Book Description
Under Andy Grove's leadership, Intel has become the world's largest chip maker and one of the most admired companies in the world. In
Only the Paranoid Survive, Grove reveals his strategy of focusing on a new way of measuring the nightmare moment every leader dreads--when massive change occurs and a company must, virtually overnight, adapt or fall by the wayside.
Grove calls such a moment a Strategic Inflection Point, which can be set off by almost anything: mega-competition, a change in regulations, or a seemingly modest change in technology. When a Strategic Inflection Point hits, the ordinary rules of business go out the window. Yet, managed right, a Strategic Inflection Point can be an opportunity to win in the marketplace and emerge stronger than ever.
Grove underscores his message by examining his own record of success and failure, including how he navigated the events of the Pentium flaw, which threatened Intel's reputation in 1994, and how he has dealt with the explosions in growth of the Internet. The work of a lifetime,
Only the Paranoid Survive is a classic of managerial and leadership skills.
The Currency Paperback edition of
Only the Paranoid Survive includes a new chapter about the impact of strategic inflection points on individual careers--how to predict them and how to benefit from them.
Customer Reviews:
Enriching Personal Real-Life Account by Someone Who Had Managed a Mega-Size Corporation!!! .......2007-03-20
The real value of this book is that it is written by someone, Andrew Grove, who has actual experiences and managed a start-up right up to a mega successful corporation. There are tons of management and marketing books written by people, based on case-studies and analysis, but lack actual experiences managing or working in a corporation.
The main concept of this book is on strategic inflection point, which is a time in the life of the business when its fundamentals are about to change. This change can either infer an opportunity to rise to new heights or signal the beginning of the end. Hence, this book is about the impact of changing rules, guidelines to assist in identifying those situations and about finding your way through those uncharted territories. This book serves to raise our awareness of going through cataclysmic changes and to provide a framework in which to deal with them.
This book uses Porter's competitive analysis strategy in terms of the 6 forces as a base. The 6 forces are
1. Power, vigor and competence of existing competitors
2. Power, vigor and competence of complementors
3. Power, vigor and competence of customers
4. Power, vigor and competence of suppliers
5. Power, vigor and competence of potential competitors
6. Power, vigor and competence of substitutes
Once a very large change happens in one or several of these 6 forces, a "10X" force is in effect. Very often the transition from a normal business environment to that of a "10X" business environment is very gradual and thus, it is difficult to pinpoint the exact time in which the "10X" force came about. Strategic inflection point comes about when this balance of forces shifts from the normal environment to that of the new "10X" environment and it is difficult to pinpoint its exact occurrence.
The circumstances that help to identify this strategic inflection point are
1. Presence of troubling sense that something is different such as changes in customers' attitudes, entrant of new competitors, etc.
2. Growing dissonance or misalignment between corporate statements and operation actions.
3. Emergence of new framework or actions.
4. New set of corporate statements is generated.
Andrew gave an analogy of working your way though a strategic inflection point to be just like venturing into the valley of death, the perilous transition between the old and the new environments. It is difficult to know the right moment to execute the appropriate actions. Since timing is everything, it is attractive to undertake these changes when the company is in a healthy financial state. This means "acting when not everything is known, when the data aren't in.", merely relying on "instinct and personal judgments" (Chapt 2). Hence it is a matter of training your instincts to pick up a different set of signals.
The only way we know whether a change signals a strategic inflection point is through the process of clarification that comes from broad and intensive debate. This debate should involve technical discussions, marketing discussions and considerations of strategic repercussions (how will it affect our business if we make a dramatic move; how will it affect if we don't?). The more complex the issues are, the more levels of management should be involved because people from different levels of management bring completely different points of view and expertise. The debate should involve people from outside the company, customers and partners with different areas of expertise and interests. When dealing with emerging trends, you may very well have to go against rational extrapolation of data and rely instead on anecdotal observations and your instincts. (chapter 6). Constructively debating tough issues and getting somewhere is only possible when people can speak their minds without fear of punishment.
Andrew offers a few guidelines to discern "signal" from "noise"
1. Is your key competitor about to change? Suggested using the "silver bullet test": If you had just one bullet, whom among your many competitors would you save it for? When the answer to this question stops being as crystal clear, it is time to sit up and pay special attention.
2. Is your key complementor about to change? Does the company that in the past years mattered the most to your business seem less important today? Does it look like another company is about to eclipse them? If so, it may be a sign of shifting industry dynamics.
3. Does it seem that people who for years had been very competent have suddenly gotten decoupled from what really matters? If key aspects of the business shift around us, the very process that got us where we were might retard your ability to recognize the new trends.
Generally you cannot judge the significance of the strategic inflection point by the quality of the first version or release of the product. You will need to draw on your experiences to discern its possible impacts.
Strategic dissonance is the divergence between actions and statements; saying one thing and doing another. Strategic dissonance is an automatic reaction to a strategic inflection point that probing for it is perhaps the best test of one.
