Big Red Horseshoe - Vanderbilt Owen MBA Students on Everything Business

Exam week strategy

It’s the final week of classes and the entire load of papers, book reviews, presentations and of course the ever so painful final exams are staring right into my eyes. I am finally facing the result of weeks of procrastination. Up until this day I loved work, I could stare at it for hours, now I actually need to get stuff done, not only for my own dear life but also for upholding the commitment I made to my team members which counts to about 18 this mod! Yes it is true, I have 18 different classmates that I have teamed up with and need to at least meet all expectations.

Given that I have gone through this exact phase about 5 times now, I planned out ahead this time (not too far ahead I must say). I made a conscious decision and the required effort to stay just one day ahead of the required timelines. Although to follow through this, I had to painstakingly convince myself to start one day ahead of my regular last minute schedule but once I got the ball rolling it has been rather smooth since then. Today, as my roommate worries about the Game theory quiz that is due tomorrow, I know I already worried about it last night. Everything I do falls right in sync with what he does, just that I feel I am always one day ahead. It was surprising that not only was it much easier to flow ideas without my nerves playing pac-man through my head  but the quality of work I delivered was at least better on my standards than some other last minute submissions I have done.

I guess it could rhyme with some other last minute workers out there but I know we have been trying to find a solution to our procrastinations and the repercussions therein for all eternity. We do try to convince ourselves by stating that we work better while under pressure (or the classic hard work Vs smart work paradigm), but we all know it’s the justification of the lazy boy inside of us. We know we are better than this and the day we decide to get off our recliners and work the night we will rule the world. This one might not be the best medicine out there but has surely given me some relief.

Hope you all survive through the high tide!

“You are said to have mastered the art of procrastination, if and only if

• you do not feel guilty any more for just thinking what to do and what not to do throughout the week
• before whatever you start doing, determine if you do not do that work now, what would be the big deal
• you would continually remain under the inertia of "nothing important to do" unless and otherwise a powerful external force is applied”

http://www.cs.purdue.edu/homes/ashishk/Procrastination.html

All the best!

My Starbucks Idea...

So I was curiou s about Starbucks recent decision to go with the Gold Card.

http://www.starbucks.com/GoldCard/index.html

I pulled this post off of my starbucks idea.  A place where anyone can submit an idea or comment on Starbuck's corporate strategy.   http://mystarbucksidea.force.com/ideaView?id=08750000000599nAAA

"I am a Gold card holder. If I purchase one item ie: iced grande soy latte, using a standard registered starbucks card I would receive a $.40 credit for the purchase. However, using my Gold Card today I only received a $.36 credit (10%) on the total. Why doesn't the Gold Card discounts equal the 'standard' card discounts on small purchases? If the Gold Card is for the "most frequent customers" why then do we need two cards? Can't the computers give us the same credits for soy, extra shots, syrup as the standard cards while still recognizing "the most frequent customers" with the 10% on other instore purchases? "sbx_kema's" attitude is that we, who have a gold card have to stop and decide which card to use for this transaction or that transaction is really cold; not the kind of customer friendly language we received in the Gold Card literature. It was not made clear to me that we would need a standard card along with a Gold Card. If I place money on my Gold Card why does it not function like any other card on those days when I need only to purchase drinks? I am a daily Starbucks customer who was recognized by Starbucks with a gold card.
In sbx_kema's words "When we launched Starbucks Card Rewards, we heard from many of you that you weren’t able to take advantage of the benefits. We created Starbucks Gold with our most frequent customers in mind who are looking for everyday savings on everything from espresso beverages to espresso machines." I read, "From expresso beverages to expresso machines" And that is why I am writing...."

So I guess that means that they want me to buy more expresso machines  because I make that purchase on a regular basis, right?  If I were buying an expresso machine I would probably go to Cosco or Walmart becuase I know I am going to get the best deal.  Not sure I agree with the current strategy.  It appears to have alienated and confused their current segment that already own a card.  Oh my Starbucks...we are closing stores and trying new card ideas.  What's next? 

