scherm9e_c01-001-028hr2 1/30/07 3:21 PM Page 1 Introducing Management 1 Planning Ahead Chapter 1 Study Questions 1 What are the challenges of working today? 2 What are organizations like? 3 Who are managers and what do they do? 4 What is the management process? 5 How do you learn managerialCOPYRIGHTED skills and MATERIAL competencies? scherm9e_c01-001-028hr2 1/30/07 10:05 AM Page 2 Putting Progress into Practice Do big ideas drive best practices? Or do the needs of eBay has no shortage of big ideas, and it has an business ultimately dictate the where and when of excellent track record of putting them into play. creative propositions? Web-auction powerhouse “Build a better mousetrap, and the world will beat What They Think a path to your door.”—Ralph Waldo Emerson “You are constantly taking in new information, con- Emerson has a great line; but, if we take it too stantly changing the prism through which you view quickly we may only get half the point. Being cre- your business.” ative and inventing something is great, but it isn’t Meg Whitman, CEO of eBay. a sure fire guarantee of success. In the real world, after you build a better mousetrap you have to INNOVATION: “Just as energy is the basis of life it- sell it. self, and ideas the source of innovation, so is innova- Whether we’re talking about a new business idea, tion the vital spark of all human change, improvement product, or just a new way of doing something, and progress.” the lesson is the same. Coming up with the idea Ted Levitt, marketing guru. is one thing, realizing the benefits when it is put IMPLEMENTATION: “So if you’re a customer today, into use is another. the same person who came in to demonstrate the tech- Management today is focused on innovation as nology for you and helped you architect the solution the process of both creating new ideas and put- before you bought it is likely going to be leading the ting them into practice. This involves a combina- team to help you do the implementation.” tion of insight and creativity, what some call in- Sanjay Kumar, former Chairman & CEO of Computer Associates In- vention, with actual implementation. The best ternational; current co-owner of the NHL’s New York Islanders. performers, individuals, groups, and organizations all have a great capacity to both generate new ideas and put them into practice. Just ask the folks at eBay. The king of online auc- tion sites knows well the power of implementa- tion to move creative, profitable ideas from the- ory to reality. When its founders first conceived of a web site which could act as a central market- place for buyers and sellers worldwide, it drove the implementation of a computing architecture capable of handling the intense demands of fre- quent bidding and purchasing, as well as the means to track and manage all such purchases. The idea that eBay customers might want to pur- chase items other than knick-knacks and col- 2 scherm9e_c01-001-028hr2 1/31/07 1:52 PM Page 3 lectibles led to the implementation of their highly The Numbers successful specialty stores. One innovation was eBay Motors. In a recent year, eBay Motors han- Annual eBay Net Revenues (in millions) dled more than $3 billion in automotive-related Upon Key Innovations or Acquisitions purchases.1 The idea that eBay might attract even Founding of eBay (1997) $0.2 more customers by straying from its model of frenzied bidding thrived as well. It lead to the Addition of PayPal (1999) $224.7 firm’s purchase of Half.com, a site where sellers Acquisition of Half.com (2000) $431.4 try to attract buyers on the strength of a fixed Acquisition of Latin American auction sites price. Mercado Libre, Lokau, and iBazar (2001) $748.8 According to Meg Whitman, CEO of eBay, inno- Acquisition of PayPal (2002) $1,214.1 vation means keeping a dynamic frame of refer- Acquisition of 25% of Craigslist (2004) $3,271.3 ence. “You are constantly taking in new informa- Acquisition of Skype (2005) $4,552.4 tion,” she said, “constantly changing the prism through which you view your business.”2 But sometimes necessity is the mother of inven- tion, and competition drives a business to innovate for either Quick Facts success or survival. To keep with ever-growing demands on its Web site, eBay has upgraded and remodeled its server sys- * Power Sellers—users who make all or a tem multiple times in order to keep transactions smooth and substantial portion of their living on avoid service outages.3 eBay—account for about 29 percent of 5 One company’s successes can compel another to continuously eBay’s sales. innovate as a means of improving its products and services. * The most expensive item ever sold on Such was the case when fledgling online payment company eBay was a Grumman Gulfstream II jet for 6 PayPal offered its services to eBay. The rest was history, with $4.9 