Friday, 13 December 2013

excellent customer service case studies in retailing in india

1. On 02nd Sept Kalpana was about to close the store around 9pm, a customer named Shekar rushed in and was requesting to transfer the data. She said its closing time. Please visit tomorrow. Customer started requesting Kalpana that he is traveling to abroad next day morning at 4 am flight and data transfer is urgent for him, he said can you ask any guy to handle him. Kalpana said this is an Angel store where only female employee works. There was no sound from customer. Understanding customer urgency she said. "Sir I will help you". She started transferring his data from Nokia to IPhone. it did not support, time was passing on, she tried again in vain. She could notice tension on customers face. With the help of store manager she called up back-end team for support and some setting in RED BOX(DATA transfer machine). She finally transferred the data successfully and the shop was closed around 11.40pm. Customer was very happy that his work was done.

2. One of our customers, Ms. Sadaf Khan, claimed that she had forgotten her sunglasses at the Customer Service Desk (CSD) when she came to collect her altered garment. We searched for the sunglasses but could not trace them anywhere. While going through the CCTV footage of the section it was noticed that the sunglasses were purloined by another customer who pretended as if they were his and sneaked them into his carry bag. Though we could see the customer picking up the glasses, we did not have any details about him. 
The CSD team member tried calling associates from the Menswear team to identify the customer by the purchase he had made. During this effort, one of the associates recalled selling Allen Solly trousers to the same customer. Team members were able to find the details of the customer from the alteration slip. This issue needed to be handled with sensitivity and tact, as it involved theft by a customer. Satish Pandey, one of our most reliable team members, called up the customer and requested him to return the sunglasses, claiming that they had ended up in his carry bag by mistake- thus seeking a resolution without offending him. Initially the customer was reluctant but when Satish cited the CCTV footage, he agreed to return it. 
Satish and Team Leader Manish Rana visited the customer and collected the sunglasses and handed them over to Ms. Khan. She was overjoyed and pleasantly surprised. In the entire episode, Satish maintained a very firm yet polite approach. He managed to collect the sunglasses without embarrassing the customer. A classic example of balanced and systematic approach to address a complicated situation.

