Archive for February, 2008

Strategy as a pattern

Published
by
John Hannafin
on February 27, 2008
in Business
. 1 Comment Tags: .

I recently had a conversation with a client who wished to develop a strategy for her team. She manages a creative team of people who she felt were looking for more direction. During the conversation we discusses strategy as a pattern  in which "strategy is consistency in behaviour, whether or not intended" (Henry Mintzberg, California Management Review, Fall 1987) and emerging strategies in which the "strategy can evolve in response to an evolving situation" (Henry Mintzberg, Harvard Business Review, July-August 1987). In essence, the pattern of actions her team performs defines their strategic direction. This approach to strategy definition suited the creative nature of her team and the constantly changing environment in which they work. So how was she to address their need for direction? Some team members were happy to work in an environment that was guided by high level goals yet others wanted more specific direction.

One approach we discussed was for her to essentially ask her team members what actions they feel the team should be pursuing and then to identify patterns in those actions and infer the strategic objectives. A problem she had with this approach was that it didn’t address the needs of the team members who wanted direction as she was the one who was asking for direction. In the end we settled on the following approach:

  1. She would reflect on and document the current, and past, activities the team is pursuing
  2. She would complement this list of activities with activities she felt the team should be pursuing
  3. She would identify patterns in the list of activities and infer strategic objectives from them
  4. She would present her strategic objectives and ‘action’ plan to the team for discussion
  5. She would incorporate feedback into the strategic objectives and plan
  6. She would "sanitise" the strategy by conducting an environmental analysis and a competitive analysis
  7. She would identify the core competencies and capabilities of the team
  8. She would document, as best she could, what it is the customer values
  9. Together with the team, she would refocus the strategy and plan based on her findings from steps 6, 7 & 8
  10. She would identify key performance indicators, measure performance using those indicators and regularly communicate back these performance results to the team
  11. She would use the regular meetings she has with each team member to capture new emerging strategies

The open source business model

Published
by
John Hannafin
on February 26, 2008
in Business
. 0 Comments Tags: .

Many people often find it difficult to get their heads around how exactly open source companies survive, after all they give their product away for free. Today, one of the largest open source companies in the world, MySql AB, was purchased by Sun Microsystems for a cool $1 billion. Jonathan Schwartz, CEO of Sun, in a great blog post explains the economic justification for the purchase. In it he quotes Marten Mickos, MySQL AB’s CEO, on his explanation of the open source business model:

the spectrum describing the marketplace spans those with more time than money, who form the user and developer communities around free software; and those with more money than time, who purchase commercial support contracts typically in more mature enterprises. To win in the long run, you have to win on both sides of the spectrum - with the same product. Crippling products, or sneaky licensing exceptions don’t work - freedom does

Jonathan himself says of both companies:

we both invest in very high quality free software and the cultivation of large communities, then turn our efforts to monetize at the point of value for companies that want commercial support

Now that’s what I like about open source - it is an understanding of what customers value. How many companies out there don’t know what their customers value and how many don’t even try to figure it out. Remember it is the customer that defines value, you as a business are simply required to create it.

How the world is adopting technology

Published
by
John Hannafin
on February 25, 2008
in Innovation
. 0 Comments Tags: .

A recent New York Times article discussed how American households spend their money. The article presented a graph on the rate of technology “consumption” amongst US households.

Consumption Rates NY Times

It shows, for example, that the Internet was adopted by just over 60% of households within a 15 year period (1990 - 2005), it took approximately 45 years (1927 - 1972) for the same percentage of households to adopt the washing machine, approximately 20 years (1927 - 1947) for 60% of households to adopt the refrigerator and approximately 10 years (1923 - 1933) for 60% of households to adopt radio. The graph suggests that while adoption of technology is taking less time, adoption rate is also linked to the consumers perceived value of the technology in question.

The World Bank’s recently released its Global Economic Prospects: technology diffusion in the developing world 2008 in which it documents that the rate of technology adoption in poor and middle income countries during the past century was far greater than that in “developed” countries (160%, 100%, 77% respectively).

TechAdoption-EconomicReport

With regard to the definition of technology achievement, the report describes it as:

a broad definition of technology and technological progress, one that encompasses the techniques (including the way the production process is organized) by which goods and services are produced, marketed, and made available to the public.

As for the reason behind the difference:

A sustained policy of increased openness to foreign trade and foreign direct investment (FDI), plus increased investments in human capital, have contributed to substantial improvements in technological achievement in developing countries over the past 15 years.

AdoptionFramework(Resized)-EconomicReport

Links to New York Times article, graph and Global Economic Prospects: technology diffusion in the developing world 2008

Internationalisation for SME’s is not optional

Published
by
John Hannafin
on February 22, 2008
in Business
. 0 Comments Tags: , .

