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Showing 1-7 of 7 reviews(5 star). Show all reviews
Previously, I read and then reviewed three books co-authored by Hagel which I greatly admire. Specifically, Net Worth, Net Gain, and Out of the Box. In this most recently published volume, Hagel and Brown assert that effective business strategy "depends on productive friction and dynamic specialization." As I began to read this book, I was curious to observe how Hagel and Brown formulate and then present what they call a "compelling case [for reshaping] the business landscape -- where and how value and profit get created -- to create a scalable catalyst for broader institutional and policy changes."

For them, "edge" has several dimensions. "First, we mean the edge of the enterprise, where one company interfaces or interacts with another economic entity and where it currently generates marginal revenues rather than the core of its profits. Second, the edge refers to the boundaries of mature markets as well as industries, where they may overlap, collapse, or converge...[Third], geographic edges, especially those of such emerging economies as China and India, where consumers of all kinds crave Western goods and services that will ease their burdens and improve their lives. Finally, we refer to the edges between generations, where younger consumers and employees, shaped by pervasive information technology, are learning, consuming, and collaborating with each other and where baby boomers are preparing to retire or switch careers over the next decade."

Hagel and Brown explain how to build a sustainable competitive advantage by focusing on three broad strategic imperatives: dynamic specialization, connectivity and coordination, and leveraged capability building. Of special interest to me is what they have to say about process outsourcing and offshoring, loose coupling of extended business processes, and what they call "productive friction." Many of those who reads this book will derive substantial benefit from completing three "quick audits" (pages 26-29) because they will help those who comprise a senior management team to build a shared view of where their organization is. Only then can an appropriate strategy (or strategies) be formulated and then implemented to get that organization where it needs to be.

By the way, according to research which Robert S. Kaplan and David P. Norton provide in The Strategy-Focused Organization, only 5% of the workforce understand their company's strategy, only 25% of managers have incentives linked to strategy, 60% of organizations don't link budgets to strategy, and 85% of executive teams spend less than one hour per month discussing strategy. If true, these are chilling statistics which suggest that few decision-makers in any organization (regardless of its size or nature) would be able to answer, clearly and realistically, questions such as these when completing a migration path audit:

What have been the five most important operating initiatives -- based on resource commitments -- during the past twelve months?

How to characterize each of the five initiatives in terms of its efficiency, specialization, coordination of third-party resources, and accelerating capability building across enterprises?

Based on a calendar review of executive involvement, how much time was spent over the past twelve months discussing the four elements of each operating issue?

Approximately what were the resources committed to these four elements across the five operating initiatives?

When you next participate in a group discussion of strategic planning, ask questions such as these. The silence which follows will be almost deafening.

As indicated earlier in this brief commentary, when Hagel and Brown refer to "the only sustainable edge," they do so in terms of four separate but closely related dimensions. It is important to keep that in mind as you follow their narrative through seven chapters to the Epilogue. It is also helpful to remember that Hagel and Brown are intrigued by an often troublesome but irrevocable convergence as digital information technology expands both within the enterprise and beyond through global communication networks as public policy in diverse domains continues to shift and thereby intensify competition on a global scale.

When formulating new approaches to developing strategy, Hagel and Brown suggest, first build alignment on the long-term direction of the company. (They pose three excellent questions on page 160. Can you answer them?) "To sustain a meaningful longer-term direction, explicitly identify what you will not do as a business. Most companies will probably shed areas of activities for which other firms have developed world-class capabilities." Next, build alignment around near-term operating initiatives. (There are two more excellent questions on page 162.) Then identify and address major organizational barriers. Finally, create tight performance feedback loops. I think it would be a serious mistake to think that this recommended process is relevant only to larger organizations, especially those competing or at least operating on a global scale. The information and counsel they provide as well as the questions they pose will be of substantial value to decision-makers in any organization, whatever its size or nature.

In their Epilogue, they shift their (and the reader's) attention to still another of those questions which are so easy to ask but so difficult to answer: How to recast public policy to develop talent? The suggestions they offer are eminently sensible and best revealed within the context created for them. Of special interest to me is the fact Hagel and Brown seem to function so effectively on both the macro and micro levels. Although they provide an abundance of specifics throughout their brilliant book, they always have the so-called Big Picture in mind. This is especially evident in the remarks with which they conclude The Only Sustainable Edge:

"By focusing on talent development, policy makers can help individuals in their society more effectively realize their full potential. But the benefits extend far beyond this. Talent development, especially when situated in economic activity, can drive improved productivity and, in turn, enhance the standard of living in any society. Even more broadly, a focus on talent development helps attract highly motivated and creative people and provides them with the resources and time to develop a rich and evolving cultural and social environment. Talent development is an ongoing race, but those who lead the race will unleash passion and rewards that will make the race worth winning."

