In the late 1990s, the leadership of Neighborhood Conservation Services (NCS) of Barberton, Ohio--a nonprofit housing rehabilitation organization founded two decades earlier to help reverse the decline of this aging industrial city--found its once popular mission had suddenly become politically controversial. The long unassailable idea of using public funds to target low-interest loans to lower-income homeowners was being questioned by elected officials in the city of 28,000, officials concerned that limiting loans to those of low-income--in conjunction with a concentration of public housing and rent subsidies--might make Barberton a "magnet" for low-income households. A mayor intent on reviving the city's tax base and attracting and retaining the middle class challenged NCS to demonstrate how its policies could help the city. This new political climate posed a difficult and crucial strategic challenge for the organization--which relied on funds voted by the City Council for the overwhelming majority of its budget. NCS, believed its leadership, would have to find ways to reconcile its mission with the new political climate in town or find a new way to fund its programs--or simply close up shop. This nonprofit management case is meant to allow for discussion of how organizational strategy should adapt to political change. In particular, it raises the question of the extent and nature of the obligation of those receiving public funds to defer to elected officials. The case can also be used in discussion of housing policy per se, to explore the question of when and where housing subsidies are appropriate. HKS Case Number 1707.0
In 1990, President Alberto Fujimori swept to power in Peru on a wave of public enthusiasm for his promised reforms. Indeed, over the next five years Fujimori accomplished something of an economic turnaround miracle. He also vanquished a homegrown terrorist movement and proved a willing partner in the war against drugs. The international community, including the US, admired and supported him. By Fujimori's side stood a shadowy figure, Vladimiro Montesinos. Never appointed to any official office, Montesinos nonetheless became the virtual head of the intelligence service, and he exercised unique influence over Fujimori. His reputation was as Mr. Fix-it: he could get anything done. Both Fujimori and the US (he had a relationship with the CIA) benefited from his services. With Montesinos' behind-the-scenes assistance, Fujimori's government became ever more authoritarian, extending executive influence over the judiciary, the military and the legislature. But in September 2000, the reason for Montesinos' remarkable effectiveness was dramatically exposed with the television airing of a videotape in which he bribed an opposition congressman. As the story unfolded, Montesinos was revealed as the mastermind of a sophisticated network of corruption which reached into most sectors of society: the legislature, judiciary, media, military and industry. Working with the primary evidence of the videotapes, this case paints a rarely glimpsed picture of corruption in action. It describes Montesinos' rise to power, and the mechanics and protocols of bribery and fraud. HKS Case Number 1722.0
Jurgen Mehr, the European head of marketing for German software giant Typware, is irate about the salary demands of the American executive he wants to hire. Anne Prevost, the executive in question, is the marketing director at a U.S. software company that has been making forays into Typware's markets. She engineered a huge uptick in sales for her company, and now she is ready to jump ship--provided Typware makes her a good offer. She would be a brilliant catch. But the salary she wants is nearly as much as Mehr's. Since 1996, Typware has ventured aggressively into international markets. The consultants who helped negotiate compensation for overseas employees recommended variable standards depending on the employee's location. However, individual expatriate packages are becoming increasingly complicated. HBR senior editor Bronwyn Fryer explores the question of what kind of international compensation approach Typware should adopt. In R0311A and R0311Z, commentators George T. Milkovich, the Catherwood Professor at Cornell University; Jeffrey Alan Thinnes, the managing director of Manugistics Central Europe, a U.S. software subsidiary based in Germany; Joseph Yaffe, a partner with the global law firm Latham & Watkins; and Dietmar Kokott, the senior vice-president of global human resources, executive management, and development at BASF Group, offer expert advice on this fictional case study.
