Phones 4U: When suppliers become competitors (“Bargaining power of suppliers”)

Phones 4U collapses into administration.  PWC has been called. This certainly does not make for savoury news especially with “up to 5,000 jobs at risk” in the run up to Christmas.  A few days after the announcement, the suppliers are being touted as potential buyers of some parts of the business – shops and stock.  Phones 4U has not stopped blaming the suppliers; the suppliers (EE & Vodafone) have turned around and blamed the owners saying “they had ladened the business with debt”.  The founder has also joined in the debate, blaming the suppliers!

Whatever your view points, whichever side you stand, whether you see Phones 4U as the victim, or you see the suppliers as predators or “barbarians at the gate”,  it is simply an industry with a lot of competition and Phones 4U could no longer compete. Phones 4U was swimming in shark infested waters and she had no defence to cope with the ‘onslaught of sharks’.

From the information that is available, what seems apparent is: there had been ongoing change in the industry and the suppliers had become competitors for a while (did Phones 4U not spot that!), however, what has suddenly changed is: they have now become more ‘aggressive‘ competitors. And why not? Why do they have to share their revenues with a 3rd party when they can sell directly to the customer?

Michael Porter in his seminal work on competitive strategy, “The five competitive forces that shape strategy” discusses the “bargaining power of suppliers” as one of the factors that should influence business strategy. Certainly, when you have 2 suppliers you are indeed at their mercy; when it becomes only 1 supplier, your whole business becomes endangered. If the supplier or those suppliers become competitors and you have no competitive advantage, you are probably waiting for the onset of myocardial infarction.

Porter’s five force analysis has been in existence for quite some time, so it is indeed amazing that the owners of the business did not foresee this, more so O2 (Telefonica) had decided to ditch Phones 4U not quite long ago. One could argue that perhaps 2 suppliers walking out simultaneously hardly happens, but would having only 1 major supplier i.e. either EE or Vodafone led to a sustainable business?

If the management of Phones 4U had been sensitive to the external environment, perhaps they would have exited and sold the business (a year earlier) before being forced out of business. Unfortunately, that is the nature of the competition in the industry.  All organisms, animals (including humans) and organisations have to adapt in other to survive, and go beyond adaptability in order to thrive.

“Every morning in Africa, a gazelle wakes up, it knows it must outrun the fastest lion or it will be killed. Every morning in Africa, a lion wakes up. It knows it must run faster than the slowest gazelle, or it will starve. It does not matter whether you are the lion or a gazelle – when the sun comes up, you had better be running.”

Phones 4U did not outrun the fastest lion. The suppliers did not want to starve; they ran faster than Phones 4U. Phones 4U did not adapt and she becomes another casualty of the tough competitive landscape.

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Effective error management

The concept of error management is not new, however, the financial crisis of 2008 which can be attributed to a catalogue of persistent errors has unwittingly resurrected the interest of management researchers in this field. Professor Kathleen Sutcliffe defines error management as “the prevention of a crisis and not the prevention of errors”. It is widely acknowledged that mistakes and errors cannot be totally eliminated, however, handling those mistakes correctly when they occur may be the difference between organisations that will succeed and those that will fail.

How is your organisation handling errors? Do you panic when errors occur? Do you know the experts to defer to when errors occur? For answers to those questions and many more, read “Managing the Unexpected: Resilient Performance in an Age of Uncertainty“.

The blame culture: A silent killer of creativity

“To err is human”, so they say. So why do organisations and employees look for someone to condemn and blame whenever the actual outcome differs from the expected outcome? Why do people jump on the bandwagon of looking for the perceived “culprit” before understanding the reasons for the error? How much energy do organisations expend on understanding the issues and the reasons for the deviation in comparison to the energy expended on endless gossips even long after the event? What efforts do organisations expend on castigation of the employee involved in comparison to improving the process, the products and the people?

Whilst the purpose of the article is not to proffer solutions to the culture of blame and its impact on creativity, it is hoped that it will serve as a reminder to managers and decision makers of the impact on employees based on first-hand experience.

