Enews April 2018

SMR Learn & Perform E-news – April 2018

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Dear Learn & Perform subscriber:

Welcome to Learn & Perform April edition. In a world driven by Big data and Analytics and all of that, there has been an interesting case study from Harvard about the acquisition of Whole Foods by Amazon and the cultures of the two companies on a collision course.

Let us cover in the April e news:

  • The Collision of Organisational Cultures
  • Entrepreneurship Programmes at Asia Metropolitan University
  • SMR News
The Collision of Organisational Cultures

Harvard Professors Dennis Campbell and Tatiana Sandino discuss their new case study, Amazon’s acquisition of Whole Foods. It is being described as the corporate equivalent of mixing tap water with organic extra virgin olive oil. You’d be hard-pressed to find two companies with more different value propositions, they say. This was about a clash of corporate cultures was at work. It was not about who is right and who is wrong. The case study discusses the limits of trying to force one culture or management style on another organisation. This was a story about two cultures: Amazon making its name on being fast, cheap, and efficient—using data to drive its product mix and enforcing strict employee discipline to squeeze out cost savings to pass on to its customers. Whole Foods, on the other hand, was a company that always prided itself on its personal touch, empowering individual stores—even individual employees—to make decisions about products that emphasise high quality, healthy and local foods. That decentralisation, however, caused enormous inefficiencies that drove up prices to the point leading to lots of criticism. While the acquisition was initially met positively by Wall Street, with hopes that Amazon’s data-driven mindset might be just the thing to enable Whole Foods to scale up and add more stores while maintaining its employee-empowered culture. But this did not happen. Whole Foods was built on an empowerment model while Amazon was focussed on turning data into value for the customer. There is a lot more performance pressure and accountability as the Professors point out. While 85% of Amazon’s Prime members became intensely loyal to Whole Foods, the employees of Whole Foods struggled and frustrated with the new performance metrics.

The question the Professors ask in their case is: Given the pressures Amazon was facing to turn around Whole Foods’ slide, should they have approached the acquisition differently? I can understand the challenges given our recent acquisitions and the pressures of merging cultures to succeed at the bottom line. Prof Campbell says, “It’s not totally clear that data will be a perfect substitute for human judgement,” he says. “That might work in a digital platform, where you have tons of data on customer history you can use to drive a recommendation engine, but in a store environment, there is a lot of learning that takes place from employees interacting with customers that can be very localised and specific.” Prof Sandino suggests Amazon may have been better off pursuing a management concept known as structured empowerment, where a company standardises operations but allows flexibility for employees to make their own choices in key areas where having high-touch contact with customers matters. In addition, she says, Amazon might have changed its performance measures to focus more on results rather than processes, holding employees accountable for goals, but “They can make some tradeoffs and incorporate their own knowledge, rather than having to follow a recipe,” she says. That, in turn, could give them more incentive to use the data. Amazon is serving up to further drive results.

Prof Campbell stresses that the ideas in their case are speculative, based on second-hand reports in the press. They can’t be sure how much Amazon tried to integrate its culture with that of Whole Foods, or what its ultimate goal is for the acquisition.

To read the full article please visit https://hbswk.hbs.edu/item/amazon-vs-whole-foods-when-cultures-collide?cid=spmailing-20188797-WK%20Newsletter%2005-16-2018%20(1)-May%2016,%202018

Look forward to being in touch with you in May.

With Best wishes



Entrepreneurship Programmes at Asia Metropolitan University

Several entrepreneurship programmes right from short continuing education, Diploma, Bachelors, Masters and Doctorate programmes are being offered by Asia Metropolitan University. The University has several options to equip adults with the skills necessary to remain relevant in a competitive world. For more details, please email lily@smrhub.com


SMR News

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