Those who share my high regard for this book are urged to check out the works co-authored by Kaplan and Norton (especially The Strategy-Focused Organization) as well as Don Mankin and Susan G. Cohen's Business Without Boundaries: An Action Framework for Collaborating Across Time, Distance, Organization, and Culture, Robert Simons' Levers of Organization Design: How Managers Use Accountability Systems For Greater Performance and Commitment, and Strategy Safari: A Guided Tour Through The Wilds of Strategic Management co-authored by Henry Mintzberg, Bruce Ahlstrand, and Joseph Lampel.
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on September 5, 2005
Full disclosure: I don't have an MBA. I've never been to business school. When I hear the word "metrics", my eyes tend to glaze over like those of the rabbits that hang upside down outside butcher shops in certain parts of New York City. But business books are where forward-looking thinkers are incorporating key insights from Chaos Theory and complexity to create new models - that's why I read them. And John Hagel and John Seely Brown are the most forward-looking - and up-, down- and side-ways looking - of all those I've read.

The authors also demonstrate unusual depth. On the surface, "The Only Sustainable Edge" is your passport to a globalized world: the authors take you to China, India and other locales normally seen as far-off places to which we off-shore and/or out-source (the authors nicely distinguish between those two practices) and show us, instead, the specific conditions and cultural traits in those countries that create innovative practices we could learn from. But what gives this book such deep resonance is its underlying vision of a globalized world and the shift in theory and practice its operating principles demand. Because the tropes the authors use are brilliantly complex - they encode so much information - you can't help but grasp the implications. Take just these three examples:

"DYNAMIC SPECIALIZATION": The pre-globalized world world was divided into what Isaiah Berlin called "hedgehogs" - generalists, who know a little about a lot of things; and "foxes" - specialists, who know a lot about one thing. In a globalized world, the specialist is neither fox nor hedgehog: the specialist must know a lot about one thing...and how it works in many, many different contexts. To (I can't believe I'm using this word) grok the specialist as a boundary-crosser, moving laterally across a broad spectrum, is also to understand the shift from a vertical to a horizontal focus (what Thomas Friedman calls "flattening"). Likewise, the transcendence of the fox/hedgehog paradigm suggests that oppositional constructs themselves may be passé. Indeed, throughout the book, the authors look to maintain the tension between opposites rather than resolve the tension either one way or the other. (Thus, unlike the early enthusiasts of chaos theory, who replaced "things" with "flow", Hagel and JSB have a healthy respect for both.)

2) "PERFORMANCE FABRIC": Pre-globalization, growth was measured size and/or efficiency. In a globalized world, growth is measured by complexity. You grow by deepening and broadening your connections, forming new partnerships, entering into new collaborations, growing one's skills across many more contexts. That tapestry of connections is what Hagel and JSB call "a performance fabric". I'd be tempted to say that the richer the tapestry, the richer the company and its shareholders, but now I'm thinking "tapestry" doesn't do justice to the elasticity of the performance fabric. Perhaps "trampoline" would be better - it gives you that added bounce you need to vault into a higher stratosphere, a higher level of complexity. (Perhaps it could be said that in a globalized world, companies have to grow up.)

3) "PRODUCTIVE FRICTION": Pre-globalization, boundaries were thought to be hard and fast, built like moats around a castle to protect one's enterprise against competitors, predators (or pirates) and/or regulatory bodies. In a globalized world, boundaries are points of connections as well as separation. Companies and individuals have to collaborate with competitors. Those working in and with countries that have different ideas of property and the boundaries we create to protect property, need to negotiate boundaries rather than impose them. Rubbing up against each other in this way creates friction, but, as anyone who's ever watched "Survivor" knows, rubbing two sticks together produces fire. Likewise, productive friction sparks new ideas and new solutions.

In fact, I had my own experience of productive friction reading this book. While I sometimes found the going difficult, rubbing up against the unfamiliar business syntax and vocabulary produced a fireworks of thoughts and images. That mine had less to do with the business models Hagel and JSB are proposing than with the social model I was extrapolating from it was inevitable because, as the authors themselves suggest, much of the information in this book translates immediately to the social arena. How could it not, given that the underlying principles are the same? If the abilities to be sensitive to your surroundings, to respond quickly to change, to be able to negotiate tension rather than to try to resolve it either one way or the other are crucial to the success of companies and workers in a globalized world, how could they not be useful for its citizens as well?

That said, this is a business book. Hagel and JSB focus on the business model and leave the social model to the reader's imagination. They provide companies with criteria by which they can analyze their strengths and weaknesses and offer a host of best practices - both of American companies and those of other countries - to help companies compete and grow in a globalized world. Neophyte that I am, I can only presume the value of these precepts to business. But as a shareholder in some of those companies, I'm prepared to hold them accountable to the standards set forth in this book.
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on August 1, 2005
This book is a must read, because the thoughts and ideas are provocative. The target audience, I believe, is the strategic decision maker for the enterprise.

For example, the assertion that offshoring is here to stay and that as a business trend, it is the first of a 4-phase phenomenon. The book logically outlines the concept that enterprises initially offshore for cost advantage, but could end up bringing back value-added goods and services to the host market. This is not obvious to many first time offshoring firms. Strategy that does not support the 4-phase phenomenon might end up being more expensive.

Or the idea that Service Oriented Architecture can be enabled technologically, today; but needs cultural change within the enterprise to be effective.

