# data[].attributes.attachment_link.readable_text
The Production Process

Imagine that you're a small business owner that started a successful bakery several years ago. You specialize in making muffins. A buddy from college has approached you about partnering up to bring your muffins to the national market. It sounds like a great opportunity, and you and your friend form a new company. You obtain financing to build an industrial bakery to mass-produce your muffins. However, before you complete construction, you need to figure out what production process you will use to make the muffins.

A production process is the method you'll use to turn inputs into muffins to sell. Inputs include raw materials, such as flour, sugar, oil, yeast, fruits and other ingredients you use for making muffins. Inputs also include the work you and your employees put into making the muffins. The production process is the manner in which you organize your muffin making activities. You have more than one production process from which to choose.

Mass Production

One option is to use mass production to produce your muffins. Mass production allows you to make massive amounts of muffins in a very efficient manner utilizing machinery, assembly lines and specialized labor. Each employee will be assigned a specialized task.

You'll have employees that are responsible for putting the ingredients into industrial mixers and employees responsible for monitoring the baking process. You'll also have employees who monitor the quality of the muffins as they leave the ovens and employees who package the muffins. Other employees will transport the packaged muffins to your shipping department for distribution to your retailers. This is a type of flow production where all production activities flow smoothly in one direction throughout the factory.

Batch Production

Since you are operating a bakery, the batch production process looks appealing. In batch production, you focus on producing a set quantity of one product at a time - called a batch. You can produce a batch of blueberry muffins followed by a batch of apple cinnamon muffins. You can then produce your chocolate chip and bran muffins. If you use batch production, it will be easier to keep your baking process running smooth because you won't have to worry about changing ingredients as much.

Job Production

You also looked into job production as a method of production, but it didn't seem to be a good fit. Job production is all about a variety of products but at a low volume of production. The same tools and similar resources are used, but the products are diverse. For example, a wedding cake company might have a team of bakers working in an assembly line. However, unlike your muffins, each cake will be different in some way. Some cakes will have two tiers and some will have three or more. Some cakes will be chocolate, some white and some marble.

Each cake will be decorated in different ways as well. So, while each baker on the line will have the same job, the details of that job changes from cake to cake. Unlike making bran muffins, each wedding cake is a separate 'job' unto itself. If you were starting a custom wedding cake business, the job production process might take the cake, but you're mass-producing muffins.

Flexible Manufacturing System

You've looked into purchasing a flexible manufacturing system, but don't have the cash to do it right now. A flexible manufacturing system would allow you to almost completely automate your muffin manufacturing. Flexible manufacturing systems usually increase productivity and reduce costs in the long run. It also leaves the boring part of the job to the machines.

Just-In-Time Production

You pride yourself on your organic muffins. Since you want to keep the same level of quality when you go national, you are looking into just-in-time production. When using just-in-time production, you will not need to keep much inventory of muffins beyond what has been ordered by your retailers. This not only keeps your muffins fresh, but your business partner happy, because it also means you won't have a bunch of cash tied up in flour, yeast and blueberries until you need them.

Productivity

Now, imagine that your factory is built and you've just completed your first year of muffin production. You are meeting with your business partner to discuss costs and revenue. While your business made a profit this year, you both feel that you could make even more money if you can increase the factory's productivity.

# data[].attributes.attachment_link.keywords[]
the processes of production and improving productivity - video & lesson transcript | study.com

# data[].attributes.attachment_link.title
The Processes of Production and Improving Productivity - Video & Lesson Transcript | Study.com

# data[].attributes.attachment_link.description
Imagine that you're a small business owner that started a successful bakery several years ago. You specialize in making muffins. A buddy from college has approached you about partnering up to bring your muffins to the national market. It sounds like a great opportunity, and you and your friend form a new company.

# data[].attributes.attachment_link.readable_text
This comment came in to another blog post:

"I run production in a small 2-production person sign shop. We rank among the top 10 producing franchisees per square footage (we have a tight space). We have a new owner who of course wants to increase output. I'm looking for ways to improve productivity, efficiency, flow, my sanity. Every order is custom made. Help!"

I thought this warranted its own discussion. Here's what comes to my mind:

It's easy to be so focused on current production that you don't see the big picture of how productivity could be improved. So approach this challenge with an open mind. Too many people react negatively, which isn't good: not for increasing production and not for getting along with the boss.

Brainstorming with your production colleague and the owner may bring up some ideas. One good approach is to break up a typical job into various steps. Then analyze each step: can it be sped up, combined with another step, worked on while waiting for something else. In 2009, Starbucks brought in efficiency experts to help baristas make drinks faster. One element was placing components in the right place as well as fine tuning various procedures. Starbucks had been serving coffee for over 20 years-and still found ways to increase productivity.

Outside help might be needed. One of the great things about a franchise operation is taking advantage of the franchisor's knowledge. Often franchisees follow the store manual just well enough to make a small profit and meet service and quality requirements. They don't really pore over the details that can boost efficiency. So review your store manual and ask the franchisor what resources they have to help increase productivity.

Spending on equipment (what we economists call "capital") may be necessary, though I'd recommend this only after working on better usage of existing tools. Here again, getting outside advice about the best equipment would be worthwhile.

I'm not an expert in printing, and I've never seen your shop, but I'm willing to bet that some improvement is possible.

Readers, what would you recommend to this person? Answer in the comments section.

# data[].attributes.attachment_link.description
This comment came in to another blog post: "I run production in a small 2-production person sign shop. We rank among the top 10 producing franchisees per square footage (we have a tight space). We have a new owner who of course wants to increase output. I'm looking for ways to [...]

# data[].attributes.attachment_link.title
Controlling and its Importance in Management

# data[].attributes.attachment_link.description
This animation introduces the learner to the concept of controlling and process for the same. This is a product of Mexus Education Pvt. Ltd., an education innovations company based in Mumbai, India. http://www.mexuseducation.com, http://www.ikenstore.in

# data[].attributes.attachment_link.readable_text
Information technology plays a crucial role in every business

rackmount server farm datacenter image by Adryn from Fotolia.com

Information technology (IT) has become a vital and integral part of every business plan. From multi-national corporations who maintain mainframe systems and databases to small businesses that own a single computer, IT plays a role. The reasons for the omnipresent use of computer technology in business can best be determined by looking at how it is being used across the business world.

Communication

For many companies, email is the principal means of communication between employees, suppliers and customers. Email was one of the early drivers of the Internet, providing a simple and inexpensive means to communicate. Over the years, a number of other communications tools have also evolved, allowing staff to communicate using live chat systems, online meeting tools and video-conferencing systems. Voice over internet protocol (VOIP) telephones and smart-phones offer even more high-tech ways for employees to communicate.

Inventory Management

When it comes to managing inventory, organizations need to maintain enough stock to meet demand without investing in more than they require. Inventory management systems track the quantity of each item a company maintains, triggering an order of additional stock when the quantities fall below a pre-determined amount. These systems are best used when the inventory management system is connected to the point-of-sale (POS) system. The POS system ensures that each time an item is sold, one of that item is removed from the inventory count, creating a closed information loop between all departments.

Data Management

The days of large file rooms, rows of filing cabinets and the mailing of documents is fading fast. Today, most companies store digital versions of documents on servers and storage devices. These documents become instantly available to everyone in the company, regardless of their geographical location. Companies are able to store and maintain a tremendous amount of historical data economically, and employees benefit from immediate access to the documents they need.

Management Information Systems

Storing data is only a benefit if that data can be used effectively. Progressive companies use that data as part of their strategic planning process as well as the tactical execution of that strategy. Management Information Systems (MIS) enable companies to track sales data, expenses and productivity levels. The information can be used to track profitability over time, maximize return on investment and identify areas of improvement. Managers can track sales on a daily basis, allowing them to immediately react to lower-than-expected numbers by boosting employee productivity or reducing the cost of an item.

Customer Relationship Management

Companies are using IT to improve the way they design and manage customer relationships. Customer Relationship Management (CRM) systems capture every interaction a company has with a customer, so that a more enriching experience is possible. If a customer calls a call center with an issue, the customer support representative will be able to see what the customer has purchased, view shipping information, call up the training manual for that item and effectively respond to the issue. The entire interaction is stored in the CRM system, ready to be recalled if the customer calls again. The customer has a better, more focused experience and the company benefits from improved productivity.

About the Author

Chris MacKechnie is a graduate of Carleton University's Law Program and has been writing professionally for more than a decade. He is a regular contributor for a number of travel and business magazines and marketing websites, including "OutPost Magazine," "Report on Business" and several insurance trade publications. MacKechnie also writes extensively for several Fortune 500 companies located around the globe.

# data[].attributes.attachment_link.title
Information Technology & Its Role in the Modern Organization

# data[].attributes.attachment_link.description
Information technology (IT) has become a vital and integral part of every business plan. From multi-national corporations who maintain mainframe systems and databases to small businesses that own a single computer, IT plays a role. The reasons for the omnipresent use of computer technology in business can best be determined by looking at how it is being used across the business world.

# data[].attributes.attachment_link.readable_text
Share to email

Share to facebook

Share to twitter

Share to linkedin

Share to google

Creator and host of The Small Business Advocate Radio Show Opinions expressed by Forbes Contributors are their own.

Smart business owners know that there's a direct link between motivating employees to be successful in their assignments and the success of that business. Want a good example of why you should be one of these smart managers?

Let's imagine that your best employee has just resigned. How much will it cost - directly and indirectly - to find, hire, train and get that replacement up to the productivity level of your former employee? The answer is: maybe years. Scary, huh? Now ask yourself if you could be in jeopardy of losing good employees merely because you aren't motivating them.

There are many ways to successfully motivate employees and all of them require managers to focus on the human beings with whom they work, and who desire to find their own success. Consider these six motivational elements.
1. Communication. 2. Professionalism.
There's nothing more fundamental to having loyal, productive and engaged employees than good communication. If you're having problems keeping good employees, the low-hanging fruit for you may be to just start talking with - not to - your people.
3. Management style.
This is the aggregation of proper business, ethical and interpersonal behavior, and it's critical to successful employee motivation. Professionalism fosters pride and employee loyalty. Demonstrate your professionalism first and then help employees achieve and value their own professionalism. And don't forget to recognize their progress.

Check yours. Are you a leader or a driver? Managers who are drivers disregard others, consume people as a means to their end, and are identified by high employee turnover. Leaders value their people and encourage them to be successful. They can be identified by the double-digit numbers representing how many years their employees have been with them, and the multiple black digits to the left of the decimal on their bottom line.

Page 1 / 3 Continue

Share to email

Share to facebook

Share to twitter

Share to linkedin

Share to google

# data[].attributes.attachment_link.description
Smart business owners know that there's a direct link between motivating employees to be successful in their assignments and the success of that business. Want a good example of why you should be one of these smart managers? Let's imagine that your best employee has just resigned. How much will it [...]

# data[].attributes.attachment_link.description
Dreams and Reality, Business Motivation video. The music we use in this video is royalty free and you may use it. Credit to " Ross Frederick Gordon Bugden" for the music! Search him up on YouTube if you're interested. My Twitter page: http://www.twitter.com/elementalewan My Facebook page: http://www.facebook.com/ewankennedyy Thanks for watching!

# data[].attributes.attachment_link.entities[].name
Essential Qualities of All Great Leaders

# data[].attributes.attachment_link.title
Secrets of Successful Business Leadership - Inspirational Leaders pt 1 | MeetTheBoss

# data[].attributes.attachment_link.description
Inspirational leaders from around the world share their secrets of successful business leadership with MeetTheBoss Business TV Successful business leaders have to have vision. They need to share a dream and direction that other people want to share and follow. The business leadership vision must go beyond written organizational mission statements and permeate the workplace.

# data[].attributes.attachment_link.readable_text
Today's business world is as complex as ever. And it's always changing.

Ray Carvey, executive vice president of corporate learning at Harvard Business Publishing, a subsidiary of the Harvard Business School, says management structures today are very different than 20 years ago, namely because of the middle manager.

Carvey describes today's business world as "volatile, uncertain, complex, and ambiguous," and says it's crucial to stay productive through this time of change.

According to Harvard Business Publishing's recent report, " Leading Now: Critical Capabilities for a Complex World," there are eight critical capabilities leaders must possess to be effective today.

1. Effective leaders manage complexity.

"Leaders who know how to manage complexity are skilled at solving problems and making decisions under fast-changing systems," the report says. Even before any definitive information is available, effective leaders must assess a situation's complexity and choose appropriate courses of action.

2. Effective leaders manage global businesses.

Carvey says that managing a global business wouldn't have made the list 10 years ago, but today, understanding global markets and knowing you're in a global market is key. Leaders must maintain a global focus on a day-to-day basis. "This includes assessing what's happening with consumers, competitors, the economy, and the politics of the markets in which their businesses operate," according to the report.

3. Effective leaders act strategically.

Just as thinking globally is a must, a forward-thinking approach is also necessary. "While older practices focused on long-term strategy development, today's world requires a more continuous process: Leaders must always be prepared to adjust their strategies to capture emerging opportunities or tackle unexpected challenges," the report says.

4. Effective leaders foster innovation.

With the ever-increasing levels of competition, "no strategy can sustain a company's competitive edge indefinitely," the report says. Regardless of how successful something may be, there can always be an emphasis on innovation. Effective leaders understand this and are focused on taking a business to the next level.

5. Effective leaders leverage networks.

Successful leaders take networking beyond advancing their own careers, the report says. Rather, they view it as a way to benefit the organization and create relationships with "customers, suppliers, strategic partners, and even competitors." No matter how it's used, though, effective leaders in this category must "demonstrate a talent for collaboration," according to the report.

6. Effective leaders inspire engagement.

It's absolutely crucial to keep employees at all levels of an organization interested and engaged in the work being done. It's all about giving them a feeling of value. Simply retaining employees isn't the goal. "People can occupy jobs for years, but they won't create value for their organizations if they're not invested in their work," the report says. It's up to the leader to ensure employees actually feel that they're making a difference.

7. Effective leaders develop personal adaptability.

Again, this is a matter of understanding the continuous change that's occurring. Something that may have worked brilliantly in the past won't necessarily work again. "Adaptable leaders steer clear of a 'that's how we've always done it' mentality," the report says. Instead, they look at new realities through fresh eyes so they can spot and seize valuable opportunities.

8. Effective leaders cultivate learning agility.

Learning agility is the trait most everyone struggles with, Carvey says. As business strategies and models evolve, the leader must, as well. Effective leaders take the initiative in finding opportunities to learn. "They continuously experiment with new approaches, using techniques such as rapid prototyping," the report says. "And they take time to reflect on their experiences so they can learn from successes and failures."

Keep in mind, however, that as the business world continues to change, the key traits necessary for leaders to be successful may also change. In a volatile environment, the ability to react to new scenarios is imperative.

# data[].attributes.attachment_link.title
Harvard says these 8 leadership traits are critical for success

# data[].attributes.attachment_link.description
Today's business world is as complex as ever. And it's always changing. Ray Carvey, executive vice president of corporate learning at Harvard Business Publishing, a subsidiary of the Harvard Business School, says management structures today are very different than 20 years ago, namely because of the middle manager.

# data[].attributes.attachment_link.description
Human Resource Management, HRM - Download From Over 45 Million High Quality Stock Photos, Images, Vectors. Sign up for FREE today. Image: 40265090

# data[].attributes.attachment_link.readable_text
Communication would be the change connected with information, ideas, would like in addition to behavior among or maybe involving persons. This particular change turns into fruitful when the device is aware of this is connected with message in terms sender encoded. On the other hand, several elements perspective this is of your message running a business. A few of these reasons tend to be outlined underneath:

1. Sensible romantic relationship between sender and also recipient: Sensible romantic or functional relationship between sender and also recipient considerably influences the meaning of transmission running a business. When sender and also recipient fit in with various functional departments or even parts, your recipient might not exactly understand your sender's message. One example is, your financial director might not exactly obviously understand your message of item pattern director; high quality handle director might not exactly understand your message of company accounts.

