Winter 1996, Vol. 37, No. 4

 

Self-examination doesn't come up much in the management literature. We pay more attention to how business processes work, for example, than to our own mental processes. Management articles about people tend to be simplistic — they're about visionary, charismatic leaders (and surely many of these stories are fairy tales) or about empowering minimum-wage, front-line service workers. The characters aren't finely drawn or particularly interesting. They're also at a comfortable distance from the typical reader — "them," not "us."

Does it matter? After all, management literature isn't literature. Furthermore, managers as a class aren't wildly introspective.

I think it does matter. Managers rise and fall on the quality of their judgment. Business judgment depends on numerous factors — technical knowledge, capacity to read people and trends, even blind luck — but none more than self-knowledge. The best managers know what they know and what they don't know. That isn't as simple as it sounds. A fascinating and under-hyped stream of social-psychology research that looks at the psychology of decision making finds that our perceptions are far more distorted than we think they are. When assigning responsibility for an error, for example, we'd rather blame human error than a badly designed system. When assessing risk, we routinely deny uncertainty. When developing policies, we underestimate their complex, cascading effects. We consistently overestimate how much we know, how often we're right, and how much control we have over the future.

David Messick and Max Bazerman's thoughtful lead article describes this research and suggests steps to prevent these systematic biases from distorting judgment. Their focus throughout is on how the biases affect ethics in decision making. It's the most interesting piece on this topic I can remember.

The second article is a follow-up to Sumantra Ghoshal and Christopher Bartlett's Fall 1995 article, which proposed a new context for organizational renewal. The article in this issue gets into the nuts and bolts of rebuilding a behavioral culture, drawing on the authors' major research project on this topic.

Every year we spend vast amounts on computer hardware and software that's obsolete before the bills get paid. That fact makes consumers understandably anxious, uncomfortable, hesitant — and sometimes just plain angry. Meanwhile, the computer industry worships speed and will do anything to get to market first. Anirudh Dhebar tackles this inconsistency with his accustomed spirit; his article examines the problem in more depth than this sketch suggests, and proposes that producers consider the following: establish an optimal pace of product improvement (one that takes customer needs into account); stimulate new need and capture new market share; offer modular upgrades; and phase product improvement into a product line.

Did you know that there was a disposable diaper on the market back in the early 1930s? Or a video recorder in the 1950s? Or a light beer, also in the 1960s? None was familiar or especially successful until much later. These examples, and others like them, caused Gerard Tellis and Peter Golder to doubt the conventional wisdom about being first to market (i.e., Be sure to be. . . .) Subsequent research uncovered that pioneers and early market leaders are often not one and the same. Early market leaders are distinguished by how well they envision the mass market, persist, commit financial resources, leverage assets, and innovate.

Craig Wood, Allen Kaufman, and Michael Merenda have developed a framework for looking at OEM suppliers: they can be commodity suppliers, technology specialists, collaborative specialists, or problem solvers. The most successful suppliers, according to this research, have been migrating from the first group toward the fourth over the past decade. The authors' case study of Hadco, a PCB manufacturer in southern New Hampshire, illustrates their typology and brings OEM suppliers' predicament to life.

In another case study, Andrew Hoffman examines Amoco Corporation's response to the CERES (formerly Valdez) Principles. It's that rare thing — an article that neither demonizes nor idealizes corporate America's attitudes toward the environment. Instead, it illuminates the political process whereby the CERES coalition and Amoco influenced one another, jostled for control of the industry's environmental agenda, and compromised enough to accomplish something. Don't miss this article if you're a manager who must cope with activist investors — or an activist who wishes to influence corporate behavior.

Readers may recall a Summer 1993 article on how private labels affect national brands. Stephen Hoch's follow-up article explores possible strategies to adopt in response to this growing phenomenon.

The demise of Japan Inc. has been vastly overstated, according to Lawrence Franko. True, U.S. firms are posting higher profits than Japanese firms, but consider the following. Japanese world market share has held steady or increased in every major sector since 1980. Leading Japanese firms may not be posting large profits, but they have cash to burn. Despite the continuing Japanese recession, few major Japanese firms cut R&D spending between 1990 and 1993; many increased it. Twelve of the top twenty-five holders of numbers of U.S. patents are Japanese. Perhaps most important, Japan is investing aggressively in Asian markets and is well on its way to preempting U.S. and European firms in this most important growth market. This data-rich Opinion piece may worry some U.S. and European managers — but better to be worried now than shocked in 2001.

— Sarah Cliffe

 

[top] [back to list]