Appendix: Screen-Reader Accessible Tables
This appendix includes versions of select tables from the book, formatted for screen reader accessibility. Tables not listed here include embedded descriptive text. Click on the hyperlink above each table to return to the location of in the book.
1. Introduction to Management
| Management — An Overview | |
|---|---|
| Why Learn About Management? | • Develop skills to become a manager • Enable improved working relationships with managers • Promote understanding of the role of managers in society • Improve ability to create value and to capture value • Nurture self-understanding |
| The Nature of Management | |
| The What of Management: Functions and Roles | Fayol’s four generic functions of management: • Planning: identifying organizational resources, goals, and strategies • Organizing: designing systems and structures to enable meeting goals/plans • Leading: influencing others to help meet the organization’s goals • Controlling: ensuring that members’ actions are consistent with the organization’s standards/values |
| Mintzberg’s ten managerial roles: • Interpersonal roles: figurehead, leader, liaison • Informational roles: monitor, disseminator, spokesperson • Decisional roles: entrepreneur, disturbance handler, resource allocator, negotiator |
|
| The Why of Management: Effectiveness and Success | FBL management • Based on the financial bottom line, seeks to maximize an organization’s financial well-being |
| TBL management • Based on the triple bottom line, seeks to enhance an organization’s financial well-being while reducing its negative social and ecological externalities |
|
| SET management • Based on social and ecological thought, seeks to enhance social and ecological well-being while maintaining financial viability |
|
| Why Learn About Three Management Approaches? | • Increase critical thinking skills • Improve ethical thinking skills • Improve adaptability in working in different situations and with different people |
| Entrepreneurial Management | Three reasons people become entrepreneurs: • To be one’s own boss, choose one’s work • To pursue opportunities for improving social and environmental well-being • To achieve financial goals |
Table 1.1. Management functions and roles
| Fayol’s Management Functions | Mintzberg’s Managerial Roles |
|---|---|
| 1. Planning: deciding on an organization’s goals and strategies, plus identifying the appropriate organizational resources required to achieve them. | Entrepreneur role: proactively and voluntarily initiating, designing, or encouraging change and innovation |
| Negotiator role: making incremental changes related to plans and resources | |
| Disseminator role: transmitting to members of one’s organizational unit information gathered from internal or external sources | |
| 2. Organizing: ensuring that tasks are assigned and a structure of organizational relationships is created that facilitates meeting organizational goals. | Resource allocator role: distributing all types of resources (time, funds, equipment, human resources, etc.) |
| Liaison role: building and maintaining a good structure of information contacts beyond the boundaries of a one’s specific work unit | |
| 3. Leading: relating to other members in the organizational unit so that their work efforts contribute to the achievement of organizational goals. | Leader role: communicating with subordinates, including motivation and coaching |
| Spokesperson role: transmitting decisions and other information up, down, and across an organization’s hierarchy, and/or to the general public | |
| Figurehead role: representing an organizational unit in a symbolic or ceremonial capacity | |
| 4. Controlling: ensuring that an organization’s activities serve to accomplish its goals. | Monitor role: acquiring internal and external information about issues that can affect the organization |
| Crisis handler role: taking corrective action when things are not going as planned |
2. A Short History of Management Theory and Practice
| Time Frame | Era | Emphasis | Hallmarks |
|---|---|---|---|
| Five eras of pre-contemporary management thought | |||
| 13.7 billion years BCE | Pre-humankind
|
Creation/Evolution | • Development of the cosmos and the ecological capacity of Earth to support human life |
| 40,000 BCE | Hunting and gathering | Attunement to nature and people | • Organization by humankind into groups and development of technologies to enhance human well-being |
| 10,000 BCE | First agricultural revolution | Stability | • Management of natural resources to serve human interests |
| 1500 BCE | Advent of money | Commerce | • Invention of money (which can be used to make more money) |
| 1500 CE | Industrial Revolution/ capitalism (pre-FBL) | Economic development | • Development of and growing agreement that capitalism and (large) business encourages positive expressions of the materialistic and individualistic nature of humankind |
| Six eras of contemporary management thought | |||
| 1910-1930 CE | Classical (FBL) | Organizing | • Development of technical skills to improve the design of jobs and organization structures to maximize performance (i.e., productivity, efficiency, and financial well-being) |
| 1930-1950 CE | Human relations | Leading | • Development of people skills to further enhance performance |
| 1950-1970 CE | Calculating | Planning | • Understanding how planning and organizational systems can be used to further enhance performance |
| 1970-1990 CE | Values and beliefs | Controlling | • Understanding how organizational values and beliefs can be managed to further enhance performance |
| 1990-2010 CE | Sustainable Development (TBL) | Triple bottom line | • Understanding how addressing (some) negative socio-ecological externalities can further enhance financial well-being |
| 2010-present | Emergence of Social and Ecological Thought (SET) | Social and ecological well-being | • Understanding how relaxing the need to maximize financial well-being can enhance social and ecological well-being |
Table 2.1. Noteworthy dates on the cosmic calendar
| Date | Event |
|---|---|
| Jan. 1 | Big Bang: The origin of our universe |
| Sept. 14 | Planet Earth is formed |
| Sept. 25 | First life on Earth |
| Dec. 21 | First animals on Earth |
| Dec. 25 to 30 | Dinosaurs on Earth |
| Dec. 31, 11:53 pm | First Homo sapiens (200,000 years ago) |
| Dec. 31, 11:59:30 pm | Invention of agriculture (shift from nomadic lifestyle) |
| Dec. 31, 11:59:53 pm | Aristotle, the Roman Empire |
Table 2.2. Forager vs. modern values and ways of organizing
| San people’s approach | Typical modern FBL/TBL approaches |
|---|---|
| Looking out for the interests of others and sharing resources is key to a flourishing community. | Individualism and self-interest are key to a flourishing society (via the “invisible hand”). |
| True wealth and status is gained by giving, not having (e.g., there is no merit in the best hunter carrying 100 spears). | Financial wealth is desired and seen as a sign of success (materialism). |
| No notion of money. | Money and financial marketplaces play a central role in ordering behavior. |
| Everyone in a clan belongs to the same “organization.” Clans have no warriors or defenses to fight other clans. | Competition between producing organizations is seen as healthy; it is “natural” that some people are unemployed. |
| A kinship structure is evident (based on systems of names that serve to tie people together and thereby reduce uncertainty). | Bureaucratic structures are evident, with legal contracts and formal job descriptions. |
| Clans typically have 10 to 40 members. | Organization size fluctuates widely. |
| Low division of labor beyond hunting and gathering (much work is shared). | High division of labor. |
| If a clan no longer “fits” in a given ecological niche (e.g., water in an oasis runs dry), it moves to the next niche. | Survival of the fittest; organizational failure is expected for the misfits. |
| Leadership is informal and everyone has a voice; both men and women have an equal chance to be leaders; older people have some advantages. | Managers hold a position in the formal hierarchy and have more power than others; women are under-represented in leadership positions. |
| Egalitarianism (people appreciate the meat provided by a top hunter, but will “insult the meat” in order to keep the hunter humble).[2] | Top performers are rewarded with extra pay and promotions. |
| Workweek is 25 hours (18 hours gathering food, plus 7 hours for making and fixing tools).[1] | Workweek is 40 hours. |
3. Management and Financial Well-Being: Jobs, Goods and Services, and Profits
| FBL | TBL | SET | |
|---|---|---|---|
