High Performance Companies E-Book

Nitin Pangarkar

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 350

Veröffentlichungsjahr: 2011

Beschreibung

The easy-to-adopt strategies that make companies from Coca-Cola to Starbucks perennial over-performers and that you can use, too High Performance Companies complements the frameworks for strategy making detailed in many existing books, proposing a number of rules of thumb (or principles) that companies can consider when making their day-to-day decisions which, in turn, will determine their actual strategies. These principles traverse a wide range of scenarios, such as strategic changes implemented by companies, resource allocation decisions--especially towards building durable assets--and resource acquisition through inorganic means. The book adopts a reader-friendly approach by teasing out the lessons to be found in detailed cases studies from interesting companies. The writing minimizes jargon while maintaining rigor, especially with regard to the applicability and relevance of the strategic principles to different business contexts. * Cites extensive evidence in support of the proposed arguments, without sacrificing readability * Combines both short and long case studies within each chapter to demonstrate the general applicability of the principles presented * Uses a variety of examples ranging from well-known companies such as Coca-Cola, Singapore Airlines, and Starbucks to relatively lesser known companies such as Illinois Tool Work, SAS Institute, and Heng Long Leather to show that the principles presented are applicable everywhere Providing valuable new insight into what makes a business successful and how to replicate this in a company of any size, High Performance Companies is an essential addition to the library of any manager or student of business.

Leseprobe

Contents

Foreword

Preface

Acknowledgments

Chapter 1: My Motivations

Introduction and Positioning

A Book on Strategic Principles: The Idea

Organization of the Book

The Final Word

Chapter 2: Discover Diamonds among Coals

Resources, Firm Strategy, and Performance

Mittal Steel: Discovering Diamonds among Coals—Consistently!

The Final Word

Chapter 3: Build Durable Assets

Durable Assets and Performance

Tiger Balm: Durable Assets Withstand Twenty Years of Neglect

The Tiger Balm Case and Its Implications for a Strategy Based on Durable Assets

The Final Word

Chapter 4: Focus on Small Wins

Big Hits, Big Flops, and Their Performance Implications

Illinois Tool Works: Scoring Big with Numerous Small Wins

The Final Word

Chapter 5: Integrate to Innovate

The Importance of Innovation

Innovation Strategies

Innovation through Integration

SAS Institute: The Consummate “Integrator”

Fanuc: Industry Dominance through Integration and Innovation

The Final Word

Chapter 6: Advance (Strategically and Competitively) During a Crisis

Crises as Common Events

Top Managers and Crises

The Tylenol Crisis and Johnson & Johnson

Toyota Fumbles

Singapore Airlines (SIA): Proactive Management of Crises

The Final Word

Chapter 7: Beware of the Incremental (Strategic Change)!

Importance of Strategic Change and Its Performance Implications

Mixed Performance Outcomes of Strategic Changes at Starbucks and McDonald’s

Strategic Changes and Their Performance Implications at Tupperware

The Final Word

Chapter 8: Strategic Principles in a Nutshell

Strategic Principles and Their Relevance

Some Common Themes (and Factors) Across the Examples

In Conclusion

Index

Copyright © 2012 by John Wiley & Sons (Asia) Pte. Ltd. All rights reserved.

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Library of Congress Cataloging-in-Publication Data

ISBN 978–0–470–83010–9 (Hardcover)

ISBN 978–0–470–83012–3 (ePDF)

ISBN 978–0–470–83011–6 (Mobi)

ISBN 978–0–470–83013–0 (ePub)

I dedicate this book to the three generations who have

influenced me tremendously:

My (late) parents (Shri V.M. Pangarkar and Mrs. S. V. Pangarkar);

My siblings (Shobha, Anand and Prakash) and my wife (Ashwini); and

My children (Natasha and Anish).

Foreword

I take great pleasure in introducing this book. Professor Nitin Pangarkar has distilled the wisdom of many years of academic experience and training into a wonderful set of extremely practical and sensible principles. The book is a fascinating read and should appeal to many different profiles of readers. Any student of business, executive with an interest in strategy, or general managers with responsibilities for managing a business would find the book useful on a multiplicity of counts. I note four of these distinctive counts below.

First, the book is very easy to read, but with very significant lessons, replete with simple but illuminative illustrations. Very often strategy books have a tendency to get lost in jargon. This book takes a refreshingly distinctive take on the problem of strategy. Rather than developing complex frameworks it focuses on simple, but broadly generalizable principles. Perhaps even more important than simplicity is relevance. And on that count Professor Pangarkar identifies a set of fairly generalizable “strategic best practices” that are meaningful for most businesses. Thus, in the first instance, the book is notable for its combination of simplicity and insight.

