【不可能（Impossible）】或【我可能（I’m possible）】
這是一個發生在美國通用汽車的客戶與該公司客服部間的真實故事。
有一天美國通用汽車公司的龐帝雅克（Pontiac）部門收到一封客戶抱怨信，上面是這樣寫的：
“這是我為了同一件事第二次寫信給你，我不會怪你們為什麼沒有回信給我，因為我也覺得這樣別人會認為我瘋了，但這的確是一個事實。”
我們家有一個傳統的習慣，就是我們每天在吃完晚餐後，都會以冰淇淋來當我們的飯後甜點。由於冰淇淋的口味很多，所以我們家每天在飯後才投票決定要吃一種口味，等大家決定後我就會開車去買。但自從最近我買了一部新的龐帝雅後，在我去買冰淇淋的這段路程問題就發生了。
”你知道嗎？每當我買的冰淇淋是香草口味時，我從店理出來車子就發不動。如果我買的是其他的口味，車子發動就順得很。”
我要讓你知道，我對這件事情是非常認真的，儘管這個問題聽起來很豬頭。為什麼這部龐帝雅克當我買了香草冰淇淋它就秀逗，而我不管什麼時候買其口味的冰淇淋，它就一尾活龍？為什麼？為什麼？
事實上龐帝雅克的總經理對這封信還真的心存懷疑，但他還是派了一位工程師查看究竟。當工程師去找這位仁兄時，很驚訝的發現這封信是出之於一位事業成功、樂觀、且受了高等教育的人。
工程師安排與這位仁兄的見面時間剛好是在用完晚餐的時間，兩人於是一個箭躍上車，往冰淇淋店開去。那個晚上投票結果是香草口味，當買好香草冰淇淋到車上後，車子又秀逗了。
這位工程師之後又依約來了三個晚上。
第一晚，巧克力冰淇淋，車子沒事。
第二晚，草莓冰淇淋，車子也沒事。
第三晚，香草冰淇淋，車子 “ 秀逗 ”。
這位思考有邏輯的工程師，到目前還是死不相信這位仁兄的車子對香草過敏。至此，他仍然不放棄繼續安排相同的行程，希望能夠將這個問題解決。
工程師開始記下從頭到現在所發生的種種詳細資料，如時間、車子使用油的種類、車子開出及開回的時間…，根據資料顯示他有了一個結論，這位仁兄買香草冰淇淋所花的時間比其他口味的要少。
為什麼呢？原因是出在這家冰淇淋店的內部設置的問題。因為，香草冰淇淋是所有冰淇淋口味中最暢銷的口味，店家為了讓顧客每次都能很快的取拿，將香草口味特別分開陳列在單獨的冰櫃，並將冰櫃放置在店的前端；至於其他口味則放在距離收銀檯較遠的後端。
現在，工程師所要知道的疑問是，為什麼這部車會因為從熄火到重新啟動的時間較短時就會秀逗？原因很清楚，絕對不是因為香草冰淇淋的關係，工程師很快的由心中浮現出，答案應該是 “ 蒸氣鎖 ”。
因為當這位仁兄買其他口味時，由於時間較久，引擎有足夠的時間散熱，重新發動時就沒有太大的問題。但是買香草口味時，由於花的時間較短，引擎太熱以至於還無法讓 “ 蒸氣瑣 ”有足夠的散熱時間。
讀後感想：
即使有些問題看起來真的是瘋狂，而且有時候它還是真的存在；但是如果我們下次在看待任何問題並秉持著冷靜的思考去找尋解決的方法，這些問題將看起來就比較簡單不那麼複雜。
所以碰到問題時不要直接就反應說那是不可能的（IMPOSSIBLE），而沒有投入一些真誠的努力。
仔細觀察
“ 不可能 ”這個字【IMPOSSIBLE】，你也許可以看到 “ 我可能 ”【I’M POSSIBLE】
這個差別的關鍵乃在於我們在看待一件事情的 “ 態度 ”及 “ 理解力”。
12/08/2008
別叫錯人起床
從前從前有一個尼姑跟一個屠夫是好朋友，尼姑天天早上要起來念經，而屠夫天天要起來殺豬。
為了不耽誤他們早上的工作，於是他們約定互相叫對方起床，多年以後....
尼姑與屠夫相繼去逝了。
屠夫上天堂了
而尼姑卻下地獄了!!
why?? why?? why?? why?? why??
因為屠夫天天作善事，叫尼姑起來念經；相反地，尼姑天天叫屠夫起來殺生。
看完了給您什麼啟示？
為了不耽誤他們早上的工作，於是他們約定互相叫對方起床，多年以後....
尼姑與屠夫相繼去逝了。
屠夫上天堂了
而尼姑卻下地獄了!!
why?? why?? why?? why?? why??
因為屠夫天天作善事，叫尼姑起來念經；相反地，尼姑天天叫屠夫起來殺生。
看完了給您什麼啟示？
Operations and the Competitive Edge
Obstacles facing companies in today's hyper-competitive global markets are seemingly more complex than ever, to the point that managers must rethink many of the basic principles of good operations management, says Robert Hayes.
In a new book, Hayes and three co-authors from Harvard Business School—Gary Pisano, David Upton, and Steven Wheelwright—show how a well-designed operations function can become a strategic competitive weapon.
