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Confront Reality
Sunday, December 19, 2004
The Week in Review has become my favorite section of the Sunday New York Times (The Book Review is second), because it looks beyond the day-to-day adrenalin rush of the front page to things that will matter for years.

In The Pursuit of Knowledge, From Genesis to Google, Alberto Manguel riffs from the Tower of Babel to the Library of Alexandria to Google's announcement of embracing library content. Manguel cautions that "...reading, in order to allow reflection, requires slowness, depth and context; that leafing through a material book or roaming through material shelves is an intimate part of the craft...."

As every years winds down, my mental gears begin struggling to answer the question asked by the dog who got on the bus: "Now what?"

Internet Time Blog is a place where I lay out my thoughts in public, both to clarify my meaning internally and to share what I find with others. The teacher always learns more than the pupil; I take advantage of my readers to increase my own learning.

When net-knowledge was scarce, this led me to write lengthy interpretations and essays. I maintained The eLearning Jump Page, essentially a selective page of links. These days, the problem is too much knowledge, not too little. Furl replaces the Jump Page. RSS brings exposes us to many viewpoints. Now I question what aspects of Internet Time Blog are worthwhile. Encyclopedic blogging is futile.
Jorge Luis Borges, who once imagined an infinite library of all possible books, invented a ... character who tries to compile a universal encyclopedia so complete that nothing would be excluded from it. In the end he fails, but not entirely. On the evening on which he gives up his great project, he hires a horse and buggy and takes a tour of the city. He sees brick walls, ordinary people, houses, a river, a marketplace and feels that somehow all these things are his own work. He realizes that his project was not impossible but merely redundant. The world encyclopedia, the universal library, already exists and is the world itself.
Better to just do it than to write about it. Last night I fell asleep reading reviews of the best business books of the year in Strategy+Business. Exhaustion, not boredom, closed my eyelids, for the writers were addressing a favorite theme of mine, the "Knowing/Doing Gap." Rather than tout the latest nostrum to bring about "alignment," they write:
“Great strategy, poor execution” is, in fact, a pernicious oxymoron, rooted in ineffective concepts that sharply separate the formulation of strategy from its execution, and assume that there is a linear, sequential relationship between the two.


So pervasive are these notions — and so widespread is the resulting separation of strategy from execution — that many companies today, in their efforts to increase value, seem to ignore strategy entirely, choosing instead to focus solely on execution. The highly visible failures of companies with poor execution have exacerbated this subtle twisting of the “great strategy, poor execution” oxymoron into a perilous move toward “great execution, no strategy.” Such an approach inevitably consigns a company to producing below-average returns to investors, leaving it vulnerable to competitors.
The Future of Competition asks businesses to focus on the customer relationship -- not merely cordiality but active co-creation. Think Amazon.
Co-creation requires major changes in operations. Marketing, for example, must be organized with several “experience gateways”: one for customers interested in extensive help or involvement, another for users who want only a simple transaction, possibly one for users willing to purchase the product over the Internet, and a different gateway for users who want to touch the product or interact with a human being. Operations must be more flexible, capable of providing each customer with a consistently high-quality experience without a significant increase in costs. Management of risk is more important and more difficult, since customers are part of the experience of other customers.
Confronting Reality: Doing What Matters to Get Things Right tell us strategy is iterative:
Successful companies realize that internal activities, financial results, customers, and external results are all equally important — and that the linkages between these aspects of strategy are all bi-directional. For example, not only must operational priorities and organizational structure conform to the strategy, but an effective strategy also must be built upon superior organizational and operational competencies.
The heart of effective strategic management is “an organized, rigorous way of looking at the health and profitability of a business, now and in the future” — what they call a “business model." For them, a business model is a mental model that logically breaks down the many elements that make up a business, from its markets to its income statement to its leadership elements; the mental model groups the elements into three components — external realities, internal activities, and financial targets — and then analyzes how all the elements are linked.
Robert Kaplan and David Norton's Strategy Maps continues to flesh out the elegant framework that began with The Balanced Scorecard. A strategy map addresses and links together:
  1. Financial Performance. This lagging indicator provides the ultimate definition of an organization’s success. Strategy describes how an organization intends to create sustainable growth in shareholder value.
  2. Customer Value Proposition. Success with targeted customers is a principal component of improved financial performance. In addition to measuring lagging indicators of customer success, such as satisfaction, retention, and growth, the customer perspective defines the value proposition for targeted customer segments.
  3. Internal Processes. These create and deliver the value proposition for customers. The performance of internal processes is a leading indicator of subsequent improvements in customer and financial outcomes.
  4. Learning and Growth. Intangible assets are the ultimate source of sustainable value creation. Learning and growth objectives describe how the people, technology, and organizational climate support the strategy. Improvements in learning and growth measures are leading indicators for internal process performance, customer outcomes, and financial performance.
The reviewers conclude that's what really important is:
Confront reality. Every manager should continually question whether his or her business is adequately confronting reality. Will the traditional business model continue to generate profitability? Are traditional competitors changing their models? Are potential competitors testing new business models? Is my business in danger of losing its preeminence?

Continuing the Berkleian philosophy from a previous post, dualism is dangerous.

Strategy and execution, intent and action, inside and outside, style and substance, figure and ground -- you can't have one without the other.

Don't believe him

Breaking wholes into pieces so you can analyse them logically is a mind game. Reality doesn't work that way. Logical arguments assume "everything else being equal," and it never is. The more experience I accumlate, the more my right hemisphere runs the show.


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