Book highlight—The old world of business versus the new world of business in four major industries

CurrentsBook Highlight—The Old World ofBusiness Versus the New Worldof Business in Four Major Industries DEE MCCROREY

As economic downturns don’t happen overnight,neither do missed opportunities, sometimes appear-ing so obvious to the casual observer that he mightask, “What were they thinking?”

It is challenging to connect the dots when you’re inthe midst of running a business—recognizing andeffectively responding to temperature flags beforethe water reaches the boiling point, what formerIntel Corporation Chairman and CEO Dr. AndrewGrove in his 1996 book, Only the Paranoid Survive,refers to as strategic inflection points.

In the following four industry snapshots, you willhave a chance to connect the dots and discover howoperating in the old world of business hinders howwe move forward in a reinvented world and theimportance of reinventing in front of the curve—innovating before the business requires it. The newinnovation currency requires a foundation of en-trepreneurial skill sets, adeptness in managing dif-ferent areas of expertise, and the ability to scale upquickly in cross-adjacency knowledge.

Unfortunately, the old world of business is wheremany US companies find themselves today, if,in fact, they’re still in business. One companysnapshot—Circuit City—floundered for years be-fore its death spiral ended in 2008. In anothercompany snapshot—the newly divided and renamedMotorola Mobility, Inc.—a telecom industry giantstruggles to reclaim its top position against rivalsApple, Samsung, and Research in Motion, amongothers.

Two of the industry snapshots—transportation andjournalism, new media, and publishing—representa more complex set of challenges. These industrybundles reconfirm just how connected we are to-day, whether we’re talking about rebuilding and in-vesting in our infrastructure for the next century orrethinking how we receive our news content.

What we decide or do not decide to do will greatlyaffect the world as we know it.

Industry Snapshot: Retail—Circuit City Stores, Inc.Founded by Samuel S. Wurtzel as a television store in1949, Circuit City Stores was incredibly successfulin the 1980s and 1990s by pioneering the conceptof the electronics superstore that offered a broadvariety of products in a cavernous setting. Poor lead-ership, basic inventory management, and bad cus-tomer service contributed to the demise of a one-timeretail giant that filed for bankruptcy in November2008 and closed its doors shortly thereafter.

Ultimately, the company waited too long to reinventitself and then attempted to do so in the midst of theGreat Recession.

Complacency and slow response. In the face of fast-moving retail changes and a downturn in theeconomy, Circuit City’s disjointed actions begana snowball effect that the company never recov-ered from, after losing its crown as No. 1 Ameri-can consumer electronics chain to Best Buy in the1990s.

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c© 2012 by Dee McCrorey . Repr inted with permission of John Wi ley & Sons, Inc.Publ ished onl ine in Wi ley Onl ine Library (wi leyonl inel ibrary .com)Global Business and Organizat ional Excel lence • DOI : 10.1002/ joe .21454 • September/October 2012

Exhibit 1. Circuit City, Inc.

Old World of Business Missed Opportunities

CEO and execs’ slow response to operational struggles andfinancial meltdown, no cost-reduction strategies, knee-jerkreactions to cost cutting

Closing weak/poorly performing stores preferable to cutting3,000 of top sales people; C.C. lost its qualitydifferentiator of professionals who knew the product linesand replaced them with cheaper workers

“Retention” compensation for executives in 2007 “Retention” compensation came under fire as the companydelivered pink slips to thousands of experiencedsalespeople

CEO distracted with shareholder battles and calls for hisouster

Personal ego got in the way of facing relationship issuesstraight on

Tough, open discussions with influential shareholders andvendors didn’t happen

Low-hanging fruit for competitors:Stopped selling popular appliances—opening for Wal-MartMissed in-store promotions with thriving companies such as

Apple Computer—opening for Best BuyWeb presence was weak—opening for Amazon.com

Turnaround team needed to operate as if the company couldclose tomorrow:

Daily war room meetingsAggressive execution plansAgile response to unexpected developmentsInside team members partner with external turnaround retail

expertsPoor in-store shopping experience and laborious check-out

processBest Buy offered better customer service, faster shopping and

check-out experienceBecame a copycat, often building big-box stores right across

the street from Best BuyThrowing money at a problem was no guarantee of innovative

results

Spin-off of CarMax. The company let many of its bestand most experienced people go at a time when theirskills were most needed.

Failed to secure prime real estate early on. Consumerswere tempted to check out competitor Wal-Martsince both were located in out-of-the-way locations.

Poorly executed CEO’s turnaround plan. The skill setsneeded for such an aggressive turnaround were ei-ther missing or not leveraged.

Slow response to Best Buy’s purchase of Geek Squad.Circuit City’s installation business, called Firedog,a high-margin service that generated $300 millionin sales, came four years too late to gain tractionagainst Best Buy’s service offering.

Death spiral combination of credit crunch and financialcrisis. Vendors became reluctant to offer products to

a weakened company that could go under withouttheir getting paid (which is exactly what happened).

Exhibit 1 shows what happens when a companywaits too long to reinvent itself and then attemptsto do so in the midst of a major inflection point,in this case the Great Recession, without a soundstrategy, adequate resources, or the right expertiseand with a weak execution plan.

Industry Snapshot: Technology andTelecommunications—Motorola, Inc.Motorola, Inc. invented the cell phone, popularizingit with its StarTac, before losing its lead to Nokia.The company regained its mojo with the launch ofits ultrathin Razr (22 percent market share in 2006),only to see it slip away again with the company’sslow entry into 3G, or the third-generation market,as Samsung and LG introduced several 3G phonesearly for use over next-generation wireless networks.

Global Business and Organizat ional Excel lence September/October 2012 81DOI : 10.1002/ joe

Exhibit 2. Motorola, Inc.

Old World of Business New World of Business

Attempted to innovate only from the executive suite andunwilling to take risks

Continue to leverage Google’s open source Android andVerizon wireless with new product lines

Attempted to rebrand before it reinvented the company Refocus on reinventing itself—not just adding a rebrandinglayer to the business

Company rested on its Razr laurels by not introducing adigital version—cementing the image and brand in buyers’eyes of the product as analog

Motorola’s new generation of smartphones combines Internetaccess, e-mail, and software applications

Slow to market with 3G version of Razr that had to competewith Apple’s iPhone buzz

Motorola regarded as comeback kid at 2011 ConsumerElectronics Show for its line of Droid handsets and itsiPad competing tablet, Zoom, which eWeek magazinetouts as the perfect iPad competitor

Round after round of cost cutting in a desperate attempt toright the ship may affect ability to move quickly in aneconomic upturn

Enterprise crown jewel offers good growth prospects and highoperating margins (15 percent). Motorola’s enterprisemobility sells radio, data communications, and otherequipment to police, fire departments, and othergovernment operations that won’t buy from a non-USvendor. This unit generated $1.1 billion of operatingprofits in 2009 and could be worth $10 billion, given thisentrenched customer base

Putting all its eggs in the Android basket without a Plan B Develop a pipeline of innovative products, should Google’sAndroid miss a beat. Prepare for fast marketplace shifts:Six years ago, iPhone didn’t exist; four years ago, therewas no Android

Motorola sold its wireless network unit in 2010 toNokia Siemens Networks for $1.2 billion in cash.Motorola, Inc. split itself into two separate compa-nies in January 2011: Motorola Mobility, Inc. andMotorola Solutions, Inc.

