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Chapter One: Business Acceleration

"What you have been today isn't good enough for tomorrow."
-- Susan P. Peters, Vice President for Executive Development, G.E.

'Faster, faster!'

What was once a shout on the swings from the playgrounds of our childhoods now echoes the demands of our customers. For a business or enterprise to succeed today, speed -- not time -- is of the essence. In 2000, Bill Gates wrote, "The 21st century will be about velocity: the speed of business and the speed of change." Time has proven that Bill Gates was right.

Beginning with the fall of the Berlin Wall almost 20 years ago and bolstered by the advent of technological advances, Internet connectivity and instant messaging, the world has morphed into a global village where almost anyone can connect with another person in another part of the world at any time. You, your son, or your daughter can easily be chatting on an instant messaging program with a co-worker in Australia while writing an email to a cousin in England and using a program to have a free voice conversation with a friend in Peru -- all at 8 p.m. on a Saturday night. We are all linked now and information is instantaneous. Who would have predicted that Time Magazine's 2006 Person of the Year would be, of all people, You! And how did "You and I" rise to this honor? We helped create the success story of "community and collaboration on a scale never seen before" with the World Wide Web as our tool in our business and personal lives.

At the same time, there are more countries in the world producing a greater amount of goods; this has resulted in a marketplace that is broken into smaller segments. All of these phenomena are creating the demand for speed in every aspect of the organization. Business acceleration is a way of life today, not some prediction for the future.

Speed and More Speed

We demand speed everywhere, grinding our teeth when we're put on hold and told that our wait time will be five minutes or beating our steering wheels when we have to wait at a stoplight. There's "speed dating" and its equivalent in procurement, "speed matching." A popular monthly magazine, Fast Company, is devoted to helping companies compete and expand in this era of acceleration. The world's largest computer manufacturers are introducing servers with faster processors because we crave more speed. They are also offering systems designed to guarantee no business disruption should a server or two fail or a natural disaster shut down a server room, because the few minutes that servers are taken down for maintenance are a few minutes too long.

The Internet and the Web have helped create this sense of urgency. We use both tools to start and foster dialogues and relationships, resolve differences between systems and platforms, and learn more about individual customers. Enterprise application integrators (EAIs), enterprise service buses (ESBs), and web application servers tie disparate systems and programs together. Auto ID, wireless communications technology, and business software have been standardized, and system integrators have written custom interfaces to allow the exchange of data between programs.

All of these developments have made the notion of immediate orders a reality, and we all want our products to arrive almost as soon as we've ordered them. A frequent comment from Tompkins Associates clients is, "People click, and they expect the order's shipping time to be just as quick." It's not just customers who want their products as soon as possible. Marketing departments also want to get a new product launch completed and get rid of inventory before it becomes obsolete. Executives want their companies to grow as quickly as possible.

Global connectivity allows us to work 24 hours a day, continuously racing our competitors to be the "first to market," the "first to customer," the "first to the capital markets." New trade agreements, individual countries partnering with each other to produce and export goods, international e-commerce, and web applications have created a 24/7, on-demand, global marketplace and supply chains that mirror it. This point is driven home by Thomas Friedman in The World Is Flat: A Brief History of the Twenty- First Century. He describes his meeting in Bangalore with a top engineer from Infosys in which the engineer tells him a great truth: The enormous investment in establishing broadband connectivity worldwide during the 1990s, the corresponding explosion of software development that included segmenting development in modules that could travel, and lower prices for computers made it possible for developers to work remotely. When the engineer added that this had leveled the playing field, Friedman has a revelation: "The world is flat…. Clearly it is now possible for more people than ever to collaborate and compete in real-time with more people on more different kinds of work from more different corners of the planet and on a more equal footing than at any previous time in the history of the world -- using computers, e-mail, networks, teleconferencing, and dynamic new software."

Politics and technology took us down this path, but the current focus on reducing costs and increasing profits has cemented it into a requirement for doing business today. On 26 February 2004, Jeffrey R. Immelt, Chairman of GE, speaking in front of a group of investors, had this to say about globalization: "Globalization has a bad name. But the world is inextricably global." Immelt is right. There's no going back now. If customers can get products faster and cheaper because they're being manufactured in China while they sleep, by workers who accept lower pay, then those are the products they are going to buy.

