FOUR
Stories about Development
If everyone is thinking alike, then no one is thinking.
Jack’s Turn
In lecture courses, claimed a Harvard professor, students “are waiting for you to give ‘the answer.’” There’s a built-in bias against action. What we say with the case method is: “Look, I know you don’t have enough information—but given the information you do have, what are you going to do?”42
“Okay, Jack, here you are, the CEO, at Mammoth Inc. What should the company do now?” The professor and 87 of Jack’s classmates anxiously await his reply to the “cold call”—designed to ensure that students have prepared the case. Jack did; he has been thinking about this for a long time, ever since he was told that the case study method is intended to “challenge conventional thinking.” He has also been reminded repeatedly that since good managers are decisive, good MBA students must take a stand. So Jack swallows hard and answers the question.
“How can I answer the question?” Jack begins. “I barely heard of Mammoth before yesterday. Yet today you want me to pronounce on its strategy.
“Last night I had two other cases to prepare. So Mammoth, with all those zillions of employees and products, got a couple of hours. I read the case over once quickly and again … uhm … less quickly. I never knowingly used any of Mammoth’s products. I didn’t even know until yesterday that the company makes the rat poison I use in my basement. I never went inside any of its factories. I’ve never even been to Come By Chance, Newfoundland, where Mammoth is headquartered. I spoke to none of its customers (except myself). I certainly never met any of the people mentioned in the case. Besides, this is a pretty high-tech company and I’m a pretty low-tech guy. My work experience—the little there was—took place in a furniture factory. All I have to go by are these few pages. This is a superficial exercise. I refuse to answer your question.”
What happens to Jack? At the business school, I’ll let you guess. But from there he goes back to the furniture business, where he immerses himself in the products, the people, and the processes. With his courage to be decisive and challenge conventional thinking, Jack rises to become CEO. There, with hardly any industry analysis at all (that would have come in a later course), he and his colleagues learn their way to a strategy that transforms the furniture business.
Meanwhile, Bill, sitting next to Jack, leaps in. He too has never been to Come By Chance. But that doesn’t stop him. He makes a clever point or two and gets that MBA. This gets him into a prestigious consulting firm, where, as in those case study classes, he leaps from one situation to another, each time making a clever point or two, concerning issues he recently knew nothing about, always leaving before implementation (i.e., action) begins.
As this form of experience pours in, it is not long before Bill becomes chief executive of a major appliance company. (He never consulted for one, but it does remind him of that Mammoth case.) There, after downsizing a few thousand of its Human Resources, he formulates a glitzy high-tech strategy, which is implemented, so to speak, through a dramatic program of acquisitions. What happens to that? Guess again. (Or read the next story.)
“Readers [of the book What They Really Teach You at the Harvard Business School, by two of its students] are probably asking, ‘Read the case and do that analysis in two to four hours?’ Harvard’s answer is yes. Students need to prepare two to three cases each day.… So [they] must work toward getting their analysis done fast as well as done well.”43
A few years ago, the school ran an ad in The Economist for its executive education programs. It showed an executive-looking woman who is saying, “We studied four companies a day. This isn’t theory. This is experience.” This is nonsense.
MBAs as CEOs: Some Troubling Evidence
Business schools like to boast about how many of their graduates have become CEOs—Harvard especially, since it has the most. But how do these people do as CEOs? Are the skills needed to perform there the same as those that get them there?
Most MBA students enter the prestigious business schools smart, determined, and aggressive. There case studies teach them how to pronounce cleverly on situations they know little about, while analytic techniques give them the impression that they can tackle any problem—no in-depth experience required. With graduation comes the confidence of having been to a proper business school, not to mention an “old boys” network that can boost them to the “top.” Then what?
Some Surprising Evidence
This is one question that these centers of research do not research. Some years ago, Joseph Lampel and I made an exception. A decade after its publication in 1990, I looked at a book called Inside the Harvard Business School by David Ewing, long an insider. The first sentence reads: “The Harvard Business School is probably the most powerful private institution in the world.”44 The book listed 19 Harvard alumni who had “made it to the top”—the school’s superstars as of 1990. My attention was drawn to a few of them who would not have been on any such list much after 1990.