| Capitalism: System used to reward entrepreneurs who combine resources in ways that create valued goods and services. | Documentational capitalism: Detailed written contracts, public financial reports, management rights, short-term maximization of financial performance. | Relational capitalism: Relational contracts, long-term reputation and financial performance, employee rights, the needs of all stakeholder groups. | |
| Economics: How goods and services are produced, distributed, and consumed. | Acquisitive economics: Managing property and wealth to maximize monetary value for owners, especially in short-term. | Hybrid: Managing property and wealth to maximize monetary value for owners while reducing negative socio-ecological externalities for key stakeholders. | Sustenance economics: Managing property and wealth to increase long-term overall well-being for owners, members, and other stakeholders. |
| Performance in High-Income Countries | |||
| Jobs | • Increase the number of jobs created. | • Provide jobs that motivate workers. | • Broad opportunities; pay living wage. |
| Goods and Services | • Increase overall and net productivity. | • Productivity via reduced externalities. | • More with less; reduce consumption. |
| Profits | • Increase profits. | • Increase profits. | • Enough profits; GPI. |
| Performance in Global Context | |||
| Jobs | • Jobs for people who are income insecure. | • Good jobs for people who are income insecure. | • Fair trade; living wage. |
| Goods and Services | • Free trade/global GDP. | • Sustainable development/“Base of the Pyramid”. | • Fair trade; tariffs that benefit people who are income insecure. |
| Profits | • Free flow of money helps all/IMF. | • Socially responsible investing; ESG. | • Profit circulating within local communities, social impact investing. |
| Entrepreneurship | • Maximize profits (even if it raises socio-ecological costs). | • Maximize profits (via lowering socio-ecological costs). | • Achieve financial viability and socio-ecological well-being. |
Table 3.1. Some differences between documentational and relational capitalism
| Measure | Documentational Capitalism (liberal market economies) |
Relational Capitalism (coordinated market economies) |
|---|---|---|
| Governing Mechanism | Legal systems | Socio-relational systems |
| Employment | Greater job mobility (from one organization to another) | Lower unemployment |
| Innovation | More radical innovations | More incremental fine-tuning |
| Income Equality | Greater chance to become extraordinarily rich | Greater income equality |
| Employee Protection | Greater freedom for managers to hire and fire employees | Greater employee protection |
4. Management and Ecological Well-Being: Energy, Food Systems, and Health
| FBL (Financial Bottom Line) | TBL (Triple Bottom Line) | SET (Social and Ecological Thought) | |
|---|---|---|---|
| Approaches to managing ecological well-being | • Unawareness • Obstruction-ist • Minimalist |
• Listen to consumers • Use resources efficiently • Protective/legal |
• Proactive • Stakeholder-centric • Place-based organizing |
| Energy: Issues related to carbon economy (e.g., GHG emissions, pollution) |
• Ignore issues on climate change • Undermine change efforts • Adhere to letter of the law |
• Respond to market (e.g., Tesla) • Reduce costs via eco-efficiencies • Lobby for carbon tax |
• Take initiatives like commuting via bike • Treat natural environment as stakeholder • Reduce consumerism (e.g., local, slow fashion) |
| Food systems: Issues related to food production, distribution, and consumption (e.g., waste, reduced biodiversity) |
• Ignore food-related issues • Refuse access to CAFOs • Favor large-scale farming |
• Create new industries (e.g., organic foods) • Train workers to minimize waste • Lobby for favorable laws |
• Care for environment regardless of business case • Connect with organic locavores • Support slow food movement; de-commodify food |
| Human physical health: Issues related to physical well-being (e.g., effects of diet, physical fitness, pollution) |
• Ignore health-related issues • Hide negative information • Lobby/follow letter of law |
• Introduce healthier products • Increase efficiencies providing healthier options • Create favorable health standards |
• Promote active living, company fitness center • Offer healthy food in cafeteria • Follow precautionary principle |
| Entrepreneurship opportunities |
• Fossil fuel industry | • Trends to eat less meat, reduce GHG energy | • Soil-enhancing agricultural practices, plant-based diets |
5. Management and Social Well-Being: Meaningful Work, Meaningful Relationships, and Peace
| FBL | TBL | SET | |
|---|---|---|---|
| Meaningful Work | |||
| Meaning of Life | • Materialistic source and individualistic focus | • Transcendent source and individualistic focus; materialistic source and holistic focus | • Transcendent source and holistic focus |
| Meaning at Work | • Financial success • Getting ahead |
• Job crafting • Enhancing prosocial aspects |
• Healthy giving • Voluntary simplicity |
| Meaningful Relationships | • Emphasis on instrumental aspects | • Emphasis on work-life balance | • Re-personalization • Compassion, gratitude |
| Peace and Social Justice | • International trade • Ethnocentrism |
• UN Global Compact • Polycentrism |
• Caux Round Table for Moral Capitalism • Egalicentrism |
| Entrepreneurial Implications | Work orientations influence entrepreneurial choices, and those choices have ethical implications. | ||
6. Entrepreneurship
| FBL | TBL | SET | |
|---|---|---|---|
| Most valued benefits of entrepreneurship | |||
| • as new start-up | • economic activity (and jobs and innovation) | • satisfying jobs • (and economic activity and innovation) |
• socio-ecological • innovation (and creating meaningful jobs and economic activity) |
| • as small enterprise | • opportunity for • growth/financial • return (and to target specific opportunities) |
• opportunity for growth via targeting specific/ narrow triple bottom-line opportunities | • opportunity to create socio-ecological value for a local community (and for growth and specific opportunity) |
| • as family business | • low agency costs | • low agency costs and care for family | • care for humankind |
| Four steps of the entrepreneurial process | |||
| 1. Identify an opportunity | • to seek financial value capture | • to seek financial value capture via reducing negative externalities | • seek value creation through positive socio-ecological externalities |
| 2. Test the idea | • to gather information to test and refine the opportunity | ||
| 3. Develop a plan (business plan and Entrepreneurial Start-Up Plan) | • to convince stakeholders of profit potential | • to justify the profitability of reducing targeted externality | • to engage stakeholders in developing the key aspects of the organization |
| 4. Take action (based on qualities of entrepreneurs and key resources) |
• access traditional sources of financing (e.g., banks, venture capitalists); use this to mobilize other resources called for in the plan | • access new and/or traditional sources of financing; use this to mobilize other resources called for in the plan | • consider newer sources of financing (e.g., crowdfunding) to get started; then work with stakeholders to mobilize resources to run the organization |
Table 6.1. Elements of a generic business plan (including the 5 elements of an ESUP*)
| Business Plan Element | Content | Discussed in Book Chapter |
|---|---|---|
| 1. Summary | · Executive summary of the whole plan, highlighting key points and exciting the reader (1 page; related to elevator pitch) | · 6 |
| 2. Description of the new venture* | · Opportunity being pursued (e.g., relevant trends) · Target customers, size of market · Mission and vision · Business strategy · Legal form |
· 3, 4, 5 · 6 · 8 · 8 and 9 · 6 |
| 3. Description of the product and competitors* | · Key features of products/services · Analysis of competition (competing and substitute products/ services, competitive advantage, SWOT analysis, stakeholder maps) |
· 6 · 8 and 9 |
| 4. Management* | · Top management team (qualifications, roles) · Organization structure and systems |
· 15, 16 · 11, 12, 18 |
| 5. Staffing* | · Details about employees—numbers, required skills, recruiting, training, compensation | · 12, 14, 15, 16, 17 |
| 6. Marketing | · Total and served available market, target market · Marketing plan, selling approach, customer retention methods, distribution, pricing |
· 6 |
| 7. Operations | · Location, facilities, equipment, methods, quality control, inventory management, suppliers, purchasing | |
| 8. Finances | · Financial requirements, sources, projected revenues and costs, break-even analysis, cash flow | |
| 9. Timeline and contingency plans | · Goals and milestones, achievements by dates, insurance, liability considerations |
