The Connected Company

 In Industry News

In The Connected Company, Dave Gray makes the statement on page 8 (of the ePub version) that this book is based on other people’s thinking. I will agree. There is not much new thinking in this book. However, the book is still definitely worthwhile reading.

The short version: Consumer market conditions are changing so fast that the traditional hierarchical and top down driven organizations cannot adapt fast enough to accommodate these changes. The inability to respond to changes in consumer market conditions increases exponentially with the size of the organization. Success can be a fast route to failure. Hierarchical, rule based and top down driven organizations cannot deliver quality service. Service is delivered in the touch point with the individual customer. It is not possible to foresee exactly what is required to deliver a positive experience for each customer. The person delivering the service most be empowered to do what is necessary to make the individual customer happy. Unhappy customers can create a tornado of bad-will through social media and be devastating to any brand.

“The Connected Company” is well written and Dave Gray delivers his messages convincingly. The book and its contemplations are primarily related to companies and organizations serving consumers. The book is not addressing similar issues for B2B type companies.

Services, production and security

Living in Scandinavia, we are used to flat organizations and a high degree of delegation. With the lowest power distances in the world, Scandinavian companies already rely on the principles promoted in “The Connected Company”. Unfortunately, this doesn’t always translate into good service. You can also empower people to terrorize their customers. Mechanisms to monitor and manage quality levels still need to be in place.

Although I strongly believe in the connected company philosophy, there are situations where I prefer to be served by an old fashioned, rule based organization. I can live with a lot of variety and individualism when I buy a cafe latte at my local Cafe, but not when I fly, go to the doctor or have my car in for maintenance. I do hope that the Mac I buy from Apple is produced under the most stringent quality control circumstances. Even the most friendly and flexible customer service representative will have a tough job compensating for the consequences of a poor product.

The combination of excellent products and excellent service is powerful. Excellent service is not always individual service.

A year ago my iPhone stopped working. I checked the Apple web site and found a service where Apple will send you a new iPhone immediately. When you receive the new iPhone you return your defective iPhone in the packaging delivered with the replacement. You have to call Apple to initiate this service. You also have to call the logistic company to come and pick up the defect product. But it all works so smoothly and you have a replacement in just a few days.  When you turn on your new iPhone it automatically installs everything from your previous iPhone. This experience was so powerful that I – in the foreseeable future – won’t bother looking at any other brands than Apple for my smart phones.

Creating and leading a connected company = alignment

The book does offer discussions on how you create, lead and push your connected company forward. Part four of the book is devoted to “How do you lead the connected company”.

An interesting observation is made at the very beginning of this section:

Strategy is usually considered the province of senior executives. But senior executives are in some ways the least qualified to envision the future, because they are the most invested in the past and the least likely to be around in the long term. In a connected company, strategy happens at all levels, across diverse groups and different time scales, generating a rich pool of experiments for senior leaders to draw from.

The delegation of strategy and execution requires very strong alignment around purpose, objectives and values. The book doesn’t offer much help on how to check and ensure alignment. Maybe it is beyond the scope of the book to address the alignment issue, but a connected company must be based on people with a strong passion for the same purpose, objectives and values. The leader of a connected company cannot ignore the alignment challenge. Continuous alignment becomes one of the top priorities of leaders in a connected company. Even minor differences in the perception of purpose, objectives and values will tear a connected company apart. Tools and process for continuous alignment must be in place.

The connected company and the power distance

As mentioned above countries with low levels of power distance will have a much easier job of embracing “the connected company” principles. Both the management and the operations people will be comfortable with this structure. The operational people will thrive with the empowerment and the leaders will accept mistakes and failures as the price paid for increased productivity and improved customer service. Autocratic and feudal type environments will have a hard time moving in this direction. The leaders don’t want to delegate the “power” and the operations people are reluctant to take it. It will be interesting to see how the proliferation of connected companies will happen around the globe.

The connected company, by Dave Gray and Thomas Vander Wal, O’Reilly, August 2012

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