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The Business Challenges of Globalization

October 18, 2017 Leave a comment


 

Taken from Creating New Superstars by Carol and Ennio Fatuzzo (1)

 

IMG_0065In spite of the chaotic world around us, the risks involved in playing some types of games haven’t changed. For example, playing roulette, whether it is Russian roulette or the more civilized version in Monaco, is the same as it always has been. However, in today’s fast paced environment, the “game” of business has become a much more dangerous venture. Developing a new business or expanding an existing one involves a whole new dimension of risk due to many developing “agents of change.” Globalization, including the rapidly expanding global economy and the consequences of global competition, is one of the most powerful influences.

On a positive note, globalization significantly increases potential market sizes, creating extremely attractive and visible business growth opportunities. Just think about the worldwide explosion of smartphones, or the rapid expansion of wine import and export businesses, or the huge potential for new cancer drugs. Even water is now a global opportunity, as the recent history of San Pellegrino shows. Twenty years ago it was a relatively unknown Italian mineral water. Today, it is distributed worldwide to more than 120 countries on five continents. (2) But with size comes different challenges.

Highly visible, big growth opportunities create new global competitors that were never before threats―Korean car manufacturers, Indian software developers, Chinese computer and internet-based companies, and more. The bottom line: More companies around the world are likely to be pursuing the same specific growth opportunity at the same time. Therefore, the risk of failure for any single company is high—significantly higher than in the past.

Looking at the situation another way, in the past a company had a reasonable possibility of being the only one pursuing a good new opportunity—one that was unrecognized by others. And that resulted in many single-company big successes: Kodak and silver halide film, IBM and computers, Motorola and cell phones, RCA and consumer electronics, and more. But in today’s dynamic global economy, due to the growing technical sophistication of global competitors and the faster pace of everything, there will not be many “lone pioneers.”

And there is another kind of challenge. Pursuing larger global opportunities requires greater resources than what are needed to be successful with smaller, “local” opportunities. This results in the financial risk being much higher, sometimes high enough to place an entire company in jeopardy. If a global project fails, for whatever reason, that failure is extremely costly. Kodak having to declare Chapter 11 bankruptcy as a result of its late and unsuccessful attempt to become a major global player in digital photography is a good example of today’s high cost of failure. (3)

But the risk of large financial investments isn’t the only challenge involving resources. In the past, under-resourcing a project or using resources ineffectively did not matter as much as it does today. Why? Any such “mistakes” will slow down progress; and in a faster paced and more competitive business world, this decreased speed will almost certainly create a significant competitive disadvantage. This, in turn, greatly increases the probability of a costly failure in the marketplace.

And finally, because of today’s need for speed, failure is not only is connected to making wrong or bad decisions. It frequently is the result of making good decisions too slowly. Kodak’s eventual management decision to pursue digital photography was a good one, but the delay in making that decision was a major contributor to the effort’s failure. This delay gave global competitors an insurmountable lead.

Bottom line, in a highly competitive, global business environment that is rapidly changing, a slow decision will almost always be a wrong decision; and being late to the market almost always assures failure. Just as in nature, a slow company will become prey for the faster, more aggressive one.

 


1. Ennio Fatuzzo and Carol L. Fatuzzo, Creating New Superstars: a Guide to Businesses that Soar above the Sea of Normality (USA: September 2016). Available from amazon.com.

2. S. Pellegrino Company Website, accessed October 18, 2017, https://www.sanpellegrino.com/us/en/company-intl-41.

3. Rick Newman, “Four Lessons from Kodak’s Comedown,” U.S. News online, January 19, 2012, http://www.usnews.com/news/blogs/rick-newman/2012/01/19/4-lessons-from-kodaks-comedown; “The last Kodak moment?,” The Economist, January 13, 2012, accessed online October 18, 2017, http://www.economist.com/node/21542796.

