The accountant for Palmer Limited, a sheet metal sub-contractor, has been asked to provide a monthly cash budget along with the projected income statement and balance sheet for her client. The request came about because the banker is concerned about whether Palmer Limited can repay its loan.
The concept of customer relationship management (CRM) and why it is important is examined in this note. It also examines the implementation process: corporate culture and strategy, software providers, technology and ways to measure the success of a CRM program. Many traditional bricks-and-mortar businesses are creating electronic commerce operations, therefore traditional CRM has expanded to include doing business on the Internet and this note looks at electronic customer relationship management (eCRM) as well. Also included are some examples of companies that have successfully implemented a CRM program, a list of CRM software vendors and examples of CRM software solutions.
Western Area Youth Services is a children's mental health centre and non-profit organization. Recently the board of directors spent a great deal of time discussing the implications of a significant potential liability for staff salaries. A merger was identified as a possible solution and the executive director of the centre was instructed by the board to begin the process of seeking a possible merger partner for the agency. She wonders how she might initiate the process on behalf of the board and what she should look for in a potential partner. She also wonders how a merger might benefit the agency at this point in time.
Fonterra was a cooperatively owned dairy company--New Zealand's largest company and the world's largest exporter of dairy products. To maintain its leadership, Fonterra had to respond to increased competition, new consumer tastes, consolidation of its customers, and increasing subsidies on milk by developing countries. This futuristic case identifies trends that the cooperative has to take into account for its future success. It can be examined as a model for other cooperatives in other commodity systems.
Commerce Bank has become one of the fastest growing banks in the country, despite having defied conventional wisdom about how to grow deposits. Banks historically have grown either by competing on deposit rates or through acquisitions that expand their deposit base. Commerce has the lowest deposit rates in each of the local markets it serves and has acquired no other banks, yet its growth rate is unparalleled. Its secret? Commerce differentiates itself on service. Explores the highly refined service model that guides the design of its operations and service features and considers the trade-offs involved in competing on service.
Sheldon Bloomfield, senior vice-president of character properties for Multi-Media Worldwide, has a hit with Baby Ruby. Originally a children's book character, Ruby has become the fastest growing kids' show on television. In fact, Bloomfield's starting to wonder whether Baby Ruby is his evergreen property--the one that will generate licensing income for years to come. Bloomfield has many offers on the table, including one from the nation's leading fast-food franchiser to make Baby Ruby its next kids' meal tie-in. But the fact is, no one wants to risk making a big financial commitment to a relatively new property, and most of the companies are demanding exclusives--which would eat away at Bloomfield's profits even more. The pressure is on. If Bloomfield doesn't make these deals, he may not get another chance. But if he does make the deals, and Baby Ruby ends up on everything from T-shirts to collectible spoons, the public may lose all interest in her. In R0212A and R0212Z, commentators Grant McCracken, a visiting scholar at McGill University and the author of Culture and Consumption; Jack Soden, CEO of Elvis Presley Enterprises; Timothy Rothwell, a senior vice-president of Universal Studios Consumer Products Group; and Bill Griffith, creator of the comic strip Zippy the Pinhead, offer their advice in this fictional case study.
Everyone knows a story about a talented businessperson who has lost his passion for work or a person who ditched a 20-year career to pursue something completely different and is the happier for it. "Am I doing what is right for me, or should I change direction?" is one of the most pressing questions for today's midcareer professional. A true change of direction is hard to swing. Many academics and career counselors contend that the problem lies in basic human behavior: We fear change and don't want to make sacrifices. But author Herminia Ibarra suggests another explanation. People most often fail, she says, because they take the wrong approach to finding new careers. Indeed, the conventional wisdom on how to change careers is a prescription for how to stay put. Most of us have heard that the key to a successful career change is figuring out what we want to do next, then acting on that knowledge. But change actually happens the other way around. Doing comes first, knowing second, because changing careers means redefining our working identity--our sense of self in our professional roles, what we convey about ourselves to others and, ultimately, how we live our working lives. Who we are and what we do are tightly connected, the result of years of action. And to change that connection, we must first resort to action.
