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Case study. what companies want

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Case study. what companies want

  1. 1. Case study July 2010 ”What Companies Want “ Graduate education needs in a global labour market BIANCHI Paolo ANDERSEN Solveig GAGLIARDI Marcello GUERIN Julia VLEUGELS Jenneth
  2. 2. TABLE OF CONTENTS 1. INTRODUCTION AND PROBLEM DEFINITION 2 2. EXTERNAL ENVIRONMENT 3 2.1 Economic developments 3 2.2 Globalization 4 2.3 Entrepreneurial thinking 4 2.4 Corporate social responsibility 5 2.5 Demography 5 3. STORY OF LUISS BUSINESS SCHOOL 6 3.1 LUISS Guido Carli University and LBS: history in brief 6 3.2 Business areas and offers 7 4. STRATEGY OF LUISS BUSINESS SCHOOL 7 4.1 Three strategic pillars 7 4.2 Positioning of Luiss Business School´s educational model 8 4.3 Competitive advantage 9 4.4 Directions for improvement 10 5. HOW TO CONTINUE? 10 REFERENCES 11 APPENDIX 1: INTERVIEW SUMMARIES 12 Mr. B. - Fabrica Immobiliare SGR 12 Mr. V - Director of Operations and Development - Gruppo Della Valle 16 Mr. D - TL Com 21 APPENDIX 2: STRUCTURE OF THE PRESENT MBA PROGRAM CASE STUDY LBS, JULY 2010 25 1
  3. 3. 1. INTRODUCTION AND PROBLEM DEFINITION Mr. Paolo Boccardelli, Head of the International Division at Luiss Business School1, and Luca Giustiniano, coordinator of the MBA program at LBS, have a conversation about the strategy of LBS. Mr. Boccardelli is concerned about the future and expresses his ideas to Mr. Giustiniano: “After the economic crisis the world is changed, and now we can see how important it is for companies to be flexible and to adapt. Therefore, we have to understand companies’ new needs, caused by such changes, as companies are our customers.” Mr. Giustiniano nods to show his consent and adds to Mr. Boccardelli’s concerns: “I completely agree with you, Paolo. We must find out what new competencies are required from present and future managers, the ones we train here. Other external factors, besides the economic crisis, might influence the competencies they should develop now as well”. Mr. Boccardelli’s sighs as a sign of how complex the whole situation is. He continues: “Yes, that’s true, I keep in mind factors like the different demographic trends in the world, the globalization and the increased requirements from stakeholders, who put pressure on the companies to behave in a socially responsible way”. By the end of their conversation, Mr. Boccardelli and Mr. Giustiniano agree that LBS needs to understand “what companies want”. Likewise, it is important that LBS adapts to the external changing environment. As companies are LBS’ customers, it is crucial that LBS meets the new requirements from its customers. Therefore, Mr. Boccardelli and Mr. Giustiniano agree that the problem LBS is facing, can be defined as follows: “What are the companies’ needs, influenced by the global changing environment, in terms of present and future managerial competencies?” After having defined the problem, Mr. Boccardelli and Mr. Giustiniano look for the next step to solve the problem. They quickly reach the conclusion that after such new competencies will be identified, a reshaping of the MBA program may well be necessary. The main goal of their efforts is to increase the satisfaction of the companies, they train managers for, as well as the quality of the tuition they provide at LBS. A new MBA program, or a reorganization of the existing one, is likely to be the practical result of the analysis Mr. Boccardelli and Mr. Giustiniano started. 1 Hereinafter: LBS CASE STUDY LBS, JULY 2010 2
  4. 4. They know from the literature concerning managerial competencies that several definitions and meanings of the word “competency” exist, so they decide to clarify the meaning of the word for their purpose. They perceive a competency as an individual’s readiness to use knowledge, skills and attitudes. They decide to discard the meaning of competency as the strategic core competencies an organization uses in order to gain competitive advantage. They distinguish between skills and competencies as well. A skill is the ability to carry out a specific task, whereas a competency is the ability to use a combination of different skills. 2. EXTERNAL ENVIRONMENT Providing a first insight into the global environment surrounding LBS, Mr. Giustiniano and Mr. Boccardelli refer to some literature. The following paragraph will provide a summary. 2.1 Economic developments “The global economic crisis, which severely tested our adaptability and flexibility this past year, will be truly transformational in its impact. Many accepted paradigms, including the way in which business interacts with its stakeholders, particularly governments, will have to be rewritten. The turbulence of the last months will significantly accelerate the development of business models that capitalize on the new opportunities created by the crisis, including the expansion of the so-called green economy” (Schwab, 2009, p.2). The important economic development besides the economic crisis that is not captured by this quote is the following: according to Goldman Sachs, Brazil, Russia, India and China will definitely overrun the G-6 economies by 2043, therefore the future will be multi-polar, which means that there will be more dominant economic centers than in the past2. Besides these shifts in economic dominance most markets will experience pressures regarding pricing. The weakness of the economy, leading to overcapacity within companies and a shift in mentality from superiority to soberness and modesty, has already pushed prices downward. This trend will be intensified by the expansion of companies into poorer markets all over the world. 2 Goldman Sachs (2003) CASE STUDY LBS, JULY 2010 3