million. eBay incorporating PayPal in 2002 for $1.5 billion.4 About the * eBay went public on September 24, advantages of competition, Whitman says: “we believe that 1998 at an IPO split adjusted price of when a company is out in front of the competition and you $0.75.7 have an opportunity to acquire such a company, it’s a great * Adam Ginsberg, one of eBay’s most thing to do.” successful sellers, sold over $20 million Will eBay continue its track record of combining innovative of merchandise on the site between 8 ideas with the business acumen and discipline necessary to 2001–2004. implement them? Log on and see. * An innovative restructuring of eBay’s computer servers helped it reduce the number of servers by 71%.9 What Do You Think? 1. Given eBay’s strength in the online auction market, does it need to innovate still more? Can you suggest an innovation that would benefit either eBay or its customers? 2. What difference does a leader make in terms of an organization’s propensity to be innovative? 3 scherm9e_c01-001-028hr2 1/30/07 10:05 AM Page 4 4 ■ Chapter 1 Introducing Management Introducing Management Study Question 1 Study Question 2 Study Question 3 Study Question 4 Study Question 5 Working Today Organizations Managers The Management Learning How Process to Manage ■ Intellectual capital ■ What is an ■ What is a ■ Functions of ■ Essential manage- ■ Globalization organization? manager? management rial skills ■ Technology ■ Organizations as ■ Levels of managers ■ Managerial activi- ■ Skill and outcome ■ Diversity systems ■ Types of managers ties and roles assessment ■ ■ ■ Ethics Organizational ■ Managerial Managerial agen- performance das and networking ■ Careers performance ■ Changing nature ■ Changing nature of organizations of managerial work Learning Check 1 Learning Check 2 Learning Check 3 Learning Check 4 Learning Check 5 e are dealing with a new workplace, one in which everyone must adapt to a rapidly changing society with constantly shifting demands and op- portunities. Learning and speed are in; habit and complacency are out. W Organizations are fast changing, as is the nature of work itself. The economy is global, driven by innovation and technology. Even the concept of success, personal and organizational, is evolving as careers are transformed. The editors of Fast Company magazine have called this a time of “unparal- leled opportunity and unprecedented uncertainty,” where smart people and smart organizations create their own futures.10 In the quest for the future the best employers share an important commitment—they value people! They offer supportive work environments that reward and respect people, allowing their talents to be fully utilized. The themes of the day are “respect,” “participation,” “empowerment,” “in- volvement,” “teamwork,” “self-management.” You probably know them well. What you also need to remember is that the best employers are not just ex- tremely good at attracting and retaining talented employees. They also excel at creating high-performance settings in which talented people achieve great results—individually and collectively. After studying high-performing companies, management scholars Charles O’Reilly and Jeffrey Pfeffer concluded that success is achieved because they are better than their competitors at getting extraordinary results from the peo- ple working for them. “These companies have won the war for talent,” they say, “not just by being great places to work—although they are that—but by figuring out how to get the best out of all of their people, every day.”11 This, in large part, is what Management 9/e and your management course are all about. Both are designed to introduce you to the concepts, themes, and direc- tions that are consistent with career success and organizational leadership in today’s high-performance work settings. WORKING TODAY ■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■ There is no doubt that our new economy is ripe with challenges, uncer- tainty, and great possibilities. Expectations for organizations and their mem- bers are very high; our society is demanding nothing but the best from all its scherm9e_c01-001-028hr2 1/30/07 10:05 AM Page 5 Working Today ■ 5 ISSUES AND SITUATIONS Talent Wars Scene: Executive conference room at a Fortune 500 corporation. Action: The vice president for human resource development is convening an important staff meeting. “Welcome everyone. The purpose of today’s meeting is to get everyone’s attention focused on a fundamental issue, one that may well determine the future of our company. I’m speaking about TALENT, the lifeblood of any organization. And I’m concerned about the implications of facts on this Power Point slide. Now, here’s the task. Each year we hire many newcomers into the Facts: firm; we also make a fair number of offers that are rejected.