3. Mr. Jitender Singh came to our store one evening to buy a suit for his marriage. Our Senior CCA, Ravi Sharma, showed him some elegant suits from our ceremony collection. Mr. Singh liked a white suit. Ravi showed him shirts and ties that matched the suit. Mr. Singh tried them on and was very happy with Ravi’s suggestions. He appreciated Ravi a lot and told us that his wedding would take place two days later in Meerut. He purchased the merchandise and left, promising us that he would come back to Van Heusen on his next shopping trip. 
The next morning, Ravi got a call from Mr. Singh saying that his suit had been misplaced somewhere while travelling from Delhi to Meerut. Mr. Singh felt very sad as he had liked that suit very much and didn’t have the time to come again to the store to buy a new one. Ravi told Mr. Singh not to worry and promised him that he will arrange another suit before his wedding. 
He searched the whole collection and found a suitable tie and shirt in the store but could not find the suit anywhere in Delhi NCR. After continuing his search in other locations, he found the same kind of suit at the Van Heusen store at Chandigarh. Ravi wanted to keep his commitment as he had promised Mr. Singh a complete suit for his marriage. Though it was raining heavily he left for Chandigarh by bus. He was drenched but still managed to catch the bus, reach Chandigarh in the evening, collect the suit and from there leave for Delhi at night. 
Next morning, he left for Meerut well-dressed and reached Mr. Singh’s home with the suit and a bouquet at the eleventh hour. When Mr. Singh looked at Ravi, he was so delighted that he hugged Ravi heartily and requested Ravi to join them and enjoy the wedding ceremony. He introduced Ravi to his whole family and told everyone about Van Heusen’s marvelous customer service.
4. Chabiraj Jaiswar is a 50-year old employee, serving with his extraordinary skill in our sports department. Being the oldest staff member in this department, he manages the assembling of cycles, fuzeball tables, treadmills, home gyms etc. He also visits the customers’ homes to solve their issues.
One day, Chabiraj went to attend to a customer’s complaint. The customer had some issue with the bicycle he had purchased and was not able to bring it to the store, so he wanted someone to visit his house and repair it. Chabiraj left the store around 5:00 pm that day. He had to travel a long distance as the customer was located at Powai. As it was evening time, all BEST buses were crowded. 
He somehow got into a bus but the bag which he was carrying along remained hanging out and got entangled in a car’s mirror. Chabiraj was yanked out of the bus and onto the road. He suffered a cut on his forehead and started bleeding. A man fifty years of age, even in that injured condition, continued his journey and reached the customer’s place. The customer was shaken after looking at him. He requested him to leave the job aside and to visit a doctor. But Chabiraj completed the task and then left the place. He had satisfied the customer by solving his problem. 
The next day, he came to the store and narrated the whole incident. We offered him casual leave and asked him to leave but he resumed his job within two days. He continues at the sports department with a scar on his face.
5. Exceptional customer service shown by eyewear consultant Mr. Selva Kumar.
One of our customers, Mr. Dudani, aged 76 years, is a resident of M.G. Road, Bangalore. He is a retired army officer and owing to illness he was not able to walk or stand properly. Mr. Dudani used to be a customer of another optical store but when he came to know about a discount offer that Titan Eye Plus was offering during that period, he decided to get his spectacles made at Titan Eye Plus. He called up the store and was curious to know if the store could provide service at his home. 
The eyewear consultant (EC) at the store Mr. Selva Kumar went over to Mr. Dudani’s house with a few frames that would suit a person of his age. Mr. Dudani selected a frame and placed an order for spectacles with bifocal lenses. When asked for the prescription, Mr. Dudani handed over a prescription which was provided to him by his family doctor. Selva Kumar found that the prescription was not clear as the power mentioned in it was not specified clearly. Since Mr. Dudani could not help Kumar with this, Kumar thought of an idea. He contacted Mr. Dudani’s family doctor and visited his clinic to get all the doubts related to the prescription clarified. Mr. Dudani was moved by this gesture. He didn’t expect that a store staff would take so much trouble for the sake of a customer. He blessed Kumar from the bottom of his heart.
6. Chandan is a wonderful guy. He is very helpful to everyone. I was a stranger to him, but within a short time I became a fan of his. I thought, in today’s world still there are people who can do so much for an unknown person. I had come to Kolkata from Patna for my friend’s wedding. I had ordered a pizza but I was in market for shopping. It was going to take me some time to reach the hotel room where pizza was supposed to be delivered. Unfortunately, when I was on my way to the hotel, someone stole my wallet. In the meantime Chandan had arrived at the hotel with the pizza. He called me and asked me where I was. I told him that I wanted to cancel my order. He asked me the reason. I told him what happened. He asked me to take the pizza and told me that I need not pay for it. I was surprised by his reaction. After I reached the hotel, I saw him standing there. He gave me the pizza and told me that he would pay for it. He even asked me how I would go back to Patna without money. I told him that I had booked return ticket. But still, I had to pay for the hotel rent. Chandan offered me 500 Rs. and told me that I can transfer it to his bank account once I reach Patna. I thought if he had not helped me then how would have I faced the situations without money. He was like a miracle for me. May god bless him with all the happiness of the world.
7. On 8th of April 2013, Mr. Gurdit Singh was busy assembling and displaying sports equipment on the trading floor. He saw a customer in his section. Leaving his assembling job, he asked for the customer’s requirement and was told that the customer was interested in purchasing treadmill. He showed some treadmills to the customer and gave a demonstration of all the machines available on the floor. The customer liked a treadmill that cost Rs. 25,000 and enquired about the Home Delivery service. As per the store policy, Home Delivery up to 30 kms is free and for distance beyond 30 kms, the customer needs to pay Rs. 15 per km. After getting to know this home delivery policy, the customer’s interest in purchasing the product dwindled because his residence at Palampur District in Himachal Pradesh was 250 kms away from the store. 
Gurdit spoke to his Team Leader and Manager, but they refused to provide free home delivery as it was going to cost them around Rs. 8,000 for the product priced at Rs. 25,000. It was tough for Gurdit to decide whether to sell the product to the customer or not. He spoke to his Team Leader Mr. Vishal Chauhan, who belonged to Himachal Pradesh and came to know that there was bus service between Amritsar and Palampur. With this knowledge, Gurdit asked the customer to get the product billed and committed that he would deliver the product at Palampur free of cost. 
The next day Gurdit went to the bus stand to meet the driver and conductor of the Palampur bus and got their permission to load the treadmill on the condition that he himself will travel on the bus with the product. On the 10th of April, with the help of store staff, Gurdit loaded the product on the bus, coordinated with the customer and requested him to be present at Palampur Bus Stand. Gurdit thus delivered the treadmill to the customer successfully. After this, Gurdit received four more orders for treadmills from Palampur which he delivered in the same way and our store now regularly supplies sports equipment to Himachal Pradesh too.
8. One of our customers, Mr. Jugal Jhajharya from Sikar (which is almost 100 kms away from Jaipur), visited our store to purchase a suit for his wedding which was to take place at Sikar. Saleem Kuraishi, the sales person, attended to Mr. Jhajharya from the beginning till the end. The customer had earlier visited the store two or three times to purchase a tie, shirts and a suit. During these visits, Saleem had developed a strong bonding with him. Mr. Jhajharya invited Saleem as well as the entire Raymond Store staff to attend his wedding in Sikar. He was clearly very happy with the service provided by Saleem and gave a note of appreciation to the store manager.
At the time of trial, Mr. Jhajharya had informed us that he wouldn’t be able to come to collect his suit as he was not allowed to go outside the home post the haldi ceremony. One of his relatives would therefore come to collect the suit. The delivery date was two days before the wedding. Saleem called Mr. Jhajharya for the delivery on his mobile phone and later even on the landline number, but no one answered the calls. He continuously tried to reach Mr. Jugal for two days but all in vain. 
On the wedding day, around 6:00 pm, Mr. Jhajharya called the store and asked for his suit. The store team informed him that no one came to collect the suit and also the numbers given by him were not reachable. Mr. Jhajharya was worried and said that he thought his brother had already collected the suit. He explained that he had to wear that suit at 9:00 pm for the reception and even if he sent someone right away, it would take more than 4 hours for them to get back. Saleem reassured him and gave confidence by offering to travel to Sikar and deliver the suit before time. The bridegroom-to-be relaxed and thanked Saleem for going that extra mile. 
Saleem immediately left the store after discussing the situation with his store manager and boarded the train for Sikar. He reached his destination at 8 pm and then took an auto to Mr. Jhajharya’s home which was about 2 km away from the railway station. When the auto had moved only about 200 meters, a vehicle coming from opposite direction suddenly dashed into them. Both Saleem and the auto driver were injured and had to be admitted to a nearby clinic. 
The doctor bandaged their wounds, gave them pain killers and suggested that they take rest for the next two-three hours. Saleem requested the doctor to allow him to go because an anxious bridegroom was waiting for him. He explained the entire story. The doctor and his team appreciated his dedication and service-oriented attitude. The clinic’s peon quickly arranged for a taxi for Saleem, thus allowing him to reach the customer’s house.
Mr. Jhajharya and his parents were waiting at the door and heaved a sigh of relief as Saleem handed over the suit. Mr. Jhajharya saw the bandages on Saleem’s body and asked him what happened. Saleem explained the situation. Everyone was shocked at hearing this and were moved to tears. They thanked Saleem and the entire Raymond staff for such a level of dedication. They offered him some dinner as well. After the dinner, Saleem took their permission to leave. The entire family was so happy with him that in spite of being busy with wedding chores, they dropped Saleem to the railway station.
9. One day a customer came to the store with old merchandise for exchanging. I recognized the customer as I had personally assisted her with shopping. But it was long time back. The merchandise she wanted to exchange was almost a season back and she had lost the bill too. When I asked her the reason for exchange she said that she no more liked the design as much as she did at the time of purchasing. I informed her about our exchange policy & hearing the same she was a little disheartened. Looking at her sad face, I suggested her that I can make her look good in the same kurti. Excitedly she asked “how? “. I told her that I would need some measurements and couple of hours for alteration. Though she was in a hurry she gave permission for the same. She came back after 3 hours and asked for her kurti. I showed her the altered kurti and asked her to go for trial. She was very impressed with the final result.She said that I brought a smile back on her face. She said it feels as if she has bought a new season dress. She complimented me by saying that I should go for fashion designing course.
10. A customer, Mr. Avinash Mathur aged 54 years is a resident of HIG, Indore. He is a government officer. Owing to a paralysis in his lower part of the body due to a spinal cord injury, he was not able to stand and could manage to move with the help of a wheel chair. He visited the Titan Eye plus store at MG road, but since the store is situated at upper ground level, he was unable to come inside. He requested the driver of the auto rickshaw, in which he had travelled, to ask someone from the store to meet him. The auto rickshaw driver met the eyewear consultant Abhishek and explained him the whole situation. Without wasting a moment, Mr. Abhishek, the Eyewear consultant at the store went outside to meet Mr. Mathur. He took a few frames, a hand mirror and the optical measurement equipment (IPD meter) along with him. He attended Mr. Mathur in the auto rickshaw. All the testing and measurements were carried out in the auto rickshaw itself. Abhishek helped him in selecting the best frame. After a detailed discussion with EC Abhishek, Mr. Mathur selected a frame and placed an order for a spectacle with progressive lens. Mr. Mathur was extremely delighted when he received such care and support from Abhishek. Initially when he saw so many steps in front of the store, he thought it would be impossible to get his eyes checked and get a pair of spectacles made but Abhishek’s service and commitment proved him wrong.
11. A little girl came to our shop with her parents on a Saturday evening. It was her 7th birthday. She purchased dress and matching accessories for herself. She was eating chocolate and was probably imagining her birthday party. On Monday morning she came to me crying with her parents. She had broken a pink hair band that she had purchased matching with her pink dress. Adding to her worry that particular hair band from Disney was out of stock. I showed her all other available alternatives but she was insistent to buy the same one that she had purchased the other day. I kept on thinking how I could bring smile on her face. I started calling up all other stores in Kolkata to check if the same hair band was available anywhere. But other stores too had run out of stock. Finally I called up our store in Durgapur and found that they had one. But I kept on wondering how to get the product from such a far off distance. On several attempts I finally found out that an ADM from Durgapur was scheduled to travel to Kolkata the following day for training purpose. I personally requested the manager to do this favor of bringing the particular product to Kolkata. In the meantime, I called up the customer and informed him to come the next day. The next evening I handed over the same hair band to the little princess and she had the world in her hands. The smile was priceless.
12. On the 5th of August this year a customer, Mrs. Priya Mithun Puthran, visited our Whitefield store for replacement and transfer of ownership (TOO) of a connection which was in the name of her late husband Mr. Mithun Sumanth Puthran. Ms. Puthran met Harish, our executive, who explained the process and requested her to produce her husband’s death certificate for transfer of ownership and sim replacement. On hearing this, Ms. Puthran, who was in an emotionally disturbed state, said that it was her late husband’s number and her only contact number for her family in Mumbai. 
Harish was quite concerned after the interaction with the customer and brought the incident to the attention of Asif, a senior executive at the store. Asif called the alternate number of the and left a message for her to call him back regarding her number. Ms. Puthran was then advised to visit the store with her id and the original sim card. Asif and Harish informed her to visit the nearest BBMP office to procure her husband’s death certificate and get the TOO done. During the interaction they found that the customer was totally unaware of the procedures at BBMP and considering her emotional condition, they decided that Harish would personally go to the BBMP office and apply for her husband’s death certificate.
Ms. Puthran received the death certificate on 12th September 2013; she then visited the store with all the relevant documents for TOO of the number. During the discussion, Ms. Puthran informed them that she would be going to Mumbai for the next three days. Asif informed her that in order to ensure her connection is active while she was in Mumbai, the TOO request would be processed on Saturday night itself, thus giving her uninterrupted connectivity. 
Ms. Puthran called on the 19th of September and thanked both Harish and Asif profusely for the excellent service they provided. Both Harish and Asif went beyond the call of duty to help a customer who was genuinely in distress. They have raised the bar and set a great example for the rest of the team!
13. The 26th of June 2013 was a routine day at the Big Bazaar store on Pune-Satara road. It was on this day that Mr. Ashish Shinde came to the store for shopping. Mr. Shinde was blind and Braille-literate, around 60 years of age, living with his wife. His wife was often ill and he had to step out to shop for the house. 
While he was roaming about the store, Ananda noticed him, inquired about merchandise he needed and offered help. Mr. Shinde told Ananda that he needed to purchase some biscuits, staple items, soap and shampoos. Ananda took him to every section and patiently handed over each and every item to help him feel the product and also explained about the product. Even though it was very tiring and time consuming, Ananda never lost his patience. After assisting Mr. Shinde for about 2 hours, Ananda took him to the cash counter and billed all items he had purchased. After counting all the items, he gave him his shopping bags and even hailed an auto for him.
When Mr. Ashish Shinde completed the shopping he said, “I have never had such a great shopping experience in my entire life. I always avoided shopping at malls and felt compelled to choose home delivery, due to which I missed the joy of shopping at a mall. But when I visited Big Bazaar I realized that still there are some people who serve their fellow humans like they would serve God.”
He also referred to Big Bazaar as "Bade Dilwalon Ka Bazaar". He thanked Ananda for his help during his shopping and for treating him well. After that experience whenever he gets time he visits our mall for shopping and every time Ananda or any of his available teammages assist him with his shopping.

