Search Results

That is a question that has long puzzled marketers who have heard from customers that they want to do business with ethically based firms & #8212; defined as companies that produce products under conditions of progressive stakeholder relations, advanced environmental practices and respect for human rights. Marketers had no reason to doubt that sentiment, but they have always wondered if consumers would be willing to pay a higher price for ethically produced goods (since they tend to be more expensive to create.) It turns out that a series of controlled experiments proves that consumers will, in fact, pay a premium for ethically produced goods. But perhaps of equal interest is the fact that they will punish (by demanding a lower price) companies that are not seen as ethical. That relationship is not symmetrical. The punishment exacted is greater than the premium customers are willing to pay. How ethical do you have to be? Perhaps not as much as you might think. The research shows that a small degree of ethicalness “pays off.” It is not necessary for a company’s product to be “100% pure” in order to receive a price premium. This research is the first to find that consumers use price to punish unethical companies more than they use price to reward ethical companies, and that the ethicality of a company’s behavior is, indeed, an important consideration for consumers (as demonstrated in their willingness-to-pay decisions).

Companies are on the lookout for new forms of competitive advantage. One emerging possibility: the idea that a company's management model can become a source of advantage.

People aren’t stupid "Ò they just often act that way. Noted behavioral economist Dan Ariely explains what that should mean for strategists.

Managers and directors alike face tough choices as they decide on the quality and quantity of information that the board receives and uses in its governance and fiduciary roles. As the fallout from recent crises such as the subprime mortgage debacle illustrates, both sides must address the problem of “information asymmetry” & #8212; the gap between the information available to management and to the board. The authors’ research suggests that tomorrow’s boardroom will be reshaped by three related forces: First, they face a thorough rethinking, brought on by concerned stakeholders, of directors’ information needs. In responding to these pressures, boards and management must overcome several impediments: caution about altering the dynamics of the present manager-director relationship; directors’ lack of needed skills for interpreting the new information; and the inertia of cultural norms. Second, they face dramatic improvements in the performance assessment approaches used to guide boards’ decision making. The core of a healthy information relationship between managers and directors is their agreement on the most useful performance metrics to track and assess. This selection enables the building of trust and an eased and more pertinent workload for the board (having been freed from the need to decode reams of data while also gaining some independence from management’s sometimes self-serving evaluations). Finally, boards and managers face the adoption of technologies that support critical board functions. Once access to such information is granted, new technologies can help directors obtain and use it. Board members may apply tools that, for example, enable improved visualizations and helpful alerts. And directors may engage in electronic “what-if” analyses, using company data as well as outside information & #8212; related, say, to competing firms & #8212; which is becoming increasingly available online.

To understand the financial crisis, view it as a systems accident.

Although top managers must project an image of professionalism and strength, they still require networks of individuals they can trust. The development of trust depends on the degree to which the executives perceive the presence of three critical attributes & #8212; ability, benevolence and integrity & #8212; within their support networks, and on their ability to match these qualities with the type of support they are seeking in any particular situation. We model the support being sought as having high or low informational complexity and high or low emotional demand. The combinations correspond to four types of support requested: raw information (low, low), actionable advice (high, low), emotional support (low, high), and strategic or political help (high, high). Meanwhile, the three critical attributes (each with either a high or low rating) translate into eight kinds of support providers: Trustworthy Partner, Harsh Truthteller, Moral Compass, Loyal Supporter, Star Player, Average Joe, Dealmaker and Cheerleader. Executives in need of actionable advice will most often turn to Trustworthy Partners or Harsh Truthtellers, given their high levels of ability and integrity. For strategic or political help, Trustworthy Partners will be sought because of their high levels of ability, benevolence and integrity. Seekers of emotional support will look to Loyal Supporters and Trustworthy Partners because they offer high levels of benevolence and integrity. And when the three facets of trust are less critical, executives will be willing to go to virtually any of their contacts for raw information, though most often they seek out Average Joes. These and other matches were observed, useful data was gathered and valuable insights were obtained when we tested our model on vice presidents, directors, general managers and other executives at a Fortune 50 technology firm.

Assessment tools for better-informing decisions have proliferated. Which ones work?

Despite research showing that mergers and acquisitions rarely provide significant shareholder value, there is no sign of any slowing in the trend toward M&;A. One of the major reasons why M&;A tend, to fail, argue the authors, is that the process often puts extreme stress on senior management teams. By nature, the process is an adversarial one, with management on both sides advocating for their stakeholders. When the dust clears at the end of the process, management is left, as the authors say, "to navigate the challenging segue from 'tough negotiator' to 'trusted colleague.' " The authors draw on the experience of Hewlett-Packard, Cisco, General Electric and Adobe to propose six guidelines for improving relations between the senior management teams of both sides of the M&;A equation. The first three guidelines should be undertaken as soon as possible in the integration process. The authors advise that you can reduce the defection of talented personnel by reducing role ambiguity as quickly as possible. They also urge due diligence about the talent you are acquiring as early in the process as possible, and preferably before the deal is finished. Third, they recommend allowing some "habits to die hard." Employees often rely on habits and long-standing procedures to remain comfortable, and many of them are what made the company successful in the first place. As the integration process continues, there are three more important guidelines to follow. First, acquirers should not tolerate "bad behavior" that can sabotage the integration process. Second, it is important to have patience with the new management team, as many of them will be in unfamiliar roles. Finally, the authors suggest that it is important to remember to celebrate the value of the deal for all involved. By trumpeting the value of the new team, you can increase communication and trust. Ultimately, this trust may lead to increased shareholder value for all involved.