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News of The World – A moral crisis in the making? July 11, 2011

Posted by Alan Yu in Culture, Leadership and management, Management, Philosophy.
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The printed media industry, like the music industry, has been under pressure in recent years.  Convenient and timely electronic access to a wide variety of content has all but rendered traditional methods of delivery irrelevant.  When you can get breaking news as it happens, as long as you are on line, why would deadlines for inclusion in printed newspapers matter?

Reeling under conditions of hyper-competition to survive, let alone thrive, many big-name magazines and newspapers have had to find ways to differentiate themselves.  These include news “scoops” which are possible only through clandestine tactics involving invasion of privacy and rampant disregard for human decency.  Hacking into voicemail accounts of murder victims and celebrities is par for the course if it provides an edge on stories that pique the interest of readers.

On the surface, moral outrage against such practices has brought down UK’s Sunday tabloid News of The World (NOTW).  The abrupt decision by Rupert Murdoch’s media empire News Corporation to close the newspaper raises a number of questions in its wake.

The decision announced by News International’s Chairman James Murdoch that the edition of NOTW on July 10th, 2011 is its last appears at first sight to be admission of, if not atonement for, culpability in the phone hacking accusations.  In his statement on the closure, Murdoch says: “The good things the News of the World does, however, have been sullied by behaviour that was wrong. Indeed, if recent allegations are true, it was inhuman and has no place in our Company.”

Murdoch sugar-coats the decision by claiming to take the moral high ground, but even  commentators who are not die-hard cynics have reason to believe that other motives are behind it.  Terminating a 168-year-old institution is a momentous decision that cannot be taken lightly, especially when many jobs are involved, and even in the context of the allegations of outrageous practices by its staff, surely can be but the last resort.

First, there are commercial considerations.  Like many other brands in recent times publicly dragged through the dirt of scandalous behaviour, for example, Tiger Woods, NOTW is likely to face mass desertion by commercial benefactors
such as advertisers, at least in the short term, damaging its commercial viability.  Yet as the dominant Sunday tabloid with a circulation of 2.6 million readers, NOTW is probably profitable, and can withstand a little pressure before sinking into red ink.  Besides, shrewd businessmen such as the Murdochs don’t just give up a profitable venture that easily.

Many point to Murdoch’s intention to launch a title that mirrors the highly successful The Sun, which doesn’t publish on Sunday.  On July 5th, two days before the NOTW closure was announced, two URLs, TheSunOnSunday.com and TheSunOnSunday.co.uk, were registered.  Could closure of NOTW be a convenient way to re-brand it as The Sun?

Second, closing NOTW is a masterstroke of guilt denial.  By cutting off what might be a rotten branch, James Murdoch is clearly trying to distance himself and the rest of News International from the culprits as the tree that remains unspoiled.  Yet Rebekah Brooks, the editor in charge when NOTW committed the alleged offences, remains a trusted executive of News Corporation.  Rupert Murdoch is said to have expressed “total support” for her as CEO of News International.  Could she be the one bad apple?

Third, even if the Murdochs are genuinely ignorant about about the outrageous practices in NOTW, as leaders of the organisation, they must take responsibility for the root cause of such behaviour – sacrificing moral standards in a relentless drive for commercial results.  Even if they don’t overtly condone the behaviour of a handful of NOTW staff, they cannot deny endemic failure to maintain moral standards in the organisation.

Debates about the closure of NOTW will continue for months.  Some will concern the commercial brutality facing newspapers in general; others will focus on the symbiotic relationship between politicians and the media.  In my mind, the most important questions we need to answer are:

Are we facing a moral crisis in general, and if so do we even know?

The media survive only if they provide what readers want.  NOTW obviously did this well.  Many readers interviewed by stv claim that despite the phone hacking practices, they continue to buy NOTW.  Are we so inured to injustices in the world that all we look for is the next cheap thrill, and in response are the media right in serving us everything that we want?  If not, are they going to survive?  What wider responsibilities do the media have in defending moral standards and human decency, in the same way as they shape public opinion?

What is the responsibility, if any, of commercial executives to balance the drive for results and maintenance of moral standards?

