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on August 4, 2017
Lessons like the ones presented in this book can be found in several other books by for instance Jeffrey Pfeffer himself, David Maister and Jim Collins. What makes this book different and interesting to me is the presentation in the form of detailed case descriptions.
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on December 30, 2001
This book tells the story of eight extremely successful companies that manage to bring out the best in their people. The stories are detailed descriptions of the company's backgrounds, strategies, systems and management practices. The stories are also larded with quotes from the company's CEO's, HR managers and employees. Following this approach the authors provide the readers the opportunity to form their own hypotheses about the companies' successes. But the authors also present their interpretations of the case studies.
What these studies show is how these high performing companies have achieved their success by aligning their values, strategies and people. This is something which is easy to understand but hard to do. It requires consistent articulation and implementation of the values and vision and a relentless attention to detail in ensuring that all policies and practices support the company's values. In order to be able to show this kind of consistency a real belief and commitment are needed and a willingness to persevere.
This book shows how high performing companies consciously turn a lot of the conventional management wisdom upside down. For instance:
1. Contrary to what many people now think, recruiting, selecting and retaining unique talent is NOT the prime source of competitive advantage. Although these activities are important, the examples of these extraordinary companies show that it is much more important to build a culture and work system that enables all people to use their talents and develop their talents. A byproduct of this will be that your company will also be better at attracting and retaining people.
2. Values first instead of strategies. The conventional view puts competitive strategy on top and derives from that what structure is needed, what competencies and behaviors are needed and so on. The companies described here work differently. Although they do have competitive strategies these are secondary to their set of guiding values and to the alignment of these values with their management practices. In other words: they have a values-based view of strategy.
3. Respectful and trusting way of dealing with people. Many companies monitor, check and try to control employee behavior. The hidden value companies work differently. In the spirit of Douglas McGregor's book The Human Side of Enterprise, they seem to understand that if you begin by designing systems to protect against the small unmotivated minority, you end up alienating the motivated majority. So they put their people first by treating them respectfully, involving them and trusting them.
Lessons like the ones presented in this book can be found in several other books by for instance Jeffrey Pfeffer himself, David Maister and Jim Collins. What makes this book different and interesting to me is the presentation in the form of detailed case descriptions.
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on November 7, 2010
I fully agree with the premise of the authors, namely that focusing on employee satisfaction is key to achieving business success. The problem is that you could easily bankrupt a business before it got started if you implemented all of the insanely expensive employee centered policies in this book. Knowing where to draw the line is crucial to survival.

Like so many business books, "Hidden Value" is second hand wisdom, a description by (tenured) academics describing how entrepreneurs ran successful businesses. This is fine for academic pursuits. But if you are putting your life savings (and most likely a few other things you would rather not lose) at risk in a business, "Hidden Value" is far from the last word on the subject.
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on January 27, 2012
I am really enjoying this book, and gaining great insight and ideas on what to implement within my own future business. It really does pay to provide creative incentives for employees, in my opinion. A recommended read for anyone starting their own business.
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on January 30, 2003
This book is merely a compilation of case studies. There are few -- if any -- check lists, tables, charts, bullet points, or step-by-step methodologies to help you implement the concepts within your own company or organization. In fact, THERE ARE ONLY 21 PAGES not dedicated exclusively to either a case study and/or an analysis of the various case studies presented within the book. Save your money and purchase "The HR Scorecard", "The Talent Solution", or "Aligning Pay and Results" instead. Very disappointing...
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on April 24, 2012
1.Cisco defines the company mission as follows: "Be the supplier of choice by leading all competitors in customer satisfaction, product leadership, market share, and profitability."

2.Cisco business purpose is "To shape the future of global networking by creating unprecedented opportunities and value for our customers, employees, partners, and investors."

3. A global networked business is an enterprise of any size strategically using information and communications to build a network of strong, interactive relationship, with all its key constituencies.

4.Cisco recognizes that if the company does not have the internal resources to develop a new product within six months, it must buy its way into the market or miss the window of opportunity.

5.Cisco's initial approach to acquisition would have problems. Cisco's core strategy for growth was acquisitions; and one primary purposes for acquisition was engineering talent. Retaining acquire company top management means retaining key engineers.

