The value of information in the knowledge economy is indisputable, but so is its capacity to overwhelm consumers of it. HBR contributing editor Hemp reports on practical ways for individuals and organizations to avoid getting too much of a good thing. Ready access to useful information comes at a cost: As the volume increases, the line between the worthwhile and the distracting starts to blur. And ready access to you - via e-mail, social networking, and so on - exacerbates the situation: On average, Intel executives get 300 e-mails a day, and Microsoft workers need 24 minutes to return to work after each e-mail interruption. Clearly, productivity is taking a hit. Technological aids can help, such as e-mail management software for you, a message-volume regulation system for your organization, or even more sophisticated solutions being developed by Microsoft, IBM, and others. Yet, battling technological interruptions on their own turf only goes so far. You also need to change your mind-set, perhaps by seeking help from personal-productivity experts or by simply accepting that you can't respond to every distraction that flits across your screen. Similarly, organizations must change their cultures, for instance by establishing clear e-communication protocols. In the end, only a multipronged approach will help you and your organization subdue the multiheaded monster of information overload. The secret is to manage the beast while still respecting it for the beautiful creature it is.
Forward-looking companies are using virtual venues to mimic reality, helping employees and business partners collaborate and learn. Their increasingly user-friendly and graphically sophisticated platforms may become the next-generation means of communication.
Since 1963, Bernard Watch Company has been manufacturing watches for widely known brands, such as Dolce & Gabbana and Roamer. The company is headquartered in Denmark and has a branch office in Hong Kong and an assembly plant in Shenzhen, China. Anson Leung, chief financial officer, has conducted a series of audits on the various cost aspects of running the assembly plant. This is to ensure efficient management of the plant's human capital, which is a vital resource for the company due to the need for stable production quality with just-in-time delivery at competitive prices-a common goal for the watch-making industry. Leung is alarmed by findings that reveal a high voluntary turnover rate of 39.3% among assembly line workers during 2006, costing Bernard as much as Rmb 718,188.9. She is concerned that this may jeopardise the company's long-standing market position in watch-making. This case examines the different types of costs that may incur from voluntary turnover, including both direct and intangible costs such as those that are related to separation of leaving employees, recruitment of new staff and loss in productivity. It can be used to teach the concept of human resources accounting and to introduce how human resources management practices may help reduce voluntary turnover costs.
Unless we challenge long-held assumptions about how business leaders are supposed to act and where they're supposed to come from, many people who could become effective global leaders will remain invisible, warns Harvard Business School professor Hill. Instead of assuming that leaders must exhibit take-charge behavior, broaden the definition of leadership to include creating a context in which other people are willing and able to guide the organization. And instead of looking for the next generation of global leaders in huge Western corporations and elite business schools, expand the search to developing countries. In this conversation with HBR senior editor Paul Hemp, Hill describes the changing nature of leadership and what we can learn from parts of the world where people have not, until recently, had opportunities to become globally savvy executives. In South Africa, for instance, the African National Congress has provided rigorous leadership preparation for many black executives. Hill has also observed two approaches - in developed and developing economies alike - that she believes will be necessary in an increasingly complex business environment. The first, leading from behind, involves letting people hand off the reins to one another, depending on their strengths, as situations change. The second, leadership as collective genius, calls for both unleashing and harnessing individuals' collective talents, particularly to spur innovation. Through her descriptions of these approaches in such companies as Sekunjalo Investments, HCL Technologies, and IBM, Hill highlights the challenges of finding and preparing people who can lead by stepping back and letting others come forward to make their own judgments and take risks.
Advertising has always targeted a powerful consumer alter ego: that hip, attractive, incredibly popular person just waiting to emerge (with the help of the advertised product) from an all-too-normal self. Now, in cyberspace, consumers are taking the initiative and adopting alter egos that are anything but under wraps. These online personae, called avatars, range from simple but personalized cartoonlike characters used as pictorial signatures in instant messaging to fully developed characters in virtual worlds. And they represent a huge population of "shadow" customers who can be analyzed, segmented, and targeted. The experience of living through another self is most powerful in so-called massively multiplayer online role-playing games, which enable thousands of people to interact simultaneously within the same three-dimensional virtual world. In such settings, participants effectively become the avatars they've created, looking out through their eyes and engaging with other such beings. In this article, which expands upon an item in "The HBR List: Breakthrough Ideas for 2006" (HBR reprint R0602B), the author examines early efforts to market real-world products in virtual worlds. He argues that companies need to look quickly beyond the market itself and think about the potential customer, which may be the avatar rather than its creator. Of course, the human behind the avatar controls the money in the real-world wallet. But the avatar, as a distinct creation of the user's psyche, can influence its creator's purchasing behavior and even make its own purchases of real-world products in the virtual world, deliverable to the user's real-world door. At the least, avatars offer a window into people's hidden preferences and a means for achieving sustained consumer engagement with a brand. The marketing initiatives of the few pathfinding companies working in this area point toward some methods that might be used in the future.
