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Corner Office SPECIAL: Breakthrough Ideas for 2005…page 17 www.hbr.org February 2005 The Hole in the 72 Ending the CEO Succession Crisis Ram Charan Corner Office 82 Productive Friction: How Difficult Business Partnerships Can Accelerate Innovation John Hagel III and John Seely Brown 92 Should Nonprofits Seek Profits? William Foster and Jeffrey Bradach 104 Change Through Persuasion David A. Garvin and Michael A. Roberto 114 The HBR Interview Transforming an Industrial Giant Heinrich von Pierer 17 The HBR List Breakthrough Ideas for 2005 59 HBR Case Study Springboard to a Swan Dive? Ajit Kambil and Bruce Beebe 125 Managing Yourself Two Executives, One Career Cynthia R. Cunningham and Shelley S. Murray 132 Best Practice Strategic Sourcing: From Periphery to the Core Mark Gottfredson, Rudy Puryear, and Stephen Phillips …page 72 146 Executive Summaries 152 Panel Discussion TLFeBOOK Allstate High-performance customer service, delivered. To maintain its position as one of the country’s 2004 Accenture. All rights reserved. largest property and casualty insurers—while © also positioning itself to offer a broader range of financial products—Allstate wanted to offer new ways of interacting with customers, and to do it on an aggressive schedule. Building on a long relationship with Allstate, Accenture deployed eight development teams to help design and implement The Good Hands Network,® which adds integrated Internet and call center channels to the existing system of local agents. Deployed in just 18 months, the two new channels enable customers to do business with Allstate 24/7. Already, over 40 percent of the company’s more than 6 million yearly inquiries are made outside of traditional business hours, further extending the company’s standing as a high-performance business. Thomas Cook High-performance operations, delivered. A 163-year-old brand with many owners over the years, Thomas Cook UK & Ireland was a respected but complex, decentralized travel services business in need of a return to profitability. In an innovative co-sourcing arrangement with Accenture, the company created a shared services center to consolidate its widely dispersed IT, finance and HR administration operations. Responsibility for strategy and policy was retained by Thomas Cook, with Accenture facilitating operations management. In 16 months, the company removed £140 million in operational costs, helping to achieve an £83 million turnaround, establishing Thomas Cook as a high-performance player in the competitive UK travel business. TLFeBOOK There comes a time when execution is more important than theory. Go on. Be a Tiger. When all the theorizing ends, a high performer knows you either deliver or you go home. By enhancing your executional skills, Accenture can help your business become a high-performance business. See how at accenture.com TLFeBOOK It’s big, it’s bold, it’s Xerox color. Put it to work in 39% more memorable. Pretty impressive. Success is in the details. Keeping those details fresh in points, and adds “aha’s” to your work. That’s why our everyone’s mind is what Xerox color is all about. Use color wide selection of desktop color printers, multi-function smartly and it communicates facts, underscores salient systems, and digital presses has something more. Xerox Xerox color printers multi-function systems & digital presses xerox.com/color 1-800-ASK-XEROX ext. COLOR © 2005 XEROX CORPORATION. All rights reserved. XEROX® and Xerox Color. It makes business sense are trademarks of XEROX CORPORATION in the United States and/or other countries. TLFeBOOK your business and it can make your sales pitches Xerox Color. It makes business sense. color expertise. It’s the know-how that combines state-of- is already making business sense in thousands of companies, the-art technology with real economy, to help you boost leaving lasting impressions that make an impact on the productivity and business performance. Xerox color expertise bottom line. It’s the juicy stuff any business would like to see. TLFeBOOK TLFeBOOK TLFeBOOK HBR 92 Features February 2005 72 Ending the CEO Succession Crisis Ram Charan 72 You know something’s wrong when two out of every five new CEOs last less than two years on the job. The ultimate fix may take time, but there’s a lot com- panies can do right now to stop the revolving door. 82 Productive Friction: How Difficult Business Partnerships Can Accelerate Innovation John Hagel III and John Seely Brown Companies get better at what they do – and improve faster than their competitors – by working with outsiders 104 whose capabilities complement their own. The trick is to harness the creative power of the inevitable clashes. 