Thought leaders and rising stars

As with all books in the Harvard Business Review Paperback Series, this one too is written by the preeminent thinkers and the emerging experts of the field. There are eight separate essays or chapters, each devoted to a certain aspect of crisis management.

Each chapter is equipped with an executive summary that can be read before the article, to see if this is something worth spending time on, or after the article, for summary and refreshing one’s memory. Excellent. There’s also a very brief bio of the contributors (which helped me in locating my links below) and a keyword index.

As always, I did my best in trying to find a personal or company website belonging to each of the authors, but I didn’t find many, mostly because this book is almost 10 years old, so if any of my readers want to help locate the rest, or if my links are wrong, particularly if you are the author who is mentioned, please contact me).

Those who lived to tell

This is a book with three stories told by those who lived to tell how they survived a major crisis, and it is a book with three fictional crisis cases, where different management consultants weigh in on the options available and it is a book with two articles on strategic advice on how to and how not to manage closes calls and near misses.

One by one

Managing the Crisis You Tried To Prevent by Norman R Augustine is an essay about the six steps or stages of crisis management: 1) Avoiding the crisis, 2) Preparing to Manage the Crisis, 3) Recognizing the Crisis, 4) Containing the Crisis, 5) Resolving the Crisis, 6) Profiting from the Crisis. All with examples of companies that did well, and companies that did not so well, as Ericsson and Nokia are prime examples of.

When An Executive Defects by Anurag Sharma and Idalene F Kesner is  fictional case study about how companies should address the “defection” of an executive going to a competitor. Here, five experts of communication offer advice on how communicate with the media, with the employees and customers, with the “culprit”,  and how to protect intellectual property and manage knowlegde that is disappearing out the front door with a no-disclosure agreement.

A Strategic Approach to Managing Product Recalls by N Craig Smith, Robert J Thomas, and John A Quelch is a step-by-step guideline for product recalls, looking at the time before, during and after a product recall and what implications this should have on 1) Policy and Planning, 2) Product Development, 3) Communications 4) Logistics and 5) Information Systems. Again, with excellent real-life examples that will make you think. Here’s a recent reminder of things that can go wrong: Mr. Squiggles, as reported by Regester Larkin.

Right Away and All at Once: How We Saved Continental by Greg Brenneman is a fascinating account by the then COO of Continental Airlines, describing first-hand the five lessons of how he and the new team at Continental transformed the company: 1) File your flight plan and track your progress:  find your action plan, stick to it, and monitor your performance. 2) Clean your house: The people who brought the business in to the crisis are NOT the ones who are likely to bring the business out of the crisis, so sweep out the old. It’s brutal, but it works. 3) Think “money in” not “money out”: Cutting costs lessens money out, but it never brings money in. Find ways to generate revenue, do not seeks ways to minimize losses. 4) Ask the customer the right questions: What is it that they would actually be willing to pay for to use your services rather than your competitors’. 5) Let the inmates run the asylum: Engaging your employees in making work fun does not run counter to strong, firm and directing leadership. Treat their ideas and suggestions with respect.

Media Policy – What Media Policy? by by Sandi Sonnenfield is another fictional case study. Here a charity donation goes terribly wrong, as it turns out that the initial benefactor in turn has supported an organization that now has resorted to violence to make a political statement. How far does corporate social responsibility run and where do you stop being responsible for someone’s actions, and most of all, how do you handle the media who will love sticking this incident on your brand reputation, not for good, but for worse. Again, five media experts weigh in on what steps to take and discuss the components of an effective media policy. Sidenote: For a list of current “OOPS”es in Public Relations, Fineman PR’s list of annual PR blunders is a good read.

After the Layoffs, What’s Next? by Suzy Wetlaufer is yet again a fictional case, a complex story of mismanaged downsizing and of a defecting manager taking with him a seizable number of employees, a sudden unannounced closure of a major store, and the rest wondering what or who is next, perhaps a poignant but otherwise unrelated reminder of the SAAB demise. Nonetheless, the essence of this case is how does a company revive morale and survive under such circumstances? On a sidenote, Susan Wetlaufer has had her own share of crisis management to deal with. She is now Susan Welch, and in early 2002, she was forced to resign from the Harvard Business Review after admitting to an affair with the then-married Jack Welch, the former chief executive officer of General Electric, while preparing an interview with him for the magazine.

Leadership When There Is No One To Ask: An Interview with Eni’s Franco Bernabè by Linda Hill and Suzy Wetlaufer tells the story of how Eni, an energy-focussed industry group in 1992 became a prime target during Italy’s “Mani Pulite” or “Clean hands” anti corruption investigation in the midst of a structural re-organization. How do you leas a company through extreme internal resistance to change and extreme external scrutiny. Bernabé answer was to seek consultation, but to lead and decide in solitude.

Lincoln Electric’s Harsh Lessons from International Expansion by Donald F Hastings is an account of how Lincoln Electric failed miserably when they tried to expand their business in Europe and Asia, not realizing perhaps that the American way of doing business can not and will not work in Europe or Asia. The business culture is simply too different, and labor laws and regulations are often counterproductive to incentive systems aimed at improving performance. It was a bitter lesson learned, but a necessary lesson, without which the company would not be as strong as it is today.

