Project Management Podcast

Andy Kaufman interviewed me recently for his terrific People and Projects Podcast series.   Andy's expertise lies in the field of project management.  His blog has a wealth of resources for managers responsible for managing complex projects in a variety of fields.   To access the podcast, please click here.  I hope you enjoy it. 

Read More

Budweiser: Can It Go Global?

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.

Read More

Break Up the Washington Post Corporation

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?

Read More

Why Great Leaders Don't Take Yes for an Answer

Here's a fun video that we produced to introduce readers to the new edition of my book, Why Great Leaders Don't Take Yes for an Answer.   Enjoy!

Read More

Employee Recognition: The Yum Brands Way

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.   

Read More

Hiring Unqualified Candidates: Why Do We Make That Mistake?

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. 

Read More

The Invisible Gorilla

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. 

Read More

CEOs: We Want Coaching, But We Don't Receive it.

Stanford has collaborated with the Miles Group to release its 2013 Executive Coaching Survey.   The findings are quite interesting.  According to the Stanford website, the report indicates that, "Nearly two-thirds of CEOs do not receive coaching or leadership advice from outside consultants or coaches, and almost half of senior executives are not receiving any either."  However, it seems that almost every CEO responded that they welcomed outside coaching and advice, and they thought it was worthwhile.   Huh?  So, you think having an external sounding board would be a good thing... what exactly is stopping you?  Is the board prohibiting you from reaching out to get this outside advice and counsel?  Can you not afford it?   It seems that the CEOs are telling us what they think we want to hear, but when asked about actual practice at their firms, they reveal the truth - many of them are not reaching out to make sure that they receive the kind of feedback, advice, and external input that could be very helpful. 

Now interestingly, most of the CEOs who do receive coaching made this happen on their own; they were not forced to do so by their boards.  Thus, some CEOs do see the benefit, and they have reached out to find coaching that can help them. 

In what areas did the CEOs indicate that they need the most help?  Conflict management ranks very high for them.  Since I do a ton of work in this area, I was quite pleased to see that executives value this competency.   I would hope, though, that they recognize that sometimes the key challenge for CEOs is the lack of conflict in key decision-making processes; too often people do not raise dissenting voices in the presence of a powerful chief executive.

Finally, the survey responses indicated that boards of directors are very concerned about talent development practices within firms.  They want their CEOs focused on developing future leaders, and putting good succession plans in place.  That's good news, as we see too many companies left searching externally for a CEO when a sudden need emerges because they have not put a good talent development and executive succession process in place.   

Read More

A Culture of Experimentation at Intuit

If you are interested in moving your organization toward a more effective, lower cost method of developing new products and services, take a look at this terrific presentation by Kaaren Hanson, VP of Design Innovation at Intuit. 

Read More

How Can Multinationals Find Talented Candidates? Go Where Firms Don't Hire Many Women

Suppose you are a multinational company searching for highly talented candidates.  You are finding it difficult in certain markets to attract the best people.  Where might you have an easier time finding top notch talent?   HBS Professor Jordan Siegel, MIT's Lynn Pyun, and Hanshin University's B.Y. Cheon have conducted a fascinating study titled, "Multinational firms, labor market discrimination, and the capture of competitive advantage by exploiting the social divide."   These scholars find that global firms can enhance profitability by recruiting and hiring women in countries that traditionally do not have ample opportunities for females to achieve leadership positions in business.  

Siegel and his co-authors focused their research first on South Korea.   According to this article on HBS Working Knowledge, South Korea makes a great setting for this research because, "Universities in South Korea are highly meritocratic about accepting and educating women. Hence, the country sports a large number of highly education, highly qualified women with advanced degrees in business, engineering, economics, and foreign languages - all useful in corporate management."   Unfortunately, the opportunities for these talented women are limited in many traditional Korean companies.   

This research focused on multinationals who were taking advantage of this talented pool of candidates that were not being given sufficient opportunities by domestic firms.  "Even after accounting for unrelated variables, the researchers found that a 10 percent nominal increase in the percentage of female managers (at the level of the then-prevailing glass ceiling) was associated with a  1 percent nominal increase in ROA."  

