Showing papers in "Sloan Management Review in 1995"

Scenario Planning: A Tool for Strategic Thinking

Abstract: Among the many tools a manager can use for strategic planning, scenario planning stands out for its ability to capture a whole range of possibilities in rich detail. By identifying basic trends and uncertainties, a manager can construct a series of scenarios what will help to compensate for the usual errors in decision making ? overconfidence and tunnel vision. Through case studies of Interpublic, an international advertising agency, and Anglo-American Corporation in South Africa, the author describes how to build scenarios in a step-by-step process and how to use the resulting stories to plan a company's future.

Understanding Organizations as Learning Systems

Abstract: How can you tell if your company is, indeed, a learning organization? What is a learning organization anyway? And how can you improve the learning systems in your company? The authors provide a framework for examining a company, based on its "learning orientations," a set of critical dimensions to organizational learning, and "facilitating factors," the processes that affect how easy or hard it is for learning to occur. They illustrate their model with examples from four firms they studied ? Motorola, Mutual Investment Corporation, Electricit« de France, and Fiat ? and conclude that all organizations have systems that support learning.

Empowering Service Employees

Abstract: The production-line approach to service is being challenged by an employee empowerment approach. Despite its growing popularity, many managers are till uncertain about empowerment's impact. The authors describe the returns a company can expect from empowering service employees, which include a number of favorable business results, but new management changes as well.

How to Manage an IT Outsourcing Alliance

Abstract: Companies are increasingly outsourcing information technology for a variety of reasons, such as concern for cost and quality, lagging IT performance, supplier pressure, and other financial factors. The outsourcing solution is acceptable to large and small firms alike because strategic alliances are now more common and the IT environment is changing rapidly. The authors offer their suggestions for determining when to outsource and how to structure and manage the resulting alliance. Most important, they suggest, is to view the outsourcing agreement as a strategic alliance and manage it as such.

The Second Toyota Paradox: How Delaying Decisions Can Make Better Cars Faster

Abstract: Although on the surface, toyota's development process seems extraordinarily cumbersome, it is a model of how to make better cars more quickly and cheaply. Toyota's engineers and managers delay decisions and give suppliers partial information, while exploring numerous prototypes. The authors examine what they call "set-based concurrent engineering," a method prevalent at Toyota but not at other Japanese and U.S. automakers. Toyota designers think about sets of design alternatives, rather than pursuing one alternative iteratively. They gradually narrow the sets until they come to a final solution. Through extensive research, case studies, and interviews, the authors present their argument - that this apparently inefficient system has made Toyota the fastest and most efficient developer of autos.

Supplier Relations in Japan and the United States: Are They Converging?

Abstract: A follow-up survey to one published in our Summer 1991 issue ("How Much Has Really Changed between U.S. Automakers and Their Suppliers?" by Susan Helper) shows that long-term, closely linked relationships have performance advantages for automakers and their suppliers in both the United States and Japan. Although such high-performance relationships with customers are still more prevalent in Japan than in the United States, the nature of supplier relations in the two countries is converging in some respects. The current survey includes more than 600 automotive suppliers in the United States and almost 500 suppliers in Japan.

Best Practice for Customer Satisfaction in Manufacturing Firms

Abstract: Although researchers have concentrated on various measures of customer satisfaction (CS) and the relationship of CS to firm performance, they have done little to determine what constitutes the best practices of firms focusing on CS as a corporate strategy. These authors report the results of their investigation into the best practices of four manufacturing firms with reputations for delivering high levels of customer satisfaction. They found that, although the firms developed a CS strategy for different reasons, each had similar characteristics that enabled them to concentrate on satisfying the customer. While the firms generally outperformed the average firm in their industry in profits and asset utilization after adopting a customer satisfaction strategy, they were not as successful in increasing market share; nor has the market valued them as highly as it has valued others in their industry. Finally, the authors suggest ways companies can improve their customer satisfaction measures and practices.

Improving the Corporate Disclosure Process

Abstract: Is it time to reform the financial reporting regulations that were established in the early 1900s? Will new regulations improve the corporate disclosure process? The authors conducted a national survey of corporate managers, financial analysts, and portfolio managers to examine their options on disclosure regulation and how companies communicate with the capital markets. Their analysis indicates that, while all three groups think market functioning is imperfect, they do not see a need for increased financial reporting regulation. Rather, the authors' analysis suggests that companies can improve the processes of disclosure and communication by developing a strategy for corporate information disclosure, upgrading the role of the investor relations staff, and voluntarily reporting nonfinancial information. Such improvements would increase management credibility, analysts' understanding of the firm, investors' patience, and, potentially, share value.

An Empirical Study of Flexibility in Manufacturing

Abstract: Despite the popularity of flexible manufacturing systems, managers suffer from inadequate frameworks to help incorporate flexibility into their strategic planning. Through a study of thirty-one plants in the printed circuit board industry, the authors progress toward such a framework, define types of flexibility, and examine the relationships among them. Their findings have implications for technology, production management, human resource management, supplier relationships, and product development.

