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(19:58)

 

In this podcast, Jim Champy, chair of Perot Systems Corporation and co-author of the best-selling management book, Reengineering the Corporation, talks about his latest book, Inspire: Why Customers Come Back. This is the second of Champy's three books in a Financial Times (FT) Press series about new business models. The resources section has a link to Enterpriseleadership.org's podcast with Champy about his second book, Outsmart: How to Do What Your Competitors Can't.

 

Jim Champy has a talent for seeing the writing on boardroom walls - companies have to change the way they work if they want to be effective. No wonder Champy's book, Reengineering the Corporation, became an immediate best seller throughout the early 1990s. Over the years, Champy's has continued to crank out books and consulted about how companies must redefine business processes and their strategies if they want to compete.

 

Several years ago, Champy embarked on a journey to find out how companies have devised new ways to do things, and what we can learn from them. Using a filter of double-digit growth and triple-digit growth, he came up with more than 1,000 companies - ranging from mostly emerging companies to some major corporations. Champy's research has turned into a FT Press three book series about new business models pioneered by these high-growth companies. His Outsmart book features case studies about nine companies, such as Partsearch, that are innovating about how to deliver a better customer experience by combining high tech with high touch. Inspire, his latest book, includes eight concise case studies about how businesses, such as Puma and Stonyfield Yogurt, have become successful by inspiring their customers to be loyal for the long term. Deliver, Champy's third book in the series, will focus on how successful companies execute on their strategies.

 

Champy says that innovation was the key to driving double-digit growth at many of the companies he has profiled. Talking about Inspire, he says a company's vision directly can affect its sales success. "The new generation of customers value transparency and authenticity above all. If you want to keep your customers coming back, you need to learn how to define a consistent value proposition - one that will make your customers stay passionate about doing business with you."

 

In this podcast about Inspire, Champy discusses the role innovation plays in the Inspire paradigm, the top five characteristics of customer-centric companies, and the ways CIOs and CTOs can use technology to get closer to both internal customers and external customers.

 

Bio
Jim Champy is chair of Perot Systems Corporation's consulting practice, and is also head of strategy for the company. He directs the company's team of business and management consultants. Before joining Perot Systems, Champy was chair and chief executive officer of CSC Index, the management consulting arm of Computer Sciences Corporation. He was one of the original founders of Index, a $200 million consulting that CSC acquired in 1988.

 

He also co-authored Reengineering the Corporation, which appeared on the New York Times' best-seller list for more than a year. His follow-up books include Reengineering Management, The Arc of Ambition, Fast Forward, X-Engineering, and his two latest books, Outsmart, and Inspire.

 

Resources
Jim Champy Discusses Inspire, FT Press
http://www.ftpress.com/articles/article.aspx?p=1349306

 

How CIOs Can Help Their Companies Outsmart Their Competitors, Enterpriseleadership Podcast with Jim Champy
http://www.enterpriseleadership.org/blogs/podcasts/2008/09/21/how-cios-can-help-their-companies-outsmart-their-competitors-jim-champy

 

Taking Care of the Company, The Wall Street Journal
http://online.wsj.com/article/SB123914815543399105.html

 

Production Credits
Tom Parish, Host and Audio Producer

 

Sponsored by BMC Software
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Launched in 1998, HCL Technologies Ltd. has quickly grown to become a $2.3 billion provider of custom-IT applications, IT infrastructure management, and business processing outsourcing. During this time, Vineet Nayar, HCL's CEO, has completely transformed the way the company's 55,000 employees in 26 countries deliver IT services to customers. His emphasis on Employee First and a strong belief in values-based leadership has earned Nayar much leadership recognition from both the London Business School and the Harvard Business School. In fact, the latter wrote a case study called the Transformation of HCL.

 

With strong strategic vision and a global outlook, Nayar has charted a defining growth path for HCL, which has catapulted the organization to being one of the last IT services countries in the world. In 2007, Business Week named HCL to the list of top 100 technology companies. Meanwhile, IDC recognized Nayar as having "one of the most cohesive and articulate visions" in the IT services sector.

 

Enterpriseleadership.org recently sat down with Nayar to learn how his management philosophy is fueling HCL's double-digit growth rate.

 

EL. Can you briefly describe what steps you took to transform HCL Technologies to become a provider of value-based IT services, rather than as a provider of linear- scale IT services?

 

VN. First, we recognized that the true value-zone exists between the employee and the customer. We asked the question, 'What business should we be in?' We answered it with, 'We should be in the business of maximizing that value' Next, we asked ourselves, 'If we are in the business of maximizing the value-zone, then how should we structure the company?' We decided to invert the organizational structure so that it faces the value-zone. We call this the inverted pyramid of the organization. Our last question was, 'What should be management's role?' We realized that management's role should be to enable, and hence, be responsible to the value-zone. We call this reverse accountability. To achieve the answers to our questions, we created a cultural transformation based on Employee First, Customer Second.

 

EL. Tell me about some of things that make that possible?

 

VN. The value-zone is in the interface of the customer and my employees. My employees need to be close to the customer. Meanwhile, I need to make sure the employees look at that value-zone rather than look up in the organization to try and to please their bosses. I call the latter trying to please the hand of God. I figure that if I could invert the organization and make managers accountable to the employees in the value-zone, then employees, in turn, would be empowered to deal directly with the customer. Next, we needed to have an effective interface between our employees and the customer. I call this the value portal. This piece of software measures ideas and measures the value we have created in that interface for the customer. Ideas that employees enter can result in a revenue increase or a cost reduction for the customer.  The customer, in turn, rates each idea on a five-star scale. Each employee gets compensated based on each customer's rating. As a result, we have changed the employee's perspective to not only focus on the here and now, but what is he or she can do to contribute to the value portal.

 

EL. Are you paying your employees based on this system?

 

VN. We pay our employees based on a personal incentive.  They earn points. The more ideas they give, the more points they earn. They can monetize their points.

 

EL. When did you realize that you had to make changes within the organizational structure?

 

VN. That is a very important question. It is like aging. Companies will slowly age and then refuse to believe that they have aged. They believe that everybody else is getting older except them. In 2005, we recognized that we needed to make the change. At that time, we were growing slower than our competitors. On the other hand, we were still growing 30 percent year over year.  We also saw the controls of the industry dramatically changing, and changing needs of the customer. We were not changing and aligning our services to our customers' needs. We also realized that if we could experience this change, then we would come out way ahead of everybody else. Now look at what happened during the recession. During 2009, we grew year over year by 21 percent, including 21 percent growth in revenue. We are one of the few global IT services, which grew positively in 2009. Our growth proves that business models are changing, and that customer needs are changing. We started to take part in the journey way ahead of the recession. During the recession, we proved that our business model could accelerate our growth.

 

EL. Which key values are the most important?

 

VN. Any large approximation has to start with people looking at their current state of affairs and saying that they are not happy with it. That's what we did. We created a very exciting vision of tomorrow and laid out the roadmap for how we could move to that vision of tomorrow. We approached the governance structure by how we could transform the outlook of the employees.

 

We have three key values critical to the company. The first is Employee First, Customer Second. It is employee centricity.  Our senior managers believe that their first responsibility is to their employees, and their employees' responsibility is to the customer. That value is very important. The second value is Creating Trust Through Transparency. Trust is a most misused word across the world. We believe that you can create trust by pushing the trust envelope.  Our third value is flexibility. If something bad happens, a company must have the flexibility to respond to the situation in real time.

 

EL. What changes did you make to the enterprise architecture?

 

VN. Prior to the transformation, everybody ran their own small business, completely independently of each other. We had to integrate all of the business managers owning their businesses. We were focusing on the customer being the point of consolidation. The organizational enterprise structure changed from how we turn control into influence.  It does not mean how many people report to you. What matters is how much influence you have over the value your employees create for the customer. We moved away from this unit called every business manager does his or her own thing. Instead, we integrated that exchange to focus on creating value in the zone of the customer. We created trust through transparency. Much data have been thrown at the desktops of our customers and of our employees. To this end, our employees have access to much transparency of data. We had to create an architecture where the information role was virtual, and the collaboration was virtual. Thus, we depend on virtually collaborative teams working together. So to make all this happened, we implemented the enterprise architecture all over again. We did over all of our IT systems. We re-implemented the social networking technology on top of these systems. We used Web 2.0 for data availability and collaboration at the desktop.

 

EL.  I read that various employees can interact with management. What did you do with management to get them to accept this feedback?

 

VN. I, fortunately, believe that the management of any company must seek the right direction. There is the goal about winning. Upper management wants to win, and thus be part of a winning company or a winning team. Our management team realized several things: the architecture had changed, and the company transformed itself from a traditional company to a Generation Y company. As a result, the management team realized that they could lead us to a place where no other company had gone before.

 

Elizabeth M. Ferrarini is a technology writer from Boston, MA. Reach her at elizabethferrarini@yahoo.com.

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With revenue of $8 billion, Owens & Minor, Inc., ranks as one of the country's top distributors of disposal medical and surgical supplies and a leader in healthcare supply chain management. The company serves some 4,500 customers, including hospitals, integrated healthcare systems, alternate care locations, group purchasing organizations, and the federal government. The company's 51 distribution centers service these customers. With roots dating back more than a decade, Owens & Minor provides its customers with products from major healthcare manufacturers such as Johnson & Johnson, Kimberly Clark, and 3M. Rick Mears, CIO of Owens & Minor, says that the company's technology and consulting services help customers to improve their inventory management and streamline logistics across their medical supply chain. "By continuing to improve alignment between IT and the business, we've been able to use make use of innovative technology to provide exceptional customer service." In fact, Owens & Minor has received several awards from Information Week for innovative customer-facing initiatives.

 

Enterpriseleadership.org recently sat with Mears to discuss how his IT organization carries out the corporate strategy.

 

EL. Can you briefly describe your IT organization?

 

RM. We outsource most of our IT services to Dell Services, which acquired Perot Systems. We have had a relationship with Perot Systems for 12 years now. We have a small data center in the home office. Dell's Plano technology center outside of Dallas, Texas, hosts most of our technology.

 

Our corporate IT team makes sure that the company gets what it needs from technology and bridges the gap between business needs, technology, and our services. To this end, we make sure IT aligns with the business and that we support the strategy and the vision of the company.

 

EL. What is the overall corporate strategy and how does the IT strategy fit into it?

 

RM. Our overall strategy is to be the best supply management services company in healthcare. Our customers range from a variety of healthcare providers. They rely upon us every day to get the right products at the right place, at the right time, at the right price, and at the right unit of measure. We refer to this process as our Bill of Rights. We warehouse supplies locally and typically make same-day deliveries when a customer places an order. We also represent the sales and distribution channel for a couple of 1,000 manufacturers that have decided to go through wholesale distribution to move their items. We view our customers on both ends of the supply chain. We sit in the middle servicing both manufacturers and hospitals, and other healthcare providers that buy from us every day. That has been our strategy for decades.

 

If you look at our current vision and strategy, we want to continue to be great in terms of our Bill of Rights. Our strategy going forward will focus on expanding our services to manufacturers beyond those that have typically gone through wholesale distribution. We also want to expand our services to healthcare providers well beyond the acute hospital facilities.  In these areas, we would focus on all healthcare facilities outside of hospitals, such as physicians' groups.

 

EL. Can you describe some of the key IT investments you have made, why you had to make them, and what they returned to the business?

 

RM. Our focus has been to extend our technology and our services to our customers via the Web. We have invested much in e-commerce technology and Web-based technology to connect our business with our customers. Specifically, we have extended our supply chain capabilities to our customers to allow them to manage their own supply chain better. By leveraging our technology, our customers can take advantage of our decades of expertise in healthcare supply chain services. We have also done this on the manufacturer side as well. As a result, our technology investments have been to extend our capabilities to our hospital customers and manufacturer partners. We also have looked internally and have invested in our infrastructure. During the past year, we invested heavily in our voice recognition system for our 51 distribution centers across the country. Our pickers no longer use paper or a hand-held device to locate and select the appropriate products. Instead, voice recognition directs the picker to the proper location and tells them how many items to pick.

 

EL. Did you have to make changes to your enterprise architecture to carry out the voice recognition system?

 

RM. We have absolutely done that. We just completed a migration of our primary enterprise systems from a mainframe legacy environment to a Microsoft Windows environment. A few years ago, we decided not to take on a major systems replacement approach to our modernization. Instead, we worked with Microsoft and Dell to migrate our systems to a more modern platform. We have opened up many new opportunities. For example, we have created a modernization approach that funds itself. It leverages the operations on a less-expensive HP/Microsoft platform to fund a number of our application modernizations. We also rolled out a new customer service system that will have a dramatic impact on how we serve our customers, and how our customer service people are positioned using technology to serve our customers.

 

EL. Can you describe the governance process for making and measuring these technology investment decisions?

 

RM. We go through a capital investment review process. Our capital investment review committee includes our senior management team who evaluate the return on any major investment. The team also goes through the strategic investment process to look at whether or not the investment fits with the company strategy and our anticipated future direction. On the larger investments, we work with the board of directors.

 

We use an internal rate of return calculation. We put the business owners through a rigorous process. Specifically, they need to look at what is the value of the investment we are going to get, what are the benefits to occur, and how would we measure those benefits doing forward. We try to link the benefits to one of several things: new sources of revenues, improvements in employee productivity, or improved business processes. The return could also be reduced cost or increased revenues. We also make sure that the project is a strategic fit.