14. One day, a customer named Ms. Priya Aiyer called up the Titan Eye+ store at Adyar, Chennai, and requested for a pair of spectacles for her brother. She said that her brother’s spectacles were not to be found anywhere after he met with a major accident and also she didn’t have any prescription for his eye power. 
We learnt that Ms. Aiyer’s brother had met with a major accident and as a result had slipped into coma for a period of 45 days. He had undergone surgery and had just been discharged from the hospital. The recovery process was slow and he was not even able to identify his family members correctly. Getting a pair of spectacles was very important to aid him in the recovery process. 
Immediately after the call, Mr. Raj Kumar, who attended the call, briefed the store optometrist, Ms. Anu Tharika, and asked her to find a solution. Anu evaluated few options and realized that it was possible to check the patient’s eye power by using retina scope and trail set. She made the necessary arrangements and left for the customer’s house along with eyewear consultant, Mr. Harikumar. Anu was surprised to see that the patient was not even able to sit properly. Lack of spectacles was a major hindrance in his recovery process. 
Without wasting time, she performed the eye test for the patient with the limited means she had and finally got the eye power of the patient. Another problem was that since the patient had suffered head injuries, he could not wear any heavy or rigid frames. Overcoming all such problems, spectacles with titanium metal frame with flexible thin side were made in a span of two hours and delivered to the customer. The patient’s family was more than delighted to receive such service from Anu.
Anu made the best possible arrangement under the given circumstances to test the eyes of the customer at his home with least trouble to him. Ms. Aiyer thanked her innumerable times for her outstanding support. Later, she couldn’t help but visit the store and thank Ms. Anu and her team for such humane and kind gesture.

15. On 12th March 2013, Mr. Abhigyan Kumar came with his two friends to our store to place an order. He wanted to place the order in Bengaluru. They had a friend in Bengaluru whose birthday was on that particular date. All CSRs were confused about how to place the order for a different location. At this time Ms. Neha took the responsibility of placing the order in Bengaluru. She wrote down the address of the place in Bengaluru where the pizzas had to be delivered. She called the Domino’s store which was near to the place of delivery. She asked about the VAT charges in Bengaluru, calculated the price and placed the order and collected the cash from the customer. She asked one of the team members to transfer the amount to Bengaluru Domino’s Pizza account. 
This is what the customer mentioned in our feedback book 
“When I first entered the store, I didn’t expect so much in a city like Patna. This Domino’s store defines customer satisfaction and service. Thanks to all the staff of Domino’s. You guys are rocking. The way you deliver is mind blowing, keep it up. May god bless Domino’s.” 
Abhigyan kumar.

Thursday, 21 November 2013

General Management: A Severe Accountability

Contents

[hide]

Basic Information of General Management: A Severe Accountability

Author: Mark Kennedy
Publisher: USC Marshall School of Business
Case Number: 533-01
Publication Date: Feb, 2005
Course Category: Management

Case Summary of General Management: A Severe Accountability

Accountabilities of GM are demanding and uncompromising.
1. Demanding b/c need to balance competing demands of varied constituents.
2. Uncompromising b/c continuing in GM depends on delivering results.

