Betting on Business Strategy

An increasing number of companies including HP, Best Buy, GE, and Google are creating teams that ultimately determine how decisions should be made through engaging collaboration and are encouraging those employees to bet on such strategy (with winners getting actual compensation).  The HP scenario is described in Business 2.0 as such…

"On the first Tuesday of every month, 10 or so commodity managers from
across Hewlett-Packard’s hardware divisions dial in for a conference
call - but the civility often ends there. For an hour or more, they
bicker, squabble, and joust over one seemingly innocuous question: What
will the price of DRAM memory chips be in one month, three months, or
six? "Usually, it’s the loudest, most obnoxious guy who gets heard,"
says HP research scientist Leslie Fine, who’s studied the process.

Jawing about tomorrow’s weather for an hour might sound more intriguing.
But at HP, the DRAM powwows often turn into shouting matches for a
simple reason: After each meeting the managers vote and then put out an
official forecast that 70 HP buyers rely on to price more than $50
billion in HP computers and other hardware-often months before the
chips that go in them are bought. If the forecasts miss by even a few
cents, the difference, which can add up to millions of dollars, comes
out of HP’s slim profit margin for hardware."

An interesting things to note by the project lead, was something out of an OD course…

"…Removed from the closed-door setting of executive meetings, where
personality and ego can skew honest opinion, the new forecasting tool
"works better than the best person,""remov(ing) the closed-door setting of executive meetings, where
personality and ego can skew honest opinion, the new forecasting tool
"work(ed) better than the best person."

I wonder what the forecast tool predicted for the survive-ability of HP’s chairwomen in the past few days?

September 13th, 2006