18. April 2015
Source: The Economist
Subject: Management theory: Survival of the fittest
THE MODERN THEORY of the firm is the theory of the public company: obsessed with questions such as transaction costs but blind to questions of transmitting wealth to future generations. In numerical terms, this emphasis on the public company is clearly a mistake. Its triumph is limited to the Anglo-Saxon world. The economies of most of the rest of the world—developed as well as emerging—continue to be dominated by family-focused businesses that control a wide range of companies, not just individual firms.
It is also out of date. Talk of the triumph of the Anglo-American public company might have made sense in the post-war era when the British empire still had a glow and the American Century was in full swing (though family companies continued to flourish in both countries). It makes far less sense in an increasingly integrated Europe and in rapidly emerging markets. The world’s fastest-growing region, Asia, is dominated by powerful business houses run by families. Though some of these could no doubt benefit from more focus, a significant number are Schumpeterian entrepreneurs destined for success, thanks to a rare combination of risk-taking and long-termism. Read the rest of this entry »
3. April 2015
Source: The Economist: Free exchange
Subject: Meeting up
WORKING life often seems like an endless sequence of tiresome meetings. Catch-ups, kick-offs and reviews litter the calendars of most professionals. Effectiveness around the conference table can determine success in almost every career. Chief executives spend a third of their time in pow-wows of one sort or another, by one estimate. Monetary policy is usually set by committee; juries deliberate behind closed doors before voting. Yet despite our reliance on meetings, most decisions made by committee are subject to serious and pervasive bias.
In 1785 the Marquis de Condorcet, a French mathematician and philosopher, noted that if every voter in a group has a better-than-even chance of choosing the preferable of two options, and if voters do not influence each other, then large groups of voters are very likely to make the right choice.* The bigger and more diverse the group the better: more people bring more information to the table which, if properly harnessed, leads to improved decisions. But ever bigger meetings imply more time spent in them: few workers would welcome that. And even with more people in the room, all manner of behavioural flaws stand in the way. Read the rest of this entry »
5. June 2014
May 13, 2014
It’s no secret that big data offers enormous potential for businesses. Every C-suite on the planet understands the promise. Less understood—and much less put into practice—are the steps that companies must take in order to realize that potential. For all their justifiable enthusiasm about big data, too many businesses risk leaving its vast potential on the table—or, worse, ceding it to competitors.
Big data has brought game-changing shifts to the way data is acquired, analyzed, stored, and used. Solutions can be more flexible, more scalable, and more cost-effective than ever before. Instead of building one-off systems designed to address specific problems for specific business units, companies can create a common platform leveraged in different ways by different parts of the business. And all kinds of data—structured and unstructured, internal and external—can be incorporated.
Yet big data also requires a great deal of change. Businesses will have to rethink how they access and safeguard information, how they interact with consumers holding vital data, how they leverage new skills and technologies. They’ll have to embrace new partnerships, new organization structures, and even new mind-sets. For many companies, the challenge of big data will seem as outsized as the payoff. But it doesn’t have to be.
In engagements with clients of The Boston Consulting Group, we’ve found it helpful to break down big data into three core components: data usage, the data engine, and the data ecosystem. For each of these areas, two key capabilities have proved essential. (See Exhibit 1.) By developing the resulting six capabilities, today’s businesses can put in place a solid framework for enabling—and succeeding with—big data:
- Data Usage: Identifying Opportunities and Building Trust. Companies must create a culture that encourages experimentation and supports a data-driven ideation process. They need to focus on trust, too—not just building it with consumers but wielding it as a competitive weapon. Businesses that use data in transparent and responsible ways will ultimately have more access to more information than businesses that don’t.
- The Data Engine: Laying the Technical Foundation and Shaping the Organization. Technical platforms that are fast, scalable, and flexible enough to handle different types of applications are critical. So, too, are the skill sets required to build and manage them. In general, these new platforms will prove remarkably cost-effective, using commodity hardware and leveraging cloud-based and open-source technologies. But their all-purpose nature means that they will often be located outside individual business units. It’s crucial, therefore, to link them back to those businesses and their goals, priorities, and expertise. Companies will also need to put the insights they gain from big data to use—embedding them in operational processes, in or near real time.
- The Data Ecosystem: Participating in a Big-Data Ecosystem and Making Relationships Work. Big data is creating opportunities that are often outside a company’s traditional business or markets. Partnerships will be increasingly necessary to obtain required data, expertise, capabilities, or customers. Businesses must be able to identify the right relationships—and successfully maintain them.
In a world where information moves fast, businesses that are quick to see, and pursue, the new ways to work with data are the ones that will get ahead and stay ahead. The following six capabilities will help get them there.
Read the rest of this entry »
16. May 2013
Source: The Economist
As the world grows more confusing, demand for clever consultants is booming
ELITE management consultancies shun the spotlight. They hardly advertise: everyone who might hire them already knows their names. The Manhattan office that houses McKinsey & Company does not trumpet the fact in its lobby. At Bain & Company’s recent partner meeting at a Maryland hotel, signs and name-tags carried a discreet logo, but no mention of Bain. The Boston Consulting Group (BCG), which announced growing revenues in a quiet press release in April, counts as the braggart of the bunch.
Consultants have a lot to smile about (see table). The leading three strategy consultancies have seen years of double-digit growth despite global economic gloom. In 2011, the last year for which Kennedy Information, a consulting-research group, has comparable revenue numbers, Bain grew by 17.3%, BCG by 14.5% and McKinsey by 12.4%. All three are opening new offices.
Big trends that befuddle clients mean big money for clever consultants. Barack Obama’s gazillion-page health reform has boosted health-care consulting; firms would rather pay up than read the blasted thing. The Dodd-Frank financial reform has done the same for financial-sector work. Energy and technology are hot, too.
Companies are reluctant to talk about their use of consultants, and consultancies are relentlessly tight-lipped. Bain is said to use code-names for clients even in internal discussions. Such secrecy makes this a hard industry to analyse.
It also lets stereotypes flourish. McKinseyites are said to be “vainies” (who come and lecture clients on the McKinsey way). BCG people are “brainies” (who spout academic theory). And the “Bainies” have a reputation for throwing bodies at delivering quick bottom-line results for clients.
In fact, the big three all learn from each other. All three now use their alumni networks to gather intelligence and generate business—something McKinsey is famous for. All three stake some of their fees on the success of their projects, a practice once associated with Bain. And all three show off their big ideas to the wider public, as BCG’s founder was once among the few to do. Read the rest of this entry »