When Rich Teerlink, now retired chairman and CEO of Harley-Davidson, became president and COO of its motorcycle division in 1987, the hard work of saving the company was already done. The company had just survived seven arduous years of crisis and was on a steady path toward growth. Realizing how much circumstances had changed, Teerlink immediately saw the need for a new kind of leadership--one far removed from the command-and-control model that had carried it through its turnaround. In this First Person account, Teerlink tells the story of how difficult it was to make that shift. In a plan to improve operations, for example, Teerlink came up with an idea for a program he hoped would motivate every employee, customer, and stakeholder. The program, called gain sharing, would allow every employee to share in the company's financial success. The problem? The program was yet another initiative created and imposed from the top. Throughout his tenure, Rich Teerlink launched several programs designed to elicit ideas, enthusiasm, concerns, and vision from employees. These initiatives--as well as other efforts toward inclusiveness--have helped transform Harley's culture and made it the success story it is today.
No one can say for certain how many millionaires have been created by Wall Street's long boom. But this new breed of employee certainly creates a whole new set of challenges for managers today. Working millionaires make motivation and retention--two hard games to play in the first place--harder than ever. And they push already steep compensation levels upward. What, then, can be done to manage millionaires in a way that makes them worth the effort, not to mention the cost? To answer this question, Suzy Wetlaufer, senior executive editor of HBR, interviewed more than two dozen CEOs, HR executives, and headhunters from Wall Street and Silicon Valley, as well as a half-dozen working millionaires themselves. Their thoughts--and the managerial imperatives they imply--have culminated in the first HBR at Large, a new department designed to explore multifaceted business ideas confronting people creating, leading, and transforming business today. Wetlaufer discovered, somewhat unexpectedly, that many executives see an upside to the rise of the working millionaire. Millionaires force companies to be far more creative--indeed, entrepreneurial--about their products and services. They push companies to keep beating their targets in the marketplace. And they compel their bosses to build a productive, healthy culture. Admittedly, some millionaires can only be kept happy with corporate jets, original art lining big offices, and world-class executive lunchroom cuisine. Indeed, millionaires are driving managerial practices that, in another time, might have been dismissed but that today are merely admission to the game. But the irony is that such practices should perhaps have been there for everyone all along.
It's been four years since Dave Souza, Joe Castle, and Ryan Bahar started Socaba.com--an e-business that sells office supplies and services. Six months ago, acting on the advice of their VC, the young founders hired three seasoned managers to help bring the business to the next level. The new executives appeared to complete the Socaba management team. But even as early as the welcome lunch for the three, a rift between the insiders and outsiders developed. Just minutes after the party, the founders were seen drifting into Dave's office to assess the three newcomers. Such exclusionary meetings have continued on both sides, further aggravating the situation. To complicate matters, one of the company's main competitors wants to partner with Socaba, and there's controversy about whether to enter into the deal. Socaba.com is at a crossroads--the company is in position to grow, but internal conflicts could hold it back. In R00408 and R00414, commentators Tom Scott, Ted Murguia, Christine Comaford, and Stever Robbins offer advice on this fictional case study.
It's been four years since Dave Souza, Joe Castle, and Ryan Bahar started Socaba.com--an e-business that sells office supplies and services. Six months ago, acting on the advice of their VC, the young founders hired three seasoned managers to help bring the business to the next level. The new executives appeared to complete the Socaba management team. But even as early as the welcome lunch for the three, a rift between the insiders and outsiders developed. Just minutes after the party, the founders were seen drifting into Dave's office to assess the three newcomers. Such exclusionary meetings have continued on both sides, further aggravating the situation. To complicate matters, one of the company's main competitors wants to partner with Socaba, and there's controversy about whether to enter into the deal. Socaba.com is at a crossroads--the company is in position to grow, but internal conflicts could hold it back. In R00408 and R00414, commentators Tom Scott, Ted Murguia, Christine Comaford, and Stever Robbins offer advice on this fictional case study.