  5. 5. Meanwhile, a great debate is taking place concerning the behavior of managers, who were in charge of leading large financial institutions, and whose behavior were not aligned with the public opinion. In addition to this, the whole category of top managers is nowadays accused of being greedy and more interested in stock options than in the common good3. Furthermore, pragmatically speaking, the dominance of the government will be more prevalent in the future. Because the current crisis has demonstrated that markets do not automatically control systemic risk or automatically create competition, governmental intervention will be required to prevent markets from destroying themselves4. 2.2 Globalization One of the most significant changes in the world economy over the past two decades has been an increasing globalization of markets and industries5. The ongoing consequences of globalization include widespread industry rationalization and heightened competition at regional, national, and global levels6. Besides this, the number of cross-border mergers and acquisitions and the number of multinational firms has increased extensively7. Furthermore, as an influence of globalization, the cultural diversity in society and business has grown considerably8. Because of the fact that organizations are becoming more multicultural, effective management of a multicultural team is gaining in importance and is crucial to maximizing the productivity and input of each member9. 2.3 Entrepreneurial thinking Changes in the environment, such as the increased dynamics of the market, the speed of changes and increased turbulence, have a major impact on the way managers should act and think. Therefore, entrepreneurial thinking becomes more and more important. With regard to this, in order to survive, companies must change their focus on linkages between technology and management to enhance the capability to produce entrepreneurial strategies and innovative business models10. 3 Ghemawat (2010) 4 Watts (2009) 5 Wiersema & Bowen (2008) 6 OECD, Organization for Economic Co-Operation and Development (2003) 7 UNCTAD, United Nations Conference on Trade and Development (various years) 8 Source: Mr. Boccardelli, iMBA director, LBS 9 Day. (2008) 10 Source: Mr. Boccardelli, iMBA director LBS CASE STUDY LBS, JULY 2010 4
  6. 6. 2.4 Corporate social responsibility Concerns about corporate social responsibility have grown significantly during the last two decades11. What is important regarding CSR is the mindset of the manager, because managerial perceptions are of crucial importance for the company’s CSR strategy. This involves the idea that a right interpretation of the environment and the requirements from stakeholders can lead to success and improved performance, while a wrong interpretation can lead to performance deterioration and crisis12. 2.5 Demography The statistics are undeniable: in most developed economies, the workforce is steadily ageing, as a reflection of declining birth rates and the graying of the baby boom generation. The percentage of the workforce between the age of 55-64 is growing faster than any other age group. Even in an emerging economy like China, the number of manufacturing workers aged 50 or older will more than double in the next 15 years 13. This will have several implications for organizations. First, as older individuals tend to have lower rates of labour force participation, this shift is likely to result in lower overall participation rates and a contraction of labour supply14. Second, as employees get older, and retire, businesses can face significant losses of critical knowledge and skills. The shortage of labour supply will increase this problem, because older talents cannot be substituted by younger ones15. Third, there is a strong debate surrounding the effect of aging on productivity. A key finding on aging and productivity is that individual performances at work strongly depend on the content, organization and environment of the work itself. This emphasizes the responsibility of the organization to deal with the ageing workforce16. 11 Campbell (2007) 12 Maon, Lindgreen & Swaen (2008) 13 Strack, Baier & Fahlander (2008) 14 Spieza (2002) 15 Dychtwald, Morison & Erickson (2006) 16 Spieza (2002) CASE STUDY LBS, JULY 2010 5
  7. 7. 3. STORY OF LBS In order to discover “what companies want” and to define the necessary intervention on the MBA program, Mr. Boccardelli and Mr. Giustiniano hire an external consulting firm. To inform the consultants about what is going on at LBS, they give them a short overview of the history, business areas and offers at LBS. 3.1 LUISS Guido Carli University and LBS: history in brief LUISS stands for “Libera Università Internazionale degli Studi Sociali” that is “Private International University for Social Studies”. LUISS Guido Carli University is an independent university, established by a consortium of private and public companies over the years 1974-1978, and traces its origins back to a pre-existing institution, Università Pro Deo, founded in 1966. The university consists of three faculties: Economics, Law and Political Science. In 1974 Umberto Agnelli, member of the well-know Agnelli family, which is the owner and founder of the Italian automotive company FIAT, led a group of businessmen in a project of higher education, investing human and financial resources in the education and training of the managers. Important banks, along with industrial groups belonging to both the private and the public sector, joined the project. In 1978 the chairman of the Italian Confederation of Industry (Confindustria), Guido Carli, was appointed as President of the University. He covered this position until his death in 1993. Presently the President is Luca Cordero di Montezemolo, former chairman of Confindustria as well. The milestones in the history of LUISS Guido Carli University are the following: - In 1982 the faculty of law was founded and the campus expanded; - In 1986 the foundations of LBS were made. It was a “managerial education area” (Area Formazione Manageriale) within the LUISS Guido Carli University; recently it officially became an autonomous department established under the name: LBS; - In 1994 the Board of Directors decided to name the university after the death of Guido Carli. - In 1997 the University set up Luiss Management S.p.A., the company which manages the business school in order to cater for market-oriented education. - In 2010 the Luiss School of Government was created. CASE STUDY LBS, JULY 2010 6