Table 6.2. Overview of key components and content in Business Model Canvas
| Key Partners | Key Activities | Value Proposition | Customer Relationships | Target Segments |
|---|---|---|---|---|
| Which partners/suppliers are crucial for your business model to work? | What critical activities must you perform to deliver your value proposition? | What unique combination of products/services are you offering to solve customer problems or meet their needs? | How will you build and maintain relationships with each customer segment? | Which specific groups of people or organizations are you creating value for? |
| Key Resources What essential assets (physical, intellectual, human, financial) do you need? |
Distribution Channels Through what channels will you reach and deliver value to your customers? |
| Cost Structure What are the most significant financial costs inherent in your business model? |
Revenue Streams How will you generate revenues from each customer segment? |
| Social and Environmental Costs/ Considerations What negative externalities might your operations create? |
Social and Environmental Benefits What positive impact will your business model generate for society and environment? |
Table 6.3. An example of the Business Model Canvas for MAD Travel
| Key Partners | Key Activities | Value Proposition | Customer Relationships | Target Segments |
|---|---|---|---|---|
| • Indigenous communities and local farmers • government agencies and academic institutions • environmental organizations and NGOs • strategic corporate and celebrity partners • legal and technical support networks |
• organizing immersive restoration tours • community training and development • environmental conservation projects • digital education and e-commerce • product development with communities |
For Communities Economic empowerment through (a) sustainable tourism; (b) new related revenue streams; (c) skills development; and (d) environmental restoration
For Customers |
• long-term community partnerships • immersive experiences and education • direct producer-consumer connections through social media and word-of-mouth |
• eco-conscious travelers • educational institutions • corporate groups • environmental enthusiasts • urban consumers seeking sustainable products |
| Key Resources • community partnerships and trained guides • agricultural land and forest areas • digital platforms and infrastructure • brand reputation and expertise • training materials and facilities |
Distribution Channels • direct website bookings • MAD Market online platform • educational institutions • corporate partners |
| Cost Structure • community training and development • infrastructure and equipment • digital platform maintenance • staff and operations • marketing and logistics |
Revenue Streams • tour packages and experiences • product sales through MAD Market • online courses and workshops • tree planting gift cards • consulting services |
| Social and Environmental Costs/ Considerations • initial community adaptation • resource use and carbon footprint • cultural transition challenges |
Social and Environmental Benefits • increased community income • forest restoration and biodiversity • cultural preservation • sustainable livelihood creation •enhanced environmental education |
7. The Decision-Making Process
| Decision-Making Process | FBL | TBL | SET |
|---|---|---|---|
| 1. Identify the need for a decision (e.g., a problem to solve or an opportunity to seize) | Managers identify problems or opportunities to improve the financial bottom line. | Managers and stakeholders identify problems or opportunities to improve the financial bottom line by reducing socio-ecological externalities. | Managers and stakeholders identify problems or opportunities to improve various forms of socio-ecological well-being. |
| 2. Develop alternative responses: (i) do nothing (ii) programmed (iii) non-programmed |
Ensure that financial benefits outweigh financial costs. | Ensure that financial benefits outweigh total costs. | Ensure that overall well-being of stakeholders is enhanced. |
| 3. Choose appropriate alternative • Based on available knowledge • Agreement on aims and means |
• Emphasize explicit knowledge and idea that certainty is possible • Seek conformity |
• Balance tacit knowledge and explicit knowledge • Seek conformity, with some variation |
• Celebrate diversity • Balance tacit knowledge and explicit knowledge |
| 4. Implement choice • Overcome resistance • Get feedback |
• Via selective participation • Potentially escalate commitment |
• Via moderate participation • Accept experimentation |
• Via extensive participation • Embrace experimentation |
| Entrepreneurship implications |
The four-step decision-making model and transaction cost theory can help entrepreneurs decide in make-or-buy choices. | ||
Table 7.1. Relative emphases in scripts for identifying the need for a decision
| Emphasis | FBL approach | TBL approach | SET approach |
|---|---|---|---|
| Maximize financial well-being | High | High | Low |
| Reduce negative externalities | Low | Medium | High |
| Attend to external stakeholders | Low | Medium | High |
| Enhance positive externalities | Low | Low | High |
8. Formulating Strategy
| Four steps of formulating strategy | FBL | TBL | SET |
|---|---|---|---|
| 1. Establish the organization’s mission and vision | • financial well-being • acquisitive economics • competitiveness • top-down process |
The TBL approach is consistent with FBL practices, unless there is a business case that supports adopting SET practices. | • socio-ecological well-being • sustenance economics • collaborativeness • multi-stakeholder input |
| 2. Analyze internal strengths and weakness • valuable • rare • inimitable • non-substitutable |
Prefer resources that enable organizations to enhance • financial well-being • revenue • monopoly power • competitiveness |
Prefer resources that enable organizations to enhance • socio-ecological well-being • opportunities to help others • opportunities to teach others • collaboration |
|
| 3. Analyze external opportunities and threats • supplier power • customer power • substitutes • threat of entrants • intensity of rivalry |
Prefer industries where the firms have • power over suppliers • power over customer • no substitutes • high entry barriers • no competitors |
Prefer industries where firms have opportunities to • empower suppliers • empower customers • promote holistic substitutes • lower entry barriers for SET • collaborate with others |
|
| 4. Choose and develop strategy • generic strategies • strategies for diversified organizations |
• cost leader vs. differentiator • star, cash cow, question mark, pet |
• minimizer vs. transformer • sustainability hero, fragile player, innocent bystander, lavish actor |
|
| Entrepreneurial mission and vision | Establish organizations with a primary mission to enhance financial well-being. | Establish organizations with a primary mission to enhance social and ecological well-being. |
Table 8.1. Nine common ideas in mission statements
| Ideas | Examples of what mission statement might say |
|---|---|
| Product, services offered | banking services, game apps, fresh vegetables |
| Customers served | university students, seniors, millennials, basketball fans |
| Self-concept | a distinctive competency or competitive edge, such as safest, fastest, environmentally friendliest |
| Survival, growth, profitability targets | stable, rapid, cautious |
| Employees | go-getters, diverse, engineers, long-term, treated with dignity |
| Markets and regions of operation | local community, city, region, national, global |
| Philosophy and values | customer is always right, shareholder is #1, triple bottom line, social justice, ecological well-being |
| Technology used | high-tech, low-tech, hands-on, affordable |
| Public image | socially responsible, environmentally friendly, local, leader in international marketplace |
Table 8.2. Six recommended hallmarks of vision statements
| Hallmark | Example/Description |
|---|---|
| Future oriented | By 2030, we will be . . . |
| Inspiring, idealistic | We will be the world leader, most-admired . . . |
| Challenging | Grow tenfold, reduce GHG emissions by 90 percent from 2018 levels |
| Brief | Preferably no more than thirty words |
| Clear | Can be understood without rereading |
| Stable | Does not need to be changed or updated annually |
Table 8.3. Three management approaches to mission and vision statements
| FBL | TBL | SET | |
|---|---|---|---|
| Emphasis in content of statements | financial bottom line; acquisitive economics | triple bottom line; mostly acquisitive economics | socio-ecological well-being; sustenance economics |
| Strategic orientation | competitive | mostly competitive | collaborative |