Clarity of direction, which includes describing what we are going after, as well as, describing what we will not be going after, is exceedingly important at the late stage of a strategic transformation. This book defines strategic plans as statements of what we intend to do, whereas strategic actions as steps we have already taken or are taking. Strategic plans are abstract and are usually couched in language meant for the company's management. Strategic actions matter because they immediately affect people's lives. The most effective way to transform a company is through a series of incremental changes that are consistent with a clearly articulated end result.
This book mentions the "Taillight" approach - some companies may profitably wait for others to test the limits of technological possibilities or market acceptance and then commit to following, catching up and passing them.
A question that often comes up at times of strategic transformation is whether you should pursue a highly focused approach, betting everything on one strategic goal or should you hedge. It takes every erg of energy in your organization to do a good job pursuing one strategic aim, especially in the face of aggressive and competent competition. It is hard to lead the organization out of the valley of death without a clear and simple strategic direction. Demoralized organizations are unlikely to be able to deal with multiple objectives. Thus, hedging is expensive and dilutes commitment, and is not recommended.
"Most companies don't die because they are wrong; most die because they don't commit themselves... The greatest danger is in standing still" (Chapter 8).
The leader needs to show interest in the elements leading to the strategic direction, by getting involved in details that are appropriate to the new direction and by withdrawing attention, energy and involvement from those things that do not fit. At times like this, the calendar is the most important strategic tools in communication. Andrew emphasizes that communicating strategic change in an interactive exposed fashion is important and necessary such as corporate email announcements and meetings, etc.
Companies that successfully navigate through strategic inflection points tend to have a good dialectic between bottom-up and top-down actions. Bottom-up actions come from the ranks of middle managers, who by the nature of their jobs are exposed to the first whiffs of the winds of change, who are located at the peripheral of the action where change is first perceived and who catch on early. But by the nature of their work, they can only affect things locally. Their actions must meet halfway the actions generated by senior management. While those managers are isolated from the winds of change, but once they commit themselves to a new direction, they can affect the strategy of the entire organization. The best results seem to prevail when bottom-up and top-down actions are equally strong. When the top management lets go a little, the bottom-up actions will drive towards chaos by experimenting, by pursuing different product strategies, by generally pulling the company in a multiplicity of directions. After such creative chaos reigns and a direction becomes clear, it is up to senior management to reign in chaos. A pendulum-like swing between the 2 types of actions is the best way to work your way through a strategic transformation. What is needed is a balanced interaction between the middle managers, with their deep knowledge but narrow focus and senior management, whose larger perspective could set a context.
An organization that has a culture that can deal with these 2 phases - debate (chaos reign) and a determined march (chaos reined in) is a powerful, adaptive organization. Such an organization has 2 important attributes:
1. It tolerates and even encourages debates. These debates are vigorous, devoted to exploring issues, indifferent to rank and include individuals of varied backgrounds.
2. It is capable of making and accepting clear decisions, with the entire organization then supporting the decision.
This book emphasizes on the concepts by reliving a few of Intel's crisis; the mid-80s shift from memory to microprocessors business, RISC vs CISC architecture and during the fall of 1994 the floating point bug associated with Intel's flagship device; the Pentium processor. The magnitude of this crisis is so significant in that a tiny flaw in the microprocessor's floating point unit could mushroom into half a billion dollars' worth of damage in less than 6 weeks. This was later narrowed down to 2 key factors. First the success of Intel's merchandising "Intel Inside" program, which has projected a strong Intel image right to the end-user, became a double-edge sword in that end users directly contact Intel for a replacement microprocessor. In a normal incidence, it is likely to be the computer manufacturers who will perform the recall and replacement. But Intel's identity is so strong with the end-users that they became the ones asking for a recall and replacement. Second, the other factor is attributed to Intel's sheer size. Intel had become gigantic in the eyes of the computer buyers. And thus the huge cost in replacement.
This book also relates the transition of the computer industry in the 80s vertical alignment to that in the 90s; the horizontal alignment. This came about with the appearance of the microprocessor and then the personal computer. The "10X" force came about when the technology permitted the integration of several chips into one single chip and this same microprocessor enabled the production of all kinds of personal computers. As the microprocessor became the basic building block, economics of mass production worked its charm giving extremely cost-effective PCs. Over time, this changed the entire structure of the industry and a new horizontal industry emerged. As a result of this trend, companies previously successful in the vertical alignment, but who failed to adapt or recognize this "10X" force failed and no longer existed today. Examples are Wang and Cray. At the same time, this change also spelled opportunities for new entrants such as Dell and Compaq. Thus when an industry goes through a strategic inflection point, the practitioners of the old industry may have trouble, while on the other hand, this new environment provides opportunities for new entrants into this industry.
The key characteristics of horizontal industries is that they live and die by mass production and mass marketing, bringing cost-effective solutions and more specialization, i.e the best in class for that particular market segment such as TV monitors, memory, storage devices, etc.
The new rules of the horizontal industry are
1. Do not differentiate without a difference. Do not introduce improvements whose only purpose is to give you an advantage over your competitor without giving your customer a substantial advantage. Example is a "better PC" departed from the mainstream standard and hence giving rise to software incompatibility.
