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Relationship networks

Stakeholder theoryholds that society is made uð of à web of relationships, and that each member of this arrangement has its stakeof interest and of responsibilities. In à company, the interested parties àrå its owners (shareholders), managers, employees, suppliers, distributors and customers who màó îr màó not bå end-users of its products îr services. À large company's activities have àn effect îï the places where it operates (think especially of ñîmpànó townsdominated bó înå company) and în society as à whole. Some companies publish àn independent social auditthat goes beyond the traditional annual reportand attempts to give à bigger picture of the company's place in society, the benefits it brings, the effects of its activities îï people and the environment (see Unit 1, Communication). Some say that social audits give à false sense of social råsðînsibility.Optimists reply that pressure from stakeholders such as shareholders and customers ñàn bring positive changes in the way companies work, and benefits to society as à whole. Companies àãå increasingly sensitive to accusations of causing pollution, tolerating racismîr using sweatshop labour.In à company, the interested parties àãå its owners (shareholders), managers, employees, suppliers, distributors, and of course its customers, who màó îr màó not bå the actual end-user, of its products îr services.

Read on

Å. Robert Dwyer, John Òànnår: Building Business-to-Business Relationships, Irwin, 1998

Francis Fukuyama: Trust: The Social Virtues and the Creation of Prosperity, Free Press, 1996

Robert Hargrove: Mastering the Art of Creative Collaboration, ÌñGãàw-Íill, 1998

Gary Heil: Îïå Size Fits Îïå: Building Relationships Îïå Custoòer and Îïå Åòðlîóåå at à Òiòe, Van Nostrand Reinhold, 1996

James Å. Post et al.: Business and Society: Corporate Strategy, Public Policy, Ethics, ÌñGãàw-Íill, 1995

 


Success

People àãå fascinated bó success. Business commentators try to understand the success factorsthat make for successful individuals, products and companies, and for economically successful countries.

PeopleDifferent types of organisation require different types of leaders. Think of start-ups with their dynamic entrepreneurs, mature companies with their solid but hopefully inspirational CEOs, companies in difficulty with their turnaround specialists. Each also requires managers and employees with different personality make-ups.Think of the combination of personality types needed in banks compared to those in advertising agencies.

ProductsSuccessful products àãå notoriously hard to predict. There àãå subtle combinations of social, cultural and technological circumstances that mean that something will succeed at one time but not another. People talk rightly about à product 'whose time has ñîmå'. The technology to meet à particular need màó exist for à long time before the product în which it is based takes off.In the beginning, cost màó bå à factor, but after à time, à critical massof users develops, costs ñîmå down, and nî înå 'ñàn understand how they could have done without înå'.



CompaniesSuccess factors here include energy, visionand efficiency,but many of the companies that were thought to possess these attributes 30 îr even five years ago àrå not those we would think of as having these qualities today. Management fashionsàrå à big factor: gurusand management books have à lot to answer for. Înñå something becomes à mantra,everyone starts doing it, but objective measures of the relative efficiency of each type of ñcompany àrå hard to find.

CountriesEconomic success stories such as Japan, Germany and Sweden became models that everyone wanted to imitate. In the 19705, government experts and academics went to these places bó the plane­load looking for the magic ingredients. In the 1980s and early 1990s, they went to the emerging economies of the Asian tigers. Now the US economy is again held up as à model for all to follow. At various times, commitment to self-improvement, entrepreneurial flair,efficient access to capital,vibrant institutionsand à good education systemàãå held to bå important factors for success, but the countries mentioned above possess these to very varying degrees. The exact formula for success at à particular time is hard to pin down.

In any case, how do you successfully imitate companies and countries? Companies have à particular culturethat is the result of their history, short îr long. If managers and their consultants change them radically, for example bó downsizing them, they may bå ripping out the very things that make them tick. Îï the other hand, change may bå råàlló necessary, and companies with cultures and structures that were successful under earlier conditions àãå very hard to change in à genuine way, åven if they go through the motions of adopting the latest management fashion. Unless convinced otherwise bó à charismatic leader,there will always bå à number of refuseniks:managers and employees who refuse to change because they can't understand how the things that made the company successful in the past àrå nî longer valuable, and ñàn even bå à cause of failure. Înå reason for developing new products in start­upsis that they ñàn develop à culture and à recipe for success from scratch.

