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How Fast Can Firms Grow?

Abstract: Building on recent research on dynamic, high-growth firms—so-called “gazelles”—this paper explores a simple question that is important in both theoretical and practical terms: What is the fastest rate at which firms can grow? Based on a sample of seven high-growth firms (Cisco, GM, IBM, Microsoft, Sears, Starbucks, and US Steel), we find that 162% is the maximum sales growth rate in any one year that an established company can grow without mergers and acquisitions, while the maximum rate of employee growth is approximately 115% even including some mergers and acquisitions. All of the companies in our sample attained a maximum sales growth rate of above 50%, with most hovering around 75%. Furthermore, the firms’ growth rates exhibit similar patterns. No company experienced its maximum sales growth rate toward the latter part of its history. Every company experienced its slowest employee growth rate after attaining its maximum employee growth rate, usually within a decade of one another. Most importantly, all firms show an average sales growth that exceeds the average employee growth. This finding is an indication that successful growing firms have a superior capability to continuously improve employment efficiency and adjust organizational structures to suit an increasing workforce.

Murmann, J. P., Korn, J., & Worch, H. 2014. How Fast Can Firms Grow? Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), 234(2-3): 210-233. 

If your library does not subscribe to the journal, the paper just before publication is available on SSRN for download. Or contact me for copy.

Another Great Example of Serendipity in Scientific Discovery

People underestimate that scientists often make progress by chance.  Here is the story of researchers studying a species that has invaded Florida’s Everglades made an unanticipated discovery: deadly Florida pythons have internal GPS.

“We found that Burmese pythons have navigational map and compass senses,” said Shannon Pitman of North Carolina’s Davidson College, the lead researcher of a team of scientists that released six captured snakes back into the wild, then tracked them through the Everglades National Park for up to nine months.

“It wasn’t what we expected. We thought we’d see a kind of aimless, wandering behaviour, but the pythons made their way pretty quickly back to where to where they were captured. It was more sophisticated in terms of movement than we’ve seen in other species of snake.”

What makes the discovery more remarkable is that it was completely accidental. Pitman’s team originally wanted to release the snakes closer to their capture points within the Everglades, as they were more interested in studying the habitat through which they were moving than the actual distances they travelled.

But wildlife officials, whose efforts to eradicate or contain the up to 100,000 non-native snakes estimated to have spread through the park’s 1.5m acres, refused permission.

That led to the team releasing the snakes at more remote locations between 13 and 23 miles away, outside the National Park’s boundaries, and then watching in amazement as one python after another made its way back “home”.

Each snake was fitted with a radio tracker and its position monitored by GPS one to three times per week. All six moved in a near-straight line towards their capture points and five ended up within a couple of miles. The snake with the longest journey took nine months to reach its destination.


Full Story: Guardian

Joel Mokyr Sees no End to Innovation

Mokyr points out the modern GDP measures are not accounting for improvements in quality of products and life.
He sees no end to innovation. Basic science needs to be funded by governments because private individuals and corporations cannot appropriate the returns from these investments. He sees culture that encourages natural skepticism of students as a key ingredient for furthering innovation of a country.

Improving Your Case Method Skills: Two Methodological Pieces by Michael Scriven

The philosopher and polymath Michael Scriven has written extensively on the logic of explanations. Here are two of his most valuable pieces. The first one is how one can make good inferences from single cases studies and the second one one explanations in history.

1. Scriven, M. (1974). Maximizing the Power of Causal Investigations: The Modus Operandi Method. In W. J. Popham (Ed.), Evaluation in education: Current applications: 68-84: McCutchan Pub Corp. Download

2. Scriven, M. (1966). Causes, Connections, and Conditions in History. Philosophical Analysis and History. W. H. Dray, Harper & Row: 238-264.  Download

 

Scaffolding in Economics, Management, and the Design of Technologies

This chapter reviews the ideas that have been developed to describe the emergence and change of structures in three fields: Economics, Management, and Design of Technologies. The chapter focuses on one empirical setting, the economy, and more specifically how firms, industries, and technologies change over time. Today’s industrialized economies are very different from the economies before the industrial revolution. The chapter presents key theoretical ideas from evolutionary economics, management, and technology that try to explain why and how economy has been so dramatically transformed over the past 400 years. You can download a draft of chapter here or find the book in your library or buy it at Amazon.com or MIT Press.

Excerpts from Arthur Stinchcombe’s on “Theoretical Methods in Social History”

Ten years ago I read Stinchcombe’s “Theoretical Methods in Social History”. I recently reread the parts that I had highlighted and I thought it useful to share some key passages.[1]

One does not apply theory to history; rather ones uses history to develop theory. [2]
——
It is rather that the fashion in quantitative history has come to be that one must agree to be voluntarily ignorant of the any evidence other than numbers. [3]

As the argument develops, it will become clear why I am unenthusiastic about most quantitative history. Let me state the argument in capsule form.
For a number, say a count, to be theoretically interesting, it has to be a count of a comparable instance. What instances comparable for a scientist is that those instances have identical causal impact. Thus a count is more illuminating, the more theory and the more detailed examination of the facts went into making the instances counted comparable. But this ordinarily means that making a count should be the last stage of a scientific enterprise, a stage reached only after an extensive development of theory on what makes instances comparable. Is the proletarian in the Vyborg district of Petersburg or in the Baltic Sea Fleet equivalent in impact on the Russian Revolution to a proletarian in Moscow? Trotsky convinces me he was not (and if the proletarian was a she, in either place, she was not equivalent to a male proletarian either). Consequently, a count of proletarians in Russia in 1917 is fact of relatively little interest. [4]

My Editorial Statement for Management & Organization Review

MOR is the official journal of International Association for Chinese Management Research. While the journal is focused on China, comparative studies of China and other countries are highly appropriate for the journal.

I am interested in detailed studies of how technologies, organizations, industries and supporting institutions evolve over time. Methodologically, I hope to attract comparative case studies that are rich in descriptive data that is both quantitative and qualitative.  I also hope to attract historical case studies.  Papers that feature particularly innovative companies or organizational and institutional structures are of particular interest.

Examples of papers that illustrate work of interest to this editorial area can be found here.

Collection of Research Methods articles in SO!

SO! has pulled together the collection of articles on research methods that the journal published over the years. I for one will come back to these articles. I suspect many doctoral students will find them useful.

Ann Langley: Over the years, Strategic Organization has published a number of very useful and insightful articles on research methods for studying strategy and organization. This section of the website groups together a collection of the most interesting articles of this type. Both quantitative and qualitative researchers will find ideas for novel approaches and pointers for enhancing the quality of their research among these contributions.

SO! Collection on Research Methods

AOM 2013: Two workshops I am participating in: History and Design Evolution

History and Strategy: Toward an Integration of Theory and Method History and Strategy

New Presentation Slides for Download. Click here.
Program Session #: 80 | Submission: 14401 | Sponsor(s): (BPS, MH, TIM)
Scheduled: Friday, Aug 9 2013 11:45AM - 1:45PM at WDW Swan Resort in Swan 10


Organizer: Steven Kahl; Dartmouth College (TUCK);
Organizer: Brian S. Silverman; U. of Toronto;
Participant: David A. Kirsch; U. of Maryland;
Participant: Huseyin Leblebici; U. of Illinois;
Participant: J Peter Murmann; Australian School of Business, UNSW;

While historical research has played a central role in the development of the strategy literature, it remains underrepresented in strategy journals. This PDW explores how historical analysis can inform strategy research. As the strategy field continues to develop dynamic models of strategy, the historical perspective can provide unique perspective, and could potentially even develop a history-based theory of strategy. Yet, doing historical research in strategy faces methodological challenges given its different approach to the development of theory and use of evidence. Consequently, this PDW addresses the different opportunities available to strategy scholars to engage in the historical method. The format of the PDW is a combination of 1) presentations in which scholars experienced in conducting historical analysis within the strategy and organizational fields discuss the challenges of doing this work and 2) interactive breakout sessions in which participants break into smaller groups to discuss design of a historical study in topical strategy research areas, such as dynamic capabilities and industry evolution. These breakout sessions will help identify how the historical approach can make novel theoretical contributions and reveal roadmaps for pushing this work further.

Search Terms: History/Historical Analysis , Strategy , Theory and Methods

Architectural Strategy and Design Evolution in Business Ecosystems: Opportunities and Challenges
Ecosystem Design and Strategy

Program Session #: 279 | Submission: 10331 | Sponsor(s): (TIM, BPS, ENT, OMT)
Scheduled: Saturday, Aug 10 2013 10:15AM - 12:45PM at WDW Swan Resort in Swan 3

Honoring the late Steve Klepper

Steve Klepper, who has been an inspiration to so many of us, recently passed away. At the 20th anniversary of the CCC colloquium, we honored Steve Klepper. The video captures very nicely how much Steve touched an entire generation of doctoral students working on the intersection of industry evolution and technological innovation.

 

Nelson, Richard R. (born 1930)

This short article is the draft of the entry on Richard R. Nelson in the forthcoming Palgrave Encyclopedia of Strategic Management

Richard R. Nelson (b. 1930) is an American economist who has had a significant influence on the field of strategic management. The fundamental question driving his work is how societies can be organized to improve their material well-being. In answering this question, Nelson identifies sustained technological innovation and a diverse range of often industry-specific institutional structures as the key engines of economic growth. He sees business firms as playing a key role in the growth process because firms are the carriers of the knowledge and abilities required to produce the complex product and services that characterize modern economies.

Keywords: evolutionary theory, firms, innovation, organizational capabilities, patents, Carnegie School, RAND Corporation; science policy, tacit knowledg

Touchstones: Examples of Excellent Papers

Research Project on Innovative Firms and Sectors in China

Successful Entrepreneurs Minimize Risk

Many scholars see entrepreneurs as action-oriented individuals who use rules of thumb and other mental heuristics to make decisions, but who do little systematic planning and analysis. In this new article, Deepak Sardana and I argue that what distinguishes successful from unsuccessful entrepreneurs is precisely that the former vary their decision-making styles, sometimes relying on heuristics and sometimes relying on systematic analysis. In our proposed framework, successful entrepreneurs assess their level of expertise and the level of ambiguity in a particular decision context and then tailor their decision-making process to reduce risk. Download the article here.

The co-development of industrial sectors and academic disciplines

Marrying History and Social Science in Strategy Research

Strategy research at its core tries to explain sustained performance differences among firms. This article argues that one, out of the many, ways to create a productive marriage between strategy research and historical scholarship is to carry out historically informed comparative studies of how firms and industries gain and lose their competitive position. While much of current strategy research adopts a large N hypothesis testing mode with the implicit assumption that one discovers generalization just like a Newtonian law such as F=m*a that applies across all space and time, an historically grounded methodology starts from the opposite direction. It assumes that a process or event may be idiosyncratic and therefore seeks to establish with detailed evidence that a 2nd (and later 3rd, 4th, ...nth) process or event is indeed similar before generalizing across observations. The article argues that the field of strategy would benefit from allocating more effort on building causal generalizations inductively from well-researched case studies, seeking to establish their boundary conditions. It articulates a comparative research program that outlines such an approach for the arena of industry and firm evolution studies.  Download Article.

Lack of Replication in Management Studies

Tim Devinney and Donald Siegel write in their recent editorial of the Academy of Management Perspective (Feb2012, Vol. 26 Issue 1, p 6-11):

Hubbard and Vetter (1996) estimated that fewer than 5% of management studies are subject to any published form of replication, and when this occurs it invariably refutes the initial research. (p.7)

Reference: Hubbard, R., & Vetter, D. E. (1996). An empirical comparison of published replication research in accounting, economics, finance, management, and marketing. Journal of Business Research, 35(2), 153–164.

Herb Simon on Numbers in Social Sciences

In Herb Simon’s obituary, the Pittsburgh Post-Gazette reports:

He had hoped to use mathematics to give the social sciences the same rigor as such hard sciences as physics and chemistry, but found that a frustrating experience; even with the new machine called a computer that was available at Carnegie Tech, it seemed that something was always missing when human factors were translated into numbers.

Maria Konnikova rearticulates this point in Scientific American.

