Putting leadership back into strategy

In recent decades an infusion of economics has lent the study of strategy much needed theory and empirical evidence. Strategy consultants, armed with frameworks and techniques, have stepped forward to help managers analyze their industries and position their companies for strategic advantage. Strategy has come to be seen as an analytical problem to be solved. But, says Montgomery, the Timken Professor of Business Administration at Harvard Business School, the benefits of this rigorous approach have attendant costs: Strategy has become a competitive game plan, separate from the company's larger sense of purpose. The CEO's unique role as arbiter and steward of strategy has been eclipsed. And an overemphasis on sustainable competitive advantage has obscured the importance of making strategy a dynamic tool for guiding the company's development over time. For any company, intelligent guidance requires a clear sense of purpose, of what makes the organization truly distinctive. Purpose, Montgomery says, serves as both a constraint on activity and a guide to behavior. Creativity and insight are key to forging a compelling organizational purpose; analysis alone will never suffice. As the CEO--properly a company's chief strategist--translates purpose into practice, he or she must remain open to the possibility that the purpose itself may need to change. Lou Gerstner did this in the 1990s, when he decided that IBM would evolve to focus on applying technology rather than on inventing it. So did Steve Jobs, when he rescued Apple from a poorly performing strategy and expanded the company into attractive new businesses. Watching over strategy day in and day out is the CEO's greatest opportunity to shape the firm as well as outwit the competition.     

The innovation catalysts

A few years ago the software development company Intuit realized that it needed a new approach to galvanizing customers. The company's Net Promoter Score was faltering, and customer recommendations of new products were especially disappointing. Intuit decided to hold a two-day, off-site meeting for the company's top 300 managers with a focus on the role of design in innovation. One of the days was dedicated to a program called Design for Delight. The centerpiece of the day was a PowerPoint presentation by Intuit founder Scott Cook, who realized midway through that he was no Steve Jobs: The managers listened dutifully, but there was little energy in the room. By contrast, a subsequent exercise in which the participants worked through a design challenge by creating prototypes, getting feedback, iterating, and refining, had them mesmerized. The eventual result was the creation of a team of nine design-thinking coaches--"innovation catalysts"--from across Intuit who were made available to help any work group create prototypes, run experiments, and learn from customers. The process includes a "painstorm" (to determine the customer's greatest pain point), a "soljam" (to generate and then winnow possible solutions), and a "code-jam" (to write code "good enough" to take to customers within two weeks). Design for Delight has enabled employees throughout Intuit to move from satisfying customers to delighting them.     

The hidden messages managers send

If a manager in an organization talks about making an "end run," what is he saying? Is he seeing life in the organization as a game; is he seeing it as hazardous and maybe nominating himself for a hero role; or is he merely saying he's going all the way with a project, regardless. The truth is we don't know what he's saying. It is all too easy both to interpret the metaphors others use to fit out own meanings and to ignore the fact that metaphors have idiosyncratic meanings that should be listened to. The author describes three ways managers convey messages about themselves and the ways they see the world. He encourages the reader to see these ways--their metaphors, office settings, and body language and tones that accompany their speech--as means of communicating. Just as speech or mathematics, these are languages that can be learned. With skill in them, a manager can see or hear what is really going on when people talk, what hidden messages we are sending all the time. The author gives some hints on what to look and listen for in trying to understand others, but he warns against simplistic interpretations: all messages occur in context.     

British privatization--taking capitalism to the people

From 1983 to 1986, John Moore served in the Thatcher government in Britain, launching that country's privatization program. In "British Privatization--Taking Capitalism to the People, " he describes the thinking behind privatization, the objections raised against it, and the actual measures taken to implement it. With privatization, corporate performance has improved and the government has been able to focus on regulation, not ownership. But in the end, says Moore, the greatest success of British privatization was that it transformed the public's attitude toward ownership and economic responsibility.     

