Archive for category The Global Economy

How successful companies speak and think has not really changed

It is easy to spot them, the companies that have started their decent. If you hear words like:

- We are still recovering from the recession; we cannot invest
- We only want to do the basics; we cannot afford to do more
- Our management team is cutting all costs; everything non-essential has to go

On the other hand, with companies on the rise you hear words like:

- We want to substantially increase productivity, we are ready to make the investment, what does it take?
- The basics are not enough. We want to do more. We want the most advanced tools so we can compete more effectively
- We want to leverage our existing investments but our management team is looking to invest in game changers
- What are some best practices you recommend?

Companies that take risks, make investments in good or bad times and stick with them all the way, and empower their employees to think about, find and implement game changers win. Those who start “restructuring”, “right-sizing”, “focusing on essentials only” “leave projects unfinished” don’t do very well.

Hundreds of prospects and customers later. The pattern is undeniable.

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The Recession Generation

In this Newsweek article http://www.newsweek.com/id/229959 the author explores the impact of the recent financial crisis, the new age of uncertainty, and severe economic downturn on employment and spending patterns.

Some key takeaways:

  • It’s no accident that the psychology of entire generations is shaped by the milieu in which they grew up; economic research tells us that our lifelong behaviors are determined in large part by the seismic events—good or bad—of our youth
  • Even one really tough year experienced in early adulthood is enough to fundamentally change people’s core values and behaviors
  • Recession babies not only invest more conservatively, they tend to make less money, choose safer jobs, and believe in wealth redistribution and more government intervention
  • This division between capital and labor and the permanently high unemployment that it seems to encourage not only depresses wages, it depresses people; a large body of research shows they tend to withdraw from their communities and societies after being laid off (their spooked neighbors, encouraged to work ever harder, do too)
  • Parental unemployment has huge negative consequences for children, making them more likely to fall behind in school, repeat grades, and exhibit anxiety disorders
  • The worry today, say Reich, Soros, and political scientists such as Harvard’s Robert Putnam, is that fearful, vulnerable people will become more easy prey for ugly class politics, being drawn, as Reich puts it, to “populist demagogues on either side of the political spectrum.”
  • Americans generally have a high tolerance for inequality. Yet that tolerance may wane as we enter a new age in which young graduates can’t expect to do better than their parents—and one in which Wall Street is perceived as being able to continue business as usual while Main Street struggles. “Americans are OK with inequality,” says Reich, who believes we are at a tipping point, “as long as they feel the system isn’t rigged.”

All this said, there are some glimmers of hope in the New Normal.

  • Post-crisis, consumers are putting a greater value on time spent with family and friends than on money (a good thing when there’s little of the latter around)
  • There’s also a glimmer of possibility that hard times might make us nicer to each other … simply thinking about money made subjects less sensitive to pain, and less likely to help each other or want to connect with strangers

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Localism – There’s No Place Like Home

A great article by Newsweek magazine (http://www.newsweek.com/id/217029/page/1) on the trend towards staying local. Here are some of the key takeaways:

Perhaps nothing will be as surprising about 21st-century America as its settledness.

Yet in reality Americans actually are becoming less nomadic. As recently as the 1970s as many as one in five people moved annually; by 2006, long before the current recession took hold, that number was 14 percent, the lowest rate since the census starting following movement in 1940. Since then tougher times have accelerated these trends, in large part because opportunities to sell houses and find new employment have dried up.

Our less mobile nature is already reshaping the corporate world. The kind of corporate nomadism described in Peter Kilborn’s recent book, Next Stop, Reloville: Life Inside America’s Rootless Professional Class, in which families relocate every couple of years so the breadwinner can reach the next rung on the managerial ladder, will become less common in years ahead. A smaller cadre of corporate executives may still move from place to place, but surveys reveal many executives are now unwilling to move even for a good promotion. Why? Family and technology are two key factors working against nomadism, in the workplace and elsewhere.

Nothing allows for geographic choice more than the ability to work at home. By 2015, suggests demographer Wendell Cox, there will be more people working electronically at home full time than taking mass transit, making it the largest potential source of energy savings on transportation.

Some studies indicate that more than one quarter of the U.S. workforce could eventually participate in this new work pattern. Even IBM, whose initials were once jokingly said to stand for “I’ve Been Moved,” has changed its approach. Roughly 40 percent of the company’s workers now labor at home or remotely from a client’s location.