Their book is titled Operations, Strategy, and Technology: Pursuing the Competitive Edge (Wiley). For the authors, operations includes "all those activities required to create and deliver a product or service, from procurement through conversion to distribution."
In the following interview, Hayes explains why operations usually gets relegated to a support role and what needs to be done to put it front and center in your organization. Prior to his appointment to the Harvard Faculty in 1966, Hayes worked for IBM and McKinsey & Company. He is currently the School's Philip Caldwell Professor of Business Administration, Emeritus.
Martha Lagace: You write in the book that many managers relegate operations organizations to a support role. Tell us where the four of you see the place for operations, and some of the hurdles that operations might face getting there.
Robert Hayes: Most companies in the late 1990s were preoccupied with keeping up with burgeoning demand, and exploring the possibilities created by the explosion of information and telecommunications technologies, particularly the Internet, which enabled entirely new ways to communicate with customers and suppliers, as well as internally. This was the era when everybody was developing new initiatives in B2C (business-to-consumer) communications and B2B (business-to-business) supply chains, installing ERP (enterprise resource planning systems, as exemplified by SAP), and worrying about Y2K. The threat posed to our economy by Japan and Germany had eased, the stock market was going crazy, and everybody was pursuing dot-com start-ups.
In that kind of climate, traditional operations took somewhat of a back seat. There were just too many new things to think about and explore, and everybody's attention was focused on "breakthrough improvements," so the mandate for operations became "just keep up with business while we pursue the pot of gold at the end of the rainbow everyone sees out there."
Now, of course, the economic bubble has burst, the "easy money" is gone, and managers are worrying about how to stay competitive in the new world economy that has emerged. It's time, once again, to concentrate attention on your core business, squeeze out the waste, and focus on how to differentiate yourself from your competitors in meaningful ways. But the tools available to—and the challenges facing—companies are so much greater now than before, that managers have to rethink many of the basic principles of good operations management that they have adopted in the past and decide if these are still appropriate in today's world. And, if not (for a variety of reasons that we describe in the book), what new principles and methodologies should replace them?
Q: Your book focuses on strategy, technologies, and encouraging/managing improvement. Could you give us a snapshot of the general challenges and opportunities in each of these three areas?
A: The basic theme of the book is that there isn't "one best way" to do anything—whether it's creating an organizational structure; hiring, training, and motivating a sales force; or designing and managing an operations organization. The best way to do something depends critically on the characteristics and capabilities of your organization and the competitive context in which it finds itself. That is, lean manufacturing shouldn't necessarily be the goal for every company any more than mass production or mass customization should be.
So the book's first section, on operations strategy, focuses on how a company can go about creating an operations organization and approach that best fits and supports a particular business's economic environment and chosen competitive strategy.
Managers have to rethink many of the basic principles of good operations management.
The second section applies that point to choosing and designing operating technologies, particularly information technologies. IT is becoming critically important in operations, as it is in all other aspects of business, but we see too many companies adopting "cookie cutter" software packages, and seeking the assistance of facilitators that adopt one-size-fits-all approaches. One has to approach the development and implementation of an IT system—in fact, of any key process technology—in a way that is sensitive to one's organizational capabilities and competitive priorities.
And the same is true of improvement efforts. People (and too many books directed at managers) often appear to assume that the biggest problem is simply getting their organizations to realize that they need to improve. They say that once that need is accepted, and management commits to supporting the improvement effort and applying continual pressure, it will happen. We point out that while managers obviously need to accept the importance of internalizing the desire to improve, and provide that effort with ongoing support and leadership, there are different approaches that can be taken in seeking improvement.
One has to adopt a strategy for improvement that fits the specific needs of the organization at that point in its life. Slow, steady improvement is appropriate in some situations, and attempts at dramatic breakthroughs through process reengineering are appropriate in others. Moreover, different improvement strategies require different resources, management styles, and support structures. They not only require different organizational capabilities, they also create new capabilities.
Q: You write, "Companies too often treat decisions about operations on an ad hoc basis, regarding them as a series of technical problems that can be surmounted one by one without regard for the interactions among them." How should senior managers guide the organization?
A: Since there isn't one best way to do anything, it naturally follows that senior managers can't simply delegate critical decisions involving operations, the adoption of IT or other technologies, and improvement efforts to "experts," whether they're internal or external (e.g., consulting firms).
Such experts are likely to make decisions based on what has worked at other companies or even at your own company in the past. But your company (and, in particular, its competitive strategy) may have changed over time, and/or be different from these other companies in critical ways. So top managers have to get involved in these decisions, to ensure that these decisions are based on a complete understanding of what the company hopes to achieve, what it has the resources to support, and how they fit with the other activities that are underway.
Q: Tell us about teams. You and your co-authors say "team" is one of the most overused and least understood words in the current management vocabulary. Why?
A: We're not against "teams" per se. After all, the authors of this book are, in a sense, a team. What we argue against is some people's apparent assumption that, first, teams are the solution to all problems and, second, that simply assigning a group of people to work together makes them a team.
We point out that assigning a team to carry out a job may not always be the best way. Sometimes it's more effective to let a gifted individual do it by him or herself or with the help of a few selected subordinates. Moreover, as we see every day in sporting contexts, there are such things as bad teams: teams that aren't very successful and cause their participants to perform more poorly than if they worked alone.
In the book we address the different ways teams, particularly project teams, can be organized, and the key supporting activities that have to be undertaken in order to prepare people to be effective team leaders (or team members). We also provide guidance as to how senior managers can manage a portfolio of team projects, and monitor their ongoing activities effectively.
