Consumption Chain - customers value a complete experience, but companies organize otherwise
A short recent piece in Fast Company highlights a point that I make over and over again in our executive programs and with clients: customers value a complete experience, while companies organize themselves by a different logic, often one that has to do with efficiencies. The article (September, 2007 edition, page 27) features a senior leader at GE trying to sell to the Olympic organizing committee of the Beijing Olympics. Here’s the stunning revelation they discovered:
“We have always geen good at winning customers in a specific space - for example, our energy experts can sell to energy folks. But when governments spend billions of dollars on Olympic projects, they don’t want to be sliced and diced by the same company. Our number-one revelation is that customers don’t necessarily organize their buying behavior the way we structure our business.”
To learn more about how to create complete customer experiences, you can read Chapter 4 in McGrath and MacMillan The Entrepreneurial Mindset (Harvard Business School Press, 2000). To see how the technique can be used to drive growth opportunities, see chapter 2 in MarketBusters: 40 Strategic Moves that Drie Exceptional Business Growth (Harvard Business School Press, 2005).
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- Posted Rita McGrath on November 19, 2007
Critical Success Factors for Corporate Ventures
This week, I’m directing the Columbia Business School Executive Education course Leading Strategic Growth and Change. The course is designed to help companies learn to better manage opportunities for growth through innovation, new product development and venturing. This weeks’ course has been fantastic so far, with a veritable United Nations of participants. In fact, we have folks here from every continent (except Antarctica!).
Today’s presenter is Ron Pierantozzi, who was at one point the director of New Business Development for Air Products and Chemicals, Inc., During the period from 2002 to now, Air Products’ stock has gone from around $29/share to over $100/share, its P/E ratio has soared, and the company has grown 18% a year. Not at all bad for an industrial company in markets that face grinding margin pressure in many commodity businesses. He’s just talking about the disciplines he’s learned are necessary for growth. One of the more interesting discussions we’ve had today has to do with the critical success factors necessary for managing corporate ventures. He lists six that he’s found to be valuable and important:
Role Clarity - are people being managed with appropriate metrics? Who is coordinating the innovation efforts, and what roles do they play?
Senior Governance - The venture leaders should have direct reporting relationships to senior corporate executives so that decisions don’t get held up and resources winnowed away. The leadership team for ventures should be functionally diverse.
Comprehensive idea capture and triage - You ideally want a clear process for developing new ideas, and clear screening criteria that would help people understand what kinds of ventures are OK, and which are not.
Venture Capital style financing - adopt staged funding, based on pre-determined venture objectives. We’d also add the ability to stop investing is key.
Independent ventures - ideally, not beholden to the core business, but independently managed by a venture board. You also need processes to facilitate the transition of a venture from one place to another in the corporation. See also our ideas on capturing value from failed ventures.
Entrepreneurial Talent - you need to set up a system so that there isa pool of potential managers for ventures, who cycle in and out of the venturing process.
So check out your venturing system - anything missing?
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- Posted Rita McGrath on November 15, 2007
Making passengers smile at Zurich International Airport - the power of small differentiators
Here I am in Switzerland, working with one of Columbia’s best clients, Swiss Reinsurance. We run a program called “Creating Breakthrough Strategies” for their most senior executives, and it’s always a highlight.
I was struck once again upon arriving at Zurich Airport how often simple little things can create a differentiated experience for customers. In this case, when one takes a train from the “E” terminals (which are remote) to get to the area where there is baggage claim and so on, the airport has created a little light show that looks like a movie of the bucolic Swiss countryside as you go by. Even better, they accompany the movie with sounds of cowbells and loud, authentic sounding mooing. I was watching one family whose children were clearly not happy with the whole travel experience, and the little ones burst into smiles. Imagine how nice more ordinary transactions could be if we put some energy into such small but friendly touches.
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- Posted Rita McGrath on November 06, 2007
Columbia Business School offers one of the best “spare time” B Schools in Business Week
Business Week has just published its highly influential rankings of executive MBA and Executive Education programs, and I’m pleased and proud to note that Columbia has not only done well, but improved its position considerably in both.
In his first year as Associate Dean of our executive education offerings, Troy Eggers has led a strong upswing in our position. For non-degree executive education offerings, Columbia ranked #5 for Open Enrollment (programs that people from any company can take) and #7 for custom programs (designed specifically to meet the needs of individual clients). We were ranked #7 and #20 respectively in the survey done two years ago. Of particular note is that our strategy and leadership offerings were both rated with an A+.
Our Executive MBA program, under the leadership of Associate Dean Ethan Hanabury, has captured the #6 spot on the ratings. That’s huge, because two years ago flaws in the program had led to its not even making the top 20 (which was a major psychological blow). To learn more about the Columbia Executive MBA program click here.
Rankings of course do not capture the heart and soul of a program, but it’s still nice to have the external validation.
To have a look at the article, Click here
To browse around Columbia Executive Education’s web site Click here
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- Posted Rita McGrath on November 03, 2007
So now CEO’s have to create value? How novel!
It was fascinating to read in this week’s Business Week that as easy money has evaporated in the world of private equity, that the CEO’s of these firms have to resort to the traditional practice of management - “making the companies they control more profitable” as the magazine says (November 5, 2007 issue, page 40). Astonishing. And perhaps gratifying, as we see evidence that the folks with purely financial know-how have come a cropper, to think that perhaps knowing how to actually run a company has value.
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- Posted Rita McGrath on October 29, 2007
