Fictitious promotions work because people love to feel like they got a deal. In one common type of fictitious promotions, a retailer raises the price of an item just before a sale and then “promotes” the product by claiming the original price is now the sales price. The Wall Street Journal article entitled “The Dirty…
To prepare for the upcoming holiday shopping season, I’m reading ‘Priceless: The Myth of Fair Value (and How to Take Advantage of It)‘ by William Poundstone. Poundstone references a wide variety of psychology studies which show consumers are unable to accurately estimate fair prices and are “strongly influenced by the unconscious, irrational, and politically incorrect.”…
Years ago, I took a class called “Managing With Influence” from Jeffrey Pfeffer, professor of organizational behavior at Stanford University and author of the book subtitled “Profiting from Evidence-Based Management.” During the class, Professor Pfeffer claimed layoffs do not improve financial performance – except in the very short term. He based this on a careful analysis of…
For several years, I’ve argued that performance management is more than just budgeting. I’ve also pointed out that the term planning was often misused by software vendors whose products were mostly limited to financial planning (aka budgeting), rather than end-to-end resource allocation and management. And finally, I’ve advocated outcome-based budgeting, rather than activity-based budgeting, so…
Performance management is more popular than ever; it’s practically an epidemic. Just a few years ago there were only three or four conferences dedicated to the topic. So far this year I’ve already been to 10 and the conference season doesn’t even get into full swing until later this month. Why the extraordinary rise in…
One of the recurring themes during my week at HBS was understanding profitability. At first glance, profitability seems like a seductively simple topic. After all, aren’t profits just sales minus costs? The issue is that getting a handle on costs is a non-trivial exercise. For many organizations, the cost of goods sold (COGS) only represents the direct,…