Q: Which companies exemplify the best in operations vis-à-vis strategy? What are they doing differently from their competitors?
A: The companies that jump to most people's minds are big ones, such as Dell Computer, Southwest Airlines, Toyota, and Wal-Mart. But there are lots of smaller ones that are not as well known, several of which are described in our book. All these companies compete in markets that have long existed, and in which they were minor players up to a few years ago. None offers products or services that are markedly different from those their competitors offer.
The basic theme of the book is that there isn't one best way to do anything.
None has chosen a highly unusual competitive strategy. For example, lots of companies try to compete on the basis of low cost, or high reliability, or fast response. All have risen to industry dominance because they adopted and followed a consistent, coherent strategy for operations, and through operating superiority have been able to achieve lower cost, better reliability, or faster responsiveness than their competitors have been able to provide.
Q: You don't seem to be particularly enthusiastic about TQM, process reengineering, and several of the other operational improvement programs that have been so popular in the past. Why not?
A: That's not true! We often have recommended in our writing and consulting both TQM and reengineering, as well as other types of improvement programs. And we've seen many of these programs produce excellent results.
But we've also seen even more fail. In fact, a number of studies have shown that about two-thirds of these programs "fail" in the sense that they don't produce the results expected of them (the same success ratio, by the way, has been experienced with the implementation of ERP systems). Many commentators suggest that the primary reason for these failures is poor implementation, particularly a lack of sufficient, forceful leadership by top management, and that's certainly an important factor in many cases. But in our book we point out that another reason for many failures is that the selected improvement program simply may not be appropriate for that organization. TQM is appropriate in some cases; process reengineering in others, and lean manufacturing in still others. But none is appropriate for all companies all the time—the basic theme of our book.
Q: It's pretty unique to write a book with four co-authors. How did your collaboration for Pursuing the Competitive Edge come about?
A: An earlier book, Restoring Our Competitive Edge: Competing Through Manufacturing, that Steve Wheelwright and I wrote, had been so successful—it won a Best Book in Business & Economics award from the Association of American Publishers—that in the early '90s our publisher, John Wiley, asked us if we would develop a new, updated edition. Steve and I did some preliminary thinking about this, even prepared a possible chapter outline, but then got distracted by other commitments: I was serving as the School's Senior Associate Dean for Faculty Planning and Development, and Steve was Director of the MBA program.
By the time we had a chance to think seriously about this project again, in the late '90s, we came to the conclusion that a simple "update" was no longer appropriate. The world had changed so profoundly since the early '80s when we wrote the previous book, and the concerns of managers were so different, that what was required was a complete reconceptualization of that first book. Moreover, this reconceptualization would have to include several topic areas, such as outsourcing and information technology, that were moving so rapidly that we no longer felt we were the best informed people to write about them. So we enticed two of our colleagues, Gary Pisano and Dave Upton, who were experts in those fields, to contribute their expertise and share the load. Both had been working with us on other teaching and research projects, and fortunately both also saw a need for this "new" kind of book.
In a new book, Hayes and three co-authors from Harvard Business School—Gary Pisano, David Upton, and Steven Wheelwright—show how a well-designed operations function can become a strategic competitive weapon.
Their book is titled Operations, Strategy, and Technology: Pursuing the Competitive Edge (Wiley). For the authors, operations includes "all those activities required to create and deliver a product or service, from procurement through conversion to distribution."
In the following interview, Hayes explains why operations usually gets relegated to a support role and what needs to be done to put it front and center in your organization. Prior to his appointment to the Harvard Faculty in 1966, Hayes worked for IBM and McKinsey & Company. He is currently the School's Philip Caldwell Professor of Business Administration, Emeritus.
Martha Lagace: You write in the book that many managers relegate operations organizations to a support role. Tell us where the four of you see the place for operations, and some of the hurdles that operations might face getting there.
Robert Hayes: Most companies in the late 1990s were preoccupied with keeping up with burgeoning demand, and exploring the possibilities created by the explosion of information and telecommunications technologies, particularly the Internet, which enabled entirely new ways to communicate with customers and suppliers, as well as internally. This was the era when everybody was developing new initiatives in B2C (business-to-consumer) communications and B2B (business-to-business) supply chains, installing ERP (enterprise resource planning systems, as exemplified by SAP), and worrying about Y2K. The threat posed to our economy by Japan and Germany had eased, the stock market was going crazy, and everybody was pursuing dot-com start-ups.
In that kind of climate, traditional operations took somewhat of a back seat. There were just too many new things to think about and explore, and everybody's attention was focused on "breakthrough improvements," so the mandate for operations became "just keep up with business while we pursue the pot of gold at the end of the rainbow everyone sees out there."
Now, of course, the economic bubble has burst, the "easy money" is gone, and managers are worrying about how to stay competitive in the new world economy that has emerged. It's time, once again, to concentrate attention on your core business, squeeze out the waste, and focus on how to differentiate yourself from your competitors in meaningful ways. But the tools available to—and the challenges facing—companies are so much greater now than before, that managers have to rethink many of the basic principles of good operations management that they have adopted in the past and decide if these are still appropriate in today's world. And, if not (for a variety of reasons that we describe in the book), what new principles and methodologies should replace them?
