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Google has been ranked as the best place to work in the United States. It practices a time allocation method of 70-20-10, with 70 per cent of employees’ time devoted to Google’s core business of search and advertising, 20 per cent to off-budget products, and 10 per cent to ideas based on personal interests and competencies. Luxury perks and generous rewards for employee innovations improve the likelihood that employees stay at Google instead of forming competing ventures. The firm is notable for its employee loyalty and investor confidence; the two founders and the CEO, Eric Schmidt, even took an annual salary of $1 just before the initial public offering in 2004. Schmidt’s leadership practices can be summarized as follows: 1. Get to know your employees. 2. Create new ways to reward and promote your high-performing employees. 3. Let your employees own the problems you want them to solve. 4. Allow employees to function outside the company hierarchy. 5. Have your employees’ performance reviewed by someone they respect for their objectivity and impartiality. This article concludes with the eight qualities of Google’s leader-managers, which relate to coaching, empowering, well-being, productivity, communication, career development, vision, and technical skills.

The innovation function — the starting point for creating new advantages — is ineffective in most companies. Warning signs that an innovation process is broken can be grouped into six categories. 1. Innovation is episodic. Innovation should be continuous and systematic, yet it is often downsized during a company’s financial struggles and is sometimes suppressed if a new idea threatens existing business models. 2. The innovation process is invented from scratch. Companies often neglect the wealth of educational opportunities and coaching, as well as the vast literature on venturing and entrepreneurship. 3. Resources are held hostage by incumbent businesses. Allowing existing businesses to determine where employees and funds are allocated does not enable or support innovation. 4. Innovations are force-fitted into existing structures. New businesses should be given combinations of people, assets, and resources that suit their particular needs. 5. Applying the same criteria to evaluate both an innovation and the core business. It is wrong to use the same planning, budgeting, and control processes for things that are predictable and those that are not. 6. Insisting on the venture meeting the plan. Many innovation leaders try to defend past assumptions even after they have been proven wrong.

KSOIL has a project that bills customers on units of documents delivered. The productivity of employees is evaluated on the same basis. The output of the home-based team has increased two to three times compared to its previous office-based performance. As a result, the rewards and compensation for the home-based team have doubled compared to office-based employees. The head of HR is convinced home-based workers are using unfair means to achieve such high output. She is against the decision of the project manager to increase the size of the home-based team. She believes this will only increase the unrest among office-based workers. The general manager needs to make a decision soon, while keeping in mind the profitability, employee welfare and ethics of the firm.

The founder and CEO of a management company needs to address the future of its joint venture in Iran with a U.S. developer of enterprise resource planning (ERP) systems. The joint venture partners need to decide whether to pursue a potential client’s request for a custom version of the ERP system that the joint venture sells. The two partners disagree regarding the strategic direction forward, but must make a decision.

There is arguably no more important role for senior leaders than to prepare organizations for risk. Firms face different types of risk, including strategic, operational, market, liquidity, credit, and reputational. This article starts by exploring risk leadership at TD Bank Group and Maple Leaf Foods Inc. In 2002, TD Bank’s leadership lowered its risk tolerance following years of volatile and uneven performance. It avoided excessive risk (including sub-prime lending) and grew from the 55th-largest North American bank in terms of market capitalization to the sixth in 2012. Maple Leaf Foods Inc., a large food-processing company, underwent a crisis in 2008 when its processed meats were implicated in 23 deaths due to Listeriosis. The firm then developed a world-leading food-safety culture, mobilized an increased industry focus on food safety, and recovered financially. <br><br>Five activities that lead to the establishment and maintenance of a strategically driven culture are described. “Think it” stresses the need for a deliberately conceived culture, rather than one that is merely emergent. “Talk it” emphasizes the need for messages and expectations to be articulated forcefully and clearly. “Walk it” suggests that leaders must not deviate from messages about a desired culture, and should offer organizational rewards for culturally congruent behaviours. “Reinforce it” states that leaders should celebrate the success of their organizational culture, while exercising caution. “Check it” suggests that leaders must link their current culture with their desired future culture and prevent the emergence of unplanned, undesired manifestations of culture.

