Tuesday, January 9, 2007

Still Looking for the "B" in B-School

The November 27th issue of Businessweek featured an insightful article by Richard Schmalensee, Dean of the MIT Sloan School of Managment In short, Mr. S. believes that Business schools aren't teaching enough Business but are focusing on much more arcane subjects such as game theory and econometrics, which while undoubtedly appealing to the beuatiful minds out there don't seem to have much to do with business in the real world.

I experienced a perfect example of this today while sitting in my Strategic Management course where we were exposed to the research done by Pankaj Ghemwat in his book Commitment which showed that over a 10 year period a sample of 700 business units half with high performing ROI (average of 38%) and half with underperforming ROI (average 3%) both progressed toward the mean (about 23%) at the end of the 10 year period.

On the surface this seems very interesting. High performers come down and underperformers come up in a very assymptotic approach to the mean till they are very close together. These are averages mind you so there will be some differences to be sure but here is the rub. When I asked the professor if there had been any investigation into why the underperforming business units turned themselves around and the outperforming business units lost some of their luster I was met with a blank stare.

"Well, obviously the underperforming companies tried to emulate the best practices of the outperforming firms", he said. True enough I thought but why in all the years since 1991 when Ghemawat published this little tidbit hasn't some enterprising academic jumped in to fill the knowledge gap and find out why the competitive advantage was lost. Maybe if a few of these academics went beyond game theory, contract theory and agency theory we could figure some of these things out.

What this inquiring mind want's to know is, "What where the factors that lead to the erosion of the competitive advantage that the outperforming firms seemed to have at the beginning of the 10 year period?" Did their talent get headhunted away, did they toot their own horns about proprietary best practices better left undisclosed, did they stop investing in R&D because they thought they had the whole thing figured out? What was it? Did one factor have dramatically more impact than another? Perhaps if we knew we could begin to guard against it. Evidently such trivial knowledge is unimportant in the ivy halls of acadamia, but you can bet we're going to know the in's and out's of the prisoners dilemma...now which box was I in?

Sunday, December 10, 2006

Holistic Marketing at Toyota

Need more evidence that Holistic Marketing is the way to go? Look no further than the December issue of Fast Company and the story on The Secret of Toyota's Success (Pg 82). The quick and dirty of the story is that Toyota's operations in America are kicking some serious tail because they are never satisfied with their performance and thus always seeking to improve.

The process they describe is an example of Holistic Marketing at it's best. Toyota seeks to create a culture where everyone is trying to add value at every step and the best thing about it is that they don't even think about like it's marketing. This article focused mostly on manufacturing but once you accept the idea of adding value everywhere, at every level, by everyone then you're entering the realm of Holistic Marketing.

The beauty of it all is that other companies can try to copy the mechanisms but unless they internalize the belief that every single person can add value they will just add another project to be completed rather than building a culture where every person is focused on creating value for the customer.

The folks at Toyota have found a way to employ the principles of Holistic Marketing but their way shouldn't be copied ad hoc. Instead we should all find "The Secret to Our Success" rather than trying to copy Toyota's Secrets. If you focus on the principles; that every person can and should add value, that we always have room to do better and that when people believe in something they are capable of powerful things then you will find the "Secret to Your Success".

When you do it the right way, the authentic way you'll find a lasting answer, rooted in Holistic Marketing, rather than a copycat answer based on another companies hard work. Start with yourself and create value by making the process better every day and soon it will start to spread. Ask yourself, "What can I do to create value for the customer?"...and then do it!!

Tuesday, December 5, 2006

Relationships Matter

Relationships Matter. I heard it again just as I have been hearing it time and time again over the last year. This time it came from a rather unusual and unexpected source; Mr. Robert Gates, Nominee for Defense Secretary.

I was watching the confirmation hearings on C-Span this morning while studying for my Enterprise Resource Planning Final, an odd pairing I know but such is the life of an MBA.

As I was reviewing how an ERP system can help with ABC (Activity Based Costing), I heard Senator Jeff Sessions of Alabama ask Dr. Gates what he had learned in his professional life that would help him in his new job as Secretary of Defense. Loving to hear that type of question I tuned in a little closer.

What Dr. Gates said was so familiar given what I have been increasingly hearing from executives visiting our program over the last year. Almost to a person all of these very diverse, experienced and successful people have said that it is the personal connections they have with people that matter when it comes to getting things done. Imagine my surprise when Dr. Gates said exactly the same thing in his reply to Senator Sessions.

To paraphrase Dr. Gates , he said that you can throw out the organizational chart when thinking about how to get things done because it is the personal relationships which matter more than anything else. To be sure what you do matters in this world but it's not the only thing that matters. As human beings we are uncomfortable with the unknown regardless of its accomplishments. This it seems is where relationships come in.

Relationships allow individuals to get comfortable with each other because they become "known" to each other. When people have strong relationships based on trust and respect they are freed to get things done. So if you want to get things done in your organization focus more on building bridges to other people and less on analyzing data. It's not that the analysis isn't necessary, it certainly is, it's just not sufficient.

