14 August 2012

Stage 9 How to Get Out of the Pit - 5 Transformational Wisdom from I-Ching

How to get out from the pit or to reverse the declining trend? I-Ching provides us with 5 transformational wisdom. Firstly, Retreat - get out and sell out intact. Secondly, Return to the core of original success. Thirdly, Replace with new mission. Fourthly, Extra-Ordinary boldness packaged with softness. Fifthly, the attitude of Uncompleted work for continued transformation. A good example of transformation that uses the 5 wisdom is Anne Mulchany who transformed Xerox of the copyier into the New Xerox of Document and Business Process services.
1. Retreat - get out and sell out intact from
Previous post covers detection of decline. Once you detect and confirm the decline, it is good to immediately take effort to transform the company. You may need to get out of your declining market. Please note, the market may be not be declining, it is just that you are not able to compete with the leaders. e.g. Digital Photography is increasing for the Samsung, Canon etc but not for Kodak. Cloud-Devices like the iPhone, tablets are blooming markets except for Rim and Nokia who are still trying very hard to stay in the market.

To enter a new market or to revitalize key businesses, you need a lot of cash and resources. The fast way to get cash is to sell-off businesses and assets that are of value, painful maybe, but needed to be done. Xerox sold of their desk-top printers division, the one started by Anne herself, and other things.

Plan withdrawal is no shame but a good transformation strategy. It gives you the resources needed to start new mission when the time is right.

2. Return to the core of original success  #24 复 Return – Recovery 
When a company is going on a fast track of high growth, they tend to get into all kinds of new businesses and into areas that where they may not have the strength but just the money. The grand strategies may attract a lot of interests, support and investments, but if not executed well, it will end in great failure. Actually, slower or reducing growth rate may cause the management to invest in more and diverse businesses to try jack up the revenues. Those are bad strategies. One should get back to the core, the core principles and strengths that make the company successful in its early days.

When Steve Jobs returned to save Apple, he cut the 150+ product lines of Apple back to  the original Apple computer and laptops only. When Lou Gestner took over IBM, people advised him to break IBM down and sell off. He found that IBM have great people, technology and customer relationships. What was needed was not breaking up but more integration around the needs of their customers and helping their customers with their capability, extending even into non-IBM products. Anne found in Xerox the same things of great people and technology. She sell off to get money to invest more in R&D so that Xerox can take the lead in the new mission of business process management and document services, a natural extension of Xerox copier and printer business.

Get back to the core righteous business practices and your core competences. 

You may need find new uses and markets for your core competences as Xerox did. 

Kodak, while invented the digital photography, have missed the boat due to their reluctance to cannibalize their successful film business, have rightly and boldly gave up their digital camera business and back to where they are strong at in printing and chemical businesses. They may need to find new markets for their chemical strength in order to get out of Chapter 11. Corning Wares is able to find great new market for their glass-competence.

3 Replace with new mission -  49 革 Replacement
Actually, the Chinese word has a stronger meaning that the 'replacement'. It is the word used in revolution 革命, the over-throwing of a government and establishment of a new regime. Transformation requires such drastic effort. It is best to start with a new mission. Below are the additional steps:

  A Transformational Replacement must have
        1. worthy mission
        2. benefits the people (staff, customers, and other stakeholders)
        3. at the right time
        4. with the right preparation
        5. based on righteousness
        6. build trust among the people after the replacement

Under Anne, Xerox replace the old mission of being a copier or a printer product company into a new mission of "Business Process & Document Management Service" company. The new CEO has extended it to include Information Technology outsourcing. But hopefully, they realize their key business is still in business process management for effectiveness in running businesses and IT are but the enabler.

4 Extra-Ordinary boldness packaged with softness -28 大過 Excessive
Transformation requires boldness because you are going against the tide. But Boldness alone is not enough. You cannot bull-doze your way against the tide. You must use the soft approach. This is the great wisdom from i-Ching. You must package your bold core with softness. To attract is better than to force.

Back to Anne of Xerox. She communicated with her staff and customers face to face. She had to sell her story of the new xerox. She have to explain the reasons for the laying off to the very people that grew up with her and now having to let them go. The support she gained help much moving the transformation.

When Steve Jobs got back to Apple to save it, he boldly went to Bill Gates for help. He got an investment of US$150M from Microsoft and Gates' commitment to continue to improve the Ms-Office suite on Apple. To Apple to succeed, he got support from his past arch-enemy. He boldly declared in the Apple Conference, Steve Jobs' annoucement of microsoft's investment. http://www.youtube.com/watch?v=WxOp5mBY9IY
  • If we want to move forward and see Apple healthy and prospering again, we have to let go of a few things here. We have to let go of this notion that for Apple to win, Microsoft has to lose. We have to embrace a notion that for Apple to win, Apple has to do a really good job. And if others are going to help us that's great, because we need all the help we can get, and if we screw up and we don't do a good job, it's not somebody else's fault, it's our fault. So I think that is a very important perspective. If we want Microsoft Office on the Mac, we better treat the company that puts it out with a little bit of gratitude; we like their software. 
  • So, the era of setting this up as a competition between Apple and Microsoft is over as far as I'm concerned. This is about getting Apple healthy, this is about Apple being able to make incredibly great contributions to the industry and to get healthy and prosper again.
5 The Attitude of Uncompleted work for continued transformation - 64 未济 Uncompleted – Finish it Wisely & Boldly

The only way to have sustainable success in the long run is always to have the attitude of "Uncompleted":  - it is never finished - it can be better - incrementally or radically differently better.

The practice, after you have your mission, vision and values, shall be:
  1. Analyze the situations. 
  2. Find the right positions. 
  3. Take actions to move in the direction with adjustments along the way. Changing the how to achieve the objective is good when the how does not work.
  4. Accomplish this worthy project is good enough. No need to be distracted with other things.
  5. Go on to next higher visions when you have come close to your existing ones.
This is the end of the Series Making I-Ching Come Alive!

Lim Liat (C) 14 Aug 2012

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