Groupon Follies: Get a Brazilian…

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This Groupon Superbowl commercial is quite funny (even if it is in bad taste). However, the company has struggled and one year after its IPO the price was 81% below the initial price. A recent spike when a hedge fund took a toehold position only underscores the company’s troubles as investors hope for better management. Before the IPO, Groupon turned down a $6B offer from Google — something that Google should appreciate since the company is worth less than half that amount a year after the IPO. One reason for the bearish response is that the entry barriers are fairly low and the competition is significant (e.g., Living Social and even a new eBay venture along these lines). Why was this so hot anyway?

Contributed by Russ Coff

Social Media: Avoiding new ideas

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This “Onion Talk” (parody of a TED talk) describes how social media obviates he need for any new ideas. “The world’s most successful companies know that social media is a powerful marketing tool, and Cameron Hughes knows how to make social marketing even more effective: by never injecting an ounce of effort into it.” One might use this to discuss whether there is a social media bubble (consider Facebook, Groupon, etc.).

Contributed by Russ Coff

Merging Cultures: BaFa BaFa

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Cultural differences can undermine M&A, alliances, or entry into foreign markets. As such, it may be important to show students how difficult it is to comprehend and coordinate with a different culture. The BaFa BaFa exercise accomplishes this beautifully. This exercise was originally developed for the U.S. Navy to train personnel on how to interact when being exposed to new cultures (see the extended history in this Simulation & Gaming article). The web site describes it as useful in diversity training. That’s true but it is also useful for strategy courses where cultural differences are relevant. The exercise requires about 2 – 3 hours to run so it is more useful for evening or executive courses where you have larger blocks of time. Here is an overview of how the exercise unfolds:

  • Separate the class into two groups that will be trained in the two cultures (you will need two classrooms and assistance in bringing both cultures up to speed).  Continue reading →

Winner’s curse at Gourmet Adventures

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Often in M&A, there is a concern that the buyer has overbid – especially when there is competition for the target and the risk of winner’s curse is heightened. In essence, if firms bid based on their “unbiased estimates” of the target’s value, the bids may be normally distributed around the true value and the winner is especially likely to have overbid (cursed). The task then, is to shade one’s bid to avoid overbidding. A standard exercise to demonstrate this phenomenon is to have the students bid on a jar of coins (which I describe as a restaurant chain). This is of special interest in a strategy course since the risk of being cursed is driven by the variance around the valuation (not the mean). Variance, it turns out, is driven by aspects of the target that are hard to value. These include strategic resources, human capital, complementarities, cross business synergies (e.g., layers of coins to reflect different target business units), or any other source of uncertainty. As such, even if the winner’s curse is covered in another course, these elements will be specific to a strategy course. Here are materials needed to run the exercise:

  • Instruction sheet describing the bidding/valuation task (and to submit bids)
  • Spreadsheet to record the results and show a simple estimation method
  • PowerPoint slides to lead discussion
  • 500ml jar with quarters, pennies, and nickels (as shown)

If you teach an online course, there is also a nice online simulation of this at GameTheory.net.

Contributed by Russ Coff

Core Competence Follies at 3M

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This is an old video depicting the process for a $20M investment in the laserdisk division. It has two uses in class. First it illustrates some limits of “core competence” (as the term is usually used) as a guiding principle for analyzing whether business units will add value — the clip describes 3M’s competence, with a straight face, as “two dimensional products.” Second, the video might be described as depicting an exercise decision for a real option that was acquired earlier. One can explore the role of core competence and other organizational factors in making such exercise decisions.

3M, of course, is extremely sophisticated in it’s management of core competencies — maintaining deep expertise in a well-defined set of technologies. The only one with the wool pulled over their eyes was the filmmaker who really did believe that 3M’s core competence was 2 dimensional products…

Contributed by Russ Coff

Words in Sentences Org Design Exercise

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The attached documents (below) contain the instructions to distribute to students and the raw material strips for the exercise. The attached PowerPoint file contains a list of what to prepare before class (slide 1) and the slides for class, including discussion and wrap up slides. It is best to go over the directions in detail in class as, unfortunately, students often do not read the directions very carefully; the verbal overview also gets them thinking about setting up a divisional vs. a functional structure for the task. It really is worth stressing the fact that they need to set up a structure. Choose an external quality control group at the beginning of class — Purposefully pick students who are quick and pay attention to detail for this task, as it will have to be completed in a short period of time.Overall, what tends to happen is that both groups improve from trial 1 to trial 2, however the functional group improves by a much greater amount and generally has fewer QC errors (i.e. words used repeatedly). Continue reading →

FBI Investigates Kickstarter as a Scam

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This ONN report describes Kickstarter as a cyber crime scam. Of course, Kickstarter has some spectacular successes. However, this spoof does underscore some legitimacy issues that impede this business model and this may lead to a valuable discussion.

