A new science called evolutionary psychology--sometimes called Modern Darwinism because it is based on the theory of natural selection--is drawing widespread support and sparking fierce controversy. The reason: evolutionary psychology asserts that human beings today retain the mentality of our Stone Age ancestors. We are, in other words, "hard wired" for certain attitudes and behaviors. If that is so, what are the implications for managers? In this article, Nigel Nicholson, a professor of organizational behavior at London Business School and dean of the school's Division of Research, explores this provocative question. Of course, evolutionary psychology is still an emerging discipline, and its strong connection with the theory of natural selection has sparked significant controversy. But, as Nicholson suggests, evolutionary psychology is now well established enough that its insights into human instinct will prove illuminating to anyone seeking to understand why people act the way they do in organizational settings. Take gossip. According to evolutionary psychology, our Stone Age ancestors needed this skill to survive the socially unpredictable conditions of the Savannah Plain. Thus, over time, the propensity to gossip became part of our mental programming. Executives trying to eradicate gossip at work might as well try to change their employees' musical tastes. Better to put one's energy into making sure the "rumor mill" avoids dishonesty or unkindness as much as possible. Evolutionary psychology also explores the dynamics of the human group. Clans on the Savannah Plain, for example, appear to have had no more than 150 members. The message for managers? People will likely be most effective in small organizational units. As every executive knows, it pays to be an insightful student of human nature.
In this article, co-authors B. Joseph Pine II and James Gilmore, founders of the management consulting firm Strategic Horizons, preview the likely characteristics of the experience economy and the kinds of changes it will force companies to make. First there was agriculture, then manufactured goods, and eventually services. Each change represented a step up in economic value--a way for producers to distinguish their products from increasingly undifferentiated competitive offerings. Now, as services are in their turn becoming commoditized, companies are looking for the next higher value in an economic offering. Leading-edge companies are finding that it lies in staging experiences. An experience occurs when a company uses services as the stage--and goods as props--for engaging individuals in a way that creates a memorable event. And while experiences have always been at the heart of the entertainment business, any company stages an experience when it engages customers in a personal, memorable way. The lessons of pioneering experience providers, including the Walt Disney Company, can help companies learn how to compete in the experience economy. The authors offer five design principles that drive the creation of memorable experiences. First, create a consistent theme, one that resonates throughout the entire experience. Second, layer the theme with positive cues--for example, easy-to-follow signs. Third, eliminate negative cues, those visual or aural messages that distract or contradict the theme. Fourth, offer memorabilia that commemorate the experience for the user. Finally, engage all five senses--through sights, sounds, and so on--to heighten the experience and make it more memorable.
Challenged by world-class competitors, manufacturing companies in the United States have greatly improved their product development efforts as well as their factory operations. Today, however, U.S. companies are beginning to see the effectiveness of their product development systems plateau. More important, that effectiveness seems to have leveled off far short of the best Japanese companies. The authors, Durward Sobek, assistant professor of engineering at Montana State University, Jeffrey Liker, associate professor of engineering at the University of Michigan, and Allen Ward, head consultant at Ward Systems, explore how one of those companies, Toyota, manages its vehicle development process. Toyota's managerial practices can be grouped into six organizational mechanisms. Three of them are primarily social processes: mutual adjustment, mentoring supervision, and integrative leadership from product heads. The other three are forms of standardization: standard skills, standard work processes, and design standards. Alone, each mechanism would accomplish little, but every piece has its own role and at the same time reinforces the others, unlike many of the sophisticated tools and practices at U.S. companies that tend to be implemented independently. Together, the mechanisms give Toyota a tightly linked product-development system that relies on training and standardization to achieve cross-functional coordination while still building functional expertise. Toyota has added a number of twists to ensure that each project has the flexibility it needs and still benefits from what other projects have learned. This balance allows Toyota to achieve integration across projects and over time, as well as within projects.
