Articles

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.

Many complicated, proprietary systems attract a community of underground innovators who explore and alter them -- and not always in ways that manufacturers appreciate. These individuals have little regard for the business models that companies have carefully devised to profit from those systems. Instead, they are driven by utility, curiosity and occasionally even anger, bypassing technical and legal safeguards in their drive to explore. Called by different names -- hackers, phreakers, crackers and modders, among them -- these underground innovators have complex and often antagonistic relationships with the companies whose products they modify. Indeed, in many cases the underground innovation triggers a war between the community and the company. But if handled properly, it also can lead to cooperation between the two parties, potentially resulting in new business models and novel products. To achieve that, though, companies first need to understand how underground communities operate. Underground groups typically contain two distinct classes: elites and kiddies. "Elite" is a term reserved for those who truly innovate -- the wizards who understand the inner workings of a proprietary system and are able to make it do things never intended by its developers. "Kiddie" is short for "script kiddie," signifying someone who does not truly understand a system but merely uses tools created by the elites to exploit the system in some way. Most companies make the mistake of treating elites and kiddies the same way, often alienating those who might make positive contributions. A more effective approach is to nurture the constructive elites, rewarding and even supplying them with tools to encourage their efforts, all while deploying more aggressive means to thwart the destructive kiddies.

The seeds of effective change must be planted by embedding procedural and behavioral changes in an organization long before the initiative is launched.

In many companies, there has been a marked fall-off in the influence, stature and significance of the corporate marketing department. Today, marketing is often less of a corporate function and more a diaspora of skills and capabilities spread across the organization. By itself, the disintegration of the marketing center is not a cause for concern, argue the authors, but the decline of core marketing competence certainly is. For this article, the authors undertook a series of in-depth interviews with leading marketing executives and chief executive officers to clarify the root causes of the decline. Their research identifies eight distinct factors that contribute to marketing's waning influence -- among them a worrying "short-termism," significant shifts in channel power and marketing's inability to document its contribution to business results. The consequences are not immediate, but they are far-reaching: Absent a core of marketing competence, say the authors, the corporate brand will suffer, product innovation will weaken, and prices will be less robust. However, the fact that marketing does continue to influence corporate strategy in some companies suggests there are opportunities and viable approaches for building marketing competence as a source of competitive advantage. The article suggests four key issues facing marketing management, placing the focus not on restoration of the corporate marketing function but on the rebuilding of marketing competence across the organization.