Managers are told: Be global and be local. Collaborate and compete. Change perpetually, and maintain order. Make the numbers while nurturing your people. To be effective, managers need to consider the juxtapositions to arrive at a deep integration of these seemingly contradictory concerns. That means they must focus not only on what they have to accomplish but also on how they have to think. When the authors, respectively the director of the Centre for Leadership Studies at the University of Exeter in the United Kingdom and the Cleghorn Professor of Management Studies at McGill University in Montreal, set out to develop a master's program for practicing managers, they saw that they could not rely on the usual MBA educational structure, which divides the management world into discrete business functions such as marketing and accounting. They needed an educational structure that encouraged synthesis rather than separation. Managing, they determined, involves five tasks, each with its own mindset: managing the self (the reflective mindset); managing organizations (the analytic mindset); managing context (the worldly mindset); managing relationships (the collaborative mindset); and managing change (the action mindset). The program is built on the exploration and integration of those five aspects of the managerial mind.
What stands between you and the yes you want? According to negotiation experts David Lax and James Sebenius, executives face obstacles in three common and complementary dimensions: tactics, or interactions at the bargaining table; deal design, or the ability to draw up a deal at the table that creates lasting value; and setup, which includes the structure of the negotiation itself. Each dimension is crucial in the bargaining process, but most executives fixate on only the first two: 1-D negotiators focus on improving their interpersonal skills at the negotiating table, and 2-D negotiators focus on diagnosing underlying sources of value in a deal and then recrafting the terms to satisfy all parties. In this article, the authors explore the often-neglected third dimension. Instead of just playing the game at the bargaining table, 3-D negotiators reshape the scope and sequence of the game itself to achieve the desired outcome. They scan widely to identify elements outside the deal on the table that might create a more favorable structure for it. They map backward from their ideal resolution to the current setup of the deal and carefully choose which players to approach and when. And they manage and frame the flow of information among the parties involved to improve their odds of getting to yes. Lax and Sebenius describe the tactics 3-D negotiators use and cite examples from business and foreign affairs.
Most multinationals see globalization as a matter of replication--spreading a single business model as widely as possible to maximize economies of scale. From this perspective, the key strategic challenge is choosing how much of the model to keep standard and how much to grudgingly adapt to local tastes. But focusing exclusively on that choice is a mistake, for it blinds companies to the very real opportunities they can still gain from arbitrage--from exploiting differences as opposed to similarities. Indeed, the scope for arbitrage is as wide as the differences that remain among countries, and those differences continue to be broad and deep. They can, in fact, be divided into four main categories: cultural, administrative, economic, and geographic. In each category, old opportunities persist and new ones are arising. Consider the continued cachet of French culture in its wines and haute couture or how swiftly the Finns have become known for their expertise in wireless communications. Clearly, legal and other administrative differences, particularly in tax laws and the cost of capital, remain large. So do purely economic wage differentials. Both the differences that make arbitrage valuable and the similarities that make replication important will remain with us for the foreseeable future, and combining the two, while necessary, is tricky.
Increasingly, companies are measuring customer loyalty, employee satisfaction, and other nonfinancial areas of performance that they believe affect profitability. But they've failed to relate these measures to their strategic goals or establish a connection between activities undertaken and financial outcomes achieved. Failure to make such connections has led many companies to misdirect their investments and reward ineffective managers. Extensive field research now shows that businesses make some common mistakes when choosing, analyzing, and acting on their nonfinancial measures. Among these mistakes: They set the wrong performance targets because they focus too much on short-term financial results, and they use metrics that lack strong statistical validity and reliability. As a result, the companies can't demonstrate that improvements in nonfinancial measures actually affect their financial results. The authors lay out a series of steps that allow companies to realize the genuine promise of nonfinancial performance measures. First, develop a model that proposes a causal relationship between the chosen nonfinancial drivers of strategic success and specific outcomes. Next, take careful inventory of all the data within your company. Then use established statistical methods for validating the assumed relationships and continue to test the model as market conditions evolve. Finally, base action plans on analysis of your findings, and determine whether those plans and their investments actually produce the desired results.
