Flip

Peter Sheahan

• Publisher: HarperCollins e-books
• Year: 2009
• ISBN:
  9780061847134
• Topic: Business
• Subtopic: Industrial Management
• Index: Business

What do the superstars of modern business have in common? An ability to "flip"—to think counterintuitively and then act boldly, with no regard for "business as usual" conventions. one of the youngest and fastest-rising stars on the international consulting and speaking circuit, Peter Sheahan reveals how the world's most effective organizations and individuals distinguish themselves from the competition instead of running with the pack.

Sheahan explores six major flips

• Action Creates Clarity—to move forward you must act in spite of ambiguity.
• Fast, Good, Cheap: Pick Three, Then Add Something Extra—the new standard in every industry.
• To develop competitive advantage, you must Absolutely, Positively Sweat the Small Stuff.
• Satisfy customers' needs for engagement and contact—it's not "just business"—Business Is Personal.
• To win mass-market success, be courageous, Find It on the Fringe, and separate yourself from the competitive herd.
• To Get Control, Give It Up—empower others to create, dream, and believe for you.

Stick to what you learned in business school at your peril. Today's small-world economy calls for a new way of doing business. It calls for Flip.

1

THE FOUR FORCES OF CHANGE

I hope everyone knows that the world is changing. Pundits in every field talk incessantly about the constant change we are experiencing, to the point that “change agent” has become one of the biggest clichés of our time. But what specifically is changing? And why does it feel so pervasive?

Allow me to introduce you to the four forces of change that are completely redefining the way you compete in the marketplace, attract and reward staff, and even live your life. And then, through a series of flips, allow me to help you deal with these four forces of change. (The latter being more important.) This is not a book about the fact of change, it is a book about how to handle and profit from change. First, however, it is essential that we identify succinctly what is changing, because only then can we get more specific about what to do about it.

Here are the four forces of change I will be referring to throughout the book:

• 1. increasing compression of time and space
• 2. increasing complexity
• 3. increasing transparency and accountability
• 4. increasing expectations on the part of everyone for everything

These forces are squeezing organizations and individuals alike. If you want to, you can see them as enemies, as the Four Horsemen of the Apocalypse that are ending business as you know it. Or you can welcome them as allies that are indeed changing the nature of business in challenging ways, but that also have the potential to accelerate your success and help you achieve competitive advantage.

IF YOU AND YOUR COMPANY LEARN TO RIDE THE WAVE OF CHANGE, YOU STAND TO REAP MASSIVE WINDFALLS.

None of the four forces is new. They’ve been around in one form or another at least as long as human beings have been creating complex societies. But there has been a dramatic shift in how the four forces affect our daily lives. They’ve never been in as tight and immediate a feedback loop as they are today. That’s why the pundits can’t stop talking about change and change agents. That’s why organizations and enterprises all over the world are freaking out about these shifts. And that’s why you and your company must get on the front foot and learn to ride the wave of change—you stand to reap massive windfalls. Just think of Toyota and the car-industry-shifting Prius, or Apple and iTunes leading to the phenomenal sales of the iPod.

Let’s take a look at these four forces.

1. INCREASING COMPRESSION OF TIME AND SPACE

Outside of science fiction and the thought experiments of theoretical physicists, it is not actually possible to compress time or space. However, our perceptions of both are certainly malleable.

Compression of time

Human beings have always been impatient. Today we expect things to happen faster than ever before. And not just a little bit faster, but over the last few years a lot faster. The quicker something can be done, the quicker we expect it to happen, whether it’s the movement of goods by overnight courier companies such as DHL, FedEx, and UPS, the movement of people on flights from one side of the world to the other, or the movement of digital information from anywhere to anywhere via broadband Internet (something that merits fuller discussion below). They all feed our insatiable need for speed.

Staffan B. Linder’s book The Harried Leisure Class notes that as economic growth and affluence increase, “the pace is quickening, and our lives are in fact becoming steadily more hectic.” This has formed the basis of a commonly discussed sociological concept: as affluence increases, so does pressure around time. Ask yourself, are you feeling a little bit of pressure around time? Consider the following example.

