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Business Innovation Newsletter - November 2002 |
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As the weather here in New England cools down, our activities continue to heat up. Hey, we've got to keep warm somehow. I hope you enjoy reading about our explorations, and I really hope that you get involved, on-line or in person. Let us know what you're up to and what's on your mind these days. To get things going, here's what's up with us. CBI Future Scan: The Network Knows... - What happens when everything is connected, and knows it? RFID technology is forcing the question. (1415 words) Godin: Survival Is Not Enough (Nov 20 Webcast) - The next CBI webcast features Seth Godin's advice for managing in volatile times.(323 words) nerve Event Overview - A glimpse into the first nerve gathering, exploring "weak signals" that will change our world. (760 words) Adaptive Enterprise Update: Examining Earnings - Two perspectives on the importance of earnings stability. (654 words) PDMA International Conference Trip Report - What's new in new product development. (776 words) Thinking About thinkAbout - A quick report from Pine & Gilmore's thinkAbout U experience.(748 words) Book Reflection - Retooling: A Historian Confronts Technological Change (Williams) - Lessons learned from how technological and social changes coevolved at MIT. (1737 words) CBI Calendar as of November 2002 (570 words) |
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CBI Future Scan: The Network Knows... |
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posted by Rudy3 on Friday, November, 1st Each month, we highlight one of the elements of the CBI's Future Scan. For an overview of Future Scan 5.0, please go to http://idea-x.net/display_topic.php?topic_id=902. If you are ready for more detail, here is this month's drill-down. -------------------------- The Network Knows Where Everything Is Embedded sensors will enable greater device-to-device communication, fueling economic growth in location-based services and transforming business processes across all sectors. There’s a big new four-letter term that promises to transform retail, inventory management, distribution, transportation, and many other areas of business and daily life: RFID. Radio frequency identification tags are the miniature devices that will increasingly allow the network to know where everything is. These tiny chips, equipped with a transponder and an antenna mounted on a flexible plastic square, measure less than one-tenth of a centimeter across. They offer an elegant mechanism for automating tasks, and promise to suck all the hyperbolic power from the phrase “searching for a needle in a haystack.” With an RFID tag attached, no needle will go missing for long. The network will know just where to find it. Smart cards, the Mobil Speedpass, and other key fobs introduced us to the convenience of smart sensor technologies. As RFID tags replace, and in time eclipse, scanners and barcodes, they will create an “Internet of things,” where device-to-device communications trigger automated responses and perhaps even anticipate hidden needs and avert mishaps. We foresee the rise of an intelligent network that will liberate users from location dependence and will shed light on process chains that are now only partially visible, or completely obscured. RFID tags are not the only technology that enables device-to-device communication and lets the network locate individual items and the people, crates, or vehicles associated with them. PDAs can communicate with each other via infrared, PCs via wireless LAN, and HP’s JetSend technology coordinates communications between scanner, printer, camera, etc. Cell phone networks locate users by detecting the base station handling their transmissions and provide localized traffic updates, and information about nearby ATMs and gas stations. Vert Inc., a wireless media company, broadcasts advertisements using intelligent displays that, sensing the time of day and their position, adapt their messages to suit different locations—they’ll stream stock quotes in the financial district, or switch to Spanish upon entering a Latino neighborhood. GPS chips are also used for navigation, and sometimes for police work. These chips are generally attached to vehicles (and more recently, embedded in cell phones, and even human beings), but not to hundreds of thousands of library books, tins of soup, or warehouse pallets. Because GPS signals are not designed to function well indoors and require substantial, independent power sources, their practicality is limited. It is RIFD technology, though still in development, that will most likely drive major change and significant business value. What happens when the network knows the location and movements of everything? Let’s start with the good things. Embedded sensors enable improvements in efficiency, safety, and service, by reducing inventory costs, preventing waste of perishable goods, deterring theft, facilitating recall, and minimizing stock-outs. Unlike barcodes, RFID tags are weather resistant, “always on,” able to be read at any angle, and reprogrammable and reusable. Consider the following applications of RFID technology. · Inventory management—tracks individual items from container to truck to shelf to cart. Walmart is already tracking pallets of soft drinks, paper towels, and razors. Sainsbury is tracking prepared foods throughout their supply chain. Food retailers, subject to fines for stocking out-of-date inventory on their shelves, can use RFID tags to ensure compliance. Similarly, drug companies, liable for the safety of their products, can use RFID tags to monitor expiration dates, storage temperature, and the precise location of controlled substances. · Express package delivery—ensures that only authorized Federal Express couriers have access to delivery vehicles, by automatically locking and unlocking doors. · Library operations—accounts for books coming in and going out automatically, reducing checkout time by as much as 40%, eliminating thousands