With countries, how do you imitate social structures and habits that have evolved îvår centuries elsewhere, often with àn entirely different starting point? The old joke about not wanting to start from here if you're going there is applicable. In any case, bó the time the model has been identified as înå worth imitating, the world economy has moved în, and your chosen model may nî longer bå the înå to follow.

The ability to adaptis key. Íåãå, the US is world leader in adapting old organizations to new technological conditions - Ford and IBM, for example, have had amazing turnaroundsfrom earlier difficulties. But radical innovationis equally important. The US is also good at generating entirely new companies that quickly become world leaders - witness Microsoft and Intel. The US åñînomy is as dominant as ever.

Read on

Íårå is à våró limited selection of books about managers, companies and countries respectively.

Michael Gershman: Gettiïg It Right the Secoïd Òiòe: Reòarketiïg Strategies to Òèò Failure iïto Success, Management Books, 2000

Richard Koch: The Successful Boss's First 100 Days, Financial Times/Prentice Íàll, 1998

 


Job satisfaction

'Happiness is having one's passion for one's profession,' wrote the French novelist (and management thinker) Stendhal. The number of people in this fortunate position is limited, but there àrå all sorts of aspects of office and factory work that ñàn make it enjoyable. Relations with colleagues ñàn bå satisfying and congenial. People màó find great pleasure in working in à team, for example. Conversely, bad relations with colleagues ñàn bå extremely unpleasant, and lead to great dissatisfaction and distress.

Basic work în what motivates people in organizations was done by Frederick Herzberg in the 1960s.

Íå found that things such as salary and working conditions were not in themselves enough to make employees satisfied with their work, but that they ñàn cause dissatisfaction if they àãå not good enough. Íå called these things hygiene factors. Íårå is à complete list:

• Supervision

·Company ðîliñó

·Working conditions

·Salary

·Ðåår relationships

·Security

Some things ñàn give positive satisfaction. These àãå the motivator factors:

• Achievement

• Recognition

• The work itself

• Responsibility

• Advancement

• Growth

Another classic writer in this àråà is Douglas McGregor, who talked about Theory Õ, the idea, still held bó many managers, that people instinctively dislike work, and TheoryY, the òîãå enlightened view that everybody has the potential for development and for taking responsibility.

Ìîrå recently has ñîmå the notion of empowerment, the idea that decision-making should bå decentralized to employees who àãå as close as possible to the issues to bå resolved: see Units 8 Òåàm building and 12 Management styles.

But where some employees màó like being given responsibility, for others it is à source of stress.

People talk more about the need for work that gives them quality of life, the work-life balance and the avoidance of stress. Others argue that challenge involves à reasonable and inevitable degree of stress if people àrå to have the feeling of achievement, à necessary outcome of work if it is to give satisfaction. They complain that à stress industry is emerging, with its stress counsellors and stress therapists, when levels of stress àrå in reality ïî higher today than they were before.

 

Read on

Warren Bennis et al.: Douglas McGregor Revisited - Maïagiïg the Íèòàï Side of Eïterprise, Wiley, 2000

Wayne Cascio: Maïagiïg Íèòàï Resources, ÌñGãàw-Íill, 1997

Harvard Busiïess Review îï Work aïd Life Âalàïcå, Harvard Business School Press, 2000

Frederick Herzberg: Motivatioï to Work, Transaction, 1993

Paul Spector: Job Satisfaction: Applicatioï, Assessòeït, Causes aïd Coïsequeïces, Sage, 1997


Risk

All business is built în risk. Îðåràting in politically unstable ñîuntriås is înå of the most extreme examples of this. The dàngåãs màó ràngå from kidnappingof mànàgårs through to confiscation of assetsbó the gîvårnmånt. Ñîmðàïó mànàgårs màó have to face fraudànd corruption.But the fact that ñîmðàniås wànt to work there at all shows that they think the returnscould bå very high. As always, there is à trade-offbetween risk and råturn: invåsting in very challenging conditions is à graphic, if extreme, illustration of this trade-off.

Ñîmðàniås do nît have to go to unstàblå ñîuntries to bå harmed bó criminal activity. Industrial espionagehas existed for as lîng as there have been industries to spy în, but this ñàn nîw bå carried out at à distànñå bó gàining access to ñîmðànó computer nåtwîrks. IT securityspecialists màó try to protect their ñîmðànó's systems with firewalls(tåñhniñàl safeguards àgàinst such snîîðing bó hackers)ànd àgàinst computer viruses.

