Indholdsfortegnelse for 1/2022 i I by IMD

War has returned to Europe, the kind of war the continent has not seen in over 80 years. Russia’s brutal attack on Ukraine has led to unspeakable suffering. Yet amidst the onslaught of armor and artillery, we can see clearly the difference that leadership makes - the seemingly superhuman steadfastness of Volodymyr Zelenskyy, Ukraine’s president, has given hope to his people and inspired a degree of unity across governments, businesses, and civil society in the West that few would have thought possible. The IMD community stands with Ukraine. We condemn this war. And we know this view is shared by our many friends in Russia, who overwhelmingly reject their government’s criminal conduct. When we picked supply chains as the focus of this fifth issue of I by IMD, it was…

And three tips for managers 1 Delegate more to address your own workload issues. This will only work if the rest of the team is sufficiently staffed. 2 Empower employees to use flexitime to match their work schedules with their optimal sleep schedules. Late night chronotypes might arrive later and work later, while early risers start before dawn and finish earlier. 3 Introduce nap room infrastructure as another layer of support for sleep. Scan to download poster…

[Chain reactions] There is growing recognition that we need to move away from the take-make-waste model of production and consumption towards a more circular economy where we stop waste from being produced in the first place. Much attention has been focused on how companies can prolong the lifespan of products, by making it easier for consumers to reuse, repair, and recycle goods. IKEA has rolled out a buyback program for lightly used products, adidas has designed shoes that can be ground down to be remade into another pair once they are worn out, and outdoor gear brand Patagonia has launched a repair guide for its clothing. Yet firms would do well to take a closer look at how they can re-design supply chains to reduce the amount of production-related waste…

The next 10 years are going to be revolutionary for global trade. Companies will find themselves having to take responsibility not just for their own actions, but also those of every business involved in the manufacture and movement of their products. Consumer pressure and new environmental, social and governance (ESG) regulations will force companies to not just know far more about, but also be held accountable for, what happens at every point in their supply chains. Global supply chains have evolved in complexity over decades to meet one primary objective: cost minimization. In meeting this objective, they have been amazingly successful. Products of all kinds can be shipped around the world with incredible efficiency. Yet efficiency has masked other shortcomings. One, of course, was a lack of resiliency, as the…

Here are four main action points to keep in mind when trying to activate your company’s strategic incumbency: 1. FOCUS ON JOINT PROBLEM SOLVING TO ADDRESS EXTERNAL OPPORTUNITIES Too often, passive companies are overly focused on maintaining the existing structures that they have built and view innovation as a way to drive efficiency rather than transform the current system. Innovation is kept separate from the main business, pushed into an incubator or venture fund staffed by different people who may not be familiar with the rest of the organization. Strategic incumbents recognize that the best innovations come from sharing expertise and experience across the company, joining together to solve problems and address external opportunities. They adopt a learning mindset and actively look for how to create new business models. 2.…

Building on academic literature on the topic, as well as our extensive research and interviews, we identified six hidden traps that unprepared leaders can fall into, especially in times of crisis. 1. Entrenchment syndrome Soldiers in the trenches losing their will or ability to fight. 2. Evaporating ethics In the struggle to survive either redundancy or the collapse of business, what actions might desperate leaders resort to as base survival instincts kick in to save themselves and their businesses? 3. Our dominant characteristic prevails How can we avoid either being too caring or too daring but modulate through agility? 4. The weakest could pay a heavy price How as leaders can we bring people with us rather than throwing them to the wolves, particularly the most vulnerable? 5. Danger of…

Allergan’s carcinogenic breast implants were on the market for years, a delay that may have caused hundreds of women to develop a rare type of T-cell lymphoma, and dozens to die from it. Bayer’s Trasylol, a drug used to reduce bleeding during major surgeries, remained on the market, despite indications that it led to kidney failures, potentially causing tens of thousands of unnecessary deaths. According to a US Senate report, Olympus failed to act on information it had about how its duodenoscope (a device used to examine the small intestine) spread bacteria and caused infections, with sometimes potentially lethal consequences. Delaying the recall of faulty products not only has potentially devastating consequences for end-users; it also disrupts a firm’s supply chain, and can result in large fines, lawsuits, and reputational…