of forms, and saving millions of dollars in staff wages every year. The National University of Singapore, Rockefeller University in New York, and several community libraries in the United States have adopted this system, which also assess fines and enables automated inventory checks. RFID tags are also used in museums to monitor location of priceless works of art. · Waste collection—collects data on a trash bin’s weight and address, to assess accurate fees for waste removal. · Bus terminal management—provides real-time information for waiting passengers, assigns buses to loading and unloading platforms dynamically. · Highway circulation—allows for “wave-throughs” at traffic lights, giving priority to public transportation and emergency vehicles, reduces congestion and streamlines highway toll collection (in the United States services like FasTrack and EZ-Pass). · Fleet management—monitors equipment abnormalities and triggers preventive maintenance, optimizes geographical distribution, and allows for real-time inventory management. · Airport operations—enables hands-free access through security doors for more efficient freight handling. · Health care—enables not only tracking of medical equipment (everything from wheel chairs and portable ultrasound to medications and charts and films), but also continuous patient monitoring. · Manufacturing—coordinates the work sequence in assembly lines and captures test data, eliminating the need for a central server to handle these tasks. Bumps in the Road In spite of the great promise of embedded sensors, and RFID tags in particular, several technical challenges and social issues still present barriers to their widespread adoption. Technical Challenges · Cost and output: Today, RFID tags cost anywhere from one dollar to 40 cents. Readers remain pricey, too, costing at least $1000. Conventional production methods limit manufacturing output to 10,000 tags per hour, but by 2005, tag manufacturer Alien Technology forecasts producing $100 readers and 5-cent tags at a rate of 80 billion per year. · Standards: MIT’s corporate-sponsored Auto-ID Center is trying to nip this potential problem in the bud, by promoting and developing open standards—for example, common data storage formats, power sources, band(s) in the radio frequency spectrum, and so on. · Limited range: Radio frequency reception is usually limited to a distance of two-meters and can be blocked by some physical structures. Social Issues · Elimination of human labor: Automation technologies continue to encroach on certain kinds of jobs, and in this case, check-out cashiers and data-entry operators may not survive the competitive threat. · Privacy concerns: Undetectable surveillance—if a product, say your wooly winter overcoat, is equipped with an embedded location chip, there’s no more traveling incognito, no more alibi for that quick trip across town. · Hacking: Many RFID tags are programmable and thus vulnerable to malicious hacking. As more and more smart chips communicate with other devices across the network, opportunities for mischief will multiply. Companies using this smart sensor technologies will help spurn performance improvements, and private users may not lag business by much in adopting these for personal and home use, including smart washing machines and microwaves that read tags on products and adjust their settings automatically, and “digital angels,” location identifying bracelets and collars for kids and pets. Extrapolations—this makes us think that sometime soon… · Every object might have a unique ID. In fact, according to MIT’s Auto-ID Center, a 96-bit electronic product code (ePC) allows for unfathomable scale—enough unique combinations to accommodate 80 thousand trillion trillion unique identifiers. · Most Internet traffic will be object-to-object · Everybody will be on GPS, and your friends’ locations will show up on your phone · Out-of-date food will be almost impossible to buy, as shipping, handling, and temperature tracking reports become available for every item in the grocery store · Self-check-out and instant billing will move from the supermarket to the department store · Everyone’s kids will be wearing RFID-enabled security bracelet Implications—you should be thinking about… · Embedding ID chips in everything that you sell (and developing ways to incorporate feedback from these—about product use, durability, etc.—into your product design and CRM practices) · Reengineering supply-chain tracking to leverage unique IDs and object-to-object communication · Dynamically generating delivery schedules several times a day · Customizing pricing—across time, space, and customer · Exploiting new streams of data that connected objects are generating · Discarding data once it’s been analyzed—omniscience will soon overwhelm storage capacity, so companies will need to develop systems for assessing the useful life of information about objects in the network, and disposing of data that is no longer relevant Selected sources “The Compact Electronic Product Code,” an MIT Auto-ID Center white paper by David L. Brock, published November 1, 2001 (http://www.autoidcenter.org/research/MIT-AUTOID-WH-008.pdf) The Association for Automatic Identification and Data Capture Technologies (http://www.aimglobal.org) “Something to watch over you,” The Economist, August 17, 2002, 61-62. Roberti, Mark, “Your Inventory Wants to Talk to You.” Business 2.0. 05/02. (http://www.business2.com/articles/mag/print/0,1643,39278,FF.html) Roberti, Mark, “Wal-Mart, Early Adopter.” Business 2.0. 05/02. (www.business2.com/articles/mag/print/0,1643,39277,FF.html) Mobil Speedpass: http://www.speedpass.com/news/article.jsp?id=50 Singapore National Library: http://www.lib.nus.edu.sg/linus/01jan/selfchec.htm ( Comment ) |
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Seth Godin: Survival Is Not Enough (Nov 20 Webcast) |
