Tag: Strategy

To Disrupt or be Disrupted – that is the Question

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Nanyang Business School of Singapore
1st Place Winner – John Molson MBA International Case Competition

“Connect. Innovate. Grow.” in an Age of Rapid Change and Disruption

Last week I again had the honor to serve as a lead judge to the John Molson MBA International Case Competition, organized by the John Molson School of Business at Concordia University.

It brings to Montreal students from business schools all over the world – from Canada, the US, Europe and places as far away as Australia, South Africa and Singapore (Nanyang Business School was this year’s winner!)

I’ve been doing this for the last 13 years and it is always a great start to the new year – it gets your brain cells working again after the restful holiday break! And, it is certainly energizing to see and hear from young people grappling with today’s business issues and challenges.

Disruption was the theme of this year’s competition and had the tagline “Innovate. Connect. Compete.”, not dissimilar to my own “Connect. Innovate. Grow.”

It demonstrates that connections, innovation, competition and growth are top of mind for everyone in business – both young and old(-er) – in view of the rapid and accelerating pace of change driven on by digitalization, AI, IoT, and many other disruptive technologies and business models.

So, how can you not only survive but thrive in today’s rapidly evolving business environment?

There are no quick and easy answers, but I’ve been giving this a lot of thought in my discussions with clients, business leaders, academics, policy-makers and other consultants.

I’ve come up with a Business Builder Growth Framework℠ – not quite the “theory of everything”, but perhaps helpful for developing your strategy for growth in these rapidly changing times.

The framework can serve as a blueprint for building your value creation engine – get its 6 essential elements right and it can turbocharge your growth. Read more about it in my next blog post – stay tuned!

The 5 Trends Shaping the Future of Aviation

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What Are You Doing to Remain Relevant?

“Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.” Those were the words of Jeff Bezos during Amazon’s all-hands meeting held last year in response to the question what Day 2 would look like. He continued with what he felt were some of the essentials for Day 1 defense, on how to fend off Day 2.

Among these essentials was the eager adoption of external trends – “These big trends affecting our world are not hard to spot,…. If you won’t or can’t embrace them quickly – or if you fight them – you will probably be fighting the future. Embrace them and you have a tailwind,” said Bezos. I absolutely agree, and I like the aviation analogy!

For those not familiar with aviation terms used as business jargon, a tailwind is a wind that blows in the direction of travel and increases an aircraft’s in-flight speed and reduces the time required to reach its destination. Thus, in business a “tailwind” refers to a situation or condition that will ramp up top-line or bottom-line growth, preferably both.

Every organisation – both large and small, public or private, for profit or not-for-profit – should be aware of today’s big trends that can become tailwinds to a more prosperous future.

As you read the following top five trends that are shaping the future of aviation, ask yourself some profound and important questions: “How can these trends impact our business? What capabilities do we need to build to exploit them and continue to delight our customers? How can they take our business to that next level of performance and value creation?”

Artificial Intelligence and machine learning goes mainstream

AI is quickly becoming a mainstream obsession that will affect every industry. In aviation, algorithms are learning to predict aircraft delays, giving airports and airlines a better chance at avoiding them.

Airlines like EasyJet and Emirates are using AI to redesign the ticketing process and improve the in-flight experience to cater to customer expectations.

But the real promise is in the cockpit, where AI autopilots could help manage the complex airline operation and even respond to emergencies as they arise in the cockpit.

For the moment, AI is augmented intelligence, i.e. man plus machine, where AI augments human performance. Instead of replacing productive workers, the use of AI technology will be pervasive – from piloting an aircraft, to aircraft maintenance and air traffic control, and to training and simulation – and is being used to amplify human performance.

The introduction of AI will be subtle but it’s taking hold as the pressures to improve performance continues to grow.

Ask yourself :

How can we exploit AI to enhance the performance of people?

How can we delight our customers with new insights this technology can give us?

Automation achieves dramatic growth

Automation, driven by data analytics, AI and advanced hardware, is set to disrupt work as we know it. We’re automating traditional jobs out of existence on a regular basis.

In the automotive industry, autonomous vehicles are fast-becoming a reality, and it will be a game changer for the trucking industry where it is forecast that there simply won’t be enough drivers.

Similarly, with the forecast pilot shortage, it is not hard to imagine that remotely-piloted commercial aircraft – first for cargo, followed by passenger aircraft – will take to the sky. And, while still some years off, as AI and further automation takes hold, we will eventually see a transition from remotely-piloted aircraft to fully autonomous aircraft, capable of self-separation and flying the most efficient flight trajectories.

The air traffic management function will therefore also see a major change, with increased use of AI and automation driving out the traditional function of the air traffic controller and heralding in the air traffic manager responsible for monitoring the efficiency of traffic flows.

