Reports EMC's decision concerning the second shareholder class-action suit and its implications. Legislative efforts to reform securities litigation are also discussed.
Costly "wars of attrition" are common. Examples include: 1) the battle over the business of market-making in British government bonds that took place following the 1986 deregulation of the London financial markets, and 2) the battle that took place in the late 1980s between British Satellite Broadcasting and Sky Television over the U.K. satellite broadcasting business. The case explores what can happen when two companies find themselves engaged in a war of attrition. Analysis shows that given any length of time whatsoever, it is possible to rationalize a strategy of fighting for precisely that length of time. This provides a reason why wars of attrition often lead to long fights and large cumulative losses for the players involved. There is an irreducible "fog of war" that makes the war of attrition a very dangerous game to play.
Today's managers feel that a once clear separation between public and private sectors has broken down. Specifically, managers are spending heavily on education and training and wondering if this is their responsibility. In answering this question, the author looks back to Adam Smith's "The Wealth of Nations" and industrial capitalism's first social compact. As work became increasingly simplified under what Smith called the division of labor, the level of education that management required of its workforce declined. According to Smith, business managers were only responsible for providing the most rudimentary elements of education. Avishai goes on to examine business's social contract in a competitive environment that has superseded the division of labor. In the foreseeable future, virtually every business will focus on continuous learning and will therefore have both an obligation to support teaching and an opportunity to profit from it.
A senior executive's instinctive capacity to empathize with and gain insights from customers is the single most important skill he or she can use to direct a company's strategic posture. Yet most top managers at industrial companies consider customer contact the bailiwick of sales and marketing staff. And even if they do believe market focus is a priority, most retain only limited contact with consumers as their organizations grow, relying instead on subordinates' reports to define and sense the market for them. Such approaches are dangerous. First, most industrials define "customer" as the next entity in the distribution channel and requisition reports accordingly. But to get a true sense of the market, senior executives should consider the wants and needs of every step in the distribution chain. Another danger is that senior executives at industrial concerns often confuse information with knowledge. Managers faced with too much general market data tend to average results, blur boundaries, and miss distinct, segmented market opportunities. Finally, unless senior executives make market focus a strategic priority, they will not be motivated to initiate organizational change.
Virtually all manufacturers aspire to "world-class" status. But even those who attain it will only be as good as their toughest competitors. This explains why so many companies that have adopted improvement programs like just-in-time, lean production, and total quality management lament that they never seem to get ahead. The problem is that managers tend to view such programs as solutions to specific problems, like high inventories or products that are difficult to manufacture. As such, they are not manufacturing strategies. In the turbulent 1990s, the goal of competitive strategy should be strategic flexibility. A company must be able to switch gears relatively quickly and with minimal resources. A true manufacturing strategy is a plan for developing the skills and capabilities that will enable a company to do certain things better than competitors over the long haul.
The continued vitality of the most successful U.S. and European pharmaceutical companies in the face of accelerating scientific and technological change holds valuable lessons for managers in all industries trying to respond to turbulent times. The pharmaceutical industry faces some serious challenges in the future, most notably, the proposed reform of the U.S. health care system. Yet its success in the crucial area of research can serve as a benchmark for companies seeking to become more innovative in the overloaded environment of the information age. New research conducted by Rebecca Henderson of MIT and Iain Cockburn of the University of British Columbia suggests that the longevity of pharmaceutical companies attests to a unique managerial competency: an ability to foster a high level of specialized knowledge within an organization, while preventing that information from fixing the company in the past, unable to respond to an ever-changing environment.
Risk, complexity, and uncertainty currently define the business environment of the 1990s. In this interview, Merck CFO Judy Lewent talks about her scientific approach to finance, one that is both long term in nature and eminently tied to Merck's overall strategy. At 44 years of age, Lewent ranks among the most powerful women in corporate America and is the only woman to hold the title of CFO at a major corporation.
Strategic planning has fallen from the pedestal it occupied when it came on the scene in the mid-1960s. Strategic planning failed because it is not the same as strategic thinking. Planning is about analysis--about breaking a goal into steps, formalizing those steps, and articulating the expected consequences. Strategic thinking, in contrast, is about synthesis. It involves intuition and creativity. The outcome of strategic thinking is an integrated perspective, a not-too-precisely articulated vision of direction that must be free to appear at any time and at any place in the organization.
In this fictional case study, Diane Bryant, who is pregnant, is up for a significant promotion at Hunter Peripherals, a director's position overseeing environmental testing and product compliance. But Jim Serra, vice president of engineering at Hunter, is concerned that Diane won't be able to handle the combined challenges of her new job and new baby. Hunter is planning a critical product launch in six months, and Diane is due in four months. Jim isn't sure he can rely on Diane to put in the time necessary to ensure the product's successful entry into the market. Jim must make a recommendation to the executive committee, either supporting Diane's bid for the job or not. Six commentators offer their solutions to Jim's dilemma and discuss related family and work issues.