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posted by Rudy3 on Thursday, October, 31st The next in the Center for Business Innovation's bi-monthly webcast series is on Wednesday, November 20, 2002 12:00 EST (Duration: 60 minutes) featuring bestselling author, entrepreneur and agent of change Seth Godin (http://www.sethgodin.com/sg/index.html) describing his approach to business in times of great change. Survival is Not Enough — how to thrive when the whole world is nuts Seth is the author of four books that have been bestsellers around the world, and his latest book is really shaking things up. Godin believes that even though change is unavoidable, change management is a myth. The core of Godin’s thesis is this: organizations that welcome a changing environment, that embrace change instead of fighting it and that measure the results of their actions (and do something with those results!) will always defeat more traditional companies. Should we shut down our factories and build a very different kind of organization? There’s a breakthrough idea here, one that affects just about every company, large and small. The fear that grapple with whenever our worklife changes can be debilitating… and today’s environment is making that fear a more common emotion. There’s a different way, one that’s positive instead of negative, and filled with significant upside opportunity. Seth Godin is one of the country’s top-ranked public speakers. You may disagree with him, but you’ll certainly be challenged to push your notions of what it means to deal with change to the limit. Please join us for this live, interactive webcast (with streaming audio and video) on Wednesday, November 20, 2002 12:00pm EST. REGISTER: http://www.iian.ibeam.com/events/capg001/112002a_be Contact Audrey Boldt at audrey.boldt@cgey.com or +1-617-494-5703 with any questions. For technical support, contact Williams Communication by email at tsc@ibeam.com or by phone at 1-800-773-3371 or 405-717-4872. **For those unable to join this presentation via the Internet, you are invited to call in and listen only to this important presentation. International: 1 (847) 944-7313 Continental United States: 1 (866) 297-6391 (Reservation #6380722) Press *0 at anytime during your conference call for operator assistance. ( Comment ) |
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nerve Event Overview |
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posted by Rudy3 on Thursday, October, 31st On October 23rd and 24th, an amazing group gathered at the CGE&Y Center for Business Innovation for our first nerve blast. Or was it a confab? A salon perhaps? Traditional labels don't seem to apply particularly well, so let me describe what happened and you can let me know what you think it was. As regular readers know, the CBI started a program called nerve late last year that has as its mission to find and amplify "weak signals" of important changes arising from advances in science and changes in social dynamics that will have an impact on business in the next 5-10 years. One of the primary elements of this effort is to bring together a set of the signals that we want to highlight each year to see what happens. Our shindig on the 23rd and 24th was the first occasion of this and it was amazing. Here's why. The Participants Every one of the 30 people who joined us had a role. Some, such as robotics wiz Jordan Pollack and behavioral economist David Laibson, were representatives of a particular signal that we (the CBI) had chosen for highlighting at this event. Others, including the Harvard Business Review's new editor Tom Stewart, MIT professor Sherry Turkle, and Grameen Phone founder Iqbal Quadir, were respondents, giving their thoughts and perspectives on the signal from a non-specialist's or alternative point-of-view. Author Kevin Kelly, Fast Company founder Alan Webber, and entrepreneur/screenwriter Kyle Shanon were "tea leaf readers," whose job it was to kick-off our sense-making discussions by sharing the patterns they saw in the many elements and ideas discussed. And others worked to support, capture, and represent the conversations in various forms, including Jerry Michalski who created a "Brain" (http://www.thebrain.com) for the event. Everyone was a contributor. The Signals While it wasn't possible to get to all of the "weak signals" that seemed interesting into the spotlight during this 1.5 day event, the ones that we explored were fascinating. One of the highlights for me was hearing about the Global Consciousness Project from its director, Roger Nelson. See http://noosphere.princeton.edu/ for more, but what I loved was the fact that it is a perfect example of what Arthur C. Clarke meant when he talked about the most important phrase in science being not "Eureka!" but "Gee, that's funny..." The amazing results Nelson is observing, with no obvious reason why they should be occuring, is fascinating. Plus, we heard about essentially growing buildings, how hard it is to separate our feelings about living and non-living things, evolving creative outcomes, and on and on. The signals were excellent building-blocks for discussing the anxieties and solutions that will shape our future. The Experience In order to get out of our traditional frames of mind and points of view, we did all we could to get people out of their comfort zones, physically and intellectually. Michael Counts, Karen Dalzell and her team at Dalzell productions helped transform the space and the experience, breaking down boundaries to open up room for us to explore new ideas. Meshing the context with the content enabled us to interact with the ideas on multiple levels. Whether it was the indoor marsh created to enhance the Biology*Design signal or the "life on the screen = immortality" cues during the Extension of Life segment, the subtext/context vortex swirled throughout, simultaneously unbalancing us and challenging us to engage thoroughly at many levels. So What? Nerve is not over. What happened on those two days has added significant energy to the nerve program and has generated some wonderful sparks. Over the coming months, we will be simultaneously drilling more deeply into several of the ideas from the event, clustering and working on implications of others, and searching for new signals to highlight in the future. There are many ways to get involved in these endeavors. The online hub of activity is the program's website (http://www.gotnerve.com). There you will find, among many other things, a list of participants and their backgrounds, descriptions of the signals we profiled, and a link to the Idea-X site developed to support ongoing collaboration in finding, discussing, and evaluating nerve-worthy signals. We will also be posting artifacts from the event over the next couple of weeks, including graphics depicting the sessions and the Brain Jerry created, so check back often. We have a variety of ways we will take this work forward, live and online. I will keep you informed, but do let me know if you have ideas or would like to collaborate by responding to this posting or email me directly at rudy.ruggles@cgey.com. ( Comment ) |
