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A note to our readers
FT Business school will be taking a break over the Christmas and new year holiday. The newsletter will return on January 8, next year. Season's greetings and a happy 2018 to all our readers.
Andrew Hill's challenge
The FT's management editor sets a weekly test of your business, strategy and management skills.
Business is plagued by the modern equivalent of the perpetual motion machine: those circular strategy loops that offer a much neater version of the business model or strategy than is ever likely to fit reality. As I've written in my column this week, "companies that want to move forward need to stop going round and round in circles".
Here's the challenge: suggest a way in which the "strategy loop" could be made meaningful, or better still, come up with a better visual metaphor for the way businesses evolve. Pictures are welcome, obviously. Send them, with a minimum of text explanation to firstname.lastname@example.org.
I had a rich crop of responses to my challenge last week to suggest a strategy for independent toy stores. Arvin Anoop suggests stores refocus on "experiential retail", including "movie screenings, holiday parties, dessert fairs and summer camps". He was also among a number of you who suggested "embrace Amazon rather than fight it". I tend to think that embrace might turn out to be a chilly one.
Peter Hahn also urges toy stores down the "touch and feel" route, encouraging them to let children try before they buy. But he points out that toy shops will only bring people in if their stock is "not too mass market and 'play opportunity'... changes frequently". Finally, he says as children grow older there may be no point in trying to keep them as customers; better to specialise in those age groups that are still interested. "I passed a side street shop in Germany last Christmas selling traditional wooden toys with a few moving parts, it was amusing seeing the parents on mobiles and the small children still playing with trucks," he writes.
Back to one of my favourite topics for the final further reading of 2017 — how much hierarchy is too much, and how little is too little? Bret Sanner and J Stuart Bunderson, writing for the latest MIT Sloan Management Review, question the assumption that hierarchies are the enemy of new ideas. "The right hierarchy can help teams become better innovators and learners," they write, and when teams "insist upon being flat [they] often become unfocused, tumultuous, and inefficient."
Every week a business school professor or academic recommends useful FT articles.
Kevin Morrell, professor of strategy at Durham University Business School, selects:
Paul Polman: how I fended off a hostile takeover bid A consequence of sterling depreciation has been that some British companies are cheaper. The FT explained in February that this was not the case for Unilever even though figures like Vince Cable linked a hostile takeover bid from the giant Kraft Heinz to Brexit. This piece is interesting because it looks at the bid from the perspective of the CEO Paul Polman. Business students should read this because his vantage point highlights an important truth about business: even with such huge commercial transactions, personalities and values are still key.
Top companies risk legal action on sexual harassment In the wake of abuses in the entertainment industry, there is an opportunity across society to establish new norms and to encourage people to report abuse. This piece looks at a letter from the Equality and Human Rights Commission (EHRC) to all FTSE 100 chairs, that signals one way that behaviour may change. EHRC's stance shifts the balance of responsibilities more onto companies — who have been asked to provide evidence of safeguards they have in place to prevent harassment. This heightens the exposure for companies that do not take proactive steps to eliminate abuse.
Now the Brexiteers surprise us with their realism On Dec 5, the FT led on the 11th hour derailing of Brexit divorce plans by the DUP. A bright spot during this gloomy day's news was the deliciously colourful caricature in the comment section by Janan Ganesh. His characterisation of negotiations might resonate with business students, who would be well versed in Mintzberg's contrast between the idealised vision of strategy-as-plan and the messy, emergent realities of strategy-as-practice.
Rather than the "strategic guile" repeatedly promised by our negotiators, Janan portrayed Brexit politics much more accurately in light of the DUP's intervention as: "more like Whac-A-Mole in its minute-by-minute improvisation". He also found time to characterise the Prime Minister's dilemma of Trump's state visit in terms of its "sheer Britishness" where Theresa May was simply: "Like every good Briton who invites you to visit them one day, she does not mean it".
Jonathan Moules' business school news
Entrepreneurs tend to have a love-hate relationship with the MBA. But for every successful college dropout, like Facebook founder Mark Zuckerberg or Bill Gates of Microsoft, there is a business school alumnus with a start-up success, such as William Shu of food delivery service Deliveroo.
I visited Deliveroo’s sprawling new London headquarters to interview Mr Shu, a Wharton graduate, and hear exactly how he built a company with a $2bn valuation in a little under five years.
A driving force is Mr Shu’s passion for food – the 38-year-old American waxes lyrical about the quality of the food in London, his adopted home. But he is also a huge fan of convenience. Deliveroo’s office is built over one of the City of London’s best stocked gyms, complete with swimming pool, spin classes space and several courts for squash, Mr Shu’s favourite sport.
However, he admitted to me that he will never go downstairs to use the ample facilities because he had a small gym room built in his office. When it comes to convenience, Mr Shu leads by example.
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Edited by Wai Kwen Chan — firstname.lastname@example.org