7. February 2020
Source: The Economist
The rules of management are being ripped up. Bosses need to adapt
On paper this is a golden age for bosses. Chief executives have vast power. The 500 people who run America’s largest listed firms hold sway over 26m staff. Profits are high and the economy is purring. The pay is fantastic: the median of those ceos pockets $13m a year. Sundar Pichai at Alphabet has just got a deal worth up to $246m by 2023. The risks are tolerable: your chances of being fired or retiring in any year are about 10%. ceos often get away with a dreadful performance. In April Ginni Rometty will stand down from ibm after eight years in which Big Blue’s shares have trailed the stockmarket by 202%. Adam Neumann got high in private jets and lost $4bn before being ousted from WeWork last year. The only big drawback is all those meetings, which eat up two‑thirds of the typical boss’s working hours.
Yet ceos say the job has got harder. Most point the finger at “disruption”, the idea that competition is more intense. But they have been saying that for years. In fact the evidence suggests that, as America’s economy has become more sclerotic, big firms have been able to count on cranking out high profits for longer. Nonetheless, bosses are right that something has changed. The nature of the job is being disrupted. In particular, ceos’ mechanism for exercising control over their vast enterprises is failing, and where and why firms operate is in flux. That has big implications for business, and for anyone climbing the corporate ladder. Read the rest of this entry »
2. November 2019
Source: The Economist
We have obtained a copy of a recent letter to a business dean
Dear Dean Whiteboard,
On behalf of the trustees of the Gordon Gekko Business School, I write with a helicopter view on our beloved institution. There is good news and bad. First, congratulations are in order. Under your leadership, GorGeBS has again been named by The Economist as one of the world’s top 100 business schools.
The bad news is that our best-of-breed status is in jeopardy because the very business model of our school faces tectonic challenges. Demand is plunging. Our mba applications are down by a quarter. Across America, applications to business schools have fallen for five years in a row. Even at Harvard, they are down this year by about 6%.
One reason is a drop in international applicants, many of whom are put off by America’s anti-immigration policies. But before you rush to blame all those law graduates staffing up government departments, the bigger factor is that we are charging too much. Our mba costs nearly twice as much as it did a decade ago, but nobody believes we are delivering twice as much value. Read the rest of this entry »
7. May 2017
Source: The Economist: Schumpeter
A confidential memorandum of warning to its senior faculty
YOU will all be aware that a book has just been published about our institution, Harvard Business School (HBS). Entitled “The Golden Passport”, by Duff McDonald, it makes a number of unflattering claims about the school’s ethics and its purpose. While often unbalanced, it is likely to galvanise hostility to HBS both inside Harvard University, of which we are a part, and among the public. This memorandum, circulated only to the most senior faculty members, assesses HBS’s strategic position.
Our school has been among the country’s most influential institutions since its foundation in 1908. Our forebears helped build America’s economy in the early 20th century and helped win the second world war. HBS educates less than 1% of American MBA students but case studies written by our faculty are used at business schools around the world. Our alumni fill the corridors of elite firms such as McKinsey. Many bosses of big American companies studied here. Even in Silicon Valley, where we are relatively weak, about a tenth of “unicorns”—private startups worth over $1bn—have one of our tribe as a founder. Read the rest of this entry »
17. June 2016
Source: The Economist: Schumpeter
Chief finance officers are amassing a worrying amount of power
THE days of imperial CEOs have long gone. Today’s chief executives do their best to contain their egos and, instead, project a modest image. They talk about “servant leadership” and make a point of cultivating their “stakeholders”. Many bosses leave the limelight to company founders and big-name investors. And yet a new authority figure has emerged within companies, much less exuberant than old-fashioned autocratic CEOs but just as determined to amass power: the imperial CFO.
Chief financial officers barely existed 50 years ago: company accounts were administered by mysterious people called “comptrollers”. Today, CFOs are at the heart of all the world’s big firms. They are the only corporate officers other than the boss who are able to monitor every corner of an organisation. They are the only executive other than the chief who is feared by everybody: a “no” from the CFO means that your precious project is dead. Russell Reynolds, a search firm, calls them “co-pilots”. At one high-profile company, Twitter, the CFO, Anthony Noto, is arguably doing most of the piloting. Read the rest of this entry »
11. October 2015
Source: Fortune january 2015, Ram Charan
Get ready for the most sweeping business change since the Industrial Revolution.
The single greatest instrument of change in today’s business world, and the one that is creating major uncertainties for an ever-growing universe of companies, is the advancement of mathematical algorithms and their related sophisticated software. Never before has so much artificial mental power been available to so many—power to deconstruct and predict patterns and changes in everything from consumer behavior to the maintenance requirements and operating lifetimes of industrial machinery. In combination with other technological factors—including broadband mobility, sensors, and vastly increased data-crunching capacity—algorithms are dramatically changing both the structure of the global economy and the nature of business.
Though still in its infancy, the use of algorithms has already become an engine of creative destruction in the business world, fracturing time-tested business models and implementing dazzling new ones. The effects are most visible so far in retailing, creating new and highly interactive relationships between businesses and their customers, and making it possible for giant corporations to deal with customers as individuals. At Macy’s, for instance, algorithmic technology is helping fuse the online and the in-store experience, enabling a shopper to compare clothes online, try something on at the store, order it online, and return it in person. Algorithms help determine whether to pull inventory from a fulfillment center or a nearby store, while location-based technologies let companies target offers to specific consumers while they are shopping in stores. Read the rest of this entry »