Posted by: Rachael King on November 12
Guest blogging today is George Colony, CEO of Forrester Research, who for 30 years has been advising CEOs on the impact of technology on business. He also blogs at The Counterintuitive CEO:
I was shocked when I heard that Conde Nast was shuttering Gourmet Magazine after 68 years of operation. Gourmet had 900,000 subscribers, with total readership of approximately six million. Yes, advertising revenue was off 30%, but clearly Gourmet was a brand and franchise that was destined to morph into an Internet beehive of content, social sharing of travel and food tips, community, and close affinity. And they were on their way with 8,000 Facebook friends, 22,000 followers for editor Ruth Reichl on Twitter, and a YouTube channel. Gourmet could have and should have become the upscale Grand Dame sister of Epicurious.com, Conde Nast's successful recipe site. Why didn't the company get this?
Because much of Conde Nast is stuck in media meltdown.
It's all in a recent report from Forrester -- How To Rebuild The Media Industries. I've extracted the most important lessons for CEOs:
CEO Lesson One: Media companies must move through three stages. Stage One: digitization -- when their music, newspapers, books, magazines, TV shows begin to leave their traditional form and enter low-cost digital forms. The majority of media has passed through this stage. Stage Two: media meltdown -- when companies resist digital distribution, unsuccessfully try to reproduce their old analog business models in a digital world, and finally willy nilly liquidate their old assets in the hopes that their profit margins will rebound. That's the stage where Conde Nast finds itself. And then finally Stage Three: rebuild -- when CEOs figure out the new pricing models, understand that consumer convenience is the new imperative, let the market (not imperious editors and producers) decide what it will pay for and value, and move their companies forward.
CEO Lesson Two: Get your company through media meltdown as fast as possible. Rupert Murdoch is clearly not there yet -- he spent the week threatening to sue the BBC and Google for "...stealing content." You might be able to replicate your old model for a time, but, as the Forrester reports states, "...you do so under a sun that is gradually sinking on the horizon." The more time you spend in the meltdown stage, the fewer resources you'll have to work with during your recovery -- cf. Gourmet.
CEO Lesson Three: Use your leadership to prod, push, cajole your company into Stage Three. No, it won't be easy and you could very well lose your job in the process -- note that Reed Elsevier's Ian Smith left the company this week after spending nine months on the job. Your executives may only know the old way. Your board may only know the old way. You see lower operating margins ahead. You don't have a clear pricing model. But why wait around while Jeff Bezos, Steve Jobs, and the Google guys feast on your carcass? Get out there and start innovating and moving at their speed. You have no choice.
Posted by: Rachael King on November 03
Guest blogging today is George Colony, CEO of Forrester Research, who for 30 years has been advising CEOs on the impact of technology on business. He also blogs at The Counterintuitive CEO:
Have you ever wondered what CEO's really want? Ever pondered on what you'd find in the CEO's head if you could take off the top of his or her skull and peer inside? Here's a short story and simple answers to those questions.
I have spent many years helping technologists in large companies communicate with executive management. Chief Information Officers often speak a different language than the CEO and commonly see the world through a different lens. As a way of signaling to the CEO that a new era of business-focused technology has arrived I have been advocating that the CIO change the term Information Technology (IT) to Business Technology (BT). It's a not-too-subtle way for the CIO to say, "Hey, I'm no longer the insular geek you've come to know and love through the years -- my team and I are about making money, not just tech."
But CIOs tell me they need more. They want to know what is in the CEO's mind so they can tune their message more precisely to that frequency.
To gather clues, you could read the annual report letters from CEOs. But they don't offer a clear answer. You'll get a lot of flowery language about, "Helping our customers through a pretty tough year…” or “Develop safe, fuel-efficient, high-quality new products” or corporate-wide re-invigoration...”
Yes it is true that seven themes recur -- numbers, organization, shareholder value, customers, innovation, brand, improving the world -- but that still feels too general and mushy...
So I'm about to let you in on a simple but powerful secret -- one they only reveal at Chief Executive School. CEOs think incessantly about only two things: 1) higher revenue, and 2) increasing profits. That's it. All of the rhetoric about productivity, or efficiency, or corporate responsibility can be directly linked to these two goals.
Why? Because in the long run, revenue and profit change governs the stock price. While in the short term, alluring strategic statements or charming executives can cause temporary share price spikes, you can't get sustainable valuation without driving the top and bottom line. In the 13 years I've spent running a public company, the intelligent investors I've worked with focus on these two metrics above all else.
