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Copyright © 2008, Emerald Group Publishing Limited
Strategy in the media
Strategy in the media
Management’s big goals for the new century
So let me ask once more, what should be management’s moonshot for the 21st century? When you think about the way your company is organized and run, when you think about management as usual, what makes you indignant – what do you think is just plain wrong? When you focus on the future, what are the over-the-horizon challenges that are going to stretch your company’s antiquated, industrial-age management practices to the breaking point? When you look into the faces of your colleagues, all those folks who are working 10-hour days to feed their kids and pay their mortgages, do you think they deserve better? Do you want to improve their lot somehow? When you listen to the buzzwords and platitudes that get bandied about in management meetings, do you sense an appalling gap between rhetoric and reality? Are there areas where management practice is still lagging badly behind management rhetoric?
As I’ve reflected on these questions over the past few years, three big and meaty problems have taken shape in my mind:
Challenge #1: How can we build organizations that are as nimble as change itself – not only operationally, but strategically?
Challenge #;2: How can we make rule-breaking innovation a systemic capability – how can we give everyone the chance to be an innovator?
Challenge#3: How can we create work environments that inspire individuals to give their very best of themselves – that truly inspire human beings?
Gary Hamel, “What is management’s moonshot?, HBSP Discussion Leader, December 7, 2007, http://discussionleader.hbsp.com/hamel/2007/12/what_;is_managements_moonshot.html
From selling to customer value management
Demonstrating superior value is necessary, but it is no longer enough to become a best practice company in today’s business markets. Suppliers also must document the cost savings and incremental profits that offerings have delivered to customers. Thus, suppliers work with their customers to define the measures on which they will track the cost savings or incremental profit produced and then, after a suitable period of time, work with customer managers to substantiate results.
Documenting the superior value delivered to customers provides four powerful benefits to suppliers. First, it enhances the credibility of the value demonstrations for their offerings because customer managers know that the supplier is willing to return later to document the value record. Second, documenting enables customer managers to get credit for the cost savings and incremental profit produced. Third, documenting enables suppliers to create value case histories and other materials for use in marketing communications to persuasively convey to prospective customers the value they, too, might obtain from the supplier’s offerings. Finally, by comparing the value actually delivered with the value claimed in the demonstrations and regressing these differences on customer descriptors, documenting enables suppliers to further refine their understanding of how their offerings deliver the greatest value. This sharpens subsequent efforts to target customers. We term the tools that suppliers use to document the value of their offerings value documenters …
Before pursuing a proposed approach that changes the way of doing business, senior management wants to know why it’s more likely to succeed than others. After all, achieving any enduring change in a business is very difficult. So what are the unique strengths in an approach that make it worth pursuing? Customer value management has three unique strengths: superior conceptualization of value, a progressive approach to assessing value in practice, and proven concepts and tools for translating knowledge of customer value into superior business performance.
James C. Anderson, Nirmalya Kumar, and James A. Narus, Value Merchants: Demonstrating and Documenting Superior Value in Business Markets (Harvard Business School Press, 2007).
The evolving role of the executive
The first iteration made its mark in the 1990s, as chief executives like Sanford I. Weill, Gerald M. Levin, John F. Welch Jr and Michael Eisner built empires, not to mention their profiles, at the companies they ran: Citigroup, Time Warner, GE and Disney. When the shares deflated earlier this decade after the burst of the tech bubble and various corporate scandals, a new cadre moved in: the Fix-it Men. They were lower-key leaders like Charles O. Prince III of Citigroup and Richard D. Parsons of Time Warner, whose job it was to repair the excesses and mistakes of their predecessors.
Now, management experts and longtime watchers of corporate America say the current environment demands, and is attracting, yet another kind of chief executive: the team builder. “It’s someone who can assemble a team that functions as smoothly as a jazz sextet,” said Warren Bennis, a professor of management at the University of Southern California and author of many books on leadership.
