Art & Craft of Management

Henry Mintzberg suggests that MBA programs overemphasize the science of management while ignoring its art and craft. The art of management refers to insights or gut feel that may lie at the core of critical strategic decisions – especially when made under great uncertainty. For example, one might ask whether a given advantageous decision resulted from tacit insights or serendipity. The craft is experience that managers draw on in such contexts. For example, recent research on analogizing explores how managers extrapolate from experience to new situations. Certainly most management education focuses on analysis (the science). The following video (of Mintzberg) may open up an interesting, and perhaps counterintuitive, discussion of strategy process.

Contributed by Aya Chacar

Beaten: An Alliance Out of Tune

Beats by Dre has a newly told story of an alliance partner that did most of the work but lost everything in the process. Monster, a father and son business (Noel and Kevin Lee) came up with the technology but was severely out negotiated by ts more experienced partner. A great cautionary tale for the study of alliances. I use the “Four C” alliance framework to teach alliances:

  • Complementarities. Monster had the engineering chops to design the path-breaking audio. Interscope and Dr. Dre had the marketing expertise and contacts to make them a fashion item. Clearly these complementary capabilities were strong.
  • Congruent goals. While they had a strong interest to cooperate, their interests diverged on the issue of who would own the intellectual property, brand, and on how the value would be split.
  • Compatibility of the Organizations. The larger and professionalized Interscope had a team of experienced lawyers. Kevin Lee had a BA in engineering. They could work together but not necessarily understand each other.
  • Change. Over the course of the alliance Interscope needed Monster less and less. Once the first products were designed and produced, they could hire other expertise to keep the products fresh (much of that was around fashion rather than new technology). This allowed Interscope to shut out Monster altogether.

Contributed by Russ Coff

6 Seconds to Make an Impression

A recent study found that recruiters look at each resume for an average of 6 seconds (using eye tracking software). This is especially revealing given self reports of 4 to 5 minutes per resume. Online profiles get about the same amount of scrutiny with almost 20% of the time spent on the picture — of course this has the potential to introduce significant bias. The other few seconds is spent scanning the current and prior work experience, dates, and education. They do report that well-organized resumes, with clear headers marking the critical information, are rated significantly better. So you teach a strategy class, why should you care? First of all, this is an insight into how imperfect strategic factor markets actually are. In this context, you might ask, how can a firm gain an advantage in hiring talent. A key reason to use this example is that your students will tend to care about the job market and this will instantly get their attention. You could couple this with an exercise where teams of students rank a stack of resumes to identify candidates who might have critical capabilities for a company you are doing a case on (could work with any case where human capital is critical).

Contributed by Russ Coff

Special Orders Outsourced at BK

This funny video depicts the movement from poorly trained and low paid local workers to outsourced workers overseas and finally to flawed voice recognition software. The result is equally frustrating for the customer. Ultimately, this touches on a variety of subjects including human capital, global strategy, outsourcing, and technology strategy. One important caution is that the video reinforces stereotypes. This too should probably be a part of the conversation.

Contributed by Russ Coff

Taking Strategic Risk for a Spin

Individuals and firms have different tolerances for risk. This video certainly captures fearlessness (and maybe stupidity). This might lead to a nice discussion on how such different attitudes might affect competition (for example between small and large firms). It also might seed a discussion of how decisions are made or human capital.

Contributed by Russ Coff

An Engineer in a Meeting…

This clip illustrates how an engineer perceives the product specifications as communicated by marketing professionals. As silly as it is, the underlying language problems are very real and are at the root of many failures to coordinate in organizations. Indeed, the firm that is able to do this effectively and consistently may enjoy an advantage in the marketplace. The video is a bit longer than I would use in class (especially given how silly it is) but might be good as an electronic resource outside of class. If you are looking for an exercise that emphasizes coordination across units, you might check out the MicroDesign negotiation.

Contributed by Russ Coff

Google/Apple vs. Their Employees?

