Management – Page 10 – artdiamondblog.com

How Sega Came Out of Nowhere to Leapfrog Near-Monopolist Nintendo

Source of book image: http://images.eurogamer.net/2014/usgamer/original.jpg/EG11/resize/958x-1/format/jpg

(p. C10) “Console Wars” tells how Sega, an unremarkable Japanese manufacturer of games played in arcades, came out of nowhere to challenge Nintendo for dominance of the videogame world in the first half of the 1990s. Nintendo, which had revived the stagnant home videogame category a few years earlier, had something close to a monopoly in 1990 and behaved accordingly, dictating terms to game developers and treating retailers as peons. Sega, in Mr. Harris’s telling, was a disruptive force in a highly concentrated market, introducing more advanced gaming technology, toppling Nintendo from its perch and becoming the largest seller of home videogame hardware in the U.S. by late 1993.

Mr. Harris’s hero is a former Mattel executive named Tom Kalinske, who became president of Sega of America, then a small subsidiary, in 1990. Mr. Kalinske assembled a team of crack marketers who would not have gone near Sega but for his reputation and persuasiveness. Within a year and a half, according to Mr. Harris, Mr. Kalinske’s leadership, along with a new gaming system called Genesis and a marketing assist from a mascot named Sonic the Hedgehog, made Sega the U.S. market leader in videogames.
And then, after only three years at the top, Sega fell from its pedestal. Sega’s management in Japan, suffering mightily from not-invented-here syndrome, rejected Mr. Kalinske’s proposals to collaborate with Sony and Silicon Graphics on new gaming systems. Instead, over his objections, Sega pushed out its ill-conceived Saturn game console in 1995. While Saturn flopped, Sony struck gold with its PlayStation; Silicon Graphics sold its chip with amazing graphics capabilities to Nintendo; and the game, so to speak, was over.
. . .
The author admits he has taken liberties: “I have re-created the scenes in this book using the information uncovered from my interviews, facts gathered from supporting documents, and my best judgment as to what version most closely fits the historical record,” he writes. The result is more a 558-page screenplay than a credible work of nonfiction.

For the full review, see:
MARC LEVINSON. “Sonic Boom; How a no-name company took on Nintendo, tied its fate to a hyperactive hedgehog, and–briefly–won.” The Wall Street Journal (Sat., May 24, 2014): C10.
(Note: ellipsis added.)
(Note: the online version of the review has the date May 23, 2014, an has the title “Book Review: ‘Console Wars’ by Blake J. Harris; How a no-name company took on Nintendo, tied its fate to a hyperactive hedgehog, and–briefly–won.”)

The book under review is:
J., Harris Blake. Console Wars: Sega, Nintendo, and the Battle That Defined a Generation. New York: HarperCollins Publishers, 2014.

Harvard Rejects Christensen’s Advice to Try Disruptive MOOCs

“Harvard Business School faced a choice between different models of online instruction. Prof. Michael Porter favored the development of online courses that would reflect the school’s existing strategy.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) Universities across the country are wrestling with the same question — call it the educator’s quandary — of whether to plunge into the rapidly growing realm of online teaching, at the risk of devaluing the on-campus education for which students pay tens of thousands of dollars, or to stand pat at the risk of being left behind.

