Snippet from Davos - Cool ideas from older industries

I’m sitting in a panel entitled “Cool ideas from older industries”.  Among the participants is Brad Anderson, the CEO of Best Buy.

Great phrase:  The huge disadvantage established organization have is habits.  Many organizations choose their habits vs. choosing survival. 

I thought that was an insightful observation. 

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• Posted Rita McGrath on January 30, 2009

Green:  Nice while it lasted?

Only the blink of an eye ago, it seems, you couldn’t open a paper or read a magazine without someone talking about how ‘green’ their businesses were and how environmentalism has become a top-line concern.  With the economy in crisis, one thing we can predict is that green concerns are going to have to fight a lot harder to stay on top of the agenda.  In fact, I was recently involved in planning session for a major corporate event in which the event organizers, who had planned a session on “Green Business”, were told in no uncertain terms that the session was now irrelevant and should be yanked from the agenda. 

It will be interesting indeed to see which organizations stick to their green commitments as economic conditions continue to dominate the headlines. 

What can we predict?  Firstly, that a lot of smaller companies that went into business with a ‘green’ proposal are going to find things very tough, particularly if they are counting on a premium price for greener products.  They will be hit not only by the economic troubles of their evironments but by a radical shift in people’s priorities:  green may be nice, but if the choice is a green widget or a gallon of gas, it may not be affordable.  Secondly, we’ll see companies continue with programs that are green but that genuinely save money or time; while those that are more expensive or inconvenient are likely to be phased out (quietly of course).  Finally, we may see the beginning of an era in which items that are both not green and expensive or optional take a beating (bottled water, anyone?).

Your predictions?

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• Posted Rita McGrath on November 07, 2008

More examples of the benefits of early warnings and leading indicators

As I often say in class, information that we use to make decisions falls into three categories:

1)  Lagging indicators:  Often highly accurate and precise, but give us data only about the past;
2)  Current indicators:  Tell us where we are at the moment - for example, what inventory turns are right now;
3)  Leading indicators:  Give us information (albeit subjective information) about where we might be headed.  Leading indicators belong in every company’s strategic toolkit, but all too often they are completely overlooked. 

A really good recent example of a company that effectively acted on leading indicators was noted in the Wall Street Journal of January 14, 2008.  The Journal mentions how YRC Worldwide, a global transportation company, noted that the size of shipments it was handling for customers was declining as was the size of those shipments.  Anticipating a major retail slowdown, which would have harmed their business, the executive team laid off staff, took about 12% of its vehicles out of commission and otherwise prepared for a much slower season than normal. 

In my experience, such bold action is often not taken in time.  Why?  Companies don’t get the data for starters.  Or they get it and don’t know what to do with it.  Or even worse, they get it, know what to do with it, but don’t believe it (sub-prime, anyone?).  Or worst of all is to avoid taking action in the futile hope that all will recover on its own. 

So, questions to ponder:  Are you getting enough data on leading indicators to inform your decision making?  And if you get it, are you regularly spending time to make sense of it? 

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• Posted Rita McGrath on January 15, 2008

Making passengers smile at Zurich International Airport - the power of small differentiators

Here I am in Switzerland, working with one of Columbia’s best clients, Swiss Reinsurance.  We run a program called “Creating Breakthrough Strategies” for their most senior executives, and it’s always a highlight.

I was struck once again upon arriving at Zurich Airport how often simple little things can create a differentiated experience for customers.  In this case, when one takes a train from the “E” terminals (which are remote) to get to the area where there is baggage claim and so on, the airport has created a little light show that looks like a movie of the bucolic Swiss countryside as you go by.  Even better, they accompany the movie with sounds of cowbells and loud, authentic sounding mooing.  I was watching one family whose children were clearly not happy with the whole travel experience, and the little ones burst into smiles.  Imagine how nice more ordinary transactions could be if we put some energy into such small but friendly touches. 

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• Posted Rita McGrath on November 06, 2007

Of curtains and cup holders

Today I was teaching in Columbia Business School’s “Emerging Leader Development Program,” which as the name suggests is an executive education program focused on developing the leadership skills of younger, high-potential managers.  We were chatting about the interesting fact that the lowly cup-holder, introduced into the States by Honda in 1988, has by now become what I call a ‘non negotiable’ attribute in cars designed for the American market.  One of the participants in class, a woman from a foundation in the Middle East, said that cup holders were not particularly important or popular there.  But, she noted, what is important?  Curtains!  It seems that drivers (particularly women) appreciate the privacy that curtains afford.  Among other benefits, it means that they can take off some of the head gear that hides them from view and relax in the car.

I wouldn’t have thought of that in a million years.  Amazing. 

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• Posted Rita McGrath on October 02, 2007

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