What it takes to be a CEO in the 2020s

7. February 2020

Date: 06‑02‑2020

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 »


The future of management education

2. November 2019

Date: 31-10-2019
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 »


Even if WeWork is in trouble the office is still being reinvented

27. September 2019

Date: 26-09-2019
Source: The Economist

It could lead to a two-tier system

“From nine till five, I have to spend my time at work,” warbled Martha and the Muffins back in 1980. “My job is very boring, I’m an office clerk.” Many of the hundreds of millions of people who trek into an office will feel as despondent at the prospect as Martha did. The office needs a revamp. But the crisis at WeWork, a trendy office-rental firm whose boss, Adam Neumann (pictured), stepped down this week after its attempt to float its shares turned into a debacle, shows that businesses are still struggling to come up with a new format.

The large office, like the factory, is an invention of the past two centuries. The factory arose because of powered machinery, which required workers to be gathered in one place. Big offices grew from the need to process lots of paperwork, and for managers to instruct clerks on what to do. But now the internet, personal computing and handheld devices mean that transactions can be dealt with on-screen and managers can instantly communicate with their workers, wherever they are. The need for staff to be in one place has been dramatically reduced.

A new model may take time to emerge—electric power was first harnessed in the 1880s but it was not until the 1920s that factories changed their layouts to make full use of it. The new model will have to balance three factors: the desire of many workers for a flexible schedule; the high cost for firms of maintaining office space; and the countervailing desire to gather skilled workers in one place, in the hope that this enhances collaboration. Read the rest of this entry »


Johnson: The importance of pauses in conversation

15. December 2017

Date: 14-12-2017
Source: The Economist

“Um”, “uh”, “mm-hmm” and interruption are not killers of conversation, but its lubricants

MARGARET THATCHER was known for a voice that brooked no disagreement. While still in opposition, she had taken elocution lessons to sound more forceful. Despite this, she was often interrupted in interviews as prime minister, and in 1982, three researchers set out to understand why. They played clips from one of her interviews to a variety of people. The clips included segments that ended in interruption (while editing out the interruptions themselves). More often than not, those hearing the interrupted phrases thought that the prime minister was ending her conversational turn. It seems her interviewer had come to a similar conclusion.

Why? Conversation, it turns out, is a finely tuned machine, as Nick Enfield, a linguist at the University of Sydney, suggests in “How We Talk”. Humans mostly follow a rule called “no gap, no overlap”, reacting to the end of a conversational turn by beginning their own in about 200 milliseconds—about the time it takes a sprinter to respond to the starting gun. This is all the more remarkable given that it takes about 600 milliseconds for someone to work out what they are going to say by mentally retrieving the words and organising how they are to be expressed.

People, therefore, must plan to begin speaking before their conversation partner has stopped. That requires a fine attention to the cues signalling the end of a turn, such as a lengthening of syllables and a drop in pitch. As it happens, using a downward shift of pitch is also a frequent piece of advice given to those who want to sound more authoritative—like Thatcher. The researchers studying the times she was interrupted found precisely that a sharp drop in her pitch accurately predicted an interruption. Read the rest of this entry »


Crowded cloud: Microsoft

20. July 2017

Date: 20-07-2017
Source: The Economist

Today the world’s largest software company reports earnings for the second quarter. Its share price is at an all-time high, elevated by expectations that the chief executive, Satya Nadella, will continue to transform the company and develop new business lines.

Mr Nadella, who is enthusiastic about artificial intelligence (AI), wants Microsoft to become an “AI-first” firm. He has pumped more time and money into Azure, its cloud-computing business, hopeful that it will account for much of the firm’s future growth.

But the company faces stiff competition from deep-pocketed rivals, such as Amazon and Google. Jefferies, an investment bank, reckons Azure will chalk up around $5bn in sales in 2017, or 21% of the market—an impressive sum but far less than Amazon Web Services, with 71%. Investors will be looking for clues as to how much new cloud business Microsoft has won. When expectations are great, even good results can disappoint.


Harvard Business School risks going from great to good

7. May 2017

Date: 04-05-2017
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 »


What Satya Nadella did at Microsoft

17. March 2017

Date: 16-03-2017
Source: The Economist

The world’s biggest software firm has transformed its culture for the better. But getting cloud computing right is hard

A DECADE ago, visiting Microsoft’s headquarters near Seattle was like a trip into enemy territory. Executives would not so much talk with visitors as fire words at them (one of this newspaper’s correspondents has yet to recover from two harrowing days spent in the company of a Microsoft “brand evangelist”). If challenged on the corporate message, their body language would betray what they were thinking and what Bill Gates, the firm’s founder, used often to say: “That’s the stupidest fucking thing I’ve ever heard.” Read the rest of this entry »