New Leadership at the Federal Reserve*

As Chairman of the Federal Reserve for the past 18 years, Alan Greenspan deserves praise for his stewardship of monetary policy. He has guided the Fed and monetary policy in a way that has led to low and stable inflation. But if Greenspan's record clearly deserves praise, he could have done more to move monetary policy into the 21st century and prepare the institution for the future. Greenspan has relied heavily on his personal judgment and has argued repeatedly that the Fed must have extensive flexibility to respond to the economic environment. But if Greenspan's judgment, skill, and luck have served him and the country well, it is dangerous to rely so heavily on the judgment of a single individual. When he departed, he took with him his skill and judgment, as well as his credibility and his personal commitment to low inflation. The Fed he leaves behind has no explicit institutional commitment to long‐run price stability. This article argues that by operating with a set of rules and guidelines, or at a minimum clearly stated institutional objectives, the Fed would eliminate much of the second guessing about what it is doing and why, and the associated volatility in markets. More generally, the benefits of more explicit guidelines for monetary policy include:

• ? Increasing public understanding of monetary policy, including what it can and cannot do.
• ? Increasing transparency and accountability. Most organizations have clear goals and we hold their leaders accountable. The Fed is different. The Fed seems to be held accountable for all things economic and thus it is truly accountable for nothing. It never has to explain its actions and what went right or wrong.
• ? Establishing a clear focus for the Fed regarding its goals and objectives.
• ? Creating increased confidence that sound monetary policy will be followed in the future.

     

Apple's changing business model: What should the world's richest company do with all those profits?

Apple Inc. stands out as the world's most famous, and currently richest, company. To the general public, Apple is known for three things: its intriguing CEO Steve Jobs, who has achieved iconic status in death as in life; its amazing iOS products, especially the iPhone and the iPad, and their predecessor the iPod, which have literally placed sophisticated technology in the hands of the masses; and its stratospheric stock price, which even when in March 2013 it had dropped to 63 percent of its September 2012 peak, gave Apple the highest market capitalization of any company in the world. As a result of its phenomenal success, at the end of fiscal 2012 Apple had $121 billion in liquid assets. In April 2013 the company committed to distributing as much as $100 billion to shareholders in stock buybacks and cash dividends by the end of calendar 2015. By employing the theory of innovative enterprise to analyze how over the course of its 37-year history Apple became so profitable, we argue that there is no economic justification from a risk-reward perspective for this distribution to Apple's shareholders. Taxpayers and workers have superior claims on these profits. In analyzing by whom value is created as a basis for considering for whom value should be extracted, we raise the implications of Apple's changing business model for the future of innovation at this heretofore exceptional American company and even in the U.S. economy as a whole.     

比尔·阿克曼 贪婪的资本家

他是新生代激进对冲经理中的佼佼者,也是一位贪婪的资本家,正是贪婪使得他能够在短期内创造更多的财富,他就是比尔·阿克曼。在2011年6月14日这天,比尔·阿克曼(BillAckman)一定是世界上最开心的人,因为他投资的美国第三大百货公司J.C.Penney刚刚完成了一笔特别的"收购"——将苹果全球零售高级副总裁罗恩·约翰逊(Ron Johnson)揽入麾下,他将从11月1日开始接替麦伦·乌曼(Myron Ullman)     

The best of intentions

Cynthia Mitchell has finally gotten a plum management opportunity at AgFunds, a Houston-based company that provides financial services to farmers and farmer-owned cooperatives. Peter Jones, regional vice president, has recruited Cynthia to revive the Arkansas district, which has been losing customers for 15 years. The sales force there isn't bad; it's just been poorly managed by an indifferent boss for too long. Still, Cynthia knows she'll need at least one powerhouse sales rep to get things back on track. She thinks she's found that person in Steve Ripley, this year's top trainee at AgFunds, who is inexplicably available three months after the training period is over. In the interview, he proves to be ambitious, intelligent, and personable. But several of Cynthia's colleagues suggest that Steve might not be the best fit for the job: He's a black man in a company whose customer base is mostly conservative and white. Uncomfortably recalling her own experiences at AgFunds--she'd been rejected for a position in a territory that was deemed too unfriendly to female sales reps--Cynthia addresses the issue with Peter. The mostly white farmers in Cynthia's district just won't trust their books to a black professional, Peter explains. And other minority professionals at AgFunds have derailed their careers trying to make inroads in unfriendly districts. "Steve deserves to start out in a more hospitable district. Once the right opportunity opens up, he'll be hired, and he'll do brilliantly," Peter reassures Cynthia, but she's still uncertain. Should she ignore her customers' biases and hire Steve, possibly setting him up to fail? Or would it be better to let Steve wait for a friendlier opportunity? Four experts comment on this fictional case study.     

