Let Go To Grow: Escaping the Commodity Trap

Praise for Let Go To Grow

"Over the next ten years large companies will be hit with a wide array of harrowing new business challenges—commoditization being at the top of that list.

Let Go To Grow elegantly outlines the critical new innovation, standardization, and globalization strategies that corporations can use to hurdle these obstacles and thrive in the coming years."

—George F. Colony, CEO, Forrester Research, Inc.

"This is a very important book for CEOs and top executives who are facing brutal, global competitive pressures, which is probably a majority. Let Go To Grow describes a strategy that will allow you as a business leader to do what you do best, while sidestepping the commoditization that's driving down profit margins in so many businesses. This book reflects not only what IBM is thinking, but also what other companies ranging from Dell to FedEx to Wal-Mart are doing to win in extremely competitive markets. Read this book for practical real-world insights, not for any academic theories."

—William J. Holstein, Editor-in-Chief, Chief Executive magazine

"Let Go To Grow is a must-read for executives who are trying to use strategy and management practices to drive innovation and productivity gains. It puts concepts like componentization, outsourcing, and off-shoring in a much more strategic context than anything else I've read. The book clearly shows how winning companies have gone from optimizing value chains to managing global "value webs" for competitive advantage. The argument is enhanced significantly by specific practical case examples featuring leading companies like Dell, eBay, GE, Procter & Gamble, and Toyota."

—Tony Friscia, President and CEO, AMR Research

"Sanford and Taylor carefully analyze the global marketplace and offer a progressive new strategy for transforming an underperforming business...A pioneering blueprint for the 21st-century business."

—Kirkus Reports

Drive sustained growth!

—Use on demand techniques to gain unprecedented speed, flexibility, and adaptability

—Construct dynamic "value webs" that leverage innovation from any source

Deregulation, globalization, and the Internet are driving rampant commoditization in virtually every industry. To escape that trap and grow profitably, you must "let go" of traditional control mechanisms. In their place, you must build new models, relationships, and platforms that capture and deliver value from multiple sources, inside and outside the enterprise.

In Let Go To Grow, IBM senior executive Linda Sanford and long-time entrepreneur Dave Taylor show exactly how to do that.

Sanford and Taylor systematically review the On Demand Business processes, people strategies, technology shifts, governance practices, and leadership vision you'll need to maximize profitability in tomorrow's business environment. They introduce powerful new techniques for balancing and measuring three key drivers of top-line growth: productivity, collaboration, and innovation.

You'll discover how to gain unprecedented flexibility by constructing your business around components, platforms, and standardized interfaces. The authors demonstrate how to expand your growth space, liberate your cost structures, and build profits—not just revenues. Drawing on the experiences of companies ranging from GE to eBay, Toyota to IBM, this book focuses on practical implementation, offering a proven, start-to-finish approach for moving from vision to results.

• Create a virtuous cycle of growth.
  Discover how great companies are escaping commoditization and the vagaries of economic cycles.

• Improve, balance, and measure the key drivers of top-line growth.
  Use on demand techniques to supercharge productivity, collaboration, and innovation.

• Drive unprecedented agility with proven on demand strategies.
  "Open up" your firm: source and coordinate capabilities dynamically, on-the-fly.

• Build flexible "value webs" that liberate your cost structures.
  Master powerful new ways to refocus precious resources on growth.

• "Componentize" your business functions, processes, and services.
  Simplify the creation of any new business configuration, from supply chain management to customer service.

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Component Business Models: Making Specialization Real

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Index

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Preface

Sustained revenue growth is hard. The odds of a company maintaining a growth rate above the Gross National Product are worse than one in ten. Markets are in such a state of flux that responding to the challenges of the marketplace with traditional business strategies does little more than let a firm survive.
This difficult business environment has been fueled by technological advances that enable suppliers and customers to work hand-in-hand, globally and in real time, remaking the way companies need to operate.

There are big winners in this economy, though. These winners are creating new opportunities by driving productivity, collaboration, and innovation in concert-through their businesses and relationships-to create a cycle of growth liberated from the vagaries of economic cycles and commoditization.
Productivity is a driver of top-line growth, and its benefits are unmistakable.

For countries, gains in productivity spur economic growth and job creation and raise the overall standard of living. For companies, productivity drives competitiveness, offers performance bonuses and raises, and fuels long-term sustainability through acquisitions and investments in high-growth areas and new markets. Productivity is also a major factor in earnings per share growth, a key measure of performance. Slower productivity growth or product stagnation means companies must accept lower profit margins or raise prices, making them less competitive.
By enhancing organizational productivity with new technological and cultural advancements, time is freed up for employees, enabling them to achieve greater collaboration across the organization. This new, deep collaboration allows the organization to build teams dynamically, sparking breakthrough innovation to solve client problems.
In the 21st-century economy, innovation is a core value. Companies need to value big discoveries that open new paths for exploration and new ways to meet the ever-changing needs of the marketplace. It's not about technology (which enables all of these concepts) but about business transformation, pioneering progressive workplace policies and making a difference in the world.

Companies drive revenue growth by delivering innovation, both for their clients and for themselves. They can do this because they have built-or are building-a business based on a set of configurable components and a technology platform that gives them the ability to respond to the unpredictable and uncontrollable with speed, flexibility, and adaptability. Such leaders build value through opportunistic collaboration with customers, partners, and suppliers, choosing how to source and integrate components across their value web. They focus on profitable growth, enabled by on demand technology-available as needed, when needed, where needed; immediately integrated, open, and financially productive, not just technically efficient.

They have "Let Go to Grow."

This is a handbook for transforming your business, whether you're in the Fortune 500 or you're determined to make the list.
We didn't choose the title of our book lightly, either. Let Go To Grow is all about our vision of the future of business, its implications, and our best practices. It's about the future of your business too.

We begin the book with some sobering marketplace realities and offer a set of management principles to guide you through the new, fluid marketplace. Chapters 3 through 8 describe the process, people, technology shifts, governance and leadership vision, qualities, and characteristics needed to succeed in this new commoditized business climate.

Chapter 9, "Achieving Measurable Productivity Improvements," explains how to measure success by driving both efficiency and growth in concert through a balanced focus on productivity, collaboration, and innovation.

The final two chapters of this book offer practical implementation details for some of our most critical ideas about componentizing your business. Chapter 11, "Gaining the Collaborative Edge: Building the Creative Company for the Creative Economy," also explains where, why, and how you can start building a Let Go to Grow business.

Let Go to Grow is not something happening in the future. It's happening right now!

We make extensive use of case studies, including GE, eBay, TAL, Dell, Toyota, Southwest, UPS, Federal Express, and IBM to illustrate our themes and gain insight from what these innovators have recognized and created.

By understanding the principles of this book, you will gain insight into the new marketplace reality and learn how to utilize the principles collected here to drive sustained growth. Your goal? To escape the commodity trap.

Table of Contents

Preface.

Acknowledgments.

About the Authors.

 1. Grow To Build Profits, Not Just Revenues.

 2. Commodity Markets Defined.

 3. It’s ALL About Components.

 4. Creating Business Components.

 5. Integrate Your Business Components End-to-End.

 6. Expand Your Growth Space.

 7. Liberate Your Cost Structures.

 8. From Vision to Results: The Leadership Agenda.

 9. Achieving Measurable Productivity Improvements.

10. Practical Implementation of the Component   Business Model.

11. Gaining the Collaboration Edge: Building the Creative Company for the Creative Economy.

Endnotes.

Index.