Q: Your book focuses on strategy, technologies, and encouraging/managing improvement. Could you give us a snapshot of the general challenges and opportunities in each of these three areas?
A: The basic theme of the book is that there isn't "one best way" to do anything—whether it's creating an organizational structure; hiring, training, and motivating a sales force; or designing and managing an operations organization. The best way to do something depends critically on the characteristics and capabilities of your organization and the competitive context in which it finds itself. That is, lean manufacturing shouldn't necessarily be the goal for every company any more than mass production or mass customization should be.
So the book's first section, on operations strategy, focuses on how a company can go about creating an operations organization and approach that best fits and supports a particular business's economic environment and chosen competitive strategy.
Managers have to rethink many of the basic principles of good operations management.
The second section applies that point to choosing and designing operating technologies, particularly information technologies. IT is becoming critically important in operations, as it is in all other aspects of business, but we see too many companies adopting "cookie cutter" software packages, and seeking the assistance of facilitators that adopt one-size-fits-all approaches. One has to approach the development and implementation of an IT system—in fact, of any key process technology—in a way that is sensitive to one's organizational capabilities and competitive priorities.
And the same is true of improvement efforts. People (and too many books directed at managers) often appear to assume that the biggest problem is simply getting their organizations to realize that they need to improve. They say that once that need is accepted, and management commits to supporting the improvement effort and applying continual pressure, it will happen. We point out that while managers obviously need to accept the importance of internalizing the desire to improve, and provide that effort with ongoing support and leadership, there are different approaches that can be taken in seeking improvement.
One has to adopt a strategy for improvement that fits the specific needs of the organization at that point in its life. Slow, steady improvement is appropriate in some situations, and attempts at dramatic breakthroughs through process reengineering are appropriate in others. Moreover, different improvement strategies require different resources, management styles, and support structures. They not only require different organizational capabilities, they also create new capabilities.
Q: You write, "Companies too often treat decisions about operations on an ad hoc basis, regarding them as a series of technical problems that can be surmounted one by one without regard for the interactions among them." How should senior managers guide the organization?
A: Since there isn't one best way to do anything, it naturally follows that senior managers can't simply delegate critical decisions involving operations, the adoption of IT or other technologies, and improvement efforts to "experts," whether they're internal or external (e.g., consulting firms).
Such experts are likely to make decisions based on what has worked at other companies or even at your own company in the past. But your company (and, in particular, its competitive strategy) may have changed over time, and/or be different from these other companies in critical ways. So top managers have to get involved in these decisions, to ensure that these decisions are based on a complete understanding of what the company hopes to achieve, what it has the resources to support, and how they fit with the other activities that are underway.
Q: Tell us about teams. You and your co-authors say "team" is one of the most overused and least understood words in the current management vocabulary. Why?
A: We're not against "teams" per se. After all, the authors of this book are, in a sense, a team. What we argue against is some people's apparent assumption that, first, teams are the solution to all problems and, second, that simply assigning a group of people to work together makes them a team.
We point out that assigning a team to carry out a job may not always be the best way. Sometimes it's more effective to let a gifted individual do it by him or herself or with the help of a few selected subordinates. Moreover, as we see every day in sporting contexts, there are such things as bad teams: teams that aren't very successful and cause their participants to perform more poorly than if they worked alone.
In the book we address the different ways teams, particularly project teams, can be organized, and the key supporting activities that have to be undertaken in order to prepare people to be effective team leaders (or team members). We also provide guidance as to how senior managers can manage a portfolio of team projects, and monitor their ongoing activities effectively.
Q: Which companies exemplify the best in operations vis-à-vis strategy? What are they doing differently from their competitors?
A: The companies that jump to most people's minds are big ones, such as Dell Computer, Southwest Airlines, Toyota, and Wal-Mart. But there are lots of smaller ones that are not as well known, several of which are described in our book. All these companies compete in markets that have long existed, and in which they were minor players up to a few years ago. None offers products or services that are markedly different from those their competitors offer.
The basic theme of the book is that there isn't one best way to do anything.
None has chosen a highly unusual competitive strategy. For example, lots of companies try to compete on the basis of low cost, or high reliability, or fast response. All have risen to industry dominance because they adopted and followed a consistent, coherent strategy for operations, and through operating superiority have been able to achieve lower cost, better reliability, or faster responsiveness than their competitors have been able to provide.
Q: You don't seem to be particularly enthusiastic about TQM, process reengineering, and several of the other operational improvement programs that have been so popular in the past. Why not?
A: That's not true! We often have recommended in our writing and consulting both TQM and reengineering, as well as other types of improvement programs. And we've seen many of these programs produce excellent results.
But we've also seen even more fail. In fact, a number of studies have shown that about two-thirds of these programs "fail" in the sense that they don't produce the results expected of them (the same success ratio, by the way, has been experienced with the implementation of ERP systems). Many commentators suggest that the primary reason for these failures is poor implementation, particularly a lack of sufficient, forceful leadership by top management, and that's certainly an important factor in many cases. But in our book we point out that another reason for many failures is that the selected improvement program simply may not be appropriate for that organization. TQM is appropriate in some cases; process reengineering in others, and lean manufacturing in still others. But none is appropriate for all companies all the time—the basic theme of our book.
Q: It's pretty unique to write a book with four co-authors. How did your collaboration for Pursuing the Competitive Edge come about?