Motorola Mobility’s challenge is to out-compete en-trenched rivals Apple, Research in Motion, and Sam-sung, among others.

Shelled out too much money. Overpaid when it pur-chased bar code scanner maker Symbol Technolo-gies in 2007 for $3.7 billion; wasted money on sharebuybacks in 2006 to 2007, repurchasing $6.8 billionof stock at an average cost of $20 per share.

Brought in new talent to right the ship. The ouster ofCEO Ed Zander following the Razr’s stalled 3Gstrategy ushered in a number of executives who ro-tated at the helm.

Lawsuit distractions. Activist Carl Icahn filed a law-suit against Motorola. Apple’s 2010 patent law-suit against Google’s Android and Motorola’s Droidcould distract the company from building out itsproduct pipeline.

Samsung threw a curveball in early 2011. Korean de-vice maker Samsung Electronics, following cuesfrom Apple, introduced a line of Galaxy S smart-phones in 2010 that saw sales of 10 million units.The company unveiled the Galaxy Tab, its answerto the Apple iPad.

Verizon threw its own curveball. Verizon announcedthat it would offer an iPhone 4, which was expectedto sell at least 20 million in 2011, 10 million to12 million of which would go to Verizon wirelesscustomers.

Exhibit 2 shows what can happen when a companyrests on its laurels and gets too comfortable (and

82 September/October 2012 Global Business and Organizat ional Excel lenceDOI : 10.1002/ joe

a bit complacent) before aggressively responding tocompetitors. The revolving talent at the helm withshifting strategies and priorities creates confusionand missed opportunities.

Industry Snapshot: Transportation—Airlines, Rails,and AutomobilesOur country is sorely behind the rest of the worldin implementing the transportation ecosystem thatAmerica requires in the twenty-first century. TheUnited States invests at most 2.5 percent of its grossdomestic product (GDP) on infrastructure comparedwith China, which invests at the rate of 9 percentto 12 percent of its GDP, and we find ourselves in27th place among 36 Organisation for EconomicCo-operation and Development (OECD) nations.

Our growing population paints a picture of astrained infrastructure in the not so distant future—in 2010 the US population reached 308 million peo-ple. Imagine for a moment what the Internet ofthings will look like with the prospect of a tril-lion connected objects: cars, cameras, roadways,pipelines, and even livestock and pharmaceuticals.Then think about the movement and interaction ofall those things.

No doubt, intelligent systems will be needed to man-age America’s needs just in this century to augmentour shrinking labor force and aging population.Working smarter, not harder, is imperative for theUnited States.

The old world of business with its disconnected sys-tem of vehicles, pathways, and terminals will notget us to where we need to be in the next decade. Amature society that expects to compete in a globaleconomy, where our planet is becoming smarterand faster every day, must put its reinvention ofthe transportation industry in overdrive just to keepup with the rest of the world. A snapshot of ourcountry’s transportation system—airline, rail, and

automobile—offers a glimpse into the complexity ofthis interconnected world.

AirlinesThe deregulation of US air carriers in 1978 leveledthe playing field for the flying public with increasedcompetition and lower fares, as no-frills carrierswere allowed to join the ranks alongside legacy air-lines that had controlled the skies for decades.

Two decades later, on September 11, 2001, the in-dustry found its image tarnished when the flyingpublic questioned its ability to keep them safe inthe air. A number of US legacy carriers, alreadyweakened by the spiraling costs of fuel, labor, andgeneral operating costs, filed for Chapter 11 protec-tion; Continental Airlines had already gone throughbankruptcy proceedings in the 1980s and 1990s.

The airline business is not for the meek. With eachnew aircraft delay, new emissions policy, or en-try of low-cost carriers (LCC), airline executivesmust make tough decisions just to stay in business.Decisions to postpone the opening of new routes;whether to keep older, fuel-guzzling, and higher-maintenance planes in the air longer; buy additionalaircraft to fill gaps; or bring planes out of storageuntil newer planes can be added to the existing fleetadd to the complexity of operating an airline.

With fuel prices accounting for at least a third ofairline operating expenses, volatile conditions in theMiddle East threaten the fragile gains made by do-mestic carriers in 2010. Delta Airlines and AMRCorporation, American Airlines’ parent company,warned analysts in early 2011 that if fuel pricesreach $100 a barrel in 2011, their operating costswould increase by $1 billion.

Bloomberg estimates that the airlines could losemore than $600 million because of extreme weatherconditions across the country since November 2010with close to 90,000 flights scrubbed—the most


canceled flights recorded by the government sinceit started tracking this information in 1987.

Industry success story Southwest Airlines has thrivedwith its lean operations and emphasis on ser-vice, no-fee baggage policy, and no rebooking feesfor changed tickets. Through its innovations, loyalnonunion labor force, and direct ticketing (no third-party bookings), Southwest has kept costs in check.In 2010, the company marked 38 consecutive yearsof profitability.

Domestic US airlines, legacy and LCCs alike, willface severe disruptions—here and abroad—in thenext few years that could further shake out the in-dustry.

However, the airlines can turn these disruptions intoinnovative, profitable products and services by view-ing these six challenges as opportunities for reinvent-ing the industry.

Reinvention Challenge #1: Reduce Operating Costs with-out Further Eroding Customer Service. To offset the ris-ing costs of fuel, most US domestic airlines hedgetheir bets by entering into a contract to pay a setprice for future fuel purchases. Hedging is an im-portant aspect of fuel cost management, a strategythat minimizes the impact of volatile fuel prices onoperating costs.

As carriers focus on cutting operating costs, con-sumers now pay for everything from baggage fees($2.9 billion in 2009) and in-service meals, drinks,and snacks to aisle seats and blankets. Accordingto CIT Group’s 2011 “Global Aerospace Outlook,”nearly 40 percent of airlines now charge passengersfor food (41 percent) and their first checked bag (38percent). The trend is more common among US car-riers (75 percent) than among European carriers (17percent) and carriers in other regions (19 percent).

A primary focus on cost cutting has come with aprice—the rise of customer service complaints. In the

last decade, the number of customer complaints hasreached a noise level where Congress is consideringthe prospect of creating a government body for flyersto get some service satisfaction.