A second feature of the book that I commend is the amazing breadth and depth of illustrations. In addition to detailed case studies that form the centerpieces of the individual chapters, every chapter contains many illustrations. Even more compelling, is the fact that the illustrations are drawn from a variety of contexts ranging from developed to emerging economies and from well known famous companies to relatively lesser known businesses. The book is probably unique in this respect, of drawing from such a variety of contexts. In addition to helping ground the concepts of the book for managers these illustrations will serve as a treasure trove for instructors also.

In addition to the wonderful illustrations a particularly useful aspect of the book is the detailed case studies. By fleshing out the key concepts through the context of a fairly deep case study, the book helps to really ground the concepts and enable their articulation in a detailed enough fashion that the reader can make a thoughtful attempt at executing the idea. This focus on rich detail that is necessary for execution is remarkable.

A fourth aspect of the book worth noting is the actual content of the principles. The principles are valuable not just because they reflect logical, sensible thinking, but also because even though they are fundamental, they are often ignored. As an illustration consider Professor Pangarkar’s first principle—buying assets on the cheap. It is amazing how simple this is and how commonly it is violated. Indeed the history of mergers and acquisitions (M&A) consists of a plethora of violations of this advice. The other principles are similarly essential but often underemphasized or ignored. But for me to say more would be to hold the reader back from the feast that waits. So without much further ado let me hold the door open. . . .

Gautam Ahuja

Harvey C. Fruehauf Professor of Business Administration, Professor of Strategy

Stephen M. Ross School of Business

University of Michigan, Ann Arbor

Preface

Over the past eighteen years, I have conducted strategy sessions in a number of different contexts—undergraduate and graduate classes, executive programs, and managerial conferences, among others. I have enjoyed these interactions, and the participants also seem to enjoy learning about strategic issues. While conducting these sessions, I have made a number of observations about how strategy ideas and content can be best delivered in the classroom as well as applied by managers, which has led me to write the present book.

As scholars in the strategic management discipline, we like frameworks and, consequently, we have had a proliferation of these frameworks. Sometimes, the frameworks are conceptually dense and/or complex, which may imply that practicing managers wishing to apply the frameworks have not comprehended them (or at least their subtleties/nuances) fully. Also, despite their analytical value in terms of comprehensiveness and strong theoretical foundations, many frameworks are difficult to translate into specific actionable recommendations.

In this book, I have aimed to address the above issues. The following are my main reasons for doing so:

1. I do not propose a new framework since I think we have several excellent ones already. I propose key “principles” instead, which, hopefully, can be directly applied by managers to improve their companies’ strategies and performance.

2. I believe that simplicity and implementability are valuable traits for any strategy advice or book. I have strived to keep the language and presentation simple and readable, and I have made conscious efforts to think about the implementability of the ideas I have proposed here.

3. I have also aimed to include novelty and diversity regarding the companies mentioned in the book. My informal checking (discussions with my colleagues and students) suggests that fewer of them have heard about companies such as Fanuc, ITW, YKK, and SAS Institute than the frequently cited GE, Google, and Apple.

I sincerely hope that the readers will take away useful (and implementable) ideas from this book.

Acknowledgments

I have been teaching many of the ideas on which this book is based for the past several years. Some of these ideas emerged from classroom discussions, others from academic discussions with colleagues (e.g., about our experiences with cases and specific topics), and yet others from my general reading. The thought of converting these ideas into a managerial book came to me in early 2010. Fortuitously, one of our MBA graduates, Debesh Sharma, was available for doing research work on the ideas so that they could be fleshed out. I thank Debesh for doing the research on some of the early chapters of the book, providing his comments on early drafts of some of the chapters, and also for serving as a sounding board for whether some of the ideas would be interesting and valuable for managers.

Several other people, including MBA alumni, friends in the corporate sector as well as in academia, and some of my own family members, also read through parts of the book and provided valuable comments. Ravi Prakash from Accenture (India), an alumnus of our MBA program, read through all of the chapters and provided feedback. Sriram Srinivasan of JOil (Singapore) and Dr. Chung Yuen Kay of the NUS Business School (Singapore) also commented on three chapters each. My cousin, Mrs. Saranga Netke, not only read the chapters but also served as the chief cheerleader—her positive comments spurred me on and diminished my self-doubts about the value and the readability of the book. Additionally, several people provided detailed comments on a couple of chapters each, including Ramesh Sankar of DBS (Singapore), Rishi Khasgiwale of Mentor Graphics (USA), Ajay Pathania of Asia Pacific Centre for Management Education (Singapore), and Ashish Kalay of Airtel (India). Their comments gave me specific and concrete ideas about improving the book with regard to writing, readability, and presentation.