Google and Apple must pay a total of $324 Million to current and former employees in a class action lawsuit that they lost. This highlights the multiple arenas on which competition and cooperation play out. Is it surprising that strategic alliance partners might agree not to actively poach employees from each other? Such trust seems like a prerequisite to a productive alliance. And yet, fierce competition in product and intellectual property markets makes it hard to imagine close coordination to collude in strategic factor (human capital) markets. This brings together a nice discussion at the intersection of factor markets, alliances, diversification, game theory, and rent appropriation. The video below gives an idea what Google employees do all day…

Contributed by Russ Coff and Aya Chacar

The Bear Necessities…

There are several nice Samsung cases that describe how the company has tried to merge Western practices (and managers) with Korean/Japanese practices (and managers), to become the truly global firm. It leads to a nice discussion of how a firm can transcend national identity and become a global player. The advertisement below exemplifies this: 1. Bears aren’t identified with a single region (a global species), and probably considered “cute” just about everywhere; 2. The advertisement is easily dubbed in any language as you never see the people talking; and 3. The creative/fun aspect of the ad is probably not what students think of when they think about Samsung tech products — it exemplifies that Samsung has achieved a sophisticated level of global infotainment expertise. Or has a great ad agency. Or you could just do something simpler by using it in an intro about how diversified Samsung is. (e.g., “What industries do you think Samsung is in?” (put answers on board) If someone gets to washing/drying machines, pause for a moment, smile, run the ad. If no one gets to washing/drying machines, pause, smile, ask “What about major appliances?” and run the ad. Fun fun fun.

If you have other ideas for how to use this, please post them as comments below.

Contributed by Melissa Schilling

Graphene with a Kitchen Blender?

Can a simple “kitchen blender” method of making graphene shake up the electronics industry? The one-atom thick sheets of carbon may one day replace silicon wafers and revolutionize computing and electronics. For example, recent findings suggest that electricity can be generated by running salt water over graphene. Samsung may soon use graphene to make ultra thin hard cases for it’s phones. A fun thought experiment in class might be to develop scenarios for how this disruptive innovation might alter the dynamics of the industry (and adjacent industries).

Contributed by Russ Coff

Let Your Emotions Go, Deer

Strategy is a cold calculating science, right? And yet emotion may be the key to value creation on so many levels. Recent research by Quy Huy (among others) expands on this. However, this is still only scratching the surface. How far might we take this in the classroom to balance the more analytical frameworks we regularly trod out? How might it relate to differentiation advantages? Human capital as a resource? The strategy process? Governance? In fact, it may add an important dimension to almost any topic we cover in class.

And here is another video along the same lines: Continue reading

Human Capital: Spinning to the top

While it is clear that human capital may be a source of competitive advantage, most of our discussion still centers around pay as a critical motivator. As important as that is, advertisers have long ago discovered that people have complex motivations that go well beyond pay (see the video below among others). How can firms take advantage of this to gain access to VRIN human capital? This topic has been explored more fully in my paper with Ben Campbell and Dave Kryscynski (Rethinking Sustained Competitive Advantage from Human Capital).

Contributed by Russ Coff

Coopetition: Shaping up your strategy

This exercise is a simplified version of the Global Alliance Game. That is, there are resource complementarities created among teams. However, this one emphasizes (to a greater extent) that the teams are in direct competition to complete the same tasks. As such, it is a nice exercise to explore coopetition and alliances with competitors. Introduce the exercise as an experience with the use of resources needed to accomplish a task that have been distributed unequally. Form the groups. Groups should be placed far enough away from each other so that their negotiation positions are not compromised by casual observation. Distribute an envelope of materials and a copy of the accompanying task sheet to each group. Explain that each group has different materials, but must complete the same tasks. Explain that groups may negotiate for the use of materials and tools with other teams. The first group to finish all the tasks is the winner. Give the signal to begin. When the groups have finished, declare the winner. Then conduct a discussion on using resources, sharing, negotiating, competing and using power.