Reflections on the 30th Anniversary of Nelson & Winter (1982)

The 9th Atlanta Competitive Advantage Conference had a panel to celebrate the publication of Nelson and Winter’s 1982 landmark book. The panel included Sid Winter, Connie Helfat, L.G.Thomas III, and myself. As part of my reflections, I offered a citation analysis to demonstrate the influence of the book with data. I went on to explain that there is a tension between the goals of IO economics and strategic management and argued that Nelson & Winter’s focus on firms doing innovations is a way to resolve this tension. Finally, I called for more research that examines the the relative role of population level selection versus firm-level adaptations in industrial change.

Download: Slides from Presentation

List of firms how superior performance cannot be explained by randomness

Andy Henderson and his coauthors have done us a great service. They are analyzed last decades to find a list of firms whose superior performance cannot be explained by randomness.

Although sustained superior firm performance may arise from skillful management or other valuable, rare, and inimitable resources, it can also result from randomness. Studying U.S. companies from 1965–2008, we benchmark how long a firm must perform at a high level to be confident that it is something other than the outcome of a time-homogeneous stationary Markov chain defined on the state space of percentiles. We find (a) the number of sustained superior performers in Compustat, measured by ROA and Tobin’s q, exceeds the number of false positives we would expect to be generated by such a process; yet (b) the occurrence of false positives is often enough to fool many observers, so (c) the identification of sustained superior performers requires particularly stringent benchmarks to enable valid study.

Read Full Article
Click on More to see the list of firms.

The Coevolution of Industries and Important Features of Their Environments

As the rate of innovation increases, organizational environments are becoming faster and more complex, posing greater challenges for organizations to adapt. This study argues that the concept of coevolution offers a bridge between the prescient adaptationist and ex post selectionist perspectives of organizational change to account for the increasing rates of change. The mutual causal influences in a coevolutionary relationship help explain why competing sets of firms or individual firms can capture dominant shares in product markets. Using a comparative historical method and drawing on evidence from five countries over a 60-year period, this paper inquires how precisely coevolutionary processes work in shaping the evolution of industries and important features of their environments. It identifies—in the context of the synthetic dye industry—three causal mechanisms (exchange of personnel, commercial ties, and lobbying) and suggests how they acted as levers on the fundamental mechanisms of evolution. Understanding the levers is important for managing change in a world that is increasingly becoming coevolutionary, requiring managers to focus more on the emergent, system-level properties of their environments. Download Article.

Regional institutions, ownership transformation, and migration of industrial leadership in China

Scholars have emphasized the gradual ownership transformation of enterprises as a key driver of the Chinese economy’s unprecedented growth. However, little work has been done on the issue of whether this transformation process takes place evenly across the various regions in China. This article describes the important role of regional institutions in shaping the ownership-based competitiveness of local enterprises and the migration of industries across regions. In the case of the Chinese synthetic dye industry, the passing of leadership from state-owned enterprises (SOEs) to collectively owned enterprises (COEs) and then to private enterprises (PEs) was accompanied by a concurrent leadership migration from one region to another. The article contends that this simultaneous occurrence was not accidental. Four institutional constraints—the degree of central supervision, the local labor arrangements, the local social welfare provision, and the degree of ambiguity in property rights—retarded the rise of new ownership forms in the previously dominant regions. This gave other regions the opening to take over leadership positions by providing a more favorable institutional context for new ownership forms. These findings are likely to apply to all of the Chinese manufacturing industries that existed prior to 1978 and that subsequently did not experience significant technological changes and were not highly protected by the government. Download Article

A Conversation with Malcom Gladwell

For every Social Scientists: Mattias K. Polborn translates an Ancient Letter from the Editor

Mattias K. Polborn writes: Preface
I have recently found an ancient scroll, written in Reformed Egyptian, in my crawl space. It turned out to be a rejection letter from the editor of an ancient scientific journal, Geometrica, addressed to Ptolemaeus of Alexandria, the famous geographer. It is a remarkable document that shows how little scientific publishing has changed since ancient times.
Before proceeding to the full translation provided below, the critical reader may wish to ask how this document came into my basement. While details remain clouded in mystery, there are some strong indications that the document is genuine. Specifically,
• it was found in mid-America, the prime location where Reformed Egyptian docu- ments are found;
• after I completed the translation, the original document mysteriously vanished without a trace;
• the document contains sentences that are almost verbatim the same as written much later by different people who definitely had no knowledge of the text in my basement.

Read full letter here.

Review of DuPont?s Dyes Business: Three Decades of Innovation, 1950-1980

Constructing Relational Databases to Study Life Histories on Your PC or Mac

In this article, I present a strategy for designing relational databases with the program FileMaker Pro (FileMaker) to study the histories of individuals and organizations. The approach facilitates efficiency in inputting data and flexibility for constructing statistical analyses from the rawdata. The key feature of the strategy is to define the basic unit of observation in the database in terms of an agent, an event, and a date. Given that programs such as FileMaker can easily sort data by agent and date, once one structures the data correctly, he or she can construct well-ordered event histories for agents, even if the researcher enters the data in an unordered fashion. By using events that happened to an agent at a particular time as the basic unit of observation, one maintains maximum flexibility to do statistical analysis that aggregates basic data in different ways. This article illustrates the power of the approach by outlining ways to analyze changes in geographic distances between two events marking the life histories of chemists. Download Article.

Evolutionary Economics Meets Business History at Trinity College in Dublin

I participated in a workshop bringing together Business Historians and Evolutionary Economists at Trinity College in Dublin.  Overview information on the workshop and the presentation slides have been posted in the Economic-Evolution.net discussion forum.

Problems with the Peer Review System in Science

Frank Furedi has written a very thoughtful essay on the problems with current peer review system in science. In my view, the issues are a lot more serious in the social sciences where is much harder to formulate non-trivial general laws and make precise predictions that can be proven or disproven. The natural sciences require replication before something is accepted. There is very little exact replication in management research for example. Theories are accepted on very tenous grounds and when you write a paper that contradicts existing paradigms your data is not going to persuade your peers who have a vested interested in the status quo.  Read Furedi’s Essay.

Update 28. June 2010:Interesting Problem Case in Economics:  Copy URL into your browser: http://www.handelsblatt.com/politik/nachrichten/no-comment-please;1446947

Jeffrey Meyers on Writing Habits

CM: Having written 43 books, including more than 20 biographies, you’re nothing if not prolific. What’s your work routine?

JM: I work every day— it’s important to keep up momentum—from 9:30 to 1 in the morning and from 7:30 to 11 in the evening. In the afternoons I recharge by playing tennis (inexpensive psychotherapy), taking long walks, frequenting bookstores, going to the Cal library, and wandering around San Francisco. I do research and interviews with family and friends for six months. I then write by hand on yellow pads, type three pages a day and 100 pages a month on the computer, and finish a 400-page book in four months. Finally, I spend two more months revising.

When I’m done, I follow the example of my longtime friend, Iris Murdoch, who began her next novel the day after completing the previous one. (More momentum.) While the editor is reading my typescript, I do the research and write a ten-page proposal that secures the contract and advance for my next book.

From California Monthly.

Economics: Is the discipline in crisis?

Drake Bennett of the Boston Globe is reporting on the soul searching that is going on the field of economics and finance after the professions inability to foresee the crisis. 

THE DEEPENING ECONOMIC downturn has been hard on a lot of people, but it has been hard in a particular way for economists. For most of us, pain and apprehension have been mixed with a sense of grim amazement at the complexity of what has unfolded: the dense, invisible lattice connecting house prices to insurance companies to job losses to car sales, the inscrutability of the financial instruments that helped to spread the poison, the sense that the ratings agencies and regulatory bodies were overmatched by events, the wild gyrations of the stock market in the past few months. It’s hard enough to understand what’s happening, and it seems absurd to think we could have seen it coming beforehand. The vast majority of us, after all, are not experts. But academic economists are. And with very few exceptions, they did not predict the crisis, either. Some warned of a housing bubble, but almost none foresaw the resulting cataclysm. An entire field of experts dedicated to studying the behavior of markets failed to anticipate what may prove to be the biggest economic collapse of our lifetime. And, now that we’re in the middle of it, many frankly admit that they’re not sure how to prevent things from getting worse.

Read Full Story “Paradigm lost: Economists missed the brewing crisis. Now many are asking: How can we do better” on Boston.com

Paulson on the diversity of firm in the financial industry

Trying to imitate high-status Newtonian physics, management scholars over the past fifty hear have tried to formulate general laws about the behavior of organizations.  In his statement after the passing of the $700 billion bailout of the financial industry, Paulson in my view correctly emphasized that the salient fact about most industries is the diversity and not the sameness of firms within them.

Charles Tilly 1929- 2008

I don’t know anyone who has come in contact with Charles Tilly and who was not inspired by him. For those who have never met him, here are wonderful tributes to this exemplary scholar.
Social Science Research Council Tribute Website
Tributes by Scholars
NY Times Obituary

Automatic Coding of Printed Materials

Traditionally most researchers working with printed data sources have entered data by hand to convert it into electronic format. If a research project involves large amounts of data from similarly formatted sources – for example, when one tries to create a longitudinal database of directory information spanning many years – entering this data by hand is a very labour intensive and tedious task. We wanted to automate the coding of printed directory information in order to cut down the time it takes to transfer this information into electronic data. Once the data is in electronic format, it can be further analysed with a plethora of software packages ranging from Microsoft Excel, FileMaker, SAS and SPSS, depending on the needs of the particular researcher. The purpose of this technical paper is to share with other scholars in a clear and practical way the methods we developed for automating the coding of printed information. Download article.

The Power of Richness IV: How Can Qualitative Methods Help us Ask Better Questions

Over 150 people came to the Power of Richness PDWs at each of the last three Academy meetings, drawing from many different divisions and interest groups.  With the demand for the workshop running so strong, Diana Day and I will try to organize an All-Academy PDW for the next meeting Annaheim. The format this past year proved very successful for learning how to do qualitative research well. The first part of the 2008 PDW will feature again a panel of leading qualitative scholars (Jane Dutton,  Royston Hinnings,  Martha Feldman and Ann Langley ), who will offer their insights qualitative research can help us ask the right questions. The second part of the workshop will have parallel sessions designed for people beginning or developing qualitative research and those trying to publish qualitative research.  Participants in the second part can have small group discussion with panelists, attend at least two of several tutorials, or sign up for a paper feedback session with experience scholars. For more up-to-date information on this Qualitative Research PDW, interested parties should go to our website PDW 2008 where we will post new information as the specifics of the PDW (tutorials subjects and leaders chosen), working paper discussion leaders, etc.


When and Where: Friday, August 8, from 1:00 to 5:00 pm, Anaheim, California

Presentation slides from the event are now posted. Please click on this link.

The Power of a Good Meta-Analysis

Chinese scientists have carried out a powerful meta-analysis and created new knowledge about the chemical pathways that lead to addiction. Can social scientist imitate this model? I am not sure. But certainly we should strive to do so.

Dr Wei therefore ran her 396 genes through a database of all known pathways to see which involved several enzymes encoded by those genes. She found 18 that were involved in addiction to at least one type of drug. Five, however, were common to all four types, and these five pathways therefore look as though they are at the core of the process of addiction. Three of the five were already under suspicion. Dr Wei’s result provided strong statistical evidence to back up what had just been hunches. Two other pathways, however, had not previously been considered as being involved in addiction. The existence of these five central pathways helps explain a lot about addiction. First, it gives weight to the belief that some people are more susceptible to all sorts of addiction than others are. That contrasts with the thought that addictions are substance-by-substance phenomena, though the two ideas are not mutually exclusive since changes in the 13 substance-specific pathways clearly also result in addiction.

Full story is available at Economist.com.

Malcom Gladwell Reviews the Problems with IQ Measurements

This is an excellent piece that shows how important it is to actually understand how IQ measures are constructed. Any empirical researcher can learn from the New Zealander who showed how much the alleged genetic intelligence is socially constructed. Read NONE OF THE ABOVE: What I.Q. doesn’t tell you about race.