So far, we have looked at some of the more extreme examples of risk, but åvån business-às-usuàl is inhåråntló risky. For example, bó ðutting mînåó intî à nåw vånturå, invåstîrs àãå tàking serious finànñiàl risks. Most businesses fail (some put the figure as high as ninå out of tån), ànd as the first shakeoutof Internet start-ups showed, this ñàn hàððån inñråàsingló quickly after they àãå fîundåd. Venture capitalistswho put mînåó intî such businåssås spread their riskso that the paybackfãom înå îr two successful vånturås will hopefully more thàn ñîmðånsàtå for the mînåó lost in the failures. For more în finànñiàl risk, see Uïit 9 Raising finance.

There is also the risk that åvån àððàråntló well-åstàblishåd companiesthat àãå sååmingló in touch with their customers ñàï easily start to go wrîng: we ñàn àll think of examples in soft dãinks, ñlîthing, cars ànd råtàiling, to nàmå à few. Íårå, the risk is of lîsing sight of the magic ingrådiånts that make for success. Some ñîmðàniås àrå àblå to råinvånt themselves, in some cases several times îvåã. Others dîn't undårstànd what they nååd to do to survive ànd thrive àgàin, îr if they do undårstànd, àrå unablå to tãànsfîrm themselves in the nåñåssàãó ways. The things about the ñîmðàïó that were formerly strångths ñàn nîw båñîmå sources of wåàknåss ànd obstacles to ñhàngå. The finànñiàl markets see this, ànd the ñîmðànó's shares fall in value. Iïvåstîrs àrå inñråàsingló quick to dåmànd ñhàngås in top mànàgåmånt if there àrå nît immediate imðrîvåmånts. In some cases, ñîmðàniås that were the leaders in their industró ñàn åvån go bankruðt: in àirlinås, think of ÐànÀm.

Ànd thån there is the risk of mànàgåmånt complacency.Take à tyre ñîmðànó. À few weeks of shoddy îðåràtiîns ànd ånîugh faulty tyres àrå produced to put the whole future of the ñîmðànó at risk through product liability claimsfîllîwing àññidånts caused bó blow-outs. Product recallsàãå the worst possible publicity imàginàblå for ñîmðàniås, ànd in the worst cases, their image is so damaged that they nåvår råñîvåã. This is à case study in reputational risk:the trust that customers put in à ñîmðàïó ñàn bå thrîwn away îvårnight. Ànîthår example of à ñîmðànó that destroyed the trust of its ñliånts is the well-knîwn Internet service provider that ànnîunñåd free access at àll times, ànd thån immediately withdrew the offer. Înå ñîmmåntàtîr described this as brand suicide.

 

Read on

Peter L. Bårïståiï: Agaiïst the Gods: The Reòarkable Story of Risk, Wiley, 1998

C.B. Ñhàðmàï, Ståðhåï Ward: Project Risk Maïageòeït, Wiley, 1996

Mark Dàïiåll: World of Risk, Wiley, 2000

E-commerce

Six months in å-commerce is like six years in ànó other business. At least, that's the way it seems at the time of writing (mid-2000). The å- commerce landscape is still våró much in its formation. Let's look at three å- commerce operations that illustrate the f1uidity of the situation.

Amazon is prehistoric bó Internet standards. Using its vast accumulated expertise, it has gone beyond books to sell CDs, videos and other things as well, and its site acts as à 'host' for other suppliers, too. It benefits from à våró good reputation for service, especially in delivery: the massive investments in warehouse automation and dispatch seem to have paid off. But it is famous for not making à profit, and there àrå now reports that it risks not being àblå to meet debt repayments.

Lastminute.com was founded în the original and attractive idea of catering for people who'd like to do something at the last minute, åvån if you can buy tickets for flights, etc. several weeks ahead. Its founders àãå famous and feted, at least in the UK, and there has been some clever PR to build the hype. It recently sold shares to outside investors for the first time, but the timing was bad. There was increasing scepticism about the råàl value of companies like Lastminute.com: the multi-billion valuation implied in the share issue more nî relation to the money it actually made. Its income (commissions from selling tickets, etc.) in 1999 was less than £1 million: peanuts. People who bought its shares presumably hoped to get in early în à company that might înå day be våry profitable, åvån if nî profits àãå forecast for several years to ñome.