A: An earlier book, Restoring Our Competitive Edge: Competing Through Manufacturing, that Steve Wheelwright and I wrote, had been so successful—it won a Best Book in Business & Economics award from the Association of American Publishers—that in the early '90s our publisher, John Wiley, asked us if we would develop a new, updated edition. Steve and I did some preliminary thinking about this, even prepared a possible chapter outline, but then got distracted by other commitments: I was serving as the School's Senior Associate Dean for Faculty Planning and Development, and Steve was Director of the MBA program.
By the time we had a chance to think seriously about this project again, in the late '90s, we came to the conclusion that a simple "update" was no longer appropriate. The world had changed so profoundly since the early '80s when we wrote the previous book, and the concerns of managers were so different, that what was required was a complete reconceptualization of that first book. Moreover, this reconceptualization would have to include several topic areas, such as outsourcing and information technology, that were moving so rapidly that we no longer felt we were the best informed people to write about them. So we enticed two of our colleagues, Gary Pisano and Dave Upton, who were experts in those fields, to contribute their expertise and share the load. Both had been working with us on other teaching and research projects, and fortunately both also saw a need for this "new" kind of book.
What Really Drives Your Strategy?
"While companies might have an intended strategy, the strategy that actually emerges can be very different," says HBS professor Clark G. Gilbert. It is a topic that Gilbert and professor Joseph L. Bower have explored at length for a new book they have edited, From Resource Allocation to Strategy, published by Oxford University Press. Contributors to the book include Harvard Business School's Clayton M. Christensen, Walter Kuemmerle, and Thomas R. Eisenmann, as well as nine other scholars.
Bower and Gilbert recently sat down with HBS Working Knowledge to explain how internal and external factors play a surprising role in strategy formulation and execution. As Gilbert explains, "A lot of our book is about understanding (a) that realized strategy is often different from intended strategy, and (b) there are forces that shape strategy in unintended ways."
Martha Lagace: Professor Bower, since 1970 you have articulated views on the resource allocation process and how it fundamentally shapes corporate strategy. Could you give us a brief overview of the resource allocation process?
Bower: Organizations of any size are built around a series of building blocks, and the bigger the company the more responsibility in those building blocks. Today they are called SBUs—Strategic Business Units—or they are country organizations. The people who run them have a lot of responsibility. If you add up what those people actually do, which ideas they choose to bring forward, and which of those get funded, the consequences of that activity is what adds up to the strategy of the company, not words on paper.
And once you see that, you begin to ask questions such as: What determines which ideas get sponsored and funded? If I'm the top management, how can I shape that process, manage it, and give it direction?
That's what our new book, From Resource Allocation to Strategy, is about. People have studied the process in various ways, first to understand how it works and then to understand how it breaks down; and then to understand how it has worked in particular circumstances like high tech or in multinationals—and then how to manage it better. The answers to those "how" questions are the first four sections of the book.
Gilbert: The key is that what can be understood as the strategy of a company is more than the statement of strategy as presented in company documents or written plans, but is the actual aggregation of commitments and their relationship to the realized strategy of the firm.
If I'm the top management, how can I shape that process, manage it, and give it direction?—Joseph L. Bower
While companies might have an intended strategy, the strategy that actually emerges can be very different. A lot of our book is about understanding (a) that realized strategy is often different from intended strategy, and (b) there are forces that shape strategy in unintended ways. This second point highlights that the structure of the resource allocation process itself can actually shape the realized strategy of the firm. This can include internal reporting structures and incentive systems, but it can also reflect external factors such as capital markets and customers.
One of the criticisms we would have of some of our colleagues who have studied strategy (and some consultants who advise on strategy) is that they assume that once you design strategy it gets executed. They don't look inside the process and realize that it's much more complicated.
Bower: It's almost as if they think strategy is like a software program: You pop it in the company and boot it up and all of a sudden it works. It's anything but that.
Q: In your preface, you explain that there has been less progress in the strategy field understanding the interaction between economic forces and organizational pressures than you have expected. Why is this so?
Bower: In the 1970s, economic growth in industrial countries began to slow down. All of a sudden companies found that they couldn't do everything. They had to make some choices and needed a way to think about it. The economics of strategy seems to be a very powerful way of making some sense, and it is; but I don't think they spent enough time understanding what it took to make sure that the specific plans—which products to make in which kind of facility, located where, using which technologies, selling to which customers—were lined up with more abstract notions about economic strategy.
It turns out that all those specifics are determined lower down in the organization. Even if you get the plan right, implementing it is a whole other project. Some of Clark's research in the book deals with the extent to which the operating organization also has to be converted so you can implement new ideas.
Gilbert: One of the frustrations that can emerge as we talk to people who work with or study strategy is they read these ideas and say, "OK, so the resource allocation is complicated and it can get in the way of the execution of our great strategy ideas."
They fail to recognize that it can also go the other way: that sometimes the content of strategy can come from the operating levels of the firm. So it's not just that resource allocation "gets in the way of implementation," it's that research allocation can lead firms in a whole new direction—and that direction might be the right way to go, or the wrong way. In either case, it needs to be understood and managed.
For people running or advising large organizations about strategy, the obvious implication is: Let's not understand the resource allocation process just so we can implement ideas, but let's also understand it because that's where the ideas often come from in the first place.
Q: What are the main findings of your research on the resource allocation process?
Gilbert: In certain settings, the resource allocation process is inherently a multi-level process in that the manager in the middle and the operating manager have just as big an impact on strategy as corporate-level managers.
