Resolutions for Business Executives
Oh. Hello and welcome to the h. b. alrighty i cast from harvard business school publishing i'm paul mike lemon online editorial director here and i'll be your health uhhuh uhhuh uhhuh uhhuh. This week three percent a special program aimed at helping you get the new year off to a smart start. We rounded up a handful of our favorite management experts and asked each to suggest a couple new year's resolutions for business executives. Our guests are harvard business school professor roosevelt's mosque after bill taylor cofounder a fast company magazine in c odd processor for many uh e borrow. Paul him but see in your rhetoric the harvard business review camera erickson co author of workforce crisis how to be becoming shortage of skills and talent and perhaps in management professor and why we published author tom down import. In total are just suggest quite an array of activities for managers do tend to in two thousand and seven. And in our h. b. r. in brief segment the mismanagement of customer loyalty. So stay with us as we provide some insights on how to get your new here started food that we knew center was so. Our first set of managerial new year's resolutions comes from harvard business school professor roosevelt's most cancer. Parents remember his for his happens happens. Press the power in your personal life you might wanna slim down saying your business life you might wanna bulk up there it's a slow down protected for kids happen happen but it's a great time could build capacity. Toward a real growth bird in two thousand hey you could be thinking ideas and thinking about you know they had and read that thing i can pay him. Could become conservative i can guess because economic conditions i right everything like it they didn't it happens tax. Back in call on the rug. Um if you were you know there will be an incredible impact from your visit everywhere at your company that that's near that even if you are can plan antiterror go find out what people are doing anything. I know that the web can accent but there's nothing like i say okay is it. And for i think open open here the new password. Bye before you're going to wrap open up all of your business processes has his i d s like some of the popular it's i it now indicating you hear partners. Hi parents like suppliers contributor are often what happened last time you to lie riverway cos hat they have insight into your bear hang out here customer. Panel window on you know they haven't got closer to your partner that select it happens happens can bring airlines their their relationship help you grow have pulling for future growth in two thousand and. Next up william taylor the co author of maverick's at work and the founding editor a fast company magazine i think executive should begin the process of rethinking the relationship between leadership. In innovation uh i think most people would agree that the most powerful thing in business today is it really compelling new ideas of the question is well where to new ideas. Come from and for a long time i think most executive c o's presence has the department assume that if they were in charge they it was their job to do all the thinking they were clinical the smartest people. In the room i think the new logic of innovation we see this alive in so many different settings is that nobody is a smart. As everybody we're in the era of grassroots participation when it comes to creativity in innovation in the old style leadership was for exec is a safe i've got a great idea what's my top down stylus communication to get everybody on board. The new approach delete it should but innovation is executive say. I need a great idea what is my architecture participation to get as many people either in the ranks of my organization or even from outside the organization people who may never work for me. But will be more than happy to work with me contributing a a great idea uh a new design for one of my products or what have you in so whether it's tapping you know the brain favre your customers. Tabbing in the brain called rank and file employees tab and the brain power of smart people who may live thousands and thousands of miles away and have a passion for whatever industry you were in in the age of. Uh the internet. Instant communication lots of grassroots participation in an error when uh time magazine is just name the u. y. o. u. the person of the year. So much grassroots participation and creativity is going on in so many places beyond my space in face but at least crazy things that the kids use uh and it really could become a powerful tool for innovation in business. Now here's er many uh you bar up a professor of organizational behavior it in c odd and co author of how leaders create and use networks in the january issue of the harvard business review. I mean that both of us are not very that taking to me is resolutions although we like to make them and so what i'd like to proposed for business people in two thousand seven is left to make any new year's resolutions i thought that professional renewal. That to do the won't thing that i see my research most likely. To get that hop towards that you'll get that that did it to get involved in and you professional activity outside if um and ideally outside you dominate area of experience break fix team. Any other thing it could be getting involved in any boy it professional association could be thank you or you did court. Getting involved in it died out involving yourself in some adviser activity could be all the way it's saying. But that a nice day today getting involved in any of these days and outside project outside you you here isn't much more direct away i bet it will that that they