Summer 1997, Vol. 38, No. 4

 

Recently, a family therapist told me that she'd long since abandoned any fixed ideas about child rearing. "Different approaches work for different people," she said. "The strongest, nicest teenagers I know grew up in a quite chaotic family with only two serious rules: Work hard, and don't be mean." Those strike me as pretty good rules to raise children by, or for that matter to live by oneself. They might even stretch to cover running a business, if translated loosely as "make money, be creative, beat the competition" (work hard) and "treat people fairly" (don't be mean).

Often, though, the drive to make money and the desire to treat people well come into conflict. Or seem to. This issue's lead article, "Unexpected Connections," does a neat job of reconciling the two. Lotte Bailyn, Joyce Fletcher, and Deborah Kolb found an untapped source of strategic innovation when they made an explicit connection between employees' work-related concerns — long hours, rigid schedules — and their employers' business goals — shortening time to market, increasing revenues. Their article is full of win/win stories you'll remember.

Linda Stroh and Anne Reilly look at the profits vs. people conflict from another point of view: Has the routinization of downsizing undermined managers' commitment to employers? Does it matter? Two interesting findings: first, helping managers enlarge their skill set may be an acceptable substitute for job security. Second, managers that choose to leave shrinking firms are more loyal to their next employer than are managers who stay with the old, downsized firm. One almost senses that people want to be committed but find it hard to do in today's business climate.

Barbara Bashein and Lynne Markus studied IT specialists' credibility, noting how often they were left out of IT-based reengineering projects. The IT folks assumed that their technical expertise was in question; in reality, people just didn't trust them. Perhaps they hadn't adequately balanced "hard work" with "treating people fairly". . . ?

Determining proper distance is always an element in the "treating people decently" half of our ethical equation. Sometimes psychological distance is an ethical requirement. Max Bazerman, Kimberly Morgan, and George Loewenstein argue that auditors are necessarily affected by their financial dependence on the firms they audit. Their paper makes a strong case for reforming the audit relationship, perhaps by forbidding auditors to provide other services to clients whose books they audit.

Then there's the money that firms spend to create a pretense of proximity and chumminess. It's not always money well spent. Grahame Dowling and Mark Uncles found that customer loyalty programs typically cost far more than they're worth. The ones that work add independently to the product's value proposition.

Mergers and acquisitions perform better financially when the two firms start out in close proximity. Paul Healy, Krishna Palepu, and Richard Ruback found that "strategic" deals — friendly deals made in overlapping businesses — had substantially better financial performance than did "financial" deals between unrelated businesses.

SMR doesn't often publish industry analyses, but we made an exception this summer. The U.S. electrical utility industry is undergoing phenomenal changes; Michael Weiner, Nitin Nohria, Amanda Hickman, and Huard Smith analyze those changes (and their causes) with fascinating insight.

I'm uncomfortably aware of changes in channel design right now, having recently heard four conference presenters state that the electronic version of a scholarly paper will soon be the "archive" version; the bound version will be an ancillary product. Erin Anderson, George Day, and Kasturi Rangan discuss such radical changes in channel design in a forthright, strategically oriented style.

— Sarah Cliffe

 

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