Reinvention Challenge #2: Aggressiveness in PursuingInnovations. The last time the airline industry intro-duced something truly innovative was the UnitedAirlines introduction of ticketless travel in 1995,with the help of Electronic Data Systems and AT&TGlobal Information Solution. As part of its $3 bil-lion cost-saving program, the company assessed thatmanually producing a paper ticket cost them about$8 versus 45 cents for transacting the booking elec-tronically.

Airlines must look to new technologies to help leadthe way. For example, Southwest hopes to save $60million a year with the General Electric AviationSystems TrueCourse flight management system thatcontrols the aircraft track to an accuracy of 10 me-ters (33 feet) and the time of arrival to within 10 sec-onds to any point in the flight plan. Benefits are theability to fly shorter flight paths and idle-thrust de-scents, which reduces fuel consumption, while low-ering emissions and noise levels.

Reinvention Challenge #3: Reduction in Carbon Foot-print and Meeting Environmental Impact Requirements.Europe-bound airlines will face the EuropeanUnion’s (EU) newest policy for tackling the highenvironmental costs of carbon emissions by air car-riers. The policy covers all flights that land or takeoff within the EU. With US airlines expected to facethe largest bill of all, court battles are heating upbetween the EU and the US Air Transport Associ-ation (ATA) and three of its members—American,Continental, and United Airlines—who allege thatthe EU has no jurisdiction over non-EU countries.Associated carbon costs mean that consumers canexpect to pay more for the price of a ticket.

Next-generation aircraft, regardless of size, will haveone thing in common: planes that produce a smaller


carbon footprint. According to Boeing, the newB787 Dreamliner ($200 million each) will be 20 per-cent more fuel-efficient than the comparable midsize767 or the Airbus A330.

Reinvention Challenge #4: Managing Equipment Delays,Cost Overruns, and Complex Supply Chains. Fierce air-craft competitors Boeing and Airbus continue tostruggle with manufacturing headaches: deliverydelays, cost overruns, labor strikes, engine prob-lems, cancelled orders, and disappointed customerswho expect compensation for delayed equipmentdelivery.

Rising fuel prices in 2011 could result in more ag-gressive decisions to mothball old gas-guzzlers andinvest in newer, more fuel-efficient jets to replaceaging DC-9s, A320s, 757s, and unpopular 50-seatregional jets, further placing pressure on aircraftmanufacturers to get their houses in order.

Supply chain complexity has slowed the delivery ofBoeing’s Dreamliner—three years behind scheduleand at least several billion dollars over budget. Thishistoric design feat for Boeing also marks the com-pany’s departure from its own time-honored man-ufacturing practices, contracting 65 percent of thework to outside suppliers versus Airbus’s 52 per-cent. Boeing leads an international team of suppliersand engineers from the United States, Japan, Italy,Australia, France, and elsewhere.

Reinvention Challenge #5: Ongoing and Emerging Com-petition. The Airbus 380—a super-sized behemothof an aircraft—risks putting to bed the Boeing 747.With its 49 percent more leg room and operatingcosts cited at around 15 to 20 percent lower perseat, along with its claims of fewer emissions, lessnoise, and a seat capacity of 800 people, the Airbus380 puts it squarely in Boeing’s crosshairs.

The problems of both Airbus and Boeing have awak-ened the dragon and given China an opportunityto grab its own piece of the small jet market. The

Chinese-made ARJ21 (which stands for the Ad-vanced Regional Jet for the Twenty-First Century)is scheduled for its first deliveries in 2011, carryingbetween 90 to 105 passengers and serving regionalairports in China and beyond—a market poised forexplosive growth. In China alone, domestic airlinesare expected to purchase almost 3,500 new aircraftby 2025.

Reinvention Challenge #6: Continued Passenger Safetyin the Face of Rising Costs. As US airlines look forways to trim here and cut there, outsourcing theirmaintenance to third-party maintenance, repair, andoverhaul (MRO) companies continues to be an at-tractive option. The question then becomes one ofwhether US carriers are relying so heavily on cuttingcosts that they risk inconsistent maintenance qual-ity and increasingly unsafe flying conditions, partic-ularly as planes age and require more maintenance.

According to the most recent survey of nine majorUS airlines conducted by the Department of Trans-portation’s Office of the Inspector General, close tothree-quarters of the airlines now outsource theirheavy maintenance work—planes stripped com-pletely down to their shells for inspection and thenreassembled—compared with a third in 2003. Laborrates abroad can be a fraction of those in the UnitedStates.

Federal Aviation Administration (FAA) inspectorsonce had oversight for only centralized shops at theairlines on US soil, but with the work now spreadacross the globe, site visits often require govern-ment clearance, eliminating the element of surprisethrough unannounced audits. Today, American Air-lines is the only US legacy carrier that performs itsheavy maintenance in-house. Most low-cost airlinesdo not include the costs of maintaining their fleetsas part of their core operations.

United Airlines grounded 96 of its Boeing 757aircraft—less than a third of its fleet—in Februarywhen the airlines discovered that follow-up checks


on previous maintenance to air-data computers hadnot been done according to FAA specifications. TheFAA had given United six years to correct the air-worthiness directive (AD). Three questions madethe rounds of airline-related blogs and communityforums: (1) Why had FAA inspectors missed thisAD during subsequent site audits between 2004 and2011? (2) Why hadn’t United maintenance crewscorrected the problem before it became a potentiallypricy FAA fine? (3) Would the FAA have caught thisproblem during one of their regular audits, had theMRO facility been on foreign soil?

In today’s global environment, MRO is the compet-itive reality of airlines doing business. But perhapsthe question isn’t where the work is done but how,and who is minding the store to ensure that main-tenance is completed safely—even in an outsourcedworld.

Reinvention Challenge #7: Sustaining Safety on theGround—High-Risk Operational Audits. The recentspate of US air controllers asleep in the tower orabandoning their posts while at work and leavingair crew on their own to land jumbo jets obviouslypoints to a serious underlying problem.

This high-risk operational and safety issue has prob-ably lain dormant for years before reaching thislevel of exposure. Airport locations across the coun-try from Reno-Tahoe, to Seattle, Knoxville, andWashington, DC, confirm that years of cost cutting,downsizing, and lax internal controls are now risk-ing passenger safety.

What operational controls exist for monitoring crit-ical ground crew situations? If control mechanismsdo exist, what is the frequency of these audits, andare they self-administered or managed by an impar-tial third party? Who monitors the results of theseaudits, and how can the public access these findings?

Exhibit 3 shows what happens when an industry at-tempts to compete with itself by lowering standards

for customer service and responding to operationalchallenges with a fee structure that charges for ev-erything except oxygen.

RailsThe history of rail in this country is a mixed bagfor many Americans. The United States continues tofight an uphill political battle about whether we needto invest in the next generation of transportation—high-speed rail (HSR)—and whether this is the bestinvestment for our country’s future.

