on the idea that they were a data-driven company and innovation often lacks the necessary data to gain approval.

So I recommended to people to have a discussion within their company on, "How the Internet will "Change" (alternative wording used) their business or their industry?" It was blunt and maybe harsh, but it's the reality of today's compressed-cycle economy.

I thought I'd make a list of where some of those discussions could go for the industries that are represented within my class:

Education - I've discussed this several times before (here, here and here), but the Internet will allow the model for education (at many levels) to become collaborative and global. And if the actual education content becomes free via certain outlets, then what new value will schools provide their customers? Is job placement &/or venture funding (or incubation) the new value to provide? Are silo'd discplines (Liberal Arts, Business, Science) easier to blur with Internet technologies, hence creating new opportunities to create "renaissance majors" which may produce more competitive students?

Manufacturing - We're already seeing what digital technology and fabricated labs can do to initiate "creation" opportunities in emerging markets. Combine this with organizations like Kiva.org that provide funding for entrepreneurs, and you have the potential for radical change in how manufactured goods could be created and sold in emerging markets.

Radio & Newspapers - (see New York Times) - enough said. And if you've got a niche in a local market (ie. Hispanic audiences in North Carolina) and you're able to make that model work, why not look to use the Internet to aggressively license/franchise that to other parts of the country? Even companies like AOL and Google haven't figured out "local" yet, so leverage your competitive advantage as quickly as possible.

Mattresses - I highlight this one separately just because one of my classmates is in the "sleep enhancement" business and has an interest in technology. He mention a few weeks ago that their largest distribution channel was a big-box retailer who sold the mattresses vertically in a rack on the floor. Not a fancy showroom where people come in an "try them out", which is how many mattresses are sold. He then said that one of their competitors just decided to move to an all-online model. He said that his company was taking a wait and see approach to moving online because it could disrupt their existing distribution channels (ie. channel conflict). Let's think about that one:

• "Wait and see" on the Internet. How has that worked out for other industries? Maybe those Gen-Y mattress buyers will go against their current buying habits and want to shop in stores (see Zappos).
• Their largest distribution channel already sells the product without the "lay on it" option, but you're still worried that online might not provide the options your customers want?

But even if they aren't sure how to deal with the channel conflict that could happen from an online strategy (hint: channel conflict will always be there), what about setting up an online contest or "fan" page on Facebook or crowdsourcing community that allows people (all ages, all disciplines) to design your next generation mattresses? We've already heard 3-4 good ideas generated in our hallway conversations, why not open that up to 1000x the number of smart minds that might have a suggestion for using a mattress?

Banking - Why should I pay for high-end financial services advice when I can go to Mint or Motley Fool or eTrade or even Charles Schwab? Why should I trust companies that take my tax dollars and make them their dollars without providing any value? The Internet is making financial information more readily available and more transparent, so where could banks do to create need value-creating knowledge for customers? Charging additional fees on ATMs and Account Management is not the answer. Using Internet technologies to expose customers (not hiding information) to knowledge faster, and more globally is where new value will be created.

Healthcare - What are companies doing to get homes for elderly people wired so that low-cost monitoring equipment can be installed to remotely provide services (refill prescriptions, monitor movement for falls, monitor breathing equipment, etc..)? What are you doing to encourage the use of technology (speech recognition, online communities, etc.) that enhance the quality of life when patients are home alone or away from friends (or other with similar illnesses that want to share stories & support)?

Airplanes and Air Travel - The airline industry is already been radically changed by the Internet (see Travelocity, Expedia, Priceline), but now it faces a threat from technology companies like HP and Cisco with their Telepresence systems. But are the airplane companies working with their technology companies (or creating their own) to enhance the connectedness when people do fly? Are they allowing kids to play video-games against each other (in different rows) to help parents relax? Are they helping business travels stay better connected while flying?