The Tragedy of the Commons refers to the depletion of a shared resource by individuals acting independently and rationally, according to self-interest, despite knowing that an abuse of the common resource is contrary to their long-term interests. The Tragedy is a model of many of society’s resource-based problems, including over-irrigation, habitat destruction, over-fishing, traffic congestion, and air pollution. The Free Rider problem refers to when an individual benefits from another’s work without paying for it. The two practical ways to overcome this problem are through compulsory participation (e.g. carbon tax, cap-and-trade) and through linking the public good to a desirable private good (getting people to pay voluntarily). Both methods are controversial and politicized. <br><br> Social entrepreneurs have attempted to solve the Free Rider problem, including Verdant Power, a developer in the design and application of marine renewable energy. The obstacles it faces are the same as those that stymie most social entrepreneurs. The firm lacks revenue streams and profits, is at the mercy of private equity investors and/or the government, and must counter existing bureaucratic and regulatory impediments. The good news, however, is that institutional support for social entrepreneurs has grown enormously into a support ecosystem. Ultimately, the problem for social entrepreneurs may not be opportunity recognition as much as obstacle recognition and finding solutions within this burgeoning ecosystem.

The 21st century has witnessed colossal missteps by corporate leaders, from Enron to Wall Street. While business spent the first half of the 20th century searching for and securing capital, it spent the latter half devoted to the use and flow of those funds. The second half of the 20th century witnessed the space race, the introduction of the computer and Internet, the expansion of food distribution, and the interconnectedness of global finance. What made this rapid development possible might have been the innovative ideas of management. Over successive decades since 1950, universities have educated and informed management students using a range of tools and concepts. While these can be influential and transformative, they can also be misused. Leaders have gradually allowed their authority to become eroded as their attention has shifted from purpose to performance. Management’s ideas and concepts have become a substitute for leadership and this leadership vacuum has had three primary negative effects. 1. Shareholders and stakeholders have lost confidence. 2. Generations X and Y have lost significant respect for business. 3. Boards of directors, who are supposed to provide organizational oversight, are now scrutinized and less autonomous. In the 21st century, leaders must allocate time for serious reflection on strategy, understand the boundaries and limitations of management protocols, appreciate the untapped value of collaboration, and communicate with integrity.

The state-owned copper miner Codelco is the largest contributor to the Chilean treasury and has helped the Latin American nation prosper through the global financial crisis. Notwithstanding the Chilean government’s prudent austerity measures and savings, it has deprived Codelco of much of the profits needed to increase competitiveness and production capacity, and has not addressed the firm’s inefficiency and lack of productivity. After examining this state-owned enterprise (SOE), this article describes ten best practices to turn around SOEs. 1. An agreement between the state and the SOE. 2. Cut through the old arguments for and against change. 3. History, relationships, and causality matter. 4. Transforming an SOE is more about execution than strategy. 5. The CEO can only manage what he/she measures. 6. The most sustainable turnarounds focus on both revenue and cost. 7. Arrange performance metrics to encourage value creation. 8. Empower functions that allow the “little things” to be done well. 9. Ensure that the ability to innovate is dispersed across the SOE. 10. Accept the fact that there will never be complete agreement. Most SOE mergers and acquisitions of the past decade have occurred in a resource-grab phase that has resulted in bloated, inefficient organizations, where acquiring SOEs export bad practices to acquired companies. As this article contends, moving to a talent-grab phase furthers the end point of acquisition strategy (efficient asset management), makes SOEs appear less threatening, reduces resource myopia, and matures an SOE’s management philosophy.

