how would techies describe a dog?

vinay kamat

The Cluetrain Manifesto? What's that? Those were the questions that geeks would ask when the book first hit them in 2000. Short of asking the netizen in you to rebel, it said everything. Perhaps it should have had an elaborate sub-title: Converse, You Lose Nothing But Your Chains. The book became a cult very much like Po Bronson's paean to Silicon Valley entrepreneurship, Nudist On The Late Shift.

The Manifesto came alive last week, in The Economist, when David Sifry, founder of the blog search-engine Technorati, acknowledged he was inspired by the controversial work. But what the hell is The Cluetrain Manifesto? Here's blogger Andrew Savory's take on the geek bible:

- it's made up of two words, "clue" and "train"- "clue" is something you give to users "hitting them with a cluestick, hitting them with a clue-by-4".
- train is obviously something for transporting people, but also a general idea of "moving things along".
So, I think the general idea of cluetrain is that it's something that everyone should hop on to really_get_ the idea of the manifesto.

According to the frequently updated Wikepedia, the book and its website (www.cluetrain.com) both challenge outmoded, 20th-century, thinking about business, listing 95 theses as a reference to Martin Luther's manifesto which heralded the start of the Protestant movement. To understand what maverick authors Rick Levine, Christopher Locke, Doc Searls, and David Weinberger have to say, let's look at their core thesis:

"Markets are conversations. Their members communicate in a language that is natural, open, honest, direct, funny, and often shocking. Whether explaining or complaining, joking or serious, the human voice is unmistakably genuine. It can't be faked. Most corporations, on the other hand, only know how to talk in the soothing, humorless monotone of the mission statement, marketing brochure, and your-call-is-important-to-us busy signal. Same old tone, same old lies. No wonder networked markets have no respect for companies unable or unwilling to speak as they do."

Simple and heretical. After all, organizations need structures to create, perform, and improve. Size and complexity feed on processes. Conversations can't scale up organizations. But if markets began, and continue, as conversations, why can't organizations be chats, discussions, or even blogs? Why can't informality redefine formality? Why can't we converse strategy instead of formulating it?

Why can't we all jump on a cluetrain and have a jolly good ride? To cluetrain your thoughts, think of Abraham Lincoln's Gettysburg address as a PowerPoint presentation. Google's Peter Norvig already has a six-slide ppt at www.norvig.com. It's delightful because it's structured. But it may not provoke you because it's not emotive.

Well, six years after The Manifesto first appeared on the web, it's still a refreshing read. It's not the internet's very own manual, nor is it the guiding principle of the blogosphere. It is a handbook of ideas, starting with you.

Perhaps the best posting in the book is its advice to companies to first understand themselves: "Every business is dysfunctional because everything human is at least a bit broken. It's not an accident. It's the human condition."

So, conversation is surely continuous improvement. That is one view among the many threaded opinions you'll find on the web.

If anything, The Manifesto is amusing, intelligent, provocative. It's not afraid to take a dig at its own community. Here's an extremely sticky example: "A veterinarian using TechnoLatin might say that a dog serves as a platform for sniffing, is an open environment for fleas, and that it supports barking." Can you you think of any line with a better bite?

mavericks of tomorrow

Two contrarians. Two counter-intuitive thinkers.

One, truly a colossus in the arena of management.

The other, a Quentin Tarantino of economics, who senses the extraordinary in the ordinary. Indeed, the duo - Sumantra Ghoshal and Steven Levitt - are dream-catchers, filtering conventional wisdom and showing us a new way to dream.

Ghoshal is a must-possess for every manager wanting to be different. In Sumantra Ghoshal On Management: A Force For Good, editors Julian Birkinshaw and Gita Piramal have brought out a 378-page book that distills the work of a man that many regard as an inflection point in management literature.

His books, Managing Across Borders and The Individualized Corporation, have become management classics. The first, co-authored by Christopher Bartlett, argues for a transnational strategy that seamlessly combines size, speed of response in local markets, and ability to disseminate knowledge across the globocorp. The second, also co-authored by Bartlett, puts the individual at the epicentre of the organisation, even arguing that the organisation must be built around him.

