In this week's look at what's new and interesting:
» MUTUALITY LAB
• Businesses need to collaborate to address sustainability challenges
• Banding together to solve major problems
» CULTURE LAB
• Mergers thrive when capabilities are a strong fit
• Properly fostering intrapreneurship can encourage success
» DEMAND LAB
• Helping customers understand percentages can boost business
Businesses need to collaborate to address sustainability challenges
February 1, 2015
In January 2015, co-authors David Kiron and Knut Haanaes presented findings from the "Joining Forces: Collaboration and Leadership for Sustainability" study, which discussed the benefits of collaborating for sustainability. They presented their findings on what makes successful collaborations, which include shared language, due diligence and the right entrance and exit strategies. They study found that 90% of respondents agreed that businesses need to collaborate to address sustainability challenges, and 61% of executives whose companies participated in sustainability-related partnerships view these collaborations as quite or very successful. The complete webinar can be found here.
source: MIT Sloan
Banding together to solve major problems
March 10, 2015
In Jinotega, Nicaragua, a collective of representatives for the world's biggest coffee brands and leading NGOs - including Keurig, Starbucks, the Specialty Coffee Association of America, Farmer Brothers, Counter Culture Coffee, and Mercy Corps - band together every year to help coffee farmers deal with not only the regular aspects of the coffee bean business, but also more pressing concerns afflicting those who provide their product. The "Coalition for Coffee Communities" use their collective weight and expertise in a quest to improve coffee-growing communities around the world. For example, farmers in Jinotega are struggling with seasonal hunger, as many in the region find their harvests are too small to support their family for a full year, and are dealing with a complex intersection of climate change, weak local government, few options for financial credit, and limited agriculture extension services - a set of problems too big for any one company to tackle alone.
In Nicaragua, the coalition has partnered with Mercy Corps and Aldea Global, an association of smallholder farmers launched by Mercy Corps in 1992. The association has grown substantially, today working with 2,200 farming families and 12 cooperatives, generating a loan portfolio of $2.4 million for its members to borrow and expand their farms and small businesses. The group is also working with farmers to bring back some of those traditional practices, but with a new spin - adding an extra source of income wherever possible, like intercropping bananas and citrus trees. By accepting these new ideas and partnerships into the coalition, what originally started as a few has grown substantially, and is making headway in helping deal with problems farmers face. Building on its beginnings as a tight-knit group of companies and associations piloting ideas focused on food security, the group plans to become "a hub for thought leadership, investment and action."
source: Next Billion
Mergers thrive when capabilities are a strong fit
March 10, 2015
Gerald Adolph, co-author of Merge Ahead: Mastering the Five Enduring Trends of Masterful M&A, examines why some companies fail when it comes to executing a merger and others succeed. He said those that succeed are based on a strong capabilities fit. While post-merger integration is a key piece of the puzzle, the best integration planning can't cure a deal that should never have happened. Only those M&A deals that either enhance each company's distinctive capabilities systems or leverage those systems - or both - have a shot at real success. A capabilities system is very specific: three to six mutually reinforcing, distinctive capabilities that are organized to support and drive the company's strategy, integrating people, processes and technologies to produce something of value for customers. Clarity and specificity from the start is critical, and can smooth integration, even when the companies don't have much in common. The most successful deals are those in which an acquiring company took a capability of its own and leveraged it in the newly acquired company. The second most successful ones were those companies that acquired a capability that could then be leveraged to enhance their own capabilities.
Dangers still remain when it comes to picking the right M&A, however. No matter how good they look, some mergers are doomed because they happen as a result of pressure from stakeholders responding to a current trend. When the economy recesses, for example, people want to retrench and consolidate rather than diversify or grow. In other cases, a company will bite off more than it can chew, and lose sight of its goal. Even with the best-laid plans, the integration can fail on the people end, however, there is a learning opportunity here. By starting the process with a focus on capabilities, CEOs can not only choose the right partners but also ensure that they preserve what is special about the company they're buying—not to mention their own.
source: Chief Executive
Properly fostering intrapreneurship can encourage success
February 27, 2015
With the economy rebounding, employers are again fostering intraprerneurship among their employees. Though, given the still shaky financial atmosphere, successfully fostering employee potential can be tricky. To get things off on the right foot, one has to make sure there's a solid leader at the helm. Leadership must provide the air cover required to protect bottom-up ideas so, as the best ideas mature, they can be promoted within the organization and embraced from the top down. Creating the right culture is also key to building the right environment. This can be achieved by giving team members creative tasks that they are passionate about, as well as encouraging them to share their innovative ideas.
Ideas won't be shared, however, if employees feel like they won't be properly recognized, which could actually lead to a less inspired environment. To avoid this, it is crucial that higher-ups encourage transparency at all stages of innovation. Incentives also help, which can include the opportunity to run with a successful innovation, public recognition, and access to accelerated career path opportunities, though companies should build a reward structure that encourages all employees to contribute to the success of the overall organization. However, not every idea will be a success, so innovators should be prepared for failure. By giving team members a positive response for a negative outcome, companies are rewarding them for taking a calculated risk, which in turn can lead to them taking more risks in the future and encouraging a constant cycle of intraprerneurship.
Helping customers understand percentages can boost business
March 10, 2015
Research found that most consumers, even highly educated ones, are bad at percentages. Offer an average shopper a choice between 50% more product per dollar and a 35% price reduction, and the majority will pick 50% more volume, thinking that it's a better deal, but it's not. The 35% cost reduction leads to a 54% improvement in price per unit of volume whereas the 50% benefit increase only leads to a 50% improvement in unit price. Faced with a choice between two marketing offers with percentages, consumers almost always opt for the largest percentage without calculating its impact in terms of cost/benefit (or benefit/cost) rate. What consumers fail to see is that percentage cost discounts always beat percentage benefit bonuses.
This approach has been good for marketers, as it gives the perception of a better deal despite it not actually being so, though customers have access to more information than ever before and their patience for corporate self-interest is wearing thin. These clever ploys won't last forever, which is where companies can step in and offer assistance. Companies seen as protecting their customers and giving them value will come off as more authentic and trustworthy. Studies show that more transparency helps consumers to make more informed decisions, regardless of how good they are at percentages.
Source: INSEAD Knowledge