One of the examples we use in the book is Intel. While the corporate office continued to conceive of Intel as a memory chip company, an operating rule in their manufacturing organization (to maximize gross margin per wafer of square inch) meant that the manufacturing floor was increasingly allocating more space to microprocessors. As that more profitable market grew, Intel became a microprocessor company, not a memory company. These operating level decisions changed the de facto strategy of the firm prior to the corporate office's conception of the company strategy. It's one of the more powerful examples of how operating managers can have a huge impact on the real-life strategy of the firm.
Bower: The other side of that is, they wouldn't have had the choice if Gordon Moore didn't buy back the technology. So essentially what we look at is the roles of the top, bottom, and middle, how they interact, and how the top can provide guidance.
In the '70s, as companies began to understand that they didn't have enough resources, they realized that to win in a competitive battle in one business they had to commit to enough resources to do whatever was necessary to gain scale and capture market share. They discovered that they generally didn't have enough to fund all the businesses in which they were trying to compete. So they had to get out of some businesses or at least harvest them.
And when they looked at the way they allocated resources, it had nothing to do with those imperatives. What they were doing was simply allocating resources to projects on the assumption that all the businesses were fine. So, one of the ways in which the ideas of our book really got implemented at that time was around what I would call strategic resource allocation systems. Consultants began to help companies see that they had to make fairly radical choices at the top, but to do so they needed a very different kind of planning from the bottom.
Operating managers often constrain strategy adaptation in ways that are very powerful.—Clark G. Gilbert
Gilbert: The same problem exists today. We have just talked to a large financial services firm that has spent millions of dollars building a formal resource allocation system, yet all their efforts have been at the very senior levels of management. The decisions were made only in budgeting processes. As we walked through this research with them, they could see the impact that middle level and operating managers have on the process, both on its implementation and on the ideas that arise. I think they realized that they couldn't just hardwire their planning system into the budgeting process; all these other elements have an impact as well.
Q: What role do customers play?
Bower: In the ordinary course of events, when managers of business units make proposals for investments, they are almost always driven by opportunities to grow and the need for resources to do so.
When you are competing for resources with other business units, the most powerful argument you can make is that important customers want it and will commit. If you think about the mantras we have today such as "Get close to the customer" and "Fast to market," all of those kinds of ideas mean that the business unit is getting closer and closer to its best customers. And what the best customers want, the best customers get. There is detailed research in our book about how customers can almost capture the resource allocation process.
Gilbert: How customers capture the resource allocation process at every level happens in ways that are not always intuitive to people who think about strategy as a top-down planning process. For example, customers can capture what gets considered in a formal budgeting meeting because the pricing and margin implications that underlie a business model are linked to existing customer preferences.
But the challenge is not confined to formal budgeting meetings. Operating managers often constrain strategy adaptation in ways that are very powerful. We have seen this in the response of print media organizations to the Internet. For example, senior management at a U.S. newspaper company says, "We need to get into the Internet, we need to prioritize this and make a big investment." But then at the operating level of the firm you have a sales rep who is used to selling a display ad for $40,000. The new business has a lower gross margin, the customer who is buying it isn't the rep's traditional customer, and the price point isn't the same. And so that sale rep says, "Well, I can sell a $40,000 display ad, or I can go out and find one of these new customers and sell them a $2,000 banner ad." Every day as that sales rep comes into work he makes a resource allocation decision at the operating level—how to allocate his time and attention—which de facto keeps the investment from happening, even though financial resources have been procured.
So this is a case where the customers capture the resource allocation process not just in budgeting, but in the operating levels of the firm.
Bower: Other examples in our book are very different. The field of medical devices is one in which successful companies have their sales technicians literally in the operating room with the doctor. One of the biggest problems in the field of medical devices today is cost control. It turns out that the last thing the surgeon in the OR thinks about is how, on a total cost basis, to deliver a service in a lower cost way.
Gilbert: Especially if it doesn't include the doctor.
Bower: So a medical devices firm is going to have to rethink the whole way in which ideas are developed and funded in order to respond to something which the top can see clearly: that cost containment is a big issue.
Q: What role do capital markets play in the resource allocation process?
Bower: Capital markets play an important role in several ways. To begin, companies can write whatever they want about growth in their strategy or annual report, but top management responds to the capital market's need for quarterly earnings, and it turns out that quarterly earnings drive the resource allocation process. That takes the following form: It means that the projects and plans that get approved are the ones that deliver earnings in the short term. This is a very big problem, because it happens even when managers wish it didn't.
Another very interesting way the markets are influential is that when companies begin to run down, when the quality of their performance deteriorates, it's often true that the internal processes of the firm don't really respond. Management keeps saying, "What we need is to pour more money into these businesses because then we'll fix them." Quite often it's the bankers or bond holders or their representatives on the board of directors who exert pressure to really change failing companies.
Unfortunately, it often takes a crisis, which then leads to a new chief executive. One of the chapters in our book, by Donald Sull of London Business School, develops a brilliant example from the tire industry. During the 1970s, most of the tire companies were investing in old technology and in the technology that was making it obsolete—at the same time. Eventually the capital markets had their way.
Q: What are you both working on next?
Gilbert: Right now I am looking at a couple of new research areas. One is how what we've observed about the resource allocation process in large, complex organizations applies when considering small, emerging firms. And related to that, I am exploring how resource allocation patterns shape strategy redirection efforts in new venture settings.
