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  • J. C. Penney CEO Ron Johnson Resigns Under Pressure

    When J. C. Penny (JCP) hired Ron Johnson as Chief Executive in June 2011, he was known as a retailing genius. Johnson was Apple's senior vice president of retail before joining J. C. Penney. He wanted to make JCP America's favorite store by offering everyday low prices and shops within a store - a collection of 100 branded shops and specialty boutiques within the store. Sephora and MNG by Mango were successful when he was hired. In an interview with Harvard Business Review , Johnson said, "In retailing, you've got to trust your intuition much more than you trust the data. You can't follow the customer. You've got to lead your customers . . . even before they know what they want." Picture from Wall Street Journal http://blogs.wsj.com/deals/2013/04/08/will-ron-johnson-be-apples-prodigal-retail-genius/ The strategy was implemented without testing. Coupons and regular sales were eliminated. Loyal, discount-minded customers left and shopped elsewhere. Sales continued to decline. Employees lost their jobs. Ron Johnson resigned April 8, 2013. Have you shopped at an Apple store? Why? Have you shopped at J. C. Penney? Why? What is the difference between Apple and JCP? Why wasn't Ron Johnson able to turnaround J.C. Penney?

  • Sales Decline at J.C. Penney

    J.C. Penney CEO Ron Johnson was hired in 2011 to revive the company. He had been very successful when employed at Target and then Apple. But, his plan to abolish sales and coupons at J.C. Penney has backfired. The sales outlook is bleak. Sales have declined even though advertising expenditures have increased. See graphic below from AdAge . Penney's sales and coupons were popular customer incentives that often drove seasonal traffic. Yet, Mr. Johnson did not approve researching consumer behavior before implementing the everyday low prices. Thus, the J.C. Penney core customer felt alienated. Mr. Johnson said, "We have brought back coupons for our rewards members, although we still call them gifts. And we'll offer sales each and every week, as we move forward. But we will do it differently than we did in the past. We don't need to artificially mark up prices to create the illusion of savings." Bernie Sosnick, an analyst at Gilford Securities, said, "You're getting down to a point where Penney cannot absorb many more significant losses without the damage becoming irreparable." (See http://adage.com/article/news/jcp-s-ron-johnson-endures-grilling-court/240129/ ). What might customers think of Mr. Johnson's quote above? Will they understand "gifts"? How does testing fit into a strategy? What role has research played in Mr. Johnson's strategic decisions? What would you recommend?
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  • Social Media Strategy

    A study, What do Corporate Directors and Senior Managers Know About Social Media , was conducted in April 2012 by the Conference Board and the Rock Center for Corporate Governance at Stanford University . The results were published last October. The study found that CEOs are regular users of social media both for personal and professional use. They actively use Twitter. But, they passively use social media, such as blogs, videos, and discussions. In other words, CEOs read blogs, watch videos, read discussion boards and rating sites. Companies appear to be relatively unsophisticated when it comes to formally gathering data from social media and incorporating them into corporate strategy, operational plans, and risk management. Directors and executives do not request this information nor rely on it for decision making. However, those who do rely on this information find it useful in pursuing corporate objectives. The findings suggest considerable opportunity for companies that develop a reliable infrastructure for capturing data from social media and distilling them into an actionable, usable form for corporate decision makers. The authors of the report recommend companies engage in the steps below. Assess your current capabilities Determine how social media fits with your strategy and business model Map your company's KPIs and risk factors to information available through social media Implement a "listening" system to capture social media data and transform it into metrics Develop formal policies and guidelines for employees, executives, and directors Consider the legal and behavioral ramifications Read the attached report. Should managers actively engage in social media? Explain. Is a company doomed if it does not use social media? Explain.