Commercial enterprises exist to generate profit for shareholders and economic benefits for the wider population.  Many regulations prevent behaviour detrimental to some segments of society, for example unfair competition, price
fixing and misleading product descriptions.  Yet many commercial practices are legal but morally questionable.  How do leaders in these organisations choose between the ignominy of missing commercial targets and defending moral
standards?

What lessons are we going to teach the next generation about NOTW debacle?

The financial crisis of 2008 has taught the world nothing about the fiduciary duty of bankers to protect customers’ life savings.  In fact, banking leaders have shown no remorse for taking, and then passing on, incalculable risks.  Worse still, they feel entitled to millions in bonus payments in return.  As economies in developed countries suffer severe budget cuts resulting from decades of profligacy, it is inevitable that comercialisation of education will intensify.  We have
already shown an avid appetite for vocationally friendly courses at universities (cf. my comments on Middlesex University’s abolition of philosophy courses).  Are we likely to reflect on the NOWT case and pause to think about the need for moral education as a fundamental requirement?

Until we have fully considered and answered the above questions, those who have lost their jobs in NOTW will have done so in vain.  They deserve our sympathy.

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Ensuring leadership continuity and renewal – succession planning January 3, 2011

Posted by Alan Yu in Leadership, Leadership and management, Management.
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At this time of the year, it’s customary for companies to evaluate the performance of their staff.  The purpose of performance appraisal is to understand how staff can improve personal performance in their current jobs, and how they can step up or across to other jobs.  This latter objective is part of succession planning, a broader activity which addresses improvement in organisational performance. 

In most large to mediumsize organisations, succession planning is a regular and well-understood process.  In fact, there are many books on the market which purport to make the process effective.  One example is Effective Succession Planning by William J. Rothwell.  Although I have not read this book, it appears to be a compendium of everything you need to know about the topic. 

During the past few weeks, however, two unconnected events have led me to wonder whether succession planning genuinely delivers its intended outcome, and the factors that enable organisations to derive maximum benefit from the process. 

The first of these events is chancing upon the review by Alan Murray in the Wall Street Journal of a new book by Bill Conaty and Ram Charan entitled The Talent Masters.  The second event is sitting at dinner next to a fellow graduate from my university, a few years senior to me, who tells me how she is retired in the comfortable knowledge that the business she started almost three decades ago is in good hands.

According to Murray, The Talent Masters is as much a celebration of the Welch Way, management practices established by Jack Welch, former CEO of GE, as it is an exposé of why perhaps we need a “new icon for the rapidly evolving world of business management”.

In addition to recounting the three principles that characterise the Welch approach to management – focus, differentiation and candour – the book also documents a number of interesting examples from industry.  By far the most dramatic example revolves around Larry Johnston, head of GE’s appliance business, who decided to leave to head up Albertsons.  GE was apparently able to agree on the successor to Johnston and “three other slots down the chain of command” within half a day of his resignation.

Succession planning is obviously easier with the depth of talent and the elaborate processes possible in a large corporation such as GE.  Yet I was struck by the visionary approach my fellow graduate takes to ensuring that the small PR consultancy firm she started could continue after her retirement.  As I think about succession planning in light of these two events, it seems that a few factors determine how much benefit we derive from it:

Succession planning works only if people let go

It’s all very well for us to go through an elaborate process of identifying and nurturing talented people in the organisation to take over our jobs, but we have to accept that the jobs have to be vacant before the successorscan prove whether they are ready to take over.

John Howard and Tony Blair, Prime Minister of the Australia and the UK respectively, highly competent and effective leaders in their own right, both tacitly accepted that their finance chiefs, Peter Costello and Gordon Brown, would succeed them eventually.  Both, unfortunately, overstayed their welcome.  In the end, Costello never got the chance to prove himself; and Brown spent a woefully short time on the job before the electorate booted him out.

By contrast, my schoolmate decided early that she was going to retire by a certain time. She had recruited, several years before she even came to that decision, a few talented young people into the organisation.  When she felt the time was right, she stepped back, taking an advisory position and coming to the office half a day for four days.  She made it clear to her successors that they were running the show, although she would be available as a sounding board for important decisions.