| Process for developing statements; key participants | top-down; top management team | mostly top-down; key stakeholders | broad participation; many stakeholders |
9. Implementing Strategy
| Four Steps to Implement Strategy | FBL (Financial Bottom Line) | TBL (Triple Bottom Line) | SET (Social and Ecological Thought) |
|---|---|---|---|
| 1. Develop operational goals | SMART goals: Specific Measurable Achievable Results based Time specific |
A TBL approach is consistent with FBL practices, unless there is a business case that supports the adoption of SET practices. | SMART 2.0 goals: Significant Meaningful Agreed upon Relevant Timely |
| 2. Develop operational plans | • Developed by managers • Ignore externalities |
• Involve all stakeholders • Incorporate externalities |
|
| 3. Implement and monitor goals/plans | Managers ensure that plans are followed, goals are met, and scripts are functional. | Managers work with stakeholders to ensure that plans are followed, goals are met, and scripts are functional. | |
| 4. Learn from the strategy in action | • Tendency to emphasize top-down learning | • Tendency to emphasize bottom-up learning | |
| Entrepreneurship implications |
Stakeholder mapping can help entrepreneurs to better understand and navigate the changing relationships with their stakeholders over time. | ||
Table 9.1. Five characteristics of SMART goals (associated with FBL management)
| Characteristic | Description |
|---|---|
| Specific | The goal is precise regarding what is to be accomplished. |
| Measurable | The goal’s accomplishment can be assessed objectively. |
| Achievable | The goal is challenging but within reach. |
| Results-Based | The goal has clear, demonstrable outcomes. |
| Time-Specific | The goal has a time by which it is to be accomplished. |
Table 9.2. Five characteristics of SMART 2.0 goals (SET management)
| Characteristic | Description |
|---|---|
| Significant | The goal is challenging and engaging. |
| Meaningful | The goal has meaning beyond simply maximizing productivity. |
| Agreed-upon | Members participate in developing their own goals. |
| Relevant | The goal is linked to important issues for a variety of stakeholders. |
| Time-Specific | The goal is appropriate for the times and situation. |
Table 9.3. Checklist for making a plan
| Steps |
|---|
| 1. Describe exactly what steps and actions are necessary to meet your goal(s). |
| 2. Identify possible constraints and factors that may make it difficult to put your plan into action. |
| 3. Identify what resources (e.g., material, financial, time) are necessary to perform the activities. |
| 4. Ensure that the required resources are available (this includes acquiring resources you don’t already have). |
| 5. Determine the order, timing, and milestones for each action to be performed. |
Table 9.4. Checklist for making a plan to develop a new ice cream flavor
| 1. Required steps and actions | 2. Possible constraints and challenges | 3. Required resources | 4. Steps to ensure availability of resources | 5. Order and timing of steps |
|---|---|---|---|---|
| Develop recipes to create new flavors | Lack of necessary ingredients to make new (tasty) flavors | Gain access to required ingredients a kitchen | Use money to buy new ingredients; reserve a time in the kitchen | Step 3: Assume this will take 2 weeks |
| Do taste tests with public to choose the new flavor | Unpopular flavors may tarnish firm’s reputation | Find people willing to be taste testers | Rent a “taste test table” at a public event | Step 2: May need to arrange a month or more ahead of time |
| Find name for new flavor | Someone else owns patent to the name | Do a patent check | Organize a “Name That Flavor” contest and offer a prize | Step 1: Announce contest 2 months in advance to build anticipation |
| Standardize recipe for making in bulk | Recipe may require several variations, in case some ingredients are unavailable year-round | Schedule kitchen time to make large batches | Ensure proper equipment is available (e.g., for cooling, stirring, storing) | Step 5: Assume that this step will take 1 week |
| Access ingredients in bulk | Some ingredients may not be available in bulk | Find the best suppliers | Ensure all ingredients are in stock | Step 4: Ensure 3 weeks’ lead time to account for delivery time |
| Make appropriate quantities | Possible short shelf life and low demand | Acquire containers, freezer space | Ensure proper equipment is available | Step 6: Enjoy! |
Table 9.5. Case studies describing Honda’s success in the US motorcycle market
| As described in Harvard Business School case (consistent with the content school) | As described by the managers from Honda involved in entering the US market (consistent with the process school) |
|---|---|
| Establish vision: The vision of Honda’s top management team was to be #1 in the US market. | Establish vision: The managers who oversaw the process said that Honda’s goal at that time was to “sell something” in the US market. |
| Perform SWOT analysis: Honda’s competitors were focusing on the “black-leather-jacket” market; in contrast, Honda saw an opportunity to target “everyday Americans” via its smaller motorcycle sold in Japan, which offered economies of scale in production (a strength). | Perform SWOT analysis: Honda had enjoyed success winning motorcycle races (strength), and managers thought there was an opportunity to compete against the large muscle bikes in the US market. A threat was that the market already had established competitors. A weakness became evident when Honda’s big bikes initially broke down in the United States (from being driven over much longer distances than in Japan), a problem eventually solved by its engineers (a strength). |
| Choose strategy: Honda managers adopted a cost leadership strategy that took advantage of Honda’s lower costs and economies of scale in making smaller bikes, and chose to focus this strategy on the untapped market of “everyday Americans.” | Choose strategy: Honda’s intended strategy was to compete head-to-head with Harley-Davidson by selling large bikes to black-leather-jacket customers. When the retailer Sears expressed interest in selling the smaller bikes that Honda employees had brought along for their own travel, Honda said it wasn’t interested (it didn’t want to tarnish its reputation among black-leather-jacket riders by placing such a small bike on the market). |
| Implement: With a well-designed strategy, Honda developed appropriate operational goals and plans, and became the industry leader within four years of entering the US market. During that same period, Harley-Davidson fell from #1 to #4. | Implement: Honda’s original strategy failed badly owing to its big bikes breaking down, bike shops not embracing the Honda product, and lack of interest among American black-leather-jacket bikers. Desperate to generate sales and cash flow, Honda’s salespeople began to sell the smaller lightweight bikes. Seeing the potential in this emergent strategy, Honda adopted the slogan “You meet the nicest people on a Honda” on the advice of its US team (even though the president of Honda was personally opposed to the idea) (see Pascale 1984). |
10. Fundamentals of Organizing
| FBL | TBL | SET | |
|---|---|---|---|
| Organizing Ensuring that tasks have been assigned and a structure of relationships created that facilitates meeting organizational goals |
Emphasizes • the content of organizing • rational competencies • the individual level of analysis |
Emphasizes • the content (sometimes process) of organizing • rational (sometimes relational) competencies • the individual (sometimes group) level • stakeholders inside the organization (and sometimes external) |
Emphasizes • the process of organizing • relational competencies • the team/group level of analysis |
| Fundamental 1 Ensure work activities are designed to be completed in the best way for the organization |
Standardization Determining the extent of uniform practices for organizational members to follow in doing their job |
Enlightened standardization Standardization, coupled with experimentation when it is profitable |
Experimentation Implementing new and possibly better ways of performing tasks on an ongoing trial basis |
| Fundamental 2 Ensure tasks assigned to members are the ones required to fulfill the work of the organization |
Specialization Selecting subsets of standardized organizational tasks and allocating them into separate jobs |
Enlightened specialization Specialization, coupled with sensitization when it is profitable |
Sensitization Attending to and improving how tasks fit with those of co-workers and others |
| Fundamental 3 Ensure orderly deference among members |
Centralization Determining the extent to which decision-making authority is atop the hierarchy |
