Mintchell on business and manufacturing strategy

You can watch or listen as I discuss Inder Sidhu's book "Doing Both". He's a Cisco Sr. VP and shows examples of how to do two seemingly contradictory strategies. Also Jon DiPietro's blog Domesticating IT about business strategy death spirals. The message is be aware of your situation from a larger perspective and be ready to chuck your model for a new one.

Mintchell on Strategy

Automation, Marketing and Manufacturing Blogs

Not much relationship, but I know both of these bloggers and follow their writing. One is thinking business strategy and the other operational. Both are important.

Death Spiral

Jon DiPietro's Domesticating IT blog today includes a must-see video of Douglas Adams discussing parrots and death spirals. Oh, the answer is "42".

Jon discusses several industries, including mine, that could exhibit the death spiral response to stress that Douglas Adams describes--you gotta follow the links to the video.

The problem for probably all of us when we are up to our butts in alligators is to be able to think long range enough to see the horizon. I have been in so many businesses that were boom and bust that I try often to stop and sniff out the horizon. Then change behavior (in my case change industries and even careers).

When I started at Airstream we were manufacturing about 50 travel trailers a DAY in three plant with about 1,800 employees. It's done about 12 a MONTH for the past 30 years (I think, on average). At my first pure marketing position, we made a PC add-on board that outputted high-resolution printer graphics to dot-matrix printers. At that time, the Intel 80386 microprocessor came out. I thought, "Hmm, this can do everything our board does while also running all the rest of the system and more. We're SOL." And we were. I got a job back in manufacturing automation. See where that landed me!

I'm in publishing now. I don't think print is going away. I don't think magazines are going away. But both need to continue to morph. Magazines serve niche markets (the general ones are struggling). You must always be sensitive to your niche market. How many suppliers and how many readers still care about that niche? If it dwindles, then you'd better be ready to find a new niche.

Magazine people in general have had a terrible time figuring out digital (better than newspapers, but that's another story). I agree with Wired's Editor in Chief Chris Anderson that each has its own strength and purpose. Print magazines are an event. It's a once a period thing that combines information around a niche market and presents it in a package. Digital (Websites and the like) are either a repository (where people visit as the result of a Google or Bing search) or (better) they are a constant stream of news and ideas that also serve the niche. What was that song, "different strokes for different folks"?

Operational Gains

Meanwhile, Jim Cahill at Emerson Process Experts searched out one of his experts whom I've interviewed several times about how the proper use of Foundation Fieldbus can improve your operations. That is also good thinking.

Acquisitions and corporate strategies

I've accumulated a bunch of stuff. Won't have a bunch of posts for the next 10 days or so, but check back once in a while or check your RSS reader. By the way--subscribe to the comments as well as the main feed. Sometimes they get interesting.

I'm not sure how many people receive Jim Pinto's newsletter, but I'll put in my analysis for those who do. I guess Jim attended an analyst meeting regarding automation companies recently. One of the analysts (I wonder how they get hired sometimes) heard GE's CEO Jeff Immelt say that he was interested in acquiring industrial companies and suggested that perhaps Immelt meant Rockwell Automation. Pinto thought that was good, partly because he thinks Rockwell needs to be purchased and partly because GE would give it broader distribution in China.

I (non-analyst that I am) believe that when Immelt said industrial that he was talking about companies that make things that would also fit within the GE portfolio. The hot areas right now involve power and energy plus medical devices. GE has significant investments in manufacturing in those arenas, and I would expect to see some acquisitions to expand its reach there. GE would be looking for acquisitions poised for growth. Specifically, I'd expect more in wind turbines and the electric grid.

Now if I knew everything I'd be rich, then I'd be like Jim and writing for fun instead of trying to make a living (wait a minute, this blog is for fun, oh well). But a $5 billion automation company may not be the best play right now. Plus the stock has rallied since March more than doubling its worth. The window for purchase was last spring. By the way, Pinto also cites an uptick of RA stock since the meeting. But it's been growing for eight months now. By the way, as has ABB's and Emerson's.

And, oh yes, GE has an automation company--GE Intelligent Platforms--that supplies much of the parent's automation needs. As for distribution--automation distribution is a far cry from turbine and appliance distribution.

Usually Jim and I agree, but we don't on Rockwell. I follow more the ideas of an investment banker whom I recently talked with who admires Rockwell for its sound cash management policies. It's not a buy and flip stock where you try to make big bucks on growth. It's more of a conservative buy and take the dividends. (Disclosure: If I have any ROK, it's buried somewhere deep in the funds I have. I don't trade in automation stocks. And I definitely don't advise people, even me, on stocks.)

Invensys

I see that Invensys Operations Management is still coming together, but it's getting there. A new Website has popped up I guess I'd go with the majority of people I've talked with outside the company--the new logo doesn't do anything for me. But the new site brings together all the disparate parts that they are trying to merge.

Standards

I talk often about standards in automation. The last 18 months or more have seen more than its share of discussion about wireless standard development -- WirelessHart and ISA100 especially. I think standards help an industry move forward, because people can start to develop products or write code around them and users gain some assurance that the technology will stay around a little while and applications will interoperate. On the other hand, I always saw the wisdom of Ken Spenser who was at the time CEO of Think&Do software--"The best standards are de facto standards." Here is a blog post by Dave Winer on the subject. He is concerned with the "high tech" world, but the ideas are applicable here. What do you think?

Volkswagen the new GM?

Here's a post by Bill Waddell over at Emerging Excellence analyzing recent moves of Volkswagen. I agree with much of what he says. But I'd add a question -- can companies become so large and complex that they simply can't be managed any longer and must be pruned in order to prepare for new growth?