strategy+business Winter 2015

The cover story for this issue, “Innovation’s New World Order” (page 34), argues that the footprint for research and development is more global than ever. Labs that create new products no longer have to be situated near headquarters — engineers may expect to log more frequent flier miles in years to come. Authors Barry Jaruzelski, Kevin Schwartz, and Volker Staack point out that although the challenges are huge, and so are the benefits. They talk about innovators getting closer to markets, suppliers, and technical talent. I can’t help but wonder if a cultural factor is also contributing to this shift. In the Thought Leader interview on page 104, Bran Ferren (former head of “Imagineering” at Disney and current co-proprietor of an influential R&D house) describes breakthrough innovation as a creative act.…

When Darren Entwistle became CEO of Telus in 2000, the Canadian telecommunications firm was a solid but unspectacular amalgamation of two former regulated telephone utilities. Since then, the company has experienced a notable transformation. During the last 15 years, few companies have delivered as consistently on almost all metrics that matter. Telus’s revenue has doubled, from US$4.5 billion in 1999 (CA$5.9 billion, using 2015 dollars) to $9.2 billion (CA$12.0 billion) today. The company has become the global leader in total shareholder value creation among incumbent telecom companies worldwide, returning 351 percent to shareholders between 2000 and now. It has the lowest customer churn rate of any major wireless carrier in North America, and receives customer satisfaction ratings among the top tier on J.D. Power and Associates. And Telus’s employee engagement…

On July 31, 2015, just before Congress broke for the August recess, lawmakers approved yet another temporary cash infusion to keep the U.S. Highway Trust Fund solvent. The fund was established in 1956 to pay for the construction of the United States’ first interstate highway system. Each year, it funnels billions of federal dollars to national, state, and local projects across the country. The trust fund’s main source of revenue is taxes, mainly taxes on gasoline. But given the relatively flat level of gas consumption in recent years and the rising price of road building, the trust fund has had to rely on short-term “patches,” like the one Congress passed in July, to keep from running out of money. Aside from being inefficient, this approach is insufficient to maintain an ailing…

If a company has a problem with, say, a sales force that is chronically unaware of the latest findings from the research division, its managers might turn to technology to promote better communication between the departments. But that’s missing the point, says Kentaro Toyama, the W.K. Kellogg Associate Professor of Community Information at the University of Michigan School of Information. Toyama calls himself a “recovering technoholic” who once believed technology was the answer to almost every problem in the world. Now he is trying to spread the word that the more technology we have at our disposal, the more we need human skills, both to solve problems and to use all this technology effectively. In his new book, Geek Heresy: Rescuing Social Change from the Cult of Technology (PublicAffairs, 2015), Toyama…

In recent years, activist investors like Carl Icahn and Jana Partners have developed a welltuned methodology for targeting publicly held companies they believe are underperforming. They buy a significant stock position, agitate for board seats, and attempt to force strategic and structural changes aimed at increasing shareholder value. (See “Be Your Own Activist Investor,” by Deniz Caglar, Vinay Couto, and Gary L. Neilson, page 50.) Activists focus on companies that are cash-rich but whose stock prices lag the market average, that have portfolios of businesses in which underperforming units might be worth more to other owners, and that are in industries that are ripe for consolidation. Because most companies in the aerospace and defense (A&D) sector meet these criteria, several defense contractors have become prime targets for activist campaigns, including L-3…

Around the time the millennial generation started flooding the workforce, alarms were sounded. Managers were told to be wary of these 20-something new hires, who were likely to jump ship at the first hint of something better. More recently, however, studies have started to dispel the myth of the itinerant millennial. Using data from the U.S. Bureau of Labor Statistics, for example, the website FiveThirtyEight.com has shown that millennials change jobs less frequently than gen Xers did at the same age. This disconnect between perception and reality is rooted in common stereotypes about millennials (whom we define as those born between 1980 and 2000). Among the most damning? They are inherently disloyal to their employers. Our research suggests that it’s time to change the conversation. Whether the millennial generation, which recently…