Psychologist Carol Dweck's work on "mindset" has been hugely influential in fields such as education and sports training, and her 2006 book Mindset was a bestseller. Some people, Dweck has argued, view talent as a quality they either possess or lack, and thus have a "fixed mindset"; others, with a "growth mindset," consistently see potential to develop new skills. Now she is extending her work on mindset to organizations. This article describes her new research with Fortune 1000 companies and details several implications for managers. This reprint includes three additional Idea Watch articles: "Is Extra Legroom Worth Fighting For?" provides a visual analysis showing that on economy class flights, higher ticket prices don't necessarily mean greater comfort. "In China the Right Political Ties Count" describes a study of the TV manufacturing industry in China from 1993 to 2003 revealing that ties to local officials were associated with higher rates of company success, but ties to national officials had no such effects. "The Real Cost of 'Patent Trolls'" focuses on three new studies that show how damaging patent-troll lawsuits are to the economy. They suppress venture investing and R&D spending by substantial amounts.
This teaching case examines the challenges of using Information Technology (IT) outsourcing, adopting new technologies, undertaking business transformation, and evolving the IT function's structure, governance arrangements and capabilities - all in a dynamic business context. The Commonwealth Bank Australia has over the last 20 years experienced similar IT management dilemmas as countless organizations across the globe. The case foregrounds six perennial issues in IT management. First, what form of outsourcing is suitable at different stages of an organization's development, and how can that outsourcing be managed? The case here covers the challenges of single and multi-supplier outsourcing. Part 2 will focus on sourcing issues with cloud computing. Second, what are the key IT capabilities that must be retained within a large corporation? Part 2 will ask whether these capabilities change with cloud computing. Third, what are the mechanisms for developing, nurturing, maintaining, and evolving retained capabilities? Fourth, how should IT be governed in the face of changing business needs, new technologies, and changing organization structures? Fifth, Parts 1 and 2 of the case question the roles of the CEO, CIO, and business managers in leveraging IT performance for business value, the building of project and program management capabilities, and how to organize IT to support a business transformation program. Finally, the case raises the challenge for students of how an organization with its history and legacy in technology and sourcing partners can then move into even newer technologies - in this scenario cloud computing - the primary focus of Part 2 of the case. Overall, the two cases raise the fundamental challenge - what perennial management practices are effective, over time, in dealing with the challenges raised by changing technologies, and what new practices may be required, in contemporary dynamic business contexts.
This teaching case explores the business and ethics of prison sourcing, the practice of training and hiring prisoners to perform work for the private or public sectors. Although most prison employment programs train and hire workers for manual labor, such as furniture building or textiles, some prison employment programs now train and hire inmates to perform low-level Business Process Outsourcing (BPO) services like call center work, data entry, and document preparation. Prison sourcing is highly controversial. Besides the usual concerns about security and quality of work performed by prisoners, the ethical aspects of prison sourcing are hotly debated. Proponents argue prison sourcing is ethical because it defrays the costs of corrections, helps individuals successfully complete their confinement and prepares them to reintegrate into society, benefitting the individuals, their families, communities, and ultimately tax payers. Opponents argue that prison sourcing is a form of slavery, hurts small businesses, and steals jobs from law-abiding citizens. The authors developed this teaching case to allow students to explore these issues. The case is a dramatized version of an actual case study of prisoners performing BPO work for a private sector company.
