OwenBloggers: Sam - MBA 2008

HBS cases I'd like to see - the AAPL NDA

In part three on an ongoing series, we take a look at one of my favorite companies, the almighty Apple...

Launched just last month, the iPhone 3G has already sold over 3MM units. Taking advantage of the "computer in the palm of your hand" concept, Apple has opened up the platform for development by 3rd party software companies. Current favorites include Twitterific, Facebook, Google, and a whole host of other applications sold exclusively through the iTunes store in the hopes of presenting a seemless and integrated user experience.

Or is it?

There has been much discussion around the blogosphere about the Nondisclosure agreement (NDA) that goes with becoming an iPhone developer. You see, the only way to get your application onto the iPhone is through iTunes, and the only way into iTunes is through Apple. In order to do that, a developer has to be certified by Apple, a process that involves, amongst other things, signing an NDA that severely restricts the developers' ability to discuss anything iPhone related with basically anyone anywhere.

As I understand it, NDA's preventing developers from disclosing details to the public aren't that uncommon, but ones limiting access to their peers are. By imposing these restrictions, which are effectively the price of entry, Apple is limiting the developer community's ability to help each other troubleshoot and offer other forms of support. Which in turn slows down the development/revision cycle and pretty much guarantees a crappy 1.0 product (the NDA also precludes beta testing).

All this from a company that's notorious for their secrecy and "proprietariness," so much so that there are those that say that it's the sole reason that APPL and MSFT aren't revered in scale and scope.

This one feels like a job for Dave Dilts, Oh He of Strategic Management of Technology. Some of the things I'd like to see discussed include:

• AAPL is a relatively small (but growing) fish in the Koi pond of personal computers. But when talking about the iPhone, are they a computer company, a phone company, or something else entirely?
• No help with debugging, troubleshooting, or beta testing means inherently less stable products. Are program crashes blamed on the software or on the iPhone in general? Are you more likely to hear "#$%^& Facebook crashed on me again," or "#$%^& iPhone, why doesn't it 'Just Work'?" What are the long term implications of that for AAPL?
• Developing for Windows or the web represents a larger market than developing for the Mac. At what point does AAPL start to worry about alienating all their outside developers? Or is that their strategy, to make sure all the toys are their own?
• If this is a case of "His Steveness" being his oft-referred micromanagerial self, at what point does the company start feeling hamstrung by that attitude? How does the Pepsi Incident factor in to that decision?

[Photo credit: Chris Radcliff via Flickr]

HBS Case I'd like to see - MFST and YHOO

In part two of the series, we look at the attempted MSFT takeover bid for YHOO.

According to the bloggerati, MSFT's take-over bid for YHOO stemmed from their desire to shore up strategic holes in the online search area, specifically tied to search-based advertising revenues (currently dominated by GOOG). Whatever the real reason, Chief Yahoo (his real title, if the ads are to be believed) Jerry Yang responded with a resounding "Ummm, yeah ... I don't think so." A subsequent proxy "fight" involving the never-good-news-when-he-gets-involved Carl Icahn and a week of Ross and Rachel style will-they-won't-they guessing led to MSFT's abandonment of the negotiating table followed by YHOO's utter lack of a public response. And while it seems that this might be best served as a finance case, I'm again thinking strategy and would love to read discussions about:

 
• What were the real reasons behind rejecting the buyout offer?
 
• Who made that decision? Was it Yang? Was it the Board? Was it both?
 
• How much was communicated to the employees during the talks? Who made those decisions?
 
• When Icahn got involved, how did the strategy change? Or did it not change?
 
• Rejecting the buy-out suggests that YHOO thinks their long term strategy is more profitable than the buy-out. What is that plan?

[Photo credit xenolon via Flickr]

HBS case I'd like to see - the Netflix meltdown

Your thoughts on their relative effectiveness aside, its hard to deny that the case study is a staple of the MBA diet. From Erik-with-a-"K" Peterson in first mod's LTO to Wal-Mart in mod 3's Core Strategy, stopping briefly in mod 2 to visit with Arthur Dief as well as the gang at Southwest Airlines during Core Operations, my first year at Owen saw a significant number of hours devoted to pouring over the pages of the all-too-familiar classpack, highlighter in hand and Excel standing at the ready. Add to that the hours spent discussing, writing, polishing, and paring down to fit inside the sometimes-questionably-low word limit, and its fairly safe to say that the case study represented a significant portion of our lives at the Owen School.