In the wake of the recent corporate scandals, it's time to reconsider the assumptions underlying American-style stock-market capitalism. That heady doctrine--in which the market is king, success is measured in terms of shareholder value, and profits are an end in themselves--enraptured America for a generation, spread to Britain during the 1980s, and recently began to gain acceptance in Continental Europe. But now, many wonder whether the American model is corrupt. The American scandals are not just a matter of dubious personal ethics or of rogue companies fudging the odd billion. And the cure for the problems will not come solely from tougher regulations. We must also ask more fundamental questions: Whom and what is a business for? And are traditional ownership and governance structures suited to the knowledge economy? According to corporate law, a company's financiers are its owners, and employees are treated as property and recorded as costs. But whereas that might have been true in the early days of industry, it does not reflect today's reality. Now a company's assets are increasingly found in the employees who contribute their time and talents rather than in the stockholders who temporarily contribute their money. The language and measures of business must be reversed. In a knowledge economy, a good business is a community with a purpose, not a piece of property.
When it comes to philanthropy, executives increasingly see themselves as caught between critics demanding ever higher levels of "corporate social responsibility" and investors applying pressure to maximize short-term profits. Increasingly, philanthropy is used as a form of public relations or advertising, promoting a company's image through high-profile sponsorships. But there is a more truly strategic way to think about philanthropy. Corporations can use their charitable efforts to improve their competitive context--the quality of the business environment in the locations where they operate. Using philanthropy to enhance competitive context aligns social and economic goals and improves a company's long-term business prospects. Addressing context enables a company not only to give money but also leverage its capabilities and relationships in support of charitable causes. Taking this new direction requires fundamental changes in the way companies approach their contribution programs. Adopting a context-focused approach requires a far more disciplined approach than is prevalent today. But it can make a company's philanthropic activities far more effective.
For better or worse, investors now view chief executives as the primary determinant of corporate performance. But the reality is that most companies perform no better after they dismiss their CEOs than they did in the years leading up to the dismissals. Worse, the organizational disruption created by a rushed firing can leave a company with deep and lasting scars. The blame for such poor results, the author argues, lies squarely with boards of directors. Boards often lack the strategic understanding of the business necessary to give due diligence to choosing a replacement CEO. Concern over restoring investor confidence quickly--rather than doing what's right for the company--drives the selection process. And all too often, companies continue to be dogged by the same old problems after the new CEOs come on board. But a good board can make a CEO replacement pay off if its members first develop a better understanding of the business context, worry less about pleasing the investment community and more about a replacement's strategic fit, and take an active role in overseeing the new CEO and the performance and direction of the company. In the long run, such approaches are likely to foster stability at the helm--making it less likely that a company will have to fire its CEO in the first place.
It's natural to promote your best and brightest, especially when you think they may leave for greener pastures if you don't continually offer them new challenges and rewards. But promoting smart, ambitious young managers too quickly often robs them of the chance to develop the emotional competencies that come with time and experience--the ability to negotiate with peers, regulate emotions in times of crisis, and win support for change. Indeed, at some point in a manager's career--usually at the vice-president level--raw talent and ambition become less important than the ability to influence and persuade, and that's the point at which the emotionally immature manager will lose his effectiveness. This article argues that delaying a promotion can sometimes be the best thing a senior executive can do for a junior manager. The authors recommend that senior executives employ these strategies to help boost their proteges' people skills: sharpen the 360-degree feedback process, give managers cross-functional assignments to improve their negotiation skills, make the development of emotional competencies mandatory, make emotional competencies a performance measure, and encourage managers to develop informal learning partnerships with peers and mentors.
The use of stock options for executive compensation has become a lightning rod for public anger, and it's easy to see why. Many top executives grew hugely rich on the back of the gains they made on their options--profits they've been able to keep even as the value they were supposed to create disappeared. The supposed scam works like this: Current accounting regulations let companies ignore the cost of option grants on their income statements, so they can award valuable option packages without affecting reported earnings. Not charging the cost of the grants supposedly leads to overstated earnings, which purportedly translate into unrealistically high share prices, permitting top executives to realize big gains when they exercise their options. If an accounting anomaly is the problem, then the solution seems obvious: Write off executive share options against the current year's revenues. The trouble is, Sahlman writes, expensing option grants won't give us a more accurate view of earnings, won't add any information not already included in the financial statements, and won't even lead to equal treatment of different forms of executive pay. Far worse, expensing evades the real issue, which is whether compensation (options and otherwise) does what it's supposed to do--namely, help a company recruit, retain, and provide the right people with appropriate performance incentives. Only ethical management, sensible governance, adequate internal control systems, and comprehensive disclosure will save the investor from disaster.