We know that strategies in new ventures often require frequent redirection. What are the things that will help those redirections occur, both in large company settings as well as in new start-up settings? There are very interesting interactions in terms of how resources are allocated, both in the amounts and in the timing and sequencing of resource allocation.
Bower: One consequence of this research is that we have begun to get a picture of just how complex a job it is to manage a large corporation. And in this way, in a sense, we have gained a much better sense of how the corporate office adds value. So my work right now is trying to express what corporate value added is. Most business units think that "corporate adds overhead and that's about it." But in fact, great corporate offices do a number of very important things in driving a company.
I'm also writing a book right now on succession. Probably the most vital work of the corporate office is making sure that leadership continues over time.
Bower and Gilbert recently sat down with HBS Working Knowledge to explain how internal and external factors play a surprising role in strategy formulation and execution. As Gilbert explains, "A lot of our book is about understanding (a) that realized strategy is often different from intended strategy, and (b) there are forces that shape strategy in unintended ways."
Martha Lagace: Professor Bower, since 1970 you have articulated views on the resource allocation process and how it fundamentally shapes corporate strategy. Could you give us a brief overview of the resource allocation process?
Bower: Organizations of any size are built around a series of building blocks, and the bigger the company the more responsibility in those building blocks. Today they are called SBUs—Strategic Business Units—or they are country organizations. The people who run them have a lot of responsibility. If you add up what those people actually do, which ideas they choose to bring forward, and which of those get funded, the consequences of that activity is what adds up to the strategy of the company, not words on paper.
And once you see that, you begin to ask questions such as: What determines which ideas get sponsored and funded? If I'm the top management, how can I shape that process, manage it, and give it direction?
That's what our new book, From Resource Allocation to Strategy, is about. People have studied the process in various ways, first to understand how it works and then to understand how it breaks down; and then to understand how it has worked in particular circumstances like high tech or in multinationals—and then how to manage it better. The answers to those "how" questions are the first four sections of the book.
Gilbert: The key is that what can be understood as the strategy of a company is more than the statement of strategy as presented in company documents or written plans, but is the actual aggregation of commitments and their relationship to the realized strategy of the firm.
If I'm the top management, how can I shape that process, manage it, and give it direction?—Joseph L. Bower
While companies might have an intended strategy, the strategy that actually emerges can be very different. A lot of our book is about understanding (a) that realized strategy is often different from intended strategy, and (b) there are forces that shape strategy in unintended ways. This second point highlights that the structure of the resource allocation process itself can actually shape the realized strategy of the firm. This can include internal reporting structures and incentive systems, but it can also reflect external factors such as capital markets and customers.
One of the criticisms we would have of some of our colleagues who have studied strategy (and some consultants who advise on strategy) is that they assume that once you design strategy it gets executed. They don't look inside the process and realize that it's much more complicated.
Bower: It's almost as if they think strategy is like a software program: You pop it in the company and boot it up and all of a sudden it works. It's anything but that.
Q: In your preface, you explain that there has been less progress in the strategy field understanding the interaction between economic forces and organizational pressures than you have expected. Why is this so?
Bower: In the 1970s, economic growth in industrial countries began to slow down. All of a sudden companies found that they couldn't do everything. They had to make some choices and needed a way to think about it. The economics of strategy seems to be a very powerful way of making some sense, and it is; but I don't think they spent enough time understanding what it took to make sure that the specific plans—which products to make in which kind of facility, located where, using which technologies, selling to which customers—were lined up with more abstract notions about economic strategy.
It turns out that all those specifics are determined lower down in the organization. Even if you get the plan right, implementing it is a whole other project. Some of Clark's research in the book deals with the extent to which the operating organization also has to be converted so you can implement new ideas.
Gilbert: One of the frustrations that can emerge as we talk to people who work with or study strategy is they read these ideas and say, "OK, so the resource allocation is complicated and it can get in the way of the execution of our great strategy ideas."
They fail to recognize that it can also go the other way: that sometimes the content of strategy can come from the operating levels of the firm. So it's not just that resource allocation "gets in the way of implementation," it's that research allocation can lead firms in a whole new direction—and that direction might be the right way to go, or the wrong way. In either case, it needs to be understood and managed.
For people running or advising large organizations about strategy, the obvious implication is: Let's not understand the resource allocation process just so we can implement ideas, but let's also understand it because that's where the ideas often come from in the first place.
Q: What are the main findings of your research on the resource allocation process?
Gilbert: In certain settings, the resource allocation process is inherently a multi-level process in that the manager in the middle and the operating manager have just as big an impact on strategy as corporate-level managers.
One of the examples we use in the book is Intel. While the corporate office continued to conceive of Intel as a memory chip company, an operating rule in their manufacturing organization (to maximize gross margin per wafer of square inch) meant that the manufacturing floor was increasingly allocating more space to microprocessors. As that more profitable market grew, Intel became a microprocessor company, not a memory company. These operating level decisions changed the de facto strategy of the firm prior to the corporate office's conception of the company strategy. It's one of the more powerful examples of how operating managers can have a huge impact on the real-life strategy of the firm.
Bower: The other side of that is, they wouldn't have had the choice if Gordon Moore didn't buy back the technology. So essentially what we look at is the roles of the top, bottom, and middle, how they interact, and how the top can provide guidance.