Now that I'm out and in "the real world," a handful of recent events have me wondering what would appear in the pages of the HBS case if there were a HBS case written about them. Over the course of the next few posts I'm going to explore a few of those stories.

Netflix's August meltdown

Like a lot of people, my wife and I subscribe to Netflix. The combination of easy online tools, no late fees, and set-and-forget movie rentals appeals to both of us. In fact, we spend less on Netflix than we did in late fees at Blockbuster, which in itself translates to an incredible amount of value for us. Just last week Netflix found itself in crisis mode. Its normally storied operations went dark for 3-4 days. And while the details haven't yet been forthcoming, what we do know is that the "outage" affected nearly 50% of its distribution centers. As it turned out, operations were restored by the end of the week. In a show of good faith, Netflix has offered to refund 15% of the monthly charge to those affected. Not being familiar with Netflix's books, I can't say how that will impact their bottom line for the quarter/year, but I'm thinking it might be recouped in customer goodwill.

Some of the questions I'd like covered in the case include:

• What happened and how was it fixed?
• What were the disaster recovery plans in place?
• How was the decision made to pull the plug?
• How were the decisions made to inform the public?
• Who was on the crisis management team? How were they organized? And how was the team built for nimbleness?
• What discussions went on around the decision to compensate those customers affected by the outage?

This one feels like a Core Strategy case to me, perhaps written by the Dynamic Duo of Deans (are they still teaching Core Strategy?).
Up next, the second part of the series: YHOO and MSFT: the take-over wars.

[Photo Credit super-structure via Flickr]

Death by Powerpoint

Given the sheer tonnage of PowerPoints I've found myself wading though recently, I thought I'd share a bit of comic relief poking fun at that all-too familiar presentation tool.
Enjoy.

Think like a CEO

Yesterday I had the chance to sit over a cup of coffee and catch up with one of my mentors here at The General.  That's not a typo - I did, in fact, write "one of"; as cheesy as it might sound, it turns out that I actually have a personal "Board of Directors" on which I lean for various modes of support, advice, and whatnot.

I can just hear Susan nodding vigorously in the background, perhaps throwing in some snaps and an "Amen" or two ...

At some point, the discussion turned to the idea of "Thinking Like a CEO."  During my time at The Owen, it seemed like not a single day went by that I wasn't challenged to put myself in the shoes of a CEO, suddenly promoted to the level of CEO, reminded that I *am* the CEO, or something similar (unless it was one of Mike Shor's classes, but that's a discussion for another day altogether).

The wonders it did for my ego aside, I can't help but wonder whether that was the best use of our time.  Sure, being able to think big-picture-strategically is important.  Sure, setting lofty goals are important.  And sure, we should be preparing for the job we want rather than the job we have. 

But don't we have the more immediate challenge of being able to think like a team leader who has to manage both up and down?  Or how about thinking like a product leader that has to integrate multi-functional teams?  Or perhaps a division/department head who has to navigate cross-vertical political/operational/company objective issues?

And more to the point, won't we have to be all of those things if we're to be CEO?  Won't those experiences inform how we "Think Like a CEO" when we're actually the CEO?

Rather than being about bashing the teaching style at the Owen School (or, I'd suspect, every single other MBA program in the whole entire world), my point is to wonder whether variations on the theme might be useful.

What do you guys think?

 

[Photo Credit: Peter Kaminski via Flickr]

Stretch Management

 

The leadership of General Electric introduced the management concept of "stretch" in the 1990s. The idea was not just to create extraordinary goals higher than those thought achievable for the coming year. It was to set outlandish, almost unthinkable goals that business groups might achieve in the longer-run.

Has the Time Come for "Stretch" in Management? — HBS Working Knowledge

Topicality and timeliness are funny things. No sooner had I returned from two weeks of GE Corporate Training than this piece appears in the pages of HBS Working Knowledge. The ever-so-slightly ironic thing is that one of the major themes running through training was the idea of the stretch goal.

In the paper, Professor Heskett describes the idea of a stretch goal on the corporate level. Put simply, rather than setting quarterly or yearly targets, management sets longer term goals and then intermittently measures progress towards them. So, for example, rather than looking for a 5% reduction of cost in the coming 12 months, management sets a goal of 15% reduction over 5 years. And its relatively ease to see the relative merits in a) effectively communicating the Big Picture Vision to the entire organization and b) giving the organization a rallying cry.

