Articles

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.

Some successful innovations, such as the microwave oven and the dishwasher, were initially slow to achieve consumer acceptance. When consumers resist adopting an innovation because it requires them to alter established habits, the innovation is called a resistant innovation. The authors use a case study involving the diffusion of screwcap wine closures in three countries -- Australia, New Zealand and the United States -- to analyze strategies for marketing a resistant innovation. For winemakers, screwcap closures represent a solution to "cork taint," a quality problem that can be caused by poor-quality corks and that can affect wine flavor. But consumers have shown resistance to screwcap closures, associating them with cheap wines or preferring the tradition associated with cork. However, among wine consumers in Australia and New Zealand, screwcaps have now achieved widespread acceptance. But 2005 wine industry statistics showed that less than 5% of U.S. wineries used screwcaps on fine wines. What is the reason for this difference? Earlier research in 2004 had found few differences between U.S. wine consumers and those in Australia and New Zealand -- except in their attitudes toward screwcaps. Garcia, Bardhi and Friedrich interviewed decision makers at more than two dozen wineries in the three countries. The authors concluded that winemakers in Australia and New Zealand had generally taken a different approach to marketing screwcap wine closures than United States wineries did. United States winemakers tended to employ vertical cooperation strategies that involved working with distribution channels to market screwcaps. New Zealand and Australian winemakers, on the other hand, used coopetition strategies involving cooperation among wineries, such as a New Zealand wine industry group called the New Zealand Wine Seal Initiative. The authors conclude that, under certain circumstances, coopetition strategies, which involve some cooperation among competitive firms, can be an effective strategy for marketing a resistant innovation. To determine whether or not coopetition is an appropriate strategy, the authors suggest that managers should analyze the marketing problem the new innovation faces and the resources available to address it; consider the kind of specific resources and knowledge that might be exchanged during coopetition; and evaluate the industry climate, including the role of trade associations and industry experts.

Managing intellectual property rights used to be straightforward. A company produced great innovations, obtained as many patents as possible and exploited those patents in the marketplace. But the intellectual property world has changed argue the authors. Today, leading companies are focusing on securing only the essential protections they need to exploit their innovations. Most businesses, though, continue to pursue the old "more is better" strategy. In effect, they're flying blind when it comes to managing their IP portfolio. The authors identify three key areas where leading companies drive profits and effectively manage their intellectual property. First, they have a strong market focus, which provides them a clear sense of the "freedom of action." Second, the leaders can articulate how they will derive value from each potential patent and ruthlessly prune patents that cannot generate an attractive overall return. Finally, top-tier organizations hire only the best talent to lead their IP efforts. Following this blueprint will allow companies to successfully manage a more complicated IP landscape.

Business schools and others interested in management education and development have vigorously debated how best to teach strategy to future leaders. Some experts have questioned whether the topic should be taught at all -- or at least whether it should be taught to managers. Often missing from the debate, however, has been any in-depth discussion of how individuals learn to think strategically in the first place. What specific experiences are important and how do they contribute? Moreover, what are the different ways in which people absorb those experiences to develop the ability to think strategically? To answer these and other questions, the author conducted a study that identified executives who were considered the top strategic thinkers in their industry. The study then investigated the totality of experiences (educational, job related or other) that contributed to the high ability of those individuals. In addition, the research investigated the different ways in which the executives acquired their expertise in strategic thinking -- a process that typically took more than a decade The data showed that strategic thinking arises from 10 specific types of experiences -- for instance, spearheading a major growth initiative or dealing with a threat to organizational survival. Moreover, executives appear to gain their expertise in strategic thinking through one of three developmental patterns. These findings help demystify the process by which strategic thinking is learned, offering important implications for management development and the practice of strategy.

The place of multinational corporations in China has rapidly changed since the 1970s. No longer expected to bring cash and management expertise to China, the authors argue that MNCs have taken on a new role as teachers and role models. However, recent high-profile mistakes including a McDonald's Corp. (of Oak Brook, Illinois) ad that over 80% of Chinese surveyed found offensive, show that MNCs are not entirely up to this task. They illustrate the consequences of this inability to cope and suggest eight strategies for improving MNC's success in China: Think local-act global, don't apply double standards, don't bend the rules, avoid making "symbolic" acquisitions, avoid employing aggressive tactics over intellectual property rights, guard against management insensitivity, don't "strip mine" profits and don't use China as a lab. The authors then go on to show how these strategies can be executed to increase MNC's profits and standing in China.

Why publicly praised executives tend to underperform.

In the past, companies have tried to manage risks by focusing on potential threats outside the organization: competitors, shifts in the strategic landscape, natural disasters or geopolitical events. They are generally less adept at detecting internal vulnerabilities that creep into organizations and other human-designed systems. Indeed, as companies increase the complexity of their systems -- products, processes, technologies, organizational structures, legal contracts and so on -- they often fail to pay sufficient attention to the introduction and proliferation of loopholes and flaws. Ericsson, Barings Bank and Comair are but a few examples of companies that have suffered disastrous breakdowns in their complex internal systems. A crucial thing to remember is that the possibility of random failure rises as the number of combinations of things that can go wrong increases, and the opportunity for acts of malicious intent also goes up. Build new applications on top of legacy systems, and errors creep in between the lines of code. Merge two companies, and weaknesses sprout between the organizational boundaries. Build Byzantine corporate structures and processes, and obscure pockets are created where bad behavior can hide. Furthermore, the enormous complexity of large systems like communications networks means that even tiny glitches can cascade into catastrophic events. In fact, catastrophic events are almost guaranteed to occur in many complex systems, much like big earthquakes are bound to happen. So, without the benefit of perfect foresight, how can businesses uncover and forestall the fatal flaws lurking within their organizations? There are three complementary strategies: (1) Assess the risk to make better-informed decisions, such as purchasing an insurance policy to cover the risk; (2) spot vulnerabilities and fix them before catastrophic events occur; and (3) design out weaknesses through resilience. These ideas have been around for years, but researchers have recently had to reinvent them in the context of extremely complex, interconnected cascade-prone systems.

How environmental cues influence consumer behavior.