Chronicles the board game company's early formation and growth, and culminates in two issues often faced by business owners: (a) what to do about the over-dependence that the company has developed on its founder/CEO, and (b) what are the possible exit options worth pursuing. Describes University Games' founding by two friends after graduating, its internal and market-facing growing pains, periods in which each of the two founders left the company, a buy-back of shares from a VC investor, and culminates in the emergence of exit opportunities. Concludes with the CEO questioning whether he should court a financial investor or strategic acquirer, or even consider the options of a public offering and of a leveraged re-capitalization for the company.
The case study is about a successful strategy formulated at Dow Corning for marketing commodity silicones, a chemical used in diverse applications. It deals with important issues in B2B marketing: refocusing on user needs and developing a "needs-based" segmentation of industrial customers; bundling and de-bundling of technical services; branding of commodity chemicals; web-based low price/no-frills value proposition; making money with commodities. The case also describes a "tipping point" in Dow Corning's history and strategy where their leadership in the silicone business was at stake; management had to chart radically new ways to compete in commoditized markets--what they call their "disruptive innovation". At the end the students are asked to look at the success of Xiameter (the company's web-based brand) and decide its future. The choices are: maintain status quo; incrementally fine tune the strategy; go for a major overhaul. Learning objectives: The Xiameter case can be used to: 1) show an example of using customer insights in successfully re-defining business and marketing strategies; 2) address issues of segmentation, value proposition and branding in industrial marketing; 3) demonstrate how two contrasting value propositions could be offered to industrial customers under different brands; 4) discuss value innovation in B2B markets ; 5) examine and analyze elements of a successful web-based business model; 6) learn how adversity can challenge an organization to re-define its business and marketing strategies for future success.
Centers on the Inditex Group (Industria del Diseno Textil), a Spanish corporation that ranks among the world fashion industry leaders along with companies such as GAP, Nike, Benetton, and H&M. Inditex owns several brands, including Zara, Pull and Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, and Kiddy's Class. To respond to repeated attacks by NGOs, the company had initially pursued a reactive corporate social responsibility (CSR) strategy. However, it was now actively working on the implementation of a CSR plan that spanned its whole production and sales processes, focusing on working conditions at the company's manufacture outsourcing shops. Its strategy addressed profound structural changes undergone by the industry and the company itself. While in 1980 all production operations were based in Spain, by 2003 Inditex had expanded to include production centers as well as certified suppliers in the Americas, Africa, Europe, and Asia. On the other hand, the initially family-owned company had gone public at a world level. At the time, several NGOs had begun to look into and report on the overall textile sector in the midst of a campaign against labor exploitation, child labor, and corporate social irresponsibility at large. This situation posed new challenges for the company, especially regarding labor, and workers' social and economic conditions. In order to face these challenges, a Corporate Social Responsibility Department and a Social Council were created to ensure that corporate actions reflected the company's social responsibility and commitment and to communicate sustainability values and respect for human rights across the board.
In the four years since Rob Miranda became CEO of Growing Places, a provider of on-site child care for companies in the Midwestern United States, he has been a font of ideas. For instance, he set up rooms where moms can breastfeed their babies during breaks in the workday and put Webcams in classrooms so that parents can "visit" their children from their desks. As a result of Rob's entrepreneurial vision and operational savvy, the company has achieved profitable growth. The problem is that Rob tends to stick his foot in his mouth. Evan Breyer, the company's founder and chairman, hopes that Rob will learn to avoid making verbal gaffes; he even gets Rob to see a coach. But while Evan is wrapping up a facility tour for a potential corporate sponsor of a scholarship program, Rob makes an insensitive remark about breastfeeding in front of the visitors--among them, a reporter. Not surprisingly, the local paper runs a scathing editorial the next day. Several days later, during a conference presentation on preschool curricula, he does it again with a comment implying that teachers are lazy and unprepared. The result is more bad press and a meaningful dip in stock price. It's beginning to look as though Rob is not going to change, and many board members are talking ouster. Should Evan try to persuade the board to hang on to Rob? Commenting on this fictional case study in R0612A and R0612Z are Ronald A. Heifetz, a professor at Harvard's Kennedy School of Government; John H. Biggs, the former CEO of TIAA-CREF; Torie Clarke, a CNN analyst; and Roger Brown, a cofounder of Bright Horizons.
