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The Secret to True Service Innovation
The secret to true service innovation lies in shifting focus away from the service solution back to the customer. Rather than asking, "How are we doing?" managers must ask, "How is the customer doing?" For far too many businesses, service innovation means making incremental improvements to existing services. While a focus on improving current services certainly has its place, we indicate that this has constrained firms' innovation capabilities by limiting new ideas. In order to truly innovate, firms must expand their focus beyond existing services and service capabilities to address the fundamental needs of their customers, including the jobs and outcomes those customers are trying to achieve. By further focusing service innovation on developing shared solutions with customers, firms are better able to create breakthrough service offerings and processes. This will result in value co-creation that is both meaningful to customers and uniquely differentiated from competitive offerings. To this end, we present a four-step process for firms to guide job-centric service innovation. -
Developing and Sustaining an Ethical Corporate Culture: The Core Elements
Of all the issues boards of directors, executives, and managers face, one could argue that unethical corporate activity is one of the most significant in terms of its potential negative impact and also one of the most difficult to properly address. This article argues that three key elements must exist if illegal or unethical activity within and on behalf of organizations is to be minimized through developing and sustaining an ethical corporate culture. The three elements include (1) the existence of a set of core ethical values infused throughout the organization in its policies, processes, and practices; (2) the establishment of a formal ethics program, including a code of ethics, ethics training, an ethics hotline, and an ethics officer; and (3) the continuous presence of ethical leadership-that is, an appropriate 'tone at the top' as reflected by the board of directors, senior executives, and managers. While each of these three elements is distinct, they also overlap, relate to, and reinforce each other. This article discusses each of the three key elements necessary to develop and maintain an ethical corporate culture. -
Supply Chain Lessons from the Catastrophic Natural Disaster in Japan
While supply chain management has been approached from a variety of perspectives, the role of the global supply chain as a mechanism to overcome severe supply chain disruptions has not been explored adequately. This article discusses the ways in which Japanese manufacturing firms have responded to the recent earthquake, tsunami, and nuclear disaster. Based on case studies of Japanese manufacturing firms, this article presents a discussion of the supply chain restoration process after severe natural disasters and humanitarian disruptions and reflects on supply chain lessons in terms of disaster planning and recovery responses. The critical capabilities of supply chain information design, portability, and dispersion are discussed. -
Strategy Made Simple: Thinking in Threes
In this increasingly complex world, managers understandably seek experts' advice to chart a path forward. Yet they encounter a jumble of metaphors, methods, and models; too often, old wine in new bottles. This article helps managers cut through the clutter. It presents a triangular framework which integrates concepts that, despite contrasting language, are more similar than different. The schema is based on the three kinds of Venn diagram: disjunction, containment, and intersection. Disjunction implies autonomy; containment, control; and intersection, cooperation. Every organizational strategy is a balance of these three variables. Once the triadic pattern has been grasped, managers can 'speed-read' the literatures on strategy, technology/organization, mergers and acquisitions, and cognition-as well as see parallels across these writings. They also become better able to address strategic issues systemically and efficiently, and to communicate to a wide organizational audience. -
Linking Candour to Leadership Character with Gen. Rick Hillier
Lack of candour stems from avoidance of difficult or uncomfortable situations. However, what begins as an attempt to avoid difficulty often turns into a series of bad decisions and bad consequences. Candour allows organizations to have better idea generation, faster problem solving through avoiding “beating around the bush,” and more efficient processes. The authors argue that candour requires character and that with character comes the judgment that ensures the appropriate expression of candour. Their research has shown that candour requires depth of character across eleven dimensions. <br><br>To understand candour in practice, the authors have interviewed General Rick Hillier, former Chief of the Defence Staff of the Canadian Forces. Hillier defines positive candour as that which focuses on a leader’s charges. He refers to leaders making comments for personal gain — such as in the case of certain whistleblowers — as an example of negative candour. He explains that if a leader acts candidly, then they must expect their subordinates to be equally candid and must not punish them for doing so. Arguably, being candid is the best way to treat people fairly. However, Hillier clarifies that candour is culturally bound and that leaders must be patient and polite in their interactions with foreigners in order to ensure effective communication. -
Dealing with Cartels
