Management thinkers disagree on how to manage complexity

28. November 2013

Date: 27-11-2013
Source: The Economist: Schumpeter

THERE can be few better places to talk about complexity than Vienna. This was the capital of the most complicated political organisation yet seen: the Austro-Hungarian Empire. It was also the centre of some of the most convoluted cold-war spy games. On November 14th and 15th hundreds of management enthusiasts converged on the Austrian capital to debate the subject. They had little interest in the complexities of the Habsburgs or the cold war. They were preoccupied instead by two points: that business is more complicated than ever before; and that managing complexity is at the top of businesspeople’s agenda.

Whether they were right about the first point is debatable. In the 18th century it took six months for letters to travel from East India House in London to Calcutta and back. Today, supply chains can be managed in real time, and masses of data can be crunched instantly at the touch of a button. But they were right about the second. Businesspeople are confronted by more of everything than ever before: this year’s Global Electronics Forum in Shanghai featured 22,000 new products. They have to make decisions at a faster pace: roughly 60% of Apple’s revenues are generated by products that are less than four years old. Therefore, they have a more uncertain future: Harvard Business School’s William Sahlman warns young entrepreneurs about “the big eraser in the sky” that can come down at any moment and “wipe out all their cleverness and effort”. Read the rest of this entry »


Batteries: Going viral

22. November 2013

Date: 21-11-2013

Source: The Economist

Modified viruses help researchers boost battery performance

BUILDING a better battery has become an intense area of research. A device that could store more power in the same amount of weight as widely used lithium-ion cells could, for instance, allow smartphones to run for weeks on a single charge or an electric car to be driven non-stop for hundreds of kilometres. Among the alternatives being explored, lithium-air batteries are a favourite. But they can be tricky to make and unreliable. Now researchers have found a way to overcome some of those shortcomings with the help of genetically modified viruses.

Using viruses to make batteries is not new:

Angela Belcher and her colleagues at the Massachusetts Institute of Technology (MIT) demonstrated in 2009 that it was possible by getting modified viruses to coat themselves with the necessary materials required for the anode and cathode in a small button-sized lithium-ion cell.

Lithium-air batteries oxidise lithium at the anode and reduce oxygen at the cathode to induce a current flow. Because the oxygen comes from the air there is no need for some of the relatively heavy internal materials used in other types of battery. That promises a greatly increased energy density (the amount of power that can be stored in a given weight of battery).  Read the rest of this entry »


Closing the Skills Gap

21. November 2013

Date: 21-11-2013
Source: Project-Syndicate

MONA MOURSHED

Mona Mourshed leads McKinsey & Company’s global education practice.

WASHINGTON, DC – In an age of skyrocketing unemployment, it may seem reasonable to assume that companies do not have to worry about finding workers. But a recent McKinsey survey of more than 2,800 employers worldwide has underscored just how flawed that perception is. Four out of ten employers said that they cannot find workers to fill entry-level positions in their firms, with more than one-third of respondents saying that their businesses are suffering from a lack of appropriate skills in the labor market.

Meanwhile, young people worldwide are struggling to find jobs. While the eurozone crisis helps to explain why more than half of young people in Greece and Spain are unemployed, rapidly growing economies like South Africa and Nigeria are experiencing similar rates of youth joblessness. In the Middle East and North Africa, one in three young people are unemployed. And, in the United States, roughly half of bachelor’s degree-holders under the age of 25 were jobless or underemployed upon graduation last year.

All of this points to the costly skills mismatch at play in today’s economy. In the US alone, the opportunity cost of failing to improve education would amount to $1.7 trillion by 2030. Similarly, by bridging its growing skills gap, China could augment its GDP by $250 billion by 2020. So why isn’t more being done to ensure that young people acquire the skills they need?

The problem is rooted in divergent perceptions among the various players in the labor market. More than 70% of the educational institutions surveyed by McKinsey believe that their graduates are ready for the job market; more than half of employers and young people disagree. Closing this gap requires that educators and employers work together more closely. Employers should communicate their requirements to educators; educators need to give their graduates the tools that will enable them to meet these requirements. The problem is missed connections, so the solution is to make more of them. Read the rest of this entry »


Amazon’s Greatest Weapon: Jeff Bezos’s Paranoia

16. November 2013

Date: 15-11-2013
Source: The Wall Street Journal

BezosJeff Bezos, CEO of Amazon

Let me ask you to do something scary: Imagine you’re Jeff Bezos and you’ve just spent the morning studying your retail empire. How do you feel? Do you brim with confidence? Or do you harbor profound, unshakable paranoia about the rivals storming your gates?

