CASE 1: Spirituality in the workplace
Traditionally, the workplace and spirituality did not mix in America. But things are changing. Andre Delbecq, a Professor in Santa Clara University, a Jesuit institution, said: “There were two things I thought I’d never see in my life, the fall of the Russian empire and God being spoken about in a business school.” Now management books and conferences (including the annual meeting of the Academy of Management) deal with the various aspects of how God can be brought into the organizational environment. To be sure, people who want to integrate spiritual dimensions into the workplace are still considered rebels. But ServiceMaster, a Fortune 500 company with some 75,000 employees, created a spiritual organization culture many years ago. Indeed, Peter Drucker, one of the most prolific writers on management, had high regards for the company that is known for its products such as Terminix (pest control), TruGreen, Merry Maids, and others.
When people in the US were asked if they believe in God, some 95 per cent said yes. It is in a spiritual context that business people under the daily pressure can discuss their inner feelings. As the baby boomers, now in their 50s, are reaching the top in the organizational life, they begin to wonder what life is all about. They lived through the youth culture of the 1960s and the 1980s that was dominated by greed. They are now questioning the real meaning of life and the ethical dimension of work. Jose Zeilstra, an executive at Price WaterhouseCoopers worked around the world, practicing her Christian principles in different cultures. During her assignment in China, she strongly argued against the practice of giving “very expensive gifts.” As a result the business transaction did not work out. Yet, in the long run, while integrating her personal beliefs with her work, resulted in a very successful career. Academic institutions such a the University of St. Thomas, the University of Denver, and the Harvard Divinity School are following and studying the movement of spirituality. Other schools such as Antioch University in Los Angeles, the University of New Haven in Connecticut, the University of Scranton in Pennsylvania, Santa Clara University in California as well as institutions abroad such as the University of Bath in England and the Indian Centre for Encouraging Excellence in Bombay, India, are conducting research, conferences, or lecture on spirituality.
The cover story of Business week (November 1, 1999) discussed how company outlets such as Taco Bell, Pizza Hut, and McDonald’s as well as the Xerox Corporation pay attention to spiritual needs of their employees. Some companies claim an increase in productivity, decrease in turnover, and a reduction in fear. A research study by the consulting firm McKinsey & Co. in Australia showed that firms with spiritual programmes showed reduced turnover and improved productivity. Professor Ian I Mitroff at the University of Southern California even stated, “Spirituality could be the ultimate competitive advantage.” But there is also the concern that cult members and groups with a radical perspective could use the workplace for their own aims. Still, employees in companies that integrate spirituality in their work place count on the potential benefits of greater respect for individuals, a more humane treatment of their fellow workers, and an environment that permeates their organization with greater trust.
1. What is spirituality?
2. Is this topic appropriate for businesses?
3. What are the arguments for and against its inclusion in business?
CASE 2: Coke’s European Scare
What seemed like an isolated incident of a few bad cans of Coca-Cola at a school in Belgium turned into near disaster for the soft drink giant’s European operations. In June 1999, Coke experienced its worst nightmare—a contamination scare resulting in the recall of 14 million cases of Coke products in five European countries and a huge blow to consumer confidence in the quality and safety of the world’s most recognizable brand.
After the initial scare in Bornem, Belgium, Coke and Coca-Cola Enterprises (CCE), a bottler 40 per cent owned by Coca-Cola, thought they isolated the problem. Scientists at the CCE bottling plant in Antwerp found that lapses in quality control had led to contaminated carbon dioxide that were used in the bottling of a recent batch of Coke. Company officials saw the contamination as minor problem and they issued an apology to the school.
At the same time that the problems were being dealt with an Antwerp, things were breaking down at Coke’s Dunkirk, France, bottling plant. In Belsele, 10 miles from Bornem, children and teachers were complaining of illnesses related to drinking Coke products. The vending machines at the school were stocked with Coke from the company’s Dunkirk plant and were thought to be safe. Now a second bottling plant’s practices were being questioned. What initially seemed like an isolated incident was now a crisis.
Immediately following the second scare, Belgium’s health minister banned the sale of all products produced in the Antwerp and Dunkirk plants. Things got worse when Coke gave an incomplete set of recall codes to a school in Lochristi, Belgium, resulting in 38 children being rushed to the hospital. Immediately following this incident, French officials banned the sale of soft drinks produced in the Dunkirk plant. It was believed that fungicide on wooden shipping pallets were the cause of the illnesses at the Dunkirk plant.