This governance process really is what links IT to the business and creates that alignment. The process we go through as we consider IT investments forces IT and the business to sit down and come up with real, actionable impacts of the investments, and to use these impacts to defend the need for these investments. We have to collaborate effectively before we bring the investment to the committee. We have to make the case, explaining how we are going to track the internal rate of return that has been set up (whether it is based on sales or expenses or operating profits). The next step in the process involves coming back as a team during post-implementation of the project to show the actual results that we have achieved. It is not only a governance process, but the way we force alignment between the business and IT.

 

EL. What did it take to achieve this type of alignment between IT and the business?

 

RM. It took a while to achieve this type of alignment. When I came on board, I put much discipline in place for the governance process.  I said that the business had to end up driving the rate of return. As a result, IT developed a close connection to the business. In fact, in many cases, the business owners are the ones who represent these enhancements or these investments that we need to make.

 

EL. Since you outsource most of IT, what type of cost savings are you realizing?

 

RM. We would not say that cost reduction has been the motivation for our partnership with Dell. Dell is the expert in technology with a great deal of resources. We can pull from those resources as we need them. We can swap out people based on the projects we need to do. We just tap into that pool. It forces us to not hire and fire people. Our relationship with Dell enables us to continue to be the best and most innovative in our business relative to when it comes to technology. Dell has an ability to not only bring us the expertise, but help us to get that technology implemented and supported quickly and effectively. It also gives us the ability to shrink and swell as we need to as projects are in place or not in place.

 

EL. What is the process to update the business strategy and the role IT plays in it?

 

RM. Because we want to extend our systems and technologies to our customers and our suppliers, IT is an important part of the strategic planning process. That is where we see synergy with IT, in addition to the investment in our infrastructure.

 

Our senior management team has always held the belief that truly innovative technology can have a great impact on business operations. Of course, IT has to deliver collaboratively with the business. Our CIO is included at the management table during every step of a technology initiative - from initial discussion to post implementation.

 

The management team meets quarterly to update the business strategy. We also have a formal strategy process with our board of directors. We meet with the board's strategic planning committee at least twice a year and then we have an annual meeting with the full board once a year. Because no one is sure of the status of healthcare, we want to stay current with where and how care it is going to be delivered, and how technology is going to impact healthcare.

 

EL. What challenges have you faced because of the economic downturn and the Obama healthcare legislation?

 

RM. It is very difficult to comment on it until the Obama healthcare legislation gets carried out in 2014. The economy has forced our customers and our suppliers to look across their entire organization for efficiencies. That is where we come in. Our value is helping our customers and suppliers to be as efficient as they can be with their supply chain. It goes back to our Bill of Rights. If you look across those things, we have proven that we bring great value, drive efficiencies, and drive cost out for our customers and our suppliers. That has created many opportunities for us.

 

EL. What about growth?

 

RM. Our growth rate has been on target for the past couple of years. There are some acquisitions tied to this. I can only give you a historical viewpoint of it. We have been where we thought we would be for the past two years. This is from a revenue standpoint too.

 

EL. What new technologies are you looking at?

 

RM. Now that we our enterprise systems operate in a Microsoft environment, we will continue to extend our technology to our customers and suppliers via the Web. We are focusing on better user interfaces for all of our users and a better experience using our enterprise systems. We are focusing on business intelligence and effectively presenting our information in support of decision making, for our company, our customers, and our partners. We have had great success replacing our warehouse interfaces with voice recognition technology. We expect to do more of that.

 

EL. How do you work with the CFO and CIO to prioritize technology investments?

 

RM. Again, it comes back to the capital investment review process. Our CFO has laid out some easy-to-use tools for us to present internal rate of return and to show how we are going to monitor the achievements of each project. Our CFO is involved in helping us to put this stuff together, as well as holding us to some tight requirements of approving these capital investments. We meet regularly with the capital investment review committee to demonstrate how we doing against those measurements.

 

Elizabeth M. Ferrarini is a technology writer from Boston, MA. Reach her at Elizabethferrarini@yahoo.com.

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(27:55)

 

 

In this podcast, Sherry Lowry-researcher, Business Mentor and Collaboration Coach-talks about a new group of people emerging in companies called 'Generation Savvy' and their impact on new socially oriented business environments in successful companies.

 

I bet you have known the following from personal experience: In every organization are people whose leadership emphasis is on getting things done effectively, gracefully and with authentic gratification from the work they do. The thing is, they often are not visible in the hierarchy. They capitalize on, rather than being frustrated or stymied by, differences in personalities. They epitomize follow-through and innovative ways to support talent around them by bringing into action each employee's greatest potential and distinctiveness.

 

To support her conclusions, Sherry Lowry has been formally collecting "evidence" since 2008, partly through observation and then through interviews, to identify more than 40 specific elements, behaviors, mind-sets, and demonstrated actions of people across five generations, who are, in effect - ageless. She believes we already have a group she says are "Generation Savvy" amongst us, operating seamlessly and successfully within every generation. These people are called Vision Enactors.

 

Bio:

Sherry Lowry, Business Mentor and Collaboration Coach

 

Building on the experiences of founding and developing 7 businesses within 7 different industries, the largest of which included 20,000 clients throughout North America, her current focus is on serving our most effective small to mid-sized organizational future-leaders, and identifying and documenting their qualities and behaviors.

 

She believes these are our vision enactors, both now and throughout all times in the past, across all generations, within all cultures, communities and families. They know what works, wherein talent resides, how to connect it to purposeful endeavor, and they are willing to run interference for those they help shepherd, be their primary encouragers or, if necessary, skillfully create and facilitate alternatives with them.

 

Her primary client base now and for the past seventeen years consists of company and organizational founders and decision-makers who are implementing and adopting positive changes and who control the budgets to execute these changes.

 

Never having had a client who needed a stronger weakness has led her to consistently focus on supporting companies to identify true and renewing strengths of their people, building upon and expanding upon those, and developing strategies to delegate or partner-up and collaborate on all else.

 

Part of her future will include building a virtual and live community for the creation of alliances and collaborations between these "glue and fabric" people who are the early adopters and so often the catalysts, creators and facilitators of our emerging work cultures of effectiveness.

 

For more about Sherry Lowry visit www.SherryLowry.com

 

Production Credits
Tom Parish, Host and Executive Producer

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Buzz. Wall-E. Up. Walt Disney's Pixar is synonymous with animated films, which display creativity, magical stories, and unforgettable characters. Behind the fun of making these films, Pixar has a set of deeply rooted values that champion excellence, tap innovation, and encourage collaboration. Bill Capodagli, the co-author of Innovate the Pixar Way: Business Lessons from the World's Most Creative Corporate Playground, and co-founder of Capodagli Jackson Consulting, says, "These are just the starting points for pushing your own team or organization to unleash a Pixar-style creativity, innovation, and brilliance. From its humble beginnings in the 1990s, Pixar modeled its culture after Walt Disney's legendary studio of the 1930s. In fact, Capodagli has written one of the most authoritative books about Disney called the Disney Way. In deconstructing Pixar's success, Capodagli provides readers with a proven example of how an organization can cultivate innovative talent across all levels of employees and background.

 

Enterpriseleadership.org sat down with Capodagli to learn more about what fuels innovation at Pixar and how Capodagli's consulting practice applied similar techniques to technology-based organizations. Here is what he had to say:

 

EL. Why did you decide to write this book? 

 

BC. I have been studying the Disney culture more about 30 years.  I continue to speak on keynotes about Walt Disney's success. Pixar first came to our radar screen in 1995 when we were in the middle of writing the Disney Way. We watched this rather obscure boutique arise from being a subcontractor to Disney to replacing Disney animation in the late 1990s. Disney acquired Pixar in 2006 for a cool $7.4 billion. The Pixar president, the creative officer, and retired co-founder all admired and emulated Disney's creative genius. Pixar honors the legacy of Walt Disney by refusing to take short cuts and bringing the story to life in each of their movies. It lives by the simple formula that quality is your best business plan.

 

EL. What was your first-hand experience dealing with the Pixar folks?

 

BC. During the research of our book, Pixar was all consumed with the launch of UP, which ultimately got an Academy Award nomination for a feature film. We were fortunate to have one of the Pixar cofounders grant as much time as we needed to understand the inner workings of Pixar, especially how the organization was born in the spirit of collaboration and trust. We talked with other Pixar employees as their time prevailed. They shared with us some wonderful stories about the collaboration and this childlike playground Pixar has created.

 

EL. Can you describe some of the methods Pixar uses to innovation?

 

BC. The Pixar cofounders pioneered computer graphics technology back in 1974. The 1984 hiring of John Lassiter helped to bring all of the pieces together. Pixar's innovation brings technology and art together.  John was an animator and the cofounders were these computer graphics technocrats. Walt Disney said when art and technology come together magic happens. That is really Pixar's secret and that is how it works today. Everyone at Pixar works in a collaborative environment. The technical people and animators work hand and hand.

 

EL. If I want to make my organization more innovative, what things can I take from the Pixar innovation model?

 

BC. The culture of collaboration is the missing key in most organizations. At Pixar, everything revolves around the story boarding, which Walt Disney created.  In the traditional sense, it involves pinning up the story on the board and then starting to put the story together in that conceptual phase. Everyone contributes to the story during daily meetings.  In most film companies, the executive producers, directors, and some of the executives preside over the daily meeting. Everyone participates in the daily meetings at Pixar. An open discussion takes place about how they can make what they are doing better.

 

The brain trust is another interesting concept. Pixar has a brain trust whenever a director or a producer decides that their stock needs some input. The process includes a group of eight directors and other they would like to invite to this meeting. During the brain trust, they present segments of the film and have a lively two-hour discussion about how they can improve it. The key to the brain trust is that there are no mandatory notes, and no mandatory action. It has absolutely no authority. The director and his or her team make the changes as they see fit.

 

EL. Does Pixar normally have many people seeking them out for their innovation methods?

 

BC. I am sure they have many people seeking them out, but they are like a closed set. They are not like Disneyland or Disney World where you can visit and observe the innovation, creativity, and the customer service. They do know welcome people in to observe the process.  I have known many companies that tried to open Pixar's door.

 

EL. How does Pixar reward employees for outstanding innovations?  Do they have a specific rewards system?

 

BC. We asked the co-founder about that. The biggest reward system these people have is that they can publish their findings and their methods in technical journals and speak at technical conferences. Technical people value this more than to monetary rewards.

 

EL. What is the Pixar education program about?

 

BC. Pixar modeled its education program after Walt Disney's eight-page, 1938 memo to Don Graham. Don was an art educator in the Los Angeles area. Walt wanted his animators to, not only be technically competent in drawing, but he wanted them to be creative when they got into the story. This memo outlined ways of doing education in music and comedy and storylines as such. The two Pixar cofounders had a copy of this memo and decided this was a good way to provide an education program to everyone in the organization. As a result, everyone in the organization can take up to four hours of educational courses on company time at Pixar University. It offers more than 110 courses. They say someone can go to Pixar U as a janitor and take enough courses to obtain the equivalent of a BS in filmmaking.

 

EL. Can you provide an overview of your managing consulting business?

 

BC. I have spent most of my professional career in management consulting.  In 1980, my clients started asking us to benchmark the best-of-the-best companies. Disney would always appear at the top of the list, come up as one of the best of the best, not only in customer service, cut in areas of training, turnover, and even in production. Disney has the fifth largest laundry in the world. I have taken many clients behind the screen to Disney interviews. My firm has interviewed 1,000s of Disney employees. We started using Disney as a model for our consulting practice. In 1998, when we wrote the Disney Way, we did 90 percent consulting and about 10 percent public speaking and seminars. Because of the Disney Way, we spend more time doing the opposite.

 

EL. Where does the innovation initiative reside in many of your client companies?

 

BC. Our main thrust is to help our clients develop a culture of innovation. That means having a culture where you unleash the abilities of everyone in your organization.  Walt Disney and the cofounders of Pixar believed that innovation comes from everyone in the organization.  Because one person has the idea for a film, that person is not the only innovative genius. Rest assured that innovative ideas from everyone on the team went into making that film. Pixar promotes and encourages that. We have organization tell us that they cannot afford to have the Pixar-type innovators. We say that is not the case. 'You need to look at everyone in the organization as an innovator.' These people might not come up with the next Harry Potter novel or a flat screen TV. Instead, they need to be innovative about how they do in the cost-effective way to serve their customer.  Everyone has input into that.  Unleash that power on these things.  We encourage people to do that.

 

EL. Does that include IT? Is IT a different animal from everyone else?

 

BC. I do not think so. Pixar has taught us that the technocrats and the animators need to work in concert. One person is no more equal than another person is. In many technical organizations, engineers and IT people reign super. The production people and other support people feel like second-class citizens. In other organizations, the marketing people might have that perception.

 

Sure, you can train people on techniques like storyboarding, or improvisation that help stimulate those creative juices. On the other hand, everyone has a stake in helping to make people more creative. The good ideas come from everyone in the organization. We found that many of the ideas, especially in large corporations, come from the front-line people who are trying things out and saying, 'Gee, this seems to work better than what is coming from corporate. You need to unleash that capability and have a culture that nurtures that.

 

EL. Are you saying that storyboarding can apply to other things besides filmmaking? Have you ever applied it to IT people?

 

BC. Yes. I have storyboarded with many IT groups. One large IT group wanted to install a large computer system in many locations throughout a foreign country. We brought a group of 30 IT professionals from all over the world to convene at hotel for a week. We started storyboarding by throwing ideas out to the group.

