Management Techniques actually work!
If you didn’t catch the article by Scott Thurm in today’s Wall Street Journal, you should check it out.
He reports that researchers from Stanford University, the London School of Economics and the consulting firm McKinsey & Co. found that solid management techniques, yes, the kind we teach in business schools, actually make a difference to the performance of manufacturing plants. They found that better managed facilities employed management tools that helped them achieve better performance. It’s comforting to know that the research we do and the resulting tools and techniques can have a good performance effect.
Among the studies’ more intersting finding is that (for now) factories in the US are better managed than those in other countries. But - that gap could soon close, they warn.
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- Posted Rita McGrath on September 08, 2008
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Even private equity firms need to worry about management disciplines to add growth and create value
As the financial markets continue their dizzying spiral into a never-never land of losses (did I see that UBS lost over $11 billion in the fourth quarter alone???) I’ve been interested to watch the response of LBO shops and hedge funds to the changing economic situation. One of the more intriguing shifts, to me, is a recognition of management as—gasp—potentially important to enjoying good returns from their investments. Indeed, in a recent column in the Wall Street Journal, the editors of BreakingViews.com, a financial commentary site, report on suggestions being made to those managing private equity firms. Among the suggestions:
- Greater focus on operational improvement. This one is a hoot! You mean, people actually have to learn to run companies to create value? The columnists observe that “Every buyout firm claims to bring strategic focus, but it isn’t clear that many do.”
- Don’t focus only on financial returns.Here, the need to think about the longer term and about opportunities in different kinds of markets (such as emerging markets, or with innovative products and services). Intriguingly, it was long thought that the absence of short-term quarterly earnings pressure would allow LBO managers to function with longer time-frames. This presumption is now being tested.
It has long struck me that the way we structure rewards and incentives to value creation in our society is skewed. Taking a job and exercising your entrepreneurial talent in the financial sector has for some time now rewarded individuals much more richly than taking those same talents and investing them in the improvement of, say, a manufacturing company. It would be a very interesting change to see value-creation through real growth, rather than through financial engineering, to once again take priority. One can live in hope.
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- Posted Rita McGrath on March 05, 2008
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Pulling the plug… end of life cycle and standards losers in today’s top stories
One of the most difficult - but essential - decisions to make in today’s hypercompetitive markets are those that involve shutting things down. It is heartbreaking - every product, every line of business and every bright idea always has teams of committed, hopeful individuals supporting them. Saying goodbye is a mournful matter.
My heart went out to two companies who had to make those painful decisions. In one case, that of Polaroid, the decision was to stop making instant film, a product deeply linked to the company’s identity. They have just announced that they plan to close factories in Massachusetts, Mexico and the Netherlands that make instant film. They’ve stopped making instant cameras for some time now. The other, even sadder case is that of Toshiba, whose virtually stillborn high-definition DVD format has now lost out in the standards wars and will be discontinued.
Fans of the instant film format are howling, but the relentless realities of declining sales and the relegation of instant film to a footnote in the photography industry leave Polaroid with few options.
The good news is that perhaps a smaller company will license the rights to manufacture the instant film and keep some supply available.
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- Posted Rita McGrath on February 20, 2008
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The curse of past success: Fast Strategy Diagnostic
Doz and Kosonen have a most interesting diagnostic tool posted on their website strategic agility, which is linked to their book Fast Strategy. If you are concerned that your organization may have enjoyed too much of a good thing in the past and may be ill-equipped to cope with future challenges, it’s a sobering exam to take.
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- Posted Rita McGrath on February 10, 2008
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When Yesterday’s Leaders Can’t Lead Tomorrow’s Business-some ideas from Doz & Kosonen
One of the enduring dilemmas of any successful business is that there will inevitably come a time when those who led the great success of the past will be faced with the erosion of what made the past so successful, and the need to develop new capabilities, skills, market positions and the like. Often, such a shift is deeply threatening to these former leaders, setting in place all kinds of dysfunctional behavior throughout the organization and ultimately hampering its ability to effectively mobilize around new opportunities. But what can you do? These folks are often very respected, have deep internal networks, are seen as representative of the company to outsiders and have considerable formal and informal authority.
An interesting idea for how to deal with this is in Yves Doz and Mikko Kosonen’s brand-new book Fast Strategy. The book is getting great reviews for its practical but novel ways of thinking about strategic agility.
The excerpt that caught my attention is on page 91-92, as follows:
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- Posted Rita McGrath on January 24, 2008
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