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Incentive Problems in a Software Company
In July, 2009, Jeffrey Pfeffer, a professor at the Graduate School of Business at Stanford University, received an e-mail. The two co-founders and joint co-CEOs and their colleagues at Orange Kimono Software were struggling with their pay system. Orange Kimono, based in the north of England, was a software company with approximately 150 employees that made products sold to businesses. This case contains the text of the e-mail which details the old and new sales compensation systems and the resulting effects on sales, representative behavior, and customer experience. -
Shareholders First? Not So Fast...
When did we start measuring the success of a company only according to the increase in its share price? Stanford professor Pfeffer argues that it's time for CEOs to once again balance shareholders' interests with those of the other stakeholders: employees, suppliers, and customers. -
Kimberly-Clark Andean Region: Creating a Winning Culture
Kimberly-Clark in the Andean region had hit a performance plateau. Five years prior, Sergio Nacach had taken over as general manager for the region and had embarked on a cultural transformation to build a winning culture centered on the people who worked for the organization. This case explores what he did and the context within which he did it. Similar to other cases on high commitment work arrangements, but set in a non-U.S. context, the case discusses organizational cultural change, the extent to which high performance work practices generalize across settings, and what made the Andean region a particularly receptive place for this management approach. The case also raises the issues of how to keep the enthusiasm going and the extent to which this transformation depended on a particular individual and his personal style. -
Zia Yusuf at SAP: Having Impact
Zia Yusuf, a Pakistani graduate of Harvard Business School in 1998, joined SAP, a high technology software company, in 2000 after working first at Goldman Sachs. Although Yusuf had no technical background nor ever worked in sales, marketing, or software development, he moved up rapidly at SAP, bringing a great deal of business value to the organization. This case explores Yusuf's success in navigating the organizational dynamics of a very complex and large organization, tracing his career path at SAP and before. -
Note on Power and Social Interaction
This note summarizes a lot of the research on communication and language in its relationship to exercising power. Specifically. How language is used to negotiate power, what are the characteristics of effective communication, and how you can tell if someone is lying are all briefly considered. The note is used in a class on power in organizations, for a session on the use of language in attracting support and allies. -
A Note on Social Networks & Networks Structure
This note summarizes important ideas in the social networks literature-including brokerage and structural holes and the trade-offs between networking and getting work done and between brokerage relationships and the dense connections required to build trust. The note was prepared for a class on power in organizations for a session on building efficient social networks. It can be used with readings or cases on the importance of social relations in building power. -
Nuria Chinchilla: The Power to Change Workplaces
In 1993, Nuria Chinchilla had recently completed her doctoral thesis at IESE Business School in Barcelona, on the topic of organizational turnover, with no particular focus on women, flexible work arrangements, or work-family issues. She chose to remain at IESE, where she had worked since the early 1980s as an assistant professor. By 2003, just over a decade later, she had attained the rank of full professor, had founded the International Center of Work and Family at IESE, and was generally acknowledged to be a leader if not the leader in workplace flexibility and work-family issues internationally, attending conferences all over the globe and being extremely visible in the media. Many observers echoed the comments of Gloria Renom, a deputy in the Catalonia parliament: "for a long time, Nuria has been considered the leading authority in the field of work-life balance." Renom attributed Nuria's success to a good understanding of the themes involved and intense preparation for the challenges she faced. Indeed, how else to explain Chinchilla's remarkable ability to influence others and to use a number of levers of power extremely successfully? It was not clear how Chinchilla had accomplished so much in so short a time, and what else she might do to be even more effective in obtaining changes in workplace flexibility in the future. And there was another interesting aspect to her career. Chinchilla seemed to have largely surmounted the trade-offs faced by so many people in positions of power-the apparent need to choose between having influence and being true to one's values and beliefs, as well as the choice between one's work and the rest of one's life. How had she been able to accomplish this? -
Management Half-Truth and Nonsense: How to Practice Evidence-Based Management
