Management Today article

November/December 2009: Cover story

The Next Big Thing

If you are wondering what the next big thing is for business, SAP's Jeff Word believes he knows: business network transformation. By Richard Jones.

Jeff Word, Vice President Product Strategy at SAP, one of the world's leading providers of business software, was in Sydney recently to present a SAP Australian User Group presentation on business network transformation (BNT). The next week he was scheduled to deliver the same speech in Guatemala, in Spanish…

"I am on the road a lot. While I'm a virtual employee based out of our innovation labs in Palo Alto, California, my family and I actually live in Dallas, Texas after moving there last year."

Word admits that as a road warrior he hasn't quite worked out what work/life balance is about.

"My work role is in two parts. One part is looking some three to five years into the future to anticipate the types of business changes and capabilities that SAP's global customer base of 80,000 companies is going to require.

"The other side sees me go out and talk to our customers about SAP strategy, where we are heading and the types of things that they can expect.

"Because our customers invest significant quantities of time and financial and human resources into their SAP systems, we provide them with a clear and consistent road map so they can make the right planning decisions," he says.

Business network transformation
Word recently edited a book on BNT and he is convinced it is the next step for business innovation. He says BNT is not primarily related to technology and is more akin to the next generation of competitive dynamics. Word admits it is a sort of outsourcing 2.0 but, when combined with the new technological capabilities to manage relationships, it is actually a much smarter proposition.

"Businesses can not only outsource, they can also share pieces of their processes with other partners in their network who can do it more efficiently and more effectively and faster than they can.

"By specialising in what you do better than anyone else and developing a network of partners who can do the rest, you can orchestrate an entire network towards a common goal of delivering more value to the customer."

Word says that is the crux of BNT. He uses Apple, a top to bottom SAP user, to show how it can work.

"Ten years ago, Apple built everything themselves. They were a computer manufacturer. They designed them, built them in their own factories, and sold them. Today, Apple doesn't build anything; they don't have a single factory. If you look at the back of your iPhone it says 'Designed by Apple in California, assembled in China'."

Word says that Apple figured out that their competitive advantage - their core competency and the thing they do better than anyone else - is to design the best user experience possible.

"I know they use hardware and software technologies to do this but, essentially, they're the same technologies everybody else has; they just use these capabilities to design a better user experience.

"The other thing they do really well is orchestrate. As soon as the design is done and the blueprints are finished, they hand it off to hundreds of other companies to do the chips, parts, assembly, quality tests, assurance shipping, logistics, everything; and then Apple sells it.

"The real core competency of Apple, if you look at it, is their ability to orchestrate those hundreds of companies in their business network to ensure that the end product has the exact same level of user experience that they designed at the beginning."

Word is a true disciple. He believes that BNT is an inevitable force happening to every company on the planet - large, medium or small - in every industry.
"It really is a global phenomenon that has evolved. Everybody feels it, although they feel it a little bit differently depending on where they are in the network," he says.

Word stresses BNT isn't a SAP thing, but he believes that it will have a massive impact on the way his business will be conducted in the next three to five years. "SAP needs to understand this because it has a huge impact on the capabilities we must build into our products for users."

Leadership today
As you may expect, Word also has some firm ideas on the role of leadership and management in today's business environment.

"I had the fortune of working with Shai Agassi, SAP's CEO-in-waiting, for several years," he says. "Shai actually embodied the difference between leadership and management for me.

"When I worked for him, he was a SAP board member when it was very common to have board assistants. Shai used to call me his 'extra bandwidth', really another set of brains to help make the executive more effective by filtering out stuff that gets in their way. At heart, it's actually a mentorship program and one of the primary goals of it is to build the next generation of leaders in the company."

Word says, first, the ability of a leader to actually create a vision and a strategy that the employees can connect with, and buy into, is critical.

"The second thing that I think makes a leader unique, as opposed to a manager, is that leaders invest in building leaders around them. To have that as a primary goal makes you an incredible leader; I think that's near to management consultant Jim Collins's philosophy of leadership," he says.

Word believes that management encompasses a significant portion of what's left over as part of the job description.

"So leadership is one piece of it and then the management is the other. I've had the great fortune to work with some phenomenal managers and leaders around the world and the ones that combine the skills of leaders and managers are the really special ones."

Key management skills
One of the key skills Word says he has observed in good managers, with or without leadership-style qualities, is that they are able to see beyond the boundaries of their responsibilities.

"The really great managers that I've come across understand the breadth of the business; they understand it from a business-process perspective. They understand it's not only about monitoring what's underneath them, just seeing the reports and managing their people well, they also manage across boundaries, inside and outside of the company."

When it comes to leadership Word believes it can be taught to someone who's very willing to learn, but it tends to be taught passively.

"Part of it is that people learn how to be leaders by example but, again, if you have a good leader in place, they will invest time and energy in building leaders around them.

"They will be constantly putting challenges and opportunities in front of them and giving people the ability to make mistakes on their own and learn from them in a somewhat safe environment. It allows them to 'fail forward', as personal and leadership development expert John Maxwell says."

For Word there have been no great secrets in his business pathway. "I have been fortunate that I have an ability to recognise people that I can learn a whole lot from and who also are not too annoyed with my pestering questions!

"I tend to gravitate to these people and extract as much as I can from them and put that into my own portfolio of knowledge."

About SAP
Sap is the world's leading provider of business software. Today, more than 80,000 customers in more than 120 countries run SAP applications, from distinct solutions addressing the needs of small businesses and midsize companies to suite offerings for global organisations. Powered by the SAP NetWeaver platform to drive innovation and enable business change, SAP software is used by enterprises of all sizes around the world to improve customer relationships, enhance partner collaboration and create efficiencies across their supply chains and business operations.

Richard Jones is a staff writer for Management Today

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