In the last week, Mr Prince and Mr Parsons both announced they would be stepping aside. Mr Prince’s abrupt exit followed huge losses that dragged down Citigroup’s long-stagnant stock, while Mr Parsons is retiring at the end of 2007 after a five-year tenure, during which he stabilized the company but failed to move Time Warner shares higher. A third chief executive, E. Stanley O’Neal of Merrill Lynch was forced out late last month after his firm announced an $8.4 billion write-down. Mr O’Neal substantially increased Merrill’s revenue and profit during his tenure but has been criticized for forcing out subordinates he perceived as rivals, while several top executives left Citigroup during Mr Prince’s reign. Now both companies find themselves searching for permanent replacements. “They’ve got to have not just the cognitive ability to run a major firm, which Stan O’Neal definitely had, but the ability to make people feel like they’re working together,” Mr Bennis said.
Nelson D. Schwartz, “CEO evolution phase 3,” The New York Times, 10 November, 2007.
B-schools and academic research
Like other academic institutions, business schools are judged by the quality of the research carried out by their faculties. At the same time they mean to equip their students for the real world, however that is defined. Whether academic research actually produces anything that is useful to the practice of business, or even whether it is its job to do so, are questions that can provoke vigorous arguments on campus …
On one level, the question is simple to answer. Research in business schools, as anywhere else, is about expanding the boundaries of knowledge; it thrives on answering unasked questions. But it is also about cementing schools’ – and professors’ – reputations. Schools gain kudos from their faculties’ record of publication: which journals publish them, and how often. In some cases, such as with government-funded schools in Britain, it can affect how much money they receive. For professors, the mantra is often “publish or perish”. Their careers depend on being seen in the right journals.
The research is almost universally unread by real-world managers
Part of the trouble is that the journals labor under a similar ethos. They publish more than 20,000 articles each year. Most of the research is highly quantitative, hypothesis-driven and esoteric. As a result, it is almost universally unread by real-world managers. Much of the research criticizes other published research. A paper in a 2006 issue of Strategy & Leadership commented that “research is not designed with managers’ needs in mind, nor is it communicated in the journals they read … For the most part it has become a self-referential closed system [irrelevant to] corporate performance.”
Lost in translation
Most professors argue that it is only right that academic journals be written with other academics in mind. Peer review ensures rigor, after all. However there is a growing belief, both within schools and elsewhere in the sector, that there is a need for research not to be simply rigorous enough to make the journals, but also to be relevant enough to make itself felt in the actual world of business.
“”Practically irrelevant? What is the point of research carried out in business schools?,” The Economist, 28 August 2007.
B-schools: professional learning or vocation training?
A university-based business school, in my view, faces the challenge of deciding whether it’s going to be a professional school or not. If it decides not to become a professional school, it risks devolving into a vocational school. And that raises a fundamental question: Why should universities have vocational schools? …
Second, business schools need to look at what differentiates a professional school from a vocational school. There are at least 4 criteria that scholars use to describe a profession, criteria that business schools would need to have a conversation about:
A professional school consists of some agreed-upon body of knowledge that it believes the practitioners of the profession need to know in order to be effective. Current trends suggest that an institutional fragmentation is taking place with respect to whether business schools even agree about what their students need to know.
The second challenge is about faculty. How do schools ensure that faculty continue to exert cultural authority in the classroom and are seen by their students as legitimate sources for information, knowledge, and directions to practice? If that is not addressed, business schools risk being seen as largely places where students come to develop elite social networks and acquire a credential that helps them access particular types of jobs.
The third challenge is the hallmark of any profession: some kind of governance or guidance that the practitioners take to say that they will use their knowledge and the practice of their work to benefit others rather than engage in self-dealing or self-interest.