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Adaptive Enterprise Update: Examining Earnings |
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posted by Rudy3 on Friday, November, 1st (Written by Eric Mankin; eric.mankin@cgey.com) This month's update will focus on the value of earnings stability and predictability. The two studies highlighted here, which review financial data from the past 10 years, indicate that stability and predictability are positively but weakly related to performance. All other things equal, a company with a more consistent earnings stream will be valued slightly higher than the same kind of company with more variable earnings. The effect of stability on total returns to shareholders, however, is quite weak. Earnings growth, for example, is a much stronger driver of financial and operating performance than is earnings stability or predictability. If a company's senior officers are interested in improving its financial and operating performance, they should put a low priority on investments in structures for achieving earnings stability and predictability. In most companies, there are many better ways to improve returns to shareholders. 1. Volatility and Earnings Growth In November of 2001, Prabal Chakrabarti of the CBI examined the effects of earnings volatility on earnings growth. Looking at 10 years of US financial data for the 3000 largest publically traded firms, Prabal divided the sample in half, based on volatility of earnings, and compared earnings performance from 1991-2000 across the two groups. He found that those companies with more volatile earnings also experienced much faster earnings growth than companies with less volatile earnings over the 10 year time period. Results (all figures in $ Million) Average Adj. Earnings...1991....2000....10 YR CAGR Volatile...........................43.......307.......24.4% Less Volatile...................119......320.......11.6% Average Income.........1991....2000....10 YR CAGR (unadjusted for Special Items) Volatile..........................27......305.......30.5% Less volatile...................93......293.......13.1% Volatile sample is 552, Non volatile is 1,006. It appears that, overall, companies with volatile earnings were able to grow their earnings much faster than those with less volatile earnings. This analysis is intriguing but problematic. One potential problem with it is "survivorship bias." Presumably, the companies which have more volatile earnings should also have a higher number of companies going out of business. But if a company went out of business during the period, they weren't included in the analysis. This survivorship bias would make the group of more volatile firms look more attractive. 2. Profit Volatility and Stock Market Performance Following on this work, Will Clifford of the CBI pointed me to an article called "Who's Afraid of Variable Earnings," published in the Summer 2002 issue of McKinsey on Finance (online at http://www.corporatefinance.mckinsey.com). The authors, Tim Koller and SR Rajan, looked at the question: Does the market value steady and predictable profit growth, and if so, how much? They concluded: "We found that variability in earnings growth rates had little effect on total returns to shareholders (TRS). It is true that as earnings stability decreases, TRS declines, but the magnitude of these effects are small, especially when compared to the effect of fundamental drivers like earnings growth and return on invested capital. Similarly, greater earnings stability results only in a small increase in market to book ratios and has no effect on a company's P/E ratio." The authors look at the effect of missing analysts expectations, and find minor impacts on stock market returns. "While the short-term effects of meeting or missing projections can be significant, fundamental performance drivers are much more important over time.... for example, both McDonald's and Sherwin Williams produce notably predictable earnings, with each company's earnings varying on average less than 3 percent from annual forecasts over the ten years studied. But they have underperformed the S&P 500 on a risk-adjusted basis, with ten year cumulative excess returns of -21 percent and -57 percent, respectively. On the other hand, Southwest Airlines and Biogen are both considerably less predictable, varying annually by nearly 30 and 50 percent, respectively, on average from forecasts...yet both of these companies have outperformed the S&P 500 with ten-year cumulative excess returns of 109 percent and 164 percent." With limited management time and attention, the time and system investment in managing earnings to expectations appears to generate a relatively low return. In a volatile world, variable earnings do not carry major penalties. ( Comment ) |
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PDMA International Conference Trip Report |
