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Chobani's Founder on Growing a Start-Up Without Outside Investors
The author grew up on a dairy farm in Turkey, where his mother made yogurt from scratch. When he moved to the United States, in 1994, he found the yogurt to be "disgusting--too sugary and watery." So he made his own at home. By 2005 he was running a cheese factory in upstate New York when he saw an ad for a run-down but fully equipped yogurt factory that Kraft was divesting. It had a price tag below $1 million. Against the advice of his attorney and business adviser, he bought the factory with a bank loan backed by the Small Business Administration and immediately hired a master yogurt maker from Turkey. They spent two years perfecting their recipe, and Ulukaya worked hard to get the packaging just right. Three crucial decisions allowed him to finance growth after the business took off: He insisted that Chobani be sold in mainstream grocery stores and be stocked in the dairy aisle alongside existing yogurt brands. He negotiated with retailers over their slotting fees. And he spent a lot of time determining the right unit selling price. Within a few weeks of launch, very large orders started coming in; by 2009 the company was selling 200,000 cases of yogurt a week. It needed to make a big investment to increase capacity--but Ulukaya ruled out private equity investors. Here he tells why. -
The Strategy That Will Fix Health Care
In health care, the days of business as usual are over. Around the world, every health care system is struggling with rising costs and uneven quality, despite the hard work of well-intentioned, well-trained clinicians. Health care leaders and policy makers have tried countless incremental fixes--attacking fraud, reducing errors, enforcing practice guidelines, making patients better "consumers," implementing electronic medical records--but none have had much impact. It's time for a fundamentally new strategy. At its core is maximizing value for patients: that is, achieving the best outcomes at the lowest cost. We must move away from a supply-driven health care system organized around what physicians do and toward a patient-centered system organized around what patients need. We must shift the focus from the volume and profitability of services provided--physician visits, hospitalizations, procedures, and tests--to the patient outcomes achieved. And we must replace today's fragmented system, in which every local provider offers a full range of services, with a system in which services for particular medical conditions are concentrated in health-delivery organizations and in the right locations to deliver high-value care. The strategy for moving to a high-value health care delivery system comprises six interdependent components: organizing around patients' medical conditions rather than physicians' medical specialties, measuring costs and outcomes for each patient, developing bundled prices for the full care cycle, integrating care across separate facilities, expanding geographic reach, and building an enabling IT platform. The transformation to value-based health care is well under way. Some organizations, such as the Cleveland Clinic and Germany's Schon Klinik, have undertaken large-scale changes involving multiple components of the value agenda. The result has been striking improvements in outcomes and efficiency, and growth in market share. -
"Special Forces" Innovation: How DARPA Attacks Problems
The Pentagon's Defense Advanced Research Projects Agency arguably has the longest-standing track record of radical invention in history. Over the past 50-plus years, DARPA has produced an unparalleled number of breakthroughs, including the internet, global positioning satellites, stealth technology, MEMS, and carbon composites. The agency's advances are now used in everything from smartphones to sporting equipment to artificial limbs, and it has played a central role in creating a host of multibillion-dollar industries. What makes these accomplishments even more impressive is DARPA's swiftness (its programs last only three to five years) and relatively tiny organization (about 120 permanent staffers) and modest budget (about $3 billion annually for roughly 200 programs). With its unconventional speed, efficiency, and effectiveness, DARPA has created a "special forces" model of innovation. In this article, two former DARPA leaders who now head an advanced research group at Google decipher the DARPA model and explain how it can be adapted for the private sector. The model has three critical, mutually reinforcing elements: (1) Ambitious goals. Projects are designed to push the boundaries of science to solve urgent real-world problems or create new opportunities. (2) Temporary project teams. DARPA contracts world-class experts from industry and academia to work on projects with relatively short durations. They are led by about 100 technical managers who have been brought in for fixed terms. (3) Independence. By charter, DARPA has autonomy in selecting and executing projects. Its model also challenges assumptions about how personnel are hired, and how contracting and intellectual property are managed. Such independence allows the organization to move fast and take bold risks, and helps it persuade the best and the brightest to join it. -
Corporate Venturing