Fourth, it is critical to restore a goal of professionalization in business schools and create some kind of evergreen MBA. The reality is that almost all the high professions require continuing education in order to ensure that their practitioners are up to date with the newest knowledge and techniques. Given the rapidity by which our business context is changing, the graduates of business schools should be able to access continuing education.
Rakesh Khurana, “Management education’s unanswered questions,” Harvard Business School’s Working Knowledge, 8 October 2007, http://hbswk.hbs.edu/item/5735.html
Learning to let outsiders help you innovate
First of all, let’s define what innovation networks are. Innovation networks are people, institutions and companies that are outside the firm – they can also be inside the firm, but for purposes here they’re outside the firm. They are intellectual assets that companies can link up with to solve problems and find ideas, while beginning to think about those assets as an extended part of their organization – and therefore quickly create top-line growth and bring new things to the marketplace.
From a competitive-advantage standpoint, yes, I think it’s going to be a really big deal. I don’t believe we’re at a tipping point yet, but I think, in the future, the companies that identify those assets outside and begin to build relationships with them have a real shot at building a competitive advantage and preferential relationships …
Procter & Gamble spent a lot of time defining the assets outside that could help it in its various science areas and business areas and set about developing, in different regions of the world, assets, hubs where we could link into those. [It also] developed a proprietary network of individuals who could contact others in different parts of the world.
So I think P&G has done that, and I think Boeing has done that with the Dreamliner, particularly around building supply networks that are solving problems. Microsoft has certainly done that to build out developer ecosystems, as has IBM and others. But it’s a relatively new idea to really think about how you [can] build growth platforms utilizing ideas outside the company.
Larry Huston, “Innovation networks: looking for ideas outside the company”, Knowledge@Wharton, 14 November 2007.
Getting smart about your customers
It sounds so obvious: you have to know your market.
Yet when it comes to actual market intelligence, too many companies do it all wrong. Some miss the big picture by focusing on just a slice of their market, or by limiting their studies to transactions and other customer data already in their possession. Others have the opposite problem: They don’t look at their customers closely enough, causing them to miss opportunities right under their noses.
Such efforts reveal little about new market opportunities and risk losing current customers to companies with better data. By contrast, obtaining a better understanding of a complete market and what drives customers’ purchasing decisions would help companies discover untapped or underserved customers.
How can companies get better information to make smarter decisions and increase their market share? They need to raise their market IQs.
We believe the way to do that is by creating what we call a market panel. A market panel is a sweeping, detailed and continuing survey of a large, carefully selected group of consumers who reflect a statistically reliable sample of a much larger market. It’s a wide-angle view of a market’s total buying population, made up of a series of individual portraits taken every six to 12 months or so.
Picture a comprehensive spreadsheet on which the rows represent thousands of individual consumers, and the columns display specific information about them: their demographic profile, needs, attitudes and behaviors; their current spending and future purchase plans; what competitors they patronize; the factors that drive their product selections and satisfaction ratings; their ratings of brands.
In short, a market panel reveals how much and why consumers buy, and from whom. Without such information, a company can miss sizable and adjacent opportunities even while its own position is being eroded by focused competitors.
What separates a panel from most surveys is not only its sweeping view of the consumers who make up the market, but the fact that it is repeated on a regular basis. Because the same group is surveyed at periodic intervals, the panel reveals where market shifts are occurring – where consumers are shopping more, and less, and how their total spending is changing.
Calvin P. Duncan, Constance M. O’Hare, and John M. Matthews, “Raising your market IQ,” Sloan Management Review, November 2007
Technology and the informal organization
If you scratch the surface of any business, you’ll find two very different organizations. There’s the formal organization – the one that can be represented by the boxes of an org chart. And then there’s the informal organization, the one shaped by the day-to-day interactions of employees – conversations in hallways or in airport lounges, exchanges of messages through email and voicemail, glances and whispers in meetings.
The formal organization is important, if only because it tends to determine how much one gets paid. But it’s nowhere near as important as the informal organization. It’s the informal one that governs the real flow of information and influence in a company, that defines who’s in the loop and who’s not, what’s important and what can safely be ignored.
