Archive for the ‘Corporate Strategy’ Category

Politics: Red, blue or green (as in money)?

January 29, 2013

When Obama was elected in November 2008, GE CEO Jeff Imment told his troops: “We’re all Democrats now”.

It wasn’t a political statement as much as a practical business reality.

Now, Forbes is asking “Are Apple, Whole Foods and Google Democrats or Republicans?”

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Forbes’ central thesis:

Welcome, in short, to a new, neutral … U.S. corporate environment — thanks in no small part to the increasingly polarized politics of this country.

“Companies know if they align too much with one party or political view they will alienate one half of the buying public.”

Companies might lean Red or Blue in politics but in the end the only color that really counts is green.

Here are Forbes’ poster children of the new neutral …

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Sara Lee splits company … incorporates part in the Netherlands.

March 6, 2012

I bet you missed this one.

It announced on a Friday afternoon, so most folks missed it.  And, it sounds innocuous enough …

According to the WSJ:

Sara Lee Corp. said Friday it will seek a listing for its coffee and tea business on the Amsterdam stock exchange, as part of its plan to split the company in two.

Sara Lee said the business will be incorporated in the Netherlands, where its Douwe Egberts coffee brand is already based.

The new company, which also makes Pickwick Teas, will be headquartered in Amsterdam.

Maybe the move is simply to get company execs closer to the relevant markets.

Call me cynical, but I think we’re going to see quite a few of these offshore splits by U.S. companies.

Why?

Simple.  If Team O continues to push for taxation without repatriation of non-U.S. earnings, you can bet that more American companies will split and plant major parts of their companies in non-U.S. locations.

The economics are compelling …

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Google looks for new ways to keep its lights on

February 4, 2010

Takeaway: In an unexpected move, Google has gone offline in an attempt to diversify its business. The company recently started an energy subsidiary with the goal of making renewable energy more affordable.

Taking such a large step away from its core business to enter a highly capital intensive industry will likely leave analysts wondering what Google’s ROI projections look like for its new division.

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Excerpt from FastCompany, “Google Expands Its Empire With Energy Subsidiary” by Ariel Schwartz, January 7, 2010.

It’s no secret that Google is interested in clean energy technology. The company has previously invested in enhanced geothermal technology, smart grid ventures, electric cars, and wind power. Now Google is forming its own energy subsidiary called Google Energy. The Delaware-based company was quietly formed in December, and earlier this week it put in a request to buy and sell electricity on wholesale markets. What, exactly, is Google up to?

The search giant is hoping to use its new venture as an aid in its quest for carbon neutrality. Presumably, that means Google Energy will help Google offset its power use by buying clean energy credits and selling excess power off to the grid. Google already has a 1.6 MW solar array at its Mountain View headquarters.

Knowing Google, however, the new energy subsidiary might be more than meets the eye. Company reps admit that there aren’t any concrete plans for Google Energy yet. That means Google isn’t ruling out the possibility of becoming a utility sometime in the future. It wouldn’t be all that surprising–Google has already stated its plans to make renewable energy cheaper than coal. The company says that its “over-arching vision is that one day a large portion of the world’s vehicles will plug into an electric grid fueled by renewable energy,” so why wouldn’t it also want to be in charge of doling out that energy?

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Full Article:

http://www.fastcompany.com/blog/ariel-schwartz/sustainability/google-expands-its-empire-energy-subsidiary

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Wanna double shareholder returns? … Try "organic" growth through focused innovation.

November 25, 2009

HBR: Focus Intensely on a Few Great Innovation Ideas, by Georg von Krogh and Sebastian Raisch, Oct 2009

The global companies that are the most successful at achieving growth through innovation (as opposed to acquisitions) tend to devote their energies to a small number of breakthrough ideas. They select the initiatives with the greatest market potential and marshal their resources to develop them.

The organic-growth champions do more than focus on breakthrough ideas. They also put innovation at the top of the agenda, work across functional and divisional boundaries, and empower employees with an entrepreneurial mind-set.

Obviously, pursuing dozens of innovations is less expensive than developing thousands. But it also requires an intense focus on picking winners and commercializing them.

In a study of organic-growth champions— including GE, BMW, Nestlé, and Samsung— researchers at the Center for Organizational Excellence in Switzerland found that the firms’ shareholder returns were almost double those of the other Global 500 companies (which had lower rates of organic growth).

Procter & Gamble focuses its R&D on just eight to 10 core technologies, and Nestlé  … allocates large budgets to the 10 most promising innovations.

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Are “great” companies great … or just lucky?

November 18, 2009

Excerpted from: HBR, Are “Great” Companies Just Lucky?, by Michael E. Raynor, Mumtaz Ahmed, and Andrew D. Henderson, April 2009

Studies that examine high-performing companies to uncover the reasons for their success are both popular and influential.

They’re the basis of the insights behind best sellers like In Search of Excellence and Good to Great.

But there’s a problem: The “great” companies from which these studies draw their conclusions are mostly just lucky.  Many of the “great” companies cited are, in fact, nothing special. 

A firm is remarkable only when its performance is so unlikely that systemic variation alone cannot account for its results. Most success studies don’t address this fact, relying instead on the “self-evident” nature of exceptional performance.

To understand how lucky some firms might get because of systemic variation alone, we ran simulations that gave us a picture of how firms might do if they differed only in their luck.  Then, we compared actual results with simulated results, which allowed us to determine which firms had delivered performance so
unlikely that it was probably due to something remarkable about them.

Using this method, we evaluated 287 allegedly high-performing companies in 13 major success studies.

We found that only about one in four of those firms was likely to be remarkable; the rest were indistinguishable from mediocre firms catching lucky
breaks.

By our method, even in the study with the best hit rate, only slightly more than half the high performers had profiles
that were credibly attributable to something special about the firms. In short, what qualifies as remarkable performance is anything
but self-evident.

This doesn’t mean you should necessarily dismiss the advice offered in success studies. But, success studies should be treated not as how-to manuals but as sources of inspiration and fuel for introspection.

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