usually usually resolved to do that actually never quite that too. Uh how may that that that's where it says this year look i'm going to get out there and give that a network or or a bit here i'm really good they start thinking about what the next career move for me. If that they gave that that way what i would argue to do is to go out and get involved in you activity which automatically okay it does benefit your well your network you'll have session you ideas whether they are. For your organization for your career even for your personal development as a whole. Bye bye he in two thousand seven is to go out and do something you. Next we have pull him a senior writer of the harvard business review and all sort of to reason h. b. o. road uncles focusing on the growing economic important so they have a tart. Let me steer clear of the noble and ponder it's resolutions uh i will become a level five leader we will turbo charge are innovation engine. And uh instead offer up three so much quirky though i think still valuable resolutions for senior managers. Resolution number one i will get myself an avid tar at explorer and internet based virtual world. So as most of us no no in the past few months there's been an explosion of interest in virtual worlds and at the towers that is those alternative identities that users create to represent themselves in these online three d. environments. Much of the attention is focused on a place called second life uh and environment too where people uh through there ever towards have created a a fairly realistic society with the real economy. No there's undoubtedly some frost's here around the ultimate commercial put ten show but hey decide for yourself go to second life. Created habits are it's free it takes only about fifteen minutes and then spend a little time exploring the place and um people you find. Resolution number two i won't forget about japan. Okay hardly likely you say but. It all the hype about china in india it's. Easy to overlook the gross of japan. As a formidable entrepreneurial rather than simply industrial power. Sure the countries recent uh economic rebound has been fueled in part by the turnaround of corporate giants the traditional big companies into industry consolidation. But it's also the result at least in part. Uh of the emergence of new cos it led by entrepreneurs in their twenties and thirties this represents a big changing the culture of japanese business lifetime employment for a paternity stick firm career advancement through seniority. These there's no longer the expectation of the ambitious young japanese young entrepreneurs in factor becoming celebrities buying a baseball and soccer teams the i p o market is booming. Other been more offerings in the past few years. In japan then in the u. s. simply put entrepreneurial japan is no longer an oxymoron and in the near future at least um may overshadow the much touted start up cultures of china in india. Resolution number three. I will put my s p p marketing on the advanced purchase list for harry potter in the deathly house. No why is that. Well ah for one thing the book uh the seventh and ah supposedly last in the harry potter series could help you make that long sought after connection with these teenage daughter izzy fight surfer reading rights to the book. But perhaps more relatively it could also prompt him to think in in new ways about the nature of a brand. Justice harry the fictional school boy wizard has aged with his readers from and eleven year old neophyte wizard to an accomplished sixteen year old similar brand could conceivably age with a particular cohort of customers. For example. A cosmetics line instead of targeting a particular age group late teens for example could evolve and it's image and in its products as it's targeted set of customers mature throughout their life. It's a fascinating idea and actually like the notion of an entrepreneurial japan is the focus of one of the articles in a harbor business reviews annual listed break through ideas in next month's issue. In fact i can't help uh but at if i were to add a fourth resolution it might be to peru's that list to see which of the ideas could be applied in your business. Now onto workforce crisis co author camera erickson. In two thousand seven we're going to school controlling tighten up the labor for i thought well world and other major markets around the world this is the time for both individuals. Aren't corporation he's doing some soul searching about the relationship between the employee and the corporation and how that can be made even stronger. Probably won't get into a perspective you should ask yourself what you really want from work i guess there ever was a time when you could begin to ask for those. Additions tier overall package this is a good time to start having this conversation. So if you've always wanted a more flexible schedule bring it up now if you'd like to cut back on the time that you that didn't work um perhaps go to a more we did alone that time to nineteen. Well what about things that you really care about at work including more responsibility one's learning last time that try ask here can play available this year. Prominent client perspective really need to understand what's your employee care of that. It's corporation it's definitely this is not something you can do phone company best practices around and disgrace. Uhhuh understand your employment important and what the people who work for you really terrible and make sure you're doing everything possible to emphasize how you mean. And we closed our new year's resolution segment with tom devon port professor of information technology in management attached in college. I think one of the big