Articles

Strategy can be thought of as a loop with four steps: making sense of a situation, making choices, making things happen and making revisions.

Avoiding the pitfalls in leveraging customer data.

How innovators identify the critical things they don’t even know that they don’t know.

Five conversations — often avoided — are essential to the success of any high stakes project.

Dynamic pricing, in which prices respond to supply and demand pressures in real time or near-real time, has long been used by airlines and hotels. Now dynamic pricing is making inroads in many different sectors including apparel, automobiles, consumer electronics, personal services, telecommunications and second- hand goods. These companies are making use of new findings on dynamic pricing and of increases in data-processing power to raise their average realized prices, thereby increasing revenues and profits. There are two mechanisms for dynamic pricing: posted prices that customers can see; and price-discovery mechanisms, in which customers determine prices through their own actions. These two mechanisms are employed in seven different forms: yield management (commonly used by airlines), demandbased pricing, three types of auctions, group buying and negotiations. The article describes eight situations for using the various forms of dynamic pricing. An important constraint in employing dynamic pricing is consumers' Latitude of Price Acceptance, which varies for different products and situations and which can be discovered through observation, surveys or analysis of demand elasticities. Customer participation in the pricing process decreases the chances of a consumer backlash. Customers also tend to embrace dynamic pricing in the following situations: where the price reflects intensity of demand for the product, there is communication between the seller and the consumer, and the price difference is explained by a difference in perceived value across channels through which the transaction occurred. The more the seller understands the buying cycles and habits of the customer, the more he is able to manage price margins to the rhythm of the customer's shopping, to segment customers and to develop price discrimination.

The image of one omnipotent and charismatic CEO, alone at the top of the company, is closely held both in business theory and practice. But the authors argue that under the right conditions, co-chiefs -- two or even three individuals sharing the top job -- can benefit the organization because different leadership styles and competencies are simultaneously available to most effectively deal with differing situations. Notable examples past and present include Google, IMAX, Merrill Lynch and Goldman Sachs. From their study of over 100 companies that adopted power-sharing -- sometimes productively, sometimes not -- the authors conclude that it is most likely to work when the relationship between the co-CEOs evinces complementarity, compatibility and commitment. Further, careful design of the leaders' shared and separate responsibilities -- especially regarding communication mechanisms (for external constituents, inside the organization and between each other) -- is required. Lastly, it is essential that there be co-evolution, in which each of the co-leaders show willingness to change over time and allow their relationship to further develop. In that spirit, the authors offer seven practical "rules of engagement" for forming power-sharing structures with good potential for success, for ensuring smooth day-to-day functioning and for adjusting these relationships as conditions change.

The differences between veterans, boomers, Xers, Ys.

For executives running global companies, the challenge of keeping abreast of events in markets around the world is mind-boggling. The problem is not a lack of information -- it is having the time and energy to process the information. How should executives prioritize their time to ensure that it is focused on the countries and subsidiaries that need the attention? Which markets should they emphasize, and which ones can they allow to fall off their radar screen? The authors researched executive attention at global companies for five years, interviewing 50 executives at 30 corporations including ABB, Dun & Bradstreet, Nestl_ and Sara Lee. They found that executives end up prioritizing a handful of markets at the expense of the others, but they don't always select the most promising ones. Because executive attention is so limited, executives tend to focus on the home market or on "hot" markets, always at the expense of other opportunities. The authors examine the nature of executive attention and identify mechanisms by which subsidiary companies attract attention from the top executives. Although attention can be harmful as well as helpful, the article focuses on the positive aspects. In particular, the authors focus on three elements: support, in terms of how headquarters executives interact with and help subsidiary managers achieve their goals; visibility, in terms of the public statements headquarters executives make about how the subsidiary is doing; and relative standing, in terms of the subsidiary's perceived status vis-_-vis other subsidiaries in the organization.

Research shows that the most important factor for driving innovation is company culture.

Numerous studies confirm that few people can make it through a typical day without lying. So it should not be surprising that falsehoods and deception are widespread in business negotiations as well. The unspoken, and perhaps unconscious, thought is that if everyone lies, why is it so bad? The author examines legal and ethical views of lying, noting that while courts often hold parties to the truth of their representations, negotiators have many ways to mislead the opposing side. For example, negotiating tactics such as nondisclosure and evasion are rarely considered illegal. Indeed, it is often possible to avoid liability by using misleading behaviors that make no representations but which seem to. In light of the moral and legal ambiguity of lying, the author offers suggestions for how to detect lies and how to protect oneself against bargaining deception including: establishing negotiating ground rules before the discussions begin, asking the same question in different ways, asking questions to which you already know the answer, including written claims in the final agreement, using contingent agreements or using an escrow agent or a performance bond.