The researchers are focusing on Japan next, a country that also does not provide wide opportunities for women to assume senior leadership positions in business.  (I just read yesterday that only 1% of Japanese chief executives are women, though 1/2 of university graduates in the country are women).  Interestingly, Siegel's research in Korea suggests that Japanese multinationals might be providing more opportunities for women abroad than they are at home.  His work looked at 37 Japanese firms hiring in Korea, and he found that many of them were hiring female mangers there, but not at home in Japan. 

Read More

When Joint Ventures Fall Apart

The Wall Street Journal reports today that Ford and Toyota have chosen to end a partnership focused on hybrid vehicle development.  The article offers some speculation about why the partnership was dissolved, but it's not quite clear what all the reasons are.  The story does offer us a good opportunity to comment on some of the reasons why joint ventures do fail:

1.  Disagreements and concerns about intellectual property protection - who exactly owns the IP, and how does a firm protect the IP that it does not want to share/lose to its partner or any other rival?

2.  Culture clash - different firms have contrasting styles of decision-making and leadership, as well as different values and norms

3.  Strategic misalignment - the firms have a different view of how and where to compete in the future, or they potentially cannot overcome the challenges and conflicts of interest associated with head-to-head competition in many markets

4.  Catching up vs. Holding you back - Firms sometimes engage in joint ventures as a mechanism for "catching up" in an area in which they lag technologically (or otherwise).   However, at some point, the joint venture may hold you back.  If you have caught up sufficiently, you may wish to reduce your dependency on the partner at some point and focus more on internal capability development

Read More

True Engagement via Social Media: Honda's Latest Campaign

Honda launched a very creative social media campaign recently designed to truly drive engagement.  The company created a powerful back-and-forth conversation with its customers.  To kick off its summer promotions, Honda asked customers to write tweets using the hashtag #wantnewcar if they were itching to ditch their old car for a new set of wheels.   The company responded with six-second personalized Vine videos in response to some of these creative tweets.  The Vine videos made suggestions for new Honda cars and encouraged these potential customers to take a closer look.  As you might imagine, this campaign created quite a conversation between Honda and potential customers, as well as among consumers.    Check out this creative exchange as one example of the type of back-and-forth that emerged.  You can see that Honda was truly trying to have some fun with this campaign. 

Did the social media campaign have an impact?  It tripled Honda's engagement via Twitter.  According to this article, the hashtag has been used nearly 7,000 times.  The article reports that, "The word 'Honda' received an estimated 247 million impressions between July 14 and Tuesday morning." 

Has this incredible level of social media engagement with the consumer led to increased revenues?  That will be the key question.  We will watching closely to see if Honda reveals any data on the connection between the increased social media engagement and auto sales. 

Read More

Understanding Cultural Differences: The Michigan Fish Test

Check out this image. What do you see?   

Source:  Richard Nisbett via CNN.com

In this article for CNN, Columbia Professor Sheena Iyengar describes how people of different cultures view this picture quite differently, and she explains what that tells about important cross-cultural distinctions.   Iyengar is an expert on cross-cultural differences in decision-making processes.  Here is an excerpt:

The image here, known in psychology as the Michigan Fish Test, was presented to American and Japanese participants in a study conducted by Richard Nisbett and Takahiko Masuda.  In their five-second viewing, Americans paid more attention to the large fish, the "main characters" of the scene, while Japanese described the scene more holistically. For Americans, the large fish were the powerful agents, influencing everything around them. For Japanese, the environment dominated, interacting with and influencing all the characters.  After the initial test, the researchers offered participants different versions of the fish picture, with some elements changed and some not. With the altered pictures, the Japanese were more likely to notice changes in the scenery or context. The Americans, on the other hand, proved adept at recognizing the large fish wherever they appeared, while the Japanese had more trouble recognizing the fish in new contexts, outside the original environment.  So members of two different cultures--the more individualist Americans and the more collectivist Japanese--"saw" the pictures with differing emphasis on individuals, the environment, and how these elements interacted. The divergent accounts point to differing narratives of what controls what in the world, and how individual people fit into it.

For more on Iyengar's own research comparing how Japanese and American children approach choice, see this earlier blog post. 

Read More

Is the Sum of the Parts Worth More Than the Whole at Sony?