Most corporate IT systems, unfortunately, are geared to the needs of the formal organization and ignore the informal one. Designed through elaborate, top-down processes, these so-called enterprise applications usually end up as rigid, cumbersome systems that are disconnected from the everyday jobs of workers. The informal organization is served, instead, by simpler, personal software programs like email, PowerPoint, and Excel. As a result, most of the really useful information that flows through a company never gets captured in corporate databases or broadly shared by employees. It ends up scattered across scores of individual hard drives …
Social networks are popular – and powerful - because they are constructed in response to, and through, the actions and conversations of their members. In stark contrast to corporate IT systems, social networks shape themselves to their users rather than forcing the users to adapt to preset specifications.
Because they seem so natural to use, the social networks end up being incredibly sensitive mechanisms for recording the real life of a human organization. They serve not only as a flexible communications medium but as a means for identifying, refining, and recording valuable information. They do what corporate systems so often fail to do: they make the codification and sharing of valuable information easy.
Nicholas Carr, “My workspace” Rough Type Blog, 28 November 2007, http://www.roughtype.com/archives/2007/11/myworkspace.php
What path for manufacturing?
Manufacturing is at a crossroads. In one sense, there have never been better prospects for the makers of products than there are right now. Innovation is rampant; capital is available; technological changes have enabled new materials and manufacturing processes; and the global standard of living is steadily improving, enabling billions of consumers to buy new and existing products.
Renewed political interest in manufacturing is also evident. French President Nicolas Sarkozy, upon being elected, vowed to protect his nation’s industrial base. There is a similar movement brewing in the United States, driven in part by the idea of reclaiming an American reputation for quality. But these signs of a potentially bright future coexist with an un-precedented and extremely daunting confluence of challenges. The pressures on manufacturing are so great that they threaten to drive a significant number of firms to bankruptcy – especially those that do not fully appreciate the strategic value and distinctive opportunities of manufacturing.
The uncertain future of manufacturing raises fundamental geopolitical questions: How important is industrial capacity to a nation’s well-being? Can older economies ever be great manufacturing bases again? And, if not, can they survive as global powers? …
How then can national leaders foster a revitalized manufacturing base? By encouraging the development of more companies with the vision to invest wisely. To be sure, it will never be easy. Even enlightened manufacturing companies must work extremely hard to keep their edge. But with any luck, in the next few years, we’ll see remarkable tools and ideas emerging that break the boundaries of conventional practices. Old, fossilized plant footprints can become nimble networks; confrontational labor relationships can evolve into constellations of joint interest; outmoded supply chains can be transformed into clearly defined, mutually beneficial partnerships; and stolid aging factories can be retrofitted into showcases of lean manufacturing. Only those companies that appreciate manufacturing, invest in technology, and innovate in this field are likely to prosper. The challenge for governments is to figure out how to support them – for they are carrying the future.
Kaj Grichnik and Conrad Winkler, “Manufacturing’s ‘make or break’ moment,” Strategy+Business, Winter 2007.
Wal-Mart: check-out lines and teller windows
Every day 2.5 million people walk through the doors of a Wal-Mart store in Mexico, generating nearly $20 billion in sales last year. Now they are potential customers of Banco Wal-Mart, the chain’s new lending operation. So are the company’s 12,000 Mexican suppliers, as well as its 155,000 employees. “We want to leverage this traffic we have in our stores,” says Julio B. Gómez, Banco Wal-Mart’s chief executive.
As in the US, Wal-Mart is Mexico’s largest retail chain. It has 997 locations, including supercenters, food and clothing stores, and restaurants …
Sixteen Wal-Mart bank branches are already offering installment plans on electronics and household appliances. By the end of next year, Banco Wal-Mart expects to operate in 100 stores, and it projects that it will be profitable within four years. It also intends to offer credit cards and micro-loans for entrepreneurs.