Job of the GM: set direction, define goals, make plans, structure people and resources to pursue them, do it, and answer for the results.
To whom do they serve: Shareholders? GMs should develop specialties, but also understand broader context and accountability that got them to the top.

5 basic accountabilities of the GM: Governance (government), Organization and Partners (stakeholders) on vertical. Suppliers and Buyers on horizontal axis of star.
What It Really Means to Manage: Exercising Power and Influence

New managers must unlearn the deeply held attitudes/habits they developed when only responsible for self. The GM must learn to set and implement an agenda for a whole group. Two kinds of learning: task learning and personal learning.

New managers focus on their formal authority (rights and privileges of a promotion). Bosses and peers are hard to deal with for the GM. 2 sets of responsibilities: manage their team and also manage the context within which their team resides.

Power: def. as potential of an individual (or group) to influence another individual or group.
Influence: def as exercise of power to change behavior/attitudes/values of that individual or group.

To be effective, managers must find ways to acquire power and exercise influence with those on whom they are dependent. Need to cultivate networks (mutually beneficial relationships with those on whom they are dependent). Metaphor of currency exchange is used in article.

3 important criteria for evaluating power/influence:
1. Is it effective for individual?
2. Is it effective for organization?
3. Is it ethical?

What Effective General Managers really do:
2 fundamental challenges/dilemmas:
1) Figuring out what to do despite uncertainty and an enormous amount of potentially relevant information.
2) Getting things done through a large/diverse group of people despite having little direct control over most of them

Agenda Setting:
a. agendas tend to be less detailed in financial objectives, more detailed in strategies and plans
b. tend to focus on broader time frame
c. contains list of goals or plans that are not explicitly connected
--effective GMs rely more on discussions with others, develop agendas immediately after hire

Network Building:
--develop a network of cooperative relationships among people they feel are needed to satisfy their agendas
--often shape networks by moving, hiring, firing subordinates
--GMs use networks to exert indirect influence on people
--best performers tend to mobilize more people to get more things done, and do so using a wider range of tactics to influence people

Responsibilities of Top Mgmt
--do not put someone in a GM role just because he or she is a successful manager (unless he/she knows the business)
--Growing one’s own executives is a high priority
--Mgmt training courses overemphasize formals tools and unambiguous problems and situations
--People who are new to GM can probably be gotten up to speed more effectively than is the norm today



GE’s Two Decade Transformation

Contents

[hide]

Basic Information of GE’s Two Decade Transformation: Jack Welch’s Leadership

Author: Christopher A. Bartlett
Publisher: HBR
Case Number: 399150-PDF-ENG
Publication Date: Apr 28, 1999
Course Category: Management

Case Summary of GE’s Two Decade Transformation: Jack Welch’s Leadership

Overall
Key for management, recognize environmental change and transform company
8 Transformational Steps: Establishing a sense of urgency
Forming a powerful guiding coalition
Creating a vision
Communicating the vision
Empowering others to act on vision
Planning for and creating short-term wins
Consolidating improvements and producing still more change
Institutionalizing new approaches
(series of phases, often require significant time, can’t skip steps, each step must be successful)
Jack Welch CEO in 1981: Early 80’s radical restructuring
Late 80’s changed culture, values and managerial mind set
1990s managed norms (boundaryless behavior, stretch goals, 6 Sigma)
Questions
How difficult a challenge did Welch face in 1981?
How effectively did he take charge?
What is Welch’s objective in series of initiatives he launched in late 80s and early 90s?
What is he trying to achieve in the round of changes he put in motion in that period?
Is there a logic or rationale supporting the changes?
How does such a large complex diversified conglomerate defy the critics and continue to grow so profitably?
Have Welch’s various initiatives added value? If so, how?
What is your evaluation of Welch’s approach to leading change?
How important is he to GE’s success?
What are the implications for his replacement?
Case
- 1999 revenues $100B+, margins high, earnings per share high… “Most Respected Company in the World”
- Shareholders were worried with Welch upcoming retirement… could the company sustain the pace of change and growth characteristics of the Welch era
GE Heritage
- Stated in 1878 w/ focus on generation, distribution and use of electric power.
- Additionally it expanded into power generation, household appliances, and lighting
- 1978 engaged in diverse aircraft engines, medical systems, and diesel locomotives
- Leading edge of management practice
Jones (Welch predecessor) CEO in 1973, good at strategic planning, company leaders SBU-based structure and sophisticated planning process, he was dubbed CEO or the decade

