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Cisco Systems (2001): Building and Sustaining a Customer-Centric Culture
Customer centricity has been an important part of the culture at Cisco Systems since its inception. While part of this is attributable to values put in place by the founders and retained by subsequent management, it is also closely interwoven with its organizational architecture that reaffirmed those values. Until 2001, Cisco had a decentralized organizational structure with three business units organized around each of its three main customer types: Service Provider, Enterprise, and Commercial. Each unit developed and marketed a complete product line for its specific customer group further reaffirming its belief in the centrality of distinct customers. A number of other systems, structures, and behavioral mechanisms reaffirmed the importance of customer centricity. The 2001 market downturn, however, brought new challenges as Cisco was forced to lay off 18% of its workforce and reexamine its organizational structure that was costly due to duplication of activities across each of the three customer-facing business units. Ultimately, Cisco Systems decided to transform the company from a decentralized to centralized organization. While recognizing that a centralized, functional structure was necessary to avoid product and resource redundancies, it also threatened Cisco's customer-centricity in that the centralization of R & D and marketing made them more distant from Cisco's customers. To overcome the perceived misalignment between its structure and culture, Cisco introduced a number of initiatives like the Customer Focus Initiative (CFI) to ensure that while the structure was turning away from customer centricity, the beliefs and actions of its employees maintained that focus. In doing so, management accepted the likely misalignment between its structure and culture and sought ways to compensate for this perceived gap. -
Cisco Business Councils (2007): Unifying a Functional Enterprise with an Internal Governance System
In response to the 2001 market downturn, Cisco Systems implemented a major restructuring that transformed the company from a decentralized to centralized organization. While recognizing that a centralized, functional structure was necessary to avoid product and resource redundancies, it also risked making the company less customer-centric. To mitigate this risk, Cisco implemented a cross-functional system of executive-level councils that would bring leaders of different functions together to collaborate and focus on the needs and issues of specific customer groups. Each council employs a "Three-in-a-Box" leadership model consisting of an executive leader from the engineering or technology business unit, a member of the go-to-market team, and an operations resource director. Each council is also accountable to the Operating Committee, which is chaired by CEO John Chambers and determines the long-term corporate strategy and allocation of corporate resources. Many other companies have failed at facilitating collaboration across functions-particularly large organizations-but Cisco's system has been successful because the company remained committed to the system, required a consistent infrastructure while also allowing for flexibility, gave members decision making authority, and used council leaders who thrive in collaborative environments. The success of the council system led to the creation of 20 boards of "sub-councils" in 2007. The boards are charged with driving development efforts and customer reach further into the organization by addressing specific issues too narrow for the councils to address. -
Semiconductor Manufacturing International Corporation: "Reverse BOT"
Semiconductor Manufacturing International Corporation (SMIC) is executing a strategy that leverages the desires of municipalities in China to build clusters of high technology companies. By partnering with those cities to build new semiconductor fabs that SMIC would then operate under contract, the company could build scale without necessarily confronting immediate large capital outlays. Unlike the Build-Operate-Transfer model that some municipalities were using to build infrastructure like the new subway in Shenzhen, in the SMIC "Reverse BOT model" a municipality would build a capital intensive fab and SMIC would operate it, sharply lowering its capital costs. This model gave the company a unique level of flexibility in an industry where capital costs were the major driver of product costs. -
DANFOSS MOTION CONTROLS AND HOLIP (A)
At the time of the case the good enough segment was growing about three times as quickly as the premium segment and Danfoss was thinking about entering this fast growing market. To do this Danfoss had evaluated several of the local Chinese players as acquisitions targets, and had picked Holip as the best potential target. Erhardt Jessen, a vice president of the division, has to recommend whether to acquire Holip and, if yes, the strategy that Danfoss Motion Controls should adopt for Holip. Key issues that he would have to address included the continued use of the Holip brand and the degree to which Holip should be integrated into Danfoss. The (A) case describes the overall Danfoss situation and issues and describes in some detail the history of Holip, its business model and its strategy. It was written with the support of both Danfoss and Holip management teams. Learning objectives: The case gives