Enjoy the Holidays

I’d like to wish a Merry Christmas to everyone who celebrates, and Happy Holidays to the rest. Thank you for reading MaximumCEO.

The Future of Strategy

HARVARD BUSINESS ONLINE—Many organizations would benefit from a blended approach that combines entrepreneurship with execution. In small startup companies, successful entrepreneurs innovate, take risks, and solve problems as they arise. The same approach can work in big companies. “Entrepreneurial” acknowledges the need for local invention and risk-taking, but places it in a broader context of strategy execution. It presumes that all workers have something to add to the success of their organizations (and in this age of well-educated knowledge workers, it’s likely that they do).

But in addition to innovation, high-performing organizations need some degree of alignment around strategic goals and objectives. Many aspects of this approach are similar to the strategy execution of Toyota, which is clearly the most successful automobile firm, and one of the world’s most successful companies. Read article.

How the Cooling Economy Is Stealing Target’s Christmas

THE NEW YORK TIMES—It was supposed to be a Target Christmas. Buffeted by high energy costs and a slowing housing market, consumers were expected to trade down from midpriced department stores, like Macy’s and Nordstrom, to discount retailers with designer cachet — Target’s undisputed terrain.

But instead of dominating this holiday season, Target is muddling through it, perplexing rival merchants and Wall Street analysts, who consider the chain a bellwether and are scrutinizing its performance for clues on the health of the economy.

In two of the last three months — September and November — Target’s sales growth has slipped below 1.5 percent, well under its historical average and lower than its biggest rival, Wal-Mart Stores. Read article. 

Why Firing Your Worst Customers Isn’t Such a Great Idea

KNOWLEDGE@WHARTON—Fire your bad customers.That piece of advice has become widely accepted in recent years as companies have sought to manage their relationships with customers in more sophisticated ways. The rationale for this idea is clear-cut: Low-value customers — such as the ones who hardly spend any money on your services or products yet tie up your company’s phone lines with questions and complaints — end up costing more money than they provide. So why not jettison them and focus your customer-relationship efforts on more profitable individuals? Or, as an alternative, why not at least try to increase the worth of the low-value customers to your firm? If a firm has only valuable customers, the thinking goes, its profitability and shareholder value should increase.It all sounds quite rational, and many corporations have jumped on the bandwagon. But a new study by two Wharton marketing professors, Jagmohan Raju and Z. John Zhang, and Wharton doctoral student Upender Subramanian, cautions that firing low-value customers may actually decrease firm profits and that trying to increase the value of these customers may be counterproductive. Read article.

For a Top-Tier University, There’s Now Room to Get Even Better

THE NEW YORK TIMES—As Columbia University officials doggedly pursued their plan to acquire 17 acres a few blocks north of their main campus in Manhattan, they often pulled out a chart showing their pint-size 36-acre campus stacked up against those of competitors like Harvard, Princeton and Yale, whose campuses are measured in the hundreds of acres.

The New York City Council’s approval of a rezoning plan Wednesday that clears the way for the expansion in Manhattanville, in Harlem, will still not put Columbia into the big leagues on space. But Lee C. Bollinger, Columbia’s president, says it will give the space-starved university enough room to hold its own for decades to come in an increasingly competitive arena.

“The key to preserving and enhancing Columbia’s greatness is space,” Mr. Bollinger said on Thursday. “It’s always space and resources. But in this case, space was critical.”

He added that while the university had used space deftly — and would probably rank highest if universities were judged on creativity per square foot — it had pretty much reached the limit. Read article.

Mao and the Art of Management

THE ECONOMIST—Books on management tend to define success in the broadest possible terms—great product, happy employees, continuous improvement, gobs of profits, crushed competitors. Even when words such as “excellence” and “success” are omitted from the title, they are often implicit. A case in point is the book which many would say defined the genre, Alfred Sloan’s “My Years with General Motors”, published in 1963 when GM was still an iconic company and Sloan correctly acknowledged as the architect of the well-run, decentralised, global corporation.

But focusing on how the best produce the best has its limits. Most managers, after all, do not stitch an industrial triumph from a vast bankrupt junkyard, as Sloan did. They do not delight their customer, crush competitors and create vast wealth. They struggle. They stumble. Read article.

Marketing is the Tax You Pay for Being Unremarkable

CNET—Robert Stephens, founder and chief inspector of The Geek Squad, contends that “Marketing is a tax you pay for being unremarkable.” Does marketing smell bad? Or is it perhaps even dead? There have been a number of articles recently that question the marketer’s ability to make sense of his/her somewhat wishy-washy role. BusinessWeek reveled in the “short life of the CMO,” and McKinsey Quarterly provided some stats that reveal how much today’s marketing executives are grappling with the new social media environment, arguing that “many chief marketers still have narrowly defined roles that emphasize advertising, brand management, and market research.” No wonder even marketing guru Seth Godin has turned negative and asks in his new book whether “your marketing is out of sync.”

Clearly, marketing needs some serious marketing. Conferences that seek to redefine (and thus strengthen) marketing’s role are therefore burgeoning: The American Marketing Association offers seminars such as “Beyond Marketing 2.0: Harnessing the Power of Social Media for Marketing Campaign Results,” Forrester’s Marketing Forum 2008 heralds “engagement” as the profession’s “new imperative for success,” and the humbly titled THE Conference on Marketing (well, I guess it makes sense if you consider marketing the function of superlatives) aspires to be the penultimate forum for marketing leaders who “seek certainty in experimental times.” In the meantime, Seth Godin has it all figured out and presents “14 trends marketers need to embrace to avoid eating meatball sundaes.” Read article.

The State of Innovation

BUSINESSWEEK—For most business leaders, the dusk of 2007 is a time of transition and, well, uncertainty: Will the U.S. dollar continue its slide? How deeply will the problems of the home mortgage market affect the broader international economy? Do China, Google, and the next presidential administration pose threats or opportunities?

But when it comes to “innovation,” there is at least some agreement among senior executives. This year, surveys from three leading consultancies—Boston Consulting Group, McKinsey & Company, and Booz Allen Hamilton—show innovation remains a high priority for most corporate leaders around the world.

There’s consensus across industries that innovation is a key growth driver. Unfortunately, the surveys also reflect a broad belief that most companies don’t have the leadership, systems, or tools to successfully and consistently innovate. Read article.

Eight business technology trends to watch

MCKINSEY QUARTERLY—Technology alone is rarely the key to unlocking economic value: companies create real wealth when they combine technology with new ways of doing business. Through our work and research, we have identified eight technology-enabled trends that will help shape businesses and the economy in coming years. These trends fall within three broad areas of business activity: managing relationships, managing capital and assets, and leveraging information in new ways. Read article.

The Shape of Trends to Come

THE GUARDIAN—Trend-spotters and futurologists have become the evangelists of the modern business world. Spend more than 10 minutes listening to their breezy uplift about what is around the corner, however, and two questions begin to well up inside you – how come they know this stuff, and how does one go about separating the wheat from the chaff? Built into the discipline, after all, is a tendency to exaggerate the shock of the new: it helps to drum up business. And by the time their prognostications have failed to materialise, it is safe to predict that most of them will have scarpered.No matter. The business of short-range futurology – that hybrid of science and intuition that reads the runes of business and consumer trends in an effort to predict what will whistle its way into the mainstream within the next 12 to 18 months – is now in high demand. So what do the crystal-ball gazers reckon will be the top 10 trends of 2008? Read article.

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