In recent American corporate history, Anne Mulcahy handing over the reins to Ursula Burns as CEO of Xerox is a case study in smooth implementation of succession planning.  Mulcahy was only 56 when she stepped down, and having rescued the company from near bankruptcy might have felt entitled to bask a little longer in the glory of success.  BusinessWeek quotes her confessing how hard it is to give up power, but she is also wise enough not to overstay her usefulness: “To have stuck around until I was 65 would be a disservice to Xerox, a disservice to my successor”.

It is a huge challenge for leaders, especially successful ones, to decide consciously to hand over power.  They tend to believe, with a lot of help from sycophants around them, that nobody can do the job better.  Talented successors also tend to be fairly ambitious, and are not prepared to wait in the wings for too long.  When they decide to accept an opportunity that beckons in another company, all the effort in succession planning will have been wasted.

Succession planning is taking risks with people

Very often, candidates identified to have potential to succeed a certain position lack some skills, experience or track record to be either suitable or even credible.  For example, someone who has done a brilliant job in the domestic market may be considered successor to a position with global responsibilities.  Her cultural insensitivity is thought to be a weakness that needs to be tested.  Putting her through an international market may do more harm than good.  Nevertheless, if we are serious about her candidacy we have to take the risk and coach her along the way.

I have personal experience in having identified a highly skilled and competent marketing manager as a future marketing and sales director.  For her to succeed in a broader role, she has to demonstrate to the sales force, who were notoriously entrenched in their traditional way of doing things and somewhat hostile to analytical marketing types, that she could hold her own and lead this rather recalcitrant group into the future.  When a vacancy in the sales area came up, I decided to give her the assignment, warning her about the pitfalls.  She acquitted herself well in the challenge, and eventually eased seamlessly into the broader position a few years later, having won the respect of everyone on the team.  It was a wise move in hindsight, but at the time it was risky.  She could have totally flunked and made a fool of herself.

Personal needs have to align with business needs

Younger generations of executives have different needs from their baby boomer generation predecessors.  Work-life balance, health, family and community are important considerations given less weight a couple of decades ago.

Besides, candidates with good potential are usually high-flying go-getters not prepared to wait in the wings for too long.  A marketing executive earmarked for a general management position may not want to spend a couple of years in the operational wilderness in order to move ahead; a domestic high-flier may not want to leave the domestic power base for experience in an international market.  We have seen many cases of potential candidates passed over for the CEO job joining another organisation to leap-frog their careers.

Since personal as well as corporate circumstances change constantly, no succession planning can assume that potential candidates are even available when the positions for which they are successors become vacant.  All succession planning, therefore, needs to address a number of “what if” scenarios.

In summary, leaders can maximise benefits from succession planning by handing over power when the organisation is ready, rather than when they are; by taking risks with potential candidates early; and by anticipating contingencies.  The first is obviously the hardest to do.

Lessons from the Change of Guard at HSBC September 25, 2010

Posted by Alan Yu in Leadership, Leadership and management, Management.
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According to the New York Times, HSBC has settled management succession at the top after its current Chairman Stephen Green departs to become UK Trade Minister.  It has been a week of tumultuous week of public relations damage control.

HSBC is not known to be flamboyant or attention seeking.  The amount of speculation surrounding succession in the last week has been somewhat unusual, especially when at times the company appeared to have been caught off guard.

Speculation started when the Financial Times reported that current Chief Executive Michael Geoghegan had threatened to resign if he was passed over for the top job.

The New York Times quotes Glen P. Suarez of Knight Vinke, an HSBC shareholder and a critic of the bank’s strategy in the United States, as saying: “It is not the most glorious episode in HSBC’s history, but…it will all come down to execution.”

This “episode” in the history of HSBC highlights some fairly universal issues concerning management, succession planning and leadership:

Nobody can be indispensable

An organisation functions because of all its people working together, not because of any individual.  For an organisation, the old adage that “nobody is indispensable” is not enough.  It should be: nobody can be indispensable.  All organisations have some reporting structures, with some positions senior to others making decisions with greater impact, but they need to exist above and beyond the individuals.