We highlight 20 ideas just bubbling up to the surface in 2006. Howard Gardner contends that the ability to synthesize information will be the most valued trait for leaders. Dan Williams explores how body area networks can lower health care costs and improve safety. William McDonough describes China as a seedbed for environmental innovation. Nitin Nohria and Thomas A. Stewart say the next frontier for business will be managing incalculable uncertainty. Jeff Cares outlines the challenge confronting business as networks face off against networks. Claire Craig reports how scientists are going beyond the lab and using the world outside as their petri dish. Ted Halstead recommends that every newborn in America receive $6,000 as a down payment on a productive life. Georg von Krogh warns that customer-collaborators are starting to demand a stake in IP. Ged Davis envisions an OPEC-like organization to benefit consumers instead of producers. Nancy M. Dixon describes a model for peer-to-peer leadership development. Harris Allen and Sean Sullivan contend that investment in employees' health can pay for itself. David Weinberger says that stores should imitate Web design. Gerd Gigerenzer shows how a leader's personal rules of thumb influence employees. Zachary Karabell discusses the growing gap between nations' and companies' economic performance. Paul Hemp tells why avatars make good customers. Philip Parker explains why creating private labels for your retail customers is smart strategy. Judith Samuelson and Claire Preisser describe how companies are combating short-term thinking. George Stalk Jr. explains why many firms aren't benefiting from China sourcing. Michael S. Gazzaniga punctures inflated expectations about what neuroscience can do for business. E.L. Kersten says employees shouldn't expect their jobs to provide meaning. HBR also offers a list of important business books due out in 2006.
Lou Gerstner's was a hard act to follow. As CEO in what were arguably IBM's darkest hours, Gerstner brought the company back from the brink. After nearly 10 wrenching years, in which the big-machine manufacturer remade itself into a comprehensive software, hardware, and services provider, business was looking good. So the challenge for Sam Palmisano, when he took over as CEO in 2002, was to come up with a mandate for a second act in the company's transformation. His primary aim was to get different parts of the company working together so IBM could offer customers "integrated solutions"--hardware, software, services, and financing--at a single price. As part of this effort, he asked all of IBM's 320,000 employees, in 170 countries, to weigh in on a new set of shared corporate values. Over a 72-hour period, thousands of IBMers throughout the world gave Palmisano and his executive team an earful in an intranet discussion dubbed "ValuesJam," an often-heated debate about the company's heart and soul. Twenty-four hours into the exercise, at least one senior exec wanted to pull the plug. The jam had clearly struck a chord with employees, but it was a dissonant one, full of rancor and discontent. Palmisano let the discussion continue, and the next day, the mood began to shift. The criticism became more constructive. Out of the million words generated by the jam grew a set of values that, as Palmisano explains in this interview, are meant to guide the operational decisions made by IBM's employees--and, more important, to serve as Palmisano's mandate to continue the reinvention of the company.
Employers are beginning to realize that they face a nearly invisible but significant drain on productivity: presenteeism, the problem of workers being on the job but, because of illness or other medical conditions, not fully functioning. By some estimates, the phenomenon costs U.S. companies over $150 billion a year--much more than absenteeism does. Yet, it's harder to identify. You know when someone doesn't show up for work, but you often can't tell when, or how much, poor health hurts on-the-job performance. Many of the health problems that result in presenteeism are relatively benign. Research in this emerging area of study focuses on such chronic or episodic ailments as seasonal allergies, asthma, headaches, depression, back pain, arthritis, and gastrointestinal disorders. The fact is, when people don't feel good, they simply don't perform at their best. Employees who suffer from depression may be fatigued and irritable--and, therefore, less able to work effectively with others. Those with migraine headaches who experience blurred vision and sensitivity to light, not to mention acute pain, probably have a hard time staring at a computer screen all day. A number of companies are making a serious effort to determine the prevalence of illnesses and other medical conditions that undermine job performance, calculate the related drop in productivity, and find cost-effective ways to combat that loss. Indeed, researchers have discovered that presenteeism-related declines in productivity sometimes can be more than offset by relatively small investments in screening, treatment, and education. So organizations may find that it pays to make targeted investments in employees' health care--by covering the cost of allergy medication, for instance, or therapy for depression.