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The Next Game-Changers

Nice article by Morningstar on how technology and market forces are making fundamental changes in the competitive landscape. Companies whose previous market dominance and position were virtually unassailable have now become also-ran businesses experiencing a rapid decline in revenue and, specially, profits.

There is also a good non-techie explanation of Cloud Computing. Here is an excerpt:

Consider “cloud computing” (which is sometimes called “software as a service”). Basically, instead of having all your software and files installed on your computer, in a cloud computing world, you would just fire up a Web browser and use services provided remotely from central locations. In the current way of doing things, I buy Microsoft Word, install it on my machine, use it, and store my files on my local hard drive. But on the bleeding edge of technology, I could just fire up a Web browser, visit the Web site of a word processing service (such as the current Google Docs), and save my documents on the service’s central computers. It’s cheaper, and the documents are automatically backed up and available from anywhere.

Allow me a short analogy using electricity. Think of how the world would look if each of us had our personal electricity generator in our backyards. Although silly and inefficient, this is essentially what we have with computers today. Eventually, it looks as though the computing world will move to the electricity model, where power is generated efficiently at a handful of central locations and then distributed via a robust transmission system.

Another emerging example of this trend comes from console gaming. A new firm named OnLive will soon be offering a service that–according to early reviews–will offer games comparable to what is available today from Microsoft’s Xbox or Sony’s PlayStation. But with OnLive, there is no big box under the television or physical games required, just a controller and a simple device that connects to the Internet.

Cloud computing is perhaps the most revolutionary trend in this article, as opposed to the other trends that are more evolutionary. Simply put, software is no longer married to hardware. Or, just think of it as the trend toward having the majority of computing power no longer distributed on millions of desktop boxes, but rather provided by central servers in thousands of locations and distributed via the Internet.

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How the credit crisis is affecting project management software initiatives

After fourteen years, Tenrox has been through several economic turmoils and shocking world events such as 9/11. The credit crisis is the latest challenge we are all now facing together and it is unlike anything I have seen or heard of in a life time. It is simply amazing almost incomprehensible to me how a small group of mostly innocent but naive individuals, greedy mortgage brokers and deceitful investment firms can cause so much damage to the financial system and the real economy. The list of bank and company failures is truly astonishing. Incredibly, the world's entire financial system is at risk.

Take Lehman Brothers, a Wall Street icon that has been in business for many decades. A month or two before its collapse we got a call from a department head at Lehman who was looking for a project management tool to improve their internal project cost accounting. A few weeks into the sales process we got to the step of the credit check which is something we do when we do not know about the company we are dealing with. When our account executive asked me if a credit check is necessary on Lehman Brothers I smiled and said "Joe, this is Lehman Brothers. I am sure their credit is good."

A few days later Lehman had still not signed the agreement so Joe called to see what happened. His Lehman contact said "Did you read the newspaper this morning?" and Joe said "Yes but I wanted to see if the initiative will still proceed" … Lehman Brothers had collapsed!

We have seen a few project cancellations and delays in the last several months but so far on-demand project management software is still in very high demand in 2008.  Judging from our current pipeline we will close the year on a very strong note. I would not even venture to predict 2009 for any industry or market sector! … we just have to hope that we have looked into but stepped away from the abyss.

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Why US companies are worldwide leaders

I have been involved in the project management software business for more than thirteen years. Over the years one consistent pattern has been the glaring difference between the decision making efficiency of our American customers versus that of virtually any of our customers in other countries.

After studying this for years, I can comfortably say that an American prospect is highly likely to make a purchasing decision (go/no go) 3 to 4 times faster than a UK, Canadian or Australian prospect. And, an American customer is much more likely to quickly move forward with a project even if there are some unknowns and timeline risks, based on a mutual trust and commitment to the project’s success. Whereas a Canadian prospect, for example, may procrastinate, over-analyze and hesitate to the point that any momentum or enthusiasm for the project is long gone.

This pattern is more evident in times of trouble. American companies seem to invest even more aggressively in tough economic times. In the last 4 quarters, while the rest of the world has started to tighten their belts and reduce software spending, our American customers have actually increased and accelerated such investments so that they can outmatch their competitors.

This type of decision making process and speed makes American companies far more competitive and capable in comparison to their peers in other countries. There are a lot of challenges for the United States of America, healthcare, debt, deficit, war against terrorism/extremism, … but from my observations, on the innovation front, the United States is by far, the absolute global leader.