The pandemic has been catastrophic for people and communities around the world. And while Big Tech has flourished in an online-first world, achieving unheard-of valuations, small businesses have faced existential challenges. In spite of this, one surprising trend stands out: the rate of new business startups is booming. According to the US Census Bureau, the number of new business applications increased to over 4 million in 2020 and more than five million in 2021, jumping by over 50% compared to prior years. This is especially surprising because, by some measures, the rate of business startups in the US has been in long-term decline since the late 1970s. One reason for this flood of startups is that information and communication technologies (ICTs) have radically reduced the costs of starting a business.…

[Chain reactions] INVENTORIES ARE FRONT OF MIND Quarterly US GDP would not normally be considered a matter for supply chain professionals, but we are in strange times. US GDP grew at an annualized rate of 6.9%, a robust figure that is being attributed in large part to inventory growth, as companies look to restore stock levels depleted by the global shipping crisis. It’s worthwhile to take this moment to consider the implications this, and other dynamics, may have on working capital levels and supply chain management as a whole in the coming months. THE INVENTORY BOUNCE Reconstituting inventories right now may have surprising impacts on the long, and still sluggish, global supply chains. The restocking is in fact a form of “inventory bounce”. The increased production that enabled the increase…

Based on our calculations, the cost of excess inventory in online retailing: 179.9 trillion liters of water Equivalent to 71.96 million Olympic swimming pools or around a fifth of the total human water consumption annually Methodology: With Amazon’s 185 fulfilment centers and 7.7% global online retail market share, the total environmental cost of excess inventory in online retailing is 179.9 trillion liters of water (assuming that around 12,000 liters of water are required to produce a smartphone). With a world population of 7.9 billion and average daily water consumption of 300 liters per person per day (assumption of average for US water consumption), online retailers waste solely due to excess inventory is estimated to be 20.7% of total human water consumption annually.…

Every day when we turn on the news, there seems to be another corporate scandal. Someone, somewhere stole from someone else, hid their money overseas, mistreated their employees, or neglected to look out for society. And such failures don’t affect only the obvious victims - the legal and financial consequences, and the reputational damage, rebound on the companies themselves, destroying organizations and ruining careers. Demand is growing for greater corporate accountability, but it is coming from people rather than governments. Shareholders, customers, and citizens are demanding that organizations add values and ethics to the triple bottom line, and governments are under pressure to listen to this societal push and impose sanctions that act as a real brake on unethical behavior. Corrupt practices seem to be far more than a question…

Have you ever reflected on how you pick up information from observing and listening to others? We come to quick and often correct judgments about other people. For example, most of us can correctly pick out the extroverts during a regular team meeting or group lunch, because we implicitly know that they tend to talk a lot and express emotion easily in their faces and gestures. Or imagine a situation where you are trying to convince someone of your point of view. At a board meeting for instance, you might be able to tell if certain members or investors like what you’re pitching even before they have spoken. This gives you crucial time to clarify or even pivot the presentation before they come to a decision. This is impressive since…

Team performance can often be the underlying cause of success or failure within a business unit. It’s not just the bottom line that is affected by a team’s dynamics either. Overall morale, employee retention and corporate culture are heavily influenced by the way an organization’s teams are formed and collaborate. Top teams don’t happen by accident. There are factors that high-performance teams have in common, and leaders have tools they can use to affect the quality of collaboration within the group. For a good example, look no further than The Beatles - four dynamite individuals whose success in innovating offers much-needed inspiration. What can executives learn from The Beatles? 1. Set a high bar for chemistry: Aim for fireworks and magic in a bottle. Unfortunately, when recruiting team members, too…

Leaders too often see diversity, equity, and inclusion (DEI) as a series of incremental initiatives that suddenly become dispensable when faced with competing business priorities or in times of crisis. The COVID-19 pandemic and economic downturn exemplify this. DEI budgets quickly evaporated. Later, disparate impacts of the pandemic on women and marginalized groups, and the intense scrutiny of systemic racism nudged leaders to turn their attention and resources back to DEI. To lead with enduring purpose and passion, leaders need to be intentional about their commitments. Public outcry over the fast succession of killings of George Floyd, Breonna Taylor, and Ahmaud Arbery in the US in 2020 spurred commitments by white male executives who still comprise 90% of all Fortune 500 CEOs in the US. These events thrust leaders into…

