Archive for December, 2006
What do Michael Porter, Bono, and The Gap have in common?
They’re all related to “The Competitive Advantage of Corporate Philanthropy.” The HBR article, by Michael Porter and Mark Kramer, proposes a fundamentally new way to look at the relationship between business and society that does not treat corporate growth and social welfare as a zero-sum game.
They introduce a framework that individual companies can use to identify the social consequences of their actions; to discover opportunities to benefit society and themselves by strengthening the competitive context in which they operate; to determine which CSR initiatives they should address; and to find the most effective ways of doing so.
Perceiving social responsibility as an opportunity rather than as damage control or a PR campaign requires dramatically different thinking—a mind-set, the authors warn, that will become increasingly important to competitive success.
The framework identifies three ways in which social issues should be prioritized:
- Generic: Social issues that are not significantly affected by a company’s operations nor materially affect its long-term competitiveness.
- Value Chain: Social issues that are significantly affected by a company’s activities in the ordinary course of business.
- Competitive Context: Social issues in the external environment that significantly affect the underlying drivers of a company’s competitiveness in the locations where it operates.
Case studies? Porter gives us a few examples: Whole Foods, Microsoft, GE, Volvo etc. Some of his examples are weak (ExxonMobil building roads is not exactly CSR, or is it?)
What’s truly great about this article is the diagram mapping the societal impact of the value chain ( pp.86-87). In it, Porter shows us how companies can start analyzing it’s “inside-out” linkages to see where it can do the most good — for society and itself.
Which brings us to The Gap. Duke grad-student Jeremy MacNealey writes:
“The apparel retailer has struggled mightily over the past few years, but we learned that the company may have found new hope from the most unlikely of sources — its charitable efforts. Teaming up with (Product) Red and launching a new apparel line called Gap (Product) Red, it has seen an overwhelming response by consumers to the edgier and more premium product. The response by the public has been so strong that the company is now planning to apply a similar look throughout the Gap brand. It just may be that the long-awaited turnaround that investors have anticipated will actually come about in part as a result of Gap’s charitable efforts.”
More about Product Red here >>
December 30th, 2006
Here’s a report you’ll be interested in: The Globalization of White-Collar Work: The Facts and Fallout of Next-Generation Offshoring from Duke’s Fuqua School of Business and Booz Allen Hamilton.
The news? Apparently offshoring is no longer “all about moving jobs elsewhere; increasingly, it’s about sourcing talent everywhere.”
And: “…what used to be a tactical labor cost-saving exercise is now a strategic imperative of competing for talent globally. White-collar work can be performed where it makes the most sense and saves the most cents. More important, a looming shortage of technically trained talent, such as engineers and computer scientists, in advanced economies will require the ability to source and manage such talent globally.”
Here are the 5 main points:
1. Labor arbitrage is giving way to accessing talent as the primary driver of next-generation offshoring.
2. Offshoring high-skilled functions does not replace jobs onshore.
3. Companies look elsewhere because they can’t get it at home.
4. Where you offshore depends on what you offshore.
5. The obstacles to successful offshoring are increasingly internal and organizational.
The reports also says that higher skilled jobs (like R&D, Marketing, and Design) won’t go away because of this growing global talent shortage. Instead firms will compete globally for brain power, regardless of location.
Sorry, I don’t buy that. China’s working hard on educating the next generation of designers, and in India you’re going to see the next generation of innovation. (I’ll get John Hagel to talk about this soon.)
December 25th, 2006
Wired’s Chris Anderson writes about the effect of the Internet on media industries in the Economist’s The World in 2007:
“The web takes its victims one at a time. First, in the mid-1990s, print media started to feel the terrifying effect of losing their monopoly on publication…in the early 2000s, the same thing happened to music…Now it’s television’s turn. In 2007 TV will have its first “music moment”—the realisation that a core audience (the 18-34-year-old male) has moved online, possibly for good.”
The key insight: “Short, user-created videos are creating a new kind of watching experience, one more about “snacking” than half-hour sitcoms.”
