Turning gadflies into allies

Multinational companies are the driving force behind globalization, but they are also the source of many of its most painful consequences, including currency crises, cross-border pollution, and overfishing. These problems remain unsolved because they are beyond the scope of individual governments; transnational organizations have also proved unequal to the task. Nonprofit, nongovernmental organizations have leaped into the breach. To force policy changes, they have seized on all forms of modern persuasion to influence public sentiment toward global traders, manufacturers, and investors. By partnering with NGOs instead of opposing them, companies can avoid costly conflict and can use NGOs' assets to gain competitive advantage. So far, however, most companies have proved ill equipped to deal with NGOs. Large companies know how to compete on the basis of product attributes and price. But NGO attacks focus on production methods and their spillover effects, which are often noneconomic. Similarly, NGOs are able to convert companies' standard competitive strengths--such as size and wide market awareness of their brands--into liabilities. That's because the wealthier and better known a company is, the juicier the target it makes. Emboldened by their successes, NGOs continue to take on new causes. By partnering with NGOs instead of reflexively opposing them, companies could draw on NGOs' key strengths--legitimacy, awareness of social forces, distinct networks, and specialized technical expertise--which most companies could use more of. And with NGOs as allies and guides, companies should also be able to accelerate innovation, foresee shifts in demand, shape legislation affecting them, and, in effect, set technical and regulatory standards for their industries.     

Putting leadership back into strategy

In recent decades an infusion of economics has lent the study of strategy much needed theory and empirical evidence. Strategy consultants, armed with frameworks and techniques, have stepped forward to help managers analyze their industries and position their companies for strategic advantage. Strategy has come to be seen as an analytical problem to be solved. But, says Montgomery, the Timken Professor of Business Administration at Harvard Business School, the benefits of this rigorous approach have attendant costs: Strategy has become a competitive game plan, separate from the company's larger sense of purpose. The CEO's unique role as arbiter and steward of strategy has been eclipsed. And an overemphasis on sustainable competitive advantage has obscured the importance of making strategy a dynamic tool for guiding the company's development over time. For any company, intelligent guidance requires a clear sense of purpose, of what makes the organization truly distinctive. Purpose, Montgomery says, serves as both a constraint on activity and a guide to behavior. Creativity and insight are key to forging a compelling organizational purpose; analysis alone will never suffice. As the CEO--properly a company's chief strategist--translates purpose into practice, he or she must remain open to the possibility that the purpose itself may need to change. Lou Gerstner did this in the 1990s, when he decided that IBM would evolve to focus on applying technology rather than on inventing it. So did Steve Jobs, when he rescued Apple from a poorly performing strategy and expanded the company into attractive new businesses. Watching over strategy day in and day out is the CEO's greatest opportunity to shape the firm as well as outwit the competition.     

Transforming corner-office strategy into frontline action

When CEOs push decision making out to the far reaches of an organization, good things happen: fleeting business opportunities are seized quickly and workers are motivated to innovate and take risks. But it's tricky to achieve both decentralized decision making and coherent strategic action at a company. If everyone is a decision maker, things can spin out of control. In this article, Bain consultants Orit Gadiesh and James Gilbert explore the concept of the strategic principle--a memorable and actionable phrase that distills a company's corporate strategy into its unique essence and communicates it across an organization. If it's devised and disseminated properly, a strategic principle can empower employees to seize business opportunities but also focus everyone in an organization--executives and line managers alike--on the same strategic objectives. The authors outline the three defining characteristics of a good strategic principle--it should force trade-offs between competing resource demands, it should serve as a test for the strategic soundness of a particular action, and it should set clear boundaries for employees to operate within even as it grants them freedom to experiment. They explain how managers can create a strategic principle, how they should test it, and when they should revisit it. The authors present real-world examples of how companies use their strategic principles. For instance, they describe how South-west Airlines stopped flying to Denver after it measured the high costs of providing flight service in that part of the country against its strategic principle of offering customers short-haul air travel at fares competitive with the cost of automobile travel. This tool is increasingly useful in today's rapidly changing business environment, the authors conclude, and it is likely to become even more crucial to corporate success.     

