Presentation: Transcending commoditization in professional services
On December 5 I am giving a “View from the Top” online presentation to US and European members of the Association of Executive Search Consultants on Developing Knowledge-Based Client Relationships:The Key to Avoiding Commoditization.
There is no question that commoditization is one of the most powerful driving forces in the global economy. While this has been starkly obvious in product markets such as textiles and manufactured goods, commoditization is also fundamentally shaping professional service industries.
If clients believe that professional firms are replaceable, then they are commodities. Even if firms boast top talent and long-standing relationships, it is self-deception if you believe no-one else can do the work. The ‘black-box’ style of professonal services that relies purely on expertise is dated, and encourages clients to shop around. Ultimately the only thing that cannot be replicated and commoditized is a deep, collaborative, “knowledge-based” relationship. The field of competition for professional firms is increasingly the ability to build these high levels of engagement with their clients. This requires, among other capabilities, building effective networks to deliver value to their clients.
The slides for the AESC session are below (as usual, do not expect these to make complete sense without my accompanying presentation):
For more detail you can download chapters from Developing Knowledge-Based Client Relationships: Chapter 1 on the big picture of professional services and knowledge-based relationships, and Chapter 6 on implementing key client programs.
The acceleration of open business: 2007 is the turning point
In my 2002 book Living Networks I wrote about the gradual shift to open accepted standards. Earlier this year, in the context of the social network battles, I wrote Is the trend to openness accelerating? Social networks as an inflection point.
I think we can now safely say that the trend to open business is inexorable, and that in hindsight, we are quite likely to point to 2007 as the turning point.
The latest is the extraordinary news that Verizon Wireless will introduce an “Any Apps, Any Device” option for its customers in 2008, allowing them to use any phone runnning any application. There are sceptics, but because there is the real potential to attract new customers and thsu create competitive advantage, this massive step is likely to create followers, shifting the industry.
Let’s review just a few of the other steps towards open business in the last six months:
May:
Facebook opens its developer platform
September:
New York Times online goes open
October:
Google launches Open Social
Path 101 established a ‘naked start-up’
November:
Google launches Open Handset Alliance
Murdoch says he will open up access to Wall Street Journal Online
Verizon Wireless announces open access
Five global trends for 2007
In the February issue of Voyeur, the inflight magazine of Virgin Blue, I was interviewed for an article about the major trends of 2007. The article is below – as usual allow for journalistic interpretation in the quotations…
FUTURE FOCUS
Ross Dawson is the founder and chairman of Future Exploration Network – an innovative company that helps multinational organisations understand the future technological and social changes that will affect the way they do business. Here Dawson lets us in on the top five trends that will shape our 2007.
1. Web 2.0 revolution
“What we’ve seen in the past five years is a whole new phase of the internet. One of the most important principles of this is participation – everyone can easily set up blogs, upload videos and create music and podcasts. For the first time we are not just consumers but are enabled to become creators, so we have this doubling of media space leading to a world of infinite content, of infinite entertainment.”
The trend for trend maps
There seems to be a trend for trend maps! Back in late December Nowandnext.com and Future Exploration Network released a map of major trends for 2007 and beyond, as below. My original blog post described some of the background to the trend map.
