The terrorist attack of September 11, 2001 on the Pentagon brought death and destruction to one of the nerve centers of American power, a site where top military officials came to work every day. When terrorists deliberately crashed a commercial jetliner into the southwest wall of this giant government landmark, it rendered a large portion of the building unstable and started a ferocious fire inside, where--rescuers hoped--Pentagon workers might be trapped but still alive. Despite the serious nature of the attack, the emergency response to the disaster was led by neither a high political official nor a four-star general. Instead, remarkably, the response and rescues at the Pentagon were led by James Schwartz, the assistant chief of a county fire department in the State of Virginia. A few hours into the emergency, Schwartz was, in fact, introduced to US Defense Secretary Donald Rumsfeld as "the man who owns this ground" by one of Rumsfeld's own generals. This case describes the unprecedented emergency response operation and many of its key turning points and places it within the broader context of a national system in which authority is widely decentralized. Specifically, the case tells the story of how Arlington County, Virginia Fire Department used the "incident command system" to oversee the Pentagon emergency response and how it responded when the professional mandates of far higher-profile agencies--including the Department of Defense, Federal Bureau of Investigation, and Environmental Protection Agency--collided with those of the firefighting and rescue effort. Despite years of practice and preparation, fire officials would face a string of predicaments at the Pentagon emergency that had never been foreseen. The case can serve as a platform for discussion about inter-jurisdictional cooperation in emergency response and, by extension, cooperation across units of government in a wide variety of situations. HKS Case Number 1712.0
Capital One, a credit card company, has built its business on a strategy with a clear customer focus: The company systematically gathers and analyses information on its customers in order to correctly assess their individual credit risk and to offer products and services tailored to their individual needs. The case is designed to illustrate how the concept of customer relationship management (CRM) can be translated into strategy, organizational design, hiring, marketing processes, and IT infrastructure of a company.
In July 1996, the French social security governmental agency (the CNAM) sent a letter to all doctors urging them to prescribe generic amoxicillin instead of Clamoxyl, SmithKline Beecham's (SB) blockbuster antibiotic. Pierre Chahwakilian, Marketing Director of SB in France must decide how to respond: (1) milk Clamoxyl and divert promotional investments towards Augmentin, a more specialized and still patent-protected antibiotic, (2) strengthen Clamoxyl's brand equity among doctors by increasing the effort of medical reps, by launching new forms, or with new advertising, (3) go against SB¿s corporate philosophy and reduce the price of Clamoxyl, or (4) change nothing and count on the resistance of French doctors towards generics. The B case (Augmentin in 2002) shows that GSK (the company formed by the merger of Glaxo Wellcome and SmithKline Beecham) now faces the same options for Augmentin, another blockbuster antibiotic. Should they use the strategy that was so successful for Clamoxyl or have the market conditions changed so much that a whole different approach should be followed?
easyGroup is contemplating its entry into the cinema exhibition business in the UK through the launch of a no-frills cinema. The company believes that it can redeploy the capabilities, such as yield management, that led to the success of easyJet, its low cost airline business, into this new venture. The case examines the market for cinema in the UK, as well as the evolution of easyGroup's portfolio of companies, with a view to assessing the attractiveness of the company's planned launch of easyCinema.
Espoir Cosmetics has received a tantalizing offer: sponsorship of the sequel to the Hollywood hit Diana's She Devils. For Natasha Singh, the U.S.-based company's global marketing officer, the movie is an ideal vehicle for global brand building. As the film is released in each country, Espoir can launch tie-in lipsticks and nail polishes. But some of Espoir's regional executives don't see it that way. One of them--Vasylko Mazur, the head of Eastern European operations and Tasha's old friend--is particularly upset. "Tasha," he says, "you don't realize how different Eastern Europe is from the rest of the world. Movie-based promotions won't do anything for my sales." Tasha understands his point of view. When she was Espoir's marketing head in India, she had to fight for her unconventional local initiatives. But she has come to believe that tastes are changing rapidly all over the world. From Eastern Europe to the smallest towns in India, customers want the products they see on TV, in the movies, and in international magazines. Should Espoir take its new branding initiative global? In R0306A and R0306Z, offering their perspectives on this fictional case study are Peter M. Thompson, president and CEO of PepsiCo Beverages International; Jennifer L. Aaker, associate professor of marketing at Stanford Business School; Harish Manwani and Simon Clift, executives of Unilever; and Masaaki Kotabe, professor of international business at Temple University.