Friedman agrees, although he states that globalization has been around since 1492, when Columbus set out for the West Indies. He says that there are actually three eras of globalization. The first, Globalization 1.0, began in 1492 and lasted until 1800. During that time, countries explored the possibilities of muscle power, horsepower, wind power, and steam power and in so doing, began a march toward global integration. Globalization 2.0 began about 1800 and lasted until 2000. This era, fueled by faster transportation, the telephone, electricity, fiber optic cabling, and the early days of the Internet and World Wide Web, created multinational companies, successfully shrinking the size of the world "from medium to small."

In 2000, he says, the world entered Globalization 3.0, which differs from the first two eras because not only is the world flattened, but the individual, rather than the company, now has the power to collaborate and compete globally. The driving force is not horsepower and not hardware, but software applications that have "made us all next door neighbors."

There are arguments over whether these developments are good or bad. Friedman sees them as a good thing; others find them frightening. No matter how you look at it, though, one thing is true: In this, the Globalization 3.0 era, it takes much more effort to establish a brand and this increases the importance of providing quality service. At the same time -- after more than a decade of de-layering, reengineering, downsizing, and deverticalizing in efforts to improve efficiency and reduce cost base -- companies are smaller.

The result is that everyone in business organizations has too much to do and not enough time to do it. CEOs are pressed, but so too are those who hold entry-level positions. The notion of "24/7" is now "28/9," even though that isn't possible. Company leaders are given 15 pounds of apples and told to fit them into 5-pound plastic bags. The reality is that we have much more work to accomplish in our quest to achieve customer satisfaction, grow business, and increase profitability and we have almost no time to do it. Our business climate today is best characterized as chaotic, and most companies have no real sense of how to handle it.

Handling the Apples

How are company leaders answering this call for speed? Well, as I see it, they're doing one of three things with their apples. Some are watching their apples spill out of the bag. They've heard the call for speed, but they've decided that they can't do anything about it. They're kicking the apples out of the way, tossing away the bag (either on the ground or into the hands of another company) and giving up. They close their businesses and find some other way to make a living.

Others keep stuffing the bag as if they have only 5 pounds of apples, even though they know that the bag won't hold them all. They close their eyes and keep shoving them down, hoping that by sheer force, the apples will fit. In other words, they continue to try to conduct business the old way -- concentrating too much on the physical aspects of expansion or allowing functions that are not core competencies to eat up most of their precious time. These appleweary folks are hoping that today's business challenges are hurdles that can be conquered by pushing them down.

Unfortunately, a 5-pound bag can't hold 15 pounds of apples, no matter how much stuffing you do. So, the bag breaks and apples go everywhere. Their companies rupture and their leaders are left with very little to salvage. Some even end up in re-structuring programs. These companies are suffering because they continue to do business as if it were still the early 1990s.

No one is immune. The number of companies admitting that their business models do not work anymore is increasing. Recently, Ford and Viacom admitted that they need to change the way they do business or they will not make money, and even Dell and pharmaceutical giants Merck, Pfizer, and Bristol-Myers Squibb say that they must develop new ways of doing business. The pressure is on and company boards and other stakeholders are not patient -- if you do not fix things in a short period, you are toast. In some ways, it's almost better to be like the company that gives up, because they haven't expended all their energy trying to get ahead by doing the same things they've always done.

The third possible response to the puzzle is to look at the apples and the bag and rely on innovation to develop a way to get those apples in the bag without breaking it. Some are sorting the apples, keeping the ones that look the best, and giving the rest away. Others are making applesauce, putting it into the bag, and then sending the bag to someone to put in jars. Another group is taking seeds from the apples and using them to plant new trees. Some are making applesauce and using the seeds to plant new trees. These are the companies that are thriving in the current business climate through bold leadership.

The Good News: There Is Hope

An increasing number of company leaders are either facing ruptured bags or the threat that they might break. These leaders can take heart, however, because there is hope. The leaders that have made applesauce are not all that different from them -- some may even have gotten the idea to make applesauce when the first few apples got smashed on the ground. A good example is Lou Gerstner of IBM. When he took over IBM in 1993, the company was on the brink of disaster. The company had lost sight of its customers and was completely mired in its arrogant, top-down, "it's our way or the highway," mindset, and this was killing it. But, in only nine years, he transformed the company and brought it back from the brink. It took a lot of hard work and Gerstner had to make unpopular decisions, but in the end, he saved the company.

Arrogant mindsets are being phased out, as many successful leaders are creating new ways to manage and motivate. The incredibly fast-paced, information-packed environment we live in has caused a shift in leadership style. A leader can misspeak, and the comment can be instantly reported to a worldwide audience through blogs, text messages, television and other mass media outlets. Because of scenarios like this, integrity and vision are more important than ever. >>Continue

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