So Joe and I studied the post-1990 records of all 19. How did they do? In a word, badly. A majority, 10, seemed clearly to have failed, meaning their company went bankrupt, they were forced out of the CEO chair, a major merger backfired, or the like. The performance of another four appeared to be questionable. Some of these 14 CEOs built up or turned around businesses, prominently and dramatically, only to see them weaken or collapse just as dramatically. The other five appeared to have done fine.
For example, Frank Lorenzo experienced major failures with all three airlines that he headed, and Roy Bostock, who for a decade headed up renowned advertising agency Benton & Bowles, saw it close down five years after he retired. Perhaps most prominent and dramatic was the story of Bill Agee, CEO of Bendix and later of Morrison-Knudsen, a construction company. About a book written by Mary Cunningham, another Harvard MBA, who worked alongside Agee, a Fortune reviewer wrote:
What little discussion there is of actual business consists mainly of genuflecting in front of a deity called The Strategy.… Near as I can tell, it consisted of getting Bendix out of a lot of fuddy-duddy old-fashioned products and into glitzy high tech. What makes this a terribly ingenious idea, let alone a good one, she does not say.45
Another Fortune article elaborated. Agee “was facile with finance and accounting, shrewdly selling assets and investing in other companies.… [But after] Bendix’s ill-conceived effort to go high tech … a takeover attempt … backfired, leading to the sale of Bendix.” Then, at Morrison-Knudsen, Agee “made some dreadful business decisions.” According to some executives, he used questionable accounting practices to boost earnings by tens of millions of dollars. The writer concluded that “Agee’s fatal flaw was his weakness as a manager.”46
But then again, maybe he wasn’t a manager so much as a leader. (Read the following rules and judge for yourself.) Okay, so sitting still in a classroom for a couple of years does not spoil everyone’s potential to manage—there were, after all, those five other CEOs on that list. But the performance of the 14 suggests that the MBA degree has succeeded in putting some wrong people in the CEO chair, also that an emphasis on cases and analysis may have given some right people the wrong impression of managing.
More Surprising Still
The results of our study were obviously surprising. They didn’t prove anything, but they certainly raised a serious concern: is it possible that the coveted MBA degree could actually be damaging the practice of managing?
More surprising still is what followed our study (published prominently enough in a Fortune magazine article as well as in my 2004 book Managers Not MBAs, which has sold almost 100,000 copies).47 Nothing. You might think that it would have set off some alarm bells or at least evoked a bit of curiosity. That it did not tells us as much about business schools as do these results themselves.
More Troubling Still
Recently, two business school professors, Danny Miller and Xiaowei Xu, weighed in on this issue, with two studies that had larger samples—and results that were more troubling.
In “A Fleeting Glory: Self-Serving Behavior among Celebrated MBA CEOs,”48 they used an ingenious sample: 444 chief executives of American corporations celebrated on the covers of Business Week, Fortune, and Forbes magazines from 1970 to 2008. Their research compared the subsequent performance of those companies that were headed by MBAs—one-quarter of the total—with the ones that were not.
Both sets of companies declined in performance after the cover stories—Miller commented that “it’s hard to stay on top”—but the ones headed by the MBAs declined more quickly, and that decline “remained significant even seven years after the cover story appeared.” The authors found that “the MBA degree is associated with expedients to achieve growth via acquisitions … [which showed] up in the form of reduced cash flows and inferior return on assets.” Yet the compensation of the MBA CEOs actually increased, in fact about 15 percent faster than the non-MBAs! Apparently, they had learned how to play the “self-serving” game, which Miller referred to as “costly rapid growth.”49
Gobbling up “value”
The second study, titled “MBA CEOs, Short-Term Management and Performance,”50 used a wider, more recent sample of 5,004 CEOs of major US public corporations from 2003 to 2013. The results were similar: “We find that MBA CEOs are more apt than their non-MBA counterparts to engage in short-term strategic expedients such as positive earnings management and suppression of R&D, which in turn are followed by compromised firm market valuations.” Once again, these MBA CEOs were rewarded for this “performance.”
Why Does This Problem Persist?
Business schools have become enormously successful, in certain respects deservedly so. They do a great deal of significant research and some are centers of interdisciplinary work, the best of them bringing together psychologists, sociologists, economists, historians, and others. Their MBA programs train well for the business functions, such as finance and marketing, if not for the practice of managing. So why do these schools persist in promoting this education for management when it appears to foster so much mismanagement?
