Monday, December 27, 2004

Is Business Managment about Analysis?

MBA courses and Strategy consultants operate on the assumption that Management is about analysis. Professor Henry Mintzberg has recently pointed out that it is even more about synthesis. To this, I would add that it is about insight as well. The best analysis is worthless without both of the latter.

Saturday, December 18, 2004

What do companies under attack have in common with Michael Jackson?

Over the years, from Detroit when Ralph Nader seized on them for safety, to drug companies when pharmaceuticals are found to be be dangerous; tobacco companies denied that cigarettes caused lung cancer and food companies that too much eating causes obesity, we see the same patterns. Top management thinks that if they repeat their defense often enough and loudly enough they can drown out the critics. They often even believe it is true. However, this is parallel behavior to Michael Jackson continuing to spend social time with children after being accused of pedophila. Whether true or not, the appearance of impropriety or bad behavior may be all that it needed. Unfortunately, lawyers may advise denial, but this only serves to increase the enormity of the crime in the public's eyes. The manufacturer's of silicone breast implants denied any fault, and while there is still scientific doubt, the public condemmed them. Asbestos manufacturers denied all flaws. The public believes that corporations lie, and certainly that any data which seems to prove innocence that comes from the company, or is sponsored by it, is unlikely to be true. Any inaccuracy or ambiguity in the data is the end of any credibility the company has.

Comanies should not stonewall, and have to make the public part of the solution.

Sunday, December 12, 2004

Irrational actions

People persist in trying to explain their own and the actions of others in rational, logical, terms. Sometimes, they are so clearly nonsensical that we ascribe them to psychological or characterological disorders. People may have thinking which is so distorted by psychoses, neuroses, or character issues, that that are incapable of thinking and reacting logically. However, on a lesser level, most of us behave in ways which are the result of past experiences. Just as the burnt child fears the flames, so we may associate some rational act with something which turned out badly, and so we avoid performing it.

This carries over to interpersonal relations as well as business decisions. Knowing yourself objectively is the only way to avoid this.

Sunday, December 05, 2004

Why is a 175 year old soap company in Cincinnati, Ohio, the most consistently innovative company on earth?

In each year, business magazines publish lists of the top companies in each field of excellence. Books, dating from In Search of Excellence to Built to Last, extol the virtues of this company or that. Yet over its 175 year history, Procter & Gamble has demonstrated an ongoing eagerness to challenge the accepted wisdom and reinvent itself. From organizational innovation, such as the creation of the Marketing function and invention of the Brand Manager. It has created new tools of business, from mundane promotional tools to moving close to WalMart in a new defintion of supply chsin efficiency, or creation of the Tremor process to harness word-of-mouth to build businesses. It has a record of innovation in new products, from new potato chips to the spinbrush, which is unequalled in business.

The fundamental reason for this is the company's eagerness to challenge all that has gone before. It assumes that if something has been done for a number of years, it can probably be done in a better way. This is rare in any organization, and while other companies try to copy Procter & Gamble, the very thought process of "copying" means it starts off on the wrong footing.

Thursday, December 02, 2004

Walmart's Remedial action

Today, the company announced that it would divert advertising to tell people about its low prices. On August 19th, I pointed out that the attacks on the company for not treating people well merely reinforced its image for low prices. However, WalMart put a lot of effort into telling the world how much it spends on the social good such as education, healthcare, and training. As one might expect, this effort has backfired, and the company has to shift the balance yet again.

Beware of unintended consequences. The results of an action are rarely exactly what you predict.

Wednesday, December 01, 2004

Things change all around us and we do not see it.

We are creatures of three dimensions, and all spacial ones. Although we move through time, we live in the present. We rarely have the ability to step back and see the sweep of time. a very few humans have the ability. H.G. Wells was one. Olaf Stapledon in his 1930 novel "last and First Men" covered the future history of mankind over 2 million years! In his later novel, written in 1937, "Starmaker," he covered the history of mankind in a couple of paragraphs!

So we forget thst the top ten discount retailers of 1962, the year of WalMart's foundation are none of them in existence. We find it difficult to imagine the sweep of time so that even the most imaginative prognosticators are wildly wrong. The future of the computer, the phone, film and even distribution channels and book publishing have been poorly predicted. Yet while this realization may not make us better forecasters, it does not even make us more wary about the predictions of others.

Of course, if anyone could predict the future their dreams would be dismissed as signs of insanity.