The POWER OF CORPORATE KINETICS: CREATE THE SELF-ADJUSTING, SELF-RENEWING, INSTANT-ACTION ENTERPRISE - Softcover

Fradette, Michael; Michaud, Steve

Softcover

ISBN 10: 0684855909 ISBN 13: 9780684855905

Publisher: Touchstone, 2001

Synopsis

Argues that the key to sustaining corporate success lies in a reorganization of the basic structure, operation, and resources so as to cultivate appropriate responses to opportunity and change. Reprint. 17,500 first printing.

About this title

About the Author:

Michael Fradette, a partner with Deloitte Consulting, is the firm's global director of manufacturing management consulting. An expert on enterprise transformation, supply chain, strategic cost management, manufacturing systems, and factory modernization, he has more than twenty-five years of consulting and industry operating experience. He lives in Boston.

Excerpt. © Reprinted by permission. All rights reserved.:

Chapter 1

THE DEATH OF PREDICTABILITY

YOU CAN'T PREDICT THE FUTURE, BUT YOU CAN BE READY FOR WHATEVER IT BRINGS

Kinetics comes from the Greek word kinesis, for movement. The dictionary defines kinetic as an adjective "relating to the motion of material bodies and the forces and energy associated therewith." We apply it to a dynamic business that instantly responds to new demands and seizes new opportunities.

Sometimes you have to step back from the pressures and challenges of your daily routine and try to make sense of it all. Where is your industry going? What are your company's prospects? Where is your career headed? We believe that you ignore these questions at your peril. All those trees that keep you from seeing the forest have contrived to create a whole new business environment. Something profound has changed: Predictability is dead.

This book is about the death of predictability and how you can turn it to your advantage.

Until now, virtually every work of management theory, as well as every business, has been based on a single premise: The future is predictable. Until now, we have forecast market trends, scheduled production, designed services, and trained employees on the assumption that we could count on a stable future except for the occasional unexpected earthquake.

In one sense, of course, the unexpected is a business staple. In fact, business would be pretty boring without the unexpected and the unpredictable -- the off-the-wall customer or vendor, the production deadline almost missed, the power outage that crashes the computers just before the print run. Something to groan or laugh about later and Share with friends and family on the weekend. But if you step back, you will see that what is happening now is of an entirely new dimension.

It's not just the increase in the rate of business change -- we all know markets are moving faster. It's that the magnitude of the increase is making the future completely unpredictable. It's not just that customers know more and want more; we all know that the nature of our relationship with them is changing. It's that their needs and demands are no longer predictable. It's not just that competition has heated up -- we all know the basic rules of competition have been rewritten by deregulation, the breakdown of industry boundaries, globalization, and nonstop technological shifts. It's that we can no longer predict which rules will change next. We are experiencing what scholars call discontinuities, drastic changes that destroy companies, reinvent industries, and make skills obsolete. Discontinuities, coupled with an accelerating pace of change, make a mockery of the very notion of long-range planning.

Sooner or later, something fundamental in your business world will change.

Andrew S. Grove, Chairman and CEO, Intel
Corporation, and author, Only the Paranoid Survive

At the beginning of this decade, senior managers at Mazda Motor Corporation looked around their world and planned for their company's future. The Japanese economy was thriving, and the public was clamoring for luxury cars. Everyone was sure the good times were going to keep rolling, so Hiroshima-based Mazda, the smallest of Japan's large car makers with sales of more than $2.5 billion in the first half of 1997, spent $550 million erecting its Hofu assembly plant to manufacture upscale cars. The plant, which was a marvel of automated manufacturing and worker-friendly industrial design, opened in 1992. In 1996 it was running at only 35 percent of capacity. What happened? Japan had entered an economic slump. Public fancy had abruptly turned from sedans and toward trucks and vans.

In another time, Mazda's predictions and plans might have worked out just fine. In another time, we might have considered the sudden changes that led to the company's mishap as nothing more than anomalies on the business radar screen, rare exceptions to the common experience. Not now. Not in the climate of uncertainty and unpredictability that is rapidly overtaking us all. When the future can no longer be counted on, the best-laid plans, based on the most elaborate and ingenious research, are doomed to fail.

