The Kaesong Industrial Complex (KIC) is a 1.25-square-mile industrial park six miles north of the Demilitarized Zone in the Democratic People's Republic of Korea. The complex includes both North and South Korean workers, and is subsidized by Seoul. The result of an agreement between North and South Korea in 2000, Kaesong stood as the sole beacon of hope for economic cooperation between the divided states, and remained open for business despite a number of hostilities over the ensuing decade. This case reviews the political and economic risks and opportunities of entering Kaesong through the lens of Bright Ray Apparel, a hypothetical South Korean textile manufacturing firm. Jihoon Lee, Bright Ray's CEO, is encouraged by his CFO and a trusted senior economist to enter Kaesong. But risks abound. North Korea's nuclear threats and leadership transition have brought a new wave of uncertainty to the Korean Peninsula. Facing its own upcoming presidential election, much remains to be determined in Seoul regarding future economic policy and outreach toward Pyongyang. As Jihoon Lee's meeting with his financial adviser nears, Bright Ray's leadership must consider a variety of influences and factors involved in entering Kaesong, from political instability to economic opportunity, and the potential to improve the working condition of North Korean employees.
Describes the challenges and successes encountered by GE's Aviation business in implementing a teaming work structure and culture in plants across its supply chain. GE Aviation leadership had seen dramatic gains in productivity, quality, and worker satisfaction in manufacturing plants where it had implemented teaming, which was designed to move decision-making as close to the product as possible by delegating authority, responsibility, and accountability to front-line workers. The case describes what teaming looked like in two of GE Aviation's plants and discusses the benefits realized in teaming sites. It also describes the challenges GE Aviation leaders had encountered in implementing teaming in the face of an entrenched work structure and culture in one particular plant, and discusses the difficulty management had faced in moving forward in transforming the culture of the plant.
The case discusses the development of palm oil in Malaysia. This experience provides important insights about when and how government intervention can be successful in developing new sectors in the economy.
Over the past decade, Brazil's future as a leading world economic power appeared certain. An expanding middle class and commodity boom had fueled economic growth, with GDP growth hitting a peak of 7.5% in 2010. However, the high cost of conducting business in Brazil, known as "Custo Brasil," was hurting domestic manufacturing, while incoming foreign investments threatened to overwhelm Brazilian markets. Under President Dilma Rousseff, economic growth stagnated, and the Rousseff administration struggled to find the best balance between reducing inflation, maintaining a flexible exchange rate, and improving the competitiveness of Brazilian exports.
This B2B case describes a common situation that arises when channel partners gain success and the perceived balance of power shifts from the supplier to the channel. The manager for Bolster Electronics, one of the largest suppliers in Canada of state-of-the-art industrial video equipment for harsh environments, must consider a request from Vickers Industrial Supplies, a regional dealer, to be upgraded from a dealership to a distributor. Vickers was generating a growing business volume for Bolster in an important market segment, the Canadian oil sands in northern Alberta. Approving Vickers' request will generate slimmer margins for the manufacturer, which may be made up with higher projected volume, if the projections are reasonable. The potential reaction of the company's national distributors is causing concern. Although Bolster sells to regional dealerships in the United States, its policy is to distribute its products in Canada through two national distributors, and it fears that increasing Vickers' role will alienate these distributors. Each alternative has benefits and risks.
Facebook’s director of policy communications was faced with a situation caused by a YouTube video posted by the non-governmental organization (NGO) Greenpeace. This video publicly critiqued the environmental sustainability of Facebook’s decision to build a new data centre, its main objection being that the new facility would be connected to a local utility provider that supplied electricity mainly from the burning of coal, one of the largest sources of global warming. This video was only the latest of a series of actions, commenced by Greenpeace eight months earlier, immediately following Facebook’s decision to build the new facility. Greenpeace had dubbed these actions the “Unfriend Coal Campaign,” which now had 500,000 followers and had generated numerous media stories. Greenpeace’s goal was to pressure Facebook into adopting cleaner energy policies by leveraging Facebook’s own social media against the company. As Facebook had no plans to stop building the facility, its director needed to figure out the best course of action to take in response to the mounting pressure from Greenpeace, in order to alleviate the increasingly negative attention from media and consumers.
Back in the late 1990s Ibrahim, who was running a software and consulting company in the UK, regularly worked with big telecom companies. He began asking them why they were ignoring the huge opportunities to develop mobile communications in Africa, especially in countries where licenses would be free. The telecom executives who were his clients simply saw Africa as too unknown and too risky. One of them cited Idi Amin as a barrier--but Amin had been gone from Uganda for 15 years. Convinced that the potential market was too big to pass up, Ibrahim decided to develop it himself. He began with just five employees and initial funding from his consulting firm, and subsequently had to spend a significant amount of time raising capital--$300 million during the first five years. To establish credibility, he recruited an experienced and respected board and instituted rules to prevent bribery and corruption. The company began in Uganda and a few other countries where the pent-up demand was almost overwhelming. In Gabon, for example, customers actually knocked down the door in one of its offices trying to get in. "That's how badly people wanted to make phone calls," Ibrahim writes. The challenges he faced in meeting that demand were infrastructural as well as political and cultural: Some places lacked roads, so helicopters had to move the heavy equipment. The company had to supply its own electricity and water and to refill its batteries and generators every day. Nevertheless, Ibrahim succeeded in building a large company and creating an even larger economy to support it. When Celtel was sold to Zain, in 2005, it was operating in 15 African countries under licenses that covered more than a third of the continent's population.