This series of contextual essays provides an overview of the history and status of philanthropic giving in the United States. Drawing on federal tax-based data, reports of the National Commission on Philanthropy and Civic Renewal, the American Association of Fund-Raising Counsel and a wide variety of scholarly sources, the notes look broadly at overall philanthropic trends (share of national income devoted to philanthropy; major recipients of charitable donations; sources of donations) and at the giving patterns of the various sectors of the economy: individuals, corporations and foundations. Each note begins with specific conclusions (e.g. almost half of all philanthropy goes to religious institutions; the strongest predictor of giving is level of wealth; foundation giving is highly-correlated to the performance of the stock market; corporate philanthropy is increasingly a component of firms' competitive strategy) before elaborating on the conclusions and providing an extensive bibliography. Although not providing an explicit overview of the independent (non-governmental) sector as a whole, the notes comment on the evolution of the sector and its changing reliance on private and public support. HKS Case Number 1445.0
This series of contextual essays provides an overview of the history and status of philanthropic giving in the United States. Drawing on federal tax-based data, reports of the National Commission on Philanthropy and Civic Renewal, the American Association of Fund-Raising Counsel and a wide variety of scholarly sources, the notes look broadly at overall philanthropic trends (share of national income devoted to philanthropy; major recipients of charitable donations; sources of donations) and at the giving patterns of the various sectors of the economy: individuals, corporations and foundations. Each note begins with specific conclusions (e.g. almost half of all philanthropy goes to religious institutions; the strongest predictor of giving is level of wealth; foundation giving is highly-correlated to the performance of the stock market; corporate philanthropy is increasingly a component of firms' competitive strategy) before elaborating on the conclusions and providing an extensive bibliography. Although not providing an explicit overview of the independent (non-governmental) sector as a whole, the notes comment on the evolution of the sector and its changing reliance on private and public support. HKS Case Number 1443.0
This series of contextual essays provides an overview of the history and status of philanthropic giving in the United States. Drawing on federal tax-based data, reports of the National Commission on Philanthropy and Civic Renewal, the American Association of Fund-Raising Counsel and a wide variety of scholarly sources, the notes look broadly at overall philanthropic trends (share of national income devoted to philanthropy; major recipients of charitable donations; sources of donations) and at the giving patterns of the various sectors of the economy: individuals, corporations and foundations. Each note begins with specific conclusions (e.g. almost half of all philanthropy goes to religious institutions; the strongest predictor of giving is level of wealth; foundation giving is highly-correlated to the performance of the stock market; corporate philanthropy is increasingly a component of firms' competitive strategy) before elaborating on the conclusions and providing an extensive bibliography. Although not providing an explicit overview of the independent (non-governmental) sector as a whole, the notes comment on the evolution of the sector and its changing reliance on private and public support. HKS Case Number 1444.0
This series of contextual essays provides an overview of the history and status of philanthropic giving in the United States. Drawing on federal tax-based data, reports of the National Commission on Philanthropy and Civic Renewal, the American Association of Fund-Raising Counsel and a wide variety of scholarly sources, the notes look broadly at overall philanthropic trends (share of national income devoted to philanthropy; major recipients of charitable donations; sources of donations) and at the giving patterns of the various sectors of the economy: individuals, corporations and foundations. Each note begins with specific conclusions (e.g. almost half of all philanthropy goes to religious institutions; the strongest predictor of giving is level of wealth; foundation giving is highly-correlated to the performance of the stock market; corporate philanthropy is increasingly a component of firms' competitive strategy) before elaborating on the conclusions and providing an extensive bibliography. Although not providing an explicit overview of the independent (non-governmental) sector as a whole, the notes comment on the evolution of the sector and its changing reliance on private and public support. HKS Case Number 1446.0
In 1995, the President of Chile proposed to the legislature several reforms designed to strengthen the agency that regulated the tariffs charged by Chile's water companies. Although a half dozen water companies were private, most of the water systems were still in public hands. The government wanted to reform the regulatory agency before it privatized the rest of the companies. HKS Case Number 1448.0
