The newly appointed manager of commercial accounts considers a loan request from the owner of a recreational motorsport dealership in the amount of a $60,000 long-term loan for renovations and the addition of a tattoo parlor. The owner has also requested a $450,000 working capital loan for operations and to help manage seasonal fluctuations in sales. This is a comprehensive case in which students assess qualitative issues affecting the recreational motorsport industry during a weak economic climate. Students learn the basics of commercial lending and the risks involved in lending to a company that has no bank loan history and that is seeking credit for sustainability.
A summer intern student at 3M Health Care must analyze the health care division’s logistics systems and report her findings to the vice president of 3M Health Care Markets. The vice president is most interested in the recommendations for the proposed changes to the existing method of distributing products to Canadian hospitals. This case provides sufficient information for students to assess the quantitative and qualitative issues relating to direct distribution versus maintaining a current supply chain structure of using value-added resellers.
Veteran product launch PR executives Joan Schneider and Julie Hall examine the five most frequent reasons why new products flop: The company can't support fast growth, the product falls short of claims and gets bashed, the item exists in "product limbo," the product defines a new category and requires substantial consumer education but doesn't get it, and the product is revolutionary but has no market. The authors describe real-world examples of each kind of failure and suggest how companies can avoid these pitfalls.
It's one of the most basic aphorisms of business: The customer is always right. But when companies, especially large ones, try to rectify a service failure, they may run into opportunistic customers who try to take advantage of the situation. Treating customers justly can allow companies to settle grievances without giving in to over-the-top demands, the author finds. He argues that companies should do three things to resolve complaints without being exploited: ensure that compensation is fair, provide a convenient claims process, and express friendliness and concern. They should also offer any compensation promptly, which is apt to lessen excessive demands and leave customers feeling more satisfied.
Company founders have to be optimistic and resilient. But new research shows that serial entrepreneurs-those who involve themselves in only one project at a time-tend to be so overoptimistic that they don't learn from failure. Some venture capitalists factor this in when making investment decisions, and they tend to have better results than those who don't. Other potential investors should perform this due diligence, interviewing candidates about the causes of their past successes and mistakes.
An assistant professor at the University of Kentucky examines the similarities between people's responses to physical pain and their responses to social rejection, including the surprising finding that taking acetaminophen decreases hurt feelings.
One difference between winners and losers is how they handle losing. Even a winning team might make mistakes, fumble, and lag behind before the game is over. But it recovers quickly and gets back on course. Kanter's Law is "Anything can look like a failure in the middle." The culture that surrounds high performers helps them resist the behaviors that losing can produce: panicking and throwing out the game plan; scrambling for self-protection and abandoning the rest of the group; hiding the facts and hoping things will get better by themselves; denying that anything needs to be learned or changed. Performance under pressure is the key.
Efforts to bring clean water to Bangladesh by installing tube wells appeared to be a huge success, but over time they led to epic failures: widespread arsenic poisoning, a rise in crime and prostitution, a projected increase in diarrheal diseases as villagers resume using groundwater.
In early 2006, Helen Drinan, Senior Vice President of Human Resources, Caritas Christi Health Care System (CCHCS), Boston, received two sexual harassment charges against the organization's CEO and President, Robert Haddad. While she knew she was legally charged with acting, she faced a complicated situation: one, the hospital system was owned and operated by the Archdiocese of Boston with Cardinal O'Malley as the Chairman of the Board for the system; and two, these charges came after the priest molestation cases which rocked the Catholic Church of Boston. In Case A, Drinan presented the well-documented results from an independent investigator into the sexual harassment charges against Haddad. Although Drinan's investigator presented clear evidence as to Haddad's guilt, the Cardinal decided to launch a second investigation, using the Church's lawyers. Drinan, interpreting this action as a delaying or avoidance tactic, decided that she must act. But, what should she say, to whom and how should she frame this critical conversation? In Case B, students read the letter Drinan sent to O'Malley, voicing her values. There is an extensive Epilogue that the instructor can report from or hand out to students that brings the case to a conclusion.
This is an MIT Sloan Management Review article. After finding his guitar badly damaged by United Air Lines' baggage handling, and after enduring nine months of fruitless attempts to secure restitution from the company, an exhausted customer retaliated by posting a YouTube video about his misadventure. A year later, the video has become viral and generated more than 9 million hits. This musician's course of action is but one example of a bona fide movement, and not only is online public complaining becoming more prevalent, but this form of customer response could also be very costly for companies. So what can companies do to deal with online complainers? Based on their eight years of research, the authors summarize their understanding of this phenomenon and provide actionable recommendations. They organize their conclusions into a two-by-two matrix. First, the matrix's rows differentiate between (1) understanding complainers' motives and behaviors and (2) recommendations whereby offending companies may change those behaviors. Second, the matrix's columns distinguish between the before and after of the online complaints, as motives and behaviors change over time. The authors' recommendations highlight how companies can prevent, or at least reduce, online complaining, and how companies should respond after an online complaint happens anyway. In particular, they show that the best way to avoid the triggers of online complaining is to develop fair processes and a triage system for initial non-online complaints. Also, they show that companies should respond to online complaints as quickly as possible-in any case, no later than four weeks after the online complaint posting-and that the nature of the apology should depend on the type of customer involved.