participants an opportunity to deepen their understanding of the issues a multinational manufacturer of high performance products must address as it faces increasing competition from local players manufacturing good enough products. Participants also have an opportunity to learn how a somewhat typical small, low cost Chinese manufacturer operates. Participants can look at the pros and cons of entering the good enough segment and the advantages and disadvantages of using an acquisition as the entry vehicle. Finally, they have an opportunity to understand the issues that need to be resolved to successfully leverage the acquisition to achieve the company's objectives in the good enough market segment. Depending on the course's learning objectives, the Danfoss-Holip case series can be taught either by using the A case followed by the B case, or by using the A1 and A2 cases followed by the B-case. -
Renault Nissan: The Challenge of Sustaining Change
The case discusses the story of Nissan's miraculous turnaround after Renault decided to invest in the company. The automobile industry had just begun another wave of consolidation, and many industry leaders believed that size was crucial for survival. This conclusion led to several mergers and acquisitions that produced varying results. The deal concluded between Renault and Nissan was remarkable because it was not billed or designed as an acquisition or even a joint venture. It was structured as an alliance, emphasizing the fact that both companies would have their own separate identities in the marketplace and separate executive committees that would run their strategy. However, the benefits were expected to originate in cross-company synergies, ranging from design to manufacturing and logistics to R&D. The case offers a rich description of the critical competitive elements that characterized the industry at the time the deal was signed. It also provides a good background on the strengths and weaknesses associated with each of the two companies before getting into the details associated with creating the turnaround plan and its implementation. The study paints a very good picture of the internal challenges that Carlos Ghosn, the incoming leader from Renault, faced in implementing the significant changes that were called for. It particularly emphasizes people-related issues such as performance management, creating change in a tradition-bound culture, the weight of administrative heritage and its impact on performance management, and other related issues. Given the global nature of the setting, the cross-cultural angles provide additional insights into the challenges leaders face when given a mandate for change. The case ends with a description of Renault and Nissan, both of which reported poor performance in late 2007. Ghosn had been at the helm of both firms for some time already, and was finding it difficult to sustain the momentum behind the change. -
Softbank's New Strategy: The Largest LBO in Japan
On 17 March 2006, Japanese Internet company Softbank Corp announced that it had reached a final agreement with British cellular phone giant Vodafone Group Plc to buy its Japanese unit, Vodafone K.K. for ¥1.75 trillion. To finance the largest business acquisition ever by a Japanese firm, Softbank intended to raise between ¥1.1 trillion and ¥1.2 trillion through leveraged-buyout ("LBO") financing, using Vodafone K.K.'s assets as collateral . With the acquisition of Vodafone K.K., Softbank aimed to build a multilateral communications business, integrating news, video and other online content with Vodafone's cellular and fixed-line services. But first Softbank had to borrow between ¥1.1 trillion and ¥1.2 trillion to finance its purchase. The sum was the largest ever to be raised for a buyout by a single Japanese company. -
Live Nation Faces the Music
In 2008, concert producer and promoter Live Nation, faces a decision about its strategy in light of the tumultuous changes in the music industry and the increasing power of the major artists. As the music business once again recreates itself in response to new technologies and consumer needs, this major player is considering focusing on its principal business of concert booking and related revenue, or moving forward with its efforts to take advantage of new opportunities in the music industry by forging comprehensive, and often expensive, relationships with artists and other clients. -
GLOBALGAP: Food Safety and Private Standards
In response to new laws governing liability and several food safety scares in the 1990s, European retailers drove the creation of a universal production standard based on Good Agricultural Practices (GAP) for fresh fruit and vegetables and a third-party certification system to monitor compliance. By 2008, the GLOBALGAP standard had expanded to cover coffee, tea, livestock, and aquaculture. Over 90,000 producers in 87 countries had been certified. Looking ahead, GLOBALGAP's board and management were discussing a number of questions, including: should GAP include environmental and social aspects beyond food safety; what was GLOBALGAP's role outside of Europe; and how GLOBALGAP as a 'hidden asset' compared to ethical labels such as Fair trade. -
Marks and Spencer: Plan A
Marks & Spencer initiated a comprehensive approach to sustainability (reduction of waste, carbon emissions, fair trade) called Plan A. Does it offer a competitive advantage? -
The Management of Berkshire Hathaway
