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A summary of Gary Hamel’s analysis of the secrets of Apple Inc.’s success March 9, 2010

Posted by Alan Yu in Management.
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In two blog entries in the Wall Street Journal over the past couple of weeks, management guru Gary Hamel has taken a stab at analysing the success of Apple Inc.  You can find Part I here, and Part II here

He begins by going through a set of surprising statistics about Apple: 

          It’s the market leader in computers costing more than $1,000 – in one month, its share in this segment exceeds 90%

          It makes more money from its 3% share of global handsets than Nokia makes from more than 30%

          It’s the world’s largest music retailer

          Its stores generate four times more revenue per square foot than big box competitors; with its store on Fifth Avenue, New York, being the most profitable retail outlet in the world

          Its market value is three and a half times that of Nokia, and more than 60% higher than Hewlett-Packard’s, which has three times Apple’s revenue 

He runs through a laundry list of strategies to which many would attribute Apple’s success: 

          Heavy focus on design

          Fusion of hardware and software

          Integrating a broad array of complementary technologies

          Captivating customers with great end-to-end user experience

          Harnessing the talent of independent software developers

          Leveraging core competencies into new markets – Steve Jobs describes Apple as the world’s large “mobile devices company” 

But, Hamel argues, while the above list is logical, it is also unsatisfying, as it reveals the “how” but not the “why”. 

With a disclaimer that he has neither spoken to Apple’s senior executives, nor done thorough research into the company, Hamel offers “unstinting devotion to a particular set of values” as the secret behind Apple’s success.  According to him, these values are “as rare as a rose in winter” among Fortune 500 companies: 

Being passionate – although Apple doesn’t always pioneer a new product category, it always sets out to radically redefine a category with a distinctive product or business model. 

Aiming to surprise – the company’s penchant for pre-launch secrecy is simply the way you produce the same sort of gee-whiz delight that any parent aims for on Christmas morning. 

Being unreasonable – Apple regularly challenges itself to do the impossible, producing products that are as sexy as Ferraris and as practical as Hyundais, and its lean and agile supply chain gives nothing away to Wal-Mart or IKEA.

Innovating incessantly and pervasively – innovation infuses everything Apple does, in products, services and business models. 

Sweating the details – “it just works” because hundreds of people sweat the details. 

Thinking like an engineer, feeling like an artist – a company can’t produce beautiful products if the bean counters win every argument: Apple’s executives know that something lovely and sleek and unexpected can provoke a visceral reaction in a customer – a reaction that may not be easy to quantify but can nevertheless be monetised.

To the above, I would personally add: meticulously making the look and feel "hang together".

Of course, Apple also has its flaws.  According to Hamel, Jobs is said to be “an egomaniacal control freak” and it has "all the monopolistic tendencies of its competitors".  “Apple will one day fall prey to the same sort of arrogance, nostalgia and denial that has destroyed other once-venerated companies”, Hamel concludes.  But for him the case of Apple “is just a convenient and plausible vehicle for driving home a fundamental truth: you can’t improve a company’s performance without improving its values”.

RT @mickyates: How to Keep Good Employee March 2, 2010

Posted by Alan Yu in Management.
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RT @mickyates: How to Keep Good Employees in a Bad Economy, Marshall Goldsmith: Marshall Goldsmith is an ol… http://bit.ly/97P29D

Top Ten Mistakes Managers Make With Email February 4, 2010

Posted by Alan Yu in Management.
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An article in the Wall Street Journal lists the top ten mistakes managers make with e-mail.  Since the newspaper has started charging for subscriber content, I’m careful not to reproduce everything, in case the law catches up with me, but the following highlights should be enough to whet the appetite:

1. Using vague subject lines: “Meeting,” “Update,” or “Question” provide no value as subject lines.

2. Burying the news.

3. Hiding Behind the “BCC” field — some blind recipients hit the “reply all” button and reveals all.

4. Failing to clean up the mess of earlier replies/forwards, such as a string of previous messages.

5. Ignoring grammar and mechanics, especially when sending from PDAs.

6. Avoiding necessarily long emails: longer messages sometimes do work best.

7. Mashing everything together into bulky, imposing, inaccessible paragraphs — length does not discourage reading; bulk does.

8. Neglecting the human beings at the other end — be careful about heaping praise or blame, and being emotional, sharp-tongued or sarcastic

9. Thinking email works best, but it’s not always the best way to communicate.

10. Forgetting that email lasts forever, as easy-to-forward proof of any error, offence or obfuscation we make.

The author is Tim Flood, assistant professor of Management and Corporate Communications at the University of North Carolina’s Kenan-Flagler Business School.  Don’t say we haven’t been warned by an expert.

