Some 70% of family-owned businesses fail or are sold before the second generation gets a chance to take over. It doesn't have to be that way. Here are three pitfalls family businesses commonly face, along with emerging best practices to help businesses avoid them.
For decades economists have wondered whether inequality is good or bad for long-term growth. A detailed examination of economic data from 48 U.S. states suggests that a certain level of inequality promotes growth. Still, reducing inequality has clear benefits over time, and growth policies that ignore inequality may ultimately be self-defeating.
A new study finds no correlation between how a company's stock fares upon the announcement of a new CEO and the share price over that CEO's tenure. In fact, under certain circumstances, CEOs whose appointments cause their company's stock to drop tend to achieve better results over time than CEOs whose appointments cause the stock to rise. Directors looking to choose a new CEO should think about other criteria, such as the company's recent performance and whether candidates are insiders or outsiders.
A new study uncovers a correlation between people's spatial skills and their social intelligence. Can strengthening your ability in one area improve your aptitude in the other?
The clinical experience gained by fledgling doctors is an ideal example of how professional schools address the "knowing-doing gap." Harvard Business School is sending its entire first-year class abroad to developing markets to gain a similar kind of real-world experience.
Interviews with executives at top banks and research at 50 companies reveals that the best teams are candid with one another. Three ways to improve teamwork through candor and criticism are: (1) break meetings into smaller groups, (2) choose one person to deliver criticism and break silences, and (3) teach people to be less defensive about honest feedback.
Photographs that record the early days of Groupon, Foursquare, LinkedIn, Twitter, and eBay, much as the iconic 1978 Microsoft photograph does for that company.
This case series is appropriate for undergraduate, MBA, executive education, and MBA Exec audiences but is specifically designed for decision analysis, a first-year MBA core course. The Part II case affords the opportunity to examine downstream decisions and a real option regarding how fast to harvest the fish when the virus hits. Monte Carlo simulation would be used to incorporate uncertainties about when the virus hits, if it hits, and mortality, and to generate the risk profile of contribution for the option alternatives and to compare whether to use 1 or 2 squads to harvest the fish. Based on the simulation results, an evaluation will be made of what to pay for the option.
After two hours of further intense, heated debate, Belton's COO has acquiesced and agreed with the manager of a large management consulting firm on every major point. But the senior partner on the assessment, as well as the consultant's mentor, considers the results disastrous. "Our job is not to be right, our job is to help," he says.
In January 2009, Mark Pincus, founder and CEO of the immensely popular and successful Zynga Game Network met with his sister Laura Hartman, DePaul University business ethics professor, to discuss building a new brand of corporate social strategy. Pincus wanted to find a way that Zynga could have a greater social impact on the world. He and Hartman talked about creating a new social strategy that would naturally flow out of Zynga's success in developing highly profitable interactive social games. The two of them wondered whether it was possible for one company to develop a strategy that would both be profitable and engender social change.
The B case of this three-case series outlines how Mark Pincus, with help from his sister Laura Hartman, began to implement his new brand of social strategy. Initial steps included two partnerships: (1) Zynga's YoVille and the San Francisco SPCA; and (2) Mafia Wars and the Huntington's Disease Society of America. A new program within Zynga was created: Zynga.org, which would focus on global problems and ways to address them. Its first project, in partnership with Zynga's wildly popular FarmVille, was a strategy in which users could purchase "Sweet Seeds for Haiti." Through FarmVille, Zynga would contribute 50% of all proceeds from the sale of these seeds to two Haiti-based causes: Fonkoze and FATEM (a microfinance initiative and an educational and school-meals program, respectively). In 2010, Zynga.org continued to evolve, with periodic bumps along the way when Zynga encountered bad press and unfavorable attention.