The quest for information and research-based insight is an obsession in the capital markets. There is a veritable industry of analysts, investment bankers, portfolio managers, and investors who seek any informational advantage, which is one reason that academics who study finance have been recruited to work on Wall Street and with money managers. Yet, the potential payoff for using valid evidence is even greater when it comes to managing organizations. At the same time, however, imitation is much slower and less effective in the world of management practices, in part because such practices depend on tacit knowledge and implementation skill, on knowing not just what to do but how to do it. In addition, management practices and logic resist copying because of the power of precedent and ideology. Most managers actually try to act on the best evidence. They follow the business press, buy business books, hire consultants, and attend seminars featuring business experts. Although companies sometimes benefit from these efforts, there is surprisingly little rigorous use or serious appreciation of evidence-based management. Explores these obstacles and offers guidelines to enable managers to practice evidence-based management better. -
Kent Thiry and DaVita: Leadership Challenges in Building and Growing a Great Company
DaVita, one of the largest operators of kidney dialysis centers in the United States, underwent a remarkable turnaround between 2000 and 2005, a transformation based on building a strong values-driven culture, with an emphasis on fact-based decision making and the theme of "one for all, all for one" and an emphasis on company as community. Now the company's top management faces a number of challenges, including the integration of one of its largest competitors just acquired in a merger, ensuring management succession and not being too CEO-centric, and dealing with the operational issues confronting a company heavily dependent on Medicare and Medicaid reimbursements that do not fully cover the cost of treatment while competing for employees in the health care industry. -
Evidence-Based Management
For the most part, managers looking to cure their organizational ills rely on obsolete knowledge they picked up in school, long-standing but never proven traditions, patterns gleaned from experience, methods they happen to be skilled in applying, and information from vendors. They could learn a thing or two from practitioners of evidence-based medicine, a movement that has taken the medical establishment by storm over the past decade. A growing number of physicians are eschewing the usual, flawed resources and are instead identifying, disseminating, and applying research that is soundly conducted and clinically relevant. It's time for managers to do the same. The challenge is, quite simply, to ground decisions in the latest and best knowledge of what actually works. In some ways, that's more difficult to do in business than in medicine. The evidence is weaker in business; almost anyone can (and many people do) claim to be a management expert; and a motley crew of sources--Shakespeare, Billy Graham, Jack Welch, Attila the Hun--are used to generate management advice. Still, it makes sense that when managers act on better logic and strong evidence, their companies will beat the competition. Like medicine, management is learned through practice and experience. Yet managers (like doctors) can practice their craft more effectively if they relentlessly seek new knowledge and insight, from both inside and outside their companies, so they can keep updating their assumptions, skills, and knowledge. -
HBR List: Breakthrough Ideas for 2005
The List is HBR's annual attempt to capture ideas in the state of becoming--when they're teetering between what one person suspects and what everyone accepts. Roderick M. Kramer says it isn't bad when leaders flip-flop. Julia Kirby describes new efforts to redefine the problem of organizational performance. Joseph L. Bower praises the "Velcro organization," where managerial responsibilities can be rearranged. Jeffrey F. Rayport argues that companies must refocus innovation on the "demand side." Eric Bonabeau describes a future in which computer-generated sound can be used to transmit vast amounts of data. Roger L. Martin says highly reliable corporate systems such as CRM tend to have little validity. Kirthi Kalyanam and Monte Zweben report that marketers are learning to contact customers at just the right moment. Robert C. Merton explains how equity swaps could help developing countries avoid some of the risk of boom and bust. Thomas A. Stewart says companies need champions of the status quo. Mohanbir Sawhney suggests marketing strategies for the blogosphere. Denise Caruso shows how to deal with risks that lack owners. Thomas H. Davenport says personal information management--how well we use our PDAs and PCs--is the next productivity frontier. Leigh Buchanan explores workplace taboos. Henry W. Chesbrough argues that the time is ripe for services science to become an academic field. Kenneth Lieberthal says China may change everyone's approach to intellectual property. Jochen Wirtz and Loizos Heracleous describe customer service apps for biometrics. Mary Catherine Bateson envisions a midlife sabbatical for workers. Jeffrey Rosen explains why one privacy policy won't fit everyone. Tihamer von Ghyczy and Janis Antonovics say firms should embrace parasites. And Jeffrey Pfeffer warns business-book buyers to beware. Additionally, HBR offers a list of intriguing business titles due out in 2005. -