There are very few professional roles where creativity and innovation are not required. Although in a lot of organisations, processes and procedures are often documented in order for: repeatability, standardisation, to reduce errors, optimisation etc. However, no matter the level of documentation, there will be occasions where there is a deviation in the input which may warrant an employee to be creative and innovative. Whilst it is ok to follow processes and procedures that have been utilised umpteen times to the letter, the lack of creativity and innovation on the part of the employee carrying out such processes and procedures eliminates improvement.

The attributes of organisations and the attitudes of employees (with the consequences) where there is an insidious culture of blame are discussed below:

  • Lack of openness / concealment. The employees seem to be unwilling to disclose information. They are reluctant to question the status quo. Consequently, the organisation becomes stagnant.
  • Fear of deviation from process. The employees are paralysed by fear of outcomes, and in order to ensure the blame game does not enrobe them, they stick to their guns even when they know the procedures and processes are bound to fail. A common phrase you will hear employees repeat is: “I will do it as long as a document says so, even if I know the process / procedure is wrong.” Following processes to the letter is indeed mandatory, even more so in environments where safety is paramount e.g. aviation, nuclear industries etc. However, the phrase “even if I know the process / procedure is wrong” is the real cause for concern and worry.
  • Inefficiency. The levels of inefficiency in such organisations are really astounding. The processes and procedures are never really improved; continuous improvement is not a phrase that .is used in such organisations. No one is willing to take ownership and identify areas of improvement for fear of being the culprit if there is a failure.
  • Reduced staff morale. There is a general lack of sense of accomplishment for those employees who like to challenge themselves. The employees also tend to be dissatisfied, unhappy and unmotivated.

Although the elimination of the culture of blame from human thinking and human is almost unachievable, we can reduce the impact of the insidious culture in the organisation by starting with removing all references to: who did what; who did not do what; who should have done what; who should not have done what; during the root cause diagnosis.

In conclusion, creativity and innovation come with risk; mistakes will be made and there will be failures. If you want to kill creativity & innovation in your organisation, sow the seed of a blame culture and nurture it. #Innovation #creativity

Ineffective communication will kill your change initiative

Whilst there is resounding acknowledgement of the impact of communication and its criticality in the success of change initiatives, the actual implementation of effective communication continues to be a challenge during most change initiatives. Technologist and IT practitioners are particularly well renowned not to have those soft skills associated to communication; this is not to exonerate other professionals in other functions who sometimes may be the change agents or lead change initiatives where you may also have across communication challenges. However, my background is mainly technology, therefore, my world view will be influenced by my background and experience i.e. technology, although, I am consciously aware of those views and I am able to extricate them from my articles.

Many researchers – Beer & Einstant (2000), Elving (2005),  Peng & Litteljohn (2001), Palmer, Dunford & Akin (2009), DiFonzo & Bordia (1998), Bruch, Gerber & Maier (2005), Clampitt & Berk (1996), Fox & Amichai-Hamburger (2001)whom have investigated the relationship between successful change initiatives and communication, have noted how critical and important it is to get communication right during periods of uncertainties which is an attribute of most change initiatives.

Most change agents and change sponsors also now recognise the criticality of  communication but despite the acknowledgement and recognition, why does it remain extremely difficult to effectively communicate during change programmes?Fox & Amichai-Hamburger (2001) opined that there must be recognition by the message deliverer to be aware of the emotional realms of those receiving the messages. My experience from various change initiatives really backs the aforementioned argument. The interpretation of a message by the hearer is influenced by a lot of factors. In Neuro Linguistic Programming (NLP), it is widely stated that the “meaning of your communication is the response you get“.  Whilst a “fire and forget approach” to communication may be required when broadcasting messages during change initiatives, it will hardly achieve anything.

Although, I do not have answers and no management practitioner or researcher will claim to have answers that can help you completely eliminate ineffective communication, there are ways in which you can increase the effectiveness of your communication in order to simply simplify the complexities of your change initiatives therefore removing  one of the key barriers to success.