We can’t stop moving forward unless we want to fallfaster behind. Although freight, passenger rail, andHSR needs differ in China and Europe than in theUnited States, we still need to move forward on therail agenda. But doing so will be difficult on threefronts:

1. High-speed rail is considered flighty and fluffywhen you don’t have a job. Congressional mem-bers, including a number of men and womenelected to office in November 2010, came inpromising not to support HSR. In a reverse showof support for HSR, two Florida state senatorsfiled a lawsuit in March against Republican Gov-ernor Rick Scott, saying he overstepped his au-thority in rejecting $2.4 billion in federal fundsto build a high-speed rail link in Florida.

2. Conflicts exist between big oil and those whosupport alternative fuel and multiple forms oftransportation. An uphill battle will ensue forupgrading our existing infrastructure and find-ing new ways to drive innovation in transportingfreight and passengers.

3. Political baggage stemming from 100-year argu-ments could cloud the next 100 years. Everythingfrom land leases to labor issues and NIMBY (not-in-my-backyard) concerns will need to be sur-faced, dealt with, and laid to rest.

Shifting buying behavior will be difficult wheregas-run automobiles, SUVs, and trucks are consid-ered primary sources of moving people and things


Exhibit 3. US Legacy and Low-Cost Carriers (LCC)


Decline of customer service and quality flyingexperience; Congress considering a return tosome type of industry regulation

What if? Airport kiosks allowed passengers to share their flight experience withairlines via a Twitter-like tool. Employees respond in real time, withcustomers electing to receive updates via e-mail, text message, or returncall

Charging customers for food and snacks, aisleseats, baggage, blankets, and early boardingfeels like individual customer punishmentsinstead of a pricing strategy

What if? Airlines made fees fun. Airline reality chef meals-on-wings contestswhere passengers vie for a chance to have their menu selected for differentroutes. Online voting for the best meal, with winners receiving gift cardsredeemable for air miles, upgrades, preflight services, or in-flight goodies

Relying too heavily on cutting costs withoutoversight that could lead to unsafe flyingconditions

What if? Airlines became more transparent. Post maintenance specifics onlinefor each plane: age of the aircraft; where the plane was serviced; ifoutsourced, name of MRO; and when it was last serviced

Reactive, not proactive, in response toenvironmental concerns of carriers’ carbonfootprint

What if? Airlines introduced door-to-door carbon footprint reduction programsand partnered with clean tech companies and passengers to discoverinnovative ways to regreen refurbished aircraft. Southwest is on the rightpath with its environmental initiatives—a nine-program efficiency initiativethat raises the bar for other carriers

Slow to innovate—alone or in partnership withsuppliers and vendors; supply-chaincomplexity and poor oversight and execution

Southwest and GE Aviation Systems’s TrueCourse flight management system.San Francisco’s new terminal—first airport to be registered LEED Gold bythe US Green Building Council

instead of an alternative to other adjacencies in thetransportation ecosystem. Continued unrest in theMiddle East could conjure images of long gas linesfrom the 1970s, resulting in an abrupt U-turn andincreased demand for faster implementation of al-ternative modes of travel.

Ironically, America’s love affair with the automobilecame about because consumers tired of the railroadbarons getting rich by controlling the tracks. Ser-vicemen returning from World War II with moneyin their pockets and paved highways to enjoy foundautomakers ready to oblige this independent, wind-in-the-hair customer. Americans became hooked ontheir personal automobiles.

According to the Environmental Law & Policy Cen-ter, Americans spend $1 billion a day on foreignoil and an average of four weeks each year stuckin gridlock. Add to this massive flight delays andairport security screenings that have rendered short-haul flights an inconvenient hassle, and rail presentsa way to give customers greater choice.

Reinvention Challenge #1: Discover Innovative Means ofTransforming Rail Usage That Address Adoption Barriers.Ideas drive innovation. Helping people see beyondthe tracks to the possible benefits derived from con-necting businesses and their customers can beginto address HSR adoption issues. Getting-closer-toideas, where companies build divisions and cam-puses in smaller towns and cities across the UnitedStates, could provide an attractive alternative toprofessionals who want to get home the same dayinstead of the ubiquitous overnight business trip.High-speed rail discounts could become the newestcompany benefit.

Reinvention Challenge #2: Deal with the Immedi-ate, Short-Term, and Longer-Range Funding Issues—Government, Private Industry, and Public Outlays. Thebillions it will cost to add new tracks and stationsand introduce coast-to-coast high-speed rail need tobe weighed against the multitrillion-dollar outlay wespend on our existing infrastructure—dangerouslyundermaintained bridges, pot-holed roads, and con-gested airports.


Critics complain about the hidden agendas and thereal price of this proposed long-range investment.Critics point to Boston’s Big Dig, which ended upcosting three times more than estimated. Los An-geles’s subway initiative continues to be fraughtwith cost overruns and delays. Congress itself is un-sure how much high-speed rail construction wouldcost. In its March 2009 report, the US GovernmentAccountability Office found that “while some UScorridors have characteristics that suggest economicviability, uncertainty associated with rider and costestimates . . . makes it difficult to make such deter-minations on individual proposals.”

Getting people back to work is a big plus for thosewho support building out our rail infrastructure.But questions still remain about who can bid forthese construction jobs—union only or any qualifiedpersons? If a closed bid, how much more will it costtaxpayers versus an open bid?

Reinvention Challenge #3: Persuade a Skeptical PublicThat Views Rail Investment, including HSR, as a Wasteof Money. The challenge of bringing all sides to thetable to discuss and negotiate something as volatileas high-speed rail is not on the short list of priori-ties in the minds of voters and government officials,especially when federal and state budget cuts will af-fect education, health care, and possibly social safetynets such as Medicare and Social Security. The run-up to the 2012 US presidential elections could tableHSR discussions well into 2013.

Pro arguments:

� Powered by clean electricity from renew-able energy sources: wind, solar, geothermal,ocean/tidal. It’s cleaner and provides a major steptoward solving global warming by reducing ouroil consumption and emissions.

� It’s a distribution channel of people, products,and freight with a smaller carbon footprint.

� Faster, more efficient mobility, enormous energysavings, reduced environmental damage.

� Creates millions of green jobs nationwide build-ing the new rail infrastructure and manufacturingthe railcars.

� Pays for itself by significantly reducing our de-pendence on oil.

� Offers a convenient, comfortable way to travelwithout delays, freedom from never-ending flightdelays and cancellations, freedom from beingforced to spend hours stuck in airports.

Con arguments:

� There is no single, long-range vision that ties acoast-to-coast rail initiative, thus making it easierto add complexity (and cost) to projects.

� The image of corruptness, bloated management,and backroom union deals still sticks in the mindof many who don’t trust the government to over-see a strategic vision of this scope.

� Why spend all this money during a deep reces-sionary time when there is little to no data onwho would actually use high-speed rail?

� Inconsistent reports on ticket prices and how longbefore high-speed rail would break even. Percep-tion that HSR is mainly for the wealthy (or atleast those with good-paying jobs).

