The new boundaries of the "boundaryless" company

In an economy founded on innovation and change, one of the premier challenges of management is to design more flexible organizations. For many executives, a single metaphor has come to embody this managerial challenge and to capture the kind of organization they want to create: the "corporation without boundaries." According to Larry Hirschhorn and Thomas Gilmore of the Wharton Center for Applied Research, managers are right to break down the boundaries that make organizations rigid and unresponsive. But they are wrong if they think that doing so eliminates the need for boundaries altogether. Once the traditional boundaries of hierarchy, function, and geography disappear, a new set of boundaries becomes important. These new boundaries are more psychological than organizational. They aren't drawn on a company's organizational chart but in the minds of its managers and employees. And instead of being reflected in a company's structure, they must be "enacted" over and over again in a manager's relationships with bosses, subordinates, and peers. In this article, Hirschhorn and Gilmore provide a guide to the boundaries that matter in the "boundaryless" company. They explain how these new boundaries are essential for both managers and employees in coping with the demands of flexible work. They describe the typical mistakes that managers make in their boundary relationships. And they show how executives can become effective boundary managers by paying attention to a source of data they have often overlooked in the past: their own gut feelings about work and the people with whom they do it.     

A new game plan for C players

It's a big driver of business success, but one that executives are loath to talk about: upgrading the talent pool by weeding out "C" players from management. These aren't the incompetent or unethical managers whom organizations dismiss without a backward glance; C performers deliver results that are acceptable--barely--but they fail to innovate or to inspire the people they lead. The authors of The War for Talent have studied what it takes to upgrade an organization's talent pool. In this article, they explore the hidden costs of tolerating under-performance and acknowledge the reasons why executives may shy away from dealing decisively with C players. They recommend that organizations take an "iron hand in a velvet glove" approach to managing subpar performers. That is, companies should establish rigorous, disciplined processes for assessing and dealing with low-performing managers but still treat them with respect. The authors outline three ironhanded steps. First, executives must identify C players by evaluating their talents and distributing employee performances along an assessment curve. Second, executives must agree on explicit action plans that articulate the improvements or changes that C performers must achieve within six to 12 months. And third, executives should hold managers accountable for carrying out the action plans. Without such discipline, procrastination, rationalization, and inaction will prevail. The authors also emphasize the need for the "velvet glove." Executives must ensure that low performers are treated with dignity, so they should offer candid feedback, instructive coaching, and generous severance packages and outplacement support. The authors' approach isn't about being tough on people; it's about being relentlessly focused on performance.     

JUST SAY NO TO WALL STREET: PUTTING A STOP TO THE EARNINGS GAME

CEOs are in a bind with Wall Street. Managers up and down the hierarchy work hard at putting together plans and budgets for the next year only to discover that the bottom line falls far short of Wall Street's expectations. CEOs and CFOs are therefore left in a difficult situation; they can stretch to try to meet Wall Street's projections or prepare to suffer the consequences if they fail.
All too often, top managers react by suggesting or even mandating that middle- and lower-level managers redo their forecasts and budgets to get them in line with external expectations. In some cases, managers simply acquiesce to increasingly unrealistic analyst forecasts and adopt them as the basis for setting organizational goals and developing internal budgets. But either approach sets up the firm and its managers for failure if external expectations are impossible to meet.
Using the recent experiences of Enron and Nortel, the authors illustrate the dangers of conforming to market pressures for unrealistic growth targets. They emphasize that an overvalued stock, by encouraging overpriced acquisitions and other value-destroying forms of overinvestment, can be as damaging to the long-run health of a company as an undervalued stock. Ending the "expectations game" requires that CEOs reclaim the initiative in setting expectations and forecasts so that stocks can trade at close to their intrinsic value. Managers must make their organizations more transparent to investors; they must promise only those results they have a legitimate prospect of delivering and be willing to inform the market when they believe their stock to be overvalued.     

Saving your rookie managers from themselves

Most organizations promote employees into managerial positions based on their technical competence. But very often, that kind of competence does not translate into good managerial performance. Many rookie managers fail to grasp how their roles have changed: that their jobs are no longer about personal achievement but about enabling others to achieve, that sometimes driving the bus means taking a backseat, and that building a team is often more important than cutting a deal. Even the best employees have trouble adjusting to these new realities, and that trouble can be exacerbated by the normal insecurities that may make rookie managers hesitant to ask for help. The dynamic unfolds something like this: As rookie managers internalize their stress, their focus, too, becomes increasingly internal. They become insecure and self-focused and cannot properly support their teams. Invariably, trust breaks down, staff members become alienated, and productivity suffers. In this article, coach and management consultant Carol Walker, who works primarily with rookie managers and their supervisors, addresses the five problem areas that rookie managers typically face: delegating, getting support from senior staffers, projecting confidence, thinking strategically, and giving feedback. You may think these elements sound like Management 101, and you'd be right, Walker writes. But these basic elements are also what trip up most managers in the early stages of their careers (and even, she admits, throughout their careers). The bosses of rookie managers have a responsibility to anticipate and address these problems; not doing so will hurt the rookie, the boss, and the company overall.     

