IV. Look through the text and say what problems the author deals with and what

Conclusions he comes to.

Vocabulary Review

1. Translate into Russian:

Compensation; severance package; blueprint; to raise funds; side-line business; to be under way; leverage; ownership in a company; to assume debt; proceeds; credit crunch; to recover losses; divestiture; to overtake a company; to implement reforms; to restate the accounts; junk bond; to file for Chapter 11; to slash payrolls; bottom line; evolving capital markets; to list a company; a profit gain of 15%; to report financial performance; seniority-based system of compensation; return on capital.

 

II. Translate into English:

Срок пребывания в должности президента; раздутый штат сотрудников; посредственный руководитель; рядовые сотрудники; обанкротиться; испытывать замедление темпов роста; реструктуризация; дочерняя компания; отказаться от проекта; изменить положение дел в компании к лучшему; неплатёжеспособность; проигрывать другой компании; предлагать уступки; финансовое подразделение компании; избавляться от непрофильных предприятий; заключить сделку; многообещающая компания; организация по управлению средствами инвесторов; система оплаты, основанная на достижениях работника; система поощрения работников опционами.

 

Unit 5

How Failure Breeds Success

Everyone fears failure. But breakthroughs depend on it. The best companies

Embrace their mistakes and learn from them

By Jena McGregor

Ever heard of Choglit? How about OK Soda or Surge? Long after “New Coke” became nearly synonymous with innovation failure, these products joined Coca-Cola CO.’s (KO) graveyard of beverage busts.

Choglit, in case you blinked and missed it, was a chocolate-flavored milk drink test marketed with Nestle' in 2002. OK Soda, unveiled in 1994, tried to capture Generation X with edgy marketing. The “OK Manifesto,” parts of which were printed on cans in an attempt at hipster irony, asked: “What’s the point of OK Soda?” It turned out customers wondered the same thing. And while surge did well initially, this me-too Mountain Dew later did anything but. Sales began drying up after five years.

Given that history, failure hardly seems like a subject Chairman and CEO E. Neville Isdel would want to trot out in front of investors. But Isdel did just that, deliberately airing the topic at Coke’s annual meeting in April. “You will see some failures,” he told the crowd. “As we take more risks, this is something we must accept as part of the regeneration process.”

Warning Coke investors that the company might experience some flops is a little like warning Atlantans they might experience afternoon thunderstorms in July. But Isdel thinks it’s vital. He wants Coke to take bigger risks, and to do that, he knows he needs to convince employees and shareholders that he will tolerate the failures that will inevitably result. That’s the only way to change Coke’s risk-averse culture. And given the importance of this goal, there’s no podium too big for sending the signal. “Using [the annual meeting] occasion elevates the statement to another order of importance,” Isdel said in an interview with BusinessWeek.

 

Close to Blasphemy

While few CEOs are as candid about the potential for failure as Isdel, many are wrestling with the same problem, trying to get their organizations to cozy up to the risk-taking that innovation requires. A warning: It’s not going to be an easy shift. After years of cost-cutting initiatives and growing job insecurity, most employees don’t exactly feel like putting themselves on the line. Add to that the heightened expectations by management on individual performance, and it’s easy to see why so many opt to play it safe.

Indeed, for a generation of managers weaned on the rigors of Six Sigma error-elimination programs, embracing failure – gasp! – is close to blasphemy. Stefan H Thomke, a professor at Harvard Business School and author of Experimentation Matters, says that when he talks to business groups, “I try to be provocative and say: ’Failure is not a bad thing.’ I always have a lot of people staring at me, [thinking]’Have you lost your mind?’ That’s O.K. It gets their attention. Failure is so important to the experimental process.”

That it is. Crucial, in fact. After all, that’s why true, breakthrough innovations – an imperative in today’s globally competitive world, in which product cycles are shorter than ever – is so extraordinary hard. It requires well-honed organizations built for efficiency and speed to do what feels unnatural: Explore. Experiment. Foul up, sometimes. Then repeat.

Granted, not all failures are praiseworthy. Some flops are just that: bad ideas. But intelligent failures – those that happen early and inexpensively and that contribute new insights about your customers – should be more than just tolerable. They should be encouraged. “Figuring out how to master this process of failing fast and failing cheap and fumbling towards success is probably the most important thing companies have to get good at,” says Scott Anthony, the managing director at consulting firm Innosight.

”Getting good” at failure, however, doesn’t mean creating anarchy out of organization. It means leaders – not just on a podium at the annual meeting, but in the trenches, every day – who create an environment safe for taking risks and who share stories of their own mistakes. It means bringing in outsiders unattached to a project’s past. It means carving out time to reflect on failure, not just success.

 

Failure Parties

Perhaps most important, it means designing ways to measure performance that balance accountability with the freedom to make mistakes. People may fear failures, but they fear the consequences of it even more. “The performance culture really is in deep conflict with the learning culture,” says Paul J.H. Schoemaker, CEO of consulting firm Decision Strategies International Inc.

Some organizations have tried to measure performance in a way that accounts for these opposing pressures. At IBM (IBM) Research, engineers are evaluated on both one- and three-year time frames. The one-year term determines the bonus, while the three-year period decides rank and salary. The longer frame can help neutralize a year of setbacks. “A three-year evaluation cycle sends an important message to our researchers, demonstrating our commitment to investing in the early, risky stages of innovation,” says Armando Garcia, vice-president for technical strategy and worldwide operations at IBM Research.