When executives need to persuade an audience, most try to build a case with facts, statistics, and some quotes from authorities. In other words, they resort to "companyspeak," the tools of rhetoric they have been trained to use. In this conversation with HBR, Robert McKee, the world's best-known screenwriting lecturer, argues that executives can engage people in a much deeper--and ultimately more convincing--way if they toss out their PowerPoint slides and memos and learn to tell good stories. As human beings, we make sense of our experiences through stories. But becoming a good storyteller is hard. It requires imagination and an understanding of what makes a story worth telling. All great stories deal with the conflict between subjective expectations and an uncooperative objective reality. They show a protagonist wrestling with antagonizing forces, not a rosy picture of results meeting expectations--which no one ends up believing. Consider the CEO of a biotech start-up that has discovered a chemical compound to prevent heart attacks. He could make a pitch to investors by offering up market projections, the business plan, and upbeat, hypothetical scenarios. Or he could captivate them by telling the story of his father, who died of a heart attack, and of the CEO's subsequent struggle against various antagonists--nature, the FDA, potential rivals--to bring to market the effective, low-cost test that might have prevented his father's death. Good storytellers are not necessarily good leaders, but they do share certain traits. Both are self-aware and both are skeptics who realize that all people--and institutions--wear masks. Compelling stories can be found behind those masks.
Turnaround champions--those leaders who manage to bring distressed organizations back from the brink of failure--are often acclaimed for their canny financial and strategic decision making. But having studied their work closely, Harvard Business School's Rosabeth Moss Kanter emphasizes another aspect of their achievement. These leaders reverse the cycle of corporate decline through deliberate interventions that increase the level of communication, collaboration, and respect among their managers. Ailing companies descend into what Kanter calls a "death spiral," which typically involves finger pointing and deriding colleagues in other parts of the business, rising tensions and declining collaboration, helplessness, passivity and, finally, denial. To counter these dynamics, Kanter says, and reverse the company's slide, the CEO needs to apply certain psychological interventions--specifically, replacing secrecy and denial with dialogue, blame and scorn with respect, avoidance and turf protection with collaboration, and passivity and helplessness with initiative. The author offers in-depth accounts of how the CEOs at Gillette, Invensys, and the BBC used these interventions to guide their employees out of corporate free fall and onto a more productive path.
Three out of four acquisitions fail; they destroy wealth for the buyer's shareholders, who end up worse off than they would have been had the deal not been done. But it doesn't have to be that way, argue the authors. In evaluating acquisitions, companies must look beyond the lure of profits the income statement promises and examine the balance sheet, where the company keeps track of capital. It's ignoring the balance sheet that causes so many acquisitions to destroy shareholders' wealth. Unfortunately, most executives focus only on sales and profits going up, never realizing that they've put in motion a plan to destroy their company's true profitability--its return on invested capital. M&A, like other aspects of running a company, works best when seen as a way to create shareholder value through customers. Most deals are about customers and should start with an analysis of customer profitability. Some customers are profitable; others are money losers. The better an acquirer understands the profitability of its own customers, the better positioned it will be to perform such analyses on other companies. In this article, the authors show that customer profitability varies far more dramatically than most managers suspect. They also describe how to measure the profitability of customers. By understanding the economics of customer profitability, companies can avoid making deals that hurt their shareholders, identify surprising deals that create wealth, and salvage deals that would otherwise be losers.
What makes a great manager great? Despite differences in their personal attributes, successful managers all excel in the making, honoring, and remaking of commitments. Managerial commitments take many forms, from capital investments to personnel decisions to public statements, but each exerts both immediate and enduring influence on a company. A leader's commitments shape a business's identity, define its strengths and weaknesses, establish its opportunities and limitations, and set its direction. Executives can all too easily forget that commitments are extraordinarily powerful. Caught up in the present, managers often take actions that, while beneficial in the near term, impose lasting constraints on their operations and organizations. Managers who understand the nature and power of their commitments can wield them more effectively throughout a company's life cycle. It doesn't mean you should try to anticipate all the long-run consequences of every commitment. But it does mean that before making important decisions about, say, operating processes or partnerships, you should always ask yourself: Is this a process or relationship that we can live with in the future? Am I locking us into a course that we'll come to regret?