changes for organizations and two thousand and seven will be the shift from. Art to science obviously not all art and decision making man it's um it's going to go away but certainly i've seen a very strong trend. And reset years before organizations back make decisions and take actions on the basis of finance. A uh have become what i've identified as analytical competitors basing their strategies on the way they go to market on. Data and back that decision making and detail analytical that ticket which customer for about five or and. What what's gonna happen is probably chains and how to optimize there for natural resources i suspect that in two thousand a seven i will say uh oh large number more of these analytical competitors summer. Um and even for ordinary. Businesses that decide not to compete on analytical so we'll see. And increasing amount of analytical decision making kind of slip into the workplace or and more factors and business that were previously other measurable are becoming. Measurable organization for years have been trying to put. Transaction data systems in place and now they have that data from your p system sore point of sale systems or web transaction data. And now it's time to actually do something with it so i suspect that in two thousand seven we'll see i major shift from. Starting to er think about how we gather data to think about how we use data to manage our businesses better and and extreme cases. Think about how we can't use alex to advance business i was just. Uhhuh uhhuh uhhuh uhhuh uhhuh. Next offhand our h we are in pretty segment the mismanagement of customer loyalty first the idea in brief loyal customers costs was to serve they pay more than other customers and the truck new customers through word of mouth. Use loud claims prompted one high tech service provider to launch a two million dollar per year customer loyalty program. Five years later the company may disturbing discoveries half of it's loyal customers barely generator to profit and half of it's most profitable customers boss my margin products once then disappeared. What happened that's recent research reveals the loyalty evils profitability equation surprisingly week hands complicated not all loyal customers are profitable and not all profitable customers are loyal. Managing customers for loyalties doesn't automatically mean managing them for profits to strengthen the loyalty profitability link you must manage both simultaneously. Next the idea in practice reconsider customer loyalty claims a study of sixteen thousand customers that for cos revealed some surprising findings. The claim. Loyal customers cost less to serve the contrary finding loyal high volume customers know their value to you and exploit it to get premium service and discounts. The claim loyal customers pay more than other customers the contrary finding experience customers believe they deserve lower prices. The claim loyal customers attract more customers through word of mouth the contrary find customers from the word only if they feel as well as packed boy to spot a possible measure customers attitudes because well was purchasing behavior. Next measure loyalty accurately. If the loyalty profitability link is so weak should you abandoned loyalty programs no the problem is in the programs it's the crude methods used to measure and produced loyalty many tools generate dangerously inaccurate information. For example b r s n methods based on recent c frequency and monetary value ignores pasting that is time between purchases so cos miss jobs the likelihood of customers buying again. R s m also bases monetary value on revenue not profitability when customers only by little margin products serving them they cost more than the revenue they generate results cos trace the wrong customers i neglected right ones. Cos needs to better measurement system one based on event history modeling. For example by combining p sync with the average profit customers generated typical purchase periods an event history approach that's marketers design effective loyalty strategies for each customer. Next build loyalty strategies after measuring customers profitability and predicting how long ago remain loyal determine which of these four categories they fit until you're strategies. Category one true friends are profitable and loyal they buy regularly but not intensively your loyalty strategy approach softly don't communicate too often or they'll ignored everything. Reward their loyalty with exclusive access to special events in high quality limited supply products. Category too butterflies are profitable but this loyal your loyalty strategy. For the short time they buy milk them with short term hard so offers after their purchasing drops off stop investing. Category three bar nichols are on profitable but very loyal your loyalty strategy if you determine may have more money to spend offer them products related to those they've already purchased. And category for our strangers where neither of profitable nor loyal. Your loyalty strategy identify early says nothing uhhuh uhhuh uhhuh hm. We hope you've enjoyed this addition of the h. b. alright dear cast. We'd like to thank our harvard business school publishing colleagues julie duvall and cathy olson for producing the interviews for this week's program and is always we appreciate your feedback on our show. Please email your comments to us at this address idea cast at. H. b. s. p. dot harvard dot e. d. u. and if you'd like to catch up on our previous idea cast please visit us out w. w. w. dot h. b. alright dear cast dot org thanks for listening we hope you'll join us again next week. Uhhuh uhhuh uhhuh uhhuh uhhuh uhhuh
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