Articles

Responding to the growing threat of identity theft.

While most managers would think long and hard before bringing to market a product that lacked patent protection and could be easily imitated, many invest in sales promotions -- sweepstakes, coupons, time-limited price discounts, free gifts or samples, special events, displays, membership rewards, consumer- directed promotions and so on -- that are easier to imitate than the simplest new product. Others sign off on plans so generic that they seem unrelated to the brand or company offering them, despite the fact that sales promotions may absorb a significant portion of a company's promotional dollars -- currently a reported 31% of marketing budgets. By contrast, a strategic focus -- considering how customers and competitors will react to any promotional effort, as well as the message delivered and the stature in the marketplace of the brand delivering it -- leads to promotions that defy or delay imitation and yield disproportionate benefit for companies that have already developed a strong competitive position. The authors suggest that when all these strategic factors are aligned, the result is a successful promotion, and they illustrate that with successful promotions conducted by General Motors, Home Depot and Procter & Gamble, among others. However, the authors caution, such promotional strategies require inventiveness, originality and swift action -- qualities neither present nor encouraged in many corporate cultures in which familiarity and predictability are prized. Managers in such organizations, then, not only must tailor a promotion successfully to its intended market, they must also skillfully shepherd it through internal barriers. Knowing why, how and for whom sales promotions will most likely be profitable surely will help in that regard.

In studying teams at large companies in Europe and the United States, the authors found that diversity and complexity are becoming the rule. Diverse teams bring to bear a range of experiences and attitudes to tackle companies’ hardest challenges. Paradoxically, however, the very nature of team diversity often creates conditions that reduce teams’ innovative capacity. The authors observed many failures in collaboration and knowledge-sharing that resulted from faultlines & #8212; subgroups or coalitions that emerge naturally within teams, typically along demographic lines such as age, gender and functional background. Yet the authors found that some teams were able to collaborate and share knowledge despite the presence of faultlines. A defining factor was the behavior of the team leader and, in particular, the extent to which the leader was task-oriented or relationship-oriented. Where it is likely strong faultlines will emerge, many leaders tend to encourage team members to come together. However, simple socializing can make people’s differences more apparent and cause faultlines to solidify. The authors recommend that leaders vary their leadership style according to how long a team has been together. The article outlines four steps for successful functioning of diverse teams. First, leaders should diagnose the likely extent of faultlines in a new team. (The article contains a survey for gauging this probability.) Next, leaders should focus on task orientation when a team is newly formed. They then should consider when a switch in leadership style would be most appropriate. Finally, leaders should build a relationship-oriented style. Switching from task orientation to relationship orientation will be successful only when a team has developed a clear protocol for communication and coordination and an established operational structure.

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.