Some of the ways in which you can achieve effective communication with references are listed below:

  1. Measure the results of communication: http://h30499.www3.hp.com/t5/Discover-Performance-Blog/Best-practices-for-effective-communication-for-organizational/ba-p/5515197#.UoipfhBFeW4
  2. Be honest even when the consequences were possibly negative –  http://www.change-management.com/tutorial-communications.htm
  3. A communication is complete only when the receiver has integrated, understood, and applied the message. – See more at: http://changeleadersnetwork.com/free-resources/six-faulty-assumptions-about-change-communications#sthash.X9xzTFS2.dpuf
  4. Collaboration is very important – http://www.mckinsey.com/insights/organization/what_successful_transformations_share_mckinsey_global_survey_results
  5. Feedback loops should not be underestimated – http://www.bcg.com/expertise_impact/Capabilities/People_Organization/Change_Management/ExpertInterview.aspx?interviewId=tcm:12-25685&personId=tcm:12-10493&pt=U2VuaW9yIFBhcnRuZXIgJiBNYW5hZ2luZyBEaXJlY3Rvcg==&practiceArea=Change%2BManagement
  6. Communication is both outbound and inbound – http://www.boozallen.com/media/file/138137.pdf.

Supplier Management vs Partner Management

Changing technology without a change in process: No wonder it failed

Change initiatives and programmes are renowned to fail fifty percent of the time. Several massive information technology change initiatives in the largest of corporations have failed; examples abound of such failed change programmes, from the £12.4 billion NHS IT programme, to the Department of Work & Pensions, to other large private & public enterprises who are constantly changing their IT suppliers due to the failure of those suppliers to deliver on the goals set out at the beginning of such initiatives.

Although there are several reasons why change initiatives fail, but one common theme with changes that are technology led is the reluctance of the organisation to change some of their business processes despite knowing that the new technology may not fully support their business processes. One question you might like to ask is “why is there a change in technology when your business process is not ready for change?”; one other statement I have heard countless times is “business goals and processes should drive the adoption of technology and not the other way round”.  It is noteworthy to appreciate that sometimes change is enforced due to technology obsolescence and that organisations may not have any other choice than undergoing change,  despite the pains of change.

It is not difficult to know organisations that are transfixed on keeping business processes the same when a technology led change should ideally lead to change in some business process. Some of the metaphors in use in such organisations are as follows:

  • Lift and shift
  • Like for like
  • Same features and functions

Some of those organisations also expend an extensive amount of resources (human and financial capital) tweaking and customising the technology solutions to align with business processes, which most times lead to project delays.  Such organisations fail to realise that existing business processes would have evolved over time in order to effectively and efficiently utilise the underlying technological solutions, and a new technological solution might also require some time in order for the stakeholders to become proficient users.

The article is not suggesting all technology led change initiatives should translate into changes in the business process, as every change is unique, however, the article is suggesting that organisations should take a holistic approach to technology led changes and there should be no holds barred discussion areas.

Finally, undertaking a change readiness assessment may provide you with the opportunity to have a more in-depth understanding of how technology change will affect your business processes.

For more information on how to plan for a change readiness assessment when planning a technology led change initiative, do not hesitate to contact the author of this article. He and his team can help your organisation transition smoothly when undergoing a change process.

Is there a correlation between the quality of food served in an organisation’s restaurant and organisational performance?

The Technology, Dotcom, Hedge Funds and Private Equity organisations are well renowned for providing quite “luxury” meals for their staffs. Google is quite famous for this, however, there  was a recent attempt by the State of California to tax this perceived “benefit”…yes, the State seems to be on the cusp of  a financial melt down, so any source of tax revenue will do.

Organisations that offer this “benefit” would have noticed a positive benefit to doing this, otherwise, why would they continue offering it?  The following authors, Stanley A. Deetz & Sarah J. Tracy & Jennifer Lyn Simpson in Leading Organizations Through Transition: Communication and Cultural Change asserted that “managing the hearts, minds, and souls of employees is a key element of building a successful business today”.

The poll below is an attempt to gauge interest and explore if there is a perceived correlation before commissioning further work.

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