Birkinshaw’s and Piramal’s tribute gives a composite picture of management’s finest story-teller, the metaphors he formulated, the ideology he happily subscribed to, and the multiple disciplines he crisscrossed to give management a humane touch.

When Ghoshal passed away in March, 2004, the apostle of empowerment still hadn’t completed his preaching. But his rule-breaking ideas, or conversations, published with co-authors still challenge management paradigms. Interestingly, Ghoshal even changed the writing construct: he preferred a partner for writing books, believing that two can always distill the essence of a conversation better than one.

The other pick, Freakonomics, which has just come out as a paperback, is like an iPod: radical, refreshing, with zero fog-index. The book focuses on a young economist, Steven Levitt, and his weird, but absolutely convincing, ideas about day-to-day issues.

Like Ghoshal, Levitt is a keen observer and has an infectious mind. Even as he sees an elderly homeless man with torn clothes begging, the curious Levitt doesn’t fail to notice the beggar’s headphones in his car’s rear-view mirror.

Like Ghoshal, Levitt marries curiousity, data, and lateral rethinking to produce absolute stunners. Here are some of the questions that Levitt answers: Why do drug-dealers still stick with their moms if they make piles of money? Why do blacks jeopardise their kids’ careers by giving them certain names?

How corrupt is sumo wrestling? And, of course, how does a beggar sport $50 headphones?

If you have been wowed by The Tipping Point, Blink, and The Wisdom of Crowds, then don’t miss Freakonomics. Written by journalist Stephen J. Dubner and economist Levitt, the book has no unifying theme but a common thread of surprise in its dazzling discoveries about mundane things that never amazed us. So, next time you see a beggar or a sumo wrestler, start thinking. And reading Levitt.

who says msft can't dance?

vinay kamat

Microsoft is a peculiar giant. It dominates the desktop, your dashboard to the digital world, with its software prowess, pricing skill, distribution reach, and branding muscle. But that does not scare away innovative challengers.

Yet, when Microsoft celebrated its 30th birthday on Friday, it was a landmark. For, resilience and learning have been its best defences against competitors as insanely great as Apple, Netscape, and Google.

To defend Microsoft is to defend the status quo. That is what Microsoft’s PC-centric world has become. As futurologist George Gilder said in 2000, “the PC revolution has stiffened into an establishment”. It is an establishment that has become synonymous with Windows, Microsoft’s cash-cow. When nimble newcomers were rolling out products using the web as a platform, Microsoft was busy shielding its turf: the desktop.

Yet what looks like a turf fight is actually a strategy. If competitors carve out niches, Microsoft creates a software supermarket. Put simply, Microsoft layers its core Windows with innovations ranging from browser to spreadsheet to search. None of these is strictly an innovation but when they are bundled onto Windows, they create a new experience. Today, Microsoft’s software powers more than 90 per cent of the world’s PCs.

Bill Gates, who reinvents Microsoft every time it falls behind in the web race, may never be credited for creating a truly great company. Perceived variously as a software monopoly, an “evil empire”, a start-up gobbler, a geek foe, Gates’ Microsoft is a loner. Yet what differentiates Gates from other great leaders is his frozen resolve: it is a quest to create a learning entity.

To imitate is to learn. In the disruptive world of technology, only those that decipher the competition survive. Indeed, Microsoft has been able to create a culture which helps the corporation to quickly morph itself into a project the moment a rival product emerges on its radar screen. See how Microsoft has kept pace with Sony’s PlayStation with its Xbox gaming console. In both gaming and search, Gates is still behind. But few believe he will remain a pygmy when Microsoft turns 32.

Despite its strengths, the $40-billion Microsoft has quite a few things to fret about. Its stock, at $25.3, is uninspiring; its product flow is drying; it is still not intuitive enough in spotting web-driven killer apps. Free and flexible Linux software now threatens the flagship — Windows. Unlikely competitors are emerging in the world of convergence, where gadgets and formats will have to shake hands. We are already seeing tomorrow’s living rooms through Nintendo’s GameCube, Sony’s PlayStation, and Microsoft’s Xbox. The future, as Gates points out, is an “ecosystem of technologies.” Will Microsoft create that ecosystem or will it be just a part of that network?