Ask yourself :

What jobs in our organisation are ready to be automated out of existence?

What skills and capabilities do we need to build, and what does this mean for our training and development programs?

Experience management is the new quality management

Brought on by digital mobile technology and the online economy, customers today want companies to provide a consistently wonderful experience from beginning to end. And, if the experience meets expectations, customers will be willing to spend more.

We’ve seen this with Apple, Nike, Starbucks and other brands that have created a following and an entire ecosystem to support the customer experience.

There is no reason not to expect the same will happen in air transport where offerings are marketed that uniquely cater to the traveller’s needs and desires. Customers are looking for travel companies that fit with who they are and what they value. They want to work with companies that support the values, causes and ideals they support.

Quality is a given, and this is not something companies will be rewarded or recognized for. Quality is expected, and it’ll be an afterthought.

This shift in consumer expectations will require a whole new approach to customer engagement, and some airlines have only recently started to explore how this can be achieved.

Ask yourself :

What type of experience would our customers value most?

What would have them coming back for more, and evolve into a following?

Blockchain everything

While Bitcoin and other cryptocurrencies have received a lot of public attention lately, it is the underlying technology that is truly revolutionary and will disrupt several industries as well as government services.

In essence, blockchain is a different way to process transactions or records that does not require intermediation. Put simply, blockchain is a ledger of digital events that can be shared and trusted without the need for central authority.

Importantly, the blockchain resides in the cloud and isn’t located on only one computer, but on many computers, and every computer is directly in contact with all other computers in the blockchain network. Due to this constant synchronisation, it is tamper-proof and establishes trust in a transaction. This allows the transfer of anything of value between two parties without the need of an intermediary.

Blockchain is emerging in healthcare as well as financial tech.

In air transport, the technology can be the basis for virtual or digital passports that store biometrics in the form of a single secure token on a mobile or wearable device of the passport holder.

Further potential usage would be in baggage tracking, cargo manifests, aircraft history and maintenance records, aircraft spare parts logistics and a lot more.

Ask yourself:

What transactions can be simplified and made more secure using blockchain technology?

How can it affect our supply chain and what ecosystems must be built?

IoT to friendlier skies

As the costs of Internet-connected sensors and networking equipment continue to fall, IoT (Internet of Things) technologies will continue to play a bigger role in efforts to make aviation more efficient and improve the passenger experience.

While aircraft components such as engines have been providing real-time IoT data on everything from performance to required maintenance for some time, other industry players are increasingly finding new ways to deploy and use IoT technologies.

Airports are deploying interconnected sensor networks and data hubs to track and understand passenger flows and behaviour in the airport terminal to drive retail revenues, reduce connection times or improve the boarding process. And on the airport premises, airlines and airports are using IoT technologies to locate and keep track of their equipment.

Ask yourself :

Which activities can we learn more from through increased or improved monitoring?

Which of our processes can be improved or made more efficient if we had more data?

Keeping abreast of the trends affecting our world is of strategic importance and requires that you revisit your core assumptions on a regular basis. I observe that far too many executives devote their time to managing the day-to-day operation, and not nearly enough time to strategic and innovative thinking. Are you devoting equal time and energy to both?

Business resilience is about adapting quickly to trends and technological disruption as much as it is about maintaining and safeguarding the business operation. In the end, it is all about staying relevant, by continually and perpetually innovating and creating business value. How can today’s trends become tailwinds for you and your business?

P.S. Jeff Bezos’ 2016 letter to shareholders can be found here. I look forward to reading his 2017 letter, expected in the coming month.

Cost-cut Yourself to Prosperity

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Cost reduction as a strategy for rapid growth

During my career, I have saved millions of dollars for the organisations I’ve worked for and helped avoid billions of dollars for the industry I’ve represented. Cost reduction and cost containment is the name of the game in the air transport industry. Over the course of the last 60 years, the airlines have not been able to make an adequate return on the cost of capital employed, with profit margins being less than 1% on average over the period. Net profit margins of close to 5% in recent years are truly exceptional, and are the result of strong demand, improved efficiency and reduced interest payments. But operating margins are being squeezed again by rising fuel, labor and infrastructure expenses, and thus cost management will continue to play a crucial strategic role. And herein lies a useful lesson for any industry and any business.

Last week I spoke of price simplification, whereby you dramatically reduce the price of the product or service by making its delivery simpler, thereby reducing its cost. This can be achieved in one of two ways, through both product redesign and business process redesign. Through product redesign you can reduce the product or service offering to its bare essentials and nothing else. Think of Southwest Airlines, and other low-cost carriers that offer no complimentary food or drink, no reserved seating, no lounges, and no free baggage handling. You can also reduce the variety on offer, as in the case of an airline reducing multiple class travel to a single class, as the low-cost airlines have done. For a product, think of the simple Swatch that provides the basic function of telling time, but not much else that more complicated and luxurious watches do.