 

To prioritize things, we said, 'What are the first things we have to do? What are the plans? How can we put it together to carry out a materials management system throughout this large organization?'  In turn, the group members put their ideas on a card, and then we posted the cards on the wall. It does not become that person's idea. The facilitator read all the cards after we presented the problem. We had a discussion around that. At the end of a week, we had this gigantic ballroom filled with cards, plans, and ideas that would have taken months to put together the comprehensive plan that emerged from this.

 

EL. Can you tell me more about what came out of that storyboarding?

 

BC. They started working on the implementation. They would meet quarterly and refine the plan-such as what barriers keep coming up? They would react according. What would normally take three years to four years to carry out took 18 months.

 

EL. Can you talk about another technology project you worked on?

 

BC. At Whirlpool Corporation, we worked with the global No-Frost team. It was very similar to this overseas IT team. The Whirlpool team had the task of designing a brand new no-frost refrigerator, along with a factory that could  be built and produce products anywhere in South America. Normally, individuals from marketing, purchasing, technology, and such would meet and say, 'You go do this and you go do that.' After a week, they would go off in their own corner of the world. Every six months, they would get together and start putting the pieces together. This process would take about four years.

 

This team had a 20-month time period to get this project off the ground. Instead of doing it the traditional way, we worked with this team throughout their 20 months. They brought in individuals from all over the world. They had full-time representation in Indiana.  Before they even began the project, we got together for an entire week of team building and planning. We did things similar to the IT team. We put strips of tape on the walls. We had cards and said, 'Now for January what are all of the things we need to do?'

 

This team came together with the common goal of getting this thing done in record time. The barrier with the organization broke down. When we had the entire plan up there, we asked everyone, 'What are the things you need to be involved in to make our goal of getting the plans for the factory and the no-frost refrigerator done on time?' We found that technicians were doing engineering tasks and purchasing people were saying, 'I could help with marketing.'  Everyone looked at accomplishing the goal rather than trying to work in his or her own silo. We had great results.  Despite a cut in the product cost half way through the project, the team still met all the milestones and deadlines.

 

Elizabeth M. Ferrarini is a free-lance technology writer. Reach her at elizabethferrarini@yahoo.com.

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Because of the pervasiveness of the Internet, organizations of all sizes today need to be on high alert about potential security breaches, especially cybersecurity threats. Meanwhile, these organizations need to look at security risks that new technologies, such as cloud computing, pose. No one understands the security challenges that global organizations face than RSA, EMC's security division. Each year, RSA publishes its Security for Business Innovation Report (SBIC), which includes findings from 10 of the world's most accomplished security leaders from Global 1000 organizations. Enterpriseleadership.org sat down with Sam Curry, RSA's vice president of strategy, to discuss the invaluable lessons learned from these security leaders.  Here is what he had to say:

 

EL. What are some of the enterprise security concerns about moving to cloud computing and virtualization and mobility?

 

SC. It is a risk reward equation. The companies in business accept some measure of risk for some return. Cloud computing can dramatically improve efficiency on the reward side of the equation. The important thing is the ratio between the two. At a high level, the main concerns are to achieve that same or better ratio of risk to reward. Generally, it means that people focus more on the risk. So how does the risk profile change? We wind up having to do better risk management, or at least the same degree of risk management. If the ratio to the reward improves, then it becomes compelling. The things that bubble up include security controls, such as being able to see into risk, and being able to show compliance in a cloud model as you would in a legacy environment.

 

To date, most of the discussions about security in the cloud have been around commonplace themes, such as dealing with the legacy world, and dealing with anti-virus concerns or firewalls. Those are really point things. The more interesting thing is that we have an ability to have makeover security. We have an ability to change the basic risk management and make it more of a tool. In other words, we can make the infrastructure a service to risk management as opposed to a thing that focuses on itself. The most important principles are that over time you focus less on the tool and more on the task. We can rethink things such as authorization and trust or governance and reporting.

 

EL. What can CIOs do right now to minimize these security risks?

 

SC. You need to be clear about the goals you want to achieve and then really enumerate the risks. Because risk management often proves negative, people try to lift out everything that could possibly go wrong. What is likely to go wrong is more important than what could possibly go wrong. I had a customer who said, 'I have so much to fear. There is no way I can sleep at night.' He was really asking for was a means to provide some granularity to that huge realm of everything that could go wrong.

 

First, you need to be clear about the clear. Second, really enumerate the risks, and then perform some disciplined triage. Look at the content of the entire world. Who are the actors? What can happen to you? There are all kinds of names for a program to this effect. Some folks like the name governance risk compliance or GRC, while some folks hate that name. The principles are similar. You should have a business policy and carry it out on your infrastructure -- whether you have legacy, public cloud, or private cloud. It should tell you what is happening, especially to the things you care about, such as risk and business goals like growing the top line, maintaining margins, and branding exposure. List it out, enumerate the risks, and build a GRC program (whether you call it that or something else). Do not forget to question your partners and their vendors on their ability to help with those goals on the risk management side.

 

Some will do it well and some will ignore it, hoping to distract you with the same old benefits statements you have seen in the past. Your risk management process has to become a manageable one with a program to make it something you can pass business policy to, something you can obtain status from, and something you can focus on the business drivers, not just reports for the sake of reports.

 

EL. What are some of the other types of security challenges CIOs face?

 

SC. CIOs usually hear about major mistakes, such as a system improperly deployed, long after they have occurred. CIOs need to make sure the organization has chosen business relevance for specific things in security. Some organizations still separate physical and logical security. That trend has become more and more out of date as an approach. CIOs need to minimize all risks to the business, such as someone about to drive a truck into a data center, someone hacking a system somewhere, or a potentially poisonous virtual system somewhere. I saw this recently with some of the public cloud things going on.

 

CIOs need to deal with an identity set of issues: How do you come up with a single model for identity? How do you deal with federation? How do you actually get a consistent notion of identity when you are dealing with lots of different islands of trust? Again, these issues include commonplace themes about sporting malware and filtering for bad traffic.

 

The more challenges you have in this environment, the more you have to   manage your posture or your risk profile. You can think of risk in the classic sense as what can it do to you, and how do you match that up to where you are exposed, and then you need to go one step further, and match that up with what matters to you. Each one of those adds a new realm of value. What can happen to you is a big scary thing. You need a refinement process to look at where you are actually exposed and what is likely to get hit. This process includes things such as vulnerability assessments and configurations. It might also include something like an understanding of dynamic environment of cloud computing.  It is not like the legacy environment where you say, 'We are 60 percent Windows. That is what we were yesterday and that is what we are going to be tomorrow.' Your makeup of just what assets exist in a cloud infrastructure could change radically. You might have one platform being 20 percent of your environment today and tomorrow it will be 80 percent.

 

Being able to understand the shifting nature of risk becomes important as you layer that onto a more dynamic environment.  It is not like dealing with a situation such as international affairs where countries are static blocks and positions on the globe. You know their posture because you understand the physical space around them. This awareness does not apply to the virtual world of cloud computing. Here you need to show the business relevance of what is going on. You need to be able to do it in a much shorter period than most folks are used to. You need to be able to say, 'Here is the landscape and here is the state.' You also need to show the critical state. When state is not favorable, you need to know what the actions to take, who has ownership, and what path to workflow. Security has to become better at managing the controls, and as to be better at showing business relevance and tying into the business. These things should be the CIO's job.

 

EL. During 2008 and 2009, did we see more security risks at the enterprise level?

 

SC. That is a tough question to answer. The number of exposures or number of vulnerabilities that could be exploited went up. At the same time, many enterprise environments did a good job of managing security because of the solid systems they had in place. As a result, they became more effective in their defenses. It is fair to say that the sophistication and coordination among enterprises have improved. The actual things that can be done did increase the number of platforms. For example, the attention paid to finding the seams in the systems went up. The cookbook of tricks that are available to your typical hacker did increase, but that is not to say the risk increased.  Companies paid more attention to managing policies and processes, and revolutionizing the way they treat information security.

 

I am in touch with many companies where security now reports to the CEO as an information protection initiative. In fact, some CEOs give their boards updates on information security.

 

If we accurately want to evaluate how the risk landscape has changed, we need to measure it more carefully. People became more aware of how to manage risk in 2009.

 

EL. Can you summarize some of the findings of SBIC report? What advice would you offer to C-level executives?

 

SC. RSA does this report. You can read the report and come out with many different takes on it. I can give you some of my takes. First, most users became aware of phishing. We expected that. When we compare the year-over-year results, we see more people in the population are aware of it. We saw a dramatic increase in the number of people who acknowledged themselves as victims in one sense or another. About 33 percent of the respondent acknowledged this. This surprised me. People were aware of Trojans, as well, which is surprisingly. That rose on their radar.

 

We checked for 10 security violations, including viruses, trojans, spyware, phishing, and worms. More than 50 percent of our respondents said they were aware of these things. This was the first time this passed the 50 percent mark. If I were to talk to my parents, one of them would know the meaning of each of these security violations.

 

Although we are becoming like a global village, I was surprised to see that respondents were similar in spite of different environments on all major continents. Some regions have visibly embraced security. Some regions have said this is an evolution. At one time, IT organizations could not let the company's security per se to show. Instead, they had to emphasize the security benefits of whatever the service they rolled out. Things have changed and we have a new tipping point. Customers want to see the security. They feel more confident when they can touch it, see it, and know it is there. Some regions have passed that point. Here in North America some industries have reached that point.

 

After we published our latest SBIC report, I give this advice on public blogs: You need to sit there and look for that tipping point. It may or may not be the time for you to start showing security. How do you put a padlock somewhere or send out something that is tangible or physical manifestation of security. You start thinking about when that is going to come. For year, I have talked about how the bad people work with on a ROI model. They have now moved to what we see on the business side of ROI versus costs. It costs money to execute an attack and expect people to deploy defenses and increase visibility. You can also expect the bad buys to pay attention to the 10 security violations such as voice phishing or botnots. Some times visible security can scare bad people off, and some times, it can inspire confidence in them. For your demographics, you need to know where are they and what do they need to see.

 

EL. As you know, President Obama appointed a White House coordinator of cyber security. What is your opinion on the state of national cyber security?  How well has Homeland Security done its job?

 

SC. Just like private-sector companies, all types of government offices - be they federal or state -- should first establish the bar, build the instrumentation, and then determine the metrics. All of these things help give meaning to an event and help to determine how to improve these events.

 

It is wonderful that the mandate exists, and we have Howard Schmidt on the job. I, however, am waiting as a citizen and as an executive of a company that can help here. We have an interest in seeing what comes next. I am waiting to see to what degree they will do that instrumentation --- whether it will be the right approach with the right authority and the right budget. That will take a program with some phases. I cannot comment on the state of national cyber security, except that we do not have the right metrics yet, goals, or milestones. We need to build these things. Having the office is great. Now let us see what Mr. Schmidt does with it.

 

Elizabeth M. Ferrarini - She is a technology writer from Boston, MA. Reach her at elizabethferrarini@yahoo.com.

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(26:35)

Polymath — the Greek word for Renaissance Man — is someone who excels in many disciplines. From Leonardo da Vinci to Benjamin Franklin, we have relied on polymaths to innovate and find creative solutions to the problems of the day. How would these Renaissance men and women manage our current technology bounty? Which disciplines would they choose to focus on? Would they work on the architecture of next-generation green cities, or focus on nanotechnology?

 

The New Polymath is an enterprise that excels in multiple technologies — infotech,cleantech,healthtech,and other techs — and leverages multiple talent pools to create new medicine, new energy and new algorithms. Author Vinnie Mirchandani shares his varied experience as a technology adviser and market watcher to explain in business language the diversity of today's technology palette and to profile a wide range of innovations at:

  • Large multinationals, such as GE and BP,
  • Fast-growing, midsized companies, like Cognizant and salesforce.com,
  • The cleantech industry in China, on farms in Ireland, and along the back roads of Rwanda.

 

This book (available from Amazon) categorizes eleven "building blocks" for the New Polymath to leverage in its R-E-N-A-I-S-S-A-N-C-E framework, including next-generation analytics, cloud computing, sustainability and social networks. The author profiles more than a hundred innovators and demonstrates how they use these building blocks to solve both their individual, day-to-day issues and the "Grand Challenges" the world faces.

 

Brimming with examples from a variety of industries, countries and business processes, the book will inspire you to groom your own New Polymath tools, processes and ecosystem of innovation ideas.

 

Listen to the podcast to hear Vinnie's responses to the following questions:

  1. After reading your book, I'm impressed with the approach you've taken. It's not simply a book of case studies with observations about what's common and what's not. You've dug deeper into a trend emerging that's people-oriented. In particular, it's an acknowledgment that many multi-talented people who don't fit into typical résumé profiles are solving big problems. I'll have to say I have a feeling of hope from reading your book. So for the audience, what is a Polymath and a Polymath company?
  2. Give us a couple of examples of a Polymath company.
  3. Why is this important to know now?
  4. I like the title of Chapter 1: The New Polymath: In an Age of Wicked Problems and Technology Abundance. Talk more about why this was an important way to begin your book.
  5. I noticed you make reference to the 'grand challenges' throughout the book. Why?
  6. Chapter 17: What is the tie-in to The New Polymath (and Polymath Companies) with communities, crowds, contracts and collaboration? What is the relationship between the Polymath and Clouds: Technology as a Service? There was no specific mention of it in the chapter.
  7. Let's talk about grooming your own Polymath - what are the steps for doing that?
  8. I was particularly struck by your epilogue, The Beginner's Mind, because I've studied Aikido for years and that's its underpinning philosophy, which hasn't been all that popular in traditional business. Do you think this could be the fundamental characteristic of the Polymath and Polymath Companies that will be emerging in the new economy? If so, why?