In the traditional business world, strong ties refer to firms or individuals who interact frequently, invest significant time and effort in a relationship, and transfer high-quality information and complex industry knowledge. Weak ties involve looser networks between individuals or firms, infrequent contact, a wide range of additional connections, and access to diverse information and resources. The modern business environment is characterized more by weak ties, due to the Internet and the widespread use of social media (1.5 billion users globally). Firms are organized in radical new ways such as virtual work groups, and transparency is more important than ever, with firms judged mercilessly on their response to customer feedback. <br><br> This article explores six key points in the art of building business relationships through social media: 1. Individual employees are likely to be seen as social media ambassadors, with their online activities reflecting on the company. 2. A firm should create specific social media management roles. 3. Connections should be forged with key influencers or critical enablers. 4. Significant cultural and structural changes may be needed to support relationship-building through social media. 5. Developing a trusted expert or key influencer position in a niche will generate a network of followers. 6. A qualitative and long-term approach is needed to evaluate the benefits of investments in relationship-building through social media.

Though China’s foreign investment in Africa is still relatively small, it is growing at a phenomenal rate and attracting international attention. Investment is especially pronounced in the mining and energy sectors, as China consumes a quarter of the world’s annual production of minerals and Africa accounts for thirty per cent of the world’s mineral reserves. This article views China’s foreign investment in Africa through the lens of the mining industry and argues that supply and demand considerations, not political factors, are the primary drivers of Chinese investment. China has designated seven Special Economic Zones in Africa that make broad contributions to economic development in various countries by supporting industries ranging from seafood processing to the production of ceramics, textiles, medicines, and furniture. Various large infrastructure projects exist, like the 2008 Sicomines resource-for-infrastructure deal in the Democratic Republic of Congo. With $6 billion earmarked for road, railway, and water projects, it will represent the largest infrastructure upgrade in Congo since colonization. Western investors, meanwhile, face pressure from shareholders to keep activities focused and are narrower in their infrastructural contributions. On the negative side, Chinese state-owned enterprises are insufficiently transparent (e.g. in the reporting of local tax payments). Their environmental record invites scrutiny, and some critics argue that Chinese SOEs show a laissez-faire attitude and exploit weak institutional structures. Ultimately, the reality of Chinese foreign investment in Africa is neither one of “saints nor sinners.”

For most of the 20th century, innovation happened largely through co-location — that is, within one country, sometimes at different locations, where employees shared the same context and culture. This can no longer remain the norm, as the knowledge and skills needed for innovation are dispersed across the globe. There is only limited understanding of the difference between these two approaches, and this contributes to reluctance to embrace the opportunities of global innovation. Planning and managing global projects requires that the means of communication, co-ordination, and collaboration be approached differently. Organizational stability is a prerequisite for global innovation projects. Teams that are new to global projects and trying to build the necessary competence should start with small, non-critical collaborations between two or three geographically dispersed sites. It is important that the product or service architecture in a global project be thoroughly defined before development commences. Global projects require at least a small degree of competency overlap between sites. Senior managers of global projects, far from easing into informal roles, must not only champion projects but keep them together. A lead site should be designated in order to avoid inefficiency and lack of leadership. Communication must be built into the project, and an overreliance on information and communication technology should be avoided. Finally, multicultural managers should be sought out and the burden of managing subcontractors should be limited.

The Ivey Business Journal interviews Aldo Musacchio, associate professor at Harvard Business School and an expert on state-owned enterprises (SOEs). Defining state capitalism as the widespread influence of a government in an economy, Musacchio contends that the current debate on state capitalism and the efficiency or inefficiency of SOEs is outdated. Most observers compare today’s SOEs to Soviet-era SOEs, which often failed to comply with international financial standards or focus on profitability. The rise of SOEs dates to the 19th century, when governments tried to solve basic market failures and intervene to provide public services. The second stage of state capitalism, from the 1930s to the 1980s, was characterized by the state venturing into firms across many industries. The third stage saw SOEs being run more like private corporations, with governments as the majority owners. <br><br>While the Fortune Global 500 lacked an SOE in the top ten firms in 2005, it contains four in 2013. Two common forms of modern state capitalism are a) the government influencing investment decisions of private companies through majority ownership in publicly traded corporations and b) smaller government investments or loans. In recent years, large SOEs have gained more autonomy from governments, especially in financial terms. Chinese SOEs have been aggressively buying stakes in resource firms, and acquisitions that would have formerly been considered “imperialism” are now mainstream. In fact, flagship SOEs in large countries are moving towards a model in which management is quite sophisticated.