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Big Data: An Exploding Agent of Change

January 26, 2017 Leave a comment

 

Big Data: An Exploding Agent of Change

by Carol L. Fatuzzo and Ennio Fatuzzo

 

Futuristic abstract background and binary code and the words big dataToday, thanks to the internet, many kinds of data (Variety) are being sent, received, and accumulated at unprecedented rates (Velocity) in unprecedented quantities (Volume). So, how can we manage this rapidly increasing amount of data and benefit from them? How can we discover hidden patterns and reveal unknown correlations?

Storing such massive quantities of data is only the beginning. To be useful we also must be able to access and analyze them rapidly and reliably. Following is an excerpt from our latest book, “Creating New Superstars,1” which addresses this opportunity.

BIG DATA AND BUSINESS ANALYTICS

“Business analytics refers to “the extensive use of data, statistical and quantitative analysis, explanatory and predictive (computer) models, and fact-based management to drive decisions and actions.2 The rapid development and adoption of advanced business analytics technologies is already altering the business landscape.

Big data refers to data sets too large for traditional data processing. These data sets have the potential for “huge new benefits—but also heartaches.3 The explosive emergence and availability of such huge, fast-changing, unstructured data from various old and new sources, mostly external to a business, and attempts to analyze them, has created the “age of information” ― an age where knowledge is power. But in many companies these unwieldy data sets have also created an “analysis bottleneck” that limits their usefulness.

But now it is possible to combine big data with advanced business analytics. Unparalleled and real-time access to vast quantities of data and the ability to rapidly analyze them in meaningful ways are already realities. Business management is being challenged with the rapidly growing technical capability of harnessing the vast potential that is hidden in multiple sources of massive data/information.

Today many companies already are analyzing big data to achieve significant competitive advantages―to improve products and services, cut costs, attract repeat customers, and more. An IBM Global Business Services Executive Report documents several big successes: “Companies like McLeod Russel India Limited completely eliminated systems downtime in the tea trade through more accurate tracking of the harvest, production and marketing of up to 100 million kilos of tea each year. Premier Healthcare Alliance used enhanced data sharing and analytics to improve patient outcomes while reducing spending by $2.85 billion. And Santam improved the customer experience by implementing predictive analytics to reduce fraud.4

Still embryonic though, are advanced analytical methodologies that can be applied to big data to build useful models for predicting and optimizing future outcomes. Such tools would enable leaders to make better decisions and make them faster and with lower risk; and might even help scientists make fundamental discoveries. This is the promise of the emerging field of data science, the marriage between big data and advanced analytics, the former providing the information, the latter supplying the tools that can be applied to that information to develop insight and guide action.5 However, there is one giant caution for business leaders. Big data and analytics, no matter how sophisticated and expertly used, will not replace or necessarily even predict disruptive innovations. Analyzing the past and extrapolating to the future is not likely to accurately predict a future shaped by unparalleled disruptive and exponential change.”

A CAUTION AND A CONCERN

There is no question that the future benefits arising from the combination of big data and advanced analytics will be immense, but not everything is positive. For example, even with advances in analytics technology, including artificial intelligence, keep in mind the caution expressed above:

“Analyzing the past and extrapolating to the future is not likely to accurately predict a future shaped by unparalleled disruptive and exponential change.”

And for those who worry that big data collection may infringe into their privacy: Yes, large companies and organizations already have access to a lot of personal data and are using it. On the positive side, this is already leading to things such as improvements in healthcare outcomes and understanding new market trends for better business management.

But it is an entirely different situation when governments enter the arena. A number of articles have been written about “big data” in the hands of government evolving into “big brother.”  A recent article in the Economist entitled “China invents the digital totalitarian state: The worrying implications of its social-credit project6” illustrates a concerning example.

The article describes a data collection and analysis project being run by the Chinese communist party to develop what they call a “social-credit system.” To summarize, using “big data” technologies, the project’s objective is to develop a system to collect and categorize as “good” or “bad” all available information for each individual citizen. Ultimately, rewards for good behavior (e.g., prizes, better housing) and punishments for bad behavior (e.g., denial of permissions to travel or access to loans and services) would be handed out – all this aimed at improving the allegiance of citizens to the State.