  8. 8. 3.2 Business areas and offers LBS is involved in five business areas. First of all, the managerial education department is devoted to middle-managers education. The offer is strongly focused on the Italian market, and proposes varied disciplines such as marketing, communication, HR, etc. This is the traditional and main business for LBS, which represents 40 % of its revenues. Then, the International department’s objective is to enhance the ability for LBS MBA to compete with other MBAs within Europe. Here are examples of specific programs handled by the international department: classic MBAs, aviation industry MBA and a master in corporate finance. Further, there is the recently established international MBA which focuses on the global demand. The public sector management department focuses on training managers in the public sector, both at central and local levels (example: management in healthcare). The Executive education department activities concentrate on the Executive MBA. Lastly, there is a consulting department, which represents a very small proportion of LBS activities. It provides consulting and research services to private and public institutions, in cooperation with professors and researchers of LUISS University and with prominent consulting firms as well. 4. STRATEGY OF LBS In order to provide a better understanding of LBS and its heading, Mr. Giustiniano and Mr. Boccardelli give to the external consultants an overview of the strategy of LBS. Since the founding of LBS in 1986, the mission of LBS is to design and offer managerial education solutions both to recently graduated students and professionals, looking for people who want to leverage their talent and consequently further their careers, aiming at positions in big corporations, medium sized companies or the public sector as well. 4.1 Three strategic pillars As Head of International Department Paolo Boccardelli expresses, the fact that the strategy of LBS is based on three pillars: 1) Innovation CASE STUDY LBS, JULY 2010 7
  9. 9. The objective is to provide training and education to organizations and companies so as to help them developing innovation. Because of the fact that they are not so up to date in new technologies, it is crucial for Italian companies to foster this innovation dimension in order to be competitive at a national or global level. In order to provide high-level innovation education, LBS wants to create partnerships with several business- and engineering schools. Another project the management of LBS is reflecting on, is the creation of a center for innovation and entrepreneurship with specific programs. 2) Internationalization LBS needs to increase its international dimension as it wants to enter a more global arena. Efforts are made to develop international partnerships to offer exchange programs or double degrees that allow students to have intercultural experiences. 3) Public sector management The new wave of public governance, initiated by a reform by Renato Brunetta - Minister for public administration and innovation, is changing the Italian public sector, bringing it closer to the private sector model. The new development grants more responsibilities to employees, therefore new roles and working trends are emerging. LBS provides training for managers to work under these new conditions. In parallel to these three main strategic pillars, another crucial development for LBS concerns its faculty composition and research capability. While in the past LBS´s professors were external, LBS´s management realized that creating knowledge within the school, thanks to a strong faculty, was a guarantee for LBS´s quality and reputation. In 2007, Luiss Guido Carli University launched a fundraising program to increase the research activity. In this way LBS created an incentive for the professors to publish their work on an international level. 4.2 Positioning of LBS´s educational model Mr. Boccardelli explains to the consultants that there are two dominant business school models existing nowadays. The first one is a “research-based approach”; in this case, business schools guarantee their prestige through influential professors. Chicago Booth Business School and its numerous Nobel-prize professors is an example of this model. The second model is one with a much more practical approach, as “academic research is not enough to provide value for managers”: research is used in a smaller proportion and education relies much more on business insight – many European business schools tend to be on this side. CASE STUDY LBS, JULY 2010 8
  10. 10. The following graph focusing on the equilibrium between research approach and practical approach represents the current position of LBS and the desired evolution in the strategic view of the management. Figure 1: two business school approaches The consultants are a bit confused by this figure, so Mr. Boccardelli explains: ¨As you can see in Figure 1, LBS is both oriented towards research and very close to practice. In the future, the objective is to develop the school’s capabilities in terms of research to have a very high level both in research roots and practical approach.¨ 4.3 Competitive advantage One of the most important competitive advantages for LBS is that it belongs to Confindustria, the most important Italian association of employers. LBS differentiates by its strong connections to the business area. This network of organizations and companies plays a role at two levels. On the one hand, many professors are managers within this large business network. On the other hand, these organizations and companies are potential employers for graduate students of LBS. 4.4 Directions for improvement CASE STUDY LBS, JULY 2010 9