This is all about building future business models around attention spans. No one has time to read Harvard Business Review, or listen to an entire music CD, or watch the whole movie.
Our attention span is now somewhere between 3 to 5 minutes. That’s the size your idea-bite has to be if you’re going get heard at all.
December 25th, 2006
At the beginning of this year, the Edelman Trust Barometer assessed the impact on trust of a company’s national origin, industry sector, behaviors and communications policies.
[Ironic, isn’t it, that Edelman itself lost credibility this year when it was revealed that they were behind the fake Wal-Mart blogs… details here>> ]
The findings, which were presented at the World Economic Forum in Davos, included:
Opinion leaders in Europe apply a significant “trust discount” for major U.S. brands, such as Coca-Cola (U.S.= 65% vs. Europe= 41%); McDonalds (51% vs. 30%); P&G (70% vs. 44%); and UPS (84% vs. 53%). There is no “trust discount” for non-American global brands operating in the U.S. or any other market (e.g. Sony = 74% in Japan, and 79% in the U.S.), with the exception of Japanese brands in China.
Western based companies continue to make big strides in winning trust in the Chinese market. Big gainers this year included Citigroup, Procter & Gamble, Shell, Unilever and UPS, all now rated trustworthy by more than 75% of Chinese respondents, and up from under 50% two years ago.
German and Canadian companies are highly regarded by more than 70% of opinion leaders in every market surveyed. Less than 40% of opinion leaders expressed trust in global companies headquartered in emerging markets such as China and India, as well as in Korea. Such companies face particular trust deficits when seeking to buy companies in overseas markets.
Companies in the technology and retail sectors are the most trusted, while energy and media-entertainment are the least-trusted industries. Pharmaceutical concerns face considerable skepticism in the U.S. and Germany, while financial firms fare much better in the U.S. and Asia than in Europe.
Television is the big loser in media trustworthiness with the rise of the Internet. When asked where they turn first for trustworthy information, 29% of respondents in the U.S. still cite TV first, down from 39% three years ago. The Internet is now cited by 19%, up from 10% in 2003. The same trend is evident in the U.K., where television has declined from 42% to 33% as respondents’ first choice, while the Internet has risen from 5% to 15%. Newspapers, which are often thought to be the most serious casualty of the Internet wave, show rankings essentially unchanged in most markets at approximately 20%. Newspapers remain the first trusted medium of choice for respondents in France, Germany, Japan, Brazil, Korea, and Italy.
“Articles in business magazines” is the most credible source of information about a company (US = 66%, Canada = 53%; Brazil = 75% Europe = 60%), followed closely by “friends and family,” which has grown very strongly in the U.S. (‘03=35% vs. ’06=58%); Brazil (‘04=66 vs. ‘06=73%) and Canada (‘05=43% vs. ‘06=58%).
Trust has important bottom-line consequences. In most markets, more than 80% say they would refuse to buy goods or services from a company they do not trust, and more than 70% will “criticize them to people they know,” with one-third sharing their opinions and experiences of a distrusted company on the Web.
Trust in institutions overall is lowest in Germany and France, and highest in China, Brazil and the U.S. Business was trusted by only 33% of respondents in Germany, and only 28% in France, vs. 45% in Spain, 51% in Italy and 53% in the U.K. (Comparable figures for the U.S. and China are 49% and 56%, respectively.) Government is the least-trusted institution in Brazil, Spain, Germany, and South Korea, and remains low in the U.S. (38%), UK (33%), France (32%), and Canada (36%). It has increased in China (83%, up from 63% in ’05) and Japan (66%, up from 43% in ’05). Trust in media is low across all countries except for China (73%) and South Korea (49%).
Trust in Non-Governmental Organizations (NGOs), which have consistently been the most-trusted institution in Europe during the six years that the survey has been conducted, has steadily increased in the U.S. (‘01=36%, ’06=54%); and increased significantly in the last 12 months in Canada (’05=45%, ‘06=57%) and Japan (’05=43%, ’06=66%). Despite the survey asking for only trusted global companies, many respondents volunteered NGOs such as the Red Cross in France and the UK and Greenpeace in Germany were also frequently mentioned. NGOs are now the most-trusted institution in every market except Japan and Brazil. The widespread rise in trust of NGOs has now extended to Asia, especially in China, where ratings went from 36% to 60% in last 12 months.