When faced with a new competitive threat -- a discontinuous innovation, something that breaks with the status quo -- the tendency in most organizations is to get really good at doing what they've always done. Unfortunately, while that may provide some temporary salvation, in the long run it is a dead end.

James M. Utterback, Mastering the Dynamics of Innovation

In recent years we have witnessed an accumulation of discontinuities, like meteor showers across the business firmament, and every sign indicates they are going to continue and multiply. We are confronting an entirely new business landscape where our traditional assumptions and practices are no longer valid. Our very existence as businesses, even industries, is threatened. If we are to survive and thrive, we must find new ways to think about these discontinuities, new ways to organize our enterprises to exploit them, and new ways to turn them to extraordinary advantage.

Corporate Kinetics is our answer. We believe that the insights contained in this book will allow businesses to weather the storm of unpredictability. More than that, we believe this book will help businesses seize the opportunities inherent in an unpredictable future as they constantly create new sources of competitive advantage.

Our proposals aren't simply theory. They have emerged in part from our study of dozens of leading companies that have recognized the sea change in the business environment and have developed new ways to cope with it. We have also explored successful small and midsize companies that have demonstrated the flexibility and adaptive skills the death of predictability demands. In the pages that follow, we show how organizations such as Microsoft Corporation, Kinko's, Inc., and even the United States Army are following some of the paths we espouse.

Most of all, though, we offer a model of what we call the kinetic enterprise, a guide to the design of a business that can cope with the new reality. It is based on a simple yet profound insight: If we can no longer depend on our ability to predict the future, we must create a dynamic business design that can capitalize on the unpredictable, to turn it to our advantage.

The word kinetic derives from the Greek kinesis, which means movement. In physics, any body in motion -- a molecule of water heated to boiling, a hammer striking an anvil, a rocket blasting off -- possesses kinetic energy. In the same way, a kinetic enterprise moves, instantly responding to new demands and seizing new opportunities, adapting and evolving with every tick of the clock.

It is very different, in structure and behavior, from the traditional corporation as we know it. The kinetic enterprise isn't constrained by existing work processes. It is an instant-action machine, constantly changing its work and evolving its operations to address the unpredictable. What is more, it ignores traditional hierarchies and boundaries. Workers initiate and manage its activities, collaborating with one another at every level and within every area. The old command-and-control management model is defunct. Instead, a new culture motivates workers to collaborate spontaneously, make decisions, take risks, innovate, and learn.

The organization that is successful is the one that can best deal with surprise.

General Gordon R.
Sullivan and Michael V.
Harper, Hope Is Not a Method

The kinetic enterprise is organized around workers who initiate and execute individual, discrete, and unpredictable projects that we call events. Events come in two basic varieties: market events, which seize unpredictable market opportunities, and customer events, which satisfy unpredictable customer demands.

Both customer and market events require workers who are committed to the success of the overall enterprise, rather than just their own position, department, or team. Workers are expected to play a new role, initiating events and piloting them through to their conclusion. To execute events, each worker must tap the full range of human and other resources within the enterprise. They must develop the broader skills of organization, communication, and innovation in addition to their particular expertise, be it as a customer service representative, a purchasing agent, or even a lathe operator.

An event unfolds altogether; its various facets develop simultaneously. For workers to preside over these events, to work together as a team, to spur the enterprise into instant action, they require communications and information technology that lets each worker know what the organization knows, monitor operations in real time, and communicate with anyone, anytime, anywhere.

Let's take a look at some real-life examples of market and customer events.

MARKET EVENTS

A market event begins when a market opportunity is identified by a worker or team of workers and ends with the introduction of a totally new kind of product or service.

At Kinko's, for example, a copy-machine operator had a brainstorm. Kinko's is based in Ventura, California, and has some 800 locations in seven countries. During the month of December, however, customers spent more time shopping for gifts than they spent making copies or preparing presentations. The operator's idea was to use the store's new color copy technology and its laminating and binding equipment to produce gift calendars using the customer's own photographs. This worker perfected and promoted the idea within his store and then tried it out. It became an instant hit. Customers walked in with twelve of their own favorite photographs and walked out with a unique personalized holiday gift. The operator explained his idea in a phone message to Kinko's founder and chairperson, Paul Orfalea, who rushed it to the company's management and store managers via the voice mail network. Today, custom calendars are moneymakers worldwide.