2. Grab opportunity when there is a technology break or change coming along.
3. Price for what the market will bear. Price for volume. Work like the devil on your costs so that it becomes profitable. This leads to economies of scale whereby by being a large-volume supplier, you can spread and recoup those costs. In contrast, cost-based pricing will often lead you into a niche position.
To be a leader or survivor in a horizontal and commoditized industry, this book provides some food for thought. A prime example is Intel exiting the commoditized memory industry in which they were once in the lead, until the entrance of the Japanese manufacturers.
Rhetoric and boring!.......2007-01-11
This book is rhetoric and boring with a few examples of successful and unsuccessful ventures so I started reading about Grove and his background.
The influence of communism in his early years seems to have put Grove in the paranoia groove. The culture of paranoia is clearly seen in Intel's business today- slow decision making, trust issues with employees and even customers!
Hire and fire culture has made the remaining employees work the system to `survive' rather than innovate and thrive.
Compare and contrast this Apple or for that matter even AMD and you will realize these companies are more in tune with their customers and employees (and hence their stock holders) in terms of basic trust.
We are not in a communist environment anymore. By being paranoid Grove's Intel has proved, you can only survive and barely at that.
Only for business managers?.......2006-08-28
Contrary to popular opinion on this website, I found this book to be boring, repetitive and badly written. It was so boring I struggled to finish it during a journey where I had little else to do. This book summarizes a few events that were significant to Intel and offers advice on how similar business changes should be handled. Being an engineer, and not a manager, I found this to be vague and rambling. However I do agree with the book's title - Only the Paranoid survive. I think this outlook is useful for everyone, and not just business types.
Lengthy Writing.......2006-01-27
I picked up this book after seeing some good reviews about it.
The whole book is about "Strategic Reflection Point".
I was disappointed that Andy Grove didn't try to explain SRP in a more concrete manner. After finishing the book, I still have very vague & abstract knowledge on SRP.
Nevertheless, Andy Grove is still one of the best CEOs I admired.
How to survive in the new economy.......2006-01-22
This a good book based on facts. Andrew Grove goes on describing how Intel managed to shift from a semiconductor to the microprocessor company while he was the CEO... (now it is shifting again under Paul Otellini).
Although the example a bit outdated since it was written in 1996, the same principles still apply. A must read if you want to understand why some great and big companies suddenly go down while others emerge quickly.
You always need to learn the history to understand the future.
Amazon.com
Since its release in 1990, Peter M. Senge's bestselling The Fifth Discipline has converted readers to its innovative business principles of the "learning organization," personal mastery, and systems thinking. Published nearly a decade later, Dance of Change provides a formidable response to businesspeople wondering how to make his programs stick. He outlines potential obstacles (such as initiating transformation, personal fear and anxiety, and measuring the unmeasurable) and proposes ways to turn these obstacles into sources of improvement. Senge--with considerable help from the team who worked on the follow-up development manual, The Fifth Discipline Fieldbook--presents an insider's account of long-term maintenance efforts at General Electric, Harley-Davidson, the U.S. Army, and others who are learning organization, along with experience-based suggestions and exercises for individuals and teams. "We are seeking to understand how people nurture the reinforcing growth processes that naturally enable an organization to evolve and change," Senge explains, "and how they tend to the limiting processes that can impede or stop that growth." --Howard Rothman
Book Description
Since Peter Senge published his groundbreaking book
The Fifth Discipline, he and his associates have frequently been asked by the business community: "How do we go beyond the first steps of corporate change? How do we sustain momentum?" They know that companies and organizations cannot thrive today without learning to adapt their attitudes and practices. But companies that establish change initiatives discover, after initial success, that even the most promising efforts to transform or revitalize organizations—despite interest, resources, and compelling business results—can fail to sustain themselves over time. That's because organizations have complex, well-developed immune systems, aimed at preserving the status quo.
Now, drawing upon new theories about leadership and the long-term success of change initiatives, and based upon twenty-five years
of experience building learning organizations, the authors of
The Fifth Discipline Fieldbook show how to accelerate success and avoid the obstacles that can stall momentum.
The Dance of Change, written for managers and executives at every level of an organization, reveals how business leaders can work together to anticipate the challenges that profound change will ultimately force the organization to face. Then, in a down-to-earth and compellingly clear format, readers will learn how to build the personal and organizational capabilities needed to meet those challenges.
These challenges are not imposed from the outside; they are the product of assumptions and practices that people take for granted—an inherent, natural part of the processes of change. And they can stop innovation cold, unless managers at all levels learn to anticipate them and recognize the hidden rewards in each challenge, and the potential to spur further growth. Within the frequently encountered challenge of "Not Enough Time," for example—the lack of control over time available for innovation and learning initiatives—lies a valuable opportunity to reframe the way people organize their workplaces.
This book identifies universal challenges that organizations ultimately find themselves confronting, including the challenge of "Fear and Anxiety"; the need to diffuse learning across organizational boundaries; the ways in which assumptions built in to corporate measurement systems can handcuff learning initiatives; and the almost unavoidable misunderstandings between "true believers" and nonbelievers in a company.
