Articles

All executives have two basic drives: to add value to products or services, and to deploy resources with a certain amount of efficiency. The first drive can be inferred by a business's gross margin and the second by its relative indirect expenses. Together, the two numbers constitute an executive's "financial signature." There are four extreme categories of signatures: (1) gross margin and expenses are both high, (2) high gross margin and low expenses, (3) low gross margin and high expenses, and (4) gross margin and expenses are both low. The categories are labeled "venture capitalist," "buccaneer," "mercantilist" and "discounter," respectively, and each has a characteristic set of financial behaviors. Certain financial signatures are best suited for particular industries. Mercantilists, for example, are ideal for commodity markets with high fixed costs. Moreover, companies might need executives with different financial signatures at various stages in their life cycle. A startup, for instance, might be better off with a venture capitalist at the helm. Later, that same firm might need to fill its executive suites with discounters. No matter how capable the leader, a mismatch between an organization's requirements and the actual financial signature of its CEO can lead to management problems, possibly even to company failure.

Corporate social responsibility has become a vital part of the business conversation. The issue for most companies is no longer whether to engage in socially responsible activities but how to achieve the maximum benefit from the resources available for social projects while still increasing shareholder value. In this article, the authors draw on years of quantitative and case-based studies of major corporations to conclude that CSR activities work best for society and the corporate participants when they are managed strategically and in collaboration with an array of commercial and noncommercial partners. The authors cite exemplars such as Avon Products, whose name is synonymous with responses to women's healthcare issues, and The Home Depot, whose foundation involves suppliers and government agencies in large-scale efforts to combat housing problems in the United States. The authors point to five core principles behind effective CSR strategies, from the need to contribute "what we do" to the importance of accommodating government's regulatory and taxation influences.

The authors contend that a number of factors, both external and internal, are increasingly necessitating a strategic approach to corporate communications. Yet, despite regulatory imperatives, organizational complexities and a growing need for companies to increase their credibility with their various constituencies, many companies still take a tactical, short-term approach to communication that is not only nonstrategic but may, in fact, be inconsistent with the corporate strategy or even impede it. The authors conducted more than 50 interviews with CEOs, CFOs and heads of corporate communications and investor relations at companies that represent the state of the art in corporate communications (Dell, FedEx and PepsiCo), companies that have faced and survived major crises (Cendant, Knight Trading and Textron), and some that are great corporate communicators but not usually recognized for their efforts (Cognex, Infosys, Jet Blue, the New York Times Co. and Playboy Enterprises). They also included a pharmaceutical company (GlaxoSmithKline), given the formidable communications issues in that industry. On the basis of that research, the authors offer best practice lessons and a framework to enable executives to think carefully about their organization’s objectives for each specific communication, determine which constituencies are critical to meeting that objective and understand what kinds of messages to deliver through which channel.

On the basis of two different studies -- a survey of CIOs at 256 enterprises in the Americas, Europe and the Asia/Pacific region and a set of 40 interview-based case studies at large companies such as Johnson & Johnson, Carlson Companies, UPS, Delta Air Lines and ING DIRECT -- the authors conclude that when senior managers take the time to design, implement and communicate IT governance processes, companies get more value from IT. Toward that end, they offer a single- page framework for designing effective IT: a matrix that juxtaposes the five decision areas (principles, architecture, infrastructure, business-application needs, and prioritization and investment decisions) against six archetypal approaches (business monarchy, IT monarchy, federal, duopoly, feudal and anarchy). The authors illustrate how successful companies use different approaches for different decisions to maximize efficiency and value for both IT and the overall enterprise. They then offer recommendations to guide effective IT governance design.

To optimize a portfolio of brands, companies can use a five-step approach. First, managers decide on the brands to review. Second, they analyze all of the brands on the resulting short list with respect to each one's contribution to the company. Third, they assess the brands according to current market performance (traction) and future prospects (momentum). Fourth, the brands are classified along those three dimensions (contribution, traction and momentum), allowing managers to identify both challenges and opportunities. The process enables companies to sort their brands into different categories: power (a brand that needs to be defended ferociously and deployed judiciously), sleeper (a brand that with a little fast tracking can build into a power brand), slider (a valuable brand that has lost momentum, is slipping backwards and needs immediate intervention to prevent meltdown), soldier (a solid brand that contributes quietly without the need for much management attention), black hole (a brand that sucks up resources and may or may not ever pay out), rocket (a brand that is on its way to power-brand status), wallflower (a small, underappreciated brand with very loyal customers, often underpriced and undermarketed) and discard (a brand that should have been mothballed years ago). Lastly, the objectives for each individual brand are tied together into an overall plan, which will include any changes to the roster, brand architecture and resource allocation.

Board directors for U.S. corporations have been facing an increasing number of demands. At the same time, the pool of available candidates to fill such positions has been shrinking. Given these realities, companies looking to fill board openings should consider a new type of director: well-established professionals who devote all of their work, time and energies to corporate board activities. Professional board directors might come from a variety of backgrounds, but they will likely be drawn from one of three categories. The first group is senior managers in midcareer. These executives have considerable experience (20-plus years) but prefer using their knowledge and experience in a less operational and more consultative manner. The second group is executives 10 years senior to those in the first category. (Thus, they would typically have 30-plus years of experience.) Tired of senior-management stresses yet having sufficient financial resources, individuals in this group might view board positions as a prelude to retirement. The third category comprises former senior partners in national accounting firms with 30-plus years of experience in audit and internal control functions. Although their career experiences will not be as broad as that of many other senior executives, individuals in this category would be ideal to chair the corporate audit or compensation committees. The author contends that candidates from the three categories -- in addition to another group made up of retired senior managers -- could greatly alleviate the growing shortage of qualified board directors.

RESEARCH BRIEF: Emerging supply-chain e-technologies provide opportunities for growth "Ò

Business leaders often believe their organizations are swamped with business process information, but that information is a relative trickle, say the authors, compared with the wealth of physical-world, biological, public and personal-preference data that is being made accessible by powerful technologies. The sheer quantity of all this information is unprecedented, but so is the complexity of working with it. Yet, despite its volume and disparate nature, this data is potentially useful to business because the computing power necessary to merge, manage and make sense of it also has been advancing and becoming more affordable. On the basis of working sessions with hundreds of global organizations such as Best Buy, the European Aeronautic Defence and Space Co., Ford Motor Co., the Irish government, Payless ShoeSource, UPS and Walgreens, the authors illustrate how forward-looking companies are positioning themselves ahead of this information curve by moving quickly and down two parallel tracks: increasing the company's ability to gather and access new forms of data while simultaneously building organizational capability to use that data for insight.

How do managers and companies quickly transform new hires into productive employees, a process called "rapid on-boarding"? The authors contend that companies that are more successful at rapid on-boarding tend to use a relational approach, helping newcomers to rapidly establish a broad network of relationships with coworkers that they can tap to obtain the information they need to become productive. Most organizations realize the importance of integrating new employees, but many fail in this regard, often because of five pervasive myths about the process: (1) the best newcomers can fend for themselves, (2) a massive information dump allows newcomers to obtain what they need, (3) cursory introductions are all that's needed, (4) first assignments should be small, compact and quickly achievable, and (5) mentors are best for getting newcomers integrated. Because of those misconceptions, managers will frequently rely on certain taken-for-granted practices that can actually hinder new employees from becoming productive.