In 1992, Mayor Gabriel Garcia Romero confronted a situation all too familiar in developing countries-an inadequate and under capitalized water system. Only 28 percent of Cartagena's households had reliable drinking water. Thirty percent were not hooked-up to the system, and the remaining 42 percent had access, but their supply was frequently interrupted. Less than half the population had sewerage services, and there was no wastewater treatment-a problem with serious implications for public health. The water system had not been maintained adequately for more than a decade, and losses were estimated at 52 percent of the total supply. Only a percentage of the customers received bills, and many of these were never collected. Prices remained below cost, so even if the bills were collected, revenues would not have covered expenses. HKS Case Number 1482.0
In 1992, Mayor Gabriel Garcia Romero confronted a situation all too familiar in developing countries-an inadequate and under capitalized water system. Only 28 percent of Cartagena's households had reliable drinking water. Thirty percent were not hooked-up to the system, and the remaining 42 percent had access, but their supply was frequently interrupted. Less than half the population had sewerage services, and there was no wastewater treatment-a problem with serious implications for public health. The water system had not been maintained adequately for more than a decade, and losses were estimated at 52 percent of the total supply. Only a percentage of the customers received bills, and many of these were never collected. Prices remained below cost, so even if the bills were collected, revenues would not have covered expenses. HKS Case Number 1482.1
This case tells the story of McAfee Associates, which was the leader in anti-virus software. The case gives extensive background on John McAfee, the founder, as well as the anti-virus software industry as it emerged in the late 1980's and early 1990's. John McAfee realized the potential opportunity in protecting computers from viruses and created a small software package that would help solve the problem. He distributed the product primarily by shareware, giving the product out for free to individuals. However, corporate customers were required to pay for the software. With this, McAfee Associates grew to be a $5 million revenue business with 90% operating margin, and had strong prospects for continued rapid growth. John was approached by the CEO of Symantec, which wanted to purchase McAfee, with an attractive acquisition offer. At about the same time, he was approached by two VC firms, which wanted to invest $10 million for 50% of the business. Now, he had to decide which of the financial offers, if any, to take.
Although most companies confine their operations organizations to restricted, tactical roles, in some of the most successful firms operations has served as the foundation for--indeed, the driver behind--successful strategic attacks and defenses. This is most clearly seen in cases where small companies--although lacking the advantages of size, market position, and proprietary technology--take on big companies and in a relatively short time push their way to industry dominance. In such cases, the key to success often is an operations-based advantage. The peculiar nature of this advantage provides insight into the reasons many former industry leaders did not react more promptly and vigorously to such attacks, and why others, in contrast, were able to defend themselves successfully.
This article unbundles the relation between commitment and flexibility by distinguishing between firm-specific and usage-specific resources. This distinction turns out to be valuable because firm-specificity does not always imply (nor is it always implied by) usage-specificity. Firm-specific resources are more strategic than usage-specific resources. More broadly, the distinction between these two kinds of specificity helps explain why the tension between commitment and flexibility can easily be overdone: the two aren't always negative measures of each other.
Political demands for environmental improvement create obligations for managers that can conflict with shareholder value creation. While differentiating products along environmental lines is a conceptually straightforward way of reconciling these apparently conflicting demands, not all attempts to do so have succeeded. This article describes three requirements for successful environmental product differentiation: 1) firms must discover or create a willingness in consumers to pay for public goods; 2) they must overcome barriers to the dissemination of credible information about the environmental attributes of their products; and 3) they must defend themselves against imitation. More broadly, environmental strategy must be integrated with the overall strategy of the business. The appropriate environmental strategy depends, like the business's overall strategy, on the fundamental economics of the industry and the business's internal capabilities--basic constraints that have often been obscured in the academic debate about business and the environment.