At Harvard Business School, the pros and cons of the argument were personified by two of its most famous faculty members. For Michael Porter, widely considered the father of modern business strategy, the answer is yes — create online courses, but not in a way that undermines the school’s existing strategy. “A company must stay the course,” Professor Porter has written, “even in times of upheaval, while constantly improving and extending its distinctive positioning.”
For Clayton Christensen, whose 1997 book, “The Innovator’s Dilemma,” propelled him to academic stardom, the only way that market leaders like Harvard (p. 4) Business School survive “disruptive innovation” is by disrupting their existing businesses themselves. This is arguably what rival business schools like Stanford and the Wharton School have been doing by having professors stand in front of cameras and teach MOOCs, or massive open online courses, free of charge to anyone, anywhere in the world. For a modest investment by the school — about $20,000 to $30,000 a course — a professor can reach a million students, says Karl Ulrich, vice dean for innovation at Wharton, part of the University of Pennsylvania.
“Do it cheap and simple,” Professor Christensen says. “Get it out there.”
But Harvard Business School’s online education program is not cheap, simple, or open. It could be said that the school opted for the Porter theory.
. . .
“Harvard is going to make a lot of money,” Mr. Ulrich predicted. “They will sell a lot of seats at those courses. But those seats are very carefully designed to be off to the side. It’s designed to be not at all threatening to what they’re doing at the core of the business school.”
Exactly, warned Professor Christensen, who said he was not consulted about the project. “What they’re doing is, in my language, a sustaining innovation,” akin to Kodak introducing better film, circa 2005. “It’s not truly disruptive.”
. . .
One morning, [Harvard Business School Dean Nitin Nohria] sat down for one of his regular breakfasts with students. “Three of them had just been in Clay’s course,” which had included a case study on the future of Harvard Business School, Mr. Nohria said. “So I asked them, ‘What was the debate like, and how would you think about this?’ They, too, split very deeply.”
Some took Professor Christensen’s view that the school was a potential Blockbuster Video: a high-cost incumbent — students put the total cost of the two-year M.B.A. at around $100,0000 — that would be upended by cheaper technology if it didn’t act quickly to make its own model obsolete. At least one suggested putting the entire first-year curriculum online.
Others weren’t so sure. ” ‘This disruption is going to happen,’ ” is how Mr. Nohria described their thinking, ” ‘but it’s going to happen to a very different segment of business education, not to us.’ ” The power of Harvard’s brand, networking opportunities and classroom experience would protect it from the fate of second- and third-tier schools, a view that even Professor Christensen endorses — up to a point.
“We’re at the very high end of the market, and disruption always hits the high end last,” said Professor Christensen, who recently predicted that half of the United States’ universities could face bankruptcy within 15 years.

For the full story, see:
JERRY USEEM. “B-School, Disrupted.” The New York Times, SundayBusiness Section (Sun., June 1, 2014): 1 & 4.
(Note: ellipses, and bracketed name, added.)
(Note: the online version of the story has the date MAY 31, 2014, and has the title “Business School, Disrupted.”)

Some of Christensen’s thoughts on higher education can be found in:
Christensen, Clayton M., and Henry J. Eyring. The Innovative University: Changing the DNA of Higher Education from the inside Out. San Francisco, CA: Jossey-Bass, 2011.

“On the topic of online instruction, Prof. Clayton Christensen said: ‘Do it cheap and simple. Get it out there.”” Source of caption and photo: online version of the NYT article quoted and cited above.

The Noise of Open-Office Plans Destroys Concentration

Source of book image: DWIGHT GARNER. “Books of The Times; The Office Space We Love to Hate.” The New York Times (Fri., APRIL 25, 2014): C21 & C31.

(p. C3) Open-office plans–then as now–mean noise, both visual and aural. People used to private offices couldn’t concentrate because of all the chatter and typing. For all the supposed egalitarianism of the office landscape, managers usually allotted themselves more space than junior staff, and the creative use of screens and extra plants often let them carve out ad hoc private offices for themselves. By the 1970s, European workers’ councils had rejected open-office plans, insisting that employees across the continent be granted private offices.
In the U.S., however, the open-plan remained unchallenged–until Propst. He concluded that office workers needed autonomy and independence–and therefore offered a flexible, three-walled design that could be reshaped to any given need.
. . .
Many workers I’ve spoken to in open offices find concentration and privacy elusive–and often miss their cubicles.

For the full commentary, see:
NIKIL SAVAL. “When Office Cubicles Looked Like Progress.” The Wall Street Journal (Sat., May 10, 2014): C3.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date May 9, 2014, and has the title “A Brief History of the Dreaded Office Cubicle.”)

For more of Saval’s observations on the cubicle, see:
Saval, Nikil. Cubed: A Secret History of the Workplace. New York: Doubleday, 2014.

Schulman Grants that Kochs “Have Sincere Political Views that Go Beyond Being Just a Cover for Their Companies’ Interest”

“The Koch brothers, from left: William, Charles, David and Frederick.” Source of caption and photo: online version of the NYT review quoted and cited below.