Business strategy,executive compensation and firm performance

We investigate the impact of business strategy on the use of performance‐linked compensation (PLC) and long‐term incentive plans. We also examine the relation between strategy and compensation structure fit and performance. Using cluster and content analyses to classify a firm’s business strategy, we predict and find that product differentiation firms use a higher proportion of PLCs than cost‐leadership firms. Furthermore, we find that the misfit between business strategy and compensation structure has a negative impact on performance. This study contributes to the executive compensation literature by recognizing that business strategy influences the compensation structure and that a strategy and compensation structure misfit negatively affects performance.     

Turning customer data into business value: The case of Standard Life

This paper sets out the business and technological issues involved in transforming a large product-oriented financial services organisation into one with a much stronger customer focus. It begins by exploring the motivating factors behind the move away from a product to a customer orientation. The desire to achieve such a transformation is made more difficult by the diverse nature of administration systems and the absence of compatibility and consistency in the data semantics and structures. The paper examines, briefly, the internal issues involved when a group of, hitherto, autonomous trading units pool their data in the move towards a ‘group-wide’ approach in dealing with customers. Finally, it explores the ways in which the resulting enhanced information can be exploited to the benefit of the organisation and its customers. The paper chronicles the experiences of one of the UK's household name insurance companies, The Standard Life Assurance Company. Some of the ‘softer’ organisational and cultural challenges associated with such initiatives are not specifically addressed.     

What makes great boards great

In the wake of meltdowns at WorldCom, Tyco, and Enron, enormous attention has been focused on the companies' boards. It seems inconceivable that business disasters of such magnitude could happen without gross or even criminal negligence on the part of board members. And yet a close examination of those boards reveals no broad pattern of incompetence or corruption. In fact, they followed most of the accepted standards for board operations: Members showed up for meetings; they had money invested in the company; audit committees, compensation committees, and codes of ethics were in place; the boards weren't too small or too big, nor were they dominated by insiders. In other words, they passed the tests that would normally be applied to determine whether a board of directors was likely to do a good job. And that's precisely what's so scary, according to corporate governance expert Jeffrey Sonnenfeld, who suggests that it's time for some new thinking about how corporate boards operate and are evaluated. He proposes thinking not only about how to structure the board's work but also about how to manage it as a social system. Good boards are, very simply, high-functioning work groups. They're distinguished by a climate of respect, trust, and candor among board members and between the board and management. Information is shared openly and on time; emergent political factions are quickly eliminated. Members feel free to challenge one another's assumptions and conclusions, and management encourages lively discussion of strategic issues. Directors feel a responsibility to contribute meaningfully to the board's performance. In addition, good boards assess their own performance, both collectively and individually.     

对金融资产管理公司发展为投资银行的探讨

我国金融资产管理公司当前从事的业务主要属于投资银行范畴,其业务发展为向投资银行转化奠定了基础。为适应加入WTO和国际竞争的需要,四大国有商业银行应该向金融控股公司集团方向发展,把金融资产管理公司发展成为金融集团的投资银行机构。     

Turning Strategy into Practice: Organizational Development in the Modernization of Local Government

Organizational development—measures to build the inherent and generic capacity of an organization—is an important, but neglected, aspect of the current debate on the joined-up modernization of public services. Where organizational development has featured in the debate, it has tended to focus on 'what' questions, rather than 'how' individual agencies can effect change in their organization. The author shows how organizational development could help local government in gearing up to meet the new challenges set by the Government's social agenda which centres on joining-up governance. He shares some practitioner experience on possible ways forward, and poses some questions for wider debate.     

