book

The Connected Company

by Dave Gray, Thomas Vander Wal

September 2012

Intermediate to advanced

303 pages

8h 51m

English

O'Reilly Media, Inc.

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The Balance of Power is ShiftingA Wake-up Call at StarbucksSomething’s Happening HereCascading Effects Can be Initiated by CustomersCascading Effects Can be Initiated by EmployeesCascading Effects Can be Initiated by Enemies or CompetitorsCascading Effects Can be Initiated by Senior ExecutivesThe ATM RevoltPower in the Network
The Great ResetAn Age of AbundanceAn Emerging Service EconomyProduct SaturationInformation TechnologyUrbanization
The Industrial ModelService-Dominant LogicA Product is a Service AvatarProducts as VerbsProducts as Job DescriptionsServices are Co-createdA Process is Not a ServiceService Networks

Demands on Companies are Increasing in Volume, Velocity, VarietyCustomers Introduce Complexity and Variability into OperationsWhy is it So Hard to Keep Your Service Promises?Customers Resist StandardizationCustomer Support: Efficient for You, Painful for ThemCost and Quality are Not Mutually ExclusiveCustomer Service Doesn’t Have to be PainfulControl at the Edge
Why Do Companies Lose Touch?Over-ExpansionHow Starbucks Lost TouchHow Krispy Kreme Flamed OutBlind SpotsHow Xerox Missed the PC RevolutionHow Kodak Faded AwayRisk-Avoidant CulturesHow GE Revitalized its BusinessHow IBM Rediscovered CustomersWhen in Doubt, Get in Touch with Your Customers
How Did We Get Here?Dividing WorkInterchangeable PartsConflicting Constraints Lead to Rigidity
Return on Assets is DwindlingFewer and Fewer Companies are Surviving in the Long TermWhat is Causing this Increase in Death Rates?Faster ChangeCompetitionIncreasing ComplexityThe Red Queen Race: If You’re Not Running, You’re Falling BehindThe Red Queen RaceWhat is a Coevolutionary Process?Every Adaptive Move by One Organization Affects OthersAdaptive Moves Can be Competitive—and CooperativeAdaptive Moves Can Create Opportunities for OthersCoevolutionary Relationships Can be Very ComplexOptimization is a Journey that Leads to a Few Fitness PeaksWe are Reaching a Complexity Tipping PointThe Future is Connectedness
The Company as a MachineIntrinsic Rewards Drive ProductivityPeople Resist Being ControlledWhat Drives Growth?Closed and Open SystemsComplex Adaptive SystemsThe Long-lived CompanyDesign by DivisionDesign for Connection
Purpose Accelerates and Focuses LearningWhat is the Purpose of a Company?How Profits Can Destroy Your CompanyPurpose Sets the Context for Organizations to LearnPurpose is a Moving Target
Performance is How Well You are DoingThe One Judge of Service QualityBalancing Promise, Purpose, and PerformanceService Quality is a Moving TargetPromoters and DetractorsBuilding Long-Term Relationships with CustomersThe Net Promoter ScoreNet Promoter at EnterpriseConsistentGranular and TimelySeriousNet Promoter at AppleNet Promoter at Logitech
Moments of TruthThe Problem with ProceduresThe Front Line is not a Production LineThe Law of Requisite VarietyReducing VarietyAbsorbing VarietyFreedom to Experiment
The Complexity IssueAgile DevelopmentService OrientationService ContractsComposabilityLoose CouplingOrganizing for AgilityNetflix, a City of ServicesWhole Foods, an Agile Team of Agile TeamsMost Companies are Not Built for Agility
The Parable of the WatchmakersThe Podular OrganizationMorning Star’s Self-Organizing MarketplaceThe Nordstrom WaySelf-Organizing Teams at Rational SoftwareDemocratic Management at SemcoCan Your Company Go Podular?
What is a Pod?Process to PodChains Versus NetsPods are Flexible, Pods are FastPods Can FailPods Can Scale Up FastWhat Kinds of Companies have been Successful with a Podular Approach?3M is PodularAmazon is PodularA Podular System Trades Flexibility for ConsistencyWhy aren’t more Companies Going Podular?
What is a Platform?What is the Value of a Platform?A Platform is a GovernmentStandardsAttractorsSupportGovernanceBalancing the Needs of ConstituentsYou don’t have to be BigWell-Designed Platforms Absorb Variety
