Faced with the costs of building customer information systems, some managers question whether or not marketing technology can achieve competitive miracles. But the author believes that retailers and consumer goods companies can't afford to ignore the new economies of scale the best marketing information systems offer. Today's sophisticated technologies help companies sort massive amounts of information to target small groups of highly responsive customers almost automatically. The great Atlantic and Pacific Tea Co. (A&P), for example, is using point-of-sale scanning and frequent-shopper programs to build a sophisticated customer database. The mail-order company Fingerhut bases every catalog mailing and promotion on statistically determined predictions about customer behavior. And R.R. Donnelley and Sons, the world's largest printer, is using leading-edge technology to offer customers everything from consumer and life-style data to customized individual publications. Through such technology, big companies can own niches the way smaller competitors do. But it's not just a matter of size. Large companies without the vision to develop their own marketing IT will be left behind.
Nine years ago, the author bought a small manufacturing company with marginal profits, poor union relations, nit-picking work rules, and high labor costs. Today he has flexible work rules, lower relative labor costs, fewer benefits, excellent union relations, and superior profitability. How did he do it? The simple answer is profit sharing and empowerment. The process began when Frey cut wages, vacations, and holidays. The ensuing strike failed, leaving him with lower costs but an angry, embittered work force. After a year of bickering, Frey decided he wanted to implement profit sharing. To get his employees to grasp the cause-and-effect relationship between the way they worked and the profits they shared, he used every means he could muster. He refused contract wage hikes but shared 30% of pretax profits. He opened his books to the union. He offered training in new skills. He hired new managers. He learned to listen. For workers, profit sharing is now a 36% increment to income, while productivity has risen by almost a third. Best of all, the workers themselves now push for ongoing change and increasing responsibility.
Rather than follow the make-and-sell strategies of industrial-age giants, today's successful companies focus on sensing and responding to rapidly changing customer needs. In order to survive in this sense-and-respond world, big companies need to consider a strategy called "managing by wire." In aviation, flying by wire means using computer systems to augment a pilot's ability to assimilate and react to rapidly changing environmental information. In a similar way, managing by wire is the capacity to run a business by managing its informational representation. Coherent corporate behavior needs more than blockbuster applications and network connections; it must be governed by a coherent information model that codifies "how we do things around here," and "how we change how we do things around here." This article describes managing by wire at Mrs. Fields Cookies, Brooklyn Union Gas, and a financial services organization that the authors call Globe Insurance.
George Stanton helped build Sannas Pharmaceuticals in his six years there, and when he is promoted to vice president and director of risk management, he thinks he is set for life. But then a new president is appointed, and George can't tolerate his shady practices. Atwater-Jordan looks like a better company, and George is impressed with Joan, his potential new boss. So he takes the job, even though it means moving his family and asking his wife to change her job too. But within a few months, Joan's flaws start showing up: she does all the talking at meetings; she doesn't give George information he needs; and she wants to control everything he does. Other people at Atwater call her "Phony Joanie," but when George discusses the problem with the company president, Harold doesn't help. "I'm sure you can handle her and keep her off other people's backs," he tells George. Facing a new year's resolution to try to solve the Joan problem, George doesn't know where to start. He wonders if there's something wrong with him or if he's just having bad luck. HRM and relocation experts give their views.
In an earlier, groundbreaking article, Balanced Scorecard -- Measures That Drive Performance, the authors proposed a new measurement system that provided managers with a comprehensive framework to translate a company's strategic objectives into a coherent set of performance measures. Now the authors show how several companies are putting the balanced scorecard to work. Effective measurement, the authors point out, must be an integral part of the management process. Much more than a measurement exercise, the balanced scorecard is a management system that can motivate breakthrough improvements in such critical areas as product, process, customer, and market development. Several examples--Rockwater, Apple Computer, and Advanced Micro Devices--illustrate how the scorecard combines measurement and management in different companies. From the experiences of these companies and others, the authors have found that the balanced scorecard is most successful when it is used to drive the process of change.
