The young and the clueless

It's natural to promote your best and brightest, especially when you think they may leave for greener pastures if you don't continually offer them new challenges and rewards. But promoting smart, ambitious young managers too quickly often robs them of the chance to develop the emotional competencies that come with time and experience--competencies like the ability to negotiate with peers, regulate emotions in times of crisis, and win support for change. Indeed, at some point in a manager's career--usually at the vice president level--raw talent and ambition become less important than the ability to influence and persuade, and that's the point at which the emotionally immature manager will lose his effectiveness. This article argues that delaying a promotion can sometimes be the best thing a senior executive can do for a junior manager. The inexperienced manager who is given time to develop his emotional competencies may be better prepared for the interpersonal demands of top-level leadership. The authors recommend that senior executives employ these strategies to help boost their protégés' people skills: sharpen the 360-degree feedback process, give managers cross-functional assignments to improve their negotiation skills, make the development of emotional competencies mandatory, make emotional competencies a performance measure, and encourage managers to develop informal learning partnerships with peers and mentors. Delaying a promotion can be difficult given the steadfast ambitions of many junior executives and the hectic pace of organizational life. It may mean going against the norm of promoting people almost exclusively on smarts and business results. It may also mean contending with the disappointment of an esteemed subordinate. But taking the time to build people's emotional competencies isn't an extravagance; it's critical to developing effective leaders.     

In praise of middle managers

Middle managers have often been cast as dinosaurs. Has-beens. Mediocre managers and intermediaries who defend the status quo instead of supporting others' attempts to change organizations for the better. An INSEAD professor has examined this interesting breed of manager--in particular, middle managers' roles during periods of radical organizational change. His findings will surprise many. Middle managers, it turns out, make valuable contributions to the realization of radical change at companies--contributions that go largely unrecognized by most senior executives. Quy Nguyen Huy says these contributions occur in four major areas. First, middle managers often have good entrepreneurial ideas that they are able and willing to realize--if only they can get a hearing. Second, they're far better than most senior executives at leveraging the informal networks at companies that make substantive, lasting change. Because they've worked their way up the corporate ladder, middle managers' networks run deep. Third, they stay attuned to employees' emotional needs during organizational change, thereby maintaining the transformation's momentum. And finally, they manage the tension between continuity and change--they keep the organization from falling into extreme inertia or extreme chaos. The author examines each of these strengths, citing real-world examples culled from his research. Of course, not every middle manager in an organization is a paragon of entrepreneurial vigor and energy, Huy acknowledges. But cavalierly dismissing the roles that middle managers play--and carelessly reducing their ranks--will drastically diminish senior managers' chances of realizing radical change at their companies. Indeed, middle managers may be the most effective allies of corner office executives when it's time to make major changes in businesses.     

What makes an effective executive

An effective executive does not need to be a leader in the typical sense of the word. Peter Drucker, the author of more than two dozen HBR articles, says some of the best business and nonprofit CEOs he has worked with over his 65-year consulting career were not stereotypical leaders. They ranged from extroverted to nearly reclusive, from easygoing to controlling, from generous to parsimonious. What made them all effective is that they followed the same eight practices: They asked, "What needs to be done?" They also asked, "What is right for the enterprise?" They developed action plans. They took responsibility for decisions. They took responsibility for communicating. They were focused on opportunities rather than problems. They ran productive meetings. And they thought and said "we" rather than "I." The first two practices provided them with the knowledge they needed. The next four helped them convert this knowledge into effective action, for knowledge is useless to executives until it has been translated into deeds. The last two ensured that the whole organization felt responsible and accountable. Effective executives know that they have authority only because they have the trust of the organization. This means they must think of the needs and opportunities of the organization before they think of their own needs and opportunities. The author also suggests a ninth practice that's so important, he elevates it to the level of a rule: Listen first, speak last. The demand for effective executives is much too great to be satisfied by those few people who are simply born to lead. Effectiveness is a discipline. And, like every discipline, it can be learned and must be earned.     

How to rank computer projects

When it comes to deciding which project proposals should get the nod, top executives, information systems managers, and users often have conflicting views. None of these should make the choice alone, says this author. With the IS manager as coordinator, users and top executives can contribute to an eight-step process that will reconcile differing perspectives and permit an orderly ranking of projects. Such a structured approach helps managers to make a more effective use of IS resources because it includes other elements relative to the priority-setting process, rather than just those that are purely financial.     

What's wrong with strategy?