I’m betting you’re paranoid. Indeed, I suspect your paranoia explains the frenzy of expansion that has gripped Amazon.com Inc. over the past few years, from its new effort to launch Sunday delivery to its move into grocery service to providing instant, face-to-face technical support on the Kindle Fire.

What could Mr. Bezos possibly have to fear? Impermanence. Mr. Bezos is in an industry, retail sales, in which every innovation is instantly pored over and copied, in which (thanks partly to him) margins are constantly driven to zero, and in which customers are governed by passing fancy and whim. Being online confers fantastic advantages to Amazon, but it also comes at a deep cost: Very little about its business is burned into customers’ minds.

Hence, frenzy: Amazon is in a race to embed itself into the fabric of world-wide commerce in a way that would make it indispensable to everyone’s shopping habits—and to do so before its rivals wise up to its plans. Read the rest of this entry »


Gartner Says It’s the Beginning of a New Era: The Digital Industrial Economy

13. November 2013

Date: 12-11-2013

Source: Gartner

Analysts Discuss How Digitalization is Unleashing New Capabilities, During Gartner Symposium/ITxpo 2013, October 6-10, in Orlando

Worldwide IT spending is forecast to reach $3.8 trillion in 2014, a 3.6 percent increase from 2013, but it’s the opportunities of a digital world that have IT leaders excited, according to Gartner, Inc. Peter Sondergaard, senior vice president at Gartner and global head of Research, explained today to an audience of more than 8,000 CIOs and IT leaders at Gartner Symposium/ITxpo, that the digital world is here.

This results in every budget being an IT budget; every company being a technology company; every business is becoming a digital leader; and every person is becoming a technology company. This is resulting in the beginning of an era: the Digital Industrial Economy. 

“The Digital Industrial Economy will be built on the foundations of the Nexus of Forces (which includes a confluence and integration of cloud, social collaboration, mobile and information) and the Internet of Everything by combining the physical world and the virtual,” said Peter Sondergaard, senior vice president at Gartner and global head of Research.

“Digitalization exposes every part of your business and its operations to these forces. It is how you reach customers and constituents; how you run your physical plant; and how you generate revenue or deliver services. Enterprises doing this today are setting themselves apart and will collectively lead the new Digital Industrial Economy,” Mr. Sondergaard said.

Economic Impact of the Internet of Things Read the rest of this entry »


Leading in the 21st century: An interview with Hertz CEO Mark Frissora

12. November 2013

McKinsey Insights, November 2013MFrissorasm

The digital revolution has dramatically affected how rental-car companies do business, as Hertz CEO Mark Frissora explains 

Since joining Hertz as chief executive officer, in 2006, Mark Frissora has helped negotiate a major merger, implemented new technologies that will change the company’s business model, and, most recently, announced plans to move Hertz’s headquarters from New Jersey to Florida. Hertz, whose fleet consisted of just 12 Model T Fords when the company began in 1918, is now the largest publically traded rental-car operator in the United States. In an interview with McKinsey’s Rik Kirkland, Frissora discusses the enduring importance of understanding what’s happening on any company’s front line, how the car-rental business is continuing to evolve, and why organizations ignore technology at their peril.

McKinsey: Hertz has nearly 41,000 employees and more than 10,000 locations worldwide. How do you balance the need to think strategically with the challenges of running such a logistically complex business?

Mark Frissora: I often hear people say, “As a CEO, you can’t get too involved in the day-to-day operations of your business. That’s micromanaging.” My response is, “I have to get ‘too involved’ in the business because I’m setting the strategy. If I don’t understand the business, then I’m a poor manager and I’ve failed as a leader.” It’s critical that leaders spend a lot of time where the work actually gets done—that they get into the guts of the business and see what happens there. The further down the chain you go, the easier it is to see how your strategy might not work the way you’d intended. You might even discover that the strategy itself is backwards. You always walk away with a new insight or a new opportunity.

McKinsey: How do you ensure that you spend enough time on the front line?

Mark Frissora: I’m on the road about 60 percent of the time. I always try to stop in at the Hertz counter in the airport. And about three times a year, I take my whole team to visit our call center. We have lunch with about 25 call-center supervisors, and then we spend an hour listening to different types of customer-service calls—roadside assistance or reservations, for example. It’s critical to plug yourself into the call centers. Read the rest of this entry »


B-school remorse: When the degree is just not worth it

9. November 2013

Date: 09-11-2013
Source: Fortune

Mariana Zanetti had been working as a product manager for Shell (RDSA) in Buenos Aires when her husband got a promotion to a new job in Madrid. One of her colleagues, a Harvard Business School graduate, suggested that the Argentina native go to business school for her MBA while in Spain.