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posted by Don on Friday, October, 25th The PDMA International Conference in Orlando was a very good showing by the product development community. With last years conference in mind, it was larger and more satisfying conference in some ways, and less impressive in others. Over 500 people attended, and from what I understand, the split between practitioner/service provider/academic was 60/25/15. The practitioner population has continued to increase, possibly due to the belief that numerous "best practices" presentations are made, but also possibly due to the decrease in service provider's ability to justify the increasing cost of the conference. My biggest surprise this year was the high caliber of the keynote speakers. The opening keynote, Richard Tait from Cranium, was fantastic. His presentation was clear, insightful, inspiring, and intelligent. Perhaps the best presentation by a senior executive I have seen. I was particularly impressed with his vision when he started Cranium, which stretched well beyond the flagship product and has produced a clear 10-year product roadmap. He also presented a core component of their methodology - CHIFF (clever, high quality, friendly, and fun)- made it very easy to see how their products are positioned to dominate the game-board marketplace. It consisted of a multi-tiered quality test that every product they created must satisfy. This process was even more interesting because their suppliers and manufacturers seem to have bought into the CHIFF concept, and now call Cranium with suggestions on how to improve their product to be more CHIFF. Here is a link to learn more about Cranium http://www.inc.com/articles/start_biz/23798.html or www.playcranium.com The other keynoters, while good, were weak in comparison. They went much more towards a traditional presentation that might be given to analysts, and less into the science behind their business. The second keynote was by an executive at Tupperware, and the final keynote, closing the conference was from a worldwide R&D VP from J&J. The tracks this year, spliced into Imagine the Possibilities, Improve the Process, and Introduce the Product ended up providing a slightly different set of insights than in years past. There was the requisite number of service providers on the stage hawking their wares, but there were also some great presentations by executives who were new to the PDMA. A presentation by Gary Lynn on his new book "Blockbusters" was especially valuable, as it is based on 700 case studies performed over a 10 year period. His presentation went in depth into how you can ensure that your product is successful, and further, how you can create a blockbuster new product like the Polycom, Colgate Total, and the Black and Decker SureShot. Gary mostly focused on the process within the stage-gate model for the presentation, and spent little time discussing the idea-generation stage. As a result, the presentation came off as more of a project management story than a product development story. Nevertheless, the data is good, and the messages are high-quality. Another notable presentation was given by the people from GOJO (hand cleaner, well used in the auto-world). The most interesting aspect of the GOJO story was that it is the polar opposite story from the one Gary Lynn gave. GOJO is a classic "back-of-the-envelope" product that was conceived, developed and commercialized without any semblance of a product development process. They thought of this cool product based on a serendipitous encounter, and it has exploded into it's own category of hand cleaners that now includes Purell and other waterless hand sanitizers. They are huge, and growing very quickly. As for my biggest disappointment, I would nominate the Coca Cola presentation. I went to the conference because I was intrigued by a few topics, one of which was Coca Cola's presentation on creating communities. As I came to learn, the term communities to them was a synonym for teams, and the presentation ended up being a presentation by a service provider pushing her book. The main message was that we need to look to Aboriginals in Australia to better understand how we can create communities/teams that work well together. In sum, this one was a major disappointment. Finally, the other interesting item that I took away came from the exhibit hall. This year we had about half as many vendors as last year, and the vast majority of them are now software vendors. Two of them could be qualified as competitive to Idea-X,, and the rest of them are more classic project management tools like IDe and Sopheon. I didn't expect the shift to be so quick, but somehow, product development seems to have been completely overtaken by the template-wielding software salesman. That's all for now. Please let me know if you would like more on any aspect of this. -Don ( Comment ) |
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Thinking About thinkAbout |
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posted by Rudy3 on Thursday, October, 31st Joe Pine and Jim Gilmore wrote a book several years ago called The Experience Economy. It was the first well thought-through treatise on how experience was actually an economic good and should be accounted for and leveraged as such. They have turned their words into practice in a variety of ways, including consulting to over 150 leading companies and giving speeches all over the globe. One of the manifestations of their ideas is their annual thinkAbout event. Held in a different location each year, they sample the experiences associated with that area (going to American Girl Place in Chicago or traveling the strip in Las Vegas). Their events are always great fun themselves and they seem to outdo themselves each time, practicing what they preach in creating valuable experiences. This past September, they turned their own model inside out and created thinkAbout U, "an intellectual dormitory." I participated in this event and I'll attempt to share some of what I learned. Our group took over Hotel Avante in Mountain View, CA. Hotel Avante is one of the creations of Chip Conley, founder of JDV Hospitality and author of The Rebel Rules. Its funky, hip feel contributed to its transformation it into our "dorm" for a couple of days. The format for the thinkAbout was very open, playing off of this theme to encourage elements of the