For decades, large companies have been wary of corporate venturing. But as R&D organizations face pressure to rein in costs and produce results, companies are investing in promising start-ups to gain knowledge and agility. The logic of corporate venturing is compelling: A well-run fund can help a firm respond quickly to changes in markets and gain a better view of threats. In some cases, it can stimulate demand for a company's own products. And its investments may earn attractive returns. During their first three years as public companies, firms backed by corporate venture funds show better stock price performance, on average, than companies backed by traditional VCs. Managing corporate venture funds is not easy. Some companies have seen their venture initiatives fail, and even firms with successful funds have struggled to make use of the knowledge gained from start-up investments. Six steps can help companies avoid the pitfalls: (1) Align goals. Corporate venture funds are more successful if the business of the corporate parent and of the portfolio firm overlap. (2) Streamline approvals. A complicated decision process can burden the fund with too many goals and lead to ineffective investing patterns. (3) Provide powerful incentives. Companies that don't offer adequate compensation to their venture capitalists will face a steady stream of defections. (4) Tolerate failure. A zero failure rate may indicate that the fund is playing it too safe. (5) Stick to your commitments. If a company is seen as a fickle investor, professionals will be wary of joining its venture unit, entrepreneurs will be reluctant to accept its funds, and independent VCs will be hesitant to join in. (6) Harvest valuable information. Companies need to invest as much in learning from their start-ups as they do in making and overseeing deals. -
Rethinking the Decision Factory
Companies everywhere compete to find the best talent in knowledge work, and often wind up with thousands of expensive employees who aren't as productive as hoped. So they lay off a huge number of them, and soon after are out recruiting again. This binge-and-purge cycle is highly destructive, writes the author: Aside from the human and social costs involved, it is an extremely inefficient way to manage any resources, let alone knowledge workers. The problem exists, he believes, because most companies misunderstand how knowledge work does and doesn't differ from manual work. They think they should structure the former like the latter--with each worker doing the same job for a full shift. But they also assume that knowledge is necessarily bundled with the workers--and is almost impossible to codify and transfer as one could do with manual work. The trouble is that knowledge work comes primarily in the form of projects, not routine daily tasks, so these employees often have downtime. Of course it's not in their interest to advertise any spare capacity--that could lead to a poor performance review or even a layoff--and this survival imperative gets in the way of knowledge transfer. The solution is to structure knowledge work the way professional services firms do--with capabilities flowing to the projects that need them--and to put key executives in charge of codifying knowledge. -
Consulting on the Cusp of Disruption
Consulting's fundamental business model has not changed in more than 100 years: Very smart outsiders go into organizations for a finite period of time and recommend solutions for the most difficult problems confronting their clients. But at traditional strategy-consulting firms, the share of work that is classic strategy has sharply declined over the past 30 years, from 60% or 70% to only about 20%. What accounts for this trend? Disruption is coming for management consulting, the authors say, as it has recently come for law. For many years the professional services were immune to disruption, for two reasons: opacity and agility. Clients find it very difficult to judge a firm's performance in advance, because they are usually hiring it for specialized knowledge and capability that they themselves lack. Price becomes a proxy for quality. And the top consulting (or law) firms have as their primary assets human capital; they aren't hamstrung by substantial resource allocation decisions, giving them remarkable flexibility. Now incumbent firms are seeing their competitive position eroded by technology, alternative staffing models, and other forces. Market research companies and database providers are enabling the democratization of data. The vast turnover at consultancies means armies of experienced strategists are available for hire by former clients, whose increasing sophistication allows them to allocate work instead of relying on one-stop shops as they did in the past. Drawing on the theory of disruption, the authors offer three scenarios for the future of consulting. -
Ferguson's Formula
When Alex Ferguson took over as manager of the English football team Manchester United, the club was in dire straits: It hadn't won a league title in nearly 20 years and faced a very real threat of being relegated to a lower division. In 26 seasons under Ferguson, United won 38 domestic and international trophies--giving him nearly twice as many as any other English club manager--and became one of the valuable franchises in sports. In 2012, during Ferguson's final season before retiring, Harvard Business School professor Anita Elberse had the unique opportunity to observe Ferguson's management style in a series of visits and in-depth interviews. In this collaborative explication, she details eight parts of Ferguson's "formula" as she observed them and gives the manager his say. The lessons described range from the necessity of maintaining control over high-performing team members to the importance of observation and the inevitability of change. The approach that brought Ferguson's team such success and staying power is applicable well beyond football--to business and to life. -
Diaspora Marketing
