Category Archives: Business Lessons Learnt

Business Lessons Learnt

Corporate Consulting Services inside a Corporation

Under any corporate’s new banner of missions or core initiatives, especially those yet to be clearly defined, we will always see the creativeness and inventiveness of the people inside the corporation who try to align themselves to the new terms.

For some traditional large “Product” company who is moving towards a “Services” company, the same thing can be expected – many new “services” can appear inside the corporation. We are not talking about the traditional IT or back-office type of supporting “services” to any large corporation; let’s take a look at the “Insider Management Consulting Services” on business strategies, process designs, technical evaluation, problem solutions, etc. Instead of using 3rd party expensive management consulting firms, corporate divisions can now hire from an inside “consulting” division of the corporation for such services.

The practice can hardly be said new or inventive since it has happened in many large corporations already, but the effectiveness and results of such a practice are yet to be documented or measured. Some corporation (for example, former Motorola) had such a practice during some sort of situations when many divisions were facing similar problems at a certain time (although could very well be suspected as a lack of prescience). For example, system integration with new and legacies, etc. One division’s best practice could naturally come out as an example to provide similar analysis, planning and execution services to the other division. The longevity of that service division might depend on how large the corporation was, how deep the same problems existed in many divisions at the same time and how good the service provider was able to execute, adapt, continue marketing themselves inside the corporation. There haven’t been many WSJ reports on such practices and its developments for the parent corporations.

Still, the concept is a bit hard to fathom for some reasons.

First of all, the core objectives of such a consulting division – do they provide management consulting, technical consulting or both? Ideally inside a well-run corporation, each division’s strategic goals should already be well aligned to the corporation’s core mission or its present or future initiatives. Does the division heads need a helper from another management consulting division to interpret the corporate mission and initiatives or design the strategies?

Second, each corporate division’s core products/services or goals should not be the same by default (duplications can be a huge waste to a corporation). The most common problems could happen to multiple divisions are most likely in the management space, including process innovation. A management training or “advisory” type of common service will make sense, either by an outsider with the expertise or by an insider, but it needs start from the C-office first to be most effective for the corporation. Will other types of consulting services by insiders make long-term sense?

Third, there could well be some political reasons for a division to hire another division’s consultants from the same company(without worrying too much about the confidentiality) to look at some touchy problems, to cross the aisles reaching out to some a silo-ed sub-divisions, to help collaborate horizontally or to break the hostilities among peers. Could they expect an expedited consensus or result? It depends. Just like outside consultants, inside consultants also want to play neutral most of the time and they will have to tip-toe with all sides instead of a quick proposal. If a division cannot work together and make its own decisions, no one can do it for them.

Fourth, the scalability. One consulting group cannot have all the business and technical expertise to solve all other corporate divisions’ problems, especially if many inherit problems of the corporation are triggered by the corporate culture. Even if by acting like a traditional consulting firm, a consulting division can try to build and market its several core competencies, different divisions of the same corporation own different knowledge spaces and require different specific problem-solving skills. No single consulting division can have the full spectrum of resources as “tools of all trades”. If consulting resources can not be scaled to serve different client groups, they are just temporary helpers instead of consultants.

Fifth, the longevity of such a practice. When it comes to the budget and income, unless it’s a C-level sponsored program division or the corporation truly has so many touchy political problems that constantly need some outside insiders’ help, it may take some extraordinary efforts in promotion to make it truly a “consulting service” sustainable on its own for a long run.

One thing is clear, so far these inside practices appear only in large corporations when many divisions are facing some tough problems that they feel they cannot solve themselves or need new ideas/concepts that they themselves find it hard to learn or adopt directly. This phenomenon may well be an indication of something else inside a large corporation.

Business Lessons Learnt

A Strange Coffee Culture

Perhaps no other retail business can better illustrate the small-to-big retail growth process than Starbucks – from a single store in 1975 to 18,000+ stores in 30+ years, limited lines of retail products in the offering, heavy brick-and-mortar dependency, a decent sized corporation, yet trying to grow in global scale with scattered and outdated IT infrastructures and a questionable culture.