Charles Tilly’s Writings on Methodology now on the Web

Charles Tilly is one of the most innovative and productive social scientists alive.  His research know-how should be passed on to the next generation of researchers, not only to those who are fortunate to take his classes at Columbia University.  With the approval of Tilly, Sekou Bermiss and I made electronically available all his writings on methodology. You can search this archive by key word and topics.  Go to: Tilly on Methodology Archive

April 2008: Daniel Little Interviews Charles Tilly on YouTube

The Power of Richness III: Crafting Qualitative Research Papers

The large crowds that came to the Power of Richness PDWs in Atlanta and the year before in Hawaii have convinced us there is significant demand in the Academy for learning how to do qualitative research well. This year we will build on the success of our two previous qualitative methods PDWs and create an even more ambitious PDW. The first part of the PDW will feature a panel of leading qualitative scholars (John Van Mannan, Steve Barley, Andy Hargadon, and Bill McKelvey), who will offer their insights about how to craft qualitative research papers. The second part of the workshop will have parallel sessions designed for people beginning or developing qualitative research and those trying to publish qualitative research. For more up-to-date information on this Qualitative Research PDW, interested parties should go to our website PDW 2007 where we will post new information as the specifics of the PDW (tutorials subjects and leaders chosen), working paper discussion leaders, etc.

WORKSHOP REQUIREMENTS: Participants interested in submitting a working paper for feedback in the working paper discussion groups need to send their papers (more than 10 and less than 35 pages) to .(JavaScript must be enabled to view this email address) at by July 13. Each paper should provide several key words on the title page indicating the type of qualitative method, data, and analysis techniques used. Working papers will be accepted for evaluation and feedback in this part of the workshop on a basis of first-come, first-served until we fill all the slots we can make available. ONLY those participating in the working paper sessions need to register through submitting a paper. All other parts of the PDW are open to everyone.

When and Where: Friday, August 3, from 1:00 to 5:00 pm at Marriot Liberty Ballroom C.

Presentation slides from the event are now posted. Please click on this link

Knowledge and the Wealth of Nations: A Story of Economic Discovery

David Warsh tell the story of how the idea of increasing returns that was already present in Adam’s Smith’s Wealth of Nations transformed academic economics in the 1980s. Read Paul Krugam’s review in the New York Times.

Malcom Gladwell Reviews Charles Tilly’s New Book “WHY”

Gladwell writes: In “Why?” (Princeton; $24.95), the Columbia University scholar Charles Tilly sets out to make sense of our reasons for giving reasons. In the tradition of the legendary sociologist Erving Goffman, Tilly seeks to decode the structure of everyday social interaction, and the result is a book that forces readers to reexamine everything from the way they talk to their children to the way they argue about politics. Read the full review in the New Yorker.

The Power of Richness II: Exploring Qualitative Research Methods

Inspired by the large number of participants at the “The Power of Richness: The Why, When, Where and How of Qualitative Research Methods” PDW in Honolulu, Diana Day and I (Peter Murmann) decided to organize a follow-up workshop on qualitative methods at the academy meeting in Atlanta.  The workshop will again have a stellar group of scholars presenting their ideas about how to make qualitative reseach powerful. The confirmed presenters are: Kathy Eisenhardt (Stanford), Mauro Guillen (Wharton-U. of Pennsylvania), Sara Rynes (Editor of AMJ), Nicolaj Siggelkow (Wharton-U. of Pennsylvania), John Wagner (Associate Editor of ASQ), Karl Weick (Michigan). More details about the workshop will as we are getting closer to the event.

When and Where: Friday, August 11, from 1:30 to 4:30 pm at the Atlanta Marriott in International 4

Update March 17,2006: The workshop is being sponsored by virtually all divisions of the Academy: BPS/HR/MED/MOC/MSR/OB/ODC/OMT/ONE/PNP/PTC/SIM/CAR/CM/
ENT/GDO/HCM/IM/MC/ and RM.

Visit the Discussion Forum for the Event where you can now download the presentation slides from the workshop. 

Project on the Competitiveness of Firms in the Global Paper & Pulp Industry, 1805-2005

Together with two Finish scholars, Juha-Anti Lamberg and Jari Ojala, I started a comparative study of the paper and pulp industry. Human beings have been making paper from various raw materials for thousands of years. But in 1804 a Frenchman invented a continous paper machine revolutionized the manufacturing and started the modern paper making industry.

The goal of our project is to study shifts in competitive advantage from one country to the next and from firm to firm during the last 200 years.  We are starting our comparative analysis looking at Britain, Germany, Finland and Sweden. Our long-term plan is to study all the major paper producing countries in the word. If you are interested in participating in this study, contact us.

How Business Schools Lost their Way

Warren Bennis and James O’Toole just published an article in the Harvard Business Review that I wholeheartedly agree with. It is very fun to read because they are well-informed and don’t shy away from stating some unpleasant truths.  Good business schools have room for theoreticians, scientific empiricists, and practice oriented scholars.

The Stanley Reiter Lecture 2005

On January 26, 2005 I delivered the Stanley Reiter Award Lecture. The Reiter award is named for Stanley Reiter, Charles E. and Emma H. Morrison Professor of Managerial Economics and Decision Sciences at Kellogg. It is presented to a Kellogg faculty member whose paper is judged by a panel of Kellogg professors across disciplines to be the best paper written in the preceding four calendar years. I received the award for my book Knowledge and Competitive Advantage: The Coevolution of Firms, Technology and National Institutions. You can also read the text of the lecture by clicking on “More” button or by downloading it as a Word file.  Alternatively,  you can watch a video (58 minutes) of the lecture with Real Player here: Lecture Video. If you watch the video, you should download the Slides that I presented during the lecture but which are not visible in the video.

The Power of Richness: The Why, When, Where and How of Qualitative Research Methods

Participate in the workshop on Qualitative Methods the Academy of Management in Hawaii, Friday afternoon from 1:00 to 4:00, August 5, 2005.  The Panelists are: Robert Burgelman, Diana Day, Deborah Dougherty, Charles Galunic, Johann Peter Murmann, Gabriel Szulanski, and Klaus Weber.

Visit the Discussion Forum for the Event where much additional information will be posted.

Social Mechanisms: An Analytical Approach to Social Theory

I am a big fan of explanations of social phenomena that set forth the precise causal mechanisms that produce them. This book edited by Peter Hedstroem and Richard Swedberg provides a very good introduction to the approach. The only think I don’t like about the piece its believe that all mechanisms in sociology need to refer to individuals.  You can download the overview chapter here:  Social-mechanism.pdf Click on “More…” for a Table of Contents.

Review of Jared Diamond’s New Book “Collapse”

The author of Guns, Germs, and Steel considers why some societies collapse when faced with environmental or political catastrophe, while others soldier on. Malcom Galdwell has published a useful review of the book in the New Yorker .

Personality Plus: Employers love personality tests. But what do they really reveal?

A hefty percentage of American corporations use personality tests as part of the hiring and promotion process. The tests figure in custody battles and in sentencing and parole decisions. “Yet despite their prevalence-and the importance of the matters they are called upon to decide-personality tests have received surprisingly little scrutiny,” Paul writes. We can call in the psychologists. We can give [people] a battery of tests. But will any of it help? Read more of Malcom Gladwell’s revealing New Yorker Article.

The Construction of Social Reality

John Searle’s book is a must-read for every social scientist. Searle makes the important distinction between observer independent facts (the sun exists independently of any human being observing it) and oberserver dependent facts (money does not exist unless people agree that a sheet of paper is worth a particular amount). This distinction, in my view, lies at the core of what makes natural sciences different from the social sciences.

Adaptation vs. Selection in Industry Change: Toward a Contingency View

Important Workshop at AOM ‘04: Participate in the workshop on Adaptation vs. Selection in Industry Change organized by Jan Rivkin and myself. Panelists are: Bill Barnett, Clayton Christensen, Anita McGahan and Will Mitchell.

Details on the Workshop

Economist Paul Romer on Innovation, Instutitions and Economics growth

Paul Romer gave an interesting interview in Reason Magazine describing in non-technical terms on how ecnomic growth comes about.

Evolutionary Economics—The State of the Science

This is a talk I gave at a conference New Perspectives on Telecommunications and Pharmaceuticals in Europe and the United States: Conference on Evolutionary Economics:
Conference Program

Teaching Archives

Laptops are a big distraction in the class room

I am inconsistent. I some contexts I have banned computers and more importantly smartphone use in classrooms because it became apparent that large number of students were distracted by it. It others I have allowed it because I myself like to take notes on a laptop. Here is the evidence why at least internet connections need to be turned off in classrooms.

Over time, a wealth of studies on students’ use of computers in the classroom has accumulated [...]. Among the most famous is a landmark Cornell University study from 2003 called “The Laptop and the Lecture,” wherein half of a class was allowed unfettered access to their computers during a lecture while the other half was asked to keep their laptops closed. The experiment showed that, regardless of the kind or duration of the computer use, the disconnected students performed better on a post-lecture quiz. The message of the study aligns pretty well with the evidence that multitasking degrades task performance across the board.
Pop quizzes, of course, are not the best measure of learning, which is an iterative and reflective process. Recent Princeton University and University of California studies took this into account while investigating the differences between note-taking on a laptop and note-taking by hand. While more words were recorded, with more precision, by laptop typists, more ended up being less: regardless of whether a quiz on the material immediately followed the lecture or took place after a week, the pen-and-paper students performed better. The act of typing effectively turns the note-taker into a transcription zombie, while the imperfect recordings of the pencil-pusher reflect and excite a process of integration, creating more textured and effective modes of recall.

Read full story in New Yorker

CEO of Large German Publisher speaks out: Why we fear Google

This if one of the most interesting open letter I have ever read by a CEO. Mathias Döpfner, CEO of Axel Springer, closes his open letter:

Dear Eric Schmidt, you do not need my advice, and of course I am writing here from the perspective of those concerned. As a profiteer from Google’s traffic. As a profiteer from Google’s automated marketing of advertising. And as a potential victim of Google’s data and market power. Nevertheless – less is sometimes more. And you can also win yourself to death.
Historically, monopolies have never survived in the long term. Either they have failed as a result of their complacency, which breeds its own success, or they have been weakened by competition – both unlikely scenarios in Google’s case. Or they have been restricted by political initiatives. IBM and Microsoft are the most recent examples.

Read full letter in FAZ: Why we fear Google

What Employers value the most in MBA graduates

A recent survey of CEOs reveals what they are looking for in today’s MBA graduates:

Self-Awareness (62%)
Integrity (60%)
Cross-Cultural Competency (57%)
Team Skills (49%)
Critical Thinking (48%)
Communication (48%)
Comfort with Ambiguity and Uncertainty (41%)
Creativity (27%)
Execution (21%)
Sales (19%)


Source:  PoetsandQuants.com

Superb Video Illustration of Changes to USA Budget in the past 50 Years

SAP Founder, Hasso Platter, on the difficulty of changing a firm rather than starting a new one

Hasso Platter co-founded SAP. For the past two decades he has been involved in trying to adopt the SAP to area of internet and cheap clout computing.

When asked whether it is harder to set up a new company or to steer an existing company in a new direction, he does not hesitate with his reply.

“The bigger challenge, I’d say, is the latter one.”

To reinvent a successful company such as SAP is much more difficult. “You have to convince people that change has to come, and that is difficult,” he says, noting that it is easier to convince Americans about the future than people in Switzerland or Germany. “We are more conservative. We are a little bit afraid of the future. Americans are not afraid of the future.”

Source:  Financial Times

The Three Rules: How Exceptional Companies Think

In their new book, The Three Rules: How Exceptional Companies Think, Michael E. Raynor and Mumtaz Ahmed carefully identified from all publicly listed American firms those firms that performed very highly over long periods of time. When they tried to find out what they had in common, they could not identify concrete behavior. What made the companies different, according to the authors, where their mindsets. This leads Raynor and Ahmed to articulate three rules for success.

  • Better before cheaper: Compete on differentiators other than price.

  • Revenue before cost: Drive superior profitability with higher prices or higher volumes, not lower cost.

  • There are no other rules: Change anything/everything in order to abide by the first two rules.

  • The Economist wrote a very thoughtful review about the entire genre of business books that tries to glean lessons from studying successful players.  I agree with their assessment that in the end,

    The difficult question is how to find that profitable niche and protect it. There, The Three Rules is less useful.