Consumer finance offers a fresh growth opportunity for a company whose huge outlets are maturing in Mexico as in the US, says Wayne Hood, a retail analyst at BMO Financial Group Their idea is, you have a core group of loyal customers who are “unbanked” who shop every day. “Why not try to provide them banking services?” he says. “It’s easier to do in Mexico because the regulatory environment isn’t as tough.”
“Wal-Mart banks on the ‘unbanked’”, Business Week, 13 December 2007.
The straws that break a project manager’s back
Question: How many concurrent projects does it take to break the proverbial camel’s back?
Answer: Less than you think.
I read in this month’s PM Network magazine that project managers are lamenting the number of projects they’re being asked to juggle, with the average number of concurrent active project at 8. I’ve actually consulted at some organizations where some project managers are loaded with 20 or more active projects (and these are real projects, some of them large-scale initiatives).
This is the surest way to guarantee project failure. Some managers might say that not every project requires conscious activity from the project manager at the same time (maybe that should be a new book, The Unconscious Project Manager.) It’s a poor excuse, and discounts the work that a project manager really should be doing. It virtually guarantees that the project manager will shortchange the communication (which should be 90% of a project manager’s job), not to mention the appropriate risk management efforts and execution monitoring.
In most cases, here’s what I feel the correct number of concurrent large projects should be for a given project manager: 1.
For each project added, reduce 20 to 25% of the project manager’s effectiveness. It’s possible to oversee a larger number if there are project managers reporting to you, but that’s not project management; that’s program management. And even then, only one program should be managed by a person at a time …
I’ve seen more project managers fail because they are unable to make a case for turning down additional projects than for any other reason (in some cases, it’s because they themselves underestimate all the things they should really be doing during project execution). At the organizational level, lack of focus and a prioritization process is usually the root cause.
Not too long ago, I did a presentation to a room full of CIOs. During lunch, I asked them what they felt their biggest challenge was regarding project management. After some discussion, they agreed their #1 challenge was having to justify to the board why their organization should not take on additional projects (or why they should decrease their current project list). Even at the CIO level, this is an issue.
Jerry Manas, “Concurrent projects: no badge of honor,” Project Management Thought Leadership, 13 December 2007, http://www.pmthink.com/ 2007/12/concurrent-projects-no-badge-of-honor.htm
A better way to generate breakthrough ideas
Companies often begin their search for great ideas either by encouraging wild, outside-the-box thinking or by conducting quantitative analysis of existing market and financial data and customer opinions. Those approaches can produce middling ideas at best … The problem with the first method is that few people are very good at unstructured, abstract brainstorming. The problems with the second are that databases are usually compiled to describe current – not future – offerings, and customers rarely can tell you whether they need or want a product if they’ve never seen it. The secret to getting your organization to regularly generate lots of good ideas, and occasionally some great ones, is deceptively simple: First, create new boxes for people to think within so that they don’t get lost in the cosmos and they have a basis for offering ideas and knowing whether they’re making progress in the brainstorming session. Second, redesign ideation processes to remove obstacles that interfere with the flow of ideas – such as most people’s aversion to speaking in groups larger than ten. This article offers a tested approach that poses concrete questions. For example, what do Rollerblades, Haagen-Dazs ice cream, and Spider-Man movies have in common? The answer: Each is something that adults loved as children and that was reproduced in an expensive form for grown-ups. Asking brainstorming participants to ponder how their childhood passions could be recast as adult offerings might generate some fabulous ideas for new products or services.
Kevin P. Coyne, Patricia Gorman Clifford, Renee Dye “Breakthrough thinking from inside the box,” Harvard Business Review, December 2007.
Reversing Coke’s global strategy
Why do I think globaloney is potentially dangerous to your health rather than just a useful simplification or call to arms?
