This is an MIT Sloan Management Review article. In following the traditional model of strategy development, a company seeks to craft the best possible plan so that it can be handed off for a predetermined course of execution involving a predictable set of events and a specific final goal. This scripted approach resembles traditional theater: The actors speak the same lines and the action comes to the same satisfying conclusion, night after night. The model works well when business is going through a relatively stable period. The current situation, however, is not stable: Companies are still trying to navigate the technological tsunami created by the Internet. Under the circumstances, it makes much more sense for companies to follow an improvisational model -- that is, to throw out the script, bring in the audience and trust the actors to innovate on the spot. The metaphor of improvisational theater helps executives think about the way in which an entire organization can become an arena for staging experiments that can transform a company's overarching strategy. Harvard Business School professor Rosabeth Moss Kanter lays out the six elements of strategic improvisation and illustrates how companies have made use of each one to get the most out of new technologies. Senior managers who understand these elements can create an atmosphere in which improvisational theater thrives; change then becomes an organic process rather than a painful reaction to circumstances beyond the company's control. Although this approach does not advocate a big plunge into something totally new, it is anything but conservative. Companies that engage in continual improvisation through innovative projects of all sizes and shapes are much better equipped to explore highly threatening disruptive technologies and embrace quite radical changes.
This is an MIT Sloan Management Review article. Managers don't have to be told that to innovate they need to embrace drastically different practices from the ones they use for routine work. So why don't they do it? According to Robert I. Sutton, co-director of Stanford University's Center for Work, Technology and Innovation, when business leaders see what innovation actually requires, they often recoil. The right practices seem strange, even wrongheaded. Understandably, it's hard for any executive to take action that will lose money today in order to test ideas that might never make money -- in hopes one idea will make money tomorrow. Nevertheless, Sutton contends, that is just what cutting-edge companies do, bravely tackling ideas that at first blush seemed weird. From his research on such organizations, Sutton has developed eight techniques to move teams and companies from working by rote to innovating. The first two techniques are designed to provoke emotions that interrupt mindless action (provoke unpleasant emotions in others; make yourself uncomfortable). The second two are for smashing mindsets (treat everything like a temporary condition; ignore the experts). The third two help people identify and reject their dearest beliefs (plan to do something ridiculous; hold a sacred cow workshop). The last two are for exploding the composition of organizations and teams (bring in some slow learners; keep changing the composition of teams). Sutton cautions, however, that the exact methods a company uses to spark novel ideas and actions should differ depending on the situation. He recommends giving people freedom to play around with a wide variety of offbeat notions until bringing in new knowledge and helping people see old things in new ways finally enables the company to break from the past.
Describes an "application software" company that has been through several evolutions--from consulting firm to applications service provider (ASP). The firm has received significant venture funding to pursue the ASP model but this has not worked, at least at the time the case ends. The company faces a choice: continuing with its current ASP business model, increasing its burn rate to convert to a licensed software model, or decreasing its burn rate to offer a more custom version of the ASP product.
Discusses various macroeconomic, regulatory, technological, and financial forces that led to increased corporate restructuring in the United States beginning in the mid-1980s. The U.S. financial system is often viewed as the most developed in the world and a model for other countries to follow. Similarly, the U.S. model of corporate governance--with its emphasis on shareholder value and an active market for corporate control--is also viewed as a model. Examines pressures for corporate restructuring and the emergence of an active market for corporate control for very large firms beginning in the early 1970s. Discusses the effects of this restructuring on corporate profitability and productivity, and provides data on the evolution of a number of indicators of performance, including productivity by sector, market capitalization relative to replacement cost, and rates of return both on assets and on equity. In brief, it finds that U.S. firms showed significantly improved after-tax returns on shareholder equity over the period while failing to make significant improvements on their pretax returns on assets--adjusted for the effects of the business cycle. Given the lack of comparable accounting data on returns across countries, conclusions about the performance of U.S. firms versus European ones isn't possible.
Focuses on a graduating HBS MBA who has been working part-time with a Web-hosting firm in California. Discusses the question of which of several "business models" make the most sense for the company to pursue.
In 2003, Norman Walker, head of HR at Novartis, received approval from the management board to implement a global human resources information system (HRIS). Although Walker had made substantial progress in transforming the HR function, much of their efforts remained transactional and not strategic. If successful, the implementation of HRIS would change the role and responsibilities of not only the HR organization but how it added value to the company. Since its formation in 1996, Dan Vasella, the CEO, had transformed the organization from one with slow-moving functional silos into a high-performance company. His goal was to make Novartis a "premier talent machine by 2005." The new global HRIS was a key element in this transformation. It was clear to Walker that this was a major organizational change effort, not simply an IT implementation. The case describes the changes Walker had already made and poses a set of challenges that need to be addressed to implement the new HRIS project.