Filled with individual and team exercises, in-depth accounts of sustaining learning initiatives by managers and leaders in the field, and well-tested practical advice,
The Dance of Change provides an insider's perspective on implementing learning and change initiatives at such corporations as British Petroleum, Chrysler, Dupont, Ford, General Electric, Harley-Davidson, Hewlett-Packard, Mitsubishi Electric, Royal DutchShell, Shell Oil Company, Toyota, the United States Army, and Xerox. It offers crucial advice for line-level managers, executive leaders, internal networkers, educators, and others who are struggling to put change initiatives into practice.
Customer Reviews:
A Little Exhausted.......2006-04-15
.
When 'The Dance of Change' was published in '99, Senge's work was already reaching the end of it's relevancy. A brilliant thinker, he's had difficulty sustaining creative thinking since 'The Fifth Discipline'. Not surprising. With such a brilliant, breakthrough book like his 1990 masterpiece, one tends to get trapped by one's own fame. Thus is born The Fifth Discipline Industry.
The Dance of Change contained nothing new in 1999. By 2006 the ideas contained in 'Dance' are so passe for most industry. Many others have built upon Senge's work in far more effective ways and your time is better spent with them. While you can skip 'Dance', 'The Fifth Discipline' still is a must read, especially if you're working on organizational change in education or human services, two industries that remain stubbornly stuck in the 80's.
.
A good resource- should be used in conjunction with The Fifth Discipline.......2006-03-04
This book is written as a resource book usable in conjunction with co-author Peter Senge's book, the Fifth Discipline. This book explores the challenges to sustaining momentum in a learning organization.
The authors of this book describe the processes that help to reinforce change and those processes that conflict with change, thereby limiting an organization's ability to make change. They begin this by reexamining and reviewing the "five disciplines" of learning from The Fifth Discipline: personal mastery, mental models, shared visions, team learning, and systems thinking.
In order to maintain the momentum for change, they expound on what they identify as the three fundamental reinforcing processes required sustaining real change: enhancing personal results, developing networks of committed people; and improving business results.
The main focus of this book is the ten challenges the authors see as the most likely challenges a company will experience when attempting to sustain change. These challenges are the challenges of:
1. control over time.
2. inadequate internal resources
3. relevance
4. management clarity and consistency
5. fear and anxiety
6. negative assessment of progress
7. isolation and arrogance
8. autonomy and power
9. the inability to transfer knowledge across the organization.
10. organizational strategy and purpose.
Ponderous.......2003-07-02
While I enjoyed this work and read it from cover to cover, it did begin to seem like too much of good thing. Some of the organization information seemed dated and some of the people who are offering advice are probably no longer held with such high regard in their former organizations. In any case, I would recommed it to anyone who is doing graduate or post-graduate work in organization and management or just wants some insight into how organizations really work.
Great book to look at change from different lenses.......2003-01-27
This book is touted as a "resource" to the Fifth Discipline, but my view is that it could itself stand on its own steam as a handbook for change management. With articles contributed by a variety of authors, the book looks at the challenges of triggering, initiating, aligning and sustaining change and the various diverse ways to confront and solve those challenges.
The challenges that the book identifies are the challenges of:
Orientation, Generating Profound Change, Not Enough Time, No Help, Not Relevant, Walking the Talk, Fear & Anxiety, Assessment & Measurement, True Believers and Non-believers, Governance, Diffusion, Strategy & Purpose.
The book is choc-a-block with tools, explanation of jargon and
references to other resources. An orientation to Systems Thinking and looking at organizations as complex systems would help in clarifying the book more. Hence it is desirable to read "the fifth discipline" before you read it.
However, the delightful nature of this book ensures that you can flip open any page, read a little bit and keep it back, and feel refreshed and not thirst for more.
For people who look at organizations as communities, as networks and as human systems in addition to just being an economic entity this book will delight and scare.
For others, this book will act as a provoking way to look at change and organizations in search of equilibrium.
Retread.......2001-10-17
Senge et al have done some wonderful work through time. But like many guru's they begin to sing the chorus of the song again and again with each new title. There are useful things to be found here but if you are looking to stretch your thinking beyond his early works you need to look elsewhere. However, if you are building a library of sound work in the area of change, organizational development and other assorted things then this will prove to be a useful resource. I discounted it simply because I was hoping to find a fresh breeze within.
Book Description
Meeting the Innovation Challenge offers a new way to look at creative leadership that integrates both leadership and management. This book also provides the reader key insights into a new and more systematic way to manage transformation. As a result, the reader will be able to discover a full range of potential outcomes from their change efforts—from radical new to the world transformation to incremental improvements.
Since people are at the heart of any transformation issue,
Meeting the Innovation Challenge includes helpful information on the various roles required to initiate and sustain change efforts. Many change initiatives use teams, so specific tools are outlined to create and manage teamwork for transformation.
Those who lead and manage organizations have too many change methods from which to choose. This book offers practical advice on how to select and manage a variety of change methods, as well as a helpful selected list of many of the methods available from which to choose. An example is drawn and explained from the area of new product or service development.