The sheer enormity of last year's terrorist attacks on the World Trade Center and the Pentagon gave new meaning to the term "crisis management." Suddenly, companies near Ground Zero, as well as those more than a thousand miles away, needed a plan. Because the disasters disrupted established channels not only between businesses and customers but between businesses and employees, internal crisis-communications strategies that could be quickly implemented became a key responsibility of top management. Without these strategies, employees' trauma and confusion might have immobilized their firms and set their customers adrift. In this article, executives from a range of industries talk about how their companies, including Morgan Stanley, Oppenheimer Funds, American Airlines, Verizon, the New York Times,Dell, and Starbucks, went about restoring operations and morale. From his interviews with these individuals, author and management professor Paul Argenti was able to distill a number of lessons, each of which, he says, may "serve as guideposts for any company facing a crisis that undermines its employees' composure, confidence, or concentration." His advice to senior executives includes: Maintain high levels of visibility, so that employees are certain of top management's command of the situation and concern; establish contingency communication channels and work sites; strive to keep employees focused on the business itself, because a sense of usefulness enhances morale and good morale enhances usefulness; and ensure that employees have absorbed the firm's values, which will guide them as they cope with the unpredictable. The most forward-thinking leaders realize that managing a crisis-communications program requires the same dedication and resources they give to other dimensions of their business. More important, they realize that their employees always come first.
It's well known that many executives who excel at starting businesses or projects fizzle out--in other words, they fail to "scale"--as their ventures grow. But the reasons have remained fuzzy. In this article, leadership coach John Hamm identifies four management tendencies that work for small-company or business-unit leaders but become Achilles' heels as those individuals try to run larger organizations. The first tendency is loyalty to comrades. In entrepreneurial mode, you need to lead as though you're in charge of a combat unit on the wrong side of enemy lines. But blind loyalty can become a liability in managing a complex organization. The second tendency, task orientation, is critical in driving toward a big product launch, but excessive attention to detail can cause a large organization to lose sight of its long-term goals. The third tendency, single-mindedness, is important in a visionary unleashing a revolutionary product or service on the world but can limit the company's potential as it grows. And the fourth tendency, working in isolation, is fine for the brilliant scientist focused on an ingenious idea. But it's disastrous for a leader whose expanding organization increasingly relies on many other people. Leaders who scale deal honestly with problems and quickly weed out nonperformers. They see past distractions and establish strategic priorities. They learn how to deal effectively with diverse employees, customers, and external constituencies. And, most important, they make the company's continuing health and welfare their top concern.
Sheldon Bloomfield, senior vice-president of character properties for Multi-Media Worldwide, has a hit with Baby Ruby. Originally a children's book character, Ruby has become the fastest growing kids' show on television. In fact, Bloomfield's starting to wonder whether Baby Ruby is his evergreen property--the one that will generate licensing income for years to come. Bloomfield has many offers on the table, including one from the nation's leading fast-food franchiser to make Baby Ruby its next kids' meal tie-in. But the fact is, no one wants to risk making a big financial commitment to a relatively new property, and most of the companies are demanding exclusives--which would eat away at Bloomfield's profits even more. The pressure is on. If Bloomfield doesn't make these deals, he may not get another chance. But if he does make the deals, and Baby Ruby ends up on everything from T-shirts to collectible spoons, the public may lose all interest in her. In R0212A and R0212Z, commentators Grant McCracken, a visiting scholar at McGill University and the author of Culture and Consumption; Jack Soden, CEO of Elvis Presley Enterprises; Timothy Rothwell, a senior vice-president of Universal Studios Consumer Products Group; and Bill Griffith, creator of the comic strip Zippy the Pinhead, offer their advice on this fictional case study.
Sheldon Bloomfield, senior vice-president of character properties for Multi-Media Worldwide, has a hit with Baby Ruby. Originally a children's book character, Ruby has become the fastest growing kids' show on television. In fact, Bloomfield's starting to wonder whether Baby Ruby is his evergreen property--the one that will generate licensing income for years to come. Bloomfield has many offers on the table, including one from the nation's leading fast-food franchiser to make Baby Ruby its next kids' meal tie-in. But the fact is, no one wants to risk making a big financial commitment to a relatively new property, and most of the companies are demanding exclusives--which would eat away at Bloomfield's profits even more. The pressure is on. If Bloomfield doesn't make these deals, he may not get another chance. But if he does make the deals, and Baby Ruby ends up on everything from T-shirts to collectible spoons, the public may lose all interest in her. In R0212A and R0212Z, commentators Grant McCracken, a visiting scholar at McGill University and the author of Culture and Consumption; Jack Soden, CEO of Elvis Presley Enterprises; Timothy Rothwell, a senior vice-president of Universal Studios Consumer Products Group; and Bill Griffith, creator of the comic strip Zippy the Pinhead, offer their advice on this fictional case study.
