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Creating Disciples: The Transformation of Employees into Trainers
Business realities demand that organizations place a strategic emphasis on developing knowledge workers and becoming a learning organization. Numerous programs of organizational change and renewal must also be undertaken to keep firms competitive. This requires ongoing training for all employees to succeed in today's global marketplace. While external consultants and professional staff are often called upon to provide this training, many organizations are turning to their own employees as an effective, lower cost alternative. There are several benefits to using this strategy, but significant support must be provided to realize these benefits. Herein, we describe a systematic process to turn novice employee trainers into a powerful force for organizational change. By transforming employees into disciples, organizations can give training the impact it needs. -
Customer Rage:Triggers, Tipping Points, and Take-Outs
Road rage, school rage, and customer rage are becoming almost everyday occurrences. Customer rage is an intense anger coupled with expressions of physical, verbal, or other potentially harmful behaviors in response to a dissatisfying service experience. It can potentially result in severe negative consequences for firms, employees, and even other valued customers. Fortune 500 firms are so concerned about this problem that some are installing new software in their call centers to detect rising levels of anger in customers' voices so that management may intervene to prevent an incident escalating to rage. Furthermore, the Entrepreneur magazine noted that Americans are getting angrier every year. This article examines the underlying psychological processes of stress and coping that propel some consumers to experience extreme negative emotions, including rage and, finally, resentment. It explores the triggers (antecedent conditions) that give rise to rage behaviors; identifies the tipping points for extreme anger and rage incidents; and explores the extent to which these circumstances and coping behaviors can be generalized across Eastern and Western cultures. It also recommends a course of action to enable managers to prevent or, at least, better manage customer rage. -
Where's the Fine Print? Advertising and the Mortgage Market Crisis
Current conditions in the U.S. mortgage industry provide a rich context for exploring the positioning and information used in advertisements for mortgage products. This article examines television, radio, and print advertising messages employed to promote prime and subprime mortgage products. An analysis of these advertising messages reveals marked differences in the marketing for prime and subprime mortgage offers. Prime mortgage market advertisements tended to emphasize 'the American dream of homeownership' and low rates, and often provide detailed loan terms. On the other hand, subprime loan advertisements were based on fear appeals, emphasizing debt problems and encouraging consumers to rely on the lender/broker for help. These important differences in the information available to consumers for various mortgage products may have exacerbated industry information asymmetries and contributed to the current mortgage crisis. -
Aesthetics and Ephemerality: Observing and Preserving the Luxury Brand
While luxury brands are one of the most profitable and fastest growing segments of the brand pantheon, they are the least understood. There is no established definition as to what a luxury brand is; no clear understanding of the value dimensionality of luxury brands; and no rigorous conceptualization of the different types of luxury brands. They are generally treated as homogeneous. Little wonder that the management of these brands is shrouded in mystery. This article explores the value dimensionality of luxury brands, differentiates among luxury brands, and proposes a typology to help firms understand the managerial implications and challenges of each type. All luxury brands are not the same-they can mean different things to different people or even different things to the same people, which makes target marketing of luxury brands both difficult and important. This also means that they react differently to each other both in times of economic prosperity and in downturns. This article also explores strategies for migrating mass-market brands into luxury brand markets. -
Automotive Quality Reputation: Hard to Achieve, Hard to Lose, Still Harder to Win Back
This article explores the rise to quality leadership by Japanese automakers, the decline in U.S. automakers' quality reputation, and whether poor quality still contributes to the U.S. automaker's competitive woes. Perception plays a key role in quality competition but not necessarily in ways that we commonly think. The ways in which information about quality performance is displayed plays an important role in customer perception. Quality should not be seen as a stand-alone asset but rather it must be understood in the context of other assets, including a firm's brand equity. It is quality's relationship to brand equity that helps explain the current quandary of U.S. automakers, and this relationship holds lessons for other industries. -
From Volume to Value: Managing the Value-Add Reseller Channel at Cisco Systems
