This interview offers a deeper look inside Dell's highly publicized success and offers managers a model of how traditional relationships in a value chain can be reconceived in the Information Age. The individual pieces of Dell Computer's strategy--customer focus, supplier partnerships, mass customization, just-in-time manufacturing--may all be familiar. But Michael Dell's business insight about how to combine them is highly innovative: Technology is enabling coordination across company boundaries to achieve new levels of efficiency and productivity, as well as extraordinary returns to investors. In this HBR interview, Michael Dell describes to HBR editor-at-large, Joan Magretta, how his company is achieving "virtual integration" with its customers and suppliers. Direct relationships with customers create valuable information, which in turn allows the company to coordinate its entire value chain back through manufacturing to product design. Dell describes how his company has come to achieve this tight coordination without the "drag effect" of ownership.
Why do some employees perform poorly? Most managers would answer this question by ticking off a list that includes weak skills, insufficient experience, inability to prioritize assignments, or sometimes even a lack of motivation. In other words, most managers would contend that poor performance is the employee's fault. But is it? Not always, according to Jean-Francois Manzoni, assistant professor at INSEAD, and Jean-Louis Barsoux, research fellow at INSEAD. Their research with hundreds of executives strongly suggests that it is bosses themselves--albeit accidentally and with the best intentions--who are often responsible for an employee's sub-par achievement. They call this dynamic "The Set-Up-to-Fail Syndrome," and in this provocative look at what makes--and sustains--dysfunctional work relationships, the authors conclude with a detailed description of how to break out of the negative spiral that can drain both individuals and organizations of valuable productive energy.
Shrinking R&D budgets and shorter product life cycles mean investment dollars must be invested with precision if companies are going to stay on the cutting edge in their industries. For a pharmaceuticals company like SmithKline Beecham (SB), the problem is this: How do you make good decisions in a high-risk, technically complex business when the information you need to make those decisions comes largely from the project champions who are competing against one another for resources? Tom Keelin from Strategic Decisions Group and Paul Sharpe from SmithKline Beecham explain how they overhauled the resource allocation processes within the pharmaceutical development function at SB. In 1993, the company experimented with ways of depoliticizing the process and improving the quality of decision making. In most resource-allocation processes, project advocates develop a single plan of action and present it as the only viable approach. In SB's new process, the company found an effective way to get around the all-or-nothing thinking that only reinforces the project-champion culture. In another important departure from common practice, SB separated the discussion of project alternatives from their financial evaluations. The new process at SB has allowed the organization to spend less time arguing about how to value its R&D projects and more time figuring out how to make them more valuable. In the end, the company learned that by tackling the soft issues around resource allocation--such as information quality, credibility, and trust--it had also addressed the hard ones: how much to invest and where to invest it.
The executive director of the Asian Neighborhood Design (AND) attempts to quantify the potential financial and social return for investors in his nonprofit enterprise. AND seeks to raise $2.27 million. However, as a nonprofit organization, it cannot offer potential equity investors a share of future earnings, and it is not eligible for loans. The Roberts Enterprise Development Fund encourages AND to apply for a grant, but requires that the organization demonstrate that it is both operating efficiently and achieving its social goals. Using innovative tools including a true cost accounting framework and a social return on investment analysis, the director attempts to capture the fund's likely total return on investment. As the field of social enterprise continues to develop, such methods are increasingly important tools for managers and funders to measure real social and financial results.
Discusses the control mechanisms and contracts utilized by venture capitalists. The emphasis is on understanding potential conflicts of interest and how the contracts mitigate those conflicts.
Describes the marketing strategy of an entrepreneurial start-up engaged in electronic purchasing for large manufacturers. By creating an electronic bidding platform, the company has been able to cut down procurement costs by about 15%. The case question concerns how this company should now go to scale.