Accounting education: Turning wrongs into rights in the 1980's

This article speculates upon the evolution of accounting education in the 1980's. Ideas are presented which impact upon many facets of higher education including undergraduate, graduate, and continuing education programs, as well as research and service. Further, institutional issues concerning the role of academics are addressed.The paper begins with “wrongs” of accounting research, education, libraries, and continuing education. Particular stress is placed upon weaknesses in educating and motivating accounting faculty to teach and have primary concern for students. Promotion, tenure, expense support, and reward structures are biased toward research and publication rather than teaching. Funding and faculty attention are not directed toward innovation in accounting education and development of university libraries as learning centers. In short, accounting educators continue to “educate for absolescence.”The paper ends with some suggestions of how to turn “wrongs” into “rights.” More than increased funding is needed. Of primary importance is a shift in attitudes and reward structures.     

The judgmental effects of strategy maps in balanced scorecard performance evaluations

We examine whether supplemental information displays affect decisions made using a common strategic performance measurement system, the balanced scorecard. A distinguishing feature of the balanced scorecard (BSC) is the number and diversity of its metrics. To effectively formulate a decision from such a complex information set, managers must view these measures within their strategic context ( [Kaplan and Norton, 1993] and [Kaplan and Norton, 1996] ). However, academic studies indicate that problems in communication and comprehension of the strategic logic underlying the scorecard hinder its implementation and use ( [Lipe and Salterio, 2000] , [Malina and Selto, 2001] , [Ittner et al., 2003a] and [Ittner et al., 2003b] ). We investigate whether a supplemental information display, in the form of a strategy map, results in performance evaluation judgments consistent with the recognition of relations between performance metrics and strategy. Strategy maps are causal diagrams depicting temporally-separate and non-linear relations between scorecard performance measures and overriding strategic objectives. As predicted, we find that performance evaluation decisions are more consistent with the achievement of strategic objectives when participants are provided with strategy maps.     

Management accounting,performance measurement and strategy in English local authorities

This paper analyses the results of an extensive survey of UK local government which explored the relationship between strategy, management accounting practices (MAPs), and performance measurement techniques (PMTs). The research investigated a resource-based view of strategic capabilities and Porter’s strategic typologies. PMTs and MAPs were shown to be associated with strategic capabilities. Strategic typologies, however, were found to be only weakly associated with the use of PMTs and MAPs.     

Turning over Turnover

This article applies the methodology of Bai and Ng (2002, 2004)for decomposing panel data into systematic and idiosyncraticcomponents to both stock returns and turnover panels. This approachworks well for both returns and turnover, despite the presenceof severe heteroscedasticity and nonstationarity of individualstocks' turnover. We test the mutual fund separation model ofLo and Wang (2000). Trading due to systematic risk in returnscan account for 66% of systematic turnover. Thus, portfoliorebalancing due to systematic risk is a very important motivefor stock trading. Finally, several common turnover measuresmay understate the impact of stock trading.     

Investment manager characteristics, strategy, top management changes and fund performance

The present study examines the performance of Australian investment management organisations with direct reference to their specific characteristics and strategies employed. Using a unique information source, performance is evaluated for actively managed institutional balanced funds, Australian share funds and Australian bond funds. For balanced mandates, performance is evaluated with respect to the investment strategy adopted, the experience and qualifications held by investment professionals, and the tenure of the key investment professionals. The present study examines the performance of top management and the impact on returns when turnover arises. The research documents that a significant number of active Australian equity managers earned superior risk-adjusted returns in the period, however, active managers perform in line with market indices for balanced funds and Australian bond funds. A number of manager characteristics are also found to predict risk-adjusted returns, systematic risk and investment expenses for balanced funds.     

Value creation through external growth strategy: the architecture of successful performance

This paper is concerned with profitable external growth and proposes an empirical model outlining the major determinants of its success. The results of analysis of the unique sample of strategic growth acquisitions completed from 2000 to 2010 suggest that the success of transaction is determined not only by external factors but also by the pre-event fundamental performance of participating companies. Taken together they present the performance measures for a profitable sustainable growth and encourage executives to “lead for value”.     