  11. 11. According to the strategy of LBS, becoming more global, LBS has to increase its legitimacy and credibility on an international level. Therefore, LBS needs to work on accreditation processes, as the school has no international accreditation yet. References in the field are among others: EQUIS, AACSB, or AMBA. 5. HOW TO CONTINUE? Mr. Giustiniano and Mr. Boccardelli hand over the problem to the consultants, who from now on are in charge of finding a solution for LBS. After taking a closer look at the history and the context of LBS the consultants decide to conduct some exploratory interviews with managers from different companies, in order to gain a better insight into the companies’ emerging needs. The summaries of these interviews are included in appendix 1 results. After conducting these interviews, the consultants start thinking about how to continue. You are one of the consultants for LBS, and these are the questions you need to answer to: - How would you use the data of the explorative interviews in the best way? - To what extent can you generalize the results of the research in order to define “what companies want”? - How can you identify the more valuable outcomes of the research for LBS to make future decisions? - Considering the content of the current MBA program (see appendix two) is consistent with companies’ needs? How would you change it? - Can you identify new subjects that could be taught in order to develop the competencies required for the new managers? REFERENCES CASE STUDY 10 LBS, JULY 2010
  12. 12. Campbell, J. (2007). “Why would corporations behave in socially responsible ways? An institutional theory of corporate social responsibility”, Academy of management Review, 32, 946-967. Day, R. (2008). “Look at diversity as an asset”. Source: www.hrmagazine.co.uk. Dychtwald, K., Morison, R., & Erickson, T. (2006). Workforce crisis: How to beat the coming shortage of skills and talent. Boston: Harvard Business School Press. Ghemawat , P. (2010). “Finding your Strategy in the New Landscape”, Harvard Business Review, 88, 54-60. Maon, F. Lindgreen, A. & Swaen, V. (2008). “Thinking of the organization as a system: The role of managerial perceptions in developing a corporate social responsibility agenda”. Systems research and behavioral science, 25, 413-426. OECD (Organization for Economic Co-Operation and Development). 2003. Section C.2.2: “Exposure to international trade competition by industry”. OECD Science, Technology and Industry: Scoreboard 2003. OECD: Paris. Schwab K. (2009). World Economic Forum Annual Report 2008 – 2009. http://www.weforum.org/pdf/AnnualReport/Annual_Report_2009.pdf Spieza,V. (2002). “The greying population: A wasted human capital or just a social liability?” International Labour Review, 141, 71-111. Strack, R., Baier J., & Fahlander, A. (2008). “Managing Demographic Risk”. Harvard Business Review, 86, 119-128. UNCTAD (United Nations Conference on Trade and Development). Various years. World Investment Report. United Nations: New York. Watts, D. (2009). “Too Big to Fail? How About Too Big to Exist?”, Harvard Business Review, 87, 16 Wiersema, M. & Bowen, H. (2008). “Corporate diversification: the impact of foreign competition, industry globalization, and product diversification”, Strategic Management Journal, 29, 115-132. “Dreaming with BRICs, The Path to 2050”, Global Economics Website, Paper n. 99. Goldman Sachs 2003. http://www2.goldmansachs.com/ideas/brics/book/99-dreaming.pdf CASE STUDY 11 LBS, JULY 2010
  13. 13. APPENDIX 1: INTERVIEW SUMMARIES Mr. B. - Fabrica Immobiliare SGR Interview Summary Date: May 18th, 2010 EXTERNAL IMPACTS ON ORGANIZATIONS Could you name the most important external factor, out of the company’s control, that had a major impact on the organization, within the last three years? According to Mr. B there are three important factors that needs to be considered. Financial crisis, the impact on real estate market was dramatic, everything stopped. Globalization: Real estate markets are now open. New markets (China, Russia…). ECONOMICS In the next decades, world economic dominance will be shared between the G-6 and the BRIC countries (Brazil, Russia, India and China). Which competencies must present and future managers have in order to deal with this dominance? Need to create international minded people. International experience (academic exchanges, internships abroad). Need for an international approach. International mindset? Something that comes from experience outside of Italy. To be ready to move, ready to speak with people that have other mentalities, in another language. You have to be flexible and to understand the other cultures (especially China for example: “I have to learn to be Chinese, otherwise I cannot sell anything”). To adapt yourself and to learn from other people. In the years to come, growth rates will slow down in the G-6 countries, and consumers’ demand will be weak. This will cause a low-cost competition world-wide. What does this low-cost competition imply for managerial competencies? Managers have to be ready in the “cost-selling approach”, that is to say to be efficient: “don’t lose time, don’t lose money”. They have to be ready to work more, have more responsibilities. Be more open. Job organization. Be more focused on your core business. CASE STUDY 12 LBS, JULY 2010
  14. 14. The crisis of the “real” economy started from a Financial Crisis. The behaviour of top managers has been blamed worldwide. Considering this point of view, which characteristics should the next generation of managers have? Need a new approach: professional, transparent, clean way of doing business. Not too risky attitude. Strength in analysing risk. Only go for secure opportunities. Transparent and independent approach. You need to be trusted to win, to build trust so as to develop strong partnerships. Guarantee an ethic way of doing business. Governmental intervention has been essential to come out of the crisis. The role of the public sector will be prominent in the future. What competencies do next generation of managers have to develop in order to cope with this? Need to be patient. Understand bureaucracy, long and risky timing. You have to push them (but in a proper way) and make them follow you, to communicate the benefit that you can bring to the public counterpart. Managers need to have a “commercial approach”. GLOBALISATION As companies are becoming more and more global, managers are working in an intercultural environment. What competencies do they need to develop in order to adapt to this new intercultural environment? Improve proportion of international students in the MBA program. The professors should come from international Business Schools. Courses should be in English. Need to be in an international environment from the beginning. How do you imagine the characteristics of the global leader, now and in five years? International mentality. Fast in understanding business situation and making decisions. Managers have to read newspapers, to be aware of what is happening at a broad international level. The language: Italy is lagging behind on that. Companies’ organizational structures are losing span on the vertical dimension (hierarchy) and getting flatter (horizontal teamwork is increasing): how does this impact managerial competencies? Be ready to work in teams with different people and approaches. Focus on business planning. CASE STUDY 13 LBS, JULY 2010