The Strategy of Managing Creativity and Innovation

I started a new class today.  Its called the "Managing Creativity and Innovation" with Prof David Owens.  This is the class I have been waiting for a couple of mods now because I love expressing my ideas to my classmates much to their chgrin.  I was worried that I would not be able to take this course because Prof Owens left to become the CEO of Griffin Technology, however he was able to free up some of his busy schedule to teach this course.  Check out his blog. http://exovate.blogspot.com/

First assignment:  BusinessWeek.com and carefully examine the list of "25 Innovators, 6 Industries." Once you have a good sense of the list, please identify one (1) company in an industry in which you are familiar or interested that SHOULD NOT be ranked (or ranked as highly) on the list. Next, identify one (1) company in that industry that SHOULD be ranked (or ranked more highly) on the list. Please post a reply (by clicking "COMMENTS" below) with your insights along with a very brief explanation of your position. LINK

After spending last week taking a Healthcare Policy course, I had to take a crack at the insurance companies. 

In my humble opinion, I feel that United Healthcare should not be on the list of innovative companies April 16, 2006 issue of Business Week.  There are a list of reasons why but I will focus on the ethical aspect of employee incentives better known as backdating.  Here is an article quoted from the Wallstreet Journal "The Securities and Exchange Commission (SEC) placed a call to the headquarters of UnitedHealth in Minnesota and it possible that the call was a part of broad based investigation that the SEC is conducting into the practices of awarding employee stock options at a number of companies."  This company was investigated for backdating their stock options and their CEO, Dr. McGuire was “Awarded options on dates with very favorable strike prices and the chances of these dates being picked out randomly is about one in 200 million.”

Is this an innovative company through incentives process?  Possibly.  Are they unethical?  Yes!  UNH is notorious for terrible customer service and is the worst enemy of the hospital because of their aggressive tactics.  Insurance companies have driven up the cost of care drastically in the last 10 years.  Has anyone seen Sicko? There needs to be an ethical assessment to the innovative ideas/processes.  Does it better the customer? 

I would add Revolution Health to the list of Innovative companies because of the ground breaking work by former AOL CEO, Steve Case.  With the trend of consumer driven healthcare, Revolution Health was started 2005 with the hopes of becoming a disruptive technology by addressing the issue of information asymmetry in healthcare.  Revolution provides the tools, information and support to Americans to manage their health and wellness activity.  They use open source web application framework for their design work which encourages collaboration—always a good thing.  Their recent merger with Waterfront Media, an operator of health websites would combine their collective efforts of 14.7 million visitors and 11.3 million visitors each month to take on the likes of WebMD, the largest operator of health websites at 17.3 million.  Use of innovation that empowers the user and promotes ethical practices is my definition of bettering the customer.  Innovate but remember that we should strive to give the customer what they need not what we think they need.

The Dichotomy of Innovation …

“… outstanding companies can do everything right and still lose their market leadership -- or worse, disappear completely…..”

http://innovationzen.com/blog/2006/10/04/disruptive-innovation/

Prof. Clayton Christensen's work from Harvard Business School lays its foundation in the dichotomy of Sustained and Disruptive Innovation.

An innovation strategy can be sustained only if it improves the performance of existing products along the dimensions that mainstream customer’s value.

Most companies, however, follow the disruptive innovation model whereby they stay on the innovation trajectory and keep investing in R&D until they fall off the efficiency value curve and start producing new products in a quality dimension and speed that the market cannot absorb. This is where the incumbents gain a foothold by providing products cheaper and better which the marginal segment values more creating a bigger market and eventually replacing the mainstream. A major example is IBM which started in mainframe hard drive space and kept innovating in the same segment while the OEMs gained foothold in smaller storage drives for desktops and eventually drove IBM out by creating a new market underneath.

Michael Raynor from Deloitte has carried Christensen’s work a step further and suggested the Innovators Solutions in his book (http://www.theinnovatorssolution.com/)where the case of Intel innovating beyond the market absorption capacity of the market. The chips from Intel today are good enough for our computer needs for the next two decades. The incumbent being AMD provides cheaper and faster chips which suit present needs. The innovative solution from Intel comes in the form of Celeron chips which preempt AMD and still keep innovations flowing.

Who own's Organic Food Companies?

Did you know that many of your favorite organic foods are owned by some of the world's largest food producers? Kashi is owned by Kellogg, Seeds of Change by M&M Mars, Health Valley, Arrowhead Mills, Earth's Best and 16 other brands are owned by Hain Celestial who have a strategic alliance with Heinz.

An assistant professor of Community, Agriculture and Recreation and Resource Studies at Michigan State University, Phil Howard, has been creating visual charts tracking buyouts in organic food industry since 2002 when USDA implemented the Organic Standards.  Comparing his 2002 chart to the most recent update in January 2008 (both showing  food processors and organic brand acquisitions, organic brand introductions and strategic alliances) the consolidation of the industry is scary.