An MBA is no ticket to success February 1, 2010

Posted by Alan Yu in Career, Management.
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An article in the latest issue of the Harvard Business Review (http://tinyurl.com/y9k9tkq) lists what it considers to be the best-performing CEOs in the world. 

 

One of the observations the article makes is that insider CEOs – those promoted from within the organisation – tend to do better.  Of the top 50 best-performing CEOs, only about a quarter are outsiders.  This stands to reason, as critical to a CEO’s performance are such factors as understanding subtleties of the industry that enables laser-sharp judgment, ability to navigate the web of regulatory constraints, familiarity with the culture and rapport with staff to get things done.  All of these qualities tend to accrue to someone who has been in an organisation for some time. 

 

The authors of the article claim that “32% of CEOs who had an MBA ranked, on average, 40 places better than the CEOs without an MBA”, going on to conclude that “the finding suggests that MBA CEOs have not destroyed value.”  That may be so, but the fact remains that less than one third of the top 50 CEOs have an MBA.  While business education may not be a destroyer of value, it is not a good predictor of success either. 

 

In the past few decades, business education has mushroomed into a highly profitable industry.  Graduate business courses draw from a larger pool of target customers willing to pay higher fees.  Many an up-and-coming executive aspire to the qualification as a passport to higher echelons of management. 

  

As a practising manager with an education in liberal arts, I was somewhat suspicious of the real value of an MBA.  Having also been immersed in the empiricist school of philosophy, however, I nevertheless endured three years of gruelling part-time study and a monotonous Ronald McDonald diet to gather evidence for my suspicion.  While I learned a lot in the MBA programme, I concluded that it really didn’t teach me the important things I needed to do well. 

  

At about the same time as I was undergoing my torture, Mark McCormack, founder of the highly successful sports management and marketing agency the International Management Group (IMG), published What They Don’t Teach You at Harvard Business School.  Here was my salvation.  I didn’t need my MBA after all, but having done it I was now qualified to say how inadequate it was, and I had Mark McCormack to prove it! 

  

Truthfully, an MBA is very helpful, as long as we appreciate its limitations.  For a start, it gives skeptical employers at the start of our career some assurance that we know the basics.  We also learn the “lingo” – DCF, learning curve and multivariate analysis.  Above all, we learn to model.  Modelling is no easy feat, and I’m not talking about the catwalk activity either.  It’s trying to predict an outcome using complicated formulas linking a large number of variables in a dense spreadsheet. 

 

The snag about models is that they prove the old axiom about computers – garbage in, garbage out.  I remember lambasting an investment banking executive for building a perfect model but using assumptions that didn’t make sense, therefore coming up with the most ridiculous conclusions.  MBA courses don’t teach business sense, which is often gained through experience, in other words, making mistakes.  They are great for learning all the techniques of option analysis and negotiation tactics, but it is no substitute for keen observation of human signals and managing emotions.  Nor does it help develop passion and diligence.  Deals are often won or lost on the basis of personal chemistry, understanding of emotional needs and how much people care.  

 

Daniel Goleman popularised the idea of “emotional intelligence” in the 90s to help a large number of hard-charging alpha-type MBAs to understand themselves, others and everyone together in groups.  MBA courses are famous for the lack of emphasis on how to work with people to get things done. 

 

McCormack talks about the three phrases most people find hard to use: “I don’t know”; “I need help” and “I was wrong”.  Ability to use these expressions judiciously goes a long way towards winning support from others, because they show that we are humble, vulnerable and fallible – that we are human. 

 

Many corporate failures in the last decade have also shown that MBA courses need to place more emphasis on ethics.  Changes are afoot or have been implemented.  After all, no genuinely high-flying CEO can be a moral imbecile who does not stand on principles. 

 

The shortcomings of an MBA course in teaching the more subtle factors for success can be easily overcome with a little focus and adjustment in curriculum.  At its worst, it can give graduates unjustified confidence and self-importance.  Overly confident and self-important executives distance themselves from those whose help they need most to succeed.  They also lack a sense of humour, which is sorely needed to defuse tension and bounce back from adversity. 

 

In business, as in life, there are no guarantees.  An MBA alone certainly does not lead to success.  Applied with humility, forbearance and open-mindedness, however, it could go a long way. 

 

Posted via email from alanayu’s posterous