Welch Early Priorities: GE’s Restructuring
1981 Economy in recession, high unemployment, high interest rates… company needed restructuring
1 or 2: Fix, Sell or Close
Welch each business needed to be 1 or 2 competitor in industry… had to be broad strategy because it was a broad corporation.
3 Circle Vision:
Services (acquisitions, note 370 exhibit 3),
Technology (leading edge),
Core (re-invest in productivity)
Support, Outside, Ventures (exhibit 2)
Internally wanted company “lean and agile,” chip away bureaucracy example laborious strategic planning system or budgeting process (targeted towards competitors), reducing hierarchical levels from 9 to 4 ensured all business reported directly to him
Downsizing, de-staffing, de-layering 123,000 staff cut, operating profits rose dramatically, and set base for strong increase in sales and earnings for second half of decade (exhibit 5)
Replace 12 of 14 business heads, called “Varsity Team,” all strong commitment to new management values, and willingness to break old culture, and ability to take charge and bring change… Bold Action
Late 80’s: Second Stage of Rocket
- Restructuring complete, but still culture shock and management exhaustion… needed more solid foundations
- “Software” Initiatives: Work-out and best practices: software changes = cultural changed (too sustain high productivity)
- Norm to be an approach based on openness, candor and facing reality
- Core elements to be speed, simplicity, and self confidence
- 2 initiatives, Work-out and Best Practices
Workout
- Create a culture of small company
- Forum where employees could not only speak their mind, but get immediate response
- Designed a process ride of unnecessary bureaucratic work out of system
- 24 outside consultants, company-wide program
- Style New England town meetings, three days, bosses out of room, but then return here employees and make instant responses
- Productivity increased
Best Practices
- Goal to still increase productivity, studied other firms
- Focused on developing effective processes than controlling individual activities, customer satisfaction was their main gauge of performance, they treated their suppliers as partners, and they emphasized the need for constant stream of high quality products designed for efficient manufacturing
- Changed mangers managing and measuring
Going Global
- During early-mid 1980s, was on back burner
- Not want to impose corporate globalization on corporation, but allow each business to decide
- But now looked at ranking 1# or 2# on global level
- Ongoing effort
- During Mexico downturn, w/in 6 months GE bought 16 companies, positioned for country’s rapid recovery… same strategy for Asia
- 1998 international revenues were $42.5B (doubled in 5 yrs)
Developing Leaders
- Huge task of realigning skill set and mind set of 290,000 employees
- Many felt overworked and residual distrust left from layoffs
- Psychological contract based on perceived lifetime employment, produced a paternal, feudal, fuzzy kind of loyalty
- Wanted to change focus outwardly to competition…wanted staff willing to compete and in exchange get professional opportunities… made a commitment to developing people
- Adapting human resources systems to fit his goals, example reviews known as Session C
- Paid close tabs on upper 500 executives, they were responsible for presenting results in exhaustive 12 hour reviews
- Expected honest feedback, used basic for coaching and developing their staff
- Overhauled GEs compensation package, stock options became primary component of management compensation and expand stock option from 300 to 30,000 people (more aggressive bonus awards)
- Create environment in which people could be their best
- Priority to develop a generation of leaders aligned with GE’s new vision and cultural norms, training center
- Discussion leaders, Welch meet with employees twice a month (exhibit 7)
- Not all managers were able to achieve Welch’s ideal leadership profile (exhibit 8)
- Top level managers were rated on performance against targets plus how the “lived” GE values
- Introduced 360 feedback process
Into the 1990’s: The Third Wave
Foundation had been laid, now task rebuilding company at an even more urgent pace
Boundaryless Behavior
- Initiatives aimed at strengthening GE individual business, create “integrated diversity”
- Open, anti-parochial environment… sharing ideas… remove the barriers among engineering, manufacturing, marketing, sales etc
- Be as comfortable doing business in Budapest as Louisville, and erase group labels as “salaried”
- Wanted to quickly learn from each other, “integration model,” develop a model guided the actions of managers, realigning the organization and remove blockers
Stretch: Achieving the Impossible
- Reinforce his rising managerial expectations, new assault on GE cultural norms
- “Stretch” to set performance targets and described it as “using dreams to set b. targets, with no idea how to get there”
- Targets not replace traditional forecasting, managers still had to hit these basic targets, Stretch goals were set higher but not held accountable… wanted to keep a positive attitude
- Mid-1990s stretch goals were established part of culture
- Increased operating margins from 91’ to 95’ 10% to 15%
Service Business
- 1994 launched a new strategic initiative designed to reinforce one of his earliest goals, reduce GE dependence on traditional industrial products
- 1980s initiated an initial tilt towards service business, acquisition of financial service companies
- Now push for product services… needed to supplement slow growth products with added-value services, example medical business “In Site” for CT scanners and MRI equipment
- Believed they had a strong platform to build off of (ex 9000 commercial jet engines, 10,000 turbines)
- “turning the pyramid upside down”
- 1997 GE made 20 service-related acquisitions and joint ventures (exhibit 9)
Closing Out the Decade: Welch’s Final Chapter
Closing in on mandatory retirement, wanted to keep adding value… said he was not willing to split up company
6 Sigma
- 1995 company survey showed employees were dissatisfied with quality of its products and processes
- Learned from Motorola Six Sigma quality program which improve quality, lower costs, and increase productivity
- GE operating at error of rates 10,000 times the 6 Sigma level (cost $8-12 M)
- Well developed program with detailed implementation, linked series of management meetings “operating system” series of planning, resource allocation, review and communication
- 40% of bonus were tide, returns to company $750 M (exhibit 11)… rapid
“A Players” with “Four E’s”
- Continued to focus on quality of team, wanted to continue to upgrade quality depth
- “A Players” vision, leadership, energy, courage
- 4 E’s energy, able to energize, edge, execution
- Appraisal system every manger ranked employees 5 categories, only top ones received stock
- Believed continuously upgrading was key to success
Toward Retirement: One More Initiative
- 4th strategic initiative- e business, “biggest change I have ever seen”
- Knew they were late, but felt well positioned with strong brands, top ranked product reliability, great fulfillment capability, and excellent service quality… thought dot com would have a hard time challenging them
- Debate on how quickly and effectively GE could pull it off



GE's Growth Strategy

Contents

[hide]

Basic Information of GE's Growth Strategy: The Immelt Initiative

Author: Christopher A. Bartlett
Publisher: HBR
Case Number: 9-306-087
Publication Date: Feb 13, 2006
Course Category: Management

Case Summary of GE's Growth Strategy: The Immelt Initiative

- Taking Charge: Setting the Agenda
• On Friday, September 7, 2001, Jeff Immelt took over for Jack Welchc as CEO of GE. Four days later, the 9/11 attacks occurred and the world was thrown into chaos.
• By the end of Immelt’s first week on the job, GE’s stock had dropped 20%.
• Later that year, GE’s stock dropped again on suspicions from the Enron scandal.
• After a rough start to his tenure, Immelt realized that internal growth would be the key to GE’s long-term success.

- Building on the Past, Imagining the Future
• Immelt constantly went out of his way to emphasize that GE was not an over-grown, slow to move, slow to react conglomerate.
• He instead viewed the company as a collection of highly correlated businesses made up of world-class people, processes, and strategic initiatives.
• Acting on this, Immelt created a growth strategy made up of 5 key elements:
1. Technical Leadership – A key driver of future growth
2. Services Acceleration – GE already had a large amount of product out in the industry that would eventually need servicing as the products aged and wore down.
3. Commercial Excellence – Shifting focus from GE’s internal processes to external customer requirements.
4. Globalization – Main focus on China and India.
5. Growth Platforms – Build new businesses based on high-growth areas that will provide “unstoppable” opportunities.

- Investing through the Down Cycle
• Immelt felt that investing heavily in the business during the economic slowdown of the early 2000’s was crucial to the long-term growth of the company.
• Immelt quickly made the following acquisitions: the Telemundo and Bravo television networks, Interlogix security systems, and water service provider BetzDearborn.
• He also committed to building several new R&D facilities around the world.
• Despite these efforts, GE’s stock dropped another 39%.

- Ongoing Operations: Rigor and Responsiveness
• Immelt made cash flow GE’s number one financial focus. He used tools like Six Sigma to re-align the business around this objective. It was through improved cash flow that Immelt would continue to invest in the business.
• Immelt also hoped to change the image of being CEO of GE from the cold, results-oriented focus of Jack Welch, to a more open and less hard-edged image. The main offspring of this effort was a renewed focus on social responsibility and the creation of a new role within GE: VP of Corporate Citizenship.

- Rebuilding the Foundation: Beginning a Marathon
• Looking back on 2002, it was a horrible year for GE. Revenues were flat, corporate scandals were all over the news, the economy was struggling, and GE’s stock continued to slide, now 60% off of its all-time high from 2001.