At Owen we tend to think of consolidation a little bit differently based off a seminar series that I attended this week.  The Vanderbilt Entrepreneurship Association (VEA), which I am currently a member, held a lecture with successful entrepreneur, Dr. Michael Burcham.  In his first lecture titled "Building a Venture-Backed Business," "The Plan," the class was tipped off to idea that consolidation in the market is good thing.  Consolidation means there is opportunity for smaller more agile companies to respond to the massive mergers/acquisitions that tend to tie up the large holding companies working to realize "synergies."  Consolidation happens for a variety of reasons.  The current credit crisis has led to massive consolidation.  In the realm of Organic foods, I feel like there has been some consolidation but nearly as much as we might expect to see.  I believe this trend will change in the next 5-10 years because of recent and future legislation and the seeds of change already created in todays market through aspiring entrepreneurs.

Dr. Burcham also touched another key piece of information. As an entrepreneur we are taught to look to the aggregators or the biggest companies in each market to determine how you can create a business that is easily acquirable.  Basically, begin with the end in mind.  I think in the Organic foods market consolidation is not scary as one author noted, but rather it is a good thing because it leads to better oversight and gains more attention from investors both private and public.  This infusion of captial will infact inspire young entrepreneurs to create new products/processes because they know there might be a payoff at the end.  This enviornment frees up capital for visionaries to create new products or concepts like organic fast food joints.  What?  Is that possible?  Organic Fast food? 

I found this article ties into the discussion from a different angle that maybe we are not seeing. 

Part Time Vegetarians
Advocates call it flexitarianism, but critics say being a little bit vegetarian is like being a little bit pregnant.  So I was reading a recent Newsweek article as I tried to see if the trend of increased American consumption of vegetables/fruits and consolidation of organic foods show that there is opportunity for growth of this market. http://www.newsweek.com/id/161559?from=rss

I found this discussion in the recent Summer Slow food Article from the editor, Erika Lesser http://www.slowfoodusa.org/downloads/publications/snail-2008-summer.pdf?phpMyAdmin=12c48b5a649t3e319a92

"Conservation and Energy Act of 2008 (the latest Farm Bill) was finally made into law in late May. It seemed that most pundits, activists and eaters nationwide were either disappointed with or just plain unaware of the latest batch of laws to be applied to our nation’s food system. Yes, there were a few reforms worth celebrating, primarily provisions on conservation, nutrition and food security. But by and large, there seemed to be less to celebrate than to lament, especially when it came to the continuance of commodity subsidies. There was however one modest provision that caught my eye. For the first time, any school using federal school lunch program funds (which means every public school in this country) is allowed to specify “local” as a bid requirement in purchasing foods for school meals. Until now, the USDA has prohibited schools from using geographic preference in choosing their ingredients. This may seem like a minor point, but it made me wonder: has our government, through this tiny precedent, decided that it’s not only acceptable but perhaps even beneficial to determine one’s purchasing—and eating—choices according to at least one factor besides price, namely PLACE?"

Is the nation ready for change? Are we starting to see the change from meat and potatoes from all over the country to veggies grown and served locally.  Is consolidation in this market a good thing?  Can it provide a regional appeal? Are we ready for a paradigm shift away from fast food nation.  Big business could be the catalyst we need.  How can we make it affordable for those at and below the poverty line? 

With those questions in mind a provide a successful Business Case, Stoneyfield Farm.

Gary Hirshberg is president and chief executive officer of Stoneyfield Farm, the world's largest producer of organic yogurt.  Gary commented on the power of working with big business to acheive one's goals (i.e. selling 40% of his business to Dannon worth 100 million dollars.”  I encourage everyone to read his story in this month's "FastCompany" article. In his words. 

"My role as father and perhaps one day grandfather, and as a man who loves this planet, requires nothing less than shelving my own rebellious instincts in favor of this run at the biggest prize of all—market dominance," he told Pamela Accetta Smith, a writer for Dairy Field.

"Commerce is the most powerful human force on earth, and only by marshalling this force can we hope to begin to restore our planet to a place that will support and nurture life."

Gary is one example of an entrepreneur who found the niche in the market and worked with corporate to acheive his goals.  With this captial, he did not stop with Stoneyfield Farm but went on to develop his his newest creation, O’Naturals http://www.onaturals.com/onat.html an organic option to fast food started around 2001.  Thank you Gary.  Why are there only six locations in the country?  It’s time for a change for change in this country and let's use the tools we have to make it happen.    