 

Resources

The New Polymath: Profiles in Compound-technology Innovations, by Vinnie Mirchandani

 

Production Credits
Tom Parish, Host and Executive Producer

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With more than $26 billion insurance investment sales, New York Life Insurance Company, a Fortune 100 company founded in 1845, ranks as one of the largest mutual life insurance companies in the United States and one of the largest life insurers in the world. It has the highest possible financial strength rating from all four of the major credit agencies. Headquartered in New York City, New York Life's family of companies offers life insurance, retirement income, investments, and long-term care insurance. New York Life Investment Management LLC provides institutional asset management and retirement plan services. Other New York Life affiliates provide an array of securities products and services, as well as institutional and retail mutual funds.

 

While the economic downturn has wreaked havoc with some major insurance companies, New York Life has held its own, if not exceeded its expectations for financial growth and stability. Much of the company's success builds on a solid IT strategy that supports both the present and future needs of the company.  Eileen Slevin, senior vice president and chief information officer for New York Life, say that the company looks seven years to ten years out to see what types of technology investments the company needs to make, what applications the business units anticipate, and what type of infrastructure needs to be built to support those applications.

 

Enterpriseleadership.org recently sat down with Slevin to learn more about the company's IT strategy and its approach to long-term planning for IT investments. Here is what she had to say:

 

EL. Can you describe your IT organization?

 

ES. I have a centralized group of 1,400 full-time staff members. About 1,250 of them are employees and the rest are consultants. We have an applications development group, an architecture group, an engineering group, an operations or service delivery group, a finance group, a human resources group, and a best practices group, which includes the project management office. I also have a security group. One of our senior executives manages our innovation program, which includes employees spanning the department.

 

EL. Can you describe a couple of the key technology initiatives that have helped to make the company more customer-centric?

 

ES. Over the last several years, we introduced some large systems in a couple of significant areas. In 2005, we introduced our new business system, which we have been continually updating. This mission-critical system firmly planted us on the Web. In fact, we call it the cash register for the company. For example, the customer applications the agents submit come through the system, where they get underwritten, and issued.

 

For the past several years, we have been updating our agency portal, which provides the agents with all of the sales support tools electronically. Since our dedicated, career force of agents provides the main interface with our customers, this portal is critical to our success. We also conduct our business through supplemental channels as well. We recently introduced a contact system as a major addition to the agency portal. Prior to that, we had delivered a collaboration platform to them.

 

EL. Any other key technology investments you care to mention?

 

ES. We have an entire program going which focuses on how we make technology investments to support the future needs of the business. We began the process about two years ago by sitting down and trying to understand what the business units would need in the future. We are talking about seven years to 10 years out. We needed to build the infrastructure in advance of the business units building applications upon it. By understanding what applications the business units would need in the future, we would have an easier job of defining the infrastructure they would ride on. We currently have approval for 14 infrastructure projects and nine business projects. The infrastructure projects are spread over seven years to eight years, and the business projects are spread over 10 years.

 

EL. What are some of the business projects?

 

ES. One project involves a new system for our sales proposals or sales illustrations that agents present to clients. It is actually part of the agency portal process. We are taking the former client server version of this system and bringing it to the Web. The basic agency portal was built around content and information the agents needed to get access to, such as forms. The contact system we just rolled out helps them to manage information about their customers. After the agents determine what they need to sell, they can use the illustration system to explain the finances around the offering. The new business system is at the end of the process. We will be developing some things that fit in the middle. We have a program for our agents to be able to turn over their business to their family members, such as children who may be taking over the business, or colleagues who may be doing so. We provide them a more effective way to do this as they are near retirement. It gives them the ability to slowly transition that business over to someone else to manage it for them, thereby providing the long-term support that our customers have come to expect from New York Life.

 

EL. Why have you gone out as many years looking at technology investments?

 

ES. In the past, we had done three-year planning.  We believe that seven years to -10 years gives us a more favorable time frame to build the infrastructure that these applications would need to run on. We need to make sure that we are building a full and robust infrastructure. The company has been doing rounds to plan and to set goals for ourselves for 2015 and 2020. Using that as a basis, we then spoke to the business unit leaders about the applications they would need to meet these goals and objectives. Preceding that, we needed to understand what infrastructure we had to build.

 

EL. Can you talk a little more about your strategic planning process?

 

ES. We have been working from the top down, including every business unit. This work has been around more of the wide-reaching scenarios, such as inflation. Because we have set our aspirational goals out that many years, we talked about breaking through some metrics that we have not yet achieved. For example, what happens if we double the number of agents, or what happens if we get to five million customers? How will our systems hold up? What will we need to be able to do to support them? The business would need to do some of these things seven years to 10 years from now. We needed to look at how we would support all of these different things based on our growth.

 

EL. Are there any particular tools that you used to help you through this process?

 

ES. We have a unit set aside for some of the strategy planning and economic scenario planning. Most of the effort has been task forces and publishing position papers.

 

EL. Has all of this planning changed your governance process?

 

ES. We set dependencies for building out these infrastructure programs and business programs. For example, if we were going to install this infrastructure, it would be needed for our customer service applications in the future. We need to make sure we tie these projects together between infrastructure and business. The importance of specific technology was one of the things we always had a difficult time explaining to the business units. As a result, the governance process is something we now look at for each of these projects. Specifically, we look at the relationships between the projects and in the interdependencies. We make sure that these relationships still hold, and we adhere to the things we said. We have brought this program to the executive management committee several times. For top management, the governance process has been around understanding and telling us what the business objectives are, then sizing how much we can absorb into our financial model and making sure all of that runs through all of our numbers going out in the future.

 

EL. Any specific methodology do you use for measuring the effectiveness of technology investments?

 

ES. We use most of the common techniques such as ROI. We did a rigorous cost benefit financial analysis. For example, we looked at what projects would drive down costs versus the projects that would promote growth. Where we had sales coming in, we did marginal value add. Where we had expense savings, we used net present value analysis.

 

EL. Have you driven cost out of the company?

 

ES. Because we just initiated this program in 2009, we have not driven out cost with it yet. Separately, we have some strategic initiatives looking at how to drive down some future costs. In doing the cost benefit analysis, we said we could see more cost savings if we could automate some of the work done by our service centers, or provide self-service capabilities. We have identified what the savings would be. We have done this very conservatively, and have made it part of our analysis.

 

EL. Are you looking at cloud computing for some of these applications?

 

ES. We are at the very early stages of looking into cloud computing. We are also looking at how we can do our own kind of cloud computing in addition to that. We think cloud computing has a definite place for us in the future. I still have some concerns around security. I am not as comfortable with the public cloud as I am with a private cloud.

 

EL. What are you doing in collaboration?

 

ES. We do have a collaboration platform right now for our agents. We built several custom applications for them to use on that platform. We introduced that three years ago. We also use Sharepoint at the team level, but we have not done anything with it across the board for our employees. We have developed some grassroots wikis. One of the 14 infrastructure projects looks at a collaboration suite and expands that. We were early in this space. Because of the large number of agents who use it, we now need to advance that collaboration platform.

 

EL. What was the catalyst or driving force for your strategic business technology investment program?

 

ES. Back in 1999 or 2000, we put together a seven-year technology strategy plan. It enabled us to rollout our initial Internet application capabilities in early 2000. We hit the end of that plan around 2007. At that point, we knew we had to start developing our next technology strategy for 2008 and beyond. As we spoke with the business unit heads about some of the infrastructure and technologies that had good business applications, we realized that they were not thinking about the future to the degree we needed them to. To this end, it made it difficult for us to understand what infrastructure we should build and what technology strategy we would devise. That is how we then went down the path of working with the businesses to understand the applications. About 18 months ago, the executive management committee, on which I sit, came up with the goals and objectives we need to aspire to going forward. Using these things, we worked with the business units to help them define the applications they would need to meet those objectives. That is what has enabled us to lay out the infrastructure plan. All and all, that is how we developed our technology strategy.

 

EL. Have you done anything in the meantime to help the businesses understand the significant of this technology?

 

ES. At the start of this process, we did several educational sessions for the business on such topics as networking, legacy modernization, and collaboration.

 

EL. Has the economic downturn affected your company?

 

ES. We did well in 2009. While we are not are immune to this type of economic environment, we had a great year. We maintained the highest ratings from the four major ratings agencies. We believe that we have seen a flight to quality. Our financial stability, which is one of our foundational pillars, served us well. Our history of conservativeness also served us well. Our agents got the right messages out to customers. Because we are a mutual company and not a publicly held company, we can plan for the future and not worry about the short term. I am glad that we have been able to invest in technology.

 

Elizabeth M. Ferrarini is a technology writer from Boston, MA. Reach her at elizabethferrarini@yahoo.com.

Sponsored by BMC Software
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(18:08)

 

What do President Obama and Jack Welch have in common? They're both excellent communicators. Although they have different communications styles, they both know how to command attention and to get results. They also both know how to inspire and to motivate others.  In her second podcast with www.enterpriseleadership.org, Suzanne Bates, CEO of Bates Communications, provides CIOs with some communications tips from her books:  Motivate Like a CEO and Speak Like a CEO.

 

If you want to move up the IT ladder, you, undoubtedly, need to have good technical skills and solid business experience. On the other hand, if you want to earn that CIO seat at the executive table, your better hone your communications skills. You might start by going to amazon.com and ordering either Motivate like a CEO: Communicate Your Strategic Vision and Inspire People to Act! or Speak Like a CEO: Secrets to Commanding Attention and Getting Results. Suzanne Bates, the author, is CEO of Bates Communications, an executive communications consultancy, and a former award-winning television anchor and reporter.

 

When Jose Alvarez, president and CEO of Stop & Shop Supermarket Co. wanted to improve his communications skills, he turned to Bates Communications, based in Boston, Massachusetts. The firm offers everything from formal strategic communications consulting to executive presence seminars and workshops. Clients include Blue Cross Blue Shield, Dow Chemical, Fidelity, and Mellon/Bank of New York. Bates says that the company's mission is to transform leaders into powerful communicators who get business results.

 

She says that many leaders get promoted because of their business and technical skills. "When you reach the leadership of a C-level position, your primary role is to communicate the organization's vision, strategy, and values. You need good communication skills if want to inspire, to motivate, and to align the organization with the vision and strategy.  Even middle managers need good communications skills. In many cases, communications is the missing link that holds people back from reaching their full potential."

 

During her 20-year year in television news reporting, Bates interviewed 1,000 of political leaders, CEOs, experts, authors, and celebrities. She says that some people were better speakers than others. After Suzanne started working with executives at Bates Communications, she realized that good communications skills aren't necessarily an innate ability. "It's something you can learn. Leaders, like Jack Welch and President Obama, have learned to develop their own compelling communications style. All writing and all speaking has to come from inside. Many executives struggle with bringing out their authentic voice. It takes practice."

 

In this podcast, Bates talks about what it means to speak like a CEO, what makes President Obama's communications style so effective, how CIOs can use good communications to maintain staff morale, and how gender differences in communications styles can affect your job performance.

 

Bio
For about 20 years, Suzanne Bates was an acclaimed news anchor and news reporter with major television stations: WBZ-TV Boston, WCAU-TV Philadelphia, and WFLA-TV Tampa-St. Petersburg. She won an AP News Award and was nominated for a Columbia DuPont Award.

 

In 2000, Bates started Bates Communications, an executive communications and executive coaching consultancy. In 2005, her book, Speak like a CEO: Secrets to Commanding Attention and Getting Results, topped the best-seller's list at amazon.com. The book is in its seventh printing and has been published in several languages. In February 2009, Bates came out with Motivate like a CEO: Communicate Your Strategic Vision and Inspire People to Act!

 

Bates has a B.S. in broadcast journalism from the University of Illinois.

 

Resources
The Benefits of Executive Presence, Bates Communications
http://www.bates-communications.com/articles/the-benefits-of-executive-presence.php
 
How to be Yourself in Front of an Audience, EmploymentCrossing
http://www.consultingcrossing.com/article/290165/How-to-Be-Yourself-in-front-of-an-Audience/

 

Suzanne Bates Delivers Message on the Power of Communication, HarBus - Harvard Business School
http://media.www.harbus.org/media/storage/paper343/news/2006/02/06/News/Suzanne.Bates.Delivers.Message.On.The.Power.Of.Communication-1598986.shtml


Production Credits
Tom Parish, Host and Executive Producer

Audio Editing by Doug Marcis

 

Sponsored by BMC Software
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With $5.2 billion in annual revenues, the privately held Mansfield Oil operates as a recognized leader in the downstream energy industry in the United States. Each year, this company delivers more than two billion gallons of petroleum products to commercial customers and government customers, such as United Parcel Service, the U.S. Army, and retail gas stations. In fact, these customers combined account for 30,000 different destinations or individual fuel sites that Mansfield has to replenish.

 

Some of the factors that account for Mansfield's success include a thorough understanding of the industry, a commitment to improvement, and an adaption to market changes. Building an agile technology environment, however, resides as the unpinning for all of the factors that enable the company to operate profitability with 5,000 employees, including less than 50 employees in IT. Doug Haugh, Mansfield's CIO, says ," Our technology helps us to do two things - think about the best physical logistics to minimize freight costs and maximize service levels for our customers, and to  operate against the world's deepest and one of the world's most volatile commodity markets."

