entrepreneurial business system Archive

August 1, 2017

Back to Day One

Janka Krings-Klebe

After one year of exciting and challenging work, Laurence is happy: He just got praise from a customer who his company was unable to acquire for years. Now Laurence feels like he is back in the early days of the company, where flexibility was the norm. A time when it was not bogged down by processes and bureaucracy that slowly engulfed the company since then, while driving flexibility, innovation and customer-orientation out. For years, his company had been getting stuck in dangerous routines, disconnecting it from market needs. Laurence and others felt that this puts the company’s future at risk. It had to acquire new fields of business, with customers that were different. Business in general was becoming more and more volatile, with increasing competition on international level. The company had to change, but previous attempts all had failed. Laurence had feared that the company was unable to change its ways, making it impossible for Laurence to win new customers. What changed in the company, that made this last attempt successful?

This time, the company focused on the customer experience. All operations had to contribute to this effort. The company started with reorganizing the front-end to get closer to the customers. Therefore, a new organizational structure called “Product teams” was built. These teams were equipped with profit and loss responsibility to enable fast decisions on customer needs. Earlier, due to unclear and complicated decision paths, customers often had to wait. At this point, Laurence turned from a engineer into an entrepreneur. As a member of a product team, Laurence had full authority to act on business opportunities and customer requirements. When a new business opportunity came along, Laurence and his team could now turn this opportunity into a successful business. Therefore, the team had to redesign the value-stream, using as much synergies and strengths inside their company, for example using local presence and global distribution.

Inevitably, these changes to the established processes required many changes in the back-end. Front-end teams and back-end-teams had to develop new collaboration routines. The changes cascaded back into a wide range of cross functional departments. This was the make-or-break point for the product teams. Would the company’s legacy business system insist on established processes and force the product teams back into old behavior? Fortunately, the leadership team supported the new setup. Processes were adapted to the needs of the product teams. Over time, many processes between front-end and back-end were examined and changed, tearing down silos and bringing back the flexibility from the company’s early days. For Laurence, this opened the path to success.

As advisors, we observed and coached leaders in this industrial case study. The case demonstrates how to bring a company back to what Jeff Bezos calls Day 1: Clearly focus on seamless collaboration in value streams to achieve business value for the customer. Remove everything that stands in the way of this strategy. It will be necessary to tear down walls, barriers to change, and comfort zones, adjust behavioral norms, and cope with all kinds of open and hidden resistance. Top leadership needs to provide air cover to bring along the required changes into the back-end. Only top leadership is powerful enough to protect and guide those who implement the necessary changes. Guiding these efforts requires top leadership to make the needs of the customer-facing front-end a priority in their own daily routines. Are leaders in your business ready?

How to do this? We explore breakthrough concepts for this challenge in our book
FUTURE LEGENDS – Business in Hyper-Dynamic Markets.

Blog image: pixabay.com

July 20, 2017

GPDF17 – A Lifetime Opportunity for Entrepreneurs

Joachim Heinz

This is our contribution to the Global Peter Drucker Form (GPDF). This years conference discussion focuses on inclusive prosperity. In our blog post, we outline nothing less than a possible approach to globally foster entrepreneurship and help to decrease income disparities.

What did Jeff Bezos do in 2002 to turn Amazon into the business ecosystem that it is today? He discovered how to scale his operations very fast, across multiple markets, and how to follow up on business opportunities and customer needs across industries with blinding speed. Today, companies worldwide scramble to copy Amazons explosive growth and diversified business.

In the following, we will outline how to do it, and do it in such a way that it leads to broader prosperity and innovation for society: A lifetime opportunity for entrepreneurs …

June 22, 2017

The Future of Businesses – Marketplaces of Shared Capabilities

Janka Krings-Klebe

Some days ago, we read about Amazon’s latest acquisition, Whole Foods Market, an organic grocery chain. From the perspective of established business, a cross-industry acquisition like this is unexpected and seems somehow strange. From the perspective of Amazon’s goal, becoming “the marketplace for everything”, this acquisition was a logical step. Amazon aims to provide everything that makes life more convenient. This includes services of any kind. Amazon therefore does not limit its business operations on a single industry or market. It aims to cross-connect all services and markets into their business ecosystem. This different strategic perspective makes it easy to think outside of established markets. Then, cross-over innovation becomes the new normal in business operations.