  15. 15. What managerial competencies are needed for managing multicultural teams? Be patient. Understand this multiculturalism is a value. Understand who is in front of you (profile, culture), to make the best from each team player. Information and Communication Technologies are reshaping the job design and working conditions, what are the impacts on competencies required from managers? The new manager has use tools in a proper way, be ready to discover new tools, be ready to learn. But be careful because “technology can run over you”. It can be very time-consuming. DEMOGRAPHY The population and therefore employees are aging; in your company, what kind of solutions do you see for this challenge? Managers have to understand that they cannot ask 65 years old employees to do the same tasks as 30 years old employees. Adapt approach. Be patient. Use their asset, which is their experience. Understand the competencies of everyone. When a lot of employees in the company retire, what competencies are needed for managers in order to prevent critical knowledge from being lost? Managers need to be open and ready to learn from experience of others, and by doing yourself. And adapt to a different language. Need to be humble. Very different generations are now coexisting in the company. This may generate conflicts and misunderstandings. How does this diversity have an impact on managerial competences? It is a question of mentality. Need to be open-minded. Humility. Be ready to learn. CORPORATE SOCIAL RESPONSIBILITY Companies are experiencing increasing pressure from stakeholders to invest in CSR. What impact does this pressure have on managerial competencies needed? Need to be professional, open/”clean” and transparent. Give a good image of yourself and of your company. CASE STUDY 14 LBS, JULY 2010
  16. 16. What managerial competencies are needed in order to understand stakeholders requirements? What managerial competencies are ensuring a good reputation for the company? Understand you have to defend the reputation of your company. Again, transparency and professional approach. Former Prime Minister of the UK, Gordon Brown, claimed: ¨we will join a Green New Deal¨. President Obama promised to pump $150 billion into green technology over the next decade. Which competencies do managers need to develop to work in a world, where the so-called “green economy” will become extremely important? Managers will deal with green economy more than in the past. It is a good chance to do something social, and do it for business. It is connected to the reputation of the company, providing it a clean, green image. It is mainly a matter of personal sensitivity. If you don’t have it, it is important to understand the potential, the benefit on the image of the company. The manager needs to be ready to study about something that is quite new, and have a business approach about it. It will be very important in the future as a business opportunity but also in term of reputation. It is becoming an issue for companies to encourage gender diversity. How does this gender issue have an impact on the managerial role and their expected competencies? The real estate sector is a male dominated sector. Therefore, there are no special competencies needed. Just to understand people, understand the persons who are in front of you. CASE STUDY 15 LBS, JULY 2010
  17. 17. Mr. V - Director of Operations and Development - Gruppo Della Valle Interview Summary Date : May 17th, 2010 EXTERNAL IMPACTS ON COMPANIES Could you name the most important external factor, out of the company´s control, that had a major impact on the organization, within the last three years? When asked what external factor had a major impact on the organization, within the last three years, Mr. V immediately mentions the globalisation of business. According to him, this creates a need to rethink how the company is organized, in order to be able to send its products in many countries. He mentioned that Italian companies are still operating with a lot of “power to the center”: operations all around the world are rather an “execution of what is decided at the center”. Therefore companies need people who know different cultures, who “know the world”. Then he thinks of another external factor: the “value for money perception” of the consumers, which has changed after the crisis. ECONOMICS China and India may account for 50% of global GDP by 2050, and forecasts (Goldman Sachs) claim that China will overtake Europe by 2023. World economic dominance will be shared between the G-6 and the BRICs countries. Which competencies must present and future managers have in order to deal with this dominance? Answering to the question concerning the new economic dominance, Mr. V expresses that companies have to put in place an organization that is able to understand differences among the different countries in order to operate in different environments This will bring the need to have managers that are able to cope with these differences and to report to the HQ what are the needs of the different countries. He gives an example concerning China: “Tod’s need people that go there, get to know china and its consumers”. In the years to come, growth rates will slow down in the G-6 countries, and consumers’ demand will be weak. This will cause a low-cost competition world-wide. What does this low-cost competition imply for managerial competencies? CASE STUDY 16 LBS, JULY 2010