 

Staying competitive in an industry weighed down by dependency on fossil fuel has propelled Mansfield to get a jumpstart in the renewable energy industry. In 2009, Mansfield acquired the $700 million C&N Companies, a renewable fuel marketer representing annually 500 million gallons of ethanol production and 150 million gallons of biodiesel production capacity. Haugh says the company's agile technology environment made it possible seamlessly to fold an acquisition's business operations into Mansfield's business processes, financial systems, and network infrastructure.

 

Enterpriseleadership.org recently sat down with Haugh to learn how Mansfield's technology environment can deliver much business value to an organization that needs to meet market challenges around the clock. Here is what he had to say:

 

EL. Can you briefly describe how your business operates and what role technology plays in it?

 

DH. Each day, we deliver transportation fuel, such as diesel fuel, for our commercial customers and government customers. We have a smaller component of industrial fuels and power generation fuels. In essence, we move fuel from point to point. The United States' fuel storage space today has about 1,300 bulk product terminals where barrels are stored as the refineries make them.

 

When it comes to technology, we use remote telemetry to monitor those inventory positions for our customers. Using a variety of decision support and automation systems around our supply chain management function, we can determine how we should react to the remote telemetry reading. For example, say you oversee a UPS site in the middle of Montana. You have 4,000 gallons in storage and use 600 gallons a day. Your facility is one day away from the nearest supply terminal. We have to factor in led time. Our decision support systems goes through that entire algorithm and figures out how much fuel you will need on, say, Friday.

 

Physical replenishment is something we routinely execute as part of our supply chain and logistic process. On the other hand, we need to keep a constant eye on the commodity market because it moves up and down every minute. We use technology to work against that commodity market on behalf of our customers and continually extract the best opportunities. We know they are going to need 100 loads of fuel in the next 72 hours. We are constantly looking at when is the best optimal time to make that purchase and deliver it to their locations in that market.

 

Our deals are very transparent. Unlike a commodities broker, we work within the commodities market on a trading basis to extract value for our customers by trading the best we can. We work very much on their behalf. While we deliver fuel in the traditional sense, our customers, however, hire us because we have the technology scale to optimize that supply chain for them. A nationwide company, such as UPS, does not have the energy procurement experts to maintain their own supply chain and logistics for fuel consumption and delivery. We provide the roomful of energy experts who know how to execute a customer's plan.

 

EL. Can you be specific about the types of customers you have?

 

DH. We have three main categories of customers. About 30 percent of our business comes from the federal government and state government. For example, we supply various fuels to close to 200 military bases across the country. We might supply fuel to a school district. Another 20 percent of our business includes the traditional retail business of supplying gas stations. We also design, construct, and operate gasoline stations with mini-markets. We do that for a couple of different grocery chains. The rest of our business comes from nationwide commercial customers, such as UPS, Ryder, FedEx, and Waste Management. If these companies do not get the fuel they need, they cannot operate.

 

EL. Can you describe your IT organization?

 

DH. We provide both infrastructure support and applications development. We develop and maintain our own ERP system and trading and logistics systems. Throughout our 50 years history, technology automation has been one of our main drivers. What we do is unique. Because there is not a wealth of software for what we do, we have had to build our own backoffice platform. We also developed our customer-facing solution in-house. In both cases, we have relied on external development partners.

 

EL. Can you describe some of the changes you are making to these systems?

 

DH. We are now taking all of our proprietary modules and transitioning them to very rich, graphical-based Web 2.0 applications based on the Flex architecture. It sits within a Sharepoint delivery framework. That technology directly touches our customers 1,000 of times a day. As a result, they have transparency into their entire supply chain. They can see all of their tanks remotely distributed across the country. They know how much fuel they have, and how fast they are using it. They can look at all of their invoices and bills of lading. This information helps them to determine, for example, if they need to run a report in order to book an accounting accrual for a delivery in transit, but not listed in the inventory. We have put all of our decision support systems online and presented them to our customers in our Web solution. We developed and deployed it, and we maintain it ourselves. We remotely monitor over 10,000 sites through remote telemetry nationwide. We support about 6,000 users. That translates to1000s of logins a day to that customer system.

 

EL. Can you explain the necessity for agility in moving into new markets? 

 

DH. Agility is important to us. We have to be fast and opportunistic. Our industry is changing at a faster pace than it ever has. We are a 53-year company that grew up in a 100-year old industry. Fossil fuel is on its way out. It will take a 20-year transition, if not longer. Within a decade, ethanol has captured a 10 percent market share. Nothing has ever done that in the past 100 years. Because we want to be a part of that, we acquired C&N, a $700 million company which produces a half billion gallons of renewable fuels annually. This strategic acquisition provides us an entry point into a growth business.

 

Biofuels and renewable fuels will continue to grow. On the other hand, if a company like C&N is going to be a leader, it needed our strengths in logistics, marketing, and distribution. C&N has been highly successfully in producing this type of fuel, but it had not done a good job of integrating that production efficiently into the existing supply chain. That is the key to cost competitiveness, overall efficiency, and ultimately to sustainability of that industry itself. We need to leverage what we know. To this end, we can take that ethanol and biodiesel business, and operate its logistics, distribution, and marketing within our traditional processes. We have already spent billions of dollars optimizing these processes.

 

EL. Are you saying that you are going to apply your existing business processes and technology to C&N?

 

DH. Yes. Like most processes, we go in and do a gap analysis of our practices to theirs. We compare those business processes, and we do a gap analysis against the technology capability we have. We determine what changes in business processes can permit the adoption of our current technology. Next, we look at what remains, and decide how to close the gap with development. That process is coming to conclusion now. We are finalizing the new capabilities that are necessary to accommodate the differences in the renewable fuel business versus the traditional business. There are more rail logistics in the renewable fuel space than in the petroleum space. Most of the petroleum products in the United States move via pipeline not rail car. Because it is a different mode of logistics, there are impacts to how transactions are handled and how forecasting occurs. These things occur all through the entire technology stack.

 

EL. Can you give me an example of how you plan to integrate C&N?

 

DH. It is going to be similar to a $1 billion acquisition we made in the spring of 2008. We completely took that business, lifted the master data, customer data, and transactional data; transformed it; and dropped it into our existing transaction platform and accounting system. We then executed the business plan.

 

When we do an integration project, we integrate that business into our business. We do not integrate the technology. We typically throw away what was there, and we operate that business on our core systems. This approach enables us to derive the ultimate efficiency we enjoy in the core business. Our reason for making an acquisition comes down to how well we can apply our strengths and technology capabilities to that business and run it more efficiently. We cannot accomplish this if we have to work with is there and just pipe in financial data to a combined balance sheet. That approach does not accomplish anything.

 

We get right at the core starting with the network all the way up through the applications stacks to the phones. We have put in our own network framework of technology which we gives us the network reliability, redundancy, and dynamic routing that we need to make many of our systems works. We work from there up. We bring their transactions and their actual processes on to our accounting and business systems. We then move on to our phone network. Their phones operate as extensions of the main office. If one entire fuel office goes down, those phones will immediately roll to their backup. A customer has never experienced an interruption.

 

EL. To what degree do you evaluate an acquisition's systems?

 

DH. If a specific system has given the acquisition a unique competitive advantage, well by all means, we will carefully evaluate that system.  Ultimately, our only decision comes down to whether or not we can derive enough unique business functionality from that system, and whether or not we can develop it within our core infrastructure. We never ask ourselves whether we should keep an acquisition's old systems.  If we did that, we would have a hodge podge of systems that could put a damper on our entire technology strategy. Our support and maintenance costs would increase. We would prefer not to invest our IT budget dollars on maintenance, but on new developments that can drive competitive.

 

EL. How do you arrive at the decisions to develop the technology you need? Does it start from the top or the bottom?

 

DH. It really is both. We have a feedback process. We have probably five suggestions a day from the floor. We operate in a very open trading environment. We do not have cubes any more. There is a ton of encouragement for a better, faster way to do something. We try to instill a culture where we have no boundaries. If multiple steps and system inefficiencies cut into your core business productivity, then our employees have a responsibility to table that issue and demand a solution. My staff has the job of continuously ranking these tasks and working through them. High priority items typically have the largest returns attached to them. We rank those by dollar value. For example, if we make that change, how many hours of labor do we eliminate, how much productivity do we pick up, and what is the financial implication of that?

 

EL. What is your governance process?

 

DH. Our technology team operates with executive sponsorship. We continually allocate a minimum of 25 percent of our development capacity to continual work against those new opportunities for productivity. The technology team is responsible for evaluating the business case, making the selection, executing the development, and deploying that back to the user group. Self-direction helps to inspire the technology team. On the other hand, senior management regularly inspects what the technology does and holds it accountable for its works.

 

Apart from that, we have a group of senior executives who look at the things beyond the horizon that will not bubble up from the existing business. In other words, as we engage in these new lines of business, such as biofuels, we need to have a different perspective. For example, we might say, 'What are my technology requirements going to be? What are the opportunities to deploy technology in a game changing fashion to become more competitive?'

 

This brings up the other part of the C&N acquisition. We are not only integrating and assimilating the core technology platform end to end, but at the same time, we are developing a completely new customer facing solution in our Sharepoint portal framework. This highly collaborative solution has joint forecasting and planning with our production plants transparently exposed to the customer. This a cutting-edge approach to supply chain optimization. No one in that industry has ever done that before. Until now, companies like C&N have communicated this information to customers via paper reports. Things, such as when did my rail car leave and when does it arrive, have not been reported in real time. This new technology development requires a different type of governance. My most important job right now focuses on looking over the horizon and seeing what is going to make a competitive difference, and how much we can be afford to spend on the business case to achieve bottom-line results for that competitive e differentiator.

 

EL. So how would you evaluate the effectiveness of a strategic technology investment?

 

DH. We look at technology two ways: We have to continue to drive efficiency in our operations. At the same time, we try to launch at least two new applications modules each year. It usually includes a new functionality that touches our customers directly. It is a revenue generator. We have revenue objectives for technology directly. They usually translate into a product or service such as a service fee, or an up-charge, or a discrete sale. We have customers that buy the services of our technology platform and not our commodity fuel. We still see this type of a relationship as a good entree to the customer, and we are happy to defray our investment costs with that.

 

Elizabeth M. Ferrarini is a technology writer from Boston, MA. Reach her at elizabethferrarini@yahoo.com.

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Where would we be today without the Internet? It certainly has caused a global revolution in the way we live and work. You might say that it is the catalyst for  global connectivity.  Using a mobile device, you can do everything from connect to your office email to ordering a pizza. Emily Nagle Green, CEO of Yankee Group, a Boston-based global technology research firm, calls this phenomenon ANYWHERE, a world in which all people can connect to the things they care about from anywhere and at any time. In fact, Green has written a book called ANYWHERE: How Global Connectivity is Revolutionizing the Way We Do Business. In the book, she examines the fast, unfolding changes in communications technology, and shows businesses how to harness the power of ANYWHERE to create new revenues streams and ignite dramatic business growth.

 

Enterpriseleadership.org recently sat down with Green to talk about the concepts she presents in her book. Here is what she had to say:

 

EL.  What motivated you to write this book?

 

ENG: For the past 40 years, Yankee Group has focused on the changes in connectivity. During the past year or two, we have seen an expansion and acceleration in making the universally connected environment a reality. It is a natural follow on to the commercialization of the Internet. We have essentially computers in our pockets. Connecting all of the devices we care about will become the next big platform in computing technology. Events such as the explosion of business people relying on devices such as the Apple iPhone motivated me to write this book. I also wanted to give people some advice about how they could benefit from the rewards from an expanding network infrastructure.

 

EL. Can you give me your elevator pitch for the book? 

 

ENG. ANYWHERE is the name for a time when all of us will be able to connect to all of the things we care about. It will become the largest technology revolution in our lifetime. Technology revolutions, like lots of other revolutions, bring risks and rewards. Much is at stake here. We will see trillions of dollars of new economic value created in aggregate from the maturation of this global ANYWHERE network. Businesses need some guidance in how to figure out to get ahead of that, such as how to identify the potential impacts of their business.

 

EL. How well-prepared are global CIOs for ANYWHERE? What two pieces of advice would you give to them?

 

ENG. Some CIOS are well prepared, but as I group, I do not think they are well prepared. The challenges of the recession, in particular, from disrupted them from thinking about how to anticipate the future. As for advice, I would tell them to first understand how quickly the unconnected world is becoming connected. The unconnected world includes the billions of people who have not been online in the last explosion of the Internet. About four billion of them will join the global network through adoption of digital mobile phones. The unconnected world also includes many assets in their own organizations. The organizations they partner with will add connectivity and transform the businesses world with those assets. In summary, they need to understand the pace of the unconnected world coming online and think about the diffusion of connectivity in their own businesses. They especially need to look at what activities have not yet benefitted from a pervasive network, and then think about how automating those activities could enhance the businesses' profitability.

 

EL. What changes in the enterprise architecture do they have to make in order to better prepared for ANYWHERE?

 

ENG. The two things one - they have to start the process of moving away from a proprietary IT infrastructure. We are moving to a world where businesses will not need to buy and manage their hardware and software. This transition will take some time for larges businesses to absorb. You need to start now. You need to plan your move away from your own investments and infrastructure. You also need to start looking at all of the employees' activities that mobile technologies do not support.  Last, you need to think about how to put technology, such as mobile apps, in the hands of your employees all of the time. This way you can recapture the lost productivity when they walk away from their desks.

 

EL. What are some of the key disruptive technologies beyond cloud computing that are driving ANYWHERE?

