Tuesday, September 16, 2008

Why MBAs from TOP institutes Don’t Necessarily Make Good Managers

Why MBA “Stars” Don’t Necessarily Make Good Managers


Why top notch MBA candidates are not always the best team members let alone managers.

Unfortunately, the students who get into fancy schools like MIT and Stanford and even our own IIMs and are evaluated both before and after they arrive largely on their individual performance: BUT then life plays a cruel trick on them, forcing them to work in groups, to deal with the messiness and sometimes craziness of human groups — and their individual brilliance is no longer enough and they have all those damn people, with different needs, opinions, priorities, and skills, and different schedules too, to deal with.

That is why you will see most of the MBA grads from top institutes look for the cushy positions and that too in an already well established company. They will leave the tough job of making their hands dirty to the managers from other institutes.In the history you do not find case of even a single company that was turned around by an MBA from a college in Ivy league or other top colleges.Not even a single company that was saved from distress in the market by these people.
If you’ve been selected and groomed based on one set of standards (individual performance) it’s hard to accept that those old standards don’t work any more and your success will be based on a new standard: the ability to work WITH a group to create, innovate and ultimately produce results as a team.

Individual performance is based on a different set of skills, talents, and motivations than group collaboration. So even if you can make the internal switch to accept the new standards, you aren’t necessarily going to have the right kind of motivation, the right skills, or the right talents to succeed at collaborative work.

Management isn’t easy, it’s hard work that requires really understanding people, their individual strengths and weaknesses, and creatively organizing them to accomplish things as a group that none of them could accomplish on their own. Unfortunately that’s just not what they teach in school, so you have to learn it somewhere else.

Sunday, December 2, 2007

Wednesday, November 21, 2007

The ROI of Open Source

The ROI of open-source software is a contentious issue.The ROI of upgrading a Windows installation versus switching to Linux and have concluded that it is less expensive to stick with Windows.Switching from Windows to Linux is the worst-case ROI scenario. After all, the new platform requires training and perhaps hiring new personnel—always expensive propositions—versus merely paying for licenses.

A more important question is, can open source generate real ROI elsewhere? Yes. Oregon State University (OSU), for example, has websites that visitors need to search, so the school bought a Google appliance for about $125,000 per year. Two years later, OSU’s IT department, aided by the Open Source Lab, replaced the appliance with an open-source search product called Nutch (license cost: $0). Nutch is not as easy to use as the Google software, so additional administration costs run to about $10,000 yearly. The overall five-year payback, however, even when you consider additional hardware and engineering time, still produced an internal rate of return of 2,300 percent.

The key to success is determining which projects make sense for open source. To get started, treat each product individually. Savvy organizations consider both commercial and open-source options for projects, and choose the right product for the given situation. Then make sure you evaluate using the proper time horizon. A single heads-up comparison between a commercial product and its open-source counterpart may not offer good open-source ROI, because the costs of training and switching can outweigh the cost of a commercial license. But if you extend the time horizon to the realistic life of the application, it may tip the balance toward open source. Finally, take the entire organization into account. While a specific open-source project may not offer great ROI, the cost benefits of pioneer applications often materialize downstream in later projects that are able to adopt the open-source package. Even if you purchase enterprise licenses for your commercial products so that your marginal cost for a new application is effectively zero, keep in mind that someday, when those licenses are up for renewal, that marginal cost may be much higher.

This column hasn’t touched on any of the other reasons organizations use open source: flexibility, reduced operational costs through not needing to track license compliance, and greater control of the organization’s software stack, since there are no forced upgrades or product end-of-life announcements. Because ROI is so tangible, however, it is critical to address it explicitly. Just keep in mind that there is no single answer; you need to find the right choice for your organization and your application.

Saturday, November 10, 2007

Strategy--- an introduction

What is strategy?

The word “strategy” derives from the ancient Athenian position of strategos.
Generally, the definition of strategy is regarded as a complex combination and there are lots of debates about the definition itself.

“A number of reasons contribute to this complexity. First, the field represents the
convergence of multiple disciplines, including economics, organization theory, general business, marketing, finance, and geography (to name but a few). As a result, strategy is often viewed through different lenses, depending on one’s background and purpose. Second, and perhaps more important, business strategy is a very young field. As a result, not all of the concepts and approaches to analysis are yet well established or agreed on.” (http://www.ache.org/PUBS/Luke1.pdf, 2005-11-22)

Mintzberg has created a “five-P-model” for the definition of strategy,which provides some clues to the rich meaning of the concept.

