This is an MIT Sloan Management Review article. It's hard to pick up a major management magazine -and we're not excluding this one -and not find several articles outlining in painful detail where a leader went wrong in a particular case. Implicitly or explicitly in these stories, the employees are treated as receptive individuals waiting only for the boss to offer a productive channel to their intrinsic energies. But when a boss stumbles, it may be as a direct result of actions taken by employees who have sabotaged their actions. To keep this from happening, leaders must: 1. Understand the situation they are walking into. Leaders need to know how they are likely to be perceived and what their predecessor was like. 2. Invest early in subordinates. New bosses need to spend significant time one-on-one with employees for three reasons: to understand them; to get to know them; and to establish a rapport. 3. Be mindful of their own behavior. New leaders often overestimate the extent to which their good intentions and good character will shine through. Demonstrating one's "authentic self " does not mean "being natural." Rather, it requires managers to seize everyday opportunities to demonstrate that they are trustworthy, supportive and fair. 4. Intervene early. New bosses need to take action if there is a problem. Letting things fester only postpones the inevitable.
This is an MIT Sloan Management Review article. Editor's Note: MIT Sloan Management Review first published "The New Practice of Global Product Development"in our Summer 2006 edition. In the article, authors Steven D. Eppinger and Anil R. Chitkara examined state-of-the-art and emerging best practices in global product development (GPD). GPD continues to evolve, and in 2009, we asked Eppinger, the General Motors Leaders for Manufacturing Professor of Management Science at the MIT Sloan School of Management, to update the article with new insights about GPD. His additions are published here along side the 2006 article, annotating the original text.
An employee union is threatening Detonation Media with a strike. What should the company do? Three experts comment on this fictional case study in R0907B and R0907Z: Richard L. Trumka, Richard B. Freeman, and Jeffrey Anderson.
The author, who imagines brave new worlds for a living, sees technology not as an Orwellian threat but as an empowering vehicle for individual expression.
What if the current recession turns out to be like the Great Depression of 1929-1933? Four years from now, the United States might find itself with a still-shrinking economy, half as many banks as in 2009, a third as many hedge funds, and retail banking resembling a public utility. The federal debt could be at $20 trillion, the top income tax rate at 45%, and the S&P 500 at 418. Ferguson, a professor at Harvard University and Harvard Business School, imagines that to be the worst-case scenario. The Breakdown, as Ferguson calls it, would alter the international economic order, too, with China's GDP rising to half that of the U.S. by 2013 and the IMF's Special Drawing Rights replacing the dollar as the international reserve currency. Ferguson analyzes the roots of the crisis as well as the measures taken by the Obama administration to tackle it. He goes on to describe the impact on the global economy and points out that the slowdown is hurting other nations more than the U.S., thereby building a powerful case for a somewhat more sanguine view of America's future. In a better-case 2013, he posits, the Federal Reserve's policies have produced neither inflation nor deflation. A remarkable number of new banks have appeared, the top income tax rate is 35%, and the S&P 500 stands at 976. Because the world has become more dangerous as well as poorer, everyone looks to the United States to continue acting as a global policeman - and the greenback is still the world's currency of choice.
Executives are beginning to look to the future after spending a full year in crisis mode. As they reengage in strategic thinking, they will need to continually assess the changing economic landscape - and they can effectively do that by keeping a close watch on the underlying forces outlined in this article. The authors, from McKinsey & Company, discuss the current trajectories of 10 particularly important trends: strains on natural resources, a damper on globalization, the loss of trust in business, the growing role of government, investment in quantitative decision tools, shifting patterns of global consumption, the economic rise of Asia, industry structure upheaval, technological innovation, and price instability. Companies' strategic behavior should be tied closely to these trajectories. For instance, given recent reversals in what had seemed to be an unstoppable trend - globalization - managers should reassess their business models under different future scenarios. Would they fare as well in a more protectionist world as they would in one with free and fair movement of goods, capital, and talent? Or would certain production locations no longer make sense, certain overseas business units lose value, or certain core activities be harder to perform? Meanwhile, as the U.S. ceases to be the engine of global consumption, businesses should increasingly set their sights on China and India, where consumer spending is growing faster. In mature markets, they should refocus their offerings on the remaining sweet spot of demand: consumers over age 50.