In May, hedge fund investor Dan Loeb proposed a break-up of Sony, the Japanese electronics and entertainment giant that has struggled over the past decade.   Actually, he's not proposing a complete break-up, but rather an initial public offering whereby Sony would sell a 20% stake in its music and movies business to outside investors.  Loeb argues that the sum of the parts is greater than the whole.  Sony has an entertainment division that produces movies (Skyfall, Spiderman) and represents recording artists (Adele, Springsteen).  The entertainment division has been more profitable than the electronics division in recent years.  Investors recognize that Sony has been subsidizing losses in areas such as its television business with profits from its entertainment division.   Sony also still owns a majority stake in a firm called Sony Financial Holdings, which operates in the banking and insurance business.  Here's an excerpt from a Bloomberg article about Loeb's push for a partial break-up at Sony:

The value of Sony’s entertainment division -- which makes the “Spider-Man” movies through its Culver City, California-based Sony Pictures and also represents music artists including Grammy winner Adele -- isn’t being realized in the company’s current structure, said Michael Souers, an equity analyst at Standard & Poor’s.  “It’s totally being weighed down by the struggling consumer electronics unit and the fact that it’s had to subsidize that unit,” Souers said in a phone interview from New York. A partial spinoff “would make sense for them. And from a managerial perspective, they could focus a little bit more on turning around the electronics business.” A sum-of-the-parts analysis by Christian Dinwoodie, a Tokyo-based analyst at CLSA, values Sony at 2,400 yen a share, 28 percent higher than its price May 14, before Loeb’s proposal lifted the stock. Spinning off part of the entertainment business would give Sony an infusion of capital and allow it to transfer some debt to the new entity, Dinwoodie wrote in a May 14 report. 

In late June, Sony CEO Kazuo Hirai announced the board of directors would be conducting a thorough review of the Loeb proposal.   The board has yet to make a decision on the Loeb proposal, to my knowledge.  Will Loeb succeed in his efforts?   It will be a tough slog, given that activist investors from foreign countries have not fared well historically in Japan.  Having said that, Sony did sell a stake in its financial services business several years ago; there is precedent for a refocusing of the company's strategy.  

Sony should consider Loeb's proposal seriously.   Years ago, many firms pursued strategies that combined media content with hardware/electronics businesses.  Most of those companies failed to realize the purported synergies.   Focused firms outperformed many of the integrated players (think Apple outmaneuvering Sony, not by owning media content, but by negotiating to secure access to content for iTunes).   One of the problems with integration in the entertainment business is the conflicts of interest that arise.  If you tailor content to your devices or vice versa, you run the risk of losing certain customers and partners. CEO Kazuo Hirai will have to explain clearly how he will make synergies materialize between the two arms of Sony, if he wishes to allay the concerns of investors.   If he holds onto both businesses, he has to explain why the entertainment business isn't going to continue subsidizing unprofitable elements of the electronics business. 

Read More

Can Uniqlo Succeed in the US?

Uniqlo, a division of Fast Retailing, is the largest apparel retailer in Asia.   Headquartered in Japan, Uniqlo (pronounced You-nee-klo) actually manufactures a majority of its clothes in China.   Known for its affordable bright-colored basic, the company aspires to be the largest apparel retailer in the world.  However, Uniqlo has encountered challenges expanding into Europe and the United States.   The firm opened a number of stores in the UK a decade ago, but then had to close many of them a few years later.  Still today, it has not been able to match the dominant home-grown rivals in Europe: Zara and H&M.   In the United States, Uniqlo operates seven flagship stores (3 in Manhattan, 3 in surrounding communities, and 1 in San Francisco).   The firm plans to open 10 more stores in the United States this fall.  However, Business Week recently noted that Uniqlo's July earnings report noted underwhelming performance in the US operations.  

What's the challenge for Uniqlo?   Clearly, cracking the already crowded casual apparel market in the US will be difficult for any new player.   Many companies jockey to attract budget-conscious young consumers interested in fashionable apparel.   Promotions and discounts are rampant, making it hard to sustain gross margins.  Moreover, young consumers prove incredibly fickle at times; today's high-flying retailer can quickly become yesterday's news.  

Uniqlo may be facing another challenge though.  It may not have a clear brand identity.  In this article for Racked.com, Kerry Folan argues that Uniqlo has not quite decided what it wants to be: a fashion brand such as Zara or H&M, a "blue jeans and basics" company such as the Gap, or a performance/technology apparel player such as Under Armour or even Lululemon.  The company has had incredible success with performance apparel actually, though many know it for the affordable and bright casual basics stacked to the ceiling at its flagship stores. For instance, the company's Heattech apparel has sold over 100 million units.  Heattech apparel actually helps to warm you up and keep you that way if you are outdoors on a cold day. 

