'The Internet changes everything'. This mantra has been much repeated - not least in Letter to Thinking Managers. But in the months of dot.com doom and Twin Towers distress, the message is heard more rarely. The former situation has been reversed. Then over-eager beavers were running before they could walk, anticipating the fruits of the e-revolution before the orchard had been planted. Now managers are choosing to walk when they could run - and gain great financial and other advantages by doing so. Just ask yourself these nine critical questions:
• Do I have any opportunities to do things differently and better?
• Can my organisation operate (a) smarter (b) leaner (c) quicker (d) more effectively?
• Can it be strengthened to cope better with future downturns or slowdowns?
• Can I build a more competitive platform?
• Can I get new products and services faster to market?
• Can I reduce inventory by acting on the supply chain?
• Can I make all processes more productive?
• Can customer service be more responsive?
• Can sales teams be more effective?
THE TENTH QUESTION
There can't be a manager or a management that can honestly say No to any of those questions. But there's a tenth question. Can new technology help to produce the benefits that are available on all nine scores? And there the answer is a resounding Yes. The proofs lie in an excellent new book by Michael de Kare Silver, which describes Streamlining (the book's title). It's published by Palgrave - and the nine questions are drawn from an introduction which states boldly that 'there's no limit to what can be streamlined, e-enabled and automated'.
Streamlining is a familiar metaphor in business. Just as an aerodynamic shape improves the performance of a car, so organisations can be slimmed and smoothed to achieve better results. Management consultants or internal quality teams have long analysed process chains end to end, taking out unnecessary stages and eliminating roadblocks to achieve the business variety of an aerodynamic shape. But Silver argues that 'what's creating a dynamic new opportunity are the new business tools. It's streamlining with e-a-i'.
That's not only e-enabling and automating, but also innovation. The trio respectively use new technology as a catalyst that enables things to be done differently: as a way of substituting digital data transfer for manual processes and as the prime method of achieving radical change (kaikaku in Japanese) as opposed to kaizen, incremental improvement and change.
The benefits can be transformational. Silver describes the case of Progressive Insurance, 'a sleepy US insurer, no.10 in their markets'. A new management looked at the value chain and processes and found a key area of under-performance: 'claims settlement'. Motorists are all too familiar with this defect: you have an accident, have to ask for a claims form, fill it in, wait for an assessor to inspect the damage and approve the repairers' estimate - it all takes time and trouble.
CHANGE IT COMPLETELY
Progressive's answer was not to improve the process but to change it completely. 'Roadside settlement' allows the insured driver to contact a 'mobile claims assessor' by freephone. He should arrive within 20 minutes, armed with pocket PC and wireless Net connection. He checks the policy details and claims record, assesses the accident and, all being well, the cheque is automatically mailed, and the happy (or considering that he's been in an accident) less unhappy customer has a settled claim.
The results? Progressive's revenues doubled in three years, taking it to fourth position. Note that the transformation not only cut costs and raised efficiency, but gave the company that sine qua non, a Unique Selling Proposition, a reason for the customer to buy from you and not from anyone else. The new technology can allow you to differentiate - which is more and more difficult in markets where managements all think alike.
That raises an important problem. Why do they all think alike? Why don't managers spend their time seeking critical advantages over the opposition? Why did so many react to the dot.com collapse by breathing a metaphorical sigh of relief and assuming that they could now comfortably forget about enabling, automation and innovation, and continue with business as usual? Why is it hard to persuade managers to adopt new methods that will yield quick and certain rewards in key areas?
Part of the answer lies in one word in that last sentence: 'certain'. There is always an element of risk in doing things differently. The old saw in the mainframe computer age was that no one was ever fired for buying IBM. So that's what nearly everybody did. But fundamentally the decision-taker only runs one risk: that he or she may be wrong. That risk, however, doesn't arise only when deciding to change. You may be just as wrong in deciding to stay put, to preserve the status quo into all eternity.
This last forlorn hope is cherished, not only by the Conservatives (among whom managers, even ultra-conservative ones, hate to be numbered), but by easily the largest bloc: the Pragmatists. This is the 'wait-and-see' brigade, who want evidence of another company's success before they will adopt a change for themselves. This loses them the prime mover advantage and may leave the competition in a lasting lead. On the other hand, they don't need the courage of the Visionaries (who in the American auto insurance business may as well be called Progressives).
The latter know from experience that they will encounter setbacks, cost overruns, revenue shortfalls, market resistance and mistakes as they lead their innovations forward. The new technology can help to reduce these risks in the first place (for example, by simulation) and to ensure (for example, by analysing the cash flows) that the business can withstand all the possible mishaps. But it must be said that many of Silver's e-a-i benefits are essentially risk-free, available via off-the-shelf solutions, and posing no threat to the business at all.