6.Cisco emphasizes the importance of being either number of 1 or number 2, in each segment in which they compete.

7.Cisco emphasizes reliance on empowered teams and programs to increase the speed of assimilation of the acquired company.

8.Cisco prefers to acquire companies that are much smaller than it is. Acquisitions are screen on five principles: The presence of a share vision; The right chemistry or cultural compatibility; The likelihood of a short-term win for both parties; A long-term win for all parties; and Reasonable geographic proximity.

9.In Cisco experience, excessive secrecy may signal a lack of openness and honesty. Cisco looks for how flexible the candidate company is in conversation and how widely they share equity. "We won't deal if the candidate company has aggressive vesting" of stock options, says Giancarlo. We prefer gold handcuffs, typically consisting of two year non-compete agreements with key executives and technical personnel and provision of Cisco stock options that vest over time. This technique is an effective way to retain key personnel."

10.Chambers says, "We've learned that to make acquisitions successful, you have to tell employees up front what you are going to do, because trust is everything in this business. You have go to tell them early so you don`t betray their trust later."

11.Over 70 percent of senior managers from acquired firms are still with Cisco. The senior managers stay because they now have corporate resources and back to purse their dream projects.

12. "Early if not elegant" means the goal is to ship the acquired companies product under the Cisco label by the time the deal is closed, usually within three to six months.

13.In the typical acquisition, the engineering, marketing, and sales units will be integrated into the sponsoring business unit, while human resource service, manufacturing, and distribution are merged into the Cisco infrastructure. The process has been refined to the point that is usually takes two to three months, with smaller acquisitions being competed in as few as ten days and the largest, with 1,200 employees, taking only four months.

14.Cisco uses the buddy system after acquisition, pairing each new employee with a Cisco veteran of equal stature and similar job responsibility The buddy offers personalized attention better suited to conveying the Cisco values and culture.

15. Cisco pays between $500,000 and $2 million per employee, the economic rationale for retaining these assets is clear.

16. Chambers says of his experience at IBM and Wang, "I learned at both companies that in high tech, if you don't stay ahead of trends, they'll destroy everything you work for and tragically disrupt the lives of your employees." Skills and strategy is the way to win against smarter opponents.

17. Three things can get you fired at Cisco: not producing business results, not recruiting and developing the right people, or not being a team player.

18. Cisco espouse five core values: a dedication to customer success, innovation and learning; partnerships; teamwork; and doing more with less. Chamber contacts customers each day, he says, "I want to hear the emotion, I want to hear the frustration, I want to hear the person's level of comfort with the strategy we're employing. And you can't get that through emails." 85% of Cisco customers claim they are satisfied.

19. Learn by taking a risk and learning from the failure.

20. Cisco believed meeting time to market guidelines was, the key to successfully dominating the market, they realized that Cisco needed to act like a small company from a product development point of view while retaining big-company strengths in manufacturing, distribution, and finance. All component manufacturing is outsourced, but there is centralized final assembly and test manufacturing organization. The overarching intent is to develop high value added products that offer high margins. Achieving high margins and profitability growth is key to Cisco's continual investment in technology.

21. Roger Sant and Dennis Bakke wrote a book called "Creating Abundance: America's Least-Cost Energy Strategy". The book reflected the emerging view and gave some answers to the energy crisis. The primary answer was produce services - heat, light, and power, at the lowest possible cost."

22.Sant and Bakke start AES as a provider of consulting services in the energy industry. They raise $1.3 million of their desired $3 million from Venture Capitalist. Initial investors did well. A $10,000 investment in 1982 was worth about $20 million in 1999. Eventually AES moved beyond consulting and began operating an independent power plant. The first power plant was in Houston, Texas, in 1996. AES total energy generation capacity is 24,076 Megawatts and in 1996 was the twelfth fast growing company in the US. AES operates power plants in the US, England, Northern Ireland, Wales, the Netherlands, Argentina, China, Hungary, Kazakhstan, Republic of Georgia, Canada, Brazil, Dominican Republic, Panama, Australia, India, and Pakistan.