- Rebalancing the Portfolio
• As 2003 began, GE finalized plans to acquire Vivendi-Universal Entertainment. Immelt felt that this acquisition was crucial to growing the NBC business within GE as the deal would provide them with important content, production facilities, cable distribution and a strong management team.
• Shortly after the Vivendi deal, GE announced plans to acquire a British life-science company, Amersham. Immelt felt that Biotechnology would be very important part of GE’s future growth.
• There were many concerns about this second merger, particularly the idea that GE’s corporate culture would stifle the innovation and creativity that had made Amersham successful in the first place. Immelt vowed to not allow this to happen.

- Focusing on Customers, Emphasizing Services
• Immelt named Beth Comstock as GE’s first Chief Marketing Officer in 2001. This move was meant to stress GE’s new focus on their customers and less on their internal processes.
• Acting on the momentum created by the new marketing emphasis, Immelt formed Commercial Council in 2003 to bring together GE’s top sales and marketing leaders. Immelt chaired that council himself.
• GE began to work very closely with their customers to improve their customer’s business (focus on providing service for GE). In 2002, GE completed 6,000 Six Sigma projects with their health-care providers alone.
• Immelt wanted GE service to be a critical part of their customer’s operations.

- Driving for Growth: New Platforms, New Processes
• GE’s top leaders identified 6 business growth platforms that would lead to way for GE’s growth opportunities over the next few years:
1. Health-care information systems, security and sensors, water technology and services, oil and gas technology, Hispanic broadcasting, and consumer finance.
2. These businesses were averaging a 15% annual organic growth rate.

- Aligning Management: New People Profiles
• As GE’s growth strategy began to take hold, Immelt worried that some of GE’s traditional managers may not have the skills to be able to succeed in the more entrepreneurial environment that he was trying to create.
• Acting on this, HR developed new career paths for managers, focusing on more in-depth job experience as opposed to job rotations.
• HR also developed 5 action-oriented leadership traits that they would require all leaders to possess:
1. External (customer) focus
2. Think Clearly
3. Imagination and Courage to take risks
4. Inclusiveness and Connection with People
5. Expertise in a function
• To develop these skills, 20-30 “pillar jobs” were created within each organization which required the continual use and development of these 5 skills.

- Funding the Growth: Operating Excellence
• Throughout GE’s re-investment in itself, Immelt insisted that the companies ongoing operations fund the growth. To accomplish this, Immelt enacted tools such as Lean Six Sigma
• These efforts, as well as an overall simplification and consolidation of the business, allowed GE to save a considerable amount of money by the time 2004 rolled around.

- Preparing for Liftoff: Innovation and Internationalization
• By 2004, the world economy was turning around. By year’s end, 11 of GE’s businesses had turned in double-digit earnings growth from 2003 numbers.
• Immelt felt that this was only the beginning and that GE’s focus on growth and re-investing in itself would soon start to pay off.

- Imagination Breakthroughs
• Imagination Breakthroughs (IBs) were identified as large projects or business opportunities that had the potential to generate at least $100 million in earnings within 3 years.
• Within 1 year of launching an initiative to develop IBs, over 80 had been identified within GE. By 2005, 25 of these were generating revenue.

- Of Town Halls and Dreaming
• Immelt started holding Town Hall Meetings with customers to get a better idea of what they wanted out of GE and how he could serve them better.
• He also created another type of forum known as “Dream Sessions” in which he would meet with major CEOs from major industries to discuss roadmaps, implications for GE, and future opportunities for GE.

- Infrastructure for Developing Countries: A New Growth Market
• In 2004, revenues from outside of the US grew by 18%.
• Leading the way was a massive increase from developing countries – an area that Immelt was particularly focused on for long-term growth

- Reorganizing for Efficiency – and Growth
• In 2005, Immelt reorganized the company into 6 major groups:
1. GE Industrial
2. GE Commercial Financial Services
3. NBC Universal
4. GE Health Care
5. GE Consumer Finance
6. GE Infrastructure
• Each group was to focus highly on coaching, developing and supporting younger managers within the group.

- Going Forward: Immelt’s Challenges
• Immelt’s main challenge moving forward is to maintain the momentum that his moves have produced to date.
• “GE thrives because we use our size to help us grow.”
• “Our goal is not just to be big, but to use our size to be great.”


Adoption of a New Product

Contents

[hide]

Basic Information of Forecasting the Adoption of a New Product

Author: Elie Ofek
Publisher: HBR
Case Number: 505062
Publication Date: Feb 15, 2005
Revision Date: May 20, 2008
Course Category: Marketing

Case Summary of Forecasting the Adoption of a New Product

The Bass Model or Product Diffusion Model
- Created by Frank Bass in 1969 as an analytical framework for modeling the first-purchase growth of a new product
- The model makes assumptions about how information is passed between individuals in a social system, and how this affects their timing of adoption
- Assumes that a consumer can adopt a new product only once
- Innovators – individuals who adopt a product independently of others
- Imitators – individuals who adopt a product only after observing that others have done so first; they respond to influences
- Variables in the Bass Model:
N(t) is the total cumulative # of consumers that have already adopted the new product through period t;
N(t-1) is the cumulative # of adopters for the new product through the previous time period (i.e. t – 1)
S(t) is the # of new adopters for the product during the time period t, and can be expressed as N(t) – N(t - 1)
m is the total market size; provides the scale of the demand forecast; gives a total consumer base or terminal value of total adopters that will not be exceeded
p is the coefficient of innovation; represents the rate or probability that an innovator will adopt at time t
q is the coefficient of imitation; accounts for “word-of-mouth” effects that result from interpersonal communication between adopters & non-adopters
- The Bass model asserts that the likelihood of an initial purchase being made at time t, given that a purchase has not been made before, is a function of the # of previous adopters, such that:
p + (q/m)N(t - 1) = likelihood of purchase by a new adopter in time period t
m – N(t - 1) is the # of consumers that haven’t previously adopted by the start of time period t; this is the pool from which new adoptions in the current period can occur
- The Bass model in its simplest form gives us the number of new adopters in time period t by multiplying the rate of new adopters by the # of consumers that have yet to adopt:
S(t) = [p + (q/m)N(t – 1)][m – N(t – 1)] -> the Bass model
  • Ex. A1 in the reading shows possible adoption curves for new products, where a product with a high coefficient of innovation will have a sudden increase in the adoption curve before leveling off. Conversely, a product with a low coefficient of innovation and a high coefficient of imitation will have a gradually sloping adoption curve.
Estimation of Parameters
- Market research surveys that assess consumer interest or likelihood of purchase is one way to gauge total market size
- p & q may be determined through the analysis of p’s & q’s for previously launched analogous products
- Several analogous products may be considered, in which case a weighted average of their p & q values is appropriate
XM Satellite Radio and its launch:
- XM used a national telephone survey to gauge interest and determine total market
- There are other factors that influence total market though, such as the % of the market that’s willing to purchase new radios and pay a monthly fee, so it is important to do a sensitivity analysis
- to estimate p & q, XM assumed AM/FM automobile radios, portable CD players, & mobile phones & satellite TV to be analogous products and used weights to determine p & q
- XM forecasted a gradually sloping demand curve after launch due to a model dominated by imitators rather than innovators.
- Of course, market penetration may be affected by price decreases or advertising spend, in which case the ff. generalized Bass model (GBM) holds:
S(t) = [p + (q/m)N(t – 1)][m – N(t – 1)]Z(t)
Where Z(t) = 1 + α[P(t) – P(t – 1)]/P(t – 1);
α is a coefficient that indicates the percentage increase in the speed of diffusion that results in a 1% decrease in price
P(t) is price in period t
And the ff. assumptions hold:
1. a price decrease affects the # of adoptions in that period only
2. the actions of the firm through it’s marketing mix affects imitators and innovators the same way
OTHER MODELS DISCUSSED BRIEFLY IN THE READING:
The Discrete Choice Model
- Use this if 2 or more versions of the new product are already in marketplace, or if prototypes exist
- Develop a set of key attributes by which to compare competing versions of the product, perform a conjoint analysis, & use this data to estimate market share for each product
Data Driven Demand Forecasts
- used when historical sales data is available to forecast future sales, therefore cannot be used with new products
- A Moving Average forecast of demand uses the average sales from previous periods to forecast future sales
- The Exponential Smoothing Method uses an exponentially weighted moving average of previous sales; best used when drastic changes have recently occurred in marketplace; i.e. recent observations are weighted more heavily than older ones
- Be careful not to forecast past the terminal value of m (total market size)