When put to my class of ECLPs at training, the concept of a stretch goal was framed slightly differently. Rather than being a variation of the ever popular "Where do you see yourself in 5/10/15 years?" - which, I'm sure Susan will agree, is a valuable tool to use in charting your career trajectory - the stretch goal was put to us as one of personal development: on what do you need to work to get you to the next level of your career. One hint would be that DCF's, cost accounting, or figuring out how to work the office printer are a bit too narrowly defined. Another hint would be that everyone needs stretch goals.

Life after school - the first month

Like most of my classmates, I spent the first two weeks of my post-MBA-"working for the man" life locked in a series of ballrooms attending one training session after another. As part of the Experienced Commercial Leadership Program at GE (and more specifically at GE Healthcare), I spent two weeks learning about the business, listening to talks by senior management (Jeff Immelt, Beth Comstock, and the ever-popular "Q," to name but a few), and, well, eating and drinking on the company's tab.

Before I get an irate email from my program manager(s), I'll mention that there were many many other things; those were only the highlights of a week packed with fun and interesting yougetthepoint ...

I'll just briefly mention that ECLP is not limited to GE Healthcare; ECLP is a cross-company organization with members in very nearly every business out there. For those of you at the Owen School interested in ECLP outside of healthcare, drop me an email from your OGSM account to the blog (owenbloggers@gmail.com) and we'll see what we can do to get you connected with someone in your target business.

Now, on to the list:

• Day 1 was spent learning how to lead teams. My very second class at the Owen School was the Professor T-Love taught Leading Teams and Organizations, so its only fitting (and by fitting I mean "comically ironic") that my very second session at Corporate Training was a crash course in LTO. Judging by the puzzled stares drawn by my laughter, I was among a very select few who thought the "Forming, Storming, Norming, and Performing" slide was even remotely amusing. The balance of the afternoon was the soundcheck version of LTO's greatest hits, minus the rap interludes and Dawson's Creek references.
• You're expected to know stuff. While that might sound like a "well, duh!" statement, I'll mention that we spent quite a few days learning about the business: how GE is organized, how GE Healthcare is organized, the products we offer, as well as a full day of human anatomy. We didn't spend any time whatsoever learning about the healthcare system; they just assumed we knew all about that. So however painful those healthcare classes are (and let's be honest: some are painful and others are downright excruciating), take the time to learn it now, because the question "How do you not know this?" is not a fun question to have to answer.
• The only constant is change. On the first day of my second week, the CEO of GE Healthcare resigned to take a job at another company. On the same day a new CEO of GE Healthcare was announced, a man who had been, until that very day, in charge of one of the Industrial Businesses. And on the first day of my third week, a brand new organizational structure for the whole entire company was announced. The overall corporate structure was changed from 6 major businesses (of which GE Healthcare was one) to 4 major businesses (with GE Healthcare now being part of the newly formed Technology Infrastructure business). And all of this after the announcement that both GE Money (credit cards and other consumer finance properties) and GE Consumer & Industrial (appliances, lighting, and other consumer items) might be leaving the fold. GE might be an approximately $180BB company with about 320K employees, but "stagnant" might not be the best descriptor.
• There's more to marketing than <insert misconception here>. *Here I'm talking in general, not just about GE* I know its easy to dismiss marketing as print/radio/television advertising for toothpaste and hair gel (I'm looking at you, finance concentrators), but there's a whole lot more to it than that. In today's world, the really successful companies are the ones that make things that people want, and the only way to figure out what people want is to ask them, and that falls under the marketing function. Marketing feeds into product development, marketing feeds into long term strategic planning, marketing feeds into pricing, and it even bleeds into production. So while DCF's, Black Sholes, and asset pricing are cool and impressive, you'll always need to know how to position yourself to take full advantage of the results.
• This blogging thing is really taking off. Although many of the bloggerati will bristle, when the CMO of a fairly large corporation has her own blog (which, unfortunately for you guys, is behind the GE firewall) and actually updates it bi-weekly, its pretty safe to say that blogging has made its way into the mainstream. The public facing blog of GE is called "From Edison's Desk" and is for the more technology-minded amongst you.

I'm sure there's more, but this post is already a bit on the long side, so perhaps I'll post a follow-up in a few days.