In most free-market economies, restrictions exist to curb the activity of cartels — groups of otherwise independent businesses that collaborate to lessen or prevent competition. Between 1990 and 2008, the total known affected sales of cartel activity topped US$16 trillion. Although government bodies have committed substantial resources to battling illegal corporate activity, it still happens and many corporations reoffend after being sanctioned for crimes. The authors have conducted research using a database of all known international cartels between 1970 and 2008. They suggest four courses of action to curb cartel activity: 1) Remunerative practices should be designed with a better understanding of the environmental drivers of illegal activity. Compensation should focus on solid strategic behaviours rather than rewarding short-term performance. 2) More independent boards are associated, somewhat counter-intuitively, with more illegal activity. Thus, the call for more independent boards needs to take into account the tendency of independent boards to structure CEO compensation to be more output-based, which often leads CEOs to focus only on short-term financial metrics. 3) Regulators should introduce harsher financial penalties in order to incent “means-based” organizational behaviour and punish “ends-based” activity. 4) Organizations should be made to have a legal requirement to protect society. -
Empowering Autonomous Teams
Autonomous teams — work groups granted the organizational latitude to establish their own internal goals and work practices — have surged in popularity. This article discusses findings from a recent study that revealed a unique set of organizational dynamics that can be nurtured to fuel powerful autonomous teams. Three distinct dynamics were found to prevail in organizations with strong autonomous teams. 1. Firstly, an organization must be committed to using autonomous teams. Weak support from management can precipitate failure. Members of autonomous teams desire the ability to make decisions without significant managerial interference. However, too much autonomy can negatively influence team outcomes and result in increased stress levels in team members. 2. Secondly, strong teams require steady, upfront commitments to allocating resources for team use. Stating an upfront commitment to providing resources can be more significant in motivating team members than actual resource availability. 3. Finally, autonomous teams benefit from frequent face-to-face feedback from organizational leaders. While a plethora of team dynamics, ranging from internal conflict levels to demographic composition, influence the effectiveness of autonomous teams, the power of organizational dynamics to shape the implementation of these teams must not be underestimated. -
Uncle Sam's Governance Is Ugly: But Still a Sideshow
The U.S. federal government has attracted increased criticism due to the government shutdown in 2013. This author, a former director of financial and enterprise affairs at the Organization for Economic Cooperation and Development (OECD), recommends a reform of laws regarding political contributions and the way legislative districts are determined. Nonetheless, he argues that from a broad governance perspective, the United States still looks relatively attractive as a market in which to invest. He supports this view through a global-governance ranking he has developed of 44 countries as investment destinations, based on major comparative studies. These include the annual “Doing Business” ranking by the World Bank and IFC, where the United States ranked fourth and Canada ranked 19th out of 189 countries; the World Economic Forum’s Global Competitiveness Index, in which the United States ranked seventh and Canada ranked 14th; and the Corruption Perceptions Index by Transparency International, where the United States ranked 17th and Canada ranked ninth. In the author’s global-governance ranking of 44 nations, he places the United States in seventh and Canada in 14th. He argues that despite justified fears of America’s increasing governance failures, it remains a relatively strong investment destination. -
Making Canada's SMEs More Productive
Canadian businesses have fallen far behind their foreign counterparts in competitiveness. Private-sector enterprises should increase internal efforts to be more productive and compete internationally. But before this happens, managers must ensure that the organizational factors that nurture productivity growth are aligned. The Three Pillars of Productivity (3POP) framework presented in this article uses strategy, operations and technology as three pillars that stand upon a base of solid organizational culture. <br><br>Strategy, the first pillar, is usually given minimal attention by SMEs, who focus instead on tactical operations. However, SMEs that follow strategy-execution processes almost always outperform those that do not. After clarifying a company’s mission and performing strategic analysis, a firm should execute its strategy through its operations. This pillar is more flexible and open to continual adjustment, especially in smaller firms. Finally, using technology and collecting quantitative and qualitative data to support decisions is critical, but the wrong investment can make or break a business. While aligning the three pillars is key, the first step to significant productivity improvements is creating a supportive culture. Willingness to change, tolerance for failure and acceptance of calculated risk are almost always needed to realize strong productivity gains. Ultimately, culture characterizes a firm more than any other part of the framework. -
Mind Over Marketing
Brand battles occur in every industry and in practically every product category. They consume significant managerial attention and consist of far more than marketing tactics — they are ultimately about winning customers’ cognitive resources. Brands make it easier for consumers to find the products they want and need. They also make markets more efficient by bringing buyers and sellers together at a lower cost than would otherwise be possible. In fact, the loss of a brand would often be more harmful to a company’s ability to continue business operations than the loss of its upstream assets. Consumers’ attention is finite, but available information is increasingly abundant, which gives rise to a principle of scarcity that makes brands particularly valuable. Moreover, cognitive economy states that because information-processing capacity is finite, customers often trade off accuracy of results and optimal outcomes for what is most accessible. This partly explains the high failure rate of new, novel products — and why Lexar, when it introduced memory cards for digital cameras, wisely packaged them in gold packages similar to those used for Kodak film. As this article shows, the battle between brands takes place inside the minds of consumers. -
Followership: The Other Side of Leadership
