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Showing posts from September 27, 2015

Volkswagen success: thanks to its strategy

At a time when Volkswagen is battling dozens of lawsuits, I'm talking about what made the company great. Bad timing perhaps, but why stop learning from the company's strength?

Volkswagen owes its success to: its STRATEGY.

And the strategy? Cars share components.

Karan Girotra and Serguei Netessine writing in HBR say, "Although the strategy does not protect the company from general demand swings, it reduces demand variability for individual components, because shared components make it easy for VW to switch production at its plants from one model to another whenever the demand for car model shifts."

Would Cleveland Clinic have gone from good to great without Kara's political incorrectness?

CEO of the mighty Cleveland Clinic, Dr Toby Cosgrove is a pioneering surgeon who had operated on over 22,000 patients. He just finished delivering a speech to Harvard students.

The students admired the speech, but Kara Barnett stood up and said, "Dr Cosgrove, my father needed surgery, but we decided NOT to go to your hospital in spite of your great results because we heard you had no empathy."

Kara was politically incorrect. She not only said something offensive about someone and his institution that the world considered the best, but embarrassed Harvard that brought an outstanding speaker.

Dr Cosgrove responded, "Not really" and moved on. However, Kara's statement kept his mind busy. He imagined redefining medicineas patients experienced it rather than as what hospitals provided. He questioned the very foundations of doctors' specialist silos. What he eventually did changed the lives of many. His change initiative was hugely risky, challenging, and inspiri…

We know very little about strategy translation

Today we may know what strategy means, but "we know a lot less about translating a strategy into results (HBR, March 2015)." Here, strategy translation means strategy execution. The latter comprises many activities including project management, which many managers have mastered. But "execution" includes the critical activity of "embedding" targeted strategic outcomes. Without this, you could be brilliantly managing the wrong project. There is even less information available about this critical activity.

Strategy Map: the Marriott example

Talking about Marriott's much-admired employee-first culture, CEO Arne Sorenson says that this culture "drives loyalty of our folks, which drives better service, which drives customer preference. which drives higher retention, which reduces costs."

The flow is obvious: from Assets to Process Performance to Customer Value to Financial Performance. A nice example of how to use Strategy Maps (Kaplan & Norton)!

Strategy: keeping focus while widening product range

Two examples ...

1. Carlos Ghosn wants to move Nissan from good to great. His STRATEGY: “mobility for all.” By that he means, being present in every market in the world and in every segment in every market. So, the Nissan alliance produces 110 different models in 170 different markets.

2. Jonathan Goldberg wants BBL Commodities Value Fund to keep an eye on short-term opportunities as well as on the horizon. His STRATEGY: Trade oil “across the barrel” — refined products as well as crude itself.

We have to wait for their financial results to see how well their strategy is working. In the meantime, I love their compelling mottos expressed in just 3 words and yet covering both focus and range! Take another look.

Does treating employees well hurt the bottom line?

In many cultures (mostly non-Western), top management denies basic employee rights or even basic human rights because they believe this is how they can grow and make profits. WRONG.

Companies on Fortune's 100 Best Companies to Work For are "shining examples of a different way of doing business that puts to rest the old notion that treating employees well might hurt the bottom line." One example: the Marriott philosophy: "Take care of associates, and they will take care of the customers."

Consider the 12 companies that have made the Fortune list every year since they published the first in 1998 ... They're the top job creators ... They outperformed the S&P 500 index by a ratio of nearly 20 to 1 ... They're winners in the marketplace as well as in the workplace!

Source: Fortune, March 15, 2015