Articles

Corporate America has spent the last few years in restructuring mode, drastically reorganizing processes in order to wring profits from a battered economy. However beneficial these efforts may be to the bottom line, say the authors, a reliance on restructuring has had unintended negative side effects, as hierarchies that once controlled the direction of many companies become less relevant, and loyal employees become increasingly disheartened by disruptive -- and often short-sighted -- strategies. In response, companies resort to even more restructuring, frequently with less than optimal results.The authors recommend that companies shift away from knee-jerk responses such as restructuring and hierarchy building toward a transformation of established corporate structures, a wider distribution of knowledge, and the use of modern performance-measurement systems and technologies. Citing examples at BP, North Carolina's Duke Power and W.L. Gore, the authors claim that only companies developing their advantage upon the agility and flexibility of their processes, people and technologies can build lasting value for their company, customers and employees.

Performance variability frustrates managers everywhere. According to the authors, it takes a variety of forms: vastly different sales figures for similar retail stores in similar neighborhoods; significantly varying productivity rates at factories producing the same products; major differences in insurance payments for similar auto accidents. In their quest to reduce performance variability, however, managers often go too far, say the authors. By forcing workers to "copy exactly" or "follow instructions exactly" in every situation, they make it far more difficult for people to use their own judgment and knowledge to solve problems that would benefit from a new approach. Having studied this issue in depth, the authors found that the appropriate intervention to reduce differences in performance depends on individual work practices -- their frequency and predictability. Practices that are more frequent and predictable tend to be more conducive to rigid duplication, whereas those that are rare and unpredictable have greater need for flexibility and innovation. The authors contend that it's not enough to have a balance between uniformity and discretion at the company level: Each group of practitioners within an organization must also have it.

If a brand fails to develop or maintain differentiation, consumers have no basis for choosing it over others. The product's price will then be the determining factor in a decision to purchase. Absent differentiation, says the author, the core of any brand and its associated business -- a loyal customer base -- cannot be created or sustained. In a time when the competitive terrain for most brands is difficult to brutal, the author describes a new tool that can help companies maintain an advantage: the branded differentiator. A branded differentiator can be a feature, service, program or ingredient. To be worthy of the term "differentiator" -- to be more than just a name slapped on a feature -- it must be meaningful to customers; that is, it must be both pertinent and substantial enough to matter when people are purchasing or using the product or service. It must also be actively managed (and thus be able to justify the investment of management time) over an extended period -- years or even decades -- so that it does not become stagnant. This article explores the different types of branded differentiators, the pros and cons of developing them internally versus looking outside for them, and questions about managing these brands-within-brands.

What separates high-performing knowledge workers from their more-average peers? Superior ability is part of the answer, as is superior expertise. But according to the authors, what really distinguishes high performers from the rest of the pack is their ability to maintain and leverage personal networks. The most effective knowledge workers create and tap large, diversified networks that are rich in experience and span all organizational boundaries. Contrary to the popular image of the networker, the authors say, the building and use of such networks is rarely motivated by explicit political or career-driven motives. In addition, they posit that high performers are much more than "social butterflies," who tend to have numerous relationships that don't scratch below the surface. Effective knowledge workers focus on building deeper relationships that will be mutually beneficial over time. The authors discuss the three tactics used by high performers to build and maintain their networks. Ideally, they say, organizations should use tools and readily available human-resources practices to hire people who are likely to develop large, widespread networks. Once on board, people should be encouraged through incentives to maintain their networks. Such important work -- and it is work, even if isn't usually visible -- shouldn't be left strictly to chance.

Long-term research conducted with companies such as ABB and Lufthansa has helped the authors identify four organizational energy zones that, harnessed properly, can provide a powerful boost for achieving strategic goals. The researchers offer insight on selecting the type best suited to a company's culture and its leaders' personal style. They find that analytical approaches to management are increasingly incorporating a greater understanding of the major role that emotions play in corporate behavior. Today's challenge for leaders, the authors say, is to ensure that the company's vision and strategy capture employees' excitement, engage their intellect and fill them with urgency for action taking. First, they show that companies operating in what they call the aggression zone (responding to a threat) or the passion zone (responding to an exciting goal) are more likely to be successful. Companies in the low-energy comfort zone coast dangerously on past success, and those in the resignation zone have nearly given up. Second, they describe two strategies for unleashing organizational energy and the circumstances that indicate which to use. Finally, they point out ways to avoid common energy traps. Without a high level of energy, the authors contend, a company cannot achieve radical productivity improvements, grow fast or create major innovations. The researchers give examples of enlightened managers who are focusing on unleashing that energy and are leading their companies to outstanding performance.

