Category: Management

WSJ writes on how technology and globalisation are changing the nature of blue-collar work (taken to mean manufacturing):

Gone are traditional assembly jobs that required little skill and less education, those tasks being automated or sent overseas to less-industrialized countries. Remaining in the U.S., as well as in most industrialized countries, are blue-collar jobs involved in making products with proprietary technology, or items that require frequent tweaks and updates. These workers make goods that are perishable or too bulky to ship and thus must be close to the market: Bread and frozen foods; custom furniture, innovation-intensive computer components or refined hospital devices using technology a company wants to protect.

Today’s blue-collar workers are more involved in customized manufacturing, coming up with solutions to a particular customer’s needs, rather than churning out standardized parts and commodities.

Workers need to be able to think globally, too. An engineer at Timken Co., a century-old bearing maker, whose team once would have been limited to his Canton, Ohio, plant, now collaborates with colleagues at a Timken plant in Ploiesti, Romania, to design and make bearings for a client in China.

The world of blue-collar work has changed as well. What once took two weeks and a dozen workers now takes two people only a few hours. Jobs once considered a lifetime commitment are now more temporary, forcing workers to stay adaptable. Many of them move from one factory or plant to another, from day shift to nights to keep up with changing demands.

HBS Working Knowledge writes about research done by HBS professor Narakesari Narayandas about how “buyers and sellers in mature industrial markets can turn single transactions into long-term beneficial relationships by a deeper understanding of the complex connection between the two.” Three questions addressed are:

1) From the suppliers viewpoint, does it pay off to be in long-term customer relationships?

2) If yes, how do you as the supplier get started?

3) If you the supplier are in an arms-length transactional relationship, how do you move it into a fuller relationship?

A few pointers:

Suppliers increased sales over time. If you get in with fewer customers for a long time, you get a greater share of wallet from the fewer customers (as opposed to more mass market customers), he said. Manufacturing costs went down. Even in long-term relationships, opportunism is always shown. Customers still are opportunistic, customers still look out for themselves.

To explain how he came to answer question twoabout starting a customer relationship from scratchNarayandas first told his audience about the classic vendor-customer standoff. The vendor wants money first; the customer sits back with arms folded and replies, Prove to me that you can do what you say….Rather than going after the entire volume, break up the needs into different parts, and try to initiate a relationship using one component, selling only this one component, he advised.

Fortune writes about six steps to boost business – by focussing on what customers want. Simple lessons that we tend to overlook many times.

Step 1: Figure out the needs of your most profitable customers
Step 2: Get creative
Step 3: Test and verify your hypotheses
Step 4: Tell customers how great your value propositions are
Step 5: Apply the best value propositions on a large scale
Step 6: Begin anew

Forbes has two useful links to business-related content: B-School E-zines and B-School Gurus, as part of its Best of the Web series.

Newsweek writes about how Jim Collins’ book “Good to Great” has achieved success outside the business world, too.

Its gone through 48 reprintings, and just inked its millionth hardcover. Collinswhose first book, Built to Last, sold about 200,000 hardcover copieshas received thousands of e-mails and roughly 250 speaking requests from people outside the business world, including orchestra managers, church leaders, principals and hospital chiefs (the list goes on). Whats the attraction? Many of the books findings are counterintuitive. The companies that made the leap are low-profile firms. Abbott, Kimberly-Clark and Nucor are among those that overcame average stock performance for a 15-year run that far outpaced the broader market. None were run by flashy CEOs from the outsidethey were led by quiet insiders who inspired with standards and goals. They determined what their company could do better than anyone else, figured out the smartest way to measure progress and stayed focused.

There’s an article by Jim Collins in Fast Company on Walmart (thanks to Abhay Bhagat and Karthik for the link):

It is entirely possible for a company to grow to 1.4 million people and retain much of the vibrant culture and sense of purpose created by its entrepreneurial founder. I must admit, I hadn’t thought that that was possible. By the time most companies reach $10 billion or $20 billion in revenue, they have long ago lost the entrepreneurial zeal that fueled them in the first place. By $50 billion, they have gone fully corporate, and their very success has made them complacent, dull, and slow. The usual story is that what was once a fast company — in its attitude, its values, its spirit, and its execution — eventually succumbs to inertia and spirals into a doom loop of mediocrity.

