Sandy Michaels, chief marketing officer of financial services giant Pace Sterling, faces a tough dilemma now that the high-profile golf tournament her company sponsors has been tainted with controversy. The Dover Hill country club, where the prestigious Champions invitational is played, accepts only men as members. This year, a powerful women's organization has decided to make a bigger issue of that exclusivity. Under pressure from the Women's Rights Organization (WRO) to withdraw its support, Pace Sterling must think about the marketing value it gets from the sponsorship and how much that value might be diminished--or heightened--by the controversy. CEO Cal Buckley enlists the help of Michaels and other senior executives in the company to determine just that. Michaels firmly believes that Pace Sterling should stay the course and sponsor the event. Michaels is unwavering--that is, until the day she comes across this newspaper headline: "Tommy Ward Should Boycott Dover Hill." Ward is the undisputed king of the golf world and the odds-on favorite to win the Champions. The WRO is clearly turning up the volume. Should Pace Sterling proceed with its sponsorship? In R0304A and R0304Z, offering advice are Sergio Zyman, former chief marketing officer of Coca-Cola; James E. Murphy, global managing director of marketing and communications at Accenture; Kim Skildum-Reid, co-author of The Sponsor's Toolkit and The Sponsorship Seeker's Toolkit; and Paul A. Argenti, a professor of management and corporate communication at Dartmouth's Tuck School.
From 1983 to 2001, British bank Lloyds TSB increased its market capitalization 40-fold, in part by shedding assets and narrowing its focus. But something else was at work: a CEO-led transformation of the company's culture. In this article, Sir Brian Pitman, chief executive and chairman of Lloyds during this period, describes how the company became an exemplar of what has come to be called value-based management. Pitman emphasizes that leading for value involves making difficult, even wrenching choices. To make these tough choices, you need to have a single definition of success and a single means of measuring it. At Lloyds, he replaced the existing array of implicit objectives with a single governing objective (generate greater value for shareholders) and established increasingly sophisticated internal metrics for achieving it. He found that this objective served to create value for everyone. Customer satisfaction levels rose, employees were better remunerated, and Lloyds contributed more to the communities in which it did business. Furthermore, getting people to concentrate on things that really create value for the company demands that a leader create an environment of inquiry and discovery.
There is a new class of American consumer and a new category of products and services has sprung into being to cater to it: new luxury. America's middle-market consumers are trading up to higher levels of quality and taste than ever before. Members of the middle market (those earning $50,000 and above annually) collectively have around $3.5 trillion of disposable income. And they will pay premiums of 20% to 200% for well-designed, well-engineered, and well-crafted goods that can't be found in the mass middle market and that have the artisanal touches of traditional luxury items. Supply-side forces are essential to the rise of new luxury. Like the consumers of their goods, entrepreneurs are better educated and more sophisticated about their customers than ever before. In addition, global sourcing, falling trade barriers and transportation costs, and rising offshore manufacturing standards are making possible the economical production of alluring products of high quality. Unlike old-luxury goods, new-luxury products can generate high volumes despite their relatively high prices. As a result, companies at the new-luxury forefront are achieving levels of profitability and growth beyond the reach of their conventional competitors.
When William Bratton was appointed police commissioner of New York City in 1994, turf wars over jurisdiction and funding were rife, promotion bore little relationship to performance, and crime was out of control. Yet in less than two years, and without an increase in his budget, Bratton turned New York into the safest large city in the nation. And the NYPD was only the latest of five law-enforcement agencies Bratton had turned around. In each case, he succeeded in record time despite limited resources, a demotivated staff, opposition from powerful vested interests, and an organization wedded to the status quo. Bratton's turnarounds demonstrate what the authors call "tipping point leadership." The theory of tipping points, which has its roots in epidemiology, hinges on the insight that in any organization, fundamental changes can occur quickly when the beliefs and energies of a critical mass of people create an epidemic movement toward an idea. Bratton begins by overcoming the cognitive hurdles that block companies from recognizing the need for radical change. He puts managers face-to-face with operational problems. Next, he manages around limitations on funds, manpower, or equipment by concentrating resources on the areas that are most in need of change and that have the biggest possible payoffs. He meanwhile solves the motivation problem by singling out key influencers--people with disproportionate power due to their connections or persuasive abilities. Finally, he closes off potentially fatal resistance from powerful opponents.
