Author: Adrian J. Slywotzky of Mercer Management Consulting
The Upside is a substantive and thoroughly interesting look at organizations and individuals who found the opportunity that was hidden in risk. Using examples as diverse as Joshua Lawrence Chamberlain's decision to launch a bold charge at Gettysburg, Toyota's development of the Prius, and Apple's invention of the iPod, Slywotzky goes far beyond motivational stories and dissects the way risk was minimized and odds were increased.
This willingness to look squarely at the unlikelihood of projects succeeding is a major strength of the book. One chart notes the typical failure rates for specific project types:
Hollywood movie 60%
Company merger or acquisition 70%
Information technology project 70%
New food product 78%
Venture capital investment 80%
New pharmaceutical product Over 90%
As Slywotzky observes:
In truth, every project you undertake is a kind of suspense story. How and when and where will it go wrong? What unexpected obstacles will arise to derail it? There are many, many ways a project can fail. They range from undercommunication among team members to conducting too few experiments and considering too few options when designing the new product or the new business; from relying on a flawed technology to using a technology that works but costs too much or takes too long to develop; from failing to anticipate a competitor's preemptive move to inaccurately forecasting consumer demand; and from overlooking the need to retool your marketing infrastructure to support a new product to ignoring the time bombs planted by internal politics that will blow up any chance of successful implementation.
The seven risks explored by the book are:
- Your big initiative fails.
- Your customers leave you.
- Your industry reaches a fork in the road.
- A seemingly unbeatable competitor arrives.
- Your brand loses power.
- Your industry becomes a no-profit zone.
- Your company stops growing.
In the section on big initiatives, Slywotzky notes that Toyota's odds for success with the Prius were less than five percent at the beginning of development. They tested 80 different engines and 20 different transmissions while using an existing platform to keep down the costs. They worked with Masushita on the creation of a new battery, a challenge illustrated by the fact that on the early test drives an engineer had to "monitor the battery from the backseat with a laptop to keep it from bursting into flames."
One technique that was used to reduce communication problems was establishing a dedicated space for the project - a "big room" - where the team members would work together on the project. The rapid sharing of information and identification of problems was stressed in order to circumvent turf lines and save time. This was even more important given the emphasis on considering a large number of options.
The first Prius received little attention and Toyota wisely limited its sales to Japan so various problems could be worked out before hitting the larger U.S. market. What now looks like an obvious decision to introduce a fuel-efficient vehicle in an energy-sensitive world was far from obvious when the process was started. Toyota turned enormous risk into a major opportunity.
Slywotzky's book is filled with fascinating examples of companies boldly but wisely doing extraordinary things. (IKEA is building houses!) I caught myself skipping ahead to discover outcomes and moving back and forth to contrast various examples. This is not a minor book. I suspect that it may well become a business classic.
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