    Letters from China: “Breathtaking Beijing”

    In early June, I visited Beijing for the first time. The Chinese capital is breathtaking in every sense of the word. The city has gone through an amazing development and is more glitzy than many American and European large cities. It definitely feels more modern and dynamic than Philadelphia, whose neighborhoods I explored while living there for most of 2012.

    Guy Kawasaki on Lessons he Learned from Steve Jobs

    PM: Guy also shows how to put together a great simple slide presentation.

    Announcing a Special Feature: “Letters from China”

    During the first two weeks of June,  I will visit China for the first time. To share my impressions, I plan to write a few Letters from China.  Today I want to give you a bit background on the trip. For a long time, I wanted get out behind my desk and see China with my own eyes. This visit is long overdue given that I started to research the development of the Chinese synthetic dye industry five years ago.

    How to tell stories in graphical way

    With his books on how to present data in a graphical way, Edward Tufte has taught many of us to be more creative in how we try to communicate a story based on quantitative data. Here is a short video that explains the power of communicating complex data in a graphical way. Tufte appears in the video.

    David Gonski on Leadership

    Gonski is a towering figure of Australian life. But his ideas of leadership apply everywhere in the Western world. To appreciate a bit more Gonski’s words, read this profile on him.

    Daniel Kahneman: The riddle of experience vs. memory

    This is a very thought-provoking Ted talk on happiness and how we construct our judgement of happiness. TED summarizes: Using examples from vacations to colonoscopies, Nobel laureate and founder of behavioral economics Daniel Kahneman reveals how our “experiencing selves” and our “remembering selves” perceive happiness differently.

    Jeff Bezos on how to build organizations for innovation

    Here are Bezos thoughts on n how to build organizations for innovation:

    A willingness to fail and to be misunderstood “then what you can do is you can ramp up your rate of experimentation”. “So successful inventions [are] inventions that customers care about. It’s actually relatively easy to invent things that customers don’t care about, but successful invention, if you want to do a lot of that, you basically have to increase your rate of experimentation.

    “And that you can think of as a process: how do you go about organising your systems, your people, all of your assets, your own daily life and how you spend time, how do you organise those things to increase your rate of experimentation because not all of your experiments are going to work.”

    Bezos advice for aspiring entrepreneurs is “never chase the hot thing”. “That’s like trying to catch the wave, and you’ll never catch it. You need to position yourself and wait for the wave.”

    From CIO Magazine

    BBC Documentary on Facebook

    The Hollywood movies about Facebook gave us an outline of the history Zuckerberg and the firm he founded. While this BBC documentary retells some of the facts from the Hollywood film, it brings to light many other interesting features of the facebook phenomenon.

    10 Management insights courtesy of Carol Tice

    Carol Tice summarized the 10 lessons in recent management books.

    1. Instead of hiring people with fancy resumes, hire people who fit your culture and are teachable.
    2. Build a strong brand and don’t change it.
    3. Focus all your products on the consumer by studying and listening to customers and innovating accordingly.
    4. Appoint a DRI, or Directly Responsible Individual, for every task.
    5. Create a confrontational workplace culture where workers feel free to challenge others’ opinions.
    6. Have a system of secrecy that builds excitement and a sense of ownership—from launching projects in an outbuilding that flies a pirate flag to erecting walls around off-limits “lockdown rooms.”
    7. Create a recognition culture. Novak was once horrified to find a 30-year company executive who only heard how great people thought his contributions were a few weeks before his retirement. Now, Yum! managers all over the world give out unique recognition awards, from miniature Taj Mahal statues to rubber chickens.
    8. To lead people and achieve big goals, ask three questions: What’s the single biggest thing you can imagine that will grow your business or change your life? Who do you need to affect, influence or take with you to be successful? What prescriptions, habits or beliefs of this target audience do you need to build, change or reinforce to reach your goal?
    9. When you build strong relationships with your management team before you launch, it makes it easier to execute on your vision.
    10. Execution is more important than the idea.

    Full Story on entrepreneur.com.

    Different skills are crucial for managing corporations, non-for-profits and government organizations

    People who have had very successful careers in corporations frequently underestimate how much they have to change their style to be effective in academic and other non-for-profit sectors.  Here is a illumnating quote from Donna Shillalah who was quite effective in the government sector but found academia much more challenging.

    “Everybody thinks university presidents are hierarchical and top-down,” said Donna E. Shalala, president of the University of Miami, and a former president of the University of Wisconsin and secretary of health and human services. “But we are not corporate chieftains, and we cannot rule from the sky. We are more like tugboat captains, trying to get our ships aligned and pulling them in the right direction.”

    The great research universities, she said, have achieved their dominant position in the world through shared faculty governance, and leaving faculty both academic and research freedom.

    “It was a lot easier to run a cabinet department than the University of Wisconsin,” Ms. Shalala said. “There are a lot of different constituencies at a university, and the president cannot be successful without buy-in from all of them.”

    Souce: NY Times

     

    A Gravity Defying Idea

    Daniel Pink: What really motivates us

    For Profit Colleges under Fire

    Information Video on the AGSM MBA (Executive) Strategic Management Year

    Understanding Introverts

    I discovered a very useful article describing introverts. All managers, especially if they are extroverts can benefit from getting a deeper understanding of introverts.

    Caring for Your Introvert: The habits and needs of a little-understood group.
    Do you know someone who needs hours alone every day? Who loves quiet conversations about feelings or ideas, and can give a dynamite presentation to a big audience, but seems awkward in groups and maladroit at small talk? Who has to be dragged to parties and then needs the rest of the day to recuperate? Who growls or scowls or grunts or winces when accosted with pleasantries by people who are just trying to be nice? If so, do you tell this person he is “too serious,” or ask if he is okay? Regard him as aloof, arrogant, rude? Redouble your efforts to draw him out? If you answered yes to these questions, chances are that you have an introvert on your hands—and that you aren’t caring for him properly. Read more in the Atlantic.

    Flat World Knowledge Provides Textbooks for Free

    Do you need to learn a new subject but you want to do it on your own and not pay for it. Flat World Knowledge publishes free textbooks if you simply want to read them online and not print them. I found it useful to look up a textbook on project management. For a full category of free textbooks, go to flatworldknowledge.com.

    Steve Jobs’s Seven Rules of Success courtesy of Carmine Gallo

    Learning From Failure:  From Webvan to Zappos

    Rudy Giulani’s Six Principles of Leadership

    The Northwestern University 2011 graduation you at least want to see on YouTube

    Burt Teplitzky on Using Humor in Sales Pitches

    THE WALL STREET JOURNAL: How do you go about incorporating humor into sales presentations?

    I use humor to reinforce a point in selling a product or service. My formula is punch them with the joke, stick them with the point and leave them with the benefit. When you take a joke and incorporate it into a conversation or a presentation, it carries a lot more power. It carries the power to change people’s minds, reinforce what they think or feel, and to sell something. That chosen joke is no longer just a joke. It becomes a gem, a humor gem.

    Speaking in front of an audience for fun and profit only requires one laugh every three to six minutes. This should be your goal. In a comedy club, you need to have at least three laughs per minute to get regular stage time.

    Remember, your audience wants humor and they fear that if they don’t laugh, you will stop using it. They don’t want to have to suffer through a dry presentation.

    Read full interview in the WSJ.


    PM: The general point being made here is that you need to figure out how to establish a relationship with the person you want to sell to. In the end, you need to provide them with reason to go with you rather than competitor. Everything else being equal, the reason might be that they like you more because it fun to be around you.

     

    Andy Penn’s Tips for Doing Business in Asia

    1. Be patient.
    2. Focus on building relationships.
    3. Get the right people and invest in them.
    4. Have a high level of cultural sensitivity and awareness.
    5. Diversify across Asian markets as the risks are higher.
    6. Build a regional model with a distinct platform that can handle all different tax and regulatory environments.

    Common Mistakes when Doing Business in Asia

    1. Barriers to entry are very high, so don’t overestimate how long it will take to reach objectives.
    2. Don’t underestimate the importance of relationships. Early discussions probably won’t focus on business but on areas such as family and interests.
    3. Don’t underestimate cultural differences and how they can lead to a situation of being exploited or causing exploitation.
    4. The rest of the world is not blind to the opportunities Asia represents. Competition is fierce and there is a higher risk of failure. Don’t go unprepared.

    From BRW, April 14- 20, 2011, pp. 30-31   Biographical Information on Andy Penn

    CEO Q&A: Ned Montarello

    Great Animation: The Credid Crisis Explained in Simple Terms (11 Minutes)

    Global Health and Wealth over the past 200 years

    All you ever wanted to know about macroeconomics in seven minutes

    CEO Q&A: Skander Malcolm

    New Management Focus: Invest in Relationships!

    Designing an organization requires making a million decisions both large (e.g. picking a strategy) and small (e.g. picking out paper for the PC printer). It is easy to get lost in the trivial instead of focusing on getting the critical elements right. In my courses, I try to present ideas and frameworks that help identify what is important. At the recent Academy of Management Conference in Montreal I came across a phrase that was new to me. In my view,  it crystallizes what managers need to do to design an organization that is able to respond to all the unexpected events that invariably occur in the life of an organization:

    Invest in relationships!

    You Don’t Have to Pay Employees More Than the Competition to Keep Them Happy

    Returning to Chicago for the first time in three years, I went to two of my favorite restaurants. In one, Lulu’s, most of the waitresses and busboys I had seen three years ago were still there. In the other, I recognized no one except for the owner. So I asked the owner of Lulu’s if he was paying his people more.  He said: “No.” I asked him a second time. He still said:  “No.” Confirming the lesson that many management professors emphasize in the context of the Southwest airline example, you don’t have to pay people more than the competition to keep them happy. Lulu’s is a fun place and the interior design is attractive, providing employees non-monetary rewards. Evidently the owner is also not getting on the nerves of his staff.  Jokingly he says in front of one of his female employees: “I cannot even get rid of the people I would like to see go.” The lady—who must have been working there for at least 8 years—interjects: “I knew you were going to say this.” The general lesson (except perhaps for Wall Street before the crash) is: You don’t need to pay people more than the competition. But the total rewards of working for you have to be more than the total rewards of working for someone else. Otherwise people will leave.

    The Wrong Stuff Blog

    We seem to have a built-in tendency to want to learn from successful people and pay little attention to failures. We also have a hard time admitting mistakes. In fact, what dintinguihses mature and, dare I say, clever,  indivdiuals is precisely that they can admit mistakes and learn from them.  Kathryn Schulz, who is about to publish a book on the subject, has published on Slate a number of great interviews and reflections on being wrong. The one with Alan Dershowitz is particularly interesting. If you want to start with the most recent entry, start here: The Wrong Stuff

    CEO Q&A: Greg Bourke

    What is your number one tip for managing people?

    Be empathetic: When you understand the issues that constrain staff from doing their job you will usually identify bigger issues in the organization.

    Is there a lesson you have never forogotten?

    Progress is not perfection.

    From BRW, April 29-June 2, 2010, p. 12.

    CEO Q&A: Lincoln Crawely

    What has been your greatest regret in Business?

    That I didn’t really get to know and accept my strengths and weaknesses earlier.

    What is your number one tip for managing people?

    Fairness and balance, which must not be confused with compromise.

    From BRW, April 15-21, 2010, p. 10.

    Warren Buffet’s Symbolic Leadership

    Watch this great advertisement staffed by employees of Geico. Warren Buffet, whose companey fully owns Geico, participates in the ad to demonstrate that he is one the many co-workers. It is funny to see the 80-year-old billionaire impersonate Axl Rose.

    The New AGSM MBA (Executive) Strategic Management Year

    Apple did not forsee the success of the application store

    It is hard to forsee the future as the recent episode with Apple’s application store demonstrates.  The NY Times reports:

    The App Store’s success — as much a surprise to Apple as it has been to competitors — has given rise to a new digital ecosystem. Today, hundreds of software aspirants, from individuals tinkering in their bedrooms late at night to established companies looking for lucrative new revenue streams, are jumping into the App Store fray.

