Managers instinctively think about the threat of competitors because they can push down prices and lower profits. But there are other threats to profits that managers should not ignore. One of these is the threat that suppliers can pose. This idea was formalized and called “supplier power” by Harvard economist Michael Porter in 1979. The idea is that even with little competition a firm can still lose profits to a supplier that has significant bargaining power. But the situation gets even more complicated when the people bearing the supplier power are its own star employees. What should a company do about that?
About 15 years ago, Brian Robertson was feeling frustrated with the management hierarchy traditionally used by companies. He felt it had a tendency to stifle innovation, create inefficiencies and prevent individuals from fulfilling their potential. Robertson channeled that dissatisfaction into the development of one of the best known self-management systems, Holacracy, something that has been adopted by the likes of Tony Hsieh, CEO of online shoe retailer Zappos. In this interview, Robertson, the author of Holacracy: The New Management System for a Rapidly Changing World, clears up some of the misconceptions and gives an overview of Holacracy.
Even when a deal is signed, the acquisition is far from over. The next step, integration, can be even more challenging. Up to 80% of M&A transactions fail to create any new value. This becomes even more complex when a Chinese company is buying a Western company, purely due to the cultural differences. Given that marriages in rich countries end in divorce about half the time, it’s perhaps not surprising that a union between thousands of people also faces long odds. But integration experts say that with foresight, planning and clear communication, many of those challenges can be overcome.
Congratulations! After all the haggling, 14-hour flights, and 11th-hour dramas, you’ve closed the deal. Your firm now owns a business in another country. The bad news: that was the easy part. Post-acquisition legal and regulatory troubles can present huge challenges. There are many, many requirements, and companies ignore them at their peril. Depending on the market, there may be a lot to advise about. In the US, for instance, the Uniform Commercial Code runs to 2,698 pages, and each of the 50 states has adopted its own variation of those model statutes. In addition, companies should also be concerned about intellectual property law and labor compliance issues.
Like the movies, corporate acquisitions are a collaborative art: miscast one role, and you can ruin the whole picture. The CEO may be the star of the show, but a successful deal demands a strong executive board and chief financial officer—along with investment bankers, lawyers, accountants and public relations advisors—especially when the deal in question is the purchase of a foreign company. As Chinese companies look to expand abroad through acquisitions, it’s worth reviewing the difference each member of the team can make. Here’s our take on how a company should go about choosing the cast of characters prior to an M&A.
Few direct actions of the CEO can have as much impact on the future of a company as the decision to make an acquisition. For Chinese companies that have decided to buy a foreign company, the stakes may be even higher. Unfortunately, it’s not only lonely at the top; often, there’s not much oxygen. One of the biggest risk factors in a merger is that the CEOs involved pursue the deal based on a less-than-rational reading of its merits. Overconfidence, ignorance and greed can lead to the loss of thousands of jobs and billions of dollars in value in a CEO in the grip of a merger mania.
Sometimes the biggest obstacle that stands between you and your goal is your wayward mind. You often start something new, but end up not finishing it. Think of the number of times you took a gym membership. Or vowed to eat healthy. Or decided on a career choice. What happened? So why do we deviate from our well-chosen and well-thought out goals? Francesca Gino, a behavioral scientist and the author of Sidetracked, researched this problem and found the psychological drivers behind our inability to stick to a plan of action. In this interview, she suggests ways to identify these drivers—and combat them.
Over the past 30 years Haier CEO Zhang Ruimin has led the company through several path-breaking business model changes, which have helped the company build a strong brand, grow both organically and through acquisitions, globalize and “get close to the customer”. Zhang is now leading the company through yet another transformation to make it what he calls an “internet-based platform company” made up of extremely responsive micro-enterprises. For the closest parallel, think of a Silicon Valley within a company. In this rare interview, he talks about his management philosophy.
White goods manufacturer Haier is turning itself into an internet-based ‘platform company’ made up of several micro-enterprises. The idea is to create an organization that is extremely responsive to customer needs, constantly cultivates new ideas and innovates quickly. To do that it needs to discard the traditional organizational structure where ideas flow top-down and execution is done bottom-up. The company is now a flat organization which is a marketplace of ideas, talent and resources. The plan sounds good in theory but will the execution be easy?
Companies are abandoning the age-old tradition of the annual performance review. What can possibly replace it