Along with Apple, Sony, Nokia, Samsung, Google, and Yahoo, Microsoft is faced with an unfamiliar future. Technologies are converging but nobody knows for sure what the dominant technology, or the overall user architecture, will be like.

As Lou Gerstner, the CEO who taught IBM to dance, puts it: “It isn’t a question of whether elephants can prevail over ants. It is a question of whether a particular elephant can dance.” Microsoft can be that particular elephant if it cranks up its product pipeline. That’s one way to leverage size, breadth and depth when you are 30. With an R&D budget of $6.8 billion and cash reserves of $40 billion, Microsoft has the firepower to define the future.

In fact, Microsoft’s success is embedded in its own strategic code: just be ahead of the herd. It sounds convincing, if not disruptive. It is herd logic, not instinct. But that’s one way to tread into unknown terrain.

oceans of strategy

Vinay Kamat

After Tom Peters, who? That was the FAQ a few years ago. Today, after the popularity of Tipping Point, that is perhaps the least asked question. For, author Malcolm Gladwell may have just become management’s feisty intellectual, its pop diva. The simplicity of his writing, and his uncanny ability to relate management ideas to you and me, explains why Tipping Point has become as significant as Tom Peters’ In Search Of Excellence and Al Ries’s and Jack Trout’s Positioning.

Still a hip best-seller, Tipping Point explains why certain ideas click and why others don’t. On his website, www.gladwell.com, the author explains the idea behind the book: “It’s the name given to that moment in an epidemic when a virus reaches critical mass. It’s the boiling point. It’s the moment on the graph when the line starts to shoot straight upwards.”

And when and why does this happen? Perhaps the best example in the book is about Hush Puppies. The brand was dying until a few kids in downtown Manhattan started sporting them because nobody would. Soon, a fashion celeb wore them too, creating a buzz. It did not take long for the shoes to debut on Manhattan catwalks, triggering an epidemic and creating a global brand out of Hush Puppies. All this happened in two years, and the manufacturer, Wolverine, had absolutely nothing to do with it. What the kids had created was a word-of-mouth effect.
How did it all start? It all began with a good product that hadn’t reached the influence market. A few kids added attitude to their walk to be different, bringing their bold act under the gaze of the influence (fashion) market. And once the influencers got infected, a tipping point was crossed.

Despite his talking gigs around the world, Gladwell has hardly been on the Indian seminar circuit. And although his books are intellectual treats, they are not management gospels since they lack the academic vigour of Peter Drucker or the data-driven constructs of Michael Porter. Still, like Hush Puppies, Gladwell is an attitude that will continue to infect marketers when they are not sure what to do when they have a great product.

Blue Ocean Strategy, a new arrival, may just provide you with the impetus to reach a tipping point. Like Gary Hamel’s and CK Prahalad’s pet theory of strategic intent — the Honda-like obsession to gain global leadership — Blue Ocean is a desire to be different. Authors W Chan Kim and Renee Mauborgne do not steer away from strategic intent’s core premise: that “the strategist’s goal is not to find a niche within the existing industry space but to create new space that is uniquely suited to the company’s own strengths – space that is off the map”. They add easy-to-follow tactics to the very idea of outwitting competition.

The authors give an interesting example, Cirque du Soleil, which reinvented the circus by crisscrossing multiple business formats and upselling big-top entertainment. How did they do that? “Instead of following the conventional logic of ... creating a circus with even greater fun and thrills...it sought to offer people the fun and thrill of the circus and the intellectual sophistication and artistic richness of the theatre at the same time.” In essence, Le Cirque got out of a red ocean mindset and plunged into their very own blue ocean.

Another Blue Ocean navigator, Casella Wines, devised a wine for the entertainment economy. They turned wine into a fun product that was high on attitude and low on pedigree. “Instead of offering wine as wine, Casella created a social drink accessible to everyone: beer drinkers, cocktail drinkers, and other drinkers of non-wine beverages.”