    When making a decision, managers often make the mistakes of only considering the potential upsides, but not the cost of downsides. Positive surprises don’t kill firms. It is the negative surprises that bring you down. 

    Benefits of the Knwoledge Economy

    Figure 1 from the ETH Strategy Report: Knowledge is the main engine of economic growth. A strong correlation can be observed between the Knowledge Economy Index (KEI) and GDP per capita. The KEI is calculated by the World Bank and is based on the four pillars of the Knowledge Economy framework: 1. An economic and institutional regime to provide incentives for the efficient use of existing and new knowledge and the flourishing of entrepreneurship; 2. An
    educated and skilled population to create, share, and use knowledge well. Click on More to see a powerful picture.

    The Economist on Annoying Bussiness Guru and the Problems with MBA Curricula

    The Economist has a wonderful new column called Schumpeter. The October 22 issue revists the shortcomings of management gurus that I highlight in my classes. The Sepember 24 column encourages business schools to teach people to be more sceptical. 

    The three habits…of highly irritating management gurus

    Business schools have done too little to reform themselves in the light of the credit crunch

     

    Phil Tetlock Critically Reviews Three Books on Forecasting the Future

    Telock does us the service of giving a close reading of three books that what to overcome the obstacle that Yogi Berra identified in his qib: “Prediction is very hard, especially about the future.”

    The Fat Tail: The Power of Political Knowledge for Strategic Investing by Ian Bremmer and Preston Keat.

    The Predictioneer’s Game: Using the Logic of Brazen Self-Interest to See and Shape the Future by Bruce Bueno de Mesquita

    The Next 100 Years: A Forecast for the 21st Century by George Friedman

    Read Telock’s excellent review at National Interest.

    Debate: Do Women Make Better Managers

    The jury is still out. But read this interesting exchange on NYTimes.com. Rember that just because on average women may be different than men, this does not mean that it is true for the person in front of you.

    Susan Pinker: Whether we’re talking about mentoring, managing or office politics, the research is clear: “Men and women together are the best.”

    Sharon Meers: Women often take an alternative approach to leading teams — encouraging more open discussion, cultivating talent and sharing credit. Feedback is the place where women bosses may add the most value.

    Three Books on the Origins of the Financial Crisis and its Lessons

    John Lanchester reviews three books on the origins of the financial crisis and its lessons in the New Yorker.  Two of them are useful for the general reader.

    Gillian Tett, “Fool’s Gold” (Free Press)

    Richard A. Posner, “A Failure of Capitalism” (Harvard)

    I personally personally found Fools Gold the most rewarding of all the books and a higly recommend it to anyone who works in the finance industy or simply wants to understand what caused the recent financial crisis.

    Read full review here.

    CEO Q&A: Bernie Brooks

    Chief executive, Meyer (Australia)

    What is your number-one tip for managing people?

    You never get in trouble for over-communicating with them.

    What is your number-one tip for managing a business?

    Give the team more responsibility than they expect and measure everything in the business that can be measured.

    A lesson you have never forgotten?

    How the mighty have fallen. Some six of the top 10 retailers in 1987 don’t exist today and that is a sign that you can never be complacent in retailing.

    Excerpted from BRW, Vol. 31, No. 12, FYI.

    GE’ s Jeff Immelt refuses bonus for 2008

    Radical Rethinking of Cash Management

    The Economist summarizes the profound implications of the financial crisis for the management of cash in firms.

    SELDOM has corporate strategy been turned on its head so quickly. Barely a year ago, cash was a dangerous thing to accumulate: activist investors stalked companies, urging boards to return it to investors, to pay special dividends or to buy back shares. Ever since the 1980s the fashion had been to make companies as lean as possible, outsourcing all but your core competencies, expanding your just-in-time supplier system around the globe, loading up with debt to “leverage” your balance-sheet. Old-style defensive conglomerates, such as Arnold Weinstock’s General Electric Company, were dismantled. Companies that hoarded cash—even ones as good as Toyota and Microsoft—were viewed with suspicion.

    Short History of Modern Finance

    THE RECKONING: As Credit Crisis Spiraled, Alarm Led to Action

    Background:The NY Times reports on the what triggered Paulson and Bernacke to seek an immediate 700 billion fund to prevent the American markets from collapsing. Read full story on NYTimes.com.

    Risk will always equal potential reward

    Greed, as it periodically does when traders and bankers forget the lessons of the past, clouded judgments. Some very smart people talked themselves into believing in the repeal of one of the fundamental laws of economics: risk will always equal potential reward. The idea that risk can be eliminated and high yields guaranteed is as idiotic as the idea that gravity can be suspended. Remember Long-Term Capital Management? Ten years ago it figured out how to eliminate risk using highly sophisticated computer programs and rolled up annual returns averaging 40 percent — until it collapsed in a heap.

    Read more by John Steele Gordon on the Financial Mess: Greed, Stupidity, Delusion — and Some More Greed here.

    The F.A.Q.?s of Lehman and A.I.G.

    Doug Diamond and Anil Kashyap of the University of Chicago explain the recent financial crisis.

    For most of the last 20 years we have been studying banks, monetary policy, and financial crises. So for us the events of the last year have been especially fascinating.The last 10 days have been the most remarkable period of government intervention into the financial system since the Great Depression. In talking with reporters and our noneconomist friends, we have been besieged with questions about several aspects of these events. Here are a few of the most frequently asked questions with our best answers.
    Read more on NYTimes.com

    Management Wisdom Courtesy of Jeff Pfefer

    Jeff Pfeffer has spent the past twenty years figuring out what management ideas have some systematic data behind them and what ideas are make for a good story but are simply wrong. Guy Kawasaki (who wrote a fantastic little book on entreprepreurship, The Art of the Start, which I am using in one of my classes) has sat down with Pfeffer and asked him questions on his book What were they thinking?. Read the interview.

    What Don Quixote Can Teach Managers and Entrepreneurs

    Taming Your Inner Homer Simpson

    My Kellogg students will remember that I asked them to rate their intelligence vis-a-vis the average member of the class. I routinely had 75 percent of all student who rate themselves above average. That is 25% too many. A colleague of mine warned me that 90% academics feel undervalued by their institution. But until now I read Dahlia Lithwick review of Richard Thaler’s and new book Nudge: Improving Decisions About Health, Wealth, and Happiness I did not know that 94 percent of professors at large universities to believe themselves better than the “average professor.” Read Lithwick excellent review of the book.

    The Latest Reasoning about our Irrational Ways

    Elizabeth Kolbert reviews in the New Yorker the latest on findings on how people behave in irrational ways when making economic decisions.  Read her Reviews of two new books.
    “Predictably Irrational: The Hidden Forces That Shape Our Decisions” (Harper; $25.95); by Ariely, Dan;
    “Nudge: Improving Decisions About Health, Wealth, and Happiness” (Yale; $25); by Thaler, Richard H.

    Irrational fear: No good at risk

    The Economists reviews of “Risk: The Science and Politics of Fear” by Dan Gardner
    THE official death toll from the September 11th terrorist attacks in 2001 was 2,974. But in 2002 America’s death toll on the roads grew by more than 1,500—casualties of the terrorism-inspired exodus from safe aeroplanes to dangerous motor cars. A swan washes up on a British shore, dead from bird flu, and the press panics, while the 3,000 people who die every year on the country’s roads (13 times the number of people who have ever died from bird flu) go largely unremarked. Human beings are notoriously bad at dealing with risk. Two new books explore why, and investigate the effects that misunderstanding risks can have on public policy. The first, an excellent work by a Canadian writer, Dan Gardner, is a broad meditation on the nature of risk, beginning with a psychological explanation for why people find it so difficult to cope. Mr Gardner analyses everything from the media’s predilection for irrational scare stories to the cynical use of fear by politicians pushing a particular agenda.

    Introducing the Meeting Meter?

    What CEOs are Reading

    The common perception is that CEOs are reading the latest popular management books to help them with their difficult job. An article in the New York Times suggests otherwise. I am not sure if the CEOs that Harriet Rubin portrays in here article are representative of all CEOs and I think the title of the article “C.E.O. Libraries Reveal Keys to Success” is an overstatement, but any manager should read what she has to say. 

    Harriet Rubin: Michael Moritz, the venture capitalist who built a personal $1.5 billion fortune discovering the likes of Google, YouTube, Yahoo and PayPal, and taking them public, may seem preternaturally in tune with new media. But it is the imprint of old media — books by the thousands sprawling through his Bay Area house — that occupies his mind. “My wife calls me the Imelda Marcos of books,” Mr. Moritz said in an interview. “As soon as a book enters our home it is guaranteed a permanent place in our lives. Because I have never been able to part with even one, they have gradually accumulated like sediment.” Serious leaders who are serious readers build personal libraries dedicated to how to think, not how to compete. Ken Lopez, a bookseller in Hadley, Mass., says it is impossible to put together a serious library on almost any subject for less than several hundred thousand dollars. Perhaps that is why — more than their sex lives or bank accounts — chief executives keep their libraries private.

    New School of Strategy & Entrepreneurship launched in Sydney

    The Global Climate Crisis

    The website for An Inconvenient Truth provides the basics facts about the science of climate change.  Watch the trailer for film.

    Give the DVD to your friends this holiday season.

    Commissioned by the British government, the economist Stern published on October 30th his study evaluating the economic consequences of global warming. He writes: “The scientific evidence is now overwhelming: climate change presents very serious global risks, and it demands an urgent global response (p. i) ...There is still time to avoid the worst impacts of climate change if strong collective action starts now.” (p. xxvii) You can download a summary of his review here. If you don’t have time to read the 27 page summary of the 600 page report, here is a short review of its conclusions in the New Yorker.

    Reflections On “The Long Tail” - Give me Good Data!

    A few days ago, I came across a very positive review of The Long Tail, a new book by Wired Maganize writer Chris Anderson. The book’s main thesis is that “the future of commerce and culture isn’t in hits, the high-volume head of a traditional demand curve, but in what used to be regarded as misses - the endlessly long tail of that same curve.” The books purports to show that the 80/20 rule (most sales derive from a few products) does not apply any more with internet retailing because internet retaling can stock many more items. This morning Lee Gomez in his Wall Street Journal column trashed Anderson’s analysis, claiming that Anderson’s data was flawed. (You can read the Gomez colum “Long Tail’ May Not Wag the Web Just Yet”  on WSJ.com or through your library’s article database.) Anderson in turn claims that Gomez did not get the data right and wrote a facinating rebutall on his website. What this exchange underlines is that getting good data and working meticulously to draw the correct conclusion often is worth a “fortune” for managers. More broadly, before you adopt a new fashionable business idea, ask yourself what data supports that the idea in fact is going to work. With more data you might have realized that the idea hurts as often as it helps.

    The Essential Drucker: The Best of Sixty Years of Peter Drucker’s Essential Writings on Management

    Even the Best Cannot Predict the Future

    It is very useful to recognize that the social world is too complex to predict well what will succeed and what will fail. Those who think they know with great certainty what will succeed run the danger of overinvesting in their pet scenarios. What is the lesson? Just like with stocks, we should always have a portfolio of beliefs about the future, reducing the risk of getting stuck with the wrong scenarios.

    Who Says Elephants Can’t Dance: Inside IBM’s Historic Turnaround

    In the early 1990s, IBM was in danger of going bankrupt. Loius Gerstner was called in to turn the company around.  Anyone who is trying to change a formerly successful orgazation will benefit from reading Gerstner’s thoughts on change management. Beware: the book starts out slow, turning off many readers. But after the first 20 pages, Gerstner’s training as an organizational consultant provides him the analytic language to lay out what are the key challenges in changing large organizations. Because he was an outsider at IBM, he has no reservations to analyze how IBM got itself into a near death experience.  I highly recommend this book.

    The Freedom Tower Case: Why is group decision making not better individual decisions

    Individual human beings have limited skills, knowledge,  and expertise can get carried away by emotions when making decisions. One would think that involving multiple people in a decision could overcome the limitations of individual decision making but social psycholgoists have long known that groups have their own limitations. The New York Times published a pertinent article on how a comittee came up with the redesigned Freedom Tower that architectual critics find dissappointing given the grandeur of the originial proposal.