Probably the best example I can think of was Coca-Cola, which a decade ago, in the waning days of CEO Roberto Goizueta’s reign, was acclaimed as the aggressively globalized corporation. Goizueta emphasized that the distinction between international and domestic no longer applied (which he embodied in organizational changes), set aggressively high growth targets, focused on a handful of megabrands to drive volume growth, and engaged in an unprecedented amount of centralization and standardization.
Ten years later, under CEO Neville Isdell, Coke has executed an about-face. Isdell has separated out the domestic and international organizations and cut growth targets by half, to the cheers of analysts who had come to regard the earlier ones as unrealistic. The emphasis now falls on variety, with particular push to learn from Japan, Coke’s most profitable major market and one in which it has a particularly broad array of products, ranging from best-selling Georgia Coffee to offerings such as Real Gold, a hangover cure, and Love Body, a tea that some believe increases bust sizes. And the emphasis on variety carries over from products to strategies: in China and India, in particular, Coke has lowered price points, reduced costs by indigenizing inputs and modernizing bottling operations, and upgraded logistics and distribution, especially in rural areas.
The difference between Coke’s strategies under Goizueta and Isdell is that the former relied on globaloney whereas the latter rejects it. Goizueta believed that the only fundamental difference between the US and other country markets was the lower average levels of market penetration overseas – which he also thought could be changed in “not too many years.” With such a faith in the underlying structural similarity of markets, it was natural for Goizueta – or any other purveyors of globaloney – to lump the international and domestic organizations together with an emphasis on international growth, to focus on economies of scale since there are, by assumption, no barriers at borders to hinder their exploitation, and to employ the strategies that worked at home overseas. Rejection of globaloney, in contrast, implies a reversal of these biases.
It took Coke the better part of a decade to figure out that globaloney and its strategic implications were hazards to its health – in the course of which its market value declined by about $100 billion, or more than 40% from its peak.
Pankaj Ghemawat “Coca-Cola’s global rethink,” What in the World, 1 October 2007, http://discussionleader.hbsp.com/ghemawat/2007/10/cocacolas_global_rethink.html
The changing role of the chief marketing officer
[Anthony Palmer, Chief Marketing Officer, Kimberly-Clark]: To me, the role of a CMO is really pretty simple. You can’t ever lose sight of the fact that your role is to sell more stuff to more people for more money more often. That has got to be the ultimate goal. You also have to inspire the organization to take calculated risks, and inspire the organization to love winning more than they’re afraid of losing.
The pace of change is pretty quick right now. We’ve got an industry that has been built around positioning a brand and then shooting a 30-second ad. At Kimberly-Clark we’re re-engineering how we think about that. You need to have a view of what your brand stands for that is very media-agnostic and business-model-agnostic. We are also re-engineering the way we work with [ad] agencies to make sure it supports this new way of thinking …
The target for our brand Depend is people with incontinence. But it addresses the issue with the idea of preserving relationships, because people who are incontinent tend to withdraw from society – they’re embarrassed. So preserving your dignity through discretion should drive a lot of your thinking. You certainly wouldn’t shoot a 30-second ad and scream about incontinence. You wouldn’t have bright packaging that yells, “I’m Depend and you’re incontinent!” at the checkout. But you do want to say “I want to build a relationship,” with the consumer. You look for ways to do that …
You have to go back to the simple point that a brand is a promise and the product is a delivery of that promise. If you make that promise and deliver it better than the competition, you’ll build brand equity. I believe brands are more salient today to consumers than they ever have been – they are a simplifying mechanism in a world where there are many more options. Private label is declining in some categories. My belief is where brands are weak, the people who are stewarding those brands aren’t spending as much on communication. Therefore they’re not telling consumers about the promise of the brand.
“How to sell more, take on competitors with fatter wallets,” The Wall Street Journal, 15 August 2007.