2. Positional big difference: When sender and also receiver keep various roles inside hierarchy, communication between these may perhaps fall short. One example is, superiors commonly shell out less focus on virtually any message with their subordinates.

3. Group affiliations: Dissimilarities inside group-affiliation additionally affects communication running a business. When sender and also receiver fit in with various formal or even informal communities, communication between these could become less useful. One example is, communication between business marriage frontrunners and also handles may perhaps fall short simply because of their own dangerous mindset to each other. Likewise, informal group romantic relationship based on religion, sexuality, region, age group for example. make a difference to organization communication.

4. Educational difference: Difference in formal educational level of sender and receiver also influence the meaning of communication. If they have similar educational qualifications, communication will be effective. Because they are likely to hold similar perception, understanding, feeling, thinking, view etc.

5. Past experience: Experience of previous communication strongly determines the effectiveness of further. Communication between the same sender and receiver. If either of the party has bitter experience, further communication between the same sender and receiver. If either of the party has bitter experience, further communication between them is likely to be ineffective.

6. Emotive big difference: Inner thoughts as well as emotions with the parties involved with communication significantly have an effect on the meaning connected with communication. As an example, doctors are often fewer mental in order to individual as compared to those with the general with the patients.

7. Difference throughout inheritance: In the event that there is certainly virtually any big difference inside inheritance connected with sender as well as receiver, communication concerning these people might be upset. On account of like big difference, receiver may perhaps present both negligence and maybe disinterest in order to sender's message.

8. Misunderstanding of words: Communication exchanges running a business in addition fail while people delegate diverse meanings in order to exact same world. This kind of misconception transpires while technological text or maybe jargon's utilized. Also, people may perhaps deliberately misunderstand the particular inner this meaning of words.

9. National variety: As soon as people through diverse ethnic history communicate, misconception as well as completely wrong model connected with text may perhaps occur. As an example, the boss shows that his superior can obtain a report inside of 'fortnight'. Nonetheless, the particular superior realizes that he's going to receive the idea throughout 'forth night' because word 'fortnight' will be mysterious in order to him.

Facebook Comments

# data[].attributes.attachment_link.title
Factors influencing the meaning of business communication

# data[].attributes.attachment_link.description
Communication would be the change connected with information, ideas, would like in addition to behavior among or maybe involving persons. This particular change turns into fruitful when the device is aware of this is connected with message in terms sender encoded.

# data[].attributes.attachment_link.readable_text
What is the difference between a group of employees and a team? A group is a collection of individuals who coordinate their individual efforts. On the other hand, at team is a group of people who share a common team purpose and a number of challenging goals. Members of the team are mutually committed to the goals and to each other. This mutual commitment also creates joint accountability which creates a strong bond and a strong motivation to perform.

Without purpose and goals you cannot build a team. The purpose must be worthwhile and create a sense of doing something important together. The goals must be challenging and specific so that each member can understand how they contribute to the success of the team.

A well-defined strategic plan outlining the purpose, values, goals and objectives of the team becomes the glue that binds the group together and helps transform them into a team. Participation in developing that plan helps to build understanding, consensus, and commitment. As a leader, you use the plan to set expectations for individuals and the team as a whole.

The power of a team emerges from the sense of community that develops and exerts strong influence on the attitudes and behaviors of the participants. Peer pressure and a desire to be a productive member of the team helps to shape priorities and direct efforts where they will support the team goals.

As a leader and manager, you are no longer limited to managing individuals. You have an opportunity to manage the team as a whole and enlist the support of the team to help manage the individuals.

Jim Sisson is a principal of Vantage Associates, a management consulting firm specializing in strategic planning. You can reach him at jsisson@vantageassociates.com.

# data[].attributes.attachment_link.title
The difference between a group and a team - The Business Journals

# data[].attributes.attachment_link.description
What is the difference between a group of employees and a team? A group is a collection of individuals who coordinate their individual efforts. On the other hand, at team is a group of people who share a common team purpose and a number of challenging goals.

# data[].attributes.attachment_link.readable_text
Companies with women in top leadership positions are more financially successful than companies run by men.

At least, that's the lesson implicit in a November 2015 report from MSCI, a New York City-based research-based index and analytics firm. Companies with "strong female leadership" generated an average return on equity of 10.1 percent per year, compared to an average of 7.4 percent for those without top women leaders.

The study, which examined more than 4,200 companies between December 2009 and August 2015, is in sync with a September 2014 report from Credit Suisse that also found a link between companies with more female executives and higher returns on equity-as well as higher valuations, stronger stock performance and higher payouts of dividends. The Credit Suisse report was based on a database that tracks the gender mix of about 28,000 executives at 3,000 companies in 40 countries.

Diana Bilimoria, KeyBank Professor and Chair of Organizational Behavior at Case Western Reserve University's Weatherhead School of Management, isn't surprised.

"Our organizations need women leaders," she said. Ample research, she added, "shows a correlation between the presence of women in top governance and leadership roles and organizational performance, philanthropy, and corporate social responsibility."

Bilimoria is considered an international expert on women in leadership. She has won large grants to study the issue and to help women develop as organizational leaders. She believes female leaders tend to bring about better results at companies because they practice "inclusiveness," making each employee feel "authentically valued and respected and ... engaged in achieving a shared vision," according to an article she wrote on the human capital and social capital characteristics of women and men selected for leadership positions.

"Research indicates that women leaders use more transformational leadership styles and are more communal-that is, concerned about developing and supporting individual employees and the team," she said. "These are the elements of being a more-inclusive leader."

Despite evidence that having more female leaders is a recipe for business success, female CEOs are still in the minority. According to Boardroom Insiders, a San Francisco company that maintains a database of in-depth profiles of C-level executives, only 19 of the Fortune 500 CEOs (3.8 percent) in 2015 were women. Other Fortune 500 C-suite positions have a greater percentage of women, including chief financial officers (10 percent) and chief information officers (16 percent), but women are still, by far, the minority in these leadership positions.

"We are making progress, but it is slow," Bilimoria said. "At the current rate of progress, it will take a very long time-literally decades-before equity is achieved. The reasons for this slow change are complex and involve societal, organizational, interpersonal and individual reasons."

Catalyst, a New York City-based nonprofit organization with a mission to expand opportunities for women in business, says on its website, "High-potential women advance more slowly than their male peers, in terms of both career progression and pay, even though they employ career management strategies similar to men's. Organizations that neglect this critical talent-management issue risk lagging their competitors in attracting, developing, and retaining the best candidates to serve as the next generation of leaders."

A 2011 news release from Catalyst underscored other findings from MSCI and Credit Suisse: Companies with more women in top leadership positions, on average, far outperform those with fewer female leaders; companies with more female board directors are likelier to have more women in senior leadership positions five years later; and companies with more women in senior leadership positions practice more corporate philanthropy and likely also have higher-quality corporate social responsibility initiatives.

Sharon Gillenwater, founder of Boardroom Insiders, said that her company has uncovered a few patterns about female C-level executives. First, many women who advance to the C-suite were heavily involved in sports in their school years and still pursue a variety of athletic pastimes as hobbies. Being accustomed to competing and working in teams from an early age could contribute to success, she said.

Other female leaders come from families of entrepreneurs or corporate executives, where business was discussed every night at the dinner table. Examples of this include sisters Denise Morrison, president and CEO of Campbell Soup, and Maggie Wilderotter, executive chairwoman of Frontier Communications Corp. Their father, an AT&T executive, talked to his four daughters while they were still in grade school about setting profit-margin goals. Their mother taught them that ambition was a part of femininity.

And still others started at the bottom of the corporate ladder, moving up only after a key mentor recognized their talents, boosted their confidence, offered advice and helped them advance. Perhaps, Gillenwater said, this is why female leaders tend to put a big emphasis on mentoring.
Thomas K. Arnold is a freelance writer based in Carlsbad, Calif.

# data[].attributes.attachment_link.title
Companies with Female Leaders Have Higher Returns on Equity

# data[].attributes.attachment_link.description
Companies with women in top leadership positions are more financially successful than companies run by men. At least, that's the lesson implicit in a November 2015 report from MSCI, a New York City-based research-based index and analytics firm.

# data[].attributes.attachment_link.title
Fundamentals of organizing (Principles of Management)

# data[].attributes.attachment_link.description
Definitions of ORGANIZING and ORGANIZING SKILL Organizing - is the process of establishing orderly uses for resources within the management system. Organizing ...

# data[].attributes.attachment_link.readable_text
How often have you heard somebody - a new CEO, a journalist, a management consultant, a leadership guru, a fellow employee - talk about the urgent need to change the culture? They want to make it world-class. To dispense with all the nonsense and negativity that annoys employees and stops good intentions from growing into progress. To bring about an entirely different approach, starting immediately.

These culture critiques are as common as complaints about the weather - and about as effective. How frequently have you seen high-minded aspirations to "change the culture" actually manage to modify the way that people behave and the way in which they work? And how often have you seen noticeable long-term improvements?

What Is Corporate Culture?

At its worst, culture can be a drag on productivity. At its best, it is an emotional energizer. Here's how companies can use it to gain a competitive advantage.

If the answer to these last two questions is "rarely," it wouldn't surprise us. We don't believe that swift, wholesale culture change is possible - or even desirable. After all, a company's culture is its basic personality, the essence of how its people interact and work. However, it is an elusively complex entity that survives and evolves mostly through gradual shifts in leadership, strategy, and other circumstances. We find the most useful definition is also the simplest: Culture is the self-sustaining pattern of behavior that determines how things are done.

Made of instinctive, repetitive habits and emotional responses, culture can't be copied or easily pinned down. Corporate cultures are constantly self-renewing and slowly evolving: What people feel, think, and believe is reflected and shaped by the way they go about their business. Formal efforts to change a culture (to replace it with something entirely new and different) seldom manage to get to the heart of what motivates people, what makes them tick. Strongly worded memos from on high are deleted within hours. You can plaster the walls with large banners proclaiming new values, but people will go about their days, right beneath those signs, continuing with the habits that are familiar and comfortable.

But this inherent complexity shouldn't deter leaders from trying to use culture as a lever. If you cannot simply replace the entire machine, work on realigning some of the more useful cogs. The name of the game is making use of what you cannot change by using some of the emotional forces within your current culture differently.

Three dimensions of corporate culture affect its alignment: symbolic reminders (artifacts that are entirely visible), keystone behaviors (recurring acts that trigger other behaviors and that are both visible and invisible), and mind-sets (attitudes and beliefs that are widely shared but exclusively invisible). Of these, behaviors are the most powerful determinant of real change. What people actually do matters more than what they say or believe. And so to obtain more positive influences from your cultural situation, you should start working on changing the most critical behaviors - the mind-sets will follow. Over time, altered behavior patterns and habits can produce better results.

You may be asking: If it is so hard to change culture, why should we even bother to try? Because an organization's current culture contains several reservoirs of emotional energy and influence. Executives who work with them can greatly accelerate strategic and operating imperatives. When positive culture forces and strategic priorities are in sync, companies can draw energy from the way people feel. This accelerates a company's movement to gain competitive advantage, or regain advantages that have been lost.

Research shows that companies that use a few specific cultural catalysts - that is to say, those that use informal emotional approaches to influencing behavior - are significantly more likely to experience change that lasts. Of the companies that reported consciously using elements of their culture in Strategy&'s 2013 Global Culture & Change Management Survey, 70 percent said their firms achieved sustainable improvement in organizational pride and emotional commitment. That compares with 35 percent for firms that didn't use culture as a lever. Although there is no magic formula, no brilliant algorithm, no numerical equation that will guarantee results, we have gleaned some valuable insights through decades of research and observation at dozens of enterprises, including some of the most successful companies in the world. By adopting the following principles, your organization can learn to deploy and improve its culture in a manner that will increase the odds of financial and operational success.

1. Work with and within your current cultural situations. Deeply embedded cultures cannot be replaced with simple upgrades, or even with major overhaul efforts. Nor can your culture be swapped out for a new one as though it were an operating system or a CPU. To a degree, your current cultural situation just is what it is - and it contains components that provide natural advantages to companies as well as components that may act as brakes. We've never seen a culture that is all bad, or one that is all good. To work with your culture effectively, therefore, you must understand it, recognize which traits are preeminent and consistent, and discern under what types of conditions these traits are likely to be a help or a hindrance. Put another way, there's both a yin and a yang to cultural traits.

For example, a European pharmaceutical company with a solid product development pipeline had a tendency to be inward-looking. It had great execution capabilities and an excellent record of compliance with regulators around the world. However, when new products were ready to be launched, the company had a hard time marketing them to physicians and healthcare providers. Rather than bemoaning the company's ingrained insularity - for example, its collective tendency to value the opinions of internal colleagues more than those of outside experts - the leaders decided to use this feature of its culture to its advantage. They set up a program through which employees were acknowledged and rewarded by colleagues for "going the extra mile" to support customers. By recognizing a new kind of internal authoritativeness, the company tapped a powerful emotional trigger already in place, and engendered a new (and strategically important) behavior in its sales force.

2. Change behaviors, and mind-sets will follow. It is a commonly held view that behavioral change follows mental shifts, as surely as night follows day. This is why organizations often try to change mind-sets (and ultimately behavior) by communicating values and putting them in glossy brochures. This technique didn't work well for Enron, where accounting fraud and scandal were part of everyday practice, even as the company's espoused values of excellence, respect, integrity, and communication were carved into the marble floor of the atrium of its global headquarters in Houston. In reality, culture is much more a matter of doing than of saying. Trying to change a culture purely through top-down messaging, training and development programs, and identifiable cues seldom changes people's beliefs or behaviors. In fact, neuroscience research suggests that people act their way into believing rather than thinking their way into acting. Changes to key behaviors - changes that are tangible, actionable, repeatable, observable, and measurable - are thus a good place to start. Some good examples of behavior change, which we've observed at a number of companies, relate to empowerment (reducing the number of approvals needed for decisions), collaboration (setting up easy ways to convene joint projects), and interpersonal relations (devising mutually respectful practices for raising contentious issues or grievances).

Neuroscience research suggests that people act their way into believing rather than thinking their way into acting.

A telecommunications company was seeking to improve its customer service. Rather than trying to influence mind-sets by, for example, posting signs urging employees to be polite to disgruntled customers, or having employees undergo empathy training, the company focused on what psychologists call a "precursor behavior" - a seemingly innocuous behavior that reliably precedes the occurrence of problem behavior. Leaders had noticed that poor teaming led to poor customer service, so the company rolled out a plan to encourage better and more effective teaming within call centers. To accomplish this, they set up regular design sessions for improving practices. When employees felt they were part of a happy team, and sensed a greater level of support from colleagues, they began treating their customers better.

In another example, a resources company in the Middle East was seeking to make its workplace safer. Rather than erect placards threatening workers with consequences, the company focused on a relatively basic precursor behavior: housekeeping. It organized a litter drive. Picking up trash as a team helped employees take greater pride in the workplace, which engendered a greater sense of care for fellow employees and made them more likely to speak up when they noticed an unsafe situation. Changed behavior, changed mind-set.