So what will the Trust Barometer tell us in 2007? Stay tuned!
December 20th, 2006
Teaming is one of the two disciplines for achieving performance in small groups.
In addition to keeping groups small, the team discipline revolves around needed skills, shared sense of purpose, goals and how to get along and work together, and mutual accountability — all of which make these findings from Grovewell must reading for folks in cross cultural teams.
We are all human — we bring with us beliefs and behaviors that reflect ‘how we do things around here’. Increasingly, more and more of us absorb and practice such values in organizations.
Still, the forces of national and ethnic culture remain the starting point because of family, because we ‘grow up’ in contexts heavily influenced by those cultural dimensions. The shift from place to organization going on around the globe holds both promise and peril — but surely one potential advantage comes from blending the best of various cultures into ‘how we do things around here’ in our organizations. Teams are powerful crucibles for making this happen because they are small thick we’s with an orientation toward performance — toward some objective purpose that brings us together meaningfully.
As the Grovewell research shows, achieving performance requires small cross-cultural groups using the team discipline to grapple with how to get the best from values that are seemingly at odds, such as:
1. Individualism versus group orientation
2. Hierarchical versus democratic distribution of power
3. Content-focused versus context-focused communication style
4. Formality versus informality
5. Punctuality versus flexible sense of time
6. Task and goal orientation versus relationship orientation
7. Deductive versus inductive reasoning
8. Holistic versus linear thinking
9. Confrontation versus diplomacy/face-saving
10. Short-term versus long-term viewpoint
11. Competition versus cooperation
12. Loyalty to particular people versus obedience to universal rules
13. Self-determination versus acceptance of fate/circumstance
14. Religious versus secular worldview
15. Permissiveness versus strict rules/regulations
16. Pragmatic flexibility versus adherence to detailed plans
17. Achieved versus ascribed status
18. Change as positive versus tradition as revered
19. Youth orientation versus age veneration
20. Male dominance versus gender equality
21. Rigid class structure versus social mobility
22. Action/doing versus contentment with being
Much turns on the attitudes with which these questions are approached, especially how best to respect differences while finding a shared path to performance that matters.
Folks who jump straight to ‘good versus bad’ step into unpromising territory.
In contrast, those who take the time and make the effort to understand nonjudgementally will build the initial respect and trust required for more difficult choices about the best path to performance.
The Grovewell piece speaks specifically to cross-cultural teams. Over thirty years of experience with small groups, however, suggests to me that several of the items listed apply just as much to folks coming from different organizational cultures (e.g. in a post-merger integration team) and different functional/expertise cultures (e.g. marketing versus engineering).
December 20th, 2006
Carlos is the CEO of a successful food company. He is brilliant, hard-working, and an expert in his field. He started out on the factory floor and rose through sales and marketing to the top spot. There is nothing in his business that he hasn’t seen firsthand. Like many creative people, he is also hyperactive, with the metabolism and attention span of a hummingbird. He loves to buzz around his company’s facilities, dropping in on employees to see what they’re working on and shoot the breeze. Carlos loves people and he loves to talk. All in all, Carlos presents a very charming package, except when his mouth runs ahead of his brain.
One month ago his design team presented him with their ideas for the packaging of a new line of snacks. Carlos was delighted with the designs. He only had one suggestion.
“What do you think about changing the color to baby blue?” he said. “Blue says expensive and upmarket.”
Today the designers are back with the finished packaging. Carlos is pleased with the results. But he muses aloud, “I think it might be better in red.”
The design team in unison roll their eyes. They are confused. A month ago their CEO said he preferred blue. They’ve busted their humps to deliver a finished product to his liking, and now he’s changed his mind. They leave the meeting dispirited and less than enthralled with Carlos.