In the much-heralded war for talent, it's hardly surprising that companies have invested a lot of time, money, and energy in hiring and retaining star performers. For most CEOs, recruiting stars is simply more fun; for one thing, the young A players they interview often remind them of themselves at the same age. For another, A players' brilliance and drive is infectious; you simply want to be in their company. Besides, in these troubled times, when businesses are so vulnerable, people who seem to have what it takes to turn around a company's performance are almost irresistible. But our understandable fascination with star performers can lure us into the dangerous trap of underestimating the vital importance of the supporting actors. It's true that A players can make enormous contributions to performance. Yet, as the authors have found, companies' long-term performance--even survival--depends far more on the unsung commitment and contributions of their B players. These capable, steady performers are the best supporting actors of the corporate world. They counterbalance the ambitions of the company's high-performing visionaries. Unfortunately, organizations rarely learn to value their B players in ways that are gratifying for either the company or these employees. This article will help you to rethink the role of your organization's B players.
In the 1990s, funding pension obligations by investing in stocks looked smart. By 1999, the bull market had poured a collective $260 billion surplus into the pension coffers of the S&P 500, permitting the companies to record the year-to-year increases as additional income. But just two years later, the bear market had obliterated those gains, replacing them with a cavernous $240 billion deficit--which had to be offset by the unlucky firms' ongoing cash flows, wreaking havoc on their earnings, debt levels, and stock prices. Corporate executives may be blamed for this debacle. But they were only following the rules. Current accounting guidelines keep companies from recording pension liabilities and assets on their balance sheets, instead relegating them to the footnotes. That makes it hard to see the risk to which market drops expose companies. Board members and top executives need to look beyond distorted accounting numbers to the economic realities of pension plans. Once they do, they may be surprised to find that they would gain far greater value and flexibility by passively investing their pension funds entirely in bonds. A bond portfolio can be designed to meet precisely, and with virtual certainty, a company's pension obligation, thus eliminating the chance of a funding gap. The predictability of bond investments also stabilizes earnings and cash flow. The expanded corporate debt capacity that results can then be used to fuel growth or reduce the firm's overall cost of capital.
If you run a midsize manufacturing business, you may be familiar with that anxious sense of being left behind. At every turn, someone is pushing you to jump onto the latest strategic bandwagon before it's too late. But no matter how great the hot, new strategy might be, it can't replace an approach that helps you get the most out of your existing businesses. Such an approach offers a tremendous potential payback--annual revenue and earnings growth as high as 15% to 20%. And it poses few of the risks associated with pursuing chancy acquisitions, untested ventures, or radical strategies. For this article, the authors largely draw on their experience at Fiberite, which made advanced composite materials for military and commercial airplanes, among other things. Fiberite was a healthy business, but its incumbent management--with its ambitious plans for introducing new products and tapping new markets--ignored the unrealized value remaining in what they already had. Like so many companies, Fiberite didn't really understand what had made it successful in the first place. The authors offer a method for setting strategic priorities--a strategic pathway--that focuses on a company's existing businesses. The pathway has four stages. First, protect your existing business. Next, penetrate further into existing market segments with existing products or upgrades. Then, extend the business by developing new products for existing segments or by entering new segments with existing products. Finally, diversify into new markets with new products. This sequence of priorities is not new, but formalizing it helps people resist the siren call of new products and markets, which can do as much damage as good.
Few senior executives pay much attention to computer security. They either hand off responsibility to their technical people or bring in consultants. But given the stakes involved, an arm's-length approach is extremely unwise. According to industry estimates, security breaches affect 90% of all businesses every year and cost some $17 billion. Fortunately, the authors say, senior executives don't need to learn about the more arcane aspects of their company's IT systems to take a hands-on approach. Instead, they should focus on the familiar task of managing risk. Their role should be to assess the business value of their information assets, determine the likelihood that those assets will be compromised, and then tailor a set of risk abatement processes to their company's particular vulnerabilities. This approach, which views computer security as an operational rather than a technical challenge, is akin to a classic quality assurance program in that it attempts to avoid problems rather than fix them and involves all employees, not just IT staffers. The goal is not to make computer systems completely secure--that's impossible--but to reduce the business risk to an acceptable level. This article looks at the types of threats a company is apt to face. It also examines the processes a general manager should spearhead to lessen the likelihood of a successful attack. The authors recommend eight processes in all.