3. Focus on a critical few behaviors. Conventional wisdom advocates a comprehensive approach - everybody should change everything that's not perfect! But companies must be rigorously selective when it comes to picking behaviors. The key is to focus on what we call "the critical few," a small number of important behaviors that would have great impact if put into practice by a significant number of people. Discern a few things people do throughout the company that positively affect business performance - for example, ways of starting meetings or talking with customers. Make sure those are aligned with the company's overall strategy. Also check that people feel good about doing these things, so that you tap into emotional commitment. Then codify them: Translate those critical behaviors into simple, practical steps that people can take every day. Next, select groups of employees who are primed for these few behaviors, those who will respond strongly to the new behaviors and who are likely to implement and spread them.

At an Asian banking company, rapid inorganic growth had led to diverse ways of working across different units and geographies. To focus on improving teaming, customer outcomes, and the ability to realize synergies, the CEO and leadership embarked on a culture-led evolution program. They targeted just three critical behaviors: taking extra steps to delight customers, valuing performance over seniority, and backing up and supporting one another. They then converted these three general behaviors into specifics for each part of the company. Delighting customers, for instance, was translated into frontline staff collaborating with other colleagues to solve client problems and prioritizing the implementation of process improvements that affected customer outcomes. For all three behaviors, leadership recognized and celebrated examples in which people made an extraordinary effort. Senior leaders acted as role models, explicitly modeling these three new behaviors. The company also identified influential frontline, client-facing employees who could demonstrate these new behaviors in action.

4. Deploy your authentic informal leaders. Authority, which is conferred by a formal position, should not be confused with leadership. Leadership is a natural attribute, exercised and displayed informally without regard to title or position in the organizational chart. Because authentic informal leaders, who are found in every organization, are often not recognized as such, they are frequently overlooked and underused when it comes to driving culture. It is possible to identify such leaders through interviews, surveys, and tools such as organizational network analysis, which allow companies to construct maps of complex internal social relations by analyzing email statistics and meeting records. Once identified, these leaders can become powerful allies who can influence behavior through "showing by doing." In fact, when companies map out their organizations, they can identify leaders who exhibit different core leadership strengths (see "Four Types of Authentic Informal Leaders").

Four Types of Authentic Informal Leaders

Every organization has people who influence and energize others without relying on their title or formal position in the hierarchy to do so. We call them "authentic informal leaders." They are a powerful resource in spreading a critical few behaviors from the bottom up. Among the many types of informal leaders present in organizations, the following are seen most frequently.

Pride builders are master motivators of other people, and catalysts for improvement around them. Often found in the role of line manager, they understand the motivations of those with whom they work. They know how to foster a sense of excellence among others. They can be found at every level of a hierarchy; some of the most effective pride builders are close to the front line, where they can interact directly with customers as well as employees. Pride builders often have powerful insights about the culture and about what behaviors are likely to lead to improvement.

Exemplars are role models. They bring vital behaviors or skills to life, and others pay attention to them. They are well respected and are effective peer influencers in the middle and senior management cohorts.

Networkers are hubs of personal communication within the organization. They know many people, and communicate freely and openly with them. They serve as links among people who might not otherwise share information or ideas. If you want to see an idea travel virally through an enterprise, enlist your networkers.

Early adopters enthusiastically latch onto and experiment with new technologies, processes, and ways of working. Involve them in your performance pilots, or whenever you are trying to demonstrate impact quickly.

At one major oil company, an informal leader named Osama became known as the "turbo-collaborator." His role gave him very little formal influence. But when he began working at the refinery, he walked the plant with the engineers, maintenance technicians, and operators, and took copious notes. As a result, he knew everyone and developed relationships across disciplines. Whenever somebody wanted to know how the place really worked, they would speak to Osama - who would either have the answer in his notebook or know precisely the right person to ask. When the company formed a buddy program between operations and maintenance aimed at using greater collaboration to improve plant reliability, it knew it needed Osama at the heart of it. He connected people, defined templates to encourage collaboration, and captured success stories. Identifying, engaging, and nurturing such informal leaders allows companies to harness their talents and further the company's transformation efforts.

5. Don't let your formal leaders off the hook. Most organizations tend to shunt culture into the silo of human resources professionals. But leaders in all parts of the company are critical in safeguarding and championing desired behaviors, energizing personal feelings, and reinforcing cultural alignment. The signaling of emotional commitment sets the tone for others to follow. If staff members see a disconnect between the culture an organization promulgates and the one its formal leadership follows, they'll disengage quickly from the advertised culture and simply mimic their seniors' behavior. The people at the top have to demonstrate the change they want to see. Here, too, the critical few come into play. A handful of the right kind of leaders have to be on board to start the process.

When Jim Rogers was CEO of GE Motors in Fort Wayne, Ind., he became frustrated because his senior leadership group of more than 15 leaders seldom functioned together as a "real team." As described by Jon Katzenbach and Douglas K. Smith in The Wisdom of Teams: Creating the High-Performance Organization (Harvard Business School Press, 1993), a real team is one with a high level of emotional commitment; the leadership role shifts easily among the members depending on their skills and experience and the challenges of the moment, rather than on any hierarchical positions. Team members hold one another accountable for the quality of their collective work. Interestingly, at GE Motors the senior leadership group members often demonstrated real team capabilities in running their individual business units and functions. So Rogers decided to find ways to break them into subteams of three or four members to address specific cross-organizational issues facing the larger group. Over time, he mixed the subgroupings to match emerging issues. By working in different subgroup settings, the executives developed camaraderie, which in turn improved the effectiveness of the group as a whole.

6. Link behaviors to business objectives. When people talk about feelings, motivations, and values - all of which are vital elements of strong cultures - the conversation can often veer into abstractions. It may then range far afield of what it takes to succeed in the market. Too many employees walk away from culture-focused town halls or values discussions wondering how the advice on how to be a better person actually translates into the work they do. To avoid this disconnect, offer tangible, well-defined examples of how cultural interventions lead to improved performance and financial outcomes. Select behaviors that are aimed specifically at improving business performance and can be measured over time.

Related Stories

by Jon Katzenbach , DeAnne Aguirre

by Jon Katzenbach , Gretchen Anderson , Art Kleiner

An oil company's drive to reduce maintenance costs at an industrial installation highlights the importance of such an approach. The critical few behaviors included empowerment and good decision making. One of the company's exemplars (employees who lead by example) decided it would be a smart move to make costs visible to workers. So he placed price tags on various pieces of machinery. These cues inspired behavioral changes related to decisions about whether to repair or replace equipment. Workers and managers began to recommend fixing expensive equipment rather than replacing it. The company celebrated and publicized cost savings identified by employees. The behaviors led to a change in focus and mind-set. When an employee noticed that fans were cooling the machinery during the winter, he felt empowered to call it out, and ask whether it was necessary to do so. It turned out that it wasn't - and the company saved US$750,000 annually in power costs as a result.

7. Demonstrate impact quickly. We live in an age of notoriously short attention spans. That applies as much to organizational culture as it does to people's media consumption habits. When people hear about new high-profile initiatives and efforts, and then don't see any activity related to them for several months, they'll disengage and grow cynical. That's why it is extremely important to showcase the impact of cultural efforts on business results as quickly as possible. One effective method of doing so is to stage performance pilots - that is, high-profile demonstration projects. Pilots are relatively low-risk efforts that introduce specific behaviors that can then be evaluated and assessed. They often rely on a dashboard that defines desired impacts, the tactics used, and the specific metrics to be employed.

When Bell Canada first explored using new behaviors at the front line to improve its customer service and profitability, there were many more skeptics than believers within the leadership ranks. There simply wasn't any numerical proof that the tactics would work. So CEO Michael Sabia decided to set up a pilot test in a sales unit near Toronto. The sponsors of the test blocked out a tight time frame of eight months, and developed realistic ways of measuring behavior change, customer reactions, and actual sales and margin performance. Armed with positive results in these areas - a 29 percent increase in customer satisfaction in retail stores, a 31 percent increase in revenue per call at call centers - the company went on to accelerate the expansion of these efforts across the front line in different geographies, functions, and businesses.

8. Use cross-organizational methods to go viral. Ideas can spread virally across organizational departments and functions, as well as from the top down and from the bottom up. One powerful way to spread ideas is through social media: blogs, Facebook or LinkedIn posts, and tweets - not from senior management, but from some of the authentic informal leaders mentioned in Principle 4.

By now it is well established that social media can be more effective at spreading information, news, and music than traditional modes of distribution. The same holds with critical behaviors. People are often more receptive to changes in "the way we do things around here" when those changes are recommended or shared by friends, colleagues, and other associates. This kind of credible social proof is more compelling than similar testimonials from someone whose job it is to sell something.

Just as there is an art to making content go viral, there's a craft to making behavior go viral. For example, in a model that we have tested successfully in several situations, a company starts with a few carefully chosen groups of 12 to 15 informal leaders in three or four different parts of the business. After several weeks, an additional 10 to 15 groups of informal leaders are set up in every business unit. After about three months, the existing groups are encouraged to expand and bring in new people. After another three to six months have passed, the groups become more autonomous, allowed to control their own expansion. Meanwhile, the company facilitates connections among groups to share learning and insights. As behavior spreads, company leaders see increased performance as well as peer and leadership recognition.

9. Align programmatic efforts with behaviors. We've emphasized the role that informal leaders can play in helping ideas go viral. But it's also important to match the new cultural direction with existing ways of doing business. Informal mechanisms and cultural interventions must complement and integrate with the more common formal organization components, not work at cross-purposes. By providing the structure in which people work - through disciplines such as organization design, analytics, human resources, and lean process improvement - the formal organization provides a rational motivation for employee actions, while the informal organization enables the emotional commitment that characterizes peak performance.

The U.S. Marine Corps provides a classic example of integrating formal and informal leadership efforts. The "rule of three" dictates how the Marines design their organizations and projects and how they execute in a hierarchy. (Three squads form into one of three divisions, which form one of three battalions.) The formal leaders of those units are expected to know the intent of the officer two levels above them - and to call out any order or situation they perceive to be incoherent or in conflict with that intent. But there are also informal leaders: Each of the four members of a frontline rifle team is prepared (and expected) to take the lead whenever the formal leader is disabled or loses the high-ground position. This means that the informal leaders also need to know the intent of that officer two levels above. Integrating informal norms with the formal structures helps enable the timely battlefield adjustments that have served the Marine Corps well for more than 200 years.

10. Actively manage your cultural situation over time. Companies that have had great success working with culture - we call them "culture superstars" - actively monitor, manage, care for, and update their cultural forces. Why? As we noted at the outset, when aligned with strategic and operating priorities, culture can provide hidden sources of energy and motivation that can accelerate changes faster than formal processes and programs. Even if you have a highly effective culture today, it may not be good enough for tomorrow.

Southwest Airlines stands as an example of a battle-tested company in which culture has been managed over time. Famous for its long-term success in an industry where even the largest players routinely fail, Southwest for 40 years has been energized by a deep sense of pride among all employees. Southwest has found that constructing an environment that puts its employees first - above customers and owners - fosters a sense of emotional commitment and pride that delivers excellent customer service. But at Southwest, the work on culture is never completed. Just as the airline's strategy, tactics, and technologies have evolved to cope with a changing external environment, specific HR practices, including informal behaviors, have shifted over time.

Living in Your Culture

Although challenging, multidimensional, and often difficult to deal with, a company's cultural situation constitutes a powerful set of emotional resources. As is the case with other resources - human, technological, financial - it is incumbent upon leaders to strive to get the most value out of it.

To a degree, culture can be compared to natural forces such as winds and tides. These elements are there in the background, sometimes unnoticed, sometimes obvious. Endowed with immense power, they can waylay plans and inhibit progress. They can't really be tamed or fundamentally altered. But if you respect them and understand how to make the most of them, if you work with them and tap into their hidden power, they can become a source of energy and provide powerful assistance.

The best way to start is to ask yourself a series of questions. What are the most important emotional forces that determine what your people do? What few behavior changes would matter most in meeting strategic and operational imperatives? Who are the authentic informal leaders you can enlist? And what can you and your fellow senior leaders do differently to signal and reinforce those critical behaviors?

Of course, you shouldn't plan for dramatic results overnight. Expect an evolution, not a revolution. One of the challenges of working with culture is that, as we've noted, it changes gradually - often too slowly for leaders facing fast-moving competitors. That's the bad news. The good news? If you approach culture with respect and intelligence, as a milieu in which you and your enterprise live, you can use it to accelerate your competitive momentum. There's no better time than the present to start.

Reprint No. 16105

Author Profiles:

Jon Katzenbach is an acclaimed advisor to executives for Strategy&, PwC's strategy consulting group. He is a managing director with PwC US, based in New York, and founder of the Katzenbach Center, Strategy&'s global institute on organizational culture and leadership. He is a best-selling author on organizational culture, leadership, and teaming; his books include The Wisdom of Teams (with Douglas K. Smith; Harvard Business School Press, 1993) and Leading Outside the Lines (with Zia Khan; Jossey-Bass, 2010).

Carolin Oelschlegel is a director of the Katzenbach Center for Strategy&. She leads the global operations of the center and advises clients around the world on culture and leadership topics. Based in San Francisco, she is a director with PwC US.

James Thomas is a thought leader in organizational culture with Strategy&. He is the Middle East lead of the Katzenbach Center and an expert in culture and organizational topics. Based in Dubai, he is a partner with PwC Middle East.

Also contributing to this article were Strategy& specialists Varya Davidson (partner with PwC Australia), Kenji Mitsui (partner with PwC Japan), Henning Hagen and Rutger von Post (principals with PwC US), and Shona Especkerman (senior manager with PwC Malaysia).

# data[].attributes.attachment_link.authors[].name
Jon Katzenbach, Carolin Oelschlegel, and James Thomas

# data[].attributes.attachment_link.description
How often have you heard somebody - a new CEO, a journalist, a management consultant, a leadership guru, a fellow employee - talk about the urgent need to change the culture? They want to make it world-class. To dispense with all the nonsense and negativity that annoys employees and stops good intentions from growing into progress.

# data[].attributes.attachment_link.readable_text
The idea of management by objectives (MBO), first outlined by Peter Drucker and then developed by George Odiorne, his student, was popular in the 1960s and 1970s. In his book "The Practice of Management", published in 1954, Drucker outlined a number of priorities for the manager of the future. Top of the list was that he or she "must manage by objectives". John Tarrant, Drucker's biographer, reported in 1976 that Drucker once said he had first heard the term MBO used by Alfred Sloan, author of the influential "My Years with General Motors".

With the benefit of hindsight, it may seem obvious that managers must have somewhere to go before they set out on a journey. But Drucker pointed out that managers often lose sight of their objectives because of something he called "the activity trap". They get so involved in their current activities that they forget their original purpose. In some cases it may be that they become engrossed in this activity as a means of avoiding the uncomfortable truth about their organisation's condition.

MBO received a boost when it was declared to be an integral part of "The HP Way", the widely acclaimed management style of Hewlett-Packard, a computer company. At every level within Hewlett-Packard, managers had to develop objectives and integrate them with those of other managers and of the company as a whole. This was done by producing written plans showing what people needed to achieve if they were to reach those objectives. The plans were then shared with others in the corporation and coordinated.

Bill Packard, one of the two founders of Hewlett-Packard, said of MBO:

No operating policy has contributed more to Hewlett-Packard's success ... MBO ... is the antithesis of management by control. The latter refers to a tightly controlled system of management of the military type ... Management by objectives, on the other hand, refers to a system in which overall objectives are clearly stated and agreed upon, and which gives people the flexibility to work toward those goals in ways they determine best for their own areas of responsibility.