Presents measures of financial performance and health for pairs of Asian and American companies in different industries from 1996 to 2000. The measures include economic profit (also known as Economic Value Added) and other classic measures, such as financial ratios and stock price performance.
In 1999, a powerful struggle amidst complex corporate and interpersonal networks led to the failed merger between Banca Commerciale Italiana and Unicredito Italiano--two of Italy's largest banking groups. This case analyzes the actions of Abelli and Saviotti, co-CEOs of Banca Commerciale Italiana at that time, as well as those of central players in Banca d'Italia, Mediobanca, and several prominent national and international banking and industrial groups. The events shed light on the management of multilayered resource dependencies and tactics of political influence as a critical precondition for implementing sound business strategy.
Examines the industry structure and competitive strategy of Coca-cola and Pepsi over 100 years of rivalry. New challenges of the 21st century included boosting flagging domestic cola sales and finding new revenue streams. Both firms also began to modify their bottling, pricing, and brand strategies. They looked to emerging international markets to fuel growth and broaden their brand portfolios to include noncarbonated beverages like tea, juice, sports drinks, and bottled water. For over a century, Coca-Cola and Pepsi-Cola had vied for the "throat share" of the world's beverage market. The most intense battles of the cola wars were fought over the $60 billion industry in the United States, where the average American consumes 53 gallons of carbonated soft drinks (CSD) per year. In a "carefully waged competitive struggle," from 1975 to 1995 both Coke and Pepsi had achieved average annual growth of around 10% as both U.S. and worldwide CSD consumption consistently rose. This cozy situation was threatened in the late 1990s, however, when U.S. CSD consumption dropped for two consecutive years and worldwide shipments slowed for both Coke and Pepsi. The case considers whether Coke's and Pepsi's era of sustained growth and profitability was coming to a close or whether this apparent slowdown was just another blip in the course of a century of enviable performance. A rewritten version of an earlier case by Michael E. Porter and David B. Yoffie.
Most parties today agree that insiders should hold the balance of power on a board. Perhaps so, but there is also a third way, write these authors, who suggest that insiders and outsider should have equal power.
Emotional intelligence can be misunderstood and misrepresented. But the bottom line is that the manager who can think about emotions accurately and clearly may often be better able to anticipate, cope with, and effectively manage change.
Marketers have never been more challenged to find the right mix of channels. Seeing the choices clearly will make that challenge less daunting. This author has sound advice for developing clear channel vision.
The American Red Cross has a system for structuring, staffing, and leading teams to review its local chapters. Mirroring professional services firms that use teams to serve clients, this system provides detailed guidelines to increase individual team member's efficiency and thoroughness. The protagonist at Red Cross headquarters who designed the system, however, is concerned that the structure she has provided is detracting from the teams' overall creativity and integration. Highlights the trade-offs of providing teams with too little structure (e.g., inefficiency, variable quality of team's work products) vs. too much structure (e.g., team members have little opportunity to utilize their expertise and creativity).
Describes a specific approach for measuring the efficiency of the groups of computers inside an organization and suggests ways this tool may be used to reduce the company's computing investment while maintaining service. It is a software-enabled industrial engineering approach to delivery of computing resources. The evolution of this approach and the listing of its strengths and weaknesses is the key purpose for the class discussion.
Describes IBM's ongoing Reinventing Education initiative to improve K-12 public education via information technology developed by IBM's engineers and consultants. Focuses on one site, West Virginia, to reveal how IBM and the state created a mutually beneficial partnership that provided the basis for the next step of the initiative--Reinventing Education 3.
This case escribes the antitrust prosecutions in the United States and abroad of the international bulk vitamins cartel. Both the civil and criminal fines were historically high, and it was the first time the United States prosecuted foreign nationals for U.S. criminal antitrust charges. It also details allegations of price-fixing by NASDAQ securities traders, which began when an academic paper accused NASDAQ market makers of avoiding quotes with odd-numbered increments. The remaining vignette provides an account of the price-fixing scandal involving Christie's and Sotheby's fine-art auction houses.
Managed properly, knowledge can become an organization's competitive advantage. Effective knowledge management, however, can occur only after an organization has established a knowing culture. Creating that culture, and promoting the organizational learning to sustain it, must become priorities for today's business leaders. These authors describe how leaders can create and sustain that knowing culture.