agenda to be more like "bull sessions" than presentations or facilitated discussions. This worked well for some things, such as exploring the meaning of charity, but there were other times when more direction was needed. In these cases, there were presenters (who were also participants throughout) who told about their work as a way to give some information and kick-off relevant discussions. Pine and Gilmore took their turns in these roles, as did Amy Nedoss (Marketing Manager, American Girl Place), Tim Sanders (Chief Solutions Officer, Yahoo!, author of Love Is the Killer App), and others. In addition, Sally Harrison-Pepper (author, Drawing a Circle in the Square) took folks on a field trip to experiment with different approaches to customer interaction. As with most events, and especially with an experience-centered one such as this, it is difficult to pull the lessons apart from the context. That said, here are a couple of ideas I found particularly interesting. "Experience" is context-dependent. That may seem obvious, but it really matters when you are trying to engage with people who have different contexts. For example, during the Harrison-Pepper field trip, we went into several different retail establishments to see how their employees would deal with challenges (e.g., a very slow talker, someone who wanted to buy something that the store doesn't sell). The reactions would vary depending on how in or out of context the behavior was. They were generally prepared to engage with people who were roughly in context (speak slower), but had a harder time engaging if the behavior was out of context (e.g., guy talking like a pirate in a flower shop, woman doing Irish step dancing in a mail services store). Experience creation needs to consider the variety of contexts people bring with them. People want "authenticity," but it's not clear how that relates to things being "real." It seems to have to do with things being as you say they are, even if that thing isn't truly what it appears to be. Pine & Gilmore have thought a lot about this, and have the 2x2 matrix to prove it, but what I took away from the conversation was that people want to be able to trust but verify. In asking for authenticity, they say "don't lie to me" and then they want the transparency that allows them to confirm that things are as they are described. This is the only way I can see for us to ever regain trust in all the institutions that have let us down, but that we need to believe in. A few random notes: - Experience is an "idea wrapper" (my term for something that enables people to understand and internalize ideas). - "Our" stories are more effective (authentic?) than "their" or even "my" stories. - It's helpful to have a three word description of the theme of your business. American Girl = Extension of girlhood. Marriott Vacation Club = Stuff in pool (good stuff, like a pirate ship; and I should say that this was Jim Gilmore's description, not Marriott's). If you are interested in more about this event, past thinkAbouts, or Pine & Gilmore, their website is http://www.customization.com/default.asp. ( Comment ) |
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Retooling: A Historian Confronts Technological Change (Williams) |
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posted by Dsmcintosh on Thursday, October, 31st CGEY Center for Business Innovation CBI Network Book Review Rosalind Williams Retooling: A Historian Confronts Technological Change (Cambridge, MA: MIT Press, 2002) ISBN 0-262-23223-5, 252 pp. The Massachusetts Institute of Technology, the most famous scientific institution in the world, was originally more of a technical school. As recently as the late 1940’s, a majority of its students were commuters who lived at home and not on campus. It prepared the sons of the lower middle class to be engineers, to be professionals equal in stature with doctors, lawyers, and clergymen. MIT’s provost once summed up his institution’s cultural DNA in five words: “We’re engineers. We solve problems.” But this comfortable, professional perspective was disrupted in the 1940’s. World War II put engineers in situations where the most important, difficult problems to solve were organizational ones, not so much what to do as how to get other people to help. Engineering needed to become equal parts management and science. A second disruption in the 1940’s was the detonation of the atomic bomb. From August 6, 1945, on, engineers knew they weren’t simply scientific advisors operating on the fringes of society. They could no longer afford the detachment of disinterested professionals. MIT acknowledged these changes by reevaluating its mission and educational goals. Warren K. Lewis, a professor of chemical engineering, led the commission which identified “a need to develop a broader type of professional training that will fit engineers to assume places of leadership in modern society.” After all, the Institute wasn’t just producing engineers, it was educating the men who would be leading the free world. The Lewis Report laid the groundwork for decades of institutional change. The School of Humanities, Arts, and Social Sciences grew to become thirty percent as large as the School of Engineering Individual departments changed their names and their missions in response to changing times: Civil Engineering, for instance, became Civil and Environmental Engineering. The amount of building space that MIT occupied tripled between 1960 and 1990. One thing that could be said about MIT was that it was not afraid of change. Forty years later MIT faced a new challenge. After half a century of steadily increasing funding, the federal government started cutting back its support for R&D. MIT found its expenses increasing faster than its revenues. In response, President Charles Vest proposed a three-part strategy: advocating for continuing government funding of R&D, finding new revenue sources, and cutting costs. In November 1993, he announced the “Reengineering Project” The official announcements promised “a fundamental rethinking and radical redesign