(p. 12) “Sons of Wichita” may strike some readers as surprisingly pro-Koch. . . . [Schulman] grants Charles and David two key concessions: They have sincere political views that go beyond being just a cover for their companies’ interest in lower taxes and fewer regulations, and many of their political activities have been right out in the open, rather than lurking in the shadows. He seems to be almost in awe of Charles, the most mysterious of the brothers, who runs Koch Industries by a system he devised called Market-Based Management. Summarizing, but not dissenting from, the views of Charles’s employees, Schulman calls him “a near-mythic figure, a man of preternatural intellect and economic prowess,” adding: “He is unquestionably powerful, but unfailingly humble; elusive, but uncomplicated; cosmopolitan, yet thoroughly Kansan.” It’s noteworthy, Schulman argues, that for decades the Koch family was definitely not welcome in the Republican Party. That they came to stand for Republicanism, at least in the minds of liberals, in 2010 and 2012 is testament to their persistence, to the weakening of the traditional party structures and to their success in making libertarianism a mainstream rather than a fringe ideology. “It’s a brilliant, extraordinary accomplishment,” Schulman quotes Rob Stein of the liberal Democracy Alliance as saying about the Kochs’ rise to influence.
. . .
Even the Tea Party movement is not entirely dependent on intravenous feeding from the Kochs or that other favorite liberal villain, Fox News. And elements of Koch-style libertarianism, connected to the interests of major donors, now live within the Democratic Party too — not just on social issues like same-sex marriage, but on economic and regulatory ones too. “Sons of Wichita” reminds us that political outcomes depend far more on ideas and organization, and the energy and persistence devoted to them, than they do on the balance of power between good guys and bad guys.

For the full review, see:
NICHOLAS LEMANN. “Billionaire Boys Club.” The New York Times Book Review (Sun., MAY 25, 2014): 12.
(Note: ellipses, and bracketed name, added.)
(Note: the online version of the review has the date MAY 23, 2014.)

The book under review is:
Schulman, Daniel. Sons of Wichita: How the Koch Brothers Became America’s Most Powerful and Private Dynasty. New York: Grand Central Publishing, 2014.

Source of book image: http://media.npr.org/assets/bakertaylor/covers/s/sons-of-wichita/9781455518739_custom-bd178f0c1a2667e448cf13ff7df2850774d77dd8-s6-c30.jpg

“Man Is Born Free, But He Is Everywhere in Cubicles”

Source of book image: online version of the NYT review quoted and cited below.

(p. C21) I’ve spent about half my working life sitting in, and loathing, cubicles. You’ve probably spent years in one, too. About 60 percent of us work in cubicles, and 93 percent of us dislike them.
. . .
(p. C31) Mr. Saval describes the image we have of the cubicle today: “the flimsy, fabric-wrapped, half-exposed stall where the white-collar worker waited out his days until, at long last, he was laid off.”
. . .
When he discovers that half of Americans report that their bathrooms are larger than their cubicles, for example, he writes: “One wonders to what extent the extravagant growth of the American bathroom, and of the suburban home in general, is partly a reaction against the shrinking of cubicles, where the owners of those bathrooms spend so much of their time.”
. . .
Putting a spin on Rousseau, he says,
. . .
By the end of “Cubed,” the author is dropping in on Silicon Valley offices, where companies like Google cater to their employees’ every need, almost eliminating the distinction between work and leisure. Mr. Saval savors the fact that so many well-known Silicon Valley figures dropped out of college yet want their offices to resemble college campuses.

For the full review, see:
DWIGHT GARNER. “Books of The Times; The Office Space We Love to Hate.” The New York Times (Fri., APRIL 25, 2014): C21 & C31.
(Note: ellipses added.)
(Note: the online version of the review has the date APRIL 24, 2014.)

The book under review is:
Saval, Nikil. Cubed: A Secret History of the Workplace. New York: Doubleday, 2014.

When Labor Markets Are Flexible, Workers Need Not Fear New Technology

(p. 6) Driverless vehicles and drone aircraft are no longer science fiction, and over time, they may eliminate millions of transportation jobs. Many other examples of automatable jobs are discussed in “The Second Machine Age,” a book by Erik Brynjolfsson and Andrew McAfee, and in my own book, “Average Is Over.” The upshot is that machines are often filling in for our smarts, not just for our brawn — and this trend is likely to grow.
How afraid should workers be of these new technologies? There is reason to be skeptical of the assumption that machines will leave humanity without jobs. After all, history has seen many waves of innovation and automation, and yet as recently as 2000, the rate of unemployment was a mere 4 percent. There are unlimited human wants, so there is always more work to be done. The economic theory of comparative advantage suggests that even unskilled workers can gain from selling their services, thereby liberating the more skilled workers for more productive tasks.
. . .
Labor markets just aren’t as flexible these days for workers, especially for men at the bottom end of the skills distribution.
. . .
Across the economy, a college degree is often demanded where a high school degree used to suffice.
. . .
The law is yet another source of labor market inflexibility: The number of jobs covered by occupational licensing continues to rise and is almost one-third of the work force. We don’t need such laws for, say, barbers or interior designers, although they are commonly on the books.
. . .
Many . . . labor market problems were brought on by the financial crisis and the collapse of market demand. But it would be a mistake to place all the blame on the business cycle. Before the crisis, for example, business executives and owners didn’t always know who their worst workers were, or didn’t want to engage in the disruptive act of rooting out and firing them. So long as sales were brisk, it was easier to let matters lie. But when money ran out, many businesses had to make the tough decisions — and the axes fell. The financial crisis thus accelerated what would have been a much slower process.
Subsequently, some would-be employers seem to have discriminated against workers who were laid off in the crash. These judgments weren’t always fair, but that stigma isn’t easily overcome, because a lot of employers in fact had reason to identify and fire their less productive workers.