Every company makes choices about the channels it will use to go to market. For instance, traditionally, customer demographics guided the decision to sell through a discount superstore or a pricey boutique. It was a fair assumption that certain customer types were held captive by certain channels. The problem, the authors say, is that today's customers have become unfettered. As their channel options have proliferated, they've come to recognize that different channels serve their needs better at different points in the buying process. The result is "value poaching." For example, certain channels hope to use higher margin sales to cover the cost of providing expensive high-touch services. Potential customers use these channels to do research, then leap to a cheaper channel when it's time to buy. What does this mean for your go-to-market strategy? The authors urge companies to make a fundamental shift in mind-set toward designing for buyer behaviors, not customer segments. A company should design pathways across channels to help its customers get what they need at each stage of the buying process. Customers are not mindful of channel boundaries--and you shouldn't be either.
Procter & Gamble has long been regarded as a major power of the marketing world and a prime training ground for marketers. But in the summer of 2000, with half of P&G's top 15 brands losing market share and employee morale in ruins, company executives realized that the marketing organization was in trouble. In an attempt to rebuild P&G's marketing strength, James Stengel, the heir apparent to the chief marketing officer position, began working with University of Cincinnati professors Chris Allen and Andrea Dixon on a new training program to fix the weaknesses in the marketing organization. But when the two professors began interviewing P&G senior executives, they discovered that the plans in motion for mapping out the marketing group's recovery were based not on data but on the intuition of a few individuals at corporate headquarters. So began the most comprehensive internal research endeavor in P&G marketing's history. Using the company's existing process for consumer research, Allen and Dixon shadowed employees, conducted one-on-one interviews, held focus-group sessions, and surveyed 3,500 members of the marketing staff to learn what the company was doing right--and wrong--and what mattered most to its people. The results led to the most sweeping redesign of P&G's marketing organization in 60 years.
In late 2001, the directors of Pfizer asked that very question. And with good reason. After its 2000 merger with rival Warner-Lambert, the New York-based pharmaceutical giant found itself sitting on a net cash position of $6 billion, which seemed extraordinarily conservative for a company whose products generated $30 billion in revenues. Most large companies with revenues that healthy would increase leverage, thereby unlocking tremendous value for shareholders. But knowledge-intensive companies like Pfizer, this author argues, are in a class apart. Because their largely intangible assets (like R&D) are highly volatile and cannot easily be valued, they are more vulnerable to financial distress than are firms with a preponderance of tangible assets. To insure against that risk, they need to maintain large positive cash balances. Only by investing in their intangible assets can knowledge-based companies hope to preserve the value of those assets.
Jurgen Mehr, the European head of marketing for German software giant Typware, is irate about the salary demands of the American executive he wants to hire. Anne Prevost, the executive in question, is the marketing director at a U.S. software company that has been making forays into Typware's markets. She engineered a huge uptick in sales for her company, and now she is ready to jump ship--provided Typware makes her a good offer. She would be a brilliant catch. But the salary she wants is nearly as much as Mehr's. Since 1996, Typware has ventured aggressively into international markets. The consultants who helped negotiate compensation for overseas employees recommended variable standards depending on the employee's location. However, individual expatriate packages are becoming increasingly complicated. HBR senior editor Bronwyn Fryer explores the question of what kind of international compensation approach Typware should adopt. In R0311A and R0311Z, commentators George T. Milkovich, the Catherwood Professor at Cornell University; Jeffrey Alan Thinnes, the managing director of Manugistics Central Europe, a U.S. software subsidiary based in Germany; Joseph Yaffe, a partner with the global law firm Latham & Watkins; and Dietmar Kokott, the senior vice-president of global human resources, executive management, and development at BASF Group, offer expert advice on this fictional case study.