In addition to making sure performance evaluation takes a long-term view, managers should also think about celebrating smart failures. (Those who repeat their mistakes, of course, should hardly be rewarded.) Thomas D. Kuczmarski, a Chicago new product development consultant, even proposes “Failure parties” as a way of recognizing that it’s part of the creative process. “What most companies do is put a wall around a failure as if it’s radioactive,” says he.

Intuit Inc.) (INTU), based in Mountain View, Calif., recently celebrated an adventurous marketing campaign that failed. The company had never targeted young tax filers before, and in early 2005 it tried to reach them through an ill-fated attempt to combine tax-filing drudgery with hip-hop style. Through a Web site called RockYourRefund.com, Intuit offered young people discounts to travel site Expedia Inc. and retailer Best Buy Co. and the ability to deposit tax refunds directly into prepaid Visa Cards issued by hip-hop mogul Russell Simmons.

But even hip-hop stars can’t make 1040s cool enough to get young adults exited about taxes. “We did very few returns” through the site, says Rick Jensen, vice-president for product management at Intuit’s consumer tax group. “It was almost a rounding error.” Through a postmortem process, the team that developed the campaign documented its insights, such as the fact that Gen Yers don’t visit destination Web sites that feel too much like advertising. Then, on a stage at the Dolche Hayes Mansion in San Jose, Calif., last October in front of some 200 Intuit marketers, the team received an award from Intuit Chairman Scott Cook. “It’s only a failure if we fail to get the learning,” says Cook.

In addition to postmortems, Intuit has begun plucking insights from its flops through sessions that focus on failure. How do you learn if you don’t examine the past?

Failure’s capacity to teach is exactly why venture capitalists look for managers to run startups whose resumès include experience with a flop.

 

Tremors and Thrills

A company’s reaction in the face of intelligent failures can send tremors or thrills through a culture. If top executives are accepting, people will embrace risk. But if managers react harshly, people will retreat from it. That’s something smart managers want to make sure doesn’t happen.

 

 

BusinessWeek

Notes

 

1. Generation X: the group of people who were born between the early 1960s and the

middle of the 1970s, who seem to lack a sense of direction in life and to feel that they have no part to play in society.

2. Six Sigma: to many companies it is a measure of quality with a continuous improvement program looking for perfection. Six Sigma is a data-driven approach and methodology for eliminating defects. The statistical representation of Six Sigma shows how well a process is performing. To achieve Six Sigma quality, a process must produce no more than 3.4 defects per million opportunities (99.9997%). This means we need to be nearly flawless in executing our key processes.

3. Hip hop is a lifestyle with its own language, style of dress, music and mind set that is continuously evolving. Nowadays the words ‘rap’ and ‘hip hop’ are used interchangeably. However it should be noted that all aspects of hip hop culture still exist.

4. 1040 Form: The standard IRS(Internal Revenue Service) form that individuals use to file their income tax return. There are several variations of the 1040; the one you choose depends on whether you process your taxes the old fashion way or by computer.

5. Gen Yers: from Generation Y which is the cohort of people born immediately after “Generation X”. Using the broadest definition commonly cited, Generation Y currently (as of 2006) includes those in their mid and early 20s, teenagers and children over the age of 6. As generations are defined not by formal process, but rather by demographers, the press and media, popular culture, market researchers, and by members of the generation themselves, there is no precise consensus as to which birth years constitute Generation Y. Also, twoindividuals of the same birth year can identify with separate generations.

 

Vocabulary

 

1. to embrace mistakes (idea, proposal, risk, извлекать уроки из ошибок

beliefs, technique, technology) (взять на вооружение идею,

предложение; взять на себя

риск; разделять убеждения;

применять методы, технологию )

2. to unveil a product (introduce ) представлять продукт

(внедрять)

3. risk-averse culture культура, не приемлющая риска

4. job insecurity (ant. job security) отсутствие гарантии занятости

5. product cycle жизненный цикл продукта

6. to measure performance оценивать результаты деятельности

(performance evaluation) (оценка результатов деятельности)

7. tax-filing 1) представление, подача

налоговой декларации

2) налоговая декларация

8. tax return налоговая декларация

9. startup (to run a startup) вновь образованная компания

 

Assignments

I. Suggest the Russian for the following:

1. edgy marketing

2. to cozy up to the risk taking

3. well-honed organizations

4. intelligent failures

5. to fumble towards success

6. to balance accountability with the freedom to make mistakes

7. tax-filing drudgery

 

II. Give the English for the following:

1. предлагать инвесторам для обсуждения

2. испытывать неудачи

3. ломать голову, биться над решением проблемы

4. выбрать безопасный путь

5. быть достойным похвалы

6. выкроить время

7. неудачная попытка

8. возврат налогов

9. идти на попятную

 

III. Explain or paraphrase the following:

1. … there is no podium too big for sending the signal

2. … most employees don’t exactly feel like putting themselves on the line

3. to evaluate on one-and three-year time frames

 

IV. Answer the question substantiating your point of view:

The truth of which adage does the article prove: “Learn wisdom by the follies of others” or “Look backward over your earlier mistakes”?

 

 

Chapter II

Supply Chain Management

 

 

 

 

 

Unit 6