Bringing ‘Lean’ Principles to Service Industries

THE MCKINSEY QUARTERLY—India’s rapid economic growth has set the stage for fundamental change among the country’s consumers. The same energy that has lifted hundreds of millions of Indians out of desperate poverty is creating a massive middle class centered in the cities. A new study by the McKinsey Global Institute (MGI) suggests that if India continues its recent growth, average household incomes will triple over the next two decades and it will become the world’s 5th-largest consumer economy by 2025, up from 12th now. (The full report, The ‘Bird of Gold’: The Rise of India’s Consumer Market, is available free of charge online.) Along the way, spending patterns will shift significantly as discretionary purchases capture a majority of consumer spending. India’s potential should make it a high priority for most consumer goods businesses, but to succeed in this complex market they must overcome major challenges. Read article.

It’s Not Easy Building Green

D/VISIBLE—On 21st Street, between Fifth and Sixth Avenues in Brooklyn-NYC, New York USA, there is a grey building that doesn’t quite fit with the rest of the scene at first glance. Its stucco facade hits your eye differently than the brick apartment buildings and the old church that neighbor it. This building aforementioned is by no means abrasive like the latest, ultramodern additions to the South Slope (the neighborhood formerly known as Greenwood Heights), but it’s calm rectangles and asymmetrically patterned windows tell you that it’s something newer than its neighbors—it is, in fact, one of Brooklyn’s first green buildings. It is an Energy Star-honored building; its bamboo floors, energy-efficient heating system that adjusts with the outside temperature, recycled carpet, and recycled tire roof decking are just a few of this apartment’s green amenities. Read article.

What Great Managers Do

HARVARD BUSINESS ONLINE—You’ve spent months coaching that employee to treat customers better, work more independently, or get organized—all to no avail.

How to make better use of your precious time? Do what great managers do: Instead of trying to change your employees, identify their unique abilities (and even their eccentricities)—then help them use those qualities to excel in their own way.

You’ll need these three tactics:

Continuously tweak roles to capitalize on individual strengths. One Walgreens store manager put a laconic but highly organized employee in charge of restocking aisles—freeing up more sociable employees to serve customers.

Pull the triggers that activate employees’ strengths. Offer incentives such as time spent with you, opportunities to work independently, and recognition in forms each employee values most.

Tailor coaching to unique learning styles. Give “analyzers” the information they need before starting a task. Start “doers” off with simple tasks, then gradually raise the bar. Let “watchers” ride shotgun with your most experienced performers.

The payoff for capitalizing on employees’ unique strengths? You save time. Your people take ownership for improving their skills. And you teach employees to value differences—building a powerful sense of team. Read article.

Redefining Business Casual

THE NEW YORK TIMES—As fashions go, casual Friday at workplaces has had a good run for more than a decade, popular perhaps because employees could dress for the weekend a day ahead of time.

“There are no rules on Friday. ‘I can wear whatever I want,’ they’re saying,” as Mark-Evan Blackman, chairman of the Fashion Institute of Technology’s menswear design department, put it. “But of course total freedom is not allowed. Some companies say you can wear jeans. Others say khakis and corduroys.”

But there are signs that companies, and many of their employees, are tiring of the informality that casual Friday inspired and getting back to serious dressing.

“I see a return to more traditional business wear,” said Gary Brody, president of the Marcraft Apparel Group, which champions suits and ties. “People dress up more in times of financial uncertainty and intense competition. It helps their sense of stability.”

In place of sartorial anarchy, companies are falling back on “business casual” to serve as a guide for all five days of the workweek. Read article.

In Praise of Middle Management

BNET—Who needs CEOs? Not Vince Thompson. While he says they are valuable in raising money and getting a company started, middle management is where the real action is. That’s where you get a real understanding of a company’s strengths and weaknesses as well as what its customer needs are. Here, Thompson shares lessons learned about how to revolutionize your company from the middle out. View video feature (8 minutes).