Carlos is a very confident CEO. But he has a bad habit of verbalizing any and every internal monologue in his head. And he doesn’t fully appreciate that this habit becomes a make-or-break issue as people ascend the chain of command, A lowly clerk expressing an opinion doesn’t get people’s notice at a company. But when the CEO expresses that opinion, everyone jumps to attention. The higher up you go, the more your suggestions become orders.
Carlos thinks he’s merely tossing an idea against the wall to see if it sticks. His employees think he’s giving them a direct command.
Carlos thinks he’s running a democracy, with everyone allowed to voice their opinion. His employees think it’s a monarchy, with Carlos as king.
Carlos thinks he’s giving people the benefit of his years of experience. His employees see it as micromanaging and excessive meddling.
Carlos has no idea how he’s coming across to his employees.
He is guilty of Habit #2: Adding too much value.
It’s not that people like Carlos don’t know who they are or where they’re going or what they want to achieve. Nor is it that they don’t have an adequate sense of self-worth. In fact, they tend to be very successful (and their self-esteem can often be excessive). What’s wrong is that they have no idea how their behavior is coming across to the people who matter—their bosses, colleagues, subordinates, customers, and clients. (And that’s not just true at work; the same goes for their home life.)
They think they have all the answers, but others see it as arrogance.
They think they’re contributing to a situation with helpful comments, but others see it as butting in.
They think they’re delegating effectively, but others see it as shirking responsibilities.
They think they’re holding their tongue, but others see it as unresponsiveness.
They think they’re letting people think for themselves, but others see it as ignoring them.
Over time these “minor” workplace foibles begin to chip away at the goodwill we’ve all accumulated in life and that other people normally extend to colleagues and friends. That’s when the minor irritation blows up into a major crisis.
Why does this happen? More often than not, it’s because people’s inner compass of correct behavior has gone out of whack—and they become clueless about their position among their coworkers.
You can learn more about this phenomenon in my new book- What Got You Here Won’t Get You There: The Twenty Habits That Are Holding You Back from the Top — and How to Stop Them.
December 15th, 2006
Booz Allen Hamilton’s annual study of the world’s 1,000 largest corporate R&D budgets uncovers a small group of high-leverage innovators who outperform their industries.
Specific findings include:
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Deep pockets can be dry wells. Analysis of the 2005 Global Innovation 1000 confirms the major finding from our initial study last year: Money simply cannot buy effective innovation. There are no significant statistical relationships between R&D spending and the primary measures of financial or corporate success: sales and earnings growth, gross and operating profitability, market capitalization growth, and total shareholder returns. Gross profits as a percentage of sales is the single performance variable with a statistical relationship to R&D spending.
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Less than 10 percent of companies are high-leverage innovators. Compared with others in their industries, only 94 of the companies in the Global Innovation 1000 produced significantly better performance per R&D dollar over a sustained period.
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Companies are getting better at squeezing benefits from R&D spending. R&D spending by the Global Innovation 1000 rose last year by more than $20 billion, but revenues rose more.
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Bigger can be better, even if it doesn’t boost breakthroughs. Scale provides advantages to R&D spenders. For the largest 500 companies, ranked by revenue and indexed by industry, median R&D spending was only 3.5 percent of sales in 2005, compared with 7.6 percent for the 500 smallest firms.
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Patents generally don’t drive profits. Boosting R&D spending can increase the number of patents that a company controls, but there is no statistical relationship between the number or even the quality of patents and overall financial performance.
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Masters of the innovation value chain have an edge. The high-leverage innovators and the companies with best overall performance distinguish themselves not by the money they spend, but by the capabilities they demonstrate in ideation, project selection, development, or commercialization.
December 15th, 2006
New products, new processes and new business models require a steady flow of good ideas, knowledge, resources, and the ability to execute.
Strategyworld.org is dedicated to ideas and execution in the fast paced world of global business. We bring you the best ideas directly from thought-leaders across the world - via this blog and through our online webinars.
Your host is Christian Sarkar, the founder of Double Loop Marketing LLC, a thought-leadership consultancy. Christian is the managing editor of this site and several others including the Zyman Institute of Brand Science at Emory University. He is interested in too many things to list here and spends too much time chasing ideas. He is “working” on a book on “double loop marketing.”