Starbucks has long been known for its infamous “consensus building” culture. Seldom the employees who left the company had anything more encouraging to say about its culture. A former Starbucks senior officer, an ivy-league graduate with degrees from both Princeton and Yale Law School, who left the company and now heading a Seattle startup company, said recently “With such a culture, nothing can be done there.” No wonder in their IT department, almost all projects run late or over budget. Yet their culture, on the other hand, is very calculating to the pennies: Most of the coffee beans to the stores are supplied from Mexico or Southeast Asia, the cheapest areas to get those (not Ethiopia as you might think); they drive hard bargains with landlord; every employee has to report allocation and hours; and extremely penny-wise to use consultants/contractors. Inside the company everyday, everyone are running around with lots of meetings, most of them are for those “sync-ups”- almost everyone wants to know what everyone else is doing so that they can have a say. All managers, no matter how remotely related to a project, request to be invited to every project meeting. Even when they can contribute little, they want their presence known and respected. Layers and layers of “sync-ups”, but can never be synced up enough for any meaningful decision to be made timely. Of course prep after prep meetings for one senior management meetup. Every minute thing needs consensus or sync-ups. There is no accountability, only plenty of superficial niceties on the surface.

In such a culture, rarely competent people can tolerate or be tolerated. Then what left are less competent managers and people in survival mode and who do what they can do the best: fear-driven behaviors(for job security), self-serving, cover-one’s-own-butt, micromanagement, in-fights. They have high focus on money saving, but can’t see that the largest costs are right in front of themselves- the penny-wise-pound-foolish ways they run their business, organize people and make decisions.

In November 2013, Starbucks lost an arbitration lawsuit with Kraft for $2.76B for its corner-cutting contract practices. Recently, the company is also over the news on the unfair pricing over the coffee offerings in China, their fastest growing region. One can say these were the results of being cunning. Yet, most of their business are still done in the very old-fashioned manual-labored retail ways. Their IT infrastructures and processes are far from ready to support the needed global efficiency. How far can they go in today’s changing world?

Coffee business is a low-entry business. Starbucks is not the first one who invented the popular combination of “espresso + foamed milk” and they will not be the last to use it. A culture that encourages mediocre dominance, to the best, can only perform mediocrely in the long run. Everything changes and no company will last forever.

Business Lessons Learnt

A Seesaw Business and its Survival

The Boeing Company (NASDAQ symbol as “BA”), founded in 1916, is world’s largest aerospace company with many very long-time employees among its nearly 170,000 work force worldwide. It is one of the largest employers in the US. It engages in two sides of the business: Commercial Airplanes (BCA) and Defense business (Defense, Space & Security). By Year 2012, BCA counts about 60% of the total revenue of $81.7 billion and half of its total employees, and Defense about 40% of its revenue.

The business model was set up after the major mergers with the expectation that the two sides of the business would weather each other- when the Commercial business going through the down cycles, Defense business can provide buffers and vice versa:  slow yet steady for years. With the acquisition of McDonnell Douglas in 1997, a big piece of defense industry was added to the original commercial focused plate. Besides the initial turmoil with Wall Street after the immediate marriage of the two distinct parties in a downward economy of the late 90s, things appeared never better or never more stable along with the rising economy. Therefore , within 10 years after the merger, the management must have gotten a little bit too complacent as scandals coming up from the top one after another.

After the MD merger in 1997, Boeing possessed the dominate presence in the aerospace industry in the US and in the world. The company culture started a paradigm shift as well. Two seemingly different types of businesses were merged together each with different needs and means to succeed. Commercial business faces market-driven competitions with innovative technologies and low-cost manufacture as the key to compete,  while Defense requires good relationship with the government for its lucrative long-term contracts although deals with its slow movements.  To the outside, it looked like a happily-ever-after marriage and Boeing became almost a bellwether company since then.

The seesaw model had worked fine for years. Did the top management ever foresee the danger of such a model in the longer term? While operating in two sides of the business with a much larger of defense contracts mixed into the revenue-generating venues, MD’s culture and management team seemed to have gotten a larger say inside the company while Boeing’s traditional culture was forced to change. Government contracts may have guaranteed terms of stable money flow, but it can also dominate the company’s culture from the process of dealing with government’s heavy and bureaucratic cycles instead of facing the ever-moving international market competitions, wooing officials to win contracts instead of focusing on building better airplanes, relentless number crunching and bottom-line calculations instead of people focus, culture focus, engineering focus like it used to be …

To modern age technology-driven businesses, government’s technology infrastructure and adoptions are almost always two or three generations behind the cutting-edge on the market. Their heavy regulations and bureaucracies can make everything move at a snail’s speed. That would not match well with the growth needs for a market-driven commercial business.

Nowadays, not only the economy crisis impacts every corner of the Commercial business, global competitions in every industry spring out like wild flowers. On the Defense side, government has started to tighten the defense budget and loads of regulations came up after the event of 911. Safety net is no longer safe and the seesaw all of sudden got pushed by heavy weights on both ends at the same time – getting stuck.

The winds are blowing from all directions. A company’s culture can decide its future path and survival rate under big storms.