Berkshire Hathaway is known to many as the investment vehicle of Warren E. Buffett. To some extent, this reputation is well founded, given the investment success that the company has enjoyed under his leadership. Less attention, however, has been paid to the management success of Berkshire Hathaway. By 2008, the array of companies that Berkshire Hathaway owned was unique in its diversity. Even more unique was the operating structure that the company employed to manage these operations. It was a model based on extreme decentralization of operating authority, with responsibility for business performance placed entirely in the hands of local managers. While many public corporations implemented strict controls and oversight mechanisms to ensure management performance and regulatory compliance, Berkshire Hathaway moved in the opposite direction. Many of the company's operating principles were in stark contrast to those generally employed by most public corporations. Company shareholders would have to decide for themselves whether these operating principles posed a risk to long-term performance or whether, contrary to expert opinion, they were a source of competitive advantage that could be sustained in the future. -
EnerNOC: Turning Energy Savings into Sales
EnerNOC - a clean energy company -- sells energy-monitoring, management and efficiency services to utility customers, who agree to reduce consumption during peak-period emergencies in exchange for payments throughout the year. Utilities sign long term contracts with EnerNOC for delivery of "negawatts", i.e. the reduced consumption of electricity during peak periods, as a way to avoid adding power generating capacity. EnerNOC is undergoing explosive growth and must manage the build out of its energy management system, as well as the growth and evolution of its sales force. This case can be used in a variety of courses. In an entrepreneurship course, it can be the basis for a discussion of entrepreneurial opportunities in the clean energy sector, as well as the challenges of managing rapid growth. In a marketing class, it can be used to discuss the concept of adjacent markets. It can be used to stimulate a discussion of a broad range of issues in a sales management class: rewards systems; identification of sales skills in potential employees; entry into a new market; sales training; and so forth. It can be used in MBA level courses and in upper level undergraduate courses. -
Kudremukh Iron Ore Company Ltd: The Sun Sets on Its Mining Operations
Kudremukh is a breathtaking mountain range in Chickamagalur District, Karnataka, India. Three rivers originate here and form an important lifeline for South India; the is ecologically very sensitive. The National Mineral Development Corporation (NMDC) conducted prospecting surveys in 1967 and obtained a mining license from the government of Karnataka for an area of 5218 hectares. In 1969, the government of India floated a public-sector undertaking, the Kudremukh Iron Ore Company (KIOCL), and NMDC turned over its 30-year mining lease to KIOCL. The majority of the surrounding communities were apprehensive about the possible impacts of massive mining operations in the virgin forest area. KIOCL's mining activities flourished, making it into Asia's largest mining and pelletization company. However, in 1985, the government of Karnataka declared Kudremukh region as a National Park under the Wildlife (Protection) Act of 1972, in order to provide effective protection to the rich flora and fauna in the region. The area leased to KIOCL was an enclave within the southern half of the national park and the mining operations started witnessing opposition in 1995, with wildlife conservationists and environment protection organizations staging rallies and agitations against KIOCL's operations. Activists filed numerous petitions in the Supreme Court, asking the court to end the activities of KIOCL in order to protect Kudremukh from the ravages of mining. The case focuses on important issues relating to shareholder vs. stakeholder responsibility in the context of ongoing ecological degradation, increased environmental awareness in Indian society, and consequent changes in legislation. -
It's a New Day: Microsoft's Office 2007 Launch Campaign
Microsoft's Office team was developing the marketing communication plan for its new product, Office 2007. Office was a very mature product and several versions of the product had been introduced over more than 20 years. As such, the new version had to overcome the consumer perception that the versions of Microsoft Office that they already have are "good enough" for them. The Office 2007 marketing team has come up with a two-step campaign strategy that sought to first create awareness and intrigue using traditional media, followed by the heavy use of digital media to get consumer to experience the product through different types of "digital experiences." The team needs to decide how much of its advertising spending it should shift from traditional media to digital media, how to design the most effective digital experiences and how to measure the effectiveness of digital experiences. The case is set at a time when digital media were emerging as a promising way to engage consumers more deeply with brands and products, but marketers were uncertain about the relative effectiveness of different digital marketing tactics and the optimal mix of traditional versus digital marketing channels for different product, market and campaign contexts. -