The new science of sales force productivity

For years, sales managers at many companies have relied on top performers and sheer numbers of sales reps to stay competitive. But while they may have squeaked by on this wing-and-a-prayer technique, their sales teams haven't thrived the way they once did. Today's most successful sales leaders are taking a more scientific approach. Savvy managers are reshaping their tactics in response to changing markets. They are reaching out to new customers in innovative ways. And they are increasing productivity by helping the reps they already have make the most of their skills and resources. Leaders who take a scientific approach to sales force effectiveness have learned to use four levers to boost their reps' productivity in a predictable and manageable way. First, they systematically target their firms' offerings, matching the right products with the right customers. Second, they optimize the automation, tools, and procedures at their disposal, providing reps with the support they need to boost sales.Third, they analyze and manage their reps' performance, measuring both internal processes and results to determine where their teams' strengths and weaknesses are. Fourth, they pay close attention to sales force deployment--how well sales, support, marketing, and delivery resources are matched to customers. These four levers can help sales leaders increase productivity across the board, the authors say, though they have the greatest impact on lower-ranked performers. The overall effect of increasing the average sales per employee can be exponential; it means a company won't have to rely on just a few talented individuals to stay competitive. This is especially important because finding and keeping star salespeople is more difficult than ever. What's more, managers who optimize the sales forces they already have can see returns they never thought possible.     

Reclaim your job

Ask most managers what gets in the way of their success, and you'll hear the familiar litany of complaints: Not enough time. Limited resources. No clear sense of how their work fits into the grand corporate scheme. These are, for the most part, excuses. What really gets in the way of managers' success is fear of making their own decisions and acting accordingly. Managers must overcome the psychological desire to be indispensable. In this article, the authors demonstrate how managers can become more productive by learning to manage demands, generate resources, and recognize and exploit alternatives. To win the support they want, managers must develop a long-term strategy and pursue their goals slowly, steadily, and strategically. To expand the range of opportunities, for their companies and themselves, managers must scan the environment for possible obstacles and search for ways around them. Fully 90% of the executives the authors have studied over the past few years wasted their time and frittered away their productivity, despite having well-defined projects, goals, and the necessary knowledge to get their jobs done. Such managers remain trapped in inefficiency because they assume they do not have enough personal discretion or control. They forget how to take initiative--the most essential quality of any truly successful manager. Effective managers, by contrast, are purposeful corporate entrepreneurs who take charge of their jobs by developing trust in their own judgment and adopting long-term, big-picture views to fulfill personal goals that match those of the organization.     

A practical guide to social networks

Saying that networks are important is stating the obvious. But harnessing the power of these seemingly invisible groups to achieve organizational goals is an elusive undertaking. Most efforts to promote collaboration are haphazard and built on the implicit philosophy that more connectivity is better. In truth, networks create relational demands that sap people's time and energy and can bog down entire organizations. It's crucial for executives to learn how to promote connectivity only where it benefits an organization or individual and to decrease unnecessary connections. In this article, the authors introduce three types of social networks, each of which delivers unique value. The customized response network excels at framing the ambiguous problems involved in innovation. Strategy consulting firms and new-product development groups rely on this format. By contrast, surgical teams and law firms rely mostly on the modular response network, which works best when components of the problem are known but the sequence of those components in the solution is unknown. And the routine response network is best suited for organizations like call centers, where the problems and solutions are fairly predictable but collaboration is still needed. Executives shouldn't simply hope that collaboration will spontaneously occur in the right places atthe right times in their organization. They need to develop a strategic, nuanced view of collaboration, and they must take steps to ensure that their companies support the types of social networks that best fit their goals. Drawing on examples from Novartis, the FAA, and Sallie Mae, the authors offer managers the tools they need to determine which network will deliver the best results for their organizations and which strategic investments will nurture the right degree of connectivity.     