That's just a few industries represented in my class, but each of them will be radically changed by the Internet in the next 5 years (if not already). Getting people to think through the possibilities of what could happen is (imho) an important strategic activity for them to consider

Making Innovation a Process/Culture within your Company

After 13 months in the program, I'm convinced that experience is the greatest enemy of entrepreneurs. People get comfortable. People change their approach to work/life after one bad experience. People constantly seek balance, or risk mitigation. People get cynical.

This weekend was an interesting microcosm of how E-MBA's see change. It wasn't completely surprising, because the older you get the more data you have to reference, the more past successes you try and emulate.

Dr.Baliga showed us a video (circa 1998) of Gary Hamel giving a presentation at Stanford. The focus of the talk was how business cycles are radically compressing. If companies want to survive they need to stop thinking about innovation as the next great project/product, but rather learn how to make innovation a core part of their business culture. In essence, re-engineer their process for fostering innovation just like they spent the 1970s-1990s re-engineering their operational processes to reduce costs or streamline efficiency.

A couple of quotes from Hamel stood out to me (paraphrased):

• Speaking with a hotel CEO, he asked why they didn't allow people to rent the rooms in a more flexible manner. The CEO responded that Hamel didn't understand the hotel business. Hamel responded, "And that's exactly why I have a valuable viewpoint on this subject". He explained that in this new economy, 90% of all innovation will come from outside your industry. Companies have to be willing to look for non-industry analogies.
• Following up on those comments, which might have been considered a "dumb question", Hamel stated that, "It's only from "dumb" questions that new value will be created. That new rules will be created. And new rules are what allow companies to gain advantage in any industry."

Following the video, the class discussed the concept. Asked for their thoughts, they responded with things like:

• He didn't give out the "how to do it" answers because he's a consultant looking for new business.
• He dismissed operational efficiency, but that's still a valuable way to create better profits for a company.
• I could never go ask my CEO to start a project like the ones he recommends, I'd get ridiculed for going against the grain.

Granted, Hamel did point out that maybe 3% of businesses today (circa 1998, although probably still true today) have the type of culture that he discussed, so it's not surprising that so many people responded with skepticism. Most companies still attempt to compete in a model that defends their existing business, extends their current models, and exploits their past loyalty from customers. People don't comprehend this because they don't believe they have experienced it. But the reality is they have experienced it, just from the other side of the fence. Their company's competition have implemented it in banking, telecommunications, manufacturing, media, consulting and high-tech.

It's difficult to be a mid-level (or even executive-level) manager and listen to people like Hamel speak, because you can see the future and yet it feels so difficult to obtain because of all the change needed (inside your company) to get there. It might impact your current role, it might impact your future salary/bonus, it might impact your status within a group. But more importantly, and this is the difficult concept to grasp, is that it's not a matter of "if" but rather a matter of "when" a lack of action will result in value destruction by your company. It's a near certainty that failing to implement an innovation culture within your company will result in failures on a massive scale. So if people are worried about risk, this isn't the risk to be worried about (it's almost 100% certainty - "no risk"). The risk to manage or exploit is how to become part of the upside when the innovation culture (that you're driving) takes off and your company starts creating new value for your customers.

As Hamel points out, sometimes it's good to take an "outside the company" (or industry) viewpoint on change. Here's a good quote from VC Fred Wilson's most recent blog:

"Bliss McCrum, one of the two VCs who taught me the venture business early in my career always said, 'if you are going to put more money into a company that is not working, make sure to change the strategy, team, or cost structure, or all three'. It's good advice. You will not get a different result doing the same thing."

Some people never learn...

The Wall Street Journal is claiming that Microsoft has it's MOJO back. Microsoft's Director of BusDev is turning up the PR hype machine. But haven't we all heard this song and dance before, especially after two internet or media giants merge?

SynOptics & Wellfleet

3COM and US Robotics

AOL and Time Warner

Lucent and Alcatel

So why will this one fail as well?