MBO urged that the planning process, traditionally done by a handful of high-level managers, should be delegated to all members of the organisation. The plan, when it finally emerged, would then have the commitment of all of them. As the plan is implemented, MBO demands that the organisation monitor a range of performance measures, designed to help it stay on the right path towards its objectives. The plan must be modified when this monitoring suggests that it is no longer leading to the desired objective.

One critic claimed that MBO encouraged organisations to tamper with their plans all the time, as and when they seemed no longer to be heading towards their latest objective. Many firms came to prefer the vague overall objectives of a mission statement to the firm, rigid ones demanded by MBO.

After a while, Drucker himself downplayed the significance of MBO. He said:

MBO is just another tool. It is not the great cure for management inefficiency ... Management by objectives works if you know the objectives: 90% of the time you don't.

Management by objectives is now largely ignored. Its once widely used abbreviation, MBO, has been taken over by management buy-out, the purchasing of a company by a group of its managers with the aim of making as much money for themselves as possible.
Further reading
Drucker, P., "The Practice of Management", Harper, New York, 1954; Heinemann, London, 1955; revised edn, Butterworth-Heinemann, 2007

Levinson, H., "Management by Whose Objectives?", Harvard Business Review, July-August 1970

Odiorne, G.S., "Management by Objectives: a System of Managerial Leadership", Pitman Publishing, 1965
More management ideas
This article is adapted from "The Economist Guide to Management Ideas and Gurus", by Tim Hindle (Profile Books; 322 pages; £20). The guide has the low-down on over 100 of the most influential business-management ideas and more than 50 of the world's most influential management thinkers. To buy this book, please visit our online shop.

# data[].attributes.attachment_link.description
The idea of management by objectives (MBO), first outlined by Peter Drucker and then developed by George Odiorne, his student, was popular in the 1960s and 1970s. In his book "The Practice of Management", published in 1954, Drucker outlined a number of priorities for the manager of the future.

# data[].attributes.attachment_link.readable_text
Definition of the Strategic Planning Process

Strategic planning is a process undertaken by an organization to develop a plan for achievement of its overall long-term organizational goals.

Model

There is no one model of strategic planning. However, the strategic planning process should include a situational analysis. This consists of looking at the current external and internal environment the organization finds itself in, formulating organizational objectives and strategies based upon the environmental assessment, and developing procedures to implement and evaluate the strategic plan. Strategic plans for business organizations often cover a three-to-five year period, but if the business or its environment is highly dynamic, a shorter period may be advisable.

Strategic Planning Steps

Here are the main steps for strategic planning.

1. Analysis of the current state

Here, you analyze your organization's external and internal environment. You may conduct a SWOT analysis, which is an examination of your organization's strengths, weaknesses, opportunities, and threats. You will also carefully examine the specific external environmental factors, such as your rivals, the power of your suppliers, the power your buyers or customers have, whether there is a viable threat that major clients or customers can effectively substitute your product or service, and whether there are any barriers to entry into a new market.

2. Defining the future state

Here, you will develop an organizational vision and a mission statement that describes the future of your organization - where it wants to be, its essential values, and what it wants to do. After you have defined the organization's vision and mission, you can begin to formulate a detailed strategy to achieve them.

3. Determination of objectives and strategies

Now that you have defined the organization's vision and mission, you can develop a set of objectives that will lead you to the overall strategic goal or vision. For an example, an objective may be to increase market share year-over-year by at least five percent. Think of achieved objectives as building blocks in constructing your goal or vision.

4. Implementation and evaluation

The next step is to implement and evaluate the plan. Implementation in large organizations, such as governmental agencies or large corporations, will be done by a different set of organizational members than the members that created the plan. Different parts of the plan are typically distributed to various parts of the organization. You will also need to constantly monitor and assess the implementation of the plan to determine if the plan is achieving the objectives leading to the strategic goal. If not, then adjustments to the long-term strategy will be necessary.

# data[].attributes.attachment_link.keywords[]
what is the strategic planning process? - model

# data[].attributes.attachment_link.keywords[]
steps & examples - video & lesson transcript | study.com

# data[].attributes.attachment_link.title
What Is the Strategic Planning Process? - Model, Steps & Examples - Video & Lesson Transcript | Study.com

# data[].attributes.attachment_link.description
Strategic planning is a process undertaken by an organization to develop a plan for achievement of its overall long-term organizational goals. There is no one model of strategic planning. However, the strategic planning process should include a situational analysis.

# data[].attributes.attachment_link.description
An overview of the strategic planning process, including mission statement, objectives, situation analysis, strategy formulation, implementation, and control.

# data[].attributes.attachment_link.readable_text
Complexity of Global Business

Nancy owns a medium-sized toy manufacturing company. Her business has been very successful, but she believes she has tapped out of her domestic market. She wants to take her products to the global market. However, she knows that conducting business globally is complicated and requires careful planning.

Each foreign market that Nancy attempts to infiltrate will have different political systems, economic systems and cultures. Let's take a closer look.

Different Political Systems

Markets still operate within the confines of national territories. Therefore, Nancy must understand the political system of each country in which she wants to conduct business. Some political systems are safer places for business.

For example, democracies tend to follow the rule of law, which is a legal principle that states no one, including the government, is above the law. On the other hand, authoritarian regimes often do whatever they want. While Nancy may be able to do business in a country with an authoritarian regime in power, she will not necessarily have the protection of the rule of law.

Nancy may also be confronted by trade barriers set up by countries to protect their domestic businesses from competition. Nancy may have to contend with tariffs, which are taxes imposed on imports. For example, tariffs are designed to make domestically produced toys more competitive with the toys Nancy imports.

She may also face import quotas, which will restrict the number of imports that can enter the market during a specific time. Due to these quotas, Nancy may be limited to the number of toys she can sell in a foreign market.

Nancy may also be helped through different levels of economic integration between countries. For example, if her country and another have entered into a trade treaty, she may not be subject to tariffs or other trade barriers. In fact, if her country is a member of a free-trade area or economic union, there will be even fewer restrictions on trade with member countries. An example of a free trade area is NAFTA, and an example of an economic union is the European Union.

The world can be a dangerous place, and sometimes events have serious effects on business. Two of the most problematic are war and terrorism. Threats of terrorism can clog up distribution systems, such as airports and shipping ports.

It's even possible that businesses and their employees may become targets of terror. War may close off entire markets either because of hostilities or because of embargoes where a business' government prevents it from engaging in trade with a country. Company facilities and employees may become 'collateral' damage in war.

Different Economic Systems

Nancy will also face different economic systems when she starts selling her toys abroad. The best business environment for Nancy is a free market system where the government pretty much stays out of economic activities and doesn't regulate all that much. At the other extreme are command economies where most production and distribution of goods and services are done by the government. Nancy will probably stay away from command economies.

Most economies are mixed economies that have aspects of both free market and command economies. This type of economy is where Nancy will be importing most of her toys.

Different Cultures

One of the biggest hurdles that Nancy will face is trying to understand the cultures of her new markets. A culture is the sum total of a group's values, beliefs, customs and practices. From a business standpoint, consumers from different cultures often have different preferences for goods or services. Understanding these cultural preferences will increase the chances of Nancy's success in a new foreign market.

Meeting the Challenge

Nancy can take different approaches when entering the global market. Let's look at some of the options. Nancy can simply export her toys to new markets. Exporting is selling goods or services in an overseas market. Nancy can also license the design of her toys to a foreign company. A license gives a person the right to use intellectual property, such as the design of Nancy's toys.

# data[].attributes.attachment_link.keywords[]
how the global business environment affects business: explanation & examples - video & lesson transcript | study.com

# data[].attributes.attachment_link.title
How The Global Business Environment Affects Business: Explanation & Examples - Video & Lesson Transcript | Study.com

# data[].attributes.attachment_link.description
Nancy owns a medium-sized toy manufacturing company. Her business has been very successful, but she believes she has tapped out of her domestic market. She wants to take her products to the global market. However, she knows that conducting business globally is complicated and requires careful planning.

# data[].attributes.attachment_link.readable_text
Today's global companies face a host of content challenges. Without a solid foundation of content management, companies face risk to their workers' efficiency, reputation among customers and overall global market success. Several factors are responsible.

For one, thanks to international, distributed workforces, internal communications are asynchronous. Different time zones and an increase in mobile workers mean that important business dialogues may happen at odd times. Without a place and platform to enable global collaboration, workers lose time and productivity searching for the right documents in order to keep up with the conversation.

Secondly, lack of a common language and cultural sensitivity can strongly affect internal business communications as well as communication to individual customer markets. According to a November 2008 Common Sense Advisory report, 70 percent of users around the world prefer to visit websites in their own language. When companies don't provide the content users want in the language they prefer, informal sources of information, such as blogs, become the main source of information about a business.

Companies need to learn to keep their customers and workforces satisfied in a variety of cultural contexts. Unfortunately, this isn't something that happens on its own. Building the right foundation for successful global teams and markets not a matter of how much you do, but rather of doing the right things.
CMS, Social Business Software Saves the Day
The first step for organizing multinational content chaos is installing a central platform that creates a unified online working environment. This could be a content management system (CMS) or social business software, any platform that puts the dizzying array of company communications into a central interface. Communications and documents can be collected in a single place, in the form of web pages, files, presentations, instant messages and more, enabling workers to collaborate across countries more easily. Needless to say, global content platforms also benefit external users, who can receive faster help and company communications without having to navigate a website intended for another country.
Curate, Don't Control
Users in almost every country glean information from informal sources, such as blogs, forums or their friends on social media.

In some countries, those independent information sources are more credible than a company's official content. Blogs tend to be more localized, and may contain more specific information for a particular market segment. I might be in China, for example, and research Adobe Flash on my favorite Chinese blog, choosing to bypass Adobe's website entirely, because I trust the blog more as a source of unbiased information.

Businesses need to embrace this development. As soon as any company launches in another country, it inherently loses a little bit of control over the content process.

Going into foreign markets means that content becomes more of a curator/moderator situation, and that can be a good thing. When companies enable an open conversation, they open themselves to feedback about their product. Businesses can feed this customer response into their product development cycle, making improvements and underscoring responsiveness to customer demand. Being able to acknowledge and adapt to customer demand is key to global marketing.
Help from the Cloud
Thanks to the cloud, companies can now easily customize their best content for each of their international markets. Cloud-based Web analytics enable us to see who is consuming, sharing and discussing which content. We can then use a data-driven model to select what areas of websites should be localized. Today's businesses need to consider a culturally sensitive approach to customer content, and this is one way to simplify adopting this approach.

For example, say you have a 100-page website, but your analytics tell you that people only ever visit 78 of those pages. Upon further inspection, you find out that people only read, share and discuss 18 of those pages. You can proactively choose to translate those 18 most important pages into another language, and leave the rest in English. Your return on investment (ROI) in terms of localization immediately improves as a result.
The Three C's
The cloud, curation and a CMS (or social business software) are the three main ingredients for your global content foundation. Together, they stave off a fourth "C," namely, chaos. They ensure your communications stay smooth, your reputation among consumers improves and your content easily adapted to new markets. For any company with global content, the three C's are, to make another alliteration, the clear answer.

# data[].attributes.attachment_link.title
This Is How You Can Manage Content In An Increasingly Globalized World

# data[].attributes.attachment_link.description
Today's global companies face a host of content challenges. Without a solid foundation of content management, companies face risk to their workers' efficiency, reputation among customers and overall global market success. Several factors are responsible. For one, thanks to international, distributed workforces, internal communications are asynchronous.

# data[].attributes.attachment_link.readable_text
It may be safe to say that deterioration of the global natural environment is today no longer a contested issue. All nations acknowledge pollution, salination, deforestation, desertification, depletion of the ozone layer, the prevalence of toxic waste dumps, and more, as tangible, problematic issues. What remains a contested issue, however, is the exact factors that underpin this ruining of the Earth's splendor. Factors labeled as root causes include meat-eating, industrialization, economic instability, and ignorance of sustainable and energy-efficient agricultural practices.

With such an array of opinions as to why the Earth's good health has waned, it is easy to see why society struggles to pinpoint the best approaches to environmental care. As a Hare Krishna devotee, and as an environmentalist since my childhood, I decided to investigate the underlying causes of such degradation from the perspective of the Vedas. When the opportunity to do a research Ph.D. through the University of Tasmania in Australia became available, I decided to employ the concept of the three modes of material nature to investigate the quality of consciousness of environmental scientists.

Understanding the Three Modes

The Bhagavad-gita and the Srimad-Bhagavatam both contain extensive descriptions of the three material modes, also referred to as the three qualities of material nature. Fundamentally, the three qualities compose a tripartite system of influence on all materially embodied beings, as well as on all aspects of the material creation. This includes the bodies and the mental and intellectual capacities of human beings, demigods, and all other living beings.

In the Bhagavad-gita (3.27) Lord Krishna says, prakriteh kriyamanani: one acts according to the particular modes of nature he has acquired. And in Message of Godhead Srila Prabhupada writes, "As long as the living entity remains conditioned by material nature, he has to act according to his particular mode of nature." The influence of the three material qualities on the materially embodied individual is both psychological and biological. But while the three modes influence the body and mind of the embodied soul, they never change the soul itself.

Within the hierarchy of the three, sattva-guna, the mode of goodness, is superior to the modes of passion ( raja-guna) and ignorance ( tamo-guna). The mode of ignorance is inferior to the mode of passion. This hierarchy is necessarily so, as the characteristics of the mode of goodness enable a person to peacefully focus on higher spiritual goals. In the mode of passion, one fervently endeavors to attain material prosperity to increase one's sense gratification, thus to focus on spiritual goals is extremely difficult. In the mode of ignorance there is no interest in spiritual goals, what to speak of any favorable circumstances within which to cultivate such interest. As such, characteristics of the material mode of goodness endow one with a higher quality of consciousness than do the modes of passion and ignorance.

While the characteristics and symptoms of each mode are too numerous to list in this article, following is a concise listing. The mode of goodness: happiness, honesty, cleanliness, compassion, purity, humbleness, simplicity, greater knowledge, interest in spiritual life, and control of the mind and senses.

The mode of passion: lust, misery, false pride, great attachment, sense gratification, knowledge based on duality, the seeking of honor and recognition, unsteady perplexity of the mind, and intense endeavor to advance materially.

The mode of ignorance: nescience, madness, depression, laziness, violence, delusion, hypocrisy, intolerant anger, false expectations, acting whimsically, and a lack of interest in spiritual life.

Results of Acts in the Modes

Lord Krishna explains in both the Bhagavad-gita and the Srimad-Bhagavatam that activities carried out in the mode of passion are destined to end in misery, anxiety,and struggle, while activities carried out in the mode of ignorance are destined to end in violence, foolishness, and helplessness. Activities carried out in the mode of goodness, on the other hand, are destined to end in peace, prosperity, satisfaction, and real knowledge.

The results of such sattvic activity enable one not only to progress toward higher spiritual goals, but also to attain immediate material goals with less difficulty. From the mode of goodness, therefore, environmentalists can most easily achieve the goals of global environmental management, such as minimizing pollution, achieving environmental sustainability, improving the quality of edible crops, and preserving all species of life. By adopting characteristics from the mode of goodness and working within their boundaries, environmentalists can expect a higher rate of success in attaining environmental management goals than those who maintain characteristics from the modes of passion and ignorance. The Srimad Bhagavatam confirms this when it states that the Earth, known as Mother Bhumi in the Vedas, responds unfavorably to acts performed within the lower modes of passion and ignorance, but favorably to acts performed within the mode of goodness.

