Agile Marketing & The Theory Of Capabilities
Harvard Business School professor Clayton Christiansen goes into great detail about the theory of Capabilities in his book How Will You Measure Your Life? Christiansen says capabilities are composed of three things: Resources + Processes + Priorities
Resources — what you have to work with, including technology, skills, money, patents, people
Processes — how you work, such as hierarchies, lean networks, the dual operating system
Priorities — why you work, including company culture and values
In some ways, American business has been so awash in excess resources that our processes and priorities have suffered. We tend to think of solving a problem by throwing more money at it and tying ourselves to quarterly outcomes.
Big budgets, big plans and big investments.
But being agile means starting small and trying things that could rarely survive a big-ticket vetting, budgeting (and possibly even approvals).
Agile is a set of processes, and as such, an attempt to bring our work into balance by redirecting resources and priorities to solve problems. One big part of that, Clayton says, is to focus on what your business suppliers are trying to do in the future, rather than what they’re doing today, so that you can keep your in-house capabilities strong — especially your processes.
Dell and Going Lean Gone Wrong
Outsourcing helped Dell increase revenue while decreasing assets, making the company a wildly profitable computer manufacturer in the late 1990s to mid-2000s.
But Dell management outsourced and outsourced until the company owned virtually nothing but a brand. They outsourced valuable company capabilities, especially the process of learning how to solve problems, which their vendors learned while serving Dell itself.
The story of Dell Computer — and the American semiconductor industry, as a whole — is an example of going lean the wrong way.
While working with Taiwanese electronics firm Asus, Dell began by outsourcing the more routine tasks of computer manufacturing — component-level stuff — to increase the company’s RONA metric (return-on-asset) and stock price.
But Asus wasn’t a passive lackey. Asus may have started off by doing simple things for Dell, but they gradually moved from down-market supplier to up-market innovator, undercutting the bigger, more lethargic Dell.
Doing most of the real work, Asus eventually developed the capabilities to move into the consumer market on its own, using processes it had developed through blood, sweat, and tears.
To continue to make its RONA goals, Dell outsourced more and more design problems to Asus, and at the same time outsourced its in-house capabilities for innovation and the responsive problem-solving process sometimes called “dark-horse prototyping”: 1. find the need 2. conceive 3. build and test
As it stands now, Dell has taken a massively different path with their business and face near obscurity in their manufacturing business . This would not have been hard to predict.
Companies that adopt agile practices cannot make the same mistakes caused by race-you-to-the-bottom outsourcing and other process-destroying tactics from the past 20 years.
Ship of Theseus
Christiansen compares Dell’s outsourcing to the Greek myth of the Ship of Theseus, which was kept docked in a harbor for posterity as a tribute to Theseus’ travels. However, as it weathered and aged in port, parts of the ship were replaced, until, eventually, all of the ship had been replaced.
The question is: Once every part of the ship has been replaced — where none of the original components remain — can it rightly be called Theseus’ ship?
Is it not another ship entirely when none of the original components remain intact?
Although Christiansen’s view of outsourcing may sound somewhat protectionist, it runs parallel to other sociological changes that outsourcing has created in American life, like hiring out all the house and yardwork to downmarket suppliers.
That is to say, American kids don’t take out the trash anymore. Instead, they are awash in excess resources like endless soccer practices, non-stop summer-camp schedules, and experience consumption.
The perspective is a bit home-spun, perhaps, but the point remains: We’ve outsourced a lot of our hard work & dirty tasks in marketing, but important capabilities emerge from doing those tasks. Surely even Mom and Dad know: When you take out the trash yourself, it makes you think about ways to reduce the weight of the bin.
If agile comes from a roll-up-the-sleeves-and-let’s-work mindset, you will benefit from having people on your teams that know what it’s like to roll up their sleeves and do some work, and that doesn’t happen by paying someone else to do it.