Both Tipping Point and Blue Ocean are sister ideas. For, you need to create a tipping point in your organisation to lead your team into a blue ocean.

search for wow

Vinay Kamat

To understand Google is to understand the future. Armed with just an algorithm, or computer code, Google not only dominates the web, it rules your life. But the six-year-old Google has become more than just a piece of code. Nowadays, you don't search Google for simple answers alone. You locate friends, compare prices, check maps and weather, see real places, email, blog, and talk. And you would soon start using Google toolbar as your desktop's ultimate console. Google is slowly becoming the surfer's dashboard, competing with Microsoft on its own cozy turf.
What will Google be up to tomorrow? Its ability to roll a slew of leading-edge products, revive internet advertising, create search benchmarks, reinvent e-mail through Gmail, enter telecom space through Google Talk, and simply thrill its customer base, has sent pundits and competitors wondering about Google's next big thing. After all, at $80 billion, it is the world's largest media company by market value.

No wonder when two media students Robin Sloan and Matt Thompson put together a Flash prognosis of the media's future, few questioned their imagination. The duo's prediction: "2008 sees the alliance that will challenge Microsoft's ambitions. Google and Amazon join forces to form Googlezon. Google supplies the Google Grid (a universal platform that provides a functionally limitless amount of storage space and bandwidth to store and share media of all kinds) and unparalleled search technology. Amazon supplies the social recommendation engine and its huge commercial infrastructure. Together, they use their detailed knowledge of every user's social network, demographics, consumption habits and interests to provide total customisation of content — and advertising."

Googlezon may be fantasy. But its basis lies in Google's marvellous search code, around which Google is building enough muscle — a set of linear offerings — to elbow out competition. The Google algorithm creates a class structure of the web when you search. It ranks pages based on links, their readership record, and the frequency of updates. And it throws up search results in less than half a second. Now, imagine Google dominating mobile space, allowing you to search and transact on the move.

Google believes it is not just an online library but a real-time database. Actually, it is an information superpower, with eight billion indexed pages and a billion images. And when you use Google search, a back-end supercomputing system is intelligently at work. Its search prowess allows Google to position itself as an ad aggregator, helping advertisers get relevant surfers/customers by a unique process of micro-targeting.

Google’s ability to process the world's information needs in nanoseconds is a test of its hardware and software skills. This dual strength is something that competitors like Microsoft are not comfortable about.

Argues Stephen E Arnold, author of The Google Legacy: "Google is, like IBM, a company that owes its existence to both hardware and software. Unlike IBM, Google has a business model that is advertiser supported. Technically, Google is conceptually closer to IBM (at one time a hardware and software company) than it is to Microsoft (primarily a software company) or Yahoo! (an integrator of multiple softwares)."

If Google becomes the first point of entry for surfers, it could set the standards for newer products just as it did for search. Predicts Patricia Seybold, author of customer.com: "Google will play a major role in digital rights management and in creating a de facto standard for pay-per-use information. It's also possible that Google will play an increasingly important role in consumer and business retail."

But what did Google do right to get where it has? Google is a cool brand built around simplicity and convenience. Its minimalist 37-word homepage hides the complexity of its back-end robots. Beneath this simplicity is the story of its founding. Like Hewlett-Packard, Google was bred in a garage by two computer science graduates from Stanford University, Larry Page and Sergei Brin. It thrilled its fans as a geek adventure before finally deciding to create a revenue model.
Often it is an innovative experience. When Google launched gmail in beta, it created a buzz by inviting people. Gmail was a robust product with 2 gigs of space, unheard of in those days. Gmail crossed the tipping point by word of mouth, fulfilling what Google believes in: focus on the user and all else will follow.

But has Google institutionalised Wow? After all, Wow is a spontaneous, unplanned way of delighting a customer that can hardly be industrialised. Marketing experts have long deliberated whether Wow can actually be systemised. For instance, can companies delight customers on a regular basis? Can products then be rolled out in Wow fashion consistently?

Indeed, Apple and Sony have created Wow technologies. Google may have taken the Wow factor away from technology to sheer user-experience and institutionalised it.
That is why Google appears a whole tera bigger than it is. That is why it looks so unpredictable.

schelling's game theory

What is the ultimate objective of game theory? That was the question buzzing in our minds when the Nobel Academy awarded the prestigious prize for Economic Sciences to Robert J. Aumann and Thomas C. Schelling for their contribution to game theory. True, games help unravel the dynamics of conflict and cooperation. But, as Schelling explains in the following interview, investigation is one aspect of game theory. The other, more important, part is peaceful co-existence.