The current economic crisis is not just another rough spell. Today's mix of urgency, high stakes, and uncertainty will continue even after the recession ends. The immediate crisis - which we will get through with policy makers' expert technical adjustments - sets the stage for a sustained, or even permanent, crisis, a relentless series of challenges no one has encountered before. Instead of hunkering down and relying on their familiar expertise to deal with the sustained crisis, people in positions of authority - whether they are CEO s or managers heading up a company initiative - must practice what the authors call adaptive leadership. They must, of course, tackle the underlying causes of the crisis, but they must also simultaneously make the changes that will allow their organizations to thrive in turbulent environments. Adaptive leadership is an improvisational and experimental art, requiring some new practices. Like Julie Gilbert, who overcame internal resistance to reorient Best Buy toward female purchasers, adaptive leaders get things done to meet today's challenges and then modify those things to thrive in tomorrow's world. They also embrace disequilibrium, using turbulence as an opportunity to build crucial new capacities, as Paul Levy did to rescue Beth Israel Deaconess Medical Center from a profound financial crisis. Finally, adaptive leaders, such as Egon Zehnder, the founder of an executive search firm, draw out the leadership skills that reside deep in the organization, recognizing the interdependence of all employees and mobilizing everyone to generate solutions.
When it comes to workplace preferences, Generation Y workers closely resemble Baby Boomers. Because these two huge cohorts now coexist in the workforce, their shared values will hold sway in the companies that hire them. The authors, from the Center for Work-Life Policy, conducted two large-scale surveys that reveal those values. Gen Ys and Boomers are eager to contribute to positive social change, and they seek out workplaces where they can do that. They expect flexibility and the option to work remotely, but they also want to connect deeply with colleagues. They believe in employer loyalty but desire to embark on learning odysseys. Innovative firms are responding by crafting reward packages that benefit both generations of workers - and their employers.
Standard economic theory assumes that human beings are capable of making rational decisions and that markets and institutions, in the aggregate, are healthily self-regulating. But the global economic crisis, argues Ariely, has shattered these two articles of faith and forced us to confront our false assumptions about the way markets, companies, and people work. So where do corporate managers - who are schooled in rational assumptions but run messy, often unpredictable businesses - go from here? In this lively article, the author, a professor of behavioral economics at Duke University, shows how the emerging discipline of behavioral economics can help businesses better defend against foolishness and waste. Smart organizations will develop a behavioral economics capability by hiring qualified experimenters and conducting small trials that build on one another, revealing a radically different view of how people make decisions. Revenge and cheating are only two of the irrational behaviors that companies will find underlying their employees' and customers' actions. Once an understanding of irrationality is embedded in the fabric of an organization, a behavioral economics approach can be applied to virtually every area of the business, from governance and employee relations to marketing and customer service.
A survey of more than a thousand HBR readers showed people and businesses bracing themselves for the worst for at least another year. Asked to describe the effects of the economy on their companies and their professional lives, readers painted a fairly grim picture, though they also reported several opportunities to improve how they innovate and operate.
When did we start measuring the success of a company only according to the increase in its share price? Stanford professor Pfeffer argues that it's time for CEOs to once again balance shareholders' interests with those of the other stakeholders: employees, suppliers, and customers.
For the foreseeable future, governments will take a keen interest in how executives manage. In the U.S., industries and sectors representing more than a third of the nation's economy - including financial services, automobiles, health care, and telecom - are being reshaped. But don't expect a return of old-style regulation, which would stifle innovation. Government will coax businesses rather than curb them by offering incentives for desirable conduct. Private-sector managers will need to develop a new mind-set and skill set so they can partner with government rather than fend it off. Change has actually been on the horizon for years. It's the culmination of several long-term trends, such as a deepening distrust of business, greater ties between the interests of business and society, and decreasing regulatory control across national borders. Over time, economies worldwide will settle on versions of the system that's beginning to emerge in the United States. Governments will make use of taxes and tax credits to promote wanted behavior, such as investing in renewable energy or hiring veterans, and to discourage unwanted behavior, like emitting excess carbon. They will also take a more active role in coordinating public and private interests through rules on how businesses and individuals are compensated.