This is an MIT Sloan Management Review article. While technological innovations have revolutionized the workplace, it is ironic that relational boundaries -- obstacles to productive human interactions -- remain largely unchanged. The authors identified five types of such boundaries: Vertical boundaries are the floors and ceilings that separate groups according to rank and privilege. Horizontal boundaries are the walls that separate them according to areas of experience and expertise. Stakeholder boundaries are the doors and windows of the organization. They open it up to, or shut out, parties such as vendors and local communities. Demographic boundaries result when workers are defined, say, by gender, race, education or ideology. Geographic boundaries are represented by the physical office location as well as by the electronic connections used to bridge time zones and distances.
To research the factors that affect the success of teams working on knowledge-intensive projects, the authors studied a companywide recognition program for project teams at a large multinational food company. Based on that research, the authors introduce the concept of the project network as an important tool for accomplishing knowledge-intensive work. Typically, project networks consist of a core set of team members who bring in noncore contributors (such as other company employees, suppliers, consultants or customers) from their personal networks to provide knowledge, information or feedback regarding the team's task. The project network thus takes advantage of both the project team as a whole and the personal networks of the members. The authors contrast finalist and nonfinalist project teams from the team recognition program at the food company. The empirical data the authors report indicate that, on average, there was no significant difference between the finalist and nonfinalist teams with respect to several project characteristics: resources, project membership or changes in the project. However, in one area there was a significant difference: The finalist project teams had more noncore contributors. After controlling for project characteristics, size of core project team and other factors related to participation, the number of noncore contributors was a positive and significant predictor of success, the researchers report. A project network can be helpful whenever any of the following conditions is present: The project scope is beyond the control and sphere of influence of the core team; the task is complex, and it is unclear whether or not there is an optimal solution; or some of the knowledge necessary to create a high-value outcome resides elsewhere. Managers can use a project's kickoff meeting to set norms and expectations that members of the project team have the option to look outside the team for possible solutions to complex problems.
This is an MIT Sloan Management Review article. Almost all executives want more and faster information, and almost all companies are racing to provide it. What many of them are overlooking is that the real aim should not be faster information but faster decision making, and those aren't the same things. Executives tend to request more information than they can use, and oftentimes the cycle time of decision making, not the speed of information flow, is the real bottleneck. While it is critical to identify what information is needed, it is just as important to deliver it at the right time. The types of information needed most quickly are not static and can depend on several conditions, including whether the current state of the economy is growing or contracting. The right cycle time for particular types of information can vary widely by industry, but in general the highest requested frequency is for competitor news, sales and customer news. Based on responses to their surveys and interviews of senior executives and managers, the authors provide suggestions and guidelines to enable IT organizations to deliver information more quickly and flexibly. That requires changes to both human and technical capabilities, but those changes could make all the difference in having the correct information to avert a crisis.
This is an MIT Sloan Management Review article. Technology has enabled people to reconnect easily with networks of contacts that have gone dormant. And it turns out that reconnecting dormant relationships can be extremely useful. In one experiment, advice that executives received from ties that had been dormant for at least three years was as useful, and often even more useful, than the advice they received from current relationships. The big payoffs of dormant ties are that: (1) They are great sources of unexpectedly novel insights, (2) reconnecting is extremely efficient, as it requires a minimal investment of time and (3) reconnecting is not like starting a relationship from scratch. People still have feelings of trust and a shared perspective, which are critical for receiving valuable knowledge from someone. The authors identify and answer "frequently asked questions"about reconnecting dormant ties. One concerns the staying power of relationships once reconnections have occurred. Typically, they conclude, these reconnected relationships do not become fully renewed and maintained, but those who reach out cite the experience as overwhelmingly positive.
Many managers think that the way to capture value through relationship marketing is to focus on the "good" customers and get rid of the "bad"ones. But there is a lot more to best practice relationship management than maximizing revenues on individual customers and minimizing costs to serve. The authors studied people who were in emerging, existing and terminated relationships with companies and identified three important ways in which the current practice of CRM fails. First, companies forget that their relationships are not just with consumers, but with people who live rich and complicated lives. Second, because relationships come in different shapes and sizes, companies need to be cognizant of the requirements of diverse types of relationships beyond the loyalty ideal. Finally, companies don't recognize that relationships are two-sided and that these relationships evolve with each interaction. These three failings, illustrated with examples, led to the identification of three principles: Get to know customers as people; think beyond loyalty; and take responsibility for relationships that are two-way. The authors provide guidelines for companies that want to improve the overall value of their customer relationships. They suggest that companies first catalog and analyze the types of customer relationships they have, then develop a portfolio of relationships, optimizing those they have and identifying which new ones to focus on. Companies then need to determine which metrics to use to track the health and performance of those relationships, adjusting as they go. For most companies, the transition to a relationship-based approach will require a significant shift in mindset and practice. Managers will need to expand the type of data collected by their CRM systems, customize CRM solutions to the specific types of relationships the company is managing and retrain customer-facing employees to be sensitive to the relational clues they receive and send.