Click here for the full Trend Blend 2007+ map
The pdf version of the trend map has been downloaded over 20,000 times from the various sites at which it is hosted, with many times that number having seen the map. Along the way it has generated many, many comments – here is a small selection:
“The World’s Best Trend Map. Ever.” The Big Switch
“The mother of all trend maps” Cookthink
“A neat map of trends, words and made-up words in the form of a tube map. This is about as close to art as marketing strategy gets. Really usefu”’ Dead Insect
“I find these graphical depictions of trends fascinating. While no map can tell you everything, they are valuable for triggering ideas at a glance.” Free Rein
“The amazing Trend Map for 2007 and beyond” Madeforone.com
“If you’re interested in a global overview of next years trends, don’t miss out on Ross Dawson’s amazing Trendmap 2007” Information Architects
“Check out this off the hook trend map! Wow, cool.” The Caucus House
“I love visual stuff like this, and just spent half an hour redrawing all the coloured lines and connections after printing the map out on my b/w printer…” Yule Heibel
“I got shivers. A pattern to give us a way to talk about the future. I particularly appreciated the “river of conciousness” that runs through Ross Dawson’s map.” Nancy White
“Great piece of information architecture that shows how all the current trends out there come together and are shaped by the underlying motivators within society” Renaissance Chambara
“Visualisation of trends is amazing. It inspired me to think of the interaction of independent trends.” PSFK
“Perdu dans la jungle des buzz word, de la mondialisation, du hype, du Web 2.0 et du reste ? Heureusement Serial mapper est là et a trouvé pour vous cette magnifique carte “Trend Blend 2007+” Serial Mapper
“Las tendencias más bonitas. De todo lo que se está publicando sobre tendencias para el 2007, me quedo con este mapa del metro del 2007 de Ross Dawson.” The Mixer
“Un documento realmente interesante que con un diseño original y bastante creativo” The Orange Market
“Interessante visualização do conjunto, uma maneira mais inteligente de se entender e contextualizar o que vem por aí neste ano que está só começando.” Coolhunterbr
“Este tipo de trabajos para presentar la información están de moda, pero recomiendo su visualización porque ofrece una mirada comprensiva a las próximas mega-tendencias.” Javier Velilla
“Interessant sind vor allem wie sich Schnittstellen zwischen unterschiedlichen Trends ergeben.” AYRWeblog
(By the way, this is not only my work as some have assumed – Richard Watson conceived this project.)
A few days later after we released our map, Information Architects, seemingly inspired by our map, created a map of web trends, based on the Tokyo subway map.
Click here for the A4 pdf
Their map seems to have got even more attention, helped by blog posts from some of the A-list bloggers featured. They even scored an article in Sankei Shimbun, a Japanese business newspaper with readership of 2.8 million, as well as other media uptake in Germany and Italy.
In the course of exploring the impact of these trends maps, I came across GreatMap, a fabulous site that has hundreds of links to fabulous visual representations. It’s well worth a browse through its links to see some of the work being done in visualization.
We are clearly rapidly shifting to an increasingly visual culture. As our world becomes increasingly complex, particularly when we consider the extraordinary possibilities of the future, words and linear structures fail us. We respond to visual representations that help us to make connections, even if they’re more fun than serious, as for our trend map. As a result, we’ll continue to produce more visual representations of interesting trends and the future – coming up soon!
Trend map for 2007 and beyond
Given it’s festive season now, it’s probably time for a bit of fun. Nowandnext.com and Future Exploration Network have collaborated in producing a map of major trends for 2007 and beyond, across ten segments: society & culture, government & politics, work & business, media & communications, science & technology, food & drink, medicine & well-being, financial services, retail & leisure, and transport & automotive. Click on the map below to get the full pdf.
Trend Blend 2007+ map
Inspired by the subway map for a well-known city, the map shows some of the major trends in each of these segments, as well as the key intersections between the trends. Have a browse through to see some of the more interesting trends in the landscape. And please don’t take it too seriously…
As with most of our content, this is released on a Attribution-ShareAlike Creative Commons license, so if you disagree with the trends we’ve chosen or think you can improve on the map, please take it and run with it!
Our clients will get a glossy pinup of the map, and if there’s enough demand we’ll release a T-shirt….
Fabulous festive season to all!
The greater the uncertainty, the greater the value of scenario planning
I have been applying scenario planning with clients for the last decade across a variety of industries and environments, including the future of financial services, technology, capital markets, risk management, construction, Internet, Asia, and far more. As I wrote back in 1998 in an article on scenario planning in portfolio and risk management, “The greater the degree of uncertainty and unpredictability, the greater the value of using multiple scenarios rather than forecasts.”
Knowledge@Wharton has just published an interesting discussion on Will a New Theory Help Firms to Manage in a ‘Flat’ World? (registration required), which looks at how executives can make sense of the rapidly changing environment. Paul Kleindorfer, a Wharton professor of operations and information management, made this very interesting comment:
In the past six months, there has been an upsurge in the number of companies coming through INSEAD [the European institute for management education] looking for assistance in scenario planning and scanning, or determining the signposts that suggest which scenario or scenarios should be the focus. Some companies — like Nestle, Unilever and Procter & Gamble — have been doing some scenario planning, but it’s been directed toward competition and technology. So these and other companies were completely blindsided by the recent increase in mineral oils — which was spurred by a law in Germany requiring power plants there to burn 10% bio-fuel by 2010 –and its impact on the vegetable oils and other ingredients they purchase for their products.
