George Stalk, Jr.

In manufacturing, costs fall into two categories: those that respond to volume or scale and those that are driven by variety. Scale-related costs decline as volume increases, usually falling 15% to 25% per unit each time volume doubles. Variety-related costs, on the other hand, reflect the costs of complexity in manufacturing: setup, materials handling, inventory, and many of the overhead costs of a factory. In … [ Read more ]

George Stalk, Jr.

While time is a basic business performance variable, management seldom monitors its consumption explicitly—almost never with the same precision accorded sales and costs. Yet time is a more critical competitive yardstick than traditional financial measurements.

A better way to drive your business

Integrated business planning is a well-known process, particularly among supply chain leaders. But in most companies, P&L owners are missing out.

Deidre Paknad

A way to think about KPIs is that they’re operating metrics. There are dashboards of them, millions of them in big companies. They tell us where we are.

The big difference with OKRs is, of the million things we could measure this quarter, on a certain five or ten measures, we want to move the needle, and this is how far we want the needle to … [ Read more ]

Hans Kuipers, Alan Iny, Alison Sander

Strong deductive capabilities allow companies to go deep, applying insights from a single source across the enterprise. And strong inductive capabilities allow them to go wide and ask, “What might this outlying piece of data foreshadow?”

Alexander Roos, James Tucker, Fabrice Roghé, Marc Rodt, Sebastian Stange

A company’s culture is frequently at the heart of mismanaged planning, with management often rewarding the wrong behavior. Because financial incentives are still frequently tied to the achievement of short-term plans, employees can feel pressured to negotiate financial goals and to sandbag. Consequently, planning begins to feel like a bazaar instead of the organized, top-down process it should be. Employees may be motivated to reach … [ Read more ]

5 Habits To Maximize The Effect Of Recognition

Unlike pay and other financial rewards, being praised and recognized is an expression of care, and this—and not money—affects the hearts in people. Here are five habits leaders must develop in order to maximize the effect of recognition and thereby derive its greatest benefits.

Shivani Berry

“Feedback” is a loaded term. Not only do you tighten up when you ask for “feedback,” so does the feedback giver. Swapping it out for “advice” is more inviting and indicates you value your colleague’s counsel. Instead of saying “Can I have some feedback on what I could have done better?” say “Do you have any advice on how I can improve on X?”

Smart Rules: Six Ways to Get People to Solve Problems Without You

Companies clearly need a better way to manage complexity. In our work with clients and in our research, we believe, we’ve found a different and far more effective approach. It does not involve attempting to impose formal guidelines and processes on frontline employees; rather, it entails creating an environment in which employees can work with one another to develop creative solutions to complex challenges. This … [ Read more ]

Ulrich Pidun, Sebastian Stange

While post-completion audits for large projects are common in many companies, the feedback into decision making typically happens only sporadically. Advanced companies review not only projects but also past decisions. The head of corporate strategy at a large industrial conglomerate puts it this way: “We made our biggest losses from moves not made. So we also explicitly review opportunity cost mistakes.”

Ulrich Pidun, Sebastian Stange

Understanding the underlying risks should be a particular focus in project selection. Research has shown time and again that human beings are weak at risk assessment, but some techniques can help. A good starting point can be to frame the discussion in terms of a base question: What do we need to believe in to make this an attractive investment? This framing can help uncover … [ Read more ]

Guide: Understand team effectiveness

Much of the work done at Google, and in many organizations, is done collaboratively by teams. The team is the molecular unit where real production happens, where innovative ideas are conceived and tested, and where employees experience most of their work. But it’s also where interpersonal issues, ill-suited skill sets, and unclear group goals can hinder productivity and cause friction.

Following the success of Google’s[ Read more ]

Liz Wiseman

People generally need two types of information to achieve top performance. The first is clear direction: What is the target, and why is it important? (In other words, the What’s Important Now) The second is performance feedback: Am I hitting the target? Am I doing it right?

Liz Wiseman

The best leaders cultivate a climate that is both comfortable and intense. They remove fear and provide the security that invites people to do their best thinking. At the same time, they establish an energizing, intense environment that demands people’s best efforts.

What occurs when you create only one of these conditions? What happens when you stretch people without first building a foundation of safety, trust, … [ Read more ]

Ulrich Pidun, Martin Reeves, Maximilian Schüssler

A business ecosystem is a dynamic group of largely independent economic players that create products or services that together constitute a coherent solution.

This definition implies that each ecosystem can be characterized by a specific value proposition (the desired solution) and by a clearly defined, albeit changing, group of actors with different roles (such as producer, supplier, orchestrator, complementor). The definition excludes some of the more … [ Read more ]

The Key To Successful Zero-Based Budgeting

To do it right, let go of your company’s “evolutionary past” and take a granular look at where your profitability comes from today—it might surprise you.

Stephen Bungay

The purpose of structure is to distribute decision-rights in a rational way. A good structure reflects the hierarchy of the main tasks the organization has to carry out, and there is clear accountability for decision-making at each level. Good processes ensure that everyone knows how the organization works, so that they can devote their energies to dealing with the chaos on the outside. To deal … [ Read more ]

Stephen Bungay

Leading and managing do not describe the activities of different people, but are different roles carried out by the same people. All executives have both to manage resources judiciously and to lead their people to motivate them. Some are better at one than the other, but every organization needs both.

Stephen Bungay

Businesses … should use the information … measures provide wisely. But they should not mistake the measures for wisdom. Creating a strategy is about setting direction. A set of measures is a just control system that helps you to understand whether or not you are heading in the direction you set.

Stephen Bungay

In science the key question is, “Is it true?” In management the key question is “Does it work?” Here, context is critical. Many of the ideas developed by management thinkers are helpful in a particular context. The problem comes when these ideas start being treated as if they were universal truths. It is then that they turn into myths, and myths can lead us astray. … [ Read more ]