Today's overachieving professionals labor longer, take on more responsibility, and earn more than the workaholics of yore. They hold what Hewlett and Luce call "extreme jobs," which entail workweeks of 60 or more hours and have at least five of ten characteristics--such as tight deadlines and lots of travel--culled from the authors' research on this work model. A project of the Hidden Brain Drain Task Force, a private-sector initiative, this research consists of two large surveys (one of high earners across various professions in the United States and the other of high-earning managers in large multinational corporations) that map the shape and scope of such jobs, as well as focus groups and in-depth interviews that get at extreme workers' attitudes and motivations. In this article, Hewlett and Luce consider their data in relation to increasing competitive pressures, vastly improved communication technology, cultural shifts, and other sweeping changes that have made high-stakes employment more prominent. What emerges is a complex picture of the all-consuming career--rewarding in many ways, but not without danger to individuals and to society. By and large, extreme professionals don't feel exploited; they feel exalted. A strong majority of them in the United States--66%--say they love their jobs, and in the global companies survey, this figure rises to 76%. The authors' research suggests, however, that women are at a disadvantage. Although they don't shirk the pressure or responsibility of extreme work, they are not matching the hours logged by their male colleagues. This constitutes a barrier for ambitious women, but it also means that employers face a real opportunity: They can find better ways to tap the talents of women who will commit to hard work and responsibility but cannot put in overlong days.
Of all the competing objectives every company faces, three pairs stand out: profitability versus growth, the short term versus the long term, and the whole organization versus the units. In each case, progress on one front usually comes at the expense of progress on the other. The authors researched the performance of more than 1,000 companies worldwide over the past two decades and found that most struggle to succeed across the three tensions. From 1983 to 2003, for example, only 32% of these companies more often than not achieved positive profitability and revenue growth at the same time. The problem, the authors discovered, is not so much that managers don't recognize the tensions--those are all too familiar to anyone who has ever run a business. Rather, it is that managers frequently don't focus on the tension that matters most to their company. Even when they do identify the right tension, they usually make the mistake of prioritizing a "lead" objective within it--for example, profitability over growth. As a result, companies often end up moving first in this direction, then in that, and then back again, never quite resolving the tension. The companies that performed best adopted a very different approach. Instead of setting a lead objective, they looked at how best to strengthen what the two sides of each tension have in common: For profitability and growth, the common bond is customer benefit; for the short term and the long, it is sustainable earnings; and for the whole and its parts, it is particular organizational resources and capabilities. The authors describe how companies can select the right tension, what traps they may fall into when they focus on one side over the other, and how to escape these traps by managing to the bonds between objectives.
Governments, activists, and the media have become adept at holding companies to account for the social consequences of their actions. In response, corporate social responsibility (CSR) has emerged as an inescapable priority for business leaders in every country. Frequently, though, CSR efforts are counterproductive, for two reasons. First, they pit business against society, when in reality the two are interdependent. Second, they pressure companies to think of corporate social responsibility in generic ways instead of in the way most appropriate to their individual strategies. The fact is, the prevailing approaches to CSR are so disconnected from strategy as to obscure many great opportunities for companies to benefit society. What a terrible waste. If corporations were to analyze their opportunities for social responsibility using the same frameworks that guide their core business choices, they would discover, as Whole Foods Market, Toyota, and Volvo have done, that CSR can be much more than a cost, a constraint, or a charitable deed--it can be a potent source of innovation and competitive advantage. In this article, Michael Porter and Mark Kramer propose a fundamentally new way to look at the relationship between business and society that does not treat corporate growth and social welfare as a zero-sum game. They introduce a framework that individual companies can use to identify the social consequences of their actions; to discover opportunities to benefit society and themselves by strengthening the competitive context in which they operate; to determine which CSR initiatives they should address; and to find the most effective ways of doing so. Perceiving social responsibility as an opportunity rather than as damage control or a PR campaign requires dramatically different thinking--a mind-set, the authors warn, that will become increasingly important to competitive success.