Conclusion

The Harvard Business Review Paperback Series are not written for us academics and researchers, but for the professional manager seeking executive perspectives and solutions. That does not make this book less valuable; as a researcher it is always interesting to know what the industry is concerned with in order to focus my research accordingly. The best essay, in my opinion, is Greg Brenneman’s account of his time at Continental airlines, along with Norman Augustine’s strategic advice and the product recall issues. The fictional cases are interesting per se, but reading more or less the same advice five times by five different experts makes these essays a less capturing read. Nonetheless, I certainly know more about the inner workings and real challenges of crisis management than I did before, and thus, can apply it to the case studies and surveys I will conduct in my research.

Reference

Harvard Business Review (1999). Crisis Management. Boston: Harvard Business Press.

Publisher link

• harvardbussiness.org: HBR on Crisis Management

amazon

• Buy this book: HBR on Crisis Management

Related

• husdal.com: SAAB is no more…
• husdal.com: Book Review: Single Point of Failure
• husdal.com: Book Review: The Business Continuity Handbook

Thought leaders and rising stars

As with yesterday’s book on Managing External Risk, this one too is written by the preeminent thinkers and the emerging experts of the field. And again, there are eight separate chapters, each devoted to a certain aspect of supply chain management. Again, I did my best in trying to find a personal or company website belonging to each of the authors (I didn’t find all, so if any of my readers want to help locate the rest, or if my links are wrong, particularly if you are the author who is mentioned, please contact me).

What happened to supply chain risk?

Admittedly, this review is perhaps a small step aside from supply chain risk as the focal point of this blog, but I cannot not recommend a good book when I find it, can I? The overarching theme of this book is the development of supply chain relationships for better supply chain performance, and one of the best insurances against supply chain risk is developing relationships that perform well, in good times, and in bad times. Nokia and Ericsson know all about that.

One by one

First out is We’re in This Together by Douglas M Lambert and A Michael Knemeyer, who describe a model that offers a quick process for aligning expectations and determining the most productive level of partnering. No partnership should exist for its own sake alone and the reason why so many partnerships fail is that should never have existed in the first place. This here will tell you how to avoid the worst pitfalls.

In Building Deep Supplier Relationships by Jeffrey K Liker and Thomas Y Choi the focus is on the Japanese model of supplier partnering and the six steps that Toyota and Honda have employed to successfully gain the upper hand on their American counterparts, the Big Three.

Rapid-Fire Fulfillment by Kasra Ferdows, Michael A Lewis and Jose A D Machuca is centered around the story of  the Spanish high-end fashion clothier Zara, and how they manage to a supply chain with maximum agility, a “superresponsive” supply chain that defies most of the traditional wisdom on how supply chains work best.

Supply Chain Challenges: Building Relationships takes the form of a conversation among some of the leading thinkers and doers in the field of supply chain management, a mix of practitioners, scholars and consultants: Scott Beth, David N Burt, William Copacino, Chris Gopal, Hau Lee, Robert Porter Lynch, and Sandra Morris.

Unsurprisingly, The Triple-A Supply Chain by Hau Lee has found its way into a book like this. Orginally published in 2004, in – where else – the Harvard Business Review. That said, The Triple-A Supply Chain is perhaps the seminal work on agile supply chains? It is certainly one of the most cited works on agility that I can think of.

Steven J Spear and H Kent Bowen make an attempt at Decoding the DNA of the Toyota Productions System, based on a four-year study of 40 plants, showing that the extreme flexibility of the system stems – paradoxically enough – from its seemingly extreme rigidity, a system that is governed by four rules: the way workers do their work, the way they interact with each other, how production lines are constructed and how people learn to improve.

Steven J Spear makes another appearance with Learning to Lead at Toyota, where he builds on the previous article and tells the story of how Toyota inculcates its managers: There’s no substitute for direct observation. Proposed changes should always be structured as experiments. Workers and managers should experiment as frequently as possible. Managers should coach, not fix. Becoming a manager at Toyota is apparently a long hard way without any shortcuts.

Finally, V G Narayanan and Ananth Raman finish off with Aligning Incentives in Supply Chains. Here, the authors make a case in point that companies are often so concerned with their immediate supply chain that they neglect that their partners need to pull in same direction and must be aligned properly for the full supply chain to function properly. If the firms all work together, and collectively share risks and rewards, they all win – if, and only if incentives are aligned.

Conclusion

To me, the first article and the Zara article, along with the final chapter are the best parts of this book. And a whole three articles on Toyota (and Honda)? I think that’s pushing the envelope a bit. While those are good and valid examples of excellent supply chain management, for a paperback handbook like this, more variety should have been sought. Just my two cents. But perhaps, there are no better examples? That may very well be…

Reference

Harvard Business Review (2006). Supply Chain Management. Boston: Harvard Business Press.