On June 15, 1999, 11 days after the initial scare in Bornem, Coke finally issued an explanation to the public. Most Europeans were not satisfied. Coca-Cola officials used vague language and often contradicted one another when making statements. France’s health minister, Bernard Kouchner, stated, “That a company so very expert in advertising and marketing should be so poor in communicating on this matter is astonishing”
After three weeks of testing by both Coke officials and French government scientists, it was concluded that the plants were safe and that there was no immediate threat to the health of consumers. Coke has destroyed all of the pallets in Dunkirk and tightened quality control on co2.
How could this happen to the company that is revered worldwide for its quality control and the superiority of its products? Coke has spent decades building its reputation overseas and the European market now represent 73 per cent of total profits. While the scare has had some effect on Coke’s profits in Europe, the company is more concerned with damages to its reputation and consumer confidence in its products.
Many critics say that Coke’s slow response time, insisting that no real problem existed and belated apology have severely damaged the company’s reputation in Europe. Some would disagree and feel that Coke handled the situation as best it could. “I think that Coke acted in a responsible, diligent way,” says John Sitcher, editor of Beverage Digest. “Their first responsibility was to ascertain the facts in a clear and unequivocal way. And as soon as Coke knew what the facts were, they put out a statement to the Belgium people.”
The character and quality of a company can often be measured by how it responds to adversity. Coca-Cola believes that this crisis has forced the company to re-examine both its marketing and management strategies in Europe. Coke executives in Brussels are predicting that the company will double its European sales in the next decade and that this setback will only make the company stronger. Wall Street analysts seem to agree. Only time will tell.
1. What are the management issues in this case?
2. What did Coke do and what could have been done differently?
What are the key factors that were or should have been considered by management?
CASE 3 Trials and Challenges For Barrett at Intel
Intel Corporation is best known for its processors. The sign “Intel Inside” is familiar to most people using a computer. There is, for example, the Pentium 3 and 4 and the new generation Itanium. For servers and workstations, Intel produces Xeon. The colorful CEO Andy Grove led the company for many years. By 2001, however, the Chief Executive Officer Craig R. Barrett faces many challenges, including criticism.
The new strategy of moving into new markets such as information appliances, communications, and Internet services was costly and so far less than successful. In fact, the move beyond its core businesses may have detracted from its core business of computer chips. These new directions resulted in frequent reorganizations resulting in organizational uncertainties for the managers. While some think that the frequent changes were necessary to adapt to new situations and to keep the organization agile, others disagree.
Barrett’s leadership and his moves into various directions is quite different from Grove’s carefully crafted strategy that focused on chips. Barrett’s personal strengths lie in manufacturing. He invested heavily in research and development. But new products such as the Itanium require several years before they show results, and Barrett has only a few more years before his retirement. Investing in new manufacturing technologies with the aim of achieving virtually automated plants results in the reduction of manufacturing costs of chips. But the PC market is stagnated in the early 21st century and wireless communication and cell phones are becoming important in the market. In the cell phone market, for example, Motorola and Texas Instruments are developing new digital signal processors and Intel would have to work hard to catch up. A key to success of Intel may be whether the company can become an important player in the wireless market. Barrett made a number of costly acquisitions, including Level One Communications. But the question remains if the heavy investments in new technologies will result in profitable businesses. This may determine the legacy of Craig Barrett.
1. What is your assessment of Barrett’s performance and his vision for Intel? Is he the right person for the job at Intel?
2. What are some problems associated with frequent reorganization?
3. What are the pros and cons for focusing on the distant futures and the heavy investments in new technologies?
CASE: 4 Profiles of Two Visionaries—Bill Gates & Steve Jobs
Two men have their hearts and souls for developing their visions have driven the personal computer revolution. However, the way in which each of these men went about this quest has been different. Steve Jobs and Bill Gates have changed the way the world does business, but the story of their leadership styles is even more compelling than the success spawned Apple and Microsoft.
Gates and Jobs: The Early Years Bill Gates started developing his computer skills with his childhood friend Paul Allen at Lakeside School in Seattle. At the age of 14, the two had formed their first computer company. After high school, Allen and Gates left Seattle for Boston. Gates was off to Harvard and Allen began working for Honeywell. After only two years at Harvard, Gates and Allen left Boston for Albuquerque to develop a computer language for the new Altair 8080 personal computer. This computer language would become BASIC and was the foundation for Microsoft, which was created as a partnership in 1975.
