“America's Most Admired Companies”
Fortune
March 17, 2008, pp. 65-130
Each year, Fortune magazine gives its rankings of America’s most admired companies, based on ratings made by U.S. and worldwide executives, directors, and securities analysts. This year’s Top Twenty in America were:
- Apple
- Berkshire Hathaway
- General Electric
- Toyota Motor
- Starbucks
- Fedex
- Procter & Gamble
- Johnson & Johnson
- Goldman Sachs
- Target
- Southwest Airlines
- American Express
- BMW (tie)
- Costco (tie)
- Microsoft
- UPS
- Cisco Systems
- 3M
- Nordstrom
Ratings were also made for companies in the respondents’ own industries on Social responsibility, Innovation, Long-term investment value, Use of corporate assets, People management, Financial soundness, Quality of products/services, and Quality of management. The high scorers on these criteria were:
- Social responsibility—International Paper, UPS, Starbucks
- Innovation—Apple, Nike, Medco Health Solutions
- Long-term investment value—Berkshire Hathaway, Medco Health Solutions, Altria Group
- Use of corporate assets—Fortune Brands, Burlington Northern Santa Fe, Exxon Mobil
- People management—Medco Health Solutions, BMW, Walt Disney
- Financial soundness—Exxon Mobil, UPS, Berkshire Hathaway
- Quality of products/services—Anheuser-Busch, Nordstrom, Medco Health Solutions
- Quality of management—Knight, McDonald’s, Fortune Brands
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“Maximizing Productivity in Product Innovation”
Research-Technology Management
Mar/Apr 2008, pp. 47-58
The authors summarize seven empirically-supported practices or principles that have been shown to increase New Product Development productivity. The principles are:
- Building in the Voice of the Customer—This is accomplished through customer visits with:
- In-depth interviews.
- “Camping out” in users’ locations.
- Lead user analysis.
- Focus group problem detection sessions.
- Brainstorming group events with customers.
- Crowd sourcing using online or IT-based approaches.
- Front-End Loading Projects—This includes:
- Preliminary market assessment
- Technical assessment
- Source-of-supply assessment
- Market research
- Concept testing
- Value-to-the-customer assessment
- Product definition
- Business/financial analysis
- Relying on Spiral Rather then Linear Development—“…fast-paced teams remove unnecessary work and move quickly to a finalized product by building a series of these iterative steps or ‘loops’—‘build-test-feedback-and-revise’—into their project.”
- Taking a Holistic Approach to Product Development, Driven by Effective Cross-functional Teams—Effective methods include:
- Teams consisting of key players drawn from different parts of the organization.
- Each member remaining on the project from beginning to end.
- A carefully-selected leader.
- Senior management support and commitment.
- Building in Metrics, Accountability, and Continuous Improvement—Success criteria are established for each project, and the team is held to these criteria. Popular metrics are sales measures, profits measures, customer satisfaction, and time-to-market or on-time performance.
- Portfolio Management Techniques to Yield Higher-Value Projects—Some of the tools used are:
- Strategic buckets of resources
- Product and technology roadmaps
- Scorecards
- The Productivity Index
- Redesigning Idea-to-Launch Processes Using the Next Generation Stage-Gate System—This approach involves making the New Product Development Process lean, through removing waste and inefficiency as much as possible. Value Stream analysis is also applied to the New Product Development process.
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“Is Yours A Learning Organization?”
Harvard Business Review
March 2008, pp.96-102
Though the concept of learning organizations is not new, the authors argue that the learning organization ideal has not been realized. Three reasons are:
- Managers could not identify the sequence of steps necessary for moving forward.
- The concept was aimed at CEO’s, and units where key work was done had no way to assess if their teams’ learning was contributing to the organization as a whole.
- Standards and tools for assessment were lacking.
Organizational research on the learning organization concept has identified three “broad factors that are essential for organizational learning and adaptability.” These building blocks are:
- A supportive learning environment.
- Concrete learning processes and practices.
- Leadership behavior that reinforces learning.
The elements of a supportive learning environment are:
- Psychological safety
- Appreciation of differences
- Openness to new ideas
- Time for reflection
The elements of concrete learning processes and practices are:
- Experimentation
- Information collection
- Analysis
- Education and training
- Information transfer
The elements of leadership that reinforces learning are:
- Actively questioning and listening to employees.
- Signaling the importance of spending time on problem identification, knowledge transfer, and reflective post-audits.
- Demonstrating through one’s own behavior a willingness to entertain alternative points of view.
The authors present a survey in the article that was designed to assess each of the above areas. Scaled quartile scores from previous survey users are included for benchmarking purposes. The authors’ experiences in using the survey have provided four major insights:
- Leadership alone is not sufficient—“Installing formal learning processes and cultivating a supportive learning climate requires steps beyond simply modifying leadership behavior.”
- Organizations are not monolithic—“In most settings, a one-size-fits all strategy for building a learning organization is unlikely to be successful.”