At the heart of business today lies a dilemma: Our economy is increasingly dependent on services, yet our innovation processes remain oriented toward products. In this article, Harvard Business School professor Stefan Thomke points out the challenges of applying the discipline of formal R&D processes to services. Most service companies have not established rigorous, ongoing R&D processes, Thomke says. But the author provides an in-depth look at a five-step process that Bank of America has used to create new service concepts for retail banking. The company has turned a set of its branches into, in effect, a laboratory where a corporate research team conducts service experiments with actual customers during regular business hours, measures results precisely and compares them with those of control branches, and pinpoints attractive innovations for broader rollout. The article describes the program's workings, its successes, and the obstacles the bank faced. The effort reveals an enormous amount about what a true R&D operation might look like inside a service business, he concludes.
Most of us see the organizations we operate in--our schools or companies, for instance--as monolithic and predictable, subjecting us to deadening routines and demanding from us dehumanizing conformity. But companies are more unpredictable and more alive than we imagine, according to Karl Weick, a psychology professor at the University of Michigan and an expert on organizational behavior. Weick says executives can learn a lot about managing the unexpected from organizations that can't afford any surprises in the workplace--nuclear power plants, firefighting units, or hospital emergency rooms, for instance. In this edited conversation with HBR Senior Editor Diane Coutu, Weick examines the characteristics of these high-reliability organizations (HROs) and suggests ways that other organizations can implement their work practices and philosophies. The key difference between HROs and other companies is the mindfulness with which people in most HROs react to even very weak signs that some kind of change or danger is approaching. Weick contrasts this kind of watchful updating at HROs with Ford's inability to pick up on weak signs in the 1970s that there were potentially lethal problems with the design of the Pinto gas tank.
The events of this past year have prompted intense soul-searching in many quarters and led us, in this year's list of the best business ideas, to reassess some of the most basic assumptions about strategy, organizations, and leadership. We began by reconsidering the role of the leader. Discussions of leadership focus almost exclusively on the CEO. But attention also needs to be paid to the other people who make organizations work: the followers--to their responsibilities, their power, and their obligation not to follow flawed leadership. And we considered the fate of soft issues, like emotional intelligence, in hard times. It's tempting to dismiss them when your employees will do anything just to keep their jobs. But hard times are good times to employ such tools on yourself. Despite valiant efforts to lead change and eliminate inefficiencies, organizations stay messy. Perhaps it's better to learn to live with messiness. There's growth potential, too, in considering the company as a portfolio of opportunities--but only if managers can sell off poorly performing business units as easily as they've been shedding ailing stocks of late.
How can you plan for every crisis that might occur, even for ones you can't imagine? The authors' 20 years of research shows that three out of four Fortune 500 companies are prepared to handle only the types of calamities they've already suffered, and not even all of those. That's unfortunate because the research also shows that the crisis-prepared companies fare better financially, have stronger reputations, and ultimately stay in business longer than their crisis-prone counterparts. Crisis-prepared companies use a systematic approach to focus their efforts. In addition to planning for natural disasters like flood and fire, they divide man-made calamities into two sorts--accidental or "normal" ones, like the Exxon Valdez oil spill, and deliberate or "abnormal" ones, like product tampering. Then they take steps to broaden their thinking about such potential crises. They imagine themselves as terrorists, for instance, or consider threats that would be common in other industries. And they seek creative outside input from investigative journalists, lawyers, and even reformed criminals. But if they think broadly about possible threats, they think narrowly about implementation. Each year, smart companies focus their resources and attention on a few facilities picked at random. That reduces the probability of an attack on the entire organization even as it allows the business to migrate steadily to a higher level of crisis readiness.