Although the three material qualities are present everywhere within the material universes, they manifest themselves in different ways and in different proportions to each other according to different mundane circumstances. For example, in a liquor outlet or a brothel the mode of ignorance is the most prevalent of the three, as its characteristics of irreligion, degradation, intoxication, and uncleanlinessare prominent. In the business world the mode of passion is the most prominent, with its focus on material gain through hard labor. Characteristics such as intense endeavor, sense gratification, and hard work to acquire prestige and fortune are typical in such settings. In religious and ethically-focused organizations the mode of goodness is the most prevalent due to the abundance of the characteristics of virtue, piety, purity, greater knowledge, and faith directed toward spiritual life. Therefore, according to the prevalence of different characteristics from the different modes within each mundane setting, one or two modes will typically predominate over the other one or two.

Just as the balance of characteristics from each of the three material modes varies within the above-given settings, so also do they vary within different environmental management settings. While students of Bhagavad-gita and Srimad Bhagavatam can easily detect some such variety, much remains obscure and hidden to the naked eye. The tamasiccharacteristics of violence, irreligion, and detestability are evident in animal slaughter. The rajasiccharacteristics of greed, dissatisfaction, and great attachment are evident in management practices involving excessive proprietorship claims over the Earth. And the sattviccharacteristics of mercy, piety, and spiritual insightare evident in animal protection, the cultivation of vegetarian foodstuffs, and decision-making based on spiritual aspects of the natural environment.

An essential lesson from the Vedas is that the three material qualities manifest themselves within a particular material setting according to the consciousness of those taking part in it. As such, the material modes reveal themselves within environmental management practices according to the consciousness of environmental scientists, managers, and policy-makers, as well as other persons instrumental in environmental management programs.

Among such contributors, environmental scientists play a key role. Not only are they entrusted with the onerous task of delivering factual information on the workings of material nature to the rest of the world, but also they are also often called upon to advise managers on optimum strategies. As such they often contribute toward both management strategies and policy formulation.

The Study Sample

For my study sample I chose the Australian Antarctic scientific community, made up of several hundred environmental scientists. Their research fields include geophysics, biology, astronomy, geology, human impacts, glaciology, meteorology, paleontology, oceanography, and space and atmospheric sciences. Scientists maintain that the Antarctic continent acts as the engine room for the entire Earth's weather patterns. It thereby follows that both the natural phenomena within the region and the science carried out there have global significance.

My official research objective was "To investigate if there exists a need for environmental scientists to raise the qualitative level of their consciousness, for the purpose of enhancing outcomes of environmental management activities." I defined "consciousness" as an individual living being's awareness. It followed that "quality of consciousness" would be determined by "The degree to which an individual's conscious awareness is afflicted by material desires and material characteristics. The greater the affliction, the poorer the quality."

This definition proposed that materialism is the root cause of poor quality of consciousness in general. I stipulated at the outset of my thesis that if my investigations found that scientists predominate within either the mode of passion or ignorance, then they would be considered to be suffering from a poor quality of consciousness.

I organized the characteristics of each mode according to their anticipated relevance to environmental science. I asserted that by collecting data on such things as scientists' research activities, workplace relations, and professional motivations, and by analyzing these data against the characteristics of each mode, I could gain an accurate picture of how environmental scientists are situated within the triguna. I also asserted that by identifying which material mode and which specific characteristics were the most prevalent within the Australian Antarctic scientific community, I could build a fairly accurate profile of the current quality of consciousness of environmental scientists.

Would the data reveal, for example, that scientists predominate within the mode of goodness, with only a weak representation within the other two modes? Or would it reveal that they affiliate strongly with two modes, such as goodness and passion, with the mode of ignorance being only minimally supported? Or would I see some other mixture of the modes.

To answer these questions, I designed models for data collection and processing. The main data-collection item was an inventory based on the three material modes, in which each of sixty statements represented either the mode of goodness, passion, or ignorance. For example, the statement "It is very important to me to be thoroughly honest in all of my work as a scientist" represented the mode of goodness, as honestyis a sattviccharacteristic. The statement "I am proud to be an Antarctic scientist" represented the rajasiccharacteristic false pride . And the statement "I usually procrastinate in my daily schedule" represented the tamasiccharacteristic procrastination.

I asked scientists to respond to each statement by marking one of six Likert-scale options on their papers, ranging from "I strongly agree" to "I strongly disagree." Other data-collection items included an examination of Australian Antarctic science publications and interviews with scientists.

Looking at the Results

The overall results revealed that Australian Antarctic scientists predominate within the mode of passion. Prominent rajasiccharacteristics included sense gratification, intense endeavor, seeking honor, and creating theories and doctrines through logic and speculation.

Particularly prominent was sense gratification, in the form of scientists' seeking mental stimulation from their work. Srila Prabhupada describes the mind as the sixth and chief material sense. Scientists' desires to satisfy their minds through interesting, challenging, or pleasurable scientific activities thereby constitute one type of sense gratification, regardless of how sophisticated such activities may be.

The mode of goodness received the second highest support from scientists, with the sattviccharacteristics of mercy, honesty, cleanliness, and careful study of the past and futurebeing the most prevalent.

The mode of ignorance received the least support. Most prevalent were the tamasiccharacteristics of speaking (publicizing) without scriptural authority, acquiring knowledge without any higher purpose, and being uninterested in and unconcerned about spiritual matters.

Although the results revealed that Australian Antarctic scientists do not maintain many tamasiccharacteristics, responses to question seven predominated within that mode: "Do you have any thoughts on the process of peer review as a means by which to ensure rigor in Antarctic scientific research?" The scientists' responses to this question predominated within the mode of ignorance because they persist in relying on the peer-review system even though they are aware that it is full of faults. A typical response: "It's fraught with all sorts of problems, but I think it's the best system we can use at the moment." That scientists are aware of the defective nature of the peer-review system but still use it to deliver scientific knowledge to other scientists, academics, and the public suggest tamasiccharacteristics such as hypocrisy, irresponsible work, indulgence in false hopes, speaking without scriptural authority, and acting in illusion, without regard for scriptural injunctions or concern for future bondage for oneself or for violence or distress caused to others.

In the fourteenth chapter of Bhagavad-gita As It Is (14.7) Srila Prabhupada states that "modern civilization is considered to be advanced in the standard of the mode of passion." As symptoms of one whose consciousness is predominated by the mode of passion include unsteady perplexity of the mind and distortion of the intelligence because of too much activity, it is easy to see how science carried out within this mode harms environmental management strategies. Afflicted with such symptoms, scientists can hardly be expected to conduct research that will help restore and preserve the Earth's good health. Conversely, if scientists were conditioned primarily by the mode of goodness, their symptoms would include sobriety and the ability to see things as they really are. The sattviccharacteristics of speaking words that are truthful, pleasing, beneficial, and not agitating to others, and regularly reciting Vedic literature,may thereby manifest themselves within environmental science policy and publications. If such changes could be instigated, management programs might also come to address spiritual needs, not just material ones. Mother Bhumi, a pure devotee of Lord Krishna, would certainly be pleased by such changes appearing within current environmental management practices.

# data[].attributes.attachment_link.title
Global Environmental Management and the Vedic Triguna

# data[].attributes.attachment_link.description
It may be safe to say that deterioration of the global natural environment is today no longer a contested issue. All nations acknowledge pollution, salination, deforestation, desertification, depletion of the ozone layer, the prevalence of toxic waste dumps, and more, as tangible, problematic issues.

# data[].attributes.attachment_link.readable_text
Note: This article is based on a book by David W. Conklin entitled The Global Environment of Business: New Paradigms for International Management (Sage Publications, Thousand Oaks California, 2011) The article consists of excerpts from an article with that title in Effective Executive, IUP Publications, Hyderabad, India, June 2011, pp.32-43.

Forces outside the firm's traditional boundaries are increasingly important in determining the firm's success. These forces in "the environment of business" differ among nations and over time, continually confronting the firm with new issues that require modifications in strategies and management practices. Managing in the context of turbulence has become an ongoing reality. Readers will learn how to modify their strategies and management practices and adapt to this new reality.

Social Forces

The subject of ethical codes and CSR crystallizes many social challenges. At the one extreme are those who, like Milton Friedman (1970/2001), advocate the guiding principle of shareholder value maximization as the sole determinant of managerial decisions. At the other extreme are those who expound an altruistic philanthropy based on philosophical beliefs concerning universal ethics, such as those related to human rights. Within this range of perspectives, many authors offer distinct typologies for analyzing social forces and for developing appropriate firm responses to each set of social forces. Meanwhile, the rise of activist groups who threaten public criticism and boycotts means that even Friedman's dictum of maximizing shareholder value now requires a wide range of CSR strategies.

Some analysts, such as Porter and Kramer (2006), believe that each firm should create a competitive advantage through appropriate CSR strategies. From this perspective, CSR morphs into political strategies through which a firm's reactions can be designed in order to achieve desirable government decisions. For multinational enterprises (MNEs), it is clear that CSR has become a subject of major importance, but the complexity of dealing with social forces that differ among nations has created uncertainties about the optimal strategies. The pursuit of least-cost alternatives in each country conflicts with the objective of creating globally consistent strategies. Meanwhile, international NGOs and national governments are negotiating CSR agreements to create global standards. For the MNE, corporate governance with division of responsibilities between the parent and its subsidiaries adds confusion to the implementation of global strategies and adds difficulties to the creation of appropriate procedures for global reporting and enforcement. CSR has become a central management issue in a world where public expectations, legal requirements, and social needs all differ significantly among nations and where the MNE must continually reconcile its universal ethical positions with nation-specific realities.

A major force underlying the CSR challenges in international business is the difference in culture among countries. The impacts of cultural differences extend beyond CSR to include the business behaviour of local management and employees, as well as the preferences of consumers. For the MNE, there are advantages in creating a globally consistent set of organizational structures and incentives and a unified marketing program. Yet there may be many instances where exceptions geared to the local culture may be most effective. Countless articles have utilized the typology created by Hofstede and Bond (1988) in order to analyze the implications of cross-country cultural differences for management decisions. On the basis of extensive surveys, Hofstede and Bond conclude that each country's culture can be best examined in accordance with five dimensions: individualism/collectivism, uncertainty avoidance, power distance, masculinity/femininity, and long-term versus short-term orientation. Not only do cultural differences impact CSR, they also impact consumer preferences and marketing, as well as structures within firms and industries. For example, cultures differ in regard to the weight they place on attributes such as quality, privacy, service reliability, the introduction of breakthrough services, and the means of consumer communication with the firm. The retail MNE in particular must create an international expansion strategy on a country-by-country basis, focusing on differences in consumer preferences and the need for market segmentation.

For many cultures, personal relationships are built on an ongoing exchange of favours. Personal relationships and trust form a central determinant of success, both within the firm and in its external interactions. In China, the pervasive importance of guanxi demonstrates the benefits that MNEs derive from developing ongoing and long-term exchanges of favours that link individuals, as well as the organizations in which they work. Government approvals can be expedited, and informal preferences can place an MNE ahead of its competitors. Furthermore, without a tradition of business jurisprudence, rapid contract enforcement may become impossible with the result that one must rely on personal relationships to cope with misinterpretations and misunderstandings. Continual changes in the environment of business may require ongoing renegotiation of contracts-a process that may be most effective in the context of longstanding personal relationships and trust. The literature on joint ventures and strategic alliances repeatedly emphasizes the need to create procedures for decision making that are conducive to the building of trust among firms. These behavioural characteristics may be more significant in predicting the degree of success than any structural or organizational features among firms. Yet the exchange of personal favours may raise questions related to ethics.

Personal relationships that involve an ongoing exchange of favours may be criticized as petty corruption that can pervade all types of business transactions, both between firms and also with government employees. While some of this bribery can simply expedite decisions and actions, other situations may involve a distortion of business outcomes. Meanwhile, government officials in positions to alter the firm's overall profitability may receive substantial payments. Funds that rightfully belong to the public may be diverted into private hands. Firms that would have paid fees to the government may be able to reduce their financial obligations. Corruption distorts free market outcomes, resulting in business and government decisions that reduce efficiency and so reduce a nation's aggregate production. Some investors may reject potential business dealings in certain cultures because of the presence of corruption. Recent years have witnessed global attempts to reduce corruption, and many nations now treat corruption as a crime. In this context, management encounters issues that challenge ethical positions and that involve risks of legal prosecution, as well as impacting potential profits.

Managers today must be continually concerned about preventing fraud. New governmental reporting requirements seek to enhance transparency and accountability. New legal provisions increasingly add to the responsibility of boards of directors in providing accurate information to investors. At the core of these concerns is the need to develop a corporate culture that provides ethical guidelines to all the firm's employees so that decisions throughout the firm are socially acceptable.

For the MNE, these issues are linked in a host of multidimensional decisions that require ongoing responses, hopefully within a consistent set of strategies that create a competitive advantage while maintaining an ethical code of conduct. Social forces are changing as the MNE confronts these issues. People throughout the world are now watching the same television and movies, reading the same books, purchasing globally branded products, and communicating via the Internet. For many, there is now an ongoing adaptation to global norms and values. Migration is creating new international relationships that may alter cultures in both the old home country and the new. Much of the academic literature has ignored youth's rapid degree of adaptation to the realities of cultural differences, as opposed to the intransigence of older groups in this regard. As the years go by and the youth age, each national culture will likely be modified. Changes in each nation's demographic profile over time can also impact certain cultural characteristics. Meanwhile, there is an ongoing interplay between social forces and other forces-with an ongoing modification of many other elements in the environment of business.

Among cultural differences, the role of personal relationships and trust is a key determinant of the nature and extent of social capital, linking these cultural differences to their implications for entrepreneurship. While physical capital obviously differs among countries, the more ephemeral social capital also differs among cultures. Social capital has important implications for managerial decision making, particularly in relation to innovation and entrepreneurship. Networks based on personal relationships and ethnic trust can facilitate business transactions and risk taking. Social capital impacts the degree of cooperative behaviour that the firm can expect from its employees, as well as its customers, government agencies, and other stakeholders. Hence, it influences the firm's ability to develop new forms of value creation. Social capital can play a key role in market entry decisions and in the creation of new products, services, or procedures. Firms differ in their ability to utilize social capital within each culture, so the enhancement of a firm's ability in this regard may lead to a competitive advantage for the firm.

Many authors use the social capital perspective to analyze differences among countries in regard to economic growth and the productivity improvements that drive growth. For the World Bank, this subject has been the focus of considerable research-much of it linking social capital with human capital. Cultures differ in regard to the degree to which they encourage and reward risk taking and innovation. These differences impact a country's legal, financial, fiscal, and education systems. For the MNE, an understanding of these cultural differences is essential in reaching optimal investment decisions and business practices.

Until recent decades, innovations were generally created as responses to specific challenges within particular circumstances. The printing press, for example, resulted from a desire to improve on the time-consuming process of writing by hand. The steam engine resulted from a desire to increase efficiency in the removal of water from mines and to achieve a more rapid pace than that of horses. Often, the innovation process then involved the diffusion of such technological breakthroughs to additional uses. Many business opportunities grew out of the array of potential applications related to a single basic concept.

While this process is still prevalent in today's business environment, what is new is the creation of innovation procedures that aim to achieve continual cost reductions and improvements in products and services. What is new is the conscious pursuit of knowledge that can lead to ongoing competitive advantages for the firm. What is new is the development of a learning organization whose culture and practices are designed to stimulate and facilitate the innovation process on a continual basis. This vision of the firm often includes the involvement of all of the firm's employees, as well as the involvement of customers and suppliers throughout the value chain. For many firms, this vision also includes new partnerships, particularly with universities and government research institutes. This pervasive impact of technological forces has created new paradigms for strategies and management. New success indicators relate to the firm's capability in acquiring and managing knowledge. A "balanced scorecard" includes more than just financial results, and intellectual capital focuses on the firm's strategy for building and managing its knowledge activities.