By Vinay Kamat & Sumit Chakraberty

Q:. Why do you think the Nobel Academy awarded you with the top honor? Is the ultimate objective of game theory peaceful co-existence?

A: They didn't really tell me, except that I'd contributed to the understanding of conflict and cooperation with the help of game theory. They haven't mentioned any specific works of mine, or specific ideas I'd contributed. I think it's more of a "lifetime achievement" award than an award for any specific contribution. The ultimate objective of game theory is to illuminate the nature of conflict and cooperation; the ultimate objectiveof some game theorists, like myself, is peaceful coexistence

Q: How do you relate to day-to-day life as a game theorist?Do you see day-to-day relationships, family interactions, through the prism of game theory? Is life also about game-theory situations?Has it made you a better father or husband?

A: Yes, I tend to see day-to-day relationships through the prism of game theory--not technical mathematical game theory but game theory's insight into strategic behavior. Game theory may have made me a more perceptive father or husband, whether a "better father or husband"you'd have to ask my wife and children…

Q: What would you consider as your most significant contribution to game theory?

A: I think my most significant contribution, not so much "to game theory" as to the kind of behavior alanalysis that game theory tries to illuminate, is the concept of "commitment". Commitment lies behind efforts to make credible promises, credible threats, credible offers and counter-offers in bargaining. Finding ways to commit is often difficult but crucially important. It is important to commit the nation never to launch a surprise attack, but how to do that requires careful analysis, appropriate technology, and an appreciation of its importance.

Q: How does a game theorist apply his knowledge and work to international conflicts? Do governments take their help often? In how many cases has the US Government sought the advice of game theorists?

A: I’ve often been asked for help and advice, but Ithink not because of game theory. Game theory helps me think about important issues in international security, butI never phrase my advice in terms of game theory and I'm not sure that the people who seek or heed my advice think of me as a game theorist.

Q: How would game theory apply to some current international situations?

A: People who are game theorists, or who know a little game theory, who spent time during the Cold War trying to make deterrence work, might in years to come try to help a nation like Iran, if it should acquire some nuclear weapons, think about how to use its nuclear capability solely for self-defence via deterrence rather than in more mischievous or dangerous ways.

Q: Do you wish game theory were more popular than it is today, where its benefits percolate to larger sections of society? How can it be made more accessible and popular?

A: Game theory will always be restricted to people who do explicit formal analysis, mainly academics or specialists in business, law, or government. A lot of the results of game theory can be made usefully available to a much wider audience by game theorists who are good at translating their results into normal language.

metaphors of transformation

by vinay kamat

Objects have a strange way of telling stories. They can be metaphors for actions and objectives; they can even be reflections of real issues. Film director Ang Lee is said to have come up with a box of metaphors to create a film. During the making of Hulk, he gave his animators four objects to deliver what he wanted. The four keys to the animation puzzle: driftwood, sand, wet rock, and rake. Together, they represented a persona called Hulk: strong, sentimental, adaptive, bottled up, wounded, uncared, a split personality. Lee was on the dot with the odd items he had collated to help create a complex personality. His symbols helped bring the comic superhero alive: a human being caught between frailty and superpower.

What if CEOs asked their COOs, or strategists, to create an organisation they really desired? And what would be the ideal objects they would give these designers? At a meeting, four friends—all aspiring to be Ang Lees—came up with ideas to create blockbuster organizations. Separately, the ideas are at odds with one another. Together, they represent a new way of scripting success.

First friend: “ICE should be one of the objects. Ice explains the difference between curiosity and detachment. Ice is a metaphor for innovation. You can’t afford to be clinical and detached in the workplace; you must get curioser and curioser. Gabriel Garcia Marquez describes the joy the villagers of Macondo experience when a gypsy introduces them to ice, in his book One Hundred Years Of Solitude. Ice was the spirit of discovery and imagination in the colonial village. It made Macondo so very different.”

Second friend: “There’s nothing better than DUSTER. Always start with a clean slate. If you want to change something, first rub your organisation clean. You can’t change what exists. Here’s what Tom Peters has to say on learning: ‘Organisational learning is one of the hottest management topics of the 1990s (some say even beyond). But I say forgetting is far more important. Cybernetics pioneer Gregory Bateson said it best: You can’t leave without an eraser. Gentlemen and women…are you erasers ready? They better be.’”