The living company

What can explain the longevity gap between a company that survives for centuries--the Swedish company Stora, for example, which is more than 700 years old--and the average corporation, which does not last 20 years? A team at Royal Dutch/Shell Group explored that question. Arie de Geus, a retired Shell executive, writes about the team's findings and describes what he calls living companies-organizations that have beaten the high mortality rate of the average corporation. Many companies die young, de Geus argues, because their policies and practices are based too heavily on the thinking and language of economics. Their managers focus on producing goods and services and forget that the organization is a community of human beings that is in business--any business--to stay alive. In contrast, managers of living companies consider themselves to be stewards of a long-standing enterprise. Their priorities reflect their commitment to the organization's long-term survival in an unpredictable world. Like careful gardeners, they encourage growth and renewal without endangering the plant they are tending. They value profits the same way most people value oxygen: as necessary for life but not the purpose of it. They scuttle assets when necessary to make a dramatic change in the business portfolio. And they constantly search for new ideas. These managers also focus on developing people. They create opportunities for employees to learn from one another. Such organizations are suited for survival in a world in which success depends on the ability to learn, to adapt, and to evolve.     

Who goes, who stays?

The merger announcement between DeWaal Pharmaceuticals and BioHealth Labs was front-page news. Pictures of CEO Steve Lindell and chairman Kaspar van de Velde had appeared in newspapers around the world. Two months later, the press had moved on to a new story, and the hard labor of integration loomed. Steve had worked tirelessly to clear regulatory hurdles, and all signs pointed toward approval in the near future. Now Steve was feeling pressure to attack the real challenge of the merger: bringing together two very different cultures as quickly and efficiently as possible. DeWaal was an established drug-maker based in the Netherlands, and BioHealth, headquartered just north of New York City, had in recent years become competitive at the highest tier of the market. The first step in integrating the two companies was to select the top layers of management for the new company. At the moment, there were some 120 people on two continents for about 65 senior-level jobs. Steve's urgency was not without cause: talented people from both sides were jumping ship, and BioHealth's stock price had dipped 20% after the initial euphoria over the deal had worn off. Complicating matters was confusion over who was really in charge: Steve wanted to take leadership and move ahead rapidly, but he was often disarmed by Kaspar's charming persuasiveness. As the two men attempt to work through the important personnel issues during a lunch meeting, they quickly hit a roadblock. How can they come to agreement about who goes and who stays? Four commentators offer advice in response to this fictional case.     

High tech the old-fashioned way. An interview with Tom Siebel of Siebel Systems. Interview by Bronwyn Fryer

There is a growing awareness among corporations that the quality of the customer experience they provide directly affects their bottom line. Many are turning to high-flying software maker Siebel Systems for help in managing those relationships. The young company holds a leadership position in an explosive market-enterprise application software. But customer satisfaction, not dot-com chic, is foremost on the mind of Siebel Systems' founder, chairman, and CEO, Tom Siebel. The buttoned-down Siebel rejects the freewheeling management style and culture that characterize many Silicon Valley companies. As the former CEO of Gain Technology and a former executive at Oracle, Siebel believes in putting customers ahead of technology, discipline ahead of inspiration. In this interview, conducted at the company's San Mateo, California, headquarters, Siebel describes how this obsessive focus on customer satisfaction has been the driving force behind the company's success. He talks about how the organization remains true to its core values: a deep commitment to providing customer satisfaction; responsible fiscal practices that have created a cash-positive business amid today's cash-negative dot-coms; and general professionalism. "The notion of dressing in jeans and a T-shirt to greet the CEO of a major financial institution who just got off the plane from Munich is not acceptable," he says. Siebel Systems rejects the concept of going to war with rivals; instead, the CEO says, the company has forged an ecosystem of partnerships that allows it to support and integrate its own systems with other companies' software products and ultimately ease the customer's software installations. Indeed, Siebel says, the CEO's most important job is to understand what customers need and deliver that.     

