BusinessWeek’s March 23-30, 2009 issue focuses on Smart Ideas for Tough Times which describes how managers are trying new things to weather the downturn.  The most interesting part of the series covers 11 management ideas that are the basics of any business education, but were quite revolutionary at the time.

This 4 part series (See Part 1 here, See Part 2 here, See Part 3 here) will examine these ideas alongside social media to see if we are witnessing a world-changing idea, or just another management fad.  First, here is the recap from BusinessWeek:

Some of the most powerful and lasting management methods were launched during tough times, when companies needed new ways to manage costs and grow. Here is a look back at some of the biggest ideas over the past 100 years.

1910 – The Assembly Line – Explanation

1920 – Market Segmentation – Explanation

1931 – Brand Management – Explanation

1943 – Skunk Works – Explanation

1950s – Lean Manufacturing – Explanation

1967 – Scenario Planning – Explanation

1973 – 360 Review – Explanation

1987 – Six Sigma – Explanation

1989 – Outsourcing – Explanation

1990 – Reengineering – Explanation

2000s – Open Innovation – Explanation

#11 – Reengineering

The Breakthrough: Radically redesign business processes to make them more efficient by removing functional silos and focusing resources on end to end processes.

The Question: Can Social Media help businesses effectively organize resources around complete processes to make them more efficient?

The Answer: Yes, empahtically!

• Cross-functional teams are at the heart of reengineering, and these teams often suffer from poor communication and unclear responsibilities.  Creative applications of Social Media will help cross-functional teams more quickly and easily share information that is relevant and accurate.
• Organizing a business around processes requires suppliers of the inputs to be well aware of the needs of the customers of the outputs.  Social Media improves the communication at all levels of the supply chain allowing for problems to be quickly solved.

#12 – Open Innovation

The Breakthrough: Companies should look beyond their R&D departments to customers, suppliers, and even competitors for innovative ideas.

The Question: Can Social Media help companies discover ideas while still allowing for control over Intellectual Property rights?

The Answer:  Probably Yes

• Open Innovation uses many of the same technologies that launched Social Media.  It follows that Social Media will help Open Innovation succeed because they both allow for increased information distributed to the people who will find it most useful.
• The problem is whether all companies can adopt the concept.  Open Innovation works for Starbucks because a competitor would have a difficult time implementing an idea without the huge distribution network Starbucks has.
• Other industries, like Hedge Funds or Restaurants, will never completely adopt Open Innovation because they can gain no competitive advantage they could protect from competitors

BusinessWeek’s March 23-30, 2009 issue focuses on Smart Ideas for Tough Times which describes how managers are trying new things to weather the downturn.  The most interesting part of the series covers 11 management ideas that are the basics of any business education, but were quite revolutionary at the time.

This 4 part series (See Part 1 here, See Part 2 here) will examine these ideas alongside social media to see if we are witnessing a world-changing idea, or just another management fad.  First, here is the recap from BusinessWeek:

Some of the most powerful and lasting management methods were launched during tough times, when companies needed new ways to manage costs and grow. Here is a look back at some of the biggest ideas over the past 100 years.

1910 – The Assembly Line – Explanation

1920 – Market Segmentation – Explanation

1931 – Brand Management – Explanation

1943 – Skunk Works – Explanation

1950s – Lean Manufacturing – Explanation

1967 – Scenario Planning – Explanation

1973 – 360 Review – Explanation

1987 – Six Sigma – Explanation

1989 – Outsourcing – Explanation

1990 – Reengineering – Explanation

2000s – Open Innovation – Explanation

# 7 – 360 Review

The Breakthrough – Employees get a better perspective from feedback collected from their supervisors, peers, subordinates, and customers/suppliers

Question – Can Social Media provide a more candid, well-rounded assessment of one’s performance?

• Answer:  Yes, with limitations
  
• Social Media greatly improves the ability for managers to assess their talent.  It is now easier to reach more people that can provide feedback as well as reduce the time it takes to collect the feedback – the major complaint with 360 Review
• Because the technologies make it quicker to communicate, employees can receive feedback in real-time, making it more relevant and more actionable
• However, 360 Review feedback requires anonymity which, if not managed properly, can take away the benefits of reach and speed

# 8 – Six Sigma

The Breakthrough: Quantifying processes through statistics to improve and control their outputs

Question – Can Social Media improve business processes through identifying defects and improving outputs?

• Answer:  Nope, not even worth it
• Six Sigma removes subjectivity and boils processes down to data and statistics.  There is no room for interpretation in Six Sigma, and this is important because it is used to make jet engines, medical devices, and nuclear technology
• Social Media is most successful when it facilitates the exchange of ideas and information between people who share the same interests.  It works best when it’s open to interpretation

#9 - Outsourcing

The Breakthrough: Identifying partners who specialize at performing complementary tasks for an organization at a fraction of the cost

Question – Can Social Media provide more opportunities for companies to focus on the tasks they do well and pay for tasks that are not a differentiating part of the value they bring to customers?