PROCUREMENT WASTE
An obvious example is e-procurement. Do you know how much your current purchasing activities are costing? Eastman Kodak found that its maintenance, repair and operational items (excluding raw materials and parts for the main manufacturing processes) were involving 6, 500 suppliers, 30,000 transactions a year, average value $45, at a cost per transaction of $115 - and a time cost of 19 man or woman days for each fulfilment.
The total bill of $900 million a year included a ridiculously high levels of wasteful spending: small transactions represented 85% of the total, and a huge proportion of the costs, but only 3% of the spend. Unless you have conducted a similar analysis, and acted on the awful performance that it revealed, your purchasing almost certainly is as bad as Kodak's used to be. But the giant's solution is available to all. Several suppliers (Kodak used Commerce One) will be only too happy to help you establish a Buysite. Using a desktop, employees simply key in their stationery and travel orders, with a limit of $2,000. Within a year, 1% of total spend had been automated, and costs had already been significantly reduced.
The typical cost-saving opportunities listed by Silver are print media 8-10%, travel 7-10%, workforce 13-16%, facilities 10-18%, direct inputs 13-15%, indirect inputs 13-15%. It's a fortunate manager who can afford to turn up his nose at such risk-free mini-bonanzas. But risk-aversion is obviously not the only factor. Inertia certainly plays a part, but an ignoble one. Managers are paid to take time and trouble over improving their results. However, inertia is encouraged by something other than idleness: an embarrassment of choice.
Two stars of the Harvard Business Review, Joan Magretta and Nan Stone, describe the problem well in a new book, What Management Is (HarperCollins). They say that over 2,000 books and major article on management appear annually, typically producing 'to-do lists - the ten things you can do today to be an effective leader or a savvy negotiator'. That adds up to 'an overwhelming and bewildering 20,000 things to do' from just one year's reading.
INDECISION AND INACTION
In fact, their arithmetic is faulty. Nobody will read all 2,000 works, not all will contain to-do lists, and many of the to-dos will overlap. But they are right to pose the problem: 'which list of ten fits you and your situation? How will you know if you've chosen the right one?' The outcome is indecision, which leads to inaction: or a decision which leads to action, but eventually suffers from inattention as enthusiasm for the initiative fades and as another bunch of to-dos seems to matter more.
Magretta and Stone, naturally, have an answer to this. They argue that managers need a 'coherent view' of the whole of what is known as 'general management'. If you understand the 'underlying why' of the theory and practice of management, you will understand what 'management is capable of on a very good day. And on those bad days when things are going wrong, you will be far more likely to figure out what needs to be fixed'.
Their 'coherent view' takes in design, meaning first and foremost planning (whose 'real output' is 'insight as to where an organisation is headed and what it needs to do to get there'). Magretta and Stone then move on to translating plans into performance, or execution: after some blinding glimpses of the obvious ('doing is...a lot harder than it sounds'...'execution requires both discipline and judgment'), the book goes on to list some 'musts' of management. That sounds awfully like the 'to-do lists' which the authors somewhat decry.
The truth is that you need to understand, not the arts and science of management in general, but in your particular circumstances. You need this knowledge so that you can make your own 'to-do list' - the priority items, the critical 20% that account for 80% of the outcomes in the organisation. That list should be kept in your desk, checked every week to see that the objectives are being met, and revised as circumstances change. Avoid at all costs the 'Flavour of the Month' approach - the to-do programme never ends.
E-COMPANY CHANGES
When it comes to e-company changes, the first priority is to take the organisation boldly into the new era. That will involve many matters that would require your attention even without the new technology. Silver tells you to streamline not only procurement, but the whole supply chain, the use of knowledge management, and customer relations management (CRM). The approach required is that of analysis, planning and execution - the equivalent of a doctor's examination, diagnosis, and therapy. The prognosis should be rudely healthy to judge by what is already being achieved:
• Mitsubishi in the US introduced a web-based 'order to delivery' supply-chain network to link dealers to the company and each other: it more than halved dealer inventory, eliminated parts inventory, slashed lead-times, and boosted sales by 40%.
• In the UK, Torex Meditel, a small healthcare systems firm, has got rid of 3-inch thick reports by using an Onyx Front Office solution that puts every customer's complete history on line.
• Reaching the customer costs $34.70 per transaction by phone, $10 by e-mail, $7.80 by 'chat', $4.50 by Web message-board - and just $1.77 by Web self-service (RightNow Technologies).
These facts, remember, are only a very few examples among a myriad of cases. It's much more important to visualise your organisation in e-terms than to master Magretta and Stone's 'coherent view' of general management. After all, what is management if it isn't about doing the right things better and differently - which an 'e-to-do programme' will surely achieve.
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