Group Materials (Groups may negotiate with each other for the use of needed materials and tools on any mutually agreeable basis):

Putin Game Theory in it’s Place

A recent Slate article notes that Vladimir Putin may be trying to create the impression that he is crazythat it may all be part of a game theoretic ploy. This seems like a great opportunity to discuss game theory on a much larger stage. The article notes, “Consider strategic theorist Thomas Schelling’s concept of the “rationality of irrationality.” This can be illustrated through the game of chicken, in which two drivers are heading for each other at full speed, and the first to swerve is the chicken. A driver who appears crazy enough to prefer dying over chickening out will always have the advantage. It is therefore rational for a player to convince his opponent that he is actually irrational.” Game theory can seem inaccessible when it is only presented using abstract examples (though Dilbert can help there), this offers a concrete example that may bring it to life for the students.

Contributed by (“heard through”) Nicolai Foss

An Agent Who Lacks Principles…

Often times students become quite disinterested when the topic of agency theory comes up, and they may not completely understand its implications. This short video does a nice job of presenting it in an interesting way in which the students can identify. The context is the relationship between a manager and his assistant, but the discussion can easily be extended to CEOs and the board of directors. Here is another video along similar lines.

Contributed by Tim Folta

Marshmallow Challenge

This TED talk describes the marshmallow challenge exercise. This discussion has a nice twist to focus on team dynamics and the decision process. Interestingly, kindergarten students tend to do best on the exercise because they are more likely to iterate and prototype rather than separate planning and execution (as MBA students tend to do). Of course, this is similar to the Tinkertoy exercise but the team dynamics and decision-making message is quite distinct. You may also recognize this as a slightly altered version of the spaghetti challenge exercise that has been around for quite some time.

Contributed by Darren Dahl and Joann Peck

Exercise: Seed of an Idea

Stanford’s Tina Seelig describes a classroom experiment (below) where students were given $5 of “seed” funding and 2 hours to make as much money as possible. The best teams made money by working outside of the stated constraints (e.g., ignoring the seed funding & timeframe). Understanding their human capital and unique resources was critical. This really simple exercise gets at the crux of entrepreneurial opportunity.

Contributed by Russ Coff

CEO Pay vs. Iron Man & LeBron

CEO pay is back in the news. Harvard Economics professor Greg Mankiw offers a NYT piece on executive compensation and income distribution suggesting that the public is ok with large incomes of sports stars or actors (like Robert Downey Jr in Iron Man) because they understand how these people contribute. In contrast, understanding what executives add is much more complex. Paul Krugman responds, with an angry rant arguing that few of the top earners are stars or athletes and maintaining his position that executives are greedy and overpaid. This seems like a nice point to debate in a strategy classroom. Are executives overpaid? You might want to conclude the discussion with Alison Mackey’s SMJ article that applies actual data analysis to the question (instead of angry rhetoric). She found that “in certain settings the ‘CEO effect’ on corporate-parent performance is substantially more important than that of industry and firm effects, but only moderately more important than industry and firm effects on business-segment performance.” That is, in some cases, up to 29% of the variance in firm performance can be attributed to the CEO. In the case of a Fortune 500 firm, that could easily amount to billions.

Contributed by Peter Klein and Russ Coff

Do MBAs destroy value?

MBA programs help students gain general human capital which may give them a feeling that they can solve problems in a broad range of contexts. Some have lamented how this can result in arrogant behaviors that make them hard to work with. Scott Adam captures this problem admirably below. It might make sense to use this to imbue students with a sense of caution as they enter the workforce.

Contributed by Russ Coff

Homer’s Oddity: A Human Capital Chip

The Simpson’s clip below illustrates how human capital can be co-specialized with other assets to create an advantage. The Intel chip, once paired with Homer, becomes a strategic asset in the pastry sciences. In this way, human capital becomes industry and firm-specific and can be a source of competitive advantage especially if rivals have no substitutes. This is also related to Lazear’s skill weights model where unique combinations of general human capital form highly idiosyncratic knowledge bases. Could Homer be a source of advantage for Dunkin Donuts? Who would reap the gains?

Contributed by Russ Coff