Recently in MGMT 301 Category

I've spent a little time today updating the help on BadDog with some help infromation .... oh well it is a start.

Dar has asked me to set up a Wiki for his current MGMT 301 (Management Theory & Practice) and MGMT 329 (Advanced Theory & Practice) classes.

Well its done and now the site Bad Dog is up and running.

The name of the site came from one of the symbols/characters used in the simulation ... which we lovingly called "Bad Dog" (it is a picture of a dog after all).

I hope current (and former) students contribute to the wiki.

Today, I had to stand in for Darl (who had to go overseas rather unexpectedly).

It was nice being back in undergraduate teaching -- it was a warm comfortable feel (for me at least). I wonder how they felt about it. The first couple of weeks of Mike's Bikes is often a shock to the system.

As prep, I re-read the readings for this week -- a piece by Daudling (1996) on Reflection for managers, and good ol' Kolb on his learning cycle. I also went back and looked at some of the excellent journals that were done by Amit, Kelly, SV and others. Ah, happy memories.

After class, I had a really interesting talk with one student (and a couple of others who largely just listened) about doing journals. I worry that I made her feel that I thought finance was dull -- that isn't true -- nor was it my intent. What I was trying to get at was the essence of good journalling (see also journalling). I remember the hours I spent one year working with an engineering student trying help him "get" journalling.<

The introduction of consultants: The message I was trying to get across today, is that the successful firms (in Net Mike and often in business) are those where the management team have good processes in place. Whilst in the short-term wiz-kids might be able to produce extraordinary returns, a team with good processes will normally out perform them. So, the process consultants should add a lot of value to their teams if they use them well. I need to trust my instinct with teams; I had suspected that there would be difficulties, but I hadn't been able to articulate the logic behind my nagging doubt. What I realise now is how difficult it is for the new teams to shift their focus from one another (who are very immediate and present) to the consultants who are distant and remote (and often delayed). I think I need to find a better model than this next time. Perhaps the teams could form, and then they seek to make contact with the consultants later in the week.

Taking about instinct, I caught myself making some huge assumptive leaps with people and teams. That's a bit of a talent of mine, but sometimes I think I make leaps that are too large. Anyway, I'll find out in the coming weeks when I visit the teams (from time to time). I was talking to another student about this and about how quickly we make judgments. Any way I mentioned a book, and I thought others might find it interesting. It is:

Goffman, E. (1971). The presentation of self in everyday life. Harmondsworth: Penguin.

The author's blurb on the front say exactly what the book is about:

I shall consider the way in which the individual in everyday work situations presents himself and his activity to others, the ways in which he guides and controls the impression they form of him, and the kinds of things he may and may not do while sustaining his performance before them.

I also mentioned David Thomas's thesis:

Thomas, D. (2002). Defining the oubliette: Simulated business practice.

His piece on events as cues or clues is really quite good (and I think it was his orginal idea too).

There were a few questions about team agreements. I've talked about these once or twice before. At the beginning, journals are often hard to do. With practice (and dare I say) with age, we get better at reflection and hence better at journalling.

Oh, well, as often happens I've spent more time than I intended going on about MGMT 301. however, it is nice to be writing here again.

Most of the marking of the Case and Annotated Bibliographies are done. We, DPE, will meet next week to review the marks before releasing them. Unsurprisingly some are very good, and some are not.

What is surprising is the patterns that we've seen occurring in the cases and bibliographies.

Firstly, the members of each team seem to write about the same thing. E.g. Zoom and takeovers.

Secondly, the pattern of the case and the bibliography amongst the poorer cases often the same. The case goes along the lines of "We didn't do [planning], and so we had problems". The bibliography then often the consists of article saying "[Planning] is good" and the link that gets made is "We should have done more [planning]". You can substitute what you like instead of planning, be it leadership, sensemaking, strategy, etc. My question tends to be, where is the insight that the article generates about the case?

Finally, the issue that gets chosen is often very broad, i.e. "Things didn't work out for company X, I wonder what they could have done differently". This results in bibliographies that are they general (covering everything from strategy to leadership, etc). There is a variation on this where the case that is just a history of the company with a rather general issue bolted on the end. The better cases ended with a very specific question "i.e. Should company X try to takeover company Y", the bibliography is then focused on the pros and cons of takeovers ... which is much more interesting.

To everyone who has posted their journals online, I'd like to express my thanks to you for making your work publicly available.

I've enjoyed reading what you have written, and I think many members of the class have benefited from seeing your work. They have been the source for many dicussions at the weekly 'Exec' meetings.

I had hoped that others would have provided you with more comments online -- but that type of culture takes more time than we have to develop.

If you would like to keep using your online journal (in the way Amit has), please do so.

Once again, thanks.

So looking at the brief results below, the question is How did Eron have profit that is greater than their sales? (After all, their profit as a percentage of sales (after tax) was 231%)

Well the answer is probably that they are sucking cash out of Zoom. However, what isn't clear is would it have been better to leave the money in Zoom?

