Do you think banks process transactions first-come-first served? Think again. Opportunity!
In yesterday’s USA Today a columnist noted that banks have taken to the practice of clearing transactions from the highest to the lowest dollar amount, rather than in the order they arrive for processing (USA Today, Tuesday, September 25, 2007 page 3B). The purpose? According to the banks, it’s to make sure that big bills such as mortgages, get paid in a timely way. A second-order consequence, should an account holder go into deficit, is to be able to charge more fees for lots of smaller transactions that come in behind the larger ones. For the same amount of overdrawn money, in other words, a cardholder will pay more in fees simply by the way that banks structure their processing! That surprised me.
It also got me thinking about how few people are probably aware of this, particularly the younger or less well-off people who are hurt most by fees and most likely to incur them.
Here’s a beautiful situation for a .forward-thinking financial institution to make some strategic headway. Step 1: Create awareness of this practice among competing banks. Step 2: Show customers how your bank can help you, either by not engaging in this practice or by helping you avoid trouble even if they do; Step 3: Emphasize how much better your solutions are, thereby possibly pushing fees that consumers tolerate from the ‘tolerable’ category for customers into a dissatisfier or even an enrager. It could be one of the cases in which simply removing a negative can gain you as much strategic headway as accentuating a positive.
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- Posted Rita McGrath on September 26, 2007
If you want to be more productive, stop multi-tasking
I hear it (and see it) all the time - executives who are supposed to be studying, discussing or working together tuning in and out as they engage in the so-called blackberry prayer, or trying to simultaneously deal with email while supposedly on a conference call. My protests, notwithstanding, they will often argue that such multi-tasking allows them to accomplish more in less time.
Turns out that recent research supports the idea that people do better when they focus on what they’re doing, rather than spreading their attention over multiple tasks. Researchers at Vanderbilt University posit that the brain experiences a bottleneck of sorts when trying to accomplish more than one objective at a time. See here for links to the original research.
We’ve been making the argument for a long time that you’re better off focusing on one thing at a time and avoiding distractions—interesting to know that research is starting to suggest why.
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- Posted Rita McGrath on September 26, 2007
Market Busting Case Studies and Applications
3MTechnologies.pdf
Apollo_Group_Report.pdf
ARM_Holdings.pdf
BHP_Billiton.pdf
Cadence_Design_Systems.pdf
DrReddys.pdf
GAF.pdf
Google.pdf
Haier_Report.pdf
Infosys_Technologies.pdf
Netflix_Report.pdf
Puma.pdf
Ranbaxy.pdf
Ryanair_Report.pdf
Save-A-Lot.pdf
Tata_Motors.pdf
Wahaha.pdf
Whole_Foods.pdf
Willie_Nelson_Biodiesel.pdf
WL_Gore.pdf
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- Posted Admin on September 26, 2007
How much does the prestige of a university matter to business?
I was recently asked to consider whether the prestige of a university matters at all in the business world. I’d say it does.
One place you see it make a huge difference is when companies are looking for universities to partner with in the world of executive education. They feel a great comfort with a name brand as their university collaborators.
For individuals, in my experience, a prestigious degree (and the social network that goes with it) helps perhaps in landing that first job, but it isn’t a guarantee of career success. As I’m sure some grandmother somewhere would say, it can open the door, but you have to walk through it.
That much being said, some highly selective companies wouldn’t even look at an inexperienced candidate without a certain pedigree.
It’s been shown that the more selective MBA programs tend to convey a salary and job advantage on their graduates. There are several studies cited in this article:
Bennis, W. G. & O’Toole, J. 2005. How Business Schools Lost Their Way. Harvard Business Review, 83(5): 96-104.
I think university prestige always creates a nice opening, whether for business or for more social purposes. It provides people with a way to categorize your quality without actually having to make an individual judgment.
It’s also worth remembering the downside of a highly prestigious degree—possible employers, dates and others may assume that you’re stuck up, too expensive or too demanding and you could also lose out on opportunities.
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- Posted Admin on September 21, 2007
Will a weaker dollar change outsourcing habits?
I was recently asked to consider how a weaker dollar might influence outsourcing / nearshoring decisions.
Well, obviously, exchange rate fluctuations change the ousourcing/near-sourcing equation considerably. The work that will be most immediately affected by the declining dollar is the stuff that is pretty much plug-and-play, and that doesn’t require training, systems transfers or complex data conversion. With more complex work, a weak dollar definitely reduces the attractiveness of certain locations versus others as they become more expensive for American companies.
A larger, and more interesting question to me, is that the nature of a lot of outsourcing work has shifted from having a cost-reduction focus to having instead a focus on acquiring skills and accessing talent. Microsoft and other large organizations are farming work overseas not necessarily to decrease their costs but to capture the talents of highly skilled workers who either can’t get a visa to come to the US or don’t wish to relocate here. Although the dollar’s drop makes them more expensive, since the reason for hiring them is strategic, not operational, it won’t be that much of a deterrent.
Companies aren’t usually able to shift their operations quickly, so unless the dollar’s slump is looking to be a long-term situation, I don’t expect that much will change in most companies’ attitudes towards Canada and other locations.
On the bright side, the slumping dollar means that American firms can be much more aggressive in their competition for overseas contracts – in comparison with foreign players, our companies are going to be at an advantage. They can bid at local rates for less than their equivalent competitors in the area.
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- Posted Admin on September 21, 2007