Sandy Michaels, chief marketing officer of financial services giant Pace Sterling, faces a tough dilemma now that the high-profile golf tournament her company sponsors has been tainted with controversy. The Dover Hill country club, where the prestigious Champions invitational is played, accepts only men as members. This year, a powerful women's organization has decided to make a bigger issue of that exclusivity. Under pressure from the Women's Rights Organization (WRO) to withdraw its support, Pace Sterling must think about the marketing value it gets from the sponsorship and how much that value might be diminished--or heightened--by the controversy. CEO Cal Buckley enlists the help of Michaels and other senior executives in the company to determine just that. Michaels firmly believes that Pace Sterling should stay the course and sponsor the event. Michaels is unwavering--that is, until the day she comes across this newspaper headline: "Tommy Ward Should Boycott Dover Hill." Ward is the undisputed king of the golf world and the odds-on favorite to win the Champions. The WRO is clearly turning up the volume. Should Pace Sterling proceed with its sponsorship? In R0304A and R0304Z, offering advice are Sergio Zyman, former chief marketing officer of Coca-Cola; James E. Murphy, global managing director of marketing and communications at Accenture; Kim Skildum-Reid, co-author of The Sponsor's Toolkit and The Sponsorship Seeker's Toolkit; and Paul A. Argenti, a professor of management and corporate communication at Dartmouth's Tuck School.
Sandy Michaels, chief marketing officer of financial services giant Pace Sterling, faces a tough dilemma now that the high-profile golf tournament her company sponsors has been tainted with controversy. The Dover Hill country club, where the prestigious Champions invitational is played, accepts only men as members. This year, a powerful women's organization has decided to make a bigger issue of that exclusivity. Under pressure from the Women's Rights Organization (WRO) to withdraw its support, Pace Sterling must think about the marketing value it gets from the sponsorship and how much that value might be diminished--or heightened--by the controversy. CEO Cal Buckley enlists the help of Michaels and other senior executives in the company to determine just that. Michaels firmly believes that Pace Sterling should stay the course and sponsor the event. Michaels is unwavering--that is, until the day she comes across this newspaper headline: "Tommy Ward Should Boycott Dover Hill." Ward is the undisputed king of the golf world and the odds-on favorite to win the Champions. The WRO is clearly turning up the volume. Should Pace Sterling proceed with its sponsorship? In R0304A and R0304Z, offering advice are Sergio Zyman, former chief marketing officer of Coca-Cola; James E. Murphy, global managing director of marketing and communications at Accenture; Kim Skildum-Reid, co-author of The Sponsor's Toolkit and The Sponsorship Seeker's Toolkit; and Paul A. Argenti, a professor of management and corporate communication at Dartmouth's Tuck School.
Focuses on Inditex, an apparel retailer from Spain, which has set up an extremely quick response system for its ZARA chain. Instead of predicting months before a season starts what women will want to wear, ZARA observes what's selling and what's not and continuously adjusts what it produces and merchandises on that basis. Powered by ZARA's success, Inditex has expanded into 39 countries, making it one of the most global retailers in the world. But in 2002, it faces important questions concerning its future growth.
In the years since independence, tiny, landlocked Botswana has gone from being one of the world's poorest nations to becoming a stable, prosperous state, blessed with the highest sustained growth rate in the world. This case highlights the role that foreign direct investment (FDI) has played in this success, as well as how strong local institutions have helped to harness the benefits that the foreign investor--here, the giant De Beers company--has brought. Also, examines how Botswana was able to avoid the natural resource curse that has haunted so many other resource-abundant countries.
Examines the political and economic dimensions of the campaign to improve workers' rights around the world through the inclusion of labor standards in international trade agreements. The U.S.-Cambodia Textile Trade Agreement was the first agreement of its kind to link increased access to U.S. markets to improved working conditions in an exporting country. Some argue that labor standards are becoming a new form of protectionism. Others see them as necessary to preserve open markets and fair trade. How this debate is resolved will undoubtedly have great implications for investors in developing countries and ultimately for the economic development of the poorer countries themselves.