So the next time you have to present to the CEO, remember to connect your tech project, or your new product idea, or your reorganization plan to revenue and profit increases. That's when the CEO's brain will light up and you'll be speaking his or her simple language. And don't tell them I let you in on the secret.
As a note, I presented these thoughts as a keynote at Forrester's Business Technology Leadership Forum held in Chicago on October 8th and 9th, 2009.
Posted by: Rachael King on October 27
My colleague, Stephen Baker, is starting work on a new project on enterprise 2.0 consulting and needs your input. If you’d like to share information or opinions, please weigh in on his BusinessWeek blog post:
For the next couple of weeks, I’m going to be writing about consulting, of the Enterprise 2.0 variety. For this I need all the help I can get: suggestions, tips, insights, case studies.
Here’s the idea: Enterprise 2.0 is a rage. C-suite execs are hearing non-stop that their competitiveness, agility, innovation, and ability to attract top brainpower hinge on their effective adoption of new social tools and practices. We all know the words. (We’ve written many of them ourselves.) Transparency. Break down the silos. Conversations. Market research on Twitter. Wikified research.
This boom is attracting hordes of consultants and software entrepreneurs. Many, no doubt, offer valuable advice. But it’s a new domain, very short on best practices and metrics. Who’s an expert? Opportunities abound for poseurs.
So, what’s going on? How can you spot a legit player? Is there any common advice that just doesn’t make sense for certain types of companies? Are there bogus metrics? (Twitter followers, perhaps?) Smart ones?
One more question: In Enterprise 2.0, where the community delivers intelligence, answers questions, and solves problems, shouldn’t much of this type of consulting be… free? Isn’t it weirdly old-school to pay thousands of dollars a day for this type of advice?
I could use all the suggestions you have. I’ll be carrying out the research on this blog, and publishing some of what I learn along the way. Thanks.
Posted by: Rachael King on October 09
Guest-blogging today are Eric Riddleberger, global leader for IBM’s business strategy consulting practice and Jeff Hittner, corporate social responsibility leader for IBM Global Business Services. They work with a range of industries and clients to address the emerging role of corporate social responsibility and sustainability in core business strategies. The survey referenced in this post can be found here:
From a sustainability standpoint, it was like declaring a moonshot.
When Walmart recently announced that it will create an index detailing the full social and environmental impact of every product it sells, it highlighted one of the most vexing issues companies face today -- managing the many tradeoffs of creating "green" or sustainable products and services.
The challenge is to optimize each product or service for its total environmental and societal impact -- taking into account an intricate set of possible considerations and alternatives. Put simply, it's not good enough if water usage is reduced but waste disposal increases. And to be truly sustainable, a company must optimize offerings in a way that also maximizes business performance.
The implications of this are staggering. Imagine tracing the energy and water use, waste, labor standards, and carbon dioxide and other greenhouse gas emissions associated with every phase of every product a company makes or sells. That covers sourcing and delivering raw materials, development and manufacturing, packaging and delivery, consumer use, and reclamation and recycling at the end of life.
Fully understanding all the implications associated with sustainability requires a 360-degree perspective. And it entails massive collection of information not only inside a single company, but across hundreds or thousands of suppliers around the world. And it requires understanding the consequences of any decision to optimize a given process or component.
Three major factors are driving this level of introspection:
-- Key stakeholders such as customers, investors, business partners, and current and prospective employees are monitoring sustainability performance and factoring it into who they'll do business with, work for and buy from;
-- The costs associated with energy, water and waste are volatile and rising, so cutting consumption and improving efficiency are essential to the bottom line;
-- Government regulations on sustainability issues are becoming increasing stringent. Companies that fail to comply face growing financial penalties, restrictions on their business operations, and negative publicity.
While this trend has been emerging for quite awhile, a recent survey our company conducted with business leaders from around the world showed a couple things. First, most of them are unprepared to measure and improve their own sustainability. Second, they are unprepared to monitor suppliers for it as well.
For example, while many companies have ambitious goals to reduce CO2 emissions, in our survey only 19 percent were measuring them often enough to make changes to lower them. In fact, only 30 percent are collecting data frequently enough to make strategic decisions that address inefficiencies, environmental impact and risk across eight major categories – CO2, water, waste, energy, sustainable procurement, labor standards, product composition and product lifecycle.
Twenty-nine percent aren’t collecting any sustainability data at all from their supply chain partners. Eight in 10 aren’t collecting supplier data for CO2 and water, and six in 10 aren’t checking supplier data for labor standards.
