The Strategy Seminar:Business Leaders-Virgil Cammack-Bonus Current Event Post-Blame It on Leo

Blame It on Leo

The new HP hit Blame It on Leo, starring Meg Whitman and the rest of the HP board, is a fascinating tale of suspense and denial, pitting one ex-CEO against a future one. The tale develops in backwater Palo Alto with a 8.8 billion writeoff and a trail of bread crumbs leading back to the HP Board of Directors.

Actually, all kidding aside, HP CEO Meg Whitman’s blaming of the Autonomy debacle on ex-CEO Leo Apotheker and former CTO Shane Robison is ludicrous. First of all, where was the board during all of this. In July 2011, short seller Jim Chanos reported on his concerns with the target company’s books, disclosures, and future. Even HP’s own CFO, Cathy Lesjak, had stated that the acquisition price was too high and that the purchase was not in HP’s best interests.

CEO Meg Whitman’s passing of the blame to prior management is just a way to deflect it off of the current board, as a means for her own preservation and a ploy to reduce the board’s liability toward its stockholders . . . but it begs the question: When is the board ever responsible? If HP, with all of its problems, can show such carelessness as this, when will the board be called to answer?

CEO Whitman is betting her future on extended cloud capabilities and tablets. It will in the end be the success of these ventures that seal her fate. I hope the best for HP, but not many are betting on them.

References

Bloxham, Eleanor. How HP’s Meg Whitman is passing the buck. CNN Money. web.               November 30, 2012.

Ricadela, Aaron. Meg Whitman to sharpen HP business focus. http://www.sfgate.com/technology/article/Meg-Whitman-to-sharpen-HP-business-focus-3887883.php    September 23, 2012.

Bort, Julie. Meg Whitman Blamed a Well-Respected HP Tech Executive for the Autonomy Disaster –and that’s Ruffling Feathers. http://www.businessinsider.com/shane-robison-hp-autonomy-2012-11  November 28, 2012.

Business Leaders-Quantitative Analysis- The Moderating effects of Transformational Leadership on Knowledge Management and Organizational Effectiveness

The Moderating effects of Transformational Leadership on Knowledge Management and Organizational Effectiveness

               In this article the authors try to explore the moderation effects of Transformational Leadership (TL) on Knowledge Management (KM) and Organizational Effectiveness (OE).The model was tested on 524 research and development professional at 21 research institutes. The following variables were used in the research:  Control variable for Gender and Academic Ranking, Independent variable for Knowledge Management, Moderating variable for Transformational Leadership and Interaction variable for Knowledge Management and Transformational Leadership.  The following hypothesis was used in the research.

Hypothesis 1: Transformational Leadership (TL) will be significantly and positively related to Organizational Effectiveness (OE).

Hypothesis 2: Transformational Leadership (TL) will be a moderator between Knowledge Management (KM) and Organizational Effectiveness (OE).

Hypothesis 3: Knowledge Management (KM) will be significantly and positively related to Organizational Effectiveness (OE).

            In the study regression analysis was applied to test the hypothesis of the research. The results showed that Knowledge Management is significantly positive and related to the Organizational effectiveness. It also showed that Transformational Leadership is significantly related to the Organizational Effectiveness. Thus, Hypothesis one is supported. In the research it was also used the hierarchical regression analysis to examine the moderating effect, and in order not to be influenced by exogenous variables, it examined the effects of control variables that included the gender and academic rank.  The results also showed that the independent variable and the moderating variable are significantly correlated to dependent variable. In addition, the results also revealed the interaction effects of knowledge Management and Transformational leadership is also significant to Organizational Effectiveness. Thus, all of the hypotheses are supported.(1)

             Research and Development organizations need to learn and know what the effective Knowledge Management is because you can know what to focus on and learned what the valuable assets of the organization are. Research and Development managers can be more effective if they are able to create and or promote new knowledge of the external market because it can be more appreciated and be more effective that another manager who only focuses on the effectiveness of the organization. Therefore, if the manager is Transformational Leadership he/she is more likely to have a bigger impact on the organization than a manager who only focuses on the effectiveness of the organization.

Work Cited:

Chi, Hsin-Kuang. Lan, Chun-Hsiung. Dorjgotov, Battogtokh. The Moderating effects of Transformational Leadership on Knowledge Management and Organizational Effectiveness. Retrieve from:  (1) <http://libproxy.uhcl.edu:2057/ehost/pdfviewer/pdfviewer?vid=13&hid=107&sid=6e5d0e9a-550a-44ab-8626-2b20b4c7301c%40sessionmgr113>.