Wells Fargo and Norwest: "Merger of Equals" (A)
On June 8, 1998, California-based Wells Fargo and Minneapolis banking company Norwest announced a "merger of equals" in a stock deal valued at $34 billion and one that created the Western Hemisphere's most extensive and diversified financial services network. The Wells-Norwest combined company would have $191 billion in assets, more than 90,000 employees, approximately 20 million customers, and 5,777 financial services "stores" (mortgage, consumer finance, or banking stores) in 50 states, Canada, the Caribbean, Latin America, and internationally. The new combined company, Wells Fargo & Co., would be the sixth largest bank in the United States and have the largest supermarket branch network and the largest Internet bank of any U.S. bank. With the merger, Paul Hazen, chairman and CEO of Wells Fargo at the time, became chairman of the new organization. Richard Kovacevich, chairman and CEO of Norwest, became president and CEO of the new organization. Despite Kovacevich's and Hazen's enthusiasm for the merger, they had a series of potential barriers to overcome: First, Wells Fargo and Norwest had contrasting cultures--Norwest was known for customer service and a superior sales culture, whereas Wells Fargo was a leader in online banking and technology, with a focus on efficiency. Second, in 1998, Wells Fargo was still in the process of overcoming a merger with First Interstate that was widely considered a failure. Finally, many industry analysts viewed the Wells-Norwest merger with much caution. Given such barriers, Kovacevich and his team wondered how they could overcome such issues through an optimal integration strategy and effective execution toward that plan. -
Wells Fargo and Norwest: "Merger of Equals" (B)
On June 8, 1998, California-based Wells Fargo and Minneapolis banking company Norwest announced a "merger of equals" in a stock deal valued at $34 billion and one that created the Western Hemisphere's most extensive and diversified financial services network. The Wells-Norwest combined company would have $191 billion in assets, more than 90,000 employees, approximately 20 million customers, and 5,777 financial services "stores" (mortgage, consumer finance, or banking stores) in 50 states, Canada, the Caribbean, Latin America, and internationally. The new combined company, Wells Fargo & Co., would be the sixth largest bank in the United States and have the largest supermarket branch network and the largest Internet bank of any U.S. bank. With the merger, Paul Hazen, chairman and CEO of Wells Fargo at the time, became chairman of the new organization. Richard Kovacevich, chairman and CEO of Norwest, became president and CEO of the new organization. Despite Kovacevich and Hazen's enthusiasm for the merger, they had a series of potential barriers to overcome: First, Wells Fargo and Norwest had contrasting cultures--Norwest was known for customer service and a superior sales culture whereas Wells Fargo was a leader in online banking and technology, with a focus on efficiency. Second, in 1998, Wells Fargo was still in the process of overcoming a merger with First Interstate that was widely considered a failure. Finally, many industry analysts viewed the Wells-Norwest merger with much caution. Given such barriers, Kovacevich and his team wondered how they could overcome such issues through an optimal integration strategy and effective execution toward that plan. -
Keith Ferrazzi
Keith Ferrazzi had certainly come a long way. The son of a steelworker and a cleaning lady, he attended an elite elementary school and then a top prep school in Pennsylvania, followed by undergraduate work at Yale and then Harvard Business School. He was wooed by top consulting firms and ended up on the partner track at Deloitte Consulting, where he built the company's marketing function. He left consulting to become the chief marketing officer of Starwood Hotels and Resorts, eventually leaving the company to become CEO of YaYa Media. In 1997, he was named by Crain's Chicago Business as a member of the "40 Under 40." In 1999, he was also named one of the "Power 10" by Business Marketing, and in 2002 was named among the most creative Americans in Who's Really Who. The World Economic Forum named him a "Global Leader of Tomorrow." In the summer of 2003, Ferrazzi was at a key crossroads in his life. He had sold YaYa Media to a company called American Vantage. He questioned the opportunities for growth within YaYa and was considering a transition from the company into a new role. Ferrazzi faced two questions: First, what should he do? Should he work for a large company in a senior management position, ultimately seeking to become the CEO? Should he seek out another CEO position at a smaller, entrepreneurial company? Should he do something entirely different, such as turn his skill at networking and his interest in teaching others how to build relationships into a business? Second, what other bases of influence besides networking and building social relationships should or could he develop? -
Gary Loveman and Harrah's Entertainment
