The Art of War for the Enterprise

The Art of War for the
Enterprise:
The Key Elements of Agility
and Innovation in Business
Author: Richard Platt
Former Intel Corporate Innovation Program Manager and
The Senior Instructor for Innovation Methods
CONTACT INFO | EMAIL: rplatt_inov8@comcast.net | PHONE: (503) 805-7612

Author: Richard Platt | All Rights Reserved

Using the Analogy of Warfare?
Competition: The struggle among organisms for food, space
and other vital requirements (Webster’s Dictionary)
Put another way: Competition is the wrestling for resources
or having desired relationships
Survival Analogies in the Animal Kingdom explain the
mechanisms but not the Rules / Guidelines
Warfare as the ‘Ultimate Competition’
Hard to refute, is there a better one that works?
The argument against the use of Warfare Analogy is based on
Utopian ideals and being PC; not practical, or useful
There are Rules, Guidelines and Principles for Warfare and Non-
Rules “All’s Fair in Love and War”
Who Wins dependant on…Who is the most Adaptable

Where do you find a rules for Adaptability in an ever changing environment?

10/16/07 Property of Strategy + Innovation Group LLC 2


Best Fit Model for Adaptability
Business can be described as Darwinian –
“Survival of the Fittest” – Adaptability
Most Adaptable (Fastest, Biggest, Smartest, etc…)
The benefits of being “Alpha” of their species:
Get to eat 1st
Procreate 1st
Garner the largest amount of resources, etc…
Competition for Resources and Survival

Hindsight is insufficient. Essential to have an effective way to look
toward the future, and create it. - Got to have tools to do this


Business Warfare is about Winning

‘Hearts and Minds’ & Gaining
Competitive Advantage
There are multiple battlegrounds:
Primarily in the mind of the customer AND then in the
marketplace:
Market share and influence in the mind of the
customer– harmonizing with customers needs/wants
Competing against a ‘brother’ company in the
innovation space – out innovating your competitor
Competing against a ‘brother’ company in the core
competency space – known as Red Ocean
There are multiple others…..

Source: Adapted from the Book – “Customer Chemistry” -- http://www.inc.com/resources/inc500/existingcustomers.html



Data: The Hard Truth
Fortune 500: 46 year period (on average)
1970 – 1983: 1/3 fell of the list or out of business
30 companies left the list every year; 6% turnover / year

Forbes 100: 70 Year period
1917 – 1987: 61 companies no longer existed
Average of 1 company / year disappeared

S&P 500: Originally 90 top companies, expanded to 500 in 1957
1997: 74 companies remained of the original 500
Avg. Mortality Rate: 10 companies / year
Avg. Life Span: steadily decreased from 50 to 25 years
“By 2020, > ¾ of the S&P 500 will consist of companies that don’t exist
today.”

Key Question: Why?
Source: “Business Model Warfare” article by Langdon Morris • May 2003


A Sobering Yet Clear Pattern
Projecting forward its likely that only about
1/3 of today’s major corporations will
survive as significant businesses for the
next 25 years.

“Most will die or be bought out and absorbed
because they are too slow to keep pace
with change in the market.”

Source: Richard Foster and Sarah Kaplan. Creative Destruction. Currency Doubleday, 2001. P. 14.



A Change Conspiracy
The three most critical market factors are:
Accelerating Change
Increasing Competition
Increasing Complexity
Resulting in drastically compressed planning
and execution horizon for every company
requiring faster responses throughout
company
Root Cause Issue: Adaptability

Source: Business Model Warfare by Langdon Morris • May 2003


Poor Habits Contribute
“Change, is the common condition, not stability”
observed more than 60 years ago by economist
Joseph Schumpeter
...the very nature of market evolution to weaken some
companies while creating opportunities for others.
Instinctive habit of management is to look
backwards to the past to guide a course into the
future.
In an era characterized by a “Change Conspiracy”,
this approach cannot succeed.

“This misplaced focus is usually only evident in hindsight,
when market share, jobs, or stock value have already
been lost.”
Source: Business Model Warfare by Langdon Morris • May 2003


戦略法
The Way of Strategy



Getting Grounded on the Basics
Highest Form of Competing: “Winning without
Fighting” a.k.a. getting the true Win-Win.
Harmonizing with customer’s needs is KEY
Compete where your competitor is NOT. You
need tools for this: using “Blue Ocean
Strategy” (BOS) is one of the best
Col. John R. Boyd developed O-O-D-A Loops
Observe – Orient – Decide – Act same approach martial
artists use and based in part on the AOW
Framework on unfolding competitive awareness that
provides a capability to look at the landscape while
adapting to changes real time


What OODA Loop speed really means
Quickly
understand Know what
what’s going on to do And be able to
do it
Decide Act
Observe Orient
Implicit Implicit
Cultural
Guidance Guidance
Unfolding
Traditions
& Control & Control
Circumstances
Genetic
Analyses &
Heritage
Synthesis
Feed Decision Action
Feed
Feed
Observations Forward Forward
Forward (Hypothesis) (Test)
New
Previous
Information
Experience