This articles examines the core competencies of twelve leading multinational companies. It explores their competencies, how they were developed, and how they are shifting over time. Successful companies rely on three types of competencies: superior technological know-how, reliable processes, and close external relationships. Different approaches are needed to develop each type of competency. While these firms have historically relied on technological know-how and reliable processes, they are planning more close external relationships for the future. External relationships help these firms strengthen and extend their traditional competencies while responding to the demands of globalization, mass customization, enhanced quality, and rapid technological change.
This articles examines the main cultural differences and similarities between American managers and their Russian counterparts. It also explores the applicability of familiar American management concepts concerning leadership styles, motivation approaches, performance appraisal systems for strategic planning, and organizational configurations in the context of the Russian culture. Certain American management concepts--such as legitimate power-based leadership style, employee relations policies, gainsharing, appraisals based on work team performance, strategic improvising, and strategic alliances--can be successfully put into practice in Russia. Differences in managerial values between these two countries, however, require that the application of American management approaches in Russia be carried out patiently and systematically.
This is an MIT Sloan Management Review article. By sharing components and production processes across a platform of products, companies can develop differentiated products efficiently, make their manufacturing processes more flexible, and take market share away from competitors that develop only one product at a time. The platform approach also enables companies to manufacture products in high volumes that are tailored to meet the needs of individual customers. A platform is a collection of assets--components, processes, knowledge, people, and relationships--that a set of products share. The platform planning effort involves two key tasks. First, product planning, where marketing managers determine which market segments to enter, what the customers in each segment want, and what product attributes will appeal to those customers. Second, system-level designers decide which product architecture to use to deliver the different products while sharing parts and production steps across the products. Three key ideas underlie the platform planning process. First, customers care about distinctiveness, how closely the product meets their needs. At the same time, the cost of a firm's internal operations is driven by the level of parts held in common among a group of products. Second, given a particular product architecture, there is a trade-off between distinctiveness and commonality. Third, product architecture dictates the nature of this trade-off. By developing and aligning three tools--a product plan, a differentiation plan, and a commonality plan--managers can balance the need for distinctiveness with the need for commonality. The process must involve all key functions and be guided by top management.
Discusses a young MBA plant manager who is improving the operations of a small General Motors components plant in Fredericksburg, Virginia. At 29 years old, Joe Hinrichs is the youngest plant manager at GM, and in his new assignment, he is faced with the daunting challenge of designing and implementing significant manufacturing procedures that will dramatically improve the plant and remove it from its current unprofitable and inefficient state. Aided by the introduction of new carbon fiber technology that has revolutionized the plant's product (the torque converter clutch, a component of the automatic transmission of a car), Hinrichs hopes to keep the plant open by streamlining operations, reducing inventory, redesigning worker jobs, increasing worker commitment, and other improvements. During this process, he must deal with an unexpected union strike, equipment malfunctions, and other problems that threaten the success of the improvement process. He has, however, found unusual ways to overcome these barriers without eroding worker trust. At the end of the case, Hinrichs faces the serious dilemma of what to do about the broken 1,500-ton press, one of the most important machines in the production process. Three options are outlined, each with technical and managerial tradeoffs.
Features the challenges facing an entrant in the New Zealand telecommunications market during the period 1989-1994. Clear Communications Ltd. (CCL), a joint venture owned by Bell Canada, MCI, New Zealand Television Corp., and Todd Companies, begins offering long distance service in May 1991. The firm is dependent on access to the network of the incumbent, Telecom Corp. of New Zealand, to offer most of its services. This dependence proves to be a significant obstacle to CCL's expansion into the local business call market, particularly given New Zealand's unique "light-handed" regulatory system. Clear ultimately spends millions of dollars in a failed four-year lawsuit to obtain better terms of interconnection. In October 1994, CEO Andrew Makin must decide the future strategic direction of the firm.