Espoir Cosmetics has received a tantalizing offer: sponsorship of the sequel to the Hollywood hit Diana's She Devils. For Natasha Singh, the U.S.-based company's global marketing officer, the movie is an ideal vehicle for global brand building. As the film is released in each country, Espoir can launch tie-in lipsticks and nail polishes. But some of Espoir's regional executives don't see it that way. One of them--Vasylko Mazur, the head of Eastern European operations and Tasha's old friend--is particularly upset. "Tasha," he says, "you don't realize how different Eastern Europe is from the rest of the world. Movie-based promotions won't do anything for my sales." Tasha understands his point of view. When she was Espoir's marketing head in India, she had to fight for her unconventional local initiatives. But she has come to believe that tastes are changing rapidly all over the world. From Eastern Europe to the smallest towns in India, customers want the products they see on TV, in the movies, and in international magazines. Should Espoir take its new branding initiative global? In R0306A and R0306Z, Peter M. Thompson, president and CEO of PepsiCo Beverages International; Jennifer L. Aaker, associate professor of marketing at Stanford Business School; Harish Manwani and Simon Clift, executives of Unilever; and Masaaki Kotabe, professor of international business at Temple University offer their perspectives on this fictional case study.
Espoir Cosmetics has received a tantalizing offer: sponsorship of the sequel to the Hollywood hit Diana's She Devils. For Natasha Singh, the U.S.-based company's global marketing officer, the movie is an ideal vehicle for global brand building. As the film is released in each country, Espoir can launch tie-in lipsticks and nail polishes. But some of Espoir's regional executives don't see it that way. One of them--Vasylko Mazur, the head of Eastern European operations and Tasha's old friend--is particularly upset. "Tasha," he says, "you don't realize how different Eastern Europe is from the rest of the world. Movie-based promotions won't do anything for my sales." Tasha understands his point of view. When she was Espoir's marketing head in India, she had to fight for her unconventional local initiatives. But she has come to believe that tastes are changing rapidly all over the world. From Eastern Europe to the smallest towns in India, customers want the products they see on TV, in the movies, and in international magazines. Should Espoir take its new branding initiative global? In R0306A and R0306Z, offering their perspectives on this fictional case study are Peter M. Thompson, president and CEO of PepsiCo Beverages International; Jennifer L. Aaker, associate professor of marketing at Stanford Business School; Harish Manwani and Simon Clift, executives of Unilever; and Masaaki Kotabe, professor of international business at Temple University.
Elise Smart must decide what performance assessment to give one of her employees who has, uncharacteristically, failed to meet one of her key objectives for the year. The situation is difficult for several reasons; the causes of the unacceptable performance are not clear; the employee has previously received excellent appraisals, including a recent one by the vice-president; and the employee was absent for a good part of the year on maternity leave. The various factors that influence sustained performance (ability, motivation, resources, role clarity, reinforcement) are examined, as well as steps leaders can take in improving performance of those for whom they are responsible.
Elise Smart must decide what performance assessment to give one of her employees who has, uncharacteristically, failed to meet one of her key objectives for the year. The situation is difficult for several reasons; the causes of the unacceptable performance are not clear; the employee has previously received excellent appraisals, including a recent one by the vice-president; and the employee was absent for a good part of the year on maternity leave. The various factors that influence sustained performance (ability, motivation, resources, role clarity, reinforcement) are examined, as well as steps leaders can take in improving performance of those for whom they are responsible.
Competition is present, explicitly or implicitly, in many business negotiations. Rarely in buyer-seller negotiations are the bargainers stuck with each other, usually they have an alternative trading partner to whom they can turn. The terms of agreement that are negotiated are shaped by the fact that the alternatives exist. The ability to exploit competition among potential trading partners is a major source of bargaining power. Competition within a negotiation works much like competition in a formal auction. The case describes the bidding for television rights.
The Wild Salmon Center was originally created to provide anglers access to some of the best fishing in the world in return for funding research and conservation. Starting in 1998, the Wild Salmon Center expanded from angling tourism to the implementation of conservation programs aimed at protecting salmon rivers in the Russian Far East and U.S. Pacific Northwest. This case discusses the Wild Salmon Center's efforts to protect the pristine watersheds of the Kamchatka peninsula by developing ecotourism angling expeditions to raise funds for the Center's conservation efforts there. The case touches on involvement of local Kamchatka residents, the development of the angling expeditions, and the challenges that the Wild Salmon Center faced as it grew and its strategic direction evolved to larger scale conservation efforts.