According to a European project on Supporting the Internationalisation of SME’s (December, 2007),

SMEs that do not consider internationalisation are unknowingly self imposing a severe restriction on their potential for long term survival

According to the report, the barriers SME’s face with regard to internationalisation

are a lack of financial resources but most of all lack of skills or skilled human capital to tackle internationalisation

The report recognises the important role technology has played, and continues to play, in breaking down borders and facilitating globalisation. It also makes an important observation; even if you as an SME decide not to trade internationally, and instead concentrate on your domestic market, you must still be able and willing to compete with international SME’s that target your market.

Therefore, a pro-active attitude to global competition and markets is increasingly becoming not a choice but a matter of necessity.

It is not just access to new markets that is driving SME’s to internationalise but also access to technology and, not surprisingly, those SME’s that do internationalise have shown a greater capacity to innovate.

So what are the drivers?

  • The “international orientation of decision makers”, which is, more often than not, the owner/manager.
  • The size of the SME.
  • The industry/sector to which the SME belongs to.

Interestingly, although the research indicates that international firms are more productive, this is not limited to firms that export. Firms that import are also international and have equally demonstrated increases in productivity.

Finally, seeing it is something close to my heart,

In relation to SME competitiveness, for the vast majority of companies there is a large potential for innovation in operations and management, including the acquisition of IT and quality systems and capabilities. To further highlight this point its is important to remember that “marketing” entrepreneurs will go international before “technical” entrepreneurs and that innovation at plant level is not a guarantee per se of improved or increased performance. In this sense, greater use of the possibilities offered by IT and support for greater use of ecommerce and CRM systems (just to mention two examples) point one way forward and can be the most relevant innovation strategy for small companies, crafts and services.

Technology adoption is not just about the technology

Published
by
John Hannafin
on February 18, 2008
in Innovation
. 0 Comments Tags: .

I’ve seen it again recently. This is the scenario. A business decides that it wants to adopt technology in an effort to address some identified issue or capitalise on some identified opportunity. Hopefully it doesn’t start with wanting to adopt technology (although it often does) but rather wanting to improve the business. Either way, the business puts a lot of effort into capturing the requirements of the technical solution and then identifying or developing an appropriate solution. These pre-adoption stages are often heavily influenced by people who are technology savvy, who often want the technology for the sake of the technology itself. The "adoption team" slowly starts to loose sight of the issue/opportunity it is seeking to address and become immersed, and somewhat dazzled, in the technology on offer. The project moves into the deployment phase and the technology is finally switched on. The project team disband (or seriously slows down) as they feel their job is done. The original issue/opportunity remains, for the large part, un-addresses.

The adoption of technology into a business is as much about organisational development as it is about aligning business goals with technology solutions. The organisation has to be prepared for the change the technology will bring about. Peoples fears have to be addresses up-front, training has to be provided and new behaviours have to be enforced. The whole change process has to be effectively managed. If not, then the best one can hope for is that the performance of the business remains unaffected. At worst, business performance will decline.

A resurgence in Instant Messaging

Published
by
John Hannafin
on February 18, 2008
in TechTalk
. 0 Comments Tags: .

Are we seeing a resurgence in Instant Messaging? I think so. Applications like Jaiku which allows you to communicate with it using IM have, I feel, introduced IM to many users for the first time. Various social networking applications now incorporate the notion of a "presence" which allow users to see who is currently online (as apposed to email where you don’t know it the recipient  is currently ‘present’) in much the same way as IM does. GMail supports IM via its Google Talk client. More and more people are seeing the benefits of IM over email, which include:

  • instant communication
  • less email noise
  • group conversations

Here at Tipperary Institute I have seen more IM users coming online on the back of Jaiku’s IM support. The client of choice seems to be Pidgin.

Innovation Vouchers for small businesses

Published
by
John Hannafin
on February 15, 2008
in Innovation
. 2 Comments Tags: .

Enterprise Ireland are currently running an Innovation Voucher Scheme for small businesses (fewer than 50 employees and has either an annual turnover and/or an annual Balance Sheet total not exceeding €10m) designed to help such businesses develop innovative solutions to an opportunity or problem they want to explore. The voucher, worth €5000, can only be used with approved “knowledge providers” of which Tipperary Institute is one. Knowledge providers are essentially 3rd level educational institutes that have been approved for the scheme. According to their web site, eligible activities include:

  • new business model development
  • new service delivery and customer interface
  • new service development
  • tailored training in innovation management
  • innovation / technology audit
  • acquiring knowledge of:
    • efficiency audits, process change
    • supply chain management and logistics
    • product and service testing and economic impact assessment

“Vouchers can also be exchanged for knowledge transfer projects from the knowledge provider. For the purposes of this initiative, a knowledge transfer project is defined as one that transfers knowledge of a scientific, technological or innovative nature that it is new to the small enterprise. The small enterprise may then use the new knowledge to innovate a product, process or service.”

If you are interested you need to send in an application form to Enterprise Ireland and than seek out a knowledge provider who can best assist you.