While writing the book, I did less than my fair share of work at home, and all of my family, especially my wife Ashwini, picked up the slack. Our daughter Natasha not only read through several chapters but also gave me ideas about making it reader friendly. I consulted her extensively to come up with short (and hopefully punchy) chapter titles. Her assistance is gratefully acknowledged. Our son, Anish, prodded me to push harder by often asking about how many pages I had finished writing and comparing my progress to the “target page count.”

I am also grateful to the several well-known managers and academics who read through the “finished article” and were kind enough to make positive remarks about the book. These include Gautam Ahuja of University of Michigan, who wrote the foreword and Grace Lee (CitiGroup Private Bank), Alok Mishra (Johnson and Johnson), Will Mitchell (Duke University), Srinidhi Raghvendra (Straits Financial) and Carl Zeithaml (University of Virginia) who provided endorsements for the book. Last, but not least, I am grateful to several people at John Wiley and Sons (Singapore). My publisher, Nick Wallwork, put the book proposal through a rigorous review process, and his suggestion about adding an extra chapter was indeed an excellent one; though it made me work longer and harder, I believe the extra chapter made the book more complete. Melissa Smith, the editor assigned by Wiley, helped tremendously in making the book better. I am also grateful to Joel Balbin for helping with the production process (and patiently responding to all my requests) and Jules Yap for serving as the point of contact at the proposal stage and being understanding when I asked for more time to finish the book.

Despite all the help I received from this diverse set of people, the book is bound to have its own rough edges and flaws, for which I am solely responsible.

Nitin Pangarkar

Singapore

Chapter 1

My Motivations

Introduction and Positioning

Companies around the world aim to achieve sustained superior performance. Managers and analysts believe that a sound and robust strategy, in addition to serving as a roadmap to guide management,1 can also contribute to sustained superior performance.2 In their book Strategy Execution is the Key to Success, Robert Kaplan and David Norton (2008) argued that 70 percent of organizations that used a formal process to manage their strategy out-performed their peers.3 In fact, a good strategy can lead to superior performance regardless of context—in industries characterized by varying growth prospects or technological characteristics (e.g., high technology versus low technology), different levels of competitive intensity, and even across different countries. Frequently cited examples of companies achieving excellent performance through the deployment of a sound strategy range from Google and Apple in the high technology space, to Nestlé in foods, to Tesco and McDonald’s in retail and services.

The furniture retailer IKEA and the budget airline Southwest serve as excellent examples of how a sound strategy can result in superior performance, even in competitive industries. Both companies have been the subjects of numerous articles in the academic arena and the popular press. In their article in the Harvard Business Review, Richard Normann and Rafael Ramírez (1993) examined the key elements of IKEA’s strategy and their implications for IKEA’s performance. Regarding IKEA’s business model innovation in the furniture retailing industry, they observed, “IKEA has blossomed into the world’s largest retailer of home furnishings by redefining the relationships and organizational practices of the furniture business.”4 In the following discussion, I will detail a few aspects of IKEA’s strategy and that strategy’s performance implications.

IKEA’s strategy revolves around the key insight of selling disassembled furniture in flat-packs, which, being less bulky, can be procured from the most cost-efficient sources around the world. Both the design and the procurement processes at IKEA are geared towards achieving low costs, with the purchasing managers scanning the globe for more efficient suppliers and using their large volume as a bargaining chip to drive down costs. In the year 2010, for instance, the company sourced its products from 1,074 suppliers in fifty-five countries. These key strategic thrusts are coupled with a global presence that increases purchasing volume (thus reducing procurement costs), excellent global management in terms of product mix (with 70 percent standardized and 30 percent localized items), sharing of talent (expatriate managers spreading the IKEA culture), as well as leveraging of the good ideas (e.g., an idea such as a children’s play area, which originated in one store, is implemented in all IKEA stores) and innovative and impactful marketing (see ). In 2010, more than 197 million copies of the IKEA catalogue, an important aspect of its marketing strategy, were printed in twenty-nine languages and sixty-one editions. The common look and feel of these catalogues combined with innovative brand campaigns and catchy slogans (e.g., in Singapore: “You don’t have to be rich to be clever”; and, in the US, around the time of President Obama’s inauguration, IKEA ran a campaign with the tagline, “Fiscally responsible furnishings for all, Embrace change”) contributed significantly to the reputation of the IKEA brand, ranked 35th most valuable in the world by with a brand value (in 2008) of US$10.91 billion.