From Regional Star to Global Leader (HBR Case Study and Commentary)
Yang Jianguo was recently promoted from country manager for China to global head of product development at a staid French perfume maker. He was chosen for his technical smarts and his knowledge of emerging markets - a critical avenue for growth, given that sales in the company's core markets have stalled. Eager to succeed in his new role in Paris, Jianguo has lots of fresh ideas, but they seem to be falling on deaf ears. Members of the executive team, for their part, find Jianguo to be largely indifferent to their input. Can Jianguo adjust to this new culture? And can he succeed without sacrificing his identity? Three experts comment on this fictional case study in R0901A and R0901Z. Katherine Tsang, the CEO of Standard Chartered Bank in Shanghai, explains the cultural differences between China and France and recommends that Jianguo push his thinking beyond the Chinese market. She also suggests that the company give all its executive team members multicultural training so they have the tools to understand one another and work together effectively. Mansour Javidan, the dean of research and a professor at Thunderbird School of Global Management, acknowledges that Jianguo's transition would be easier if he had the full support of the CEO, Alain Deronde. But since that isn't forthcoming, he advises Jianguo to work with Alain to develop targets for growth in emerging and traditional markets and a plan for building an infrastructure to achieve those goals. James Champy, the chairman of consulting for Perot Systems, is surprised that a family business would choose an "outsider" for this important post, but he recognizes it as a wise strategic move. He says that Jianguo needs a coach and should focus on learning the home market first, before trying to make inroads further afield. -
From Regional Star to Global Leader (HBR Case Study)
Yang Jianguo was recently promoted from country manager for China to global head of product development at a staid French perfume maker. He was chosen for his technical smarts and his knowledge of emerging markets - a critical avenue for growth, given that sales in the company's core markets have stalled. Eager to succeed in his new role in Paris, Jianguo has lots of fresh ideas, but they seem to be falling on deaf ears. Members of the executive team, for their part, find Jianguo to be largely indifferent to their input. Can Jianguo adjust to this new culture? And can he succeed without sacrificing his identity? Three experts comment on this fictional case study in R0901A and R0901Z. Katherine Tsang, the CEO of Standard Chartered Bank in Shanghai, explains the cultural differences between China and France and recommends that Jianguo push his thinking beyond the Chinese market. She also suggests that the company give all its executive team members multicultural training so they have the tools to understand one another and work together effectively. Mansour Javidan, the dean of research and a professor at Thunderbird School of Global Management, acknowledges that Jianguo's transition would be easier if he had the full support of the CEO, Alain Deronde. But since that isn't forthcoming, he advises Jianguo to work with Alain to develop targets for growth in emerging and traditional markets and a plan for building an infrastructure to achieve those goals. James Champy, the chairman of consulting for Perot Systems, is surprised that a family business would choose an "outsider" for this important post, but he recognizes it as a wise strategic move. He says that Jianguo needs a coach and should focus on learning the home market first, before trying to make inroads further afield. -
From Regional Star to Global Leader (Commentary for HBR Case Study)
Yang Jianguo was recently promoted from country manager for China to global head of product development at a staid French perfume maker. He was chosen for his technical smarts and his knowledge of emerging markets - a critical avenue for growth, given that sales in the company's core markets have stalled. Eager to succeed in his new role in Paris, Jianguo has lots of fresh ideas, but they seem to be falling on deaf ears. Members of the executive team, for their part, find Jianguo to be largely indifferent to their input. Can Jianguo adjust to this new culture? And can he succeed without sacrificing his identity? Three experts comment on this fictional case study in R0901A and R0901Z. Katherine Tsang, the CEO of Standard Chartered Bank in Shanghai, explains the cultural differences between China and France and recommends that Jianguo push his thinking beyond the Chinese market. She also suggests that the company give all its executive team members multicultural training so they have the tools to understand one another and work together effectively. Mansour Javidan, the dean of research and a professor at Thunderbird School of Global Management, acknowledges that Jianguo's transition would be easier if he had the full support of the CEO, Alain Deronde. But since that isn't forthcoming, he advises Jianguo to work with Alain to develop targets for growth in emerging and traditional markets and a plan for building an infrastructure to achieve those goals. James Champy, the chairman of consulting for Perot Systems, is surprised that a family business would choose an "outsider" for this important post, but he recognizes it as a wise strategic move. He says that Jianguo needs a coach and should focus on learning the home market first, before trying to make inroads further afield. -
