Business Strategy

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FBEMBA Internet Radio Interview

The Family Business Radio network is featuring an interview tomorrow, August 19th, on our Executive MBA for Families in Business. To listen in at 1pm EST go to http://www.familybusinessradio.com/?p=639 then simply click on the “Listen Live” icon in the upper right corner. The pre-show promotion is now posted on that link as well.

As far as I know, this is still the only graduate-level program based around Boyd’s strategic framework.  For more information, please visit the Cox Family Enterprise Center’s site.

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Developing the touch

Ibis raised an interesting question in one of his comments:  If Fingerspitzengefühl can be taught, why do so few people have it?

Two points:  First, Fingerspitzengefühl is a skill, so although most people can get better at it, some are going to get a lot better.

Second, it’s a strange kind of skill, not for performing complicated or even dangerous tasks mystically well, but for sensing what is going on among groups of people in conflict and then influencing what happens.

If you learn juggling, for example, and get so good that people go “Wow!  How did she do that?” the clubs still obey simple laws of motion, pretty much f=m•a. You may do amazing things, but it’s all predictable, at least in theory, and you can learn them yourself under good coaching and maybe a practice partner to help.

The first problem in learning Fingerspitzengefühl is that you can’t learn it by yourself.  You have to have at least two groups of people to practice with — your team and some opponents.  And to develop this skill, you have to practice a lot, because people, unlike clubs, don’t obey laws as simple as f=m•a.  And you have to practice influencing your own team — call that “leadership” — while also influencing the opposition — call that “strategy.”  And you have to learn it in increasingly unstructured and even threatening situations, under varying time constraints. This is the concept behind Vandergriff’s adaptive leader methodology, which I’ve referred to before.

If your conflict is business, not war, then it’s even more complex because you have to influence both customers and competitors (and the relationship between the two), not to mention your own team.

So you can see that Fingerspitzengefühl is hard to practice.  Many military organizations just don’t provide the opportunity to hone it as a skill (my military training in the 1960s and ’70s offered virtually none) or enough for people to get good at it.  On the other hand, some companies do this quite well, particularly in those sales training organizations that stress role playing.

Here’s Boyd quoting Blumentritt (Patterns, 74):

… an officers training institution which allows the subordinate a very great measure of freedom of action and freedom in the manner of executing orders and which primarily calls for independent daring, initiative and sense of responsibility.

or as he put it in Organic Design (23):

Arrange setting and circumstances so that leaders and subordinates alike are given the opportunity to continuously interact with external world, and with each other, in order to more quickly make many-sided implicit cross-referencing projections, empathies, correlations, and rejections as well as create the similar images or impressions, hence a similar implicit orientation, needed to form an organic whole.

It’s important to note that while you’re building Fingerspitzengefühl, you’re also building Einheit, that is, mutual trust and a common outlook.  That statement has a lot of implications …

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The Essence of Winning and Losing

Boyd’s last briefing, also called “the big crunch,” available through our “Articles” page link above.

In the 10 years after the last dated version of his major briefings, including Patterns of Conflict (available at http://dnipogo.org/john-r-boyd/), Boyd thought long and hard about the essential elements of his work.  About a year before he died, this is what he came up with.

It ties together all the major elements of his work, including orientation, implicit guidance and control, Fingerspitzengefühl, the OODA loop, and the notion of “operating inside the OODA loop.”  All in 3 pages.

It’s not an easy read, but it will repay many hours of deep pondering.

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Great time to start an airline

This post picks up on one of my favorite themes from my previous blog at chetrichards.com, namely that the US airline industry is working as hard as it can to put itself out of business, and this generates opportunities for someone else.

First, to recap, the “legacy” carriers, those who were here before deregulation in 1978, appear to have only one business strategy: wring maximum revenue out of their product, while reducing its cost wherever possible. Thus, distance between seats becomes smaller, planes are fuller (though there are fewer of them — available seat miles are down about 6% from 2000) — and hardly anything except the seat itself is included in the price.  Classic description of a commodity.

Is this the way it has to be?  Consider a few points:

  • In Europe, high speed rail is replacing air travel on city pairs where they compete.  Thousands of miles are complete for trains traveling over about 130 mph and some clip along at over 200 mph.  On city pairs where they compete, high speed trains have taken a big chunk of the airlines’ business, to the point that only people who can’t afford the train have to use airplanes.
  • In many businesses, people will pay more, sometimes considerably more, for what they see as either a better product or better service.  Will a Lexus get you downtown any faster than a Toyota?  And realistically, what does a Mac do that a PC won’t?
  • Of course, there’s always business class. Let’s compare some fares, ATL – LAX, 18 – 25 August (all on Delta) nonstops:  Coach $248; business$1,242.  International?  ATL – LHR coach $1,082; business $5,182.  This gap has always presented an attractive target, but nobody seems to have figured out how to hit it, aside from a few niche players like Virgin’s Premium Economy.