Other pundits are wondering how Zoom feels about carrying the 'dead wood' of Enron. (As an aside, Ballistic, who were previously owned by Zoom, are now worth 25% more than when Zoom sold them). Even more interesting is the low (or very low in the case of Enron) ROA of the former BEZ companies

And what will happen when Balistique stops pumping cash into Ultimate Cycles and Revolution Cycles -- is it a case of good money after bad? Will they be able to catch up with Enron.

Let us suppose there there exists a small town, which has two bakers. Currently, the bakers sell their bread for $1.50 per loaf. Both bakers have been in the business a long time, and their cost structure for bread is pretty much the same. It costs them $1.00 to produce a loaf. So, their profit per loaf is 50 cents. Each baker sells the same number of loaves (800) each day. So, in total, each baker is making $400 in profit per day.

After doing some (very good) market research, one of the bakers discovers that dropping the price by 10 cents, will increase sales by 30%. The competitor's sales will decrease by a similar amount. In other words, if one baker drops the price, they will sell 1040 loaves and by making a profit of 40 cents each loaf, the baker will get $416 in profit. Of course, the other baker is now only selling 560 loaves, and making $280 dollars.

Should both bakers drop their price to $1.40 then there will be no change in the number of loaves sold by each baker (800), and their total profit will be $320.

So, should either baker drop the price of bread?

In the original prisoner's dilemma if there was only one change to sell bread then the 'best' thing either baker can do is drop their prices. However, if there are likely to be repeated rounds, then the baker should wait and see if the other baker drops their price.

Of course the problem becomes more complex when there are more bakers in the town -- with many bakers, breaking ranks can lead to the classical economics situation of the "tragedy of the commons".

But, I feel, that at the heart of these type of situations is the issue of trust. Can we trust our competitor to do the right thing? And yet... and yet classical market theory seems to be based on people acting in their own (self) interest.

As an aside, has anyone tried the 100 prisoner's problem ? I'm surprised this hasn't shown up in BCG interviews yet (or has it?).

Some relevant law

27.Contracts, arrangements, or understandings substantially lessening competition prohibited

1. No person shall enter into a contract or arrangement, or arrive at an understanding, containing a provision that has the purpose, or has or is likely to have the effect, of substantially lessening competition in a market.
2. No person shall give effect to a provision of a contract, arrangement, or understanding that has the purpose, or has or is likely to have the effect, of substantially lessening competition in a market.
3. Subsection (2) of this section applies in respect of a contract or arrangement entered into, or an understanding arrived at, whether before or after the commencement of this Act.
4. No provision of a contract, whether made before or after the commencement of this Act, that has the purpose, or has or is likely to have the effect, of substantially lessening competition in a market is enforceable.

And

30.Certain provisions of contracts, etc, with respect to prices deemed to substantially lessen competition?

1. Without limiting the generality of section 27 of this Act, a provision of a contract, arrangement, or understanding shall be deemed for the purposes of that section to have the purpose, or to have or to be likely to have the effect, of substantially lessening competition in a market if the provision has the purpose, or has or is likely to have the effect of fixing, controlling, or maintaining, or providing for the fixing, controlling, or maintaining, of the price for goods or services, or any discount, allowance, rebate, or credit in relation to goods or services, that are?
   1. Supplied or acquired by the parties to the contract, arrangement, or understanding, or by any of them, or by any bodies corporate that are interconnected with any of them, in competition with each other; or
   2. Resupplied by persons to whom the goods are supplied by the parties to the contract, arrangement, or understanding, or by any of them, or by any bodies corporate that are interconnected with any of them in competition with each other.
2. The reference in subsection (1)(a) of this section to the supply or acquisition of goods or services by persons in competition with each other includes a reference to the supply or acquisition of goods or services by persons who, but for a provision of any contract, arrangement, or understanding would be, or would be likely to be, in competition with each other in relation to the supply or acquisition of the goods or services.

Of course for all the details one should read the whole Act, which is available at the Public Access to Legislation project. Perhaps one of the most interesting sections is S.80 which discusses the pecuniary penality, and S.82A which dicusses

Finally,

98.Commission may require person to supply information or documents or give evidence?

Where the Commission considers it necessary or desirable for the purposes of carrying out its functions and exercising its powers under this Act, the Commission may, by notice in writing served on any person, require that person?

1. To furnish to the Commission, by writing signed by that person or, in the case of a body corporate, by a director or competent servant or agent of the body corporate, within the time and in the manner specified in the notice, any information or class of information specified in the notice; or
2. To produce to the Commission, or to a person specified in the notice acting on its behalf in accordance with the notice, any document or class of documents specified in the notice; or
3. To appear before the Commission at a time and place specified in the notice to give evidence, either orally or in writing, and produce any document or class of documents specified in the notice

Paula Jarzabkowski (2004) has recently had one of articles published in Organization Studies. Her article is based on an earlier working paper she wrote a few years ago. Good on her for getting it in to a tier-one journal. As it happens, Paula will be visiting the department in November and will be giving a couple of seminars. If you're interested in strategy (and who isn't), then I would commend her seminars to you.

