Willie Pietersen, retired CEO of businesses Lever Foods, Seagram USA, and Tropicana has written a column for Fortune in which he argues that many leaders proclaim too many priorities. The article is titled, "You can’t have 5 priorities—even Steve Jobs and Bob Iger couldn’t." He writes:
Professor Michael Roberto's Blog
Musings about Leadership, Decision Making, and Competitive Strategy
Monday, October 14, 2024
Five Priorities Is Probably Too Many
Willie Pietersen, retired CEO of businesses Lever Foods, Seagram USA, and Tropicana has written a column for Fortune in which he argues that many leaders proclaim too many priorities. The article is titled, "You can’t have 5 priorities—even Steve Jobs and Bob Iger couldn’t." He writes:
Wednesday, October 09, 2024
Successfully Onboarding New Employees
https://hires.shareable.com/ |
Friday, October 04, 2024
Careful about Romanticizing Failure
Source: Vistage |
Tuesday, October 01, 2024
Why Might CVS Be Breaking Up?
Why might CVS Health be considering a break-up after moving so aggressively to transform themselves from a pharmacy retail chain to an integrated healthcare company? Several factors may explain the potential strategy reversal.
1. Diversification works best when the different business units within a corporation operate by the same "dominant logic." C.K. Prahalad and Richard Bettis coined this term in a very famous academic paper published in the 1980s. They defined dominant logic as "the way in which managers conceptualize the business and make critical resource allocation decisions..." In short, what is the mental model that leaders use to think about the business and make choices? Do the businesses make money in a similar manner, or are the value propositions and business models fundamentally different? They argued that strategic variety and complexity means that multiple "logics" exist across the portfolio of businesses, making it very difficult for the top management team to lead them all effectively. They cannot apply the same criteria, rules, and principles when making decisions across the businesses. One could easily argue that the dominant logics at CVS vary considerably from pharmacy retail to health insurance to primary care provision. Can one CEO and her leadership team manage all these businesses effectively?
2. Scale and scope do not always yield economies. We often hear about the benefits of bringing multiple units together. In short, what are the economies of scale and scope? I would argue that managers often focus on these potential economies when justifying acquisitions, yet they underestimate the potential diseconomies of scale and scope. How might the increased complexity of the business make it more difficult to manage effectively? What conflicts might emerge among business units? What costs and disruption might occur as a company tries to secure key synergies? Do the costs outweigh the benefits of collaboration and integration? CVS Health has become a behemoth, and at some point, that sprawling conglomerate becomes very hard to manage.
3. The existence of potential synergies alone does not justify mergers. One has to ask whether one could achieve some of these benefits through some other sort of organizational arrangement (stretching from contracts and partnerships through strategic alliances and joint ventures). Firms don't always have to merge to coordinate and collaborate in pursuit of certain economies of scale and scope. Consider Target's decision about its own pharmacy business. The company wanted to continue to have pharmacies within each of its stores. However, it came to the conclusion that it was best not to try to manage and operate these pharmacies themselves. Instead, they sold the business to CVS, letting the pharmacy experts run the "stores within a store" at each Target location. Target shed a business, but it retained some of the benefits of having a pharmacy within each of its stores (the pharmacies are good traffic drivers and lead to other incremental sales for Target).
4. Vertical integration has many potential benefits, but it does not come without substantial risks. One risk is that you find yourself competing with your own customers at times. That brings challenges for many companies, including in the healthcare space. CVS Health has embarked on quite a bit of vertical integration over the years, creating these potential conflicts of interest that can be challenging to manage.
Friday, September 27, 2024
Women Rise to Executive Ranks More Often in Decentralized Organizations
Does organizational structure affect the likelihood that women will climb to C-suite positions? Indeed, it seems that structure has a substantial impact. Women tend to do better in decentralized organizations. That finding emerges from new research by Tingyu Du and Ulya Tsolmon. They assembled a dataset of over 15,200 companies with nearly 600,000 managers. The scholars state that, "Our findings suggest that decentralized organizational structure seems more conducive to reducing the gender gap than centralized structures."
Monday, September 23, 2024
Communication Breakdowns During Leadership Transitions
Stephen Michael Impink, Andrea Prat, and Raffaella Sadun have published a thought-provoking paper titled "Communication within Firms: Evidence from CEO Turnovers." Impink and his co-authors studied internal communication data for more than 100 companies in the period around a CEO transition. They found an interesting pattern. First, during the three months following the appointment of a new CEO, email traffic and the number of meetings declined by approximately 20%. Roughly five months after new CEOs began their tenure, communication increased to slightly more than the amount prior to the leadership transition. Six months after the transition, meetings and email volume returned to approximately the level prior to the appointment of the new CEO.
Thursday, September 19, 2024
Keeping Secrets at Work: When Transparency Isn't Valued
We often hear discussion of the value of transparency in organizations. Nevertheless, many employees become frustrated about the lack of openness in their organizations. They wish that more information was shared about key initiatives so that they could understand future plans, as well as the rationale for pursuing certain courses of action.