Countries, organizations, and individuals around the globe spend aggressively to solve social problems, but these efforts often fail to deliver. Misdirected investment is the primary reason for that failure. Most of the money earmarked for social initiatives goes to organizations that are structured to support specific groups of recipients, often with sophisticated solutions. Such organizations rarely reach the broader populations that could be served by simpler alternatives. There is, however, an effective way to get to those underserved populations. The authors call it "catalytic innovation." Based on Clayton Christensen's disruptive-innovation model, catalytic innovations challenge organizational incumbents by offering simpler, good-enough solutions aimed at underserved groups. Unlike disruptive innovations, though, catalytic innovations are focused on creating social change. Catalytic innovators are defined by five distinct qualities. First, they create social change through scaling and replication. Second, they meet a need that is either overserved (that is, the existing solution is more complex than necessary for many people) or not served at all. Third, the products and services they offer are simpler and cheaper than alternatives, but recipients view them as good enough. Fourth, they bring in resources in ways that initially seem unattractive to incumbents. And fifth, they are often ignored, put down, or even discouraged by existing organizations, which don't see the catalytic innovators' solutions as viable. As the authors show through examples in health care, education, and economic development, both nonprofit and for-profit groups are finding ways to create catalytic innovation that drives social change.
Companies find it challenging and yet strangely reassuring to take on opponents whose strategies, strengths, and weaknesses resemble their own. Their obsession with familiar rivals, however, has blinded them to threats from disruptive, low-cost competitors. Successful price warriors, such as the German retailer Aldi, are changing the nature of competition by employing several tactics: focusing on just one or a few consumer segments, delivering the basic product or providing one benefit better than rivals do, and backing low prices with super-efficient operations. Ignoring cut-price rivals is a mistake because they eventually force companies to vacate entire market segments. Price wars are not the answer, either: Slashing prices usually lowers profits for incumbents without driving the low-cost entrants out of business. Companies take various approaches to competing against cut-price players. Some differentiate their products--a strategy that works only in certain circumstances. Others launch low-cost businesses of their own, as many airlines did in the 1990s--a so-called dual strategy that succeeds only if companies can generate synergies between the existing businesses and the new ventures, as the financial service providers HSBC and ING did. Without synergies, corporations are better off trying to transform themselves into low-cost players, a difficult feat that Ryanair accomplished in the 1990s, or into solution providers. There will always be room for both low-cost and value-added players. How much room each will have depends not only on the industry and customers' preferences, but also on the strategies traditional businesses deploy.
In 1985 the architect Michael Graves designed his first consumer product--a now famous teakettle--for Alessi, the northern Italian home-furnishings manufacturer. Although Graves later designed a knockoff for Target that goes for one-fifth the price, Alessi has sold more than 1.5 million of the original version, which grew out of a process that Roberto Verganti calls "design-driven innovation." Alessi, the lighting manufacturers Flos and Artemide, the furniture maker Kartell, and a handful of other firms based in the Lombardy region ignore the design industry's two norms: "tech push," whereby an improvement in performance and functionality dictates a modification in design, and "market pull," whereby the design accommodates consumers' demand for new features. Instead, they favor an R&D operation in which a community of architects, suppliers, critics, publishers, artists, designers, and others immerse themselves in a discourse about the role, identity, and meaning of a product well before they address its form. The products that result often represent a dramatic break from their predecessors--giving them longer commercial lives and creating high consumer expectations for the brand's future offerings. A familiar example of how a change in a product's meaning can lead to a change in its design and identity is the iMac, whose friendly colors and ovoid form declared it to be, in contrast to the typical desktop computer, an appliance for the home. The author's eight years of research into seven European design communities revealed the Lombardy cluster's special strengths: the number and quality of the links between components of the design system, such as schools, studios, and manufacturers. In addition, Lombardy is strong on imagination and motivation--qualities within reach of any group of businesses. Verganti uses the Finger Lakes region of New York State to demonstrate that the potential for a design discourse exists almost everywhere.