Enlightened centralization Centralization, coupled with dignification when it is profitable | Dignification Treating everyone with dignity and respect in community |
| Fundamental 4 Ensure members work together harmoniously |
Departmentalization Determining how members and resources are grouped together to achieve the work of the larger organization |
Enlightened departmentalization Departmentalization, coupled with participation when it is profitable | Participation Emphasizing mutual discernment; giving stakeholders a voice in the organization and how jobs are performed |
| Entrepreneurial implications | The uncertain nature of start-ups tends to make them less developed in terms of an FBL approach, and more likely to adopt a SET approach. | ||
Table 10.1. Three management approaches to ensuring work activities are completed in the best way
| FBL | TBL | SET |
|---|---|---|
| Standardization: Developing uniform practices for organizational members to follow in doing their jobs |
Enlightened standardization: A variation of FBL standardization that embraces SET experimentation when it profitably reduces negative socio-ecological externalities |
Experimentation: Members’ ongoing voluntary implementation of new and possibly better ways of performing tasks on a trial basis |
| Each of the three management approaches place some emphasis on both standardization and experimentation. The key difference is in their relative emphasis on each. | ||
Table 10.2. Three management approaches to second fundamental of organizing: Ensuring appropriate tasks are assigned to members
| FBL | TBL | SET |
|---|---|---|
| Specialization: Selecting subsets of standardized organizational tasks and allocating them to separate jobs. |
Enlightened specialization: A variation of FBL specialization that embraces SET sensitization in instances where it profitably reduces negative socio-ecological externalities. |
Sensitization: Members actively being aware of how their work fits with co-workers and others and improving practices via experiments that take advantage of opportunities of address needs. |
| Note that each of the three approaches to management has some emphasis on both specialization and sensitization; the key difference is in their relative emphasis on each. | ||
Table 10.3. Three management approaches to ensuring orderly deference among members
| FBL | TBL | SET |
|---|---|---|
| Centralization: The extent to which decision-making authority resides atop the organization's hierarchy. |
Englightened centralization: Variation of FBL centralization that embraces SET dignification on a piecemeal basis when it profitably reduces negative socio-ecological externalities. |
Dignification: Treating everyone with dignity and respect in community. |
| Note that each of the three approaches to management has some emphasis on both centralization and dignification; the key difference is in their relative emphasis on each. | ||
Table 10.4. Three management approaches to ensuring members work together harmoniously
| FBL | TBL | SET |
|---|---|---|
| Departmentalization: How members and resources are grouped together to achieve the work of the larger organization. |
Enlightened departmentalization: A variation of FBL departmentalization that embraces SET participation when it profitably reduces negative socio-ecological externalities. |
Participation: Mutual discernment and giving stakeholders a voice in how the organization is managed and how jobs are performed. |
| Note that each of the three approaches to management has some emphasis on both departmentalization and participation; the key difference is in their relative emphasis on each. | ||
11. Organization Design
| Four generic types of organization design | FBL | TBL | SET |
|---|---|---|---|
| Examples | |||
| 1. Simple type Structure: familial Culture: clan Environment: harsh Technology: craft Strategy: focus |
Amway | Botanical PaperWorks | Greyston Bakery |
| 2. Defender type Structure: programmed Culture: hierarchy Environment: barren Technology: routine Strategy: cost leader/minimizer |
garment factories in Bangladesh | Everlane | Taylor Guitars |
| 3. Prospector type Structure: pioneer Culture: adhocracy Environment: prolific Technology: non-routine Strategy: differentiator/transformer |
Apple | Tesla | MAD Travel |
| 4. Analyzer type Structure: outreach Culture: market Environment: oasis Technology: engineering Strategy: dual/compounder |
Goldman Sachs | 3M | Habitat for Humanity |
| Entrepreneurial implications | Start-ups are most likely to have a simple or a prospector organization design type. | ||
12. Human Resource Management
| Four Components of Human Resource Management | FBL (Financial Bottom Line) | TBL (Triple Bottom Line) | SET (Social and Ecological Thought) |
|---|---|---|---|
| 1. Job analysis and design Identify tasks that need to be done |
• Use input from human resource staff and current jobholders • Focus on individual jobs • Emphasize efficiency |
A TBL approach is consistent with FBL practices, unless there is a business case supporting the adoption of SET practices. | • Use input from multiple stakeholders • Focus on workgroup/team • Emphasize meaningful work |
| 2. Staffing Get the right people to join the organization |
• Recruit from traditional applicant pools • Base selection on fit with individual jobs • Use input of managers |
• Recruit from chronically underemployed pools • Base selection on fit with team and job requirements • Use input of co-workers |
|
| 3. Training and development Prepare and improve the abilities of members |
• Maximize the organization’s financial benefits of training and minimize its costs • Emphasize the development of individuals most likely to enhance the organization’s future financial well-being |
• Provide training as a long-term investment to promote community’s overall well-being • Emphasize group-focused training and development, with an emphasis on enhancing socio-ecological well-being |
|
| 4. Performance management Measure performance and provide rewards for people |
• Use administrative appraisals to reward employees • Top-down emphasis • Recognize individual performance, and reinforce independence via individual rewards • Focus on financial rewards |
• Use developmental appraisals to provide constructive feedback • Bottom-up emphasis • Recognize collective performance, and reinforce community via group-based rewards • Address income inequality, value non-financial rewards |
|
| Entrepreneurship | HRM work may be outsourced when start-ups lack adequate expertise | ||
Table 12.1. Examples of legal and illegal questions in the selection process
| Issue | Illegal Question | Legal Question |
|---|---|---|
| Origin | Are you a citizen of this country? | Are you authorized to work in this country? |
| Family/Travel | Are you married? | Are you willing to travel? |
| Age | How old are you? | Are you over 18? |
| Disability | Do you have any disabilities? | Can you perform [a specific task]? |
| Background | What is your religion | What is your past work experience? |
Table 12.2. Common rater biases that cause errors in making performance appraisals
| Bias | Description |
|---|---|
| Leniency | Giving higher-than-deserved ratings |
| Halo/horn effects | Using one piece of known information about a person (good or bad) to influence the rating of the person on unknown information |
| Representativeness | Allowing one prominent trait or impression to stereotype the employee |
| Availability | Relying on memorable information (dramatic or recent) to make overall judgments |
| Attribution errors | Attributing poor performance to the person without giving adequate regard for situational factors beyond the person’s control |
| Anchoring and adjustment effects | Failing to sufficiently adjust a judgment from an initial impression (i.e., an anchor), even in the face of contrary evidence |
13. Organizational Change
| FBL | TBL | SET | |
|---|---|---|---|
| Types of change (four-phase change process) | Change varies based on scope (transformational versus incremental), preparedness (proactive versus reactive), and source (innovative versus imitative) | ||
| Phase 1 Recognize the need/opportunity for change |
Recognize the need to unfreeze: Managers recognize a need/opportunity, and develop a vision to address it | Recognize a good time to unfreeze: Members recognize and discuss a TBL-based need/opportunity for change | Recognize the need to freeze (press the “pause” button); Invite members to critically reflect on ongoing activities |
| Phase 2 Prepare for change |
Begin unfreezing: Managers convince members to embrace the change by overcoming resistance to change | Begin unfreezing: Involve members in developing a vision for change; enhances commitment | Praxis: Invite experimental activities to address a problem/ opportunity |