Our founding “thought-leaders” include:
Douglas K. Smith
Doug Smith is one of the world’s leading management thinkers and consultants. While at McKinsey & Company, he co-led the Firm’s worldwide organization practice and launched the “horizontal organization,” a part of the reengineering revolution that Fortune called “the model for the next fifty years.” Most recently, he authored On Value and Values — a sweeping vision to revitalize our values for our new world of markets, networks, organizations, friends and families. He is the co-author (with Jon Katzenbach) of The Wisdom of Teams and The Discipline of Teams, books used by millions of people in organizations the world over. Smith also authored Make Success Measurable and Taking Charge of Change — praised for using performance to drive real change in a dynamic world. His book Fumbling The Future changed forever how Fortune 500 companies manage innovation. He has contributed to performance, innovation, strategy and change in scores of organizations across more than forty industries in all three sectors: private, government and non-profit. He is the architect of Achieving Excellence in Community Development, a performance-driven organizational investment program that has revolutionized executive and leadership education. Cited in High Impact Consulting for having the number one impact of all consultants mentioned, his philosophy and practices routinely generate better than 100:1 returns.
John Hagel III
John Hagel is an independent management consultant and author who works with senior management to shape global business strategies and improve business performance. His experience includes senior management positions in technology businesses and sixteen years as a consultant with McKinsey & Co. John has written numerous books, including The Only Sustainable Edge with co-author John Seely Brown; they have created a joint web site – www.edgeperspectives.com – where their continuing research on “edge-strategy” can be accessed. Hagel is also the author of Out of the Box, Net Worth and Net Gain, all published by Harvard Business School Press. He has also written frequently for major business publications including Harvard Business Review, Wall Street Journal, Financial Times and McKinsey Quarterly.
John Seely Brown
JSB is currently a visiting scholar at USC and prior to that he was the Chief Scientist of Xerox Corporation and the director of its Palo Alto Research Center (PARC)-a position he held for nearly two decades. While head of PARC, Brown expanded the role of corporate research to include such topics as organizational learning, knowledge management, complex adaptive systems, ethnographic studies of the workscape and nano technology. He was a cofounder of the Institute for Research on Learning (IRL). His personal research interests include the impact of globalization on business, the management of radical innovation, digital culture, ubiquitous computing and organizational and individual learning.
Tom Davenport
Thomas H. Davenport is the President’s Distinguished Professor of Information Technology and Management at Babson College in Babson Park, Massachusetts, the director of research at Babson Executive Education, and a fellow at Accenture. He is the author of Thinking for a Living (Harvard Business School Press, 2005). Davenport directed research centers at Ernst & Young, McKinsey & Company, and CSC Index, and most recently, what used to be called the Accenture Institute of Strategic Change. He has written, co-authored or edited ten books, including the first books on business process reengineering, knowledge management, and the business use of enterprise systems.
Marshall Goldsmith
Marshall Goldsmith is a coach to top executives in many of the world’s leading companies, a prominent speaker and educator, and the well-known author of many books and articles on leadership. He is one of the foremost authorities on how to help leaders achieve positive, measurable changes in their own behavior and in the behavior of their people and teams. In his coaching career, Dr. Goldsmith has worked with over 70 CEOs and their management teams. He continues to conduct workshops for executives, high-potential leaders and HR professionals. Recently, the American Management Association named Dr. Goldsmith as one of the 50 greatest thinkers and business leaders who have most influenced the field of management. Forbes named him as one of the five most-respected executive coaches. Dr. Goldsmith’s work has received recognition from the Academy of Management, the Institute for Management Studies, the American Society for Training and Developing, the Center for Creative Leadership, the Conference Board and the Human Resource Planning Society. He serves on the faculty of the executive education programs at Dartmouth and the University of Michigan. He has authored 18 books, including the best-selling The Leader of the Future. For 10 years, Dr. Goldsmith served as a Board Member at the Peter Drucker Foundation. He also donates a substantial amount of time to non-profit organizations. He has been selected as an American Red Cross “National Volunteer of the Year.” Dr. Goldsmith holds a B.S. degree from Rose-Hulman Institute of Technology, an MBA from Indiana University and a PhD. from U.C.L.A.