The Strategy Seminar: Business Leaders-Virgil Cammack-Academic Article-Human Capital and Social Capital in Entrepreneurs and Managers of Small and Medium Enterprises

In Felicio Augusto, Eduardo Couto, and Jorge Caiado’s article Human Capital and Social Capital in Entrepreneurs and Managers of Small and Medium Enterprises, the authors examine the characteristics of both human and social capital. As the article’s title states the study was conducted with small and medium size firms. This was done across numerous industries within a small open economy country. The study’s hypotheses were as follows:

H1:    Human capital elements (knowledge, experience, professional field, cognitive ability and proactivity) are associated with elements of social capital (status, entanglement, complicity, personal relationships, family support and social relationships).

H1a.  An entrepreneur’s elements of human capital are related to his elements of social capital –namely, family protection and complicity.

H1b.  A manager’s elements of human capital are related to his elements of social capital -namely, power and influence.

H2.    Business sectors and industries influence different relationships within human and social capital.

H2a.  Across different industries an entrepreneur’s elements of human capital are linked with his elements of social capital -namely, family protection and complicity.

H2b.  Across different industries a manager’s elements of human capital are linked with his elements of social capital -namely, power and influence.

The hypotheses above where supported by the study. Though there is further need for study in the interdependence and causality of social and human capital elements –as the study noted –the study nevertheless provided insight into the “best fit” for manager and entrepreneur types in general and for manager and entrepreneur types per industry. It should not seem surprising that entrepreneurs would need elements of support (since they are responsible for raising the capital and overcoming other start-up obstacles) and managers need elements of power and influence (since they must accomplish tasks without the control inherent in ownership).

Entrepreneur types and manager types might naturally be drawn to their roles as entrepreneurs and managers; however, if this is not the case, an analysis such as this one is beneficial to both types in helping them find their natural place. Understanding one’s role and recognizing what one needs from human and social capital can only make the journey easier.


Citation.
Augusto, Felicio, Eduardo Couto, and Jorge Caiado. Human Capital and Social Capital in Entrepreneurs and Managers of Small and Medium Enterprises. Journal of Business Economics & Management; Jun 2012. vol. 13 issue 3. pp. 395-420.

Alec Korogodsky - Current Event Post - What Really Happened to Hostess?

                We’d be lying if we said we’re not going to miss Hostess products. Who never enjoyed taking a bite out of a Twinkie, a classic snack that almost embodied Americana? But I think what we can all agree on is we won’t miss the mismanagement and overcompensation of Hostess management. Hostess is in complete liquidation and is ceasing its operations; no longer manufacturing American classics such as Twinkie’s, Cupcakes, Ho-Ho’s, Zingers, Wonder Bread, and a myriad of other products (can you tell I love my junk food?) But what really happened?

                Management is claiming the shutdown is due to a massive labor strike. To quote CEO Greg Rayburn on Friday, “We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike. Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders.” But who caused this massive strike? In January of this year the company filed for bankruptcy, the second time in over two years while top management received over an 80% raise!  The tensions came to a boil when the Baker’s Union became infuriated at managements request for a 300% raise to the ineffective CEO at the time. This caused the Baker’s Union to strike at 24 of Hostess’ 33 plants, and management caved. Instead of giving into the concessions, they took the money and ran, shutting down Hostess

                So what really caused Hostess to shut down? First off, their products were getting old. People were still buying Twinkie’s but not for a price that gave the company good margins and raising the price would cut demand. Forbes argues that management should have been creating new products with higher margins instead of proverbially trying to motorize a horse and buggy. Another reason was the ridiculous slashes in wages and benefits management was proposing. If it’s been a while since you’ve taken economics, remember that everything has a market price, even labor. To cut the cost of labor to well below market price is just asking for a labor strike, which is exactly what happened.

                To sum it up, it wasn’t the fault of the employees, or the fault of the unions for the demise of Hostess. It was the incompetence of upper management to adapt to an ever changing market, the greed of the top executives to give themselves outrageous raises and bonuses that no one in their right mind would believe they earned. Corporate greed and incompetence is what killed Hostess.  Top executives of similar companies should take notice. I wouldn’t be surprised to see new innovations in the snack food industry in response to the sudden demise of a snack food giant.

Sources:

http://www.examiner.com/article/what-happened-to-ho-hos-should-we-mourn-the-demise-of-hostess-brands

http://americablog.com/2012/11/hostess-twinkie-ceo-salary.html

http://www.forbes.com/sites/adamhartung/2012/11/18/hostess-twinkie-defense-is-a-management-failure/