| Phase 3 Make the change |
Transition: Managers use their authority to design and implement organizational changes | Transition: Managers lead members in designing and implementing organizational changes | Transition: Members reflect on praxis experiments which prompts them to change their world view |
| Phase 4 Safeguard the change |
Refreeze: Managers promote social norms and develop structures and systems that reinforce and reward members who support change | Re-slush: Managers support structures and systems that facilitate continuous learning and celebrate improvement | Resume: Implement desired changes (i.e., press the “play” button) and resume adaptive improvisation and learning |
| Intrapreneurial implications | The tools of organizational change, alongside strategic management and organization design, are key to intrapreneurship. | ||
Table 13.1. Influence tactics to prepare members for change
| Pressure | Introduce or suggest threats or negative consequences |
| Exchange | Indicate willingness to reciprocate or share benefits |
| Coalition tactics | Appeal to the buy-in of others (e.g., a third party) in attempt to persuade |
| Ingratiation | Use praise, flattery, or friendly behavior before making a request |
| Rational persuasion | Use logical arguments and factual evidence |
| Personal appeal | Appeal to feelings of loyalty or friendship |
| Inspirational appeal | Arouse enthusiasm by appealing to values, ideals, aspirations |
| Legitimizing tactics | Appeal to an agreed-upon authority (e.g., a vision/mission/founder) |
| Consultation | Involve others in planning or formulating an idea or strategy |
| Praxis | Encourage practical action and critical reflection by members |
14. Motivation
| FBL | TBL | SET | |
|---|---|---|---|
| Innate Bases of Motivation | |||
| 1. Personality traits | Matches members’ personality traits to specific types of jobs in order to improve productivity | A TBL approach is consistent with FBL practices, unless there is a business case supporting the adoption of SET practices. | Identifies personality traits associated with being motivated to work for socio-ecological well-being |
| 2. Innate needs • Existence • Relatedness • growth |
• Pay a primary motivator • Focus on individuals |
• Growth a primary motivator • Focus on community |
|
| Acquired Bases of Motivation | |||
| 1. Desire for accomplishment • Goal setting • Expectancy • Instrumentality • Valence • Reinforcements |
Achievement (extrinsic) • SMART goals • “I can do it” (self-efficacy) • “What’s in it for me? • “The reward is dear to me” • Emphasis on financial rewards for individuals |
Significance (intrinsic) • SMART 2.0 goals • “We can do it” (group) • “What's in it for everyone?” • “The reward is dear to us” • Emphasis on overall well-being for community |
|
| 2. Desire for fairness | Equity • Treat members equitably |
Justice • Treat stakeholders justly |
|
| 3. Desire for relationships | Affiliation • An exchange-based view that values affiliation and instrumental benefits |
Community • A view that values contributing to a caring community |
|
| 4. Desire for power | Opportunity to gain power to get ahead | Responsibility to others via use and sharing of power | |
15. Leadership
| FBL | TBL | SET | |
|---|---|---|---|
| Big Five personality traits • Conscientiousness • Agreeableness • Extraversion • Emotional stability • Openness to experience |
Emphasis on how Big Five traits can help leaders to maximize organizational financial well-being. | A TBL approach is consistent with FBL practices, unless there is a business case that supports the adoption of SET practices. | Emphasis on how Big Five traits can help leaders to optimize socio-ecological well-being, while ensuring adequate organizational financial well-being. |
| Four leadership behaviors 1. Task-oriented (initiate structure, contingent rewards) 2. Relationship-oriented (consideration) 3. Change-oriented (transformation, servant) 4. Avoidance |
• Focus on organizational efficiency/productivity • Focus on instrumental relationships (motivating productivity) • Focus on achieving organizational goals • Do not avoid leading |
• Include socio-ecological externalities with organizational operations • Focus on community, belongingness, meaning • Focus on anticipating and serving stakeholder needs • Do not avoid leading |
|
| Leadership contingencies • Follower competence and commitment • Environmental stability • Workgroup diversity • Stage of change • Organization culture/design • Shared leadership |
Emphasis on how leaders should respond to contingencies in order to maximize organizational financial well-being. | Emphasis on how leaders should respond to contingencies in order to optimize socio-ecological well-being, while maintaining adequate financial well-being. | |
| Entrepreneurship implications | Shared leadership is of particular relevance for the leadership challenges facing entrepreneurs. | ||
Table 15.1. Personality traits and measures of effective leadership
| Leadership effectiveness (%) | Satisfaction with leader (%) | Group performance (%) | Average (%) | |
|---|---|---|---|---|
| Conscientiousness | 5.9 | 0.9 (negative) | 8.6 | 5.0 |
| Agreeableness | 0.2 | 4.9 | 3.1 | 2.7 |
| Extraversion | 7.7 | 0.0 | 0.0 | 2.6 |
| Openness to experience | 2.9 | 0.1 | 1.0 | 1.3 |
| Overall variance explained by the Big Five combined | 19.8 | 6.0 | 13.8 | 13.2 |
Table 15.2. Main types of leadership behaviors
| Task-oriented behaviors · Plan, organize, and coordinate work activities; establish goals and standards for tasks · Organize tasks into jobs and roles · Explain tasks and standards, and priorities regarding task objectives · Monitor activities · Ensure tasks are performed efficiently and reliably · Develop and follow systems that motivate and encourage members to meet standards |
| Relationship-oriented behaviors · Build social connections with members · Recognize members for their accomplishments and contributions · Encourage cooperation and mutual trust among group members · Build group identity using stories, symbols, and rituals · Express confidence and support for members, especially those facing difficult tasks · Manage conflicts constructively · Inform, consult with, and empower members regarding decisions affecting them |
| Change-oriented behaviors · Engage in strategic planning, especially developing a new vision and performing SWOT analyses · Engage in change management, especially recognizing need/opportunity for change and preparing for change · Encourage, announce, facilitate, and celebrate the implementation of change · Model intrapreneurship |
| Avoidance/non-leadership behaviors · Exhibit passive indifference to followers and to the task · Ignore problems and follower needs · Avoid engaging in task-, relationship-, or change-oriented leadership behaviors |
Table 15.3. Leadership behaviors and measures of effective leadership
| Leadership behaviors | Leadership effectiveness (%) | Satisfaction with leader (%) | Group performance (%) | Average (%) |
|---|---|---|---|---|
| Task-oriented · initiating structure · contingent rewards |
14.3 6.1 8.2 |
11.8 3.4 8.4 |
8.4 6.6 1.8 |
11.4 5.3 6.1 |
| Relationship-oriented (consideration) | 9.2 | 31.4 | 3.3 | 14.6 |
| Change-oriented · transformational · servant/active management-by-exception[3] |
12.1 10.7 1.4 |
16.2 13.9 2.3 |
6.8 5.7 1.1 |
11.7 10.1 1.6 |
| Avoidance · laissez faire · passive management-by-exception |
11.5 (negative) 10.4 (negative) 1.1 (negative) |
10.6 (negative) 10.2 (negative) 0.4 (negative) |
1.5 (negative) unknown 1.5 (negative) |
7.9 6.9 1.0 |
| Overall variance explained by four types of behavior | 47 | 70 | 20 | 46 |
16. Groups and Teams
| FBL | TBL | SET | |
|---|---|---|---|
| Types of teams | Permanent vs. project; hierarchically vs. self-managed; functional vs. cross-functional; co-located vs. virtual |
||
| Stage 1: Forming Team is created |
• Describe how team goals fit within the larger organization • Focus on task cohesion more than social cohesion • Draw attention to team boundaries and competitors |
A TBL approach is consistent with FBL practices, unless there is a business case that supports the adoption of SET practices. | • Describe how team goals fit with rest of organization and the socio-ecological realm • Focus on social cohesion more than on task cohesion • Draw attention to team boundaries and cooperation |
| Stage 2: Storming Conflict occurs |
Embrace moderate task conflict but avoid relationship conflict | Embrace moderate task conflict and relationship conflict | |
| Stage 3: Norming Ways of working together are established |
Reinforce suitable norms via • information sharing on task goals • introducing systems to minimize free riding |