A CEO Survey of U.S. Companies' Time Horizons and Hurdle Rates

Abstract: A survey of CEOs at Fortune 1,000 firms asked about their firms' hurdle rates and time horizons. Survey results suggest that most U.S. firms use hurdle rates that are higher than standard cost-of-capital analyses would suggest. The average discount rate applied to constant-dollar cash flows was 12.2 percent, distinctly higher than equity holders' average rates of return and much higher than the return on debt during the past half-century. At the time of the survey, the fall of 1990, U.S. CEOs believed that their firms had systematically shorter time horizons than their major competitors in Europe and (especially) Asia. U.S. CEOs also thought that government policy is a powerful agent affecting corporate planning horizons. They saw several policy reforms, including a cut in corporate tax rates, a permanent R&D tax credit, a corporate tax deduction for dividend payments, and a credible commitment to a stable tax policy for the next decade, as policies that could lengthen planning horizons.

Channel Partnerships Streamline Distribution

Abstract: Formerly adversarial relationships between retailers and their suppliers are giving way to cooperative partnerships in which both try to improve merchandise and information flow in the distribution channel system. By cooperating, retailers and suppliers can speed up the replenishment of inventories, improve customer service, reduce the need for markdowns, and cut the cost of bringing goods to the customer. The authors outline the key features of channel partnerships and discuss the reasons for their rapid formation during the 1990s. They describe the changes needed in traditional merchandising and distribution systems to gain the benefits of a partnership and the requirements for a successful channel partnership.

The Nonmarket Strategy System

Abstract: For managers, the challenge of understanding nonmarket forces ? government, interest groups, activists, and the public ? is frequently more difficult than understanding the market environment. The author develops a strategy system of principles, frameworks, and action plans to deal with the issues, institutions, interests, and information that characterize the nonmarket environment. He uses the concept of a rent chain, analogous to the value chain, to show how companies can participate in policy-setting processes and generate leverage to their own benefit.

Using Scenario Analysis to Manage the Strategic Risks of Reengineering

Abstract: Reengineering is a risky business, and the risks result both when companies try to do too little in their reengineering efforts and when they try to do enough They may make the wrong or inadequate changes to systems or processes, or they may make radical changes that lead to political backlashes To manage the risks of reengineering, according to the author, it is essential to anticipate a company's future environmental and operational uncertainties and to achieve consensus on the changes that need to be made Scenario analysis provides a way to avoid the obstacles to "revisioning" ? overconfidence, intellectual arrogance, and anchoring in the present

Improve Data Quality for Competitive Advantage

Abstract: Errors in data can cost a company millions of dollars, alienate customers, and make implementing new strategies difficult or impossible The author describes a process AT&T uses to recognize poor data and improve their quality He proposes a three-step method for identifying data-quality problems, treating data as an asset, and applying quality systems to the processes that create data

Returns Policies: Make Money by Making Good

Abstract: Although returns policies have been widely used for many years, they continue to be a source of controversy. The authors present a framework that explains when and how to adopt returns policies. They analyze the benefits and costs of accepting returns from distributors, and also compare returns policies to alternative ways of coordinating the distribution channel.

Marketing Strategies for the Ethics Era

Abstract: Marketing strategies are increasingly subject to public scrutiny and are being held to higher standards. Caveat emptor is no longer acceptable as a basis for justifying marketing practices. The author's "marketing ethics continuum" explains the shift in society's expectations of marketers and provides benchmarks against which marketers can evaluate their practices and perspectives. Today, consumers' interests are increasingly favored over producers'; consumers can make more informed choices, and less capable consumers are offered special protection. The author provides a practical framework - including the consumer sovereignty test - for marketers to apply to their decision making. The framework attempts to answer the question: What constitutes ethical marketing practice? The test examines consumer capability, information provision, and consumer choice.

Improve Software Quality by Reusing Knowledge and Experience

Abstract: The approaches for improving quality in manufacturing processes don't work especially well for software development The authors provide a quality improvement paradigm for the software industry that builds on manufacturing models but focuses on reused learning and experience by establishing "experience factories" Their iterative process enables an organization to acquire core competencies to support its strategic capabilities

Between 'Paralysis by Analysis' and 'Extinction by Instinct'

Abstract: In their decision-making activities, managers need to tread a fine line between ill-conceived, arbitrary decisions ("extinction by instinct") and an unhealthy obsession with number, analyses, and reports ("paralysis by analysis"). The author examines the over- and underuse of formal analysis and describes its underlying motives. She identifies three types of situations that lead to excessive analysis and three that lead to insufficient analysis. She concludes that, since the causes are frequently structural, simply exhorting managers to be more or less analytical is unlikely to solve the problem. Attention must be given to deeper structural and cultural issues. Moreover, because the obvious solution to one problem may drive the organization to the opposite one, rational yet efficient decision making is a complex balancing act that requires frequent diagnosis and realignment.