In 1998, 38-year-old Gary Loveman was perfectly content with his job as an untenured associate professor at the Harvard Business School. He was a popular teacher with standing room only classes in service management. He lived comfortably with his family in Massachusetts and had successful consulting engagements and executive education assignments with companies such as Harrah's Entertainment. His prospects for tenure review, coming up in the next year or two, looked good. Then his life dramatically changed when the then-CEO of Harrah's, Phil Satre, offered him a job as chief operating officer (COO) of the company. Commuting from his home in Massachusetts, Loveman took the job and never turned back. But hiring Loveman caused some internal and external rumblings. Loveman had never before managed anyone apart from his administrative assistant and some research assistants; he was now going to manage 15 casinos with more than 10,000 hotel rooms and over 35,000 employees. The company was also closing one of its largest acquisitions to date, Showboat. Moreover, the gaming industry was not, in 1998, a common destination for MBA graduates, let alone PhDs--it was an industry dominated by insiders who had spent their careers in gaming, working their way up from the bottom. The tasks facing Loveman as he joined Harrah's were daunting. He had somehow to gain credibility and respect inside Harrah's, as well as in the industry. He had to lead Harrah's through a transition to a more marketing-focused company and help the company break out of a financial performance plateau. And he had to build a set of relationships and a power base to potentially attain the CEO position when Satre stepped down in five years. What could he do to accomplish all this? -
Dr. Laura Esserman (B)
Supplements the (A) case. -
Dr. Laura Esserman (A)
Laura Esserman, a surgeon and faculty member at the University of California at San Francisco as well as a graduate of Stanford Business School, is engaged in a major effort to change the delivery of breast cancer services and the information systems used to support both research and patient care. A true visionary with enormous personal charm and charisma, Esserman has run into obstacles and opposition as she tries to get support in a bureaucratic, complex, academic medical organization. Focuses on Esserman's accomplishments and various other actors and brings up the issue of how she should develop more power and influence to move along her vision. -
SAS Institute (B): The Decision to Go Public
In 2000, SAS Institute, the largest privately owned software company in the world, confronted the decision of whether to become a public company. The organization, know for its family-friendly policies and low turnovers, had to consider whether being a public company would adversely affect its ability to maintain its unique culture. The leadership in the organization had to address the question: If the company were to go public, what should they do to ensure its continued success? -
Smart-Talk Trap
In today's business world, there's no shortage of know-how. When companies get into trouble, their executives have vast resources at their disposal: their own experiences, colleagues' ideas, reams of computer-generated data, thousands of publications, and consultants armed with the latest managerial concepts and tools. But all too often, even with all that knowledge floating around, companies are plagued with an inertia that comes from knowing too much and doing too little--a phenomenon the authors call the knowing-doing gap. The gap often can be traced to a basic human propensity: the willingness to let talk substitute for action. When confronted with a problem, people act as though discussing it, formulating decisions, and hashing out plans for action are the same as actually fixing it. And after researching organizations of all shapes and sizes, the authors concluded that a particular kind of talk is an especially insidious inhibitor of action: "smart talk." People who can engage in such talk generally sound confident and articulate; they can spout facts and may even have interesting ideas. But such people often exhibit the less benign aspects of smart talk as well: They focus on the negative, and they favor unnecessarily complex or abstract language. The former lapses into criticism for criticism's sake; the latter confuses people. Both tendencies can stop action in its tracks. How can you shut the smart-talk trap and close the knowing-doing gap? The authors lay out five methods that successful companies employ in order to translate the right kind of talk into intelligent action. -
PSS World Medical: The Challenges of Growth and the Financial Markets
PSS World Medical has grown rapidly since its founding in 1983, largely by acquisitions. It has recently had some trouble digesting a large acquisition, and its stock price is quite depressed. The CEO and his senior management team confront the question of whether the strong culture organization they have built, and the practices they are using to manage the company, will stand it in good stead at its larger size and facing the current challenges. Also, the senior management team is wondering why Wall Street doesn't fully appreciate what the company has accomplished and its management strengths.