23.The electric power generation business is both competitive and complex. However, the growth potential for independent power generation is great because most of the world does not have access to reliable electricity. In 1997, 40 percent of the world's households had no electricity.

24.There is a growing movement to privatize government-owed power generation and distribution facilities. Complexity comes from various ownership and financial arrangements. The purchasing or building a new power plant requires governmental approval and often requires two to five years to complete.

25.AES has 300 team leaders all over the globe. AES maintains a 20 percent return on investment for projects. AES is opportunistic in that is does not believe that financial capital for good investment is scarce, so the company sets no limits on how many deals it works on or completes. Team leaders make project decisions and they make the deals not senior management. Roger Sant emphasizes that people are important, they make a real difference; they don't need to be controlled; they can be depended on. Freeing up people makes them adaptable to a world of complexity and for this reason employees are faster at solving problems and recognizing opportunities while spending less money.

26.The AES management system was designed to make people happier in the way they work. Smart people produce prodigious amounts of work. Employees are willing to learn new skills and knowledge. AES was able to leverage capital by using non-recourse project financing, where debt is secured by the specific generating asset and not by the company as a whole.

27.AES strategy is about building a competitive advantage.

28.In a McKinsey survey, of the 5,679 respondents, 58 percent cited values and culture as being absolutely essential, 50 percent cited good management, 38 percent mentioned the company having exciting challenges, and 56 percent mentioned freedom and autonomy. Only 23 percent of the respondents mentioned high total compensation.

29.What good does it do to have smart, trained, informed, committed people who can't take action? It only creates frustration. Driving out fear and helping people feel secure is a central core value in all successful businesses. Implement organizational structures that permit the knowledge, skills, and insights of the firms people to be recognized and implemented. Perform depends on the degree of decentralization and delegation of decision making authority. Successful companies attract and develop talent and intellectual capital and build relationships of mutual commitment with their people. A critical core value for senior management is too organize so intellectual capital and energy can be used to affect business decisions and operations.

30.In real delegation and empowerment, people consult others from throughout the organization, including senior leadership, but in the end they make the decisions and are held accountable for their results.

31.Listen to the market and the consumer focus, hear what the consumer wants and act. Look at how the firm acts, not what it says.

32.A focus on faster growth give people a sense of purpose and direction.

33.Competitors can not imitate successful companies because the don't understand nor believe the values that are driving the successful company. It is impossible to imitate values and culture in a company without comprehensive understanding and commitment to the values and culture.

34.Senior managers should see their roles as not managing the day-to-day business or even about grand strategy, but as setting and reinforcing the vision, values, and culture of the organization.

35.Overall alignment and consistency in supporting teams, fun in learning and risk taking, rewards and recognition, widespread sharing of information, investing for people, and hiring for fit reinforce the core values of the company.

36. Organizing for teams is not a belief in a fad but from the belief that teams are fundamental in getting work done. Teams can give people a sense of purpose and a feeling of belonging. In competitive in environments is not the natural tendency for individuals to form teams. Team organization must become a value of senior management and these values must be transmitted through the organization.

37.How to attract the right talent? Design screening processes that help identify individuals that share the same values as the company and will fit with the company culture. Most companies focus on skills for a specific job. This approach meets Human Resource requirement but can prove to be disruptive to the organization; he could change the culture of the organization. People centered firms hire for how well the person will fit the company. This does not mean HR will ignore the candidates ability, but that they will consider values, additionally. The person must feel comfortable long term in the organization. Core values should include the desire to learn new things, be part of a team, and accept responsibility. By beginning with an explicit set of values and screen people against these, companies will increase their chance that people who join will share the values and culture of the organization.

38.Values drive management practices and help define strategy - the exact opposite of what conventional wisdom teaches. Values helps solve perplexing problems, keep the company moving in the right direction, and keep policies from become bureaucratic. Business practices must align with company values, this keeps inconsistency at bay.

39.Why are values important? We want to believe that our work is important and our work is making a differences to others. No one can be very motivated if they genuinely believe that what they are doing is worthless or violates their fundamental values. People want to be respected, thought or a people and not economic agents, and be around people with similar beliefs and values.