At MTV Networks, a New York-based subsidiary of Viacom Inc., a market event started with a memo dubbed the Melissa Manifesto. "Screw the maudlin death images....We want a cleaner, brighter, more fun MTV," proclaimed the critique written by two twenty-five-year-old production assistants, both named Melissa. The memo eventually landed on the desks of Tom Freston, CEO of MTV Networks, and Judy McGrath, president of MTV. They loved it. McGrath even jokingly told a colleague, "I feel like blowing everybody out and putting these people in charge." The Melissa Manifesto sparked a network-wide overhaul that included fresh programming, remodeled studios that overlooked Times Square, and new on-air personalities.

At Minnesota Mining and Manufacturing (3M) in St. Paul, Minnesota, a market event began when William McKnight, then CEO, broke his leg and had to wear a heavy, cumbersome plaster cast. He challenged his scientists to come up with something more comfortable, and they obliged. They took a synthetic material that was stronger and lighter than plaster and designed a process to manufacture the first fiberglass-reinforced synthetic casting tape. It takes plaster-soaked cloth casts up to a day to harden, but the new material took just minutes. The market event ended with the introduction of Scotchcast Casting Tape in the marketplace, where it became the standard material for orthopedic casts.

Market events let workers see and seize embryonic opportunities the instant they appear. The kinetic enterprise is designed to allow and encourage the entire organization to ignite market events. All the resources of the enterprise are poised to be mobilized instantly by workers.

CUSTOMER EVENTS

With sales topping $11 billion annually, Deere & Co., based in Moline, Illinois, is the world's largest manufacturer of farm equipment. It is also a leading producer of industrial and lawn equipment. At Deere, customer events are a fixture. A recent one began when a farmer decided to grow a new hybrid corn that had to be planted in tight rows. The farmer went to his local Deere dealership and explained his problem to a salesman, who rattled off a series of questions: How far apart should the seeds be dropped? How many rows must be planted? How much and what type of fertilizer must be added at the time of planting? How will the furrow be opened and closed, and to what kind of tractor will the planter be attached? An order was generated and electronically transmitted to a Deere factory. In less than sixteen hours a factory team created a one-of-a-kind planter, which was then shipped to the farmer. The event ended when the farmer received his customized planter.

At Sumitomo Forestry Co., Ltd., a subsidiary of the Tokyo-based Sumitomo Group, a customer event starts in cyberspace. There, salespeople assist customers in designing their dream house on the screen -- basement to rooftop -- drawing on the nearly limitless options in the system's database. Once decisions have been made, a complete list of the necessary materials is instantly delivered along with the total bill. Simultaneously, the computer generates an order form and assigns the project to a construction team that will quickly build the house. The event ends when the construction is completed.

A customer event at New York-based Merrill Lynch & Co., Inc., began when managers at a large chemicals company asked to alter the company's relationship. Would Merrill Lynch, with sales of more than $22 billion a year, take on administration of the company's employee benefits program? It represented an emerging field for Merrill, but the opportunity was too big to ignore. Merrill created an employee benefits administration function. In the course of the customer event, Merrill added a new technology infrastructure, including automated voice response, document imaging systems, and sophisticated workstation technology with graphical user interface and connectivity to underlying systems. The customer event ended when Merrill Lynch introduced the new service to a single customer.

Customer events unleash workers to satisfy unique customer requirements. All the resources of the kinetic enterprise are poised for mobilization the moment they're needed.

THE CASE FOR KINETICS

In today's world, companies are pursuing a predictable future, a future that no longer exists. Companies rise and fall on their ability to predict. Their actions typically take the form of periodic death-defying leaps from one market to the next, one product to the next, one organizational model to the next. The kinetic business grows and evolves spontaneously with each and every market and customer event. Kinetic capabilities enable businesses to create one-of-a-kind products and services for single customers or to exploit new market opportunities, and do it profitably and pronto. When the unexpected occurs, the enterprise handles it on the fly, instantly innovating. As a result, it is constantly creating discontinuities for its co...

About this edition

• Publisher: Touchstone
• Publication date: 2001
• ISBN 10: 0684855909
• ISBN 13: 9780684855905
• Binding: Paperback
• Number of pages: 256