An Innovation Secret: Avoiding Death by a Thousand Cuts

G. Michael Maddock and Raphael Louis Viton make a really important point about engaging teams in innovation projects in their current column on Business Week's website.  Here is an excerpt:

Team building works differently from idea building. Once you have an idea you like, don’t ask a committee to agree that it’s a good idea. If they have not been involved from the beginning, it is too late to involve them now. If you bring them in at this point, everyone will chime in with small changes. The result? The idea dies the death of 1,000 cuts. You now have a dumbed-down idea without the head-jerk impact that the best ideas need.

I agree completely, though I would add a second reason for why this strategy often fails.   In some cases, you will experience death by a thousand cuts.  In other situations, the team will feel as though you have simply presented plans as fait accompli.   They may become very disenchanted as a result, and they may not commit fully to the implementation of that course of action. 

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Did Focus on New Growth Opportunities Hurt the Core at Pepsi?

Yesterday, the Wall Street Journal ran an interesting set of articles about recent changes at Pepsi.  The articles question whether PepsiCo CEO Indra Nooyi's attention on new growth opportunities, particularly in healthier foods and beverages, may have damaged the core business.   According to the Wall Street Journal, U.S. sales of Pepsi and Diet Pepsi fell by 4.8% and 5.2% last year, while Coke's comparable brands lost only 0.5% and 1.0% share respectively.    Moreover, Diet Coke passed Pepsi as the #2 soft drink brand in America.   The article points out that Nooyi scaled back advertising on the core Pepsi brand fairly significantly over the past few years, and it suggests that this move may have affected market share.   Here's one excerpt from the article:

Jim Tierney, chief investment officer at W.P. Stewart, says PepsiCo focused too much on redesigning Pepsi's logo and the Refresh Project instead of spending money on more traditional advertising.
"You just can't go dark on brands and expect them to hold their value,'' said Mr. Tierney, who is a bigger fan of the company's snack business. 

One can certainly debate the reasons for Pepsi's market share declines.   Changes in packaging and other moves certainly also had an effect.   In one of the articles, Nooyi defends her actions, suggesting that she by no means has downplayed the importance of the core Pepsi brand in her strategy.  

One cannot debate the broader lesson here though, even if Pepsi's issues aren't simply due to the focus on new growth areas in "good for you" brands... many companies do get themselves into trouble when they try to grow in adjacent markets.  Why?   The efforts to grow distract management attention and draw resources away from the slow-growing core.  As a result, however, the core suffers even more than it should due to broader external trends.   The key issue is that it's not simply about financial resources.  Even if the core continues to get its share of money, it may not be getting the ATTENTION of key executives, and perhaps not even attracting the most talented, entrepreneurial individuals at times. 

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ESPN - The Beginning

I'm reading Tom Shales and Jim Miller's entertaining book about ESPN - Those Guys Have All The Fun. In it, Bill Shanahan - an early employee - comments on how ESPN invented a new brand of TV. He points out how fortunate it actually was to be in an out of the way place like Bristol, CT. Many disparaged Bristol. However, He said that they were not surrounded by "industry wisdom" - and that was a huge blessing. I think it's a terrific point. Being distant from the existing players in your industry might help you go against the grain and think differently about the industry.

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John Rowe, Thoughts on Leadership

In this weekend's Corner Office interview in the New York Times, Adam Bryant speaks to John Rowe, CEO of Exelon.  Here is a fascinating excerpt:

There are probably only four or five real decisions I make in a year. There are an awful lot of things I just quietly ratify. I find it very hard to get officers to let you in before the food is cooked. Their natural tendency is to want to bring it to you all packaged. By then all you can do is say yes or no. And you usually say yes. I like to get in while I can still shape the menu a bit. And I try to get them to bring up problems at our executive committee before they’ve got the solution. And I try to be the one who suggests that a problem is coming before they’ve thought about it.

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Interview with Jane Perdue, The HR Goddess

Here is Part I of an interview I conducted recently with Jane Perdue, CEO and founder of Braithwaite Innovation Group.  Perdue is a former human resources executive, who has extensive experience creating leadership development programs.  

 1. What characteristics distinguish the best leadership development programs with the least effective ones?

In my view, there are three characteristics that contribute to effective leadership development programs: commitment, alignment and accountability.

Commitment. Active support from all levels of management, starting with the senior most in the organization, creates meaningful and impactful leadership development programs. Without this support, programs simply become window dressing and yield little positive outcomes.

Alignment. The knowledge and competencies taught in the program are directly linked to what’s needed to execute organizational vision, strategies and goals. Company successes and/or failures (ideally both) are used as working examples, projects, etc.

Accountability. Real leadership development is so much than hours of training. Observable and measurable metrics that demonstrate a learning transfer from coursework to practical application are essential. And, keep those metrics simple! I love how Marshall Goldsmith says it, “If leadership development is not enough of a priority for the company to establish goals and track progress against those goals, it will be difficult to make any succession planning process work.”

2. What are 2-3 factors that are most likely to derail a high potential employee’s career development/progression?

Based on my 20 years of working with senior and high potential leadership, I’ve seen three common career derailers:

1)    Lack of emotional intelligence. Having a strong sense of self-awareness as well as the ability to comprehend one’s impact on others are fundamentals for moving into positions of greater responsibility.

2)    Thinking too much about me and too little about we. Ego-centric individuals have a tough time navigating the work environment as they quickly get labeled “I win, you lose.” Others are reluctant to assist, believing (usually correctly) that they won’t get any credit for positive outcomes and all the blame for negative ones.

3)    Incapable of making the strategic transition from transactional to conceptual. Delegation and collaboration play greater roles as one moves up the career ladder. An individual focused on doing it all themselves is doomed to failure.

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Verizon to end unlimited data plans

Verizon appears ready to eliminate unlimited data plans from new offerings this summer. The move emulates rival choices made in the past year or so. Will unlimited data ever come back? Perhaps. Here is what one has to consider. The demise of unlimited data plans can be traced to two key events. First, the marginal cost of additional usage by the consumer is no longer necessarily zero. Remember that price falls toward marginal cost in hotly contested markets with high fixed costs and low marginal costs. Heavy usage can tax networks as we have seen, and video and other apps soak up bandwidth (meaning marginal costs do rise at some point). Second, recent consolidation means fewer rivals. With fewer competitors, the chances of maintaining this pricing increase goes up. With many rivals, the chances of some players cutting price (by offering unlimited plans) would be much higher.

Could unlimited plans return? Well, if the marginal costs of incremental usage go back toward zero as technology evolves and bandwidth increases, or if new entrants emerge, then we may indeed see them return.

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SAB Miller Seeks to Acquire Foster's

We should not be surprised that a major beer company has made a bid for Foster's.  After all, once Foster's spun off its wine business, it became far more attractive as an acquisition target.  Major brewers such as Inbev and SAB Miller would not have been interested in acquiring Foster's when it had a struggling wine portfolio.  Now, however, Foster's offers a solid set of brands, with a strong position in the Australian market and export potential beyond even what the firm has achieved to date.  I would not be surprised if other brewers perhaps take a look at offering a higher bid. 

It will be interesting to see an acquirer discovers that opportunities to invest and grow the business have remained untapped in recent years at Foster's.  After all, the firm treated its beer business as the cash cow which fueled the growth in the wine sector.  While the Australian beer market is mature, the opportunities globally can be attractive for a firm with strong brands and distribution capabilities.   Did the firm under-invest in the beer business while on a spending spree in wine?  It's possible.  That surely is what an acquirer will seek to determine as soon as possible. 

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