Extreme Competition: Innovation And the Great 21st Century Business Reformation

For a "hot off the presses" view of what one of the experts in the BPM and IT communities thinks about how the new "flattened" global economy will impact our industry, take a look at Peter Fingar's recent book "Extreme Competiton: Innovation and the Great 21st Century Business Reformation" (see the provocatively illustrated Executive Summary).

When Peter Fingar spoke at the October 2005 ABPMP meeting (which was hosted at the Galvin Center) he described his new book as trying to be a "wake-up call" for the US. With the new global economy, the US will no longer be at the head of the pack in the new knowledge economy of knowledge workers and the continuing dearth of interest in the US among younger folks to go into the software/knowledge engineering field will quickly put the US economy behind the pack.

This book tries to explain what the effects of Friedman's "flattened global economy" mean for our industry and how that all adds up to extreme competition and innovation engineering, with extreme globalization and extreme mass-supply chains making it possible for even the small shops to compete, and (from Clyde Prestowitz' book) the three billion new capitalists from the emerging markets in China, India and the former Soviet Union ready to take advantage of them.

So, what strikes fear in the hearts of business leaders these days? Globalization and Commoditization. We are not on the brink of a new world economic order, we've already cross that threshhold.

Fingar predicts that even what we today call innovation and "agility" won't be enough -- we'll need the "second derivative" of that, which is being able to quickly respond to change by continuously innovating and reinventing ourselves and our business processes (think of "extreme refactoring" and "continuous integration" but of an entire enterprise's business processes and supporting technology infrastructure).

We will need to focus on extreme collaboration and enabling human interaction in the customer experience as we involve the customer in our efforts. Tools and technologies to both involve/enable our customers and to enable our businesses will need to provide advanced and innovative human interaction management in order to allow us to globally and adaptively collaborate with agile responsiveness. In the era of the "always on, wired world", how can companies compete?

Operational innovation-where you forge new relationships across to globe to form extreme supply chains, pursue extreme innovation and collaborate with extreme specialists-is the next true source of competitive advantage.
. . .
Innovation is the new "holy grail" of business because with the whole world now a source of supply, your company must innovate to avoid becoming a commodity player that cannot make margins.

Fingar uses "connect and collaborate" as the catch phrase for how this new operational innovation will be accomplished. Being innovative isnt enough. To compete and dominate, you have to set the pace of innovation, and and connect and collaborate with such operational efficacy that your competitors simply cannot keep up with the pace of your "continuous innovation."

Then there is that matter of the scarcest resource, the most valuable resource--time. If you want to succeed today, you must become a time-based competitor. ... Being a time-based competitor allows you to earn solid margins be being responsive to your customers. Customers love responsiveness and, in turn, will reward you with loyalty and increased business. Being a time-based competitor allows you to be first-to-market where you earn the greatest premiums, and allows you to set the pace of innovations in your industry.

Fingar also notes that the kinds of innovations needed will be more service-focused rather than product-focused, centered on how you operate, how you deliver services to your customer, to create a "customer experience", and how you empower your customer with information to be "in control" of the whole process to demand what they want when, and at what price.

I'll be blogging more next month on various aspects of this book and some of the strong tie-ins to CM and Agility.