Bob's meltdown

Annette Innella is just coming into the lunchroom at Concord Machines when Bob Dunn starts screaming at her. After throwing his lunch tray against the wall, he stomps out, leaving Annette stunned. Naturally, Annette, the new senior VP for knowledge management, is beside herself. She knows her proposal to establish a cross-functional knowledge management committee is progressive thinking for this oldline manufacturer, but Bob's reaction is totally over the line. If Bob stays, she goes--that's all there is to it. Bob is contrite, but he's under a lot of pressure. The general manager of the Services Group, he's just returned from a two-week trip around the globe to gear up his troops to beat revenue targets again, despite shrinking budgets and hiring freezes. And what does he see when he gets back? An e-mail from Annette requesting that two of his best people devote half their time to what he calls her "idiotic" Knowledge Protocols Group. He's carrying the company on his back, and she's throwing this nonsense at him. Graphics specialist Paula Chancellor is surprised. Sure, Bob's gruff, but his staff loves him, and he's the only one of the big shots who ever talks to her. But HR director Nathan Singer is incensed; Bob's never been a team player, Singer complains, and it's time he learned a lesson. CEO Jay Nguyen is in a bind. Bob is his top manager; he brings in all the money. And even though future revenues are going to have to come from somewhere else, Jay is not totally behind Annette's initiative in the current business climate. He can't afford to lose Bob. But if he reins in Annette, it will look like he's condoning Bob's outburst. What should he do? Four commentators offer advice in this fictional case study.     

Do something--he's about to snap

Lynne Tabor, an IT manager at manufacturing giant MMI, has a great team. Everyone works hard and gets along. Everyone, that is, except Max Dyer. Max is a talented programmer, but he's terrible in the interpersonal skills department. So terrible, in fact, that three years ago Lynne reworked his job after employees complained that he was unengaged and even belligerent. Since then, he's been a solid worker, putting in extra hours and meriting good performance evaluations. But recently, Max's coworkers have noticed a change for the worse in him. True, everyone at MMI is on edge after a round of layoffs, but Max's behavior seems like more than a case of the jitters. To make matters worse, reports of a workplace shooting in Seattle are all over the news. Paige overhears Max shouting at someone on the phone. George finds Max pinning up a certificate from a shooting range in his cubicle, and Nicole, who worries they will all end up as statistics of office violence, wants to know how Lynne plans to ensure their safety. When Lynne tries to talk to Max, it's clear he thinks his coworkers are out to get him. And the truth is, they believe he fits the profile of a man on the edge. But what can Lynne do about an employee who has never made so much as a veiled threat to anyone? Commentators James Alan Fox, a professor of criminal justice at Northeastern University; Steve Kaufer, a cofounder of the Workplace Violence Research Institute; Christine Pearson, a management professor at Thunderbird; Christine Porath, a professor of management and organizational behavior at the University of Southern California's Marshall School of Business; and Ronald Schouten, the director of the Law and Psychiatry Service at Massachusetts General Hospital, offer advice in this fictional case study.     