Fast growth is a nice problem to have--but a hard one to manage well. In this interview, Kevin Sharer, the CEO of biotech giant Amgen, talks about the special challenges leaders face when their companies are on a roll. Sharer, who was also head of marketing at pre-WorldCom MCI and a division head and a staff assistant to Jack Welch at GE, offers insights drawn from his own experience--and from his own self-proclaimed blunders: "I learned the hard way that you need to become credible and enlist support inside the company before you start trying to be a change agent. If you think you're going to make change happen simply by force of personality or position or intellect, you'd better think again." And change there was: Under Sharer's leadership, Amgen overhauled its management team, altered its culture, and launched a couple of blockbuster products. How do chief executives survive in that kind of dizzying environment? "A CEO must always be switching between different altitudes--tasks of different levels of abstraction and specificity," Sharer says. "You might need to spend time working on a redesign of your organizational structure and then quickly switch to drafting a memo to all employees aimed at reinforcing one of the company's values." Having a supportive and capable top team is also key.
Deutsche Post World Net, the German postal monopoly, faced significant challenges as it began the process of integrating three businesses: Deutsche Post Euro Express, its own ground-based parcel delivery service, and two companies it had acquired--DHL, the worldwide express delivery service, and Danzas, a worldwide air and ocean freight company. The cultural differences alone were imposing. Enter EuroCup. For 20 years, DHL employees had held a soccer tournament to strengthen company culture across national boundaries. Canceled the previous year due to budget constraints, the EuroCup tournament was revived in 2003--in part to help with the postmerger integration. But did the event really help? HBR senior editor Paul Hemp attended EuroCup 2003. He set out to answer a number of questions relevant to any company staging an ambitious off-site intended to encourage teamwork and boost morale. How does a company determine whether such a large-scale event, even one that generates goodwill, is worth the investment? Does the team building extend to those back home who don't get to attend? Can intense competition between teams begin to overshadow the spirit of cooperation that such an event is meant to engender?
Paragon Tool, a thriving machine tool company in an increasingly tough industry, has been pouring money into growth initiatives. These efforts have shrunk the company's margins, but CEO Nikolas Anaptyxi believes they'll provide the foundation for a profitable future. Now Paragon is weighing the acquisition of MonitoRobotics, a company with proprietary technology for monitoring the functioning of robotics equipment. The acquisition, which would nearly double Paragon's revenue, could help transform Paragon from a slow-growth manufacturer into a high-growth technology company, bolster its struggling services business, and ultimately allow it to set the standard for how machines communicate with one another. At least, that's what the CEO thinks. Paragon's CFO, William Littlefield, isn't so sure. He says the move would introduce all the risks that come with acquisitions and put further downward pressure on profits. Paragon's management team is divided, and Anaptyxi must decide how to move forward. This case study explores growth issues that companies in many industries currently face. The specific dilemma here is, How far should Paragon go in sacrificing profits up front with the aim of generating real profits down the line? In R0209A and R0209Z, commenting on this fictional case are Rand Araskog, former CEO of ITT; Ken Favaro, CEO of consulting firm Marakon Associates; W. Brian Arthur, an economist known for his work on the idea of increasing returns; and Jay Gellert, CEO of Health Net, a managed-health-care company.