Despite the rising power of developing economies, few corporations from emerging markets have succeeded in establishing brands in the West. The problem isn't just that they're late to enter the global market; the perception is that they offer poor-quality products, not next-generation ones. Conventional wisdom holds that they'll have to spend huge sums to overcome these obstacles. But some emerging giants, such as the Indian bank ICICI and the maker of the Mexican beer Tecate, are figuring out ways to build global brands on a shoestring. They are learning to outsmart, rather than outspend, their multinational rivals. One powerful strategy they're using: targeting the emigrants who have left their homelands. Regional concentrations of these individuals can provide excellent springboards into developed markets. The key is to target the right segments of emigrants, say the authors. Assimilators, who quickly try to adopt the customs and practices of their new country, are not likely to purchase products made in their homeland. Neither are marginals, who lack economic and educational opportunities and buy mostly functional, affordable products. But two other categories of immigrants hold promise: ethnic affirmers, who cling fervently to their homeland identity, and biculturals, who tend to be affluent and well-educated and move easily back and forth between their home and host countries' cultures. Biculturals are especially attractive; because they're integrated into their local communities, they can influence other consumers and make good conduits to the general population of their host countries. -
Be Yourself, but Carefully
A rise in collaborative workplaces and dynamic teams over recent years has heightened the demand for "authenticity" and "instant intimacy," and managers are supposed to set an example. But sharing thoughts, feelings, and experiences at work can backfire if it's hastily conceived, poorly timed, or inconsistent with cultural or organizational norms. Getting it right can be challenging for leaders at any stage of their careers. The authors draw on four decades' worth of research in social and organizational psychology to look at common mistakes executives make when they're trying to be authentic and to offer a five-step plan for moving toward more-effective self-disclosure: (1) Set the foundation with self-knowledge. The best approach is to solicit honest feedback from coworkers and follow it up with coaching. (2) Consider relevance to the task. Before sharing personal information, ask yourself if it's germane to the situation. (3) Keep revelations genuine. Making up or exaggerating stories is easily discovered and can damage credibility. (4) Understand the organizational and cultural context. Some societies are more inclined than others to disclose personal information. (5) Delay or avoid very personal disclosures. First take note of how open others are. The authors include a tool to help you assess when and when not to share. -
Life's Work: Nobu Matsuhisa
The wildly successful restaurateur Nobu Matsuhisa, whose hospitality group has 22 outlets in 13 countries, overcame a lot of adversity early in his career. In this edited interview he talks about selecting the talent for his kitchens, the pleasure he gets from seeing happy customers, his partnership with the actor Robert De Niro, and more. -
Volvo and Geely
In 2010, Zhejiang Geely Holding Group Co. (Geely Holding) acquired Volvo from Ford Motor Company. In early 2011, various questions remained about Volvo's strategy and the long-term integration plan for the acquisition. With the acquisition of Volvo, Geely Holding gained access to a global dealership network, sophisticated automotive technology, and management know-how. A successful integration of Volvo could help Geely Holding improve its own line of cars for global markets and position Geely as a unique brand in the fiercely competitive Chinese automobile industry. Volvo's new management announced that its goal was to more than double global sales to by 2020, with half of the volume coming from sales in China. The company was also intent on expanding Volvo manufacturing in China and developing a new luxury car for the China market. To implement the plan for growth, Volvo would have to address various issues, such as the future of the Volvo brand, the integration between the European and Chinese organizations, and the relationship between the China-based Geely automobile business and the global Volvo Company. -
CH2M HILL: Reinventing Organizational Careers
This case addresses one over-arching problem - a broken career development system - and two concrete manifestations (symptoms) of the problem at CH2M HILL, an employee-owned engineering services firm. The first manifestation of the problem was unusually high voluntary turnover, at least by CH2M HILL's standards, among newer employees. The second was a lack of qualified internal candidates for top jobs. The voluntary turnover problem was the most immediate issue. Exit survey data and engagement survey data pointed to a lack of advancement opportunity as the main reason for high voluntary turnover among new employees. The second problem was less acute but still serious. Though CH2M HILL thought of itself as a career employer, fewer than 25 percent of top managers in early 2012 had been promoted from within. Internal candidates were not filling positions near the top and some top positions were vacant for months because the right person could not be found for the position, inside or outside the company. Both problems suggest the larger issue needs to be addressed -organizational careers need to be reinvented in the firm. Jan Walstrom, Chief Learning Officer, had been charged with rebuilding CH2M HILL's career development systems and processes. It fell to her to determine what steps she could take to solve the over-arching career development challenge while addressing the two concrete manifestations in the short run. -
