Honeywell’s spectacular turnaround

The Economist reports an amazing on an amazing turnaround of Honeywell. It appears to be a great example of strategy implementation.

Honeywell likes its meetings short but plentiful. Every production cell, as the smallest shop-floor unit is called, starts the day with one. The aim is to try to identify problems and ideas for improvements, which are then pushed up to senior managers. Even the lowliest worker is expected each month to come up with two implementable ideas for doing things better. As an illustration of the firm’s devotion to “continuous improvement”, this is one of the pillars of what has become known as the “Honeywell operating system” (HOS).

This new production system, introduced over the past eight years, has helped transform Honeywell from a troubled giant to one of America’s most successful companies. Honeywell’s sales in 2011 were 72% higher than in 2002, and its profits doubled to $4 billion. A new emphasis on generating cash also means the firm has more money in the bank for every dollar declared in profit.

Full Story at Economist.com

What it takes to do a corporate turnaround

John John Baldoni writes on CBS.com.

Enter Sergio Marchionne. With Fiat was on the brink of solvency in 2004, Marchionne was named CEO and completely revamped the enterprise. He would later do the same at Chrysler. As Clark writes: “Marchionne’s unusual ability is that he can see what actually needs to be done, and then cajoles and goads his flat management structure of dozens of direct reports in weekend meetings to achieve the goal.” “Marchionne doesn’t let go,” A UBS analyst adds. “That’s what his strength is. He is good at strategy and at execution.” Under Marchionne, both Fiat and Chrysler have turned the corner (at least for now).

The balance between vision and execution is akin to right- and left-brain thinking. A visionary thinks about what can happen. He or she has a highly specific vision of the future—and not simply as a set of desired outcomes, but rather in terms of what must occur to produce those outcomes. By contrast, executing the vision requires putting the right people in place and providing them with the necessary resources to succeed. It also means holding people’s feet to the fire. Marchionne is known for firing people who aren’t up to the task. It’s never pleasant, but it is imperative.

Read Full Article on CBSnews.com

Evidence that markets are becoming more dynamic courtesy of Frank Rothaermel

Blackberry has difficulty adjusting its strategy quickly to a changed environment

The leaders of Blackberry did not realized that the iPhone was a real threat until their marketshare had been decimated. The smartphone market is moving so fast that leaders quickly quickly becomes losers because the cannot change quickly enough.  The NY Times reports today:

At the time the first iPhone appeared in 2008, RIM had successfully moved the BlackBerry into the broad consumer market from its base of government and corporate customers. But the company was totally unprepared for the popularity of a phone that lacked a physical keyboard and ran thousands of applications — in effect a versatile Web-connected handheld computer.

RIM’s co-chief executives were initially dismissive of the challenge from Apple, and Mr. Balsillie boasted that the iPhone would enhance RIM’s fortunes by increasing awareness of smartphones.

But the iPhone introduced two broad changes to the smartphone market that had severe consequences for RIM and other phone makers, including Nokia.

The iPhone and its apps shifted the emphasis from hardware to software. Then, the iPhone’s popularity led corporate information technology departments, which once allowed only BlackBerrys to connect to their e-mail networks, to support employees’ iPhones. The arrival of Android-based phones from a variety of manufacturers only compounded RIM’s woes.

Read full story here.

Related: The New Yorker on BlackBerry’s troubles.
Click on “More” for an video message of the new CEO to employees.

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Critics rave about new Windows phone software: Does a new design philosophy take hold at Microsoft?

I was quite puzzled why Nokia would throw out its own smartphone operating system and replace it with Windows since the latter seemed to be quite a dud compared to Apple’s iOS or Android. But today I learned just how good critics think the new Windows operating system is. The NY Times provides an interesting look at how Microsoft finally managed to get a technology out of its company hall that has critics raving.

The tale of how Microsoft created Windows Phone starts with the introduction of the iPhone, in 2007. To Joe Belfiore, now 43, an engineer who oversees software design for Windows Phone, that was the spark.“Apple created a sea change in the industry in terms of the kinds of things they did that were unique and highly appealing to consumers,” Mr. Belfiore said in an interview at Microsoft’s campus here. “We wanted to respond with something that would be competitive, but not the same.”

Read the full NY Times article.