Dov Frohman was the head of Intel Israel at the start of the First Gulf War, and it fell to him to determine how the company would respond. In this first-person account, he describes what it's like to hold not just the future of a company but the future of an entire industry and the lives of many employees in his hands. Israeli businesses were used to preparing for war, or so Frohman thought when he assigned a task force to draw up plans in the fall of 1990 to replace enough called-up reservists to operate the Jerusalem fabrication plant, the Haifa design center, and the Tel Aviv sales and marketing office on skeleton crews. But that was before Saddam Hussein stationed ballistic missiles just seven minutes away from Tel Aviv. Concerned about chemical attacks, the Israeli civil defense agency called for all nonessential Israeli businesses to shut down when the allied attacks against Iraq began on January 17, 1991. The first missiles hit Jerusalem in the small hours of the next day. Instead of being behind the war zone, Intel Israel was going to be right in it. Frohman called in his task force and drove the 20 minutes to work that morning. It would have been easy to follow the civil defense directive and close down. Everyone was doing it; Intel's senior executives in California would have understood. But Frohman chose to ignore the directive and asked his employees to continue coming to work to keep operations running. This is the story of how and why the Intel senior executive made that decision, how he carried it out, and what the consequences were. It is a lesson about decision making when the stakes couldn't be higher.
More and more, expanding companies are hiring high-functioning groups of people who have been working together effectively within one company and can rapidly come up to speed in a new environment. These lifted-out teams don't need to get acquainted with one another or to establish shared values, mutual accountability, or group norms; their long-standing relationships and trust help them make an impact very quickly. Of course, the process is not without risks: A failed lift out can lead to loss of money, opportunity, credibility, and even native talent. Boris Groysberg and Robin Abrahams studied more than 40 high-profile moves and interviewed team leaders in multiple industries and countries to examine the risks and opportunities that lift outs present. They concluded that, regardless of industry, nationality, or size of the team, a successful lift out unfolds over four consecutive, interdependent stages that must be meticulously managed. In the courtship stage, the hiring company and the leader of the targeted team determine whether the proposed move is, in fact, a good idea, and then define their business goals and discuss strategies. At the same time, the team leader discusses the potential move with the other members of his or her group to assess their level of interest and prepare them for the change. The second stage involves the integration of the team leader with the new company's top leadership. This part of the process ensures the team's access to senior executives--the most important factor in a lift out's success. Operational integration is the focus of the third stage. Ideally, teams will start out working with the same or similar clients, vendors, and industry standards. The fourth stage entails full cultural integration. To succeed, the lifted-out team members must be willing to re-earn credibility by proving their value and winning their new colleagues' trust.
In the four years since Rob Miranda became CEO of Growing Places, a provider of on-site child care for companies in the Midwestern United States, he has been a font of ideas. For instance, he set up rooms where moms can breastfeed their babies during breaks in the workday and put Webcams in classrooms so that parents can "visit" their children from their desks. As a result of Rob's entrepreneurial vision and operational savvy, the company has achieved profitable growth. The problem is that Rob tends to stick his foot in his mouth. Evan Breyer, the company's founder and chairman, hopes that Rob will learn to avoid making verbal gaffes; he even gets Rob to see a coach. But while Evan is wrapping up a facility tour for a potential corporate sponsor of a scholarship program, Rob makes an insensitive remark about breastfeeding in front of the visitors--among them, a reporter. Not surprisingly, the local paper runs a scathing editorial the next day. Several days later, during a conference presentation on preschool curricula, he does it again with a comment implying that teachers are lazy and unprepared. The result is more bad press and a meaningful dip in stock price. It's beginning to look as though Rob is not going to change, and many board members are talking ouster. Should Evan try to persuade the board to hang on to Rob? Commenting on this fictional case study in R0612A and R0612Z are Ronald A. Heifetz, a professor at Harvard's Kennedy School of Government; John H. Biggs, the former CEO of TIAA-CREF; Torie Clarke, a CNN analyst; and Roger Brown, a cofounder of Bright Horizons.