of support processes to bring about dramatic improvements in performance.” Like companies all across America, MIT was embarking on The Journey. By chance, one of the reengineering project team members was Professor Lewis’s granddaughter, Rosalind Williams, a historian on the faculty at MIT and the Dean of Students and Undergraduate Education. Williams has written a book about how MIT confronted change, Retooling. (Humor alert: at MIT, a “tool” is someone who works hard, and “tooling” is what they do.) In her book, Williams focuses on two Institute-wide projects, the reengineering project, and the Task Force on Student Life and Learning. In looking at these two projects, she provides a rich analysis of how change affects technology and community, and vice versa. The reengineering project focused on the support processes at the Institute. The school was looking for ways to save money without disrupting MIT’s teaching and research. After an ample number of task force meetings, it became clear that the heart of the reengineering effort would be the installation of a new university-wide financial software system, SAP R/3. The need for such a system was fairly evident. A school with 10,000 students had an accounting system with over 100,000 expense categories. Nobody was in a position to see what was really going on. Once the project was underway, it quickly became clear was that there were two camps, engaged in a long-term struggle. On one hand were the software vendors, the consultants, and the reengineering leadership team. On the other were the resisters. One side represented change, the other side tradition. Being a historian, Williams was sensitive to the language she was hearing and what its unintended implications were. People became process owners, team leaders, and change agents. They had roles and competencies. Not only were teams going to capture the low-hanging fruit, they were going to break the institutional culture of the Institute they worked for. This all sounds like the French Revolution, but with a mouthful of New Age jargon. What were these people thinking? Was MIT so thoroughly messed up that it needed a conspiracy of consultants and committees to dismantle its operating culture? Were the benefits of a new accounting package so substantial that the savings would outweigh the costs? Of course not. Just like their fellow revolutionaries two hundred years earlier, they had come to believe that radical change was the only rational path. Yet in hindsight, it was the change agents who were the romantics, and their opponents the realists. Even though the schemes for reengineering and “culture change” were dressed up in the vocabulary of logic and technology, they were at their heart founded less on data than on hopes and dreams. The genius of reengineering is in redesigning processes to take advantage of information technology. But the blind spot of reengineering is in overlooking the informal component of most interactions. Automating the formal components of a transaction doesn’t eliminate the informal components, it just makes them reappear elsewhere. Putting answers to frequently asked questions up on a web site doesn’t eliminate any phone calls, it just alters the content of those calls. All too often, process redesign doesn’t eliminate work and costs. Sometimes it just moves them around. After SAP R/3 was installed, ostensibly to reduce costs, some laboratories needed to hire their own financial analysts to interact with the system. The savings in the CFO’s office were offset by increased costs in the labs. When the change resisters are fighting the forces of process redesign, they are sometimes making an economic argument, albeit unwittingly. The consultants and change agents can identify savings from new processes and systems. But they cannot always identify, much less measure, the costs of discarding the knowledge that has been embedded in people, relationships, and culture. As Williams notes, “Trust and loyalty allow people to make demands on one another, to have high expectations of one another. Trust and loyalty allow people to come to terms with technological change when they know that the larger goals and the social setting are relatively stable.” As anybody who has ever remodeled their kitchen knows, it’s the change orders that bankrupt you. MIT’s Jim Curry estimated that eighty percent of the cost of implementing software comes from customizations. If MIT had just been able to implement the software the way it comes out of the box, it could have saved a fortune. But the only way to do that would be to change the Institute’s processes to fit SAP’s software. Which would clearly be folly. The way the Institute works has been hammered out over a hundred years, the result of endless compromises and accommodations. It contains an enormous amount of implicit knowledge about the best way to match the organization’s needs with its resources. But this was a clumsy conversation to have, since the people that understood SAP didn’t understand MIT, and the people who knew how things worked at MIT didn’t know much about SAP. The reengineering project was completed in 1999, to somewhat mixed reviews. The new financial systems allowed the central administration to have control over spending at the Institute than ever before. On the other hand, the anticipated cost savings are still being anticipated. The school’s budget situation improved, but more because of growing revenues than falling costs. Still, implementing the university-wide SAP system may have helped on the revenue side, because it showed donors that the Institute was serious about being a well-run operation. MIT’s unique culture emerged intact. It is dangerous to redesign our cultures to fit our technologies. Just because, for instance, the technology exists to use web-based video to deliver lectures in an introductory computer science course (6.001, to be exact) doesn’t mean it’s a good idea. The bottom line is, what decisions will help students learn better? Although technology plays a role in this mission, so does community, and the