Articles

In this article, the authors review various streams of research suggesting that although companies are increasingly under pressure to manage conflicting or difficult-to-reconcile stakeholder demands, managers are still largely behind the curve in recognizing, justifying and developing the capabilities to do so. In contrast to primary stakeholders such as customers, suppliers and shareholders, secondary stakeholders are often difficult to identify beforehand, or they may not be willing or able to engage, negotiate, compromise or clearly articulate their positions -- a phenomenon the authors refer to as stakeholder ambiguity. Citing examples involving companies such as Monsanto, Conoco-Philips, Texaco and the French oil company Perenco, the authors present research indicating that managers are often ill-prepared to deal with the idiosyncratic and context-specific nature of stakeholder ambiguity and typically revert to formulaic decision-making frameworks, such as discounted cash flow and cost-benefit analysis, which misrepresent the challenges. Some research indicates that stakeholder ambiguity may actually erode the competitive advantage of large multinationals. Although such companies possess significant competencies, technological capabilities and economies of scale, they may be at a disadvantage when trying to determine and align the interests of secondary stakeholders.

Recent research has greatly improved management's ability to anticipate customer wants.

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.