Outside Unfolding
Information Interaction
With
Unfolding
Environment
Interaction Feedback
With
Feedback
Environment
While learning
from the
experience

Source: Adapted from presentation by Chet Richards author of “Certain to Win”; http://www.belisarius.com/index.htmli


OODA and Agility of the Enterprise
Agility is a time based strategy for operational success and not
based on size.
Agility is a relative concept, not an absolute concept.
Agility is an important attribute for project success, large or
small.
• Rapid prototyping projects and then refine by iterating (Read
“Serious Play” by Michael Schrage)
• Recommend Rule Developing Experimentation (Blue
Elephants) application
Agility depends on organizational culture.
What Determines OODA Speed?
• Ultimately Culture & climate of Trust encourages people to
use their initiative to further the goals of the organization
• In such a climate, people solve the technical problems
Source: “What Lessons Can the Agile Community Learn from a Maverick Fighter Pilot?” article by Steve Adolph
http://www.belisarius.com


Operating Inside Their OODA Loop
“It’s like they’re moving in slow motion.” —Boyd describing
“operating inside opponents’ OODA loops.”

“It’s like you’re commanding both sides.” — typical impression
of a successful cheng / ch’i operation.
cheng - “orthodox, expected”
ch’i - “unorthodox, shocking, irregular.”
Operating inside an opponent’s OODA loop, (decision making
process) makes it easier to set up and exploit cheng / ch’i
situations

Source: Adapted from presentation by Chet Richards author of “Certain to Win”; http://www.belisarius.com/index.htmli


Proof of OODA Loops in Action
A time-compressed company does the same thing as a
A time-compressed company does the same thing as a
pilot in an OODA Loop … It’s the competitor who acts on
pilot in an OODA Loop … It’s the competitor who acts on
information faster who is in the best position to win.
information faster who is in the best position to win.
George Stalk, Jr. & Tom Hout,
“Competing Against Time”, 180-181.

Toyota Production and Development Systems are 2X faster than
most of their competitors
Apple iPod + iTunes combination and taking advantage of Napster’s
failure with stakeholders (Recording Industry)
Dell’s supply chain is shorter (in time) than its competitors
Honda – Yamaha War: 18 month war
Honda had 2X the # of designs in the marketplace (testing in the
marketplace) – out innovated Yamaha
Yamaha left with 12 months of unsellable inventory – they lost
Source: Adapted from presentation by Chet Richards author of “Certain to Win”; http://www.belisarius.com/index.html


Way of Strategy Summary
1. Rigorously assess ALL environmental factors
Use OODA or something else that works?
2. Determine your company’s competitive stance
Competitor focused (fast follower) or customer focused?
3. Find your Gaps – determine what you provide is effective
and what is not
Find out your technical shortcomings ASAP and solve quickly
4. Find out what the customer wants (explicitly and implicitly)
Get into the Mind Of the Customer (MOC) – there are tools for this
5. Incorporate findings from above and rapidly Prototype
different Strategies (Virtual is cheapest and fastest)
Investigate – Propose – Iterate – Learn – Refine – Deploy



革新法
The Way of Innovation


Corporate Infrastructure

Barrier or Enabler of Innovation?
Decisions made at mid-
Snr Mgmt expects the
level, made even more
mid-level mgmt to vet
difficult across silo’d orgs,
good from bad ideas
which then turns it into a
before it gets to them
political discussion

For the Innovator:
This is what passes for an Get your track shoes on to
Innovation Pipeline in run the “corporate gauntlet”
Innovative
Concept
most companies today For Corporations:
This isn’t a system its “trial
by fire”


Impact to Speed & Efficiency
Impact of a corporate structure on innovation:
Corporation NOT setup to Integrate or Effectively Exploit
innovation opportunities
Even profitable ideas don’t make the cut
Political element enters into decision making (away from data
driven decision making)
Inadequate / Insufficient / No resourcing
Momentum and Speed of implementation slowed or stopped
Siloed efforts (not-holistic)

RESULT: Few new Strategies to enable corporation in
new markets or profitability. Bureaucracy rules, if the ones
at the top are the only one’s with good ideas


What is Industrial Innovation*?
…something that people VALUE and are willing to pay
for (it’s about providing jobs a.k.a. as solving problems)

* A.K.A.: Commercial Innovation Source: David Verduyn (c2c-solutions Inc) - All Rights Reserved


Why is Industrial Innovation Important?
Technology and Service Based Business commoditize over
the long run…Global Competition Drives Down the Price
Innovation (Value Provided to Customer) is the fighter of Product
and Service Price Deflation -- this is where Margin Lives!!
Innovation is actually a Core Competency
UNDERSTAND: strategy and Innovation are inexorably tied
together. Strategy pulls everything together, without it
innovation is rudderless over the long term
Other Reasons:
Aging Product / Service Lines
Business Decline
Customer Defection
Bureaucracy of Large Enterprise