Everything I know about business I learned from monopoly

How do game designers approach their work? Perhaps in the same way that managers should. Here, the author, an expert in board-game design and the world's foremost authority on Monopoly, translates six tenets of game design into management principles. Three tenets focus on giving players the right level of structure. First, design simple and unambiguous rules: That also holds true in business; people engage most when responsibilities, objectives, and evaluation criteria are clear. Second, avoid frustrating the casual player. Just as not every game player aspires to be a grand master, not every employee wants to think like an executive. Third, establish a rhythm so that players know intuitively whether they are at the beginning, middle, or end of the game. Managers can also engineer such shifts of momentum and motivation for workers. Three more principles focus on providing entertainment. The most important is to tune into what's happening off the board. For many people, the real joy of a great game--or a great job--comes from the larger social experience surrounding it. Another key is to offer chances to come from behind. Even struggling employees want to believe, "The odds may be stacked against me, but just one great stroke and I'm right back in it." Finally, managers, like game designers, should provide outlets for latent talents. Games themselves can be useful in the workplace. For instance, an afternoon of game playing builds relationships and increases an organization's social capital. And simulation games can sharpen employees' business judgment. Managers may come to appreciate that games succeed depending on how well designed they are--and that many design challenges have their equivalents in the art of management.     

Leveraging the psychology of the salesperson. A conversation with psychologist and anthropologist G. Clotaire Rapaille

We have to admire salespeople's resilience in the face of endless rejection, their certainty that things will work out in the end. At the same time, we're repelled by what their job can do to them. (Think Death of a Salesman and Glengarry Glen Ross, dramatic portraits of hollowness and moral capitulation.) Just what type of person goes into sales, and how do salespeople cope with their jobs? For insight into these questions, HBR approached G. Clotaire Rapaille, a psychologist, anthropologist, and marketing guru who researches the impact of culture on business and markets. In particular, he studies archetypes--the underlying patterns in psychology that illuminate the human condition--and shows organizations how to use those patterns to sharpen their sales and marketing efforts. He points out, for instance, that a keen understanding of the Great Mother archetype has helped Procter & Gamble achieve great success with Pantene hair products. By promoting nutrition--and reminding consumers that hair must be nurtured--the Pantene brand appeals to the maternal instinct. Rapaille says that salespeople have their own archetype: They are Happy Losers who relish rejection and actually seek out jobs that provide opportunities to be turned down. That, of course, has implications for how they should be managed. Rapaille's research shows that the leading motivator in sales is not money; it's the thrill of the chase. "Hold huge company meetings where you give a salesperson the gold medal of rejection," he advises. "Jonathan sold 500,000 computers last month, but he was rejected 5 million times! It may sound ludicrous, but this is the way to get fire in the belly of your sales force--particularly in America, where beating the odds is highly prized".     

The ethical mind. A conversation with psychologist Howard Gardner

Business leadership has become synonymous in the public eye with unethical behavior. Widespread scandals, massive layoffs, and inflated executive pay packages have led many to believe that corporate wrongdoing is the status quo. That's why it's more important than ever that those at the top mend relationships with customers, employees, and other stakeholders. Professor Gardner has spent many years studying the relationship between psychology and ethics at Harvard's Graduate School of Education. In this interview with HBR senior editor Bronwyn Fryer, Gardner talks about what he calls the ethical mind, which helps individuals aspire to do good work that matters to their colleagues, companies, and society in general. In an era when workers are overwhelmed by too much information and feel pressured to win at all costs, Gardner believes, it's easy to lose one's way. What's more, employees look to leaders for cues as to what's appropriate and what's not. So if you're a leader, what's the best way to stand up to ethical pressures and set a good example? First and foremost, says Gardner, you must believe that retaining an ethical compass is essential to the health of your organization. Then you must state your ethical beliefs and stick to them. You should also test yourself rigorously to make sure you're adhering to your values, take time to reflect on your beliefs, find multiple mentors who aren't afraid to speak truth to your power, and confront others' egregious behavior as soon as it arises. In the end, Gardner believes, the world hangs in the balance between right and wrong, good and bad, success and disaster. "You need to decide which side you're on:" he concludes, "and do the right thing."     