This case is about the takeover bid of Zandu Pharmaceutical Works, a small Indian traditional medicine manufacturer based at Jamnagar, (Gujarat, India). It encapsulates the protracted multi-level negotiations among its two promoter families - the Parikhs and the Vaidyas - with Kolkata, India based Emami group that intended to take over the firm in 2008. The two families had established Zandu Pharma in 1910. The Vaidyas came from a lineage of Ayurveda practitioners and brought technical know-how to the business. The Parikhs belonged to a traditional trading community and brought their business acumen to the firm. Complimenting each other, the two families managed the business for about hundred years. However, with passage of time, the later generations of the Parikhs gained technical knowledge and became firmly entrenched within the firm's operations. On the other hand, the Vaidyas failed to effectively pass on the technical expertise to their later generations. Thus their importance in the eyes of the Parikhs went down and Vaidya descendants were viewed as incompetent. The Vaidyas felt ignored and marginalized; the Parikhs repeatedly denied their demand for a director's position on the company's board. Pushed into a corner, the Vaidyas sold their stake in Zandu to Kolkata based beautycare and healthcare company - Emami. The Parikhs viewed this as a hostile move and tried to thwart Emami's bid for Zandu's control. The decision dilemma that Parikhs face in the case is - whether to sell their stake to Emami or to fight the takeover battle. The case narrates the circumstances and the actions taken by parties involved. The case deals with various managerial issues like leadership, communication, acquisition strategy and emotional issues faced by promoter families. The case serves as an effective tool for students to learn and apply leadership, communication, strategic and negotiation skills in complex acquisition scenarios, like those in family controlled businesses.
PwC's workforce is strikingly young: Two-thirds of its employees are in their twenties and early thirties. In the past, the assumption has been that most hires will eventually move on to other firms or other careers, while a few will be promoted all the way up to partner--rewarding and justifying years of long hours in service to clients. But a recent study done by the company revealed that the allure of someday becoming partner is no longer enough to generate high levels of engagement. Millennials are less willing than Boomers to make their work lives an exclusive priority, even when offered the prospect of substantial future compensation. They want job flexibility in the here and now, along with opportunities for training and mobility and more frequent feedback and rewards. PwC has instituted several initiatives in response to the results of the study: Employees are asked for their ideas on how to invest in human capital and given choices about what form their bonuses will take. Career paths have become far more flexible. Life skills and leadership training and sabbaticals demonstrate appreciation in nonmonetary ways. Participation in corporate responsibility programs has improved retention and engagement.
The knock on most CEOs is that their focus is too myopic--that they're fixated on achieving short-term goals to increase their pay. If you studied results produced over the long term, which leaders would truly show strong performance? HBR's ranking of the 100 best CEOs provides an answer. To compile our list, we examined how active CEOs of global public companies performed over their entire tenures. We took a scientific, objective approach, basing our evaluation on hard data, rather than on reputation or anecdote. For each executive, we looked at three metrics: the total industry-adjusted shareholder returns produced, the total country-adjusted shareholder returns, and the total increase in market capitalization. The CEOs who made the 2014 list have undeniably been effective. On average, the top 50 have delivered total shareholder returns of 1,350% during their time on the job. That translates into an annual return of 26.2%. Adjusting for industry effects, average total shareholder returns for the top 50 are 1,161%, and for country effects, 1,087%. But the results turned in by the #1 CEO on our list, Jeff Bezos, were especially impressive. Under his leadership, Amazon produced country-adjusted returns of 15,189% and industry-adjusted returns of 14,917% and grew its market capitalization by $140 billion. We also collected biographical and compensation data on the CEOs to see if we could identify what they had in common and whether there was any correlation between performance and pay. While the top 100 have each had unique journeys to success, there do seem to be two preferred pathways: Over a quarter of the CEOs have MBAs, and nearly as many studied engineering. But in some ways, Bezos's place at the top says it all: The best CEO in the long haul turned out to be one who frequently underperformed in the short term--while continuing to make big bets on the future.