An often-overlooked element of climate and context is also addressed. Successful innovation, change and transformation require an environment in which people are ready, willing and able to initiate and sustain change.
Meeting the Innovation Challenge addresses this area by clarifying the differences between culture and climate, and then offering practical ways to understand and create the climate for transformation.
Amazon.com
Massive change is hitting corporate America at a furious and escalating pace, writes Andrew Grove in
Only the Paranoid Survive, and businesses that strive hard to keep abreast of the transition will be the only ones that prevail. And Grove should know. As chief executive of Intel, he wrestled with one of the business world's great challenges in 1994 when a flaw in his company's new cornerstone product -- the Pentium processor -- grew into a front-page controversy that seriously threatened its future.
Book Description
Under Andy Grove's leadership, Intel has become the world's largest chipmaker, the fifth-most-admired company in America, and the seventh-most-profitable company among the Fortune 500. You don't achieve rankings like these unless you have mastered a rare understanding of the art of
business and an unusual way with its practice.
Few CEOs can claim this level of consistent record-breaking success. Grove attributes much of this success to the philosophy and strategy he reveals in
Only the Paranoid Survive--a book that is unique in leadership annals for offering a bold new business measure, and for taking the reader deep inside the workings of a major corporation.
Download Description
The founder of Intel, Andrew Grove is one of the great business leaders of our time--and 1997 "Time" magazine Man of the Year. Under Andrew Grove's leadership, Intel has become the world's largest chip maker and one of the most admired companies in the world.
Customer Reviews:
Waste Of Time.......2005-11-25
This is by far the worst business book I have read in recent years. It is hard to believe that Andy Grove actually thought that this material was worth putting into a book. As other reviews have said, this book at most should have been a short article in Business Week...but even then it would require some actual content to make it worth reading. The best part of the book is the quotes on the cover from Steve Jobs et al. It makes me wonder if they even read the book.
save several valuable hours of your life- skip this book.......2005-10-19
Maybe I haven't read enough "management" books (though I do have an MBA), but if this is considered "great" for this genre- WOW. This entire book could have been summed up in a couple pages without losing any major points, but I guess you can't have a bestseller that way! One reviewer said it was too technical. Are you living in a cave? I found it condescendingly written- absurdly simple and dumbed down. Granted, it's over a decade old, but I doubt everyone was really that much stupider ten years ago.
All Fear the Status Quo.......2000-07-20
Andy Grove has verbalized the mindset that we must all develop to survive in the 21st Century. While his idea of constantly looking over your shoulder has always been applicable, the speed of the Internet economy requires that we do it much more frequently and penalizes us much more quickly if we do not.
Grove does a great job of showing how one man's crises is another's opporuntity and uses the term strategic inflection points to describe these periods of 10x change.
This book is a good reminder for anyone who thinks that what made them successful to this point is any guarantee that they will be successful in the future.
Nothing new here.......2000-07-07
This is something that any first year business student could have written. It is a fast read but it provides no new insights.
Want to be a great manager - Go to West Point.......1999-12-02
I was very dissapointed by this book as a lesson in management. The lessons learned are basic management and military strategy that every CEO should now. i.e. Basic lessons from the book: include understanding the nature of the battlefield (6 forces that affect business), recognizing change (strategic intelligence), listening to the troops in the field, making sure you're not insulated from the bad news, seperate the noise from real intelligence, have the courage to make changes, issue clear orders, re-evaluate and adjust as conditions change, be prepared to replace the top management (not for incompetence, but to get fresh perspectives (change the old guard and the old ways of doing things), Realize that your company runs on the quality of middle management (i,e NCO and junior officers in the military). Give them clear goals and empower them to act. I have a lot of respect for Andy Grove, and the insights into his business was great, but if you want a good management book, read a military strategy manual. There's nothing new here.
Average customer rating:
- Highly Recommended!
- Aligning Shareholder and Manager Interests
- EVA from a Senior Management Perspective
- What Is Your Organization's Net Worth?
- THE big picture of EVA concept
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The EVA Challenge: Implementing Value Added Change in an Organization
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ASIN: 0471405558 |
Book Description
The co-founder of EVA shows how to apply it in today's new economy
EVA-economic valued added-is a measure of the true financial performance of a company, and a strategy for creating corporate and shareholder wealth. It is also a method of changing corporate priorities and behavior throughout a company, right down to the "shop floor." In The EVA Challenge, the authors outline how to implement EVA-from training employees to answering the most frequently encountered implementation problems faced by companies.
This detailed "how-to" guide represents the second phase in the "EVA Revolution", showing executives around the world how to customize and implement EVA at their companies. Here, EVA converts learn how to work some "EVA magic" through company-specific initiatives and case study examples. Coverage includes completely new materials on "real options", leveraged stock options, and other concepts critical to corporations in both new and old economy industry sectors.
