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Rethink: A Business Manifesto for Cutting Costs and Boosting Innovation Hardcover – April 8, 2009
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From the Back Cover
It's the trap that ensnares virtually every business.
We focus on process: “how” we're doing the job. And we forget about the bigger issue: “what” we're doing and “why” we're doing it. That's why we're leaving so much value on the table. In Rethink, business architect Ric Merrifield exposes this problem with vivid examples and introduces breakthrough techniques for overcoming it.
Merrifield shows how to rise above the clutter of your “hows” to expose what does and doesn't need attention in your organization. You'll learn to identify the activities most critical to success, as well as those that are borderline, redundant, or even counterproductive. Merrifield helps you get past the parochial, subjective viewpoints of ground-level participants...find more cost-effective ways to achieve core goals...capture better information for prioritizing investments...identify hidden sources of value...use technology-driven plug-and-play management to increase efficiency and agility...and reconfigure your company to ride nonstop waves of change.
Along the way, Merrifield presents powerful case studies ranging from ING DIRECT to Amazon.com to Procter & Gamble. These diverse companies have learned how to cut costs, strengthen innovation, and profit from change all at the same time. Using the lessons in this book, you can, too.
• Rise above low-level processes and narrow perspectives
• Step back, identify what really matters to the organization, and act accordingly
• Understand the hidden connections that can make or break your business
• Make profitable changes without setting off destructive chain reactions
• Expose activities where people, process, and technology matter...and, equally important, where they don't
About the Author
Ric Merrifield spent nearly 15 years in various consulting roles helping organizations define and achieve their goals. Since joining Microsoft, Merrifield has spent more than 10,000 hours as a business architect and has filed twelve patent applications all with the goal of helping companies rethink their operating models and get out of the “how” trap described in the pages of this book.
Merrifield recently coauthored “The Next Revolution in Productivity,” a June 2008 Harvard Business Review article focused on case studies that highlight needs of the organization and the opportunity to rethink business operating models before making major technology changes. Merrifield is an alumnus of Lakeside School in Seattle and Georgetown University in Washington, D.C.
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Of course the books suffers some from being a book-length expansion of a core idea originally published in the Harvard Business Review, "The Next Revolution in Productivity" (free online at Phi Beta Iota), but from where I sit, 47 of the 53 reviews miss the whole point, and I am not that thrilled with the remaining six, but they did help me.
POINT NUMBER ONE: Businesses are eco-systems within eco-systems. The industrial era has piled up a mish-mash of stovepipes, conflicting chains of command, etcetera etcetera. Until Web 2.0 (I'm working on Web 4.0) there was not much one could do about it, but now Information Technology (IT) has reached a point where it CHANGES EVERYTHING. Bare bone zero sum reviews are a priority.
POINT NUMBER TWO: The Cloud is the Context. Location is now generally irrelevant, knowledge and trust and reliability of performance are higher values, and in fact forcing individual performers to center on a fixed point (desk, secretary, coffee pot) is COUNTER-PRODUCTIVE. However, you cannot send them out as lone rangers without giving them a suite of software & services (S+S).
As some of the author's critics observe, the idea that we spend too much time on the how and not enough on the what is not new. In military circles (war college level) it is called "strategic decrepitude," when flag officers confuse growing staffs, more PowerPoint briefs (sorry, Tuft has it right on this one), and body counts to be "progress." They actually have no clue.
POINT NUMBER THREE: The existing business processes were established in earlier eras, the legacy systems represent earlier generations of everything, and if you do not drill down deep and wide, you will not identify the true costs of everything, nor the hidden values.
At this point I want to list ten books that I have reviewed with the suggestion that anyone unsure about the value of this book read my summaries of the other books first, and then decide. These other books provide a useful context for this book--saying it is incomprehensible or whatever is like saying that the Redskin Playbook is incomprehensible to someone who is not a Redskin. So what?
