Over the past 100 years, organizations have faced tremendous challenges in the ways they compete. In doing so, we clearly saw different layers of competitive advantages appear. The pyramid below (found in a PDF on the InterWeb) presents how competitive advantages evolved over time and transformed organizations. It also identifies what will drive business in the second decade of the 21st century: relationships.
What are relationships? Is it social networks? Is it happy hour? Is it friends, colleagues, family relations? Relations is networking. Business networking is the new competitive advantage. Who you know and who knows you is the new competitive advantage. After decades of figuring out how to manage and optimize manufacturing, technical support, information, data and knowledge, we must learn how to develop, nurture and profit from relationships. This is the most important business opportunity of the next decade.
Excerpt from the document
Each step on this pyramid represents a major shift in the competitive advantage of an organization. Going back to the turn of the century, economies of scale and manufacturing led to price advantages. When price was equalized in the market, quality and service became the new differentiators. Producing widgets with fewer defects and/or providing value-added services to enhance an enterprises’ product offering allowed them to compete more effectively.
The explosion of information technology led to the central role of data in an enterprise. Collecting, disseminating, and managing data in cost-effective ways, aligned with continuous improvement of an organization’s business processes, were key measures of viability and growth. Information technology became a critical success factor in evaluating organizations. Organizations unable to leverage automation and information technology to reduce costs and realize new opportunities were at a huge disadvantage.
The next phase of competitive organizational evolution revolved around knowledge. This has been elusive, partly because knowledge in essence is unstructured data. Unlike the 0s and 1s of this document that can be digitally stored as one self-contained document, knowledge sits in the minds and experiences of people. Therefore, it neither lends itself to being easily packaged and stored in centralized repositories nor can it be marked up with metadata (the data that label and describes the data stored in the repositories). There are some excellent examples of enterprises that have learned how to tap into knowledge to spur innovation and create competitive advantage. Design industries offer excellent examples. Through math-based, knowledge driven CAD/CAM (computer aided design, computer aided manufacturing) initiatives automotive manufacturers have been able to significantly reduce design time cycles, costs of producing prototypes, and increases in safety. In these cases the information technology paradigm morphed well to match these data-driven knowledge opportunities. The short tenure of actionable knowledge strategies is less a function of failure and more an indicator of exciting times that lie ahead.
Cultivating and nurturing a complex and rich collection of relationships is paramount to success. In the future, employees will create value through interconnected relationships. These relationships will need to be capable of and organizationally empowered to synthesize information in real time to fabricate new products, services, information, or relationships to respond to real-time, emergent market needs.
I am moving in the business of developing, nurturing, managing and profiting from relationships. Anyone wants to learn more?
Dakx
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Nouriel Roubini, the New York University economics professor who predicted the financial crisis, said the global economy may suffer another slump due to higher oil prices and widening budget deficits.
“I see the worry of a double whammy” from energy costs and fiscal burdens, increasing the risk of a setback in the economic recovery, Roubini told a conference in Paris today. Oil may rise to $100 a barrel, he said.
” — Bloomberg[video]
My target on the Dow Jones was made at the opening this morning (May 6): 8,504.06.
My new target is now 5,500.
I am liquid since 8,400.
Dakx
[video]
In the same line of putting your money where your mouth is, I will do so on my expectations of the Dow Jones Index performance in the forseeable future.
My prediction: the Dow will go up to 8,500 range, then back down to 5,500.
Reasons: First quarter corporate financial results started coming out. Unemployment figures. GDP figures. Interest rate problem: they cannot go lower. Dollar strenght. Amount of dollars printed over the past 6 months. Eastern Europe & Asian economies.
So, I am putting a sell order on all my funds that have the Dow in it at 8,400. And a buy order at 5,600 for the same amount.
Don’t say I didn’t tell you.
Dakx
I am a big fan of performance-based compensation models, not only for others, for myself included. And I was really excited to see a shift being pushed by a large corporation to promote performance-based compensation for advertising and PR firms.
Coca-Cola announced earlier this week they would promote “value-based” compensation for their ads/PR firms. Here’s how it works:
BEFORE: Agencies and Coke negotiate in advance how much profit the former will see on a given project.
AFTER: Agency is guaranteed only recouped costs, with any profit coming only if certain targets are met.
BEFORE: Agency decides what Coke should pay for a project based on the time it expects to expend on it.
AFTER: Coke tells agencies how valuable a project is based on strategic importance, whether other agencies could deliver the same outcome, and other factors.
In other words, you will recoup costs but if you exceed targets, you can get 30% profit margin in bonus.
How is performance-based compensation going to change things for the overall industry? It will force large ads firms who control the advertising market to put their money where their mouth is. Will it change things? Yes, it will force creative people to understand the idea behind value, targets, objectives and reality.
I strongly believe we should introduce similar systems for any employee in every company, but the importance of setting real targets and objectives is key.
Dakx
[video]
Results for GM:
Look at their cars, and tell me which one you would seriously consider buying for you, your wife or one of your kids if they could drive: http://www.gm.com/vehicles/results.jsp?sort=brand.
Poor outlook for these guys. Sucks to be them.
[Version française plus bas/French version below]
Many people say simplicity is the key to success when in business. Many people on the InterWebs have put out their theories of what it needs to have success in business. Of course, I have my own, inspired by one of my University teachers, Dr. Richard-Marc Lacasse. What I like about his theory is its simplicity. Called the “Success Puzzle”, his theory is good, as examples, for aspiring entrepreneurs who want to know the vital elements needed to build a business, or for investors to know what they need to look for when investing in a company.
In the following posts, I’ll explain more in details the elements of this theory, but here’s a summary:
More to come on this subject!
Version Française
Plusieurs personnes disent que le simplicité est la clé du succès en affaires. Plusieurs personnes sur l’InterWeb ont établi leur théories sur ce qu’il faut pour avoir du succès en affaires. Bien entendu, j’ai la mienne, fortemment inspirée de celle d’un de mes professeurs d’université, Dr. Richard-Marc Lacasse. Ce que j’aime de sa théorie est sa simplicité. Intitulée le “Casse-Tête de la Réussite”, sa théorie est parfaite, par exemple, pour des aspirants entrepreneurs cherchant à comprendre les éléments vitaux requis pour démarrer et développer une entreprise, ou pour des investisseurs cherchant à comprendre ce qu’il faut chercher et voir avant d’investir dans une entreprise.
Dans les articles qui suivront, j’expliquerai en plus amples détails les éléments de cette théorie, mais en voici un résumé:
Plus à venir sur ce sujet!
Dakx