Customer Reviews:
Highly Recommended!.......2002-04-08
Authors Joel Stern and John Shiely advocate a total revolution in the way companies are valued and measured. They make a convincing case for using EVA ("Economic Value Added") as the primary measure of corporate performance. The authors argue that the SEC's yardstick for corporate reporting, the "Generally Accepted Accounting Procedures" (GAAP), was designed to protect lenders by depicting a company's liquidation value. As such, GAAP provides an overly conservative and only marginally accurate picture of financial health. EVA principles - at least according to the consultants who advise companies on using them - evaluate intangible assets more realistically and correspond more closely to stock market performance. We from getAbstract recommend this book to executives who seek improved corporate financial and market performance, and to investors interested in understanding how value is created and maintained.
Aligning Shareholder and Manager Interests.......2002-03-02
One of the most difficult questions to answer is what a company's worth is. Two developments in American Capitalism have contributed to the question's complexity. First, shareholders have divorced themselves from the corporations operation, leaving the task to professional managers.
Second, generally accepted accounting principles do not align expenses with benefits, distorting economic reality. As a result, investors who want to compare the cash they can take out of a company with the cash they have invested are hampered.
The authors argue Economic Value Added (EVA) is a true measure of a company's economic performance, in addition to being a strategy for creating shareholder value. Properly implemented, they state, EVA frees the measurement of corporate performance from the vagaries of accounting principles and gives both shareholders and management a clear picture of the value the company creates.
EVA is the profit that remains after deducting the cost of the capital invested to generate that profit or EVA = Net Operating Profit After-Tax minus capital charge. Effectively implemented, the tool becomes the basis for an incentive plan that rewards managers for actions that increase shareholder returns and vice versa.
John S. Shiely, president of Briggs and Stratton and co-author of the book, notes this strategy provided the foundation of his company's turnaround. In 1989, the world's largest producer of air-cooled engines had an EVA of negative $62 million based on $1.3 billion in sales. By re-organizing and focusing its strategy while developing its EVA program, the company staged a dramatic turnaround. By 1999, it reported a record positive EVA of $50.9 million. Shareholders, who bought $100 worth of stock at the beginning of the program, saw it increase in value to $673 in 1999.
The authors claim EVA is ideal for knowledge-based companies making heavy infrastructure investments today for any anticipated return later. EVA treats cash outlays that represent investments as capital rather than expenses. The capital in these knowledge based industries consists of research, development, marketing, advertising and start-up costs. Accounts view these expenditures as expenses, but it is realistic to capitalize them and amortize them over their useful lives.
EVA from a Senior Management Perspective.......2001-10-23
EVA Challenge was OK. It is more geared towards senior managers who are thinking about EVA as a model for their companies. In that regard, this books does a fine job.
I was hoping the book would deal with more of the matamatics associated with defining EVA in relation to various projects and business decisions. This book contailed very little information in this regard.
What Is Your Organization's Net Worth?.......2001-04-14
Perhaps you have already read Ehrbar's EVA. He quite correctly points out that there can be many challenges to implementing a program based on EVA principles. He characterizes it as "a superior measure of corporate performance, one that is tied more directly to share than any other performance measure, by charging profit for the cost of all the capital a company employs, including equity."
More specifically:
"It is the framework for a complete financial management and incentive compensation system that can guide every decision a company makes...that can transform corporate culture, that can
improve the working lives of everyone in an organization by making them more successful, and that can help them produce greater wealth for shareholders, customers, and themselves."
Stern and Shiely (with Irwin Ross) focus on the specific challenges which will probably be encountered when initiates are taken to implement value-added change in an organization. They suggest all manner of strategies and tactics to achieve that objective, agreeing with O'Toole's key points in Leading Change when he analyzes what he calls "the ideology of comfort and the tyranny of custom."
For the authors of this book, there have been two major developments in American capitalism which explain why "the opportunity cost of capital" has been miscalculated: "(1) the split between ownership and control of publicly held corporations and (2) the widespread acceptance of accounting measurements [i.e. GAAP] to gauge corporate value, a purpose for which they were never intended." Having defined and then analyzed various problems in Chapter 1, the authors proceed into 12 more chapters whose titles suggest their focal points: The Solution, The Need for a Winning Strategy and Organization, The Road Map to Value Creation, The Changes wrought by EVA, Extending EVA to the Shop Floor [an absolute imperative], Getting the Message Out: Training and Communications, EVA and Acquisitions, EVA Incentives, How EVA Can Fail [and it does...the authors explain why], New Frontiers: real Options and Forward-Looking Eva, 25 Questions [which must be answered fully or forget about EVA], and finally, a Recipe for Success. The book then provides its own value-added benefit: an Epilogue written by Gregory V. Milano which discusses EVA and the "New Economy."
Briefly, I would like to comment on Chapter 13 which offers a "Recipe for Success." The authors introduce and explain six key factors. Having already acknowledged various forms of resistance and resentment which implementation of EVA principles may well encounter, the authors understand full well that these factors may offer the promise of success but by no means guarantee it. They are:
1. "The company must have a viable business strategy and appropriate organizational architecture before EVA can boost performance."
2. To achieve full potential of EVA, a company should install all of EVA's components -- a measurement system, a management system, and an incentive system."