Why is it that successful strategies are rarely developed as a result of formal planning processes? What is wrong with the way most companies go about developing strategy? Andrew Campbell and Marcus Alexander take a common sense look at why the planning frameworks managers use so often yield disappointing results. Companies often fail to distinguish between purpose (what an organization exists to do) and constraints (what an organization must do in order to survive), the authors say. Many executives mistakenly believe, for example, that satisfying stakeholders is an objective that drives thinking about strategy. In fact, it's a constraint, not an objective. Companies that don't win the loyalty of stakeholders will go out of business. Strategy is not about plans but about insights, the authors add. Strategy development is the process of discovering and understanding insights and should not be confused with planning, which is about turning insights into action. Furthermore, because executives develop most of their insights while actually doing the real work of running a business, it is important for companies not to separate strategy development from implementation. Is there a better way? The answer is not new planning processes or more effort. Instead, managers must understand two fundamental points: the benefit of having a well-articulated, stable purpose and the importance of discovering, understanding, documenting, and exploiting insights about how to create value.     

The new boundaries of the "boundaryless" company

In an economy founded on innovation and change, one of the premier challenges of management is to design more flexible organizations. For many executives, a single metaphor has come to embody this managerial challenge and to capture the kind of organization they want to create: the "corporation without boundaries." According to Larry Hirschhorn and Thomas Gilmore of the Wharton Center for Applied Research, managers are right to break down the boundaries that make organizations rigid and unresponsive. But they are wrong if they think that doing so eliminates the need for boundaries altogether. Once the traditional boundaries of hierarchy, function, and geography disappear, a new set of boundaries becomes important. These new boundaries are more psychological than organizational. They aren't drawn on a company's organizational chart but in the minds of its managers and employees. And instead of being reflected in a company's structure, they must be "enacted" over and over again in a manager's relationships with bosses, subordinates, and peers. In this article, Hirschhorn and Gilmore provide a guide to the boundaries that matter in the "boundaryless" company. They explain how these new boundaries are essential for both managers and employees in coping with the demands of flexible work. They describe the typical mistakes that managers make in their boundary relationships. And they show how executives can become effective boundary managers by paying attention to a source of data they have often overlooked in the past: their own gut feelings about work and the people with whom they do it.     

The ambidextrous organization

Corporate executives must constantly look backward, attending to the products and processes of the past, while also gazing forward, preparing for the innovations that will define the future. This mental balancing act is one of the toughest of all managerial challenges--it requires executives to explore new opportunities even as they work diligently to exploit existing capabilities--and it's no surprise that few companies do it well. But as every businessperson knows, there are companies that do. What's their secret? These organizations separate their new, exploratory units from their traditional, exploitative ones, allowing them to have different processes, structures, and cultures; at the same time, they maintain tight links across units at the senior executive level. Such "ambidextrous organizations," as the authors call them, allow executives to pioneer radical or disruptive innovations while also pursuing incremental gains. Of utmost importance to the ambidextrous organization are ambidextrous managers--executives who have the ability to understand and be sensitive to the needs of very different kinds of businesses. They possess the attributes of rigorous cost cutters and free-thinking entrepreneurs while also maintaining the objectivity required to make difficult trade-offs. Almost every company needs to renew itself through the creation of breakthrough products and processes, but it shouldn't do so at the expense of its traditional business. Building an ambidextrous organization is by no means easy, but the structure itself, combining organizational separation with senior team integration, is not difficult to understand. Given the executive will to make it happen, any company can become ambidextrous.     

Coaching the alpha male

Highly intelligent, confident, and successful, alpha males represent about 70% of all senior executives. Natural leaders, they willingly take on levels of responsibility most rational people would find overwhelming. But many of their quintessential strengths can also make alphas difficult to work with. Their self-confidence can appear domineering. Their high expectations can make them excessively critical. Their unemotional style can keep them from inspiring their teams. That's why alphas need coaching to broaden their interpersonal tool kits while preserving their strengths. Drawing from their experience coaching more than 1,000 senior executives, the authors outline an approach tailored specifically for the alpha. Coaches get the alpha's attention by inundating him with data from 360-degree feedback presented in ways he will find compelling--both hard-boiled metrics and vivid verbatim comments from colleagues about his strengths and weaknesses. A 360-degree assessment is a wake-up call for most alphas, providing undeniable proof that their behavior doesn't work nearly as well as they think it does. That paves the way for a genuine commitment to change. In order to change, the alpha must venture into unfamiliar--and often uncomfortable--psychological territory. He must admit vulnerability, accept accountability not just for his own work for others', connect with his underlying emotions, learn to motivate through a balance of criticism and validation, and become aware of unproductive behavior patterns. The goal of executive coaching is not simply to treat the alpha as an individual problem but to improve the entire team dynamic. Initial success creates an incentive to persevere, and the virtuous cycle reverberates throughout the entire organization.     