• Answer:  No, value comes after the fact
• A company should outsource tasks that distract from their ability to improve product value.  This is why most companies outsource processes like Benefits Administration, Facilities Management, and – interestingly enough – Customer Service.  Many brilliant leaders have weighed the value these provide and determined that profit maximization comes from hiring these outside.
• With Social Media, you can learn the impact of these decisions through a richer discussion with your customers.  Social media allows you to better listen and quantify the level of customer dissatisfaction associated with the outsourcing decisions your are making.

BusinessWeek’s March 23-30, 2009 issue focuses on Smart Ideas for Tough Times which describes how managers are trying new things to weather the downturn.  The most interesting part of the series covers 11 management ideas that are the basics of any business education, but were quite revolutionary at the time.

This 4 part series (See Part 1 here) will examine these ideas alongside social media to see if we are witnessing a world-changing idea, or just another management fad.  First, here is the recap from BusinessWeek:

Some of the most powerful and lasting management methods were launched during tough times, when companies needed new ways to manage costs and grow. Here is a look back at some of the biggest ideas over the past 100 years.

1910 – The Assembly Line – Explanation

1920 – Market Segmentation – Explanation

1931 – Brand Management – Explanation

1943 – Skunk Works – Explanation

1950s – Lean Manufacturing – Explanation

1967 – Scenario Planning – Explanation

1973 – 360 Review – Explanation

1987 – Six Sigma – Explanation

1989 – Outsourcing – Explanation

1990 – Reengineering – Explanation

2000s – Open Innovation – Explanation

#4 – Skunk Works

The Breakthrough – Lockheed Martin organized an autonomous, high-performance team separated from bureaucracy to develop a plane in 143 days.

The Question:  Can Social Media improve productivity by minimizing the organizational need for bureaucracy?

• Answer:  Somewhat, but not completely
• We like to complain about bureaucracy, but it has a purpose in organizations.  Don’t believe me?  Well look around and talk to people in the world’s largest organizations.  If bureaucracy were not a competitive necessity, it would not be present in ALL of the world’s largest firms.  Skunk Works was a success because it gave TOP TALENT the ability to work around the controls required to make a large organization run efficiently.
• For non-Skunk Works teams, made up of Typical Talent where control and oversight are necessary, Social Media can streamline the governance process through more timely communication.  It can allow teams to break from painful state-gate cycles to move to an environment of more iterative, constant feedback.

# 5 – Lean Manufacturing

The Breakthrough: From Toyota, an approach to efficiency that allocates resources only to those processes that create value for the customer.

The Question:  Can Social Media identify and improve those processes that create value for the customer?

• Answer:  Not really
• Social Media is all about communication which is more art than science.  In order to improve communication skills, you have to practice.  Practicing communication has a fuzzy connection, at best, to creating consumer value
• There’s a soft argument around Social Media democratizing communication to allow front-line employees to identify processes, but most modern production facilities have processes/systems in place already to do this.

#6 – Scenario Planning

The Breakthrough: Shell Oil improved strategic planning by creating scenarios, or possible outcomes, that take into account the combined effect of many different possible factors.

The Question:  Can Social Media improve strategy by offering a better view of the possible future?

• Answer:  Yes, emphatically
• Good strategy is hard evaluate because it can only be measured in hindsight.  Bad strategic decisions are is easy to justify because you can always tie a bad outcome to something not considered in the strategy.  Social Media can offer exponentially more points of view on the future than currently used by strategy managers and consultancies.
• Social Media can also improve the quantification of probabilities of possible outcomes through technologies that can collect and measure the perspectives of millions of people.  These technologies are in their infancy, but will scale rapidly as more data is collected and analyzed.

BusinessWeek’s March 23-30, 2009 issue focuses on Smart Ideas for Tough Times which describes how managers are taking innovative approaches to weather the downturn.  The most interesting part of the series covers 11 breakthrough management ideas that are now the basics of any business school education.

This 4 part series will examine these breakthroughs alongside social media to see if we are witnessing a world-changing idea, or just another management fad.  First, here is the recap from BusinessWeek:

Some of the most powerful and lasting management methods were launched during tough times, when companies needed new ways to manage costs and grow. Here is a look back at some of the biggest ideas over the past 100 years.

1910 – The Assembly Line – Explanation

1920 – Market Segmentation – Explanation

1931 – Brand Management – Explanation

1943 – Skunk Works – Explanation

1950s – Lean Manufacturing – Explanation

1967 – Scenario Planning – Explanation

1973 – 360 Review – Explanation

1987 – Six Sigma – Explanation

1989 – Outsourcing – Explanation

1990 – Reengineering – Explanation

2000s – Open Innovation – Explanation

#1 – The Assembly Line

The Breakthrough: Ford dramatically lowered labor costs through standardized parts.  This made an expensive technology cheaper and therefore increased mass market demand.

The Question:  Can Social Media make expensive technologies more affordable for the Mass Market?