After five years in New Mexico, Microsoft relocated to Bellevue, Washington in 1980 with BASIC and two other computer languages (COBOL and FORTRAN) in its arsenal. Later that year IBM began developing its first PC and was in need of an operating system. Microsoft developed the Microsoft Disk Operating System (MS-DOS) for IBM while two other companies created competing systems. Gates’ determination and persuasion of other software firms to develop programs for MS-DOS made it the default IBM platform.
As Microsoft became more successful, Gates realized that he needed help managing Microsoft. His enthusiasm, vision, and hard work were the driving force behind the company’s growth, but he recognized the need for professional management. Gates brought in another one of his friends from Harvard, Steve Ballmer. Ballmer had worked for Proctor & Gamble after graduating from Harvard and was pursuing his MBA at Stanford University. Gates persuaded Ballmer to leave school and join Microsoft. Over the years, Ballmer has become an indispensable asset to both Gates and Microsoft. In 1983, Gates continued to show his brilliance by hiring Jon Shirley who brought order to Microsoft and streamlined the organizational structure, while Ballmer served as an advisor and sounding board for Gates. Microsoft continued to grow and prosper in the 1990s and Gates became the richest man in the world with Microsoft dominating the operating systems market and the office suite software market with Microsoft Office.
Gates recognized that his role was to be the visionary of the company, but that he needed professional managers to run the operations of Microsoft. He combined his unyielding determination and passion with a well-structured management team to make Microsoft the giant it is today.
The other visionary, Steve Jobs, and his friend Steve Wosniak started Apple Computer in Job’s garage in Los Altos, California in 1976. In contrast to Bill Gates, Jobs and Wosniak were hardware experts and started with the vision for a personal computer that was affordable and easy to use. When Microsoft offered BASIC to Apple, Jobs immediately dismissed the idea on the basis that he and Wosniak could create their own version of BASIC in a weekend. This was typical Jobs: decisive and almost maniacal at times. However, Jobs eventually agreed to license Microsoft’s BASIC while pursuing his vision of developing a more usable and friendly interface for the PC.
Jobs, seen by some as the anti-Gates, is a trailblazer and a creator as opposed to Gates who is more of a consolidator of industry standards. Jobs, whose goal was to change the world with his computers, was very demanding of his employees. Jobs was not a hard-core computer programmer, but he sold the idea of the personal computer to the public. He changed the direction of Apple by developing the Macintosh (Mac) that used a new Graphical User Interface (GUI) that introduced the world to the mouse and on-screen icons. With all this success, there was a major problem developing at Apple: Steve Jobs was overconfident and did not see Gates and Microsoft as a serious threat to Apple.
Soon after the release of the Macintosh computer, Jobs asked Microsoft to develop software for the Mac operating system. Gates obliged and proceeded to launch a project copying and improving Apple’s user interface. The result of this venture was what became Microsoft Windows.
Jobs’ cocky attitude and the lack of management skills contributed to Apple’s problems. He never bothered to develop budgets and neglected his relationship with his employees. Wosniak left Apple due to differences with Jobs. In 1985, John Scully, formerly CEO of PepsiCo, was hired to replace Steve Jobs as president and CEO of Apple Computers. Differences between Scully and Jobs developed which eventually resulted in the dismissal of Jobs.
Microsoft and Apple at the turn of the Century: An Industry Giant and a Revitalized Leader With the success of Windows, the Office application suite, the Internet Explorer, Microsoft has become a household name and Bill Gates has been hailed as a business genius. The fact that Microsoft’s competitors, the press, and the US Justice Department have called Microsoft a monopoly reinforces Gates’s determination to succeed. Some people even questioned whether Microsoft can survive the Justice Department’s decision. But Bill Gates has shown that he is the master of adapting to changing market conditions and technologies.
In the 1990s, Apple went in the opposite direction. The outdated operating system and falling market share eventually led to a decrease in software development for the Mac. Something needed to be done. In 1998 Steve Jobs returned to Apple as the “interim” CEO. His vision, once again, resulted in an innovative product: the iMac. In the 80s he created the simple-to-operate Macintosh to attract people who were using IBM PCs and their clones. Now he developed a simple, stylish, and Internet-friendly computer that added some much-needed excitement to the computer market. Jobs had also changed as a manager and a leader. He had matured and looked to his professional staff for advice and ideas. The Mac is an expression of his creativity and Apple as a whole is an expression of Steve, leading to continuing the success for Apple and a renewed battle between Gates and Jobs.
