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Daniel Pink on Motivation

January 28th, 2011 Comments off

I recently read Daniel Pink’s book, A Whole New Mind, in which he contends that right-brain thinking and those capable of it will rule the world.  Tasks like typical accounting work are increasingly being outsourced or replaced entirely by computers.  I thoroughly enjoyed the book and have even contemplated taking a drawing class of all things to strengthen my right-brain skills.  It was with this mindset that I stumbled upon a TED talk by Pink where he discusses motivation and incentives.  These are areas where companies have failed miserably of late — many contend that the recent economic collapse was really a failure of incentives (read The Big Short for a good summary of these kinds of things or watch the 60 Minutes interview with the books’ author).  Pink reveals that typical carrot/stick rewards system work only in very narrow circumstances and are not applicable to knowledge workers.  In fact, performance drops when higher rewards are offered.

This is fact-based analysis but are businesses getting the message?  Some are…like Best Buy where ROWE (Results-Only Work Environment) has been embraced and the idea of measuring performance by the length of time someone has their butt in their chair is seen as laughable.  Or Google where 20% Time is a tactic to make engineers more engaged but also to allow creativity to flourish that will result in new products. But how many other firms have gone this route?  How many will fail because they don’t recognize the shortcomings (or don’t recognize them soon enough) of their own beliefs about management and incentives.

Company Hires for Culture First, Skills Second

January 26th, 2011 Comments off

In the wake of watching the Simon Sinek TED talk in class, here is an interesting (and somewhat obvious) way that companies can focus on the “why” instead of the “what.”  They can hire people that share the same values and that will fit in with the company culture.  It makes sense, but how many job listings to you see that look at the culture?  Mostly they list educational requirements and skills, don’t they?

By focusing on hiring people that value the same thing that the company (and its culture) have as priorities, they can be more successful.  Another company that I’ve written about before that does this is Zappos.  In fact, the Zappos slogan is “powered by service” and that service starts with the employees.

How My Company Hires for Culture First, Skills Second – Alan Lewis – The Conversation – Harvard Business Review.

Outsmarted by Apple: Nokia Looks to Recover the ‘Magic Dust’

December 23rd, 2010 Comments off

It seems like certain industries like airlines, automakers, and mobile phone companies get a lot of attention in strategic management accounting.  This is with good reason as they each tend to highlight several things we discuss.  In terms of the mobile phone companies, the timelines have become so compressed between product introduction to obsolescense that we get to see things happen in months that in the past would have taken decades.  Think about the most recent mobile phone you have purchased…is there any chance that the same model will be on the shelf a year from now?  Doubtful.  Fortunes change quickly and none have been impacted more than Nokia.  Faced with game-changing competition from Apple and Google, this Finnish company is attempting to stay relevant and the next year or two are going to be critical in terms of whether the company will once again dominate the marketplace. 

German magazine, Der Spiegel, does a nice job outlining the challenges faces and the path Nokia has taken to arrive at this point.  You may read more at this link: Outsmarted by Apple: Nokia Looks to Recover the ‘Magic Dust’ – SPIEGEL ONLINE – News – International.

The Atlantic Turns a Profit, With an Eye on the Web – NYTimes.com

December 15th, 2010 Comments off

A great example of a complete revamp of corporate culture that has allowed a print institution to thrive in the digital age, when so many others have failed  Read more at: The Atlantic Turns a Profit, With an Eye on the Web – NYTimes.com.

Ford: Epiphany in Dearborn | The Economist

December 9th, 2010 Comments off

Here’s a lengthy piece from this week’s Economist magazine that outlines the culture shift at Ford that has allowed it to survive (and thrive) while other automakers required bailouts.  The opening paragraph says a lot about how things began to change:

SOON after Alan Mulally arrived as Ford’s chief executive in September 2006 he organised a weekly meeting of his senior managers and asked them how things were going. Fine, fine, fine, came the answers from around the table. “We are forecasting a $17 billion loss and no one has any problems!” an incredulous Mr Mulally exclaimed. When he asked the same question the next week, Mark Fields, head of Ford’s operations in the Americas, raised his hand and—in what once would have been a moment of career suicide—admitted that a defective part threatened to delay the launch of an important new car. The room fell silent, until Mr Mulally began to clap his hands. “Great visibility,” the new boss added.