These sorts of commodity risks have escaped the scrutiny of many companies. Now they see a single government make a decision and it throws the profitability of an important ingredient out the window. So scenario planning and scanning, together with strategic modeling, intelligence and other issues, are really beginning to take on a much larger significance than before. It used to be about markets, technology and competitors, but now there’s a much richer texture.
Over the last decade I have certainly seen how the cycle of interest in scenario planning from major organizations has tracked the degree of perceived uncertainty in the business environment. The scope of the imponderable now, ranging from geopolitics to consumer behavior, overlaid on the necessity for long-term strategic thinking, means that scenario-based approaches are again on the rise. As suggested by Kleindorfer’s comments, I have seen many traditional consulting firms do scenario planning in such a reductionist manner that the scenarios cover only part of the scope of uncertainty, which entirely defeats the purpose. Today more than ever, there is massive value in engaging in scenario planning for long-term strategy development, in a way that really does uncover assumption and open out thinking across the organization.
Changing investor disclosure could transform the world of blogging
I have previously written about blogging and Regulation FD, which is a Securities and Exchange Commission (SEC) regulation that requires egalitarian dissemination of substantive news that could affect the share price. On the face of it, blogs and RSS are the perfect way to allow perfectly equal access to news by everyone. Yet this is not allowed by current SEC regulations. So Jonathan Schwartz, CEO of Sun Microsystems, has written to Christopher Cox, the chaiman of the SEC, to ask him to change the regulations to allow blogs and similar tools to be used for disclosure of substantive news. He says that previous conversations with Cox indicate this will be heard with receptive ears. Schwartz has of course disclosed this on this own blog, together with the full letter to Cox. If this change is approved, this will be an enormous boost for blogs, because it will mean investors and intermediaries will have to monitor the blogs of public company officers, and it will allow company directors to disclose substantive information on their blogs, in turn reducing the governance issues of corporate blogging. It makes all the sense in the world to use the power of RSS to disseminate information – this in fact would be a significant improvement to current mechanisms – so with just a tiny variation in the regulations on what are appropriate ways of disseminating corporate information, blogging could become quite a different world, with the development a thoroughly corporate segment of the blogosphere focused on egalitarian diffusion of investor information, and by-the-by, resulting a deeper and broader view of public company activities, and better informed investors.
IBM drives open business
This is fantastic. IBM has announced that it will voluntarily publish its patent filings on the Internet. The upside is that it is taking the lead in creating a clearer, less confused, higher quality patent landscape. The (potential) downside is that it exposes its technology directions and strategy to its competitors as they develop rather than once they’re implemented. The great thing about this kind of leadership in creating openness and transparency in business is that it usually is a ratchet – once it becomes more open, it is very hard for it to go back. There are plenty of businesspeople who hate the idea of open business, and fight it in every aspect of how they do business. Too bad for them. We are shifting to a world of open business at a very tidy pace, and I for one think that’s a great thing. Embrace it, or have a tough and miserable time fighting the trend.
Will economic growth transcend flattening population? …keynote speech on the long-term future of investment
Yesterday I did the closing keynote at the PortfolioConstruction conference. The conference, run by Portfolio Construction Forum, was for fund managers and portfolio advisors, covering many of the emerging issues on portfolio analytics, as well as the more interesting asset classes. My role was to pull this all out to the big picture, looking 10-20 years forward at future opportunities for investors. There was probably close to a book’s worth of material in the talk, so I won’t try to summarize it here – I’ll cover some of the issues raised in future blog posts and elsewhere. However I want to share the chart I kicked off my presentation with, which shows the economy over the last four centuries and the next 4-5 decades.