40.Why does team need to be promoted as a core value? Teamwork across groups or divisions with others whom a person see infrequently is not likely to be highly valued. In this world, status comes from getting more money and promotions, not helping customers or fellow employees. The culture emphasizes individual achievement and short-term success, not mutual obligation, trust, and loyalty. Senior management must create incentive systems to ensure teamwork occurs and loss of intellectual capital minimized, such as, Team rewards that make being part of the team attractive
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One of the greatest challenges facing organizations today is attracting and then keeping "the best and the brightest" people they can. Then, there is another great challenge to develop their talents and skills. Here is one of the best books I have read thus far which addresses the second challenge directly...and indirectly, addresses the first challenge as well (pun intended). O'Reilly and Pfeffer organize their material within a series of chapters, each of which (presented as a case history) focuses on eight exemplary companies (e.g. Cisco Systems, The Men's Wearhouse, and Southwest Airlines). The authors utilize a basic format (introduction, background, values, philosophy and spirit, etc.) which enables their reader to draw relevant comparisons and contrasts. They also summarize key points at the end of each chapter.
After extensive involvement with several of the exemplary companies, I can personally attest that organizations such as they which effectively develop the "hidden value" in their employees achieve at least three highly desirable (indeed imperative) objectives: they create a workplace environment in which people at all levels are much happier as well as much more productive; as a result, they have less attrition of their "best and brightest"; and finally, they are much more successful when competing for the "human capital" they need. To their credit, O'Reilly and Pfeffer do not promise to offer all manner of "secrets" to simplify the process of attracting and developing talent. Everything they suggest is common sense and much of it is obvious. The "hidden value" of their book is revealed only as you correlate all the ideas and experiences it provides within the context of your past and current circumstances.
If you agree that an organization should be value-driven and that values are driven by people, almost everything O'Reilly and Pfeffer share can be of substantial assistance. But I presume to conclude with three caveats. First, what they recommend is relatively simple to explain but will be immensely difficult (if not impossible) to implement without a firm commitment, sufficient time, and (yes) patience. Second, given the wealth of information provided, beware of massive adoption of what may have been effective elsewhere. Rather, select only what is most appropriate to your organization's needs when formulating a model. Finally, keep in mind that all of the eight exemplary companies have changed, some quite significantly, since the period during which this book was written. So must yours in months and years to come.
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on January 26, 2006
In a McKinsey & Company's study, "The War for Talent," McKinsey found that of 200 executives interviewed 58 responded that values and culture were absolutely essential in their decision to join, stay with, or leave an organization. The authors believe that by establishing the right value system and culture, companies can make all their employees perform as if they were in the top 10% of their field. The authors further state that companies must find new ways to tap the knowledge, experience, energy, and talents of employees.

Studying several companies that the authors believed had successfully leveraged their "hidden talent," the authors summarized these 6 essential practices:

· These companies place values and culture first

· They make those values real

· They hire people that will appreciate and espouse the company's values

· They invest in people

· They share information widely

· They reward and recognize those who adhere to the company's values.

A key way to have an organization tap this hidden talent is to achieve the status of being a people-centered organization. The authors see successful people-centered organizations have 3 basic themes that are common:

· Each has a well-articulated set of values that are widely shared and act as the foundation for its management practices.

· Each has a remarkable degree of alignment and consistency in the people-centered practices that express its core values