If you want to get things done do your analysis and then get out and talk with people about everything; their families, life, beliefs and then your analysis. Build relationships day-in and day-out and you will have a strong network of support in personal and professional situations, in good times and in bad. If you don't you will be on your own...a depressing and lonely thought in a world so big.

Tuesday, November 28, 2006

Why We Need Holistic Marketing

If you need evidence that we need a holistic approach to marketing, and business in general, you don't have to look any further than the Big Picture feature (Up Front) in the October 2, 2006 edition of Business Week.

The feature pointed out the sad disconnect between what business leaders say and what they do. For those who didn't see it, a new survey revealed that managers tend to ignore their lower-grade workers when it comes to seeking their advice. According to the survey managers tend to want to collaborate more with their employees the more educated they are.

Only 24% of those with a high school diploma or less say their bosses asked them for advice compared to 54% for college graduates. I wonder if there is a Bill Gates or Michael Dell somewhere in the 76% without a college degree who might be able to help?

As the feature points out, we tend to treat the folks who work hands-on with customers as if they are functionaries with little or no added value. It is astounding to me that the very ones we trust to work one-on-one with our customers are the same ones that we pay the very least and obviously, from this survey, don't bother to ask for help, advice or input either.

The usual mantra is either, "We're here to serve our customers" or "Our employees are our greatest asset". Both seem to be more words than meaning. If customers are so important why do we delegate our lowest paid folks to work with them, or those we only want to pay by commission? If employees are our greatest asset then why do we value them so little that we don't ask for their advice?

So how do we change this attitude? That's the thrust of Holistic Marketing. We have to start believing that everyone in the organization can and should create value. Everyone, from the janitor to the CEO can add value and we as managers have the responsibility to develop that value, not ignore it. It's our job as managers to help the team achieve the most it can and that means involving the team beyond just telling them what to do.

If everyone in the organization started seeing themselves as part of marketing, started thinking about how they can create and communicate value to the customer then we would be a lot closer to maximizing the human potential available to us. Many of the solutions we are searching in vain for are locked up inside folks up and down the organization if we would only ask them. A lot of managers say they are willing to listen, but how many are willing to ask their employees what they think? By the sounds of it, not many.

Monday, November 20, 2006

An Ode to ERP

The hair lies strewn around the computer lab buried in the depths of the Communications Facility. All colors of hair, streaked with gray and with roots still attached, sway gently in the breeze created by the industrial HVAC system. A faint burning smell hung in the air explaining the haze hanging over the labs' denizen's.

The sound of shuffling papers, tapping toes and what resembles the chanting of a shaman fills the quiet of the smallish room filled with PCs. A gentle moan comes from the Grad Student slumped over the computer in the back of the lab. ERP...ERP...ERP, he mumbles. A thin trail of smoke trails from his ears as he thumbs through the configuration data for the Marshall Muffler project.

"Enterprise Resource Planning", he thinks, "more like a Plan for Ruining the Enterprise". The student across from him is mouthing the words, "Undocumented Features", over and over again while staring blankly at her screen. Another student suddenly screams with terror, "where's my inventory? I know I issued the purchase order...Oh God...where is it?"

Humor? No...it's real life in the subterranean world of an MBA student struggling to understand that which is inherently beyond understanding. Pray for us...please.

The Elixir of Optimism

I am continually stunned by how much frame of mind can impact performance. The more optimistic you are, the more it seems you can do. When you're optimistic you don't feel limited by your own thoughts but are liberated instead.

We, as individuals, teams and organizations, are capable of so much more than we show, mostly because of what we believe about ourselves. Oftentimes we believe the worst in ourselves, our abilities and our situations. When we have a negative perspective on any one area of our lives it can affect the outlook on our entire life.

When we choose to view life as full of possibilities rather than as full of barriers we begin to see what can be rather than what is. It is important not to discount the barriers though, for they are real, rather we should look over the top of the barriers to what can be.

Being optimistic takes effort to be sure but at the end of the day it's the closest thing to a magic elixir that I've ever seen.

Friday, November 17, 2006

I Love It When A Plan Comes Together

The Western MBA program had a great night last night at the Fall Open House. We filled every chair in the room, with nearly three times more guests than we have had in previous years. The speakers were wonderfully enlightening and entertaining.

There was such strong interest in Westerns MBA program that several people didn't enter because there weren't enough chairs for them all. Luckily I have already been contacted by several of these folks hoping to get the information available at the Open House.

The interest was driven by an Integrated Marketing Communications (IMC) plan featuring small doses of traditional print and radio advertising and large doses of relatively inexpensive direct mail, email and word-of-mouth (WOM), with a dash of public relations and guerrilla marketing thrown in for good measure.

We couldn't have done any of it without our incredible speakers. Much thanks to Dr. Mottner, Simon, Christine and Traci, all gave generously of their time. The theme, "How An MBA Can Change Your Life", was driven home articulately and passionately and received with enthusiasm.

So as I sat there last night enjoying the full room, hopeful faces and great speakers I recalled the immortal words of Colonel Smith from the A-Team, "I love it when a plan comes together".