Knowledge at Wharton

Lars Kolind is the former CEO of Oticon a leading Denmark-based maker of hearing aids. In his book The Second Cycle: Winning the War Against Bureaucracy published by Wharton School Publishing he argues that size age and success can make mature companies deaf to signals that portend future decline. He summarizes his views in an excerpt from the book.

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In their book Idealized Design: How to Solve Tomorrow’s Crisis...Today (Wharton School Publishing) authors Russell L. Ackoff Jason Magidson and Herbert J. Addison build upon a simple notion. They argue that ”the way to get to the best outcome is to imagine what the ideal solution would be and then work backward to where you are today.” An excerpt based on Ackoff’s experience shows how the process worked at Bell Labs in the 1950s.

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EMI Music backs a label that turns the traditional economics of the recording industry on its head. Vivendi’s Universal Music Group creates multiple pricing schemes for CDs. Sony BMG Music Entertainment and Yahoo decide to sell a single without digital rights restrictions. These moves typify a flurry of experimentation by major record labels in recent weeks and stand in stark contrast to earlier behavior by an industry that six years ago was best known for launching anti-piracy lawsuits against Napster -- a network that originally swapped music files for free -- and individual users. Today according to experts at Wharton the recording industry is actively trying to create new business models as it navigates the emerging Internet-enabled landscape.

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Music physical movement technology and being cool have long gone hand in hand. Now two iconic brands Apple Computer and Nike are collaborating on a new system of gizmos that take exercising and digital-music players to a new level. The Nike+iPod Sport Kit allows runners and walkers to listen to songs and to record store and share information (such as speed distance covered and calories burned) with others about their exercise sessions. The system also ”talks” to runners in real time providing information as they jog along. Members of Wharton’s marketing department say it’s a winning combination that will bolster each company’s image and open the door to other co-branding opportunities. But they disagree as to whether the joint effort will actually sell more iPods and Nike shoes.

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As most travelers to Europe know French workers tend to take the month of August off shutting down many of their shops and cutting back the hours of some museums. But the French aren’t alone. People in much of Western Europe can afford to check out for a month because they receive an average of nearly two months a year in paid leave a combination of vacation and government holidays. That distinguishes them from citizens of the United States who despite a similarly productive economy and a comparable standard of living enjoy about half as much paid time off. What gives? Why are Americans reluctant or unable to extricate themselves from their jobs and sign up for some serious vacation time?

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K. V. Kamath CEO of India’s second largest banking and financial services conglomerate ICICI is a man in a hurry. When he occupied the driver’s seat at ICICI more than a decade ago it was a financial institution hamstrung by political constraints. As a key member of the top team at ICICI that led the organization into new businesses such as insurance and banking Kamath used technology effectively to pry open market expansion. Today his top challenge is to retain the talent ICICI trains which is keenly sought by other financial services players. In an interview with Michael Useem Wharton professor of management and director of the school’s Center for Leadership & Change Management Kamath discusses ICICI’s foray into rural banking and other challenges.

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While a lot of research has been done in the past two decades on work-family conflicts few studies have looked closely at how mood affects workers’ performance. Wharton management professor Nancy Rothbard and co-author Steffanie Wilk wanted to find out which mood-altering events have the biggest effect if any -- those that influence one’s outlook at the start of the day or those that nudge one’s mood up or down as the workday advances. The results of Rothbard and Wilk’s study are reported in their paper ”Walking in the Door: Sources and Consequences of Employee Mood on Work Performance.” Among their key findings: The mood you bring with you to work has a stronger effect on the day’s mood -- and on work performance -- than mood changes caused by events in the workplace.

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In the workplace trust is essential to day-to-day business whether it’s one colleague trusting that another will do her share of a project an employee trusting that his boss will reward him for working long hours to meet a deadline or a customer trusting that a company will fill an order correctly and deliver it on time. The intertwining issues of trust deception apologies and promises are explored in a new research paper titled ”Promises and Lies: Restoring Violated Trust ” by three Wharton professors who came up with a unique laboratory experiment to see what happens when trust breaks down. ”While deception may be tempting because it can be used to increase short-term profits for the deceiver ” the researchers note ”we find that the long-term costs of deception are very high.”

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In the United States alone an unprecedented 77 million baby-boomers will be living the next 20 to 30 years in retirement. With long lives ahead of them -- and without adequate planning -- what are the risks they are facing? According to Olivia Mitchell Wharton professor of insurance and risk management and Christopher ”Kip” Condron president and CEO of AXA Financial the world’s largest financial services firm the rising tide of boomers in the U.S. and around the world needs to meet challenges that previous generations never faced including changes to key retirement institutions as well as medical-care cost inflation and the ”lump-sum illusion.” Knowledge at Wharton spoke with Mitchell and Condron about how the financial services industry is working to meet the needs of this next wave of retirees.

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On July 7 General Motors’ board of directors voted to study the pros and cons of entering into a three-way alliance with automakers Nissan and Renault. The alliance was proposed by GM shareholder Kirk Kerkorian who sees it as a way to revive the struggling company and expedite the restructuring taking place under GM’s current chairman and CEO Rick Wagoner. Another central figure in this drama is Carlos Ghosn CEO of Nissan and Renault who is credited with turning around Nissan and who is seen by Kerkorian and others as holding the keys to GM’s future. What would a three-way alliance mean for GM and for the auto industry in general?

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