Will China be successful? How far will other governments go towards using big data to become “big brother” watching over each citizen? Certainly valid concerns. However, keep in mind that every breakthrough new technology has the potential for both good and bad. It all depends on the intentions of those who develop and apply the technology.


 

  1. Ennio Fatuzzo and Carol L. Fatuzzo, Creating New Superstars: a Guide to Businesses that Soar above the Sea of Normality (USA: September 2016)
  2. Thomas H. Davenport and Jeanne G. Harris, Competing on Analytics: The New Science of Winning (Boston: Harvard Business School Press, 2007), 7.
  3. “Data, data everywhere,” The Economist, Feb 25th 2010, http://www.economist.com/node/15557443.
  4. Michael Schroeck, Rebecca Shockley, Dr. Janet Smart, Professor Dolores Romero-Morales, and Professor Peter Tufano, “Analytics: The real-world use of big data,” IBM Global Business Services Executive Report, IBM Institute for Business Value (2012), accessed June 27, 2016, http://www-935.ibm.com/services/us/gbs/thoughtleadership/ibv-big-data-at-work.html.
  5. Foster Provost and Tom Fawcett, “Data Science and its Relationship to Big Data and Data-Driven Decision Making,” Big Data, 1, no. 1 (March 2013), 51-59, http://online.liebertpub.com/doi/pdfplus/10.1089/big.2013.1508.
  6. “China invents the digital totalitarian state: The worrying implications of its social-credit project,” The Economist, Dec 17, 2016, http://www.economist.com/news/briefing/21711902-worrying-implications-its-social-credit-project-china-invents-digital-totalitarian

Thoughts on Business Leadership

January 18, 2017 Leave a comment

 

Thoughts on Business Leadership

by Carol L. Fatuzzo and Ennio Fatuzzo

Liderazgo

 

There are all kinds of leadership found in all walks of life, and much has been written about what comprises good or exceptional leadership.

For example, our book “The Death of the Julia Division1” is a moving memoir illustrating the struggles of military leadership. It chronicles the agony of a man who doesn’t believe the war he is fighting is justified but fights as hard as he can; the anger of an officer who knows that his superiors are making poor decisions from a remote location but still must follow the resulting orders; and the commitment of a leader who does his best in impossible circumstances for his soldiers and who suffers tremendously, as do all of those involved on the battlefield.

But what about business leadership? We provide some of our own views in our newest book “Creating New Superstars.”2 Following is some background and an excerpt from this book. Not everyone will agree with our opinions, but we hope this provides some food for thought.

Once Upon a Time

Once upon a time, companies developed strategic plans, in some loose fashion inspired by the strategic plans of the military. These corporate strategies commonly were reviewed only once every year because change usually occurred at a very slow pace, and gradual change is very seldom disruptive. In this peaceful time, certain practices became the norm and accepted as the standard for good management, including things such as:

  • New product definition based totally on market research
  • Extreme delegation to subordinates and teams for prioritizing and implementing programs
  • Decisions through consensus
  • Forecasting the future based on an extrapolation of the past

The general idea seemed to be that a “dull” and predictable company, managed well, would be a good and successful company. However, today the world is undergoing an explosion of disruptive change, driven primarily by rapidly advancing technology. And in these unsettled times, many dull but successful companies are struggling.

However, there are outliers or rebels—very successful, once small but now large companies where the “rules of traditional management” have generally not been followed, at least for significant periods in their lifetimes. These are the companies we call Superstars.

What is a Superstar

There is a new phenomenon emerging that we call “Superstar” companies. These are the few, extraordinary, publicly-traded, Fortune 500 companies that have managed to sustain exponential growth over more than a decade, even as they became giants. The list of Superstars and almost Superstars includes Amazon, Apple, Alphabet, Facebook, Genentech, Amgen, and Gilead Sciences. What has driven these outliers to such extreme success in the face of explosive change?