From a strategy standpoint, culture is often ignored because it can be one of the hardest things to change.  That, however, doesn’t meant that it isn’t necessary to address.  It appears that Ford has been able to go down a path of culture change that is necessary to be a world-class competitor today.  Sometimes even companies have to hit rock-bottom to realize that things aren’t “fine.”  Sometimes even then it is too late to recover.  I recently read a great book called Dethroning the King: The Hostile Takeover of Anheuser-Busch, an American Icon that detailed the complacency of management at Anheuser-Busch prior to being purchased by InBev a few years ago.  The executives at A-B realized too late that changes needed to be made and it was only when they were about to be swallowed up that they even tried to act.  For them it was too little, too late.  It appears, for now, that Ford has been able to avoid a similar fate.

Read more at: Ford: Epiphany in Dearborn | The Economist.

Next hurdle for Bombardier’s C Series: cutthroat prices

December 7th, 2010 Comments off

Photo credit: Caleb Howell at Flickr

Bombardier is a Canadian company.  They used to be involved in recreational equipment such as Ski-Doo snowmobiles and Sea-Doo watercraft and their Transportation division is involved in light-rail transit including here in the Twin Cities.

Their Aerospace division, however, is probably their best known operating segment and is known as a leading manufacturer of commuter jets (most notably the CRJ series that many of you may have flown on) containing 50-100 seats.

As Bombardier attempts to expand its aircraft product line into medium-sized aircraft (100-149 seats), it is entering space that is getting very close to the market segment dominated by industry giants, Boeing and Airbus.  While those companies tend to focus on even larger aircraft, they may want to protect themselves by defending against Bombardier in the medium-sized aircraft segment because left unchecked, Bombardier could later expand into the lucrative large-aircraft segment.

Bombardier’s $3.4-billion bet on the market for narrow-bodied aircraft faces a potential threat: a price war instigated by Boeing Co. and Airbus SAS.

I think this could be very interesting.  In general, price wars often create only losers but this could be a case where pricing power may be a big enough weapon for Boeing and Airbus to use.  In doing so, they would be hoping to establish a barrier that would keep Bombardier from becoming a thread in the market for larger planes.  It also doesn’t hurt that Boeing and Airbus are “one-stop-shops” for the increasingly larger airlines that are often looking to do more business with fewer vendors.

“The full family of airplanes offered by Airbus and Boeing give them the ability to price the A319 and 737-700 as loss leaders (should they choose to) or to wrap discounts into larger models and … twin-aisle airplanes,” AirInsight noted.

Read more at Next hurdle for Bombardier’s C Series: cutthroat prices – The Globe and Mail and stay tuned in the months and years ahead.  Perhaps we’ll forget about this foray by Bombardier into medium-sized aircraft or maybe we’ll look back and say this was the strategic move that started something big.

Dashboards: Business Intelligence At A Glance

December 2nd, 2010 Comments off

I once had a top executive tell me that each morning he needed to have all the information needed to run his business on a 3″ x 5″ index card.  That index card was a form of a “dashboard” providing summary data in a snapshot format for senior management to use in decision-making.  Technology imporovements have made it possible to build more complex dashboards complete with real-time functionality.   It is still necessary, however, to make choices about what to include on them for the sake of not overwhelming the decision makers with things that are not relevant. 

In business, dashboards are emerging as the new face of Business Intelligence. Dashboards let us consolidate information about the health of our business, our department, our branch or more, in a graphical format that is concise and easy to read. They also come in different colors and shapes, with names like Performance dashboard, Executive dashboard, Balanced Scorecard, KPI metric summary or Corporate dashboard. The goal? To showcase the facts in a way that empowers the user to make more intelligent decisions based on better information.