Well, why change when so many of their graduates are getting to the “top,” even if too many of them are corrupting their companies and the economy, as well as society.
“If you always do as you always did, you will always get what you always got.”51
Engage Managers Beyond Administration (“emba”)
There is plenty of business education, but hardly any management education. What, then, should you do as a manager who is performing well yet keeps getting bypassed by MBAs who screw up? Join them by getting an EMBA yourself? Only if it stands for engaging managers beyond administration.
Do you really want to sit in a nice neat row, listening to lectures about action and engagement? Or pronounce on companies you know hardly anything about while your own firsthand experience is ignored? Besides, are you interested in the administration of business or the practice of management?
For years I went around giving talks at business schools about what is wrong with conventional MBA education for management—namely that it trains the wrong people in the wrong ways with the wrong consequences—that’s all. The people are inexperienced: a manager cannot be created in a classroom. This makes the ways too analytical: unable to teach the art and craft of managing, the faculty rely on the science by teaching analysis and technique, or else they use the disconnected experience of case studies. And by giving the impression that this has taught the graduates to manage everything—when in fact they have learned to manage nothing—the consequences are often dire. When they graduate, MBAs should be stamped with a skull and crossbones on their foreheads: Warning! Not prepared to manage!
At these talks, people started asking me the question that should never be asked of an academic: What are you doing about it? (We academics are supposed to criticize, not do anything about anything.) Duly embarrassed, I teamed up with colleagues at prominent business schools around the world to create the International Masters Program for Managers.52
While a manager cannot be created in a classroom, experienced managers can benefit greatly from a classroom that encourages them to reflect on their own experience and share their insights with one another. T. S. Eliot wrote in The Dry Salvages, “We had the experience but missed the meaning.” Management education should be about getting the meaning of experience.
The managers in the IMPM—average age in the forties—stay on the job and come into the classroom for five modules of 10 days each over 16 months, held in England, Canada, India, Japan, and Brazil. These focus not on the functions of business but on the mindsets of managing:
• Reflection—managing yourself
• Analysis—managing organizations
• Worldly—managing context
• Collaboration—managing relationships
• Action—managing change
At the end of the very first module in 1996, on the reflection mindset, while everyone else was going around saying, “It was great meeting you!” Alan Whelan, a sales manager at BT, was saying, “It was great meeting myself!”
Our programs have a fifty–fifty rule: half the class time is turned over to the managers, on their agendas. Hence they sit at round tables in a flat room so that they can go in and out of workshops at a moment’s notice.
These managers are not lone wolves parachuted into class to sit in selfie-silos, as shown on the next page. They are colleagues in a community of social learning, connected to their context, as shown in the next figure.
This arrangement has led to a variety of novel practices.53
• Friendly consulting In friendly consulting, a concern of each manager becomes the focus of attention of a small group of colleagues. One person’s manager quit suddenly during the program, and she was struggling with whether to take the vacated position. That helpful hour of friendly consulting continued over lunch.
• Managerial exchange Mayur Vora was running his jam-and-jelly company in Pune, India, and Françoise Le Goff was number two on the Africa desk at the International Federation of the Red Cross in Geneva. They did the first managerial exchange, where the IMPM managers pair up and spend the better part of a week at each other’s workplace. At the start of the exchange, Mayur had seen Françoise typing and asked, “Can’t a secretary do that?” Welcome to the worldly mindset: Geneva is not Pune. (That is why we call it “worldly” rather than “global”: the IMPM is about getting into other people’s worlds to better understand your own.) On the last day, Mayur told Françoise he would be happy to meet with any of her staff. All of them lined up to convey through him their impressions of her management style. Françoise reported that Mayur “was like a mirror for me.”
• IMPact teams We ask the managers in the program to form IMPact teams back at work, to carry the learning into their organization for change. It has been said never to send a changed person back to an unchanged organization. But in management development programs, we always do. The participants should be changing their organizations as a consequence of changing themselves. In one small company that had run into a serious problem, a participant in the IMPM had to pick up the pieces. He formed such a team, which he said saved the company.
