Co-founders Julie Rice and Elizabeth Cutler have grown SoulCycle from a business idea in 2006 to a major presence among urban boutique fitness studios in 2015. In March 2015, fitness company Equinox approaches them with an offer to buy them out. Evaluating the offer requires an assessment of market or industry attractiveness and of SoulCycle's (potential) competitive advantage.
To transform IBM for the next technology wave, Ginni Rometty, who became CEO in 2012, led divestment of declining businesses, made acquisitions in digital innovation and cloud computing, formed partnerships with former competitors such as Apple and tech startups, and invested in internally developed cognitive computing/AI platform Watson, a big bet directed at applications for healthcare, education, and cybersecurity. Revenues declined, criticism grew, and challenges of change remained. Watson businesses were new, unproven, and required change in nearly every aspect of legacy operations and culture. To increase speed and agility, Rometty used methods such as online Think Academy, design thinking, and startup contests. In mid-2016, questions remained about the pace and magnitude of change, the scale-up and profitability of Watson, and Rometty's leadership of change. What was left to do?
In late 2016, Bridj was expanding its digital platform to help address urban mobility problems faced by cities across the country and the world. Its founder and CEO, Matt George, weighed up several possible strategies for growth as he aimed to responsibly build the company. George continued to engage with key stakeholders, and had decided to work in partnerships with Kansas City and Ford to expand Bridj's reach to the midwest. This B case on Bridj allows for a discussion of the company's new options given its public-private partnership with Kansas City, and provides additional examples of how George's strategy to engage with key stakeholders has helped Bridj to grow.
L'Itineraire Community Group was a not-for-profit organization located in Montreal, Quebec. It published a French-language magazine that was sold by homeless and socially marginalized people in the city. The group's management committee was examining ways of raising additional funds because of the reduction in contributions from traditional sources such as government subsidies. Options included targeting the magazine to the Anglophone and immigrant communities in Montreal, targeting regions outside of Montreal, and producing a digital version of the magazine. The digital option had the additional constraint that the vendors of the magazine, the homeless and socially marginalized, would not be involved in selling. How should the organization deal with this issue?
This case examines the October 2015 initial public offering pricing decision for legendary Italian sports car company Ferrari by Fiat Chrysler management. Students are invited to model the value of Ferrari in light of Ferrari CEO Sergio Marchionne's interest in expanding production despite the company's long standing tradition of severely limiting production strategy to maintain an exclusive brand image. The case is designed to showcase corporate valuation using discounted cash flow and peer-company market multiples for a company that exists in two sectors: automotive and luxury goods.
Elizabeth Mok was the second born and the only daughter in the fourth generation of the Lee family. She was also the only one of five siblings who did not own shares in the family business, the world-renowned sauce maker Lee Kum Kee, headquartered in Hong Kong. For Elizabeth, it seemed natural not to own shares, as she had high respect for the traditional approach to succession planning, where females did not inherit a family business. Besides, she believed her brothers worked hard to build the firm's international reputation and therefore deserved the shares more than she did. Elizabeth was once again asked by her family to reconsider her decision not to own shares. This time, she could sense their determination to change the state of things.
By January 2017, Paytm, a mobile payments company that started in 2010, became India's largest mobile payments platform with over 142 million users and a $5 billion valuation. Could Paytm become the $100 billion company its founder Vijay Shekhar Sharma envisioned it to be?
A few months after launching a new fitness technology product, the small staff of New York startup Classtivity gathers on a Saturday in April 2013 to take stock. With one successful pivot under their belt, Classtivity is finally generating revenue and enthusiasm among customers. But cofounder and CEO Payal Kadakia has some doubts. There are signs that customers love the offering, but studios are less enthusiastic. Efforts to get customers to return to the studios after their monthly packs expire have largely failed. Kadakia must decide, preserve the product or pivot to a new business model?
In early 2016, David Sin, founder of the Singapore-based private equity group SIN Capital and chairman of its primary holding, Fullerton Health, was deeply involved in preparations for taking Fullerton public on the Singapore stock exchange. Three years after SIN Capital had invested in Fullerton, a provider of enterprise health management, and two years ahead of the original plan, it had attained a valuation of over S$1 billion. Listing the company would provide a number of important benefits as the management team and the investors expanded the operation throughout South Asia. This case describes the benefits and drawbacks of Fullerton's planned IPO, along with the strategy that had propelled its impressive growth. It also presents David Sin's vision for SIN Capital as a different type of private equity firm.
Medical errors both in the U.S. and worldwide occur at alarming rates. In the U.S. medical errors were the third leading cause of death. Southwick experienced the consequences of preventable medical errors firsthand. As a physician and a professor, he researched and wrote about the causes and solutions for medical errors over the years. Southwick also launched pilot programs applying different quality improvement frameworks from other fields to medicine. Although the results were positive, he encountered resistance from many physicians. To build more skills, Southwick became an Advanced Leadership Fellow in 2010 and a Senior Advanced Leadership Fellow in 2011. He used his time at Harvard to develop solutions that would address the root causes of medical errors. The complexities in healthcare and the entrenched cultural norms presented strong barriers to creating change. The case explores Southwick's efforts in getting medical professionals to work collaboratively, communicate effectively, and create a new sustainable culture that improves healthcare outcomes. Southwick's experience raises the question of how one person can best make a difference in a large, complex, entrenched system.