Strategy as Plan:
Strategy is a plan- some sort of consciously intended course of action, a guideline (or set of guidelines) to deal with a situation. By this definition, strategies have two essential characteristics: they are made in advance of the actions to which they apply, and they are developed consciously and purposefully.
Strategy as Ploy:
A strategy can be a ploy too; really just a specific ‘manoeuvre’ intended to outwit an opponent or competitor.
Strategy as Pattern:
Defining strategy as a plan is not sufficient; we also need a definition that encompasses the resulting behaviour. A third definition is proposed: strategy is a pattern- specifically, a pattern in a stream of action. In other words, by this definition, strategy is consistency in behaviour, whether or not intended.
Strategy as Position:
The fourth definition is that strategy is a position- specifically, a means of locating an organization in what organization theorists like to call an ‘environment.’ By this
definition, strategy becomes the mediating force between organization and environment, that is, between the internal and the external context.
Strategy as Perspective:
The fifth definition looks inside the organization, indeed inside the heads of the
collective strategist. Here, strategy is a perspective, its content consisting not just a chosen position, but of an ingrained way of perceiving the world.


“Strategy content: basically the “what” of strategy. This means defining what strategic decisions are about and what their intention is. The content perspective also address such questions as where are we going and what is the scope of the business. “

“Strategy context: the “where” of strategy. This is the set of factors that comprise the setting for a strategy. This includes the internal context of the organization as well as the characteristics of the external context in the opening environment.”

“Strategy process: the “how” of strategy. This details who is involved in the process and when activities take place. It is the story, the drama and the list of players in the strategy as well as the characteristics of the process itself.


Mintzberg & Waters model - Intended and emergent
Strategies


According to Mintzberg and Waters (1985), there are five kinds of strategies in their model emergent strategy, intended strategy, deliberate strategy, realized
strategy and unrealized strategy. Their definition of these is:
Emergent strategies can be seen as responses to unexpected opportunities and problems and are usually developed from the locations at which business-level strategies are usually implemented, i.e. within business units and not at corporate headquarters. The pure definition of emergence requires the absence of intentions.
Realized strategy is a blend of intentions and emergence which can be interpreted by reference to the strength of pressure from the external environment—a kind of environmental determinism.
Intended strategy is strategy as conceived of by the top management team. Even here, rationality is limited and the intended strategy is the result of a process of negotiation, bargaining, and compromise, involving many individuals and groups within the organization.
Mintzberg and Waters mentioned that realized strategy – the actual strategy that is implemented – is only partly related to that which was intended (Mintzberg suggests only 10–30 percent of intended strategy is realized). The primary determinant of realized strategy is what Mintzberg terms emergent strategy – the decisions that emerge from the complex processes in which individual managers interpret the intended strategy and adapt to changing external circumstances. This model should also been seen as a process and especially if you include the variable of time. As show in the model below the realized strategy effects the intended strategy as times goes by. This is an important part of the model since it shows that current strategies will affect future strategies. There are two extreme types of organizations, the ones that have only deliberate strategies and the ones that have only emergent strategies. These two pure forms are very rare and perhaps there is no organization that has one of these pure types of processes. For a pure deliberate strategy, the organization must have pure intentions with a relative concrete level of detail. This plan has to be carried out exactly as intended. For a strategy to perfectly emergent there has to be consistency in action over time but without any intentions. Except for these two pure types of strategies that are extremely rare according to Mintzberg & Waters (1985 pp 257-258) but they argue that between those two extremes are several different type of strategies that are common in companies today. Mintzberg & Waters (1985) classifies eight different types of strategies:

1. The planned strategy
The planned strategy is clear intentions back by formal control. The leader is the centre of authority with their intentions being very clear and precise and the goal is to transform the intention to collective action with minimum distortion. Programs and systems are built in to the plan to ensure that no one acts in another way then intended.
For this type of strategic process to be effective the environment has to be extremely stable or the organization has to be able to predict it with great accuracy. When organizations put large quantities of resources in a mission or project they might nottolerate unstable environment. When they have plan several years ahead and don’t allow avoiding behaviour and commit themselves firmly. An example of this can be mining companies.

2. Entrepreneurial strategy
The second type of strategy there is has tolerance for a little emergent strategy, but is still very much planned. The owner controls the organization tightly and can impose his vision or direction on the organization. This type of strategy is very common in young organizations and in entrepreneurial organizations. The central actor is the one that places the organization were he/she wants to in the world. Compared to the planned strategy the intentions are harder to identify and are less specific, but as long the actors in the organizations respond to the will of the leader the strategy appear to be rather deliberate. Because the strategy comes from a single person there can be sudden changes in it and reformulation isn’t unusual. The adaptability of the entrepreneurial strategy is what distinguishes it from the planned one. Visions in the brain of a person are more flexible then articulated ones. The adoption and “emergentness” of planned strategies are discouraged by the articulation. Psychologists have shown that articulation of strategy manifests it, impending willingness to change it.