This is an MIT Sloan Management Review article. The quality initiative Six Sigma is sweeping the United States. Is it good for whatever ails your company? Consultant Michael Hammer thinks not. He warns that in their quest for operations performance improvement, many business leaders fail to distinguish its strengths from its weaknesses. Hammer presents a strategic, holistic approach--business process management--in which Six Sigma is only one of many useful initiatives. If a business process, such as billing customers, is fundamentally defective, why use Six Sigma to improve the performance of it? Companies that Hammer calls process enterprises (Caterpillar, Johnson & Johnson, Merck, Progressive Casualty Insurance, Bombardier, and IBM) have found more success redesigning whole processes. Certainly, Six Sigma's ability to unearth root causes of problems is outstanding for narrow cost-saving improvements. But it deploys statistical analytic tools to uncover flaws in the execution of an existing process without asking whether the process itself is flawed. Six Sigma assumes that the existing design is fundamentally sound--a dangerous assumption. For peak performance, companies should position Six Sigma in the context of process management and assign process owners. Process owners ensure that all performance initiatives (Six Sigma, enterprise resource planning, balanced scorecard, customer relationship management and so on) are integrated to support strategic goals. Fitting Six Sigma into the process-management framework allows organizations to enjoy Six Sigma's benefits while keeping it away from areas where it doesn't belong. Process enterprises already are reaping cost savings, accelerated new-product introduction, improvements in customer satisfaction, and increases in profitability.
This is an MIT Sloan Management Review article. Forget capital; it's relatively easy to obtain nowadays. Today's scarce, sought-after strategic resource is expertise, which comes in the form of employees. Although organizations have changed mightily from the days of hierarchical, top-down management, they still have a long way to go. In addition to issues of company structure and who should be involved in strategic decision making, there are questions of how the value that companies create should be distributed, now that employees, as well as shareholders, control a scarce resource. And then there are the intangible yet crucial changes that must occur in senior managers' ways of thinking--and in the atmosphere and culture of the company. Reorienting old-school senior managers away from capital and toward knowledgeable employees will be difficult, but Christopher Bartlett of Harvard Business School and Sumantra Ghoshal of London Business School have several recommendations for human resources professionals, who, Bartlett and Ghoshal maintain, will be key players in the design, development, and delivery of strategy. Their task is threefold: build up the company by acquiring and retaining highly skilled employees; find a way to embed individual-based knowledge in the company, making it accessible and useful not just to one unit or one function, but to the entire organization--that is the linking task; and create an engaging, motivating, and bonding culture to attract and keep talented employees--the bonding task.
New research from MIT's Center for Information Systems Research and others reveals that successful companies are revolutionizing the way IT investments get decided. Investments are no longer justified merely on the basis of making a functional silo more profitable. Today, the strategic needs of the whole company come first. In the last 15 years, write professors Jeanne Ross of MIT's Sloan School of Management and Cynthia Beath of the University of Texas, a tidal wave of IT-enabled initiatives has elevated the importance of investing strategically. The Internet alone has created numerous opportunities: to reengineer processes, introduce online products and services, approach new customer segments, and redo business models. The opportunities seem limitless, but the resources required--capital, IT expertise, management focus, and capacity for change--are not. How to choose? Traditionally, companies justified a given project by presenting a strong business case. But with IT's growing strategic importance, companies must now weigh individual ROIs against demands for organizationwide capabilities--and must assess opportunities to leverage and improve existing systems and infrastructures, create new capabilities, and test new business models. The authors recommend a new investment approach based on a framework they developed after studying the e-business initiatives and supporting IT investments of 30 enterprises. The framework encourages simultaneous investment in four kinds of IT initiative. Transformation investments are necessary if a company's core infrastructure limits its ability to develop applications critical to long-term success. Renewal investments maintain the infrastructure's functionality and cost effectiveness. Process improvements allow business applications to leverage infrastructure by delivering short-term profitability. Experiments enable learning about opportunities and testing the capabilities of new technologies.