Third friend: “Personally, I prefer MUD. It is nothing but waste. If you think mud, you think ahead. It’s an individual initiative: Keep your desk clean, keep your shop-floor clean. Contract the obsessive compulsive disorder of cleanliness if you want to change your organisation. Inventory management doesn’t start in warehouses; it starts and ends in your inbox. Have you finished all your tasks today? Is your personal inventory piling? Get the mud off your conscience, gentlemen.”


Fourth friend: “Since I am not into metaphors, I’ll suggest a simple, easily attainable, object. It’s called Execution, and it’s written by Larry Bossidy and Ram Charan. I quote a small passage from the book: “Much has been written about Jack Welch’s style of management—especially his toughness and bluntness, which some people call ruthlessness. We would argue that the core of his management legacy is that he forced realism into all of GE’s management processes, making it a model of an execution culture.”

Whichever way you look at them, ice, duster, mud, and execution are essential to the process of differentiation. After all, three metaphors and a meta tool are all it takes to create an Ang Lee in the organization, whose lean, simple, ideation can create a grand metaphor for execution. It can hulk up the company you work for.

the most misused word

by Vinay Kamat

Perhaps the most misused word today is proactive. It’s all around you: your boss may ask you pen a proactive letter to a customer; your wife may ask you to be proactive with your neighbour; and you may decide that thinking out of box is proactive.

Was Carly Fiorina, HP’s former CEO, proactive because she was aggressive? Does podcasting sum up teenage proactivity? Are hedge funds proactive investors?

Nothing in business literature has been so commoditised, so victimized, as proactive. It’s a trait that bosses would pay top dollar for; it’s a value that colleagues expect in a leader; and it’s something that you would readily trade off for a hefty increment. It’s not easy to be proactive. You can be active, reactive, but proactive? What’s that?

Well, if you want an idea of proactivity, you should read the fascinating story of a small company that made its customers happy in a mega crisis. The company: Mississipi Power, whose power lines were demolished by Katrina. Yet, reports USA Today, the company relit people’s homes in flat 12 days, showing its crisis-management skills, lateral thinking, and good practices. “One crew chief (even) stripped a generator of an ice machine to get a substation working.” But what drove the team was a true inspiration: Stephen Covey’s The 7 Habits of Highly Effective People and his “be proactive” mantra.

The first habit of highly effective people, writes Covey, is being proactive. In his 1989 book, which is still a best-seller, Covey explains the feeling from every angle: emotional, rational, and strategic. It’s perhaps the most elaborate definition of a word that we frequently use without understanding it.

“Reactive people are often affected by their physical environment,” says Covey. “If the weather is good, they feel good. If it isn’t, it affects their attitude and their performance. Proactive people can carry their own weather with them. Whether it rains or shines makes no difference to them.”

People often mistake proactivity with being aggressive, or filling the vacuum. Some call it vacuum management: If you spot a void in the organization, you simply rush to fill it, thereby creating a space for yourself. In Covey’s book, proactivity is a responsible action that must be wedded to values: “Many people wait for something to happen or someone to take care of them. But people who end up with the good jobs are the proactive ones who are solutions to problems, not problems themselves, who seize the initiative to do whatever is necessary, consistent with correct principles, to get the job done.”

Proactivity is the sincerest form of humility. For, it will spur a boss to accommodate divergent views, exercise subtle controls, and learn from mistakes. Here’s Covey’s tip for bosses: “The proactive approach to a mistake is to acknowledge it instantly, correct and learn from it. This literally turns a failure into a success. Success, said IBM founder T J Watson, is on the far side of failure.”

If only companies were run on proactivity, rather than by Six Sigma, TQM, EVA, or Reengineering, the organization would be a fun place. After all, great organizations are run on principles, not results. They are peopled with responsibilities, not deliverables. That’s what proactivity is all about.

A marketer that changed the world

by vinay kamat

How Dell is Dell? Not a particularly simple question to answer. Yet, if you look at the computer major, and its highly-charged CEO, you will realise why leadership makes Dell different.