This article provides an in-depth look at a value-based channel management model at Cisco Systems for managing the Value-Add Reseller (VAR) channel. In March 2001, Cisco initiated a change from a volume-based channel management model, which had been driving out partner value, to a value-based model that tied channel rewards to specific channel value-add activities. Critical components of this new model include: identifying opportunities for channel value-add; architecting channel programs to enable channel value-add; tying financial rewards to value-add channel activities including a "holdback system"; and exercising significant discipline to manage field pressures for volume-based rewards and diluting certification requirements. It demonstrates that VARs can serve as a significant sales channel, profitably selling complex solutions to satisfied customers under a value added channel management framework. They can also uncover demand opportunities that are incremental to the pull marketing of even a strong brand like Cisco. However, companies need to exercise significant discipline to avoid mixing volume-based rewards with a value-based framework. -
The Long Conversation: Learning How to Master Enterprise Systems
Few early enterprise systems (ESs) implementations lived up to expectations. How can companies meet or exceed their expectations for enterprise systems? Far from providing a quick fix, the potential of ESs is better achieved through a slow and diligent learning process. This approach emphasizes the need for organizations to focus less on the technical and temporal aspects of ES projects and rather to view them as forming part of a long journey led by users. New social networks emerge as a result of the problems and opportunities based around learning, building, and sharing users' experiences. This article develops a new model for successfully mastering enterprise systems, which is labeled "the long conversation." The application of this model has important implications for practitioners involved in the implementation of an ES. -
Why Repressing Emotions Is Bad for Business
Emotional investment improves relationships and promotes satisfying, enduring agreements. In a difficult economy, when other kinds of rewards are scarce, making people in your organization feel upbeat and engaged can yield considerable value. -
Community Relations 2.0
Before the internet, organizations had far more time to monitor and respond to community activity, but that luxury is long gone, leaving them in dire need of a coherent outreach strategy, fresh skills, and adaptive tactics. Drawing on the authors' study of more than two dozen firms, this article describes the changes wrought by social media in particular and shows managers how to take advantage of them - lessons that Kaiser Permanente, Domino's, and others learned the hard way. Social media platforms enhance the power of communities by promoting deep relationships, facilitating rapid organization, improving the creation and synthesis of knowledge, and enabling robust filtering of information. The authors cite many examples from the health care industry, where social media participation is vigorous and influential. For instance, members of Sermo, an online network exclusively for doctors, used the site to call attention to and organize against insurers' proposed reimbursement cuts. And on PatientsLikeMe, where people share details about their chronic diseases and the treatments they've pursued, charts and progress curves help members visualize their own complex histories and allow comparisons and feedback among peers. As you modernize your company's approach to community outreach, you'll need to assemble a social media team equipped to identify new opportunities for engagement and prevent brand damage. In the most successful firms the authors studied, community management was a dedicated function, combining marketing, public relations, and information technology skills. -
How to Jump-Start the Clean-Tech Economy
Billions of dollars worldwide are pumped into the search for clean technology and renewable energy. So far, however, most investment has been in companies that are using conventional business models to fit new technologies into existing systems. A far better approach, say Johnson and Suskewicz, is to create whole new systems. The authors propose a framework for thinking about clean tech that consists of four interdependent components: an enabling technology, an innovative business model, a careful market-adoption strategy, and a favorable government policy. Two recent experiments show how this framework can be applied: Better Place, founded by the software executive Shai Agassi, has a network of battery-recharging and -switching stations to support its electric cars and a business model based on selling electricity (miles) rather than vehicles. It has a foothold market in Israel, where gas-powered cars are taxed far higher than electric ones. Masdar City, now under construction in Abu Dhabi, will be a carbon-neutral incubator of clean technologies, supported by the investment, manufacturing, strategy, and academic units of a government initiative. The city is itself a foothold market and will benefit from government subsidies, "free zone" status, and favorable regulations. Both enterprises provide hope for supplanting the oilbased economy. -
What Would Peter Say?
