First Look

Publications

Ownership Quotient: Putting the Service Profit Chain to Work for Unbeatable Competitive Advantage

Abstract

Ownership behaviors have a profound impact on profit and growth. Customer/owners are those who actually recommend a company's products or services, recruit new business, and provide constructive feedback resulting in product, service or process improvements. Employee/owners recruit talent to an organization while also providing ideas for new or improved products, services, and processes. A customer/owner may be worth more than a hundred customers with more casual relationships with an organization. A series of case studies is presented to illustrate ways in which organizations measure, create, sustain, and build ownership behaviors among customers and employees. This work is an extension of research into the design and effectiveness of service profit chain relationships.

On Competition, Updated and Expanded Edition

Abstract

For the past two decades, Michael Porter's work has towered over the field of competitive strategy. On Competition, Updated and Expanded Edition brings together more than a dozen of Porter's landmark articles from the Harvard Business Review. Five are new to this edition, including the 2008 update to his classic "The Five Competitive Forces That Shape Strategy," as well as new work on health care, philanthropy, corporate social responsibility, and CEO leadership. This collection captures Porter's unique ability to bridge theory and practice. Each of the articles has not only shaped thinking, but also redefined the work of practitioners in its respective field. In an insightful new introduction, Porter relates each article to the whole of his thinking about competition and value creation and traces how that thinking has deepened over time. This collection is organized by topic, allowing the reader easy access to the wide range of Porter's work. Parts I and II present the frameworks for which Porter is best known—frameworks that address how companies, as well as nations and regions, gain and sustain competitive advantage. Part III shows how strategic thinking can address society's most pressing challenges, from environmental sustainability to improving health-care delivery. Part IV explores how both nonprofits and corporations can create value for society more effectively by applying strategy principles to philanthropy. Part V explores the link between strategy and leadership.

Risk Frameworks and Biomonitoring: Distributed Regulation of Synthetic Chemicals in Humans

Abstract

The ability to detect and measure the presence of synthetic chemicals at trace levels in humans coupled to increased environmental NGO mobilization concerning chemical exposure has challenged risk and regulatory frameworks built up over the past quarter-century. This article analyzes changing definitions of risk in U.S. environmental regulation and describes challenges posed by emerging detection techniques, government and NGO surveys of chemicals in citizens, and reduction of information asymmetries through the Internet. A new framework for regulation is proposed involving a networked approach among industry, NGOs, and government regulators.

Download the paper: http://www.historycooperative.org/journals/eh/13.4/daemmrich.html

Mission-Driven Governance

Abstract

The purpose of this paper is to provide a useful, easily applied theory of governance performance. The existing model is fundamentally adversarial, rooted in the paradigm of principal-agent conflict. At its base is an image of governance as a never-ending struggle between board members and executives—"principals" who guard the organization's resources but have limited information to "monitor" how these resources are used—and "agents" who have insider knowledge and control the information-filtering apparatus of the organizations. Many of the concepts and ideas in this traditional model are shaped by a long history of governance failure and organizational pathology. It suffices as a solution to the challenge of meeting legal compliance standards through formal systems, but we believe it utterly fails to show how to create a governance system that supports organizational effectiveness. We propose a framework that gives equal weight to creating a governance system whose effectiveness is measured by the achievement of the organization's mission or purpose. In this article, we argue that this reluctance to evaluate an organization's governance against an organization's stated mission, coupled with a narrow focus on a rules-based approach to governance, are jointly responsible for the persistence of problems in governance performance, despite decades of high-priority attention. These governance misconceptions translate into four basic barriers to effecting change: 1) Many leaders who are dissatisfied with the state of their organizations' affairs are nevertheless resigned to it because they do not think it can be changed. They are schooled to think that solutions require new rules, but new rules are inadequate to treat the performance problems that they encounter most often; 2) The refusal to see governance as a performance element that can be improved may be viewed at least in part as a defense mechanism. No one likes to be evaluated, and board members have the power to avoid it. This might explain why only about one in ten nonprofit organizations have implemented governance evaluation routines; 3) When confronted with governance problems, we tend to follow the path of least resistance, seeking simplistic solutions with bright-line rules such as the policy/implementation division of labor for board and management. The difficulty, of course, is that governance is a highly complex activity, requiring decision makers to integrate many kinds of knowledge into a coherent whole; and 4) The dominant model of governance that persists is fundamentally flawed and out of date. It simply doesn't fit experience on the ground. Without a broadly accepted theory of governance performance to provide a standard against which organizations can evaluate and improve their practices, every decision maker applies their own tacit theory. These, in turn, tend to cancel each other out in a lowest-common-denominator way. An organization's definition of "good governance" should be explicit and agreed to by all, not left to individual interpretation.

Democratizing Entry: Banking Deregulations, Financing Constraints, and Entrepreneurship

Abstract

We examine entrepreneurship and creative destruction following U.S. banking deregulations using Census Bureau data. U.S. banking reforms brought about exceptional growth in both entrepreneurship and business closures. The vast majority of closures, however, were the new ventures themselves. Although we do find evidence for the standard story of creative destruction, the most pronounced impact was a massive increase in churning among new entrants. We argue that creative destruction requires many businesses failures along with the few great successes. The successes are very difficult to identify ex ante, which is why democratizing entry is an important trait of well-functioning capital markets.

From Regional Star to Global Leader

Abstract

Yang Jianguo was recently promoted from country manager for China to global head of product development at a staid French perfume maker. He was chosen for his technical smarts and his knowledge of emerging markets—a critical avenue for growth, given that sales in the company's core markets have stalled. Eager to succeed in his new role in Paris, Jianguo has lots of fresh ideas, but they seem to be falling on deaf ears. Members of the executive team, for their part, find Jianguo to be largely indifferent to their input. Can Jianguo adjust to this new culture? And can he succeed without sacrificing his identity? Three experts comment on this fictional case study in R0901A and R0901Z. Katherine Tsang, the CEO of Standard Chartered Bank in Shanghai, explains the cultural differences between China and France and recommends that Jianguo push his thinking beyond the Chinese market. She also suggests that the company give all its executive team members multicultural training so they have the tools to understand one another and work together effectively. Mansour Javidan, the dean of research and a professor at Thunderbird School of Global Management, acknowledges that Jianguo's transition would be easier if he had the full support of the CEO, Alain Deronde. But since that isn't forthcoming, he advises Jianguo to work with Alain to develop targets for growth in emerging and traditional markets and a plan for building an infrastructure to achieve those goals. James Champy, the chairman of consulting for Perot Systems, is surprised that a family business would choose an "outsider" for this important post, but he recognizes it as a wise strategic move. He says that Jianguo needs a coach and should focus on learning the home market first, before trying to make inroads further afield.

Planning a Start-Up? Seize the Day...Then Expect to Work All Night

Abstract

If you dream of starting your own business, it's better to leave the corporate nest sooner than later, before you get too comfortable with the big-company amenities every start-up lacks. Get going before you're 40—or even earlier, if you want to make entrepreneurship your career.