Archive for the ‘Harvard Business Review’ Category

Is Apple the new Nokia?

April 25th, 2011 Comments off

Given the rapid pace of change in the mobile phone industry, we have data from a couple decades that incorporates the rise and fall of several companies.  It seems that the top-dog never remains so for very long because they lose focus, intensity, etc. and rival firms knock them off their perch (only to be knocked off themselves in a matter of years).  Therefore, it is worth pondering if Apple will be the next firm to get knocked down.

Not so long ago, Nokia was the disrupter. In 1994, the dominant global provider of mobile handsets was Motorola: its shares were trading at an all-time high and it was seen as an outstanding innovator and even described by a senior consultant at A. T. Kearney as “the best-managed company in the world” — not so different from Apple today.

Read more: Why Nokia’s Collapse Should Scare Apple – Patrick Barwise and Seán Meehan – The Conversation – Harvard Business Review.

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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.

Why Can’t Kmart Be Successful While Target and Walmart Thrive?

January 14th, 2011 Comments off

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:

Why Can’t Kmart Be Successful While Target and Walmart Thrive? – Paul Leinwand and Cesare Mainardi – The Conversation – Harvard Business Review.

Harnessing the Strengths of All Employees

November 17th, 2010 1 comment

Something that has caught my eye lately in the business press is a focus on employee empowerment and the idea that big ideas can come from anywhere within an organization — if each employee feels like he/she is supported in breaking down traditional barriers.

Gone are the days when a management structure centralized decision making at the top of the organization and messages traveled linearly to the “worker bees” at the bottom.  No longer is it possible to be a high-functioning company if information is held tightly within silos by a select few.  Today’s leading companies need to foster an environment where information is freely shared and everyone feels like he/she can do what is necessary to advance the mission of the company, make customers happy, and ultimately become more profitable.

Smart companies are implementing tools for employees to use in this pursuit.  These tools sound a lot like tools that people use in their personal lives such as Facebook, Twitter, blogs, Wikipedia, etc.  An HBR piece today highlights this rather well.  Read more at this link: Moving from Top-Down to All-In – Suzanne Vickberg – The Conversation – Harvard Business Review.

Take for example, British telecommunications giant BT. They started to encourage participation with an experimental wiki called BTpedia, designed to facilitate information sharing across the company. On its heels they launched a second experiment that introduced blogging, and a third that created a small-scale social network.These ad hoc efforts then evolved into a robust internal social network, called My BT, that lets individuals customize their own pages.

My BT provides one-stop shopping to access all the content employees have posted on BTpedia, in blogs, and elsewhere, and also shows what other colleagues in someone’s network are up to. Involving people through new mediums has been a big hit with BT’s people for sure, but the company is seeing an even bigger payoff from their investment. Richard Dennison, principal business partner at BT, described it to us like this, “I don’t think that you can have an innovative company unless every single employee thinks they can make a difference to the organization. These tools are a key enabler for people to think they can make a difference.”

Also linked in the aforementioned HBR post is a related piece about the move from a “ladder” structure to a “lattice” structure in successful organizations.  Both of these are great reads about where strategic management is heading and the power that can come from inclusion rather than tight control.

For a more in-depth examination of this topic, I highly recommend reading Empowered: Unleash Your Employees, Energize Your Customers, and Transform Your Business by Josh Bernoff and Ted Schadler, a book that was released in September.  It highlights this same phenomenon of information sharing and decentralized structures that the authors predict will be the wave of the future.  They argue that since customers are more empowered (consider the information consumers have now about nearly any product as compared to 20 years ago) that companies need to be as well.  For example, Best Buy is featured extensively in the book for their Twelpforce concept that has turned customer service into a proactive task and customer difficulty into an opportunity instead of a curse.

I loved reading this book but I’m guessing the challenge will be to get buy-in from the people that need to make the biggest changes: those entrenched in the IT department.  In my experience, IT policies can be terribly restrictive and I’m not sure how to get the ideas presented in Empowered into the hands of the people that need to change direction since, in a way, doing so is a threat to their existence.

How many companies block access to sites like Youtube, Flickr, Twitter, etc. in the name of security?  Is it really computer security or job security that is the focus here I wonder?  Lots of things that IT does today could be done by the former “worker bees” in the future and those IT folks that are not flexible will hold on until the bitter end because their lack of flexibility is exactly what spells doom for their employment future.

The opportunity, however, exists for those that are flexible (or are willing to become flexible) to set a new path for IT by becoming a partner to business units rather than performing the traditional gatekeeper role they maintain today.  Companies with management within IT and elsewhere that manage to realize this before the competition does will have a distinct competitive advantage.  In fact, those inflexible IT employees may soon find that they company the work for no longer exists.  Who is empowered then?

Did Google Arm Its Own Enemies With Android?