Reflexive Practice: Professional Thinking for a Turbulent World
Knowledge As Design
Building a Knowledge-Driven Organization
The World Is Open: How Web Technology Is Revolutionizing Education
The Hidden Wealth of Nations
Here Comes Everybody: The Power of Organizing Without Organizations
The Genius of the Beast: A Radical Re-Vision of Capitalism
The Innovator's Dilemma: The Revolutionary Book that Will Change the Way You Do Business (Collins Business Essentials)
The Fortune at the Bottom of the Pyramid, Revised and Updated 5th Anniversary Edition: Eradicating Poverty Through Profits
So getting back to this review, here are some of my summative highlights:
+ Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) now being integrated, enhanced, and displaced by Service-Oriented Architecture (SOA). The critical point here is that IT generally and the Cloud specifically make possible multiple radical process changes that reduce true costs (not just internal financial costs) and dramatically enhance outcome including return on investment and retained profit.
+ The book resonates with me because the author diplomatically touches on the fact, across various case studies, that many "leaders" are actually administrators (this is true of the $75 billion a year secret intelligence community that I served for three decades), and rather out of touch with reality, context, facts, whatever you want to call it. Lest the reader doubt me, let me cite Ben Gilad, one of the top commercial intelligence officers in the English language. He writes, in Business Blindspots (and this chapter is free online, just search for the quote below):
"One of the facts that amazed me the most over the past eight years while helping American and European firms improve their ability to read their markets, was how insulated top executives were from competitive reality. This is because they secure their competitive intelligence (market signals regarding change) at best through a close circle of 'trusted' personal sources, or at worst through those one-page news summary clippings. Top managers' information is invariably either biased, subjective, filtered or late."
In my experience helping 66+ countries directly these past twenty years, the same is true in government, and in the other six of the eight tribes of "intelligence" (decision-support): academia, civil society, law enforcement, media, military, and non-profit.
I will put this another way. Russell Ackoff (along with Jan Warfield, his online Wandwaver Solution is a must read) emphasized how so many organizations get in a rut striving to do the wrong things righter. THAT IS THE WHOLE POINT OF THIS BOOK. You have to get a grip on the truth of what you do and why and to what end, and then start doing the right things cheaper faster better NOT the WRONG things cheaper, faster, better.
+ I have a note that if the industrial era was about time management, the information era is about systems management--EVERYTHING including especially time and energy inputs, true costs, and outputs including impacts on all others and "residuals" or cascaded impacts and benefits (or costs) down the line.
+ The author is focused on software and human productivity is somewhat silent, but I absolutely see that this is a human-centric book that strives to show how IT can change the definition of what it means to be productive or profitable. This is about a QUANTUM IMPROVEMENT meaning not just a change in the how but a change in the NATURE of what is done.
+ Very lightly the author observes that any organization that does not keep current on its software is losing productivity. Beckman, the CEO author of Knowledge-Driven Organization (I sought him out and he impressed me hugely) is of the view that one must replace all information technology every two years for all if possible, but certainly for the information-intensive employees at least. Although I am critical of software pigs that suck up every bit of hardware progress before the hardware hits the marketplace, the point is valid.
The case studies are a fast read, and I am sympathetic to those that found the writing too cryptic or breezy or whatever. Some of the core repetitive points:
+ Connectivity matters. MUST KNOW how everything is connected to everything else in all directions (suppliers, integrators, etc.)
+ Context matters. Cannot ignore weather, fast-changing global government compliance idiosyncrasies, etcetera.
+ Predictability is precious. Stupid organizations do not think through the consequences of their actions or lack of action.
+ ING DIRECT and ECLIPSE (which reminds me of Jim Fallow's superb book Free Flight: Inventing the Future of Travel) are both worth study outside the quick pass that this book offers. Vern Rayburn is quoted, and this is a key point:
"Innovation and disruptive technologies can create new value propositions."
Combined with TRUST, which one Nobel Prize winner demonstrated lowers the cost of doing business, and based on the transparency that IT makes possible today, we are on to something here....such as Green to Gold, Cradle to Cradle, Ecological Economics, Natural Capitalism, Ecology of Commerce, Sustainable Design--all book titles that Amazon rather annoyingly will not allow me to link here, so use the Phi Beta Iota version of this review (which leads back here) to get all the links).
