Business Management Blog

Most companies find themselves in a situation where they don’t know what they don’t know, but even the ones with an adequate understanding of the problems are stumped when they consider where to begin fixing them. For this reason, performing a rigorous self-assessment is the first step toward helping you move into the next phase of the continuum. It is also the first step before you can effectively launch any restructuring effort because you must examine how well your business is functioning today against best-in-class (BIC) benchmarks.

An objective assessment using output metrics from your processes offers a complete view of your company’s health, assuming the metrics directly link to your strategy. If they don’t, you may be measuring the wrong things. A strategy road map that is linked to a balanced scorecard is the tool BIC companies use to monitor the state of their business. If you are missing one or both, or if they are not linked, you need to create them as soon as possible! If you have both but the balanced scorecard does not roll up to the strategy, you need to align them. Read the rest of this entry »

ABC/M was developed as a practical solution for problems associated with traditional cost management systems that we now realize are distorting and incomplete. Indirect expense and overhead cost allocation practices of traditional systems can bring more damage than good to organizations. In traditional cost- ing the indirect expenses are usually too aggregated to serve any purpose, and these large groupings destroy any likelihood for calculating an accurate cost of any type of output.

The next problem with overhead cost allocations is that excessively broad- brush average cost rates are applied to calculate costs. Worse yet, the cost allocations usually rely on a sales-related, volume-based factor or basis, such as direct labor hours or department expenses. It may be an inputs-used or outputs-produced basis measure, but the basis usually will not accurately measure the segments of the total. This flawed basis for allocating costs rarely reflects the specific cause-and-effect relationship between the indirect overhead expense and the work output, part, product, service, channel, or customer (i.e., the cost object) that is actually consuming the cost. Many managers are tired of “allocation foodfights.” Read the rest of this entry »

Licensing is often preferable for those inventors who want to make money but care primarily about innovating and spending time in their lab. A license is simply an agreement in which you let someone else commercially use or develop your invention for a period of time. In return, you receive money—either a one-time payment or continuing payments called royalties.

Your power to make this kind of agreement is based on the premise that you control the patent (or other legal rights) to your invention. Think of a license as giving a company permission to use your patent. As owner of the invention, you will always be the “licensor,” and the party receiving the license for your invention is called the “licensee.” What makes a license appealing—assuming it is the “right” license—is that the licensee assumes all of the business risks, from manufacturing to marketing to stopping those who infringe on the product’s patents.

The licensing inventor sits by the mail- box and waits for the quarterly royalty checks. Unlike a license, an assignment is a permanent transfer of ownership rights. When you assign your invention, you are the assignor and whoever purchases the rights is the assignee. An assignment is like the sale of a house, after which the seller no longer has any rights over the property. As the assignor, you may receive a lump sum payment or periodic royalty payments. Even though they have different legal meanings, the terms assignment and license are sometimes used interchangeably. Read the rest of this entry »

We need to start forgetting things. And we need to start soon. We computer users spend a lot of time learning new things: new operating systems, new troubleshooting techniques, new hardware, new software, new versions of old software, and so on. This is part of what keeps things exciting and invigorating, of course. There’s always more to learn, to remember, to try. Nothing in technology stays the same for long, so it’s always a scramble to keep up with the latest developments.

In the end, we spend a good deal of our putative computing time trying to learn new tricks–and that’s not always easy for some of us old dogs. In my case, for example, I’m limited by the fact that I have only a finite (and steadily decreasing, apparently) number of functioning brain cells. It’s obvious that the reason it’s difficult to learn new technology is that our brains are cluttered with old technology. Read the rest of this entry »

A good decision resolves an issue or responds effectively to an event. A good decision considers those who must implement it. A good decision anticipates negative consequences and aims for a preponderance of benefits. A good decision does not require that everyone be happy with the result or agree with the decision-maker. A good decision reflects the integrity of the decision-making process. In short, good decisions work.

