Articles

Futurists have long anticipated the day when computers would relieve managers and professionals of the need to make certain types of decisions. But for a variety of reasons -- including management skepticism and concerns about solution complexity -- automated decision making has been slow to materialize. Automated decision making is finally coming of age, the authors argue, and the new generation of applications differs substantially from prior decision-support systems. Today's applications are easier to create and manage than earlier systems. Rather than require people to identify the problems or to initiate the analysis, companies typically embed decision-making capabilities in the normal flow of work. Those systems then sense online data, apply codified knowledge or logic, and make decisions -- all with minimal amounts of human intervention. They can help businesses generate decisions that are more consistent than those made by people, and they can help managers move quickly from insight to decision to action. This can help companies reduce labor costs, leverage scarce expertise, improve quality, enforce policies and respond to customers. As automating decisions becomes more feasible, organizations need to think about which decisions have to be made by people and which can be computerized.

The importance of properly identifying the strategies, and anticipating the actions, of rivals.

To succeed, executives must manage a myriad of relationships.

There are three reasons why companies have trouble finding and hiring top-notch executives. First, even organizations that are adept at selecting winners will have considerable difficulty because of the way in which managerial talent is distributed across a population. Second, assessing people for senior positions is inherently tricky for a number of reasons. For one thing, the differentiating competencies for top leaders are usually in “soft” areas & #8212; such as the ability to develop people or manage change efforts & #8212; each of which is very difficult to measure in any reliable way. Finally, powerful psychological biases impair the quality of the hiring decision. Nevertheless, organizations can overcome those obstacles by deploying a set of basic practices: Define before looking, cast a wide net, compare apples with apples, evaluate thoroughly, filter biases, limit the number of people involved, close the deal and facilitate the integration. Although some of those practices might seem obvious, many companies fail to follow them. All too often, for instance, organizations make the mistake of commencing an executive search before they know what they’re really looking for. Or they unnecessarily restrict the search to certain markets, industries or geographic regions. Because of such mistakes, contends the author, the problem of poor appointments for top positions is serious and pervasive at many companies, even blue-chip corporations.

Corporate executives typically have strategic explanations for their acquisitions: that buying the company in question makes sense geographically or that the products are synergistic. However, if you inquire two years later how the company has benefited, managers tend to focus on the "softer" factors with comments like, "They made us rethink our decision-making processes," or "They introduced us to a new approach to product development," or simply "They shook up our culture." To understand this apparent contradiction, the author analyzes the acquisitions and performance of a number of large, successful companies. Several of the companies included in the research suffered from rigidity. However, the author found that companies were able to use acquisitions to restore a sense of vitality to their businesses and unleash a subsequent surge in performance. The acquired companies often stimulated the acquiring companies to develop new perspectives and different ways of doing things at critical times. Acquisitions kept their organizations fresh and vital. Even if the enterprises did not pursue acquisitions for this reason, the process of buying businesses and deciding how to integrate them into their corporate structures enabled acquirers to renew themselves before their products and operating methods became outdated.

Good communication is a prerequisite for good teamwork. But how much is enough?

We can no longer envision the future by extrapolating the present.

A new report reveals that companies with significant levels of employee control systematically underperform.

This article contends that companies' traditional approach to purchasing misses the function's significant potential to add value by driving innovation and superior long-term cost performance. As a former senior vice president of technical purchasing for BMW, the author oversaw the transformation of the department's mission from functional to strategic, and he offers insights about the transformation. Strategic purchasing, he says, can only be effective if the purchasing department constantly expands and updates its technical knowledge to preserve credibility with both suppliers and internal departments. Toward that end, BMW's purchasing agents spent up to 20% of their time training -- in everything from foreign languages to technical know-how to contract law. In addition, BMW began to hire industry experts and train them as buyers who had as much in-depth knowledge as the suppliers with whom they would be dealing. The author describes how BMW associates become involved at the early concept stage of product development, often suggesting how certain design features will affect the technical equipment at the factory or the level of investment that will be required to execute the design. They also suggest what types of materials, components and systems best meet end-user requirements.

For several decades, research about large companies' internal corporate venturing has shown that such activities frequently exhibit substantial cyclicality. Companies may enthusiastically launch ICV initiatives, later shut them down, and still later launch new ICV programs again. In this article, the authors describe four common situations that occur in cycles of corporate venturing. They argue that, unless properly managed, corporate commitment to ICV is apt to fluctuate according to the availability of uncommitted financial resources and the growth prospects of the organization's primary businesses. For example, if the corporation has uncommitted financial resources but the growth prospects of the main business are perceived to be insufficient, then the company may launch a top-down "all-out ICV drive" that is vulnerable to costly mistakes. If, however, the growth prospects of the primary business are perceived to be adequate and there are few uncommitted financial resources, top management is likely to perceive ICV as largely irrelevant. The authors examine factors contributing to ICV cyclicality; they then suggest that companies can achieve better outcomes if executives recognize the strategic importance of internal corporate venturing activities and view them as a way of gaining insights into emerging opportunities.