If leadership is important to performance, then followership must be too, yet followership is a comparatively neglected concept. This article defines followership as the ability to take direction well, adhere to a program, be part of a team and deliver what is expected. In fact, how well followers follow is almost as important as how well leaders lead. The article identifies eight qualities of followers. 1) Judgment: The key is knowing the difference between a directive that a leader gives that is questionable and a directive that is truly wrong. 2) Work Ethic: This includes diligence, motivation, commitment, attention to detail, and effort. 3) Competence: Followers must be competent, although leaders are obligated to assure this. 4) Honesty: Followers owe leaders honest and forthright assessments, especially when a leader’s agenda seems flawed. 5) Courage: Followers need the courage to be honest. 6) Discretion: Gossiping and speaking inappropriately about work matters is unhelpful and often harmful. 7) Loyalty: This is particularly important when problems exist with leaders. 8) Ego Management: Followers need to remember that they are team players. -
Delivering Public Service for the Future: Harnessing the Crowd
Governments around the world are strained financially, yet the potential of the crowd has begun to transform the way firms do business, the way ideas come to fruition, and the way social change is catalyzed. While governments increasingly offer web services that reflect citizens’ needs, there is great scope for the internal equivalent. Beyond better linkages between departments, there are at least three ways that governments can harness the wisdom of the crowd internally: a) pool resources, b) encourage agency-to-agency services and c) explore government-to-government services. Effective governments should also take steps to harness the crowd externally. Policymakers and public managers may consider the potential of the crowd in three key areas: a) the delivery base (e.g. Seniors Helping Seniors in the United States), b) the funding base (e.g. social finance) and c) the evidence base (e.g. crime mapping in Chicago). Ultimately, there are three ways to accelerate the diversification of delivery models, funding options, and evidence-based policy making: a) open up government, b) get better at working with the small details of citizens’ lives and c) trust the ability of citizens to make decisions and help shape the services they receive. -
Strategic Planning: A Roadmap to Success
Strategic planning is among the most widely used and, often, abused management terms. This article attempts to show some of the misconceptions in the strategic planning process and to touch upon the strategic planning process in a corporate setting. It defines “strategic” and then presents a seven-part framework that practicing strategic planners can use to craft strategies for their organizations: 1) Get clarity on the boundary conditions and on the specific decision criteria upfront. 2) Conduct an industry analysis. 3) Conduct a status quo analysis to see where the firm might be in the near future in the absence of strategic planning. 4) Generate strategic options — often the most complicated step — by articulating the logic behind decisions without moving directly to the evaluation stage. 5) Assess and evaluate options using financial analysis and modern tools of sensitivity analysis and scenario planning. 6) Articulate a strategic roadmap, including goals, risks, returns, investments, etc. 7) Deploy the strategy, using a tool such as the Balanced Scorecard. The article finishes by explaining the difference between budgeting and strategic planning, terms often confused. -
Keys to Success: Nurturing Effective Boardroom Culture
The difference between an effective and ineffective boardroom can be summarized in nine factors. While the existing corporate governance regime consists mostly of checklists, guidelines and best practices, the use of these tools and techniques results in liabilities of simplicity, misdiagnosis, sameness, and “the outsider.” The authors have responded to these liabilities by collecting feedback from 193 board members and have revealed five fundamental behaviours that must be developed for effective boardroom culture: a) a new approach on strategy-setting by the board; b) establishing support and respect among board members; c) encouraging director preparation; d) fostering a board that is open to change; and e) bolstering the active listening skills of directors. In addition, four secondary factors have been identified as playing an important supporting role: a) decision-making orientation; b) director satisfaction; c) curtailing rogue behavior; and d) director support for the chair, when deserved. The authors argue that the most effective corporate governance regime, based on board performance, has to originate with the board itself and the behaviours of its directors. Ultimately, the focus of all nine factors in boardroom culture is the performance of the board. -
How to Run a Board
An effective board of directors is a prerequisite to a well-managed company. However, the components of an effective board are often neglected. Most boards lack a plan and instead conduct simple, routine board evaluations. Instead, they should determine key objectives and agree on what they want to accomplish in the future. They should not only provide corporate oversight, but should collaborate with management in running the company. Furthermore, consideration must be given to whether the roles of chairperson and CEO should be separated. Any board that creates a plan needs to hold itself accountable for achieving it. Unfortunately, many board members tell managers that performance and accountability are critical, but then bring a “tenure mentality” to the board. While both independence and diversity can be important considerations in the composition of a board, real performance and contribution are equally crucial. Ultimately, board culture must change. A board is not a dinner party; the shift from a friendly, collegial culture to a performance culture is essential. -
Nine Ways That Business Leaders Can Put Out Any Fire