Gates and Jobs in 2006 Bill Gates, one of the richest men, has also become one of the biggest charitable givers. He and his wife Linda have donated some $31 billion to philanthropic causes. When Bill Gates read the World Development Report by the World Bank, he realized that he could improve the health of people in poor countries by supplying drugs and treatment. The Bill and Melinda Gates Foundation also provides scholarships for students with different backgrounds. While Gates is very much in philanthropy, Microsoft is preparing the new Windows Vista which helps users in enhancing their computing experience.
Steve Jobs’ career also took some interesting turns. After he was fired by Scully (the person he hired), he started a company called NeXT and Pixar, the firm that created the first computer animated feature film. When Apple got into trouble, Jobs was rehired, doing some amazing things. When he was diagnosed with cancer—which fortunately could be successfully treated—his outlook on life changed. In the 2005 commencement address at Stanford University he said: “Because almost everything—all external expectations, all pride, all fear of embarrassment or failure—these things just fall away in the face of death, leaving only what is truly important.” In 2006, Jobs can look back with exciting new products such as computers and the best selling iPods: the Nano and the Video. Now, the pundits are wondering, what will be Steve’s next innovation?
1. Compare and contrast the careers of Bill Gates and Steve Jobs.
2. Compare and contrast the leadership styles and managerial practices of Gates and Jobs.
3. What do you think about the future of Microsoft and Apple Computers?
What is the outlook on life of the two computer nerds?
CASE 5: INFORMATION TECHNOLOGY AT AMERICAN AIRLINES
The information system at American Airlines has become an integral part of the overall strategy to gain a competitive edge in the industry. The extensive use of computers began in the 1950s in payroll and inventory control and extended to customer service. In the early 1960s, American developed the widely known SABRE system (SABRE stands for Semi-Automated Business Research Environment). It is one of the most sophisticated passenger reservation system used by travel agents and customers.
Shortly after implementing SABRE, American also used the system for other tasks, such as controlling freight shipments, as well as dispatching and tracking flights. When the government deregulated the airline industry in 1978, the information system became an even more important tool for competing against the low-cost airlines whose labour costs were as much as 40 to 50 per cent lower. American Airlines’ strategy was to use the information technology to compete in a variety of ways. One application was to have as many aircrafts seats as possible filled without having many passengers “bumped” through overbooking. Another application was to obtain the proper balance between discount and regular fares. It was estimated that revenues could be increased dramatically by shifting only one per cent of discount fares to the full fare—clearly a competitive advantage in a market where price change occur daily and even hourly. Still another application of the information system was to find the most efficient way to fly in order to reduce fuel cost, which is the second largest expense. Some airplanes have sensors on board to monitor essential equipment; the operational information is sent to the ground station. Maintenance can then be planned effectively and performed more efficiently when the aircraft lands. Still another application of the computer was to determine the most profitable routes. The complexity of scheduling over 13,000 pilots and flight attendants on 1300 daily flights is horrendous. The high cost of overtime can put an airline at a competitive disadvantage.
Robert L Crandall, the former chairman and president of American Airlines, thinks that information systems are the key for success. He stated: “We have taken what was once a basic reservation system and built it into an integrated information system that drives our corporate strategy as much as it is driven by that strategy.” While American Airlines has been the industry leader in the use of information technology, competition developed. The 1992 program of the European Community (EC, now the European Union or EU) was designed to eliminate trade and many political barriers. The European airline industry also became deregulated than engaging in mergers, some airlines are now integrated into a network linking selected carriers together. An illustration of the cooperation among airlines involves the two computer reservation systems called Galileo and Amadeus. Thus, American Airlines—with a strategy of expanding in the European market, the largest market in the industrialized world—has ample competition. Recently, the five biggest US Airlines (Continental, Delta, Northeast, United Airlines, and now also American Airlines) developed a common website called Orbitz.com (www.orbitz.com), which could also affect SABRE.
Technology that may have given once a competitive advantage to a company may, in time, become obsolete unless it adapts to new demands and develops new applications. Max Hopper, the architect of the SABRE system, suggests that old models are no longer sufficient. Those who can use the available tools and modify them will gain a competitive edge. The trend is away from stand-alone applications to platforms that facilitate new approaches to problem solving and decision making. SABRE is not only a reservation system, but also a system for inventory control, making flight plans, and scheduling flight crews. Other data-basses were added for car rentals, hotel reservations, and theatre shows. SABRE has become an electronic travel supermarket.
1. Discuss the evolving use of information technology at American Airlines?
2. Should American Airlines expand its position in Europe? What are the arguments for and against this expansion?