Zoom: How 12 Exceptional Companies are Navigating the Road to the Next Economy - Hardcover

Citrin, James M.

Hardcover

ISBN 10: 0385501315 ISBN 13: 9780385501316

Publisher: Doubleday Business, 2002

Synopsis

A groundbreaking new book that examines the companies leading the charge in merging the practices of traditional and e-commerce business -- and the lessons we can learn from them.

In Lessons from the Top, James M. Citrin, of the world-renowned executive search firm Spencer Stuart, identified and interviewed (with coauthor Thomas Neff) the fifty top CEOs in America, and distilled the essential principles of leadership they all share.

In Citrin's compelling new management book, Zoom, he offers in-depth analyses of twelve market leaders -- including General Motors' e-GM, BEA Systems, eBay, Sun Microsystems, and General Electric -- and reveals how they are bridging the complex demands of yesterday's and today's economies. From the hard-won lessons these pioneering market leaders have learned along the way, Citrin identifies the principles that characterize success today and will help chart success in the future -- principles that other companies can use to redirect their thinking, resources, and energies. Among them:

Encourage flexibility. Relationships are much more fluid and multidimensional today. Rather than using a strategic planning process, the best leaders use a strategic framework, with a lot of room for improvisation.

Share the vision. It's not enough to just talk about the company's vision -- you need to evangelize about it, and repeat its mantra so often that it becomes second nature to everyone in the company.

Create a genuine learning organization by shortening feedback cycles, effectively transferring knowledge, and expanding a company's "listening circles."

Reward Failure. It is important to find ways to mitigate personal and organizational risk, and identify and encourage risk takers. They are the ones who can transform a company.

What makes this book invaluable are the strategies top managers and executives reveal on how to implement their principles of success: how to flatten the organization, be first to market, measure the right things, and manage customer information. The result is an indespensable road map of the twenty-first century economy that corporate leaders can use to guide and shape their own efforts.

In the bestselling fashion of First, Break All the Rules and Built to Last, Zoom is essential reading for those determined to triumph in the years ahead.

About this title

About the Author

JAMES M. CITRIN is the managing director of Spencer Stuart's Global Communications and Media Practice. The coauthor, with Thomas Neff, of Lessons from the Top, Cirtrin has a regular column in Business 2.0, has written for The New York Times and Strategy+Business, and has appeared on CNBC, CNN, NBC, and many other national business forums. He lives in New Canaan, Connecticut.

Reviews

The snide answer to the subtitle is "not very well." Soapbox.com did not survive 2000. A $10,000 investment in three other companies (Yahoo!, Akamai and Commerce One) in January 2000 would be worth $400 today. Unluckily, Citrin picked his companies in 2000 and had the hubris to boast how much they had outperformed the S&P 500 at that point. But past performance does not guarantee future returns, and stockholders of these companies have lost 83% of their investment since the beginning of 2000, while the S&P 500 is down only 21%. Of the companies, only eBay has managed to beat the index. Despite these companies' failures, there is much useful information here. Thoughtful interviews with innovative business people are presented with minimal intrusion from the author, and broad themes abound: embrace change, encourage risk taking and obsess about customers. However, the executives differ in how these tenets are implemented in different industries and organizations. For example, George Conrades of Akamai likes to share his vision with employees, then measure how well they can realize that vision; he sees himself as a referee. But Tim Koogle of Yahoo! stresses hiring people who will bring their own visions and views himself as a coach. And John Chambers of Cisco focuses on acquiring companies whose employees have already developed the skills Cisco needs, as if he were a team owner. Although this business management book carries an albatross (the failures of its subjects), it nonetheless has merit. Agent, Rafe Sagalyn.

Copyright 2002 Cahners Business Information, Inc.

Citrin, managing director of an executive search firm, profiles 13 notable companies to provide a roadmap for navigating the road to success in the next economy unleashed by technological change, including the Internet. Case studies to illustrate successful strategies are presented, which focus on companies such as Commerce One, Sun Microsystems, Yahoo!, Wal-Mart, General Motors, and Cisco System. The final case on General Electric combines all of the principles and strategies the author recommends. He identifies six factors for success: go for speed; create a learning organization; consider the customer; reward (appropriate) risk-taking and failure; absorb uncertainty; and master deal making and partnering. Citrin offers thoughtful insight and valuable advice for business leaders. One of this book's best lessons--that all these companies operate in an unforgiving arena--was confirmed recently. At this writing, one of them has filed for bankruptcy protection. Mary Whaley
Copyright © American Library Association. All rights reserved

