HARVARD BUSINESS REVIEW ON LEADERSHIP Learning from Research
Leadership Course at PAF-KIET One of the project assigned to students of this course was to give an oral presentation on a research publication on leadership from HBR. This presentation includes some of these presentations. Good effort of students is appreciated.
An inherent conservatism dominates the culture of large organizations
In the second American Revolution, John D. Rocke Feller III describes the conservatism of organization:
“ An organization is the system, with the logic of its own, and all the weight of tradition and inertia. The deck is stacked in favor of the tried and proven way of doing things and against the taking of risks and striking out in the new directions.”
Once-borns, make moderate identifications with parents and find a harmony between what they expect and what they are able to realize from life.
But suppose the pains of separation are amplified by a combination of parental demands and individual needs to the degree that a sense of isolation, of being special, or of wariness disrupts the bonds that attach children to parents and other authority figures?
The person becomes deeply involved in his or her inner world at the expense of interest in the outer world.
Self-esteem no longer depends solely on positive attachments & real rewards.
A form of self-reliance takes hold along with expectations of performance and achievement, and perhaps even the desire to do great works
Such self-perceptions can come to nothing if the individual’s talents are negligible. Even with strong talents, there are no guarantees that achievement will follow, let alone that the end result will be for good rather than evil
In his, Daniel Goleman research at nearly 200 large, global companies, Goleman found that while the qualities traditionally associated with leadership -- such as intelligence, toughness, determination, and vision -- are required for success, they are insufficient.
Truly effective leaders are also distinguished by a high degree of emotional intelligence, which includes:
BORIS GROYSBERG Assistant Professor of Business Administration Harvard business school NITIN NOHRIA is the Richard P. Chapman Professor of Business Administration at Harvard Business School. BIOGRAPHY OF ARTICLE AUTHORS
Should stock prices spike when company hires new CEO from renowned company experiencing the drastic growth ?
The market certainly seems to think so.
Stock prices spike when companies announce new CEOs from a talent generator like General Electric.
But how do these executives perform over the long run? ? ? ??
The authors studied the careers of 20 former GE executives who went on to lead other major organizations, with strikingly uneven results
Overview of the new CEO’S performance in a new org HIRING COMPANY CEO’S NAME Return of company after hiring new CEO GE Own Company Jeffrey immelt $ 1.1billion profit 3M James Mcnerney $6.5 billion profit Home depot Robert Nardelli $ 10 billion profit PRIMEDIA Tom Rogers -30.2% Intuit Steve Bennett 60.9% Stanley Works John Trani -10%
Portability of human capital NO SKILLS TYPE SKILLS PORTABILITY 1 General management human capital The skills to gather, cultivate, and deploy financial, technical, and human resources The most portable 2 Strategic human capital Individuals’ expertise in cost cutting, growth, or cyclical markets; Highly Portable 3 Industry human capital Technical and regulatory knowledge unique to an industry Portable 4 Relationship human capital The extent to which a manager's effectiveness can be attributed to his or her experience working with colleagues or as part of a team Less Portable 5 Company specific human capital The knowledge about routines and procedures, corporate culture and informal structures, and systems and processes that are unique to a company Least Portable
Individuals’ expertise in cost cutting, growth, or cyclical markets
Such skills are usually portable type of humane capital other than general management skills
Remember . . . !
· The strategic skill required to control cost s in the face of fierce price competition are not the same as those required to improve the top line in a rapidly growing business or balance investment against cash flow to survive in a highly cyclical business
· They won’t offer an advantage if the strategic needs of the company don’t match the manager’s skills
Nine of the 20 executives under studied matches strategic skills.
In case of match new organization experience abnormal return of 14.1% while in case of mismatch returns were –39.8%
Consider the experience of Paolo Fresco, whose success spearheading GE's growth into Europe did not follow him when he became chairman of Fiat in 1998. Fiat (org) was not cost competitive, and yet Fresco's attention was diverted by investments in technology and Web presence, as well as by acquisitions meant to diversify the company's portfolio. After the carmaker slid into a protracted liquidity crisis, Fresco and his board supported a politically explosive plan to divest Fiat's core automobile business; when that was rejected by creditors and shareholders, he resigned in 2003.
