Connecting the classroom to the "real world"
Chapters
Target Costing
1 year ago
Ron Baker at VeraSage has a great book review of a Target Costing text. Despite our minor coverage in class of target costing, it is not a widely used concept in the United States, but we should be prepared for that to change. As I’ve said before, I think that students in the future will take a separate course that focuses on pricing and includes more in-depth target costing coverage than we see today.
Read more at: Book Review: Target Cost Management at Verasage Institute.
Coke’s Eagan operation: A new energy-efficiency model
1 year ago
Don Shelby of WCCO fame has landed at MinnPost and offers a look at local sustainability success at Coca-Cola. As with nearly every business decision, the benefits have to outweigh the costs for any long-term efforts to take root. As with other environmental initiatives elsewhere, the opportunity to save money, increase profits, and become more marketable to green-conscious consumers are all drivers of decisions to push environmental practices. I expect this snowball to continue to grow.
Has Coca-Cola become a great steward of the earth? In many ways it has, but that alone won’t carry the day with businesses out to make money for investors. Coca-Cola gets the attention of the industrial world when it announces that all of these efficiencies have made, or will make in the future, higher profits for the company. Coca-Cola says the economic, environmental and social implications of business are more important than ever. “We understand that sustainability is core to our business,” the company says in a statement. Coke’s new in-house motto is “Live Positively.”
Mark Blaiser, executive director of the Chamber’s “Waste Wise” program, said: “Sustainability is smart business. Saving energy is smart business. Environmental sustainability is not going away, it is not a fad. There are great economic opportunities for businesses that adopt a sustainability model. Those are the businesses that will lead the way to the future.”
via MinnPost – Don Shelby: Coke’s Eagan operation: A new energy-efficiency model.
Walmart and Responsibility to Society
1 year ago
by Brenden Schaaf
in Chapters
Walmart recently announced an initiative to make the food it sells healthier. As the nation’s largest grocer, this will likely have an impact on food sold elsehwere as well since manufactures of goods aren’t going to make a “Walmart version” and a “non-Walmart version” of their products. I guess a few might, but as in so many other situations “as Walmart goes so goes the market.”
Some questions I’m pondering:
- Does a retailer like Walmart have a duty to society to undertake initiatives such as this?
- If you answer “yes” to the first question, does it matter if the retailer is a market leader? In other words, does Aldi or the corner grocer have he same level of responsbility?
- What are the other motivations for Walmart in undertaking this push for healthier food?
Most of the people I’ve talked with insist that a company’s sole responsibility is to its shareholders. In that line of thinking, Walmart would only make this move if they were projecting that doing so would result in increased profits (and if their customers were demanding it — which it seems they aren’t).
Article links about the announcment:
- http://www.startribune.com/business/114336034.html
- http://www.latimes.com/health/os-walmart-healthier-food-20110120,0,2695093.story
- http://articles.chicagotribune.com/2011-01-20/business/ct-biz-0121-walmart-healthy-food-20110120_1_wal-mart-announcement-wal-mart-stores-jim-hertel
In contrast with the prevailing though (in class and elsewhere) there is a group of folks that insist that Walmart DOES have a duty as the nations largest grocer to positively impact the health of the public. Before recently, no single grocer had enough market-share to even contemplate such a thing but now that is not the case. In spite of the fact that Walmart’s customers are perfectly willing to purchase unhealthy food (because they do it every day) Walmart is making a bold move by reformulating its offerings to be healthier.
Skeptics point out that Walmart may very well be doing this to save money it spends on employee healthcare since a good number of those folks likely buy their groceries at Walmart, but I wonder if this is really a cost/benefit type decision of if it represents something more — a social consciousness of a company’s place in society. Interesting, to say the least…
Article links analyzing the announcement and the role of businesses in society when it comes to corporate responsibility:
Daniel Pink on Motivation
1 year ago
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.
Hulu Reworks Its Script as Digital Change Hits TV
1 year ago
Like music and telecommunications before it, the digitial revolution is set to hit TV hard in the next year or two. One player that has emerged is Hulu, a joint-venture owned primarily by the companies that control the legacy broadcaster Fox, ABC, and NBC. What is interesting is that NBC is now controlled by cable TV giant Comcast and Hulu may end up being a big threat to the cable TV industry.
Even before now, the culture of Hulu that has made it successful has clashed with the culture of its owners:
The partners hired Mr. Kilar, former general manager of Amazon.com Inc.’s North American media business, giving him autonomy to chart a new course. Mr. Kilar, 39, was determined to create an independent corporate culture closer to the tech world than the tradition-bound television business.
The company built a Silicon Valley-inspired startup in a low-slung office park in Santa Monica, a few miles west of its Hollywood owners. In the break room, engineers modified a refrigerator to house a beer keg, cutting a hole in it to fit a special tap in the shape of Hulu’s logo.