� In the 1970s, the railroads were nearly threatenedout of existence by the popularity of air travel.The government-owned National Railroad Pas-senger Corp., better known as Amtrak, was cre-ated in 1971 and is still reliant on taxpayer moneytoday.

Exhibit 4 shows how old-style “What’s in it for me?”(WIIFM) thinking sabotages complex problem solv-ing and innovative breakthroughs when extreme col-laboration is required.

AutomobilesThe Great Recession has forced the auto industry—GM, Ford, and Chrysler—to reinvent at a faster clipthan ever before in their history, where for morethan three decades the struggling Big Three have


Exhibit 4. US Rail


Slow with investing and designing a transportationecosystem for the twenty-first century

Innovate in front of the curve: move people and freight faster, moreefficiently, at less cost, more securely, and with less environmentalimpact

We lose traction when many of the pre–GreatRecession jobs do not return and theirreplacements require new skill sets that we’renot prepared for

Proactive training and education for new jobs required for operating atwenty-first-century transportation ecosystem

Artificially high costs: line items that contribute toa bloated budget

Surface hidden agendas and address adoption barriers; aggressively moveforward in reinventing the transportation system

Historical baggage gets in the way of innovative,integrated transportation solutions

Develop a single, long-range vision that includes government officials,private industry, academia, consumers, and alternative transportationvisionaries—change makers in their fields and areas of expertise

Amtrak cannot financially support itself largelydue to Americans not using rail as theirprimary or secondary means of transportation

Rail decisions for the future continue to use rail data of the past inbuilding a case for moving forward. We need to ask differentquestions:

What would motivate riders to use rail as either their primary or secondarysource of transportation?

How will demographic shifts—particularly our aging population—changetransportation needs?

What environmentally friendly alternatives will we have to addresspolitically volatile sources of gas and escalating fuel prices?

attempted to sustain a viable business model whilethe world was changing around them.

Americans and their love affair with the personalautomobile, truck, or SUV has come with a price,as billions of dollars in taxpayer bailouts since the1970s have kept the Big Three afloat.

General Motors and its rivals were caught unawareby a dramatic shift toward smaller, more fuel-efficient cars and away from the pickups and sportutility vehicles that served as GM’s mainstay. Thecompany cut its fourth-quarter 2007 production by10 percent, and by July 2008, overall US sales hadfallen 20 percent. General Motors announced plansto idle plants to address the shrinking demand forpickups and SUVs. At the same time, it was addingshifts to try to make enough small cars.

Many of the excesses of the past—overproduction,bloated vehicle lineups, expensive rebates—are

gone. In 2009, the UAW agreed to game-changingconcessions, ending jobs banks, streamlining workrules, and freezing cost-of-living adjustments. Allthree carmakers have shed workers and a new breedof top management—outsiders to Detroit—were de-termined to keep the Big Three lean, agile, and fo-cused on building better cars that earn a profit.

It seems to be working. In January 2011, after a sur-prising recovery, Ford and GM announced profit-sharing checks for their hourly workers—expectedto top $5,000 at Ford—perhaps the largest in adecade. Detroit’s upbeat mood reflects a growingsense that these changes could drive the Big Three’sturnaround.

With sales rising and promising new vehicles on theway, the automakers are solidly positioned for fu-ture profits. But their competitors are also leanerand stronger and account for more than half of allcar sales in the United States.


A big piece of the industry’s long-term reinventiondepends on the United Automobile Workers (UAW).Founded in 1935, the UAW is still one of the largestunions in North America. In the years after WorldWar II, the union played a pivotal role in expand-ing the nation’s labor movement, and the generouspension, health care, and job security provisions itwon helped define labor conditions for more than ageneration.

Reinvention Challenge #1: Old Ways of Doing Things NoLonger Apply. Given the still fragile economy the fo-cus has shifted from wages and retirement benefitsto retaining as many jobs as possible as General Mo-tors and Ford attempt to figure out the future of sixplants staffed by UAW members.

Workers face a real choice: Do they try to turn backthe clock and fight to regain what they gave up in2009 and 2007, or do they partner with manage-ment to figure out a new way forward that allowsthem to share in the automakers’ success withoutjeopardizing it?

The automakers also face a choice: Do they restoreconcessions to keep the peace, or do they hold theline on costs and do whatever is required to remaincompetitive?

The deal the Obama administration imposed on theUAW during the industry bailout in 2009 preventsit from striking GM or Chrysler. Its only resort isbinding arbitration.

Reinvention Challenge #2: Nonunion Plants and UnionMembership Drives. The UAW membership hasdropped in the last three years, and its leadershipis keen to regrow its base. The UAW is positioningitself as a car company partner rather than an ad-versary as it renews a campaign to sign up workersat US plants owned by foreign-based car companies.The union may ask the Big Three for help in growingtheir membership base with Toyota, Honda, BMW,Hyundai, and others.

Reinvention Challenge #3: Gas Price Fluctuations. Theprice consumers pay at the pump could weaken afragile economy, dampen the outlook for addingnew jobs, and reduce pent-up consumer demand forreplacement cars or a new type of car—for example,GM’s hybrid electric car, the Volt.

Reinvention Challenge #4: Innovative and Fast-MovingResponses to Local, National, and Global Challenges.Government measures to cool China’s economycould bite into the Big Three’s sales. Sales falteredin the United States, China, Europe, and Japan aftergovernments withdrew stimulus measures.

Reinvention Challenge #5: Collaborative Partnershipsfor a New World of Business. Whether collaborativepartnering refers to automaker-union relationships,dealerships forced to close their doors, or new dealsthat increase their visibility in other countries, theBig Three have a chance to reinvent how they man-age their relationship infrastructure for the longhaul.

Exhibit 5 looks at the challenges and opportunitiesfaced by automakers and their extended relation-ships as they look to reinvent themselves while com-ing out of the economic slump.

Industry Snapshot: Journalism, News Media, andPublishingNot since the Gutenberg press printed its first copiesof the Bible using movable type has ink-print copygone through so many changes. Thanks to innova-tive technologies and devices, the world of news andpublishing continues to transform itself into a game-changing content machine.

News rooms and journalists unable to recognize andrespond to the changes swirling within and aroundtheir industry—slow to jump in and embrace thereinvention fray—will continue to lose an audiencelooking to receive content in new ways, tailored totheir needs.