1. Geographic distance - Seattle and Santa Clara are both in the same timezone, but even technology like Telepresence or Halo isn't going to recreate the impromptu water-cooler meetings where most strategy gets originated.
2. Cultural differences - An Internet company and an Enterprise (and failed Internet) company. Oil and water don't mix.
3. Don't buy the Competition - People matter, and people that were competitors the day before don't easily become friends with "the enemy". This is a great way to have the best people from either company leave. And this little tidbit of detail won't make things any easier.
4. Lack of Innovation - While Bing is new, and contains some interesting technology, it's not a leap forward. It's an incremental difference that isn't sustained by superior scale or cost savings.
5. Lack of Problem Solving or Value Creation - Microsoft has tons of cash. Yahoo has tons of users. Neither could figure out how to bring new value to the business in the face of Google's growth. Merging the two doesn't create any new value for customers.

I was at Cisco for about 125 acquisitions. We didn't get all of them right (maybe 15-20% were big hits), but we made sure to try and meet each of those criteria before pulling the trigger.

In the digital world of the 21st century, scale is critical, but innovation trumps all. The media loves a big story, but rarely do shareholder benefit long-term when financial engineering replaces innovation.

Some days you're the pigeon, someday days the statue...

Sometimes it's very easy to tell if you're the pigeon or if you're the statue. The day usually starts out one way, and just keeps going in the same direction.

And then sometimes you get a day like I had yesterday. We received an email from our Global Strategy professor with the details of our final exam. The final is a case analysis, focused on how you'd analyze the current and future strategy of the company in the case.

The company highlighted in the case is VMware. At first I had a rye smile on my face because VMware is one of my global alliance partners, with my team spending about 75% of their time on joint activities. We live and breathe their strategy, and how it interacts with our strategy, on a daily basis. So on the surface, this final should be fairly straight forward.

But then I started thinking about it a little more. How much would I be biased by my existing knowledge and our current company strategy? Are we actually doing the right thing? Quickly this moved from a slam-dunk academic exercise to a real-world activity that has broader implications. On one level, I need to nail the final because it impacts my grade (the least of my concerns). On the next level, I need to determine if my company is making the right strategic decisions, comparing the academic/theory approach to our corporate approach. And finally, if I conclude that the company is making a mistake, I need to figure out the best approach to selling an alternative strategy to our leadership group.

There are times when getting an MBA seems like a long drawn-out process, littered with theories and papers that are sometimes difficult to comprehend how they will be applicable back in the real-world. And then occasionally the starts align and it hits the bulls-eye, making the late nights very worthwhile.

Invention vs. Innovation (and thinking differently)

One of the topics we've discussed recently in our Global Strategic Mgmt (GSM) course is Innovation and how that differs from Invention (or Discovery). Having worked in the technology industry for years, and having been lucky enough to work on innovation-centric teams most of the time, I've seen my fair share of both sides of the discussion.

Several years back, I worked with a group of people looking to radically change the way that companies collaborate (internally & externally). So we kicked off a project called "Emergent Collaboration", focused on how we take all the sources of knowledge that are floating around a company and morph that into something that is useful to huge numbers of people. There are some remnants of the project in these videos:

Part I

Part II

Part III

Ultimately, the project got cancelled because we couldn't sell the concept to our internal business units. Looking back on the project, it's very clear that not only did we not target the "pain points" of the customers clearly enough, but we also got too caught up in thinking about the problem through old lenses. Too often, we used concepts that existed in the previous problem instead of coming up with new paradigms

Recently, Google announced the planned launch of a new product called Google Wave. Not only does it appear to solve many of the same problems that we focused on with Emergent Collaboration, but more importantly, they constantly bypassed previous concepts and came up with new innovate ways to solve customers problems.

Who knows how well Google will do with Wave, they've struggled to monetize some previous non-search projects. But no matter what happens, it is an excellent example of how to think innovatively.

Defining Innovation

One of the conversations we had this weekend in our Global Strategy course was around the definition of Innovation. In trying to define it, classmates threw out "new technology", "thinking outside the box" and other definitions that sounded close. But Dr.Baliga corrected them by highlighting the difference between Invention/Discovery and Innovation.