Selling Your Ideas to the Entire Organization, One Person at a Time

KNOWLEDGE@WHARTON—Former Chrysler chairman Lee Iacocca once noted, “You can have brilliant ideas; but if you can’t get them across, your ideas won’t get you anywhere.” In their new book, The Art of Woo: Using Strategic Persuasion to Sell Your Ideas, Wharton legal studies and business ethics professor G. Richard Shell and management consultant Mario Moussa provide a systematic approach to idea selling that addresses the problem Iacocca identified. As an example of effective persuasion, they tell the story of rock star Bono’s visit to then-Senator Jesse Helms’ Capitol Hill office to enlist his help in the global war against AIDS.

Examples such as this one illustrate what Shell and Moussa mean by “woo”: It’s the ability to “win others over” to your ideas without coercion, using relationship-based, emotionally intelligent persuasion. “The rock star Bono is superb at the art of woo because he understands what it takes to be a super-salesman, in the best sense of that term,” says Shell. “Here you have a rock star with tinted glasses and an elderly, conservative Southern senator. But when Bono had the good sense to switch from public policy talk about debt relief — what we call in our book the ‘rationality’ channel — to religious talk about poverty and disease — what we call the ‘vision’ channel — he touched Helms’ heart. He sold his idea and, in the process, created trust.”

Why Global Brands Work

HARVARD BUSINESS SCHOOL—Ford has finally woken up to what Toyota knew a long time ago: the power of a single global brand.

Over 20 years ago, Harvard professor Theodore Levitt praised Japanese manufacturers for their focus on “what every consumer in the world is seeking: world-class modernity at affordable prices.” Either because they didn’t understand regional differences in consumer preferences or out of self-confidence, Toyota, Nissan, and Honda sold standard products under a single brand umbrella.

For decades, Ford adapted its manufacturing platforms, features, and model names from one country to another. The results: added manufacturing and supply chain costs that strained consumers’ willingness to pay; a balkanized bureaucracy in which regional managers exaggerate the need for local adaptations to defend their turf; and a deteriorating market share, financial performance, and stock price. Read article.

Radiohead’s Free-for-all: Performance Art or New Business Model?

KNOWLEDGE@WHARTON—Radiohead, the British rock band, sent shock waves through the music industry recently when it announced that it would release its latest album online, without a record label, and let fans pay whatever they wanted to for it — including nothing at all. For Radiohead, this means that the group doesn’t have to pay recording, marketing or overhead costs and it gets to keep the entire price of each album sold, not just a small fraction of it. But what does this mean for the industry in general? As one AP reporter put it: “Depending on what side of the digital divide you sit, this action can mean one of two things, the end of the music business as we know it, or the dawn of the music business’s second life.” Knowledge@Wharton asked Wharton marketing professor Peter Fader and Don Huesman, senior director of information technology at Wharton, for their reactions to Radiohead’s move. An edited transcript follows the video. Read article.

Something New Under the Sun

THE ECONOMIST—Innovation, long the preserve of technocratic elites, is becoming more open. This will be good for the world, argues Vijay Vaitheeswaran

“A crisis is a terrible thing to waste,” Vinod Khosla laments to Larry Page. The two Silicon Valley luminaries are chatting one evening at the Googleplex, the quirky Californian headquarters of Google. The crisis which Mr Khosla is concerned about is caused by carmakers’ addiction to oil and the consequent warming of the planet. “The energy and car industries have not been innovative in many years because they have faced no real crisis, no impetus for change,” he insists.

The two are plotting what they hope will be the next great industrial revolution: the convergence of software and smart electronics with the grease and grime of the oil and car industries. Mr Khosla is kicking around his plans for getting “chip guys” together with “engine guys” to develop the clean, software-rich car of the future. Such breakthroughs happen only when conventional wisdom is ignored and cross-fertilisation encouraged; “managed conflict”, in his words. Read article.

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