“Ford was the Intel of that industry,” says Harry Dent Jr., author of The Roaring 2000s.
But it wasn’t long before that changed. Why? GM understood the people and the market. But more important, GM won the race for innovation. That allowed it to pass Ford and snare a greater share of the market.
So how important was it to win that race for innovation? Important enough that three straight decades (the 1970s, ’80s and ’90s) of poor management at GM couldn’t undo what had already been done, Dent says, adding, “Could anybody have run it worse during those years?”
The same race to innovate is taking place today in other industries, and the winners will ensure their future business survival.
“The Internet is to the new economy what the assembly line was to the old economy,” Dent says.
The business that becomes the first in its industry to master the new paradigm will become the leader.
Dent cites former Entrepreneur Of The Year winner Michael Dell, founder of Dell Computers, as an example of this new wave. He was the first to sell his product directly to the consumer, and although there are now dozens of imitators, Dell owns the lion’s share of the market.
But the true change isn’t in the Internet itself. The Internet is just the means to facilitate the changing way of business, Dent says. The paradigm shift is a network model of business. It’s a drastic difference from conventional theories taught in business schools, such as the top-down model.
“Nothing in nature runs this way,” Dent says.
The Internet is the epitome of the network principle.
“Why does it grow so fast?” Dent asks. “Because there’s no management to slow it down. It’s run by the end users.”
Financial markets are the same way. Investors, Dent says, drive the markets.
“Every morning, some poor guy runs up, rings the bell and then gets the hell out of the way.”
Today’s business revolution is in the organization. Technology is just the tool. To become a leader within your industry, Dent says you must first adopt four principles.
Develop a strategic focus. The first step is to figure out what you do best. Give your employees focus, train them to do their jobs and then let them go. To achieve this, business owners should ask themselves: “What role do we need to play in the market?”
Once you’ve decided on your area of expertise, stick exclusively to it. Outsource or partner with another company for areas that are not your specialty.
Organize behind your customers and front lines. Business owners need to start with the question, “Why can’t this be done on the front line?”
The front lines of your organization can react faster and add more value than by letting things filter down the food chain. Create a team with cross-functional skills. If you can’t automate it, outsource it.
Make every individual or team a real business. Now that you’ve created cross-functional teams, they need to be held accountable for their roles. Judge every team on its own profit and loss, Dent says. But in applying culpability, you must also allow your employees the freedom to work unencumbered.
Link everyone together on a real-time information system. Now that the human organization is working, it’s time to make an investment in technology. Start by linking the system that’s been created to automation. The company that is successful will be able to solve its clients’ problems quickly and effectively, Dent says.
“Sell a total solution. That’s what your customer wants.”
Daniel G. Jacobs is senior editor of SBN.