Once the product has been simplified, its cost of delivery can be further reduced through business process redesign, for a simple and standardized product can be produced more easily and efficiently through automation and mass production. In the process, an entirely new mass market can be created through an accelerator effect that can cut the price of the product or service by half or more. The classic example is that of the Ford Model T, which was designed in such a way that it could be easily mass produced on the production line. It became the affordable car for the masses. The most successful low-cost airlines have simplified and standardized their product and redesigned their business processes to such an extent that traditional carriers have had a hard time to compete.

During my days with KLM Royal Dutch Airlines, while in the midst of yet another cost reduction initiative, I was told by those who questioned such draconian practice, “you cannot cost-cut yourself to prosperity.” At the time, I felt there was some truth in that. Today, I couldn’t disagree more! A sure way to prosperity and profitable growth is to cut costs – dramatically – for it has been proven that radical price reduction will lead to an exponential growth in demand and the creation of a new market.

The Beauty of Simplicity

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And what it can mean for your business or organisation

Last week I wrote about the difference between the complicated and the complex, and its implications for your approach to introducing change, which requires leadership more than it does management skill. However, the implications are even more profound than this.

In an increasingly complex world punctuated by rapid and disruptive change, organizations must become more flexible, agile and nimble, and let go of centralized hierarchical command-and-control styles of management. Individual behaviors and decisions in reaction to the unpredictable are rather more important than executive strategies and organisational plans that rely on predictability to be effective. Individual leadership and self-organization suddenly become more important than management control. Encouraging conflict and change become necessary – even to the extent of testing the stability of the organisation – in order to cultivate a culture of creativity and innovation.

But there is a problem. If organisations in today’s world are to operate at the edge of chaos, how can they maintain a balance between flexibility and stability to avoid from failing? Without clear plans and directives, how can individuals in organizations make decisions in today’s information-saturated and rapidly-changing business environment? By determining what’s important and what’s not. By freeing yourself from complexity and committing to simplicity.

Simplicity – the art of reducing the complex to its simple essence – can give you the power to get stuff done, to be more effective, to be more efficient, and ultimately, to create more value. Many books have been written about this, in fields as diverse as theology and spirituality, to psychology, ecology and biology, design and architecture, communication and politics, as well as business theory and strategy. In business, it has been observed that those companies that are most successful, are not only market leaders, but have also embraced the principle of simplicity. However, achieving simplicity is not easy. As Steve Jobs once observed, “Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.”

As identified by Richard Koch in his book entitled Simplify and co-authored with Greg Lockwood, there are two ways simplification can be achieved – through price simplification or through proposition simplification. With price simplification, you are dramatically reducing the price of the product or service by making its delivery simpler, thereby reducing its cost. Think of Southwest Airlines or Ryanair – one class travel with no frills, a fleet comprised of one aircraft-type, service to secondary airports, and direct selling to customers. Think of Henry Ford and the Model T. Think of McDonald’s and fast food. Think of IKEA and functional inexpensive furniture. Think of Inditex of the Zara brand and fast fashion….

With proposition simplification, you are providing a product or service that is simple, easy to use and intuitive, and generally appealing, which can create an entirely new market and ecosystem. Think of Apple and its iMac, iPhone, iPod, iPad, and more recently the iWatch. Think of Amazon that pioneered on-line book sales for a more convenient consumer experience, which was enhanced by book reviews and suggestions and easy “1-click” payment. It has gone on to create a massive on-line marketplace that allows other sellers to participate and now offers a wide range of products for sale.

This is the power of simplicity in business – making the complex more simple, and creating value and new markets. By working smarter, not harder, by creating more flexible and adaptive organizations, and by creating more compelling experiences for consumers, companies can find new paths to growth and prosperity.

“Simplicity is the ultimate sophistication.” – Leonardo da Vinci

Frederic Laloux comes to Montreal

Read Time: 1 minuteYesterday I had the great privilege of meeting Frederic Laloux who was in Montreal as speaker at the annual congress of the CRHA, the Quebec society of HR professionals. His seminal work Reinventing Organizations is hugely inspiring and a must-read for any leader who yearns to create a more purposeful organization that is ultimately more innovative and better-performing. This is all the more important in today’s hyper-connected world that is punctuated by rapid and accelerated change. Frederic’s insights into emerging, next generation organizations was further shared during a “fishbowl” conversation that was expertly facilitated by Samantha Slade of Percolab.

Reinventing Organisations is possibly the very best business book I’ve ever read, and I strongly recommend the book to anyone. It is written for leaders who sense that something is broken in the way we run organizations today and feel deeply that more must be possible, especially in the face of the most disruptive wave of technology humankind has ever experienced… but wonder how to do it.