The MBA is fine so long as it is recognized for what it does well, namely train people for certain specialized jobs in business, but also for what it does badly, namely prepare people to manage. Beyond the MBA, it’s time for management education.54
Don’t Just Sit There …
This story is coauthored with Jonathan Gosling
Imagine a meeting of the board with the chairman facing backward, not allowed to speak until the end. Imagine a conference with keynote listeners instead of keynote speakers. Imagine managers sitting in a circle to “show and tell,” just like they did in kindergarten. Does all of this sound silly?
We have been doing such silly things for years in our management development programs with great success. People listen better, speak more thoughtfully, and address problems more effectively. Instead of just listening to “speakers,” or at least not listening to them while waiting to speak, or else enduring a meeting with everyone trying to speak at once, we use a host of different seating arrangements that encourage open discussion and development—in and beyond our classrooms.
When we were creating the IMPM, Nancy Badore asked, “How are you going to seat them?” She had developed a novel program for Ford executives and was helping us think through ours.
“I suppose in one of those U-shaped classrooms?” came our answer.
“Not those obstetrics stirrups!” Nancy shot back. We got the point! With that, we were off—never looking back (except when the class asked us to face backward and do some keynote listening of our own).
Half the time devoted to table talk We decided that the managers in our classrooms would sit at small round tables in a flat classroom, where they would spend half the class time learning from one another. No need to break out. Sure, they can learn from the faculty but hardly less so than from each other. Round tables turn a collection of individual participants into a community of social learners.
Show and tell in a big circle In plenaries after the table discussions, we used to do what most programs do: ask for the best ideas from each table—that dreadful go-around. Then one day a new colleague sat everyone in a big circle, himself included. A great show-and-tell discussion followed. The next day another colleague put them in the circle again but then stood there, as if to say, I will give you permission to speak, you will direct your comments to me, and I will follow with some smart reply. (Professors do have to profess.)
The day after that, one of us stood in the circle again and announced, “I’m in charge”—and walked out. Returning after the plenary, the class let him know that next time he was to take his place in the circle, just like everyone else.
Keynote listening How about this: have one person at each table turn around to eavesdrop on the conversation without speaking—be a keynote listener—and then have these people report in the plenary on what they heard. After all, don’t good managers have to be good listeners?
The inner circle Sometimes for the plenary, we bring these eavesdroppers together in the middle, all facing each other in a little circle, to chat about what they heard. Everyone else, in a larger circle around them, listens. In effect, all the others become the eavesdroppers about what they have just said.
Tapping in and out After those in an inner circle have had their say and some others are itching to add something, they can tap someone on the inside and replace him or her. The discussion carries on; in fact, it gets refreshed. Here we have something quite fascinating: a running, renewing conversation, with just a few people at a time, everyone involved yet no one in charge. One time, when we had a journalist from the New York Times visiting the IMPM class, we put him in the inner circle. Trouble was, no one dared to tap him out!55
Beyond the classrooms All of this may sound well and good for managers and professors having a good time in a classroom, but it hardly needs to stop there. We have had keynote listeners replace keynote speakers in large conferences. We have debriefed conversations in rooms of 200 people at round tables, asking at the end of a workshop, “Quick, point to someone at your table who had a really good idea,” and then asking the targets to come forward and explain. One participant described this exercise as a “great way to turn a large meeting into a series of meaningful conversations.”
And into the managerial offices We have yet to turn the chairman of some major corporation around at a board meeting (maybe because they are too busy turning their companies around). But imagine all of this brought into the workplace: round tables, reflections, eavesdropping, big and inner circles. Or don’t imagine—ask Carlos, who experienced the seating in one of our other programs (embaroundtables.com, a similar experience but for one week). When he got back to his factory in Mexico City, he installed a round table on the floor and emailed us a photo with the comment “We use it very often” when there is the need to reflect on a difficult issue.
Coaching ourselves around a table Then came another initiative, called CoachingOurselves.com, that dispenses with the professors, the classrooms, and the conferences. Managers gather in their own workplace, in one or more teams, each around a table, for some do-it-yourself development. Each team downloads slides on a particular module (for example “Strategic Blind-spots,” “Developing Our Organization as a Community,” and “Crafting Strategy”), relates the material to their common experience, and carries the insights they developed forward for improvement in the organization.
Change how and where managers sit, and management development can become organizational development.56