Paragon Tool, a thriving machine tool company in an increasingly tough industry, has been pouring money into growth initiatives. These efforts have shrunk the company's margins, but CEO Nikolas Anaptyxi believes they'll provide the foundation for a profitable future. Now Paragon is weighing the acquisition of MonitoRobotics, a company with proprietary technology for monitoring the functioning of robotics equipment. The acquisition, which would nearly double Paragon's revenue, could help transform Paragon from a slow-growth manufacturer into a high-growth technology company, bolster its struggling services business, and ultimately allow it to set the standard for how machines communicate with one another. At least, that's what the CEO thinks. Paragon's CFO, William Littlefield, isn't so sure. He says the move would introduce all the risks that come with acquisitions and put further downward pressure on profits. Paragon's management team is divided, and Anaptyxi must decide how to move forward. This case study explores growth issues that companies in many industries currently face. The specific dilemma here is, How far should Paragon go in sacrificing profits up front with the aim of generating real profits down the line? In R0209A and R0209Z, commenting on this fictional case, are Rand Araskog, former CEO of ITT; Ken Favaro, CEO of consulting firm Marakon Associates; W. Brian Arthur, an economist known for his work on the idea of increasing returns; and Jay Gellert, CEO of Health Net, a managed-health-care company.
Paragon Tool, a thriving machine tool company in an increasingly tough industry, has been pouring money into growth initiatives. These efforts have shrunk the company's margins, but CEO Nikolas Anaptyxi believes they'll provide the foundation for a profitable future. Now Paragon is weighing the acquisition of MonitoRobotics, a company with proprietary technology for monitoring the functioning of robotics equipment. The acquisition, which would nearly double Paragon's revenue, could help transform Paragon from a slow-growth manufacturer into a high-growth technology company, bolster its struggling services business, and ultimately allow it to set the standard for how machines communicate with one another. At least, that's what the CEO thinks. Paragon's CFO, William Littlefield, isn't so sure. He says the move would introduce all the risks that come with acquisitions and put further downward pressure on profits. Paragon's management team is divided, and Anaptyxi must decide how to move forward. This case study explores growth issues that companies in many industries currently face. The specific dilemma here is, How far should Paragon go in sacrificing profits up front with the aim of generating real profits down the line? In R0209A and R0209Z, commenting on this fictional case are Rand Araskog, former CEO of ITT; Ken Favaro, CEO of consulting firm Marakon Associates; W. Brian Arthur, an economist known for his work on the idea of increasing returns; and Jay Gellert, CEO of Health Net, a managed-health-care company.
You can learn a lot from closely observing a business committed to excellent customer service; you can learn even more from actually trying to provide that service. Paul Hemp, an HBR senior editor, spent a week being trained and then working as a room-service waiter at Ritz-Carlton's Boston Common hotel. His tale, though sometimes humbling, offers lessons that managers in any service business might use to improve employee-customer interactions. The author first participated in a two-day orientation program at the Ritz-Carlton, which gave him a chance to learn how the company inculcates its service philosophy in new employees. Upon completion of the program, he went to work, first with a veteran room-service waiter at his side, then on his own. His aim was to put into practice the Ritz-Carlton service precepts, including its motto: "We are Ladies and Gentlemen serving Ladies and Gentlemen." The author draws a number of conclusions from his experiences. Great service, he finds, should be based on dynamic principles rather than rigid formulas. Also, managers can build employees' emotional commitment to their jobs by emphasizing company traditions. Such commitment serves as a driver of excellent customer service only when employees are empowered to take initiative. And that empowerment has no potency unless employees are motivated to seize it. This depends in part on the kind of people you hire. For one thing, job candidates should exhibit not only concern for others but also genuine empathy--the ability to get inside customers' heads and anticipate their needs and desires.
In this HBR interview, CEO Michael Ruettgers speaks in detail about the managerial practices that have allowed EMC to anticipate and exploit disruptive technologies, market opportunities, and business models ahead of its competitors. He recounts how the company repeatedly ventured into untested markets, ultimately transforming itself from a struggling maker of minicomputer memory boards into a data storage powerhouse and one of the most successful companies of the past decade. The company has achieved sustained and nearly unrivaled revenue, profit, and share-price growth through a number of means. Emphasizing timing and speed, Ruettgers says, is critical. That's meant staggering products rather than developing them sequentially and avoiding the excessive refinements that slow time to market. Indeed, a sense of urgency, Ruettgers explains, has been critical to EMC's success. Processes such as quarterly goal setting and monthly forecasting meetings help maintain a sense of urgency and allow managers to get early glimpses of changes in the market. So does an environment in which personal accountability is stressed and the corporate focus is single-minded. Perhaps most important, the company has procedures to glean insights from customers. Intensive forums involving EMC engineers and leading-edge customers, who typically push for unconventional solutions to their problems, often yield new product features. Similarly, a customer service system that includes real-time monitoring of product use enables EMC to understand customer needs firsthand.