The Cranium case study is noteworthy to me because the success story includes the death of advertising. They used Starbucks presence, disc jockeys, and Amazon plus Barnes and Noble to reach millions at no cost. I personally believe that now that we have true cost of goods increasingly available at point of sale via handhelds and bar code queries, we are going to start seeing the death of advertising and the movement of markets based on consumer access to real-time sensible information.
The Amazon case study was certainly of interest to me. I delivered a standing room only closing briefing to the Amazon developer's conference a couple of years ago (link to briefing slides and compressed movie at Phi Beta Iota), and I learned things about Amazon that I did not know, which just deepened my conviction that one of these days Jeff Bezos has to get serious about being the hub for a World Game and Global Game, my two pet rocks (they bite). Tim O'Reilly, also a member of the Silicon Valley Hackers Conference, inspires sharp attention when he is quoted in the book saying "Amazon's a pretty serious dark horse." I agree. So is Nokia.
I am touched by learning that disabled veterans (we have tens of thousands of multiple amputees being concealed from the public by an Administration that prefers to hide the true cost of war to society) are earning money answering questions on Mechanical Turk, and this deepens my resolve to find a way to offer every disabled veteran the tools with which to connect to the world and earn money with their brains, eyes, ears, and whatever they have left in the way of limbs.
The Heat Map was not explained as well as I would have liked, this is one place where sharper graphics and greater coverage would have helped. The book ends by pointing to its website, and that is probably where I will end as well.
This mantra is repeatedly constantly in the book. Yes, start by looking at HOW you do things. You send FAXes. You answer phone calls with orders. Then step back and think about WHAT you are accomplishing. You are distributing status updates. You are bringing in orders. You could do those things far more efficiently if you just focused on those "whats" and thought up different ways of how they could be done.
The techniques he uses to help you out of your current box are similar to many other self-help books. You build a grid with four parts - high value / low performance, high value / high performance, low value / low performance and low value / high performance. The HV/LP are the ones you must actively fix. The HV/HP you can luckily just monitor. The LV/LP should be outsourced or eliminated. You're not doing them well anyway, and you don't really need to waste the time. The LV/HP is a waste of resources - people are doing really well things that don't need to be done. Sic those people on something more valuable.
There are good real-life examples in the worlds of Amazon, jet planes, online banking and other areas. You hear about specific issues they faced and how they were overcome. Cranium, the fun board game, went through numerous rethinking rounds before it reached success.
In many of the examples you hear a common theme - that company management was resistant to an idea which later proved to be quite successful. In Cranium, they thought nobody would want to play with clay. In Amazon, people resisted the idea of showing used books right alongside the new ones. The company plowed ahead with the risky idea and found success.
There are also examples of tiny changes making a big difference. For example, in one of Cranium's board games they had used a traditional hourglass as a timer. Players would nag each other during their turn, tapping the hourglass and taunting them about time running out. They made a tiny change to the game - changing the hourglass into a musical timer. Suddenly players were now encouraging each other, encouraging them to finish in time.
I've seen that some other reviewers found the writing style to be "dry". Maybe it's because I've read numerous business books at this point, but this book is NOT dry :) I can recommend several books for people to read that are highly respected and VERY dry. Yes, the tone isn't cutesy and light with examples involving puppies and kittens, but I did find the information useful.
If I had a complaint, it's that the examples all skew towards rather large businesses. Most businesses out there are small businesses, and those small business owners definitely need this assistance. However, it's hard for a small florist or a website owner to relate to a lot of these examples. I think if even a few of the examples could have been brought down to a smaller size, it would have been extremely helpful.
In the latest round of the reengineering wheel, the author challenges business leaders to refocus on the Whats---the products and services the business exists to produce in order to generate profits.
Anecdote after anecdote reinforces this "back to basics" approach, but this book doesn't offer much in the way of practical solutions nor useful tools beyond the typical consultant grids.
I certainly agree that many business leaders have strayed into a process cul-de-sac by worrying too much about finding the best way to produce something which needn't be produced in the first place. This is at the root of the hunger for innovation, but the price of innovation is one must embrace both change and risk.
Useful for its abundant examples of symptoms of this loss of focus, but we're still waiting for the clinical treatment of Howism.
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