Our Views

Although not the only important factors in creating Superstars, the repeated flashes of insight, out-of-the-box thinking and acting, and powerful personalities of the leaders are critical. Such exceptional individuals are not bound by tradition and thus can rapidly adapt to and take advantage of a changing environment. They have passionate beliefs, are intensely focused on their goals, and take pride of being the best in their industry or maybe even the best in the world. And they are dedicated almost beyond reason to building their companies. These unique business leaders are rebels and often considered dictators, and they are shaping our future.

Exceptional Leadership (Excerpt from “Creating New Superstars”)

“Much has already been written about the importance of leadership in general, and the leaders of today’s Superstars more specifically. We highlighted some of this information in our brief histories of the Superstars in Chapter 2. Drawing on this information and our own experiences and research, we provide here a short summary of some of the common leadership characteristics that we believe are essential for Superstars.

First, an intelligent, strong-willed leader whom people will follow (not necessarily like) is required. This leader must be a risk-taker who is unafraid of making mistakes, and who enthusiastically embraces the unconventional, ranging from unusual management styles to untested business models. This leader also must be able and willing to rapidly reinvent (or support and partner with those creative individuals who can reinvent) everything again and again as circumstances dictate—from business models and business definitions to entire product lines.

To say this in a different way, to create a Superstar a leader must be able to think and act “outside of the box.” Does this mean that these leaders have to have that nebulous ability called “vision?”

Our answer is: not always. Remember that some of the “visions” of leaders like Steve Jobs or Jeff Bezos led to actions that were clearly mistakes. But these same leaders also made correct decisions repeatedly, year after year. Clearly, in some cases the vision of a strong leader can create and drive markets.

One last commonality among Superstar leaders. The leaders must have exceptional commitment, persistence, and stamina to be able survive seemingly disastrous occurrences in their business and personal lives without declaring defeat—incidents we highlighted such as getting fired, ending up in hospital for stress, or having to work impossible hours, sometimes for no compensation. How many people are willing and capable to endure all of that to end up winning in business? The answer, of course, is only a few—those few capable of leading their enterprise to Superstar status.


 

 

The_Death_of_the_Jul_Cover_for_Kindle

 

1. Giacomo Fatuzzo, The Death of the Julia Division: Memoirs of an Officer (USA 2014). Available from amazon in both paperback and kindle formats: http://amzn.to/2jAi45r

 

 

creating_new_superst_cover_for_kindle

 

2.  Ennio Fatuzzo and Carol L. Fatuzzo, Creating New Superstars: Businesses that Soar above the Sea of Normality (USA 2016). Available from amazon in both paperback and kindle formats: http://amzn.to/2hAn6dy

 

Artificial Intelligence: A Door to the Future

January 9, 2017 Leave a comment

Artificial Intelligence: A Door to the Future (And the Future is Now)

by Ennio Fatuzzo and Carol L. Fatuzzo

 

Brain. Cpu. Circuit board. Vector illustration. Eps 10“2016: The year artificial intelligence exploded.” This is the title of a recent article in the SD Times that begins like this:

“Artificial intelligence isn’t a new concept. It is something that companies and businesses have been trying to implement (and something that society has feared) for decades. However, with all the recent advancements to democratize artificial intelligence and use it for good, almost every company started to turn to this technology and technique in 2016.”1

The article goes on to give examples of recent developments by Facebook, Microsoft, Google, and IBM. These are interesting, but only touch the surface of this rapidly developing technology area.

A December article in the New York Times Magazine2 does more to open one’s eyes to progress and competition in this explosive area of technology which has developed mostly “under the radar.” The title of the Times’ article is informative: “The Great A.I. Awakening: How Google used artificial intelligence to transform Google Translate, one of its more popular services — and how machine learning is poised to reinvent computing itself.” The article tells the story of how Google formed a new department (Google Brain) to focus on artificial neural networks and how that led to the radical transformation of their machine translation platform.