Putting your company's whole brain to work

Innovate or fall behind: the competitive imperative for virtually all businesses today is that simple. Responding to that command is difficult, however, because innovation takes place when different ideas, perceptions, and ways of processing and judging information collide. And it often requires collaboration among players who see the world differently. As a result, the conflict that should take place constructively among ideas all too often ends up taking place unproductively among people. Disputes become personal, and the creative process breaks down. The manager successful at fostering innovation figures out how to get different approaches to grate against one another in a productive process the authors call creative abrasion. The authors have worked with a number of organizations over the years and have observed many managers who know how to make creative abrasion work for them. Those managers understand that different people have different thinking styles: analytical or intuitive, conceptual or experiential, social or independent, logical or values driven. They deliberately design a full spectrum of approaches and perspectives into their organizations and understand that cognitively diverse people must respect other thinking styles. They set ground rules for working together to discipline the creative process. Above all, managers who want to encourage innovation need to examine what they do to promote or inhibit creative abrasion.     

In praise of middle managers

Middle managers have often been cast as dinosaurs. Has-beens. Mediocre managers and intermediaries who defend the status quo instead of supporting others' attempts to change organizations for the better. An INSEAD professor has examined this interesting breed of manager--in particular, middle managers' roles during periods of radical organizational change. His findings will surprise many. Middle managers, it turns out, make valuable contributions to the realization of radical change at companies--contributions that go largely unrecognized by most senior executives. Quy Nguyen Huy says these contributions occur in four major areas. First, middle managers often have good entrepreneurial ideas that they are able and willing to realize--if only they can get a hearing. Second, they're far better than most senior executives at leveraging the informal networks at companies that make substantive, lasting change. Because they've worked their way up the corporate ladder, middle managers' networks run deep. Third, they stay attuned to employees' emotional needs during organizational change, thereby maintaining the transformation's momentum. And finally, they manage the tension between continuity and change--they keep the organization from falling into extreme inertia or extreme chaos. The author examines each of these strengths, citing real-world examples culled from his research. Of course, not every middle manager in an organization is a paragon of entrepreneurial vigor and energy, Huy acknowledges. But cavalierly dismissing the roles that middle managers play--and carelessly reducing their ranks--will drastically diminish senior managers' chances of realizing radical change at their companies. Indeed, middle managers may be the most effective allies of corner office executives when it's time to make major changes in businesses.     

Beyond products: services-based strategy

Services technologies are changing the way companies in every industry--manufacturers and service providers alike--compete. Vertical integration, physical facilities, even a seemingly superior product can no longer assure a competitive edge. Instead, sustainable advantage is more and more likely to come from developing superior capabilities in a few core service skills--and out-sourcing as much of the rest as possible. Within companies, technology is increasing the leverage of service activities: today, more value added comes from design innovations, product image, or other attributes that services create than from the production process. New technologies also let independent enterprises provide world-class services at lower costs than customers could achieve if they performed the activities themselves. These changes have far-reaching implications for how managers structure their organizations and define strategic focus. Companies like Apple, Honda, and Merck show that a less integrated but more focused organization is key to competitive success. They build their strategies around a few highly developed capabilities. And they outsource as many of the other activities in their value chain as possible. To help managers develop an activity-focused strategy, the authors offer a new way to approach competitive analyses, guidelines for determining which activities to outsource and which to retain, and an overview of the risks and rewards of strategic outsourcing. Throughout, they draw on the findings of their three-year study of the major impacts technology has had in the service sector.     

It's so hard to be fair

When employees believe they are being treated fairly-when they feel heard, when they understand how and why important decisions are made, and when they believe they are respected-their companies will benefit. Research shows that practicing process fairness reduces legal costs from wrongful-termination suits, lowers employee turnover, helps generate support for new strategic initiatives, and fosters a culture that promotes innovation. What's more, it costs little financially to implement Yet few companies practice it consistently. Joel Brockner examines this paradox, exploring psychological and other reasons that cause managers to resist embracing process fairness. The fact that it's relatively inexpensive to implement, for instance, may be why some numbers-oriented executives undervalue it. Many managers believe that they practice process fairness, but 360-degree feedback tells another story. Some corporate policies actually undermine it--such as when the legal department won't let managers fully explain decisions for fear that disclosure could expose the firm to lawsuits. And, frequently, managers simply follow the all-too-human tendency to avoid uncomfortable situations. But the good news is that organizations can take concrete steps to promote greater process fairness. Many studies have shown that training programs make a big difference, and the author describes the most effective format. In addition, warning your managers that they may experience negative emotions when practicing fair process will help prepare them to cope with those feelings. Finally, role modeling fair process on the executive level will help spread the practice throughout the organization. The fact is, process fairness is the responsibility of all executives, at all levels and in all functions; it cannot be delegated to HR. The sooner managers realize that and work to make it a company norm, the better off the organization will be.     