In the four years since Rob Miranda became CEO of Growing Places, a provider of on-site child care for companies in the Midwestern United States, he has been a font of ideas. For instance, he set up rooms where moms can breastfeed their babies during breaks in the workday and put Webcams in classrooms so that parents can "visit" their children from their desks. As a result of Rob's entrepreneurial vision and operational savvy, the company has achieved profitable growth. The problem is that Rob tends to stick his foot in his mouth. Evan Breyer, the company's founder and chairman, hopes that Rob will learn to avoid making verbal gaffes; he even gets Rob to see a coach. But while Evan is wrapping up a facility tour for a potential corporate sponsor of a scholarship program, Rob makes an insensitive remark about breastfeeding in front of the visitors--among them, a reporter. Not surprisingly, the local paper runs a scathing editorial the next day. Several days later, during a conference presentation on preschool curricula, he does it again with a comment implying that teachers are lazy and unprepared. The result is more bad press and a meaningful dip in stock price. It's beginning to look as though Rob is not going to change, and many board members are talking ouster. Should Evan try to persuade the board to hang on to Rob? Commenting on this fictional case study in R0612A and R0612Z are Ronald A. Heifetz, a professor at Harvard's Kennedy School of Government; John H. Biggs, the former CEO of TIAA-CREF; Torie Clarke, a CNN analyst; and Roger Brown, a cofounder of Bright Horizons.
The Association for the Wellbeing of the Colombian Family, Profamilia, is a private, nonprofit organization founded in September 1965 by Dr. Fernando Tamayo Ogliastri with the objective of distributing family planning to low income families. Profamilia was a pioneer in its field; its impact increased as it became both organizationally and administratively stronger, and as its focus on family planning was expanded to include sexual and reproductive health. After four decades of operation, Profamilia continued to offer services to attend to the sexual and reproductive health of Colombians. By mid-2003, Profamilia, spurred by changes in the health sector in Colombia with the implementation of Law 100 of 1993, needed to redefine its strategy. The health sector reform encouraged the entry of other organizations that competed directly with Profamilia, resulting in the organization's loss of its relative monopoly as a provider of reproductive health services and family planning products. The most visible consequence was the reduction of its participation in the market. Changes in the sector gave impulse to the process of strategic redefinition to face critical tradeoffs between social and economic value generation.
In September 1999, the Microsoft Xbox team was wondering which strategic choices would give it the best chance against the upcoming Sony PlayStation 2. Initially called "Project Midway" within Microsoft, the console project was intended to counter the perceived threat to the Windows franchise posed by Sony expanding the original PlayStation into a broad entertainment platform with the PlayStation 2. Seamus Blackley--the chief instigator for the Xbox within Microsoft--and some of his colleagues were on a flight to Austin, Texas, where they had an appointment with Michael Dell, CEO of Dell Computer. The purpose of the visit was to convince Dell to manufacture Xbox videogame consoles running Microsoft software. Indeed, the team intended to produce a machine somewhere between a standalone videogame console and a PC tailored to play videogames. It remained unclear, however, where along the spectrum from dedicated console to PC Microsoft should position the Xbox. Would it be an open platform like the PC in the sense that independent developers could publish games on it with no restrictions and without having to pay royalties? Who would produce consoles and under what arrangements? What features should the console include, and how would it be priced to consumers? The home videogame industry had been born in the 1970s during the Atari "golden age", then collapsed suddenly in 1983. It was reborn at the end of the 1980s under Nintento's leadership, which was then challenged for a few years by Sega, only to be conquered by Sony's original PlayStation. And along the way, some companies such as 3DO had tried unsuccessfully to change the prevalent business models. This tumultuous 25-year history might provide Blackley and his colleagues with some useful tips on how best to enter the market.
In March 2006, Larry English, Director of Program Design and Innovation for Habitat for Humanity International Africa and the Middle East, was reflecting on a large development project in Durbin that had stalled. Notwithstanding global attention led by former President Jimmy Carter, the local capacity to carry out the project was limited. English wondered whether partnerships with private, for-profit real estate companies were plausible, and whether they could be carried out without undermining the mission of Habitat to focus on the very poor.
The task is to prepare a sealed bid against one opponent for a hotel that has an appraised value and a specific, higher value for a company. There is data about the ratio of bids of the other bidder to the appraised value in similar sealed bids. Students will learn to give up many unfounded notions of how to bid and to develop a strategic approach to finding the best bid.