Exhibit 5. Automotive


Automakers indicate that labor costs totaled $73 anhour per worker. Union bully tactics could feednegative public perception with UAW’s recent pushto unionize foreign car competitors Toyota, Honda,BMW, Hyundai, and others

The gap in labor costs has narrowed: Ford total labor cost for a workeris $59, compared to $56 at Toyota (Center for AutomotiveResearch)

Bypass union bully pulpit; grow membership base through valuecreation and innovative programs

Taxpayer bailouts as a safety net, sense of entitlement,WIIFM mentality between union and carmakers

Carmakers-AUW partners to compete in a reinvented worldCompete for the long haul

Critics portray the union as a major hindrance toDetroit’s ability to compete, muscle-flexing duringnegotiations

Introduce innovative and fair reward and compensation programsSuccessfully navigate volatile public sentiments about taxpayer money

used to keep GM and Chrysler afloatLack of vision, real leadership, innovation Vision for the long haul, value creation becomes part of the company

culture, initiate across-the-board ideation and faster vetting,decision making

Stodgy, slow to adapt to changing conditions—denial offoreign competition—unwilling to take thenecessary risks for reinventing the auto industry

Allows risk-taking across the board, reeducate/retrain for auto industryjobs of the future—creating value in front of the curve

Strained dealer relationships; many forced to closetheir doors during the recession

Innovative ways to help dealers boost sales, repair partnerships, newways to collaborate going forward

According to the Pew Center’s Project for Excellencein Journalism (PEJ), citizen media continued to ex-plode in 2009 and 2010, thanks to the popularityof Twitter, Facebook, and other social media. ButPEJ’s ongoing analysis of more than a million blogsand social media sites finds that 80 percent of thelinks are to US legacy media.

What would happen if traditional newsrooms closedtheir doors, since even citizen journalists are depen-dent on legacy media for links to their content? Al-though technology is making it easier for citizens toparticipate in content creation, it also means that thenews we get will increasingly be fast and furious.

One high-profile example was that of Congress-woman Gabrielle Giffords of Arizona and theNPR newscast team reporting she had died in anassassination attempt instead of being seriouslywounded. NPR’s two-source rule—common in mostnewsrooms—hurt the news organization’s reputa-tion when neither of the two sources were confirmedand identified before NPR went live with the story.NPR’s escalation process of running it up the flag-pole, contacting a senior editor for a second opinion,

was also overlooked. CBS and NBC did special re-ports, while Reuters repeated the mistake, creditingNPR. Social media site Twitter—where NPR hasthousands of followers—retweeted this report.

With so much news coming our way via rushedreporters and citizen journalists, consumers don’tknow whom to trust and so wind up trusting theirfavorite cable personalities, regardless of whetherthe news can be traced back to a credible source ordata lineage.

Earlier this year, CBS News anchor Katie Couricmistakenly informed her 140,000 Twitter followersthat embattled Egyptian President Hosni Mubarakhad stepped down after 30 years. The source of theerroneous report was apparently Al Arabiya tele-vision, with Reuters relaying the resignation story,later retracted by the Arabic-language news channel.

The Reinvention of NewsReinventing newsroom operations is one thing, butdo we really want our news reinvented? And whatare the longer-term risks in allowing the media to


disguise hard news—objective reporting—with sub-jective opinion?

In a November 2010 Washington Post column, TedKoppel, managing editor of ABC’s Nightline from1980 to 2005, wrote: “The need for clear, objec-tive reporting in a world of rising religious funda-mentalism, economic interdependence, and globalecological problems is probably greater than it hasever been. But we are no longer a national audiencereceiving news from a handful of trusted gatekeep-ers; we’re now a million or more clusters of con-sumers, harvesting information from like-mindedproviders.”

Although still in its infancy, online journalism israpidly reshaping the traditional media landscape.The newsroom as profit center is today’s reality.Revenue potential will drive media reinvention de-cisions, from newsrooms struggling with findingtheir pay-for-content sweet spot to profit-generatingheadliners misrepresenting their opinions for hardnews for an increasingly younger audience who maynot know the difference.

The February 2011 merger announcement betweenAOL and Huffington Post will continue to blur linesbetween entertainment and information. The $315million deal aims to transition AOL from a technol-ogy company to a media empire, further shifting thesands for Silicon Valley’s Yahoo!, Google, and Face-book. Frequently criticized for its lack of originalcontent—linking primarily to legacy news reports—Huffington Post will now have the funds to expandnews gathering and original content creation, areasthat AOL’s chief executive, Tim Armstrong, views asvital to reversing a decade-long decline. With AOL’selimination of close to 2,500 jobs in 2010, roughly athird of its staff, the new merger could add layers ofreinvention via new partnerships and collaborationopportunities with legacy newsrooms.

In its 2009 report titled Moving into Multiple Busi-ness Models: Outlook for Newspaper Publishing in

the Digital Age, PricewaterhouseCoopers (PwC) andthe World Association of Newspapers (WAN) re-ported that a future remains for newspapers andestablished brands that can gain access to the capi-tal needed to fund the transition to digital businessmodels.

One such success includes The New York Times,where the key to the newspaper’s survival lay in itsability to reinvent itself by crossing the digital abyssand attracting a younger audience—34 percent areunder the age of 30, compared with 23 percent ofthe public—who are discovering the virtues of thevenerable Old Gray Lady for the first time throughsearch engines and digital media sites.

New Technologies Level the Playing FieldRelationships between publishing houses, book-stores, and libraries, although symbiotic in nature,have been uneasy partnerships, at best, with tradi-tional publishers holding most of the cards.

The introduction of e-books in 1971 by MichaelHart, founder of the Gutenberg Project, with atyped-up version of the Declaration of Indepen-dence, by 2010 had made over 31,000 public-domain e-books available for free download.

In the 1990s, niche and small-press publishersstarted to leverage the Internet by offering e-booksfor sale that were read on computer screens. Mar-keters helped make the e-book a must-have in theirindustry, and within 10 years, the viral impact ofe-books—cheap to produce and free to distribute—began to transform the publishing landscape.

Sony offered the first successful e-reader with itsRocket in 1997, but few sold at the time, since e-books were such a small part of the market.

Amazon came out with its own competitive prod-uct with the invention of the Kindle 10 years afterSony’s release. The Kindle could not only read e-books, but also accepted orders for new ones and


instantly downloaded the book to the reader, givingusers more power over their pocketbooks within thedevice itself.

By 2009, the sales of e-books had taken off, withmultiple bookselling corporations investigating howe-readers could be used to boost sales.

But it was the triage of content, hardware, andsoftware innovations that offered real industry dis-ruption. Apple’s release of the first iPad in April2010—the company sold 3 million of the devices in80 days—transformed the industry and altered howpeople viewed e-books and online content. With therelease of the iPad2 in March 2011, Steve Jobs notedthat close to 15 million had been sold in its first ninemonths on the market—more than all other tabletPCs.

Today’s tablet landscape, with devices ranging fromAmazon’s Kindle and Barnes and Noble’s Nook toApple’s iPad and Motorola’s Zoom, is leveling theplaying field between traditional publishers, inter-mediaries, and authors.

One success story comes from a woman who by-passed the traditional vetting process after attemptsto interest a publisher in her work failed. AmandaHocking sells more than 100,000 copies of her nine,young-adult paranormal books each month. Virtu-ally all of them are e-books selling for $2.99 each,where she keeps 70 percent of the revenue, with theremainder going to the online bookseller.