Information technology is revolutionizing products, from appliances to cars to mining equipment. Products once composed solely of mechanical and electrical parts have become complex systems combining hardware, sensors, electronics, and software that connect through the internet in myriad ways. These "smart, connected products" offer exponentially expanding opportunities for new functionality, far greater reliability, and capabilities that cut across and transcend traditional product boundaries. The changing nature of products is disrupting value chains, argue Michael Porter and PTC CEO James Heppelmann, and forcing companies to rethink nearly everything they do, from how they conceive, design, and source their products; to how they manufacture, operate, and service them; to how they build and secure the necessary IT infrastructure. Smart, connected products raise a broad set of new strategic choices for companies about how value is created and captured, how to work with traditional partners and what new partnerships will be required, and how to secure competitive advantage as the new capabilities reshape industry boundaries. For many firms, smart, connected products will force the fundamental question: "What business am I in?" This article provides a framework for developing strategy and achieving competitive advantage in a smart, connected world.
When Google bought Nest, a digital thermostat and smoke detector company, for $3.2 billion just a few months ago, it was a clear indication that digital transformation and connection are reaching critical mass, spreading across even the most traditional industrial segments and creating a staggering array of business opportunities and threats. The digitization of tasks and processes has become essential to competition. General Electric, for example, was at risk of losing many of its top customers to nontraditional competitors--IBM and SAP on one hand, big data start-ups on the other--offering data-intensive, analytics-based services that could connect to any industrial device. So GE launched a multibillion dollar initiative focused on what it calls the industrial internet: Adding digital sensors to its machines, connecting them to a common, cloud-based software platform, investing in software development capabilities, building advanced analytics capabilities, and embracing crowd-based product development. With all this, GE is evolving its business model. Now, for example, revenue from its jet engines is tied to reduced downtime and miles flown over the course of a year. After just three years, GE is generating more than $1.5 billion in incremental income with digitally enabled, outcomes-based business models. The company expects that number to double in 2014 and again in 2015.
Big data and the "internet of things" promise revolutionary change to management and society. But their success rests on the assumption that all the data being generated by internet companies and devices scattered across the planet belongs to the organizations collecting it. Pentland suggests that companies don't own the data, and that without rules defining who does, consumers will revolt, regulators will swoop down, and the internet of things will fail to reach its potential. To avoid this, he has proposed a set of principles and practices to define the ownership of data and control its flow. He calls it the New Deal on Data. The New Deal is "rebalancing the ownership of data in favor of the individual whose data was collected," Pentland says. "People would have the same rights they now have over their physical bodies and their money." They could see what was being collected and then opt out or opt in. Many companies are afraid that the regulation of data collection will kill their business models, he says. But he believes that it will make for a healthier economy--and that it will prevent disasters such as the criminal use of data in a way that affects critical systems and causes deaths. "If that kind of disaster happened," Pentland says, "there would be an overreaction: Shut it down. You'd see very strong regulation passed overnight, and a lot of companies would be in deep trouble."
Commercial success with a new technology usually depends on the exclusive ownership of a critical asset or capability. But to create the technology, an innovator draws on knowledge from many different sources. Inventors who mismanage that tension often fail to successfully commercialize their innovations. To understand how to manage the tension, the authors carried out a comprehensive analysis of more than 1,000 inventions from the University of Wisconsin's Technology Transfer Office. They interviewed the TTO's senior leadership, IP managers, licensing and contract managers, legal counsel, and other staff to get firsthand knowledge of how inventions were evaluated for commercial potential. From this research they identified seven IP traps that unwary inventors (individuals and companies alike) fall into when developing scientific discoveries and inventions for the commercial market. The traps include publicly disclosing information prematurely, neglecting to enforce patent infringements, failing to demonstrate sufficient originality, overrelying on known science, failing to stake out the best territory for applications of the technology, mismanaging attribution of contributors, and ceding too much control over IP to funders. Drawing on examples encountered in their research, the authors describe these traps and offer advice on how to avoid them.