Management cannot be seen to succumb to threats

Only insiders will know whether Geoghegan really threatened to resign.  If he did, that threat alone would have justified HSBC not appointing him Chairman.  As a long-suffering executive who has risen through the ranks to Chief Executive, Geoghegan is entitled to think he has the credentials to take the top job.  He is certainly entitled to put that view to, and argue the case with, the board.  Threatening resignation to achieve an objective is always bad tactics.  It forces the organisation to take a stand for which it may not be ready, and is fraught with the danger of setting unpalatable precedents.

Succession planning needs to be more comprehensive

All organisations do some succession planning, formally or otherwise.  Many managers have a rough idea what to do when selected members of staff leave.  Unfortunately, we often scramble because of inadequate scenario and contingency planning.  Identifying individuals to take over certain positions is one thing, implementing succession when resignations happen is another.  Many unforeseen factors get in the way.  Anointed successors usually show high potential, making them the target of rival firms.  They may not want to wait until a higher position is available.  The timing of a change may not coincide with personal plans, for example the need for frequent travel with young children in tow.  Their skills may not be fully developed when the vacancy occurs.   It will do us well to have a few scenarios in mind in the planning process.

“Alpha” leaders need to keep their egos in check

 Some personality traits and styles render executives particularly suited to be effective leaders: decisiveness, larger-than-life presence, self-confidence and a razor-sharp intellect.  In turning around companies or when faced with an adverse operating environment, leaders with these qualities help the team move swiftly to overcome obstacles.  At other times, these same qualities could prevent leaders from being inclusive and collaborative, being good listeners and showing empathy.  Self-confident leaders with a big ego need to remind themselves constantly to keep it in check, in case on the odd occasion they are wrong.  Doing so will also help them avoid falling into the I-am-too-important-not-to-be-taken-seriously trap.  Geoghegan is not quite Chainsaw Al Dunlap, but he certainly seems to have over-estimated his importance, or under-estimated HSBC’s need for organisational integrity.

Corporate Values vs. the individual

In his books Built to Last and Good to Great, Jim Collins shows how celebrity executives fail to turn good companies great.  According to him, leaders who turn good companies into great ones tend to be comfortable being humble and with exerting a strong professional will at the same time, the so called “Level 5” leaders.  Great and enduring companies also tend to have a robust set of core values.  Talented people promote these values consistently and pervasively in the organisation.  In its most recent succession decision, HSBC has clearly asserted its corporate values over the importance of individuals.  Although it was unfortunate that some of the dirty linen was washed in public, I’m sure it will emerge to be even stronger in time.

What it takes a middle manager to be an effective leader is the right behaviour September 8, 2010

Posted by Alan Yu in Leadership, Management.
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Gurus and guru wannabes have made the topic of leadership a vastly profitable speaking circus supported by voluminous publications.

The expansive literature on leadership devotes a large amount of space to analysing the characteristics, qualities and styles of successful senior executives.

Unfortunately, this analysis is woefully irrelevant, and delivers little practical value, to middle management.

Middle managers get things done and are the foundation of the success of an organisation.  Yet they often feel helpless as the “sandwiched class” between senior executives who have the power to issue orders, and junior staff who have the luxury of merely taking them.

In a blog post entitled “We’ve Got Leaders. What we need is leadership.” author Wally Bock claims that we have leaders in abundance, but “What we need is good leadership.”

“If you are responsible for the performance of a group you are leader, because you have followers,” he continues, “You can lead well, or you can lead poorly, but lead you do.”

Let’s not forget that being a leader is merely a position.  Often you are put in that position willy nilly; sometimes you may choose to be there.

Leadership, on the other hand, involves certain types of behaviour.

Let me try and translate leadership literature aimed at senior executives into some practical pointers for middle managers on becoming effective leaders:

Developing a vision – this usually means having a clear idea of what outcome you wish to see and being able to describe it accurately.  The outcome doesn’t have to be grand.  In fact, sometimes the outcome can be simply the absence of a problem.

Inspiring others – this means talking to anyone in your circle of influence, including your boss, peers and subordinates about the outcome that you would so much like to see and convincing them that it’s a desirable cause to fight for.