Evolving a global approach to corporate distress is a difficult challenge, says the author, in part because codes vary internationally, reflecting fundamental differences in approaches to bankruptcy and attitudes about financial recovery. The U.S. approach favors rehabilitation as the way to serve creditors and restore value, whereas European nations lean toward liquidation. The author, who has worked with troubled companies in a variety of roles, describes how practitioners abroad are developing new, integrated approaches. Under the "light touch" approach, for example, a court-appointed administrator comes to agreement with the incumbent management team on operating protocols and delegates limited authority to it under administrator supervision. Thus, a more flexible, pragmatic approach is evolving that could represent a breakthrough for the global business community. To capitalize on such trends, the author, there are two additional strategies that could help establish common ground between the European and U.S. systems. The first is early intervention, which could make a difference in Europe and in relatively simple cases of corporate distress. However, in more complex situations, especially those that involve a bankruptcy filing in one or more national jurisdictions, a technique that is increasingly popular in the United States could be useful -- the retention of a "chief restructuring officer." Reporting to the board of directors rather than to a company's existing management team, a CRO is charged with developing and executing a plan to restructure the company's finances and/or operations. According to the author, the involvement of a CRO might well increase the likelihood of successful outcomes when rehabilitation is attempted with Europe-based companies, in part because many European practitioners lack experience in restructuring. With the various regulatory and attitudinal changes taking place across Europe, the author contends that a viable common-ground approach that seeks to maximize enterprise value is evolving -- to the benefit of companies, creditors and economies.

Having received a great deal of attention for decades now, customer satisfaction (CS) practices have become one of the core prescriptions for managers and organizations. Indeed, for many companies, customer satisfaction has become the guiding principle, as they increasingly initiate all manner of strategies and processes under its banner. But more and more, says Fredrik Dahlsten, these practices are losing their effectiveness for companies and their customers alike. Using qualitative research at Volvo Cars, the author illustrates how the interpretation of customer satisfaction can become skewed, employing rigorous and extensive CS measurements, but measuring the wrong variables and using the information in mainly reactive ways. Many companies have only an intrinsic CS focus -- a product orientation based on attribute quality and a short-term internal perspective triggered by surveys and aimed at cost control. With an intrinsic focus, customer satisfaction is seen mostly as the absence of dissatisfaction. In contrast, an extrinsic CS focus emphasizes finding new ways to increase the positive, emotional aspects of the customer experience over time. The author argues that managers who wish to climb out of their customer satisfaction rut must move beyond the mere measurement of quality, refocus their practices on the customer's actual experience and formulate a comprehensive strategy for using that knowledge throughout the organization. He illustrates those concepts by showing how practices at Volvo are being improved to incorporate a greater extrinsic focus and make better use of the resulting customer knowledge.

Leadership consists of opposing strengths, but most leaders overdevelop one strength.

People often talk about business competition as if it’s a short race: Get to market first and you are bound to win. Indeed, the importance of first-mover advantage has been drummed into the heads of many business executives, and some have almost been brainwashed to think that speed is everything. But when a new technology like the Internet threatens to transform an industry, the companies that are quickest to respond aren’t necessarily the ones that reap the greatest benefits. In fact, choosing a fast strategy can lock them into a set of decisions that actually hurt them in the long run. Instead, organizations that choose the right strategy for the entire race & #8212; both for the early and late stages & #8212; will come out ahead. Specifically, we have found that companies that respond quickly by launching a spinoff usually have difficulty achieving true staying power in the market. For enduring success, incumbent companies are better off creating a group that is & #8212; or will eventually be & #8212; integrated within their organizations. Only then will they be able to tap fully into their numerous strengths and assets, leveraging their incumbent’s advantage.