  • IKEA’s Sustainability Strategy for 2020

    People & Planet Positive is the IKEA Group's sustainability strategy for 2020. Sustainability at IKEA is based on its vision of creating a better everyday life for the many people, as well its business foundations. The report states, "We will do our utmost to be the leader in sustainable, affordable life at home by inspiring and enabling customers to fulfill their needs and dreams at home ." What evidence of sustainability is mentioned in this video? <
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  • Flu and Absence Management

    The flu is increasing the level of absenteeism in workplaces across America. According to the Centers for Disease Control (CDC) " widespread influenza activity was reported by 47 states ." Graphic from CDC at http://www.cdc.gov/flu/weekly/#S5 The CDC advices, "If you get sick with flu symptoms, in most cases, you should stay home and avoid contact with other people except to get medical care." But, not all employers offer sick leave. Employee benefits the employer must provide by law include social security and workers' compensation. Thus, some employees go to work sick. Unfortunately, even more employees get the flu and call in sick. Employee absences affect an organization's finances and productivity. Washington Employers Association has developed a guide to calculate the rates and costs of absent employees. (See attached Absenteeism Calculator.) The SOHO Guidebook cites the following as notable hidden cost factors associated with absenteeism: Lost productivity of the absent employee Overtime for other employees to fill in Decreased overall productivity of those employees Costs incurred to secure temporary help Possible loss of business or dissatisfied customers Problems with employee morale Managers need absence management strategies. What should managers do about flu absence? How can flu absence be prevented?

  • ‘Tis the Season to Give Strategically

    Holidays put most people in the giving mood, and their donations support charities. Giving USA: The Annual Report on Philanthropy , researched and written by the Center on Philanthropy at Indiana University and published by Giving USA Foundation , estimated that total charitable contributions by individuals, corporations, and foundations in 2011 were $298.42 billion. Sponsorship of charitable causes or events is a strategy used to increase product awareness and build relationships. Organizations use sponsorships to gain exposure to the event's audience and the image associated with the event or activity. Sponsorships involve investments in events or causes in order to achieve various corporate objectives. Managers select events to sponsor based on the target audience. Event marketing is a form of brand promotion that ties a brand to a meaningful athletic, entertainment, cultural, social, or other type of high-interest public activity. It provides companies with alternatives to the cluttered mass media, ability to segment on a local or regional basis, and opportunities for reaching narrow lifestyle groups whose consumption behavior can be tied to the local event. Just like corporations, individuals can think strategically about supporting charities. They can target their giving by choosing to make one big donation rather than making small donations to many individual charities. They can match what matters most to them to the mission of the charity. They can review the accomplishments of the charity. Websites reviewing and rating charities include CharityNavigator.org, CharityWatch.org, GuideStar.org, and GreatNonProfits.org. Reviews are based on standards such as fundraising expenses, transparency, and overhead expenses. Dan Pallotta , author of Uncharitable and Charity Case , thinks that standards, such as overhead expenses, are the wrong criteria to evaluate charities. Instead program effectiveness should be determined. Pallotta says three questions should be asked. What are your goals? What is your progress towards those goals? How do you know? Which charitable causes are important to you? How do you know if the charity is effective? Can the charity give you information indicating how successful it is? How successful is the organization?
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  • Softbank’s 300 Year Plan

    Softbank , the third largest mobile carrier in Japan, just announced a $20 billion takeover of Sprint Nextel, the third largest mobile carrier in the United States. This is all part of Masayoshi Son's 300-year strategic plan for Softbank. He is Softbank's Chairman and CEO. Son shared " SOFTBANK's Next 30-Year Vision " on June 25, 2010. He wants to "Design corporate DNA leading SOFTBANK's growth in the next 300 years." Softbank's web offers the following explanation. This vision aims for the SOFTBANK Group to contribute to people's happiness through the Information Revolution for the next 30 years, and to become "a corporate group needed most by people around the world." To achieve this vision, SOFTBANK will continue to concentrate its operations in the information industry, and advance the Information Revolution with leading technologies essential to the times and superior business models. Read "SOFTBANK Next 30-Year Vision," June 25, 2010, at http://www.softbank.co.jp/en/design_set/data/irinfo/library/vod/2010/pdf/press_20100625_01.pdf ) Most strategic plans are for more than one year, but not for 30 years, much less 300 years. What do you think about Masayoshi Son's goal to create the largest and fastest wireless network?