This case examines the business strategies available to an Indian company, Indraprastha Cold Storage Ltd. (IPCSL). It has made substantial investments in upgrading its existing cold storage to differentiate itself from the competition based on the premise that by providing superior product quality, it could charge a premium for its value added cold storage service. However, competitors lowered their rates in an attempt to capture even more customers, and IPCSL was concerned about the long-term viability of the business. It must decide on a course of action, taking into consideration the constraints of growing, transporting, storing and selling fruit in India; the asymmetry in price information available to growers and commission agents in the market, coupled with the old-fashioned way of doing business through open and closed auctions; and the costs and benefits of vertical integration between grower and IPCSL.<br><br>This case also includes a two-part video which instructors may share with the class. The first part shows the buzz of daily activities in New Subzi Mandi, Azadpur - including market exchanges by open and closed auctions. The second is an interview with Sanjay Aggarwal about the challenges IPCSL faced and his immediate reaction to the crisis. Please refer to the teaching note for details.

Many boards and senior managers have embraced talent management in order to create high-performance organizations, yet many approaches are expensive and ineffective. This article presents Talent Management 2 and summarizes the results of a five-year investigation into the merits of different ways of improving corporate performance. It suggests that it is often cheaper to work with existing employees and to put the right support environment in place, rather than recruiting top talent. Evidence from early adopters of “performance support,” a key component of Talent Management 2, suggests that it represents a quick, cost-efficient way of securing large returns on investment and achieving multiple objectives. These adopters are building critical success factors into the processes for key activities and adopting cost-effective ways of helping employees emulate the methods of high performers. Instead of focusing on investing in talented employees who may not be retained long enough to yield returns on the company’s investment, Talent Management 2 focuses on boosting the performance of today’s key workgroups. Providing better support can enable more to be achieved by fewer and less costly staff.

Before the 1990s, wealth and power in India was highly concentrated in a few business families, the License Raj system stifled growth, basic necessities were in short supply, and the nation verged on defaulting. However, India would soon eliminate the License Raj, shift to exports and more free-market policies, and boost its literacy. The massive size of India’s population — including a middle class of 390 million in 2009 — is now an asset. <br><br>India’s progress has seen the explosive growth of various industries. The information technology (IT) and IT-enabled services industry has grown to $100 billion in 2011 and India is the world’s largest player in offshore delivery. This growth was due to a labour cost advantage and a talented pool of human resources. However, the industry is maturing and climbing the value chain to higher margin services such as consulting and niche services. Similar to the IT industry in the 1990s, the telecommunications industry in India has grown exponentially in the new millennium. The prime engine of India’s economic growth, it boasts 800 million mobile phone subscribers and revenues of $68 billion. A key impediment to India’s growth is power scarcity, with more than 60 per cent of rural households lacking power. The government has launched an ambitious solar energy plan and the sector has been granted subsidies and access to bank financing. Different approaches to solar include village-owned power grids and pay-per-use models. Firms that embrace India’s rapid development will be able to create viable and scalable business models around its many opportunities.

Past discussions on sustainability highlighted issues traditionally associated with it, such as reducing environmental impacts while growing the top line. More recent discussions focus on activities that extend beyond the firm, such as long-term collaborations. This article provides a top-ten list of initiatives to help companies become more sustainable in 2013, compiled by a network of sustainability leaders: 1. Create smart, integrated public policy. 2. Engage value chain members, including industry and non-governmental organization partners. 3. Build a national dialogue on responsible consumption. 4. Create organizational structures that support sustainability. 5. Embed sustainability in corporate culture. 6. Provide clear and equitable directives regarding Aboriginal rights and entitlements. 7. Create clear conditions that support sustainability-related innovation. 8. Incorporate a social license to operate into business strategy. 9. Prepare organizations and society to mitigate and adapt to climate change. 10. Lessen the burden of sustainability reporting.<br><br>The focus of sustainability has shifted outward and new challenges represent broad issues outside a firm involving multiple stakeholders, such as value chain collaboration and civic engagement. Two reasons for this shift could be that the “easy work” (e.g. technical improvements like going paperless) have already been done, and that it doesn’t pay to do sustainability half-way.