November 16th, 2010 Comments off

Photo credit: on Picasa

Smart phones are one of the hottest consumer products these days.  Preferences change and technology advances seemingly overnight.  A piece I found today at HBR looks at the popular Android phones that run on the Google operating system of the same name.

What isn’t obvious is that Google’s strategy in developing the Android operating system for phones was to drive traffic to its advertising centered around its popular search tools since that is where Google makes its money.  In doing so, Google made their software open-source and, as such, allowed handset makers to use it free of charge and also allowed others (as is common with open-source software) to modify the software to suit their needs.  This has turned out to be a threat to Google instead of an opportunity.

The first signs of trouble brewing came out of China. Earlier this year, when Google looked like they were going to withdraw from China altogether, a number of Open Handset Alliance manufacturers realized they could be left selling smartphones in China without access to a number of key smartphone services that Google had traditionally supplied. So they started to look for replacements to Google’s services. The open-source nature of Android made that possible. More recently, Baidu, the internet search engine that has successfully challenged Google for ownership of the Chinese market, has taken an even bolder approach. It’s reportedly in negotiations with a number of smartphone manufacturers to remove all references to Google, and replace them with Baidu.

That was bad news. But what should really have Google concerned, however, is that there are instances of this fight being moved to domestic soil. Microsoft recently negotiated with Verizon that some of the Android phones that ship to Verizon customers will have Microsoft’s Bing, not Google, as the default search engine. And the manufacturers are getting in on the act too: Motorola recently released a new phone, the Citrus, based on Android, but shipping with Bing.

Time will tell whether or not Google can salvage enough from Android to benefit from the endeavor, but this may be a case where unintended consequences spell doom.  Highlighting and learning from botched strategy is as important as looking at the successes so this will be an important development to watch as things progress.

Read more:

Did Google Arm Its Own Enemies With Android? – James Allworth – The Conversation – Harvard Business Review.

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.

Should Business Benefit Society?

August 26th, 2010 Comments off

We discuss things like “sustainability” and the “environment” and “human capital investment” as new ideas in the business world…but are they really new?  I guess the increased focus is new but it seems like recent postings on this blog have linked to articles where the case has been made that focusing on these things is secondary to focusing on the financial aspects of business.  Many of the Environmental Accounting posts echo this sentiment…they say that business should focus on pleasing shareholders through increased profits and respond to environmental/sustainability only a means to that end.

But maybe focusing on financial measures is exactly what creates the short-term approach and expectations that cause problems for companies and the economy. As I mentioned this week in class, strategy is supposed to be a long-term vision and positioning of a company but time and time again we see that the measures and incentives are increasingly short-term.  A posting at the HBR blog caught my eye with some thoughts on this issue.  Read more at HBR:

It’s an interesting notion that Business, held captive by a narrow definition of fiduciary responsibility, is not able to make the long-term investments that could benefit communities, the environment, and ultimately the shareholders. If this notion is even partly correct, then our most powerful institution will be unable to do enough to solve the social and environmental crises confronting us.

The HBR piece goes on to mention that the state of Vermont now provides for a new kind of organization: a Benefit Organization that exists not simply to pursue profits but also to provide a benefit to society.  Perhaps this is going to spread beyond Vermont and will ultimately cause companies to take longer-term views and set long-term strategies tied to incentives for their employees to think long-term.

Are the directors of a Benefit Corporation still obliged to act in the best interests of the company’s owners? Absolutely. But they have legal protection to make investments with an eye to the long term, aiming for sustainable returns, not fast paybacks for shareholders.

As I mentioned in class, the book The Big Short: Inside the Doomsday Machine by Michael Lewis talks extensively about how incentives influence behavior and that the impacts are real as evidenced by the recent economic meltdown on Wall Street and beyond (you can view a great 60 Minutes piece with the author on this site as well).

Whether through the expansion of the Benefit Organization concept or some other way I think that businesses with long-term visions and strategy ultimately do their shareholders a greater service than the ones that take risks for temporary, short-term gains.  Hopefully that philosophy becomes more prevalent and we begin to demand more of our business leaders so that their behaviors and decisions will align with this concept.

Five Ways Pixar Makes Better Decisions

July 16th, 2010 Comments off

Here is a short read previewing an upcoming book about companies that make great decisions.  Having an advantage at decision making over competitors can make for a huge advantage in the marketplace as products reach c0nsumers more quickly, quality is higher, and employees are happier in these kinds of organizations.

We think that organizations with good judgment have a number of typical attributes. One is that they involve a number of different people in making important decisions. Their senior executives keep in mind that they don’t have a monopoly on knowledge and judgment and therefore involve multiple people in decision processes.