Heeding the wisdom of Peter Drucker might have helped us avoid - and will help us solve - numerous challenges, from restoring trust in business to tackling climate change. He issued early warnings about excessive executive pay, the auto industry's failure to adapt and innovate, competitive threats from emerging markets, and the perils of neglecting nonprofit organizations and other agents of societal reform. If he were still here, a century after his birth, what would he say about the path forward? The essential Drucker can be summarized in three themes: First, management should be a profession, and executives and managers should remember that their primary job is to look out for the long-term health of their organizations. That means taking responsibility for social well-being, not just wealth. Second, knowledge workers cannot be controlled; they must be motivated. Such employees must see a purpose more meaningful than personal profit. And third, nonprofits are necessary ingredients for producing a good society, one in which businesses can thrive. It is critical to invest in them. Drucker was not a revolutionary. He merely asked that we constantly challenge our assumptions. He preached steadiness and vision, recognizing that leading in turbulent times requires foresight about where things are heading as well as judgment about what not to change. -
Why Read Peter Drucker?
Peter Drucker's extensive writings, including more than 30 HBR essays, are landmarks of the managerial profession. They've influenced the practice and teaching of management for decades and no doubt line thousands of bookshelves. But does anyone read his works? More important, ought they? More important still, what will they gain if they do? In this 1980 article, Kantrow maintains that Drucker's real contribution to the discipline of management lies not so much in the cash value of his ideas but in the rigorous activity of mind by which they are formulated. One can learn far more deeply from watching Drucker think, says Kantrow, than from studying the content of his thought. Using specific passages from many of Drucker's books, the author demonstrates how Drucker's broadly contextual, logical, holistic play of thought enacts a kind of ongoing drama of perspective and how, combined with his fair-minded approach and commonsense flow of reasoning, Drucker so effectively convinces the reader. Kantrow also classifies Drucker's works into four groups - social and political thought, business and management analyses, views of what might logically develop in the future, and how-to primers on business tasks - and offers a guide for how to choose the best book for you. Accompanying Kantrow's article are essays by five leaders who write about Peter Drucker's influence on them: A.G. Lafley, of Procter & Gamble; Frances Hesselbein, of the Leader to Leader Institute; Oscar Motomura, of the Amana-Key Group; Peter Paschek, of Delta Management Consultants; and Zhang Ruimin, of Haier. -
Is It Fair to Blame Fair Value Accounting for the Financial Crisis?
When the credit markets seized up in 2008, many heaped blame on "mark to market" accounting rules, which require banks to write down their troubled assets to the prices they'd fetch if sold on the open market - at the time, next to nothing. Recording those assets below their "true" value, critics argued, drove financial institutions toward insolvency. Proponents of marking to market, on the other hand, said it exposed executives' bad decisions. If not for this fair value accounting practice, investors would be kept in the dark about the banks' real state of affairs. In this article, Pozen, the chairman of MFS Investment Management, dispels the myths about fair value accounting. For example, it's untrue that most bank assets are marked to market - in 2008 just a third were. Not all write-downs reduce the banks' regulatory capital. Nor is it true that under historical cost accounting, companies don't have to acknowledge changes in market value; they're required to record permanent impairments to assets. After explaining the controversy, Pozen proposes a solution: new, transparent practices that would draw on the best of both historical cost and fair value accounting. If adopted, they could balance the banks' desire to present assets in a good light with investors' need to understand the banks' exposures - and perhaps make everyone happy. -
A Practical Guide to Combining Products and Services
Most firms are trying to combine products and services into innovative offerings in an effort to boost revenue and profit streams and balance cash flows. These hybrid solutions can help companies attract new customers and increase demand among existing ones by offering them superior value. Such offerings are commonplace - think Apple (the iPod product combined with the iTunes service). While the promise of combined offerings is great, it's easy to get them wrong. The problem is that too many companies, expecting to catch the brass ring, don't think through exactly how to structure, market, and sell their combined offerings. Over the past three years, the authors have analyzed more than 100 winning hybrid offerings from a variety of B2B and B2C companies. Their research shows that most companies stumble in at least one of four ways: failure to differentiate, failure to scale, failure to assess markets and prices appropriately, and failure to invest in the brand. The authors identify common types of hybrids: A flexible product-and-service combination allows buyers to customize their purchase. A "peace-of-mind" bundle offers the best of breed in both product and service. A multibenefit bundle offers customers an increasing number of add-on features or benefits. A "one-stop" bundle focuses on convenience shopping. The authors also offer a practical set of guidelines for identifying the opportunities to create a successful hybrid offering in your own company. -