two are sometimes at odds with each other. The IT revolution has let scholars work with their colleagues from around the world in virtual communities, but at what cost? “Over two years of study,” Williams writes, “we concluded that MIT has been so fertile in technology creativity—so innovative, if you will—because of informal groups, unstructured encounters, odd connections, wandering, and daydreaming.” The Task Force on Student Life and Learning concluded that “the future of MIT depends not on promoting technological change but on maintaining a beloved community in Cambridge 02139.” Another point that Williams makes is the innovation is bigger than just IT, and not all change comes from technology. For instance, after September 11, we all heard that everything has changed. But when it comes to making planes safer to fly on, there has been only one change, and it is social and not technological. If a plane were hijacked by terrorists, the passengers would fight to subdue the terrorists, even at the cost of their own lives. And this informal social contract ensures that no planes are going to be hijacked anytime soon. As to technological solutions, let’s just say that all the new x-ray machines in Logan Airport don’t make me feel any safer. What would Williams’s grandfather think of all the changes in the last quarter century? After all, the farm that he grew up on is long gone. MIT has as many women undergraduates as men. There’s that internet thing. If I were to guess, I would say that he would be proud of his Institute’s ability to adapt and evolve. He would feel that engineers are still a special breed of people that makes things happen. He would be gratified that the educational changes he recommended helped MIT evolve from a technical school to one of the world’s great universities. He would understand that technology makes change possible, or even necessary, but that people make change happen. I also think he would be proud of his granddaughter for being such a thoughtful observer and sometime change agent. — David S. McIntosh ( Comment ) |
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CBI Calendar as of November 2002 |
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posted by Rudy3 on Thursday, October, 31st November 14-16, 2002 (CGE&Y University in Chantilly, France) GuruSchool (Public) At GuruSchool, we address the key issues facing innovators and idea-makers today. What does it take to get an idea noticed in the battle for mindshare among media, clients, investors, and colleagues? Is it possible to gain a competitive edge in the idea markets that can help you to commercialize your intellectual capital? GuruSchool teaches idea marketing, personal branding, and critical selling communications strategies that can help you structure and deliver insights and services for maximum impact. It is an ideal program for people taking new or innovative ideas to market. See http://idea-x.net/display_topic.php?topic_id=920 for more on this unique program. November 20, 2002 (Webcast) Survival Is Not Enough (Public) Please join the next of the CBI's bi-monthly free webcasts on November 20, 2002 at 12:00 EST/18:00 CET, this time featuring Seth Godin. Seth is the author of four books that have been bestsellers around the world, and his latest book is really shaking things up. Godin believes that even though change is unavoidable, change management is a myth. For more on this webcast, including registration information, see http://www.idea-x.net/display_topic?topic_id=954 or http://www.cbi.cgey.com/events/webcast/2002-11-22/index.html. Contact Audrey Boldt at audrey.boldt@cgey.com with any questions. November 22-23, 2002 (New York) Social Software Summit (By Invitation) CBIers Rudy Ruggles and Geoff Cohen will join approximately two-dozen shapers of the world of social software for this landmark event. As described by organizer Clay Shirky, "We are living in a golden age of social software. Only twice before have we had a period of such intense innovation in software used by interacting groups: once in the early 70s, with the invention of email itself, and again at the end of that decade with Usenet, the CB-Simulator (the precursor to irc), and MUDs. This is a third such era, with the spread of 'writeable web' software such as weblogs and wikis, and peer-to-peer tools such as Jabber and Groove greatly extending the ability of groups to self-organize. "Every time social software improves, it is followed by changes in the way groups work and socialize. One consistently surprising aspect of social software is that it is impossible to predict in advance all of the social dynamics it will create. Recognizing this, the Social Software Summit seeks to bring together a small group of practitioners and theorists (~25) to share experiences in writing social software or thinking about its effects...The big bet behind the gathering is that if we get a bunch of smart people in a room and ask each other the questions we've been asking ourselves about building software for groups, Good Things will happen." Contact co-organizer Geoff Cohen (geoff.cohen@cgey.com) for more information. December 9-11, 2002 (CBI) Futurizing Your Organization (Public) The CGE&Y CBI Trends Consortium is holding its kick-off event, and this is your chance to get in on the front-end. Futurizing Your Organization is a unique combination of education, discussion, and application. Not only will this event provide attendees with a through understanding of how to conduct various approaches to futures research, it will be a forum for the sharing of best practices. This event will also give attendees the opportunity to experiment with advanced tools—such as agent-based simulations—that can aid the futures research process. Ultimately, we envision, this event will be the beginning of a community of practice focused on creating business opportunities through futures research. For more information, please see the posting about the Trends Consortium at http://idea-x.net/display_topic.php?topic_id=904or email Jim Park at jim.park@cgey.com. ( Comment ) |