Instituting change – this means that you should not be happy with how things have always been done or thought about; in fact, you should develop the habit of asking why things can’t be done or approached another way.

Setting goals – this means that you should always have an objective in mind for any activity you undertake, and you should repeatedly tell others what this is and how far you are from it.

Setting examples – your behaviour as a leader is always under scrutiny, and often imitated by others.  It also carries symbolic value.  Behave only in a way that you are comfortable for others to imitate, and that carries the right message.  Always hold yourself to higher standards than anyone else.

Thinking strategically – this means recognising that there are many ways to skin a cat; thinking about what choices you have, and what reasons and information on which you should make a choice.  When you decide to do one thing, you are also deciding not to do other things.  You need to help others understand and buy into your choice.

Taking charge – people naturally look to leaders for decisions.  Many are afraid of doing the wrong thing and taking the blame for it.  In the face of uncertainty, you need to have the courage to take action and bear the consequences.

Giving praise and support – everyone wants to be told that he or she is doing a good job, especially when the going gets tough.  In the face of adversity, you need to rise above your own emotional reactions and help others overcome their fears and doubts.

Being helpful – the process of change, and the road towards an ambitious goal, is full of difficulties.  Not everyone is up to the task.  Never be too busy to lend a helping hand.  It’s not about you, it’s about them.

The above is clearly not an exhaustive list, nor is any of the items easy.  Besides, getting things right takes a great deal of practice.  I’m sure you can think of many other types of behaviour that help a middle manager become an effective leader.  Do let me know what else you can think of.

An epitaph for the €uro May 6, 2010

Posted by Alan Yu in Leadership, Management, Miscellaneous.
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Here lies the €uro

A fine dream born of

Lofty ideals

Brought down

By the brutal reality

Of the difference

Between rich and poor

It is sometimes amazing how simple things at a personal level can become such complicated matters when raised to the national level.  Paying for things we can afford is a good example.

What has happened in Greece, at the personal level, is akin to Warren Buffet asking me to join his exclusive club to throw a lavish party.  The bill will come to millions of dollars, and we have to put up our respective share.

Mr Buffet will dip into his billions and easily pay his $1 million dollars share of the bill.  I, on the other hand, have only savings of $100,000, and have to borrow $900,000 just to leave the party.

So what do I do?  I say to Mr Buffet: “Thanks for the invitation, but I really can’t afford to be at your party.  Have a good time.  It’s been nice knowing you.”  I will go home, have a soup and some salad, go to bed early with Milan Kundera’s The Unbearable Lightness of Being and wake up the following morning ready to tackle the world.

Greece, on the other hand, said to Chancellor Gerhard Schröder: “Thanks for the invitation Herr Schröder. We’d love to join the party.  We can’t afford it, but we’ll borrow what we need to pay our share of the bill, and worry about it long after the fun is over.”

Should we be surprised that the party turned out to be a bad dream for Greece?

In the meantime, Mr Papandreou says to Frau Merkel: “It was a lot of fun at the party, but you know we had to borrow to even be there.  Now you have to help us fend off all these loan sharks wanting their money back.  By the way, the loan sharks knew there was no way we could pay them back.”

Should we be surprised that Frau Merkel tells Mr Papandreou to go jump in the lake?

In an article carried by Project Syndicate, Professor Stiglitz at Columbia University suggests that the Eurozone might have to disband if it is not prepared to implement necessary institutional reforms.  In another article Professor Feldstein of Harvard University explains why Greece will default.

The moral of the story: PIGS have no place to be in a rich man’s party.

A summary of Gary Hamel’s analysis of the secrets of Apple Inc.’s success March 9, 2010

Posted by Alan Yu in Management.
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In two blog entries in the Wall Street Journal over the past couple of weeks, management guru Gary Hamel has taken a stab at analysing the success of Apple Inc.  You can find Part I here, and Part II here

He begins by going through a set of surprising statistics about Apple: 

          It’s the market leader in computers costing more than $1,000 – in one month, its share in this segment exceeds 90%

          It makes more money from its 3% share of global handsets than Nokia makes from more than 30%

          It’s the world’s largest music retailer

          Its stores generate four times more revenue per square foot than big box competitors; with its store on Fifth Avenue, New York, being the most profitable retail outlet in the world

