Business Intelligence

Why Employee Ownership is Good for Business

by Corey Rosen, John Case and Martin Staubus (14900)

Despite the fact that thousands of companies are now wholly or partly owned by their employees, many companies are still failing to pick up on the competitive advantages offered by employee ownership — faster growth, higher profitability and better resilience in times of economic downturn. A solid business case can now be made for the practice of making employees true partners in a firm’s success by giving them a significant equity stake in the business enterprise.

Building a successful equity company, however, isn’t just a case of letting employees buy stock and then living happily ever after. To realize the true benefits of this concept, employees have to see themselves as owners and create a different kind of workplace that aligns with that perspective. That means the culture of the organization must change and evolve as well. Furthermore, employees have to learn how to run the business differently if their ownership is to have any practical impact. Unless all three of these elements are present, employee ownership just won’t deliver any tangible benefits.

The three essentials of an employee equity business model:
1. Size: Enough equity that it will impact on the employees’ finances.
2. Culture: Employees must be encouraged to think and act like owners.
3. Understanding: Employees must understand business disciplines and commit.

More than just another option in the human resource department’s kit bag of benefits, employee ownership has the potential to comprehensively transform ordinary companies. When employee ownership is combined with participatory management, businesses often move into and stay in high-growth mode. Employee ownership turns up in a very large number of influential and successful companies. Perhaps this isn’t just a coincidence.

Equity

Expanding Your Business Around the Corner or Across the Globe

by Arthur Rubinfeld and Collins Hemingway (14500)

Great national and international retail success stories don’t happen by accident. It isn’t just a case of opening a store, making that store run well and then duplicating that first store ad infinitum. Instead, retail brands that win long term have been designed for rapid growth right from the outset. All of the necessary elements have been put in place first so growth becomes a natural part of the ongoing story rather than good fortune.

In particular, there are four phases involved in growing a great retail business:

1. Aspire to become a national / global brand
2. Prepare to expand right from the outset
3. Build your brand prominence by locating astutely
4. Maintain brand leadership by pushing the envelope

Retail businesses are great because they allow you to control your own destiny and to express your creativity. When you create a new retail business from the ground up, you build a market presence that is highly valuable. To get to this stage, however, a holistic approach will be required. You’ll need to conceive of a profitable retail concept and fine-tune your ideas in your local market first. Then you’ll need to understand how to expand from one market to another until you grow from one market to dominance and presence in regional, national and ultimately international markets. As your enterprise grows and evolves, you’ll need to keep your brand fresh and vibrant by continuing to innovate and try new things.

Built for Growth

Practical Ideas From The Best Brains in Business
Joel Kurtzman (09100)

At one level, business isn’t as difficult to master as the business schools and other sellers of educational courses would have you believe. To be successful in business, you don’t have to be a rocket scientist. In fact, if you want to be well rounded and successful, there are ten key areas you’ll need to have some knowledge and expertise in:

1. Innovation
Always keep refininig and improving the product or service you sell.

2. Sustainability
Businesses must do more than make money — thye must contribute.

3. Accounting
For capital markets to exist, accurate financial information is required.

4. Strategy
For companies, strategy is all about direction and thinking clearly.

5. Managing
Good managers learn more from the people they manage than they teach.

6. Human Resources
Smart businesses stay that way by sharing knowledge between people.

7. Leadership
Self-improvement is the foundation on which successful leadership is built.

8. Marketing
Marketing and advertising are long-term investments, not expenses.

9. Communication
Communication can mean the difference between success and failure.

10. Execution
The best way to learn is to study the slip-ups of others and avoid them.

I have asked some of the best minds in business to put down some of their best thoughts. I have asked them to be candid, open, and opinionated. I have asked them to tackle the subjects they love from perspectives that they know work. I have asked them to give readers a glimpse of how they think about what they do. My goal is to help readers shift their vantage points, shake up their thinking, and stretch their minds.

–Joel Kurtzman

MBA in a Box

How Great Organizations Use Succession Management to Sustain Competitive Advantage
by Robert Fulmer and Jay Conger (07700)

Due to the fact it is now common place for executives to change from one organization to another during their careers, succession management has moved from the background into headline status. What was once an issue of interest only to the human resources department is now a potential source of competitive advantage for organizations large and small. Quite simply whoever can win the war for executive talent stands the best chance of prospering in the future.

The seven key elements of a robust succession management system are:

Corporate Strategy
Sponsors and Owners
Talent Identification
Development Linkages
Assessors
Tracking System
Success Metrics

Growing Your Company’s Leaders

by James O’Loughlin (02000)

Warren Buffett has served 40 years as chairman and chief executive of Berkshire Hathaway. During that time, the company’s market value has grown from $600 million to $109 billion — a compoud growth rate of 25% per yar. (If Berkshire were to continue that rate of growth for the next 34 years, it would absorb the entire U.S. economy). Today, Berkshire generates annual revenues of $30 billion and employs 112,000 people.

So what is it Warren Buffett is doing differently (and better) than everyone else? This is more than being a good stock picker and investor. Instead, Warren Buffett acts like a CEO who owns the company. He has developed a framework which allows him to do three specific tasks exceptionally well:

Act like the owner of the entire business:
1. Lead and motivate able people
2. Allocate capital intelligently
3. Stay within your Circle of Competence

The challenge, therefore, in emulating the accomplishments of Warren Buffett and Berkshire Hathaway is not to become better at assembling a stock portfolio but to become a better CEO.

The Real Warren Buffett