• Answer:  Probably Not – Social Media makes communication faster and more relevant through online social networks.  This makes knowledge workers more productive than in the past.  However, big industries that rely on knowledge workers (pharmaceuticals, software, finance) can profit more from using this information to increase features, and therefore price.
• Additionally, while collaboration is now less expensive, globalization and other technological improvements have already made streamlined labor costs a barrier to entry in most industries rather than a competitive advantage.

# 2 – Market Segmentation

The Breakthrough: GM divided customers into groups based on their unique needs and focused their products on meeting those needs.  This decreased competition and cannibalization between their brands.

The Question:  Can Social Media allow companies to better identify and meet distinct consumer needs?

• Answer:  Absolutely Yes  – Tremendous amounts of data are being created by users of social networks and organized by marketing-savvy companies.  A company’s biggest challenge is how to make sense out of all thea data that is out there.
• Eventually, managers will have the tools to micro-segment their consumers and offer highly specialized products that do not contain features that would compete with other products they offer.

# 3 – Brand Management

The Breakthrough: Organize brands into “mini-businesses” that must differentiate themselves from both internal and external competitors to survive.

The Question:  Can Social Media allow organizations to more effectively align their resources to maximize total profit?

• Answer:  Sometimes – Social Media can extend the communication and collaboration ushered in by the first generation of internet technologies.  Larger organizations with many brands competing for internal resources will benefit from improved information flow, but this will be a one-time, medium-size improvement rather than a radical redesign.
• However, the majority of the benefits from improved internal communication have been realized through the adoption of first generation internet technologies.

Social Media is a hot topic in the corporate world, but many employees are skeptical of the value it can add to their business.  By viewing Social Media in the context of two recent corporate initiatives (Six Sigma and Innovation ), leaders can learn from a historical management perspective of how to implement the radical change taking place around us.

1 – Six Sigma

• Organization Ability to Understand Difficult Concepts – My three favorite Six Sigma companies, GE, Motorola, and Amazon spent tremendous resources, financial and human, to embed Six Sigma capabilities across their organization.  While the low hanging fruit ripe for Six Sigma may be gone, there is no question that the focus on fixing defects that annoy customers will continue to be critical to organizations.  Just like Six Sigma, Social Media isn’t the easiest concept for people to understand (ever try explaining the value of Twitter to someone?)  Not every employee needs to understand regression analysis but Six Sigma forced all employees to look at their work in the context of a business proces….which brings me to my next point.

• Business Process is a Common Language between Management and Employees – Leadership doesn’t have the time to understand the details behind every function in the organization.  But, Six Sigma tied the day-to-day work of front-line employees to metrics and results that leadership understands and wants quantified.  Businesses will always benefit from effiicient processes, but Social Media strategy execution requires rapid iteration and an almost wiki-like approach to the details of the execution.

2 – Innovation

• Solving Unarticulated Customer Needs – Since the dawn of capitalism, economic value has been created by those who can recognize a customer problem and solve it profitably.  It used to be a competitive advantage to have an innovation focused strategy, but it is now a strategic necessity because most companies have adopted a disciplined, consumer-driven approach to developing new products, services, and business models.  Social Media strategies and execution must follow the same process in place at innovative companies:
  • Ability to Surface Unarticulated Customer Needs – No one specifically said to Twitter, “I need a way to share 140 characters of text in as many ways as possible.”  Rather, the founders listened to people who wanted simplicity in communication and openness in idea sharing.  Social Media teams benefit from a member who knows advanced market research techniques (like ethnography) to surface customer data.
  • Skill to Quantify the Breadth and Intensity of Customer Needs – Just because someone says they need something, doesn’t mean you have to solve it.  Social Media teams must spread their customer insights across the organization to solicit feedback and perspective.  It’s not always a hard number that measures the need for a solution.  But through a diversity of opinion, you can separate customer insights into those that are interesting and also relevant to your business model.
  • Generating Ideas that Solve Problems – The IBM commercials made this concept famous.  But, a simple ideation session can yield a high number of ideas, few of which have staying power because they don’t solve a customer problem.  Social Media teams are prone to adopting fancy technology ideas that aren’t necessarily the solution to a customer problem.  However, they can learn from Innovation’s structured ideation sessions that focus creativity on real problems
  • Focus on Execution over Ideation – Malcolm Gladwell’s New Yorker article shows historical examples of simultaneous discovery like calculus and the telephone.  Simply put, ideas aren’t the magic bullet.  A Social Media team needs to understand that tradeoffs between the idea and reality will be required.  Execution is typically a function of hard work, so as long as the Social Media team can immerse itself in the details required to execute their solution to an unarticulated consumer need, success will not be lost along the path to realization.

• Strategic Risk-Taking over the Long Term – Innovation requires “big bets” often without an immediate payback to the organization’s goals.  Leaders are trained not to argue with the “big bet” principle, but true innovative companies are those that adopt risk-taking and measure management on the ability to take smart risks.  Social Media teams should seek to understand management’s commitment to patience and constant re-calibration of goals and objectives based on findings from constant iterative customer feedback.

For Discussion:  What other hot-button  ”management trends” are relevant to Social Media teams?  How can you leverage past organization-wide initiatives to better suceed in your goal for change?