ECLP, GE, GE Healthcare, T-Love, Untitled, LTO

How Starbucks' Growth Destroyed Brand Value - John Quelch

How Starbucks' Growth Destroyed Brand Value - John Quelch

But none of these moves addressed the fundamental problem: Starbucks is a mass brand attempting to command a premium price for an experience that is no longer special. Either you have to cut price (and that implies a commensurate cut in the cost structure) or you have to cut distribution to restore the exclusivity of the brand. Expect the 600 store closings to be the first of a series of downsizing announcements. Sometimes, in the world of marketing, less is more.

By now I'm sure everyone has heard the news that Starbucks plans on closing some 600 of its stores. While many analyses (including Business Week, The New York Times, and the Financial Times) have delved into the financial and economic implications of this move, none have ventured too far into the brand implications of Starbucks' recent exponential expansion and subsequent pull-back.

John Quelch of the Harvard Business School takes a look at how the expansion of product lines diluted the "brand equity" and alienated the early adopters. And while its true that a company must grow and evolve, its also true that there has to be some good balance between growth and remembering those who got you there.

I wonder what Mr. Quelch (or the Owen School's very own David Dilts, for that matter) would say about the recent iPhone 2.0 announcements from Apple and AT&T?

Customer loyalty cuts both ways

Like many people out there, I have a credit card or two. And while I use my bank's check card for most transactions, there are times that, for whatever reason, I pull out a credit card, whether it be for security when ordering online, rental car insurance, or the 6 week delay in payment.

When it comes to credit cards, my particular "go-to" card has been, for the past few years, a Discovercard. For more than a few years, I've paid my bills on time, never called for a credit extension, and been, for the most part, a trouble free customer.

That is until today...

In the process of moving, it would appear that paying my most recent bill had slipped my mind. My payment posted this afternoon, some 2 days after it was due. This morning, however, it seems that Discover had put a hold on my account for non-payment.

Now, I will be the first to admit that I should have paid my bill on time. I'll also freely admit that it is no one's fault but my own that the bill did not get paid on time. I'm a (some would say overly-) grown man who's perfectly capable of reading a calendar and planning ahead.

In my time at "The Owen" I spent a significant number of classes discussing the concept of customer loyalty (Product and Brand Management with The Hoeff comes to mind). Whether it be the special introductory prices, bonus miles on your credit card, subsidized hardware, or any number of other gimmicks, companies spend a great deal of time and energy optimizing the cost of capturing a new customer. Stealing market share, they call it.

And while some have gone so far as to institute ongoing customer loyalty programs - most of which come in the form of point based reward programs - I think most have missed the point: rather than adopt the "lap dance model" of "I'll be nice to you as long as you keep paying me," companies might want to focus on being a little bit more human with their customers. Because let's face it, most of those "reward programs" suffer from a bit of a baby-and-the-bathwater existential crisis.

I'm much more interested in a company that treats me like a real person than whether I get a free soda at the movie theater. Hopefully I'm not the only person that feels this way.

[also posted on my other blog]

Customer Service

Yesterday over on The Twitter, NotAnMBA quipped:

finance is *not* the language of business.. customer *needs* are the language of business..!

As a guy that just got done with his MBA, where NPV’s, DCF’s, and other large Excel documents are considered the language of the trade, I have to say that I couldn’t agree more. Obviously there are many skills you learn over the course of an MBA, each with a rightful place in your proverbial bag of tricks.

But the bottom line is that businesses exist for one reason and one reason alone: to make money. Sure, there can be other goals, but as Bob Nardelli once quoted, “No margin, no mission.” In today’s world, that means treating people right (unless you’re a wireless or an internet company, but their times will come).

Case in point: as part of our upcoming move, I’ve had to schedule connections for cable and internet service. As it turns out, the cable company can’t schedule a service connection until the previous tenant has scheduled a service termination. On the phone with the cable company this morning, I told them that I had been calling for two weeks, trying to get new service scheduled. The customer service rep not only offered to call the current tenants and leave a message, but also offered to keep a watch on the account and call me back as soon as the termination order had been placed by the current tenants.

It seems like such a small thing - “How about I call you back?” - but its turned out to be a relatively big selling point for me. Rather than explore other options for my television and internet needs, I’m willing to work with them a little and see what happens.

Of course, whether the cable guy shows up on time is anybody’s guess.