In the '70s, as companies began to understand that they didn't have enough resources, they realized that to win in a competitive battle in one business they had to commit to enough resources to do whatever was necessary to gain scale and capture market share. They discovered that they generally didn't have enough to fund all the businesses in which they were trying to compete. So they had to get out of some businesses or at least harvest them.
And when they looked at the way they allocated resources, it had nothing to do with those imperatives. What they were doing was simply allocating resources to projects on the assumption that all the businesses were fine. So, one of the ways in which the ideas of our book really got implemented at that time was around what I would call strategic resource allocation systems. Consultants began to help companies see that they had to make fairly radical choices at the top, but to do so they needed a very different kind of planning from the bottom.
Operating managers often constrain strategy adaptation in ways that are very powerful.—Clark G. Gilbert
Gilbert: The same problem exists today. We have just talked to a large financial services firm that has spent millions of dollars building a formal resource allocation system, yet all their efforts have been at the very senior levels of management. The decisions were made only in budgeting processes. As we walked through this research with them, they could see the impact that middle level and operating managers have on the process, both on its implementation and on the ideas that arise. I think they realized that they couldn't just hardwire their planning system into the budgeting process; all these other elements have an impact as well.
Q: What role do customers play?
Bower: In the ordinary course of events, when managers of business units make proposals for investments, they are almost always driven by opportunities to grow and the need for resources to do so.
When you are competing for resources with other business units, the most powerful argument you can make is that important customers want it and will commit. If you think about the mantras we have today such as "Get close to the customer" and "Fast to market," all of those kinds of ideas mean that the business unit is getting closer and closer to its best customers. And what the best customers want, the best customers get. There is detailed research in our book about how customers can almost capture the resource allocation process.
Gilbert: How customers capture the resource allocation process at every level happens in ways that are not always intuitive to people who think about strategy as a top-down planning process. For example, customers can capture what gets considered in a formal budgeting meeting because the pricing and margin implications that underlie a business model are linked to existing customer preferences.
But the challenge is not confined to formal budgeting meetings. Operating managers often constrain strategy adaptation in ways that are very powerful. We have seen this in the response of print media organizations to the Internet. For example, senior management at a U.S. newspaper company says, "We need to get into the Internet, we need to prioritize this and make a big investment." But then at the operating level of the firm you have a sales rep who is used to selling a display ad for $40,000. The new business has a lower gross margin, the customer who is buying it isn't the rep's traditional customer, and the price point isn't the same. And so that sale rep says, "Well, I can sell a $40,000 display ad, or I can go out and find one of these new customers and sell them a $2,000 banner ad." Every day as that sales rep comes into work he makes a resource allocation decision at the operating level—how to allocate his time and attention—which de facto keeps the investment from happening, even though financial resources have been procured.
So this is a case where the customers capture the resource allocation process not just in budgeting, but in the operating levels of the firm.
Bower: Other examples in our book are very different. The field of medical devices is one in which successful companies have their sales technicians literally in the operating room with the doctor. One of the biggest problems in the field of medical devices today is cost control. It turns out that the last thing the surgeon in the OR thinks about is how, on a total cost basis, to deliver a service in a lower cost way.
Gilbert: Especially if it doesn't include the doctor.
Bower: So a medical devices firm is going to have to rethink the whole way in which ideas are developed and funded in order to respond to something which the top can see clearly: that cost containment is a big issue.
Q: What role do capital markets play in the resource allocation process?
Bower: Capital markets play an important role in several ways. To begin, companies can write whatever they want about growth in their strategy or annual report, but top management responds to the capital market's need for quarterly earnings, and it turns out that quarterly earnings drive the resource allocation process. That takes the following form: It means that the projects and plans that get approved are the ones that deliver earnings in the short term. This is a very big problem, because it happens even when managers wish it didn't.
Another very interesting way the markets are influential is that when companies begin to run down, when the quality of their performance deteriorates, it's often true that the internal processes of the firm don't really respond. Management keeps saying, "What we need is to pour more money into these businesses because then we'll fix them." Quite often it's the bankers or bond holders or their representatives on the board of directors who exert pressure to really change failing companies.
Unfortunately, it often takes a crisis, which then leads to a new chief executive. One of the chapters in our book, by Donald Sull of London Business School, develops a brilliant example from the tire industry. During the 1970s, most of the tire companies were investing in old technology and in the technology that was making it obsolete—at the same time. Eventually the capital markets had their way.
Q: What are you both working on next?
Gilbert: Right now I am looking at a couple of new research areas. One is how what we've observed about the resource allocation process in large, complex organizations applies when considering small, emerging firms. And related to that, I am exploring how resource allocation patterns shape strategy redirection efforts in new venture settings.
We know that strategies in new ventures often require frequent redirection. What are the things that will help those redirections occur, both in large company settings as well as in new start-up settings? There are very interesting interactions in terms of how resources are allocated, both in the amounts and in the timing and sequencing of resource allocation.
Bower: One consequence of this research is that we have begun to get a picture of just how complex a job it is to manage a large corporation. And in this way, in a sense, we have gained a much better sense of how the corporate office adds value. So my work right now is trying to express what corporate value added is. Most business units think that "corporate adds overhead and that's about it." But in fact, great corporate offices do a number of very important things in driving a company.
I'm also writing a book right now on succession. Probably the most vital work of the corporate office is making sure that leadership continues over time.
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