Power failure in management circuits

When one thinks of "power", one often assumes that a person is the source of it and that some mystical charismatic element is at work. Of course, with some people this is undoubtedly so; they derive power from how other people perceive them. In organizations, however--says this author--power is not so much a question of people but of positions. Drawing a distinction between productive and oppressive power, the author maintains that the former is a function of having open channels to supplies, support, and information; the latter is a function of these channels being closed. She then descriges three positions that are classically powerless: first-line supervisors, staff professionals, and, surprisingly, chief executive officers. These positions can be powerless because of difficulties in maintaining open lines of information and support. Seeing powerlessness in these positions as dangerous for organizations, she urges managers to restructure and redesign their organizations in order to eliminate pockets of powerlessness.     

Accounting flexibility and managers’ forecast behavior prior to seasoned equity offerings

This study examines the effect of accounting flexibility on managers’ forecasting behavior prior to seasoned equity offerings (SEOs). Although SEO firms have a strong incentive to convey optimistic information to boost the pre-SEO stock price, they also face enhanced litigation risk arising from SEO-related regulations. Thus, I hypothesize that managers will release positive news through their forecasts (relative to the prevailing analyst consensus) prior to an SEO only if they have the accounting flexibility to manage subsequent reported earnings to meet or exceed their forecasts. I find that managers with greater accounting flexibility are more likely to issue a forecast prior to the SEO and that their forecasts are more likely to convey positive news and are more specific. Furthermore, I find no effect of accounting flexibility for non-SEO control firms or for non-SEO periods. My results suggest that when managers experience a tension between the incentive for voluntary disclosure and high litigation risk, accounting flexibility is an important factor that determines their forecasting behavior.     

Introducing T-shaped managers. Knowledge management's next generation

Most companies do a poor job of capitalizing on the wealth of expertise scattered across their organizations. That's because they tend to rely on centralized knowledge-management systems and technologies. But such systems are really only good at distributing explicit knowledge, the kind that can be captured and codified for general use. They're not very good at transferring implicit knowledge, the kind needed to generate new insights and creative ways of tackling business problems or opportunities. The authors suggest another approach, something they call T-shaped management, which requires executives to share knowledge freely across their organization (the horizontal part of the "T"), while remaining fiercely committed to their individual business unit's performance (the vertical part). A few companies are starting to use this approach, and one--BP Amoco--has been especially successful. From BP's experience, the authors have gleaned five ways that T-shaped managers help companies capitalize on their inherent knowledge. They increase efficiency by transferring best practices. They improve the quality of decision making companywide. They grow revenues through shared expertise. They develop new business opportunities through the cross-pollination of ideas. And they make bold strategic moves possible by delivering well-coordinated implementation. All that takes time, and BP's managers have had to learn how to balance that time against the attention they must pay to their own units. The authors suggest, however, that it's worth the effort to find such a balance to more fully realize the immense value of the knowledge lying idle within so many companies.     

Reputation management and the disclosure of earnings forecasts

In this paper, managers differ from each other in terms of the probability that they are ??forthcoming?? (and disclose all the earnings forecasts they receive) or ??strategic?? (and disclose the earnings forecasts they receive only when it is in their self-interest to do so). Strategic managers choose whether to disclose their forecasts based on both the disclosure??s effects on their firms?? stock price and on their reputation among investors for being forthcoming. Our findings include: strategic managers can build a reputation for being forthcoming by disclosing unfavorable forecasts; managers?? incentive to build a reputation for being forthcoming may be so strong that they disclose even the most negative forecasts; as managers become more concerned about their reputation: (a) the current price of the firm in the event the manager makes no forecast increases; (b) managers who have a high probability of behaving strategically (as forthcoming) in the future issue forecasts more (less) often in the present.     

How to kill creativity

In today's knowledge economy, creativity is more important than ever. But many companies unwittingly employ managerial practices that kill it. How? By crushing their employees' intrinsic motivation--the strong internal desire to do something based on interests and passions. Managers don't kill creativity on purpose. Yet in the pursuit of productivity, efficiency, and control--all worthy business imperatives--they undermine creativity. It doesn't have to be that way, says Teresa Amabile. Business imperatives can comfortably coexist with creativity. But managers will have to change their thinking first. Specifically, managers will need to understand that creativity has three parts: expertise, the ability to think flexibly and imaginatively, and motivation. Managers can influence the first two, but doing so is costly and slow. It would be far more effective to increase employees' intrinsic motivation. To that end, managers have five levers to pull: the amount of challenge they give employees, the degree of freedom they grant around process, the way they design work groups, the level of encouragement they give, and the nature of organizational support. Take challenge as an example. Intrinsic motivation is high when employees feel challenged but not overwhelmed by their work. The task for managers, therefore, becomes matching people to the right assignments. Consider also freedom. Intrinsic motivation--and thus creativity--soars when managers let people decide how to achieve goals, not what goals to achieve. Managers can make a difference when it comes to employee creativity. The result can be truly innovative companies in which creativity doesn't just survive but actually thrives.     