  18. 18. M. V says that nowadays brands are extremely important and “companies need to communicate to consumers that there is value behind the name”. In his view, a low-cost competition will not bring long-term result. “Long-term winning is about value around your branding”. The crisis of the “real” economy started from a Financial Crisis. The behaviour of top managers has been blamed worldwide. Considering this point of view, which characteristics should the next generation of managers have? In Mr. V’s opinion, this is linked to the problematic idea of “making a lot of money on a short-term” basis. He believes that in the future, there will be a strong importance given to industrial values, and to the idea of building companies that last on the long-term. He insists on the idea that long-term view is much more important than short-term one, and he underlines that this perspective is already changing in the marketplace. As a conclusion, he states: “we have to have managers looking at generating value for the longterm”. Governmental intervention has been essential to come out of the crisis. The role of the public sector will be prominent in the future. What competencies do next generation of managers have to develop in order to cope with this? Mr. V thinks that managers should not think that the government will help. “The economy should be able to find its own solutions. Managers should be focused on their business.” GLOBALISATION As companies are becoming more and more global, managers are working in an intercultural environment. What competencies do they need to develop in order to adapt to this new intercultural environment? As Mr. V says, “the big word here is diversity, being able to understand diversity”. It is particularly important for Italian culture. Managers have to understand that there are different behaviours, different ways of looking at things. He quotes the example of the Japanese: “even if they are not shouting around the table, they are giving their point of view, they do it in their own very respectful style”. Italians would say, “they are sleeping, they are not strong enough”. Indeed understanding diversity is the most difficult thing. He concludes: “in fact, the new generation has to travel a lot.” How do you imagine the characteristics of the global leader, now and in five years? CASE STUDY 17 LBS, JULY 2010
  19. 19. Mr. V explains that it is someone who has been working in many places. Someone who has an experience of different cultures. “The more you look at the future, the more intercultural experience is needed”. He says that now there are global leaders but that not all of them have global experience. Then he gives an example: “in Tod’s I am pushing for a program where many people are travelling in different regions. In five years, they are going to be better managers.” Companies’ organizational structures are losing span on the vertical dimension (hierarchy) and getting flatter (horizontal teamwork is increasing): how does this impact managerial competencies? About the flat organization, Mr. V expresses that teamwork is indeed becoming more and more important. And again, it means working with different cultures. He underlines: “I believe that globalization is creating more power at the centre”, so companies will need very strong leadership at the centre. He believes that the company is evolving with two phenomenon’s: first, the need for global managers with a lot of power at HQ, and second, good team work people spread all around the world. What managerial competencies are needed for managing multicultural teams? Mr. V emphasizes the ability to listen, to understand the communication and the way this communication is done. He repeats that listening is a big competence that managers have to learn, as there is a risk: when they have successful careers, some managers tend to believe they know everything. Information and Communication Technologies are reshaping the job design and working conditions, what are the impacts on competencies required from managers? As far as the increasing importance of ICT is concerned, MR. V thinks that managers in the future of course have to know new technologies and tools. However, as there is a lot more communication, he warns, “managers have to cope with it, have to find the right balance”. Managers in the future will have to change the way they work every day. They have to use these tools in a way they “don’t become trapped”, as it should not take too much of their time. DEMOGRAPHY The population and therefore employees are aging; in your company, what kind of solutions do you see for this challenge?/ When a lot of employees in the company retire, what competencies are needed for managers in order to prevent critical knowledge from being lost? CASE STUDY 18 LBS, JULY 2010
  20. 20. Concerning knowledge management, Mr. V says that organizations have to prepare the new generations for taking over; he gives an example from his own experience: “the day I left Procter and Gamble, I had prepared a lot of managers that knew all they needed to take over”. Organizations have to make sure there is a good flow of information. They also have to “put the younger people below the more senior people”; of course, a structure with a lot of delegation is needed, to make sure that not only top managers know what to do. Very different generations are now coexisting in the company. This may generate conflicts and misunderstandings. How does this diversity have an impact on managerial competences? Mr. V expresses that it is important to listen to the new generation. “It is important that senior people have an attitude of favouring change and let the younger generation lead the change”. He underlines that “the company evolves in the way the thinking of the new generation evolves”, and it is crucial to keep the company keep as young as you can. CORPORATE SOCIAL RESPONSIBILITY Companies are experiencing increasing pressure from stakeholders to invest in CSR. What impact does this pressure have on managerial competencies needed? MR. V expresses that “CSR is very important”, “you have to have the sensitivity” for it. He explains that the competencies to build are more “a sensitivity, an attitude”; being aware of it is important. In this perspective, he thinks that the new generations are essential for bringing this thinking to the company. He believes it is a strong advantage to have people taking care of CSR in their daily activities (what leather for shoes for instance). It is about building a new culture that comes from the younger generations. What managerial competencies are needed in order to understand stakeholders requirements? Mr. V expresses that “managers should not live only inside of the company, but also be part of outside the company”. “A manager has to go out and meet people”. A manager has to “be attentive to the outside world”. What managerial competencies are ensuring a good reputation for the company? In M. V´s view, ensuring reputation is related to communication skills: “image and reputation comes from what managers communicate”. “Managers need to go out and talk”. Former Prime Minister of the UK, Gordon Brown, claimed: ¨we will join a Green New Deal¨. President Obama promised to pump $150 billion into green technology over the next decade. CASE STUDY 19 LBS, JULY 2010