How will companies achieve the levels of transparency, efficiency and social responsibility as prescribed by Walmart's sustainability index? As Pulitzer Prize winner Thomas Friedman said in his latest book “Hot, Flat and Crowded,” you can’t make anything greener unless you make it smarter – smarter materials, smarter designs, smarter software.
For example, in order for a company to reduce its carbon footprint, it needs to know where and how energy is consumed and CO2 is emitted throughout all phases of its operations – everything from datacenters, to office space, to manufacturing, to delivery -- as well as through every phase of its supply chain. Then it needs to determine where it can make reductions balanced against other environmental considerations and areas vital to overall performance, like cost, quality and service.
Taking such a comprehensive view can lead to some interesting – sometimes counterintuitive -- conclusions. For example, excess packaging has been a major focus when examining a product's environmental impact. Yet analysis of a shelf-stable, single-serving beef chili and beans product from food processor Truitt Brothers demonstrated that a little extra packaging actually helps reduce environmental impact. It keeps food losses below 4 percent, compared to typical food losses in the home of more than 15 percent. And it eliminates refrigeration in transportation, retail merchandising and home storage, reducing energy use and greenhouse gas emissions.
Leading companies today are setting standards and measurements for themselves and their suppliers -- and even collaborating with competitors to set uniform industry specifications. They're deploying sensors and meters to collect and measure this data everywhere, and their suppliers are doing the same. They're implementing networks, analytics and dashboards that present that data in a way that lets them make better decisions to improve efficiency and lower emissions, and change business processes to put it all into action.
For many companies, this means rethinking every aspect of how they operate and who they do business with. But the long-term implications are clear -- businesses that do this effectively and proactively will meet the Walmart standard and thrive. Those that don't, will not.
Posted by: Rachael King on September 28
Guest blogging today is George Colony, CEO of Forrester Research, who for 30 years has been advising CEOs on the impact of technology on business. He also blogs at The Counterintuitive CEO:
For the past four years, I have been preaching the gospel of converting information technologists into businesspeople. I call this concept “moving from information technology to business technology — or IT to BT.”
At its core, I define BT as measuring your usage of technology with business metrics instead of technology metrics. The message is for IT to measure itself using business metrics that matter to the COO, CEO, and board of directors, instead of assessing its success with a technology yardstick, such as network availability or server uptime.
It’s not the mean time between failure or server response times that matter. If you change that one word from information technology to business technology, you begin to change the way IT people work and the way they think about their jobs.
Although this mental shift is happening slower than I figured, a generational change in IT and business leadership is beginning to force the issue. Now we’re seeing the older baby boomer generation beginning to retire, and for the first time, we’re getting CEOs of Fortune 500 companies who had an Apple II when they were 12. So now you have CEOs and presidents who are far more technology-focused. We’re no longer seeing so many people who are getting emails printed out — instead, these top execs actually read them. You know, business leaders actually use these IT devices today — maybe an iPhone or BlackBerry or Kindle —and now you have technologists who had an Apple II as a kid. Both groups of execs understand the evolution of technology out to people — technology populism, if you will — that we all have high-tech devices, and there’s now this new way of thinking and working.
Since the last technology recession from 2001 to 2003, CFOs have been looking more closely at IT spending, which accelerates the shift to BT. The overspend on technology in 2000 was so large — it was about $60 billion in the US — and that was the death knell of runaway technology expenditures. At that moment, CFOs and CEOs said, “We’re never doing that again. We’re going to have tight linkage here, higher return there.”
We’ll look back at this decade as a series of learning moments, and the real turning point from IT to BT is the two recessions, the customer moving clearly to the center stage because of the Internet, and the generational change in senior execs.
I’ll talk more about this at Forrester’s Business Technology Forum in a couple of weeks, but there are three questions companies should ask themselves before transitioning from IT to BT. First, you need to ask, “do we have the right CIO?” The CEO has to look in the eyes of the CIO and make the judgment “Is this person good enough to understand the business?”
Second, you should ask, “do we govern in the right way?” If the decision-making goes from the CEO to the CFO, or maybe to the COO and then to the CIO, I don’t think you’re ever going to get this IT-to-BT change to happen because the CIO is too far removed.
Third, you need to ask, “do we have the right business executives?” The onus is not just on the CIO; we need higher IQ in technology across all of the business executive levels.
If you answer “yes” to those three questions, then you have to ask, “how do we get there?” There’s no technology god that says you’ve got to be BT. The CEO and CIO have to go have a drink someplace, and they’ve got to say, “We’re not doing this right; let’s change our focus and make IT about the business.”