Reinforce suitable norms via • information sharing on task and socio-ecological goals • introducing ways to enhance consistent contributing |
|
| Stage 4: Performing Team excels |
Emphasize extrinsic reinforcers, often for members individually | Emphasize intrinsic reinforcers, typically for the team collectively | |
| Entrepreneurial implications | Entrepreneurs can benefit from knowing their own and other members’ preferred conflict management styles. | ||
Table 16.1. Typical characteristics of groups and teams
| Group | Team |
|---|---|
| Typically informal | Typically part of formal hierarchy |
| Members share common interests | Members work interdependently to achieve shared task-oriented goals |
| Small or large in size | Generally small in size |
Table 16.2. Stages of team development
| Realm | Forming | Storming | Norming | Performing |
|---|---|---|---|---|
| Relational • Personal • Group |
• Will I be accepted? • What will the group norms be? |
• Can I accept and trust others? • Can I shape team norms to suit my values/interests? |
• Are my skills and I valued? • Are all members and their skills valued? |
• Do I find meaning/ belongingness? • Is the team a cooperative community? |
| Task • Aims • Means |
• What is the team purpose? • What will I/we do to achieve it? |
• Can I commit to our goal? • How does my role fit with others’ roles? |
• Do we embrace a shared vision? • Do the tasks and roles align? |
• Is there agreement and commitment? • Is there excellent teamwork? |
| Key behaviors for team leaders | • Welcome and help members get to know each other. • Describe work of team and different roles on it. |
• Model tolerance for conflict but not for bullying. • Model listening and learning |
• Reinforce positive norms; facilitate self-management • Ensure information and workload are shared properly |
• Nurture a supporting community • Provide positive reinforcement for team performance. |
17. Communication
| Communication Process (Four Parts) | FBL | TBL | SET |
|---|---|---|---|
| Identify your message: • Content of message • Perspective • Directionality |
Focus on ideas that will enhance productivity: • Task-oriented knowledge transfer to enhance profit • Management; one voice • “Sell” ideas to receivers |
A TBL approach is consistent with FBL practices, unless there is a business case supporting the adoption of SET practices. | Focus on ideas that improve various forms of well-being: • Information and stories to build community; enhance ecological well-being • Multiple stakeholders/ voices; dialogue • Welcome ideas from others |
| Encode and transmit the message: • Potential barriers • Media |
Based on analysis of barriers, available media, and channels • Reduce noise and distractions from financial well-being • Prefer lean media (low cost) |
Based on analysis of barriers, available media, and channels: • Reduce noise but welcome information about externalities • Prefer rich media (face-to-face) |
|
| Receive and decode message: • Perception bias • Level of analysis |
Overcome barriers in media and channels: • “Tune out” non-instrumental ideas • As individuals |
Emphasis on managers listening to subordinates: • “Tune in” diversity, socio-ecological well-being • As a community |
|
| Information flow from receiver to sender | Feedback: Confirm whether message was understood as intended | Feedforward: Recognize that past communications provide basis for future messages | |
| Entrepreneurship implications | Developing the story of a new start-up can help to attract stakeholders and provide a context for members’ communications. | ||
Table 17.1. Hallmarks of active and poor listening
| Active listening | Poor listening |
|---|---|
| • attend to both verbal and nonverbal messages • keep an open mind, assimilate information • make good eye contact, nod, mirror body language • provide feedback, paraphrase message, clarify |
• allow mind to wander, think of what to say next • prejudge what a person will say; impatient • be easily distracted (e.g., start multi-tasking) • assume message is understood as intended |
18. Control
| Four steps of control | FBL | TBL | SET |
|---|---|---|---|
| 1. Establish performance standards |
Use value chains help to identify key control points and standards (profitability, efficiency, productivity, quality) |
A TBL approach is consistent with FBL practices, unless there is a business case that supports the adoption of SET practices. | Use value loops help to identify key performance standards (living wage, zero GHG emissions, hire people facing multiple barriers) |
| 2. Monitor performance | Use top-down information systems, especially accounting | Use bottom-up information systems, all the SET business functions | |
| 3. Evaluate performance | Use top-down approach: rational, quantitative | Multiple stakeholders: relational, qualitative |
|
| 4. Respond accordingly | Managers take action, focus on shareholders | Managers draw on and trust others, may reinvent business functions | |
| Entrepreneurial implications | Attend to founder effects and to post–start-up decisions about ownership and possible delegation of control process. | ||
Table 18.1. Illustrative FBL performance standards from select business functions
| Business function | Feedforward control |
Concurrent control | Feedback control |
|---|---|---|---|
| Supply chain management | • low-cost purchasing • dependable quality • stable relationship |
• low-cost delivery • dependable delivery |
|
| Human resource management | • strong applicant pool | • effective training and development programs • routine performance appraisal • satisfactory compensation |
• low employee turnover |
| Finance and accounting | • available financing • cost of capital |
• per-unit costs | • net profit |
| Operations management | • quality control • on-time production • minimize inventory |
• low return rates | |
| Marketing | • awareness of consumer market trends | • sales • market share • customer satisfaction/ loyalty |
Table 18.2. Illustrative SET performance standards
| Business function | Feedforward control |
Concurrent control | Feedback control |
|---|---|---|---|
| Supply chain management | • practice social procurement • monitor suppliers (& suppliers’ suppliers) externalities for - pollution/waste - GHG emissions - local - organic - ESG score - B Corp |
• monitor distribution practices: - pollution/waste - GHG emissions |
|
| Human resource management | • monitor suppliers (& suppliers’ suppliers) externalities: - pay living wage - hire multi-barriered employees - provide life-skills training |
• pay living wage • hire multi-barriered employees • provide life-skills training • treat employees with dignity |
• promote work-life balance • offer job security • offer paid time to volunteer in community |
| Finance and accounting | • attract SET-minded investors • foster local multiplier effect |
• account for externalities: - in financial statements/reports - when calculating - inputs - conversion processes - outputs |
• seek genuine profit • inspire/enable other firms to relax need to maximize profits |
| Operations management | • reduce genuine costs (i.e., take externalities into account) | • ensure products are: - easy to use - easy to repair, - cradle-to-cradle product design |
|
| Marketing | • be aware of unmet needs in the market | • improve clients’ quality of life (meet needs vs. merely wants) • de-commodify products • practice transparency • minimize GHG emission in use and post-use • foster community |
Table 18.3. Comparison of approaches to primary human resource management activities
| FBL | TBL | SET | |
|---|---|---|---|
| Inputs Job analysis and staffing |
HRM professionals (a) identify the knowledge, skills, abilities, and other characteristics (KSAOs) that an organization needs; then (b) recruit and select members who have the desired KSAOs. | A TBL approach is consistent with FBL practices, unless there is a business case that supports the adoption of SET practices. |
A SET approach is more likely to develop KSAOs for teams (rather than individuals) and to gather input from team members and other stakeholders (customers, other departments in the organization), rather than rely on HRM professionals. A SET approach is also more likely to recruit members from groups who are chronically underemployed. |
| Conversion process Training, development, motivation |
Organization provides members with appropriate opportunities for job-based training and development. | Organization provides members with job-based and beyond-job-based training and development (e.g., SET manager may pay for employees’ schooling even when it does not develop a specific KSAO for the firm[5]). | |
| Outputs Performance appraisals, compensation |