Integrity is a big word. Commentators routinely bemoan the absence of integrity, whether in the form of CEOs’ and political leaders’ shortcomings, celebrities’ moral lapses, or the media’s repeated violations of public sensibilities. Few who use the term “integrity” define what they mean. Most speak only about the space left when integrity is missing in action. Without it, any decision is incomplete and more likely to fail. Read the rest of this entry »

Innovation is very much a capability in its own right. For an organization to be innovative, all aspects of a capability must be considered and must be well honed. And as the level of sophistication in the innovation capability increases, so does the value the organization reaps. Most people are at the “innovation as an event” level. They have brainstorming sessions or hold contests to generate new ideas. If the idea is a good one, there is some value added to the organization.

In some cases, the idea may even lead to tremendous value. However, there is generally a huge amount of transformation between the idea generated in an event and its realization. At a more sophisticated level, innovation is more than an event and becomes part of a process. That is, the organization has a structure in place to define problems, generate and evaluate ideas, and develop action plans to implement those ideas. The result is a realistic, deliverable solution based on an organizational problem. However, the problem with both of these is that innovation is reactionary and discrete. It only occurs when someone decides it is time to innovate.

Innovation as a capability, however, creates exponential value. In the innovation-as-capability world, people innovate not only to solve the problems that are presented to them, but in everything they do. They continuously or even radically improve their products, processes, and organization. Innovation as a capability is comprised of the five components that make up all capabilities: Read the rest of this entry »

Dog Day Afternoon is probably the best single film on negotiating that you can watch. Millions have seen a very young Al Pacino and Charles Durning turn in virtuoso performances as captor and cop in this classic film. Based on the true story of a bank robbery that turned into a hostage situation, the film shows the local police team trying hard to resolve the situation but fumbling a bit. Then the FBI team moves quickly into action and negotiates with skill and training. The events were re-created with incredible accuracy.

Each of the six basic principles of negotiating is clearly demonstrated in this film. Here is a friendly guide through the negotiation without ruining the film. Read the rest of this entry »

H&R Block (HRB) is one of the most widely recognized consumer brands, as the company is nearly ubiquitous across the country at tax time. H&R Block misstepped badly during the housing bubble, making a major foray into mortgage loans. This mistake is now behind the company, so future value creation will depend mostly on H&R Block’s ability to gain share versus other tax services providers, such as CPAs. The trend toward electronic tax return preparation — think Intuit’s TurboTax — remains the major long-term threat to H&R Block’s prospects.

GT Solar (SOLR) provides manufacturing equipment and services for the production of photovoltaic, wafers, cells and modules, and poly silicon worldwide. While we normally avoid solar companies because the entire sector has been hyped for quite some time, GT Solar is interesting both from a valuation standpoint as well as the fact that respected value investment firm Oaktree Capital Management owns more than 5% of the shares.

GigaMedia (GIGM) is engaged in the growing business of providing gaming software and services to the online gaming industry in China, Taiwan, Hong Kong, and Macau. The company’s solid balance sheet and valuation of sightly less than 1x enterprise value to trailing revenue make GigaMedia worthy of consideration. Read the rest of this entry »

Many organizations are trying to put different labels on measures that look for knowledge or skill-gain, believing that the word test may sound unprofessional, particularly for management personnel. For the purpose of this discussion, the word test is used because it is the word that is most commonly used throughout this country and others. The tests that most are familiar with are those that measure knowledge-gain. Following are general guidelines Dixon (1990) offers for constructing knowledge-based test questions or items. Read the rest of this entry »

A 401(k) plan is a savings plan that allows you to divert a portion of your income into a tax-sheltered savings account, which accumulates without your having to pay income taxes on it.

This program falls into the defined contribution retirement category because the law defines, or limits, how much you can contribute to your 401(k) plan as a percentage of your income. The plan sponsor — your employer — must make sure your contributions comply with the law and the specific plan. In 1999, for example, the maximum amount you were allowed to defer from your income for the 401(k) plan was $10,000 or 25 percent of your pay, whichever is less, per year.

Some employers encourage you to participate in the plan by matching a part of your contributions, usually as a flat amount of, say, 25 cents for each $1 you contribute. An employer’s match isn’t taxable to you as current income, and the government allows earnings on this match to accumulate tax-deferred. Read the rest of this entry »