The Growth SpiralLevel One: How Entrepreneurs LearnLevel Two: How Organizations LearnTacit and Explicit KnowledgeLearning FieldsLevel Three: How Platforms LearnPace LayersFront Stage and Back StageBalancing the Front Stage and the Back StageMaking Platform DecisionsGrowth Spirals in the Connected Company
Linking Things Changes ThemWhat is a Social Network?Small WorldsScale-free NetworksPower and Control in NetworksPower in NetworksControlExercising Power in NetworksSituation AwarenessInfluenceCompatibilityThe PlatformThree Principles of Network Power
Strategies Don’t Last ForeverLet a Thousand Flowers BloomA Portfolio of ExperimentsSmall Bets: Set a Low Bar for Initial ExperimentationMedium Bets: Many Sources of FundingBig Bets: The Responsibility of Senior LeadersMore Experiments Means More At-BatsBe Connectable to EverythingStrategy by Discovery
Leading from the EdgeThree Types of StrategyEdge LeadershipPeople FirstAwarenessAdaptive TensionsDiversity MattersYou are a Learning FieldInfluence—Give Meaning and Moral Authority to the PurposePurposeWhat You Stand ForMoral AuthorityPrinciples Trump ProcessesIt Takes Trust to Build Relationships
Management is a Support SystemDesigning the SystemBalance the Individual Freedom with the Common GoodParticipationBuild Slack into Central Resources to Ensure AvailabilityRely on Peer-to-Peer Reinforcement Whenever PossibleOperating the SystemCritical Values in Complex Adaptive SystemsSymptomsTuning the SystemAdaptive TensionsAttractorsInformation TransparencyDensityDiversityPermeabilityRate of FlowParametersStructural ChangeEmergent LeadershipThe Job of Managers
Networks are NeutralPod FailureToo Much AutonomyNot Enough AutonomyPlatform FailureFailure to Invest in the PlatformOver-Controlling the PlatformFailure of PurposeCustomers First
How to Get there from HereIt Won’t be EasyDo You Work at a Place that Ignites Your Passion?Design Around CustomersTaking Steps Versus Crossing ChasmsThe Organic PathTop-Down, Leader-Driven ChangeConnecting an Internal Group at MarriottConnecting with Customers at U.S. CellularCommon ThreadsPilot PodsLaunch a Pilot Pod to Shift to a New Business ModelLaunch a Pilot Pod to Serve Unmet Customer NeedsDisrupt Yourself Before Someone Else DoesDisrupting Desktop Software at AutodeskDisrupting Full-Service Telecom at O2The Difference Between a Proof-of-Concept and a PilotNetwork WeavingIt’s Time to Change

Content preview from The Connected Company

Chapter 9. Connected companies have a purpose

Maximizing shareholder value is the dumbest idea in the world.

—Jack GE Welch

Learning happens in the context of a goal, an attempt to do something or to make something happen. Without a purpose to drive learning, it is haphazard—not much more useful than blind flailing about. The purpose of a company is to do something for customers while making a profit.

Purpose Accelerates and Focuses Learning

Sometimes you learn things by accident. For example, when a child puts her hand on a hot stove, she learns not to touch it. You can learn more by exposing yourself to a lot of different environments and by trying a lot of things. And certainly this kind of serendipitous learning can be very valuable. But while accidents can create a lot of opportunities, you will learn more, and have more happy accidents, if you are pursuing a goal.

Think about learning to swim. If you get into the water without a goal, you may enjoy yourself, but you won’t learn much. Most learning happens by trial and error: you try something, and then based on your success or failure, you learn and improve over time. Purpose gives learning energy and direction, and therefore accelerates and focuses it.

If your goal is to learn to swim, you will know you’re making progress by comparing the current state to your goal. If you sink, you’re not making progress. If you are able to float, you are making a step in the right direction. And if you are able to propel yourself in a given direction, ...