Push-Pull Business Management Model: Bridging Transition from World-of-Push to World-of-Pull…

Push-Pull: When ‘pulling’ a  rope, it will follow you anywhere… try to ‘push’ it… the rope goes nowhere…

We are living in an epochal period of transition… bridging two very different types of economies and cultures: Push-Pull. We are transitioning from push economy: that tries to anticipate consumer demand, and then creates a standardized product, and pushes the product into the market and culture, using standard distribution channels and marketing.

In contrast, transitioning to pull economy: that uses open and flexible production platforms with network technologies to coordinate many different entities from disparate regions… Pull economies produce customized products and services that serve localized needs (demand-driven), usually in a rapid manner. Pull networks tend to build their capabilities by leveraging networked partners, providing performance feedback, and sharing best practices among their network participants. The pull phenomenon is not confined to business/online commerce. The spread and common use of the Internet technology is finding pull techniques being applied to many areas, including; social life, entertainment, politics, education, government…

According to John Hagel and John Seely Brown, who run Deloitte’s Centre for Edge Innovation, argue; Western companies have spent the past century perfecting push models of production that allocate resources to areas of expected demand. But in emerging markets, particularly those where the Chinese have a strong influence, a very different pull model often prevails, which is designed to help companies mobilize resources when the need arises. For example; Hong Kong’s Li & Fung or China’s Chingquing Lifan Group can use their huge supply chains to produce fashion items or motorcycles in response to demand. Taiwan’s Quanta and Compel can produce cheap computers and digital cameras for a fashion-conscious digital marketplace.

These pull models fundamentally change the nature of companies. Instead of fixed armies looking for market opportunities; firms become loose networks that are forever reconfiguring themselves in response to a rapidly shifting economic landscape. Such models are not peculiar to emerging markets: Western management gurus have been advocating networks for decades. But according to Hagel and Seely Brown; pull models are far more widespread in emerging countries…

In the articleWhy Leaders Should Practice Pull Management by Tammy Erickson writes:  As we move to business models that depend on people working together in collaboration… on innovation, on individual expertise and craft, on crowds contributing to the whole… we must also move sharply away from our traditional concepts regarding the key responsibilities of senior executives. In other words: You can’t make people do these things– push management.

There is no correlation between traditional push management approaches, i.e., directives, power-based approaches, or even compensation and performance management… and, people’s willingness to be a little more creative, or more enthusiastic, or service oriented with customers, or to ponder challenges they face with greater focus and energy… Today, encouraging a greater number of people to go– just a little bit further– is the essential job of leaders.

Long gone is the time when our primary management challenge was to ensure that workers performed tasks consistently and reliably, using standardized best practices. Now we need pull approaches, geared to encourage individuals to share their ideas more widely and constructively, to push the boundaries of what’s possible further, or to be more collaborative and innovative…

In the article From Push to Pull by John Hagel writes: Push-Pull describes a basic shift in the way we mobilize resources. Organizational success depends upon effective mobilization of resources. Getting the right resources to the right place at the right time makes the difference between desired impact and catastrophe. That is the distinction between push-pull.

Over the past century, institutions have perfected highly efficient approaches to mobilizing resources. These approaches may vary in their details, but they share a common foundation. They are all designed to push resources in advance to areas of highest anticipated need.  In the past decade, we have seen early signs of a new model for mobilizing resources.

Rather than push, this new approach focuses on pull– creating platforms that help people to reach out, find and access appropriate resources when need arises.  Pull-push approaches differ significantly in terms of how they organize and manage resources. Push approaches, typically, use ‘programs’– tightly scripted specifications of activities designed to be invoked by known parties in pre-determined contexts.

Pull approaches, in contrast, tend to be implemented on ‘platforms’ designed to flexibly accommodate diverse providers and consumers of resources. The pull platforms are much more open-ended and designed to evolve based on the learning and changing needs of the participants. Rather than seeking to dictate the actions that people must take, pull models seek to provide people, on the periphery, with the tools and resources (including connections to other people) required to take initiative and creatively address opportunities, as they arise. Pull platforms are designed from the outset to handle exceptions, while push programs treat exceptions as indications of failure.

Push models treat people as passive consumers whose needs can be anticipated and shaped by centralized decision-makers. Pull models treat people as networked creators who are uniquely positioned to transform uncertainty from a problem into an opportunity. For clarity, we’re not using platforms in the literal sense of a tangible foundation, but in a broader, metaphorical sense to describe frameworks for orchestrating a set of resources that can be configured quickly and easily to serve a broad range of needs…

In the article Balancing Push-Pull Strategies by Greg Marmulak writes: Companies often times feel that they must choose between employing a push or pull strategy. For example: Should companies make product available based on their production capacity? Or, should they base it on anticipated consumer demand, which is determined by what their customers have already bought? The former, referred to as a push approach, is the most conventional.