Interfaith Partnership for the Homeless
Janine Robitaille, Executive Director of Interfaith Partnership for the Homeless (IPH), contemplated the future of the non-profit organization she had led for the past five years. IPH had served the homeless community since 1984 and assisted individuals and families by meeting their immediate needs, helped them find safe, affordable housing, and provided continuing support through long-term case management services. The recent publication of the 2010 annual report provided Janine and her staff an opportunity to reflect on their accomplishments, especially given the financial challenges brought about by the 2008 recession. Janine pondered several challenges facing her staff in the coming year. Nearly all programs at IPH were operating at capacity. The Emergency Shelter, which provided nightly refuge for 30 single men and women, was full. The Drop-In Center had reached the limits of the existing facility and could no longer meet the growing demand for daytime services. There was a waiting list for permanent housing and increased competition for scarce government resources would require stronger evidence of their programs' effectiveness. IPH needed to develop and grow corporate, organizational, and individual sources of support to reduce dependence on government funding; increase in-kind donations; and more effectively use volunteers to reduce operating costs. Janine considered several possibilities. Should they pursue additional capacity in permanent housing as a means for creating more sustainable funding? Was it time to find a bigger facility for the Drop-In Center that would provide space for new partnerships with other providers and increased services for those in need? Did it make sense to expand services or operations in another neighborhood or county? The difficulty was determining which alternatives to pursue and how to fund the existing operations. Janine felt it was probably time IPH engaged in some formal strategic planning. -
Don't Just Dump It!: Saving Sandy Pond
In July 2009, Vale NL began building a $2.17 billion nickel refinery in Long Harbour, Newfoundland and Labrador. The refinery would bring economic prosperity by creating 1,600 to 2,000 jobs during construction and 400 to 500 permanent jobs in an area of high unemployment. The project's environmental assessment process began 2006 and the company had successfully completed the required environmental impact statements for the government. A major environmental issue was the disposal of tailings from the refinery, and the approved solution was to store them in a natural lake known as Sandy Pond. Members of several environmental NGOs had opposed the use of the lake as a "tailings impoundment area" and formed the Sandy Pond Alliance for the Protection of Canadian Waters (SPA). The use of natural lakes was allowed, but SPA believed that the regulation that permitted the use was inconsistent with environmental legislation. SPA had to decide how to challenge the use of tailings ponds at Long Harbour and elsewhere in Canada, and whom to target in its efforts. Instead of being designed as a management decision-making exercise, this case places students in the position of environmentalists as they decide what course of action to initiate. -
Tackling the HIV/AIDS Pandemic Through Multi-partner Stakeholder Engagement
The Wits Reproductive Health and HIV Institute (WRHI), a South African non-government organization, played a crucial role in turning the tide in the fight against HIV/AIDS in Africa. The organization significantly influenced the national response to the HIV/AIDS epidemic through its credibility, research output and multiple stakeholder engagement. The collaborative multiparty relationships between WRHI's stakeholders were a key component of the organization's success. However, WRHI's sustainability faced serious challenges in the rapidly changing operating environment, particularly since the organization was totally dependent on funders. What strategic initiatives should WRHI pursue? -
Mitch Daniels and the State of Indiana
Mitch Daniels, Governor of the State of Indiana, knew he had to make a difficult choice as he sat in his office in December 2010. Should he aggressively push the state legislature to pass comprehensive education reform-a major priority of his administration-or, instead, push for a new "right-to-work" law that he believed might be critical to improving his state's competitiveness? He was concerned that he wouldn't be able to do both during his second term. He prided himself on being an action- and results-oriented governor. He prided himself on being able to work with both Democrats and Republicans in the state legislature. In the elections of fall 2010, the Republicans regained control of the Indiana House of Representatives. Passage of a right-to-work law was not a major part of their election platform because of the union opposition they thought it would generate. Quietly, however, Republicans did support a right-to-work law that was expected to attract more jobs to the state in a very difficult economic environment. Daniels had to weigh the political ramifications as he considered which initiative to pursue. He knew that despite his various accomplishments, this choice would likely impact his legacy as governor. As he weighed the decision, Daniels began to jot down notes about the tradeoffs relating to his various options. -
What is Branding Really About?