Gazprom: The Evolution of a Giant in the Global Oil and Gas Industry
In 2009, Gazprom was widely believed to be among the most influential companies in the global oil and gas business. It had grown from its early days as an experiment in privatization of oil and gas following the rapid breakup of the Soviet Union. The case documents the growth strategies that the company has followed, its global aspirations, and the impact of its political lineage. The case offers a rich mix of insights into the contextual forces at work in shaping the destiny of Gazprom, the political pressures it faces as Russia's largest company, and its stutter-step approach to globalization. The material in the case allows for a comprehensive analysis and discussion on central themes such as the origin of competitive advantage for NOCs (National Oil Companies), the unique governance conflicts that they have to navigate in setting strategic direction, and the viability of their globalization strategies. -
Look Before You Leap (A): Considering a Job Offer With an Early-Stage Company
In the fall of 2007 a senior director of product marketing at Qwest in Denver, Colorado, gets an offer to work for an entrepreneurial high-growth venture. The vision is for greater wealth, accelerated business opportunity, more thrill on the job, and faster path to leadership by pursuing a position with a start-up firm. Kiva Allgood has management responsibility in her current position (e.g., manages a high-budget portfolio), with compensation of $145,000 in salary and incentive bonuses up to 100% of base salary. She realizes that she is not prepared for the negotiation because she has only negotiated job offers within large firms. She needs to know what many of these entrepreneurial finance terms mean and to understand whether she is being offered terms and amounts commensurate with the value she feels she will bring to the entrepreneur. She also needs to understand her opportunity cost and the expected value of her options: staying with the current job, starting her own venture, or taking this offer at the entrepreneurial venture. She had no idea there were also so many additional, non-financial factors to take into consideration. With her future on the line, she needs to work through the numbers fast. The entrepreneur gave her five days to come back with a counter offer, which he considered a generous amount of time. In evaluating these questions, students will take Allgood's point of view. The case is based on a real job offer to a real person named Kiva Allgood. The entrepreneur and his firm are fictitious in order to heighten the issues in this situation. -
Maytag: Takeover Strategies
On April 22, 2005, Maytag Corporation's stock price fell 28 percent after the company reported disappointing first-quarter results and significantly reduced its earnings outlook for 2005. The company's sales were declining due to increased foreign competition and its production costs were increasing due to higher energy, materials, and distribution costs. Maytag's management and board clearly understood the need to make strategic decisions to turn around the fate of their company. Maytag could propose a drastic turnaround plan and remain independent, sell itself to either a large domestic competitor such as Whirlpool or a foreign firm such as Haier, or it could choose to go private by selling to a financial buyer (Ripplewood). -
Balancing Access with Accuracy for Infant HIV Diagnostics in Tanzania (A)
The Global Health Initiative (GHI) is a tripartite collaboration among Northwestern University, non-profit donors, and commercial diagnostics companies. GHI attempts to bridge the gap between the market for sophisticated medical diagnostics equipment in wealthy nations and the need for point-of-care diagnostics in resource limited settings. In 2006 GHI narrowed its focus to HIV diagnostics for underserved nations. The case examines the accuracy-access tradeoff related to the roll-out of infant HIV diagnostics in Tanzania. Tanzania has a prevalent HIV/AIDS problem, particularly in children. As of 2007, Tanzania had an estimated 140,000 children infected with HIV. Existing lab-based diagnostic equipment was either inaccurate for use in infants or required highly skilled health workers. Tanzania's limited infrastructure also forced healthcare providers to choose between providing advanced care to a minority of the population and offering minimal care to the majority with poor access. A Kellogg MBA student research team performed more than thirty in-country interviews to collect data on stakeholder perceptions of three infant test concepts: the strip test, the squeeze test, and the filter paper test. Across the three tests, access decreased as accuracy increased-rural labs could not find or afford health workers skilled enough to conduct the test. In general, interviewees closely affiliated with the government preferred accuracy over access. In contrast, private health facilities had to follow fewer regulations and preferred access over accuracy. The case focuses on the decisions facing Kara Palamountain, the executive director of GHI, in her roll-out recommendations for infant HIV tests in Tanzania. It examines key factors of working in a developing country, including the need to operate in the absence of sufficient market research, balance the competing agendas of different stakeholders, and mitigate external risks such as major international funding drying up.