Push planning is, generally, supply driven and is a successful approach when a company owns market share and controls demand for its products (e.g., think Apple and iPad). But for business selling more common-place commodities, failing to incorporate consumer-demand data into the equation can result in many problems… In response to the negative impacts a push environment may have on the supply chain, many companies have adopted a pull strategy. In this environment, the flow of product is dictated by consumer demand, that is; instead of pushing product to store shelves and hoping consumers buy them… control inventory levels by actual consumption using consumer-demand data.

This strategy is especially important when it comes to products for which consumers have a lot of choices. While there are many advantages to the pull approach… there are drawbacks: Chiefly, companies that rely solely on pull are susceptible to forecast inaccuracy… realize that a forecast is simply a guess, since consumer-buying behaviors are not always predictable. Basing a forecast entirely on what products are selling may result in a self-fulfilling prophecy in which the company only plans production based on past performance. In order for pull planning to be successful, it must be based on true demand.

However, that alone can present a major challenge for today’s companies… by pulling inventory into its network, then their distribution can only carry inventory based on what they believe their consumers will purchase. Companies employing a pull only approach may also fail to have the right products in the right place at the right time. However, a potentially viable solution is to combine and balance both push and pull, in the same implementation, which brings out the benefits and minimizes the flaws in each approach…

In the article When Push Comes To Pull: The New Economy and Culture of Networking Technology” by David Bollier writes: A push economy is geared toward mass production, anticipating consumer demand, and routing resources to the right place at the right time, to create standardized and mass-produced products. In contrast, a pull economy is based on open, flexible production platforms that are used to orchestrate a broad range of resources.

Instead of producing standardized products, pull model companies are demand-driven, and assemble products in customized ways that serve specialized or local needs, usually using rapid or on-the fly processes. Pull economies are not just centered on finding creative ways to outsource/offshore jobs away from one place and to the places where labor is cheaper. Successful pull models have encouraged and aided insourcing, where more jobs are created, for instance in the U. S. by foreign sources, than are outsourced.

This is because pull models seek out, not just the cheapest labor, but the best ways to add value to the production networks. So, they can scale too many participants around the world, regardless of local labor costs, to find the best participants needed for specific specialized productions. The social dynamics of pull models are highly centered on creating relationships of– trust, sharing knowledge, and close cooperation among network participants…

Times are changing… so must business models and management styles. The push-pull ground-swell of change stretches throughout the organization, and managers must begin to rethink their general approach to building and managing the business. Through the many decades of the ‘industrial age’, businesses pushed their products and services onto consumers. Where limited product choice was accompanied by considerable marketing hype and that was enough to make the consumer buy: It was a sellers’ market. Now, thanks largely to the ‘information age’, consumers are evolving into customers who can select what they want from a variety of providers: It’s becoming a buyers’ market.

But further changes are afoot. As customers get more… they expect more, especially in terms of; business performance, quality of life, welfare of the planet… Customers are beginning to pull solutions toward them… rather than just taking what is pushed at them. The implications of push-pull on business strategies are enormous. The differences between a business model intended to push products and services to consumers vis-à-vis a model built-in support of customers pulling solutions… are significant.

While many companies will be impacted by this evolving switch from push to pull, few are prepared for the transition. According to ‘John Hagel III’, ‘John Seely Brown’ and ‘Lang Davison’; we’re moving from a ‘world of push’ to a ‘world of pull’. Push programs operate on one key assumption– that it’s possible to forecast future demand. In fact, when demand can be forecasted, we can efficiently push resources to where they will be needed… when they will be needed.

But what happens when forecasting accuracy diminish– as it surely has in these big shifting times? Push programs become bottlenecks… preventing effective responses to unexpected changes in demand. Pull platforms, on the other hand, provide more flexible approach to mobilizing resources. In a world of accelerating change, we no longer can be certain, that we know what we are seeking.

In other words, pull platforms must offer serendipity, and robust search capability. Ultimately, that is the true value of pull– by pulling others to us; it pulls the true potential out of all of us. However, in the end, we will need a blend of both; push-pull to be successful…

Physics tells us there are two methods to move an object; push or pull– and, for each method, there is a best time and place… but, sometimes it’s best to use both methods, simultaneously together, to move an object– faster, farther, bigger, better…