  21. 21. Which competencies do managers need to develop to work in a world, where the so-called “green economy” will become extremely important? When it comes to green economy, Mr. V underlines that again, this is about “understanding the external world”; understand this external world is important “to be a social responsible manager”. It is a matter of being aware of the need to think about sustainable development. So what is needed is to build a “sensibility”17. Then he explains that while in the US green concern it is already very developed, in Italy it is developing only right now. It is becoming an issue for companies to encourage gender diversity. How does this gender issue have an impact on the managerial role and their expected competencies? According to Mr. V, this is a question of culture inside the company. “Managers have to understand these needs.” Of course, “companies also have to define their priorities”. It comes again to the idea of “listening to the outside world”; managers have to “understand what is important and why”. He specifies, “Italy is still a male society”. Gender issue will become a serious concern only when companies “understand that this will made them more successful”; managers have to believe that first. Do you see additional challenges for managers’ competencies regarding other forms of diversity? When asked about other challenges regarding diversity, Mr. V mentions that there are still a lot of prejudices in companies. 17 According to interviewer, Mr. V referred to ‘sensitivity’ instead of «sensibility» CASE STUDY 20 LBS, JULY 2010
  22. 22. Mr. D - TL Com Interview summary Date: 24-05-2010 Mr D. starts to talk about his background: he started as a financial analyst at ABBOT. After this the attended an MBA at Luiss. After that he worked as a consultant. Then TL com was launched. This is a venture capital fund (investment fund). So Mr. D fulfilled several roles and functions as being a consultant, manager and investor. EXTERNAL IMPACTS ON COMPANIES Could you name the most important external factor, out of the company’s control, that had a major impact on the organization, within the last three years? The most impact is the financial crisis and the changes in global demand. This made relocation of manufacturing very important (to countries like China and Asia). Furthermore the credit crunch made it very hard for organizations to get a loan. ECONOMICS In the next decades, world economic dominance will be shared between the G-6 and the BRIC countries (Brazil, Russia, India and China). Which competencies must present and future managers have in order to deal with this dominance? One of the main skills a manager needs to have is a broader world view. He or she needs to be able to act as a manager with global perspectives. He or she also needs to be able to understand the different impacts of this dominance on: cost-structures, price schemes and cultures. The crisis of the “real” economy started from a financial crisis. The behaviour of top managers has been blamed worldwide. In this context, which attitude should the next generation of managers develop? In the past the predominance of ethics was lacking. The first objective of companies was to maximize shareholders value. Nowadays it is very important to create value for other stakeholders as well. CASE STUDY 21 LBS, JULY 2010
  23. 23. Fairness in dealing with the client became more and more important.18 Furthermore, ´it becomes crucial that a company acts in a way that is consistent with the health profile of the customers` 19. The company needs to focus more on social responsibility and the hidden costs of doing business. This means focussing on the effect doing business has on the customers or clients. Governmental intervention has been essential to come out of the crisis. The role of the public sector will be prominent in the future. What competencies do the next generation of managersdevelop in order to cope with this? According to Mr. D a lot of decisions cannot be taken without the involvement of the public sector. Dealing with the public sector is key in business nowadays. Regarding to this the skills needed from managers are the following: the ability to establish relationships with politicians, understanding of how the public sector works, understanding of the people working within the public sector. In advanced economies, middle classes are losing purchasing power. New business models are invented worldwide in order to keep prices low. What competencies should a manager perform in a market where the customers ask for lower prices? ¨The impact of the price competition can kill the way how organizations work¨ (Mr. D). This has several implications: first, providing value is the only way to compete. The managers must understand the value of service associated with the product. Second, innovation is becoming more important, the continuous adaptation of products and it´s features. GLOBALISATION As companies are becoming more and more global, managers are exposed to an intercultural environment. What competencies do they need to develop in order to fit in this new intercultural environment? Thinking global involves understanding different needs, cultures of customers, and employees. In order to do this as a managers need to travel, need to go abroad and be flexible have an open mindset. Companies’ organizational structures are losing span on the vertical dimension (hierarchy) getting flatter (horizontal teamwork is increasing): what new competencies do managers need? 18 19 The interviewer made a suggestion about the link to transparency and the interviewee agreed. ´In Vivo` CASE STUDY 22 LBS, JULY 2010