The historical data in the chart comes from Bradford DeLong, an extremely interesting economist at UC – Berkeley. Brad has compiled a thorough analysis of economic history since the birth of mankind, which provides a good complement to some of the more traditionalist approaches. The most evident point from the chart is the acceleration of both economic and population growth over the last centuries. In the year 2000 world population had grown to 2 ½ times its levels 50 years earlier, while in the same period the economy had grown by a factor of 10, resulting in an unprecedented level of prosperity to the individual. We are now at an inflection point in population growth. The United Nations fairly recently revised its world population forecasts for 2050 downwards to 8.9 billion, from the 9.3 billion they were forecasting earlier. Now it is not just developed countries that have low birth rates, but as developing countries progress from agricultural economies, their birth rates too are rapidly falling. Clearly a substantial portion of economic growth since the second world war has been based on population growth, and the associated demands for infrastructure and consumer goods. Barring extraordinary disasters, we know with a fair degree of accuracy what the population will be in 40-50 years. However there is great uncertainty on whether future economic growth can transcend this flattening in population growth. The swift commoditization of goods and services, driven by globalization, on the face of it makes it more difficult to drive economic growth. Yet the associated shift to a highly modular economy facilitates the servicing of needs, and exploitation of economic opportunities, particularly in shifting many poor people into early middle class. I believe that the pace of absolute economic growth in the next 40-50 years will be significantly higher than the last decades, and that economic growth per capita, as human population eventually stabilizes, will grow at an even higher rate. I’ll expand on all of this a bit later.
Keynote on relationships in technology services
This morning I gave the keynote at a leadership offsite for the 300 top managers of a major bank’s IT division. The bank’s technology division faces many of the same challenges as its peers, including effectively servicing a diverse set of segregated business units, each with very different business models, and managing the outsourcing of technology services to a global array of providers. The offsite’s key theme was relationships, because they are absolutely central to the success of the individual employees, the division, and the organization. In particular, building effective partnerships with its service providers is critical to its ability to deliver value to the business.
My presentation, titled Leadership for the Future, covered the imperative of collaboration in a global, commoditized world, how to lead partners into collaborative relationships, and how to leverage networks to create value. In my concluding section on creating success I drew on some of the research that Tom Davenport presented at the Network Roundtable conference in Boston this April (his presentation is here), where I also gave a presentation about my recent research into networks in high-value relationships. Tom, from both his own research and drawing on earlier research at Bell Labs by Robert Kelley, found two key determinants of high-performance. I drew on Tom’s material and fleshed it out with some of my own work to identify three interrelated drivers of both personal success and organizational contribution.
High performing knowledge workers:
Actively build networks. There are five key attributes of the networks of high-performing individuals.
Diversity: Knowing many of the same kind of people is not very valuable. Having connections with a broad range of different kinds of people means you are more likely to find resources you need, and to generate innovative perspectives.
Awareness: One of the primary aspects of a valuable network is being aware of the expertise of others and who you can draw on when required. This doesn’t necessarily mean being buddies with everyone; it means knowing what people’s capabilities are.
Visibility. Your capabilities need to be visible to others. Again, this doesn’t require being highly social. If others are not aware of what you can do, you will be isolated in the organization and you will not be able to contribute according to your abilities.
Dynamic. Personal networks should be continually evolving. You continually need to be forming new relationships, and sometimes moving on from others. Change is at the heart of successful networks.
Investment. Building networks requires investment. Developing relationships needs spending time with people to build mutual knowledge and respect, and maintaining relationships also requires time. However the personal and business benefit of that investment is immense. It is something you have to make time for.
Take initiative and calculated risks. Robert Kelley found that the single greatest determinant of high-performance was taking calculated risks, particularly in going beyond the boundaries of the usual job definition or expectations. This requires imagination and considered action.
Learn and develop relevant expertise. In an increasingly specialized world, we cannot rest on our existing expertise. We must continually learn. This needs to be strategic, in that we decide in which domain we wish to be world-class, and work at developing that expertise. This learning draws extensively on our networks – the people we know are the source of our greatest learning. True high performers have technical expertise, industry expertise, and discipline expertise, such as in project management or other critical business practices. If your expertise is limited to one of these domains, your skills are at strong risk of becoming commodtized.