Health care providers in much of the world are trying to respond to the tremendous pressure to reduce costs--but evidence suggests that many of their attempts are counterproductive, raising costs and sometimes decreasing the quality of care. Kaplan and Haas reached this conclusion after conducting field research with more than 50 health care provider organizations. Administrators looking for cuts typically work from the line-item expense categories on their P&Ls, they found. This may appear to generate immediate results, but it usually does not reflect the optimal mix of resources needed to efficiently deliver excellent care. The authors describe five common mistakes: (1) Reducing support staff. This often lowers the productivity of clinicians, whose time is far more expensive. (2) Underinvesting in space and equipment. The costs of these are consistently an order of magnitude smaller than personnel costs, so cuts here are short-sighted if they lower people's productivity. (3) Focusing narrowly on procurement prices and neglecting to examine how individual clinicians actually consume supplies. (4) Maximizing patient throughput. Physicians achieve greater overall productivity by spending more time with fewer patients. (5) Failing to benchmark and standardize. Administrators, in collaboration with clinicians, should examine all the costs of treating patients' conditions. This will uncover multiple opportunities to improve processes in ways that lower total costs and deliver better care.
In today's organizations, innovators are in demand everywhere--from the factory floor to the salesroom, the IT help desk to the HR department, the employee cafeteria to the C-suite. Innovation isn't a department, the authors say; it's a mindset that should permeate your entire enterprise. And what fuels it is insight--an imaginative understanding of an internal or external opportunity that can be tapped to improve efficiency, generate revenue, or boost engagement. Sawhney and Khosla outline seven "insight channels" that would-be innovators in any function or role can use: (1) Anomalies, or data that deviates from business as usual; (2) Confluence, when economic, demographic, and technological trends come together; (3) Frustrations, which lead to innovative workarounds; (4) Orthodoxies, which can spark a search for alternatives; (5) Extremities, such as fringe members of stakeholder groups who push for solutions; (6) Voyages, whereby innovators leave their offices to visit colleagues or customers; and (7) Analogies, useful ideas or systems in other teams, business units, companies, or industries.
Natural Foods, a midsize chain of organic grocery stores, has chosen to donate to a super PAC that plans to fund ads promoting political candidates with strong pro-business platforms. When one of those candidates takes a controversial stance against gay marriage and news of the company's connection to him is exposed, customers and employees stage protests and ask the company to reconsider its policy on campaign contributions. One board member urges the CEO to get out of politics completely, but the head of government relations believes that the company just needs to be more strategic about how it makes political donations. Can the company have the political influence it needs without making campaign contributions? With commentary from Ken Cohen, the vice president of public and government affairs for Exxon Mobil, and John Harrington, the president and CEO of Harrington Investments.
Norman Lear, perhaps most famous for the creation of "All in the Family," has spent his entire career behind the scenes. He talks about negotiating with network bosses, bringing out the best in writers and actors, and more.
Natural Foods, a midsize chain of organic grocery stores, has chosen to donate to a super PAC that plans to fund ads promoting political candidates with strong pro-business platforms. When one of those candidates takes a controversial stance against gay marriage and news of the company's connection to him is exposed, customers and employees stage protests and ask the company to reconsider its policy on campaign contributions. One board member urges the CEO to get out of politics completely, but the head of government relations believes that the company just needs to be more strategic about how it makes political donations. Can the company have the political influence it needs without making campaign contributions? With commentary from Ken Cohen, the vice president of public and government affairs for Exxon Mobil, and John Harrington, the president and CEO of Harrington Investments.
Natural Foods, a midsize chain of organic grocery stores, has chosen to donate to a super PAC that plans to fund ads promoting political candidates with strong pro-business platforms. When one of those candidates takes a controversial stance against gay marriage and news of the company's connection to him is exposed, customers and employees stage protests and ask the company to reconsider its policy on campaign contributions. One board member urges the CEO to get out of politics completely, but the head of government relations believes that the company just needs to be more strategic about how it makes political donations. Can the company have the political influence it needs without making campaign contributions? With commentary from Ken Cohen, the vice president of public and government affairs for Exxon Mobil, and John Harrington, the president and CEO of Harrington Investments.