In May 2012, the director of human resources at Bharat Petroleum Corporation Limited was involved in negotiating a long-term collective agreement between management and the unions at the large public-sector oil corporation in India. The negotiations had begun in 2009 and were stalled largely because of wage issues. Due to time-bound promotions and open-ended pay ranges, workers’ salaries had spiralled out of control. When economic conditions changed from an administered price mechanism with government subsidies to one in which the corporation was expected to compete with national and multinational private-sector companies, the issue of high operating costs had to be addressed. After 13 rounds of discussions, there was still no agreement. The management team needed to decide which of the issues originally identified were essential for resolution and which were only desirable. The team also had to decide how to approach the negotiation in order to secure agreement from the unions.
Decision-making is one of the few variables that crosses all business functions, affects all companies, and leads to success or failure wherever it is used. However, decision-making is not a science: it’s highly subjective and susceptible to cognitive biases. In an organization, cognitive bias works on individual and group levels, influencing decision-making and outcomes. The results are often errors or bad choices, such as Lehman Brothers’s excessive risk-taking, Toyota’s inadequate response to quality problems, and BP’s decisions to skimp on safety practices. Some errors are unavoidable, but systemic errors can be prevented, largely by addressing the propensity for bias. Types of bias can include overconfidence, confirmation bias, analogy bias, availability bias, and herd mentality (groupthink). While completely removing bias is probably impossible, avoiding systemic errors is possible by taking the following steps: 1) force awareness of the potential for bias; 2) conduct a frank self-examination; 3) critically evaluate the knowledge the organization uses to make decisions; 4) diagnose the cultural codes of groups; 5) reframe problems; and 6) actively seek out contrary viewpoints. However you deal with cognitive bias, begin with acknowledgement that it exists in all organizations and teams. To prevent bias from leading to poor organizational decision-making, inputs for decisions should be tested for quality just like inputs in manufacturing are tested for quality.
For many companies, peak condition is sustained through digital fitness—an ability to invest in and innovate using digital technologies. However, Accenture research has found that many companies are not actively building their digital muscles, even when they are in a strong financial position. When we examined the financial and digital performance of over 300 global companies, we found one category of business that was surprisingly strong on financial performance, especially profitability, but comparatively weak on digital performance. We call this group Business Leaders. Business Leaders have maintained financial strength thanks to their legacy business but, if not renewed over time, the strong legacy of today can become a challenge tomorrow. Accenture research shows that Business Leaders underperform on four broad company activities: a) digital strategy planning and execution, b) digital production and delivery, c) digital customer experience management, and d) digital corporate culture and operations. As a result, Business Leaders need to: 1) get motivated to excel at serial investments, 2) renew their business model, but not alone, and 3) make cultural disruption a routine. Business Leaders may underestimate the impact that nimbler, more tech-savvy competitors can have on their current financial lead position. To get fit to lead in the future, these companies must focus on investment, business model renewal, and a persistent culture of innovation.
Can innovations come from China? Some influential people don’t think so. Today, of course, Alibaba is the Chinese innovator that clearly stands out. This paper argues that Alibaba’s impressive rise as a leading innovator on the world stage was driven in no small way by the institutional voids that challenge other firms in the same business environment. Alibaba not only thrived in an institutional void, it was a filler of institutional voids. Alibaba’s success has been attributed to factors including the massive size and rapid growth of the Chinese market, an influx of foreign capital, and an ingenious mix of Chinese and Western business systems. However, there are four reasons why China’s institutional void effect cannot be ignored: Alibaba received selective government support, experienced a strong CEO effect, strongly fit the paradigm shift to e-commerce, and accrued great benefits through ecosystem development. Arguably, developing a broad business ecosystem offers more benefits in an environment with institutional voids. One key tenet of an institutional void is the lack of market information—both for consumers and for businesses—which inhibits effective business operations. However, Alibaba became an “infomediary” for consumers by collecting information to help them make informed shopping decisions. Alibaba then collected consumer behaviour data from its online ecosystem, which is expected to have a significant impact on China’s business world and society.
In the digital space, what is the next big thing? Nobody knows. Nevertheless, today’s companies are under pressure to discover it. But chasing the digital holy grail can jeopardize management’s focus on what’s really important—digital transformation. One can read many books on how companies can accelerate digital transformation. But before you start planning, you should make one simple commitment: build digital into every project. Every opportunity to capture the creative power of digital technologies should adhere to the following four realities of competing in a digital world: 1) Customer experience is vital. 2) Customers are moving targets with short-lived attention and fragile brand loyalty. 3) Business ecosystems co-create value because no single organization possesses all the data, digital skills, and capabilities to win over today’s demanding and dynamic digital customers. 4) Digital platforms boost value co-creation and digital innovation strength is dependent on your ability to combine your digital assets with those of others. Use these four guidelines the next time you appraise an innovative idea or assess a project proposal.
Rather than giving credence to generational stereotypes that pit, for example, Baby Boomers against Millennials, effective leaders must focus on growing a strong relationship culture within their organization. Understanding and exploring individual personalities helps to grow and nurture human connection, as opposed to ascribing generic characteristics to people based on their date of birth. It’s easy to follow the path of generational stereotypes—not least because the idea is so popular in the media. We are constantly reminded how generation theory explains office dynamics. However, there are better lenses through which to view the complexity of team performance. One of the most commonly cited factors is the idea of collaboration—supposedly a Millennial character trait. But the data doesn’t fit as neatly into the collaborative Millennial construct as one might think. This tendency to transpose technological features onto generational values is one of the flaws of generation theory. A more effective approach is to drive ongoing relationship skill development within the office through formal programs. Interpersonal skill development programs help teams to understand each other and put their varied strengths to work. Although individuals and generations may show a myriad of differences, most people—regardless of age—are similar in their search for meaning and value. When understood and properly harnessed, this fundamental human desire has the power to unite any organization.
Expert crowdsourcing isn’t easy to get right because the success of a virtual community of practice is fully dependent on fulfilling the crowd’s wants and needs.