Acclaimed author and marketer Seth Godin is fur-ther expanding and redefining how books get intothe hands of the reading public. His partnership withAmazon aims to bypass the traditional publishingmodel with his “Powered by Amazon” imprint, theDomino Project. His first book under the imprint isappropriately titled Poking the Box.

“Brick-and-mortar” bookstores are feeling the one-two punch of online competitors and their e-book

cousins. Ironically, large chains responsible for theclosure of many mom-and-pop bookstores are nowat risk of closing due to fast-moving industry shifts.

Borders, the second-largest bookstore chain afterBarnes & Noble, was slow to respond to industryshifts as e-books took off and its competitors gainedfootholds in the marketplace with their branded dig-ital readers, the Nook and Kindle. It was unable tokeep pace with Barnes & Noble—the largest book-store chain—and discount chains led by Wal-Martand online retailer Amazon.

What this all means for new media, the publish-ing industry, and adjacency technology companiesis still up in the air. But these game-changing dis-ruptions and innovations are poised to change howwe learn—schools are piloting the use of e-readersand e-books as alternatives to print—collaborate,connect, and communicate in a reinvented world.

Reinvention ChallengesHere are five challenges for reinventing the journal-ism, news media, and publishing industry.

Reinvention Challenge #1: Reinventing the Business ofTomorrow While Continuing to Sustain Operations Today.Although reportorial journalism is getting smaller,news media is not so much shrinking as movinginto areas driven by new technologies and innovativedevices, from smartphones to media tablets.

Before jumping into all things social from bloggingto video to tweeting, news organizations need to firstdetermine their immediate, short-term, and longer-range strategic goals: 90 days, 6 months, and 18months, respectively. Budget centers must be sepa-rate, with a reporting structure for the reinventionteam outside of operations and with well-developedexecution plans, objectives that are trackable andmeasurable, and clear lines of ownership. By keepingthe day-to-day process team and reinvention teamseparate but collaborative, both teams ensure that


they don’t muddy their outcomes and become dis-tracted with conflicting goals.

Reinvention Challenge #2: Retaining News Source Qual-ity and Original Data Source Traceability. Even if wetrust citizen journalists, we still don’t often knowwhat fact versus opinion is. The editorial versus thenews division is now blurred and will continue toblur. With news conglomerates able to quash, re-hash, and selectively choose the content it presentsto users—vanilla news—it also becomes easier tomanipulate public opinion.

Has WikiLeaks become the new muckraking model?In a Los Angeles Times article “WikiLeaks ReflectsNew Model for Muckraking,” reporters Noam N.Levey and Jennifer Martine state that maverick Ju-lian Assange “has helped pioneer a new model forusing the Internet to unearth classified governmentdocuments and private corporate memos.” Assangehas publicly embraced the role of muckraker, usingmodern technology to do what he says the main-stream media are not doing enough of, althoughhe has acknowledged that in many cases WikiLeaksdoes not know the source of a leaked document.

As the pendulum swings from one end ofthe spectrum—little or no original data sourcetraceability—to users more willing to pay for ver-ifiable content, we are seeing new business modelsand innovative start-ups differentiate themselves asresponsible content providers.

Reinvention Challenge #3: Reinventing Traditional Jour-nalists into Hybrid Content Providers. Legacy news-rooms will look to increase the number of hybridjournalists who can write for the printed page andthe digital screen. More journalists will take thelead in their own career reinventions, regardless ofwhether their legacy employers adapt to the newreality.

Multiskilling—training an employee to cover arange of different jobs—is the reality of many

newsrooms today, with staff mastering both onlineand print. Minimally, journalists are expected to cre-ate content for all channels.

According to a survey from the Pew Research Cen-ter’s Project for Excellence in Journalism and theOnline News Association, journalists who work on-line are more optimistic about the future of theirprofession than are news people tied to off-line tra-ditional media, but they still believe the Internet ischanging the values of journalism for the worse.

Reinvention Challenge #4: Boldly Go Where Other LegacyNewsrooms Do Not. As the convergence of print andonline continues in the reinvention of traditionalnewsrooms, bold leaders willing to take risks in anindustry accustomed to playing it safe will becomethe new 3.0 game changers.

Legacy newsrooms will continue to look under thehood for their own spin-off opportunities. Factchecking—a rigorous and largely thankless job—isan interesting example of a job that has spun offinto its own niche and online presence. PolitiFact, a2009 Pulitzer Prize–winning fact-checking venture,appears to be filling a void with its Truth-O-Meter.Others in the field include the Seattle Times’s TruthMeter, a fact-checking initiative that aims to sepa-rate truth from fiction in the political arena, and AZFact Check, a partnership announced in 2010 thatincludes the Arizona Republic, Phoenix’s 12 News,and the Walter Cronkite School of Journalism andMass Communication at Arizona State University.This trend appears to be picking up steam, accord-ing to the American Journalism Review, with at leasttwo dozen media organizations or universities hav-ing launched or joined fact-checking operations in2011.

Reinvention Challenge #5: Discover New Ways to Col-laborate and Manage Ongoing Publishing Relationships,Policies, and Contracts. Industry disruptions and in-novations are changing who controls the publish-ing levers and the distribution channels. Due to


Exhibit 6. Journalism, News Media, and Publishing


Ranks of self-interested information providers growrapidly, news organizations blur the lines ofreporting and their relationships to them—lesstransparency—and truth in news becomes harder toconfirm. When it comes to audience numbersonline, traditional media content still prevails,which means the cutbacks in old media heavilyaffect what the public is learning through the newmedia.

News organizations define their relationships with contentproviders—online and print—with clear traceabilitybetween journalistic and independent content.

Increased competition from further afield. Existingcustomer relationships are at risk because of newcompetitors with innovative, value-added services.

Business spin-offs by traditional newsrooms and publishinghouses offering outsourced solutions for legacy newsroomsand publishers who can no longer afford to supportdifferent lines of business.

Legacy newsrooms stuck in the past with no strategicplan on how to move forward and manage theirfutures.

Newsrooms prepare for the attention economy, whereinformation is no longer a scarce commodity; attention is.The digital generation—people younger than 25, who havelived most or all of their lives with the Internet—demandfaster content delivery and more enriched, connectedexperiences that will affect truth in news coverage.

Controlling partnerships versus collaborativepartnerships.

Ongoing efficiency gains. Finding new ways to cooperate withsuppliers by shifting the financial burden of offeringnext-generation products and services.

The printed book purchased in brick-and-mortarbookstores and checked out from brick-and-mortarlibraries.

Digital information and distribution channels that level theplaying field and allow pricing models that reflect a newdigital golden age.

the explosive growth of e-books, HarperCollins an-nounced in March its intent to limit the length oflibrary e-book licenses and the number of checkoutsallowed per license. In the past, library licenses havebeen unlimited, but trade publishers are debatingthe digital future where a single e-book license toa library never expires, never wears out, and neverneeds replacement.

