Flat World Strategies

The World is Flat, provides a detailed perspective, with scores of examples, of ways in which companies … even small ones … use technology to provide products and services that are better, faster, and cheaper. Those companies become more competitive, and enjoy growth and profitability. As most firms in our profession may not believe these ideas can apply to them, here are seven rules Friedman provides – along with Stu tips – for helping companies take advantage of the “flat world.”

1. When the world goes flat – and you are feeling flattened – reach for a shovel and dig inside yourself. Don’t try to build walls.

Usually, a 35-person firm competes with others about that size. Giant firms now subdivide to compete with a smaller firm. A one-person firm, with a home office and a team of specialists also competes with the larger firm – and less expensively. The technology and software make all three situations look similar to a client. If all firms can, with technology, perform all tasks, we become a “commodity.” Clients then think …

Why not save money?

The counter strategy: Go inside yourselves and identify your real core competency. You need to offer something that’s both valued by clients and truly unique.

2. And the small shall act big.

Smaller firms can act big, by using the new tools for collaboration – even globally – to reach further, faster, wider, and deeper. Find the best specialists you can – anywhere – and pull together unique teams tailored to each project. Top specialists you couldn’t afford are now affordable; you need much less of their time. The mundane support work can be done where the price is lowest. With conference phoning, video conferencing, and email … team members can be anywhere.

3. And the big shall act small.

The idea is to let your clients act big. Let them lead your firm. Elicit feedback on your performance, and suggestions that would make your services more valuable. Clients can suggest changes in how you organize your firm and your projects, how you might better deliver your services, and even how you might structure your invoices. Larger organizations are often seen as less personal; that needs to change.

4. The best companies are the best collaborators.

More business will be done through collaboration – within and between companies. Creating differentiating value can be so complex, no firm …or group within a firm… is going to be able to master value-adding differentiators alone. Your firm, or group in your firm, should focus on honing its core competency. All else may be done by collaboration with a variety of specialists. Partnering itself is a core competency.

5. The best companies stay healthy by getting regular chest X-rays, and then selling the results to their clients.

A company X-ray consists of breaking all components and functions of your firm into separate “boxes.” Each is described as a cost or an income source, or both. Decide which functions are unique core competencies and which are commodities – that others could do cheaper and better. When you’re finished, you’ll usually see two or three hot spots; your core competencies. You may discover other unique skills you didn’t see as unique that should be expanded. Commodity functions can be streamlined or outsourced, to save money … to invest in building your core.

6. The best companies outsource to win, not to shrink.

Companies outsource to be able to innovate faster and more cheaply, in order to grow larger, gain market share, and hire more and different specialists … not to save money by firing more people. When you shed certain needed but commoditized functions, by outsourcing them, you focus more on differentiators. That gives you what clients will see as a measurable competitive edge when you’re marketing your services. That edge improves your hit rate, growth, and profitability.

7. Outsourcing isn’t just for Benedict Arnolds; it’s also for idealists.

The world is evolving a growing number of “social entrepreneurs.” They desire to make a positive social impact on the world, but want to do it by “teaching people to fish, not providing them with fish,” so they can feed themselves for a lifetime. These people often have a business school brain with a social worker’s heart.

Outsourcing commodity work to people who can do it a lot less expensively provides a higher than average living in their environment. That can mean outsourcing to people in developing countries – and have some of your work well done for ten to twenty percent of the cost. It can also mean outsourcing to disadvantaged groups within the U.S. – to people who are eager to do your more mundane work.

Friedman’s book, The World is Flat, provides detail and examples. The trick: adapting the ideas to your firm. Many firms are struggling in mature markets, complaining about higher marketing costs and lower profits. They’re unhappy that clients hold them in lower esteem, and see them as commodities. The responsibility for changing the situation rests on us. Setting time aside to think seriously about these guidelines – and to then apply them to the specifics of your firm – may provide you with a strong platform for a considerably better future – in a flat world.

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The recent workshop in Salt Lake City, with participants from multiple firms, enjoyed good attendance, and an excellent learning experience. If any one else has a few people who need marketing training, let me know; we’ll try to facilitate more.