中银绒业:化“险”为利

羊绒是个很特殊的行业。宁夏中银绒业股份有限公司(以下简称中银绒业)财务总监卢婕说。这句是我们对话的开始,也贯穿了对话的始终。山羊绒属于稀有的特种动物纤维,是一种珍贵的纺织原料,国外称其为软黄金。公司产品成本中     

The great transition

As China's economy grows and opens further, the opportunity it presents to multinationals is changing. Foreign companies are moving to country development and new strategic choices. Now, foreign firms can actually go after the Chinese domestic market, and it's worth going after. Improvements in China's infrastructure, workforce, and regulatory environment are making it possible for companies to lower their costs to reap new competitive advantages. Multifaceted and often-shifting risks accompany this shifting opportunity. The reforms required for admission into the WTO will be politically difficult for China to implement, and its progress will be slowed by the scarcity of resources for the country's shaky banking system, the inadequacy of the social safety net, environmental problems, and local governments' cash shortage. China's breathtaking 9% average annual GDP growth rests on an unsteady foundation of overcapitalized state-owned enterprises, which have oversupplied many markets, and fiercely protectionist regional government officials pursuing growth-at-almost-all-costs policies. Frequent changes in regulations, bureaucracies, and reporting relationships will continue to make planning difficult, and, as the SARS epidemic demonstrated, there is always the potential for serious disruptions. But for at least the next ten years, multinationals should be the biggest winners in China. To reap the benefits, a multinational must properly nest its effort into its overall organization, show "one face to China" at the national level but also tailor local strategies, be wary of joint ventures, and mitigate risk, in particular the theft of intellectual property. China is a major opportunity for companies that forthrightly face its complexities. It will remain largely inscrutable--and unprofitable--for the rest.     

The great intimidators

After Disney's Michael Eisner, Miramax's Harvey Weinstein, and Hewlett-Packard's Carly Fiorina fell from their heights of power, the business media quickly proclaimed thatthe reign of abrasive, intimidating leaders was over. However, it's premature to proclaim their extinction. Many great intimidators have done fine for a long time and continue to thrive. Their modus operandi runs counter to a lot of preconceptions about what it takes to be a good leader. They're rough, loud, and in your face. Their tactics include invading others' personal space, staging tantrums, keeping people guessing, and possessing an indisputable command of facts. But make no mistake--great intimidators are not your typical bullies. They're driven by vision, not by sheer ego or malice. Beneath their tough exteriors and sharp edges are some genuine, deep insights into human motivation and organizational behavior. Indeed, these leaders possess political intelligence, which can make the difference between paralysis and successful--if sometimes wrenching--organizational change. Like socially intelligent leaders, politically intelligent leaders are adept at sizing up others, but they notice different things. Those with social intelligence assess people's strengths and figure out how to leverage them; those with political intelligence exploit people's weaknesses and insecurities. Despite all the obvious drawbacks of working under them, great intimidators often attract the best and brightest. And their appeal goes beyond their ability to inspire high performance. Many accomplished professionals who gravitate toward these leaders want to cultivate a little "inner intimidator" of their own. In the author's research, quite a few individuals reported having positive relationships with intimidating leaders. In fact, some described these relationships as profoundly educational and even transformational. So before we throw out all the great intimidators, the author argues, we should stop to consider what we would lose.     

一场伟大的争吵

教科书上说:管理会计是以企业现在和未来的资金运动为对象,以提高经济效益为目的,为企业内部管理者提供经营管理决策的科学依据为目标而进行的经济管理活动,又称内部报告会计.     

Commonalities in investment strategy and the determinants of performance in mutual fund mergers

This paper examines the determinants of cross-sectional variation in post-merger mutual fund performance. Mergers between funds with similar management objectives, as reflected by average portfolio book-to-market ratio, price–earnings ratio, beta and market capitalization values, outperform mergers between funds with dissimilar strategies. This superior performance transcends lower portfolio rebalancing costs which might be realized between merging funds which hold more assets in common. These results suggest that mutual fund mergers create collaborative benefits between funds with similar strategies. We also examine if fund governance structures influence the fund pairing process, testing if stronger fund oversight mitigates pairing mismatches. We find that less independent boards of trustees and boards with higher compensation are related to greater strategic mismatches between funds. These results suggest that more entrenched boards are more tolerant of fund mismatches which benefit the investment company, yet are not in investor’s best interests.