    Five Tips for Strategies for Organizational Change courtesy of Motorola’s New CEO

    Commanding Heights: The Battle for the World Economy

    Rarely have I seen such a powerful documentary about how ideas shape the world. The film traces the ideas that shaped macro-economic policy making over the course of the 20th century. The film will be eye-opening for people who know very little how economic policy powerfully effects the welfare of societies all over the world. Even if you are a scholar familiar with the history of the 20 century, you will enjoy this fantastic piece of work. One word of clarification. Sophisticated scholars who believe in “free” markets believe in a need for laws. (The film originally aired on PBS and is now available on DVD.)

    What Companies do to Make Life Easier for Their Employees

    The WSJ in today’s report on leadership published an interesting article on what kind of perks companies provide to boost the morale of people and to make work life easier. “Fun perks didn’t end with the dot-com bust. They just changed,” reports Jennifer Saranow.

    Read the full article on WSJ.com.

    Four More Years of Happiness

    Harvard pychology professor Daniel Gilbert predicts that most democrats will not be depressed during the next four years of George Bush. Here is the rationale that he offers in today’s New York Times: Research suggests that human beings have a remarkable ability to manufacture happiness. For example, when people in experiments are randomly awarded one of two equally valuable prizes, they quickly come to believe that the prize they won was more valuable than the prize they lost. They are often so surprised by their apparent good fortune that they refuse to believe the prize was awarded randomly, and they are generally unwilling to swap their prizes even when the experimenter offers to sweeten the deal with a little extra cash.

    Malcom Gladwell’s Book “Blink” is out!

    In my introductory management class I discuss the how cognitive heuristics (rules of thump) help us navigate our complex daily lives and make decisions before it is too late. Malcom Glawell new book describes this quick decision-making capability with many examples. I will review the book during the next couple of months, but in the meantime you can read excerpts from the book on Gladwell’s website.  David Brooks has written a very thoughtful review of the book in the New York Times that you can read here.

    Gladwell and Surowiecki Debate How Good Decisions are made

    Galdwell and Surowiecki have a new books coming out concerned with good decision making. I am presently reading Surowieki’s The Wisdom of Crowds and have Blink on my reading list. You can read a debate they both had about their books in Slate

    Experience Gestalt Pictures

    My former student John Tsau forwarded me some other examples of pictures that can be seen in different ways. What we can see is to a large extent conditioned what we expect to see in the world in the first place…

    The Tipping Point

    Defining that precise moment when a trend becomes a trend, Malcolm Gladwell probes the surface of everyday occurrences to reveal some surprising dynamics behind explosive social changes. He examines the power of word-of-mouth and explores how very small changes can directly affect popularity. Perceptive and imaginative, The Tipping Point is a groundbreaking book destined to overturn conventional thinking in business, sociological, and policy-making arenas.

    Overall judgement: This is a superb book and should be read by every student of the social world.

    Courses Archives

    The Rapid Decline of Printed Guidebooks

    The digital revolution is devouring printed travel guides. Lonely planet is a case in point.  The BBC bought the company forf $210 in 2007 and sold it last year for roughly $121 million. Here is a instructive figure charting the decline in printed guide sales.


    Lonely Planet and the rapid decline of the printed guidebook

    John Borghetti calls on the government not to pick winners in the Australian airline industry

    Borghetti Interview

    Microsoft’s New CEO Nadella on how to organize for innovation

    In a wide-ranging interview with the NY Times, Nadella explained his views on how to organize for innovation.

    Q. Your company has acknowledged that it needs to create much more of a unified “one Microsoft” culture. How are you going to do that?

    A. One thing we’ve talked a lot about, even in the first leadership meeting, was, what’s the purpose of our leadership team? The framework we came up with is the notion that our purpose is to bring clarity, alignment and intensity. What is it that we want to get done? Are we aligned in order to be able to get it done? And are we pursuing that with intensity? That’s really the job.

    Culturally, I think we have operated as if we had the formula figured out, and it was all about optimizing, in its various constituent parts, the formula. Now it is about discovering the new formula. So the question is: How do we take the intellectual capital of 130,000 people and innovate where none of the category definitions of the past will matter? Any organizational structure you have today is irrelevant because no competition or innovation is going to respect those boundaries. Everything now is going to have to be much more compressed in terms of both cycle times and response times.

    So how do you create that self-organizing capability to drive innovation and be focused? And the high-tech business is perhaps one of the toughest ones, because something can be a real failure until it’s not. It’s just an absolute dud until it’s a hit. So you have to be able to sense those early indicators of success, and the leadership has to really lean in and not let things die on the vine. When you have a $70 billion business, something that’s $1 million can feel irrelevant. But that $1 million business might be the most relevant thing we are doing.

    To me, that is perhaps the big culture change — recognizing innovation and fostering its growth. It’s not going to come because of an org chart or the organizational boundaries. Most people have a very strong sense of organizational ownership, but I think what people have to own is an innovation agenda, and everything is shared in terms of the implementation.

    Source:  NY Times

    Founders sell WhatsApp to Facebook: Motives not clear

    Two Diagrams that show why PC makers have trouble

    image

    Click on “more” to see chart that combines PC and tablet sales.

    AOL tries to reinvent its business model

    AOL, whose dial-up internet business was destroyed by fast cable, DSL and not mobile phone internet connections connections (see graph) is trying to reinvent itself as a content company. It was to write local news and take the Huffington Post global.  Read details on Economist.com:  AOL’s second life.

    image

     

    SM4 Course Outline

    Strategic Management 4 is all about the need for an organisation to revisit and redefine its business model in response to, or in anticipation of, sustained poor performance.

    Download Full Course outline.

    Why Dell is going provide to turn-around its business

    Michael Dell believes that the stock market will be able to stomach further profit declines that are required to make investments for the turnaround.

    Mr. Dell told the board that the only way out involved changes in the company’s business model and expensive investment in new products and services. “Implementing such initiatives would require additional investments that could weaken earnings and cause greater volatility in the performance of the common stock,” the filing said Mr. Dell argued in a Dec. 6 meeting.

    “Mr. Dell stated his belief that such initiatives, if undertaken as a public company, would be poorly received by the stock market because they would reduce near-term profitability, raise operating expenses and capital expenditures, and involve significant risk.”

    Source: WSJ.com

     

    Michael Dell: I did not see rapid decline of PC market coming

    To win more time to turn around Dell, Michael Dell with the help of a private equity partners is taking Dell Computer private again. One of the reason the turnaround since 2007 has not been sufficient is that tablets have eaten into the market for PC in a way that Dell did not expect. The WSJ reports: “When asked in a 2011 interview with The Wall Street Journal what surprised him most since he returned as Dell CEO in 2007, Mr. Dell said the rise of tablets had been unexpected for him.

    “I didn’t completely see that coming,” he said, before adding that he didn’t anticipate business users would give up PCs soon.”

    Microsoft Offers Office in the Cloud and a New Price Model

    The WSJ reports: “Microsoft’s newest version of Office, available starting Tuesday, is a radical change from the past. For starters, Office 365 has a surprising new price model: It is available as a subscription that can automatically renew each year, if you choose. This new system constantly updates program features year round. Every time you open a program in Office, you will be running the latest version.”

    Syllabus for Wharton MGMT 782 Course Fall 2012

    Syllabus is available for download here: MGMT-782 Syllabus

    Tim Cook - Time’s Almost Person of the Year

    Time had nominated Tim Cook, Apple’s CEO as a candidate for the Person of the Year. Will Cook be able to make Apple come out with another revolutionary product, revealing to us what Steve Jobs saw in Cook. In any case, here is how Cook was recruited by Jobs to Apple.

    Almost immediately after he arrived at Compaq, Cook began to get calls from Apple’s headhunters. Jobs was back from exile — he was pushed out from Apple in 1985, then rehired 12 years later — and he wanted to bring in somebody new to run operations. At that point Apple was generally considered to be in a death spiral — that year alone, it lost a billion dollars — and Cook had no interest whatsoever in moving. But Jobs was a legend in the industry, so Cook sat down with him one Saturday morning in Palo Alto. “I was curious to meet him,” Cook says. “We started to talk, and, I swear, five minutes into the conversation I’m thinking, I want to do this. And it was a very bizarre thing, because I literally would have placed the odds on that near zero, probably at zero.”

    Cook was interested in Jobs’ strategy, which he describes using a favorite Cook expression, doubling down: “It was the polar opposite of everyone else’s. He was doubling down on consumer when everybody else was going into enterprise. And I thought it was genius. Compaq was doing so poorly in consumer, didn’t have a clue how to do consumer. IBM had left. Everybody was kind of concluding that consumer business is a loser, and here Steve is betting the company on it.”

     

    Full Story on Time.com

    CEO of Blackberry articulates how the company will regain its marketshare

    How HP got duped into overpaying billions for Autonomy

    HP once was the icon of good management. But for the past 10 years it has gone through several CEOs and the middle of a turnaround has to write off $9 billion dollars because it acquisition of Autonomy turned out to be a fiasco. HP alleges that Autonomy mis-represented its financial worth. The founder of Autonomy claims that HP destroyed Autonomy within one year.
    Read the stories in

    Dealbook New York Times

    WSJ.com

    Economist.com

    But here is also a voice that articulates that if you are buying a company to secure your future, many deals will go wrong but some may go right and prevent you from becoming irrelevant.
    Acquisitions is like doing R&D with a high failure rate.

    Executive Reshuffle at Apple: Scott Forstall is out

    Tim Cook take his first major step of reshaping the top executive ranks at Apple. It appears that a battle was brewing within Apple for some time about key design philosophies. Scott Forstall, who apparently has been branded as not being a team players, stumbled of the debacle with the Apple maps.

    Read the detailed stories in LA Times and NY Times

    Citi Chairman Is Said to Have Planned Chief?s Exit Over Months

    Citibank’s CEO Viram Pandit was removed through a boardroom coup. There are two questions that the episode raises. Was Pandit truly oblivious to the what the chairman Michael E. O’Neill was up to? Did O’Neill in the end do CITI a favor or has done long-term damage to the morale of the high-level employees.  The NY Times reports:

    Vikram Pandit’s last day at Citigroup swung from celebratory to devastating in a matter of minutes. Having fielded congratulatory e-mails about the earnings report in the morning that suggested the bank was finally on more solid ground, Mr. Pandit strode into the office of the chairman at day’s end on Oct. 15 for what he considered just another of their frequent meetings on his calendar.
    Michael O’Neill is said to have begun building a case to force out Mr. Pandit after Mr. O’Neill became chairman in April.
    Instead, Mr. Pandit, the chief executive of Citigroup, was told three news releases were ready. One stated that Mr. Pandit had resigned, effective immediately. Another that he would resign, effective at the end of the year. The third release stated Mr. Pandit had been fired without cause. The choice was his. The abrupt encounter, described by three people briefed on the conversation, included a terse comment by the chairman, Michael E. O’Neill: “The board has lost confidence in you.”

    Read full story on NY Times.

    Newsweek stops print edition after 80 years

    Microsoft Rumored to Become more like Apple in major Strategy Shift

    Microsoft is rumored to imitate Apple’s strategy of making both software and hardware.

    Microsoft (MSFT) is currently in the midst of a major transition unlike anything the company has dealt with in the past. According to our own sources and multiple subsequent reports, Microsoft is working on its own smartphone. While this would mark the first time Microsoft has launched a self-branded smartphone (we’re not counting the KIN), the implications for the company are much greater than just a phone. Noted industry insider Eldar Murtazin has written a lengthy piece on the company’s upcoming Windows Phone plans, but has also explored some of the reasons why Microsoft is being forced to make its own tablets and smartphones, and most likely its own laptops and desktops as well in the near future.

    Source: Yahoo News

    Summary of GE Type Workout

    One Year after his death: Apple Remembers Steve Job

    Steve Jobs best moments introducing new products

    T-Mobile buys and merges with Metro PCS: Will it succeed?

    After the government did not allow ATT to buy T-Mobile, T-Mobile needed to find a different way to achieve scale and cut costs. Today it announced buying and merging with Metro PCS. Will the firm be able to avoid the fiasco of the Sprint/Nextel merger?

