The founders of Whatsapp were very clear that did not not what to sell advertisement through the messaging app. (See their 2012 statement.They did not even want to collect data on their users. So why did they sell themselves to Facebook, which is all about collecting more data on us to sell it to advertisers? Here is a clue in their blog. Maybe they were tired of having to manage a business rather than just design a product.
The economist published two useful articles on corporate longevity. The first article examines why IBM, despite a few crisis, has been able to reinvent itself and celebrate it 100s anniversary in 2011. It contrasts the firm to DELL, Microsoft and others. IBM @ 100
The second uses the context of the failure of outside CEOs HP to questions whether outsiders know enough to run a complex high-tech company. The Trouble with Outside CEO Appointments.
From the WSJ: H-P is the world’s largest marketer of PCs. Yet Mr. Apotheker said that it isn’t possible for the Palo Alto, Calif., company to continue to invest in that business and make required structural changes to the rest of H-P. Developing a steady stream of devices that consumers want requires a lot of money and new product-development cycles that are “much faster than a conglomerate can move in most circumstances,” he said. H-P’s PC unit produced $40.1 billion in revenue and $2 billion in operating profit in its most recent fiscal year, profit that was used to fund other operations. As a standalone company, the PC unit would be able to invest in its own future, he argued.
The NY Times reports: J.C. Penney has poached the head of Apple’s retail stores to head its company starting in November, making investors hope that a man who rethought how to sell computers can also rethink how to sell clothes, cosmetics and accessories. The Apple executive, Ron Johnson, will replace Myron E. Ullman III as Penney’s chief executive on Nov. 1, the retailer announced. Mr. Ullman will then take a role as executive chairman.
“In the U.S., the department store has a chance to regain its status as the leader in style, the leader in excitement,” Mr. Johnson, 52, said in an interview. “I saw a very shared vision amongst the board to really take this great American brand and make it become something unbelievably exciting.” He added, “It will be a period of true innovation for this company.”
PM: It will be interesting to watch whether Johnson can port his computer retailing skills to an apparel setting. He may but he may not if key factors for winning are sufficiently different.
Breaking up big companies is back in vogue. In Australia, the Fosters group is spinning out its Wine business because the expectation is that the parts individually are worth more than valuation of whole company. Read the full story in on Economist.com and why emerging markets don’t have this conglomerate discount.
The Economist published a great story on how Siemens, battered by bribery scandal, recruited an outsider CEO and now has started to leverage the potential benefits of owning several business that could be run as stand-alone companies, operating at large scale all across the world, and avoiding to over-engineer products. The story illustrates most of the key ideas of SM3, including how to implement a corporate strategy.
Read: A Giant Awakens
Europe’s biggest engineering firm used to be known for two things: making everything but a profit; and scandal. Now things look very different
When Starbucks entered the Australian market in 2000, it was one of the biggest coffee chains globally, opening one new store every day somewhere in the world, notes Patterson. Its success in the US, which had not previously enjoyed a strong coffee-drinking culture, had given the brand great confidence to enter other markets including Japan (1996) and China (1998). The company now has more than 15,000 stores in 44 territories. But in mid 2008, Starbucks’ management announced that it would close 61 of its 84 Australian stores. The closures took place swiftly – within one month. Losses were enormous, including 685 jobs and A$143 million. Just 23 Australian stores were left operating in prime locations. What went so wrong?
Read the full analysis by Profeessors Paul Patternson and Marc Uncles in Knowledge @ The Australian School of Business.
Jump to minute 1:47 of the Business Week video.
This little exerpt from the NY Times explains well the concept of logical incrementalism in management.
Mr. Schmidt didn’t stop there. He acknowledged that “Google might not get it right the first time,” and said that Apple probably wouldn’t either, briefly alluding to some better features coming with the second generation of the iPad. But he said both companies would have “the next two to three years to figure it out.”
Excerpt from BRW: For an expanding independent petroleum retailer, customer relationships are everything.
Biq organisations are usually considered to be more efficient than smaller enes - but rarely more customer-friendly. Case in point, big banks. sharehelders love their taut back offices and fat profits; customers hate their skinny front lines and rate them well below small credit unions and building societies in satisfaction surveys.
It is a business theory that influences how oil companies distribute fuels in Australia. In cities, drivers have choices and can seek out the service station offering the cheapest petrol. In the country, the distance between service stations is qreater and what people expect from them - mechanical repairs and farm deliveries as well as fuel - is more varied.
Accordingly, the local arms of some of the world’s biqgest companies run city statiens themselves but use independent operators elsewhere. “I don’t think we have the ability to understand and build the sort of relationship with customers that is really important in rural Australia,” ‘BP Australia’s vice-president of wholesale reseller and retail, ‘Dean Salter, says. However, ene of Salter’s independent operators, led by a predecessor in his position, is trying to prove that big orqanisations can be intimate as well as efficient.
In the 1990s and early 2000s, Wesfarmers showed how a corporation could be successful with a similar strategy as GE in America: buying and selling unrelated businesses. But then private capital entered the acquisition market, bidding up the price for Australian corporations that were up for sales. Wesfarmers found it more difficult to pursue it disciplined strategy of finding acquisitions that you be managed more effectively and unlock shareholder value. Almost two years ago Wesfarmers but the underperforming Coles supermarket chain. Plenty of commentators were worried that Wefarmers, breaking its traditions, overpaid for Coles and would never be able to improve the performance of Coles as the Perth-based conglomerate had done with earlier acquisitions such as Bunnings.
WHEN Alcatel, a French maker of telecoms equipment, announced its plan in 2006 to merge with Lucent, an American rival, reactions were mixed. There was general agreement that bigger was better and that the combined firm would benefit from greater geographical reach. But there was also scepticism that its French and American managers would be able to get along. With good reason, it seems: on July 29th Alcatel-Lucent announced its sixth consecutive quarterly loss and the resignations of Serge Tchuruk, its French chairman, and Patricia Russo, its American chief executive. Their firm’s troubles stem in large part from its internal clash of cultures. Read more on Economist.com
“It’s much harder doing than telling. Things take a lot longer than you initially think, and along the way you have to manage a broad stakeholder base, including your team, investors and the board. A chief executive is a management consultant who has to implement his own recommendations.”