She took his advice, enrolling in the one-year MBA program at Instituto de Empresa (IE) Business School In Madrid. Zanetti borrowed money from her family to pay for the degree. And when she graduated in 2003, it took her a full year to land a job as a product manager at a Spanish version of Home Depot, at exactly the same salary she was earning three years earlier, without the MBA.

For years, Zanetti says, she wanted to write a book on her experience but didn’t out of fear that it would hurt her career, which included stints as a product manager for Saint-Gobain and ResMed, a medical supplier. Now that she has left the corporate world, Zanetti says, she can tell the truth about the MBA degree.

Her take, in a self-published book called The MBA Bubble: It’s just not worth the investment. “There is an education bubble around these kind of degrees,” she says. “I don’t think they have much impact on people’s careers. There are exceptions, of course, in management consulting and investment banking, where the MBA is always valued. But for the rest, it’s a nice-to-have degree. It’s not that it is harmful to you, but every market expert I interviewed for the book says that what is needed today is specialized knowledge and skills, and an MBA is generalist training.” Read the rest of this entry »


How Airlines Mine Personal Data In-Flight

8. November 2013

Date: 08-11-2013
Source: The Wall Street Journal

Flight Attendants Are Likely to Know What Fliers Will Buy on Board

aircraft passengerAirlines are finally starting to learn to use their wealth of customer data, meaning frequent fliers should soon expect flight attendants to know their birthday, how they like their coffee, and what they’re likely to buy onboard. Jack Nicas reports on the News Hub.
One day soon, frequent fliers should expect flight attendants to know their birthdays, how they like their coffee, and what they’re likely to buy on board.

After years of dithering, airlines are learning to use the wealth of customer data they collect. Greater stability in an industry long roiled by bankruptcies is enabling carriers to invest in technology to personalize the flying experience and better target promotions. But the airlines sometimes struggle to do all that without making customers uncomfortable.

On some airlines, flight attendants armed with tablet computers will soon have far more data on fliers at their fingertips, including their allergies, seat preferences and whether the carrier lost both their bags last trip. Airlines’ marketing pitches are also becoming more relevant, in part based on customers’ online-browsing history, their likes on Facebook and their income.

“Data is key to almost everything we’re doing,” says Maya Leibman, chief technology and information officer at AMR Corp.’s American Airlines. But with the push into data, she says, the carrier is learning to walk the line “between providing excellent customer service and suddenly becoming creepy.” Read the rest of this entry »


Here’s Why You Shouldn’t Invest in Twitter

7. November 2013

Date: 07-11-2013
Source: The Wall Street Journal

TwitterTwitter’s rise is a remarkable story but that doesn’t mean you should invest in its’ much-hyped IPO, High Definition columnist Farhad Manjoo says on digits.

Twitter Inc.’s rise has been a remarkable story. Both because it was beset by chaos (see Nick Bilton’s new book for the operatic details) and because, despite the chaos, Twitter has somehow managed to become a legitimate, even straitlaced business, its IPO is a good time to congratulate the firm on its unlikely success.

But it isn’t a good time to invest in Twitter when it starts trading Thursday. Here are three reasons to sit this one out:

Don’t invest in individual stocks. Especially don’t invest in tech IPOs. This isn’t tech advice, just widely accepted financial wisdom for normal, non-professional, non-gambling investors: Buy index funds and forget about picking. And, really, it’s the first and the last reason for you to stay away from TWTR. If you’re no expert, don’t pit yourself against the experts.

Right now, there are hundreds of stock analysts, market researchers, advertising gurus and other people who are being paid vast sums to determine whether and how much to invest in Twitter. Going up against them is a loser’s game, and you shouldn’t play. Read the rest of this entry »


Why a strategy is not a plan

5. November 2013

Date: 05-11-2013
Source: The Economist

Strategies too often fail because more is expected of them than they can deliver

EVERYONE, it seems, is in need of a strategy. Governments have lots of them: strategies for health care, energy, housing, and so on. Each area of policy is made to seem more purposeful if there is a strategy behind it. Similarly, no company these days would dare to admit it lacks one. If things are going badly it will often be put down to the lack of good strategy. People even talk about using it to improve their lives—from coping with stress to losing weight or just making other people like them more.

Over time, the word “strategy” has been drained of meaning by ubiquity and overuse. Sir Lawrence Freedman’s aim in his magisterial new book, “Strategy: A History”, is to find a workable definition of what strategy is and to show how it has evolved and been applied in war, politics and business. Above all, he argues, it is about employing whatever resources are available to achieve the best outcome in situations that are both dynamic and contested: “It is about getting more out of a situation than the starting balance of power would suggest. It is the art of creating power.” Read the rest of this entry »