Wednesday, August 14, 2013
Thursday, August 8, 2013
According to the Wall Street Journal, Anheuser Busch Inbev is making a big push to take the Budweiser brand global. A quick look at the brand's performance in the United States tells us why the company is focused on expanding Budweiser's global reach. The historic brand's consumption in the US has fallen for twenty-four straight years, and it has now fallen to number 3 in market share in the United States (behind Bud Light and Coors Light). Budweiser faces challenges winning over customers in foreign markets though. As the Wall Street Journal reports:
"Adolphus Busch launched a pale lager in St. Louis fashioned after beer from the Bohemian town of Budweis—has never won over most beverage connoisseurs. It scores only a 56, when any rating below 70 is "poor," on the website Beer Advocate. In Europe, where some beer brands have been popular for 500 years, Budweiser 'is not seen as a real beer by beer aficionados,' says Ian Shackleton, a London-based analyst with Nomura."
Budweiser faces a more fundamental challenge though. In global markets, the local beer brands still dominate. Many companies, including Anheuser Busch Inbev, have pursued acquisitions across the globe, because they understand this dynamic. In the article, SAB Miller CEO is quoted:
"We remain convinced beer is fundamentally a local business,'' says Alan Clark, SABMiller's chief executive in an interview. Although SABMiller is expanding international distribution of brands such as Miller Genuine Draft and Italy's Peroni, it puts far greater stock in its local beers, like Snow. "There's an emotional resonance we find consumers have with beer brands which frankly is different," he says. "We just see it continuing."
Of course, the question is: How large are those global economies of scale, if local brands dominate so much. What value does the global parent add? I wish that Alan Clark had commented on those core questions.
Wednesday, August 7, 2013
If I told you that a company had the following business units, what would you say?
- an education and test preparation business
- a set of local television stations
- an internet company that helps churches engage in outreach and raise money
- a company that makes components for industrial furnaces
- a home healthcare and hospice provider
Most analysts would say that this company has a scattered strategy. The company: the Washington Post Co. - or whatever it will be called now that Jeff Bezos has bought the flagship newspaper for $250 million. With the newspaper gone, the Washington Post Co. will soon face pressure for more strategic change. Investors will argue that this unrelated diversification strategy makes no sense. Investors can diversify risk much more effectively and less expensively on their own. They don't need the executives at the Washington Post Co. to do that diversification for them.
Most people are focused on the Bezos' acquisition right now. They are examining the future of the newspaper. Can Bezos transform it? Soon, though, many eyes will turn to the company that remains. Expect investors to push for more change. They will, rightfully, demand a clear strategy moving forward. The key question: What does the Washington Post Co. want to be moving forward?
Tuesday, August 6, 2013
Monday, August 5, 2013
Fortune has a feature article this week about David Novak, the CEO of Yum Brands. The article focuses on the leadership development efforts at Yum Brands, with a specific emphasis on the employee recognition program at the firm. Yum Brands has a lot of fun with employee recognition, but they also take it very seriously. They know that it's vitally important, and they stress the need for leaders at all levels to recognize the contributions of key employees. However, they also do it with a smile and a joke - they have fun with it. Here's an excerpt from the article:
As in all things, the way it's done makes all the difference. Every company offers recognition -- a trophy, a plaque, a ceremonial dinner. It typically accomplishes little, for two big reasons: It happens long after the performance that's being recognized, and it's impersonal. The Yum version is the opposite. Faster is better. "You go into a meeting, and somebody blows you away by something," Novak says. "You get up, go back to your office, get your Yum award out, and you go back and say, 'God, that's so great.' Boom! You give him a recognition award. That's the best recognition of all."
And it must be personal. Every Yum acknowledgement -- a rubber chicken, a cheesehead (used at Pizza Hut), a roof tile -- can be written on, and it must carry a handwritten message. "You want to give away a piece of yourself," says Novak.
These two attributes are so crucial: it must be immediate and personal. I would add a third criteria. Recognition must be about behavior, not just results. You have to identify the key behaviors that you want to reinforce, and you must recognize the individuals who engage in these activities. People must understand what you think is important for achieving the broader objectives of the organization. Moreover, they must know that you not only care about achieving the desired results; you also care about how people about achieving those goals.
Friday, August 2, 2013
Samuel A. Swift and Don A. Moore of the University of California at Berkeley, Zachariah S. Sharek of Carnegie Mellon University, and and Francesca Gino of the Harvard Business School have conducted some fascinating new research that might explain why we often make the mistake of hiring someone who isn't as qualified as we think he or she is. The scholars find that, "Across all our studies, the results suggest that experts take high performance as evidence of high ability and do not sufficiently discount it by the ease with which that performance was achieved." How does this problem manifest itself? Imagine that you are looking at a candidate for a sales position who worked in a high-flying business that was growing very rapidly. You might fail to account for the fact that it is much easier being a sales person in that type of company as opposed to working for a mature company with low organic growth.
The scholars conducted several experimental studies which showed that people often select candidates who have excelled at easier jobs/tasks over those individuals who may have performed slightly worse at a much more challenging task. The scholars also looked at actual admissions data for graduate schools of business. They found that students are at an advantage if they went to an undergraduate institution with a grade inflation problem! In other words, if you went to a school that gave out easy A's, you have a better shot at getting into a good MBA program; the admissions officers are not doing a good enough job evaluating the difficulty level of various undergraduate programs.
As a business school professor, I'm saddened that we appear to be rewarding grade inflation. The study shines a spotlight on an important problem. The research has much broader implications though; it shows us why many kinds of organizations may make poor hiring decisions.
Thursday, August 1, 2013
Many of you have seen the video posted below. The exercise is simple. You ask people to count the number of passes made by people in white shirts in this short video. At the end, you ask people whether they saw the person in the gorilla suit appear in the video. Many people do not notice the gorilla! They are too focused on the task that has been given to them; they are busy counting passes. Scholars describe this problem as "inattentional blindness." Basically, we see what we expect to see. We expect to see people passing a ball, and we don't expect to see a person in a gorilla suit.
Now we have an interesting new study that's a simple twist on this infamous gorilla video. Harvard Medical School researchers Trafton Drew, Melissa L.-H. Võ, and Jeremy M. Wolfe decided to examine whether experts engaged in a serious task are "less blind" than the usual naive observer conducting a mundane task such as counting passes of a ball. Here's what the scholars report about their study:
We asked 24 radiologists to perform a familiar lung-nodule detection task. A gorilla, 48 times the size of the average nodule, was inserted in the last case that was presented. Eighty-three percent of the radiologists did not see the gorilla. Eye tracking revealed that the majority of those who missed the gorilla looked directly at its location. Thus, even expert searchers, operating in their domain of expertise, are vulnerable to inattentional blindness.
Now we have an interesting new study that's a simple twist on this infamous gorilla video. Harvard Medical School researchers Trafton Drew, Melissa L.-H. Võ, and Jeremy M. Wolfe decided to examine whether experts engaged in a serious task are "less blind" than the usual naive observer conducting a mundane task such as counting passes of a ball. Here's what the scholars report about their study:
We asked 24 radiologists to perform a familiar lung-nodule detection task. A gorilla, 48 times the size of the average nodule, was inserted in the last case that was presented. Eighty-three percent of the radiologists did not see the gorilla. Eye tracking revealed that the majority of those who missed the gorilla looked directly at its location. Thus, even expert searchers, operating in their domain of expertise, are vulnerable to inattentional blindness.
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