I was discussing this idea of compression around time with the partners of a leading law firm. Afterward the CEO told me how only a decade or so ago as a young lawyer, he typically spent an hour dictating a letter to a client. Then he figured on half a day for the letter to be typed and returned to his in-box for signature before being put in the mail, two days for it to reach the recipient, two days for the recipient to draft and send a reply, and two more days for the reply to reach his desk—more than a week for a single exchange of business letters. Today, as CEO of his firm, he types and sends his own e-mails, or a short message text on his BlackBerry if he’s traveling, and he expects an answer later the same day, if not within the hour.

And this CEO is not some “young twentysomething” exhibiting the impatience of youth. Increasingly we begin our workdays not fully rested, because we got to bed so late the night before, whether from trying to get overdue work done or to have a bit of social life in the midst of all our other commitments. When the alarm first goes off, we hit the snooze button and go into what a friend of mine calls “mathematician mode,” calculating the absolute last possible minute we can get out of bed and not be late. Then we race to catch an express train or bus to the office. Whether it’s a blessing or a curse, technology frees us from the need to interact with anyone as we board; we just insert our prepaid ticket in the slot. When we arrive at work we mill about restlessly, waiting for the express elevator. Then we spend the day responding to the hectic demands of colleagues and superiors. We have two-minute noodles for lunch. And when we get home, we pop our instant dinner in the microwave and stand there thinking, Come on now, I have not got all minute.

An exaggeration, perhaps, but I’m sure most people will agree it’s only a slight one.

Unless you want to go off into the bush and be a hermit, there is no escape from the nearly instant communication and feedback loops represented by e-mail, text messaging, and cell phones. Whether we’re talking about countries, companies, or individuals, events that happen on the other side of the globe can and do have an immediate impact on our daily lives.

This is only half the story. It is not just that we want what we want faster, but that we change our minds about what we want more quickly. Consider that the average time from concept to product in the U.S. automobile industry is down from between five and seven years (about ten years ago) to around two years today. And what is ironic about this is that the U.S. automotive industry is considered to be among the least innovative and slowest to change on the globe. It is competing with companies such as Toyota, which brings entire vehicle ranges (Lexus and Scion) and new value propositions (hybrid engines) to market while most of their rivals are still trying to digest the fact that there might be a significant near-term profit opportunity in midpriced luxury cars, customizable cars for Generation Y, or eco-friendly engines.

IF THE LATE TWENTIETH CENTURY WAS ABOUT DOING MORE WITH LESS, THEN THE EARLY TWENTY-FIRST CENTURY WILL BE ABOUT DOING MORE WITH LESS, FASTER!

Back in 1979, when the Walkman, not PlayStation, was its signature product, Sony went from product inception to product launch in under four months—remarkable for the time.

Just recently, however, the PlayStation 3 cost Sony millions because of delays associated with its launch. It was shown to the public at the E3 games convention in May 2005, but didn’t hit the shelves until November of the next year. By the time the PS

3 got to market, its competition, the Microsoft Xbox 360, had shipped almost 10 million units, and Sony, a company that was once famous for its speed to market and relentless pursuit of first-mover advantage, lost almost $2.3 billion because of the late entry.

In summary, increased affluence and rapidly developing communications technology are compressing our expectation around time. If the late twentieth century was about doing more with less, then the early twenty-first century will be about doing more with less, faster!

Compression of space

Compression of the way we view space is shrinking the world. People no longer see geographical distance as a barrier to the way they do business. The world is the new market, especially in light of an increasing number of international free-trade agreements.

Distances have always been relative to the time it takes to travel them. In our grandparents’ youth, the other side of the world was weeks away. Now it is one day away by plane, or one second away given communications technology that makes it less and less likely that we actually need our flesh and bones to be on the other side of the globe.

My own business is an example of this. Daily, thousands of people from all over the planet log onto www.petersheahan.com and some buy products—some of which are digital and can be downloaded instantly—or subscribe to a free RSS feed that will help keep them on the cutting edge of new markets and trends. The point here is not to plug the “Peter Sheahan Live” section on my site (although I am glad to do so), but to point out that neither time nor geography poses any barrier to these transactions of value. I get visitors from countries I have never been to and make sales to people I have never met. I am able to complete transactions, even though neither I nor any other human is there to service the customer.

COMPRESSION OF DISTANCE MEANS THERE ARE NEW MARKETS TO BE SERVICED, AND NEW WAYS TO SERVICE EXISTING MARKETS.