The new society of organizations

Managers in every organization from the largest publicly owned company to the smallest not-for-profit face the same unsettling imperative: to build change into their organization's very structure. On the one hand, this means being prepared to abandon everything that the organization does. On the other, it means constantly creating the new. Unless this process of abandonment and creation goes on without ceasing, the organization will very soon find itself obsolescent--losing performance and with it the ability to attract and hold the people on whom its performance depends. What drives this imperative is the nature of the organization itself. Every organization exists to put knowledge to work, but knowledge changes fast, with today's certainties becoming tomorrow's absurdities. That is why any knowledgeable individual must likewise acquire new knowledge every several years or also become obsolete. Familiar as the term "organization" is, we have only begun to reckon with the implications of living in a world in which the fundamental unit of society is--and must be--destabilizing. That is why questions of social responsibility now arise so often and from so many quarters. We need new ways to understand the relationship between organizations and their employees, who may in fact be unpaid volunteers, independent professionals whose organization is a network, or knowledgeable specialists who can--and often do--move on at any moment. For more than 600 years, no society has had as many competing centers of power as the one in which we now live. Drucker explains why change is--and must be--the only constant in an organization's life and explores the consequences for managers, individuals, and society overall.     

It's so hard to be fair

When employees believe they are being treated fairly-when they feel heard, when they understand how and why important decisions are made, and when they believe they are respected-their companies will benefit. Research shows that practicing process fairness reduces legal costs from wrongful-termination suits, lowers employee turnover, helps generate support for new strategic initiatives, and fosters a culture that promotes innovation. What's more, it costs little financially to implement Yet few companies practice it consistently. Joel Brockner examines this paradox, exploring psychological and other reasons that cause managers to resist embracing process fairness. The fact that it's relatively inexpensive to implement, for instance, may be why some numbers-oriented executives undervalue it. Many managers believe that they practice process fairness, but 360-degree feedback tells another story. Some corporate policies actually undermine it--such as when the legal department won't let managers fully explain decisions for fear that disclosure could expose the firm to lawsuits. And, frequently, managers simply follow the all-too-human tendency to avoid uncomfortable situations. But the good news is that organizations can take concrete steps to promote greater process fairness. Many studies have shown that training programs make a big difference, and the author describes the most effective format. In addition, warning your managers that they may experience negative emotions when practicing fair process will help prepare them to cope with those feelings. Finally, role modeling fair process on the executive level will help spread the practice throughout the organization. The fact is, process fairness is the responsibility of all executives, at all levels and in all functions; it cannot be delegated to HR. The sooner managers realize that and work to make it a company norm, the better off the organization will be.     

Managers can drive their subordinates mad

This article explores the phenomenon of "folie à deux"--an aberrant relationship between manager and subordinates that is characterized by shared delusions. Though most visible among public figures like Adolf Hitler, J. Edgar Hoover and Jim Jones, the problem also surfaces among private managers and their associates with dangerous implications for the firm. In folie à deux, the unusual behavior patterns of a manager in an isolated setting become mirrored by dependent subordinates, and the organization loses touch with its original goals and strategies. The author describes the dynamics of this phenomenon and details steps to remedy the situation. Once recognized, he suggests that the manager establish a trusting relationship with the instigator as a prelude to altering the behavior patterns, then transfer the subordinates and reorient the work climate so that independence and responsibility are encouraged. If the instigator is a powerful executive, the author suggests enlisting the support of a countervailing force, such as the government or a union, to guide the organization away from possible self-destructive adventures.     

Production and hedging implications of executive compensation schemes

This paper connects executive compensation with hedging and analyzes a crucial shareholders and managers agency source that evolves from the pricing of the hedging device. The shareholders are risk-neutral, while the risk-averse manager hedges the price risk of the manufactured quantity, and his compensation package includes equity-linked compensation-stock grants. Only when the hedging instrument's pricing includes a risk premium, hedging is costly to the shareholders, while it is costless to the manager. Then from the owners' point of view, we observe managerial over-hedging, increasing in the equity-linked compensation level. This result leads to a violation of the classical production and hedging separation theorem. We conclude that, in the case where the hedging device's pricing bears a risk premium, shareholders can regulate the corporate value diversion to managers through diminishing the managerial equity-linked compensation scheme or by putting restrictions on the extent of hedging activities of executives.     