· Each has senior management whose primary roles are to ensure that the values are maintained and constantly made real to all employees in the organization.
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HALL OF FAMEon September 4, 2000
In Strategy Safari, Professor Mintzberg and his coauthors describe that most people approach strategy from one of 10 different perspectives, mostly ignoring the others. That book argues that we would be better served to integrate these 10 perspectives into a combined one. In Hidden Value, Professors OReilly and Pfeffer succeed in combining four of those perspectives in a valuable synthesis. The four that are combined here are values, which people to attract and retain, determining which core competencies to build, and the role of senior management in strategy development and implementation.
At a time when there are many excellent books out on how to find and retain top talent, this book aims to do something different. "Hiring and retaining talent is great. Building a company that creates and uses talent is even better." So after you have read all about Topgrading and other useful methods, read this book next.
The book is unusual (especially for one from Stanford professors published by Harvard Business School Press) in that it uses a structure designed to allow you to learn more than frequently occurs with straight exposition (thesis, followed by examples to support the thesis, and then a conclusion).
To do this, the authors found 8 companies that exhibited people-centered values in different industries to succeed in different ways. You are invited to peruse detailed case histories to get a sense of how these companies work. Following the eight is an example of a company with many similar approaches that was not doing as well, Cypress Semiconductor. You are invited to think through what's different. Later on, you also do mini-studies of People Express and Levi Strauss to see where they vary from the model that you have developed from the cases.
But if you do want to know what the authors think about the cases, their conclusions are summarized at the end of every chapter. Chapter 10 also looks at the overall model they discern.
They see a process whereby each of the successes starts out with a focus on people that is primarily employee centered. This focus often comes from the founder or the current CEO. The company then looks for people who share that focus. At some point, common values begin to emerge among the leadership and the rest of the company. The company continues to focus on coalescing around those values by hiring people with those values, and teaching the values to new employees. Values are reinforced everyday through communications, information flows, training, and rewards and recognition. This creates an environment of mutual trust and respect. Then the company looks at the core competencies that make sense in light of the people, values, and market opportunities and develop those core competencies The company then looks for new strategies that build on the core competencies. Senior management follows at this point in leading from and to reinforce the values.
The payoffs in the case histories relate to superior performance in key valued-added areas (which differ by case), reduced turnover of people which decreases cost of employment and improves performance further, trust and information flows that encourage useful experimentation, and consistency of focus which allows improvement to be greater and on-going.
The point of the book is that the "what" to do is pretty simple, but few people have the commitment and patience to handle the "how" to do it.
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on October 30, 2000
"Hidden Value" purports to offer a new management book style and a "people-first" focus to organisational competitive advantage. This style involves a learn & do structure to 8 anecdotes, rather than the usual hypotheses, case study evidence and checklists often used by many US educators & consultants. Note `learn & do" has been practiced for decades by military and engineering schools (for both physical maneuvers/value-add as well an intellectual stratagems/ designs etc..).
The repetitive anecdotal structured (e.g. introduction; background; values, philosophy and spirit; people/system, and lesson learnt) chapters span success stories from: SouthWest Airlines; Cisco Systems; The Men's Warehouse; the SAS Institute; PSS World Medical; AES; New United Motor Manufacturing Inc; and Cypress Semiconductor.
Strengths include: the broad range of case studies from different sectors including a few non-US examples; and the extremely timely "life-balance" and "people matter" message.
Weaknesses include: repetition of text (perhaps 35% of book); content gaps & granularity problems (e.g. aligned individual/team motivation models missing); a passive observational feel; a superficiality of analysis; a lack of formal tools to carry out own "people-centric" analysis; an often colloquial cliché-filled style (dates quickly); inconsistencies in many financial table rankings and formatting; and a lack of labeling/scales on the most significant table in the book on p.239.
O'Reilly/Pfeffer suggest through this table (p.239), that exceptional performance from committed people requires the organization to use the HR levers of: values, culture and strategy alignment; hiring for fit; investing in people; widespread information sharing; team-based systems; and rewards and recognition.
Better alternatives include: "The Secrets of Software Success" by Hoch et al (100 global software companies success factors including people) (ISBN 1578511054 HBS Press 1999); and the superb "First to the Future- on Active Leadership" by Willi Railo (rigorous proven methods to coach & lead Olympic-standard people, applicable to all) (ISBN82-991169-5-3 Norbok A/S 1995).
Having recently reviewed "The Knowing-Doing Gap" also co-authored by Pfeffer, I was struck by great similarities in case studies/data from SouthWest Airlines; Cisco Systems; The Men's Warehouse; the SAS Institute; PSS World Medical; AES; and New United Motor Manufacturing Inc. (couldn't remember if Cypress Semiconductor was featured). To this reviewer, both books cover a similar subject-matter less-well, and perhaps would have better been written as one really good book.
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