Let’s step back for a moment and look at the fundamental changes brought along by digital markets. Of course, markets have always changed. Today this seems to happen with a global reach at an unprecedented pace and driven by new technology and connectivity. This change perpetually creates new types of business opportunities across domains and industries, with increasing speed and decreasing investment costs. All markets will have to deal with this dynamic sooner or later. We therefore call it the age of hyper-dynamic markets. In these markets, businesses need to look beyond their usual search patterns to find profitable opportunities, they need to do it at scale, and much faster to compete successfully. In addition, the time to profit from a new business opportunity becomes increasingly short: The time frame to identify the opportunity ahead of competitors, the time to “rally the troops”, i.e. to pull together resources and build a business operation dedicated to the new opportunity, and the time to earn money from it might also be much shorter than businesses are used to. Businesses today try very hard to improve innovation and become faster and more flexible in their operations in order to overcome these problems.

But very few get down to the fundamentals of what is really holding them back: They still rely on organizational structures that were built for repetition and stability, and not for cross-over innovation. These structures are not competitive enough when long-term success depends on the ability to pivot a business very fast towards more promising opportunities. Amazon and Chinese company Haier, the world’s leading brand of household appliances, impressively and repeatedly demonstrate this ability. Their success can not only be attributed to strong and visionary leadership, or their high-performance culture. There is something more, that makes these companies so incredible fast, flexible, and able to perform very well across a wide field of vastly different business operations.

It is an organizational structure based on principles of entrepreneurial autonomy and reusable services, largely aligned through digital interfaces. Amazon and Haier work like digital marketplaces of business services for entrepreneurs. Business operations can quickly be set up by combining a customized front-end operation with standardized back-end services. These back-end-services are readily available for any kind of business operation. They offer a comprehensive catalogue of basic services, like accounting, cloud storage, invoicing, payment, or shipping, that every business operation needs. They also offer a lot of specialized and unique services, like e.g. Amazon Wallet, or Haier’s open R&D partnership ecosystem HOPE. Each service in essence provides a high-performing business capability, that can easily be integrated into any kind of business operation. Combined, this business architecture can quickly gain track across a wide spectrum of markets or industries. It can explore much more business opportunities in parallel than traditional businesses. It can scale up profitable business operations much faster. It can very easily establish a system of distributed control and management that is much more efficient than traditional organizational structures.

Amazon and Haier today already provide a glimpse of the future of businesses. We at co-shift expect that businesses who work like a marketplace for entrepreneurs, sharing assets and business capabilities, will dominate markets in the digital age. We think that businesses today should carefully consider their own position: What role will they play in their market 10 years from now? Can they turn themselves into marketplaces for entrepreneurs, ready for innovation at scale?

We have aggregated our in-depth insights in our book FUTURE LEGENDS – Business in Hyper-Dynamic Markets, offering a strategic blueprint for businesses to survive and profit in hyper-dynamic markets.

We will continue this series of articles.

Blog image:
„Night Market in Bangkok, Thailand“ by Aotaro
https://www.flickr.com/photos/aotaro/34407623185/ is licensed under a Creative Commons license: https://creativecommons.org/licenses/by/2.0/

June 16, 2017

Why Businesses Need to Master Crossover Innovation – NOW

Joachim Heinz

Most businesses today base their operations on the exploitation of a few well-understood business opportunities. They have optimized their performance to make the most of these opportunities, and defend their turf against competitors in their market. This focus on a single market, a single type of business and a known type of competitors will likely not be sufficient to ensure long-term success. The age of hyper-dynamic markets will bring along competitors from outside of established markets. It will lead to much more innovation. It will lead to products and services that can easily be substituted. It will lead to a much shorter lifecycle of products, business models, and business operations.

