The three most dangerous words in management? “Not invented here.” Only complacent leaders believe that their way of doing things cannot be improved upon. But that attitude can lead apparently successful businesses astray.

As Henry Chesbrough, executive director of the Center for Open Innovation at the University of California, Berkeley, has pointed out, senior management teams can fail to spot important innovations because the new business models they rely on do not easily fit in with the way things are being done now.

Researching the performance of Xerox, the copier and printer company, between the late 1990s and early 2000s, Prof Chesbrough found that, out of 35 projects that had been rejected as part of a review process, 10 had gone on to become highly successful businesses. Indeed, the combined market capitalisation of these 10 new ventures, even after the “new economy” crash of 2001, was twice that of the former parent itself. He calls these unfortunate rejections a “false negative”: the innovations had looked bad, but that was because senior managers were unable to recognise their virtues.

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A bit of chatter out there about how Starbucks, which has had a rough few years, has quietly launched a new shop on London’s Conduit Street. You can see some pics of the new cafe on Tiki Chris’s Flickr page. They did this first in New York a few months ago, with a cafe that you would have barely realised was a Starbucks cafe.

Judging by the pics, it is a subtle-ish revamp - more communal spaces, like shared tables, more trendy lighting and furniture, a darker and warmer feel to the place, more books and so on.

Will it work? I have no idea but I do think there are a couple of interesting points here. First, Starbucks is applauded for at least being bold enough to rethink what they are doing. When the chain first started expanding outside of its Seattle base, it traded more on being a cool place to go rather than simply being ubiquitous. When Howard Schulz, its founding chief executive, came back to run the company this was one of his key messages; the chain, he lamented, had loss the “romance and theatre” on which the company was founded.

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Hard work and relentless attention to detail: that’s management for you. Talk is cheap. Visions can inspire, for a moment or two. But without graft – and competence – things go wrong. Any business, no matter how successful, will struggle if it forgets this. There are no quick fixes for organisations that have big commercial and cultural problems.

That is the lesson to draw from the story of Little Chef, the 51-year-old British roadside restaurant chain. For generations, these little cafés, with their red and white signage, have formed a familiar part of the UK landscape. “Fat Charlie” is the diminutive chef in question, smiling out at travelling businesspeople, families and lorry drivers from the side of motorways and A roads.

At its peak, in the 1970s and 1980s, Little Chef enjoyed a dominant market position. But you did not seek out a Little Chef for a thrilling culinary experience. You went there for a reliable cooked breakfast, for plaice, chips and peas, for something acceptable to tired and hungry children. It worked.

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England football manager Fabio Capello has had a remarkably successful career in Italy, Spain and now as manager of England (ok, he hasn’t won anything yet, but they have qualified for the World Cup). Sports analogies are used too often in the world of management speak (even for a sportsfan like me) but according to an article in the Guardian about his presentation at the Global Sports Summit in London, Capello reveals a couple of interesting truths.

First, he says that when he took over England the quality of the players was very high in training but not in matches.

“I understood everything when they played Switzerland in the first match, the same players who played well in training played with fear, with no confidence, and I said this is a big problem of the mind,” he said. “Step by step, game after game, we have improved a lot.”

Continue reading "Fabio Capello on the management of fear"

• Cabinet to slims down for Sarkozy - Lucy Kellaway wrote about the balance between private health and employers earlier this week, but I’m not sure how many managers can get away with this. I especially liked his apparent suggestions he “told at least one would-be appointee to drop some weight and change his hair style if he wanted the job”
• Google paid a $1bn premium for YouTube - an interesting admission from Eric Schmidt, CEO of Google, that the company paid $1bn more for YouTube than it was worth simply to make sure no one else could outbid it (Hat tip: The Browser)
• Success stories in bad times - Ok, so the headline writer employed a bit of hyperbole (do Twinkies qualify as a success?) and it’s a bit US focused but chocolate chip cookies are certainly a silver lining to any recession

• A husband and wife switch jobs for two weeks - Huband takes become the stay-at-home parent, wife takes over his job as an editor of Slate, the online magazine. Not exactly the craziest switch in the world; Susan Burton is a former editor at Harper’s Magazine (declaration: I was an intern at the magazine at the time when Susan was an editor there) but still could prove an intriguing experiment. At the very least, it should be a good read.
• David Hockney’s iPhone passion - If I was Apple, I’m not sure I could have come up with a better advertisement of just how useful the iPhone is for some people. This has to take the mobile phone as utility to a new level. The piece includes examples of work he’s created on the phone
• The price of being gay - The authors admit that this isn’t an exact science but…
• Parental benefits for the self-employed - I’m Canadian and a parent and I know lots of people who might break out and do their own thing if not for the need to keep their benefits, including maternity or paterntiy pay. Does this hold back business and entrepreneurship?
• France Telecom makes changes at the top in wake of scandal of suicides - a story that still has yet to be resolved. Here’s the FT’s take, the story in Les Echos, Liberation and Le Figaro

Today sees the publication of CK Prahalad’s update of  The Fortune at the Bottom of the Pyramid, his book originally published in 2004 that argued that businesses could eradicate poverty and earn profits at the same time.

Stefan Stern will be writing his column on some of Prof Prahalad’s key ideas next week. Until then, you might want to check out the ‘bonus section’ on the website above.

I’m a bit late on to this but last week Jerome Kerviel, the “rogue trader” who is accused of losing French bank Societe Generale €5bn, was interviewed on French television.

The video on France 2’s Objet du Scandale is revealing partly because of all the talk at the G20 and, in the UK at the Labour party conference, of the need to curb bankers’ bonuses or at least restructure how they are paid out. Kerviel’s broader point is that there isn’t any point; whatever rules are created, clever people will find a way round them.

But I thought his other comment on the nature of his former job as a trader pointed to a wider issue that doesn’t seem to be attracting quite as much discussion. “It’s a job that makes you a bit crazy, an addict. They push you to take risks,” he said, referring to the culture of his former workplace.

Continue reading "Jerome Kerviel: curbing bonuses won’t work"