Each nation, and each region within each nation, has its own unique innovation system that forms a key component of the environment of business. These innovation systems differ significantly, with some offering distinct advantages for the firms located there. This reality rests to a large degree on culture, social capital, education, and entrepreneurship. For each nation or region, a set of crucial characteristics includes the nature and strength of attitudes toward risks and rewards, the entrepreneurial quality of university relations with businesses, the willingness of all members of a value chain to become partners in the pursuit of knowledge, and the extent to which innovations within the financial system support this process. Current success creates conditions that support future success in repeated cycles of new technological advances, each of which may move from the research phase to widespread diffusion throughout the economy.

The United States has attained a position of global leadership in the new knowledge economy. Some Western European countries have also attained outstanding success. For much of the rest of the world, a central question relates to their capacity to adopt the technological advances of the United States and Western Europe. The motivations and procedures for technology transfer have become an essential element in the growth prospects of less developed nations. The linkages between international investments and the advanced technologies that are embodied in these investments place the MNEs at the center of this subject. MNEs may regularly transfer the manufacture of new products from the developed nations to the less developed nations in order to reduce costs through payment of lower wage rates. Many governments of developing nations wish to break out of this product cycle by creating their own innovation systems through investments in universities and research institutes. However, much must first be transformed within a nation's social, economic, and political forces in order to create an innovation system.

Advances in information technology have combined with innovations in microelectronics to create a host of new opportunities for e-business activities in every business sector. The Internet has become the new infrastructure that can reduce costs, improve communication, and enhance management practices. Porter (2001) has emphasized that,

"the greatest threat to an established company lies in either failing to deploy the Internet or failing to deploy it strategically. Every company needs an aggressive program to deploy the Internet throughout the value chain, using technology to reinforce traditional competitive advantages and complement existing ways of competing." (Porter, M. Strategy and the Internet. Harvard Business Review, 79(3) p. 77)

For many nations, a digital divide may exist between regions, age groups, and income and educational levels. Advanced local loop technologies and broadband service may not be available at a reasonable cost everywhere. The nature of the digital divide underlies the need for e-market segmentation with distinct strategies and practices for different market segments. For many firms, e-business is changing the relative bargaining power in the employer/employee relationship and is changing the nature of human resource activities. In the knowledge economy, ongoing employee education and retraining programs have a greater importance and a central role in supporting the firm's competitive advantage. E-business is changing the competitive positions of incumbents and new entrants, making start-ups easier and challenging monopolies. E-business has created a new set of ethical and social issues. The ease of accumulating and distributing an array of information about each individual challenges the concept of privacy rights. "Spamming" and online marketing to children can enter a gray area in terms of ethics, while certain criminal activities such as identity theft and fraud are facilitated by the Internet.

The traditional pharmaceutical business model is being threatened by a new biotech model and by generic manufacturers. In the past, each pharmaceutical firm commanded a value chain that it integrated from clinical trials through production and marketing. Each firm would generally test an array of compounds in a trial-and-error method in the search for an optimal drug to treat a widespread illness. Today, an alternative discovery procedure rests on the scientific analysis of how a specific disease develops and the design of a drug that can interfere with the disease process. "Rational drug design" can lead to medicines that are customized for specific subgroups of people who may have somewhat different versions of a disease. This emphasis on scientific research has led to a host of partnerships between universities, research institutes, and biotech firms. Meanwhile, the traditional value chain is being separated into distinct segments with individual firms specializing in each segment, including specialized clinical research organizations, drug manufacturers, and providers of sophisticated drug delivery systems. As a result, the industry structure has changed, redefining the role of Big Pharma firms with a new focus on the coordination of these separate firms and the marketing of the final products.

A "drug divide" exists between the developed nations and the less developed nations. The United States, Western Europe, and Japan consume nearly 85 percent of the world's production of pharmaceuticals. Big Pharma firms have focused their research on health issues of the high-income populations, often searching for lifestyle drugs. They have tended to ignore diseases that are prevalent in the low-income, less developed world. Furthermore, while firms in the developed nations have built their R&D programs on the expectation of patent protection, the less developed nations have often ignored these patents. Generic production with much lower prices has led to a growth in parallel trade. In response, international trade negotiations have sought to create global standards for patent protection, largely unsuccessfully.

New social and political forces are compelling firms, particularly those in the developed countries, to create technologies that can reduce their usage of materials and energy, improve the efficiency of production processes, expand recycling practices, and improve end-of-life product management. These challenges have led many firms to institute Environmental Management Systems in order to integrate new environmental technologies more completely into their traditional business goals and activities. Some authors argue that the pursuit of these innovations can enhance a firm's profits and its international competitiveness. Consequently, more stringent government standards may benefit the firm, as well as society as a whole.

Global warming has been receiving widespread and increasing attention. Managers confront a variety of alternative strategies as possible responses to the impacts of greenhouse gas emissions. The creation of emission trading schemes means that managers must compare the costs of purchasing certified emission reduction credits with the costs of implementing new emission reduction technologies. Some countries are not bound by the Kyoto Protocol's commitment to emission reductions and have not imposed emission caps. Consequently, managers must decide whether inter-jurisdictional differences in standards should be considered in their investment location decisions.

Global warming has focused attention in particular on alternative electricity generation technologies. Among the potential renewable resources that could generate electricity, wind has gained prominence because of its relatively low cost and because of various drawbacks of other technologies. New technologies have greatly reduced wind generation costs. Wind generation facilities can be built on a relatively small scale, so individual firms and consumers can now consider investments to satisfy their own needs. Governments have instituted subsidy programs, as well as standards that mandate certain targets for generation by renewable resources. In many jurisdictions, electricity distributors must ensure that specific percentages of their electricity are derived from "green" energy. These pressures are creating many opportunities for entrepreneurial responses. For a number of reasons, the United States may not be the most attractive market for these investments. Hence, even U.S. firms may be tempted to invest in wind electricity generation in other nations. Meanwhile, government programs and policies are expanding quickly and consumer preferences are changing quickly.

Economic forces differ among nations and continually change over time. Analyses of their likely impacts and the creation of appropriate economic strategies can be the central determinant of a firm's success. The attractiveness of a particular market depends on its industry structure, including the competitiveness of existing firms, the threat of substitutes and new entrants, and the bargaining power of suppliers and customers. New communication technologies have facilitated international outsourcing, enabling each firm to locate each activity in whatever country offers the optimal combination of cost, quality, and other attributes. New organizational structures may be required to coordinate international networks and to stimulate international innovation.

An industry's profit potential depends on the structure of that industry, and industry structures differ in significant respects among nations. For managers, this perspective is crucial in international business decisions. Where a single firm dominates the marketplace, the interrelationships between that firm and its customers can have a unique configuration, where the firm has power to maintain prices and profits above competitive levels. The degree of the monopolist's strength in price negotiations will be impacted by the threat of new entrants and the threat of substitutes. If these threats are weak, then a monopolist may gain exceptionally high profits. However, even if no substitutes currently exist, the threat of new entrants may make the market "contestable," such that a monopolist has to act as if potential entrants were already in the marketplace. When only a small number of firms exist in an industry, the investment, price, and output decisions of any one firm impact the decisions of the others. Game theory provides frameworks for analyzing these inter-firm reactions. Each firm knows that if it raises prices, it may lose market share. However, if its competitors also raise prices to a similar extent, then the profits of all firms in the industry may increase. Hence, each firm makes its decisions based on its expectations about the responses of its competitors. This reality can result in an unstable market, with prices and market shares shifting dramatically. Alternatively, this mutual interdependence may result in price agreements that seek to stabilize prices at higher than competitive levels.

With modern communications and transportation technologies, outsourcing can involve any nation; so the value chain has become an international web. Many firms participate in value chains where their profitability depends on cooperation. A group of firms may work together to expand the value that is added by their group as a whole. While the group as a whole faces competition from other groups, the organizational dynamic within each group may seek to improve the outcomes for all participants. This international web will strive continually to create unique goods and services so that potential substitutes are further removed from the final customer's purchasing decision. Coordinating this complex network so that it involves an ongoing innovation process has become a key determinant of each firm's success. To achieve innovation, a firm can no longer simply accept the components or products it is offered by export agents or distributors from other countries. Firms must now create organizational structures that facilitate an ongoing international collaboration focused on the innovation process. This may require an exchange of personnel among firms on a regular basis, as well as ongoing dialogue and exchange of research information.

The MNE must choose investment locations in the context of each nation's ever-changing macroeconomic variables. Growth rates, unemployment and inflation rates, and foreign exchange rates may all impact a firm's business plans. Technological progress can increase a nation's growth rate and income levels so that consumer demand offers new opportunities. Each nation's international competitiveness differs among industries, so each nation's relative attractiveness as an investment location is not the same for all firms or all business activities. Consequently, each MNE must develop its own combination of strategies and management in response to economic forces.

In recent years, the macroeconomic objective of maximizing economic growth has led governments to implement certain industry-level policies. Governments have devoted greater attention to privatization and deregulation, education, skills training, and funding of R&D in the expectation that these programs will increase the nation's productivity and, hence, increase its growth rate. In the formerly communist nations, liberalization reforms have been extensive and have altered industry structures in significant ways. Particularly in the less developed nations, unemployment has generally not been perceived as a result of inadequate aggregate demand. Rather, analysts have emphasized inappropriate human skills, obsolete technologies, and inadequate capital stock. Here as well, certain sector-level policies and programs seek to ameliorate these shortcomings. Consequently, government policies may impact industry structures, competitiveness, and national economic prospects in ways that managers must understand and to which managers must adapt their strategies.

In The Competitive Advantage of Nations, Michael Porter (1990) analyzes the basis for a nation's competitiveness by drawing a diagram of a diamond, where each of the four corners represents an underlying feature: factor conditions, demand conditions, related and supporting industries, and firm strategy structure and rivalry. He emphasizes that for any particular industry in a specific country to be internationally competitive, it must have a strong domestic presence of each of these four features as they relate to that industry. From this perspective, the international competitiveness and the future income and growth of a nation's firms will be determined by strengths and weaknesses with regard to these four features.

A nation's competitive advantage will not be spread evenly across all industries. Each nation will have a unique combination of these factors. This unique combination will be best suited for only certain kinds of industry. Consequently, a nation will have a cluster of industries that depend on a similar combination of factors and that will form the competitive advantage for that particular nation. Within such a cluster, there will often be many different firms in the same industry. These competing firms or rivals may all be internationally competitive. Backward and forward linkages to suppliers and purchasers are necessary to create a vertical cluster that is internationally competitive.

Political and governmental forces are related to each of social, technological, and economic forces. These forces play a key role in the building of social capital, the fostering of entrepreneurship, and the facilitation of immigration. There are many ways through which cultural values shape political forces and through which interest groups influence government decisions. The attempt to reduce corruption illustrates the reverse flow, in which laws and their enforcement seek to change common business practices. In the context of these interactions, the firm must adjust its strategies and management practices in response to social and political forces, but the firm may also seek to influence these forces through lobbying of government and by relating with interest groups.

Political forces are also related to technological forces through the development of "the knowledge economy" and ongoing partnerships within the "triple helix." Government ownership and regulations can influence the speed with which firms adopt information technologies, microelectronics, and e-business. Governments determine the nature of the pharmaceutical industry, subsidizing research, approving new drugs, and controlling drug prices. Increasingly, environmental concerns are leading governments to encourage the implementation of new technologies. In all of these respects, analyses of technological forces involve the discussion of political forces.

Governments continually attempt to alter the functioning of specific markets. Each firm's industry structure is subject to government intervention in response to externalities or third-party effects and monopolistic pricing. Yet many governments have recently engaged in liberalization programs with privatization and deregulation in the hope of stimulating economic growth and particularly the productivity improvements that underlie it. Meanwhile, a government's fiscal, monetary, and exchange rate policies determine the economic environment within which the firm operates.

Public policies differ among nations, and these differences can impact the firm's trade and investment decisions. Some public policies interfere with business strategies, while others can support and assist the firm. Many countries have been altering their public policies in order to attract more international investment. Some have created special economic zones or high-tech corridors within which investors are promised particularly attractive public policies. In view of these situations, a firm can create a competitive advantage through its ability to relate with and adapt to the political process in each country. Furthermore, a firm may be able to influence the process of making laws and regulations, both directly in its lobbying of politicians and civil servants and indirectly in its communications with NGOs and the public. Consequently, it is important for firms to develop nonmarket strategies that underlie and are integrated with their market strategies. Government policies that traditionally were regarded as "domestic" have now become of international importance, as they can distort price ratios and, hence, trade patterns or even act as trade barriers. However, trade and investment agreements contain provisions that place constraints on each signatory's public policies for the purpose of creating a level international playing field.

For MNEs, relevant public policies include ownership, regulation, taxation, and subsidies, all of which impact business strategies and management. Most nations have created impediments to certain types of investment. In some nations, the use of price regulations can alter projected rates of return. In others, businesses may confront sanctions, screening agencies, or continual government intervention in business decisions. Some, such as Venezuela under Chavez, are implementing new restrictions on foreign investment. Yet in recent years, many nations have implemented liberalization reforms that reduce the degree of government intervention in order to stimulate economic growth. China, India, and Eastern Europe illustrate the challenges and opportunities created by liberalization reforms.

Many nations have devised schemes to offer foreign investors special incentives. They seek to attract not only foreign capital but also advanced technologies and managerial skills. As early as 1979, China created special economic zones with modern infrastructure and tax concessions. Many nations have copied this model. Some, such as Malaysia, have focused their zone on the attraction of high-tech firms. Meanwhile, the relatively advanced nations have been striving to retain jobs in the context of corporate "offshoring" to low-wage countries, and some have created special subsidy programs for this purpose. However, such government policies may conflict with provisions of trade and investment agreements, such as the World Trade Organization.

For some issues, a new trend has developed in the creation of international, rather than national, public policies. The protection of intellectual property requires that all nations adhere to a consistent set of government rules. The physical environment is a global phenomenon as the pollution of each country becomes the pollution of all countries. In this context, some businesses may be tempted to reduce costs by shifting their investment locations to countries that have lower standards or poorer enforcement. Competition or antitrust policy now needs to be based on international market behaviour rather than just national market behaviour. The internationalization of financial institutions has led many to advocate global regulations. This new interconnectedness within the global economy is shifting certain public policies toward an international level, but how these international agreements should be formulated and enforced remains a subject for debate.

Trade and investment disputes are a continual threat for MNEs. In particular, China's rapid and substantial expansion throughout the global economy has created a host of concerns about unfair competition and distortions that prevent the creation of a level playing field. Sanctions can suddenly disrupt established trade and investment patterns. Some nations see the growth of sovereign wealth funds as a potential danger to their own national sovereignty, leading to pressures for new protectionism. In the context of these new developments, managers must learn how to deal with the ongoing transformations in the environment of business.

# data[].attributes.attachment_link.title
The global environment of business: New paradigms for international management

# data[].attributes.attachment_link.description
Note: This article is based on a book by David W. Conklin entitled The Global Environment of Business: New Paradigms for International Management (Sage Publications, Thousand Oaks California, 2011) The article consists of excerpts from an article with that title in Effective Executive, IUP Publications, Hyderabad, India, June 2011, pp.32-43.