However, the Times article does more than focus on Google’s advances. It considers some of the broader issues associated with A.I. In the author’s own words:

“Google’s decision to reorganize itself around A.I. was the first major manifestation of what has become an industry wide machine-learning delirium. Over the past four years, six companies in particular — Google, Facebook, Apple, Amazon, Microsoft and the Chinese firm Baidu — have touched off an arms race for A.I. talent, particularly within universities… What is at stake is not just one more piecemeal innovation but control over what very well could represent an entirely new computational platform: pervasive, ambient artificial intelligence.”

Pervasive, ambient artificial intelligence— the author’s words. But is that in the future, or is it now? Virtual assistants are everywhere. And Google Brain is only one example of the race to develop more and more products that parallel human intelligence, not only in memorizing data, but also in following instructions. Many companies are now working on machines that can self-instruct on how to reach pre-determined goals. Apple, Facebook, Amazon, Microsoft and Baidu, a Chinese company, are all developing such types of products. A subsidiary of Samsung, a Japanese company, announced a machine-enhanced detection of breast cancers. And the list goes on.

But now consider a broader perspective. In the end, will all this effort on A.I. result in good for humanity or something else? For example, as we state in our recent book “Creating New Superstars”:

“We haven’t even mentioned numerous other technology advances with the potential for both great good and great harm such as robots with advanced artificial intelligence capable of learning and redesigning themselves and potentially acting independently from the humans that are supposed to be controlling them.”3

Consider what we said: robots with artificial intelligence, thinking and acting independently of the humans who control them. Such robots could theoretically be capable of redesigning themselves, or of designing and building computers or other robots better than themselves. And maybe these “super machines” could even rebel against the humans that originally created them.

Intelligent robots and other advanced artificial intelligence applications and devices may seem like science fiction, but new capabilities in this disruptive technology area are arising at an ever-increasing pace. This door to our future is rapidly opening, but what waits on the other side? Is it good or bad for humanity? According to experts such as Stephen Hawking and Bill Gates, artificial intelligence poses significant threats.4

But all major scientific and technology advances offer possibilities of great good or evil for humanity. Today:

“We have reached a room with many doors. Behind each door, there is a different future for us and our world. Should we open these doors? Do we want to? Will we?  The answer is simple: Yes, because humans always have and always will.”5

And, as we open each new door, it is up to us to follow the new paths carefully and wisely.

 

References

  1. Christina Cardoza, “2016: The year artificial intelligence exploded,” com, December 26th, 2016, http://sdtimes.com/2016-year-artificial-intelligence-exploded/
  2. Gideon Lewis-Kraus, “The Great A.I. Awakening: How Google used artificial intelligence to transform Google Translate, one of its more popular services — and how machine learning is poised to reinvent computing itself,” com, December 14, 2016, http://www.nytimes.com/2016/12/14/magazine/the-great-ai-awakening.html?smprod=nytcore-ipad&smid=nytcore-ipad-share
  3. Ennio Fatuzzo and Carol L. Fatuzzo, Creating New Superstars: Businesses that Soar above the Sea of Normality (USA: September 2016) p. 261. Available from amazon: http://amzn.to/2hAn6dy
  4. James Barrat, “Why Stephen Hawking and Bill Gates are Terrified of Artificial Intelligence,” com, April 9, 2015, http://www.huffingtonpost.com/james-barrat/hawking-gates-artificial-intelligence_b_7008706.html; Eric Mack, “Bill Gates Says You Should Worry About Artificial Intelligence,” Forbes online, January 28, 2015, http://www.forbes.com/sites/ericmack/2015/01/28/bill-gates-also-worries-artificial-intelligence-is-a-threat/#684260ef3d10
  5. Ennio Fatuzzo and Carol L. Fatuzzo, Creating New Superstars: Businesses that Soar above the Sea of Normality (USA: September 2016), p. 259. (Available from amazon: http://amzn.to/2hAn6dy)