Pricing of digital products by traditional publishersand the e-book royalties shared with authors willoffer opportunities for both to rethink and redesignthe boilerplate contract of the past. Authors willlook for a bigger piece of the royalty pie, and pub-lishers will look for authors to evolve into creativebusiness partners. Disruptive concepts, policies, andprocedures will follow close behind the innovativetechnologies.

Exhibit 6 looks at the big shifts occurring in theworld of journalism, news media, and publishingdue to technological advances affecting how peopleconsume the news (online, smartphones, tablets) andthe changing demographics of who consumes thenews (digital generation).

Facing the Facts: The Old Rules No Longer WorkIt is one thing to talk about America’s reinvention—write some policy and maybe even fund a fewprograms—but quite another to execute a full rein-vention for the long haul. This requires a receptiveculture for change, commitment from the top, focuson what to achieve and when, champions through-out the organization, project implementation teams,trainers and coaches for people who get stuck, mea-surements and reporting mechanisms, and recogni-tion and rewards that are consistent and fair.


Exhibit 7. The 10 Essential Elements to Succeed in the New World of Business

1. Vision and Values Rethinks and reinvents strategic vision for the new world of business. Core values model consistentmessaging, measurements, and accountability that set the tone of trust for the company.

2. Entrepreneurship Design and deployment of entrepreneurial capabilities throughout an organization that extends itsinfluence to the intricate ecosystem of customers, partners, suppliers, and communitysupporters. Creates new growth opportunities and sustains the business while evolving theculture.

3. Navigation Entrepreneurial leaders bridging marketplace inflection points, organizational transition, and talenttransformation; helping the workforce shift into role of value creators and innovators. HRtransitions from administrative role to that of innovation catalysts.

4. Responsible RiskTaking

Accountable leadership and responsible workforce decision making that incorporate the longer-viewimpact of decisions when moving the organization and business forward. Personal risk taking isvalued, rewarded, and an integral part of the culture.

5. Disruption andDiscontinuity

Leadership capable of connecting the dots in new ways. Leverages innovative technology anddisruptive-style collaborations that move the organization forward.

6. Experimental andExploration

Research and development is an integral part of the organization’s innovation engine. Leadersrepresent new-world-of-business thinking: agile, flexible, and tied to business results.

7. Innovation andInvention

R&D is seen as an investment strategy versus short-term business response. Leaders successfullyleverage the inventiveness of their ecosystem—workforce, customers, partners, suppliers, andcommunities—as a means of continuous innovation and new business growth.

8. Transition andTraining

Designs organizational capability for reinventing in front of the curve and for longer-term businesssustainability. Delivers ongoing training for new market innovations and emerging areas ofexpertise.

9. Networking andCollaboration

Innovative means of engaging workplace talent. Leaders extend influence throughout theirecosystem of relationships, build bridges, and inspire others to do the same. Leveragetraditional and digital collaborations for a new reality.

10. Execution Organization successfully deploys innovative products and services amid market shifts andworkplace disruptions. Leaders reinvigorate operations to repurpose programs and reinventprocesses. Transforms the business through end of cycle management of products and servicesin preparation for new growth.

The United States has two options, either of whichwill change the course of this country for years tocome:

1. We can aggressively take steps to relevel the play-ing field—what President Obama in his State ofthe Union Address called out-innovating, out-educating, and out-building the rest of the world.

2. We can choose to ignore what’s happening—atour peril.

New Rules for a Reinvented WorldThe rules have changed, and today’s world is dif-ferent. Whether you apply these new rules for tran-sitioning from the old ways of doing business to

the new, leading transformation inside your orga-nization, or managing your career, there are fiveoverarching tenets that govern these changes in areinvented world.

Size Doesn’t MatterIn today’s world of mobile access, pennies per daystorage costs, and social connectivity, businesses ofall sizes are able to compete on a more level play-ing field. America’s challenge in the next three tofive years is to ensure equal access to new tools andemerging technologies, especially as budget cuts foreducation and the closure of K–12 schools across thecountry create technology chasms. Equal access in-cludes the affordability of new technologies for the


smallest of small businesses in helping them com-pete, regardless of size.

Becoming Your Own Safety NetThe Great Recession has been a stark reminder forworking Americans that neither big business norgovernment can provide all the required safety netsfor this newest reality. Our schools and universitiesmust train their teachers and professors to preparestudents for a lifetime of career reinventions and theskills needed for reinventing businesses in front ofthe curve, whether they work for an employer orfor themselves. Consolidation and innovative part-nering between nonprofit businesses could occur inthis country, as government support dries up and re-quires niche social safety nets to reinvent themselvesin new ways.

Innovation: The New CurrencyThe demand for truly innovative products and ser-vices will never go away. Innovating in new, fasterways where innovation tribes gather to create, solve,and improve at lightning speed, disband, and moveon to the next opportunity will need to become com-monplace. Organizational politics could be a thingof the past, as cross-functional silos won’t havea chance to develop. Professional titles will meannothing in a reward system where innovation is thenew currency and value creation defines the newworld of work.

Cultural Collaboration: The New InfluenceCompeting in the global marketplace requires a cul-tural mind shift. Navigating the more nuanced as-pects of cultural communication used for solvingcomplex problems and creating bridging opportuni-ties for innovation, whether in the next office or onthe other side of the world, will increasingly becomethe skill of choice for employers and customers.

Reinventing in Front of the CurveThe inflection point in differential calculus is at thepoint when a curve changes sign from a positive (up-ward) curve to a negative (downward) one. A curva-ture can quickly change signs (positive or negative)once an inflection point is reached. In business, youwant to reinvent better, faster, and at less cost thanyour competition. In a career situation, you wantto reinvent before you become stale and compla-cent and sabotage your own efforts. Inflection pointlearning doesn’t require knowledge in differentialcalculus, but it does require business acumen, cog-nitive skills, research and data analysis, and a gooddose of intuitive sense.

Exhibit 7 lists each element and its correspondingdefinition as we explore how individuals success-fully apply these 10 essential elements in their worldof business, community outreach, or personal andcareer development.

The TakeawayThrough these four industry snapshots, you havelearned the importance of operating in the newworld of business and the risks associated whencompanies cannot, or will not, reinvent to remainin front of the curve—innovating before the busi-ness requires it.

Dee McCrorey is the innovation catalyst and chief risk guruof Risktaking for Success, a consulting and training businesslaunched after a 25-year career managing complex supplychains and leading global teams in software development andbusiness reengineering initiatives. This article was excerptedwith the permission of the publisher from Innovation in aReinvented World: 10 Essential Elements to Succeed in theNew World of Business by Dee McCrorey (Wiley, c© 2012by Dee McCrorey).


Documents

Book highlight—The old world of business versus the new world of business in four major industries