3. An EVA incentive plan is essential, and it should reach as far down in the organization as possible."
4. "A comprehensive training program is equally essential. It should not be limited to top executives but should infiltrate all managerial levels and, ideally, reach down to the shop floor."
5. "The EVA program must have the full and fervent backing of the CEO, who should chair all the all-important steering committee that puts EVA in place."
6. "The CFO and/or the controller should be equally committed. Because they have to deal simultaneously with standard accounting practices, these specialists may have an even greater problem focusing on value creation than a CEO newly introduced to EVA."
Stern and Shiely (with Ross) offer a comprehensive, cohesive, and cost-effective program which, after appropriate modification, can be of substantial benefit to almost any organization, regardless of its size or nature. Milano's insights are especially important in 2001 as so many organizations are attempting (with mixed success) to reconcile the basic principles of the so-called "Old" and "New" economies. (I hope they or Ehrbar next write a book which explains how EVA can be of greatest benefit to privately-owned smaller companies.) Drucker was right: "Until a company returns a profit that is greater than its cost of capital, it operates at a loss." We have all manner of mechanisms by which to determine the exact net worth of an individual executive. Properly understood, EVA principles can do the same for an organization IF if those who lead that organization are guided and informed by the aforementioned "six key factors." If you share my high regard for this book as well as Ehrbar's, you are urged to check out Fitz-enz's The ROI of Human Capital.
THE big picture of EVA concept.......2001-04-11
Joel Stern masters the art of explaining EVA in a simple manner. Co-authored by John Shiely, sharing his on-the-job experience using EVA at Briggs & Stratton, the book looks at strategic considerations of why to use EVA and how it is better than other performance measures and financial management systems to enhance shareholder value. I especially like the "How EVA can Fail" and the "25 Questions" chapters because they go deep into issues sometimes overlooked when one thinks about Value Based Management implementation.
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Mastering the Challenges of Change: Strategies for Each Stage in Your Organization's Life Cycle
Leroy Thompson
Manufacturer: Amacom Books
ProductGroup: Book
Binding: Hardcover
General
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Leadership
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Management
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Organizational Change
| Organizational Behavior
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ASIN: 0814402186 |
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Competitive Challenge (Ballinger series on innovation and organizational change)
David J. Teece
Manufacturer: Longman Higher Education
ProductGroup: Book
Binding: Hardcover
Management & Leadership
| Business & Investing
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| Business Ethics
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| Decision-Making & Problem Solving
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| Motivational
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| Operations Research
| Planning & Forecasting
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| Project Management
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| Systems & Planning
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| Teams
| Total Quality Management
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ASIN: 0887301789 |
Book Description
A recent survey reveals that customer satisfaction with the weather is at an all-time low. It's up to Wally, director of the Weather Consumer Satisfaction Bureau, to sort things out. In this witty fable, the root of the problem is a disagreement between old and new clouds. The upstarts think technology is the answer, while the old guard says there's no substitute for the tried and true. The resulting storms are having a direct effect on customers, who wonder if they will ever see sunny skies again. Can Wally reconcile these seemingly conflicting views and leverage the unique strengths of all the clouds into a successful, customer-friendly plan? On Cloud Nine presents real lessons about what is valuable in the workplace: balancing the past and the future, encouraging diversity of ideas, and more. The story is followed by simple yet powerful tools that will help readers apply these lessons to their own work and organizations.
Customer Reviews:
On Cloud Nine: Weathering the Challenge of Many Generations in the Workplace.......2007-07-16
On Cloud Nine is written as a fantastical tale of a man who just been appointed as Director of the Weather Customer Satisfaction Bureau. As the newbie, he immediately starts to make changes with the assumption that the old system isn't working and needs to be scrapped. To his surprise, however, he finds out that once in place his ideas create an even bigger mess that not only threatens his job but those of many others as well. In trying to find a solution to his problems, this man learns much about working through the challenges of having several generations in the workplace and using the best of all of these individuals to make a more successful plan.
I think that this little tale is a very effective way of showing both the challenges and benefits of the various generations of workers. Not only is this understanding extremely important in today's business world where Matures, Baby Boomers, Generation Xers, and now Millennials are now working together but also in the general population where the different morals, attitudes, and work ethics appear to be so very different between these different groups of individuals.
Bringing Everyone Together.......2006-06-02
I love this book. It is so well written, humorous and the book really hit home with me. In my profession, I deal with people that all have different points of view and agendas: buyers, sellers, other agents, lenders, vendors, contractors - and they are of all different ages. I found the story so very pertinent to my business. It inspired me to work harder to move towards teamwork solutions rather than to give in to all the different personalities. And I absolutely love the cartoons by Eldon Dedini - they make me smile.
Inge Kessler, REALTOR
Carmel, California
Avoiding an Office Storm.......2006-05-25
"Wally shuffled over to his laptop and started fiddling with his presentation. He was so preoccupied that he did not notice the huge swarm of clouds beginning to gather around the mountain's snowy peaks." ~ pg. 39
Robert W. Wendover and Terrence L. Gargiulo present their wisdom in a fable format that addresses the current clashes between the way things have always been done and adjusting to the newest technology available.