Basics of Branding: A Practical Guide for Managers is a 6-chapter book published in 2013 by the Business Expert Press and written by Jay Gronlund, president and founder of The Pathfinder Group and instructor at New York University. Gronlund provides an in-depth analysis of branding and the requirements of successful brand development. He explores critical concepts including market positioning, brand equity, and content marketing as well as the implications of continuing changes in the market environment due to technology. Using illustrative examples from well-known brands and summarizing important research, he provides practical guidance and insight for both managers and students. In Chapter 1, What Is Branding Really About? (15 pages), the author explores the concept of branding, its role in marketing, and branding mistakes that business managers often make. He explains how a successful brand creates a connection with the customer and the importance of strategic product positioning. He outlines shared characteristics of successful brands and explains how compelling brand messages cut through modern communication "clutter." He also presents a framework for strong brand development, which includes articulating elements such as value proposition, competitive advantage, and business potential. -
The Positioning Statement, Emotions, and Brand Equity
Briefly describes content of case. Basics of Branding: A Practical Guide for Managers is a 6-chapter book published in 2013 by the Business Expert Press and written by Jay Gronlund, president and founder of The Pathfinder Group and instructor at New York University. Gronlund provides an in-depth analysis of branding and the requirements of successful brand development. He explores critical concepts including market positioning, brand equity, and content marketing as well as the implications of continuing changes in the market environment due to technology. Using illustrative examples from well-known brands and summarizing important research, he provides practical guidance and insight for both managers and students. In Chapter 2, The Positioning Statement, Emotions, and Brand Equity (53 pages), the author examines at length the critical components of brand building. The first is the positioning statement, which brings together information about customer needs, competition, and consumer benefits in a "blueprint" that guides all marketing efforts. Using well-known brand examples, the author explains each aspect of a strong positioning statement and provides practical guidance for developing a statement. Second, the author explains the importance of understanding the customer's perspective to create an emotional relationship between brand and customer; he also outlines a process for gaining consumer insight, summarizing research on emotions and behavior. Third, the author explains brand equity, how to build it, and its benefits. He looks at how to measure equity, summarizes several basic methodologies, and reviews high-value brands in the real world. -
Branding Applications
Briefly describes content of case. Basics of Branding: A Practical Guide for Managers is a 6-chapter book published in 2013 by the Business Expert Press and written by Jay Gronlund, president and founder of The Pathfinder Group and instructor at New York University. Gronlund provides an in-depth analysis of branding and the requirements of successful brand development. He explores critical concepts including market positioning, brand equity, and content marketing as well as the implications of continuing changes in the market environment due to technology. Using illustrative examples from well-known brands and summarizing important research, he provides practical guidance and insight for both managers and students. In Chapter 3, Branding Applications (32 pages), the author explores five different areas for branding outside of product marketing, providing background and practical insight on developing brands for corporations, employers, individuals, global markets, and countries. First, drawing on the example of General Electric, he highlights the importance of corporate values, vision, and mission. Second, he explains the importance of a strong internal or employer brand, aimed at creating a robust and positive culture for employees. Third, he discusses the emerging concept of a personal brand for networking and job search purposes. Fourth, he explains the development of the transnational and global brands. Finally, he presents a model for building a country's brand in the global economy. -
Building Strong Brands
Basics of Branding: A Practical Guide for Managers is a 6-chapter book published in 2013 by the Business Expert Press and written by Jay Gronlund, president and founder of The Pathfinder Group and instructor at New York University. Gronlund provides an in-depth analysis of branding and the requirements of successful brand development. He explores critical concepts including market positioning, brand equity, and content marketing as well as the implications of continuing changes in the market environment due to technology. Using illustrative examples from well-known brands and summarizing important research, he provides practical guidance and insight for both managers and students. Chapter 4, Building Strong Brands (51 pages) introduces a five-stage model of brand development: market analysis, strategy development, positioning, brand development, and brand marketing. The author examines the market analysis stage in-depth, including different research methods, challenges, and outcomes. He considers the importance of innovation in branding and presents a three-phase innovation model of preparation, ideation, and follow-up. He provides detailed, practical guidance for a successful ideation process in five steps: situation analysis, planning, team selection, the meeting itself, and implementation. He also explores other brand elements, such as the name, visual representation, and taglines with analysis of the psychology behind each and a review of real world examples. Finally, he explains brand architecture and related initiatives.