American CEO tries to explain bankruptcy restructuring to public

CEO Video Announcement

Economist’s commentary behind the reasons of Chapter 11 filing.

Reinventing Post Offices in a Digital World

The American Postal Service is facing bankruptcy with $9 billion dollar negative cash flow. One way to come up with a new business model is to see what happens in other parts of the world. It turns out that European postal services have already spent to past 20 years trying to reinvent themselves, as detailed in this article in the NY Times.

Why the CEO of HP was fired after only 10 months on the job

The proximate cause was the HP Stock price.

For more distant causes click on “more”.

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Kodak Tries for 30 Year to Turn its Business Around

The WSJ reports:

ROCHESTER, N.Y—After three decades of serial reorganizations, Eastman Kodak Co. is struggling to stay in the picture.
The 131-year-old company lost much of its film business to foreign competitors, then mishandled the transition to digital cameras. Now it is quickly burning through its cash as it remakes itself into a company that sells printers and ink.

On July 26, Kodak reported its fifth consecutive quarter of losses. The company’s junk-rated debt coming due in two years has moved below 80 cents on the dollar, signaling the market sees a risk of default. The company’s already battered stock has taken an especially tough pounding in recent days, falling 10% Wednesday to $1.77. Prior to this week, Kodak hadn’t closed below $2 since the 1950s, according to the Center for Research in Security Prices at the University of Chicago.

Read Full Story

Update January 5, 2012.  Kodak files for bankruptcy

Economist.com: Update January 14, 2012. Kodak is at death’s door; Fujifilm, its old rival, is thriving. Why?

Feb 1, 2012: Wharton Professors comment on the demise of Kodak. What’s Wrong with This Picture: Kodak’s 30-year Slide into Bankruptcy

May 2, 2012:  John Kotter traces to failure of Kodak to complacency that set in even before the digital revolution. Read Barriers to Change: The Real Reason Behind the Kodak Downfall

Nokia needs to win back confidence for turnaround

Nokia is in trouble. The CEO realized that to win time before new phones based on Microsoft Operating system are coming out, he needs to win back confidence of key stakeholders. It will be fascinating to watch whether Nokia will be able to stem the market share loss. Clearly, the CEO understands the urgency of the situation and his communication strategy seems to be on target.  Read the full article about Nokia’s new N9 smartphone on NYTimes.com. Click on more to find stats on how Nokia is losing market share.

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Bob Lutz: Life Lessons From the Car Guy

This fascinating excerpt from Bob Lutz’s book highlights a couple of key issues: one needs to have deep knowledge about an industry to make the right decisions, one needs to select the right leadership style for the organizational context, and finally if one wants to have a long last impact, one needs to institutionalize the change. The reason why Lutz failed to institutionalize is product develop process at Chrysler but believes that it will stick may have nothing to do with him: GM went through bankruptcy and the old ways may have been forced to retreat.

Read full story at WSJ.com

A few days later Lutz was interviewed about the book and the article by the WSJ. Click on

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Nokia Announces its Turnaround strategy:  Ally with Microsoft for High-end Smartphones

You can read the full story behind this graph on Economist.com/

Does Microsoft have Game Changing Device with Kinect

From NY Times:

Microsoft has long salivated over the notion of controlling the living room and becoming a major entertainment force. Kinect may well stand as its best bet yet for turning that vision into a reality. “This is an incredibly amazing, wonderful first step toward making interactivity in the living room available to everybody,” says Mr. Ballmer, while cautioning that Microsoft still has “a lot of work to do.”

The first Kinect prototype cost Microsoft $30,000 to build, but 1,000 workers would eventually be involved in the project. And now, hundreds of millions of dollars later, the company has a product it can sell for $150 a pop and still turn a profit, Mr. Mattrick says. (People who don’t have an Xbox can pay $300 for a package that includes the console, Kinect and a game.)

For Mr. Ballmer, Kinect is far more than a business opportunity or a pleasant diversion for consumers. It offers a moment to prove to investors and company directors that Microsoft is capable of an Applesque, game-changing moment under his leadership.

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Short Introduction to the Strategic Management Year of the AGSM MBA (Executive) by Peter Murmann

Short Introduction to Strategic Management 4 by Peter Murmann