Blog Archives

Video

“Be careful how you measure success!” – Harvard’s Clay Christensen

Christensen makes some very clever statements about how one should look at the way we as people and as professionals or companies measure success.

Depending on how you will measure, you will naturally, either willingly or unwillingly, adapt your strategy. I find the examples he makes about business and life to be very impressive.

Business

As the expert on disruptive change, his example for business strategy includes two companies. The first being very successful and established while the second has an inferior product and is new to the market. The latter keeps struggling and eventually overtakes the established player in the market. The formerly successful company did not willingly decide to “die” but rather followed the metrics set up by their management which would put short-term success over long-term gains. This is pretty much in line with preaching of Finance professors in business schools all over the world, so why would you blame them? Although Christensen does not go into such line of questioning, I would like to add that short sightedness is an effect of laziness. If you are in a comfortable position with your company, do not get cozy! Keep looking out for new innovations and the next competitor. Because although you might have lost your appetite, the new guys on the block are starving and looking to gain market share.

Life

It is difficult to build the same conclusions for the aspect of measuring success in life as for the business example above. Christensen describes the experiences he had when his MBA class would meet every five years for their reunion. Initially his peers returned very happy, full of excitement and joy, as their careers were progressing, wealth was built and many were married. By that measure of career, status and money everybody was very successful and therefore happy at the time. Only later, for their 10 or 15 year reunions the picture changed. People were still successful and rich but miserable and lonely. Many were divorced and were not raising their own children. Christensen hits the nail on the head when he said that business and career provide you the most immediate and tangible achievement, while raising kids is something you will only be able to enjoy after a long time, when you look back on what you achieved and what an amazing individual you raised.

Leave a comment

October 4, 2015 · 2:15 pm
Video

HBS’s Prof. Clayton Christensen on Incentives and Free Market

While Christensen starts out talking about how a Chinese economist, who came to Harvard, showed him the importance of religion for our free market society, the really interesting bit starts in the end: The professor explains how assumptions in economics have shaped our understanding of the role of company management and pleads to reverse focus from “inflating shareholder value” back to creating long-term perspective. It is especially interesting in the context of economists, such as German Max Otte (PhD from Princeton University), suggesting that it would be wise to invest in family owned companies for there “continuity in management and focus on long-term goals“.

Please, find the last blog post here.

Leave a comment

January 13, 2015 · 12:25 am
Video

Have Michael E. Porter explain Competitive Strategy to you

While working on another piece for this blog, I came across this great video from a rather old series of Harvard Business School videos. Please find my comment below.

http://www.youtube.com/watch?v=c4ZBVp8-9gA

If you want to save lot of money for executive education on strategy, just have Prof. Porter explain the generic strategies, 5 forces and details of a low-cost strategy. A truly great lecture.

In summary, every company has to watch out for five forces that shape the profitability of every industry. Although the 5 forces are often criticized for not capturing change or government regulations, Porter mentions these factors in his review. He also brushes over what he calls the generic strategies. This is a 2×2 matrix of scope (narrow/broad) and advantage (differentiation/low-cost), which allows a positioning and survival of several competitors in the same industry. I know people insisting on “lowest cost” but Porter talks about this, too. The main idea is that one has to pick a strategy and then follow through.

The examples and interviews he uses to illustrate a low-cost strategy might be a bit outdated, but one gets the point.

1 Comment

February 18, 2014 · 5:38 pm
Video

BCG’s Yves Morieux on complexity and collaboration

This BCG partner has a great angle on competitiveness of large organizations. He claims that businesses do not really fight their competitors but rather their own complexity.

If I had to summarize the talk in one sentence it would be something like this: Because businesses wish to be productive and engage their employees, they use hard and soft approaches, which finally backfire and create complexity, thereby reducing productivity and engagement – Sounds reasonable. Out of the recommendations I find that the most important, but also most abstract, is the last one. “Reward those who cooperate and blame those who don’t cooperate”. This culture will determine whether people care, work together and perform . But how do we get there? Giving people power and therefore the freedom to make decisions (called autonomy in a different TED talk) seems to be a great starting point.

https://www.youtube.com/watch?v=gMzx2acLPIo

In his talk, Morieux states two modern enigmas he encountered: Productivity is disappointing in all the companies he worked for (despite all the technological advances) and there is little engagement of employees at work.

Ad-hoc solutions to these issues are always tackled with one of more of what Morieux calls ‘pillars’. You can use the hard way, creating/changing structure, processes, systems, or the soft way, by engaging feelings, sentiments, interpersonal relationships, traits, personality. In the end, both these two pillars, according to Morieux, are obsolete.

He claims that if an organization tries to cater to a new requirement, it will most likely add a layer of responsibilities and rules. This will add complexity, cost – without any real impact. A way out would be collaboration, but this barely happens. This is often compensated for by the individual effort of the employees, and results in disengagement of the employees.

The hard approach is unable to foster cooperation. It can only add new boxes, new bones in the skeleton.  – Yves Morieux

The way out is what Morieux calls the smart simplicity approach based on simple rules. These rules are:

  • Understand what others do. What is their real work? Go beyond the boxes, the job descriptions, beyond the surface of the container, to understand the real content.
  • Reinforce integrators. Integrators are managers, existing managers that you reinforce so that they have power and interest to make others cooperate. Remove layers!
  • Give people power! You must give more power to people so that they have the critical mass to take the risk to cooperate, to move out of insulation. Otherwise, they will withdraw.
  • Create feedback loops that expose people to the consequences of their actions.
  • Increase reciprocity, by removing the buffers that make us self-sufficient. When you remove these buffers, people will cooperate.
  • Reward those who cooperate and blame those who don’t cooperate. Blame is not for failure, it is for failing to help or ask for help.

Leave a comment

February 5, 2014 · 3:32 pm
Video

First post: What is Strategy? And what is it NOT?

When discussing strategy with other professionals (mostly during business school) I felt that organizations are often lost in setting goal, targets and visions, creating something far from what I would consider a real strategy.

To approach this topic, I would like to share a short video of strategy guru Michael E. Porter of Harvard Business School.

1 Comment

October 13, 2013 · 7:05 pm