Nobody likes performance reviews. Subordinates are terrified they'll hear nothing but criticism. Bosses, for their part, think their direct reports will respond to even the mildest criticism with stonewalling, anger, or tears. The result? Everyone keeps quiet and says as little as possible. That's unfortunate, because most people need help figuring out how they can improve their performance and advance their careers. This fear of feedback doesn't come into play just during annual reviews. At least half the executives with whom the authors have worked never ask for feedback. People avoid the truth and instead try to guess what their bosses are thinking. Fears and assumptions about feedback often manifest themselves in psychologically maladaptive behaviors such as procrastination, denial, brooding, jealousy, and self-sabotage. But there's hope, say the authors. Those who learn adaptive techniques can free themselves from these destructive responses. They'll be able to deal with feedback better if they acknowledge negative emotions, reframe fear and criticism constructively, develop realistic goals, create support systems, and reward themselves for achievements along the way. The authors take you through four manageable steps for doing just that: self-assessment, external assessment, absorbing the feedback, and taking action toward change.
The economic prosperity of the 1990s, along with the coming of age of the US baby boom generation, led to new types of philanthropy at the turn of the new millennium. This case tells the story of The Hestia Fund, a "women's giving circle" based on innovative philanthropic concepts. Hestia was not a registered nonprofit, nor a private foundation; its 40 members held that all funds donated should be on a "pass-through" basis. Each year the fund spent all it took in and passed the funds on to nonprofit organizations-with decisions as to recipients based on a collective decision-making process.
In November 2001, an Indian non-governmental organization dedicated to improving the lives and housing of the slum-dwellers of Bombay (Mumbai) learned that there were potential financial problems with a major new housing project in which it had invested and had convinced others to invest. The Society for the Protection of Area Resources Centres (SPARC) had, over the previous four years, repeatedly used its good name and contacts to bring together a group of private and nonprofit investors to construct a three-building, 268-unit development in the middle of Dharavi, generally considered Asia's largest slum. It had convinced one of the world's largest financial institutions, Citibank, to loan funds to India's National Slum Dwellers Federation, the organization that would build the Dharavi project; it had convinced an international nonprofit organization, the London-based Homeless International, to finance the loan, and had advanced its own funds to get the project started. But when Citbank warns that it has doubts about the likelihood of private, higher-income buyers being willing to move into a slum area-even into a new apartment building-SPARC finds it must decide whether and how to respond. Its options range from the pragmatic-simply scaling back the three-tower project-to organizing pressure and protest against Citibank, which appeared to have agreed to invest in part to burnish its image as it sought to expand its branch operations in Bombay. The case highlights some of the unexpected ways in which commercial globalization affects the potential for philanthropy and the tactics and strategy of community activists intent on extra-market measures to improve the lives of the poor. It raises both strategic issues for the nonprofit activists at the center of the narrative and questions about housing policy, as well-among them, the question of the extent of the role which philanthropically-financed "model housing" can play in ameliorating slum conditions.
This case covers a California-based, venture capital-backed start-up Whistle Communications in 1997 as it seeks to overcome sales growth problems in the US through a number of strategic partnerships in Asia. Whistle Communications is the provider of the Interjet, a device that allows a small business to connect to an Internet Service Provider, gives each employee email, surf the web and create an Intranet protected by a rudimentary firewall. In the A-C cases, Darnaud, Whistle's head of business development, considers three possible partnerships.
This case covers a California-based, venture capital-backed start-up Whistle Communications in 1997 as it seeks to overcome sales growth problems in the US through a number of strategic partnerships in Asia. Whistle Communications is the provider of the Interjet, a device that allows a small business to connect to an Internet Service Provider, gives each employee email, surf the web and create an Intranet protected by a rudimentary firewall. In the A-C cases, Darnaud, Whistle's head of business development, considers three possible partnerships.
This case covers a California-based, venture capital-backed start-up Whistle Communications in 1997 as it seeks to overcome sales growth problems in the US through a number of strategic partnerships in Asia. Whistle Communications is the provider of the Interjet, a device that allows a small business to connect to an Internet Service Provider, gives each employee email, surf the web and create an Intranet protected by a rudimentary firewall. In the A-C cases, Darnaud, Whistle's head of business development, considers three possible partnerships.