What Every Leader Should Know About Real Estate
Although real estate is the largest, or second-largest, asset for most companies, it rarely captures senior management's attention. And real estate decisions, many of which are made within business units and driven by short-term needs, don't usually reflect a company's broader strategy. Apgar presents five maxims that will help executives make the most of this critical resource. Manage the portfolio. Instead of making site-by-site analyses, executives need to cultivate an overall understanding of their holdings, including a snapshot of the company's existing footprint and a view of its future needs. Build in flexibility. Companies that prize flexibility own less and lease more. They favor space that can be subdivided and converted from one use to another, and they decrease their real estate costs by offering such workplace options as telecommuting. Cultivate intelligence. In order to connect real estate decisions to corporate strategy, executives need accurate data. And they must pay more attention to internal measures than to fluctuations in the real estate market. Team with professionals. Companies that maintain the most efficient and flexible real estate portfolios often do so by enlisting partners that offer expertise and efficiencies. Embrace sustainability. Companies of all types are transforming the buildings they use in order to reduce harmful emissions. Green buildings can cost more up front, but they deliver high returns over the long term. -
Galvanizing Philanthropy
Philanthropic organizations, exempt from the accountability imposed on business by markets or on government by voters, are free to experiment and take risks. But they have little experience in objectively evaluating their own performance or figuring out how to improve it. Regardless of the economic climate, the authors say, developing a philanthropic strategy is an iterative process - one they've labeled "getting clear, getting real, and getting better." Getting clear means selecting a few strategic anchors - people, problems, or philosophies the institution truly cares about - and using them to guide decisions about programs and grantees. In addition, hard evidence should be examined in light of values and beliefs. Getting real means pragmatically assessing the resources and time required to bring about desired change and soliciting candid feedback from the field. Getting better means regularly reviewing the organization's entire funding strategy in light of both outside perspectives and nonfinancial assets. Ditkoff and Colby outline the traps that funding institutions must avoid if they are to optimize their resources and organizational outcomes, and they offer stories from the James Irvine, Bill & Melinda Gates, Annie E. Casey, David and Lucile Packard, and Edna McConnell Clark foundations as examples of success. The pursuit of excellence, they say, can be imposed only by philanthropic investors themselves. -
Make Better Decisions
Traditionally, decision making in organizations has rarely been the focus of systematic analysis. That may account for the astounding number of recent poor calls, such as decisions to invest in and securitize subprime mortgage loans or to hedge risk with credit default swaps. Business books are rich with insights about the decision process, but organizations have been slow to adopt their recommendations. It's time to focus on decision making, Davenport says, and he proposes four steps: (1) List and prioritize the decisions that must be made; (2) assess the factors that go into each, such as who plays what role, how often the decision must be made, and what information is available to support it; (3) design the roles, processes, systems, and behaviors your organization needs; and (4) institutionalize decision tools and assistance. The Educational Testing Service and The Stanley Works, among others, have succeeded in improving their decisions. ETS established a centralized deliberative body to make evidence-based decisions about new-product offerings, and Stanley has a Pricing Center of Excellence with internal consultants dedicated to its various business units. Leaders should bring multiple perspectives to their decision making, beware of analytical models that managers don't understand, be clear about their assumptions, practice "model management," and - because only people can revise decision criteria over time - cultivate human backups. -
Teach Workers About the Perils of Debt
Most consumers don't understand how interest rates work and can't make sound decisions about borrowing. So wouldn't employees be better served by company programs that ventured beyond retirement planning and helped them stop pouring money into credit card fees and payments? -
Two leading researchers discuss the value of oddball data
Roger Martin, dean of the Rotman School of Management, talks with renowned autism and genomics researcher Stephen Scherer about how to tackle a big, messy problem. -
Smile, Don't Bark, in Tough Times
New research indicates that leaders who crack the whip in stressful situations don't get good results.