Citrin, a business consultant and coauthor of Lessons from the Top, here presents six factors for success in the modern digital economy: go for speed, create a learning organization, obsess on the customer, reward appropriate risk-taking, absorb uncertainty, and master deal-making and partnering skills. For each factor, he presents his theories and illustrates them with two company case studies. For deal making, he recounts how Cisco Systems and BEA Systems have successfully grown by both partnering with and acquiring other companies. General Electric is presented in a final case study as a company that has implemented all six factors successfully. A couple of the companies cited for exemplary performance have had recent problems. Commerce One, Citrin notes, has been rocked by the dot-com stock market meltdown. Since the book's completion, Enron, another of his case study companies, has suffered a financial debacle that is unresolved as of this writing. Nonetheless, Citrin makes a good case that the Internet and other new technologies will further affect the way business is done and that a study of his six factors would be a good start in coping. Recommended for business collections in larger public and academic libraries. Lawrence R. Maxted, Gannon Univ., Erie, PA

Copyright 2002 Cahners Business Information, Inc.

Excerpt. © Reprinted by permission. All rights reserved.

CHAPTER 1

"Are we there yet?"

The trouble with our times is that the future is not what it used to be. --Paul Valery

Are we there yet?" is a familiar and sometimes grating refrain for parents who take to the highways with their children. It's also the sentiment of many weary business travelers along the road to the era when technology, services, and knowledge combine to create a frictionless economy with seamless markets and price transparency. In such a Utopian world, information is readily available and infinitely searchable, and every product is custom-designed and produced as needed. The upshot: low inventory costs, improved quality, and lower prices. An ideal business scenario.

Are we there yet?

Trouble is, no one really knows where there is. Parents have an advantage: They know precisely where they're heading (most of the time). They know how long it will take, how much gas they'll need, and where they can stop to stretch their legs. Managers nowadays aren't so lucky.

For those of us struggling to apply the latest technologies, define new businesses, attract talented employees, and achieve profitable growth amid a difficult economy, unrelenting competition, and unforgiving capital markets, there is no simple road map to success. This is precisely why it's tougher than ever to be an effective leader and manager today. No one is going to fake their way through to sustainable success in the years ahead. And unfortunately, no one can prescribe easy remedies. They simply don't exist. The prickly problems are far too complex, and winning strategies are only beginning to emerge.

But it is possible to examine how some of the country's top companies are successfully building thriving enterprises based on the new realities unleashed by technological changes, including the Internet. My research team and I have spoken with thousands of executives and pored over scores of companies. In the end we've selected 13 of the very best to profile, including eBay, Sun Microsystems, Wal-Mart, Enron, Cisco Systems, and General Electric, to cull out practical management lessons for today's business executives. It is my intent to strip away the jargon and management fads in the popular press to offer enduring ideas and strategies for tomorrow's emerging economy. These strategies are based on both timeless leadership principles and today's successful new management practices. Together, the blend of the lasting and the new make up the rules for navigating the road to the future. While they won't necessarily transform your business overnight, in time, these methods will help to build a more effective and confident management team in an era marked by tremendous upheaval and uncertainty.

"Upheaval and uncertainty." This hasn't always been the best way to characterize American business. For most of the 20th century, businesses operated on calculated risk, and successful companies followed fairly predictable linear paths: Identify a niche, and then develop, market, and sell a product or service. The most significant challenges to the corporation used to be efficient manufacturing, cost containment, and consumer or industrial marketing. The major corporations that dominated the economy were asset-intensive operations that produced hard goods like automobiles or washing machines, resource-based products like oil, or infrastructure-laden services such as railroads or telephones. They transformed manufacturing into a science, gaining greater efficiencies every year. There were points along the business highway when other countries, such as Japan in the 1980s, surpassed American manufacturing abilities. But major U.S. companies eventually faced down that challenge and reasserted themselves.

This is not to belittle the business achievements of the last century. Efficient production, cost control, and effective marketing are tremendously complex challenges; but they are problems managers know and understand. They've lived with them for decades and leaders like Jack Welch of General Electric have built their legacies on them. Outsourcing. Vertical integration. Downsizing. Automation. All of these approaches have been deftly used in the war on cost. Market research, focus groups, brand extension, promotion, and advertising have been arrows in the marketing quiver for decades. Savvy managers are only getting better and better at cutting the fat from their operations and building on their established brands. In other words, when it comes to the major business challenges of the last century, we know the way.