Jurgen Mehr, the European head of marketing for German software giant Typware, is irate about the salary demands of the American executive he wants to hire. Anne Prevost, the executive in question, is the marketing director at a U.S. software company that has been making forays into Typware's markets. She engineered a huge uptick in sales for her company, and now she is ready to jump ship--provided Typware makes her a good offer. She would be a brilliant catch. But the salary she wants is nearly as much as Mehr's. Since 1996, Typware has ventured aggressively into international markets. The consultants who helped negotiate compensation for overseas employees recommended variable standards depending on the employee's location. However, individual expatriate packages are becoming increasingly complicated. HBR senior editor Bronwyn Fryer explores the question of what kind of international compensation approach Typware should adopt. In R0311A and R0311Z, commentators George T. Milkovich, the Catherwood Professor at Cornell University; Jeffrey Alan Thinnes, the managing director of Manugistics Central Europe, a U.S. software subsidiary based in Germany; Joseph Yaffe, a partner with the global law firm Latham & Watkins; and Dietmar Kokott, the senior vice-president of global human resources, executive management, and development at BASF Group, offer expert advice on this fictional case study.
Deutsche Post World Net, the German postal monopoly, faced significant challenges as it began the process of integrating three businesses: Deutsche Post Euro Express, its own ground-based parcel delivery service, and two companies it had acquired--DHL, the worldwide express delivery service, and Danzas, a worldwide air and ocean freight company. The cultural differences alone were imposing. Enter EuroCup. For 20 years, DHL employees had held a soccer tournament to strengthen company culture across national boundaries. Canceled the previous year due to budget constraints, the EuroCup tournament was revived in 2003--in part to help with the postmerger integration. But did the event really help? HBR senior editor Paul Hemp attended EuroCup 2003. He set out to answer a number of questions relevant to any company staging an ambitious off-site intended to encourage teamwork and boost morale. How does a company determine whether such a large-scale event, even one that generates goodwill, is worth the investment? Does the team building extend to those back home who don't get to attend? Can intense competition between teams begin to overshadow the spirit of cooperation that such an event is meant to engender?
When a career public employee in a research division of the US Forest Service gets a call from a lobbyist for a coalition of environmental advocacy groups, he finds himself confronting an opportunity of which he's not sure it's right to avail himself. The lobbyist-well-versed in the specific research being undertaken by the department in which "Sammy Sockeye" works, and well aware of budget cuts affecting the quality and scope of such work-offers to "help." Her coalition would, if he agrees, exert public pressure in order to force the soon-to-be-announced federal budget to include an increase in the budget of Sammy's department. The fact that Sammy himself believes very much that the public would be better served by such a budget increase complicates the already difficult question.
The (A) case describes the situation of Cadbury Schweppes (CS) and its sugar confectionery business, in a state of 'satisfactory underperformance' in which past strategies and practices make it hard for new management to initiate change in this widely respected company. The (B) case shows how from 1997 to 1999 John Sunderland, the new CEO and a new divisional manager used value based management (VBM) as a vehicle for transforming respectively the company and the sugar confectionery division with strong emphasis on people and leadership practices. The (C) case describes how CS' performance management system was redesigned in line with the Managing for Value (MfV) philosophy. It illustrates the new management performance process in action in the beverages business in Spain, where the country manager is faced with major competitive challenges.
Microsoft is on the verge of launching its Smart Watch technology, which will allow specially designed watches to receive up-to-date information on sports, business, traffic, news, etc. After several years of effort and millions of dollars spent, the questions now revolve around launch strategy and likely consumer adoption. Is this the next big thing for Microsoft or is this a waste of money and resources? Complicating the matter is the fact that although Microsoft designed and will operate the technology to deliver information to these watches, the watches themselves will be sold and marketed by several prominent watch-making partners.
Cape Wind has proposed placing a 170-tower wind farm, with each tower more than 400-feet tall, in Nantucket Sound. Not surprisingly, public reaction is mixed. Some view the wind farm as clean, renewable energy. Others view it as an eyesore and a desecration of a valued public resource. Other attempts at wind farms in the United States have run into similar resistance. Although the public can agree that wind power is a good idea, no one wants a wind farm in their community. How can firms overcome this type of resistance to change?