Vijay Govindarajan
Vijay Govindarajan, known as VG, is the Earl C. Daum 1924 Professor of International Business at the Tuck School and founding director of Tuck’s Center for Global Leadership. He is also the faculty co-director for Global Leadership 2020, Tuck’s executive education program that focuses on global management and is taught on three continents.VG’s area of expertise is strategy, with particular emphasis on strategic innovation, industry transformation, and global strategy and organization. Professional credits include: Outstanding Faculty, named by Business Week in its Guide to Best B-Schools; Top Ten Business School Professor in Corporate Executive Education, named by Business Week; Top Five Most Respected Executive Coach on Strategy, rated by Forbes; Top Ten Thought Leader in Strategy Coaching, named in Profiles in Coaching; Outstanding Teacher of the Year, voted by MBA students; and Top 50 Non-Resident Indians of the Year, named by NRI World. Prior to joining the faculty at Tuck, VG was on the faculties of The Ohio State University and the Indian Institute of Management (Ahmedabad, India). He has also served as a visiting professor at Harvard Business School, INSEAD (Fontainebleau, France), the International University of Japan (Urasa, Japan), and Helsinki School of Economics (Helsinki, Finland). VG has published seven books, including Ten Rules for Strategic Innovators — from Idea to Execution, co-authored with Chris Trimble.
Laurence Haughton
Laurence Haughton is a management consultant with over 20 years of front-line experience in manufacturing, retail, media and service industries. He is the author of It’s Not What You Say… It’s What You Do – How Following Through at Every Level Can Make or Break Your Company and co-author of It’s not the big that eat the small… It’s the FAST that eat the slow. An expert on execution and follow-through, Haughton has helped thousands of entrepreneurs and executives achieve higher revenues and profits by sharing new strategies for finding, keeping and growing customers and revolutionary tactics that make leaders faster and more effective. Haughton has co-hosted televised conferences, keynoted end-user meetings and keynoted presentations for trade groups, entrepreneurs and Fortune 50 companies like Kodak and AOL Time-Warner.
David Maister
David Maister is widely acknowledged as one of the world’s leading authorities on the management of professional service firms. In 2002, he was identified as one of the top 40 business thinkers in the world (BUSINESS MINDS, Financial Times/Prentice Hall.) His first book on the professions, Managing the Professional Service Firm, published in 1993, collected many of his best articles. It was followed in 1997 by True Professionalism, and in 2000 by The Trusted Advisor, written with Charles H. Green and Robert M. Galford. In 2001 he published Practice What You Preach and in 2002, First Among Equals, co-authored with Patrick McKenna. A native of Great Britain, Maister holds degrees from the University of Birmingham, the London School of Economics and a doctorate in Business Administration from the Harvard Business School. He began his teaching career at the University of British Columbia, Canada, and then joined the Harvard faculty, where he taught courses in managing service businesses and managing production operations from 1979-85. During that period he published seven books on academic business topics such as managing trucking and airline companies, factory operations, and architectural firms. Maister lives in Boston with his wife and coach, Kathy. He is an avid collector of popular music, and owns more than 15,000 CD’s and a rapidly growing number of DVDs. In March of 2005, he finally took his own advice, gave up smoking and lost 30 pounds.
Laurence Prusak
Larry Prusak is a researcher and consultant and was the founder and Executive Director of the Institute for Knowledge Management (IKM). This was a global consortium of member organizations engaged in advancing the practice of knowledge management through action research. Larry has had extensive experience, within the U.S. and internationally, in helping organizations work with their information and knowledge resources. He has also consulted with many U.S. and overseas government agencies and international organizations (NGO’s). He currently co-directs “Working Knowledge,” a knowledge research program at Babson College, where he is a Distinguished Scholar in Residence.
December 11th, 2006