But somewhere between the invention of the microchip and the first use of the words "hot link" everything changed. Cost faded as a primary focus of business and long-standing brand-building approaches lost their clout. What concerned American business in the nineties was not one particular scourge, but a bevy of difficult business conundrums: Technology that suddenly made it easier to hear from customers, but harder to assimilate their feedback; the fact that while capital flowed freely, it flowed to many players chasing the same idea, making it more difficult to earn a return on substantial investments; the proliferation of new competitors, striking mortal fear into all managers, only to disappear, in most cases, just as precipitously.

At the root of this rapidly changing landscape is digital technology. Some experts claim that technology is just another business tool, like a slide rule or a protractor. But it's a tool that comes with entirely new and onerous demands upon businesses and the people who use it. If they get it right, managers can help their organizations deal with the upheaval and uncertainty that typify today's environment. A business culture that grows up centered on digital technology is radically different from one that does not. Software applications, for example, are never completely finished; they are kicked out in versions. Customers respond to each version and the product is constantly updated and tweaked, with no finish line. Internet applications for business are the same way. Web sites, networking tools, and viral marketing programs are in a constant state of refinement and experimentation. Serendipitously, managers increasingly find success by trying a series of ideas and seeing which work best. And rapid prototyping and computer-aided design have brought similar management approaches to the manufacturing sector. Ford Motor Company, for example, doesn't need to build a car to test its fuel efficiency. Computer models take care of that. Pharmaceutical firms, likewise, can use 3-D molecular modeling to create new compounds that might turn into real drugs.

What we see evolving around these new technologies is nothing less than an entirely new corporate ethos: one that encompasses constant change, experimentation, failure, retooling, and finally, success--only to be reinvented yet again in the near future. While this new digital world can be challenging and nerve-racking, especially for those who like solid answers and definite goals, what we discovered is that managers can learn to cope with the uncertainty that comes with experimentation, and define the boundaries of a business that must fluidly and frequently morph into something else.

Even success itself has become more conditional in today's world. On the one hand, many of the companies profiled in Zoom encourage their employees to fail. Yet executives are under increasing pressure to show results for their actions. If you succeed one quarter, the goals are set higher for the next. And if your company fails to meet its goals, its stock will be pummeled. The bar is constantly set higher on every front--including your customers. Fabled Silicon Valley marketer Regis McKenna points out that the more you give a consumer, the more he or she expects from you. If you deliver a package overnight, customers soon expect same-day delivery. Executive management has discovered that the corporate board is not much different. Give them results and they want better results, faster.

Rising expectations can also lead to rapidly deflated stock prices on Wall Street when these expectations aren't met. As we've seen in the last year, billions of dollars of net worth can be obliterated in a matter of days. When AT and T announced in May 2000 that its growth rate would be 1 percent less than the consensus estimate on Wall Street, it lost 15 percent of its market value--$27 billion, in a single day--paving the way for the break-up of the venerable corporation. Dramatic though that was, it was still less than half as large as the 35 percent collapse in market value that Procter and Gamble suffered several months earlier for similarly missing growth estimates, an event that contributed to former Chief Executive Officer Durk Jager losing his job. When Apple Computer warned that disappointing sales of new products would cause its profit in the fiscal fourth quarter of 2000 to fall short of forecasts, the company's stock fell an astounding 52 percent, cleaving over $9 billion off its $17 billion market value. And Cisco Systems, universally acclaimed for its growth and innovation, reached the pinnacle of corporate success on March 27, 2000, when its $550 billion market capitalization gave it the honor as the most valuable public company; by April 6, 2001, barely a year later, it had crashed 83 percent. Its precipitous decline was driven by a slowdown in capital spending, which forced the company to write off $2.5 billion for excess inventory, lay off 8,500 workers, and deal with a 30 percent third-quarter 2001 revenue decline.

With each new round of earnings disappointments, there are a spate of CEO departures. According to the outplacement firm Challenger, Gray and Christmas, chief executives have been leaving their companies at an accelerating pace in recent years. For the second half of 1999, approximately 50 CEOs left their companies per month, on average. But in 2000, the rate rose to nearly 90 per month. In October 2000, more than 125 CEOs were forced out or retired from their companies...

Edition details

• Publisher: Doubleday Business
• Publication date: 2002
• Language: English
• ISBN 10: 0385501315
• ISBN 13: 9780385501316
• Binding: Hardcover
• Edition number: 1
• Number of pages: 272