Consider, too, John Trani, who in 1997 left a long career at GE Plastics for toolmaker and hardware manufacturer Stanley Works. Trani had held GE Plastics through a long period of extraordinary growth. When he joined Stanley Works, the company had emerged from a period of expansion and, with sales flattening, had to shift its focus to cost control, a type of expertise Trani lacked. Three years into his tenure, he delivered a -10 percent annualized abnormal return.
However, knowing how and where to cut was clearly a plus for Carlos Ghosn, who is not a GE alumnus but is one of the cases we teach on a new CEO widely known for transforming the nearly bankrupt Japanese auto manufacturer Nissan into one of the world's most successful car manufacturers. Having previously turned around Michelin operations in Brazil and overseen the integration of the Goodrich-Uniroyal acquisition, Ghosn earned the nickname " le cost killer" for his role in the Renault turnaround.
Example #1 when lee Iacocca joined Chrysler in 1978,he was able to hand pick a staff that could help him carry out a high-risk turnaround of a nearly bankrupt company. in first four years, to help him tackle Chrysler's financial, organizational.
Intuit’s Bennett brought several former GE colleagues to his new employer. If he had been unable to fill positions with highly capable people known to him, retirement of long time and stock-wealthy departing intuit employees could have proved operationally divesting
Most managers operate under constraints that are particular to an industry, such as regulatory supervision in the food, drug, and utility business or the deeply competitive nature of the consumer goods business. So we ere not surprised to find that relevant industry experience had a positive impact on perform in a new job, but that these skill didn’t transfer to a new industry.
In cases where a GE executive moved into an industry similar to the one that had formed the core of his experience at GE, his new company generated annualized abnormal returns of 8.8%, when the executive moved into a very different industry relative to his experience, his company generated annualized abnormal returns of –29.1%
Industry expertise also includes relationships with customers, supplier, regulators, and even competitors that can confer and advantage.
In 1989 general dynamics, one of GE”s major customers, announced the hiring of William enders, former general manager of GE aircraft equipment as vice chairman and subsequently chairman and CEO. At the time the F-22 program then an estimated $67 billion project to develop the successor for General Dynamics' highly profitable F-16 was facing ill favor in congress over costs.
Entering a new industry, by contrast, often entails a steep learning curve a factor companies in crisis should keep in mind in the hiring process.
When star executives switch companies, they leave an environment in which their skill sets allow them to be effective. The more closely the new environment matches the old, the greater the likelihood of success in the new position.
Qualities and characteristics but there annualized abnormal returns of 17.5% while the other ten, those with a lesser degree of fit (match), showed annualized abnormal returns of –37.7%.
When James McNerney left GE for 3M, he took advantage of a high cultural match between the two companies to institute certain GE practices that were new to 3M- including growth through acquisition, rigorous cost control, a leadership development institute, and a performance-based pay structure. A great degree of similarity exists between the systems and culture of the new executives former setting and those of your company Company specific : knowledge of idiosyncratic processes and management systems Intuit’s Bennett brought several former GE colleagues to his new employer. If he had been unable to fill positions with highly capable people known to him, retirement of long time and stock-wealthy departing intuit employees could have proved operationally divesting You can bring one or more of the new executive’s former teammates on board as well Relationship: Productivity deriving from participation in teams As vice president of IBM’s Microelectronics semiconductor Products ‘Christine kind established the division as a dominant manufacturer of applicatio0n specific integrated circuits. When AMI semiconductor lured her away in 2001; the company specifically cited her outstanding relationship with customers as tremendous assets for AMIS. Your company need strategic relationships with other industry players or familiarity with industry customers Industry: technical and regulatory knowledge unique to an industry Entrepreneurial, laid-back software maker intuit wanted to improve margins and top-line growth. It hired Steven Bennett, who had launched new business at GE Bennett refocused intuit on creating new products scoring double digit revenue growth in his first year. Your company’s strategic needs match the new executive’s skills Strategic: expertise in cost cutting growth, or cyclical markets Example Transferable when Skill type
THE FIVE MESSAGES, LEADERS MUST MANAGE (By: John Hamm) Presented by: Burhan Minhaj Reg.No # 2042
Real job of a leader is to inspire, support the organizations collective responsibilities and to take responsibility for creating a better future. To believe in effective communication is a leader’s single most critical management tool for making this happens
Leaders job is to deliver the messages to the team members and don’t make things unclear for the employees.