It is difficult to overstate the extent to which most managers and the people who advise them believe in the redemptive power of rewards. But more striking is the rarely examined belief that people will do a better job if they have been promised some sort of incentive. According to numerous studies in laboratories, workplaces, classrooms, and other settings, rewards typically undermine the very processes they are intended to enhance. The findings suggest that the failure of a given incentive program is due less to a glitch in that program than to the inadequacy of the psychological assumptions that ground all such plans. Research suggests that, by and large, rewards succeed at securing one thing only: temporary compliance. Kohn explains why rewards fail in a six-point framework: rewards do not motivate; they punish; they rupture relationships; they ignore reasons; they discourage risk taking; and finally, they undermine interest. Any manager thinking about a new incentive program--or attached to an old one--would do well to consider Kohn's argument. According to Kohn, incentives (or bribes) simply can't work in the workplace.
Companies searching for a way to navigate the changes in Mexico would do well to study Vitro, Sociedad Anonima, an 84-year-old Mexican company with roughly $3 billion in sales and 44,000 employees. CEO Ernesto Martens-Rebolledo is transforming Vitro from a Mexican company to an international company, and from a complacent competitor to an aggressive one. As part of this transformation, Martens has made some controversial decisions. In 1989, he led the only hostile takeover of a U.S. company by a Mexican company when Vitro took over the Anchor Glass Container Corp. And in 1992, he laid off 3,000 workers - a first for a company that used to claim that it wasn't giving workers a job but a way of life. Through its proximity to the largest market in the world and its joint ventures with Ford, Corning, Samsonite, and Whirlpool, Vitro is well positioned to take advantage of the emerging North American market. But Vitro faces many challenges. For Martens, the most important and most difficult challenge is to convince people that they can no longer be complacent in the face of world competition.
Scores of companies have been trying to become mass customizers: businesses that produce individually customized goods or services at the cost of standardized, mass-produced goods. Mass customization entails breaking up the tightly integrated networks that form the backbone of the continuous improvement organization and creating a loosely linked collection of autonomous modules. Each module performs a different task and is perpetually reconfigured in response to customer demands. Automation typically is the key to linking these modules so that they can come together quickly and efficiently. Leaders of mass-customization organizations never know exactly what customers will ask for next. All they can do is strive to be ever more prepared to meet the next request. To that end, mass customizers are forever changing and expanding their range of capabilities.
When it comes to marketing, concentrating on the four Ps - product development, price determination, place of distribution, and promotion - no longer ensures competitiveness. Relying on short-term thinking, many companies base their marketing budgets on annual sales forecasts and then demand immediate results based on dollars spent. These companies are confusing cause and effect. They don't realize that developing a "quality" customer base - loyal customers who yield high profits - can take many years. And quality is what matters for long-term success. Companies would do better treating marketing expenditures the same way they treat capital outlays: as investments that drive revenue over time. Many industry giants - Ivory Soap, Heinz Tomato Ketchup, and Ritz Crackers, to name a few - got that way through cumulative investment of years and even decades. Newcomers can leverage to beat the odds, however, and, with a shrewd strategy, turbocharge their returns.
A recently appointed store manager at a wholesale food company must make some decisions regarding management and leadership. The store is losing $10,000 per week, sales are spiraling downward, the key people in the company do not want him there and the employee morale is terrible. The supplemental (B) case outlines the change the store manager made.
The manager outlines what he did to change things at his wholesale company. The Food Terminal (A) case 9A92J008, describes the situation. His comments include an outline of his action plan, plus some data to support the improvements.
Filene's Basement is in the process of deciding where, and if, to locate two new stores in its new Chicago area of operations. The existing Chicago area stores have been performing well, however, management is concerned with over saturation of the market. At the time of the case, Filene's Basement has 49 stores in operation.
Describes the ways in which managers communicate the need to change, specifically the way in which they use vision, crisis, and transition as rhetorical strategies to mobilize change. Also discusses strategies used by those trying to resist change, setting up what may be considered a rhetorical contest that determines whether change is embraced or not.
Provides a 7S framework to complement the McKinsey 7S framework. Focuses on some of the critical choices that must be made in implementing change--Strategic Intent, Substance, Scale, Scope, Speed, Sequence, and Style. Overall, the note argues that these choices must be made so that they are coherent and robust.
Describes the strengths and weaknesses of three generic strategies for implementing change--programmatic change, discontinuous change, and emergent change.
Prochnik was a large state-owned clothing manufacturer located in the textile-production-intensive region of Lodz, Poland. In the early months of economic reform, Prochnik was one of the first five state enterprises to be privatized through initial public offerings and traded on the Warsaw Stock Exchange. The case describes the array of changes necessary to transform Prochnik into an internationally competitive private enterprise.