business success, Moore's Law, Metcalfe's Law

Consider who wins from successful revolutions. The answer is always the same: those who lead the revolution and win power. The losers are those who stick with the status quo and get dethroned. Their followers also suffer as the revolution rumbles on. But the revolution now hitting business all over the world is not rumbling on. It is racing ahead. There is no way in which businesses that fall behind the revolutionary pace can offset their lag.

The public sector is affected, too, because of new insistence that non-profit organisations should be run as effectively as commercial operations, and on the same principles. Just like the profit-makers, 'non-profits' are affected by the same Triple Revolution - in information, management and globalism. The revolutions interact in the same way that Moore's Law (chip density and computing power double at constant cost every 18 months) dovetails with the lesser-known Metcalfe's Law.

This holds that networks (of phones, computers, humans or anything else) 'dramatically increase in value with each additional node or user'. Either Law by itself would have profound effects. Feeding off each other, they generate exponential increases in the power of electronics to transform businesses. The rise of the American digital economy, with heroes and hero companies like Bill Gates and Microsoft, Andy Grove and Intel, Steve Case and America Online, has been a consequence of awesome extent.

The heroes' Silicon Management has become an object of admiration and worship. Where once books flooded forth explaining the Japanese marvels, a spate of titles devoted to the Valley's magicians and magical ways has begun to flow, with titles like Relentless Growth, Innovation Explosion and Giant-Killers. The latter, by Geoffrey James, has a revealing sub-title: '34 Cutting Edge Management Strategies from the World's Leading High-tech Companies'.

The giveaway lies in the plethora of strategies: nearly three dozen. There is no single Silicon Valley formula that can be bottled and safely drunk. Grove manages Intel differently from Gates at Microsoft, and Michael Dell and the recently deposed Eckhard Pfeiffer were well apart at Dell and Compaq. There are common features, but they flow inevitably from common pressures of rampant competition and ferocious technological pace.

The free-and-easy, quick-on-the-draw dynamism of the software and hardware leaders must be imitated by more staid industries as global competition really bites. The Valley's explosive philosophies are changing the hardware and software of management. Just as the Japanese brushed aside Western competition in industries ranging from copiers to cars, motorbikes to cameras, supertankers to transistors, so new Western entrepreneurs are undermining even giants of the new technology - like Motorola and Hewlett-Packard.

Motorola reacted enthusiastically to the Japanese incursions, adopting Total Quality Management to savage costs and transform efficiency. Former chairman Robert Galvin became America's leading TQM practitioner. The company's severe troubles as the old Millennium ended demonstrate that, in the new age, TQM is not nearly enough. Once supposedly as swift as any top gun in Silicon Valley, Motorola was late and uncompetitive in digital phones. Its core mobile business was sabotaged - by itself.

Silicon Valley gunslingers are just as keen on efficiency and cost reduction: but they combine their gains on these scores with sustained drive for the largest possible market penetration, founded on high levels of investment, innovation, and downright ingenuity. Forget the conventional Western approach to long-term strategic planning, with its three to five-year cycles. That's among the pillars torn down by Silicon Management.

A fascinating study of electronics leaders by Andersen Consulting found that they plan only 18 to 24 months ahead. Top management lays down an overall 'vision' that establishes corporate objectives. Within that framework, individual business units are delegated the task of devising and executing the strategies demanded by the market. Nobody expects the forecasts to be accurate. Everybody expects flat-out, effective correction of errors resulting from the inaccuracy.

There is a word for this revolutionary strategic approach, but it isn't English. 'Meikiki', which means 'foresight with discernment', is how the Japanese describe a process which they fully understand and apply. Significantly, five other central concepts that Andersen's found in California are equally familiar in the Japanese philosophy and practice that long ago launched the Management Revolution:

1. Continually change the basis of competition
2. Seek multiple sources of competitive advantage
3. Organise to achieve new levels of agility
4. Enter into sophisticated collaboration with suppliers and customers
5. Focus on core capabilities to execute strategy successfully

Western firms still bear many bruises from Japanese moves to change the basis of competition (as with small copiers). That concept is backed by the search for multiple sources of competitive advantage, which is basic to Japanese management. So is organising to achieve new levels of agility. Toyota, for example, revamped its development system so effectively that in 1996-97 new and reworked models totalled 18, some getting into production a mere (and stunning) 14 1/2 months after design approval.

That's partly accomplished by taking sophisticated collaboration with suppliers and customers to new heights. Andersen's final high-tech concept, focusing on core capabilities to execute strategy successfully, is another Japanese foundation. It explains why Hitachi, Matsushita, Sony, Toshiba and NEC are still leading powers in the global electronics landscape - despite the Intel-led resurgence of American semiconductors.

The like prowess of Toyota in automobiles drew the admiring comment from a Japanese professor that 'Toyota's real strength resides in its ability to learn...The company's practices are constantly changing, even though its basic principles remain unchanged'. The state-of-the-art in American management theory promotes the 'learning company', basic and undying values, and change management. Here, too, Silicon Management's hot-shots, wittingly or unwittingly, are riding in Japanese models.

The moral is that the Management Revolution is powering ahead in ways long known but long neglected by Western companies outside the Valley. The causes are not technical inadequacies and lack of resources, but inferior strategy and people management. By and large Western management is still heavily top-heavy and top-down (though that's changing, slowly) and still wedded to conservative thinking. They have consequently wasted the fat fees paid, and still being paid, to consultants who promise to eliminate waste, promote change, install teamwork, generate innovation, and so on.

Western consultants have also long been preaching the virtues of what the Japanese and the Silicon Managers practise: collaborative, collegiate, people-based management that extends beyond the borders of the corporation and aims at long-term pay-offs. The long-term lesson has apparently sunk in. In 1998 the Financial Times was pleased to discover (destroying a persistent myth) that only 7% of Britain's 100 biggest companies felt hampered in 'taking the correct long-term strategy' by the attitudes of institutional investors. But how many of those companies were actually pursuing long-term strategies, let alone correct ones?

THE SUCCESS FORMULA
The challenge facing managements is severe, but self-adjusting. If they whole-heartedly adopt the new technologies of information and communication, they will immediately and powerfully enhance their ability to exploit the buried treasure in their organisations: people, knowledge banks, ideas, global market potential. The key technologies are mostly available off-the-shelf at off-the-shelf prices. They work brilliantly as they enable applications which win high reward from simple concepts. These 'killer apps' fundamentally alter processes and radically raise competitive superiority. The success formula, too, is simple:

1. Link the computers and the systems
2. Accept that you won't manage the organisation as it has always been run
3. Act accordingly
4. Manage the transition to achieve precisely what you, the users, want
5. Accept that changes in circumstances and technology will demand continuous change in the systems

The obstacles are psychological. People prefer to run organisations as they always have done. They put off action, even on issues where they know what is needed. They still let the information and communications technologists tell them what to buy, instead of demanding what they, the management, require. They still want to pay single bills to several suppliers, rather than commit themselves to never-ending expenditure and single partners who can apply the technology to their needs. All that confines them to a dead past, a dying present and no future.

The five-point formula, in contrast, opens the door to the 'killer opportunity', the remaking of the organisation to enter and exploit the new age. It is a killer in two senses. Positively, you can achieve a killing advantage over the opposition. Negatively, you can be killed, and probably will be, if you fail the test of the times. The winning alternative is unmissable. Ride the Revolution!