Publisher link

• harvardbussiness.org: Supply Chain Management

amazon.com

• Buy this book: Supply Chain Management

Related

• husdal.com: Book Review: Logistics and Supply Chain Management
• husdal.com: Book Review: Logistics Management and Strategy

Crème de la crème

The book consists of eight separate chapters, written by a selection of outstanding scholars and industry leaders, see the links below, where I have managed to find a personal or company website belonging to each of the authors (I didn’t find all, so if any of my readers want to help locate the rest, or if my links are wrong, please contact me).

Each chapter is equipped with an executive summary that can be read before the article, to see if this is something worth spending time on, or after the article, for summary and refreshing one’s memory. Excellent. There’s also a very brief bio of the contributors (which helped me in locating my links below) and a keyword index.

While supply chain risk per se is not a topic, financial risk and enterprise risk are. It is a lesson (actually several lessons) in how to embrace risk properly.

While preparing this post and doing some background research I also discovered a new term: agile risk management, but I think I will leave that for a later post, so let’s have a closer look at the chapters of this book.

One by one

The New Arsenal of Risk Management by Kevin Buehler, Andrew Freeman and Ron Hulme shows how risk management has evolved since the 1950s and in particular since the 1070s, in response to the changing business landscape. Goldman Sachs is used as a prime example for how a company can and should address risk and create a culture for risk: 1) quantitative professionals, 2) strong oversight, 3) partnership heritage, and 4) strong and enforced business principles.

A Letter to the Chief Executive by Joseph Fuller is a fictional letter from a board member to a CEO, highlighting the challenges and complexities of running a business today, seen in the light of the flaws that have recently emerged in the American management model, in particular the lack of conviction in settings one’s own course. A bit long and winding perhaps, but a good read.

Countering the Biggest Risk of All by Adrian J Slywotzky and John Drizik takes a closer look at strategic risks, and how companies can identify and respond to the seven strategic threats they see: 1) industry margin squeeze, 2) technology shift, 3) brand erosion, 4) competitor strategy changes, 5) customer preference shifts, 6) new project failures and 7) market stagnation. This chapter concludes with a brief step-by-step description of how to assess and manage risk.

A Framework for Risk Management by Kenneth A Froot, David S Sharfstein and Jeremy C Stein focuses on financial risk, in particular hedging strategies that rest on three pillars: 1) the key to creating corporate value is making good investments, 2) the key to making good investments is generating enough cash internally to fund them, 3) the key to having enough cash is to shield the cash flow from disruptions.

Disciplined Decisions: Aligning Strategy with the Financial Markets by Martha Amram and Nalin Kulatilaka is a primer on real options and how to use them, e.g. 1) timing options, 2) growth options, 3) staging options, 4) exit options, 5) flexibility options, 6) operating options and last, but not least, 7) learning options. Real options are complex and difficult to understand, but this chapter makes it look very easy.

Six Rules for Effective Forecasting by Paul Saffo demythologizes the forecasting process, so that executives can become sophisticated and participative consumers of forecasts, rather than passive absorbers, by first observing the wide range of possibilities and then narrowing down the decision space, by following six simple rules: 1) Define a cone of uncertainty, 2) Look for the S-curve, 3) Embrace the things that don’t fit, 4) Hold strong opinions weakly, 5) Look back twice as far as you look ahead, 6) Know when not to make a forecast. Brilliant.

Strategy Under Uncertainty by Hugh Courtney, Jane Kirkland and Patrick Viguerie outlines a new approach to decision making, based on four discrete levels of uncertainty a company might face: 1) Clear-enough future, 2) Alternate future, 3) A range of futures, and 4) True ambiguity. The chapter then proposes how to tailor the strategic analysis tools to fit the according uncertainty. Very interesting.

A Leader’s Framework for Decision Making by David J Snowden and Mary E Boone is very similar to the above, where leadership and decisions are sorted into five contexts: 1) Simple and stable – one answer (best practice) : “sense, categorize and respond”, 2) Complicated – multiple answers (expert judgement): “sense, analyze and respond”, 3) Complex – no real right answers (emerging solutions): “probe, sense, respond”, 4) Chaotic -  no right answers, only patterns (rapid response): “sense where there is stability, transform from chaotic to complex”, and 5) Disorder – no apparent patterns (leadership across contexts): “break the whole into manageable contexts and act accordingly”. The best part about this chapter is the table that summarizes and compares these strategies.

Conclusion

This is a book for the industry, not for academia. It is written for C’-level executives and alikes. Nonetheless, even as a researcher I can relate to and utilize the ideas on risk management that are portrayed in this book. Unfortunately, however, for me as a researcher, there are no references. That does not make this book less valuable; as a researcher it it always interesting to know what the industry is concerned with in order to focus my research accordingly. To me, research has a value only only if it is practically applicable; there are plenty of problems that are academically intriguing but without relevance in real life. This book is real life, and while I am sure that it will inspire managers, it has also inspired me as a researcher in risk.

Reference

Harvard Business Review (2009). Managing External Risk. Boston: Harvard Business Press.

Publisher link

harvardbusiness.org: Managing External Risk

amazon.com

• Buy this book: Harvard Business Review on Managing External Risk
• See the whole series: Harvard Business Review Paperback Series

Related

• husdal.com: Book Review: Enterprise-wide risk management
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