a tour of new features

presenting

What Management is ?

1The book 2Key Insights

Scope

Mai

n Th

emes

Design

• Value Creation• Business Models• Strategy• Organization

Execution

• Facing Reality• Mission &

Measures• Innovation• Delivering Results• People

Management

Patt

ern

used

in th

e bo

ok Contemporary and historical Context

Pro and against Cases

Questions addressed

Key Insights

Design

Valu

e Cr

eatio

nManufacturing Mindset

Marketing Mindset

Value creation - a system

Valu

e Cr

eatio

n

Manufacturing mindset

Efficiency as focusMade large-scale manufacturing possible

Dehumanizing and deskillingNarrow in focus – inward looking – market dynamics not considered

Valu

e Cr

eatio

n

Marketing Mindset

Who is the customer

What customer wants / needs

How much will he pay

Valu

e Cr

eatio

nMaximizing shareholder value

Increased accountability of managementIncreased focus on customers to be successful

Quarter to quarter existenceCreative accounting practicesAbsence of long term ownership and org building initiatives

Valu

e Cr

eatio

nConcept of Value chain# discount brokerage# budget carriers

Managing the Supply chain# taking responsibility for the whole flora and fauna# building partnerships beyond organizational boundaries to tap

commercial value – value engineeringimprove efficiency (JIT)Increase predictability /security

Maximizing shareholder value

Valu

e Cr

eatio

n

Business

Customer

Employees Shareholders

Community

Value Creation – a system

Busi

ness

Mod

els

A successful business model

Some Compelling storiesAMEX ,Eastern ExclusivesEbay

Business Models for Non-ProfitElderhostel

Busi

ness

Mod

els

BusinessCustomer

Employees

Shareholders Community

Upstream Manufacturers

Downstream Franchisees

A successful business model – Key players

Busi

ness

Mod

els

Eastern Exclusives

Small Businesses (more reach)

Students (convenien

ce)

Hostel (reputation)

Eastern Exclusives

(gains brand value)

Busi

ness

Mod

els

Ebay

Sellers(more reach)(better price discovery)

Customers (convenience)

(value)

Ebay (no inventory)

(fee based model)

Small businesses (providing associated services)

Busi

ness

Mod

els

Elderhostel

Increase in AffluenceFocus on comfort

Trainings and

boarding at appropriate

cost

Provide a sense of

community

Low cost trainings

Provide a sense of

community

Low cost boarding

Less affluentFrugal life style

Stra

tegy

Better by being different

Strategy and Performance

Game of strategy

Strategic trade-offs

Stra

tegy

Key Insights

Perfect Competition Monopoly

Stra

tegy

Blue Ocean or Red Ocean - WalmartKey investment decisions to improve logistics

A pyrrhic victoryCase of Japanese Consumer Electronics manufacturer Too Successful - Dairy Farmers in UK

Moderation in success – prolonging success – prolonging the value capture

Mission creep TNC

Key Insights

Org

aniz

ation

Important Factors

Manage or buy

Global Scale

Non-profit – tackling societies problems

Org

aniz

ation

# Ronald Coase – Make or buy depends on cost effectiveness

# Does an efficient market always serve the intended purpose?# NBA

# GM vs Ford – Different times, different strokesFord – Assembly line 1908 - 1912Sloan – multi-division corporation 1940

# Standardization as design & Backward integration – Aravind Eye Hospital

# Design should match the mission

Key Insights

Execution – Key to Excellence

Faci

ng R

ealit

yMaking sense of the numbers

Plan

DoCheck

Act

# Measure should be an integral part# Different stakeholder require different measures# Measurements are a guide# should always be read in context

Mis

sion

and

Mea

sure

sIn search of the holy grail – the universal measure

ROI / EVA/ EBIT et al - measure to fit the context - matching measures to mission – case of Fidelity Insurance

ROIC – Case of Dell (return on invested capital)

Battling the broken windows – NYPD

Key Insights

Mis

sion

and

Mea

sure

sTNC – Fish creek projectMission – maintain bio-diversity -Save mussels

Key Insights

New Short term indicator- land under no-till method of

agricultureMedium term indicator – silt

levels in the riverLong term – size of mussell

population

Old measure - number of acres of land under

conservationFunds raised

Mis

sion

and

Mea

sure

sGE – Mission and Measures

Fix/close/sell

Customer satisfaction /

employee satisfaction /cash

flow

Redefine markets

Six-sigma

Shake up complacence

To improve confidence

To ensure that gaming of the system is reduced

As core philosophy of the organization

Inno

vatio

n &

Unc

erta

inty

Good management is entrepreneurialentrepreneur -> Anti-malthusian – optimistic-upbeat -> self-confident -> good management

Apollo13 – using constraints as catalysts – Nano?

Surviving the numbers – Payback / NPV/Discounted cash flow etc. – xerox and alto

Del

iver

ing

resu

ltsPareto’s law – 80 %results /20 %areas

Resource allocation – Fighting inertia– Intel’s story from DRAM to Processors

The discipline of letting go – ignoring sunk costs

Competing with yourself – beating yesterday

# walmart

Peop

le M

anag

emen

tManaging the organization culture

#setting an example# communications KISS# organizational folklore

The golden rule : Trust# verizon – actions and statements

Respect for the individual# as current and future stakeholders

# improves brand valueSelf management

# feedback & coaching