When a leader defines what he/she really means and sets a clear direction according to that direction, relationship and feedback improve, action is more efficient and on-strategy and improved performance follows.
According to the article, five messages have been defined by explaining them with the moving train compared with organization that if all the levers (messages) is well aligned then train will smoothly move forward and will be joy for both driver and passengers.
The organization chart because it represents the individual power and influence and it is an emotionally charged framework even during a company’s most stable times.
But when the corporate structure is changing, the organization chart truly become fearsome, particularly in companies where because of the political structure, employees worry about risk to their personal status.
A leader who quickly takes charge of the communication around reorganization can prevent the discourse from engendering fear.
Effective leaders by contrast understand that their role is to bring out the answers in others.
They do this by very clearly and explicitly seeking contributions, challenges and collaboration of people who report to them by using their positional power not to dominate but rather to drive the decision making process.
The more collaboration and political the process will be, the less isolated the leader and the greater likelihood that business strategy would be and greater the likelihood that business strategy will grounded in reality
CEO fed culture to employees with the help of Chief Cultural Officer with an aim of employee high morale, attitude, and teamwork and empowering them, although results might not achieved but employees’ determination will be more towards the firm.
FOOD FOR THOUGHT MESSAGE CONVENTIONAL MENTAL MODEL TRY THIS Organizational structure and hierarchy Make the org chart a proxy for politics Optimize human resources Financial results Penalize misses, Blame someone Perform a diagnostic to determine the root cause of any shortfalls The leader’s sense of his or her job The boss has answers Everyone has answers – ask questions. Time management Time is scarce so scramble against constraints Time is fixed, so choose wisely within constraints Corporate culture Hand the responsibility to HR Create an environment in which everyone can help the team win.
Power of clear communication is really a game of leverage. A CEO who communicate with his employees all the time have a drastic results in the sense of employees commitment and energy in clear, well understood, shared vision of the company’s real goals, priorities and opportunities then the results will automatically be achieved effectively and efficiently. Leader must mange these 5 Messages in the firm in order to be best of all competitors.
Michael Maccoby is an anthropologist &a psychoanalyst. He is also the founder and president of maccoby group, a management consultancy in Washington DC, &was formerly director of program on technology, public policy & human development at Harvard university’s Kennedy school of government in Cambridge, Massachusetts. This article was the basis for the book the productive narcissist: the promise & peril of visionary leadership.
The level 5 discovery derives from a research project that began in 1996.
To answer one question: can a good company become a great company and if so. how?
Jim Collin with his 22research associates worked in group of four to six at a time from 1996 to 2000, that research involved wide range of both qualitative and quantitative analyses.
Research began with 1,435 companies that appeared on the fortune 500 from 1965 to 1995 & found 11 good-to-great examples, That's not the sample: that’s the total number that jumped all hurdles and passed into study.
Level five leaders are a study in duality: modest and willful, Shy and fearless.
Colman M. Mockler, CEO of Gillette from 1975 to 1991.
Mockler, who faced down three takeover attempts, was a reserved, gracious man with a gentle, almost patrician manner.
At the height of the crisis, he maintained a calm business-as-usual demeanor, dispensing first with ongoing business before turning to the takeover.
He chose to fight for the future greatness of Gillette even though he could have pocketed millions by flipping his stock.
If Mockler had given up the fight, it’s likely that none of gentlemen would be shaving with Sensor, or the Mach 3 and hundreds of millions of people would have a more painful battle with daily stubble.
THE HEDGEHOG CONCEPT: In a famous essay, philosopher and scholar Isaiah Berlin described two approaches to thought and life using a simple parable: The Fox knows a little about many things, but the hedgehog knows only one big thing very well.
Three intersecting circles:
A CULTURE OF DISCIPLINE: When you look across the good-to-great transformations, they consistently display three forms of discipline:
How its economics works What best ignites the passion of its people What a company can be best in world