          Its market value is three and a half times that of Nokia, and more than 60% higher than Hewlett-Packard’s, which has three times Apple’s revenue 

He runs through a laundry list of strategies to which many would attribute Apple’s success: 

          Heavy focus on design

          Fusion of hardware and software

          Integrating a broad array of complementary technologies

          Captivating customers with great end-to-end user experience

          Harnessing the talent of independent software developers

          Leveraging core competencies into new markets – Steve Jobs describes Apple as the world’s large “mobile devices company” 

But, Hamel argues, while the above list is logical, it is also unsatisfying, as it reveals the “how” but not the “why”. 

With a disclaimer that he has neither spoken to Apple’s senior executives, nor done thorough research into the company, Hamel offers “unstinting devotion to a particular set of values” as the secret behind Apple’s success.  According to him, these values are “as rare as a rose in winter” among Fortune 500 companies: 

Being passionate – although Apple doesn’t always pioneer a new product category, it always sets out to radically redefine a category with a distinctive product or business model. 

Aiming to surprise – the company’s penchant for pre-launch secrecy is simply the way you produce the same sort of gee-whiz delight that any parent aims for on Christmas morning. 

Being unreasonable – Apple regularly challenges itself to do the impossible, producing products that are as sexy as Ferraris and as practical as Hyundais, and its lean and agile supply chain gives nothing away to Wal-Mart or IKEA.

Innovating incessantly and pervasively – innovation infuses everything Apple does, in products, services and business models. 

Sweating the details – “it just works” because hundreds of people sweat the details. 

Thinking like an engineer, feeling like an artist – a company can’t produce beautiful products if the bean counters win every argument: Apple’s executives know that something lovely and sleek and unexpected can provoke a visceral reaction in a customer – a reaction that may not be easy to quantify but can nevertheless be monetised.

To the above, I would personally add: meticulously making the look and feel "hang together".

Of course, Apple also has its flaws.  According to Hamel, Jobs is said to be “an egomaniacal control freak” and it has "all the monopolistic tendencies of its competitors".  “Apple will one day fall prey to the same sort of arrogance, nostalgia and denial that has destroyed other once-venerated companies”, Hamel concludes.  But for him the case of Apple “is just a convenient and plausible vehicle for driving home a fundamental truth: you can’t improve a company’s performance without improving its values”.

RT @mickyates: How to Keep Good Employee March 2, 2010

Posted by Alan Yu in Management.
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RT @mickyates: How to Keep Good Employees in a Bad Economy, Marshall Goldsmith: Marshall Goldsmith is an ol… http://bit.ly/97P29D

Top Ten Mistakes Managers Make With Email February 4, 2010

Posted by Alan Yu in Management.
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An article in the Wall Street Journal lists the top ten mistakes managers make with e-mail.  Since the newspaper has started charging for subscriber content, I’m careful not to reproduce everything, in case the law catches up with me, but the following highlights should be enough to whet the appetite:

1. Using vague subject lines: “Meeting,” “Update,” or “Question” provide no value as subject lines.

2. Burying the news.

3. Hiding Behind the “BCC” field — some blind recipients hit the “reply all” button and reveals all.

4. Failing to clean up the mess of earlier replies/forwards, such as a string of previous messages.

5. Ignoring grammar and mechanics, especially when sending from PDAs.

6. Avoiding necessarily long emails: longer messages sometimes do work best.

7. Mashing everything together into bulky, imposing, inaccessible paragraphs — length does not discourage reading; bulk does.

8. Neglecting the human beings at the other end — be careful about heaping praise or blame, and being emotional, sharp-tongued or sarcastic

9. Thinking email works best, but it’s not always the best way to communicate.

10. Forgetting that email lasts forever, as easy-to-forward proof of any error, offence or obfuscation we make.

The author is Tim Flood, assistant professor of Management and Corporate Communications at the University of North Carolina’s Kenan-Flagler Business School.  Don’t say we haven’t been warned by an expert.

An MBA is no ticket to success February 1, 2010

Posted by Alan Yu in Career, Management.
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An article in the latest issue of the Harvard Business Review (http://tinyurl.com/y9k9tkq) lists what it considers to be the best-performing CEOs in the world. 