Following the May 2010 Sweet Seeds campaign, Zynga announced that it would expand its FATEM partnership to build a school for children in Haiti who had been affected by the devastating earthquake in January of that year. In one week, more than 45,000 FarmVille users raised $110,000 through the purchase of virtual social goods. Sweet Seeds would be the first of several campaigns Zynga launched to raise funds for the school. In the meantime, Zynga.org's management had to establish concrete measures for the various projects' success, including efficient implementation, self-sustainability, and replication. Maintaining a strong feedback loop so that those who contributed to these campaigns could see the results was important. Despite competition, Zynga remained, in 2010, a wildly successful company and its dot-org arm helped Mark Pincus and Laura Hartman realize the new type of social strategy they had discussed over the years.
John Hume, a veteran game farmer and founder of the Mauricedale Game Ranch in South Africa, was deeply troubled by the record upsurge in black rhino poaching incidents and black-market horn thefts in 2010 and 2011. While the endangered black rhino represented only one segment of Mauricedale's hunting and farming businesses in 2011, the animal's survival was an important component of the ranch's and industry's growth potential in the future. As both a businessman and a rhino advocate, John Hume was contemplating an innovative idea that might help stop the decline of the black rhino: the creation of a market for legalized black rhino hunting. As he pondered the possibilities and alternatives to determine what his next move should be, Hume had several questions on his mind: Was the legalization of the international sale and trade of rhino horns a viable solution? Was it Hume's responsibility to save the black rhino, and was the animal a good investment?
Xerox Production Manager Jim Deese has to address the concerns of an employee who is uncomfortable with the company's "vision quests," or creative and spiritual retreats. Starting in the early 1990s, Xerox began conducting these vision quests as a means of invigorating production and innovation at the company, which had struggled over the years with product development and increasing competition. Xerox has worked hard to better its product, increase workforce communication, and enable employees to develop spiritually and embrace a higher vision, both work-related and personally. Some studies have shown that incorporating some element of spirituality helps to generate a happier and more creative workplace. Nonetheless, the employee, a professed atheist, is uncomfortable with the vision quests and the company's other mildly spiritual practices, and Deese must decide how to respond.
The management of Telescope, a wildly popular online search engine, must deal with an impending crisis: a security breach in which information from thousands of users has been compromised. Technically-thanks to its carefully worded "terms of use"-the company is not financially liable for any ensuing damage. But Telescope prides itself on its commitment to acting responsibly. Its motto is "We Do Only Good," and the company has published a set of philosophies, including "Focus on the customer and harmony follows" and "Make money, not mischief." Telescope is well-respected in the Internet world for its non-corporate appearance and non-greedy attitude. Its IPO, almost 10 years ago, had been met with enthusiasm and the company had stellar revenues. The big question for CEO and Co-Founder Spencer Milo is, "How do the ideals and passion with which he had started Telescope come into play now?" He has to reconcile what the company stands for and how his organization can square its sense of purpose and faith with the actions that might be necessary to keep Telescope a thriving business.
The manager of a large meatpacking factory has agreed to the request of his 100-plus Muslim workers who have asked to take breaks at sunset to properly observe the Muslim holy month of Ramadan. Although such an exception is an irregularity, the manager believes it is an appropriate response to the religious needs of such a large percentage of his employee base. But the requested breaks-at very precise times-have begun to interfere with the overall operation of the plant, resulting in a loss of productivity. Other employees have become irritated, believing they are carrying the burden of the break times and resenting what they see as preferential treatment. Because of the productivity issues, the other employees' complaints, and concerns about the credibility of his management, the manager considers reneging on his agreement with the Muslim workers.
James Bowman, a founding partner of a private equity fund manager based in New York City, has traveled to China to meet with a China Power Investment Corporation manager in the hope of cultivating a business relationship. But Bowman is flabbergasted when the manager, in what is supposed to be an introductory conversation, asks that Bowman deposit $800,000 into a Chinese banking account. The money, the manager assures Bowman, will be returned to him within 30 minutes. This request, Bowman understands, is about the principles of Confucianism, which many in China incorporate into their work and home lives. These principles involve building close, trusting relationships in business. Bowman realizes that he is being tested, and he is uncertain how to respond.