Reid Hoffman on Scaling

A while back, Sutton and Rao wrote “Scaling Up Excellence” an important book on the reasons why companies run into trouble when they need to scale. They point out that things get screwed up when an organization has to adjust to rpaid growth.

This theme resonates. How do I know? Reid Hoffman will be teaching Scaling next year at Stanford. Here is the idea

Hoffman, the cofounder of LinkedIn and a partner at venture capital firm Greylock Partners, says “the general ethos” of the Valley is such that too much value is placed on the creation of startups. “It kind of leads everyone to have the view that if you invest in the right idea, everything else comes easily,” he told Fast Company.

Right on! Scaling is a huge challenge.

As Devices Get Smarter

Consider this thought from HBR

Data now stands on par with people, technology, and capital as a core asset of the corporation and in many businesses is perhaps becoming the decisive asset.

Increased data flow means that products and services are less the subject of a single transaction than the basis for a longer term relationship

The ability to remain connected to the product and track how it’s being used shifts the focus of a company’s customer relationship from selling—often a predominantly onetime transaction—to maximizing the customer’s value from the product over time.

Think of the product as a window into the needs of the client.

Creative Industries in Flux

NYT is running an interesting article by Steven Johnson that discusses whether the digital revolution is destroying the creative arts.

The bottom line is that the digital revolution is re-shaping industries that cater to the creative arts. But the data suggests that the revenue flows to artists has actually increased, rather than decreased. Artists are making money in different ways but they are making money.

At the end of the day, I think this is a good thing. Why? We are getting rid of the middle men who squeeze profit out of their gate keeper roles. Now consumers of creative work and artists are in more direct contact. And the only gate keepers left will be curators.

Thinking about Manufacturing Clusters

Manufacturing clusters started forming a long, long time ago. Firms located nearby, and working in a given market benefited from building strong local relationships. But shouldn’t globalization change all that? Well, according to this Forbes article, it has and it has not. In some cases, clusters have fallen apart. In others, they have thrived. What is going on?

The answer is that the thriving clusters have a “knowledge integrator” That is a firm that connects the cluster to the global market and keeps innovation moving.  This is pretty interesting. It opens a field of inquiry – role differentiation in business partnering.

Here is a lesson learned.

When making supply chain decisions, executives need to understand it’s more nuanced than global versus local. “In some cases global means everything is scattered, and nothing has to be close to each other. But in others you are global in terms of supplying a global market but from a clustered location,”

And I think this way of thinking applies to development of human resources as well.

An Old Story: Leadership v. Management

Fred Wilson gets into this rather deeply. But here is the key difference

Leadership is different than management. I have said that many times before on this blog and I will say it again. I believe it to be true. Leading is charisma, strength, communication, vision, listening, calm, connecting, trust, faith, and belief. Management is recruiting, retaining, delegating, deciding, communicating, and above all executing. Many CEOs do both for their companies. But getting leadership from the founder and management from a great executive is a model that can work really well.

Capitalism and its next phase

An interesting conversation is developing about how current trends will affect our overall economic framework. The first shot was fired by Paul mason for the Guardian, where he argued that capitalism as we know is dying. Steve Denning, writing for Forbes, thinks this is an overstatement.

The two disagree on some things, but not on a basic idea – there is a huge pwer shift underway. The old dinosaurs of the 20th century with command and control institutional hierarchies will die out. They will be replaced by something more flexible and more creative.  I agree.

This has implications for firm organization and strategy. It will impact how younger folks develop their ideas about career as well. And we are just getting started.

A key thought — if you look at the trend from 19th to 20th century, work got easier. Humans could leverage their physical and mental capacities with machines.  This is the longer term path we are likely to continue following in the 21st century. Refinements in machines will make work even easier. This frees up human capacity to do other things. Denning is right – that will not be just to take more vacation. It is more likely to think more carefully about what value added stuff we want to create. As we do this, we will get better contorl over our future as a species. Yes, i am an optimist.

Ovans: People or Process to Make Innovation Happen?

It is one of those “chicken or egg” questions. Which comes first to create a culture of innovation in a firm? Andrea Ovans, writing for HBR; offers some interesting arguments for one and then the other. Her insight is that both have their place. Highly creative people can be stifled by poor processes in firms (and in life). Meanwhile, less creative people can thrive in processes that empower them to do what they do well.