A study of 236 corporate directors by RHR International and Chief Executive magazine found that 95 per cent of respondents acknowledged CEO succession as a critical business continuity issue. Yet more than half rated themselves as ineffective in executing their responsibilities in the CEO succession process. This author, the CEO of the firm of management psychologists and consultants RHR International, has leveraged his research, client insights, and 30+ years of consultant experience to create a list of ten key dimensions of CEO succession. The first steps are 1. establish board ownership, involvement, and oversight; 2. set time frames; and 3. prepare for emergencies. The next dimensions, dealing with the “who, what, and where,” are 4. align strategy and profile; 5. build a talent pipeline; and 6. source external talent and manage search firms. The final dimensions, dealing with people and process, are 7. select the CEO; 8. proactively manage the transition; 9. measure performance and improve progress; and 10. manage the dynamics of CEO succession.

By 2025, a quarter of the world’s skilled workers might be Indian. How the cohort of Generation Y workers — those either just entering the workforce or who have been working for one or two years — make the transition to the workplace, and how firms develop and engage them to excel and become business leaders, are of key importance to Indian organizations. Gaps in education, skills, and vocational training are a big challenge that the government wants to address, and some non-governmental organizations are venturing into rural regions to provide basic vocational skills training. Generation Y needs promotion opportunities and transparency, as well as work-life balance, flexibility, and learning opportunities. The older generations must be proactive in nurturing talent in Generation Y. This article, by the senior director of people resources at McDonald’s India, concludes by proposing that firms operating in India should a) work with the government to reach semi-rural and rural youth and enhance their employability; b) create an engaged workforce through, for example, the use of social media and informal workplace forums that give workers the chance to hone their skills; and c) ensure that there is a talent-management process to harness the talents of youth.

The CEO of Destimoney, a Mumbai-based financial services firm, describes his company’s journey to success. After joining the equity brokerage services firm in 2011, he explored ways to make the business more viable and sustainable. Capital markets were in a downturn, retail investors were deserting, and global markets were near crisis — outside-the-box thinking was needed to survive. Costs had to be kept under control and the business needed growth. A focus on high net worth individuals and traders was decided on. Destimoney created a franchise network, which was more suited to a nation with many languages than setting up branches across the country. On the product side, the firm focused on bringing out options strategies based on the risk appetites of clients and market conditions, and might have been the first company in India to do so in a big way. The firm spotted an uptrend in commodity markets, acquired commodity brokerage licenses, and built a flourishing commodity brokerage business. Destimoney grew exponentially in 2011, despite the year being among the worst for Indian financial markets. It then developed an outsourcing model for non-core activities and diversified into third-party products like life insurance, focusing on the tier 2, 3, and 4 cities, where penetration was especially low. The firm also launched a small wealth management business in seven leading cities across country. As the article shows, penetration of financial services in India is very low, and business models that cater to the needs of the masses carry the potential for success.

Businesses should pay attention to the practices of pirate organizations, because piracy has reshaped industries and given birth to new ones since the dawn of capitalism. For example, sea pirates fought the monopolies of the East Indies companies in the 17th and 18th centuries and forced recognition of the freedom of the seas, pirate radio defeated the BBC’s broadcast monopoly, and online file sharing through Napster triggered an overhaul of the music industry. Rather than simply threatening capitalism, pirate organizations indicate the directions in which the economy is likely to move. This article discusses the history and future of piracy and puts forth five lessons for managers. 1. Take the long view and become an industry leader, recognizing the unsustainability of consensually legitimate industries. 2. Acknowledge that opposition to your industry might point to legitimate problems. 3. Don’t sue your customers. 4. Ally with pirate organizations if it suits economic opportunity. 5. Don’t slow down industry progress through monopolistic arrangements. The article concludes with an assessment of how the music industry violated these axioms in the late 1990s.