Rebuilding Behavioral Context: Turn Process Reengineering into People Rejuvenation

Abstract: Why are some companies able to remain vital, even after extensive reengineering, while others flounder and fail? The answer, according to these authors, lies in a company's ability to rejuvenate its employees by establishing a behavioral context with four characteristics ? discipline, support, trust, and stretch The authors trace postwar corporate history to identify the pernicious qualities that have ossified many companies, using the example of Westinghouse to illustrate an oppressive context based on the elements of compliance, control, constraint, and contract They also show how companies like Intel and 3M have been able to renew themselves by creating an environment in which people are the most important resource

Hurdle the Cross-Functional Barriers to Strategic Change

Abstract: The technological hurdles to strategic change are often easier to scale than the political ones. Strategic decisions ? particularly those that imply restructuring ? upset established patterns, challenge organizational units' identities, and create barriers to strategic change. The authors track a strategic decision in a Fortune 500 corporation, identify political obstacles that overshadowed the process, and highlight turning points in the strategy's direction. The unfolding Techno story provides a close look at the implications for organizing team-based processes and managing the politics of technological change.

Strategic Work-Space Planning

Abstract: Companies are examining their use of space more carefully to reduce occupancy costs. Misconceptions about the role of accommodation in organizations have led to costly inefficiencies in space planning and building use. Reducing square footage provides a company with a two-stage opportunity for improvement. First, space "right sizing" and redesign can lead to a better "fit" between work-space design and users' tasks; employees' work space can more effectively support work performance and improve productivity. Second, the process of making space cuts and changes is an opportunity for initiating broader-based corporate change in companies seeking to reduce overhead, empower employees, and reengineer work processes. The author offers examples that show how some companies have used work-space changes to transform their business and how CEOs can take full advantage of this opportunity.

Successful Reengineering Demands IS/Business Partnerships

Abstract: Business Reengineering holds great promise for companies by changing the way they do business and breaking down outdated assumptions and rules. But unless management gives information systems a prominent role in the reengineering project, the effort will be doomed to failure. The author traces a reengineering effort at Breezy Services Company, showing where management went wrong in ignoring IS's vital participation. He presents five steps toward better reengineering by assigning IS the tasks of project management and technical vision and leadership. Only by working together can business and IS managers ensure a successful reorganization of their company.

How to Address the Gray Market Threat Using Price Coordination

Abstract: Gray market goods are brand name products sold through unauthorized channels. Gray markets have recently become more threatening to multinational companies as a result of the increasing number of global products available and easily accessible price information about them. The authors present a framework to select the right approach to the gray market threat by coordinating price-setting decisions based on the subsidiary's local resources and the complexity of the product's market. Through examples from their sample of companies that have dealt with gray markets, they show how price coordination methods have been implemented.

Economic Consequences of Illness in the Workplace

Abstract: When employers focus only on the direct, out-of-pocket costs of health care, they fail to consider the indirect costs of illness in the workplace form workers' impaired functioning on the job and absenteeism. The authors present a case study of the effects of clinical depression on direct and indirect health-related costs and provide a model that employers can apply to a wide range of illnesses to analyze their investments in health care. The authors apply the framework to several workplace situations ? employees' depression, cigarette smoking breaks, and arthritis ? to estimate the costs of lost productivity. They also show how to do a break-even analysis to determine when employers' investments in health interventions are likely justified.

Reassessing the Japanese Distribution System

Abstract: Japan's distribution systems, long the target of criticism, are changing. Deregulation, new manufacturing imperatives, consumer behavior, and the economy have interacted to reshape Japanese distribution. The trends have important implications for global business, since the system now offers areas of opportunity for Western manufacturers and retailers.

The Case for Expressive Systems

Abstract: A new kind of information system is emerging that will reduce the time to market, help tailor products and services to customers' needs, and make processes more responsive to unexpected events. Expressive systems allow users to adapt quickly and easily to exceptions from standard operating procedure. The authors describe how expressive systems work and suggest ways of modifying the roles and structure of IS departments to implement the new technology.

CEO Thought Summit

Abstract: On October 28, 1994, the MIT Sloan School and Price Waterhouse cohosted a roundtable discussion among CEOs, PW partners, and Sloan faculty. Walter Kiechel, then managing editor of Fortune, moderated the discussion, which focused on the organization in the year 2020 - its size, structure, leadership, and mission. The conversation, of which we publish only a small portion, was split into three sessions. The first focused on forces of change. In the second, Sloan professor Thomas Malone presented two scenarios for how organizations might develop, and the participants reacted to them. Peter Senge, director of MIT's Center for Organizational Learning, then proposed characteristics that tomorrow's organizations will need to foster, and the group responded to those. As in any lively, wide-ranging conversation, several themes emerged and reemerged in different forms, as the session progressed. Which is harder to manage, technology or people? Which matters more? Will the trend toward radical outsourcing continue, or are we learning that, by outsourcing, we lose control? Are organizations increasingly unpleasant places to work? Will the gap between the haves and the have nots continue to grow and, if so, at what price?