Management Lesson from Lincoln

What can we learn about Management from Political Leaders? Well that was the topic an article published in April'09 Harvard Business Review (HBR). Though most of the articles in HBR add a new dimension to managerial thought process but this one in particular stood out for me. This article claimed that there was a lot to learn from historical leaders whose tenure in political office is of extreme importance.

When talking of historical leaders, Abraham Lincoln really stands out. We all have heard about the motivation stories about Lincoln. Such stories go like, he lost 8 elections, failed in business twice, his fiancee died, he even had a nervous breakdown yet he overcame all such setbacks to become President of United States. And what a great president and leader he was. For that, only he had the courage to free the slaves. He also did many other things but abolishing slavery stands out as his key achievement.

Interestingly, I thought the article would go into similar motivational discussion. But, to my surprise the article did not touch upon motivation but highlighted that Lincoln had high level of emotional intelligence. He had a lot of control on his emotions and displayed empathy with people around him. Such was his self-awareness that he had appointed his political enemies to highly visible government positions because he deemed that the country needed such persons talent. Overall, I found it as an eye opener that one can learn so much about management from political leaders.

Virtual Integration in Service Industry

The idea of virtual integration is not new but something that has certainly caught the attention of management world is the way DELL has used virtual integration to create sustainable competitive advantage.

Historically, it was believed that a firm can capture majority of market value by using backward or vertical integration. Reliance India limited is a good example of a company that has effectively used backward integration. In essence, the point is that all part of value chain should be owned by 1 company to take maximum advantage.

However, DELL has proved that a firm can gain similar advantage as compared to backward integrated firms by strategically aligning all parties in a value chain such all these parties together are integrated. Hence the concept of virtual integration. Michael Dell has said in multiple interviews that his company's power comes from virtual integration that allows Dell and its partners to work together as a combined force.

With DELL as a test case, it is evident that virtual integration is a plausible strategy. However, after researching several scholarly journals etc. I have come to believe that all examples of virtual integration come from manufacturing or manufacturing related companies i.e. companies that are selling tangible products.

The question that I ask is can the same concept be applied to service industry. Can a financial service company leverage the concept of virtual integration ? - This is my current focus of research. Will publish my findings in the coming weeks/months.

Book Review: Six Thinking Hats

For many years I have known the concept of Six Thinking Hats. But did not know how to really use it in practice and what is the practical value of such a concept. Well, on one of the days whilst strolling along nearby bookstore I came across this book. So, I thought of giving it a go. Apart from being reasonably priced this book is an easy read and gives a lot of cues that we can use to structure different meetings.

Central theme of the book is to leverage the concept of parallel thinking. Specially in a meeting context, Idea is to have everyone present in the meeting to focus their thinking in one direction to reduce arguments. With that central theme set, this book uses hats to identify a certain type of thinking. Following is the summary of hats and their thinking types

* White - Just facts please
* Black - List all risks and dangers
* Red - List all emotions
* Green - List exploratory ideas
* Yellow - List all the positives
* Blue - Everything else. Including the meeting context

Book also says that meetings should start and end with Blue hat. Remaining hats can be used based upon the meeting context. Also, the idea is to allocate time for a certain type of thinking and encourage everyone to restrict their thinking to that type only. For example, when asked about red hat opinion people should mention their emotions only without any justification such as "I think this idea will not work". That's it .. no need to justify why the idea would not work.

Once all the thoughts are put on board or paper - team present at the meeting can easily prioritize to create plan go forward.

This book does give some examples where the Six Thinking Hats approach delivered great results for many companies. I haven't been a part of a meeting where this approach was used. But after reading the book I am encouraged to be a part of such meeting.

Strategic Integration

I think there is a no set formula to have a successful strategy. For an organization to grow it need to bring many elements together that I call as DNA.

These elements are broadly classified as Positioning elements and Execution elements. Within those elements there exists some synergies that an organization can leverage to create a sustainable competitive position.

Looking at many successful organizations around there does not seem to be anything exceptional in what they do. But the fact that whatever they do .. is done so smoothly day-in day-out that the ability to execute on desired strategy consistently becomes their strength. Few examples that stand out are Wal-mart and Dell. Walmart sell cheap products by having large warehouse type sale outlet within a community of certain size and usually out of city location. Yet other companies find it so difficult to replicate or better this model. Because the strength is not in model but the company's ability to deliver consistently on a certain model.

This notion of delivering consistently requires an organization to strategically integration all its resources such that they are aligned to deliver desired strategic position. For example, if company aims to be innovative then its organization and incentive structure must encourage innovation. Additionally, necessary resources should be provided to support such innovation. This is just one basic example where multiple elements of strategy need to come together to deliver on organization's strategy.


Reference: Fuchs, P.H., Mifflin, K.E., Miller, D. & Whitney, J.O. 2000, ‘Strategic integration: Competing in the Age of Capabilities’, California Management Review, vol. 24, no. 3, pp. 118–147.

Does luck play a factor in an organization's success?

Though not adequately supported but it does appear that some organization just got lucky by being at the right place and at the right time. Such organization's may not have a well defined strategy, at least initially, but over a period of time have built a significant scale that allows such organizations to remain ahead in their respective industry segment.

One such organization is a well known heavy machinery producer that received extensive support from Allied forces during World War II to build a worldwide support network for their machinery.

There are many articles that support this view that many organizations did not have a strategy but they just got lucky.

I am not sure how much truth is there in this claim. But something worth exploring.

Strategic Innovation: What can we learn from Dell?

Undoubtedly, DELL computers is probably the most written about organization in the past decade or so. Amongst many studies, Strategic Innovation is identified as key attribute to Dell's success. So the question arise what is strategic innovation?

A bit of history before we tackle the topic of strategic innovation. According to Michael Porter there are only 2 organizational strategies within a defined market segment i.e. Cost Leadership and Service Differentiation. Meaning an organization can either sell its product at cheapest price. Hence, it becomes cost leader in its industry segment (Think Walmart). Or an organization offers a service differentiation that does not have a close substitute (think Apple ipod).

What a strategic innovator does is it uses its strategy to increase the size of market segment in such a way the it gets both cost advantage and service differentiation. This is exactly what DELL did. It aligned every small piece of its strategy in such way that its strategy increased the size of PC market and its strategy gave Dell a cost advantage over its competitors whilst maintaining its service differentiation.

In essence, the point here that innovation is not only attributed to physical tangible products such as ipod but also attributed to strategy. As with Dell's case, its strategy in itself is an innovation.