The age of hyper-dynamic markets will be brought along by connected products and services, and by businesses that can quickly and deeply connect their operations through digital interfaces. We already observe this happening in some industries. It won’t stop there. All industries will likely be connected through digital interfaces sooner rather than later. This is the time when businesses start to connect operations across industrial domains that until now clearly separate markets and business opportunities from each other.

What does this age of hyper-dynamic, digitally connected markets mean for businesses today? It means that businesses can not rely anymore on a single line of successful operations. This single line of operations will inevitably loose its competitive edge and profitability one day. Hyper-dynamic markets make it impossible to predict when this will happen, reducing the time to adapt to zero. Businesses therefore need to be ready for the end of their money-making operations at any time.

As a way to balance this risk, they need to prepare themselves by building specific capabilities now, while there is still time:

Widening the scope of innovation beyond current branches of business
Easy, early and quick testing of new business opportunities
Partnering and collaboration across industries
Flexible scaling mechanisms according to market demand

This leads towards instant collaboration across established domains, industries and groups of stakeholders. Collaboratively shaping business opportunities into new markets becomes the regular mode of operation in hyper-dynamic markets.

How to do this? We explore breakthrough concepts for this challenge in our book FUTURE LEGENDS – Business in Hyper-Dynamic Markets. Our next post in this series will explain how to turn businesses into marketplaces for crossover innovation and collaboration.

Blog image:
„The Aral sea is drying up. Bay of Zhalanash, Ship Cemetery, Aralsk, Kazakhstan“
by Zhanat Kulenov
https://commons.wikimedia.org/wiki/File:The_Aral_sea_is_drying_up ._Bay_of_Zhalanash,_Ship_Cemetery,_Aralsk,_Kazakhstan.jpg
is licensed under a Creative Commons license:
https://creativecommons.org/licenses/by-sa/3.0/igo/deed.en

June 7, 2017

The Quest for Organizational Agility in a Dynamic World

Joerg Schreiner

Companies in all markets begin to feel the pressures of a dynamic world. Many respond by trying to become more “agile” – a mix of increased speed, flexibility and more product innovation. They then regularly report progress: How they act faster, how their products are better, how they have become “agile” in their operations. Whenever I see those kind of reports, I always ask myself: Is the progress this company made really sufficient to deal with its future market? What if this market stopped developing in the expected way? What if their customers developed a taste for a different product or service? How fast would this company be able to pivot their business model, their operations, their capabilities? Would it be fast enough to secure their position in the market?

The reality is that most companies need an awful lot of time to do this shift – years or even decades. It is way slower than the dynamic of todays markets demand. This dynamic sometimes can be measured in months, weeks and days. And I expect this to become the norm across all sectors of business: An age of hyper-dynamic markets awaits. In this age, businesses need the ability to operate on a fundamentally higher level of dynamic. It means much more than speed and efficiency. In addition, it means to be able to

flexibly scale any kind of operation and opportunity
adapt operations to different business contexts and opportunities
quickly connect operations with opportunities in any market

A company with those skills could pursue many kind of opportunities, and do it nearly at the same time than these opportunities show up. It could scale operations up and down in synchronicity with the changing demand in markets. It would not necessarily have to protect their most valuable operation at the expense of more promising opportunities. A company with those skills would not need to fear the dynamic of future markets. It would profit from high dynamic.

In order to achieve those essential business skills for dynamic markets, it would need to get rid of everything holding back the development of the skills for dynamic markets. Specifically from organizational structures and practices of management that were designed for a different age. An age were stability and predictability was more important than the ability to change and adapt. Companies need to leave the old structures behind in favor of much more flexible and entrepreneurial business systems. How do such business systems look like? How to transform existing organizational structures into ones needed for highly dynamic markets?

If such questions bother you, then you have come to the right place. We have collected deep insights and comprehensive answers in our book FUTURE LEGENDS – Business in Hyper-Dynamic Markets.

We will continue to elaborate on it here in a series of articles.

Blog image: pexels.com

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