# data[].attributes.attachment_link.description
Sustainability-related megatrends are changing our world and are having a measurable impact on companies' top and bottom lines. Long-term challenges such as resource scarcity, demographic shifts and climate change are redefining societal expectations, public policies, regulatory frameworks, and hence business environments and investment outcomes.

# data[].attributes.attachment_link.description
Discover this and millions of other royalty-free stock photos, illustrations, and vectors in the Shutterstock collection. Thousands of new, high-quality images added every day.

# data[].attributes.attachment_link.readable_text
The Four Functions of Managers

Management involves far more than just telling others what to do. Before any of you decide that you think you can do your boss's job, let's take a look into more of what a manager does.

The major functions that a manager completes can be categorized into four different functions known as planning, organizing, leading, and controlling. For some of us, we only see the final two - leading and controlling - but you should know that for every managerial behavior you do see, there is an equal amount that you do not. Behind the manager's closed door, he or she spends a good deal of his or her time planning and organizing, so that he or she can effectively carry out the functions of leading and controlling.

Now, before you think your boss is different, you should also know that the four functions of management are standard across industries, whether that be in a manufacturing plant, a home office, a grocery store, a retail store, a restaurant, a hotel, or even an amusement park. Effective managers understand how planning, organizing, leading, and controlling are used to achieve organizational success. Unfortunately, I do not have a rebuttal for those of you who have ineffective managers, but perhaps learning a little more about the four functions of management will help to identify what steps your ineffective manager needs to take to become an effective one.

Try to think about the four functions as a process where each step builds on the others. Managers must first plan, then organize according to that plan, lead others to work towards the plan, and finally evaluate the effectiveness of the plan. These four functions must be performed properly and, when done well, become the reason for organizational success.

Planning

The first of the managerial functions is planning. In this step, the manager will create a detailed action plan aimed at some organizational goal.

For example, let's say Melissa the marketing manager has a goal of increasing sales during the month of February. Melissa needs to first spend time mapping out the necessary steps she and her team of sales representatives must take so that they can increase sales numbers. These steps might include things like increasing advertisements in a particular region, placing some items on sale, increasing the amount of required customer-to-sales rep contact, or contacting prior customers to see if they are interested in purchasing additional products. The steps are then organized into a logical pattern so that Melissa and her team can follow them.

Planning is an ongoing step, and can be highly specialized based on organizational goals, division goals, departmental goals, and team goals. It is up to the manager to recognize which goals need to be planned within his or her individual area.

Organizing

The second of the managerial functions is organizing. This step requires Melissa to determine how she will distribute resources and organize her employees according to the plan. Melissa will need to identify different roles and ensure that she assigns the right amount of employees to carry out her plan. She will also need to delegate authority, assign work, and provide direction so that her team of sales representatives can work towards higher sales numbers without having barriers in their way.

Leading

The third function of management is leading. In this step, Melissa spends time connecting with her employees on an interpersonal level. This goes beyond simply managing tasks; rather, it involves communicating, motivating, inspiring, and encouraging employees towards a higher level of productivity. Not all managers are leaders. An employee will follow the directions of a manager because they have to, but an employee will voluntarily follow the directions of a leader because they believe in who he or she is as a person, what he or she stands for, and for the manner in which they are inspired by the leader.

# data[].attributes.attachment_link.keywords[]
leading & controlling - video & lesson transcript | study.com

# data[].attributes.attachment_link.title
Four Functions of Management: Planning, Organizing, Leading & Controlling - Video & Lesson Transcript | Study.com

# data[].attributes.attachment_link.description
Management involves far more than just telling others what to do. Before any of you decide that you think you can do your boss's job, let's take a look into more of what a manager does. The major functions that a manager completes can be categorized into four different functions known as planning, organizing, leading, and controlling.

# data[].attributes.attachment_link.readable_text
Today's managers have access to an amazing array of resources which they can use to improve their skills. But what about those managers who were leading the way forward 100 years ago?

Managers in the early 1900s had very few external resources to draw upon to guide and develop their management practice. But thanks to early theorists like Henri Fayol (1841-1925), managers began to get the tools they needed to lead and manage more effectively. Fayol, and others like him, are responsible for building the foundations of modern management theory.

Background

Henri Fayol was born in Istanbul in 1841. When he was 19, he began working as an engineer at a large mining company in France. He eventually became the director, at a time when the mining company employed more than 1,000 people.

Through the years, Fayol began to develop what he considered to be the 14 most important principles of management. Essentially, these explained how managers should organize and interact with staff.

In 1916, two years before he stepped down as director, he published his "14 Principles of Management" in the book " Administration Industrielle et Générale." Fayol also created a list of the six primary functions of management, which go hand in hand with the Principles.

Fayol's "14 Principles" was one of the earliest theories of management to be created, and remains one of the most comprehensive. He's considered to be among the most influential contributors to the modern concept of management, even though people don't refer to "The 14 Principles" often today.

The theory falls under the Administrative Management school of thought (as opposed to the Scientific Management school, led by Fredrick Taylor).

Fayol's 14 Principles of Management

Fayol's principles are listed below:

1. Division of Work - When employees are specialized, output can increase because they become increasingly skilled and efficient.

2. Authority - Managers must have the authority to give orders, but they must also keep in mind that with authority comes responsibility.

3. Discipline - Discipline must be upheld in organizations, but methods for doing so can vary.

4. Unity of Command - Employees should have only one direct supervisor.

5. Unity of Direction - Teams with the same objective should be working under the direction of one manager, using one plan. This will ensure that action is properly coordinated.

6. Subordination of Individual Interests to the General Interest - The interests of one employee should not be allowed to become more important than those of the group. This includes managers.

7. Remuneration - Employee satisfaction depends on fair remuneration for everyone. This includes financial and non-financial compensation.

8. Centralization - This principle refers to how close employees are to the decision-making process. It is important to aim for an appropriate balance.

9. Scalar Chain - Employees should be aware of where they stand in the organization's hierarchy, or chain of command.

10. Order - The workplace facilities must be clean, tidy and safe for employees. Everything should have its place.

11. Equity - Managers should be fair to staff at all times, both maintaining discipline as necessary and acting with kindness where appropriate.

12. Stability of Tenure of Personnel - Managers should strive to minimize employee turnover. Personnel planning should be a priority.

13. Initiative - Employees should be given the necessary level of freedom to create and carry out plans.

14. Esprit de Corps - Organizations should strive to promote team spirit and unity.

Fayol's Six Functions of Management

Fayol's six primary functions of management, which go hand in hand with the Principles, are as follows:

Key Points

Henri Fayol's "14 Principles of Management" have been a significant influence on modern management theory. His practical list of principles helped early 20th century managers learn how to organize and interact with their employees in a productive way.

Although the 14 Principles aren't widely used today, they can still offer guidance for today's managers. Many of the principles are now considered to be common sense, but at the time they were revolutionary concepts for organizational management.

# data[].attributes.attachment_link.title
Henri Fayol's Principles of Management: Early Management Theory

# data[].attributes.attachment_link.description
Today's managers have access to an amazing array of resources which they can use to improve their skills. But what about those managers who were leading the way forward 100 years ago? Managers in the early 1900s had very few external resources to draw upon to guide and develop their management practice.

# data[].attributes.attachment_link.readable_text
Steve Jobs

What on earth is happening to management? Formerly self-evident truths are being cast aside. The sacred goal of maximizing shareholder value is now " the dumbest idea in the world". The search for the holy grail of "sustainable competitive advantage" is now recognized as futile. The "essence of strategy" seen as "coping with competitors" is obsolete. The uni-directional value chain -the very core of 20th Century management thinking -is now a problem, not a solution. The short-term gains of large-scale off-shoring of manufacturing are recognized to have caused massive loss of competitive capacity. Supposed distinctions between leaders and managers have collapsed. To top it off, a slew of recent management books suggest that today's organizations represent a failure so deep and pervasive that there are hardly words to describe it. A veritable revolution in management is under way.

Although these books have many antecedents, the stirrings of the revolution began in earnest in 2009 with Gary Hamel's declaration in the landmark HBR article, Moon Shots For Management, following a colloquium with distinguished thought leaders:

"Tomorrow's business imperatives lie outside the performance envelope of today's bureaucracy-infused management practices... Equipping organizations to tackle the future would require a management revolution no less momentous than the one that spawned modern industry."

In the 20 th Century, firms had often been successful by following the precepts of hierarchical bureaucracy: "focus on making money", "tell employees what to do", "control performance through rules, roles, plans and reports" and "achieve efficiency through economies of scale".

In the last quarter of the century, corollaries were added: "focus tightly on maximizing shareholder value", "strategy is about coping with competition" and "lower costs by off-shoring". These principles worked so long as oligopolies dominated the marketplace. Firms could succeed with limited innovation, often by copying what had already been pioneered by others.

Then globalization and the Internet changed everything. Customers suddenly had real choices, access to instant reliable information and the ability to communicate with each other. Power in the marketplace shifted from seller to buyer. Customers started insisting on "better, cheaper, quicker and smaller," along with "more convenient, reliable and personalized." Continuous, even transformational, innovation have become requirements for survival.

Hierarchical bureaucracy couldn't cope. Attempts at achieving continuous innovation led to unmanageable internal complexity, while attempts at limiting innovation accelerated organizational death.

As Allen Murray noted in the Wall Street Journal, firms practicing traditional management "missed game-changing transformations in industry after industry-computers (mainframes to PCs), telephony (landline to mobile), photography (film to digital), stock markets (floor to online)-not because of 'bad' management, but because they followed the dictates of 'good' management."

Initially mature products and firms were wiped out by upstarts that offered cheap substitutes to their products, first capturing low-end customers, and gradually moving upmarket to pick off higher-end customers.

Then change accelerated. Suddenly entire product lines-whole markets-could be destroyed almost overnight as customers defected in droves as a result of " big bang disruption ". Disrupters came out of nowhere and were everywhere at once. Disruption happened so quickly and on such a large scale that it was hard to predict or defend against.

Even as hierarchical bureaucracy was failing in the private sector, its practices were infecting government, non-profits, education and health. "Reforms" here usually involved stricter implementation of hierarchical bureaucracy rather than a shift towards more productive management practices. As a result, performance was pushed even further from the frontier of what is possible. Since the public is coming to expect responsiveness from these sectors similar to that of the private sector, satisfaction steadily declined.

New ways of leading and managing emerged

Yet in this more challenging context, some organizations forged ahead.

Apple met the diverse needs of hundreds of millions of individual iPhone users by launching its own ecosystem-a technology platform that enabled hundreds of thousands of developers to create Apps that could meet every conceivable human need and to offer them directly to customers. The result is an iPhone that is easily adapted to meet the needs, preferences and passing whims of every single user-a feat inconceivable with traditional management practices.

Salesforce achieved continuous innovation in a global computer system, with more than two million subscribers and 30 million lines of code, where even a single tiny error can cause the entire system to crash. Self-organizing teams achieve continuous innovation by working in short iterative cycles of test-driven development with direct customer feedback as the work proceeds.

The US military coped with asymmetric warfare against elusive terrorists through "mission command", an approach built on decentralization, spontaneity, informality, loose rein, self-discipline and initiative. It draws on ability from all echelons. Its communications are multi-directional interactions, not just top-down directives (see chart).

Apple, Salesforce and the US military are not alone. Amazon [AMZN], Salesforce [CRM], Whole Foods [WFM] Toyota [TM], Haier Group, Li & Fung [SEHK: 0494] and Zara [BMAD: ITX] are other prominent exemplars of fundamental change, along with thousands of lesser-known firms. The transition is happening not just in high tech, but also in manufacturing, books, music, household appliances, automobiles, groceries and clothing.

None of these organizations has arrived at any final state or equilibrium: in each case, management practices continue to evolve. Nor is any of these organizations perfect, as they have to cope with a context that is filled with contradictions. Their virtue lies in the creative energy with which they are pioneering new ways of adding value.

The principles of the Creative Economy

In effect, the management revolution foreshadowed by Gary Hamel has already begun. A new kind of organization is emerging, capable of achieving both continuous innovation and transformation along with disciplined execution, while also delighting those for whom the work is done and inspiring those doing the work. These organizations have moved the production frontier of what is possible. A new economy-the Creative Economy -has appeared.

The new way of operating co-exists in the economy along with the old, sometimes even in the same organization. For example, GE is a firm that is still largely practicing traditional management, although parts of it, such as GE Health Care, have begun to operate in a more agile fashion.

The shift is thus not one of "new firms" vs "old firms". As Bill Fischer, the co-author of Reinventing Giants (2013), says, "Some 'old economy' firms are practicing 'creative economy' managerial approaches, yet receiving little or no recognition for it."

What it takes to prosper in today's different context is now discernable. A series of articles in Strategy & Leadership has sketched the radically different principles of leadership and management by which these organizations have achieved a higher level of performanc e (see below).

A set of books has similarly been delineating the principles and practices. Once-sacred and supposedly timeless truths of management and leadership are being discarded. New movements are spearheading and disseminating the change (see list below). Business schools are recognizing that they face " a crisis of irrelevance " and are beginning to reflect the shift.

A coherent constellation of fundamentally different principles in leadership and management has emerged. The principles involve not merely the application of new technology or fixes or tweaks to hierarchical bureaucracy. They represent a paradigm shift in the strict sense laid down by Thomas Kuhn: a different mental model of how the world works, leading to a different way of thinking, speaking and acting in the world.

None of the principles or practices is individually new. What is new is implementing them together in a disciplined way to get work done.

The new management canon

The books and articles describing the new paradigm constitute a canon of radically different management. It is appropriate that different writers are fleshing out the canon. The new management paradigm is a large idea and different takes on it can help us get our minds around it.

Despite differences in terminology, emphasis and coverage, the commonalities in these books are more significant than the differences. In fact, the differences between them are minor compared to the gulf between, on the one hand, the way most large organizations are actually led and managed today and, on the other, the way these books say they ought to be led and managed.

The books and articles contain insights that are unmistakably relevant to the 21 st Century workplace. While drawing on the wisdom of history, these books are not thin copies of what has been said many times before. They come to terms with the truth of our times. Their passion helps us recover a sense of wonder in the workplace, enabling us to look at the world afresh and see how truly inspiring creative work and delighted customers can be.

Leaders need to see that the books and articles:

recognize a paradigm shift in leadership and management

recognize a coherent constellation of business principles, not a bundle of individual fixes

distinguish the principles of the new paradigm from the individuals and firms practicing them

separate core principles from a multitude of related practices

distinguish drivers from results

reflect an historical awareness of a transition of one type of leadership and management to another

depict the shape a new kind of economy-the Creative Economy

are passionate in their calls for a different future.

Twelve of the books have been discussed in earlier articles: including Fixing the Game (Roger Martin), What Matters Now (Gary Hamel), Reorganize for Resilience (Ranjay Gulati), The Power of Pull (John Hagel, John Seely Brown, Lang Davison), The Innovator's Prescription (Clayton Christensen et al), The Leader's Guide To Radical Management (Stephen Denning), The Leader's Dilemma (Franz Röösli et al), Conscious Capitalism (John Mackey and Raj Sikodia), Peak (Chip Conley), The Lean Startup (Eric Ries), The Ultimate Question 2.0 (Fred Reichheld et al) and Leadership in a Wiki World (Rod Collins).

Six recent additions to the canon draw attention to complementary aspects of the new paradigm: The Elastic Enterprise (2012) by Nicholas Vitalari and Haydn Shaughnessy; The End of Competitive Advantage (2013) by Rita McGrath; Flat Army (2013) by Dan Pontefract: The Connected Organization (2013) by Dave Gray; Enterprise Software Delivery (2013) by Alan Brown and Reinventing Giants (2013)Bill Fischer et al. Each of the new books contributes to institutionalizing the paradigm shift in different ways. (see Featured Readings below).