Many Americans do not know much about Uniqlo.  I would concur with Kerry Folan's assessment.  The firm needs to establish a clear brand identity if it is to succeed in the United States.  Zara has excelled by entering the US with a clear positioning as a "fast fashion follower" with reasonably affordable price points.  Uniqlo must make some clear and perhaps difficult choices.  It would help if they clarified that brand identity before the next wave of new store openings, many in high rent urban locations. 

Read More

Can Japan Grow Again?

I'm here in Japan this week teaching an executive education program at the Nomura School of Advanced Management - something that I have done annually for the past 10 years.    Over the next week, I'll have a few blogs pertaining to interesting Japanese companies who compete in the US market. 

Today is actually election day here in Japan.   The country appears poised to support Prime Minister Abe's "three arrows" strategy for lifting the country out of the economic doldrums in which it has been mired for the past two decades.  Many Americans may forget that Japan is the third largest economy in the world, partially because of the lack of growth.  Abe's fiscal and monetary policy stimuli have created a burst of recovery, but the third arrow will be crucial.  Can he push through structural reforms, deregulation, and policies that enhance opportunities for women in the workforce, particularly in executive roles?   If he succeeds, perhaps we will see renewed attention to the Japanese economy, just as it appears that the Chinese economy is slowing down. 

Read More

Can It Scale Quickly? Is it the Wrong Question for Many Startups?

Does your business model enable you to scale quickly?   That's the question facing many start-ups these days as they seek capital from investors.   The question proves most pertinent for tech start-ups, but it seems to be thrown at founders in many different kinds of companies these days.   Is there a danger to focusing on this question?   I would argue that founders and investors must be aware of two significant downsides.    First, focusing on scale, and trying to scale too quickly, can cause start-ups to lose sight of their target market.  Who precisely do they aim to serve, and who they do not plan to serve?    A strategy can become "all things for all people" very quickly as the scale question comes to dominate conversations.   Second, founders and investors often can underestimate the challenges associated with scaling quickly.    Sometimes, it makes sense to take a bit of time to get the business model right before trying to grow rapidly.   I find it very interesting that many investors proclaim the mantra of fast iteration and experimentation, yet they also push for scale at the same time. 

Read More

The Relationship between TV and Twitter: The Sharknado Case

Read More

The Netflix Culture

If you have never viewed this presentation about the Netflix culture, you are in for a treat.  Check it out by clicking here.   I would point you to a few things, in particular, that I find insightful and refreshing.  

1. "Great workplace is stunning colleagues.  Great workplace is not day-care, espresso, health benefits, sushi lunches, nice offices, or big compensation, and we only do those that are efficient at attracting stunning colleagues."  How terrific!  People love to work with other highly talented, reliable, and kind people.    They do not like free riders, jerks, and people who don't invest time needed for self-improvement.  Think about when you went to college.  What made it a good experience?   The best courses were not simply taught by a talented professor.  They were courses in which the fellow students were intelligent, curious, reliable, and hard-working.

2.  Netflix chooses to focus on rapid recovery rather than avoidance of failure.  The firm argues that, in some environments, such as health care, we want to be highly reliable, i.e. avoid failure.  However, in creative environments, we should focus instead on rapid recovery.  

3.  The explanation of the nine behaviors and skills that the firm values in its employees is different than most "competency" models developed by company human resource departments.  The Netflix behaviors and skills are much less generic.  They describe specific behaviors, and they fit together to form a consistent whole.

4.  I like the "Keeper Test" a lot.  Here it is:  "Which of my people, if they told me they were leaving in two months for a similar job at a peer company, would I fight hard to keep at Netflix?"  The document states that you should let go of those who do not meet this test.  Make room instead for someone who will have the potential to meet this test.  It's tough medicine, but it really does make you think about whether you are keeping under-performers around too long. 

Read More

Too Cute! Lessons on Teamwork from a 6th Grade Heavy Metal Band!

Check out this Fast Company article featuring an interview with members of Unlocking the Truth - a heavy metal band comprised of ambitious and creative 6th graders!

Read More