Compression of distance means there are new markets to be serviced, and new ways to service existing markets. It also means there are more competitors—the most dangerous of whom may be a twenty-year-old at her computer in Sydney, San Jose, Seville, or Seoul, who in less than a decade could dominate your market.

Now, it is important to put the current status of this change in the proper context. Some economists argue that in many ways globalization is overstated. Consider that, for instance, of all the phone calls made in the world only 10 percent are international calls. And of all the investment in the world today, again only 10 percent is foreign (international) investment.¹

But even if the direct international component of business holds steady at around 10 percent, we are now competing against international benchmarks. In an increasingly connected world, customers are increasingly exposed to global trends and fashions. The customer’s sense of what the neighborhood business can do has irrevocably changed. Although people will always prefer to do business with people they know, like, and trust (see chapter 5, “Business Is Personal”), they expect those people to deliver at a global standard of excellence, not a local one. There is no escaping the need to position your business today to compete—in real time and on demand—in the increasingly globalized world of tomorrow. Flips are the future-focused way to achieve this.

2. INCREASING COMPLEXITY

Increasing compression of time and space produces increasing complexity. Businesses are being hit from all directions—from above, as they are saddled with dense and complex regulatory regimes; from inside, with the challenges posed by the adoption of sophisticated new technologies and the explosion of information networks; and from below, with the diversifying and intangible new demands of consumers. The uncertainty and ambiguity this complexity brings can induce paralysis that prevents innovation and positive action, and may in turn force the downfall of once-great companies and careers.

COMPLEXITY BRINGS UNCERTAINTY AND COMPLEXITY THAT CAN PARALYZE INNOVATION AND POSITIVE ACTION.

Increasing complexity is being driven by, among others, the following six things:

• Rapidly interconnecting networks of ideas and people—from interstate highways, planes, and containerized shipping to the information superhighway of the Internet.
• Disruptive technology—innovations in product and process almost always have unintended consequences that challenge our ability to adapt, and reward those with the flexibility to flip into new modes of acting and thinking.
• Explosion of choice—in a globalizing economy, no one has a monopoly on any product or service for long, and the consumer’s biggest problem is often choosing among apparently identical offerings.
• Increasingly intangible desires of the market—rising affluence shifts the business imperative from supplying customer needs to meeting customer desires for emotional fulfillment, no matter how mundane the product or service.
• Increased sophistication of technology, systems, and processes—complexity begets complexity.
• Legislation—whether it’s financial transparency, safety, the environment, or human rights, the world’s governments are regulating it.

Rapidly interconnecting networks of ideas and people

I’ve already mentioned increasing flows of people, goods, and data, but there’s more to the story. Think of every person in the world as a node in a vast information system. Each node has different perspectives, ideas, and desires from the other nodes in the system. Some differences are slight; others are large. And a slight difference in one context may loom large in another.

Now connect those nodes by all the networks—physical and virtual—that link them together: text message, e-mail, landline phones, cell phones, express delivery, container shipping, and transportation networks for people comprising motor vehicles, trains, ships, and planes. These links crisscross the developed and the developing world, and more of them are overlapping all the time. Traffic on all these networks is constantly increasing, most notably in the form of digitized words, images, and numbers moving at the speed of light.

A senior executive at Google shared some interesting statistics with me when I spoke to a large group of managers at Google’s headquarters in Mountain View, California. Did you know, for example, that 20 to 25 percent of daily searches on Google are unique? They have never been searched before—25 percent! This is not so surprising when you realize that 25 to 30 percent of the Web is new all the time. We are generating content—opinions, survey results, perspectives, ideas, or just pointless garbage—so fast that at any one time more than one-quarter of the World Wide Web is brand-new. According to Time magazine, the world produced 161 exabytes (161 billion gigabytes) of digital information in 2006. That’s more than three million times the amount of information contained in all books ever written.²

This ongoing, explosive content creation challenges us to assimilate greater and greater amounts of often conflicting information, increasing the complexity, ambiguity, and uncertainty in our lives. This rising noise puts a premium on what I call confusion management, which is without a doubt the most important asset for a leader today. Confusion management means dealing with ambiguity, contradiction, and uncertainty while still retaining the ability to function. More on how to do this later, but for now back to the challenge it represents. Separating the wheat from the chaff in the information pouring in on us, recognizing when two or more appare...