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This chapter is from the book

The IDEA Value Cycle

On a personal level, gaining self-knowledge and self-confidence is vital to creating value. The "IDEA value cycle" can be spelled out as follows.

I—Invest in Yourself

Determination must be the first impulse toward becoming successful. Before you can find anything, you must find yourself. Soar on your strengths and contain your weaknesses until you can transform them into new strengths. Seek perfection—zero defects—in the product or process by fostering a zero defect philosophy in your people. Invest in them and help them to invest in themselves to gain the self-knowledge and self-confidence needed to help you win. Without investing wisely and regularly in Talent, you can't have great returns.

D—Different Thinking

In the future, there will be tremendous competition for everything, and the only way you can compete is to do a different thing or do a common thing differently. The strong comeback of Apple Computer Company is mostly credited to its founder, Steve Jobs, who characterizes himself as well as his organization with a simple motto: "Think Different." None of the other computer manufacturers had ever thought about using multicolored plastic bodies for personal computers before Jobs's iMac. Its success is not necessarily due to the product innovation or better performance, but rather to the "think different" strategy. Using the same strategy, the United Kingdom's most admirable entrepreneur, Anita Roddick, built her cosmetics empire, The Body Shop. Roddick's bold declaration: "Small chest, flabby thighs, large hips, thick lips, BIG DEAL—love your body." Different thinking creates value for the organization and society. Cultivation of mind produces different thinking.

E—Emotional Commitment

Commitment with emotion is the key to any success. In India it is called sadhana. When the famous sitarist Ravi Shankar was learning sitar from his guru, he didn't leave his room for many days until he learned the basics. He devoted all his time to sitar. That takes emotional commitment. Throughout history, you see the greatest successes coming from those who exhibited undying commitment. Michael Dell, Bill Gates, and Anita Roddick are emotionally committed to their endeavors. Their emotional commitment has helped them succeed. They all love their work. They have their own mission and commitment. Rather than jumping into the dot-com frenzy, they focused on their own beliefs. They want to create organizations that will dominate the economic landscape. They are passionate about making a contribution to society and creating a business culture of enlightenment. They want to create and deliver real value to their customers and shareholders. They have a "love it or leave it" philosophy. They don't do things only because they want to hit revenue numbers; rather, they "just do it" because they have emotional commitment. Michael Dell had a dream to beat IBM while IBM was the giant in the computer market. He succeeded by making the dream come true through his own emotional commitment.

The success of General Electric (GE) is largely credited to retired CEO Jack Welch's leadership in creating an "emotional bond" with employees. GE's Six Sigma initiative is not just a CEO-driven quality initiative. It is a management philosophy from top to bottom. Everyone is learning the same language of Six Sigma's revolutionary five-step process: define, measure, analyze, improve, and control (DMAIC). This philosophy creates an emotional bond among employees. And the results show it: GE reported record results; 2000 earning per share $1.27, up 19 percent; 2000 revenues grew 16 percent to $130 billion; earnings up 19 percent to $12.7 billion. Welch reported: "GE's double-digit increases in 2000 demonstrate the benefits of the company's emphasis on globalization, growth in services, Six Sigma quality, and e-Business."

Emotional commitment makes the difference between workers and fighters. Workers are typical 8-to-5 performers; fighters are reaching for excellence. They want to be winners in everything they do, whereas workers may not have that winning mentality. Workers are contractually obligated to do their jobs; fighters are mentally obligated. Fighters are risk takers, whereas workers are risk adverse. Above all, fighters are always emotionally committed.

Most workers don't have a winning mentality because they don't have a sense of ownership. If you own something, then you don't want to lose it. Profit sharing, reward, recognition, and bonuses are key ingredients to seed ownership within workers. In GE's Six Sigma initiative, "black belts" receive rewards for completing projects successfully and saving GE's bottom line. Contrast this level of commitment with that of many failed dot-coms whose owners admitted to starting a business just to go public or to be bought out.

A—Action

The most important thing that successful entrepreneurs do is take "action on time," as mentioned earlier. The attitude of "Just do it"—the slogan of Nike's founder and chairman, Phil Knight—is necessary for any success. If you have a bright idea, you must act on it; otherwise, someone else will eat your lunch. If you are not an implementer, find a partner who is.

Michael Dell notes: "A lot of favorable economics occur when you take time out of the process. Dell's model has about eight days of inventory. One competitor has 81 days of inventory and 40 more days of inventory in their distribution channel—16 weeks more than our eight days. A competitor with that level of inventory can't compete with Dell and make any money doing it. As a result, our business is growing fast, and our profitability exceeds that of all of our major competitors combined."

The action at Dell is centered on customers, as Michael Dell reports:

We maintain an intense focus on the customer, even as we grow. Today, Dell is still ranked number one in customer satisfaction surveys. Our account teams work face-to-face with all of our large customers. We work with our suppliers to deliver materials on a pull basis. Instead of waiting to build a machine until we have all the materials in the warehouse, and then guessing what people will buy, we focus on how fast the inventory is moving. If we can shorten that time, not only will we save our customers a lot of money, but also they'll get a superior product that meets their precise requirements.

The next frontier of competition is in the area of customer service quality. We're constantly looking for breakthroughs, such as our direct business model, that change the dynamics of the game. Finding a new way to deliver a better customer experience and more value at less cost is a good strategy.

By following the Talent value chain, you, too, can deliver a better experience for employees, customers, and all other stakeholders.

Although Dell admits making mistakes, we learned from them. We've developed overly ambitious products that tried to do everything for everybody—without a focus, they were bound to fail. The answer is not having a brilliant conception of all the best ideas before you start, but rather learning from your mistakes and not repeating them—and making sure that those lessons are passed along. As Dell states:

"There is such a thing as excessive growth that is not only too fast but dangerous. We grew in one year from $890 million in sales to $2.1 billion in sales. It was exciting, but one year later we hit the wall. We had to learn how to understand the profitability of different parts of our business, where our business was succeeding and where it wasn't, and how to anticipate and build an infrastructure to support growth.

When we had to focus on our best opportunities, we adopted the idea that return on invested capital was a great way to measure different parts of our business. If the cost of capital is about 15 percent and a business is earning 20 percent return on invested capital, it is creating value for shareholders.

By segmenting our business, we found the path to grow into an organization that has many different businesses. We have a business selling to large customers, to global customers, to the consumer. And these businesses have different characteristics. You separate those, and you create management opportunities. This approach allows us not only to aggressively bring Talent into the company and grow Talent, but also to get very finely focused on the unique needs of specialized customers and achieve high returns on invested capital."

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