Mr. Kilar gave new hires a culture manifesto, an 1,100-word document that paints Hulu as a frugal meritocracy where “Fruity Snacks boxes hold up our monitors,” but where everyone has a “neurotic focus on quality.”
In an office expansion, Mr. Kilar and senior managers gave up their offices to sit at desks in an open floor plan among hundreds of employees, underscoring Hulu’s egalitarian approach.
It wasn’t long before the new venture clashed with owners’ established ways.
What is interesting to me is that Hulu may need a certain kind of culture like the one it has created but that may be prevented by those clinging to the past. Ultimately some company or group of companies will write the future of what TV looks like…the legacy players need to decide if they want to be part of that ride or not. There has already been upheaval at Hulu (read the rest of the article linked below) as they bring in people with cable/satellite backgrounds to manage operations instead of people from tech/startup backgrounds that were running things initially. This is a great example of how culture can impact a business, possibly negatively.
Hulu Reworks Its Script As Digital Change Hits TV. Sam Schechner, Jessica E. Vascellaro. Wall Street Journal. (Eastern edition). New York, N.Y.: Jan 27, 2011. pg. A.1
Simon Sinek on Leadership
1 year ago
This is the video we watched last week in class that spells out a simple model on leadership and looks at why some companies and individuals succeed where others (that are seemingly in a more advantageous position) fail. To see an HD version or to download the complete file to view later, visit TED.com.
Company Hires for Culture First, Skills Second
1 year ago
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.
Bill George: Corporate Responsibilty Extends Beyond Profits
1 year ago
Bill George, former chair and CEO of Medtronic and current Harvard Professor, is one of the nation’s most outspoken leaders when it comes to the role corporations play in society. I discovered his recent opinion piece in the Star Tribune when I read a rebuttal by Howard Root to it in today’s newspaper.
Bill George:
A short-term focus on shareholder gains has substantially increased the velocity of stock market trading. In the past 25 years, holding periods for stocks have fallen from eight years to six months. CEOs focusing on meeting the demands of short-term investors have led to the destruction of many once-great companies, including General Motors, Sears and Enron. This culminated in the 2008 global financial meltdown, when over-leveraged financial institutions collapsed as they tried to maximize short-term value.
Howard Root:
But George conveniently inserts the words “short-term” into Friedman’s philosophy. Contrary to George’s assertion, to maximize profits does not mean to focus only on today and ignore long-term growth. To maximize profits also does not mean to make poorly designed products (as GM did) or to fail to adapt to the popularity of the big-box retail concept (as Sears did). Friedman did not advocate short-term thinking, but rather that a corporation’s only constituency, both on a short-term and a long-term basis, is the shareholder, and that management’s favorite societal causes are irrelevant to its business goals.
I think both authors make excellent points througout their pieces and I think in an odd way (for writing and having seemingly opposite viewpoints) they can both be considered “right” when it comes to this argument. Root conveniently uses extreme examples just as George conveniently leaves out pieces of what MIlton Friedman believed.
Read both and draw your own conclusions. Regardless of how any of us feel, I think this idea of corporate social responsibility is one that will grow in the coming years. I’m not sure whether it is important if it grows because business are pursuing profits (i.e. giving customers what they want) or if it grows because they feel a responsibility to society. Drawing from Kant and Machiavelli, the ends may justify the means.
Bill George:
- http://www.startribune.com/business/113609969.html
- http://www.billgeorge.org/page/revisiting-the-rights-and-responsibilities-of-business
Howard Root
Why Can’t Kmart Be Successful While Target and Walmart Thrive?
1 year ago
In simplified terms, we can think of Walmart as a cost leader and Target as a differentiator. What does that make Kmart? Can companies get “stuck” in the middle and suffer as a result? I’m not sure it is that simple, but certainly companies that are not able to either identify their core competencies or that are unable to capitalize on them have a hard time competing. Kmart seems to be a company that is lost, and they have seemed that way for many years. Consider this quote from an HBR blog post (link at the bottom of this post)
We believe that all successful companies — Walmart and Target included — know precisely how they provide value for customers. They make a deliberate choice about their “way to play” in the market, guided primarily by what those companies do uniquely well: their distinctive capabilities. We define capabilities not as “people capabilities,” but as the interconnected people, knowledge, systems, tools and processes that create differentiated value.
The blog post goes on to mention the factors that are unique to Walmart and those that are Target’s strengths. Kmart seems to be unfocused in comparison and the market punishes them as a a result. Read more at the link below:
Twin Cities on Target’s short list for urban small-store expansion
1 year ago
I posted about this several months back, but here is an update about local plans for smaller-format Target stores in the Twin Cities.