Fire captains have only a few short minutes to pull together their team, develop an action plan, and communicate the situation to all team members. This article outlines some basic principles of firefighting and reveals lessons that business leaders can draw from firefighters regarding how to mobilize teams to address dynamic problems. 1) Simplicity: While problems are complex, the teaming process should be simple and the structure should provide all team members with a shared mental model. 2) Flexibility: This allows adjustments to a changing environment. 3) Standardization: Having a common approach to and understanding of team functioning is critical. 4) Modularity and Scalability: Allows leaders to add or scale down resources. 5) Unity of Command: One person takes on the leadership role. 6) Information Management: Business teams need to continuously collect information relevant to the problem. 7) Accountability: All functional areas and team members remain responsible for their actions. 8) Critique and Debrief: All team leaders must report on their performance, underline success factors, and reveal areas for improvement. 9) Interoperability and Integrated Communication: Allows team members from multiple levels and functions to work together on large-scale problems. -
Winning Workplace Cultures: An Imperative for Enabling Business Success
Innovative, high-performing workplace cultures enable business success. This article uses interviews with executives, researchers and authors to identify obstacles, enablers and solutions for workplace culture. Key obstacles to healthy workplace culture include poor leadership, employees’ selfish ambitions, and years of ingrained culture. Enablers of winning culture include employees believing firm success to be related to their own success, as well as open dialogue between leaders and employees. Leaders should define and share a clear picture of what the desired workplace should look like. They should also establish trust and embrace management training, while aligning culture, goals and performance. As this article explains, CEOs should understand the existing workplace culture and evaluate the tolerance for change; create a clear, shared vision of what they want the new culture to look like; be honest about why they are changing the culture, and about their own leadership abilities; take care of their team and ensure that team members feel connected; and build a strong management system and framework. -
Stopping CEO Pay Escalation at Canada's Big Banks
Inflation-adjusted CEO pay at Canadian big banks has nearly quadrupled since the early 1990s, leaving many observers outraged. The author suggests a benchmark for CEO pay at Canadian big banks that would effectively halt the ongoing pay escalation while allowing banks to stay competitive. He recommends that annual grant-date target total CEO pay should remain flat at $10 million until it is indexed to 100 times the median Canadian family income (i.e. until the median family income surpasses $100,000, from the current median of $70,000). This would not mean that actual realized pay would be flat at $10 million, as pay on incentives would continue to vary, and this benchmark could be implemented immediately without major pay cuts. It would also return CEO pay at the Canadian big banks to where it was at the end of the 1990s, before the dot-com bubble. Many boards, when setting executive pay, assume the transferability of executive talent as a reason to keep raising CEO pay. Yet opportunities for CEOs to switch from one CEO role to another are rare and often fraught with problems. In reality, the level of CEO pay matters less to many CEOs than their perception of that pay relative to their peers’ pay. -
10 No-Cost and Contrarian Solutions to Canada's Innovation and Productivity Challenges
One effective technique that a company can use to encourage innovative thinking is to imagine what it might have to do if its assumptions (e.g. about customer needs, costs and product design) are no longer valid — that is, to use “contrarian assumptions.” This article proposes ten no-cost, contrarian ideas that firms and individuals can apply to improve innovation and productivity. 1) Innovation is something everyone should strive for in their products, services and activities. R&D teams may not be needed if innovation targets and key performance indicators are present. 2) A meeting agenda should not feature a list of topics, but a list of questions. 3) Meetings should be held in spaces that encourage innovation, not just in the boardroom. 4) Meetings should be run in a way that suits the specific problem. 5) Three feasible answers should always be proposed for a problem, rather than one. 6) The prevailing assumptions in an industry are only held dear by the current players. 7) Emotion, far from having no place in business, is the root of loyalty, service and gaining buy-in. 8) Perfect certainty cannot be acquired before taking action; hold only three meetings on a specific problem. 9) Reward not only successful innovations, but also successful efforts. 10) Innovation does not come primarily out of research labs. -
Thriving With the Crowd: Marketing With (and Against) the New Influence Peddlers
Marketers face new challenges in the era of crowdsourced opinions, where sites like TripAdvisor and Yelp allow consumers to share opinions that may contradict marketing messages. This article identifies ten sources of influence that can sway consumers, four of which (social networks, opinion aggregators, recommendation engines, and price comparison services) have only gained prominence recently. With the shift from traditional marketing channels to digital realms, consumers now comprehensively inform themselves, loudly inform others, and make purchase decisions at their own pace. Marketers can take four approaches in order to gain value from the crowd. 1) Endorse the crowd: Bringing the “voice of the crowd” into marketing efforts can provide the credibility and authenticity that consumers seek. 2) Venture among the crowd: Engaging with consumers directly, e.g. through social media, can highlight a company’s transparency and build trust with consumers. 3) Listen to and learn from the crowd: Monitoring online discussions of user needs, desires, and trends can provide highly valuable data. 4) Invite the crowd inside: Companies like WebMD offer users a diverse portfolio of guidance and a useful forum in which to hold their own conversations.