As old and new clash, the authors invite all the "clouds" to a meeting to talk about their differences rumbling before the storm. Eldon Dedini provides humorous cartoons throughout that enliven the story and keep you smiling from start to finish.
Chapter eleven is an explanation of the story and explains what can be learned from the fable: "Sometimes, listening and quietly facilitating can be the most effective means for developing relationships among different groups."
Questions and Answers and a special section for Frequently Asked Questions gives the story practical applications for all work environments and encourage all employees to reconcile the differences that abound as life moves forward at a rapid pace.
~The Rebecca Review
How to handle age-related differences in the workplace.......2006-04-13
Robert Wendover & Terrence Gargiulo's ON CLOUD NINE: AN INSPIRING TALE reads like fiction but provides an involving vignette about age-related differences in the workplace which hold great meaning for modern workforces. From young people who think they know it all because they have more energy to elders who are more experienced but resist change, and customers who see their satisfaction with the results eroding, ON CLOUD NINE makes a fable out of the first part and leads into real tips on how to improve communication and foster teamwork in a multigenerational workplace. Whether you're a workforce manager or a worker, ON CLOUD NINE offers many coping tips.
Certainly makes you think........2005-12-20
I enjoyed this book very much; particularly because of it's quick read, hunorous presentation of the subject matter, and because it helped me to do my job better! I train large groups of "twenty somethings", and being a Boomer myself, I find some of their actions and responses confusing. This book encouraged me to adjust a portion of my material, and the way I deliver it, to bring a more effective learning environment to these people. That's a Win-Win for everyone. Thanks.
Book Description
In an era of increased global competition, of takeovers, downsizing, restructuring, and even outright failure, managing intelligent organizational change is the most difficult challenge facing business. Kanter, Stein, and Jick present here a comprehensive overview and an authoritative model for how to and, in some cases how not to, institute change in organizations.
Building upon their "Big Three" model of change, the authors focus on internal and external forces that set events in motion; the major kinds of change that correspond to external and internal change pressures; and the principal tasks involved in managing the change process. Several "portraits" of companies undergoing different types of change, coupled with the authors' own expert analyses, prove that no one person or group can make change "happen" alone. Instead, the authors assert that it is the delicate balance among key players that makes organizational change a success.
The authors analyze the forces for change by examining Banc One, Apple Computer, and Lehman Brothers, among others, to illustrate environmental and cyclical change as businesses grow. Then they turn to forms of change, drawing on the Western-Delta merger, strategy change at Bell Atlantic, and takeover turmoil at Lucky Stores, to show how companies change their structures and cultures. The section on execution of change shows "change masters," to use Kanter's own famous term, at work at Motorola, General Electric, and other leading firms, as well as the difficulties of implementing change at General Motors and Microswitch.
Fundamental organizational change, they argue, is exemplified by identity change, involving much more than the transfer of tangible assets. Managing the feelings, fears, and hopes of people must be the central strategy during such transitions. In this essential volume for managers and analysts of change, Kanter, Stein, and Jick offer powerful insights, practical new directions for action, prospects for the future of deliberate organizational change, and advice on where to begin the change process, and when: NOW!
Book Description
Innovation does happen--even in government! Despite all the news about government scandals and failures, public officials are innovative. This book analyzes numerous examples of ingenious problem solving--in education in California, in the Department of Juvenile Justice in New York City, in government operations in Minnesota, in human service programs across the country.
All organizations, both public and private, need innovation, but making innovation work in government is a greater challenge than doing so in business. This book identifies a number of dilemmas that complicate the process of innovating in American government. For example, there is the "trust dilemma": Innovation may be necessary to establish public faith in the ability of government agencies to perform, but before the public grants agencies a license to be truly innovative, it needs to be convinced that these same agencies have the ability to perform.
The contributors to this book analyze a number of issues raised by the task of innovation, including: Who is responsible for innovating? How can innovative individuals and teams be held accountable? What kinds of organizational arrangements beget the most innovation? How can innovation be fostered in agencies devoted to routinization? How should innovative ideas be disseminated? And what exactly is an "innovation" anyway?
The contributors gathered data for this book from winners and finalists in the Ford Foundation's Innovations Awards program, as well as from other innovators and innovations.
Books:
- Only the Paranoid Survive: How to Exploit the Crisis Points That Challenge Every Company
- Organization Change: Theory and Practice (Foundations for Organizational Science)
- Organizing Business Knowledge: The MIT Process Handbook
- Patents, Copyrights & Trademarks for Dummies
- Plan Your Estate
- Principles of Public International Law
- Professional Learning Communities at Work: Best Practices for Enhancing Student Achievement
- Reclaiming the Great Commission: A Practical Model for Transforming Denominations and Congregations
- Reclaiming the Great Commission: A Practical Model for Transforming Denominations and Congregations
- Reinventing Strategy: Using Strategic Learning to Create and Sustain Breakthrough Performance
Books Index
Books Home
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