“Culture trumps strategy, every time!”

See http://blogs.hbr.org/cs/2011/03/culture_trumps_strategy_every.html

Boeing has been facing many crises lately. The serious delays of 787 Dreamliners and many of its latest PR mishaps may be just the tip of an iceberg. There is no surgical solution to change a slow-moving, slow-adapting big elephant culture. The process will not be trivial to make an elephant dance again. It could be facing even more painful decisions ahead, to the company and to its people, esp. those people who have had their lifelong career rooted in the company. .

There are only few limited ways to transform such a large heavy company under crisis and there is also limited time. No matter which solution, predicted or totally unexpected, likely a fresher and more competitive culture is needed to ensure its future survival and growth.  Letting competitions and innovations be the main drivers again and hope it could dance very well once more. It is and will be a very good management case study for the 21st century.

Business Lessons Learnt

Boeing’s Dreamliners yet to have dreams come true

Boeing’s 787 line has been suffering some serious setbacks and bad PR lately. Well, it’s one of the most publicized product lines for Boeing. It has a long delay and it attracts long attentions. The result of any mistake is thus amplified by the time duration of the product finally coming to the market after years of delays.

It’s not the only noticible story ever in the business world. Another big company, once neighbors to each other,  has similar “Lessons Learnt” to Boeing still fresh in mind: Microsoft’s Vista launch. After 5 long years of waiting and delays, the product was reviewed unfavorably by the customers. Microsoft quickly corrected the actions in the next better OS launch after Vista, but a quick fix for an airplane model may take some time. Still, how Boeing deals with the current challenge will be critical for the big company’s image.

There hasn’t been such a Murphy’s Law which states: A significantly delayed project will result in poorer quality and worse customer acceptance. Well, it is very much the truth though in many cases. 

So what are the true reasons behind these significant drawbacks or failures?  Too many creative ideas? Too many unpredicated innnovations? To much publicity resulted in unrealistic expectations? Too daring? Too hard to manage? Bad economy? Yet, wait please, aren’t all of these already included in the normal categories of project management tasks – especially risk anticipation and risk management? To the end, a well-planned and well-managed project should encompass all and still can lead to a successful product completed on the expectations of time, budget and quality. Sounds like the true talents of such capability are still rare in big companies. People are usually the most unpreditable cause of any major failure.

Business Lessons Learnt

Lessons learnt from HP

Recent disasters of the complete write-down and lawsuit with Autonomy purchase from the tech industry giant HP provided us some valuable insights to today’s business world and management lessons:

1. A sky-dived savior from outer space seldom will save the world. HP’s use of ex-CEO from an European company proved to be more of a disaster than a game changer. European’s business culture and management system differ startlingly from those of the Americans. High flying ideas and quick turnarounds that are rarely seen from the European business arena cannot be tested on a big American company without a proof of concept.

2. Like holidays sales, hot purchases based on wishful thinking usually cool soon after getting into the hands. A lot worse for those “no-return” ones. Microsoft’s 2007 purchase of AQuantive at $6.3 billion with 85% premium (a writedown of $6.2 billion in July 2012) and HP’s purchase of Autonomy at $11.7 billion with 64% premium (a writedown of $8.8 billion in November 2012) were of the same suit. There are more similar stories to come(for example, the May 2011 acquisition of Skype for $8.5 billion while Skype was valued at $2.75 billion by EBay’s divestiture just 18 months earlier.”So wish to get it, no matter at what cost” typically describes the mindset and behaviors of those hot-headed high-ups. What you wish to get vs. what you got, how you wished it be used vs. where you truly can use it are of different things even for companies with many brilliant lawyers and accountants- it’s just not their job to decide. It’s more of the display of the management’s “sudden brilliant flashes in the head”. Caution is needed. Compare, research and listen to the questions and opposite views before you buy.

3. This is a time for many businesses on a true transformation. Yesterday’s breadwinners may no longer be suitable to feed today’s hunger needs. The worldwide recession is a warning and also a calling. Systems-political and economical, industries, individuals, welcome to a changing world where old routines may no longer apply. Tides of changes are coming in bigger and faster ways than many companies have anticipated before. For those who have the culture of easily burning tomorrow’s bread-winners on today’s altar, time to call for a wakening. Tomorrow is already here. Yes, “Elephant can dance”, but it needs leaders who stays current but can see far ahead, who truly understand the culture, the business, who has the determination and means, who has the full backing of the key stakeholders and a little bit of time, to get there. The questions usually are: where to find these leaders, will the companies still have enough time before the next crushing wave? Are leaders and companies prepared in mindset?