Five Forces Analysis

Contents

[hide]

Basic Information of Five Forces Analysis

Author: Michael E. Porter
Publisher: HBR
Case Number:
Publication Date:
Course Category: Strategy, Management

Case Summary of Five Forces Analysis

Porter's five forces analysis is a framework for the industry analysis and business strategy development developed by Michael E. Porter of Harvard Business School in 1979. It uses concepts developed in Industrial Organization (IO) economics to derive five forces which determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one where the combination of forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition".
Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace. The overall industry attractiveness does not imply that every firm in the industry will return the same profitability. Firms are able to apply their Core competences, business model or network to achieve a profit above the industry average. A clear example of this is the airline industry. As an industry, profitability is low and yet individual companies, by applying unique business models have been able to make a return in excess of the industry average.

Use

Strategy consultants occasionally use Porter's five forces framework when making a qualitative evaluation of a firm's strategic position. However, for most consultants, the framework is only a starting point or 'check-list' they might use. Like all general frameworks, an analysis that uses it to the exclusion of specifics about a particular situation is considered naive.
Porter's five forces include three forces from 'horizontal' competition: threat of substitute products, the threat of established rivals, and the threat of new entrants; and two forces from 'vertical' competition: the bargaining power of suppliers, bargaining power of customers.
According to Porter, the five forces model should be used at the industry level; it is not designed to be used at the industry group or industry sector level. An industry is defined at a lower, more basic level: a market in which similar or closely related products and/or services are sold to buyers. Firms that compete in a single industry should develop, at a minimum, one five forces analysis for its industry. Michael E. Porter makes clear that for diversified companies, the first fundamental issue in corporate strategy is the selection of industries (lines of business) in which the company should compete; and each line of business should develop its own, industry-specific, five forces analysis. The average Global 1,000 company competes in approximately 52 industries (lines of business).
This five forces analysis is just one part of the complete Porter strategic models. The other elements are the value chain and the generic strategies.

The Five Forces

The threat of substitute products

The existence of close substitute products increases the propensity of customers to switch to alternatives in response to price increases (high elasticity of demand).
  • buyer propensity to substitute
  • relative price performance of substitutes
  • buyer switching costs
  • perceived level of product differentiation

The threat of the entry of new competitors

Profitable markets that yield high returns will draw firms. This results in many new entrants, which will effectively decrease profitability. Unless the entry of new firms can be blocked by incumbents, the profit rate will fall towards a competitive level (Perfect competition).
  • the existence of barriers to entry (Patents, rights, etc.)
  • economies of product differences
  • Brand equity
  • switching costs or sunk costs
  • capital requirements
  • access to distribution
  • absolute cost advantages
  • Learning curve advantages
  • expected retaliation by incumbents
  • government policies

The intensity of competitive rivalry

For most industries, this is the major determinant of the competitiveness of the industry. Sometimes rivals compete aggressively and sometimes rivals compete in non-price dimensions such as innovation, marketing, etc.
  • number of competitors
  • rate of industry growth
  • intermittent industry overcapacity
  • Exit barriers
  • diversity of competitors
  • informational complexity and asymmetry
  • fixed cost allocation per value added
  • level of advertising expense
  • Economies of scale
  • Sustainable competitive advantage through improvisation

The bargaining power of customers

Also described as the market of outputs. The ability of customers to put the firm under pressure and it also affects the customer's sensitivity to price changes.
  • buyer concentration to firm concentration ratio
  • degree of dependency upon existing channels of distribution
  • bargaining leverage, particularly in industries with high fixed costs
  • buyer volume
  • buyer Switching costs relative to firm switching costs
  • buyer information availability
  • ability to vertical integration(backward integrate)
  • availability of existing substitute products
  • buyer price sensitivity
  • differential advantage (uniqueness) of industry products
  • RFM Analysis

The bargaining power of suppliers

Also described as market of inputs. Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm. Suppliers may refuse to work with the firm, or e.g. charge excessively high prices for unique resources.
  • supplier switching costs relative to firm switching costs
  • degree of differentiation of inputs
  • presence of substitute inputs
  • supplier concentration to firm concentration ratio
  • employee solidarity (e.g. labor unions)
  • threat of forward integration by suppliers relative to the threat of backward integration by firms
  • cost of inputs relative to selling price of the product.

Criticisms of the 5 Force model

Porter's framework has been challenged by other academics and strategists such as Stewart Neill, also the likes of Kevin P. Coyne and Somu Subramaniam have stated that three dubious assumptions underlie the five forces:
  • That buyers, competitors, and suppliers are unrelated and do not interact and collude.
  • That the source of value is structural advantage (creating barriers to entry).
  • That uncertainty is low, allowing participants in a market to plan for and respond to competitive behavior.
An important extension to Porter was found in the work of Brandenburger and Nalebuff in the mid-1990s. Using game theory, they added the concept of complementors (also called "the 6th force"), helping to explain the reasoning behind strategic alliances. The idea that complementors are the sixth force has often been credited to Andrew Grove, former CEO of Intel Corporation. According to most references, the sixth force is government or the public. Martyn Richard Jones, whilst consulting at Groupe Bull, developed an augmented 5 forces model in Scotland in 1993, it is based on Porter's model, and includes Government (national and regional) as well as Pressure Groups as the notional 6th force. This model was the result of work carried out as part of Group Bull's Knowledge Asset Management Organisation initiative.
It is also perhaps not feasible to evaluate the attractiveness of an industry independent of the resources a firm brings to that industry. It is thus argued that this theory be coupled with the Resource-Based View (RBV) in order for the firm to develop a much more sound strategy.