This is an MIT Sloan Management Review article. Executives are often baffled when they can't implement perfectly sound strategies. The root causes, according to a Harvard Business School professor and a senior organizational fellow at McKinsey & Co., are six deep-seated barriers to strategy implementation and organizational learning. The first barrier is a top-down or laissez-faire senior management style. Without transforming that barrier into a capability, none of the other barriers can be turned into capabilities either. The five others are: unclear strategy and conflicting priorities; an ineffective senior team; poor vertical communication; poor coordination across functions, businesses, or borders; and inadequate down-the-line leadership skills and development. According to the authors, the first three barriers together undermine an organization's quality of direction; a lack of vertical communication interacts with the other barriers to block quality of learning; and the last two barriers cause poor quality of implementation. The authors' own process, Organizational Fitness Profiling, has helped managers overcome the root causes of blocked strategy implementation and has led to individual and organizational learning. Not all organizations are up to the challenge, however.
This is an MIT Sloan Management Review article. Excellence at investing in and deploying IT isn't sufficient to achieve superior business performance: companies must also excel at collecting, organizing, and maintaining information and at getting their people to embrace the right behaviors and values for working with information. The authors present the results of a two-and-a-half-year international research project led by the Institute for Management Development. They show that senior managers view strong IT practices, competent management of information, and good information behaviors as components of one higher level idea--Information Orientation" or IO--which measures a company's capabilities to manage and use information effectively. IO is also a predictor of business performance. Among the guidelines: Focus your best IT resources on what makes you distinctive; actively manage all phases of the information life cycle; develop an explicit, focused view of the information necessary to run the business; and do not compromise on information integrity.
This case provides a unique illustration of how a high-tech European new venture starts-up, grows, burns cash, stumbles, adapts, captures value, disappoints, survives on the verge of bankruptcy to eventually achieve in the fall of 1995 among the most successful IPOs on NASDAQ. On 27 November 1995, L&H received an IPO pricing proposal of H and Q at the low end of the pricing range, after L and H had rejected proposals by Robertson Stephens. The proposal valued the company at US $152 million, when its accumulated deficit was $(72) million and its shareholder equity $(37). The case explains the company and its technologies. It then describes the sequence of financing and strategic events that eventually lead to the IPO: early company development, international alliances, several private equity placements, financing on main street and pre-IPO private placement. It provides a lively and timely learning opportunity for an intermediate MBA corporate finance or for a private equity course in three areas: guerrilla financing, the why, what and how of an IPO, IPO valuation.
Enables a thorough analysis of Amazon.com and the company's value proposition, in terms of its business concept, digital business capabilities, and community and shareholder value. Examines the company's complex set of business models and web of business relationships, as well as Amazon's plan to monetize (generate revenues and earnings through) its assets.
Describes the challenges facing a Japanese financial services company as it attempts to maintain its ability to attract and retain talented employees. The CEO's ideas of corporate governance and evidence from the competitive labor environment suggest the need for more performance-based compensation. But employees at all levels of the firm understand that any new compensation system must carefully consider the strategic goals of the firm, the cultural context of the Japanese workplace, and the legal framework of the Japanese corporation. Considers how a particular performance measurement system known as ORIX Value Added (OVA) might be used in the firm.
Four Seasons has a love/hate relationship with technology, including the best Web site in the industry. This case examines how a leading service delivers high-tech/high-touch, and looks at its progressive human resource strategy.
The newly hired director of human resources for a large golf and country club near Beijing, China has just presented her human resources plan to the company founder. At issue is whether this plan--in terms of recruiting, training and development, rewards, and benefits--is directionally correct and implementable.
Describes a company's struggles in implementing a subjective performance rating system for its employees. In particular, it describes the difficulties faced by the CEO in getting managers to combat "ratings inflation"--that is, to produce numerical ratings that are both differentiated and "not too high."
Describes a company's changing of its compensation and incentive plan. In particular, it shows how a change from hourly pay to piece rate pay (for windshield installers) affected productivity, pay, and turnover.
Describes IDEO, the world's leading product design firm, and its innovation culture and process. Emphasis is placed on the important role of prototyping and experimentation in general, and in the design of the very successful Palm V handheld computer in particular. A studio leader is asked by a business start-up (Handspring) to develop a novel hand-held computer (Visor) in less than half the time it took to develop the Palm V, requiring several shortcuts to IDEO's legendary innovation process. Focuses on: 1) prototyping and experimentation practices at a leading product developer; 2) the role of playfulness, discipline, and structure in innovation processes; and 3) the managerial challenges of creating and managing an unusually creative and innovative company culture. Includes color exhibits.