Anyway, as I was reading her article, my attention was drawn to:

Mir, R., & Watson, A. (2000). Strategic management and the philosophy of science: The case for a constructivist methodology. Strategic Management Journal, 21(9), 941-953.

The abstract for Mir & Watson article goes like:

In this paper, we suggest that constructivism has the potential to inform research in strategic management. The realist paradigm currently dominates strategy research, and constructivism, a well-established tradition in the philosophy of science, is often ignored. However, a study of strategy literature and research reveals that it is drawn upon more frequently than is explicitly acknowledged. Constructivism occupies a methodological space characterized by ontological realism and epistemological relativism. Ontological realism is an important cornerstone of a field as applied as strategy, while epistemological relativism helps us explore the constructed nature of the field, where the researcher is an active participant rather than a reactor or information processor. In this paper, we demonstrate the precedents and possibilities for constructivist research in strategic management. We examine some of the existent constructivist works in the strategy literature, and point to specific techniques, including historical analysis, to demonstrate how this perspective may advance the boundaries of strategy research

For the constructivists, researchers are seen as skillful craftsmen [sic], much in the same way as strategists are seen in strategy-as-practices (no wonder Paula used this article in her work). Whilst there isn't total agreement as too the nitty-gritty of constructivism, Mir & Watson say there is agreement on six main principles, viz:

1. Knowledge is theory driven.
2. The separation of researcher and the phenomena under investigation is not possible..
3. The separation between theory and practice is not equally unfeasible
4. Researchers are never 'objective' or value-neutral
5. Research occurs within a 'community' of scholarship where mutually held assumptions are deployed to create 'conversations'.
6. Constructivism constitutes a 'methodology' [rather than a method]

It is interesting to counterpoint constructivism with realism. Citing Leplin, the authors say that realism is typified by ideas such as:

• the best theories are those that are close to the truth;
• the truth of a theory explains (and is the only explanation of) its predictive validity;
• we are moving progressively towards a true account of a phenomena
• the claims made by any theory are either true or false
• only through the deployment of 'reason' can a theory be proven or refuted

It's interesting to contrast (and compare) those views with my own about theories. So despite having some constructivist tendencies, there are still elements of realism in the way I think. Nevertheless, I do reject the notion that there are abstract universal principles¹ when it comes to research.

As it happened, I used this article as an opportunity to revisit my understanding of classic research issues of ontology² and epistemology³.

I liked the quote from Foucault that was used:

We must not imagine that the world turns towards us a legible face, which we would have only to decipher; the world is not an accomplice to our knowledge; there is no prediscursive providence which disposes the world in our favor. We must conceive analysis as a violence we do to things, or in any case as practice which we impose on them (emphasise added).

That strongly reminded me of David Thomas' es clues or cues comments.

Anyway, this will be a helpful article when I write the method chapter of my thesis.

References

Footnotes

¹ Nomothetic, by another name.

² Ontology - a theories of objects and things. More particularly, what things are knowable and what things can't be known. Main types of ontology are empiricism, rationalism, pragmatism, constructivism.

³ Epistemology - regarding the truth or falsehood of knowledge. How can we prove if something is true or false (given what we can know... ontology). I hope I've got these round the right way.

A few Porterian quotes taken from:
Harfield, T. (1997). Strategic management and Michael Porter: A postmodern reading. Electronic Journal of Radical Oranizational Theory, 4(1).

Competitive advantage is hardly a new subject. ... marketing, production, control, finance, and many other activities in a firm have a role in competitive advantage. ... Competitive advantage cannot be truly understood without combining all these disciplines into a holistic view of the entire firm.

In practice, a firm must understand where each of its competitors falls on the spectrum from good to bad and behave accordingly. A good competitor understands and plays by the rules of competition in an industry, and can recognize and read market signals.
Some bad competitors will never become good competitors. A firm must be prepared to fight battles in order to convert bad competitors into good ones. For example, a foreign competitor entering what it perceives to be a strategic market is usually a bad competitor. Its stakes are too high, and it may also not understand the rules of the game.
These considerations suggest that a firm must continually work to manage its competitors' expectations and assumptions.

Competitive strategy is about being different.

... a firm can achieve and sustain overall cost leadership, then it will be an above-average performer in its industry provided it can command prices at or near the industry average. A firm that can achieve and sustain differentiation will be an above-average performer in its industry if its price premium exceeds the extra costs incurred in being unique.

A firm that is stuck in the middle will earn attractive profits only if the structure of its industry is highly favourable, or if the firm is fortunate enough to have competitors that are also stuck in the middle. Becoming stuck in the middle also affects successful firms, who compromise their generic strategy for the sake of growth or prestige.

If a firm can achieve cost leadership and differentiation simultaneously, the rewards are great because the benefits are additive--differentiation leads to premium prices at the same time that cost leadership implies lower costs.

So, I wonder, what is your firm doing. How would you describe its strategy?