Case Analysis of Five Forces Analysis

The Six Forces Model is a market opportunities analysis model, as an extension to Porter's Five Forces Model and is more robust than a standard SWOT analysis.
The following forces are identified:
  • Competition
  • New entrants
  • End users/Buyers
  • Suppliers
  • Substitutes
  • Complementary products/ The government/ The public



Executive Decision Making at General Motors

Contents

[hide]

Basic Information of Executive Decision Making at General Motors

Author: David A. Garvin, Lynne C. Levesque
Publisher: HBR
Case Number: 305026
Publication Date: Dec 21, 2004
Revision Date: Feb 14, 2006
Course Category: Management

Case Summary of Executive Decision Making at General Motors

“How does an organization achieve consistency, or fit, between the environment and its strategy, structure, and decision-making processes? The GM case will allow us to discuss the question of how to go about aligning an organization with a dynamic environment, and in so doing, ensuring that it is also self-adapting. A last important theme of this case is the role of the CEO.”

Wagoner (Chairman and CEO of GM):
“How to balance the global effective system and local focus expertise? The matrix organization is the key factor. It replaced the historic multi-divisional structure and its proliferation of vehicles, architectures, and processes that had almost cause GM’s demise”

~Case Context~
Alfred Sloan’s GM: Revving up (1920~1956)
• In 1908: Billy Durant
Created the first automotive conglomerate and first vertically integrated company in the industry.
− Challenge: Poor management decision because internal competition and duplication were tolerated and often encouraged.
• In 1918: Alfred Sloan
Reorganized GM’s structure and management processes to be in line with its strategies.
− Strategy: Three major strategies included an ingenuous marketing policy, a commitment to innovation, and international diversification.
− Structure: Multi-divisional structure called “decentralization with coordinated control.”
− Policy and Decision-Making Processes: Coordinated control in the decentralized organization came from Management Committee and the Policy Groups.
ü
Management Committee:
Ultimately responsibility for decisions around resource allocation, spending authorities, and planning for GM’s future resided until 1992.
ü
Policy Groups:
Met monthly to set standards and policies to provide recommendations to Management Committee, while they had no funding authority.
− Result: Ranked #1 of Fortune 500 (in 1955) in both sales and net profits.
− Challenges: Innovation structure is unchanged until 1990; independence and decentralization may not be able to respond the major changes quickly.

Coasting Toward Collision (1960s-1990s)
Increased competition and oil crisis in 1970s tested GM’s prevailing strategy, structure, and senior management process. However, GM’s internal focus and its ‘not invented here’ attitude didn’t help.
− Strategy: With focus on market share, the divisions compete with each other. Top managers became more focused on cost than revenue.
− Structure: The effectiveness of decentralized organization began to break down as operational complexity and internal competition increased. Each division and global region has its own functions and lacked of the economics of scale.
− Policy and Decision-Making Processes: Slowed down decision-making by adding a new layer of required review, and managers focused on lining up needed votes before meetings. The staff kept executives from knowing what going on with customers and employees.
− Result: GM was branded a “dinosaur” by the early 1990.

Getting Back on a Common Track (1992 and Beyond)
In 1992, Jack Smith was in charge of CEO and Chairman. He eliminated Policy Group, abolished the two vehicle groups, and replaced the Management Committee with President’s Council.
− Strategy: Reduced overlapping product lines, developing common systems for product development, focused on speeding up to decision-making process, and eliminating the interdivisional competition.
− Structure:
  1. In North America, GM consolidated automotive engineering, manufacturing, and purchasing into one North America organization.
  2. In 1998, GM established a single Automotive Strategy Board (ASB) chaired by Wagoner.
  3. Also in 1998, GM was reorganized into matrix organization, or ‘basketweave’, including four Region Presidents and twelve Global Process Leaders covering critical functions.
− Policy and Decision-Making Processes:
  1. Regional decisions: Responsible for developing, reviewing, and approving regional operating budgets and business plans.
  2. Functional decisions: Global Process Leaders were responsible for their functions across the entire company.
  3. Balancing the matrix: The regions were initially given the dominant role in the matrix, with budgeting and financial reporting accountabilities. Functional staffs had dual reporting system.

The Automotive Strategy Board (ASB): The Matrix in Action
In the new organization, the regional strategy boards and the global process councils came together at ASB, which, along with GM’s Board of Directors,
− Role of ASB:
  1. Governance and oversight: ASB made decisions about financial commitments and resource allocation.
  2. Policy setting.
  3. Alignment: The ASB played additional roles that promoted organizational alignment, coordination, and communication.
  4. Strategic decision-making: Strategic issues, such as acquisitions, growth strategies, and resources allocations were decided through ASB.
− Support the Matrix
  1. Doublehatting: Asked the top managers to work both sides of the matrix as a Regional Presidents and Global Process Leaders.
  2. Performance management plans: To improve alignment, Wagoner wrote the Performance Management Plans (PMPs) by hand for each individuals ASB member, who then had a week to respond.
  3. Meeting groundrules.
− ASB Operating Mechanics
ASB met monthly for two days of the month. Between two meetings, there were weekly telephone conferences. Besides, all regional strategy board met prior to the ASB meeting in preparation.
  1. Pre-meeting preparation: Collected the agenda candidates and voted before the ASB meeting to select focused agenda.
  2. Meeting format: The agenda was usually organized into seven categories. The single most important agenda item is the one-hour “roundtable” because people bring in those items that they think really matter, that others need to know, or when they need someone’s help.
  3. Evolution over time.
− ASB Decision-Making Dynamics
  1. Senior management interactions: In the view of some members, the ASB was largely rubber stamp. Others saw the ASB as an efficient mechanism for speedy decision making.
  2. The CEO rule: In some members’ view, Wagoner was an active participant and ensured there was healthy debated. Others saw Wagoner using the ASB primarily as a sounding board as his own decision-making. Wagoner himself admitted that his role often changed, but he was not concerned about the diverse roles he played in the process. He mentioned, “I like having flexibility, which makes the organization better by putting pressure on it….In the end we have to think.”

The Future of GM’s Basketweave Structure
In spite of substantial progress, GM had continued to wrestle with the challenge of maintaining the right balance between local interest and the need for the centralized coordination to ensure economics of scope and scale.
− Challenges still faced
  1. Unlike Toyota and VW, GM still lacked a single global product plan.
  2. Regionally base product development groups and programs had continued to lead to duplication.
  3. Sharing among the regions was not happening naturally.
− Action: Changing the responsibility for the product development and engineering budgets. GM would centralize the responsibility in the Product Development and Planning/R&D functions.
− Concerns of Wagoner:
”Are we ready to manage the complexities of holding Region Presidents accountable for business results when they are no longer autonomous business unit, without their own product portfolio or product development/engineering staffs?”