3. Ideological Strategy
Vision can be collective – when the members of an organizations share a vision and the members identify so strongly with it that they pursue it as an ideology. This leads to patterns in their behaviour so that clear realized strategies can be identified. Since an ideological strategy is likely to overt and becoming articulated one can see intentions. That is why one can say that this type of strategy is deliberate. These intentions would be viewed as organizational, differing from the entrepreneurial and planned strategy by being embraced by everyone in the organization and not originate from one centre and then being accepted passively. The collective vision makes it harder to change, because all members of the organization have to accept the changes. Moreover, the ideology is rooted in traditions and precedents. Therefore people resist changing it. Mintzberg &
Waters has not yet studied any organization dominated by an ideology but such
strategies seems to occur in certain organizations describe in the literature.

4. Umbrella strategy
For the umbrella organization Mintzberg & Waters relax the condition of tight control over the actors in the organizations and in some cases control over the environment. Leaders have only partial control over the members of the organization and can design the umbrella type of strategy. An umbrella strategy is when there are general guidelines for behaviour, defined boundaries and the other actors in the organization can manoeuvre within them. This means that strategies can emerge within these boundaries.
The umbrella strategy can not only be labelled as deliberate and emergent but also “deliberate emergent” in the sense that the central leadership creates conditions which allow strategies to emerge. Like the entrepreneurial strategy there is a certain vision emanating from the central leadership, but in the umbrella strategy don’t the ones controlling the vision also control the realization. One example of the umbrella strategy is NASA during the 1960, when they focused their efforts to put a man on the moon.
Within this specific target several different strategies emerged, as various technical problems were solved by thousands of different specialists.

5. Process Strategy
The process Strategy is similar to the umbrella strategy. The leadership functions in a organizations in which actors must have considerable discretion to determine the outcome. This is because the environment is unpredictable and uncontrollable. Instead of controlling strategy on a general level with boundaries and target the leadership influences the strategy indirectly. In other words they control the process of strategy making instead of the content of the strategy. This results in a behaviour that would be deliberate in one respect but emergent in another. The leadership designs the system from which patterns of action evolve from.

6. Unconnected strategy
The unconnected strategy is perhaps the most straightforward of all. One part of the organization, a subunit or sometimes even an individual is able to realize its own pattern in its stream of action. Since these unconnected strategies doesn’t come from the central leader ship or from intentions from the whole organization the can be considered relatively emergent. But for the subunit/individual they clearly can be deliberate or emergent depending on the prior existence of intentions. Thus the unconnected strategy may be deliberate or emergent for the actors involved but always emergent from the perspective of the organization.

7. Consensus strategy:
In this strategy the condition for prior intentions are totally dropped, this type of strategy is clearly emergent. In this strategy different actors converge on the same pattern or theme so that it becomes pervasive in the organizations, without need for central direction or control. The consensus strategy grow out of the mutual adjustment among the different actions as they learn from each other and from their responses the environment and thereby finds a common pattern that works for the organization. This means that the convergence is not driven by intentions by management or by prior intentions shared by the organizations as a whole; rather it evolves around the results of a host of individual actions. Sometimes actors might promote the consensus and try to negotiate others to accept it, but the point it that this strategy comes more from collective actions then from collection intentions. One example of this could be a university that finds itself over the years favouring the sciences over the humanities as its members came to realize that this is where its real strengths lie.

8. Imposed strategy
This time the strategy comes from outside the organization, its imposed on the
organization. This means that the environment can directly force the organization into a pattern in its stream of actions regardless what the central control does. The clearest case is when a external group or individual with a great influence over the organization imposes a strategy on the organization. For example, state-owned Air Canada was forced by the minister to buy a particular type of plane. The strategy was clearly deliberate but not by anyone in the organization. Given the inability to resist, the organization had to pursuit the given strategy and thus it became deliberate for the organization. Sometimes can the environment rather than individual/group that impose strategies on organizations by restricting their options. Once again Air Canada can serve as an example. Did Air Canada really choose to fly jet aeroplanes and later wide body aeroplanes? Could any world class airline decide otherwise? Again the organization has to make the external strategies, imposed on them, internal. In reality the organizations have to compromise between determinism and free choice. Environment seldom pre-empt all choice and just as rare the environment seldom offers unlimited choice. As most real world strategies have some umbrella strategy characteristics, so to does the environment set boundaries for most organization.

These eight types of strategic processes is a big part of Mintzberg & waters (1985) theory. They claim that there aren’t many, if any, companies that can be classified as the two extremes but that they have the characteristics similar to one of the above mentioned types of processes. Thus all companies that are taking part of this study should be describable by one of them.