  24. 24. Flatter organizations need higher levels of delegation. Therefore, companies need to delegate also the accountability for the results for the parts on which the managers are responsible. The success factor for this is appreciating and understanding other people´s success beside only your success as a manager. In your view, what managerial competencies are needed for managing multicultural teams? Understanding different cultures is difficult. Managers need to be able to think critical, give everybody within the organisation the power to speak, and give space to different people. Information and Communication Technologies are reshaping the job design and working conditions. How should future managers be prepared for this? ICT has provided the access to a larger amount of information. Therefore, managers sometimes have access to too much information. They need the competences to focus and prioritize and the ability to understand important information. ORGANIZATIONAL DEMOGRAPHY Regarding employee turnover, what competencies are needed for managers in order to prevent critical knowledge from being lost? It is nowadays impossible to prevent that knowledge passes the borders of the organization. Therefore, job rotation is important. Than the dependency on people decreases with regards to knowledge. A managerial skill that became very important with regards to ICT and job rotation is communication. Very different generations are now coexisting in the company. This may generate conflicts and misunderstandings. According to you, how can managers be prepared for this challenge? The former tradition was more based on the idea that experience within the company was very important. Different generations working together have to compromise a lot. Therefore, job rotation and team playing became more important to make people understanding the work of other people. Clarifying question; how job rotation influences the skills needed from managers. Today managers need to make a lot of decisions very quickly with a lot of pressure. Need to have an helicopter view. CORPORATE SOCIAL RESPONSIBILITY CASE STUDY 23 LBS, JULY 2010
  25. 25. Companies are experiencing increasing pressure from stakeholders to invest in CSR. Which competencies and attitude do you expect from managers in this field? Need to maximize the value for all shareholders. There is a need for symmetry of information for customers and employees. Need to understand societal cost associated to your business (child labour, countries where there is no freedom of speech, renewable energy); being aware of this contributes to improve the value of the company in the long-term. Taking care of these topics is a real objective for managers, while 10 years ago it was only maximizing shareholders’ profit. “Think of the company as a piece of world life”20. Ensuring a good reputation for the company has become crucial. What are the managerial competences needed? Managers in the past were only focused on increasing margins. Now they need to take into account externalities. There need to be internal and external communication about the company taking care about CSR. It is becoming an issue for companies to encourage gender diversity. What mindset and behaviour do you expect from the next generation of managers concerning this issue? It is a cultural issue. It will be solved by the next generation of managers. The new generations don’t make differences about diversity, in 10-20 years it will be solved. 20 Quote of manager. CASE STUDY 24 LBS, JULY 2010
  26. 26. APPENDIX 2: STRUCTURE OF THE PRESENT MBA PROGRAM The current MBA program is a full-time 17-months postgraduate program, which is tailored to students with a broad academic background, who want to achieve managerial positions. The features of the program are the following: - A limited number of students, selected on the basis of rigorous admission criteria - Compulsory attendance - The intensive study of foreign languages - Emphasis on computer science and information technology - Assistance from qualified tutors - World-class professors and lecturers coming from the academic world and the top management of both public and private sector - A broad network of cultural exchanges with numerous international universities - Internships in public and private institutions The teaching methods depend on the specific course and vary from seminars, role-plays, case studies, business games, team exercises, conferences and projects. The program starts each year in November, and the curriculum is designed according to the belief that the students should acquire a thorough knowledge of the basic skills and concepts in all functional areas of business and management, so that they become more than specialists. Below is the structure of the program:  Preparatory courses o o Informatics o 25 Basic Accounting o CASE STUDY Mathematics Statistics for Decision Making LBS, JULY 2010
  27. 27.  Core curriculum o Business English o Corporate Finance o Corporate Investment Banking o ICT Management o Innovation Management and Production Systems o Management Accounting and Control o Marketing o Organisational design and Human Resources Management o Political and Industrial Economics and Economics of Strategy o Quantitative Methods o Strategy o Tax and Corporate Law  Elective courses  Project work In addition to what mentioned above, LBS offers different career services such as career-planning, counseling, training, seminars and meetings with companies (e.g. “MBA for the companies” day-long event including seminars relating to HRM). Furthermore the best and most motivated students are offered the opportunity to participate in an exchange program which is established among Luiss and some of the leading international universities. CASE STUDY 26 LBS, JULY 2010

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