Invention / Discovery - these relate to the creation of something new, or expanded knowledge of something in nature.

Innovation - this is the application of that invention / discovery into a product that is successfully deployed to solve a market need.

He was quick to point out that most executives get those two definitions confused. While Invention might seem like the more difficult part (ie. synthesize a new molecule; create a new hybrid engine, etc.), the truly difficult part is creating the system around it (sales, marketing, distribution, etc.) that allows it to be successful deployed by people to solve their problems.

Innovation requires some many things to be aligned and to "go right", including being prepared to act when luck comes your way. That's precisely the reason that so many companies have difficulties trying to be innovative. They have plenty of ideas on the drawing board and in the lab, but they just can't figure out how to get them to market successfully.

Finding New Markets - From the Rest-of-World?

It's definitely an American bias, but we tend to think that new things get invented here (cars, computers, televisions, etc.) and then foreign markets open to accept those goods. Eventually they get copied for lower-costs overseas, and are exported back the US.

But the world becomes more global, I suspect that we'll see this model begin shifting and more things will take off overseas and then eventually make their way to the US. Not even market will be defined by the tastes or whims of Americans first.

I was listening to a podcast with Bill Simmons and Colin Cowherd from ESPN this morning, two American sportswriters that make their living talking about the Big 4 American sports (football, baseball, basketball and hockey). The conversation moved to HDTV and how soccer was so much more enjoyable to watch in HD, and how both of them were quickly converting into soccer fans. And not just ordinary soccer fans (since the US has had the MLS for many years now), but International soccer fans. They actually went as far as to predict that the World Cup would eventually become a bigger sporting event that the Olympics, and the International soccer (not US-based MLS soccer) would catch on big here too. Soccer! In America!!

I use this as an example because most Americans (up to a few years ago) would tell you that it could never catch on here. But the world is becoming more global. Technology (ie. HDTV, time-shifting DVRs) is having an impact that is shrinking the globe. It's happening in every industry.

So before you make that next assumption about where the next great concept or business model might come from (Silicon Valley, Cambridge, Shanghai), consider that it might just come from completely the opposite direction.

Redbox

[With our Global Strategy course this semester, I'm going to highlight a bunch of interesting business models and strategies]

This concept was created by McDonalds. They didn't put the boxes in their stores, but rather in grocery stores. I would have loved to have been a fly on the wall when thise discussion happened. Why not in McDonalds restaurants? Do they miss out on too many people shopping after 6-7pm (4-9pm is the prime time for renting movies).

Also love that they are filling a temporary niche, until streaming becomes the primary viewing choice. Redbox could be gone in 5 years. Redbox could be the equivalent to dial-in Internet in 5 years (which still exist). But in the interim, they are capitalizing on a gap in the market between the collapse of Blockbuster and the impending rise of streaming video.

Disruption vs. Shareholder Maximization

[With our Global Strategy course this semester, I'm going to highlight a bunch of interesting business models and strategies]

I don't think I made too many friends in our Strategy class this weekend when I called the b.s. on two of the foundational principles of MBA programs: Accept all positive NPV projects and Shareholder Maximization Theory. I understand the concepts, and I understand the techniques. I'm just not convinced that it's the right guiding culture to build long-term companies. As Dr.Baliga stated this weekend, "too many times, those projects start with budget and then get wedged into strategy after the fact". I couldn't agree more.

Here is a good example from a recent article about Netflix, and how they are once again innovating to change and disrupt the market.But this time, they are not only disrupting the market with streaming video, they are potentially disrupting their current business model. I suspect that Netflix probably has positive NPV projects (today) that have values greater than their streaming projects, but are they aligned to help Netflix avoid the inevitability that all media will move online? The streaming project would eventually get funded using traditional approaches, but they would probably get started two years late and Netflix would be watching a streaming-only company pass them by.