  • Getting Strategy Execution Right

    In this video, Michael Jarrett, INSEAD professor, discusses strategy, the most important imperative for any business. Does the company have the right strategy? Elements of strategy include a clear goal, a defined target market and products, and an aligned company structure. If the answer is, "No," then the company needs to rethink the plan. The company must employ a fair and open process to create a strategy. Once a problem is identified, a solution created, and vetted through a fair process, it is more likely to get buy-in from employees. Use project management skills to implement the strategy. To implement a strategy, managers must build project teams, create milestones, set performance indicators, track progress, report to stakeholders, and hold people accountable. Companies should treat strategy as a real initiative. Strategies don't form or implement themselves. Over 70 percent of corporate strategic initiatives are never implemented. Why should managers strategize?
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  • Mobile Payments

    Are you reading this from a mobile device? By 2015 most customers will be. Managers realize that a business without a mobile strategy, and the tools to track, measure, and optimize, will quickly get left behind. Thus, some of the largest U.S. retailers formed the Merchant Customer Exchange (MCE), a mobile payment system. Mike Cook, corporate vice president and assistant treasurer of Wal-Mart said, "The MCX platform will employ secure technology to deliver an efficiency-enhancing mobile solution available to all merchant categories, including retail stores, casual dining, petroleum and e-commerce." (See attached press release.) MCE will compete with other smartphone payment devices, such as Google Wallet and MasterCard PayPass . Convenience and speed are some of the benefits of using a smartphone payment system. Do you use one? What other tangible benefits like rewards, incentives and a personalized shopping experience might be available for the customer? If your manager asked you for ideas, what would you suggest?
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  • Put Customer Experience at the Center of Business

    In their book , OUTSIDE IN , Forrester Research analysts Harley Manning and Kerry Bodine found that customer experience is a fundamental source of competitive advantage. " Customer experience is defined as how customers perceive their interactions with your company. In other words, it's what your customers think and feel as they discover, evaluate, buy, receive, use, and get support for your company's products and services. . . Customer experience ecosystem is the complex set of relationships among your company’s employees, partners, and customers that determines the quality of all customer interactions." It is depicted below. Attaining the experience competitive advantage is contingent on managers mastering six disciplines: Strategy, Customer Understanding, Design, Measurement, Governance, and Culture. An excerpt from the book is attached. Repeat customers keep companies in business. How important is your customer experience when you shop? Have you had an experience where you decided not to return to a business and defect to a competitor? If so, what happened and how could the manager have solved that problem?
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  • #1 Priority for CEOs

    "Getting and keeping talent!" is priority #1 for CEOs participating in PricewaterhouseCooper's 2012 Global CEO Study . More than 1250 company leaders from 60 countries were interviewed. Skills gaps are seen as a threat to business expansion. Thus, CEOs are changing talent management strategies. Of those CEOs surveyed, 79% already have or will have their human resources directors as one of their direct reports. See the attached infographic. How can HR managers become more strategic?

  • Microsoft Surface Challenges Apple iPad

    Microsoft introduced a tablet challenger to the Apple iPad (June 18, 2011). Microsoft, a software company, makes money by charging licensing fees to hardware manufacturers who put Windows operating system and other software applications on their machines. Apple makes money by making the software and the hardware for its gadgets. Thus, for the first time in its 37-year history, Microsoft will manufacture a computer. Producing its own tablet is a major turning point for Microsoft. Is this a new strategy or a new tactic for Microsoft? What will happen to Microsoft's relationship with PC makers investing to develop their own Windows 8 tablets? Does Microsoft lack confidence in the ability of its PC partners to design alternatives to the iPad? Does Microsoft want more control to ensure Windows plays a major role in the mobile computing market?