When it comes to assessing performance, business executives can be a lot like old-time baseball scouts, who have been around so long that they've developed a gut feel for which statistics matter most. But as Michael Lewis describes in "Moneyball," the Oakland Athletics discovered that the metric the team's scouts used to choose players had nothing to do with whether those players would score runs. They had been measuring the wrong thing, and executives may be making the same mistake. Theory and empirical research show only a shaky connection between value creation and two of the most popular performance measures: earnings per share (EPS) growth and sales growth. Yet executives cling to those metrics because they are overconfident in their intuition, they misattribute the causes of events, and they do not escape the pull of the status quo. The most useful statistics reliably reveal cause and effect. They have two defining characteristics: They are persistent, showing that the outcome of a given action at one time will be similar to the outcome of the same action at another time, and they are predictive--that is, there is a causal relationship between the action the statistic measures and the desired outcome. To choose the right statistics, you must define your governing objective, assess the financial and nonfinancial drivers of that objective, and figure out which employee activities support those drivers. You must also regularly reevaluate your metrics. The drivers of value creation change, and so must your statistics.
Big data, the authors write, is far more powerful than the analytics of the past. Executives can measure and therefore manage more precisely than ever before. They can make better predictions and smarter decisions. They can target more effective interventions in areas that so far have been dominated by gut and intuition rather than by data and rigor. The differences between big data and analytics are a matter of volume, velocity, and variety: More data now cross the internet every second than were stored in the entire internet 20 years ago. Nearly real-time information makes it possible for a company to be much more agile than its competitors. And that information can come from social networks, images, sensors, the web, or other unstructured sources. The managerial challenges, however, are very real. Senior decision makers have to learn to ask the right questions and embrace evidence-based decision making. Organizations must hire scientists who can find patterns in very large data sets and translate them into useful business information. IT departments have to work hard to integrate all the relevant internal and external sources of data. The authors offer two success stories to illustrate how companies are using big data: PASSUR Aerospace enables airlines match their actual and estimated arrival times. Sears Holdings directly analyzes its incoming store data to make promotions much more precise and faster.
Back in the 1990s, computer engineer and Wall Street "quant" were the hot occupations in business. Today data scientists are the hires firms are competing to make. As companies wrestle with unprecedented volumes and types of information, demand for these experts has raced well ahead of supply. Indeed, Greylock Partners, the VC firm that backed Facebook and LinkedIn, is so worried about the shortage of data scientists that it has a recruiting team dedicated to channeling them to the businesses in its portfolio. Data scientists are the key to realizing the opportunities presented by big data. They bring structure to it, find compelling patterns in it, and advise executives on the implications for products, processes, and decisions. They find the story buried in the data and communicate it. And they don't just deliver reports: They get at the questions at the heart of problems and devise creative approaches to them. One data scientist who was studying a fraud problem, for example, realized it was analogous to a type of DNA sequencing problem. Bringing those disparate worlds together, he crafted a solution that dramatically reduced fraud losses. In this article, Harvard Business School's Davenport and Greylock's Patil take a deep dive on what organizations need to know about data scientists: where to look for them, how to attract and develop them, and how to spot a great one.
Senior leaders who write off the move toward big data as a lot of big talk are making, well, a big mistake. So argue McKinsey's Barton and Court, who worked with dozens of companies to figure out how to translate advanced analytics into nuts-and-bolts practices that affect daily operations on the front lines. The authors offer a useful guide for leaders and managers who want to take a deliberative approach to big data--but who also want to get started now. First, companies must identify the right data for their business, seek to acquire the information creatively from diverse sources, and secure the necessary IT support. Second, they need to build analytics models that are tightly focused on improving performance, making the models only as complex as business goals demand. Third, and most important, companies must transform their capabilities and culture so that the analytical results can be implemented from the C-suite to the front lines. That means developing simple tools that everyone in the organization can understand and teaching people why the data really matter. Embracing big data is as much about changing mind-sets as it is about crunching numbers. Executed with the right care and flexibility, this cultural shift could have payoffs that are, well, bigger than you expect.
More and more companies recognize that their dispersed, global operations are a treasure trove of ideas and capabilities for innovation. But it's proving harder than expected to unearth those ideas or exploit those capabilities. Part of the problem is that companies manage global innovation the same way they manage traditional, single-location projects. Single-location projects draw on a large reservoir of tacit knowledge, shared context, and trust that global projects lack. The management challenge, therefore, is to replicate the positive aspects of colocation while harnessing the opportunities of dispersion. In this article, Insead's Wilson and Doz draw on research into global strategy and innovation to present a set of guidelines for setting up and managing global innovation. They explore in detail the challenges that make global projects inherently different and show how these can be overcome by applying superior project management skills across teams, fostering a strong collaborative culture, and using a robust array of communications tools.
When leaders don't fire incompetent executives, they send a bad message to the whole organization. A case in point is the U.S. Army. "To study the change in the army across the two decades between World War II and Vietnam," Ricks writes, "is to learn how a culture of high standards and accountability can deteriorate." In this essay, adapted from his new book, The Generals: American Military Command from World War II to Today, Ricks illuminates the contrast between General George C. Marshall, an unlikely figure of quiet resolve who became a classic transformational leader, and the disastrous generals of the Vietnam era. In Vietnam, he writes, the honesty and accountability of Marshall's system were replaced by deceit and command indiscipline. If inadequate leaders are allowed to remain in command of an enterprise, their superiors must look for other ways to accomplish its goals. In Vietnam commanders turned to micromanagement, hovering overhead in helicopters to direct (and interfere with) squad leaders and platoon leaders on the ground. This both undercut combat effectiveness and denied small-unit leaders the opportunity to grow by making decisions under extreme pressure. In Iraq and Afghanistan, Ricks writes, though U.S. troops fought their battles magnificently, their generals often seemed ill equipped for the tasks at hand--especially the difficult but essential job of turning victories on the ground into strategic progress. This brief but powerful history of the army since World War II holds stark lessons for business leaders.