The real strategic value of simplicity
“Keep it simple, stupid.” That’s the advice every executive has received on how to share strategy with employees. The subtext is often, “Keep it simple, because your people are stupid.” But you don’t need to embrace simplicity just so your people can comprehend your message. The point of simplicity is more fundamental: Simplicity allows people to act …
Think about the sources of decision paralysis in your organization. Every business must choose among attractive options: growing revenue versus maximizing profitability, quality versus speed to market. Fold together lots of these tensions, and you have a surefire recipe for paralysis …
We once talked to leaders of one of the nation’s top mental-health facilities, which was in the process of revamping its mission and goals. We were surprised to find that it had 11 core values. They were admirable – innovation, integrity, and so on. But values are supposed to guide behavior, and you can’t even remember 11 values, much less use them to make decisions. Stephen Hawking can think in 11-dimensional space, but you can’t. Practically speaking, having 11 values is equivalent to having no values.
Dan Heath and Chip Heath, “ Analysis of paralysis,” Fast Company, November 2007.
Process innovation as a competitive advantage
Snazzy products are the stuff of legends, romanticized by “early adopters” and skewered by neo-Luddites. Yet while these products bring glory to companies, novel processes are often more important in keeping the cash registers ringing.
The proof of this proposition is that while companies often spend millions to advertise and market new product designs and innovations, they guard intensely the details of their process innovations.
Consider the question of Google’s greatest business secret. Is it the algorithms behind its search tools? Or is it the way it organizes vast clusters of computers around the globe to answer queries so quickly? Perhaps predictably, Google won’t disclose the number of computers deployed in its vast information network (though outsiders speculate that the network has at least 450,000 computers).
I believe that the physical network is Google’s “secret sauce,” its premier competitive advantage. While a brilliant lone wolf can conceive of a dazzling algorithm, only a superwealthy and well-managed organization can run what is arguably the most valuable computer network on the planet. Without the computer network, Google is nothing.
Eric E. Schmidt, Google’s chief executive, appears to agree. Last year he declared, “We believe we get tremendous competitive advantage by essentially building our own infrastructures.”
Process innovations like Google’s computer network are often invisible to the public, and impossible to duplicate by rivals. Yet successful companies realize that maintaining competitive advantage depends heavily on sustaining process innovations. Great process innovators often support basic research in relevant fields, maintain complete control over the creation of every aspect of a product and refuse to rely on outside suppliers for important components.
G. Pascal Zachary, “The unsung heroes who move products forward,” The New York Times, 30 September 2007.
Open offices and evidence-based management
Lovaglia’s Law: the more important the outcome of a decision, the more people will resist using evidence to make it …
Administrators and accountants usually like open offices because they cost less to build, furnish, heat, and cool – so they are motivated to make arguments that people will like open designs better and work more effectively in them.
But the best evidence I can find tells a much different story. It turns out that although there is a lot of hype from companies that sell open office furniture and related goods about how fantastic open offices are, and all that, research published in peer review journals clashes with the hype. In every study that I can find that has survived the peer review process, people in open settings are found to be less satisfied, less productive, and experience more stress than people who work in closed offices. And when people move from closed to open offices, they like them less, report being less productive, and report more stress. So long as people are doing work that is largely “individual” and that requires thinking and intense individual concentration, these findings make a lot of sense to me.
Yet, as Lovaglia’s Law predicts, many administrators and building designers seem to be have a hard time “hearing” such evidence and keep pushing for open office designs – they prefer to talk about selected anecdotes instead.
Bob Sutton, “Lovaglia’s Law and open office plans,” Work Matters, 10 December 2007, http://bobsutton.typepad.com/my_weblog/2007/12/lovaglias-law-a.html
Craig HenryStrategy & Leadership’s intrepid media adventurer, collected these sightings of strategic management in the news. A marketing and strategy consultant based in Carlisle, Pennsylvania, he welcomes your contributions and suggestions (Craighenry@aol.com).