 

ENG. The three core technologies include the adoption of IP as a standard digital networking language, explosion of the broadband technologies, and the great economics of wireless. Today, we are building things on top of these technologies. We are most interested in how we think about information display and consumption.

 

For example, with maps from Mapquest, we can expect to see mapping displays for all kinds of things layered on top of them. It might include augmented reality where a camera points to a real-world environment and collects information about that environment. We will never see maps as things just having street names and points of interest. We will expect maps to identify buildings, commercial resources, and distances. We will expect them to come embedded with recent images -- if not in real time. We expect real-time congestion information to show up. Our concept of a map will require anywhere from six to 10 dimensions of information. This will happen because a network appears wherever we need it, and that network has the capacity to move massive amounts of information. We do not have to reply on text.

 

EL. Will things such as semantic Web technology capabilities contribute to put value to ANYWHERE?

 

ENG. The ANYWHERE network brings us some challenges. For CIOs, it is real-time information. How do we digest information when it comes from censored networks that can tell us the status of very complex environments? The Web is not ready for that yet. How are people going to digest petabytes of information that comes in on a regular basis? Any innovation around the semantic Web yet is not ready to deal with the volume and complexity of information that is coming from equipping the world with communications technology.

 

EL. Has the economic downturn hampered an organization's ability to get to ANYWHERE?

 

ENG. Yes and no. It had a negative impact at an aggregate level. The economic downturn delayed network operator's investment in transforming their networks.  The networks we have today are in transition to the networks of tomorrow. Today's networks have greater capacity and intelligence added to the network infrastructure. Billions of dollars of capital need to flow into existing networks to renovate them to meet our burgeoning appetites. That process slowed down quite a bit in 2009 as network operators carefully spent their capital. That delayed the maturation of the network infrastructure.

 

During 2009, everyone hunkered down and did not think about growth, but cost cutting and trying to keep their boat afloat. In that sense, it also had a negative impact. The phrase - necessity is the mother of invention - has much merit. People start turning to smaller solutions when they need to be resourceful. You see the explosion of mobile apps as one avenue where businesses could say to themselves: 'Gee, I want to create some capability. I have a workforce that carries iPhones or Blackberries in their pockets. How can I do this in a quick and simple way?' We do see some more inventive uses of technology emerging as people lower their technology spending level. They say, 'If I do not have the massive capital expense budget that I had in past and this will not change, then I have to get used to that idea and be more creative.' We have seen some emergence of creativity from that recession.

 

EL. Five years from now, will cloud computing be a pervasive utility we hear about?

 

ENG. I believe so. In five years, small- to medium-size businesses will depend on IT services from cloud computing. Small businesses starting now may never invest in much proprietary infrastructure because it is already so workable for them. We will see more widespread adopting of cloud computing in this space. For large companies, the move to cloud computing involves a long-term conversion process. These companies still have COBOL embedded in the guts of their IT organizations. It will take awhile for the current model for hardware and software computing to work its way out of the largest firms. Five years from now, cloud computing will be robust and widely deployed.

 

EL. Why did Yankee Group deliver a book now? Is this the first book written by a Yankee Group CEO in office?

 

ENG. This is the first book written by a Yankee Group CEO. I cannot speak for why Howard Anderson, the founder of Yankee Group, never wrote a book.  He left the company in 1995 at the beginning of the Internet explosion. Perhaps, he was preoccupied with other things and changes in ownership. Because I was not with the company then, I can only speculate.

 

EL. What are some of the major changes in enterprise architecture in global companies that will need to occur to make ANYWHERE possible?

 

ENG. They will start by integrating information from many more assets in the business. For example, the RFID space had a vision for years about how more objects in our lives could participate in the global network. RFID proponents have struggled to get the RFID tag cost down and sort out some network issues. The explosion of WiFi in business environments has brought with it the cost of activating the network and supporting tagging device. As a result, it makes RFID more affordable.

 

Another big enterprise network change involves alerting business assets to their status. We will see much less focus on fixed assets, such as real estate, as employees become increasingly mobile. We already see that now with working from home and remote offices. Businesses have to think more carefully about why they need offices in multiple locations, and how can they, instead, use the network as an umbilical cord to interact with their employees.

 

We will think more generously about what resources we need to give those employees at the other end of that cord. They need to have quality access devices at the other end of the network so that they can have a first-rate experience. We are not equipping them with an office any longer. We are not buying them coffee and Danish in the mornings. As a result, we need to make sure they have a device and a connection speed that will allow them to have a productive virtual work experience.

 

EL. Do you think the down the road there are going to be problems with this type of a workforce?

 

ENG. It is a huge shift. It is definitely disrupting in markets such as the North American and Europe. We have seen a disconnect about how employers and employees view their relationship. For examples, we are seeing a piecework model where work-at-home employees answering calls from a virtual call center. They get paid for their time on the phone. The issues we are starting to see include the following: Should an employee have one employer? If they can take calls for one employer, why can't they take calls for other employers?  If an employee has multiple employers, then who is responsible for the employee's benefits? This dilemma will cause some strange conversations for the next generation of workers.  We will see different attitudes about employment within the office bound environment.

 

Elizabeth M. Ferrarini is a technology writer from Boston, MA. Reach her at elizabethferrarini@yahoo.com.

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Homes. Businesses. Schools. Cable for broadband applications is everywhere. Much of that cable comes from one well-known company, Belden Inc. In fact, Belden offers 1,000s of wire and cable products, such as multi-conductor, paired, coaxial, and flat and optical fiber cables. With the gradual decline in the traditional market for cable products, Belden, with corporate roots going back almost 90 years, has worked hard to transform itself into a new company - one that can meet the demand for wireless communications and the need for broadband cable products in emerging countries. The current Belden was formed in 2004 through the merger of Belden Inc. and Cable Design Technologies Corporation. Today, the $1.3 billion company is one of the largest U.S-based manufacturers of high-speed electronic cables. It focuses its products for the speciality electronics and data networking markets, including connectivity.

 

Like many companies, Belden saw a sharp decline in 2009 revenues from 2008. John Stroup, Belden's president and CEO, said, "By focusing aggressively on technology innovation and investing in global growth, we have seen a stable demand for our products in most of our major markets. We have demonstrated our ability to perform well during these uncertain times. We are also in a good position to excel when recovery re-ignites demand for our products."

 

Enterpriseleadership.org recently sat down with Stroup to talk about Belden's innovation initiatives, its customer-centric, go-to-market strategy, and the move from a legacy brand to a provider of special transmission products for key global vertical markets.  Here it what he had to say:

 

EL. Can you describe your business model or business strategy?

 

JS. We try to help our customers transmit data and signals in what we consider mission-critical applications. We go to a very diverse set of end markets. Most of our customers use our equipment -- whether it is copper cable or fiber optic cable or wireless or industrial networking -- in applications that are important to them. We help them get their information from point A to point B correctly, quickly, and reliably. These three things matter. We service hospitals, college campuses, large enterprises, medium-size enterprise, industrial applications such as factories, and infrastructure applications such as alternative energy.

 

EL. How has the economic downturn affected your business?

 

JS. It had a significant impact on us. Our 2009 revenues went down 30 percent from where they where in 2008. Some amount of that was correction and inventory, but much of that was role reduction and demand. Most of our customers buy our equipment for capital projects. We saw decreases in manufacturing utilization and in commercial real estate development.

 

EL. What have you been doing to expand into new markets?

 

JS. The recession has been an impetus for us to be more aggressive. When core markets like ours are declining, you need to focus on how you find growth. We have been aggressive geographically in emerging markets. We also have been aggressive in some of our market segments that have not suffered the same decline, such as wireless, as well as our industrial Ethernet businesses. Both of those businesses actually experienced growth during the downturn. We tried as hard as we could to deal with the recession affectively from a cost point of view. We tried to reinvest in the dollars we felt could give us a good return.

 

EL. Can you describe some of your key technology investments?

 

JS. We continue to invest in some product-related technology that we consider to important regardless of the environment. For example, we have made significant investments in wireless technology, which is important to our future. Customers are continually converting to wireless whenever possible because of the advantages of convenience. We are investing much money in our industrial networking applications. It turns out that industrial applications now use commonplace technology, such as routers and switches. We are a leader in this space. We are always making investments in expanding the bandwidth of our coppered fiber cable products. For example, we have been investing in 10G copper cable. It allows our customers to use copper instead of fiber, which is less expensive and easier to use.

 

On the manufacturing side, we continue to make the typical investments in ways to reduce out costs. In addition, we are also making many unique investments so that our machinery is more conducive to our Lean manufacturing environment. We work very hard to build our products according to the just-in-time manner. The cable industry has been a batch-manufacturing environment largely because of the long changeover times in the machinery. We have been working hard in the manufacturing environment to find ways to reduce the changeover of our machines and reduce the amount of scrap we incur in a changeover. We see this as an innovation area that is important to our business's success. It is also a unique innovation in our industry.

 

EL. You joined the company a year after the merger of Belden and CDT. How did you folks handle the integration of the product lines from the two companies?

 

JS.  There was an aggressive integration on the manufacturing and the product roadmap side. We have fully integrated the product roadmaps and the technology innovation between both companies. We did aggressively consolidate the backoffice function and the manufacturing function. The customer-facing resources are largely dedicated to the individual brands. The behaviors we go after with those brands differ. In the front end, you can have many different value propositions, brand propositions, and customer-facing resources. Today, a common organization services most of our product, technology, and the backoffice. Our strategy in the beginning focused on trying to leverage the backend as best we could, and to create an environment where we could use common processes as best we could.

 

EL. What is your customer-centric, go-to-market strategy?

 

JS. We have a history of being a product-oriented company. We needed to become more customer-centric. We organized our resources around vertical markets and around customers rather than around products. Our goal includes doing as much as we can for the customers we target with our key markets. We have made many investments to support that.

 

Out most significant investments includes expanding our products lines beyond our flag ship  copper cable to now include wireless, connectors, active connectivity components, and fiber optic. When we go in and work with anyone of our customers, whether it is a big hospital or a casino in Las Vegas, we can now help them solve their entire problem with a broader range of products. We are doing so with customer-facing resources that we organized around the customer and the market segment rather than around a product. We do not have five or six different product people calling on that same customer. We have one customer-centric account executive who navigates and organizes our resources to make certain that we help that customer solve its problems.

 

EL. Do you have a formal process for innovation?

 

JS. Our innovation process starts with the definition of our markets. Every year we have a strategic planning process, and a plan to execute it. The process always begins with our served markets. We subdivide that into sub-vertical markets, and then within those sub-vertical markets, we define the applications. Within those applications, we have the desire to offer unique capabilities in that application. We want to become the preferred supplier. When we think about innovation, we do not try to limit it to just technology. We think that innovation can happen in all areas of the company. We try to focus our innovation and our resources around a model that starts with the served market.

 

A great innovation we did in 2009 had nothing to do with products. It had to do with the way we package our products. We did this innovation in our channel group, the people who work with our distributor partners. We had a specific distributor partner that struggled with how it could profitably sell a certain type of product to an important customer segment. After spending time with the distributor, we completely reinvented the way this cable product comes off the reel. Now our partner can profitably deliver that product to the end customer. The innovation here was not how much bandwidth or how much copper we use in the product to get the same level of performance. Instead, the innovation was the new way the distributor got the product.

 

EL. What is your corporate governance model for making these investments?

 

JS. We take our full board through our strategic plan every year. It is part of an approved three-year plan. We share with them the investments we plan to make. Our sources of funds are the things that are going to happen year after year. These investments provide incremental margin dollars. We can give these dollars to our shareholders as dividends, or we can reinvest them in the company. We take our board's buy in and approval. This process has much detail in it.

 

We then construct an annual budget, which the board has to approval. Again, it is part of our three-year strategic plan. We also have a capital plan. Most of the innovation we do has to link to some form of capital investment -- whether it is a manufacture innovation or a technology innovation. If we do it right, the board sees several views - the 36-month strategic plan, the annual budget, and the capital budget. We give the board a quarterly update on how those programs are performing compared to the commitments we made in the strategic plan. Like any company, we do not always bat 1,000. Some programs do exactly as we predicted. We have other problems that need to do better. In this case, we do our best to describe why - What was the problem? Where did we go wrong? Was it a conceptual issues or an execution issue?  Where did we make the mistake?

 

EL. You have Lean. Do you have the balanced scorecard for measuring investments?

 

JS. We use a methodology called strategy deployment. It is similar to ocean planning. It works as follows: We identify the critical improvement priorities for the company. It cascades throughout the organization. No matter what part of the organization you are responsible for, your priorities will link in someway to the overall corporate objectives. For each one of those improvement priorities, we ask you to identify a few metrics. We call them targets to improve. Typically, they consist of two or three for each initiative that you will track. You consider these things as a barometer of how your improvement priorities are doing. We track that monthly. We use as a mechanism to report on our performance - if we have fallen short, what is our cause, what is our counter measure, and what are we going to do differently to try to get us back on track. It enables us to measure our strap plan and our breakthrough. We also have our key performance indicators. We track the things that tie to our budget. These metrics really do not change year and year out. They are mostly financial, but they also include things such as safety, incident rates in our manufacturing locations, inventory turns, and other metrics for forecasting accuracy.

 

EL. How global is your company?

 

JS. More than half of the revenue comes from outside the U.S. That is a big change from where we were three years ago. The largest market after the U.S. is Western Europe (Germany being the largest). We are trying to be in the largest countries in Asia. Our business has become more significantly global since I joined in 2005. We would expect that to continue.