The Obama administration and the U.S. Federal Reserve - along with counterparts around the world - are doing their utmost to thaw the credit freeze that took hold in the fall of 2008. But these measures, says the author, serve to show how badly the housing and derivatives bubbles deformed the economy and the global financial system. The first effect of the bailouts will be a dramatic rise in the size and cost of government borrowing, which will have serious inflationary consequences. Just as important is the transformation of the U.S. central bank into a version of the "bad bank" touted as a solution to the crisis. How disastrous the consequences will be depends on whether our appetite for risk has been increased by the bailouts or reduced by the meltdown.
Although the recession has meant a rise in some threats to corporate security and a fall in others, security directors are seeing their budgets cut without regard to these shifts. Businesses must ensure that their spending addresses the most urgent priorities.
How will consumers behave as we emerge from this downturn? Though recessions differ in their causes, depth, and duration, it's possible to anticipate the way consumers will act by understanding their behavior and motivation in previous recessions and analyzing current trends. Flatters and Willmott trace the paths of eight trends as they entered the recession and project their trajectories into the recovery. The authors' analysis paints a picture of chastened new consumers who will seek simplicity in products and services; take companies' boardroom ethics into account in purchase decisions; pursue "discretionary" thrift (virtuous but not essential cost cutting); flit capriciously from brand to brand; make green consumption more a matter of reducing waste than purchasing premium products; and steer away from frivolous, extreme leisure experiences in favor of wholesome, authentic ones. Like their great-grandparents, who grew up in the Great Depression, young consumers today, the authors say, will be permanently changed by coming of age during a profound economic downturn.
Traditional metrics don't capture many of the challenges and opportunities in store for U.S. companies and the national economy. The authors, from Deloitte, present a framework for understanding the forces that have transformed business over the past 40 years - and an index for gauging their impact on performance.
The era of unbridled, debt-financed consumer spending is over: Today's shoppers are tightfisted. To win them over, companies need to offer value and utility and build messages that emphasize getting back to basics.
For decades, U.S. companies have been outsourcing manufacturing in the belief that it held no competitive advantage. That's been a disaster, maintain Harvard professors Pisano and Shih, because today's low-value manufacturing operations hold the seeds of tomorrow's innovative new products. What those companies have been ceding is the country's industrial commons - that is, the collective operational capabilities that underpin new product and process development in the U.S. industrial sector. As a result, America has lost not only the ability to develop and manufacture high- tech products like televisions, memory chips, and laptops but also the expertise to produce emerging hot products like the Kindle e-reader, high-end servers, solar panels, and the batteries that will power the next generation of automobiles. To rebuild the commons and restore its wealth-generating machine will require government and industry in the United States to make two drastic changes: (1) The government must change the way it supports basic and applied scientific research to promote the broad collaboration with business and academia needed to tackle society's big problems, and (2) Corporate management practices and governance structures must be overhauled so they no longer exaggerate the payoffs and discount the dangers of outsourcing production and cutting investments in R&D. Restoring the ability of enterprises to develop and manufacture high-tech products in America is the only way the country can hope to pay down its enormous deficits and raise its citizens' standard of living.
As ports, highways, railways, and airports run out of room, the world faces a looming transportation crisis. The current meltdown masks the threat, but once the recovery begins, a lack of infrastructure capacity, combined with rising oil prices, will constrain growth. Congestion and delays will eat away business profits, forcing companies to rethink their long, complex supply chains. Smart organizations will use unorthodox methods to cut often-hidden transportation costs and outmaneuver rivals.