Quality circles after the fad

On the face of it, it makes sense, If you want to involve your employees more in decision making and shift the organization toward a more participative culture, starting suggestion groups called quality circles seems to be a risk-free way to begin. Having studied many quality circles in different organizations, the authors of this article conclude that quality circles have their distinct advantages but that they have inherent in their design numbers of factors that often lead them to self-destruct. Quality circles are also said to be a poor forerunner for more participative approaches to management. Changing a quality circle into an institutionalized participative structure involves making many changes in important features of the organization that do not naturally flow from the implementation of a circle program. The authors describe the stages that quality circles go through, discuss the various threats they must survive, and then outline the most effective uses that managers can make of them.     

Nothing prepared me to manage AIDS

Articles and seminars about AIDS in the workplace are not adequate preparation for the genuine problems faced by actual managers in real organizations. There are no easy, win-win solutions to the impossible dilemmas AIDS presents, only various forms of damage control and, at best, more or less humane compromises. Gary Banas knows. Over a period of four years, two of his direct reports developed AIDS, and he watched them suffer through debility, slowly deteriorating performance, and eventual death. He also watched the gradual decline of their subordinates' productivity and morale. He found that, to different degrees, both men refused to acknowledge their illness and their decreasing organizational effectiveness. One of them resisted the author's efforts to give him an easier job at no loss in salary. Both insisted on confidentiality long after the rumor mill had identified their problem. In the course of these two consecutive ordeals, Banas discovered that AIDS patients fall into no single, neat category. AIDS is not an issue but a disease, and the people who get it are human beings first and victims second. He also learned that AIDS affects everyone around the sick individual and that almost every choice a manager makes will injure someone. Finally, he came to understand that while managers have an unequivocal obligation to treat AIDS-afflicted employees with compassion and respect, they have an equally unequivocal obligation to keep their organizations functioning. "Don't let anyone kid you," Banas warns. "When you confront AIDS in the workplace, you will face untenable choices that seem to pit your obligation to humanity against your obligation to your organization.(ABSTRACT TRUNCATED AT 250 WORDS)     

Making sense of future uncertainties using real options and scenario planning

Healthcare across the world is facing many uncertainties. In Dutch healthcare, a recent policy change is forcing health organizations to deal more efficiently with their real estate, and this increases the need for real estate strategies that are more flexible. In order to support managers in incorporating flexibility in their decision-making over the design of new healthcare facilities, we have developed a method that combines scenario planning and real options. Scenario planning enhances sensemaking over the consequences of future uncertainties, and real options should help in addressing flexibility in decision-making through weighing the pros and cons of flexibility measures. We illustrate the sensemaking process by applying the method to a hospital, to a forensic clinic and to a care organization for vulnerable citizens. Data collection took place through interviews and workshops. We found that the identity and characteristics of the workshop participants influenced the sensemaking process. The method proved a useful means of making sense of abstract uncertainties that influence an organization, aspects that are normally outside the scope of real estate managers. The real options approach offered a more structured way of balancing the costs and benefits of strategies in dealing with future uncertainties.     

Enhancing the competitiveness and sustainability of social enterprises in Hong Kong: A three-dimensional analysis

Running a social enterprise (SE) is more difficult than running a small or medium-sized enterprise because SEs have to achieve both economic sustainability as business enterprises and their social mission for the benefit of society. After a few years of operation, many SEs fail or struggle for survival. In this study, we examine some of the factors that affect an SE’s profitability, financial management, and business planning and management. Based on in-depth interviews with 22 social enterprises in Hong Kong, we find that SEs with the dual investment objectives of social mission and financial return are more sustainable and competitive than SEs with social impact as their sole objective. Furthermore, SEs managed by non-owner managers have better financial planning and performance than those managed by owner managers. In addition, SEs with an oversight/advisory committee are more competitive and have better management practices than those without such a committee. Our findings have policy implications for government, SEs, funding bodies, and non-profit organizations to enhance and promote the development of the social enterprise sector.