  • Scoring Business Model Attractiveness

    Rita McGrath , a Professor of strategy at Columbia Business School , has developed a 10-step chart to assess the level of attractiveness for a company's business model, which is the way a company makes money. Of course, innovation is important to the company's growth and its ability to remain in business. In general, business models with exit barriers, for which there are switching costs and which are relationship-oriented, tend to be more attractive than those with the opposite conditions. A score below 40 would mean that the company is more vulnerable and its business model is less attractive. The business model might lack customer loyalty and/or be easy for competitors to imitate. Identify a company and use Table 2 to assess the attractiveness of its business model. What is the score? Briefly explain why the score reflects your best guess of where the model falls.
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  • Use Pinterest for Vision

    A vision is where you want to be in the future; it is where you are going, not where you have been. In the past, people cut pictures out of magazines to make a collage portraying their vision. Today, you can use Pinterest to create an online vision board. The purpose of a vision board is to keep you focused. It keeps your goals constantly in mind. The best managers are almost always described as "visionary." Yet, women managers fall behind men in this measure. On the envisioning scale (being able to articulate a vision of the future and translate that into a strategic direction for the organization), INSEAD professor Herminia Ibarra found that "women leaders are not perceived to be as strong as men when it comes to articulating a vision of the future and translating that vision into a strategic direction for the organization." Find more on 'Women and the Vision Thing' in the January 2012 issue of the Harvard Business Review . Maybe creating a vision board will help! The Internet offers an endless number of digital images. With your future in mind, search for the exact pictures which portray your vision. If you want to start your own business, find images that capture that idea for you. Then, create your vision board out of these images. Have fun looking for pictures or quotes or headlines that inspire you. Choose a lot of images and phrases and words. Pin your favorites on the board. You might want to create several boards - one for each area of your life, such as school, work, health, spirituality, relationships, etc. Add comments to remind yourself of why you chose the picture. It is good practice to include a photo of yourself on your board. Look at your vision board every day for motivation. If you find it helpful, you can share your vision across other social media sites. Do women managers lack vision? OR, is this a perception of female managers?

  • Crowdsourcing as Management Strategy

    In the external environment of fast-paced technological change, nimble competitors, and demanding customers, world-class firms have adopted an integrated product development (IPD) process to provide best-in-class new products. IPD is a management strategy that uses customer inquiry, cross-functional teaming, and technology integration to improve the performance of product development lifecycles. The U.S. Department of Defense first proposed IPD as a name that better reflected the participation of manufacturing, design, marketing and finance in product development. IPD improves an organization's ability to quickly respond to market demands with high quality new products. Increasingly diverse needs of customers are met by exercising speed, efficiency, and quality in the development of new products. It makes sense that the next evolution of IPD can be conducted faster with the use of the Internet. The Defense Advanced Research Projects Agency (DARPA) hopes crowdsourcing will speed up the design-to-production cycle. According to Steve Lohr in a New York Times blog, " Pentagon Pushes Crowdsourced Manufacturing " (April 5, 2012), "The crowdsourcing effort will rely on a software initiative, called Vehicleforge.mil, which will be a Web portal for gathering, sharing and testing ideas." General Electric (GE ) and the Massachusetts Institute of Technology (MIT) are collaborating on the project. "Pictured is a schematic of the crowdsourcing platform GE and MIT are building to support DARPA's ongoing Adaptive Vehicle Make (AVM) portfolio. The idea of this platform is to help connect data, design tools and simulations in a collaborative environment to accelerate the design of highly complex industrial systems." The integrated, or concurrent, development process has easy access to management, with a centrally networked information system in place that is readily accessible by everyone. David R. Wallace, a professor of mechanical engineering at M.I.T, told Steve Lohr that "the Vehicleforge.mil program will allow solo inventors or small teams to tap into those capabilities. A vehicle body and chassis design, submitted as code, could be plugged into the Vehicleforge.mil platform and tested for aerodynamics by in a virtual wind tunnel, for example." Simulation services for complex designs allow researchers to "predict problems earlier to get a better design faster." Why do you think these managers believe that crowdsourcing will accelerate all of the processes that link the activities for designing and building what the customer requirements specify? How else can crowdsourcing be used as a management strategy?
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