Challenger and Establishment organisations in the news headlines.

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Sony.

Have been following the coverage on Sony for a while. Our interest is from a couple of Challenger perspectives. Not least that Sir Howard Stringer is the first foreign head ever to have run the organisation! They have also been struggling to bring a Challenger Spirit alive internally, limited by internal battles and the struggle to compete in the digital era.

It was a particular bit of data though that caught our eye. 

During Sir Howard's time leading Sony, they have spent Y530bn on restructuring whilst delivering less than half that figure - Y220bn - in net profits in the same period. 

From the Financial Times 3 Feb 2012.

Research In Motion.

I read last week about how the new CEO and Board at RIM (manufacturers of the Blackberry) disappointed analysts because 'they would continue with the existing strategy and planned no seismic changes'". It made me wonder how you judge the right point for "seismic change". I can equally well imagine that by declaring "seismic change" they would have paralysed the organisation and disappointed analysts by trashing the old strategy. It makes me more committed to the idea that there is space between these polar extremes which starts with some moderate experimentation to promote learning and progress.

HMV.

The slow death of a retailer with who I spent so much of my time and money during my teenage years. HMV has been overtaken by Amazon as the UK's biggest retailer of entertainment products by share of spending.

If you combine what is spent on entertainment products through Tesco and Asda they also over take HMV.

Source: Kantar Worldpanel

Booz and Co. published their 2011 annual report - The Global Innovation 1000 - and repeated the same message that the report has found for each of the past seven years.

"There is no statistically significant relationship between financial performance and innovation spending, in terms of either total R&D dollars or R&D as a percentage of revenues. Many companies consistently underspend their peers on R&D investments while out-performing them on a broad range of measures of corporate success, such as revenue growth, profit growth, margins, and total shareholder return. Meanwhile, entire industries, continue to devote relatively large shares of their resources to innovation, yet end up with much less to show for it than they — and their shareholders — might hope for."

A report from the music industry's international trade organisation, IFPI, suggests that the industry is close to the point at which growth from digital revenues is offsetting the declining sales of CDs. Thanks to a combination of subscription services and tougher action on piracy. Must investigate this more, good to see a story where the Establishment has learned to challenge itself over time. 

Encyclopedia Britannica

I was saddened by the headline 'Encyclopedia Britannica halts print publication after 244 years', the demise of such a great institution. That was until I read the article and was heartened by the way they have managed to re-invent themselves when so many others have failed. 85% of the company's revenue is already from other sources … hooray! No mean feat when you have 244 years of history.

Goldman Sachs

From the Gaurdian yesterday, “Goldman Sachs director quits ‘morally bankrupt’ Wall Street bank” saying “I can no longer in good conscience say that I identify with what it stands for”. The bank responded “We disagree with the views expressed, which we don’t think reflect the way we run our business”. I imagine there is some truth in both opinions, I hope that enough curiosity can be shown to find out where it is.

Blackberry-maker plans new focus: RIM's decision to refocus its business back on corporate customers makes sense in terms of prioritising its resources but I can't help feeling that the days when we could neatly divide our lives between work and non-work are long gone. Most people only want to carry one device, so although it might suit RIM it might not be relevant to its customers.

Asher Rickayzen said:

Research In Motion.

I read last week about how the new CEO and Board at RIM (manufacturers of the Blackberry) disappointed analysts because 'they would continue with the existing strategy and planned no seismic changes'". It made me wonder how you judge the right point for "seismic change". I can equally well imagine that by declaring "seismic change" they would have paralysed the organisation and disappointed analysts by trashing the old strategy. It makes me more committed to the idea that there is space between these polar extremes which starts with some moderate experimentation to promote learning and progress.

With all the coverage in the UK media recently of sausage rolls and cornish pasties I have enjoyed learning a little more about the high street baker Greggs. I had always thought of them as a bit of a people's champion type of Challenger and was interested to learn that the size of their retail estate makes them bigger than McDonalds. Although the CEO Ken McMeikan is keen to point out their shops are tiny in comparison. Even so, a good example of a Challenger holding on to its core despite being a substantial size. 

Read this article about the difficulty of challenging the 'Big 4' high street banks (http://www.guardian.co.uk/business/2012/apr/06/challenging-big-four...) which I found very interesting. I wonder whether the Challenge is less direct with parts of their business being eaten away at the edges by the likes of Wonga and Paypal. Or alternatively, whether someone with a strong brand and an existing financial relationship with customers steps in and completely changes the paradigm eg Apple?

From a new book on the turnaround at Ford. The Things I Learned from Alan Mulally by Bryce G. Hoffman. A great example of tapping organisational history as a source of hope and ambition for the future. So many of our Establishment organisations could challenge their status quo if they went backwards and tested themselves against some of the founding principles of their organisation. A good place to start. 

"Mulally knew that every organization needs a clear and compelling vision. At Boeing, it was all about shrinking the world and bringing cultures together through jet transportation. When Mulally arrived in Dearborn, one of his first priorities was identifying Ford’s value proposition. He found it in the company’s archives, in an old Saturday Evening Post ad from 1925 in which Henry Ford outlined his own vision for the company: “Opening the highways for all mankind.”

Mulally had that ad blown up and mounted on his wall. He passed out copies to each of Ford’s top executives. And he made sure that all future product decisions would be weighed against that promise. It might sound hokey, but he was dead serious—and it made a real difference on where Ford focused its R&D investment. 

Sacrifice and over commit. A big organisation challenging itself from the inside. 

http://www.telegraph.co.uk/finance/newsbysector/pharmaceuticalsandc...

Glaxo has also been focusing on improving its internal R&D activities. After carrying out a Dragons' Den-style review of its 38 groups of scientists, known as Discovery Performance Units, Glaxo said it had closed three units and created four; of the remaining units, six had investment increased and five had it cut.

Sir Andrew said establishing the units had "created a degree of accountability we've never seen before" and the Glaxo has managed to lift the financial returns from its laboratories to an estimated 12pc from 11pc two years ago. It is confident of reaching its long-term 14pc target.

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