For, Dell is focused on cost, culture, and the customer. Ultimately, it all boils down to cost. Or the art of doing things simply, quickly, and effectively.

At Dell, leadership is cost management. Everything that Dell excels in has to do with cost. If a corporation comprises three parts--the supply chain, the demand chain, and the innovation chain--Dell leads in the first two. It ensures it has minimal inventory in its supply system even as it provides customers made-to-order products at high speed. By avoiding middlemen in its Direct-from-Dell model, the company develops intimacy with its customers.

An MIT study called Toyota the machine that changed the world because of its emphasis on continually declining costs, zero defects, zero inventories, and endless product variety. Dell, whose focus is as sharp, could easily be called the marketer that changed the world. What Dell did was to differentiate itself from other computer-makers by interacting directly with customers. As Michael Dell, the founder, put it: "While other compnies had to guess which products their customers wanted, because they built them in advance of taking the order, we knew--because our customers told us before we built the product."

This super-efficient demand chain, which has made Dell the biggest computer-maker, is now testing its future. The big questions: Can Dell roll out technologies at the same pace as Samsung? Can it create iconic products like Apple's iPod? Does it have Microsft's R&D muscle? Is Dell slipping behind like Sony? Should it have diversified into printers, hand-helds, and television sets at all? Is Dell now realising that a process innovator must be a product innovator as well?

Dell's problem lies in the industry it operates in: computers. Here prices are falling and margins are shrinking. And, in areas that Dell is diversifying into, the contest is severe. Even high-end computing, an area that Dell is now interested in, will not be easy to capture for a commodity-maker. For, Dell has been criticised for being just a piece-by-piece assembler and a savvy marketer with a tight supply chain, nothing more. In the world of hi-tech, you can either be an Apple, which rolls out iconic products, or a Samsung, which make huge bets on future technologies; you can't just be a just-in-time, made-to-order, seller. Can you?

Strangely, technology, the fuel for relentless product innovation, could power Dell still. For, tomorrow's customers would desire made-to-order gizmos in a world of hi-tech clutter. Convenience, customisation, and personalisation would be the key criteria for product success. This requires savvy marketers like Dell to spot the right technologies and rewire their supply-and-demand chains accordingly. Innovative products, which are actually assemblies of different types of components and technologies, can fail if their supply chains are suspect. So, vendors must meet demanding quality norms, tight supply schedules, and work to high customer expectations. Dell has flattened the learning curve in each area through its Direct-from-Dell model.

Behind every innovative technology lies a highly sophisticated supply chain. Even a small glitch can prove costly. Which is why Apple, which has encountered vendor-quality problems in its iPod Nano, is busy recalling defective music-players. The future of technology is about betting on dominant technologies and managing vendors with flexible supply chains. It is a future that Dell should be at home in.

But it's not the supply chain alone that makes Dell a highly clinical machine. It's also the values that Michael Dell, the founder, has hardcoded into the company. Business Week gave a glimpse of his style when Dell was faced with dissonance within the organisation:

Dell faced his top 20 managers and offered a frank self-critique, acknowledging that he is hugely shy and that it sometimes made him seem aloof and unapproachable. He vowed to forge tighter bonds with his team. Some in the room were shocked. They knew personality tests given to key execs had repeatedly shown Dell to be an "off-the-charts introvert," and such an admission from him had to have been painful.

In his insightful autobiography, Direct from Dell, the founder says the biggest threat to his company wouldn't come from a competitor. "It would come from our people...my goal has always been to make sure that everyone at Dell feels they are part of something great--something special--perhaps even something greater than themselves." This belief is vital for a company that can take pride only in its operational excellence, not in its tech or design skills.

Dell's autobiography details the creation of a virtual company and the people that helped nurture the Dell magic. It's plain objective was "to steer customers through the storm of technological options."

A bigger storm is coming. It is a world where virtual companies like Dell will have to learn to customise newer and newer technologies for its buyers. In other words, they will have to create the ultimate convergence offering by customising it. Can Dell do it? Yes, if it broadens and segments its customer base quickly to learn more from it. Which is why Dell's diversification may not be a bad thing after all.

james bonding

by vinay kamat

How out of box are you? Would you tolerate 007s in your organisation? Maverick management gurus keep raising these questions in their quest for an organisation which thrives on non-conformity. But what would it take to have a licensed demolition-man or an unlicensed innovator in your midst? Yes, what would it take to create a Bond who rejuvenates the company every time he breaks a rule?