HRM professionals set up and carry out performance appraisals linked to compensation systems (includes salary and benefits). | Employee performance appraisals are designed to stimulate members’ growth and development, rather than merely used to decide on pay raises and promotions. Compensation packages seek to minimize the differences between hierarchical levels (income inequality) and to pay above-industry-level wages for lower-paid positions.[4] |
Table 18.4. Comparison of approaches to the four axioms of finance
| Axiom | FBL | TBL | SET |
|---|---|---|---|
| Inputs The risk-return trade-off |
Investors will accept extra financial risk only if there is a higher potential financial payoff. | A TBL approach is consistent with FBL practices, unless there is a business case that supports the adoption of SET practices. | Investors will accept additional risk if they expect higher non-financial returns (e.g., if the investment enhances socio-ecological well-being). |
| Inputs The time value of money |
A dollar available today is more valuable than a dollar available in the future, because the dollar available today can collect interest or be invested in a profitable project, thereby making it worth more in the future. | A dollar spent today on a worthwhile cause is worth more than a dollar available in the future because the dollar spent today can save a life that would be gone tomorrow, or provide employment for someone who needs a job and wants to become a contributing member of society (“a stitch in time saves nine”). | |
| Outputs The challenge of markets |
Because of the competitive dynamics inherent in a well-functioning and efficient financial marketplace, earning exceptional financial returns can only be accomplished by achieving a sustainable competitive advantage and/or a monopoly. | Because of the cooperative dynamics inherent in a well-functioning and holistic market, any member who takes exceptional financial returns and creates dysfunctional income inequality is seen as threatening community well-being and frowned upon.[6] (Recall that the original idea of a market was a place where members of a community would gather, visit, and arrange to buy and sell goods and services.) | |
| Outputs The challenge of agency (managers as agents acting on behalf of owners) |
Agency problem: Because they are not owners, managers will be tempted to act in their own self-interests rather than to maximize the owners’ financial interests. Compensation packages should align managers’ financial self-interests with those of owners. | Agency solution: Because managers (unlike typical owners) have a daily involvement in the firm, they may thus be more sensitive and can be more responsive to employees, suppliers, customers, neighbors, the environment, and so on. |
Table 18.5. Comparison of approaches to basic assumptions underpinning GAAP
| Assumption | FBL | TBL | SET |
|---|---|---|---|
| Entity What unit of analysis is being held accountable? |
The entity is the organization, narrowly defined as an individual unit clearly separated from its owners, members, and society. | A TBL approach is consistent with FBL practices, unless there is a business case that supports the adoption of SET practices. | The entity is the organization, broadly defined as a multifaceted entity intimately connected with its owners, members, and society. |
| Unit of measure What is the firm held accountable for? |
The unit of measure is money, and the organization is accountable to maximize its financial well-being (i.e., its assets minus its liabilities). | There are multiple measures (e.g., money, neighborliness, ecological footprint, providing meaningful work), and the firm is accountable to balance multiple forms of well-being for multiple stakeholders. | |
| Periodic reporting How often is accounting information presented? |
Reporting is according to calendar time (linear, quarterly, annual), serving the interests of short-term investors. | Reporting takes into account the natural rhythms and seasons of organizational life, serving the interests of long-term stakeholders. | |
| Going concern assumption What criteria are used to decide whether an entity is viable? |
The assessment of whether an organization is a financially viable “going concern” (i) has a short-term time horizon (one year) (ii) focuses on financial measures and (iii) is at the level of analysis of the single entity (ignoring non-financial externalities). |
The assessment of whether an organization is a holistically sustainable “going concern” (i) has a long-term time horizon (e.g., considers future generations); (ii) takes into account multiple forms of well-being; and (iii) considers the organization’s positive and negative socio-ecological externalities. |
Table 18.6. Comparison of approaches to primary supply chain management activities
| FBL | TBL | SET | |
|---|---|---|---|
| Strategic purchasing | Choose suppliers who offer the best combination of • quality inputs (e.g., they have required features and meet specific standards) • dependable delivery (e.g., on-time delivery, reliable transportation network) • price (also includes factors like just-in-time delivery) |
A TBL approach is consistent with FBL practices, unless there is a business case that supports the adoption of SET practices. | Choose suppliers who offer the best combination of • inputs that have a holistic range of qualities (including consideration of socio-ecological externalities) • dependable delivery, including sustainable transportation networks • low total costs (including externalities) |
| Inter-organizational relationships | Develop long-term relationships with suppliers that nurture • trust (increased access to supplier knowledge helps to develop products and services) • supplier confidence to make long-term investments that enhance ability to supply • stable and integrated transportation of incoming logistics (lower financial costs) |
Develop long-term relationships with suppliers that nurture • trust and healthy relationships (facilitates virtue and nurtures community) • supplier confidence to invest in environmentally friendly and socially just technologies • development of incoming logistics that take externalities into account |
Table 18.7. Comparison of approaches to the four dimensions of operations management
| FBL | TBL | SET | |
|---|---|---|---|
| Costs | Aim for the lowest financial costs to the firm. | A TBL approach is consistent with FBL practices, unless there is a business case that supports the adoption of SET practices. | Aim for the lowest total social, environmental, and financial costs, inside and outside the firm. |
| Quality | Quality is defined in terms of production design standards (i.e., minimum defects, waste, reliability) in relation to consumer market expectations. | Quality is defined in terms of functionality, durability, and serviceability in relation to people’s needs (vs. wants), and taking into after-use recyclability. | |
| Customization | Ensure that products and services can be customized or changed profitably in response to consumer demand. | Ensure that products and services are adaptable to people’s specific and changing needs (and the needs of society beyond the customer). | |
| Delivery | Deliver products/services, reliably optimizing speed and cost. | Deliver products/services reliably, optimizing social and environmental well-being. |
Table 18.8. Three approaches to the four P’s of marketing
| Four Ps | FBL | TBL | SET |
|---|---|---|---|
| Product Goods and services sold in the marketplace |
Offer products that satisfy needs or wants and have maximum consumer market demand (or potential). | A TBL approach is consistent with FBL practices, unless there is a business case that supports the adoption of SET practices | Offer products that focus on meeting needs rather than wants, and on creating positive socio-ecological externalities. |
| Price The amount of money paid for a product |
Set the highest price customers will pay.[7] | Set a fair price that maximizes social and ecological well-being for all stakeholders. | |
| Place Physical and virtual marketplaces where consumers can purchase goods and services |
Place products/services where they have maximum sales potential. | Offer socio-ecologically sustainable places (e.g., energy-efficient buildings) and distribution channels (e.g., cradle-to-cradle designs), recognizing that a firm is not a self-contained unit competing with others but rather belongs to a network of stakeholders. | |
| Promotion Unified messages regarding a firm’s product and service offerings |
Develop persuasive messaging to generate maximum demand and sales. | Develop honest, transparent messaging that facilitates informed choice and voice by customers, and trust-building in the marketplace. |
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