    T-Mobile and MetroPCS will continue to operate as separate brands. Throughout the morning, T-Mobile executives sought to allay one of the biggest concerns about the merger, the incompatibility of the company’s network with MetroPCS’ own. John Legere, who will become the chief executive of the combined network operator, argued that the company will slowly move MetroPCS’ customers to its own GSM standard — with the goal of moving the unified entity to the Long Term Evolution technology down the road. The aim was to avoid comparisons to Sprint’s merger with Nextel, which failed at the same task and left that merged company in a far weaker position.

    Full Stor

    Meg Whitman is trying to turn HP around

    HP has been falling behind Apple and Google and the race to be the leading Silicon Valley company. Now Meg Whitman is trying to turn this former star company around. The NYT reports.

    So now Ms. Whitman is focusing her energy on H.P., the company founded by the tech legends William Hewlett and David Packard. Bill and Dave, as they are referred to at the company, spawned Silicon Valley. Last year, H.P. posted revenue of $127 billion. It employs 320,000 people directly, and easily that many again through a network of manufacturers and computer resellers across 170 countries.
    TWENTYyears ago, people like Steve Ballmer at Microsoft, Larry Ellison at Oracle, and John Chambers at Cisco Systems heard Kenneth Olsen, then the leader of Digital Equipment Corporation, deride the PC as unsuited for business. Within a few years, DEC had been gobbled up by Compaq Computer. Everyone knows viscerally how fast change can overtake a legacy business — and how hard it is to change.
    There’s little glory in managing decline, particularly in an industry in love with what’s next. Apple’s tablets are taking share from PC makers like H.P., but only after Apple had a near-death corporate experience that ended with the return of Steve Jobs. He created a new reality for Apple with its retail stores, something that H.P. can’t copy to sell PCs. I.B.M. also transitioned successfully after billions in losses and years of cuts. Most others ended like DEC.

    Full Story

    Why Apple wanted to wave its own Maps Application and dumped Google’s prematurely

    Yesterday the Apple CEO apologized for Apple’s crummy maps application in iOS 6. The WSJ reports on the financial reason why Apple wanted to dump Google maps.

    Maps are a big piece of the Apple-Google rivalry. Opus Research has estimated that mobile ads associated with maps or locations account for about 25% of the roughly $2.5 billion spent on ads in mobile devices in 2012. Google has had mapping software since 2005, and a Google Maps app was pre-installed on the first iPhone starting in 2007. Apple only began building its maps software in 2009 under Mr. Jobs, with an eye toward making its version the default mapping app on the iPhone and, later, the iPad. Apple acquired several companies to construct its mapping technology, as well as using information from third parties, such as navigation system maker Tom Tom NV, before it was ready to boot Google Maps.

    Source: WSJ.com

    Home Depot changes its strategy in China after failing to achieve its targets

    Home Depot is not the first company to find out that the strategy that worked well back home does not work in a foreign country. Wal-Mart failed in Germany not realizing that the competitive landscape was different. Starbucks failed in Australia, closing most of its shops because the Australian consumer was used to much sophisticated coffee. The WSJ journal reports on the changes in the Home Depot China strategy after failing to implement the previous one successfully.

    Home Depot Learns Chinese Prefer ‘Do-It-for-Me’
    The largest U.S. home-improvement retailer, which entered China in 2006, has struggled to gain traction in a country where cheap labor has stunted the do-it-yourself ethos and apartment-based living leaves scarce demand for products like lumber.
    Home Depot conceded that it misread the country’s appetite for do-it-yourself products. “The market trend says this is more of a do-it-for-me culture,” a Home Depot spokeswoman said of China.Home Depot is shaking up its strategy by focusing on specialty stores. Three months ago, it opened one paint-and-flooring store and one home-decorations outlet in the northern port city of Tianjin to cater to specific needs and shopping preferences shown by Chinese consumers, the spokeswoman said. It also plans to launch online operations with a Chinese partner, she said, without naming the company.

    Home Depot debuted in China with a 12-store acquisition six years ago and the number has since dwindled as it found that Chinese consumers differ from their global counterparts. As Swedish furniture giant IKEA discovered, Chinese consumers will pay for people to do the work for them. Several years ago, the furniture store added services to help customers assemble their furniture.

    Home Depot’s closures will cause the company to take a $160 million after-tax charge in the third quarter, a company statement said. The charge will be equal to about 10 cents per diluted share, and will include the impairment of goodwill and other assets, lease terminations, severance and other charges associated with closing the stores.

    Full Story

    Deutsche Bank lowers ROE target from 25% to 12%

    When a company has a very high financial targets, employees are encouraged to do everything possible to achieve it, which in turn may lead to an unwanted increase in the level of risk that the firm faces. As the FT.com reports, the new leadership of the Deutsche Bank determined that the target was to high. They may have felt that they needed to curb the risk taking in the bank.

    Deutsche’s new co-chief executives are expected to make a decisive break with the decade-long era of Josef Ackermann, their predecessor, when they will drop a target of generating a 25 per cent pre-tax return on equity. At a strategy presentation in Frankfurt after 100 days in charge of the bank, Anshu Jain and Jürgen Fitschen are set to announce a “substantially lower return on equity target”, one person close to the situation said.High quality global journalism requires investment. They are also expected to unveil a strategy for much closer integration of the bank’s business lines, make significant changes to the bank’s bonus model and give more details on a plan to take out €3bn of costs.Analysts estimate that the new goal could be in the region of 12 to 13 per cent ROE after tax – a benchmark more commonly looked at by investors than the pre-tax figure.

    Full Story on ft.com

    More Details on how Apple invented the iPhone

    Slate reports:

    This is the story of how Apple reinvented the phone. The general outlines of this tale have been told before, most thoroughly in Isaacson’s biography. But the Samsung case—which ended last month with a resounding victory for Apple—revealed a trove of details about the invention, the sort of details that Apple is ordinarily loath to make public. We got pictures of dozens of prototypes of the iPhone and iPad. We got internal email that explained how executives and designers solved key problems in the iPhone’s design. We got testimony from Apple’s top brass explaining why the iPhone was a gamble.
    Put it all together and you get remarkable story about a device that, under the normal rules of business, should not have been invented. Given the popularity of the iPod and its centrality to Apple’s bottom line, Apple should have been the last company on the planet to try to build something whose explicit purpose was to kill music players. Yet Apple’s inner circle knew that one day, a phone maker would solve the interface problem, creating a universal device that could make calls, play music and videos, and do everything else, too—a device that would eat the iPod’s lunch. Apple’s only chance at staving off that future was to invent the iPod killer itself. More than this simple business calculation, though, Apple’s brass saw the phone as an opportunity for real innovation. “We wanted to build a phone for ourselves,” Scott Forstall, who heads the team that built the phone’s operating system, said at the trial. “We wanted to build a phone that we loved.”

    Full story on Slate

    Apple vs. Samsung Trial Reveals a lot of data on the firms’ stratetigies

    Ina Fried of the WSJ’s All Things Digital is following the Apple-Samsung Trial and is providing an analysis of all the information the typically secretive Apple is forced to reveal.

    Apple vs. Samsung Trial Forces Companies to Open Up the Books

    At the bottom of the article are links to her other commentaries on the trial.

    Institutional Environment and Evolutionary Dynamics

    Dan Levinthal organized a workshop on Evolutionary Perspectives on Strategic Management. Dick Nelson and I faciliated the fourth day on Institutional Environment and Evolutionary Dynamics. Here you can download the syllabus for the day day and the presentation slides.

    Syllabus
    Presentation Slides

    Tim Cook Interview at DX: Following Steve Jobs

    Tim Cook was interviewed about a range of topics at DX, including Steve Jobs.

    Jobs Was an Awesome Flip-Flopper, Says Tim Cook (Video)

    Here is a summary on the remarks on Steve Jobs leadership style.

    6:33 pm: Walt: How is Apple different with you as the CEO?
    “I learned a lot from Steve. It was absolutely the saddest day of my life when he passed away.”
    “At some point late last year, I sort of — somebody kind of shook me and said, ‘It’s time to get on.’” That sadness was replaced by his intense determination to continue the journey.

    6:34 pm: What did I learn from him? Focus.
    “You can only do so many things great, and you should cast aside everything else.”
    Cook says that not accepting things good or very good, but only the best, “that’s embedded in Apple.”
    “I’m not going to witness or permit the change of that.”
    “He also taught me the joy is in the journey, and that was a revelation for me.”
    Cook also made a reference to the fact that Jobs stressed the importance of owning the key underlying technologies.
    As for moving on, Cook says: “I love museums, but I don’t want to live in one.”

    6:37 pm: Cook says he is committed to preserving the culture of Apple.
    “It is not that easy to duplicate, either,” Cook says.
    “If they could, everybody would be like this,” Cook says. “You can’t get a consultant report” and change to be like Apple.

     

    And then it is turtles all the way down…

    From Wikipedia:
    The origins of the turtle story are uncertain.
    The most widely known version appears in Stephen Hawking’s 1988 book A Brief History of Time, which starts:

    A well-known scientist (some say it was Bertrand Russell) once gave a public lecture on astronomy. He described how the earth orbits around the sun and how the sun, in turn, orbits around the center of a vast collection of stars called our galaxy. At the end of the lecture, a little old lady at the back of the room got up and said: “What you have told us is rubbish. The world is really a flat plate supported on the back of a giant tortoise.” The scientist gave a superior smile before replying, “What is the tortoise standing on?” “You’re very clever, young man, very clever,” said the old lady. “But it’s turtles all the way down!”
    —Hawking, 1988

     

    After crashing on a demonstration flight, will the new Russian jet ever find sufficient customers

    Getting 85% percent right in strategy implementation is not sufficient when it comes to airplane product. The previous example of the A320 which crashed on early test flights shows that it is crucial that plane crash is due to human error. NY Times reports:

    Until a crash inquiry is done, analysts said, Sukhoi will have difficulty marketing the Superjet. “It would be entirely understandable for any potential customer to hold off until it’s determined whether the cause was human error or mechanical failure,” said Sash Tusa of Echelon Research and Advisory in London.
    While it is rare for such a young aircraft to crash, it is not unprecedented — an Airbus 320 crashed during a demonstration flight in 1988, killing three people and injuring 50. Investigators determined that the cause had been pilot error and found no evidence of a malfunction. The A320 went on to be one of the world’s best-selling aircraft models.
    If analysts identify human error as the cause of the plane’s crash, most of the existing 240 Superjet orders will stay on the books, Mr. Tusa said, but “if it turns out there is some kind of major design flaw with the aircraft, those orders aren’t worth the paper they are written on.”

      Full Story on NY.Times

    With 8.8% market share, Apple has 73% of cell phone profits

    image

    Full Story by Philip Elmer-Dewit

    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

    Department of Justice Files Suit Against Apple and Major Publishers of ebooks

    Apple did not join the settlement of the lawsuit. This is a major win for Amazon. It will be fascinating to watch how the suit will unfold.

    Details:
    Apple should settle suit
    Associated Press on Suit April 11

     

    Reversal of Fortunes: In smartphones Microsoft is in the position that Apple was in the PC era

    The New York Times reports on this amazing reversal of fortunes.

    Microsoft’s weak position in mobile apps is in stark contrast to the clout it had with developers in the heyday of the PC era. Its success with Windows was partly built on an all-out effort it made in the 1980s and ’90s to get independent software companies to make Windows the primary operating system for which they wrote applications.That influence began to weaken somewhat when the Web era took off and more companies began to design services and products that ran through browsers. But it has accelerated further as much of the creative talent in the developer world has shifted toward smartphone and iPad applications. Sarah Rotman Epps, an analyst at Forrester Research, said Microsoft’s relative weakness was a function of not having a big enough audience of users. “Developers go where the money is, and the money is where people are,” she said.