One management guru says Bonds are born, not made. Another says the problem is CEO-related. A CEO has to wear two thinking caps, that of M (Bond's boss) and Q (the gadget-maker in Bond movies). M is an unusual boss: he doesn't compete with Bond to show who's boss; he allows him his flamboyance while laying down the big, broad, rules; and he backs him to the hilt. Q is the magician who regales Bond with gadgetry although he is always upset with Bond's demolition spree. In a way, Q is Bond's biggest challenge: his innovations represent the future that Bond must constantly unravel.

Both M and Q are essential to creating a climate where Bonds can be bred, nourished, tempted, and challenged. A colleague reminds me that one of the best examples of the M-Bond combo was the PV Narasimha Rao-Manmohan Singh duo. A non-competing boss, Rao managed the administration, allowing Singh to launch the process of liberalisation. And, like M, Rao was able to create a hero by shielding him from the politics of the day and empowering him to fight the licence-raj. Rao even allowed Singh to be a Q as well.

How tolerant are organisations of mavericks? In The Living Company, a view of the company as a living being, author Arie De Geus gives a taste of tolerance. "Long-lived companies...generally avoided exercising any centralised control over attempts to diversify the company. Later, when I considered our research again, I realised that seventeenth-, eighteenth- and nineteenth-century managers would never have used the word decentralised; it was a twentieth-century invention. In what terms, then, would they have thought about their own company policies? As I studied histories, I kept returning to the idea of 'tolerance'. These companies were particularly tolerant of activities in the margin; outliers, experiments and eccentricities within the boundaries of the cohesive firm, which kept stretching their understanding of possibilities."

But the notion of tolerance has only gone so far as the creation of strait-jacketed Bonds or structured eccentricity. While organisations are not very comfortable with the idea of having Bonds loose within, they are open to the idea of innovation-teams working far away from the main organisation. One such team was the skunk works, a term still used by organisations when they work on secret, market-redefining, projects. According to Wikipedia, skunk works is the unofficial name for Lockheed Martin's Lockheed Advanced Development Projects Unit and was the production unit responsible for a number of famous aircraft, including the U-2, the SR-71, and the F-117.

Samsung has its own skunk works in its VIP House, or Value Innovation Program. Fortune's writer, Peter Lewis, descibes a recent VIP drill at the Korean consumer-electronics major: "These days team members are allowed to go home to sleep if they want to, although Samsung executives acknowledge--with obvious pride--that the building is occupied 24 hours a day, seven days a week."

In Leading the Revolution, Gary Hamel showcases the mavericks that changed their MI6es. "Inside IBM and out, (John) Patrick and (David) Grossman are today recognised for their pivotal contribution to IBM's e-business metamorphosis...These two unlikely heroes--a software nerd and a corporate staffer--along with a pro-change CEO, helped give IBM the chance to do something it hadn't for a couple of decades: lead from the front."

The story of Sony's James Bond is even more exciting. "Lacking any formal mandate, (Ken) Kutargi launched a bandit project that eventually led to the establishment of the Sony Computer Entertainment division in 1993 and the introduction of the PlayStation video game console the following year."

But do Bonds arrive on the scene at the time of crises or can they be hired, trained, and then let loose? Perhaps the answer lies with the boss himself. Jim Collins defines the Level 5 leader as one who "blends extreme personal humility with intense professional will". Such leaders can help to create a maverick counter-culture. For, only humility allows a boss to lead without actually leading. While a CEO's intense professional will, like M's, defines Bond's broad focus, it gives Bond enough room to re-invigorate the organisation by attacking its stress-points: fossilised bureaucracy and age-old beliefs. Interestingly, both define current strategy.

The biggest problem, of course, is not about creating a nursery for baby Bonds. In fact, the real problem lies in the self-transformation of the CEO. After all, you need to be a Dr Yes to create a change-agent. And, yes, you can't have a JB unless you have an M and a Q too.