I leave you with this final quote.  "Business is the most powerful force in the world," he told David Goodman, a writer for Mother Jones. "I believe that virtually every problem in the world exists because business hasn't made finding a solution a priority."

Strategy Paradox: Please keep the doors open…..

“Those who study genetics avoid studying humans, because new generations come along only every thirty years or so, it takes a long time to understand the cause and effect of any changes. Instead, they study fruit flies, because they are conceived, born, mature, and die all within a single day”

Studying and analyzing strategy can be just as painful with no real proof of concept or sustainability. This creates an additional justification of keeping the formulation of strategy beyond the walls of the C-Suite.

Should the planning exercise itself be treated as an executive level project? Should the brains of the organization lock themselves in a room and emerge with the plan that will lead the organization into the future? Is there a better, more sustainable way to have strategy defined and executed throughout the organization?

A Clear distinction of the decision making bodies and the implementers of the strategy answers the above concern. The formulation of strategy remains a vision but the execution of it is undoubtedly a pursuit in which the stakeholders must buy in and more importantly understand it thoroughly.

Strategy is more of a living document than a written down version of the construct of an executive mind.  In fact we get much evidence of companies losing their competitive advantage and head towards bankruptcy due to lack of change in their “winning” strategy overlooking the hurdles faced by the implementing group.

“Wal-Mart and GE both brought in major players from the nonprofit industry to help them develop their sustainability strategies around water, waste, energy usage, etc. Often these outside viewpoints will ask question and open up new avenues of thought that the internal "strategy team" would have never even sniffed on their own”- notes Jeff Gowdy, an Owen Alum in the sustainability business.

 

I guess if an external viewpoint can help this much a channel to drive the concerns of stakeholders wouldn’t after all be such a bad idea.

Dog years of Strategy Consulting...

Believe it or not the experience in the consulting industry is often referred to in dog years owing to the sheer speed of learning and exposure to various aspects of business. Every one year spent doing strategic consulting for any big firm is equivalent to 4 years of work in any regular job…or so the consultants like to think.

As a strategy consultant, you truly live the client’s years in a very short span. You have to figure out the past life of a company, decisions made, outcomes, industry changes and future roadmaps all in a matter of days and a room full of charts and graphics. It’s living the client’s life on steroids.

"Dogs mature faster than people, so if a dog is 4 in man years, they actually have covered about half of their expected lifespan. And the interesting fact is that they act like it too!"

We do have reason to believe dogs learn much quicker than humans do. The fact adds much relevance to the expression “Worked like a dog!” after a long hard day.

I am a 24 year old MBA student watching the best years of my life race in front of my eyes. According to the dog year’s analogy, I am gaining much maturity and experience really fast. Sometimes I just wish I could press the pause button and unplug for a few human seconds.

Starbucks lives on...

Hello, My name is Kyle Clay and I am the new owner of the BRH blog.  In a tribute to Glen Peoples, the former blogosphere extraordinare, I am going to talk about his favorite blog topic, Starbucks!

In a recent article from Inc magazine "How Hard Could It Be?: Good System, Bad System" http://www.inc.com/magazine/20080801/how-hard-could-it-be-good-system-bad-system.html?partner=fogcreek Joel Spolsky commented on the role created at Starbucks. 

Expediters are not really there to see to it that a customer's order is filled more quickly, they believe. Rather, expediters exist solely to prevent people in line from giving up and wandering off, maybe to go to the Dunkin' Donuts around the corner. Once a customer places an order, the logic goes, he or she feels an ethical obligation to wait for it to be filled, no matter how long the process takes. Expediters are there to lock in that order as soon as possible.

Has this happened to you?  Why do I need to give me order to the expediter when I still have to repeat my order to the cashier.  Does this really save time? 

Also check out starbucksgossip.typepad.com to get the dirt from Starbucks employees. 

The way I see it I would rather support the local economy by supporting locally owned and run stores like Fido.  http://www.bongojava.com/ My time at Owen includes a daily cup of coffee from one of these establishments.  Don't get me wrong when I have to get my fix I run across the street to Starbucks, but Fido/Bongo Java provides the relaxed authentic feel that Starbucks has tried to maintain, but has lost with such strategic decisions like empowering Expediters. 

Tell me what you think?  Feel free to weigh in on any topic. My first blog..I hope I made Glen proud.