This morning David Brooks wrote a piece in The New York Times called “Globalism Goes Viral”  http://www.nytimes.com/2009/04/28/opinion/28brooks.html?_r=1&ref=opinion and in that piece I thought he did one thing very well, but strangely I thought he missed an obvious conclusion from that initial point.

The first point was that in this flat world we live in (and  he didn’t call it that, and since his office is right next to that of Thomas L. Friedman at that paper, my guess is that he doesn’t have any motivation to further boost Mr. Friedman’s ego), just as it can be great for business for things to happen so fast in a flat world, the dark side is that a virus like the swine flu can also spread just as fast now.  I hadn’t thought of it like that before, but he’s right and it is a little scary how important it is that we stay ahead of these things or it will get very bad very fast.

Then he went on to talk about the tradeoffs of managing this swine flu issue in a centralized vs. decentralized manner, concluding that the latter is more sensible.  My reaction is that better the solution is embedded in his thesis and that he needs to rethink the choices.

While it may seem like a gray area to some, I think that the right answer for this situation is a third option which is enabled by the flat world and that is a decentralized approach (each government and region figure out what’s best for them), but with a centralized virtual guidance board made up of the heads of the Centers For Disease control here, and their respective counterparts around the world, ensuring that the best and current information about the spread and the cure travel at the speed of light.  Literally.

I would love to hear your feedback on this.

-Ric

P.S. Despite the evidence to the contrary, I don’t get all of my ideas for things to talk about from The New York Times.

My previous “Companies I love” post was about Concept2 and I spent a lot of time explaining the world of rowing because it’s an unfamiliar topic to many. This post is almost the complete opposite, and that’s one reason it will be a lot shorter.

FM Global is an insurance company that I have known about for about five years.  I spent some time with them five years ago and that was when I learned about their business model and I have loved them ever since.

The basic premise of my work is to first focus on “what” you are doing before asking how you do it.  For many companies in an industry, “what” they do is identical, or close to it, to what their competitor does, and decisions about which “whats” will differentiate the organization is the basis of their operating model.  The thing I love about FM Global is that they have a whole series of “whats” that most insurance companies don’t have, and it makes so much sense to me, I don’t know why other organizations don’t follow suit.

I am not going to tell you that I am an insurance expert, but I understand the basic premise of insurance is that they will pay to fix or replace something of yours if you pay their regular fees and your risk profile is within their tolerances.  And in that sense, a lot of insurance companies are the same and they differentiate on price or customer service or something along those lines.  What I love about FM Global is that they have an entire group of people who go out to their clients and actively help them reduce their risk.  It’s a whole set of “whats” around Manage Client Risk that just don’t exist in other insurers.  They have engineers who, for no additional fee, will go out to an insured building, for example, and spot high risk areas and propose changes.

So instead of sitting on the sidelines hoping for the best, they actually step in to take an active role in risk reduction for their clients.  It’s a big cost to add these “whats” but it makes all the sense in the world because it helps their clients and it reduces the number of claims they have to pay. It’s a great model and given what we have seen with both the housing market and the automotive mess, it’s too bad there weren’t more FM Global people focused on those areas or I bet we wouldn’t be in this mess.

-Ric

One of the first things I do when talking with organizations from nonprofits to the Fortune 500 are which parts of their organizations are most valuable, and which things about their products are services are most valuable to the people with whom they interact.  Value to the organization is made up of three things:

1) How much does it connect with brand and identity, in terms of why their customers do business with them?

2) Does the block of work have a connection to a major metric / a key performance indicator?

3) Is there any value in improving the performance of the work?

While those questions, and their answers have proven to be very durable over the years, there is a new challenge for organizations around the world.  The answers are changing.  Fast.

As organizations look for ways to cut costs, protect the revenue streams they still have, and even grow the so-called recession-proof areas of their business (with maintenance contracts, the small niche high quality markets that have inelastic demand, and so on), the things that they value are shifting, partly because of the need to cut costs (where an annual conference that has gone on for years is now being questioned, first whether it can be done with fewer people, then whether it can simply be done over the phone, and then whether it is truly discretionary, and yesterday’s discretionary is today’s “are you serious?”.  That’s the comparatively easy part.

The harder part is staying in tune with what your customer values, because their ideas of required and discretionary, are moving as well.   There are two basic elements to staying on top of this:

1) Be specific about which customers you value the most (I have written about that before)

2) Figure out how their values are shifting right now

This isn’t easy, but it’s really important right now.

I usually have some examples of organizations in my blogs, but right now, things are moving so fast, I don’t have a great example of an organization that is being really smart about cost cutting while tracking the changing values of their customers, but as soon as I find some, I will let you know.

-Ric

Recently the head of the oversight committee on the financial crisis, Elizabeth Warren was on Jon Stewart’s show, and after he asked her a couple of questions about the magnitude of the mess, and she said, repeatedly, “I don’t know” he looked at her and asked “do you have Excel?” which at the time seemed not only the right question, but also very funny.

Now I am not so sure.

Mortgages are getting foreclosed all over the place these days, and it seems like every day the paper has a picture of another really sad story about someone who is losing their house.  Today was no exception.  But the story today was different in that there was a report about a case in Florida where Judge Walt Logan was dealing with a case with a company that was trying to foreclose on a house even though it had never loaned any money for that house.  Judge Logan insisted that this company explain how it came into possession of the mortgage that it was now foreclosing, even being so courteous as to ask “don’t you think that’s reasonable?” and the reply was “I don’t” and he went on to say that it would be impossible because the way mortgages have been traded over the years has made it all but impossible to track the paper trail.

My work is all about causality, getting to what is the cause of performance and what specific changes to smaller pieces of work will cause the bigger pieces to get to a better performance or outcome.  If we lave lost traceability (which is also accountability) in the mortgage business, there’s no assurance we are making any of the right moves and this is way past being an Excel problem.  Yikes.

-Ric