Contributed by Russ Coff

Situation in Nigeria is … Complex

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This ONN report features a news panel that has literally nothing to add. How do firms deal with information challenges when they enter new markets?

Contributed by Russ Coff

Steve Jobs Version 2 Released

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Of course Steve Jobs’ passing raises the question of whether Apple’s capabilities are housed more in organizational routines or were lost when Jobs died. This ONN spoof describes Apple’s release of a new and improved Steve Jobs (now in a white turtleneck with curly hair).

Contributed by Russ Coff

Alaska Gold Mine Exercise

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The Alaska Gold Mine case is my (Mason’s) favorite starter case for undergraduate, MBA, and executive MBA strategy courses. Reprinted here with permission of author Jeffrey Barach along with my PointPoint slides I use to administer the case.

Click to get the:

The video below provides a lot of good fodder to reference back to when doing the exercise. Start the class session by showing the video before doing anything else. Continue reading →

Org Change in the Classroom: A ruse

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organizational-change-timizzer1-1024x8181The mid course evaluation or any other feedback from students (such as the culture artifact hunt) can be used as a jumping off point for an exercise on organizational change. All you need to do is take their suggestions to a logical conclusion and tell them that you are changing the assignments and/or grading structure. This, of course, is small potatoes compared to real strategic change. However, even if you pick fairly moderate changes, students will typically protest. Then you can discuss the influence tactics used to thwart the proposed change. It can be great fun to play with their heads (but be sure to let them know it was only an exercise)! You might think it unwise to intentionally anger your students as part of an exercise. However, this is a lesson they won’t forget and, if you debrief carefully, they will see why the lesson is so important. Here is an example of the types of changes I announce:

  • Added assignment (to emphasize a new topic they want). Include a few additional readings and a case — hopefully that add up to an expensive additional coursepack (> $10).
  • Change the teams to emphasize diversity, skills, or to increase their inventory of available skills.
  • Change the grading weights (e.g., less emphasis on class participation is guaranteed to make the more vocal people voice their concerns).
  • Add a comprehensive exam (out of concern that the additional studying is needed for them to integrate the materials).

Contributed by Russ Coff

Crimson Tide: Launch the Missiles!

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This scene depicts a confrontation over whether or not to launch nuclear missiles. The scene illustrates a series of cognitive biases and blind spots in decision-making.


Contributed by Paul Friga

Wal-Mart as a Partner for Sustainability

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Yvon Chouinard, the enterprising founder of Patagonia explains why Wal-Mart is his biggest and unlikeliest ally.


Contributed by Sharon Livesey

Green Underwear at Patagonia

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One day, Yvon Chouinard, the enterprising founder of Patagonia, told his product design team to free the company’s underwear from wasteful plastic and cardboard packaging. His staff balked – he was told to expect failure. He pressed on with the changes anyhow, because it was the right thing to do.

Contributed by Sharon Livesey

Blockbuster Video Museum (ONN)

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This is a humorous look at the implications of new technologies. The Blockbuster Video Living Museum offers tourists a glimpse of how Americans rented movies in the days before Netflix and iTunes..

Contributed by Joan Allatta

Seagram’s Acquisition of Universal

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The short film Trey Parker and Matt Stone made for Universal Studio’s takeover of Seagrams (wine coolers). Has many guest appearances, like Demi Moore, Sylvester Stallone, and Stephen Spielberg. This is a hard to find video – even Trey says he doesn’t have it! Watch the rest of it on Part II.

Contributed by Andrew Inkpen

NASCAR Strategy: Press the peddle

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This funny video illustrates the importance of a simple strategy. “Press the peddle and occasionally turn left.” In reality much of strategy involves following routines — occasionally there is a left turn…

Contributed by Tim Madden

Awareness: See anything unusual?

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Awareness is a critical element of strategy. Have your students count the number of passes made in the video. Then ask if they saw anything unusual. Most will miss the moon-walking bear because they are so focused on the counting task.

 

Contributed by Joan Allatta

Rumelt: What is Strategy?

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Richard Rumelt offers a cogent interview on what makes a good business strategy. The video is not set up to be downloaded or embedded but can be found here at UCLA.

Contributed by Joan Allatta