R & D
The New Global Business Manager: HBS professor Christopher A. Bartlett
Protecting against the Erosion of Brand Value: HBS professor Clayton M. Christensen
The Business of Babies: HBS professor Debora L. Spar
Curb Your Overconfidence: HBS professor Max H. Bazerman
The New Global Business Manager
There is no such thing as a universal global manager, concluded HBS professor Christopher A. Bartlett in a 1992 article for Harvard Business Review. Rather, multinational corporations require three kinds of specialists: country managers, business managers, and functional managers, plus a group of senior executives to coordinate their activities. These categories still hold true over ten years later, says Bartlett, but other things have changed. Baker Library’s Cynthia Churchwell interviewed Bartlett on his current thinking. An excerpt follows.
What new lesson have global firms learned?
Companies are finally recognizing that being global is about accessing scarce resources — and that the scarcest of all is the human resource, particularly management. The assumption that “all the smart, capable people were born within a ten-mile radius of our head office” is being eroded.
What is the function of today’s global manager?
We used to think of the CEO as being the grand strategic architect. Now the world is so complex and fast-moving that the general manager’s role is less about managing content and more about managing context — creating an environment in which people can negotiate the best solution for an organization.
What is the global manager’s most essential trait?
The two most critical attributes are open-mindedness and recognizing that global management is all about legitimizing diverse views in an organization, including those based on cultural differences. A manager who is sensitive to that will understand and respond much better in a global context.
What challenge will global managers encounter in the next five to ten years?
While there are few effective transnational governmental bodies, there are a number of very effective transnational corporations. With that power comes a huge responsibility to act as global citizens who make a contribution. The great challenge for multinational corporations in the next decade will be to establish the confidence of society at large, governments in particular, and even of individual consumers, to assure them that they are worthy of their trust.
View the full Q&A with Bartlett.
Protecting against the Erosion of Brand Value
When Barnes & Noble rolled out a line of “store-brand” classic books last summer, the publishing industry gasped.The company aimed to provide consumers with high-quality books at prices significantly below what they would pay from publishers such as Penguin Books and Bertelsmann. Should Barnes & Noble’s foray into publishing cause brand-name publishers heartburn?
“Through the lenses of our theories of strategy and innovation, the answer is — emphatically — yes,” write HBS professor Clayton M. Christensen and Innosight partner Scott D. Anthony (MBA ’01) in the premier issue of Strategy & Innovation, a newsletter from HBS Publishing. “Barnes & Noble’s action indicates that within the publishing area, circumstances have changed, meaning that the power to capture value from a brand will increasingly shift from book publishers such as HarperCollins and Houghton-Mifflin to channels that stock and sell books.”
What’s at work here is commoditization, a process that results in companies being unable to profitably differentiate their products and services. “The specter of commoditization sends chills down every executive’s spine — as well it should,” note the authors, because it robs their brands of premium cachet and the premium prices that come with it. “The same forces that cause the commoditization of products and services precipitate the commoditization of brands,” they continue.
Fortunately, managers aren’t helpless in the face of market forces that erode brand value. Christensen and Anthony present a model to assist managers in identifying opportunities from creating new brands to revitalizing existing ones. It’s a model most managers will need to apply sooner or later. “As long as brands serve to close the gap between what customers need and what they can get, they will create value,” the authors conclude. “But because that gap usually exists only temporarily, firms must watch for shifts in the location of opportunities to create new brands.”
For information on Strategy & Innovation, visit HBSP Newsletters.
The demand for babies by infertile couples and other would-be parents is huge — and little discussed. HBS professor Debora L. Spar addressed the market realities of adoption and scientific conception at the 2003 Alumni Health-Care Conference in November.
The topic, Spar admits, is controversial. “We have a business that doesn’t feel like a business,” she noted. “Nobody wants to acknowledge the extent of commercialization.” Yet Americans alone spent $2.7 billion on fertility treatments in 2002. Procedures such as egg and sperm “donation,” in vitro fertilization (IVF), surrogacy, and adoption demand payments of $10,000 and up. “We’re not talking about demand for potato chips,” Spar added. “This is the kind of demand that becomes an obsession. Price is less of an issue than it is in other markets.”
Despite the classic components of supply and demand, this market does not function normally, said Spar. Pricing inequities (90 percent of couples conceive for free), inconsistent insurance coverage for fertility treatments, and ambiguous legislation around property and privacy rights all create a unique market environment.
Until there is more clarity around issues of ownership (does a surrogate mother have the right to change her mind and keep the baby she’s carrying?) and the political climate becomes more accepting of the role science can play in creation (with cloning the most radical example), the market cannot thrive. “If advances in biotechnology are to reach their full commercial and scientific promise, sustaining legislation has to be put in place to allow the market to achieve its potential,” Spar commented. “The best technology in the world won’t help you if it’s illegal to use it.”
Another determinant of success in the baby business is the ability to sell — and deliver on hope. “Providers of fertility treatments are selling the promise of a child, the dream of a family, but at some point they have to come through,” said Spar.
Privacy is a factor as well. “Acquiring a child is an intimately personal transaction, yet in many instances, people don’t want to be involved with the ultimate suppliers. It’s a market suited to intermediaries such as brokers, lawyers, and agents,” she observed.
The emphasis in egg and sperm donor profiles on intelligence and physical attributes also raises the specter of eugenics, the science of creating a superior race through selective genetics. In order to succeed, providers will have to walk a fine line between making the customer happy and avoiding controversy.
One thing is for sure, as Spar pointed out, “You can’t be politically naive and do well in this business.”
| Other Tips |
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Learn to embrace uncertainty, and you’ll be more willing to propose and accept the type of compromise that leads to mutually beneficial agreements. Seek out an objective critique of your plans from a third party, whether a professional or a colleague. Be realistic about your own bargaining weaknesses, and you’ll increase the odds of proposing an offer that is acceptable to the other side. |
Overconfidence can make the best negotiators overestimate their chances of success — and underestimate the value of wise tradeoffs, warns HBS professor Max H. Bazerman in an article appearing in the January issue of Negotiation, an HBS Publishing newsletter.
While overconfidence is a fundamental human bias, in the workplace it can lead to adverse consequences, says Bazerman. He poses this real-world dilemma:
“You are the chief legal counsel for a firm that has been threatened with a multi-million-dollar lawsuit. You feel 90 percent confident that the firm will not lose in court. Is this degree of certainty sufficient for you to recommend rejection of an out-of-court settlement?
“Now suppose you learn that if you lose the case, your firm will go bankrupt. Based on this new information, are you still comfortable with your 90 percent estimate?”
In such cases, overconfidence can diminish the inclination to compromise, with potentially disastrous consequences. “While confidence in your abilities is necessary for achievement in life, over-confidence can be a barrier to effective professional decision-making,” advises Bazerman.
Guarding against overconfidence begins with learning to view situations objectively. “In arbitration, for example, the more objective your assessment of the opponent’s offer and the position of the arbitrator, the better equipped you’ll be to use this information strategically,” he writes.
Concludes Bazerman: “By guarding against overconfidence, you’ll achieve a healthy and helpful self-confidence in your negotiation abilities.”
For information on Negotiation, visit HBSP Newsletters.