Systematic Innovation Methods
…improves an engineer / problem solver’s ability to get to
fundamental root cause, along with suggesting innovative
solutions to solving problems
1/3 of Top 25 Most Innovative Companies (BusinessWeek) use
Systematic Innovation Methods, and ½ of the Top 10 of those
Compelling results show these have been used to help tough solve
technical problems enhancing innovativeness of world class companies
Companies Now using Systematic Innovation Methods:

All brands, logos and trademarks remainInnovation Group LLC of their respective owners
Property of Strategy + the sole property
10/16/07 21
All brands, logos and trademarks remain the sole property of their respective owners


Systematic Innovation Methods Mapped to Problems

Property of: Richard Platt (Strategy + Innovation Group LLC) and David Verduyn (c2c-solutions Inc)


What Methods Increase Speed and
Growth?
New Product Development (NPD) investments
should impact:
Speed to market
Profitability

Accelerating NPD
Study of 233 Manufacturing firms
9 different NPD Acceleration approaches:

Used by Permission. Original presentation by SBTI – Sigma Breakthrough Technologies Inc



1st What Type of Competitor Are You
What type of a competitor are you?
Pioneer ?
Creates new markets, new-to-world products …
Fast Follower ?
Studies markets and enters when they ramp-up …
General ?
Core business area competitor, #1, or #2 in market
ownership
Can be both pioneering and fast following

Do you fit in one category, or does each NPD
team need to be classified by their goals?




9 Approaches
Supplier Involvement (SCI)
Lead User Involvement (LUI)
Acceleration of activities and tasks (AST)
Reduction of parts and components (DFA)
Training and Rewarding Employees (TRE)
Implementation of support Systems and Structures
(SST)
Stimulating Cross-Functional Cooperation (XFC)
Customer Emphasis (VOC)
Simplification of organizational structure (SOS)




Key Results: Pioneers, Market Creators
Pioneers have emphasis on either speed or profitability,
NPD teams must choose their approach carefully if pioneering
SCI LUI AST DFA TRE SST XFC VOC SOS

1.2
Listening to the
customer / user is
1
both speedy and
0.8 more profitable
0.6
Profitability Beta

Anything that
0.4
No structure for
increases speed
innovation, reduced 0.2 is goodness
profitability
0
-1 -0.8 -0.6 -0.4 -0.2 0 0.2 0.4 0.6 0.8 1
-0.2
Bureaucratic structures
-0.4
can’t get speed
Increase speed of
-0.6
supplier response
-0.8
Matrixed groups help but still
-1
won’t overcome internal politics
Used by Permission. Original presentation by
Speed Beta which slows speed
SBTI – Sigma Breakthrough Technologies Inc

Opportunity-driven Business Development
Summary on Moving with Speed

Fast
Fast
Sustaining
Fast
to
decision-
speed
thinking
market
making

Technology Trend Launching a crusade Simplicity
Setting guidelines
Forecasting & road-
Reduce Time-To- Boundarylessness
mapping Reduce Time-To-
Market (Rapid
Decision
Anticipating by Prototyping) Self-confidence &
looking for
growth attitude
Getting rid of Owning competitive
problems
bureaucracy advantage
Financial flexibility
Spotting trends
Getting suppliers to
Shuffling
Business Process
Apply Systematic move fast
portfolios
Innovation Methods Mgmt System
Staying beneath the
Rule Developing
Putting every idea radar Managing the
Experimentation
through the
innovation pipeline
Institutionalizing
“grinder” – letting
innovation
Constantly
the best idea win
Staying close to the
reassessing
customer
Adapted from “It’s not be big that eat the small…It’s the fast that eats the slow”, J.Jennings & L.Haughton Source: www.1000ventures.com

Summary

There are Rules, Guidelines and Tools for Effectively
and Efficiently Competing (Winning)
Increase Speed of Decision Making and Shorten the
Time To Process
Aggressively cut wasteful time consuming processes - You gain
a valuable commodity
Disciplined and Systematic Approach towards
Innovating is done by “Best-In-Class” companies, no
process, limited results (at best)
Increase Value for Customers / Users – You get
increased shareholder value as a Result

CONTACT INFO | EMAIL: rplatt_inov8@comcast.net | PHONE: (503) 805-7612


Other Corporate Systematic Innovation Users

All brands, logos and trademarks remain the sole property of their respective owners

Automotive Medical Technology

Petroleum
Aerospace

Optics/Electronics
Consumer Goods

Chemical
Microelectronics


Innovation Assumption
There aren’t any decent metrics for Innovation
Innovation = Growth
1. = Change = Measure Profitability over time
Both lagging and leading indicators are available
Qtr-to-Qtr profitability and growth measures & targets
“Real Options Theory” used as predictive tool for profitability
of a project
2. = Change Over Time
Measure 1st and then you can actually begin to see where
your process isn’t working
TTP – Time-to-Productivity
TTM – Time-to-Market
TPT – Through Put Time of Cycle

You only get results from what you measure and “…you
cannot manage what you don’t measure.” – Andy Grove


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