Posts Tagged ‘harvard business review’

Morning Star is a California-based tomato ingredient processing company founded on the principles of self-management. Employees at Morning Star initiate communications and coordinate activities without direction. No one among the company’s 400+ employees takes orders and nobody gives orders.

In the December 2011 edition of Harvard Business Review, Gary Hamel explored how Morning Star has created an organization that incorporates managerial discipline without hierarchy, titles and managers, achieving market-centric flexibility. While the concept of self-management may seem unfathomable to traditional thinkers, Morning Star has embraced this concept for over two decades, becoming a global market leader with 2010 revenues of over $700 million.

Annually each Morning Star employee negotiates a ‘Colleague Letter of Understanding’ with the associates they work with the most, to determine responsibilities. Each employee also has their own personal mission statement, which they are driven by. Employees are responsible for obtaining the training, cooperation and resources needed to achieve their mission. All employees are given access to the same system wide data, preventing information silos. Also all employees can spend the company’s money if they show return on investment and NPV calculations to demonstrate the business case behind their spending. In addition, overloaded employees have the flexibility and power to decide to hire new employees and all new hires go through a training session on self-management. Compensation decisions are based on individual contributions and determined by peers – building a good reputation is key.

The Advantages of Self-Management:

  • No time is wasted supervising others, increasing efficiency.
  • The lack of bureaucracy, results in faster decision-making, increasing the organization’s flexibility.
  • No centrally defined roles results in broader more complicated roles. Employees get to focus on what they’re good at, with unlimited scope to take on new responsibilities as their skills and experience increase.
  • Employees are empowered to imagine, innovate and contribute. Spontaneous change occurs from employees having the freedom to get involved anywhere where they think they can add value.
  • Employees value the freedom given and being treated like adults, increasing their company loyalty.

The Challenges of Self-Management:

  • Not everyone is suited to the Morning Star culture, particularly individuals that like to be told what to do and those that like to tell others what to do.
  • Cultural adjustment – takes time. New hires from traditional hierarchies will take time to adapt to the self-management environment.
  • Accountability can be challenging – everyone is responsible for peer regulation to ensure quality and service are maintained.
  • Lack of titles and promotions can make it extremely challenging for employees looking to transition in to roles with other companies.
  • In order to ensure the self-management culture is maintained growth through mergers and acquisitions is difficult to accomplish.

So what do you think? Would you want to work for a company with a self-management culture? Please share your thoughts in the comments section below.

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The latest Harvard Business Review case illustrates a theme park trying to decide whether to offer a reduced admission ticket on a social deal site. While a social deal would likely increase attendance numbers, there were concerns that social deal customers would not become loyal returning customers.

A Forbes report from last year illustrated that over 200 social deal sites reach more than 100 million people. Furthermore the social deal site market is predicted to grow to $6 billion by 2015. Here’s what business leaders need to know before committing to doing a social deal offer:

Attract New Customers: The big advantage to social deal sites is that they can help your business to attract a new group of customers. Last summer my husband and I wanted to go sailing on Lake Tahoe. We had never been before and had found three companies in the area that offered sailing excursions. One day I got an e-mail offering a LivingSocial half-price deal for Tahoe Sailing Charters. We were sold and I thought it was such a great deal I shared the deal information with a colleague who also went with her husband. According to LivingSocial 748 tickets for Tahoe Sailing Charters were purchased, not bad for a deal that ran during the off-peak season from late August through September.

Easier Short-term Sales Forecasting: Social deals require an up front purchase resulting in an organization knowing how many deals have been sold prior to the deal being redeemed.

Being Prepared For Increased Demand is Key: Preparation is key from increasing staffing levels during the promotion, to ensuring all staff are up to speed in order to win over these new customers. Corey Kaplan, owner of New York City Bagel Deli in Chicago gives some great advice in the video below on how a business can prepare to optimize their social deal site promotion: 

Negative Losses Can Occur: My advice to small businesses considering offering a deal through this channel would be to create a cap if possible to ensure demand doesn’t exceed supply capabilities. Small London business ‘Need a Cake bakery’ offered a 75% Groupon deal on their cup cakes. The deal was a lot more successful than the business owner had anticipated and attracted 8,500 people. The organization’s staff of eight employees struggled to make 102,000 cupcakes to meet the orders and the business lost approximately $20,000 on the deal. Also worth considering when determining what discount to offer is the social deal site’s commission percentage to ensure you can break even on the deal. Therefore products or services with high profit margins may be more suited to a successful social deal site campaign.

The Returning Customer Conundrum: Some reports suggest that customers that embrace daily deals are cheap and will not become loyal returning customers. This is an over generalization and is likely to become a premonition for businesses doing daily deals who have poor service and substandard products or services on offer. A social deal can be an opportunity to turn these one-time customers into returning ones by offering great products or services and delivering outstanding customer service. My husband and I had a great time on the Tahoe Sailing Charters excursion and would consider returning in the future, particularly if we had friends or family visiting.

Market Research: Social deals also offer marketers the opportunity to find out more information about what attracts customers to the company’s products or services. In the case of our sailing excursion customers had a choice between an evening sail or an afternoon one. Thus Tahoe Sail could gain insight into customer’s time slot preference. In addition organizations could obtain contact information from customers and gain geographic and demographic information from the sign ups.

Increased Online Publicity: A report by Chatmeter on social deal sites indicates that following a deal a company’s online publicity increases, particularly on review sites such as Yelp. This can be problematic if your deal disappoints, thus having a quality offering and good service is key.

Social deal sites can be extremely effective way of creating buzz and increasing sales if done correctly. Businesses should be aware of the positive and negative factors involved in doing a social deal offer, rather than leaping on the bandwagon.

So what do you think? Share your comments below

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