Accounting towards sustainability in production and supply chains

Growing interest in sustainability and corporate supply chains accompanies increased globalisation across developed and developing countries, a stronger focus on the logistics of procurement behind international trade, and information flows between parties about corporate economic, social and environmental performance. Accounting provides information to oil the wheels of supply chain relationships. The purpose of this paper is to consider what an accounting for sustainability of production and supply chains might look like. An overview is provided of the issues associated with a broadening of accounting needed for sustainable supply chains. The paper highlights: ongoing problems of scope and terminology, lack of a broad sustainability focus because of complexity which stunts the impact on decision makers, and the need for transdisciplinary teams to increase connectedness and performance of the supply chain. The need for further research relating to three issues is identified. First, who undertakes the accounting for supply chains; second, why should a business function account for supply chain involvement; and, third, what information is relevant to different functional managers?     

New project? Don't analyze--act

In a predictable world, getting a new initiative off the ground typically involves analyzing the market, creating a forecast, and writing a business plan. But what about in an unpredictable environment? The authors recommend looking to those who are experts in navigating extreme uncertainty while minimizing risk: serial entrepreneurs. These business leaders act, learn, and build their way into the future. Managers in traditional organizations can do the same, starting with smart, low-risk steps that follow simple rules: Use the means at hand; stay within an acceptable loss; secure only the commitment needed for the next step; bring along only volunteers; link the initiative to a business imperative; produce early results; and manage expectations. Momentum is gained by continuing to act based on what is learned at each step. The launch of Clorox's Green Works product line is discussed as an example.     

Covert leadership: notes on managing professionals. Knowledge workers respond to inspiration, not supervision

The orchestra conductor is a popular metaphor for managers today--up there on the podium in complete control. But that image may be misleading, says Henry Mintzberg, who recently spent a day with Bramwell Tovey, conductor of the Winnipeg Symphony Orchestra, in order to explore the metaphor. He found that Tovey does not operate like an absolute ruler but practices instead what Mintzberg calls covert leadership. Covert leadership means managing with a sense of nuances, constraints, and limitations. When a manager like Tovey guides an organization, he leads without seeming to, without his people being fully aware of all that he is doing. That's because in this world of professionals, a leader is not completely powerless--but neither does he have absolute control over others. As knowledge work grows in importance, the way an orchestra conductor really operates may serve as a good model for managers in a wide range of businesses. For example, Mintzberg found that Tovey does a lot more hands-on work than one might expect. More like a first-line supervisor than a hands-off executive, he takes direct and personal charge of what is getting done. In dealing with his musicians, his focus is on inspiring them, not empowering them. Like other professionals, the musicians don't need to be empowered--they're already secure in what they know and can do--but they do need to be infused with energy for the tasks at hand. This is the role of the covert leader: to act quietly and unobtrusively in order to exact not obedience but inspired performance.     

How we went digital without a strategy

Once you say what business you're in, you put your employees into a mental straitjacket and hand them a ready-made excuse for ignoring new opportunities. So rather than dictate his company's identity, Ricardo Semler--the majority owner of Semco in S?o Paulo, Brazil--lets his employees shape it through their individual efforts and interests. "I don't know what Semco is," he writes in this first-person account of his company's expansion from manufacturing to Internet services. "Nor do I want to know." Ten years ago, Semco employees who were selling cooling towers to owners of large commercial buildings heard customers complain about the high cost of maintaining the towers. The salespeople proposed a new business in cooling-tower maintenance, and the venture is now a $30 million property-management business. That initiative led to the creation, with Semco's support, of an on-line exchange to facilitate the management of commercial construction projects. The exchange is revolutionizing the construction process in Brazil and has become a springboard for further Web initiatives such as virtual trade shows. The author shares some of the lessons he has learned along the way: Forget about the top line. Never stop being a start-up. Don't be a nanny (treat your employees like adults). Let talent find its place. Make decisions quickly and openly when it comes to reviewing proposals for new businesses. And partner promiscuously: "Our partners," Semler says, "are as much a part of our company as our employees."