ADD WOMEN TO YOUR BOARDS We found that firms with no women and those with just one woman on the board act similarly (statistically speaking) on defective products. Adding women to your board (beyond just one or two) continues to be a defensible and reasonable strategy for improving your firm’s ESG. We can’t tell, from our data, what exactly changes on the boards after women join. It is possible that they bring a different perspective and express care for a wider range of stakeholders. But it’s equally possible that their presence prompts men to consider risks they may have overlooked or to voice concerns they may have otherwise silenced. PRIORITIZE DISCUSSION OF PRODUCT GOVERNANCE RISKS If you are still working on identifying (more) women directors for your board, stay extra…

You can sleep when you are dead. This longstanding maxim remains prevalent in society and is especially embraced within the business sector. However, decades of sleep research have demonstrated that if you adopt such a mentality, you may be dead sooner, and the quality of that now shorter life will be significantly worse. Testament to this fact are findings demonstrating that insufficient sleep is associated with all major health conditions afflicting people developed nations, including heart attacks, stroke, hypertension, diabetes, obesity, depression, anxiety, suicide and dementia. Beyond these health consequences, more recent work within the workplace context has demonstrated a simple truth: less sleep does not equal more productivity. Quite the opposite. Despite such evidence, many senior leaders believe that their years of climbing toward high-level positions have allowed them…

Creating a durably ethical organization may seem an almost impossible task, given the complexity of modern enterprises and the sheer numbers of people who need to be committed to the cause. Nevertheless, here are five steps you can take to maximise your chances of getting it right. 1. Develop a corporate culture that puts values and ethics at the core of everything you do. Values are your guiding principles, such as community, honesty and integrity, while ethics are the practical decision-making processes by which you apply your values in a societal context. 2. Use a combination of selection methods to get a balanced perspective on candidates when recruiting. While behavioral interviewing is the mainstay of targeted hiring for many organizations, other methods can yield valuable insights. 3. Establish clear expectations…

Over the past two decades, the astronomic growth of relatively new companies like Tesla and Facebook has prompted some corporate leaders to question whether legacy firms - often bogged down by bureaucracy, internal power plays and slow decision-making - will manage to survive and stay relevant in an age dominated by small, nimble, digital disruptors. The demise of former household names like Blockbuster, Kodak, Pan Am and Saab compounded the unease that size, once an asset, had become a liability. Yet all is not lost for established firms. Having conducted a three-year study of global companies across a variety of industries, we identified 38 organizations that had successfully fended off challenges and continued to thrive. The companies had to meet six criteria: age, market share, financial performance during downturns, ability…

The world is becoming increasingly polarized as the disruption wrought by the financial crisis and the pandemic pushes people into opposing camps. Yet if we are going to solve our most pressing problems - the climate emergency, gaping inequality and social unrest - we are going to have to learn to listen to the other side. Negotiating tactics provide us with a toolkit to start a constructive dialogue and resolve conflict - whether you may be dealing with a customer complaint, a tricky supplier, or a hostile takeover bid. The first step is to view negotiation as a relationship not a transaction. Many organizational and political leaders don’t take the time to build a relationship first, instead moving to the bargaining phase too soon. This is a mistake. By respecting…

The most important way executive teams create value for their businesses is by framing and solving strategic problems. There are, of course, other important things leadership teams need to do, ranging from updating strategy, doing annual budgeting and planning, reporting results, and interacting with key external stakeholders. However, to a large extent, these are routine tasks; being good at framing and solving strategic problems is the true hallmark of high-performing business teams. By strategic problems, I mean the organization's most significant emerging challenges and promising potential opportunities. Examples include deciding whether to pursue a substantial acquisition or divest an underperforming business or enter a new market or diversify into a new line of business or make a significant capital investment. What these examples have in common are: (1) they have…

I still remember as vividly and if it were yesterday a lunch conversation with my colleagues at the Yale School of Management in late 2001. It was just a few months before the euro was introduced as the common currency of 12 European countries. The changeover rate between the new currency and the legacy currencies of these countries had already been fixed, on 1 January, 1999, and by then the EUR-USD exchange rate was about 0.85, meaning you would receive 0.85 USD per euro. Laughter rocked the table when someone entertained the hypothesis that one day there would be parity between the two currencies. But by July 2002, the euro was already more expensive than the dollar. The relative price of both currencies is by no means an indication of…