Top level managers know that conflict over issues is natural and even necessary. Management teams that challenge one another's thinking develop a more complete understanding of their choices, create a richer range of options, and make better decisions. But the challenge--familiar to anyone who has ever been part of a management team--is to keep constructive conflict over issues from degenerating into interpersonal conflict. From their research on the interplay of conflict, politics, and speed in the decision-making process of management teams, the authors have distilled a set of tactics characteristic of high-performing teams. These tactics work because they keep conflict focused on issues; foster collaborative, rather than competitive, relations among team members; and create a sense of fairness in the decision-making process.
Many global companies believe they have a moral duty to respond to the world's problems but are unsure how to do that and still pursue a reasonable profit for their shareholders. Ryuzaburo Kaku, honorary chairman of Canon, the Japanese technology company, suggests that companies consider kyosei, a business credo that he defines as a "spirit of cooperation" in which individuals and organizations work together for the common good. Kyosei, Kaku claims, has helped Canon make a significant and positive impact on many world problems as the company has grown to become one of the world's preeminent innovators and manufacturers of technology.
Core competencies and focus are now the mantras of corporate strategists in Western economies. But while managers in the West have dismantled many conglomerates assembled in the 1960s and 1970s, the large, diversified business group remains the dominant form of enterprise throughout many emerging markets. As those markets open up to global competition, consultants and foreign investors are increasingly pressuring groups to conform to Western practice by scaling back the scope of their business activities. Already a number of executives have decided to break up their groups in order to show that they are focusing on only a few core businesses. There are reasons to worry about this trend, say the authors. Focus is good advice in New York or London, but something important gets lost in translation when that advice is given to groups in emerging markets.
Can the U.S. economy grow much faster than the two-point-something percent it has in recent years? Standard economic analysis suggests that it cannot. But many influential business leaders and journalists--and even a few economists--have embraced a radical economic theory that argues that the old speed limits to growth are obsolete. According to this so-called new paradigm, rapid technological change means that the economy can grow much faster than it used to; global competition means that a booming economy will not produce high inflation. Many people in the business community take the new doctrine very seriously, notes MIT economist Paul Krugman. Unfortunately, he says, it is riddled with gaping conceptual and empirical holes. Krugman lays out in clear terms the macroeconomic principles that explain how markets interact and why there are limits on growth. We would all like the U.S. economy to grow faster than it has, says Krugman, but all the evidence suggests that it cannot.
Innovate or fall behind: The competitive imperative for virtually all businesses today is that simple. Responding to that command is difficult, however, because innovation takes place when different ideas, perceptions, and ways of processing and judging information collide. And it often requires collaboration among players who see the world differently. As a result, the conflict that should take place constructively among ideas all too often ends up taking place unproductively among people. Disputes become personal, and the creative process breaks down. The manager successful at fostering innovation figures out how to get different approaches to grate against one another in a productive process the authors call creative abrasion. Managers who want to encourage innovation need to examine what they do to promote or inhibit creative abrasion.
Most profitable strategies are built on differentiation: offering customers something they value that competitors don't have. But most companies concentrate only on their products or services. In fact, a company can differentiate itself at every point where it comes in contact with its customers--from the moment customers realize they need a product to service to the time when they dispose of it. The authors believe that if companies open up their thinking to their customers' entire experience with a product or service--the consumption chain--they can uncover opportunities to position their offerings in ways that neither they nor their competitors thought possible. The authors show how even a mundane product such as candles can be successfully differentiated. By analyzing its customers' experiences and exploring various options, Blyth Industries, for example, has grown from a $2 million U.S. candle manufacturer into a global candle and accessory business with nearly $500 million in sales and a market value of $1.2 billion.
Every seasoned investor knows that detailed financial projections for a new company are an act of imagination. Nevertheless, most business plans pour far too much ink on the numbers--and far too little on the information that really matters. Why? William Sahlman suggests that a great business plan is one that focuses on a series of questions. These questions relate to the four factors critical to the success of every new venture: the people, the opportunity, the context, and the possibilities for both risk and reward. A great business plan is not easy to compose, Sahlman acknowledges, largely because most entrepreneurs are wild-eyed optimists. But one that asks the right questions is a powerful tool. A better deal, not to mention a better shot at success, awaits entrepreneurs who use it.
In the two decades following World War II, U.S. productivity grew at an annual rate of 3%. But since the beginning of the 1970s, it has grown at only about 1%. What is preventing a productivity revival in the U.S. economy? Clearly not the manufacturing sector, which has rebounded since the early 1980s. The service sector, on the other hand, has seen productivity growth rates stagnate during the same period. Why? Michael Van Biema and Bruce Greenwald believe that the usual explanations are incomplete and have resulted in some serious misconceptions. The authors point out the limitations of those explanations and offer one of their own. They lay the blame in two places: the ineffectiveness of many service-sector managers at improving productivity and the inherent complexity of the sector itself.