 

One of the observations the article makes is that insider CEOs – those promoted from within the organisation – tend to do better.  Of the top 50 best-performing CEOs, only about a quarter are outsiders.  This stands to reason, as critical to a CEO’s performance are such factors as understanding subtleties of the industry that enables laser-sharp judgment, ability to navigate the web of regulatory constraints, familiarity with the culture and rapport with staff to get things done.  All of these qualities tend to accrue to someone who has been in an organisation for some time. 

 

The authors of the article claim that “32% of CEOs who had an MBA ranked, on average, 40 places better than the CEOs without an MBA”, going on to conclude that “the finding suggests that MBA CEOs have not destroyed value.”  That may be so, but the fact remains that less than one third of the top 50 CEOs have an MBA.  While business education may not be a destroyer of value, it is not a good predictor of success either. 

 

In the past few decades, business education has mushroomed into a highly profitable industry.  Graduate business courses draw from a larger pool of target customers willing to pay higher fees.  Many an up-and-coming executive aspire to the qualification as a passport to higher echelons of management. 

  

As a practising manager with an education in liberal arts, I was somewhat suspicious of the real value of an MBA.  Having also been immersed in the empiricist school of philosophy, however, I nevertheless endured three years of gruelling part-time study and a monotonous Ronald McDonald diet to gather evidence for my suspicion.  While I learned a lot in the MBA programme, I concluded that it really didn’t teach me the important things I needed to do well. 

  

At about the same time as I was undergoing my torture, Mark McCormack, founder of the highly successful sports management and marketing agency the International Management Group (IMG), published What They Don’t Teach You at Harvard Business School.  Here was my salvation.  I didn’t need my MBA after all, but having done it I was now qualified to say how inadequate it was, and I had Mark McCormack to prove it! 

  

Truthfully, an MBA is very helpful, as long as we appreciate its limitations.  For a start, it gives skeptical employers at the start of our career some assurance that we know the basics.  We also learn the “lingo” – DCF, learning curve and multivariate analysis.  Above all, we learn to model.  Modelling is no easy feat, and I’m not talking about the catwalk activity either.  It’s trying to predict an outcome using complicated formulas linking a large number of variables in a dense spreadsheet. 

 

The snag about models is that they prove the old axiom about computers – garbage in, garbage out.  I remember lambasting an investment banking executive for building a perfect model but using assumptions that didn’t make sense, therefore coming up with the most ridiculous conclusions.  MBA courses don’t teach business sense, which is often gained through experience, in other words, making mistakes.  They are great for learning all the techniques of option analysis and negotiation tactics, but it is no substitute for keen observation of human signals and managing emotions.  Nor does it help develop passion and diligence.  Deals are often won or lost on the basis of personal chemistry, understanding of emotional needs and how much people care.  

 

Daniel Goleman popularised the idea of “emotional intelligence” in the 90s to help a large number of hard-charging alpha-type MBAs to understand themselves, others and everyone together in groups.  MBA courses are famous for the lack of emphasis on how to work with people to get things done. 

 

McCormack talks about the three phrases most people find hard to use: “I don’t know”; “I need help” and “I was wrong”.  Ability to use these expressions judiciously goes a long way towards winning support from others, because they show that we are humble, vulnerable and fallible – that we are human. 

 

Many corporate failures in the last decade have also shown that MBA courses need to place more emphasis on ethics.  Changes are afoot or have been implemented.  After all, no genuinely high-flying CEO can be a moral imbecile who does not stand on principles. 

 

The shortcomings of an MBA course in teaching the more subtle factors for success can be easily overcome with a little focus and adjustment in curriculum.  At its worst, it can give graduates unjustified confidence and self-importance.  Overly confident and self-important executives distance themselves from those whose help they need most to succeed.  They also lack a sense of humour, which is sorely needed to defuse tension and bounce back from adversity. 

 

In business, as in life, there are no guarantees.  An MBA alone certainly does not lead to success.  Applied with humility, forbearance and open-mindedness, however, it could go a long way. 

 

Posted via email from alanayu’s posterous