 

EL. What is next for the company? More expansion outside the U.S.?

 

JS. We think emerging markets are going to be very important especially in the next five years. We feel that it is quite likely that the growth rates in Europe and in the U.S. are not going to be very strong. Other capital-intensive vertical markets we serve include China and India. We are planning to make an investment in Brazil. Today we do not have much of a position there. It is an important area for us. Product extensions are important to us. We still have a relatively small share within the verticals that we serve globally. These vertical include the areas of connectors and connectivity. We want to offer a greater portion of the entire solution beyond the cable piece. It is where our legacy is and where our foundation is. It is very important to us.

 

EL. Is it hard for the company to shake the legacy identity?

 

JS. There are two sides to the coin. Many customers see our legacy identity as a good position to be in. Our reputation stands out in this area. It surprises me a little bit. The number of people I meet who know about Belden amazes me. They all have a good opinion of the products. Not having that would be horrible. On the other hand, because we are so well known as a cable company, we have had to work hard to do more things within industrial networking or within wireless. Some times, it can be more difficult because people think of us a cable company. Through our acquisitions, we have been able to leverage the brand of our acquired company.

 

EL. Have any technology investments turned out to be a mistake?

 

JS. Yes. We have made our share of mistakes, mostly going down the wrong path. For example, a path we took for wireless technology did not work the way we had hoped it would. We had to stop that and move onto another path. In manufacturing, some of our process improvements did not give us the results we wanted. As a culture, we do not want people to be afraid to make mistakes, and we also want people to feel comfortable raising their hand when they do. I believe that you do not want to spend good money after bad.

 

Elizabeth M. Ferrarini is a technology writer from Boston, MA. Reach her at elizabethferrarini@yahoo.com.

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(19:18)

 

In this podcast, Michael J. Critelli, the retired CEO of Pitney Bowes, discusses how a change of thinking about the marketplace and customers' needs helped to step up Pitney Bowes' efforts to become a technology leader.

 

Based in Stamford, Connecticut, Pitney Bowes began as an innovative company back in 1908 with the introduction of a hand-cranked, double-locking postage stamp machine. For decades, the company went on to deliver one milestone after another in the postage industry. In 1968, Pitney Bowes acquired the Monarch Marking System Company, which would produce the first barcode equipment for retail trade use. Less than a decade later, the company formed the Pitney Bowes Credit Corporation, providing customers with a range of financial payment solutions.

 

During the 1980s, Pitney Bowes intensified its marketing efforts to move beyond the mailroom and into the front office. The company introduced a line of copying machines, facsimile machines, and a suite of management services.  In 1990s, however, Pitney Bowes demonstrated its ability to bring innovative technology to the marketplace, especially in the field of digital technologies and software. The company introduced the first in-line weighing and metering system, the first secure digital postage meter, the first inkjet postage meter, and the Digital Document Deliver platform, which provides message management via hardcopy Web, mail, and facsimile.

 

Under the leadership of Michael J. Critelli, Pitney Bowes's CEO, the company transformed itself into a $6 billion mail and document management solutions powerhouse. In fact, between 2000 and 2007, Pitney Bowes invested about $2.5 billion in 83 acquisitions, primarily in software and services businesses, such as MapInfo, Group 1 Software, PSI Group, and Imagitas.  The company's intellectual property includes more than 3,500 patents in areas such as ticketing, cellular phone payment, shipping, laser printing, encryption, and mail production and processing. Critelli holds six of these patents. Today Pitney Bowes's products and services range from managing corporate mailrooms to supply providing mapping software for applications such as MapQuest.

 

So, what did it take for Pitney Bowes to undergo this type of an innovative transformation? Critelli says that the most important change was to think differently about the business it was in. "Back in the 1990s, our chief technology officer said. 'When you move a piece of mail on a postal system, three things flow: the material, the money, and the information.' All of a sudden, the light bulb went on for me. We had the opportunity to provide solutions for all three flows, as well as the entire end-to-end processes for those flows. That gave us the framework to think about new opportunities."

 

In this podcast, Critelli talks about the changes that occurred for the company to undergo the transformation; the business process to integrate technology from the myriad of acquisitions into the Pitney Bowes' brand; the purpose of Pitney Bowes' customer-centered innovation; and the strategic role IT has played in the innovation transformation.


Bio

In 2007, Michael J. Critelli retired as chair and chief executive officer of Pitney Bowes Inc., a $6 billion mail and document management solutions company. He joined Pitney Bowes as a corporate attorney in 1979 where he quickly moved up the ranks to become CEO in 1996 and chairs of the board in 1997. Critelli completed his undergraduate education at the University of Wisconsin and was awarded a J.D., cum laude at Harvard Law School. He is currently advising Connecticut Governor Jodi Rell and Transportation Commissioner Ralph Carpenter on how to make the processes and practices at the State's Dept. of Transportation more effective. Critelli has also served on the board of the Urban League of Southwestern Connecticut and the National Urban League. He joined Easton Corporation's board of directors in 1998.

 

Resources

Mike Critelli's Blog
http://www.mikecritelli.com/

 

Mike Critelli, Pitney Bowes Chairman, says you like to get unsolicited mail, CatalogChoice
http://blog.catalogchoice.org/2008/10/25/mike-critelli-pitney-bowes-ceo-says-you-like-to-get-unsolicited-mail/

 

Podcast -- Rob Pew, Larry Keeley and Mike Critelli panel discussion on healthcare, Institute of Design Strategy Conference, May 2008
http://vimeo.com/5189004

 

Michael Critelli to retire from Pitney Bowes, DMNews
http://www.dmnews.com/michael-critelli-to-retire-from-pitney-bowes/article/110077/

 

Production Credits
Elizabeth Ferrarini
, Executive Producer
Content Strategy and Media Production by Tom Parish, Inc.

 

Sponsored by BMC Software
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During the dot.com years, IT professionals had their pick of some top-paying positions. Searching for an IT position today has become an entirely new ballgame with lots of different rules. The economic downturn has prompted many companies to do more with less, thus cutting the size of the IT staff or deciding to either outsource some tasks or send them offshore.  Seasoned IT folks and their younger technology savvy counterparts can find themselves competing for the same jobs. The higher you go on the IT ladder the fewer the positions you will find. Older IT professionals might feel that age will keep them from securing a good position. Meanwhile, IT professionals in the United States, in general, face competition from lower-cost IT professionals in Asia and Western Europe.

 

So what does it take for an IT professional, especially one over 40, to get his or her next good position? Enterpriseleadership.org turned to Robin Ryan for some answers. She is one of the nation's top career coaches and best-selling career book authors. Based in Seattle, Washington, Ryan has coached many IT professionals, as well as conducted Boeing outplacement classes for laid off technical professionals. She recently came out with a book called, Over 40 & You're Hired. Her other books include 60 Seconds & You're Hired, Soaring on Your Strengths, Winning Resumes, and What to Do With the Rest of Your Life. She has appeared on dozens of TV shows including Dr. Phil, Oprah, and NBC Nightly News. Prior to starting her on firm, she was director of counseling services at the University of Washington.  Here is what she had to say:

 

EL. Because of the economic downturn, what is the first job strategy tip people need to consider if they want to find their job within a reasonable period?

 

RR.  What they should do and whether or not they will do it come as two different things. As a Seattle, Washington, resident, I have had much experience dealing with technology people from Microsoft and emerging technology companies. Most people have the idea that their next employer will somehow manage to find them. As a result, people have gotten used to being recruited. Now they have to get used to job hunting. You need a job hunter's mentality. That is a big switch for people. No one is going to find you; you have to find them.

 

EL. It seems like many people go on the hunt by putting their resume on job boards or responding to jobs on those boards. So, is this how you become a hunter?

 

RR.  The listing of your resume on job boards is usually a worthless endeavor. Instead, you first need to identify the best resources for you to find a job. Sixty-three percent of all jobs result from networking. That means contacts, lots of them. Many technology people work in Fortune 500 companies. If you see a job opening on Cisco's Web site, you will paste your resume into that job opening and hit send. You think you have applied to Cisco. Unfortunately, you have gone into Cisco's cyberspace black hole. Most likely, recruiters will never find you because that company averages about 80,000 resumes a month. If you see an opening, the more effective technique would be for you to contact your network of people, and say, 'Does anyone know someone who works at Cisco?' Your network might consist of former employees, former employers, former co-workers, neighbors, friends, family, and alumni network or members of your professional association, such as the Society for Information Management (SIM). You contact those types of people and organizations For example, your neighbor who is a nurse may have a brother who works for Cisco. You want to cast a wide net asking that specific question: 'Do you know anyone who works at that company?'

 

Once you have identified the person who works at that company, you then ask for a favor, such as, 'I am applying for a job internally. Would you be willing to submit my resume through your intranet and send it to your human resources department? I really appreciate this favor.' They are not endorsing you. They do not know you. They are just passing it along. By doing so, you bypass the 80,000 people who reside in cyberspace and you are being seen. You have just tapped into the hidden job market. When you do that, the recruiter will review your resume to see if you may or may not be a fit for that position. That is the best option you could possibly have. If you do not fit that job but the recruiter thinks you might fit another job, he or she might send your resume on to someone else. It is a more effective technique that going to Monster and pasting your resume. For IT people, Monster is the least effective job board. Dice is a better job board.

 

EL. Can you define some other networking techniques for IT people?

 

RR.  People need to get past the job boards to where they can reach out and talk to people at certain companies to see who needs, for example, a software engineer. Even if a company has a freeze on and if it is laying people off, the company may still be looking for someone with your skills. You will not see the listing on a job board because of possible internal backlash. The company might be doing a silent job search. Keep in mind, the company could be laying people off who no longer fit where the needs exists or have not performed to the required level.

 

A good way to network is to join a local chapter of SIM. You need to attend the meetings regularly. Part of networking includes talking to people, most of whom might be strangers. If you are an introvert, you probably would rather be shot in the morning than to talk to a stranger. Most technology people cannot stand the idea of talking to strangers. If this is the case, then you should look for other engineers, or other friends who you knew from your work. Ask them for names of people in their network. That may be easier. For example, you might want to find one or two other software engineers to talk to rather than trying to sell yourself to strangers at a conference.

 

EL. How do you feel about job fairs?

 

RR.  Job fairs do not provide an effective way for IT people to find relevant work. People can come away massively depressed. Who wants to be in a room with 5,000 people looking for a job? Imagine if none of the employers had what you wanted. If you do want to attend a job fair, then you should go with the attitude of looking for some job leads. Most of the time, however, you might see companies such as Hertz or Comcast. I doubt if you want to sell rental cars or take customer service calls for cable. You need to look for job fairs specifically designed as a technical fair.

 

EL. Is age still issue a big issue for people?

 

RR.  Age discrimination is difficult to prove in hiring. Certain organizations, such as hospitals and not-for-profits, make it easier for older people to land jobs. Many high-tech companies look for people who are up on the latest technology. They want people with fire in their belly and they still want to innovate. Some older people make the mistake of looking for a safe-haven until they are ready to retire, or they do not want to learn anything new.

 

Despite your age, you can still get a good job. You have to appear as if you still have something to contribute. Because a big gap exists between being over 40 versus being over 50, you, however, have to go about the process of how you present yourself differently.

 

EL. Can you provide an example of what you mean by this process?

 

RR.  As people age, they tend to become less enthusiastic and less emotional. You do not wear your emotions on your sleeve. When they are in a job interview, they appear to be more neutral. They refrain from saying, ' I am dying to take that on. I am willing to put in my 90 hours a week'. Some job hunters have told me 'Look, I have done that 90 hours a week thing. I do not want to do that any more. I want to make the bucks, but I don't want to kill myself.' On the other hand, the employer might not want someone who is not going to work that hard.

 

You have to come across with what you can deliver, such as innovations, contributions, and results. You need to do some self-analysis about the results you have delivered during the past five years. Your resume should emphasize your five-year to seven-year contributions, such as serious results that drove revenues, increased revenues, saved time, saved money, or made money. Next, you have to look in the mirror. Realize you need to show enthusiasm. You need to show professionalism.

 

EL. So what are some of the ways that an older person can look more contemporary?

 

RR.  I recently worked with a 62-year old accountant who looked like he was stuck in a time warp. This rather stocky man had on a suit jacket and a white shirt and tie. The shirt was so tight around his neck that it made his face puff up. His suit did not look like something worn by a highly paid accounting manager at a Fortune 500 company. I suggested that he go to a good men's store and select an entire outfit. Salespeople at these stores or at department stores, such as Nordstrom's, can help select clothes that mask figure imperfections. Although he could afford a good quality outfit, he did not want to buy a suit because he would not wear it that often. I told him that his shirt was too tight around the neck. He insisted on wearing dress pants to interviews. I told him that a suit would minimize his pot stomach. The more serious he looked, the better chance he had of getting the job.

 

He became my client because he had gone on five interviews and never received a second interview. I am willing to bet that his appearance made it difficult for him to get passed the first impression a potential employer had to him.

 

EL.  Any more examples you can provide about how older people can improve the impression they give to others?

 

RR.  I had a 69-year old woman who was looking for a fund raising position. She had completely white hair, but her face radiated with enthusiasm. She could not stop smiling. She brought copies of projects she had done. She had ideas she wanted to discuss with these potential employers. She wore a nice fitting suit. She presented herself to the very best of her ability.

 

Engaging people come across as being interested in the world around them. Life has not burnt them out. You can start by reading newspapers and magazines. As a technology person, you should regularly read trade publications so you know what is happening in the industry. You also need to be able to have an intelligent conversation about technology trends.