In the 1980s, U.S. business experienced an explosion of new managerial concepts unparalleled in previous decades. Many American managers felt that the emergence of new managerial ideas signaled a rejuvenation of U.S. business. But their thinking doesn't jibe with the facts. American managers did not take charge in the 1980s. Instead, they abdicated their responsibility to a burgeoning industry of management professionals. If business leaders want to reverse this trend, they must reclaim management responsibility--and pragmatism is the place to start. Pragmatic managers are sensitive to their company's context and open to uncertainty. They focus on outcomes and are willing to make do. Pragmatic managers also avoid three common pitfalls, the "let's do it better this time" syndrome and the "flavor of the month" and "let's go for it all" approaches.
Institutional investors, who now own a majority of the voting stock of publicly traded U.S. companies, have an influence on the way these companies are run. And given their influence, institutions are under increasing pressure to become activist shareholders. But institutional investors are not interested in the day-to-day management of any portfolio company; their goal is to achieve their clients' financial objectives. To decide whether and when to become active, an institutional investor compares the expected costs of a course of action, from a proxy fight to an informal discussion with management, with the expected benefits, which are difficult both to predict and to measure. If corporate executives understood what motivates the decision making of institutional investors, they would realize that institutions are not out to take control of U.S. corporations or to lobby for the German-Japanese model of intense institutional involvement. Given the rigors of the cost-benefit test, activism turns out to be the best strategy in very few cases.
Ricardo Semler is a Brazilian industrialist whose company, Semco, manufactures marine equipment, food-service machinery, and other highly differentiated products. Semco has long practiced unusual but successful management innovations, but when the Brazilian economy took a turn downward in 1990, empowerment, profit sharing, self-set salaries, and other policies were no longer enough to ensure survival. The only solution was to cut permanent staff and contract out more work. But instead of contracting it to strangers, Semler gave the contracts to his own workers, setting them up in business with generous severance settlements and an offer to lease them Semco's equipment, on- or off-site, and to defer lease payments for two years. The transition was painful, but only one satellite has failed, while most ex- and semi-employees do very well with ad hoc compensation systems.
In the late 1980s Howard Schultz led the Starbuck's Coffee Co. to explosive growth, transforming a small whole-bean coffee company into a national retail power. Starbuck's success hinged on its reputation for quality and personal service. Schultz feared that the company's rapid expansion, plus the retail industry's high turnover and reliance on part-time workers, were threats to Starbuck's competitive edge. How could Schultz reduce turnover and encourage loyalty and enthusiasm among his employees?
Facing competitive pressure from local health care suppliers and a shift in patient demand, the hospital's executive management team develops a strategic plan to reposition the hospital, including investment in new technology and upgraded facilities to attract leading-edge physicians and nursing staff. As part of this plan, they hire design consultants to create a new corporate identity for the hospital. This case examines this complex project, focusing on the relationship between marketing and design as they work through the renaming of the hospital, the creation of a new identity to satisfy the various publics served by the hospital, and implementation of a communications plan.
This case examines the design of Apple's first notebook computer in a context of extreme time-to-market pressures that challenge Apple's "time-to-perfection" culture and functional organizational structure. Its focus is on industrial design (ID), user testing, and mechanical design interaction in creating design alternatives, identifying user-centered themes that bring coherence to the design. The examines tensions between diverse concepts of product, competing priorities, and tradeoffs between design perfection and time-to-market. Holistic approach of ID versus incremental approach of other groups is highlighted.
Within its first two years, Saturn created one of the strongest automobile brands. This article explains how and why General Motors (GM) was able to accomplish this unique feat. It involved creating a world-class product, developing a team-oriented organization outside the GM fold, selling the company not the car, creating a new retailing strategy and relationship with the customer, and implementing a consistent communication effort. Ironically, Saturn's success raises difficult strategic issues as to its future management and its role in the future of GM.
The Gulf War-the US led effort to oust Iraq's armed forces from neighboring, oil-rich Kuwait-may be best remembered for the sheer effectiveness of the tactics and power which achieved the US military objectives in short order. But between the time of the Iraqi invasion of Kuwait and the subsequent US-led counter-offensive, there ensued a series of delicate negotiations through which the Bush administration put together the political building blocks which allowed Operation Desert Storm to commence. This case is the first history focused specifically on the details and dynamics of those negotiations-with regional Arab powers, members of the UN Security Council and key members of Congress-and the variety of tactics which were employed. The case is based on original interviews with a number of key players, including then-Secretary of Defense Richard Cheney, US Ambassador to the United Nations Thomas Pickering, and National Security Advisor Brent Scowcroft. It is part of a series about US military interventions and negotiations against a backdrop of military threats. All are useful for those interested in negotiations theory, diplomacy and the politics of military interventions. See also Carrots, Sticks, and Question Marks: Negotiating the North Korean Nuclear Crisis (C18-95-1297.0 and 1298.0; and A `Seamless' Transition: United States and United Nations Operations in Somalia, 1992-1993 (C16-96-1324.0 and 1325.0). HKS Case Number 1264.0