As the traditional system of health care in the United States gives way to a regime run increasingly by the private sector, a powerful force is emerging: the patient. According to Harvard Business School professor Regina Herzlinger, health care is much like other service industries. Providers that hope to survive must cater to increasingly demanding and well-educated consumers. In a review of Herzlinger's book Market-Driven Health Care: Who Wins, Who Loses in the Transformation of America's Largest Service Industry, Alexandra Wyke, managing editor at the Economist Intelligence Unit, argues that the path to consumerism in medicine will be longer and bumpier than Herzlinger suggests.
George Zimmer, CEO of the Men's Wearhouse, is considering what has made the firm so successful; what, if anything, it should do differently to continue to succeed; and how to manage its growth and culture as the firm expands in the very competitive men's tailored clothing market. Retailing is the largest industry in the United States. Most retailing firms have traditionally been staffed with poorly paid, poorly trained, part-time help, and often experience tremendous turnover. Founded in 1973 in Houston, the Men's Wearhouse now has over 300 stores and is adding stores at the rate of 50 per year as it extends its geographic reach. This case provides information on the founder's beliefs, the firm's financial performance, the company's management practices, and detailed information on its various training activities.
A thriving semiconductor industry has been created in Taiwan over the course of the past two decades by the use of advanced organizational techniques of technology leverage and accelerated technology diffusion. By the mid-1990s, the industry had reached a level of output that placed it behind only the United States, Japan, and Korea. Almost all of Taiwan's semiconductor industry is located in the Hsinchu Science-Based Industry Park, which was created in emulation of California's Stanford Research Park, but with more direct government involvement. This article explores the extent to which this emergent Silicon Valley in Taiwan shares the "industrial ecology" that has powered innovation in California and examines the extent to which the Taiwan industry suffers from weaknesses attributed to its rapid creation through technology leverage.
Honda of America has developed a comprehensive approach to teaching the principles of lean production to its suppliers, in which Honda and the supplier work intensively on narrowly targeted improvement projects in the supplier's plant. Called BP (for "Best Process," "Best Performance," "Best Practice"), this approach has been quite successful in enhancing supplier performance; suppliers participating in the program in 1994 averaged productivity gains of 50% on lines reengineered by BP. However, Honda has found there is high variation in the extent to which suppliers were able to transfer the lessons taught beyond the line or plant where the BP intervention occurred. Drawing on case studies of three of Honda's U.S. suppliers, this article explores how the BP process interacts with the broader relationship between customer and supplier in terms of organizational learning, technology transfer, and the transplantation of Japanese management practices to the United States. These cases illustrate the dynamics of the learning process and the complex relationship that emerges between the "teacher" (provider) of valuable knowledge and the "student" (recipient).
Elliot Lebowitz, president and CEO of BioTransplant, must decide on a strategy for this young biotechnology start-up. Among the issues to be resolved are focus of research and search for strategic alliance partners.
Pascal Brandys, founder and CEO of Genset, must decide whether to take this young biotechnology company public. If so, should he do a dual offering in both France and the U.S.? The case also explores the business models in genomics research.
Concerns a fictitious airline company and examines the moral hazard situation that results within a firm. Provides an opportunity to discuss corporate governance and contracting under uncertainty.
First of a two-part case on the development and use of a Balanced Scorecard (BSC) at Mobil's US Marketing and Refining Division. Split from the original (A) case to give students an opportunity to suggest objectives and measures for the division's initial BSC, without seeing the actual choices made by Mobil's managers. Describes how the CEO of the marketing and refining division of a major oil company is in the midst of implementing a profit turnaround. He has transformed a strongly centralized, functionally-organized division into 17 independent business units and 14 internal service companies. The division has also launched a new, market-segmented strategy aimed at high-end buyers. The CEO recognizes, however, that the new organization and strategy require a new measurement system. He turns to the BSC because of its ability to link measurement to strategy, and to help the new profit-center managers develop customized strategies for their local responsibilities. This case describes the development process of the initial divisional BSC, and the formulation of objectives and measures for the financial and learning and growth perspectives.
The manager of Northern Rivers Community and Business Development, must decide whether he will grant a $100,000 loan to the owners of Three Star Food Service Ltd. The owners of Three Star are contemplating the purchase of Crystal Fruit Sales. Crystal's past financial performance, the business conditions, the character of the new owners, capacity to repay and collateral issues must be considered.
Defines types of costs--current, sunk, opportunity, relevant, differential--and their use in management and management decision making. Contrasts single-period and multiple-period cost analysis.