104 Change Through Persuasion David A. Garvin and Michael A. Roberto 92 Should Nonprofits Seek Profits? William Foster and Jeffrey Bradach Change requires more than just a great turnaround plan; it also requires a persuasion campaign to make That exciting product your nonprofit is selling may seem the change stick. The impressive turnaround at a world- more like a resource sink once you factor in overhead renowned teaching hospital shows how to plan a change and the costs of diverted managerial energy. Don’t campaign – and carry it out. believe all the hype – earned-income ventures aren’t right for every organization. 114 THE HBR INTERVIEW Transforming an Industrial Giant Heinrich von Pierer Interviewed by Thomas A. Stewart and Louise O’Brien During his 12 years as CEO, Heinrich von Pierer took Siemens from a successful company to one of the world’s most competitive. Here he shares his insights about port- 82 folio restructuring, his lessons from competing with GE, and the pros and cons of being based in Europe versus America. continued on page 8 114 COVER ART: MATT ART: COVER BANDSUCH 6 harvard business review TLFeBOOK 8DBB:G8:#HNC8=GDC>O:9# LZYdcÉi_jhihncX]gdc^oZYZa^kZg^Zh# LZhncX]gdc^oZXdbeVc^Zh# IgVY^i^dcVaan!hjeeanX]V^ch ]VkZWZZck^ZlZYVhVcZXZhhVgn Zk^a#6XdhiidWZXdciV^cZY# L]^X]^hl]nhdbVcnad\^hi^Xh bVcV\Zgh]VkZWZZc\^kZc dgYZghid_jhibV`Zi]ZbaZVcZg VcYX]ZVeZg# 7jii]Zigji]^h!hjeeanX]V^ch YdcdiZm^hi^cVkVXjjb# I]ZnVgZi]ZdcZi]^c\i]Vi ^ciZ\gViZhZkZgnh^c\aZeVgid[ ndjgXdbeVcn#8dccZXi^c\ndjg hjeea^ZghVcY!bdhi^bedgiVcian! ndjgXjhidbZgh# 6iJEHHjeean8]V^cHdaji^dchHB! lZÉgZldg`^c\l^i]XjhidbZgh idhncX]gdc^oZi]ZbdkZbZcid[ \ddYh!^c[dgbVi^dc!VcY[jcYh# LZ]VkZZmeZgi^hZ^cZkZgni]^c\ [gdb[gZ^\]iVcYXjhidbh]VcYa^c\ id^ckZcidgnbVcV\ZbZciVcY hZgk^XZeVgihad\^hi^Xh# LZ`cdl]dlidYZh^\ci]Z ^YZVahjeeanX]V^c#6cYlZ]VkZ i]ZiZX]cdad\nid\^kZndj k^h^W^a^inVcYXdcigdaVaaVadc\ i]ZlVn# 6iJEHlZhZZi]^hVh hncX]gdc^o^c\XdbbZgXZ# DjgXjhidbZghjhjVaanhZZ^i Vhi]ZXdbeZi^i^kZZY\Zi]Zn lZgZadd`^c\[dg# JEH#Xdb$hjeeanX]V^c ^ÊÓää{Ê1Ìi`Ê*>ÀViÊ-iÀÛViÊvÊiÀV>]ÊV°Ê1*-]ÊÌiÊ1*-ÊLÀ>`>À]Ê>`ÊÌiÊVÀÊLÀÜÊ>ÀiÊÌÀ>`i>ÀÃÊvÊ1Ìi`Ê*>ÀViÊ-iÀÛViÊvÊiÀV>]ÊV°ÊÊÀ}ÌÃÊÀiÃiÀÛi`° &"-%%",)'"*,', TLFeBOOK HBR Departments February 2005 10 FROM THE EDITOR 102 STRATEGIC HUMOR Picking and Choosing What are the dots on the horizon that 10 125 MANAGING YOURSELF will be on the executive committee’s Two Executives, One Career agenda a couple of years hence? This Cynthia R. Cunningham year’s HBR List hands you the binocu- and Shelley S. Murray lars and tells you where to look. For six years, Cynthia Cunningham and Shelley Murray shared an executive job 17 THE HBR LIST at Fleet Bank, effectively acting as one Breakthrough Ideas for 2005 person. Not only did that arrangement Seek opportunity in biometrics. Face work well for them, it earned millions your fears of big risk. Be inspired by fig of dollars for the bank. wasps. There’s a trove of enlightening and sometimes unnerving new ideas 17 132 BEST PRACTICE in HBR’s annual survey of innovations Strategic Sourcing: From and trends. Periphery to the Core Mark Gottfredson, Rudy Puryear, 56 2005 IN BOOKS and Stephen Phillips HBR previews more than a dozen books There’s just about nothing a company due out this year. They range from does that couldn’t be outsourced any- Thomas L. Friedman’s The World Is Flat: more. Here’s a systematic way to iden- A Brief History of the Twenty-First Century tify which functions your company to Eileen C. Shapiro and Howard H. needs to own and protect, which can Stevenson’s Make Your Own Luck: 12 be best performed by what kind of part- Practical Steps to Taking Smarter Risks in 59 ners, and which could be turned into Business, which advises executives to new business opportunities. apply the techniques of skilled gamblers. 140 LETTERS TO THE EDITOR 59 HBR CASE STUDY Springboard to a Swan Dive? Traditional methods of executive coach- ing may not work with leaders out- Ajit Kambil and Bruce Beebe side the United States. Coaches need At first, the invitation to join the board to assess –and adjust. of a Fortune 500 company seems like an honor to John Clough. But then he EXECUTIVE SUMMARIES learns about the demands – and the 146 potential liabilities. Is directorship a 125 privilege or a burden? 152 PANEL DISCUSSION Death by a Thousand Cuts Don Moyer Price wars between equals produce injuries on both sides and victory on neither. So launch hostilities only when you’re sure you can drive your competi- tor from the market. 132 8 harvard business review TLFeBOOK The Power of Ideas At Work Now Available in Digital Format! !"#$ ✓send me a 12 issue digital subscription ($118) to the . Click Here To Order Now! TLFeBOOK The Power of Ideas At Work Now Available in Digital Format! !"#$ ✓send me a 12 issue digital subscription ($118) to the . Click Here To Order Now! TLFeBOOK “MOTOROLA IS TAPPING INTO AUSTRALIA’S UNIQUE INTELLECTUAL CAPITAL TALENTS. OUR SOFTWARE OPERATIONS IN PERTH AND ADELAIDE COMPLEMENT SIGNIFICANT GROWTH IN CELLULAR, BROADBAND AND PUBLIC SAFETY COMMUNICATIONS.
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