Milk is bad for children’s bones. Superman became a serial murderer. Shocking, yes? But no less shocking than Toyota, the world-class manufacturing quality expert, recalling millions of cars across its product lines. Three generations after its founder created Toyota on a philosophy that built quality into every step, it turns out that Toyota’s quality has been steadily eroding. Today, Toyota’s quality issues are deep and systemic. After all, the company’s problems: Involve multiple components, vehicles and years of manufacture. Create dangerous safety issues – failing brakes and uncontrollable self-accelerating gas pedals. Were surfaced years ago yet are leading to recalls only under regulatory pressure. May not have had the attention of top management until after all hell broke loose. (Toyota’s CEO just recently committed to creating a senior level “quality committee” to look into the problem.) May not yet be truly resolved. While…
The Root Cause of Our Economic Mess Is Commoditization
If your business can’t offer its target market(s) differentiated benefits that matter, recognize that your business is stuck in a quicksand called commoditization. Endless cost cutting to survive the recession-magnified price discounting will only push you deeper into the muck, making it even harder to escape competing on price. You only have three smart options: Redefine your business model strategy to become the lowest cost competitor. You’ll earn profits despite market commoditization Redefine your business model strategy to escape commoditization and compete beyond price Exit the business Over the last ten years our economy’s productivity increased dramatically through industry consolidation, value chain and process redesign, outsourcing and IT investments. These changes lowered inflation, but also created pervasive commoditization. Big banks engaged in these activities and ended up as lumbering copycats of each other, earning their returns by taking enormous risks rather than having…
Strategic Leadership in Fearful Times
I took up rock climbing to confront my fear of heights. I’d follow my planned route, stopping to decide on my next steps. Stopping for too long, usually out of fear, was always a mistake. Fear aroused the oldest part of my brain that screamed, “Any move other than right back down the way you came is dangerous.” I’d hold onto the rock for too long, and only look narrowly in front of me, missing potential steps. I’d exert more energy than was needed, sapping my power to move upwards, and eventually forcing me to retrace my steps. We’re in the scariest economic time in our working lives (unless we worked in the Great Depression). Fearful, we hold tight to what worked in the past. The only next step we see is the age-old wisdom: “Cut costs and lower break-even points to conserve…
The Real Strategy Work Is Business Model Innovation
Image via Wikipedia Many business leaders debunk strategic planning. “The external environment is too uncertain,” they argue. Or, “Strategy is decided at the point of contact with our customers and markets.” I also hate strategic planning because the decisions from strategic planning are strategic in name only. We delude ourselves into thinking that we’re planning strategically, when really we’re working at varying levels of the tactical. Year long tactical plans are as wasteful as a one-year plan for parenting teenage girls. Parenting tactics are decided daily subject to vision and values. There’s no other way through the confusion this age presents, just as there’s no other way through rapidly changing markets. The core strategy decisions for an organization are deceptively simple. The challenge rests in finding answers, as these questions are highly interdependent; and, strong competitors may have already claimed the obvious business…