    Full Article at NY Times

    Jack Welch and Jeffrey Immelt on the GE’s Talent Machine

    Jack Welsh on the Core Competency of GE

    Vertical Integration Works for Apple—But It Won?t for Everyone

    Wharton professors explain why Apple integrated model of designing both hardware and software may not work for other companies. Knowledge@Wharton reports:

    Google recently acquired mobile device maker Motorola Mobility and will soon manufacture smartphones and television set-top boxes. Amazon’s Kindle Fire tablet represents its bridge between hardware and e-commerce. Oracle bought Sun Microsystems and now champions engineered systems (integrated hardware and software devices). And even long-standing software giant Microsoft now makes hardware for its Xbox gaming system. Technology titans are increasingly looking like vertically integrated conglomerates largely in an attempt to emulate the success of Apple.Vertical integration dictates that one company controls the end product as well as its component parts. In technology, Apple for 35 years has championed a vertical model, which features an integrated hardware and software approach. For instance, the iPhone and iPad have hardware and software designed by Apple, which also designed its own processors for the devices. This integration has allowed Apple to set the pace for mobile computing. “Despite the benefits of specialization, it can make sense to have everything under one roof,” says Wharton management professor David Hsu.

    Read full story.

    JetBlue to Review Procedures After Pilot Meltdown: CEO

    A pilot on a JetBlue flight had a complete mental meltdown. The co-pilot had to lock him out the cockpit and passengers had wrestle him down and constraint him with their belts. If you are the CEO, what you want to know know is whether this was an isolated incident (which can always happen) or whether your HR systems are not properly design. For this reason it makes sense that the CEO ordered a review.  Read full story here.

    1997 Apple Ad “The Crazy Ones” Recut to include Steve Jobs

    Founder and CEO of IdeaLab explains how he get his employees to work with risky startups

    Jonathan Ives explains the design process at Apple

    Fundamental Objective of Cambridge University Press is not profits

    1985 Steve Jobs is fired, Bill Gates sends letter to John Sculley urging him to license Mac OS

    Neal Pancholi drew my attention to this interesting letter by Bill Gates. It shows that Gates in 1985 was sill open to making his fortune my selling Mac software rather than dominating the next generation OS.

    Steve Jobs last public appearance pitching to the Cupertino City Council (June 7, 2011)

    WSJ Journalist does not find flying experience on Boeing Dreamliner “all that different”.

    Tim Cook in a wide-ranging interview talks Apple today (Feb 2011)  and future directions

    On Tuesday, Apple CEO Tim Cook spoke at the Goldman Sachs Technology and Internet Conference, where he was interviewed on stage by Bill Shope, Goldman Sachs’s IT hardware analyst. Here’s an edited transcript of what Cook had to say on a variety of topics, ranging from working conditions at Apple’s Chinese suppliers to Apple’s culture and ethos. Transcript

    Steve Ballmer being questions about the impact of iPhone announcement in 2007

    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

    How Sheryl Sandberg (COO of Facebook) helps women to network

    When Facebook goes public Sheryl Sanberg will be a very wealth women. She wants to serve as a role model for other women in business and is actively trying to help them. Here is how she facilitates networking.

    If Silicon Valley men bond in venture capital conference rooms or on weekend bike trips, Ms. Sandberg has been building an alternate networking group of Silicon Valley women. For about seven years, since she was a Google executive, she has held catered monthly dinner parties at her home for a group of several dozen women. Guest speakers have included the feminist and author Gloria Steinem; Steve Ballmer, the C.E.O. of Microsoft; and Mayor Michael R. Bloomberg of New York, according to three people who have attended the dinners but spoke on condition that they not be identified out of respect for Ms. Sandberg’s privacy. Ms. Sandberg recently invited Senator Claire McCaskill of Missouri to attend as a speaker. “I expected to see a lot of women in St. John suits and expensive purses and was pleasantly surprised when it was anything but that,” Senator McCaskill said. “Women had been included that were in the infancy of their careers, her kids were running around, it was very low key. It was clear that she’s the kind of role model that young women are looking for, especially in the tech sector.”

    Source: NY Times

    There is also an excellent long profile of Sandberg in the New Yorker (2011). A Woman’s Place-Can Sheryl Sandberg upend Silicon Valley’s male-dominated culture?

    Steve Job trying to build NeXT

    This film, following Steve Jobs in the early days of next, show him both as a visionary and motivator but from minutes 15 to 20 as poor manager who did not ensure that deadlines were met by sticking to agreements about product features.

    Overview of the Management System of Southwest and the Leadership Style of Herb Kellerher (44 min)

    It is useful to compares this to Jack Welsh and Steve Jobs in his later years (1997-2011) when he was much more focused on creating products that would sell in large numbers.

    Steve Jobs reveals important ingredients in becoming successful

    Steve Wozniak summaries Steve Jobs shortly after Jobs dies

    You don’t speak ill about someone when they just died. But having read the Isaacson biography of Steve Jobs, Wozniak summarizes summarizes Jobs well.

    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.

     

    Can American Society Demand that Apple create more factory jobs in the U.S.?

    Now that Apple has become at least temporarily the most valuable company in the U.S and the American workers are hurting it is not surprising that the press is focusing on Apple outsourcing all it manufacturing overseas. This article brings into focus the question that we will discuss in session 4 of the class, namely what is or should be the fundamental objective of a particular firm. Who should decided this? It is possible to have many different fundamental objectives. If “yes”, how and who decides what trade-offs are to be be made.

    Apple, America, and a Squeezed Middle Class: How U.S. Lost Out on iPhone Work in NY Times.

    The Daily Show on MBAs Taking an Ethics Oath

    Here is a lighthearted take on a serious issue.

    New Transparency at Apple under the leadership of Cook?

    Notoriously secretive Apple published a list all its suppliers. Is this a sign that Tim Cook wants to break with Steve Jobs policy of keeping as much as possible secret and bring more openness and transparency to Apple? Or is the company simply responding to a new law in California and this disclosure would have happened under Jobs as well?

    Read full story by Reuters.

    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.

    Insider Talk about Reasons for Failure of HP Tablet running WebOS

    An article in the NYTimes takes us behind the scenes of HP’s abrupt exit from the tablet market. Palm did not have the organizational capabilities to introduce a tablet into the market. The article suggests that the WebOS operating was fundamentally to flowed to compete successfully with the iPad even when the full organizational resources of HP were thrown behind it. Read article in the NYTimes.

    Stanford is beaten in NYC project

    Stanford had no experience with building a campus in NYC and bowed out the competition to build new campus in NYC because the strength of the Cornell, which had already a lot of experience building in the city. Read full story in NY Times

    image

    An overview of Jack Welsh’s career (43 min)

    Why do a few companies succeed for a long time and most don’t

    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.

    American CEO tries to explain bankruptcy restructuring to public

    CEO Video Announcement

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

    John Sculley insightful interview about the mistakes he made at Apple and about Steve Jobs

    I have almost finished reading Walter Isaacson revealing new Steve Jobs biography. But a long interview with John Sculley in 2010 provides additional details that allow us to understand the history of Apple and personal computers much better. Sculley fired Steve Jobs and in this candid interview says that it would have been better if Jobs had been made CEO in 1985.  Read the full interview here.

    Fundamental Objective for Founder of HTC is making unique products rather than margin

    Chou [CEO of HTC] said he cares more about making unique products than making good profit margins. He listens and acts quickly. Often, when Beats co-founder and music producer Jimmy Iovine calls with an idea, Chou will have sent off an e-mail about it before the conversation is over, Iovine said. Chou said he tests the music himself. A $300 million controlling stake in Beats Electronics LLC, the headphones maker backed by rapper Dr. Dre, was part of a strategy to lure music enthusiasts with a marketing plan that included bringing singer Lady Gaga to an Oct. 6 audio party in London to release the HTC Sensation XL, its first handset featuring Beats audio technology and headphones.

    Source: Bloomberg BusinessWeek

    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.
    image
    For more distant causes click on “more”.

    The Reason why HP is divesting its PC Business

    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.

    Full Story

    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

    Funny Description of what the life of an entrepreneurs is like

    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.

    Can Apple Retail Executive Lead J.C. Penney?

    Information Overload in Water Systems

    PM: What does not get measured does not get managed. This is a principle I subscribe to. But you need a second principle to make this work: Avoid information overload. Here is an example of how a company figure out how to analyze large amounts of data to identify useful information that can be acted upon.

    Pipe Dreams: To plug leaks from the water supply, you first have to find them.
    An effective way of detecting leaks [in municipal water systems], both accidental and deliberate, would therefore be welcome.
    TaKaDu, a firm based near Tel Aviv, thinks it has one. The problem, in the view of its founder, Amir Peleg, is not a lack of data per se, but a lack of analysis. If anything, water companies—at least, those in the rich world—have too much information. A typical firm’s network may have hundreds, or even thousands, of sensors. The actual difficulty faced by water companies, Dr Peleg believes, is interpreting the signals those sensors are sending. It is impossible for people to handle all the incoming signals, and surprisingly hard for a computer, too.

    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

    Speaking about Paul Feyerabend

    This semester Lex Donaldson is teaching the Intellectual Foundation of Social Science class alone. But he asked me to come in and speak a bit about Feyerabend’s philosophy and my encounter with him when I took his undergraduate class on Ancient Philosophy at Berkekely.

    The Conglomerate Discount in USA is 9%

    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.

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

    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.

    Read Full Story

    Siemens Tightens up it Corporate Strategy

    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

    Why Starbuck’s Failed in Australia

    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.

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

    Short Introduction to Strategic Management 1 by Peter Moran

    Short Introduction to Strategic Management 2 by Rose Trevelyan

    Short Introduction to Strategic Management 3 by Shayne Gary

    Short Introduction to Strategic Management 4 by Peter Murmann

    James Yuille Strategies for Networking

    Don’t front up at a neworking function expecting to make a sale. “Networking is an opportunity to meet people in a neutral environment, to form relationship and to built trust. People who are too anxious about making a dollar will only ostracise themselves from the rest of the group.” Other tips include: be open-minded, don’t be pushy, be a good listener and think to long-term. [...] “I have known someone [though networking] for 12 year and only last year did that relationship come up with business.”


    From: BRW, September 2—8, 2010, p. 38

    Peter Murmann: These tips can be applied not only to win business but also to advance one’s career.

    Lehman Brothers’ did not Walk to Talk of its Mission Statement

    Dramatic Challenge to Barnes & Nobles Business Model

    This one of the most vivid examples of challenges to the existing business model of a firm. The Wall Street Journal reports:

    Google’s New Search Homepage: Integrating Quantitative and Qualitative Data as well as Intuitions

    Jump to minute 1:47 of the Business Week video.

    Excellent Overview of the Philosophy of Social Sciences

    Daniel Little’s article for the Cambridge Encyclopedia of Philosophy provides an excellent overview of the key issues in the philosophy of social sciences. You can read it here.

    Logical Incrementalism in Product Development

    The Power of Infinity

    Steven Strogatz explains beautifully how the concept of inifinity first tripped up philosophers but then provided them with a powerful tool to calculate things that could not be calculated without taking things to inifity. I wish I had had as good a math teacher as Strogatz. The lesson here is also that Strogatz does not provide a solution to Zeno’s paradox but that he shows that even without fully removing the puzzles around infinity one can use the concept to get more knowledge in other areas.
    Read his column Take It to the Limit.

    Apple with only 7% of Sales account today for 35% of Industry Profits

    According to a Business Insider article, the banking giant has aggregated numbers from the top ten PC makers in the world and determined that, while Apple only commands 7 percent of overall revenues in the PC market, its products account for 35 percent of the operating profits. See Full Article.

    Blackboard Course Website

    For all information and resources regarding the course, UNSW students should log into the Blackboard Course Website.

    Couse Outline for Intellectual Foundation of Social Sciences now available

    Here you can find the course outline. STRE 8005 More information for enrolled students is available at the UNSW course webpage.

    Richard Branson’s Fundamental Objective

    The Financial Times posed twenty questions to Richard Branson. Here are the two important ones that touch upon the idea of a fundamental objective.

    How important is money?
    My priority is learning and trying to improve the world – not being rich.

    How do you want to be remembered?
    That I have made a difference.

    Read full interview.

    Duplicity

    Rarely is a Hollywood movie such a great teaching instrument. Duplicity gives a wonderful picture of how far large companies go in figuring out what their competition is up to. What’s more, the principles of game theory are very well illustrated by Julia Roberts and Clive Owen, who make a wonderful pair. I recommend that every Strategic Management student watch this film.