Strategy as revolution

How often does the strategic-planning process start with senior executives asking what the rest of the organization can teach them about the future? Not often enough, argues Gary Hamel. In many companies, strategy making is an elitist procedure and ?strategy? consists of nothing more than following the industry's rules. But more and more companies, intent on overturning the industrial order, are rewriting those rules. What can industry incumbents do? Either surrender the future to revolutionary challengers or revolutionize the way their companies create strategy. What is needed is not a tweak to the traditional strategic-planning process, Hamel says, but a new philosophical foundation: strategy is revolution. Hamel offers ten principles to help a company think about the challenge of creating truly revolutionary strategies. Perhaps the most fundamental principle is that so-called strategic planning doesn't produce true strategic innovation. The traditional planning process is little more than a rote procedure in which deeply held assumptions and industry conventions are reinforced rather than challenged. Such a process harnesses only a tiny proportion of an organization's creative potential. If there is to be any hope of industry revolution, senior managers must give up their monopoly on the creation of strategy. They must embrace a truly democratic process that can give voice to the revolutionaries that exist in every company. If senior managers are unwilling to do this, employees must become strategy activists. The opportunities for industry revolution are mostly unexplored. One thing is certain: if you don't let the revolutionaries challenge you from within, they will eventually challenge you from without--in the marketplace.     

What is a global manager?

To compete around the world, a company needs three strategic capabilities: global-scale efficiency, local responsiveness, and the ability to leverage learning worldwide. No single "global" manager can build these capabilities. Rather, groups of specialized managers must integrate assets, resources, and people in diverse operating units. Such managers are made, not born. And how to make them is--and must be--the foremost question for corporate managers. Drawing on their research with leading transnational corporations, Christopher Bartlett and Sumantra Ghoshal identify three types of global managers. They also illustrate the responsibilities each position involves through a close look at the careers of successful executives: Leif Johansson of Electrolux, Howard Gottlieb of NEC, and Wahib Zaki of Procter & Gamble. The first type is the global business or product-division manager who must build worldwide efficiency and competitiveness. These managers recognize cross-border opportunities and risks as well as link activities and capabilities around the world. The second is the country manager whose unit is the building block for worldwide operations. These managers are responsible for understanding and interpreting local markets, building local resources and capabilities, and contributing to--and participating in--the development of global strategy. Finally, there are worldwide functional specialists--the managers whose potential is least appreciated in many traditional multinational companies. To transfer expertise from one unit to another and leverage learning, these managers must scan the company for good ideas and best practice, cross-pollinate among units, and champion innovations with worldwide applications.     

中国国有商业银行激励机制:一个新的非线性激励契约

我国传统的银行管理人激励方法是根据银行最终实现的收益决定对管理人的奖励,一般是线性的。本文通过对这种线性激励契约的剖析,发现由于银行管理人的有限责任以及企业软约束的存在,银行的预期收益与风险水平呈倒U字的二次关系,因此线性激励契约只会使管理人过度冒险,而无益于银行的预期收益。因此,本文构建了修正的资本资产定价模型,并在此基础上提出了一个新的非线性激励契约:对管理人的奖励计划不再是连续的,而是提供一个有限的奖励范围以避免银行管理人的过度冒险;只有当银行管理人选择的风险水平不超过最优风险水平时,他才可以拿到与其努力水平相等的奖金。     

What executives should remember

In more than 30 essays for Harvard Business Review, Peter Drucker (1909-2005) urged readers to take on the hard work of thinking--always combined, he insisted, with decisive action. He closely analyzed the phenomenon of knowledge work--the growing call for employees who use their minds rather than their hands--and explained how it challenged the conventional wisdom about the way organizations should be run. He was intrigued by employees who knew more about certain subjects than their bosses or colleagues but who still had to cooperate with others in a large organization. As the business world matured in the second half of the twentieth century, executives came to think that they knew how to run companies--and Drucker took it upon himself to poke holes in their assumptions, lest organizations become stale. But he did so sympathetically, operating from the premise that his readers were intelligent, hardworking people of goodwill. Well suited to HBR's format of practical, idea-based essays for executives, his clear-eyed, humanistic writing enriched the magazine time and again. This article is a compilation of the savviest management advice Drucker offered HBR readers over the years--in short, his greatest hits. It revisits the following insightful, influential contributions: "The Theory of the Business" (September-October 1994), "Managing for Business Effectiveness" (May-June 1963), "What Business Can Learn from Nonprofits" (July-August 1989), "The New Society of Organizations" (September-October 1992), "The Information Executives Truly Need" (January-February 1995), "Managing Oneself" (March-April 1999 republished January 2005), "They're Not Employees, They're People" (February 2002), "What Makes an Effective Executive" (June 2004).     