For the full commentary, see:
TYLER COWEN. “Economic View; Automation Alone Isn’t Killing Jobs.” The New York Times, SundayBusiness Section (Sun., APRIL 6, 2014): 6.
(Note: ellipses added.)
(Note: the online version of the commentary has the date APRIL 5, 2014.)

The Brynjolfsson and McAfee book mentioned is:
Brynjolfsson, Erik, and Andrew McAfee. The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. New York: W. W. Norton & Company, 2014.

The Cowen book that Cowen mentions is:
Cowen, Tyler. Average Is Over: Powering America Beyond the Age of the Great Stagnation. New York: Dutton Adult, 2013.

Koch Industries Was Only Major Ethanol Producer to Oppose Ethanol Tax Credits

(p. A17) I have devoted most of my life to understanding the principles that enable people to improve their lives. It is those principles–the principles of a free society–that have shaped my life, my family, our company and America itself.
Unfortunately, the fundamental concepts of dignity, respect, equality before the law and personal freedom are under attack by the nation’s own government. That’s why, if we want to restore a free society and create greater well-being and opportunity for all Americans, we have no choice but to fight for those principles.
. . .
Far from trying to rig the system, I have spent decades opposing cronyism and all political favors, including mandates, subsidies and protective tariffs–even when we benefit from them. I believe that cronyism is nothing more than welfare for the rich and powerful, and should be abolished.
Koch Industries was the only major producer in the ethanol industry to argue for the demise of the ethanol tax credit in 2011. That government handout (which cost taxpayers billions) needlessly drove up food and fuel prices as well as other costs for consumers–many of whom were poor or otherwise disadvantaged. Now the mandate needs to go, so that consumers and the marketplace are the ones who decide the future of ethanol.

For the full commentary, see:
CHARLES G. KOCH. “OPINION; I’m Fighting to Restore a Free Society; Instead of welcoming free debate, collectivists engage in character assassination.” The Wall Street Journal (Thurs., April 3, 2014): A17.
(Note: ellipsis added.)
(Note: the online version of the commentary was updated April 2, 2014, and has the title “OPINION; Charles Koch: I’m Fighting to Restore a Free Society; Instead of welcoming free debate, collectivists engage in character assassination.” )

Koch’s philosophy of the free market is more fully elaborated in:
Koch, Charles G. The Science of Success: How Market-Based Management Built the World’s Largest Private Company. Hoboken, NJ: Wiley & Sons, Inc., 2007.

Delta Overcomes Obstacles that Ground Other Airlines

Source of graphic: online version of the WSJ article quoted and cited below.

Cancellations due to mechanical failures, piliot illness and government regulations are often announced as though they were acts of God, outside the possible control of airlines, for which the airline is blameless. But airlines can take actions, and improve processes, to reduce the frequency and consequences of such cancellations. In airlines, and in other firms, there is not a sharp line between what can and what cannot be under the firm’s control.