The book includes some real treasures if you take the time to take a careful read. That Wipro and Infosys use different software methodologies for different industries is a fact that aspiring offshore firms might want to consider while reviewing their strategic investment options.

Even some of the concepts that are not entirely new, such as 'dynamic specialization' have been presented in an effective blend of conventional corporate wisdom and new insight. This makes it worth one's while reviewing these chapters, even if one does not entirely agree with the conclusions. If nothing else, these are as good an explanation as any of some of the startling business results we see, such as the success of the Chinese motorcycle or the Indian software industry.

There are also plenty of other useful nuggets, for example the clarification of the difference between 'offshoring' and 'outsourcing', two terms very commonly used synonymously.

I like the fact that each chapter concludes with a 'bottom line' section - the one on offshoring recommends that the executive team do site visits to to the offshore location before making any long term decisions. As a pointer, I believe this is invaluable and follows directly from the arguments (on cultural differences) in that chapter.

On the whole I strongly recommend this book to anyone who appreciates a different point of view that stimulates thought.
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on June 16, 2005
Hagel and Brown have written an amazing book - it is hard to capture its full richness because it covers so many themes in interesting and thought-provoking ways. It's a book about offshoring, globalization, business strategy, innovation, the role of IT in enabling new business capabilities and public policy.

What really intrigued me is their perspective on business innovation. We tend to view innovation as something that occurs within a company and usually associate it with breakthrough product innovation. Hagel and Brown urge us to reconsider what innovation is and where and how it occurs. Rather than emphasizing breakthrough product innovation, they urge us to think more about rapid incremental innovation of business processes and practices - as well as products. They make a strong case that the most powerful spawning grounds for this kind of innovation are at the edge - the edge of business processes, the edge of the enterprise and the geographic edge as represented in large emerging economies like China and India. Particularly provocative is their view that China and India are becoming catalysts for exactly this kind of rapid incremental innovation - and that Western companies are thinking much too narrowly about these economies as just sources of revenue growth.

They suggest that new management techniques are required to harness this potential for innovation. In particular, they focus on the role of "productive friction" as a way to drive innovation across enterprises. To illustrate the concept of productive friction, they give fascinating examples from industries as diverse as motorcycles and flat panel displays.

When most companies think about innovation across enterprises, they typically focus on "deals" or specific innovation projects. Hagel and Brown push us to build long-term, trust-based relationships across multiple enterprises to support sustained innovation. It is a much more ambitious undertaking, but they make a convincing case that this really is the only sustainable edge as we face more competition on a global scale. Rather than seeing competitive advantage erode, Hagel and Brown believe that companies can actually build even more substantial forms of advantage through learning how to get better faster by working with others. This is a "must read" book for anyone interested in business or the world we live in.
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on September 12, 2010
I have the privilege and challenge of working "middle management" in a military organization. Granted, this book is written for business applications, and the military doesn't fit particulary well into the traditional understanding of business.
It's one of the few organizations that can operate with little to no concern for the bottom line. I mean, it's not like the military is going to go bankrupt or be subject to a hostile takeover. However, as one who has owned my owned business in the civilian sector and now works in the Federal sector, I can say that what works in business will work for the military. The principles of business are true regardless of the application. The idea of collaboration and cooperation can apply to any situation and in any organization that wants to survive...and not just survive, but thrive in the 21st century.
Of special interest to me was the concepts that the authors put forth on the importance of building relationships with other organizations that share a similar goal and working to change the paradigm of competition to cooperation, for the mutual benefit of all.
I am recommending this book to my supervisors, who are beginning to realize that in order to thrive in the current economy, we must think and act like a business.
Several years have not made the book less relevant, but more.
Yes, it reads a little intellectually...what do you expect from Harvard, right? But don't miss the the keen insights offered in this work because you stumble over some of the prose. Like I tell my kids, "Think, there's very little competition!" This is a book worth reading if you want to understand the dynamics of today's constantly-changing business culture.
If ideas are the new currency, as it is often said, then relationships are the new assets. How rich are you?
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on June 18, 2005
At a time when U.S. businesses are still pondering the "if" and "when" of globalization, Hagel and Brown have written a compelling blueprint on the "how." Already the book has been positioned as a companion piece to Thomas Friedman's "The World is Flat (2205)." But heart and soul, the Hagel/Brown book is about collaboration -- the subject of the 6/20/2005 cover story in Business Week -- and how innovators are outsmarting the competition with new tools and processes for getting the most from the new networked marketplace.

At the foundation of this book is one of the most interesting conceptions of the firm since Ronald Coase's transaction theory (1937). According to Hagel and Brown, the purpose of the new firm -- at a time when IT and market-liberalizing public-policy shifts have leveled the playing field in so many markets -- the purpose of the firm is to build new capabilities that make businesses more nimble, more competitive in their markets. As the authors demonstrate, there's no better way to develop new capabilities than to learn from best practices in collaboration.
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on July 13, 2005
This book provides valuable and timely insight into alternative views into innovation taking place in China and India and tools required for modern businesses to become competitive in a interlinked work place.

Notions of eclogies of work communities are particularly insightful!
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