In the next blog I will talk about my observations regarding enterprise software implementation projects at US companies versus similar projects executed for companies in other countries.

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Microsoft Vista: Innovation for Innovation’s Sake?

In BizJournals, Brad Patten warns that Microsoft will stop selling Windows XP on June 30. He states that Microsoft is about to put many businesses between a rock and hard place, and I agree. "…There is no compelling reason to upgrade. Vista isn’t more stable, faster or easier to use."

Here is another article on CNN about how users are resisting the forced upgrade: http://www.cnn.com/2008/TECH/04/14/microsoft.xp.ap/index.html?iref=newssearch

XP has been stable and reliable. Vista looks cute/fancy, but it does not provide enough new features to make a change from XP worthwhile.  In my opinion, Vista is an "innovation" that is driven only by the desire to appear innovative–not out of any solution to a compelling business need. As a business person, it is difficult for me to justify the expense and effort involved in upgrading–except that Microsoft is forcing our hand.

As I discussed in this post about innovation among CIOs throughout the world, the "next new thing" is not always a good business decision. The reluctance of businesses to embrace Vista further validates this observation.

While US companies resist the change from XP to Vista, companies in rapidly developing areas, such as China, will buy new PCs that are only available with the Vista operating system. If you follow the same logic as Accenture did in its recent study, this indicates that Chinese are more innovative than we are. But that logic is faulty. When we meet the needs of our customer in the most efficient and cost-effective ways possible and we offer something worth investing in right now, that is true innovation.

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US Tech Leadership Slipping? I Doubt It.

New research from Accenture, covered in this article on CIO Insight (by Eric Chabrow, "US Tech Leadership Seen Slipping"), leads Accenture’s Chief Technology Strategist Bob Suh to the conclusion that the US is falling behind as a leader in technology innovation.  I believe this conclusion is wrong and misleading. 

The CIO Insight article states:

Suh reached that conclusion after reviewing results of a survey of more than 500 global CIOs that the business advisory firm conducted late last year. Only 6 percent of American CIOs surveyed responded that they wanted to be leaders in adopting new technologies vs. 15 percent among European and 19 percent among Chinese IT leaders. But 54 percent of American CIOs said they would rather be followers in adopting technology, compared with 44 percent in Europe and 27 percent in China.

These numbers could suggest a lag in innovation, if you choose to read them that way—and Accenture can certainly drive its consulting business by encouraging CIOs to “innovate” (i.e., implement new enterprise systems). But innovating just to innovate is misguided and costly. There are several ways to interpret Accenture’s findings—and none of them equate to any loss of overall leadership or lack of productivity by US IT leaders.

  • First of all, “the basics” are the basics for a reason—they work. Project Workforce Management is a perfect example. There is no rocket science here, and what we do may rarely be seen as “innovative technology.” But I see companies over and over again who fail to implement fundamental systems and best practices, especially in Europe and China. If improving Project Workforce Management can increase a company’s top and bottom lines, then it is a good investment, even if it means that the companies who implement it are called "followers." I suspect that “54 percent of American CIOs would rather be followers in adopting technology” because they are charged with helping their business units get “the basics” right.
  • Innovation doesn’t always equate to leadership—it can also indicate a need to catch up. One commenter to the CIO Insight article, Ben Breeland, states it well: “Just because some a developing country, with no existing infrastructure chooses to deploy fiber optic; it certainly does not mean that existing (operating) companies should scrap copper and replace it with fiber.” In other words, China’s drive to innovate has more to do with keeping pace than with leading.
  • In one of CIO Magazine’s blogs, Laurie M. Orlov states: “ The driver seat in technology is increasingly going to be in the business units, not in IT. Which means that technologies will be discovered and eventually thrown over to IT to support, with CIOs becoming involved at the implementation stage.” This is simply good business sense. Companies innovate when they truly need a new solution to solve a business problem, and that innovation may not necessarily be driven by IT.
  • I also have to wonder: how does SaaS (Software as a Service) fit into Suh’s conclusions? For example, a company that subscribes to an online project management or CRM system has effectively “outsourced” innovation to the provider of the SaaS, and relies on that vendor to provide innovative upgrades to its technology. If I subscribe to a leading SaaS provider’s product, am I a leader or a follower in Suh’s survey?

In a future post, I will bring this topic more close to home with my own observations about innovation for its own sake, especially as it relates to implementing enterprise solutions such as Project Workforce Management.

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