The CPA Technology Adivisor has a nice primer on dashboards at this link: Dashboards: Business Intelligence At A Glance — NEWS – The CPA Technology Advisor.

Panera Bread Strategy – Keep Spending in Recession

November 10th, 2010 Comments off

When tough times hit, lots of companies curl up inside a shell and slash spending on things like research & development and expansion thinking that doing so will be the way to survive. Often, though, companies would be better served to pursue strategic plans that focus on growth rather than merely survival during economic downturns. Companies with access to cash and with strong strategic plans have more options with regard to location and competitors that are weak will not be in a position to respond during periods of recession.

Panera Bread Company is a great example of a company that didn’t just survive — it thrived — during the recession. 

Panera has, for a very long time, played for the long term and stayed consistent. Going into the recession, we said, “This is a time to continue with our strategy.”Almost every single one of our competitors said, “We need to pull costs out.” As a consumer, if you walk into their restaurants, the lines are longer, the waits are longer. You have a table next to you with dirty dishes. That is the effect of increasing labor productivity. It has to come out of somewhere.

We’ve continued to invest in labor in our cafés and the quality of our people. We’ve invested in the quality of the food. When everybody pulled back and we did more, the difference between us and our competitors went up.

And we’ve been taking market share. We had near double-digit [same-store sales] for over a year now. The stock has tripled in the recession.

BusinessWeek has the rest of the interview with Panera Executive Chairman and founder Ronald Shaich on its website: http://www.businessweek.com/investor/content/nov2010/pi2010118_183529.htm

How Companies Can Make Better Decisions

October 31st, 2010 Comments off

Here is an interesting video from HBR that explores decision-effectiveness within companies.  Marcia Blenko is a co-author of Decide and Deliver: Five Steps to Breakthrough Performance in Your Organization and she shares the framework of some concepts in the book in this video.  In particular, there is a 4-point framework to measuring companies on decision-making skills:

  1. Quality decision making
  2. Quick/timely decision making
  3. Executing decisions
  4. Effort spent on decision-making and execution

Most of our course is about decision-making and it really is what separates the winners from the losers in the “real world.”  Too many companies focus on decision-making as an afterthought or a necessary evil rather than an opportunity to excel.  Setting up the corporate culture to foster strong decision-making and execution is important to long-term success.  Many companies focus on “big decisions” but the cumulative effect of all of the daily decisions is probably a bigger place to focus and effectiveness in this area needs to “just happen” as the result of systems encouraging it.

http://blogs.hbr.org/video/2010/10/how-companies-can-make-better.html

Cut Costs, Grow Stronger

October 6th, 2010 Comments off

Money Bag in Blue
I don’t know how I managed to never post this here, but I’m getting a new computer and found the PDF version of this article on my Desktop while I was cleaning things up for the transition.  In fact, I think it was this article that first brought me to the strategy+business website, a great resource that I highly recommend.

This article focuses on cost cutting in the beginning, as evidenced by statements like this:

Dramatic cost cutting gives you a chance to refine or even reformulate your company’s overall strategy.

…but it quickly becomes a piece about strategy, capabilities, and execution as well:

On its own, for example, PepsiCo’s high-performing capability for launching new food and drink products might not amount to much. But PepsiCo also has a related capability: a world-class skill at retail outlet distribution. That capability has made PepsiCo one of the most successful food companies in the world.

There is much to be learned from this great article.  We are perhaps the point where most companies are dramatically slashing costs, but knowing what to do “next time” and focusing on the strategic issues in here are still important.  Keeping strategy at the center of any major decisions, such as which costs to cut, is important and because it at least gets everyone “on the same page.”

Cut Costs, Grow Stronger. To reduce expenses for the long term and lead the way to recovery, start by taking a strategic view of your capabilities. By Shumeet Banerji, Paul Leinwand, and Cesare R. Mainardi. strategy+business.  September 15, 2009