Strategy

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Creating More Accurate Acquisition Valuations

Deal markets can be “hot” or “cold,” and the state of the economy can bias executives’ evaluation of potential acquisitions. For instance, relying on discounted cash flow scenarios can bolster managers’ sense of confidence and create unrealistically low perceptions of uncertainty. Executives can mitigate valuation biases by having a checklist — the list tempers natural inclinations to focus on the value of growth options in “hot” markets and risk of investment in “cold” markets.

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Finding the Right Corporate Legal Strategy

How can companies use the law to gain strategic advantages? Some companies move beyond viewing the law just in terms of compliance and use their legal environment to secure a competitive advantage. Companies can adopt one of five types of legal strategies: avoidance, compliance, prevention, value or transformation. The right strategy for a company will depend on factors such as its business model, managers’ attitudes toward the law and the legal department’s ability to collaborate with managers.

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Data Analytics Makes the Transition From Novelty to Commodity

Business is nearing a tipping point in which the use of data analytics is becoming routinely adopted. While widespread adoption of analytics will mean that it offers less competitive advantage to companies, it also means that the business environment overall will change. Information systems expert Sam Ransbotham identifies four key changes that businesses need to consider now.

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Asia Pulp & Paper and Greenpeace: Building New Directions, Together

When two organizations are on opposite ends of the spectrum with regard to sustainability issues, it may seem like there’s no hope of ever reaching agreement. Such was the case when Greenpeace and Asia Pulp sat down to negotiate a truce after Greenpeace’s hard-hitting campaign to change Asia Pulp’s forestry practices, which Greenpeace saw as destroying endangered rainforest habitat. But as Asia Pulp’s Aida Greenbury explains, it’s possible even for two polar opposites to find areas of common ground and work together for sustainable business practices.

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How to Compensate For Overoptimistic Project Leaders

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Would you know if a project was heading off the rails? Too often, members of project teams are crossing their fingers and providing only the most hopeful updates. After reviewing 14 studies into the ways in which individuals report (and misreport) the status of information technology or software projects, the authors identified five specific areas for leaders to look out for to avoid being blindsided.

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Crafting Health Care’s Future at Kaiser Permanente

Dr. Yan Chow is a director in the Innovation and Advanced Technology group at Kaiser Permanente. While a physician with over two decades of primary care clinical practice experience, Dr. Chow also has a keen interest in technology (he’s founded several technology startups). His areas of expertise: health care IT innovation, telehealth, big data and analytics. Here, he talks about innovation and the future of health care.

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Creating More Resilient Supply Chains

Global supply chains bring increased risks of disruption from events such as natural disasters. But by understanding and planning for such risks, Cisco Systems improved its own supply chain resilience. Its five-step process: identify strategic priorities; map the vulnerabilities of supply chain design; integrate risk awareness into the product and value chain; monitor resiliency; and watch for events. John Chambers, Cisco chairman and CEO, calls this type of risk management “a key differentiator.”

UBS Reports Writedowns of 18.5 Billion GBP

Is Your Company Addicted to Value Extraction?

Is your company focused on creating value — or on siphoning it off from others? Capturing value from other stakeholders by manipulating the competitive market process to the company’s advantage exposes a company to reputational or legal risks. It also can undermine corporate values. Value extraction is typically easier than developing a competitive advantage through ongoing value creation. Companies can get hooked on the practice, to the detriment of real value creation.

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The Risks and Responsibilities of Tech Innovation

The introduction of Google’s breakthrough wearable computer, Google Glass, creates numerous possibilities for risky behavior on the part of Glass users. Should companies on the cutting be held responsible for their customers’ poor judgment in using new tech? There are legal and social precedents that say they should, but business and corporate responsibility expert Christine Bader suggests ways companies can combat this problem.

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The Digital C-Suite

A new study finds that executives at large companies are unhappy with their digital strategies and ability to make decisions on technology. The problem? Lack of cohesion and coordination among departments. Having all C-level executives engage with technology and digital business strategy might be the answer.

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The American Red Cross: Adding Digital Volunteers to Its Ranks

The American Red Cross has become an excellent example of how to use social media to connect people during the three cycles of disaster: preparedness, response and then recovery. Its digital volunteers help calm people in the middle of events, and its community mobilizers help coordinate services afterwards. “We want to blur that line about who’s a Red Crosser and who’s not, to say, ‘actually, this is up to all of us,’” says the organization’s Wendy Harman.

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How to Win With a Multisided Platform Business Model

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“Increasing awareness of business models and the spectacular MSP successes from the past decade have prompted many entrepreneurs and investors to attempt building or identifying ‘the next eBay,’” writes Andrei Hagiu, an associate professor in the strategy group at the Harvard Business School. But successful MSPs such as PayPal, eBay and Alibaba are the exception rather than the rule. Haigi offers four observations about what new companies can do to position themselves to be among the winners rather than the losers.

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Reimagining Customer Service at KLM Using Facebook and Twitter

For KLM, social business arose as a spontaneous response to the Icelandic volcanic eruption that spewed ash into Europe’s airspace for days, halting all air travel and stranding thousands of passengers. Since the abrupt birth of the airlines’ social business strategy, e-commerce senior vice president Martijn van der Zee has made the company a model for using social in customer service.

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Reducing the Risk of Supply Chain Disruptions

Most managers know that they should protect their supply chains from serious and costly disruptions — but comparatively few take action. The dilemma is that solutions to reduce risk mean little unless they are evaluated against their impact on cost efficiency. To protect their supply chains from major disruptions, companies can build resilience by segmenting or regionalizing supply chains, and limit losses in performance by avoiding too much centralization of resources.

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Creating Societal Benefits and Corporate Profits

The odds of launching a new business that creates value for both the company and the public can be improved with good planning. An in-depth analysis of how four companies created for-profit initiatives that also have high societal value suggests that each followed a similar step-by-step process to achieve what the researchers call synergistic value creation. Those steps include establishing cross-business incubators and installing multi-perspective monitoring systems.

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Is Hostility to Blame for Sustainability’s Leadership Gap?

When a conservative think-tank challenged Apple’s sustainability programs at a recent shareholder meeting, CEO Tim Cook didn’t back down, refusing to bow to its calls to suspend any activities that didn’t “add to the bottom line.” Apple’s shareholders rewarded him with resounding support. If sustainability is to increase its profile as a business priority, more executives will need to follow Cook’s lead.

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The Science of Managing Black Swans

In business, a black swan is neither a bird nor a ballerina — it’s a very rare convergence of factors that leads to catastrophe. New research suggests that by exploiting all types of data, managers can help prevent some black swan events, and reduce the hazards of other risky blind spots. The caveat: less intuition, more data.

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The Art of Selling with Social Tools

“Our lives have increasingly migrated online in recent years, so why wouldn’t [sales] reps want to connect with customers on the social media front as well?” That’s the logic of Hearsay Social, whose platform lets sales people keep track of what their customers are posting on Twitter, LinkedIn and even Facebook. Says Gary Liu, vp of marketing, “social media can be used very effectively to enhance real-world interactions.”

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When Should You Fire Customers?

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Many customers are simply not profitable. Letting them go is one option, but so is trying to train them out of expensive behavior. Options suggested by Jiwoong Shin and K. Sudhir, both of Yale School of Management, include reducing services to unprofitable customers and educating them to use less costly service channels. “We recognize the mix of concerns, both ethical and practical, that swirl around firing customers,” write Shin and Sudhir. “We advocate firing customers only as a last resort.”

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