Now, I’m typing this on my MacBook, so you may be able to figure out where I’m headed.

Air Apple

Why not?  Speaking of Virgin, Sir Richard Branson leveraged his way from a record shop to an airline empire.  I’ve flown their Australian service, which is as good as it gets in the discount airline business.  But he’s still offering the same service as everybody else and is still competing on price for most of his product.  Commodity.

Key point: But Apple has already established that people will pay more for its brand.  Is there a way to transfer that willingness to pay more to the transportation business?    Here’s my guess as to what it would have to be:

  • Hassle free.  That’s how Apple conquered the music player business, recall.  In the early days, it wasn’t just the ridiculously expensive iPod, but the entire iPod / iTunes ecosystem.  Unlike their competition at the time [remember “Plays4Sure,” which didn’t?] it was easy and it worked.  Plus it was fun.  Hassle free, at least compared to the competition, and at a very premium price.  In today’s security environment, this is going to be a challenge, but it’s also an opportunity.  Southwest has taken the hassle-free concept a ways (unfortunately they haven’t been able to summon up the courage to fly to Atlanta), but I think there’s a lot more that could be done.  I just don’t know what it is.
  • Great customer service, again, though, at a price:  AppleCare for a 13″ MacBook Pro, roughly my computer today, is $249.
  • Cachet — This isn’t so true today, at least for computers, but when I first started buying Macs, they did attract attention (with about 2.5% market share).  Frankly, I think Apple is running a real risk here.  On the other hand, how many iPhone 4s have they sold?
  • Better than what’s out there today.  Fact is, for years, Macs have received the highest reliability ratings, and many reviewers continue to praise OS X as easier to use and more stable than even Windows 7 (which is quite nice, by the way).  Can this be transferred to the air travel experience?  Who would have thought it could be transferred to cell phones or retail stores?
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We didn’t expect to be treated like this

Not from Toyota:

Five months before the new 2002 Lexus ES hit showroom floors, the company’s U.S. engineers sent a test report to Toyota City in Japan: The luxury sedan shifted gears so roughly that it was “not acceptable for production.”

The warning was sent to Toyota Executive Vice President Katsuaki Watanabe on May 16, 2001. Days later, another Japanese executive sent an e-mail to top managers saying that despite misgivings among U.S. officials, the 2002 Lexus was “marginally acceptable for production.” The new ES went on sale across the nation on Oct. 1, 2001.

From “Toyota took cost-cutting approach on lurching Lexus models, records show,” Ken Binsinger, LA Times, 23 May 2010.

You can practice the Toyota Production System all you want, but by treating your customers — Lexus customer, no less — with such contempt, it all goes for nought.  The moral level trumps the mental and the physical, in business as in war.

Here’s a thought:

Moral isolation

occurs when we fail to abide by codes of conduct or standards of behavior in a manner deemed acceptable or essential by others outside ourselves.

From Strategic Game of ? and ?, J. R. Boyd, June 1987.  As Boyd notes  few charts later, your competitors cannot morally isolate you — that’s something you have to do to yourself (although competitors can make sure you get full credit for your actions).

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CTW Now Available for Kindle

It doesn’t show yet on the main Certain to Win page, but [FLASH! Update:  Now you see all editions when searching for Certain to Win]  there’s a Kindle page for it:

http://www.amazon.com/Certain-to-Win-ebook/dp/B003N9C0D0/ref=sr_1_3?ie=UTF8&m=AG56TWVU5XWC2&s=digital-text&qid=1274448496&sr=8-3

CTW is also available in eBook format for a variety of readers at Barnes & Noble and BooksOnBoard.

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Certain to Win now at BN Digital

For $7.99.  Such a deal.   Works with iPod/iPhone/iPad, Blackberry, Windows and Macs, and of course with the Nook e-Reader.  Download free apps from their site.

Search their site for Certain to Win, or try the following link:

http://search.barnesandnoble.com/Certain-to-Win/Chet-Richards/e/9781450046329/?itm=3&USRI=certain+to+win

Why “certain to win”?  Well, I get reports that people who cultivate a deep understanding of this stuff develop ways to apply it that lead to orders of magnitude improvements in time to do things (and more important, to learn from what they do).

This is not a “how to” guide.  You internalize the principles, you reach deep understanding, and then you will naturally generate ideas for implementation within your organization and learn from the efforts you make.