Reclaim your job

Ask most managers what gets in the way of their success, and you'll hear the familiar litany of complaints: Not enough time. Limited resources. No clear sense of how their work fits into the grand corporate scheme. These are, for the most part, excuses. What really gets in the way of managers' success is fear of making their own decisions and acting accordingly. Managers must overcome the psychological desire to be indispensable. In this article, the authors demonstrate how managers can become more productive by learning to manage demands, generate resources, and recognize and exploit alternatives. To win the support they want, managers must develop a long-term strategy and pursue their goals slowly, steadily, and strategically. To expand the range of opportunities, for their companies and themselves, managers must scan the environment for possible obstacles and search for ways around them. Fully 90% of the executives the authors have studied over the past few years wasted their time and frittered away their productivity, despite having well-defined projects, goals, and the necessary knowledge to get their jobs done. Such managers remain trapped in inefficiency because they assume they do not have enough personal discretion or control. They forget how to take initiative--the most essential quality of any truly successful manager. Effective managers, by contrast, are purposeful corporate entrepreneurs who take charge of their jobs by developing trust in their own judgment and adopting long-term, big-picture views to fulfill personal goals that match those of the organization.     

The discipline of innovation

Some innovations spring from a flash of genius. But as Peter Drucker points out in this HBR Classic, most result from a conscious, purposeful search for opportunities. For managers seeking innovation, engaging in disciplined work is more important than having an entrepreneurial personality. Writing originally in the May-June 1985 issue, Drucker describes the major sources of opportunities for innovation. Within a company or industry, opportunities can be found in unexpected occurrences, incongruities of various kinds, process needs, or changes in an industry or market. Outside a company, opportunities arise from demographic changes, changes in perception, or new knowledge. These seven sources overlap, and the potential for innovation may well lie in more than one area at a time. Innovations based on new knowledge, of course, tend to have the greatest effect on the marketplace. But it often takes decades before the ideas are translated into actual products, processes, or services. The other sources of innovation are easier and simpler to handle, yet they still require managers to look beyond established practices. Drucker emphasizes that in seeking opportunities, innovators need to look for simple, focused solutions to real problems. The greatest praise an innovation can receive is for people to say, "This is obvious!" Grandiose ideas designed to revolutionize an industry rarely work. Innovation, like any other endeavor, takes talent, ingenuity, and knowledge. But Drucker cautions that if diligence, persistence, and commitment are lacking, companies are unlikely to succeed at the business of innovation.     

Work and life: the end of the zero-sum game

Most companies view work and personal life as competing priorities in a zero-sum game, in which a gain in one area means a loss in the other. From this traditional perspective, managers decide how their employees' work and personal lives should intersect and often view work-life programs as just so much social welfare. A new breed of managers, however, is trying a new tack, one in which managers and employees collaborate to achieve work and personal objectives to everyone's benefit. These managers are guided by three principles. The first is to clearly inform their employees about business priorities and to encourage them to be just as clear about personal priorities. The second is to recognize and support their employees as whole people, not only acknowledging but also celebrating their roles outside the office. The third is to continually experiment with the way work gets done, looking for approaches that enhance the organization's performance and allow employees to pursue personal goals. The managers who are acting on these principles have discovered that conflicts between work and personal priorities can actually be catalysts for identifying inefficiencies at the workplace. For example, one manager and his staff found a way to accommodate the increased workload at their 24-hour-a-day command center while granting the staff more concentrated time off. So far, these managers have usually been applying the principles without official sanction. But as the business impact of their approach becomes better appreciated, the authors predict, more and more companies will view these leaders as heralds of change.     

“和而不群”还是“卓尔不群”?——基于基金网络信息使用的视角

如何识别出优秀的基金管理者,理解其信息决策机制,对于优化资源配置、提升市场效率具有重要意义。本文探究了基金经理对自身所处基金网络中的共享信息的使用程度与其管理能力之间的关系。具体而言,本文通过基金的重仓持股构建了基金网络,采用基金自身交易与其所处网络中其他基金平均交易的偏离程度作为该基金对基金网络中信息使用的衡量。研究发现:(1)对基金网络中信息使用程度较低的基金的业绩要显著好于对基金网络中信息使用程度较高的基金。(2)更高的超额收益主要来源于基金经理优异的选股能力,虽由此承担了更多的异质性风险,却并未增大总体风险水平。(3)基金经理更换数据表明基金对网络内信息的使用程度更多地与基金经理特征相关而非与基金特征相关。(4)网络内信息使用程度直接反映了基金私有信息含量,因此更可能与基金经理能力相关。