Yet if anything, Wal-Mart is gaining momentum. This fast company is becoming a faster company. Wal-Mart grows a Fortune 100 corporation each year. The company’s culture is as strong as ever. And Wal-Mart has yet to reach the larger world outside of the United States. Here is the most startling fact of all: If Wal-Mart were to maintain its average growth rate from the past 10 years, it would become the world’s first $1 trillion company within a decade.

Sounds astonishing – a trillion dollar enterprise. But so was the possibility of it becoming quarter trillion dollar company a decade or so ago.

A few points to note from Collins’ article:

When you combine a consistent direction with substantial speed, you achieve something greater than either of those elements alone: momentum.

The key to change is first to understand what not to change and then to feel free to change everything else.

Never think of your company as great, no matter how successful it becomes . Instead, always stay irrationally worried that it is never really measuring up to its potential.

HBS Working Knowledge has some suggestions:

– Don’t always have a meeting
– Don’t “discuss”
– Spend time to save time
– Park digressions, deflate windbags
– Park digressions, deflate windbags

Bill Gurley writes in the latest issue of his “Above the Crowd” newsletter (no online link available):

One might wonder, “What metric would highlight the ultimate in terms of sustainable competitive advantage?”. It would need to be something that encompassed (1) a clear advantage relative to competition, and (2) something that increased the lead over time. In other words, the competitive advantage would constantly be improving. What if a company could generate a higher level of satisfaction with each incremental usage? What if a customer were more endeared to a vendor with each and every engagement? What if a company were always more likely to grab a customer’s marginal consumption as the value continued to increase with each incremental purchase?

This may be the nirvana of capitalism – increased marginal customer utility. Imagine the customer finding more value with each incremental use….The customer who abandons increasing marginal customer utility would experience “switching loss.”

News.com (sourced from HBS Working Knowledge) traces Dell’s story and how it transformed itself after 1994:

Account selection: Dell purposely selected customers with relatively predictable purchasing patterns and low service costs. The company developed a core competence in targeting customers and kept a massive database for this purpose.

Demand management: “Sell what you have” was the phrase that Dell developed for the crucial function of matching incoming demand to predetermined supply.

Two surprises greeted the Dell executives who were creating this new process.

First, as inventory dropped, lead-time performance improved. This happened because Dell was not simply carrying component inventory against forecasted sales, but rather was aligning inventory and sales, managing profitability on a daily, weekly and monthly basis.

Second, as inventory disappeared, the company’s returns grew disproportionately. Not only did Dell avoid carrying costs and obsolete stock, but it was also saving enormous amounts of money on purchasing components because the component prices were dropping 3 percent per month.

Continue reading Dell’s History

Renee Hopkins discusses the differences between creativity and innovation, quoting Arnold Wasserman of The Idea Factory:

People always tend to use the terms innovation and creativity interchangeably. We’re very clear about the linkages and the distinction. Creativity is getting the great ideas, it’s sort of the R&D, and everybody is creative, everybody has got great ideas, every organisation has more great ideas than it can ever implement or bring into the marketplace. Innovation, however, is ‘creativity implemented. It’s taking creative ideas and bringing them into the world so that they change lives, and so they also change the organisations that bring them into the world.

Say that again: Innovation is creativity implemented.

Knowledge@Wharton reports on a talk given by CK Prahalad:

The old game was about a focus on efficiency. The new game must take into account not only new technologies but such forces as deregulation, globalization and emerging markets, including China and India. Among those new forces, Prahalad highlighted the convergence of traditional industry values that comes from the blurring of lines between various kinds of products and services.

“The fusion of new and old knowledge is creating hybrids, Prahalad noted. Companies respond by putting every possible feature into a device [or product] But there is cognitive dissonance from the enormous complications. The good news is that there is tremendous product variety. The bad news is, experience is the essence of value, not features. Customers are often frustrated and displeased because they feel there is a better one another newer product out there already or about to come out soon.

The lesson for strategists, said Prahalad, is that the definitions of the industry are driven by consumers and not by the companies. [Individual] consumers are making their choices, not you [strategists]. Each consumer is picking his or her own portfolio of products and services and defining the limits of the sector to meet his or her needs.

Continue reading Technology and the Firm