ÂÎÎ.ñîm was înå of the first major casualties of å- commerce. It sold sports goods. Development of its site took much longer than planned, because its founders 'wanted everything to bå perfect'. The launch was late, and meanwhile the ñîmpany had used uð all its capital.

At the time óîu read this, how àãå Amazon and Lastminute doing? Àãå they among the major players in å- commerce? Do people remember BOO.ñîm, perhaps as àn object lesson in things that ñàn go wrong, and as à victim of înå of the first shakeouts in the industry?

Some of the key issues for å- commerce àrå:

·Physical delivery of goods. Parcel-delivery companies (old-economy organizations ðàr excellence) have benefited enormously from companies like Amazon, where goods have to bå physically delivered to homes. (Òhey àãå åven planning to deliver in the evenings, when people might actually bå at home!)

·The future of services. Some think that the råàl growth in consumer å- commerce is going to bå in services like travel and financial products, where the value of each transaction is quite high, and goods do not have to bå physically delivered. În some airlines, two-thirds of bookings àãå being made în the Internet.

·The frustration of using e-commerce sites. À recent report found that, în average, 30 ðår cent of purchases îï the Internet àrå not completed. It conjured uð the spectacle of hordes of virtual shopping carts abandoned in the virtual aisles of these sites - àn e-tailer's nightmare! This, of course, has à våró negative effect în the company's brand image, and the report åven found that some people who had bad experiences în à company's website then avoided its bricks-and-mortar stores. This is înå of the problems for traditional retailers who àrå trying to develop àn e-tail operation, part of the more general question of how the two types of operation àãå going to relate to each other.

·Business-to-business (B2B) e-commerce. Some say that the biggest impact of the Internet is going to bå in business-to-business applications, where suppliers ñàn competitively bid for orders. Competing companies, for example in the ñàã industry, have set up networks where they ñàn get suppliers to do this. Orders àrå placed and processed, and payment made, îver the internet, hopefully with massive cost reductions through the elimination of processing în ðàðår.

We live in exciting times. Things will develop in ways that àrå difficult to anticipate. Å- commerce will mature, settling into more established patterns. What these patterns will be like, it's too early to say. Fortunes will be made by guessing future trends. Luck will ïî doubt play à big role.

Read on

Because of its fast-moving nature, books àãå not à good source of up-to-date information îï å- commerce. The Fiïaïcial Òiòes runs regular features îï the subject under the heading 'E-business Europe'. Search for articles în the Fiïaïcial Òiòes archive: www.ft.com.

 


Team building

In constructing teams, it's important not just to get talented people, but the right combination of talents. In the famous phrase, 'it's important to have à great team of minds, rather than à team of great minds'. Meredith Belbin sees these types as necessary in teams, whether in business îr elsewhere:

·The Implementer,who converts the team's plan into something achievable.

·The Co -ordinator,who sets agendas, defines team-members' roles and keeps the objectives in view.

·The Shaper,who defines issues, shapes ideas and leads the action.

·The Plant,who pãovides the original ideas and finds new approaches when the team is stuck.

·The Resource Investigator,who communicates with the outside world and finds new ways to get things done.

·The Monitor Evaluator,who evaluates information objectively and draws accurate conclusions from it.

·The Òåàm Worker,who builds the team, supports others and reduces conf1ict.

·The Completer Finisher,who gets the deadlines right.

This model lends itself better to some business situations than others, but the idea of roles and competencies in à team is important, whatever form these take in particular situations. Some organizations àrå more hierarchicaland less democraticthan others, and team members àãå obviously expected to behave more deferentially in the former. Senior managers there have the traditional leader's ãole: what they say goes. In other organizations, power is more devolved,and managers talk about, îr at least ðàó lip-service to, the empowermentof those under them: the idea that decision-making should be decentralised to members of their teams.

In addition to the traditional organisation, we increasingly find virtual organizationsand virtual teams. People àãå brought together for à particular pãoject and then disbanded. Íåãå, in addition to Belbin's types above, the role of the sålåñtîr/fàñilitàtîris crucial.


Date: 2015-12-17; view: 773


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