What the canon contributes

Leaders should recognize that these eighteen books represent, not eighteen unrelated sets of ideas, but rather one core set of ideas explained in eighteen different ways.

The common threads include:
1) The books recognize a paradigm shift in leadership and management
The paradigm shift involves not merely the application of new technology or a simple set of fixes or adjustments to hierarchical bureaucracy. It means basic change in the way people think, talk and act in the workplace. The books recognize the paradigm shift, and address the deep changes in attitudes, values, habits and beliefs involved in the change.

Whereas the traditional management pursued an ethos of efficiency and control, often treating both employees and customers as things to be manipulated, the new paradigm thrives on the ethos of imagination, exploration, experiment, discovery and collaboration. It deals with employees and customers as independent, thinking, feeling human beings. It embraces complexity as an opportunity, rather than a hurdle to be overcome.

Among the books with the clearest articulation of the paradigm shift are Fixing The Game, The Elastic Enterprise and Conscious Capitalism.

2) The books describe a coherent constellation of principles

The new paradigm is a coherent constellation of principles, practices, attitudes, values and beliefs, not just a unconnected bundle of management gadgets, processes or technologies. The books recognize that breakthroughs occur not from individual process or technology changes but rather when the goals, principles, practices, values and attitudes join together to form a interacting and consistent set of organizational possibilities.

Many of the principles, processes, practices and technologies of the paradigm shift have existed for some time, including customer focus, teams, empowerment, Agile, values, horizontal communications and so on. But in traditional management, those elements have been playing a minor or temporary role as options, or complements, to the basic way of doing things. Now these elements have moved to centre stage and represent the necessary components of the "new normal".

Among the books with the clearest articulation of the shift in management paradigm are Reorganize For Resilience and Leadership In A Wiki World.

3) The books distinguish principles from individuals and firms practicing them

Writers are often dazzled by the success of leaders like Steve Jobs at Apple, Jeff Bezos at Amazon, Marc Benioff at Salesforce and are tempted to view their idiosyncrasies through rose-colored glasses.

For the most part, books in the new management canon avoid this pitfall. They focus on principles, practices, values and attitudes, not hero worship. Instead of saying or implying: "Do what Steve Jobs did" or "Do what Apple did"? they say: follow these principles, practices, values and attitudes, which were wholly or partially exemplified in the behavior of Steve Jobs and Apple.

Flat Army is particularly good at putting Steve Jobs in perspective. Flat Army acknowledges that

"Apple was the most valuable company in history," and "Jobs was innovative, relentless, futuristic, charismatic and successful.

Yet Jobs is far from a perfect model:

"Coupled with his brilliance that was acknowledged by the mainstream, however, was a dark side-a leader extremely closed to mistakes and failures, who would fly into (documented) fits of rage, have tyrannical outbursts, and berate Apple staff in public. He even expressed an arrogant contempt for other people's ideas or celebrated them as his own...

"Apple might be even greater than it is today if Jobs had employed a more collaborative leadership model not only with those within his inner circle-which he did exquisitely-but also with his entire Apple employee community."

4) The books separate principles from a multitude of related practices

Many things need to be done for an organization to be successful in today's marketplace. My book on radical management in 2010 noted more than seventy practices. Yet no one can remember, digest, and replicate seventy separate practices. Nor does one need to. There is a shorter list of core principles from which detailed practices flow. Here's my current list:

a shift from a goal of making money to the goal of delighting customers profitably. Innovation and transformation are no longer options: they have become imperatives.

a shift from controlling individuals to inspiring collaboration among self-organizing teams, networks and ecosystems.

a shift from coordinating work by hierarchical bureaucracy with its rules, roles, plans and reports to dynamic linking, with iterative approaches to development with direct customer feedback and interaction with teams and networks.

a shift from a preoccupation with economic value and efficiency to an embrace of values that will grow the firm and the accompanying ecosystems, particularly radical transparency, continuous improvement and sustainability.

a shift from top-down directives to multi-directional conversations. Instead of telling people what to do, leaders inspire people across organizational boundaries to work together on common goals.

This list of core principles isn't necessarily final. The principles listed here have evolved since I published my book on radical management in 2010. There is a continuous process of learning. Better formulations will surely emerge. Got a suggestion? Love to hear from you.

Among the books that clearly articulate a coherent core of principles, without getting lost in a myriad practices, are Reorganize For Resilience, and Flat Army.

5) The books distinguish drivers from results

Organizations are complex phenomena with many interacting parts. There are few simple cause-and-effect relationships. In a world in which inspiring the creativity of employees and partners has become central and in which interconnected customers have become dominant, the linear thinking of traditional management which treated employees as "resources" to be controlled and customers as "demand" to be manipulated doesn't work.

Since efforts to impose linear thinking on complex situations usually lead to the opposite of what is intended, the principle of obliquity becomes relevant, as discussed in John Kay's book, Obliquity: Why Our Goals Are Best Achieved Indirectly (Penguin, 2012). Where explicit articulation of a goal will result in the complex environment pushing back in the opposite direction, oblique goals will often be more effective.

To take one example: the goal of delighting customers may make more money than an explicit goal of making money.

Another example: the kind of mass personalization that one sees in an iPhone is the result of certain leadership and managerial practices. The accomplishment of mass personalization lies outside the performance envelope of hierarchical bureaucracy. Asking a hierarchical bureaucracy to achieve it is like asking a pig to fly. Instead, the organization needs to adopt certain leadership and managerial practices, which then enable mass personalization. Mass personalization is a result, not a driver.

Among the books that do best in distinguishing drivers from results are the Innovator's Prescription, Leadership in A Wiki World and Lean Startup.

6) The books acknowledge the history of leadership and management

Three behaviors underlie the general failure of management thinking to advance as a discipline. One is the " Amnesia/Eureka!" Syndrome: a tendency to forget the past, and then rediscover it with shrieks of "Eureka!" A second is the "Old Wine in New Bottles" syndrome: minor tweaks are hyped as major changes. A third is the Virgin Birth" syndrome: writers and journals systematically eliminate traces of earlier thinking about the subject at hand and present previously documented ideas as having "a virgin birth" without any legitimate parentage.

By contrast, most of the books in the canon are careful to give credit to predecessors, signal alternative viewpoints and demonstrate sensitivity to the evolution of the subject as a discipline. Among the books that do this best are The Power Of Pull and Flat Army.
7) The books break free from obsolete management ideas
As the paradigm shift takes hold, once-sacred and self-evident truths are being cast aside. The goal of maximizing shareholder value is recognized to be " the dumbest idea in the world" and replaced with "delighting customers profitably." The search for the holy grail of "sustainable competitive advantage" is recognized as futile: competitive advantage is at best temporary. The "essence of strategy" seen as coping with competitors is declared to be obsolete: strategy is about adding value to customers.

The uni-directional value chain -the very core of 20th Century management thinking -is replaced by multidirectional networks, in which customers play a key role. The short-term gains of large-scale off-shoring of manufacturing are recognized to have caused massive loss of competitive capacity and new heuristics for outsourcing have emerged. Supposed distinctions between leaders and managers are dissolving: managers are leaders and leaders also need to manage.

Although some of the books in the canon have not been totally cleansed from this obsolete thinking, as ideas like "maximizing shareholder value" and "strategy seen as coping with competition" have been around so long that they are difficult to shake off, all the books contribute in different ways to expunging these exploded notions from our thinking.

Among the books in the canon that are the most fully emancipated from obsolete management ideas are The Connected Organization and Conscious Capitalism.

8 ) The books point to a new kind of economy:

To varying degrees, the books point to the emergence of different economies operating at different speeds.

The Traditional Economy is the economy that we inherited from the 20 th Century governed by traditional management practices. It's a real economy producing goods and services. Many of the firms in it are strong and powerful and still have plentiful resources, both tangible and intangible. Now these firms have difficulty delivering what today's more demanding, interconnected customers desire.

As The Elastic Enterprise notes, the practices of traditional management "create profound dis-economies. Scale has come to equate with sclerosis because the costs associated with organizing more and more people scale more quickly than the additional wealth those people create."

For the moment, the Traditional Economy is getting by on cheap government money while waiting for an improvement in the business cycle. But its problems are not cyclical. It is an economy in steep decline with a grim future.

The dark cousin of the Traditional Economy is Financial Capitalism. It is epitomized by the big banks which are enjoying record profits, and is also supported by cheap government money. Its fundamentals remain shaky. It is a world of financial instruments focused on making money out of money, often disconnected from the real economy. It remains to be seen whether the big banks can shift their energies to reconnecting the financial sector to the real economy and assisting in the transition to the Creative Economy, or whether an even worse financial crash will be necessary to achieve the necessary transition.

Meanwhile the Creative Economy, built on the paradigm shift in leadership and management, is booming. This is a real economy that generates products and services for real customers. It is booming despite the Great Stagnation since 2008.

As The Elastic Enterprise points out, "the techniques that the best performers have invented will spur a new era of economic growth and that their lessons are applicable to companies of all sizes... While other companies were laying staff off, these were hiring and creating opportunity for vast ecosystems of creative people... these companies were not just good for employment opportunities; they were creating new markets as well. We are talking here about real change, along many dimensions, baked into one coherent model for how business should be done...These are the new scale economics- growth without a crippling increase in complexity management."

Given the stark differences in trajectories and performance of the three economies, aggregate national economic statistics tend to conceal what is going on. In both Europe and US, the Traditional Economy is still dominant: As a result, the US economy appears to be growing anaemically since the meltdown of 2008 (the Great Stagnation) while most of Europe is still in recession. Both the Traditional Economy and Financial Capitalism act as drags on enduring, widespread economic prosperity.

Among the books in the canon that depict the broader economic scene most clearly are The Elastic Enterprise, The Power Of Pull and Conscious Capitalism.
9). The books share a passionate view of management's future
Passion is not an attribute usually associated with 20th Century management. But books in the radical management canon are imbued with it. These books aspire to enhance life both for those doing the work in it and for those for whom the work is done. They follow the dictum of Steve Jobs: "The only way to be truly satisfied is to do what you believe is really great work. And the only way to do great work is to love what you do." Traditional workplaces provided few such opportunities. The new management aspires to provide them most of the time.

All of these books share a vision of how things must be, and in some cases already are, different. While the books don't provide answers to all the problems and difficulties that modern society presents, they reveal an enhanced array of possible responses to life in the workplace. The books all seek in different ways to show the significant patterns and possibilities that lie behind current mediocre appearances. They help us learn from those who have aspired to do better.

The books are inspired by the idea that management must embody truth, both in what is said and how it is said. Clichés about the manipulation of systems and efficiency and incremental fixes will not do. The truth of our organizations, bitter and disheartening as it is, must be faced with honesty and imagination. These books do so with a force and a clarity that have not often been heard in management before.

They show leaders how the paradigm shift in leadership and management generates not only dramatic improvements in cost, size, and time of products and services, and enhancements in convenience, reliability and personalization, but also new ways of socializing, new ways of living these possibilities, new meaning in how time is spent and fresh understanding of what it means to be fully alive.
Recent additions to the canon of radical management
The End of Competitive Advantage (2013) by Rita McGrath registers the death of one of the sacred principles of traditional management: the essence of strategy is the identification of sustainable competitive advantage. ""Strategy is stuck," Professor McGrath tells us. "Virtually all strategy frameworks and tools in use today are based on a single dominant idea: that the purpose of strategy is to achieve a sustainable competitive advantage. This idea is strategy's most fundamental concept. It's every company's holy grail. And it's no longer relevant for more and more companies."

The Elastic Enterprise (2012) by Nicholas Vitalari and Haydn Shaughnessy explains how firms mobilize whole ecosystems. "Highly competitive companies have prospered through the tough years by transforming their basic operational processes, by becoming elastic. The elastic enterprise can scale its operations without a parallel increase in overhead. These are the new scale economics- growth without a crippling increase in complexity management."

Flat Army (2013) by Dan Pontefract explores the evolution of the idea that an organization is a collection of connected human beings, not a system of things to be manipulated. It also recognizes the flawed nature of even the best of the exemplars of the new management paradigm.

The Connected Organization (2013) by Dave Grayexplores the detailed management practices of the Creative Economy. It discusses how these teams, networks and ecosystems operate and the roles of individuals in them. It has a particularly rich discussion of the shift from a uni-directional supply chain to a multi-directional "podular" network, that can be reconfigured on the fly and supported by a strong platform that serves as a backbone for the "pods".

Enterprise Software Delivery (2013) by Alan Brown explains why the management of software development is generally more advanced in implementing the new management paradigm: in part, this is because software developers had no other choice. In other sectors, firms could pursue losing strategies for years. In software development, failure tends to be immediate and total: after spending more than a billion dollars, one can be staring a blue screen with no idea on how to fix it. Software developers evolved practices known as Agile, Scrum and XP, that are now spreading to other sectors.

Reinventing Giants (2013)byBill Fischer et al shows how even big old firms in mature sectors can reinvent themselves within the new paradigm. It's not another story about how this happened in a sexy high-tech sector. It happened in one of the most boring of all domains: refrigerators. The star of the story is a Chinese firm: the Haier Group.

Books in the canon describing the paradigm shift in management

And read also:
Leadership in the three-speed economy The dumbest idea in the world: maximizing shareholder value How America lost the capacity to compete The Phase Change to the Creative Economy Don't Diss the Paradigm Shift: It's Happening The five surprises of radical management
_________

Journal articles by the author

The following articles on the paradigm shift in management for the journal, Strategy & Leadership, by the author include:

"A leader's guide to radical management of continuous innovation" (S&L 2010; Vol. 38, No. 4)

"Rethinking the organization: leadership for game-changing innovation" (S&L 1010; Vol. 38 No 5);

"Masterclass: The reinvention of management Part 1" (S&L 2011, Vol. 39 No. 2),

"The Reinvention of Management: Part 2: Practices" (S&L 2011, Vol. 39, No. 3);

"Masterclass: The essential metric of customer capitalism is customer outcomes"
(S&L 2011; Vol. 39 No. 4)

"Successfully implementing radical management at Salesforce.com" Vol. 39. No 6)

"From maximizing shareholder value to delighting the customer"(S&L, 2012, Vol 40, No 3)

"The battle to counter disruptive competition: Continuous innovation vs "Good" management" (S&L 2012, Vol. 40, No. 4);

"Gary Hamel: leadership for continuous innovation" (S&L 2012, Vol. 40, No. 5);

"Roger Martin: How stock-based compensation poisons leadership (S&L 2013, Vol. 41, No. 1);

"How Agile techniques can make manufacturing magic" (S&L 2012, Vol. 40 No. 6);

"Is Agile the next best idea for US manufacturing?" (S&L Vol 41 No 2).

"Boeing's offshoring woes: seven lessons lessons every CEO must learn"((S&L 2013: Vol. 41, No. 3).

"Case: What went wrong at Boeing" (S&L 2013: Vol. 41, No. 3)

Radical management movements

Movements that are spearheading and disseminating the paradigm shift in leadership and management include:

________________________

Steve Denning's most recent book is: The Leader's Guide to Radical Management (Jossey-Bass, 2010).

Follow Steve Denning on Twitter @stevedenning

# data[].attributes.attachment_link.title
The Management Revolution That's Already Happening

# data[].attributes.attachment_link.description
Steve Jobs What on earth is happening to management? Formerly self-evident truths are being cast aside. The sacred goal of maximizing shareholder value is now " the dumbest idea in the world". The search for the holy grail of "sustainable competitive advantage" is now recognized as futile.