In the late 1940s, officials at the U.S. State Department began campaigning for the creation of an International Trade Organization (ITO). This new organization would oversee global negotiations on trade liberalization, foreign direct investment, cartels, and commodity agreements; and it would complement the IMF and the World Bank, both of which were founded at the Bretton Woods Conference in 1944 to address international financial flows. Together, the IMF, the World Bank, and the ITO would comprise a comprehensive system for the management of international economic affairs. As it turned out, however, the proposed ITO proved extremely controversial both within the United States and around the world. When President Truman finally sent the ITO Charter to Congress in 1949, lawmakers there had to decide whether to endorse this product of three years of intense international negotiations or simply to let it die an unceremonious death in Washington, D.C.
Three second-year students at the Harvard Business School decide to buy a company. The case focuses on their thoughts about an entrepreneurial career, their search process, and the evaluation of an Icedelights (an ice cream/cafe) franchise. This is a rewritten version of an earlier case.
Under the direction of President Museveni, much of the world has heaped praise on Uganda for transforming its economy from devastation to growth and managing the ethnic and racial strife that has divided the country in the past. Following a decade of reforms, Uganda is finally reaping some of the benefits brought by economic austerity. Indeed, Uganda presents a textbook case of IMF structural adjustment. President Museveni must now decide the best way in which to govern his country into the next century. Chief challenges include: how to diversify the export base and attract foreign investment; how to manage the burden imposed by external debt; and how to distribute scarce resources (balancing competing demands for investment in human capital, spending on social and economic infrastructure and health services, along with a whole host of other demands).
In 1996, Unocal Corp. joined forces with the French Total company to construct an ambitious natural gas pipeline from the Andaman Sea across the southern tip of Burma and into Thailand. At an estimated cost of $1.2 billion, the pipeline was designed to bring sorely needed energy supplies into both Thailand and Burma, and to serve as a linchpin for Unocal's expanding Asian strategy. Soon after the deal is launched, however, officials from Unocal find themselves entangled with far-sweeping political forces and activist groups that span national borders. Because of its involvement with the SLORC, Burma's military leadership, Unocal is being accused of complicity in a whole series of human rights abuses, including slavery and possible genocide. Chairman John Imle must decide how to respond to these accusations, and whether Unocal needs to rethink or restructure its operations in the face of growing international pressures.
Describes a recent Berkeley MBA's attempts to start a business aimed at corporate training via the Internet. Describes the very early efforts at finding an attorney, accountant, and financing, and the interrelationships among these choices.
In March 1997, the board chair of this small steel mill is pondering how to finance the growth of his firm: either with an initial public offering of equity or a private placement of 8 year senior notes with warrants. The task for the student is to sort out the comparative advantages and disadvantages of each alternative--including valuing the possible securities--and recommend a course of action.
The issue of how to price access to the Internet is addressed. To provide a basis for discussion of the effects of pricing that is not sensitive to volume, network externalities, and the strategic issues surrounding price wars in a short course on microeconomics
In April 1997, the president of Amway Japan (AJL, Tokyo, Japan), pondered how to reverse the first performance decline the company has experienced since entering the Japanese direct selling market in 1979. Established as the tenth overseas subsidiary of Amway Corp. of Ada, Michigan, AJL had grown to become the most successful company with 1996 sales of Y212 billion ($1.9 billion), accounting for 30% of Amway's worldwide sales. Having succeeded in doubling AJL's sales during the five years of his presidency, the AJL president now needed to develop a strategy not only for rebuilding growth in the second half of FY 1997 but also for achieving AJL's long-term goal of sales of Y300 billion by FY 2000. AJL faced the following issues in 1997: 1) fluctuating distributor motivation, 2) growing dissatisfaction with Amway products, 3) increasing difficulty in controlling the distributor network, and 4) a changing market environment. AJL could enhance its sales growth by boosting sponsoring, retention, and/or productivity of its distributor membership. Strategic options for AJL included: 1) penetration growth, 2) productivity growth, or 3) both. The AJL president needed to come up with a clear strategic design based on a thorough analysis of the pros and cons of each strategic choice.