- Comparative performance is the critical scorecard—“The most important scores on critical learning attributes are relative—how your organization compares with competitors or benchmark data.”
- Learning is multidimensional—“Managers need to be thoughtful when selecting levers of change and should think broadly about the available options.”
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“SCM and Lean Thinking: A Framework for Management Accounting”
Cost Management
Jan/Feb 2008, pp. 11-20
The authors state that “The key contribution of strategic cost management [SCM] is that it takes an external view of cost and raises the understanding of how company activities can be better leveraged and aligned with the market to improve performance. In particular, the attention is focused on the distribution of activities within the whole system in order to reconstruct the value generated overall by the industry and to grasp how value is distributed between the different actors.”
Three key principles of the Lean Management approach are also discussed:
- Understanding customer value.
- Identifying the activity value stream that adds this value.
- Creating lean flows of materials and information.
A step-by-step approach is proposed in order to integrate strategic cost management with Lean Management:
- Describe the key processes in terms of main activities undertaken.
- Relate the activities to the “owner” departments.
- Cost the activities (inside each department).
- Cost each of the whole processes.
- Link value to activities and to their cost.
- Identify cost drivers and the reasons for waste and inefficiency.
- Estimate the profit potential generated by cost-driver management.
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“Training Top 125, 2008”
Training
February 2008, pp. 76-111
Since 2001, Training magazine has been issuing its yearly list of the top internal training organizations in the United States. Brief descriptions are given of the training efforts in each company. This year’s top 25 are:
- Pricewaterhouse Coopers (professional services)
- EMC Corporation (technology solutions)
- Wyeth Pharmaceuticals (pharmaceuticals)
- Verizon Wireless (communications)
- KPMG LLP (audit, tax, and advising)
- Deloitte Touche Tohmatsu (professional services).
- General Mills (food manufacturing)
- SCC Soft Computer (healthcare information systems software)
- Microsoft Corp. (software)
- TAP Pharmaceutical Products (health/medical services)
- Satyam Computer Services (business services)
- Lockheed Martin Corp. (defense products)
- Aetna Inc. (real estate/insurance)
- Scotiabank Group (finance/banking)
- Capital One Financial Corporation (finance/banking)
- Allied Barton Security Services (contract security services)
- Inventiv Commercial Services (commercial/clinical services)
- BB&T Corporation (finance/banking)
- Mohawk Industries (manufacturing)
- Automatic Data Processing (ADP) Inc. (business services)
- Cerner Corporation (healthcare IT)
- Wells Fargo & Company (finance/banking)
- Special People in Northeast, Inc. (non-profit human services)
- Scientific Atlanta, a Cisco Company (communications)
- Hanover Healthcare Plus (health/medical services)
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Admiring Yourself: What It Takes to Be Great
Do you think your organization or team is close to having what it takes to be one of America’s most admired? Do the prescriptions we offer here in QUICK offer you hope that you can have your people doing exactly the right thing every time? Well here are some sobering statistics for you from the world of medicine. About half the people who undergo kidney transplants do not adequately adhere to the regimen necessary to thwart rejection of their new organ. A 1970s study found that 43 percent of glaucoma patients refused to take the doctor-ordered measures necessary to prevent blindness, even when that refusal had already led to blindness in one eye. Isn’t that scary? The threat of going blind will only goad about 50 percent of human beings to change behavior. What percentage of your employees do you think will radically change their behavior based on the threat of not becoming world-class? Or because you ask them nicely to change? Think small. Think very small.
Of course, there are ways to be great; many organizations show their chops year after year and decade after decade. We find three common threads among the mid level leadership at our successful clients: hire right, watch right, listen right.
The first step along the road to excellence is to hire right to get the right people in your organization. Herb Kelleher, leader of successful Southwest Airlines (number 12 on the Fortune list) said “"We hire for attitude, not expertise. If you need some skill, we can train you. If you have a bad attitude, there's nothing we can give you, nothing, except maybe Paxil, but then you can't work." Herb also promoted these folks-with-attitude from within: “Succession planning has been a major priority at Southwest for quite some time.”
The second step along the road is to watch right. Our clients often ask us about discipline, insisting that change only comes because of consequences executed. But they often neglect the first two stages of change, which are clarity of purpose and measurement of actions. Most instructions in the modern workplace are lacking in clarity of purpose, constraints and possibilities, tricks and traps and measures of success. Most requests are not followed up with careful, quick and regular measures. But it is true that measures should not only include confirmation of outcome but confirmation of actions taken. If you are tasked with helping someone to change, you should first ask about outcomes, but then also check that the required activities were carried out. You will often need a backup set of watch measures to do this.
The third step is to listen right. The variable that drives medical patient compliance with regimens is not age, nor race, nor education, nor disease intensity. It is caregiver interest and follow-up. Likewise in business, it is manager and mentor interest, engagement and follow-up that will drive employee engagement and change and give you the shot you deserve at greatness.
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