(p. D3) Atlanta

The crew of Delta Air Lines Flight 55 last Thursday couldn’t legally fly from Lagos, Nigeria, to Atlanta unless they waited a day due to new limits on how much pilots can fly in a rolling 28-day period. The trip would have to be canceled.
Instead, Delta headquarters told the captain to fly to San Juan, Puerto Rico, which they could reach within their duty limits. There, two new pilots would be waiting to take the Boeing 767 on to Atlanta. The plane arrived in San Juan at 2:44 a.m., quickly took on fuel and pilots, and landed in Atlanta only 40 minutes late.
The episode, unorthodox in the airline industry, illustrates the fanaticism Delta now has for avoiding cancellations. Last year, Delta canceled just 0.3% of its flights, according to flight-tracking service FlightStats.com. That was twice as good as the next-best airlines, Southwest and Alaska, and five times better than the industry average of 1.7%.
. . .
Managers in Delta operations centers move planes, crews and parts around hourly trying to avoid canceling flights. How well an airline maintains its fleet and how smartly it stashes spare parts and planes at airports affect whether your flight goes or not.
Delta thinks it has come up with new analytical software and instruments that can help monitor the health of airplanes and predict which parts will soon fail. Empty planes are ferried to replace crippled jets rather than waiting for overnight repairs.
Mechanics developed a vibration monitor to install on cooling fans for cockpit instruments. A plane can’t be sent out on a new trip with a broken fan.
Now when vibration starts to increase, indicating that a bearing may be wearing down and getting close to failing, a new fan is swapped in. The wobbly fan goes to the shop for new bearings. That has reduced canceled flights.
So has spending $2 million to have spare starters for Boeing 767 engines at all 767 stations abroad. Starters last about five years. While each plane has two and both engines can be started with one, you can’t send a plane out on a long trip over oceans with only one working.

For the full story, see:
SCOTT MCCARTNEY. “THE MIDDLE SEAT; A World Where Flights Aren’t Canceled; How Smartly an Airline Stashes Spare Parts and Planes at Airports Affects Whether or Not Your Flight Takes Off.” The Wall Street Journal (Thurs., April 3, 2014): D3.
(Note: ellipsis added.)
(Note: the online version of the story was updated April 2, 2014, and has the title “THE MIDDLE SEAT; A World Where Flights Aren’t Canceled; Inside Delta’s new strategies to avoid stranding fliers.”)

Managing Engaged Edison Only Half as Much as Inventing

(p. 146) In 1885, three years after the start of service at Pearl Street, a director of the company who chose to remain anonymous complained to the Philadelphia Press that Edison insisted on taking an active part in the management of the company “although he is not a bit of a business man.” He gave an example of Edison’s poor judgment: Edison had proposed installing a new cable in Manhattan that would cost nearly $30,000 a mile, oblivious to the fact that Western Union had one with similar capacity in operation that had only cost $500 a mile. “If he would leave it to practical business men to make money out of it and stick to his inventions,” the director said, “the company would in time become very rich.”
For Edison, “sticking to his inventions” full-time would mean relinquishing control of Edison Electric, which was anathema. Managing his company did not engage him half as much as creating it, but he could not bring himself to let go of the captain’s chair. Edison’s intellectual interests, however, wandered from one minor project to the next. He had always done best when attempting something both entirely new and gargantuan in scale, but in the mid-1880s he could not find a suitable project.

Source:
Stross, Randall E. The Wizard of Menlo Park: How Thomas Alva Edison Invented the Modern World. New York: Crown Publishers, 2007.
(Note: italics in original.)

Strategic Conversations: Vital to Creative Adaptation or Reinforcers of Lazy Consensus?

Source of book image: online version of the WSJ review quoted and cited below.

(p. A15) “Moments of Impact” is at its best on the importance of promoting different perspectives. Businesses need to look at the world through as many disciplinary lenses as possible if they are to cope with the fast-changing threats that confront them. But day-to-day corporate life is all about fences and silos. Strategic conversations give companies a chance to examine their business models from the outside–and, as the authors put it, to “imagine operating within several different yet plausible environments.”
. . .
Mr. Ertel and Ms. Solomon argue that companies increasingly face a choice between what Joseph Schumpeter called creative destruction and what they call creative adaptation–and that strategic conversations are vital to creative adaptation. Perhaps so. But strategic conversations can also reinforce lazy consensus, as people try to justify their jobs and protect their turf. Many bold decisions are driven by the opposite of “conversations”–by senior managers deciding to lop-off functions or take the company in a radically new direction.

For the full review, see:
ADRIAN WOOLDRIDGE. “BOOKSHELF; Go Ahead, Strategize; The best ‘strategy meetings’ unleash fresh thinking and offer maverick views; the worst and dull, unstructured time-sucks.” The Wall Street Journal (Thurs., March 27, 2014): A15.
(Note: ellipsis added.)
(Note: the online version of the review has the date March 26, 2014, and has the title “BOOKSHELF; Book Review: ‘Moments of Impact,’ by Chris Ertel and Lisa Kay Solomon; The best ‘strategy meetings’ unleash fresh thinking and offer maverick views; the worst and dull, unstructured time-sucks.”)

The book under review is:
Ertel, Chris, and Lisa Kay Solomon. Moments of Impact: How to Design Strategic Conversations That Accelerate Change. New York: Simon & Schuster, 2014.