 

EL.  What is the biggest problem many older technology workers suffer from?

 

RR.  Many older workers, especially technology workers, suffer from job entitlement. Some of them have become extraordinarily angry about being let go and having to look for a job. Their resentment fuels their anger. They can come across with the attitude of 'What do you mean I am not the right one.' Companies want to get rid of people like this. Instead, they need to come across with the inner personal skills that will make them an asset to a company.

 

People contribute less on the job as they get older. They lack the fire in the belly. Because they do not want to work as hard, they tend to slow down.  If you have not had an original thought in five years, do not expect an employer to pay you big bucks. If I pay you to be a software engineer, I expect you to come here and create.

 

If you want to sell yourself in technology, you need to be able to be a solutions person for now and for tomorrow. All types of technology companies offer exciting jobs. Apple will hire you if you are a smart, innovative 70-year old with great ideas and can lead a team. Unfortunately, they do not see many people in that age bracket with those skills. On the other hand, some people think they can quasi-retire to a job in education or in government. These organizations have stepped up their efforts to make sure people are productive.

 

EL. How do you feel about using social media to look for a job?

 

RR.  I welcome people to discuss this job-hunting approach with me. I have not seen it to be effective for mid-level to higher-level technology professionals looking for job. Forget Facebook! It is for kids looking for dates. Linkedin, on the other hand, wants to position itself as a network for job hunting and job searching. It has executive recruiters on it, but primarily job hunters use the site hoping to meet someone who might know someone and who has a job for them. It has not proved to be worth the time. I have suggested that people use the contacts they know as opposed to waiting around for three people they do not know. I also tell people to use their college network. Most colleges have good networks that will help alumni with their careers. For example, say you plan to move to Portland, Oregon, and want to know about the current climate for technology job prospects. You can connect with alumni who live in Portland. Although you do not know these people, you have something in common with them -- where you got your BS or your MBA. If you really want to use a social network, then go back to your college and use your college network.

 

EL. How would you go about trying to sell a skill that you have not done in years?

 

RR.  Okay, say you are in quality assurance, but would like to get back to project management, which you have not done in five years. You first need to network with other project managers to get the lay of the land. What has changed and what has not changed? You might go online to the Project Management Association's site. Read the site's blogs. Look at upcoming conferences you can attend. Do not forget to check out dates and locations for local meetings. If nothing else, go to these venues and listen to what people say. If you are serious about project management, then perhaps you can take courses and obtain a certification in this area. If your certification has expired, then take a refresher course and take the exam again.

 

Elizabeth Ferrarini is a technology writer from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.        

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During a tough economic climate, consumers tend to become very conscious about their spending and tend to go with brands they know and trust. That's the opinion of Eric Wiseman, CEO of VF Corp., a $7 billion global apparel manufacturer and retailer. While VF Corp.'s revenue dipped about five percent during 2009, the company has managed to hold its own, capping off 2008 as a banner year with $7.6 billion in revenues.

 

VF Corp. sells its well-known brands, such as Lee, Nautica, The North Face, Wrangler, and Vans, through more than 67,000 retailers in about 150 countries. The company owns and operates more than 700 retail stores, including about 60 outlet stores.

 

Prior to 1998, VF Corp. derived most of its revenues from manufacturing brands such as such as Lee, Rider, and Wrangler, and selling them wholesale to large retail stores.  In 1998, VF Corp. aggressively began acquiring well-known active wear and contemporary brands, such as Nautica, The North Face, Eagle Creek, Eastpak, lucy, Vans, and several others. The company divested itself of unprofitable brands. In 2004, VF Corp., which had revenues of $6 billion, launched a bold growth strategy to transform itself into a global lifestyle apparel manufacturer and retailer. "We Fit Your Life" became the mantra for the company's growth strategy.

 

Enterpriseleadership.org sat down with Wiseman to discuss the company's business transformation, and the role technology has played in it. Here is what he had to say:

 

EL. How did you categorize your different brands and how do they contribute to revenues?

 

EW. We group our brands under coalitions such as outdoor and action sports (Vans and The North Face), jeanswear (Lee, Rider, and Wrangler) , sportswear (Nautica), and contemporary and imagewear (For All Mankind and lucy). We further group the coalitions into lifestyle and heritage. Lifestyle includes outdoor and action sports, and sportswear and contemporary brands. Heritage includes jeanswear and imagewear. We acquired most of our contemporary brands during out growth period. These brands contribute to revenue as follows:  about 36 percent from outdoor and action sports, 36 percent from jeanswear, 13 percent from imagewear, about 8 sports from sportswear, and five percent from contemporary brands.

 

EL. What was your vision statement for the 2004 transformation?

 

EW. Our vision statement was to become more growth oriented by investing and building leading lifestyle clothing brands. Our transformation called for us to redirect our business from being a wholesaler to becoming more international and a more direct-to-consumer business. Our six tenets or growth drivers include the following: build more global, growing, lifestyle brands: expand our share with winning customers; stretch our brands to new geographies; expand our direct-to-consumer business; fuel the growth; and build new growth enablers.

 

Ten years ago, we had the reputation of being a rock-solid apparel manufacturer that built first-in-class programs for big box stores such as Wal-Mart and Kmart. That was most of our business. The good news is that we still exist. In 2007, many of those stores selected us as vendor of the year. We do a good job of marketing through mass and chain store channels. By changing our brand portfolio, we now reach more diverse customers than any other apparel company.

 

Up until 1995, everything we sold we made in a U.S. factory. We became the last apparel company to move offshore. You can argue that we moved too late. Because we stayed here that long, we developed a culture and a skill around incredible skills and execution. We could not survive making products in this country unless we were really good at engineering and operations plans and engineering in the factory.  It is part of our DNA. The ability to execute complex things terrifically well is part of who we are and we have not lost that.

 

EL. How did you know your transformation strategy would work?

 

EW. We were confident it would work. In 2007, we went through a robust bottom to top reconsideration of our strategy. We asked every business unit everywhere in the world to think about the six items we identified as our core strategy and to reassess their relevancy with an open mind. What came out of that was a revised growth plan we announced in 2008. The six fundamental tenets of our strategy remained unchanged. We made a minor revision to make sure we were still relevant for the environment we are in today. We still think we have the right six core tenets for our growth strategy.

 

EL. Can you explain your integration process?

 

EW. Our integration process began with our 2004 transformation. We developed a repeatable process for the 10 brands we acquired at the time. We continue to refine this process.

 

Here is how it works. Say we love your brand and your management team, and think your brand would help us get to a new consumer, a new geography, or to a new channel of distribution. We want to acquire you.  In essence, we would like to take your brand to the next level. We would like to have you and your team join us. You will run the front end of the business.  You and your team will design the products you want, pick the customers you want to sell to, and continue to brand development. We will give you permission to do that. It is non-negotiable. We will run your distribution centers, which is also non-negotiable. We will decide where you will source. We will put you on our IT systems. You will use our financial system and our HR practices. The kicker is that we will take your brand, you team, and your products anywhere in the world, especially where we have a platform and where we think it has opportunity. We will build a sidecar under that platform to enable your growth globally. If you would like to open retail stores, we have much expertise in that now and we will enable that.

 

As a result, the seller gets to keep the front end of the business with the passion and genuine pieces of the brand. All of the operating functions come to us because we get a great return for our shareholders. We reinvest some of those savings back in the company to drive growth. That's why our growth has been what it has been. It does not always work perfectly. That is the basic structure. Sometimes we leave the business standalone in its own building. Sometimes it makes sense to move it into adjacent VF buildings for business reasons. These discussions happen over time.

 

EL. How has the economic downturn affected you business?

 

EW. Our revenues decreased by about five percent. We did not anticipate much improvement in the economy during 2009. Although it has been a tough couple of years, we have taken some even tougher actions. We have been controlling expenses, investments, and lowering inventory and capital expenditures. We focused on our liquidity, our core strategy around lifestyle brands, taking in the new geographies, building our direct to consumer business, and leveraging our scale and size in the supply chain are the right strategies.

 

Since we changed our strategy in 2004, we have shown that it is working. Our revenues grew on a compounded basis more than 10 percent over a five-year period. Our earnings grew by 11 percent. Our gross margin had expanded by 230 basis points through 2007. We gave some back in the last quarter of 2008 as the economy shifted.

 

In 2008, we reported an all-time record for revenue and an all-time record for earnings per share. We delivered $679 million in cash flow, which was above the five-year average and the second highest number in five years. I was proud of this team for pulling that off in a turbulent environment.  Also, 2008 was the 36th year in a row that we increased our dividend to our shareholders. It is a good part of why we are a good investment. We ended that year with more cash than we started. We ended the year with less debt than we started.

 

EL. How do you allocate your capital budget expenditures?

 

EW. The bulk of our capital budget goes to acquisitions first, retail second, and distribution centers third. We have aligned out capital budget to support our growth strategy to invest in acquisitions, retail stores, ecommerce, and distribution centers.

 

EL. How did you build out the infrastructure from technology perspective as you began the transformation?

 

EW. Because we did 10 acquisitions in five years, the integration of the technology has been hard. Our technology has worked hard to keep up with it, which is fine. We have a suite of systems that are potentially relevant to all businesses. If we are going to put in a demand forecasting system for a brand, we will use this one if the brand needs one. Not all of our brands need all of our systems. Some of the systems have no trouble serving a brand that generates a half billion in revenues. A similar system, however, would be overkill for a $70 million brand.  Over time, everyone ultimately gets on board on our IT systems.

 

EL. Several years ago, you folks hired your first global CIO. Why didn't you do that sooner?

 

EW. Over time, we had a head of IT and a relatively stable portfolio of brands. As we began adding all of these new companies and divesting  all of the others, we said we needed to make additional investments in many areas, especially in mergers and acquisitions, corporate strategy, marketing and brand development, and global business technology. To carry out these activities, we needed a stronger IT leader.

 

EL. How do you work with the CIO?

 

EW. Martin Schneider, our CIO, is an important part of our 12-person operating committee. This committee guides the corporation. Like the other executives on the committee, Martin has an excellent point of view about how to keep the corporation moving forward. That is the best way I can describe how I work with Martin.

 

EL. What have you learned from your CIO that you didn't know?

 

EW.  Because of his Gillette background, he brought a more sophisticated global perspective than we had at that time. He had added much value. We were pursing at all-or-nothing portfolio of technology. Martin introduced the thinking of not all of it is helpful to all of these businesses. We are better off to let them select the tools that they need. As a result, we function as more of a service provider and an enabler of their success rather than as a corporate censor requiring them to use everything we have to offer.

 

EL. How do you run the technology organization?

 

EW. Each business, such as NorthFace and Wrangler, has a person who reports to Martin, but sits at the management table of the brand. That person helps the brand leaders to run that business every day.  That is our version of the hybrid matrix organization.  We use this same model for human resources, finance, distribution, and our supply chain. The majority of their incentive compensation depends on how well the business unit does.  Originally, we paid them on how the corporation did. We found that this new structure helps them to be more a part of the team. The entire team gets paid together.

 

EL. How do you go about making technology investment decisions?

 

EW. We have a typical budgeting and review process for the company. At the beginning of the year, we sit and review the global technology budget. Expenses of certain sizes require different approval levels. Martin can approve some of the investment. Some of them go to the CFO. I approve investments above a certain level. The board needs to improve capital investments.  Each quarter, Martin will give the operating committee his update on the status of everything going on in his world. We keep the fall moving forward this way.

 

EL. What is your methodology for looking at the success of technology investments?

 

EW. We look at a retail store investment differently than we do a technology investment. With technology, we look at the ROI and a payback time. We look at the rationale for the investment, such as strategic, cost reduction, or productivity. There are many metrics In fact, we are very metrics oriented.

 

EL.  What is the major challenge that retailers face during a tough economy?

 

EW.  It is consumer confidence more so than consumer spending.

 

EL. Where do you think your competitors are falling short?

 

EW.  Why are we doing better than others in this environment? We have a portfolio of relevant brands. Consumers trust brands. When consumers are being very conscious with their spending, they will go with brands they know and trust. Second, we are good at delivering innovative products that are relevant to the consumer and also offer great value. It is not just about price. We hear loud and clear from customers that are happy to pay top price for something if they perceive it has having great value. We execute very well. Because of our discipline and focus on execution, we can minimize the mistakes we make. This capability has helped us to get through this environment.

 

EL. Some companies, such as Procter & Gamble, spend much time on social media and collaboration trying to plug in what certain consumers say. What are doing to get closer to your customers so that you design your products?

 

EW. We are as good as any apparel company at marketing sciences that help us to understand consumer. We are pretty close to Procter& Gamble in what they do. In fact, some of their executives visit us to share their ideas. We understand as well as anyone how to make relevant products for consumers. We test everything we do. We use various methodologies from online testing to where you can go look at our products and tell us what you like about them. We do that with 10s of 1,000s of people. It helps get us from making 20 shirts to five we should make. We go into people's homes and talk with them. We spend millions of dollars doing these things.

 

Most of our research is proprietary that we built for a specific purpose. We are in so many different brands and markets. If we want to understand what Italians want in active wear, we have to narrow that down and speak to Italians about ski outerwear. Some of our other brands use social media as part of their marketing effort.

 

Elizabeth M. Ferrarini is a technology writer from Boston, MA. Reach her at elizabethferrarini@yahoo.com.

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349 Views 0 Comments Permalink Tags: article, strategy, it_management, corporate_strategy, governance
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