The short blog post linked below highlights how some things work at Pixar that are part of their “high-quality decision making culture.”  Furthermore, it is easy to pick out some things like Pixar University and manager autonomy that relate to things like the Learning & Growth perspective of the balanced scorecard that we have discussed in class.

Read more at: Five Ways Pixar Makes Better Decisions – Tom Davenport – Harvard Business Review.

Cut Costs Without Cutting Meaning

February 17th, 2010 Comments off

Some great thoughts in this short piece from Harvard Business Review on topics that we discuss in several points during the semester. From cost analysis and cost cutting to product design and emotional impacts of products and marketing, many factors are impacted (even though they aren’t always considered) when decisions are made.  Recently many companies have been creating stripped down products with a “value” focus to appeal to recession-weary consumers.  A good example of this was detailed in a post I made last August about Tide Basic.  For some companies, this might be a great plan in the short-term, but it potentially carries great risk in the long-term.

Cost cutting needs to be done surgically and with great care.  The bigger the brand-name the more care that is required or there is great risk that the brand will be damaged.  During hard economic times some companies are cutting costs wildly just to maintain sales volume, but the true test may be when recovery begins and consumers once again have more freedom to choose products on the basis of how they are made to feel rather than on cost alone.

In reaction to the Great Recession and the forecasts that consumer demand in the US, Europe, and Japan will remain anemic for the foreseeable future, many companies are focusing on stripped-down “value” products. In doing so, they risk making a big mistake: Assuming that consumers in hard times care more about utility and low price and less about the emotional and social dimensions of products.

While people, of course, do care about price, they care even more about how products give meaning to their lives. Even when they are pressed financially, they do not want to feel poor. So the challenge for companies is to cut costs without cutting meaning.

Cut Costs Without Cutting Meaning – The Conversation – Harvard Business Review.

“Undercover Boss” and the Missing Information Loop

February 11th, 2010 Comments off

“Undercover Boss” and the Missing Information Loop – The Conversation – Harvard Business Review.

It is rare that I read something and find myself agreeing with it completely.  I’m pretty much a skeptic (which I’m sure is  no shock to those of you that know me) so I was surprised to find myself nodding my head like one of those souvenir dolls they give out at Twins games when I read the piece linked above.

Like the author, I watched Undercover Boss after the Super Bowl last week and found it fascinating to see how many surprises the COO/President of Waste Management, Larry O’Donnell, ran across (for what it’s worth the episode preview for the coming week featuring Hooters seems to extend this even further) while he was assigned to work with low level people within his company doing tasks like picking up litter and sorting recyclables.  He discovered that one location penalized workers 2 minutes for every 1 minute late they were returning from lunch (a violation of company policy).  A female garbage truck driver showed him the can she needs to use when nature calls because she is penalized if she stops to use a restroom.  A woman at an office was doing the work of 3 or 4 people and was in jeopardy of losing her home.

At each job that O’Donnell did (one job per day for a week done anonymously) he uncovered injustices and burdens placed on Waste Management employees that are likely pervasive throughout the company (unless he really had bad luck getting assigned to jobs or the show’s producers added some things for dramatic effect).  Some of these were truly shocking.  He also uncovered some spectacular people that worked these jobs and did so happily for not much pay/recognition.

At the end of the episode he brought the employees that he had worked with each day to the Waste Management headquarters and revealed the truth.  He also set up committees that these people could sit on to spread their knowledge/skills to others within the company and he made the woman working several jobs a salaried employee eligible for bonuses.  He also dealt (briefly and kind of offhandedly) with the manager that set the “2 minute penalty for every 1 minute tardy” policy to get that corrected.

But there was one glaring omission that is the focus of of the HBR piece…how was any of this going to help the other thousands of Waste Management employees that were similar afflicted?

While the concessions given to the particular employees the Waste Management COO/President happened to work with during the week were nice, I too was wondering what fundamental changes were going to be made to avoid these same kinds of things happening in the future and with countless other employees.  And what happens in companies where the senior management doesn’t touch base with the rank-and-file?

The bottom line is that there need to be formal and in-formal processes where the feedback that the Waste Management head received by actually working with the people on the ground can reach the C-suite level without having to engage in such an extreme practice.  It shouldn’t take a CEO level person actually working with the people in the field to gather the information that O’Donnell collected.  It needs to be made part of the culture and should be the role of the levels of management in-between to bridge that gap (otherwise why do they exist? — are they just babysitters/police officers?).  Companies that succeed in bridging this gap will leave behind those that do not.

It isn’t enough to say “our people make the difference” — it really needs to be that way.

[Edited to add that I realize that Undercover Boss is designed to entertain and that most folks likely wouldn’t have been interested in seeing the implementation of the feedback loop, but it doesn’t take away from the fact that no such feedback mechanism existed in the first place.  If it had, O’Donnell would not have been surprised by so many things in his travels through different Waste Management operations.]