This is an MIT Sloan Management Review article. Despite the economic downturn and tenuous recovery, more than two-thirds of businesses are strengthening their commitment to sustainability, according to a new global study by MIT Sloan Management Review and the Boston Consulting Group, as reported in this article. The study found that 69% of companies surveyed plan to step up their investment in and management of sustainability this year. Just over one-quarter (26%) plan no change, and only 2% intend to cut back on their commitment. The study also found that a two-speed landscape is emerging, with a gap between sustainability "embracers"-those who place sustainability high on their agenda -and nonembracers or "cautious adopters,"who have yet to focus on more than energy cost savings, material efficiency and risk mitigation. Embracers are significantly more confident about their competitive position than nonembracers are. Seventy percent of embracers said they believe their organizations outperform industry peers. By contrast, only 53% of cautious adopters described themselves as outperformers, and 14% admitted to lagging behind peers -more than twice the percentage of embracers who made the same claim (6%). In addition, nearly three times as many embracers (two-thirds of them) as cautious adopters said that their organization's sustainability actions and decisions have increased their profits. "What's fascinating is that these findings depict a business landscape in general that's tilting hard toward where the embracers already are,"says Michael Hopkins, editor-in-chief of MIT SMR and a coauthor of the report. "So the embracers have handed us a kind of crystal ball. Their insights and behaviors suggest a blueprint for how management practice and competitive strategy will evolve." The report identifies seven specific practices exhibited by embracer companies, which together begin to define sustainability-driven management.
When John Antioco joined Blockbuster in 1997, outsiders were predicting that the bricks-and-mortar video rental business would be killed off by market shifts and technological advances. But he believed the company could remain relevant. First he needed to revise Blockbuster's business model, which was built on buying individual VHS cassettes at a hefty price and then struggling to rent each one about 30 times to make back the money. Antioco's team persuaded the movie studios to shift to a revenue-sharing system. Then the company jumped into the online business and eliminated its late fees, which had been a major customer irritant. Five years into Antioco's tenure, Blockbuster's revenues had nearly doubled. Enter Carl Icahn, activist shareholder, who had his own ideas about how Blockbuster should be managed and particularly about Antioco's compensation package. Icahn launched a successful proxy fight and secured seats on the board for himself and two others, putting Antioco on the defensive over his strategies for growth. The situation finally came to a head in a boardroom dispute over Antioco's bonus-resolved by his departure six months later. Three years after that, Blockbuster filed for bankruptcy. Icahn's version of events appears in a sidebar to the article.
Many executives believe that all failure is bad (although it usually provides lessons)-and that learning from it is pretty straightforward. The author, a professor at Harvard Business School, thinks both beliefs are misguided. In organizational life, she says, some failures are inevitable and some are even good. And successful learning from failure is not simple: It requires context-specific strategies. But first leaders must understand how the blame game gets in the way and must work to create an organizational culture in which employees feel safe admitting or reporting on failure. Failures fall into three categories: preventable ones in predictable operations, which usually involve deviations from spec; unavoidable ones in complex systems, which may arise from unique combinations of needs, people, and problems; and intelligent ones at the frontier, where "good" failures occur quickly and on a small scale, providing the most valuable information. Strong leadership can build a learning culture-one in which failures large and small are consistently reported and deeply analyzed, and opportunities to experiment are proactively sought. Executives commonly and understandably worry that taking an understanding stance on failure will create an "anything goes" work environment. They should instead recognize that failure is inevitable in today's complex work organizations.
Companies are spending a great deal of time and money to install codes of ethics, ethics training, compliance programs, and in-house watchdogs. If these efforts worked, the money would be well spent. But unethical behavior appears to be on the rise. The authors observe that even the best-intentioned executives may be unaware of their own or their employees' unethical behavior. Drawing from extensive research on cognitive biases, they offer five reasons for this blindness and suggest what to do about them: (1) Ill-conceived goals may actually encourage negative behavior. Brainstorm unintended consequences when devising them; (2) Motivated blindness makes us overlook unethical behavior when remaining ignorant is in our interest. Root out conflicts of interest; (3) Indirect blindness softens our assessment of unethical behavior when it's carried out by third parties. Take ownership of the implications when you outsource work; (4) The slippery slope mutes our awareness when unethical behavior develops gradually. Be alert for even trivial infractions and investigate them immediately; and (5) Overvaluing outcomes may lead us to give a pass to unethical behavior. Examine good outcomes to ensure they're not driven by unethical tactics.