The MTP Business Learning Blog

This blog is produced by MTP for senior professionals highlighting relevant and interesting books and articles on business, finance and strategy, and the opportunity to comment on them. It also contains news of MTP and its clients and, from time to time, extracts from MTP publications.

Thursday 15 July 2010

‘The Coherence Premium’ by Paul Leinwand and Cesare Mainardi, Harvard Business Review, June 2010

This article is written by senior people of the well-regarded (but amusingly named) management consultants Booz & Company. As I read it I found myself agreeing with much of what was said but also thinking - haven’t we heard all this somewhere before? For instance, from Tom Peters who said ‘stick to the knitting’ and Hamel & Prahalad who said ‘focus on core competences’. My assessment of the article is therefore based on whether there is anything original, which is not too much to expect after the many articles on strategy that have been written over the years.

The basic argument is that companies spend too much time looking at their external positioning and not enough at their own capabilities. They follow market trends to achieve growth and allow this to take them into areas that are outside their capabilities; they develop strategies that do not focus on capabilities. The desire to focus on the present and future needs of customers takes them away from their core business.

At this stage the article was clearly failing the ‘what’s new?’ test and the authors confirmed this by admitting that it was merely restating Hamel & Prahalad’s core competences argument. Their allegedly new approach is based on the argument that the successful companies are those whose strategy is coherent with capabilities, who know how they create value for customers and have capabilities that are ‘what we do better than anyone’. This is the only way that a company will produce superior returns to shareholders.

The article then provides examples of winners and losers, which is usually a good test of whether thinking is clear. I was certainly convinced by the losers, companies like Conagra and Sara Lee who had tried to achieve growth through acquisitions in a wide range of unconnected sectors; but Tom Peters could have told us that this was wrong thirty years ago. The first example of a winner is Walmart who apparently have four key capabilities that they deliver better than anyone else and thus achieve the lowest everyday prices. It is hard to argue with this but you could also say that their success starts from identifying what the market demands and developing their capabilities to match; it is hard to see Walmart developing their four capabilities without looking at the market. The argument then becomes all about ‘chicken and egg’ rather than providing new insights.

At this point I finally became convinced that this article is just a recycling of old theories with different words and it surprises me that the Harvard Business Review allowed a firm of consultants to feature in this way, knowing how hard it is to find space in this most highly regarded management publication.

The ‘coherence premium’ is merely restating something that we all should know by now; that you make money by matching core competences with a need in the marketplace and this will only deliver value if you have competitive advantage.

To read this article go to:
http://hbr.org/2010/06/the-coherence-premium/ar/1

‘Proving your worth’ by Jenny French, Training Journal, June 2010

I could have chosen at least three other articles on evaluation of training in the last month, which makes me wonder if this is a bandwagon that too many consultants are jumping on, knowing that it is a sure route to getting an article published. We all know that evaluation is important but is there anything new to say?

I chose this article because of one fundamental difference from the others; it is written by a senior learning professional in a well-regarded company and not by yet another self-serving consultant. Jenny French is Group Head of Leadership Development at BT and her article describes how she introduced a new approach to evaluation as part of a plan to communicate the value of their Leadership Development programmes. This creates a good impression at the start of the article; unlike many others BT have thought through the reasons why they want to evaluate training rather than seeing it as an end in itself.

One interesting comment early in the article is that BT would ideally like to turn the clock back and start the whole design process with ROI in mind. This raises the critical issue that has hardly been addressed in other articles, whether evaluation should be pre or post the training activity. My view is that there is no doubt in a perfect world; evaluation should be both pre and post and the actual outcome should be compared to plan. The parallel with capital expenditure evaluation is powerful; how many companies would wait until the money has been spent before evaluating it? With capital proposals, the problem is reversed – companies often do great evaluations before spending but never bother to compare with actual outcomes.

So is there anything new about BT’s approach? Their first important step has been to develop common measures for all their leadership development programmes and show these as a ‘dashboard’ which presents measures in digestible form. In addition to standard measures from course evaluation forms, they have tried to introduce the impact on key value drivers like revenue, cost, quality, customer/employee satisfaction, all the measures that you might see in a balanced scorecard.

The dashboard is analysed during monthly meetings and then there is a further stage of ‘digging deeper’ through in-depth interviews which are designed to further assess business impact. Two points occurred to me here; firstly the cost of doing this must be substantial unless you are being highly selective; secondly, how objective are the responses? We have had some experience of post-course follow-up workshops and interviews at MTP and have reason to be cautious.

The author reports that sometimes the interviewers have to dig deep to uncover monetary impact that was not immediately obvious; this enables stories to be revealed and ROI to be assessed. This may well work in some cases but I can recall when running follow-ups for MTP that you can find yourself pushing people into claiming benefits; they may eventually comply because they want to be helpful or because it seems the right thing to do. Certainly the examples quoted by BT show how difficult and arbitrary such assessments can be – for example’ ‘I became more proactive and was able to bring in 5% of revenue earlier’. This raises the hoary old question – how do you know what would have happened if you hadn’t attended the course?

This is not to devalue what BT has done; it sounds like an excellent effort and the idea of making a film to summarise and highlight evaluated benefits is an original one. But I would like to have seen more understanding of the costs and other resource implications of the assessment process and acceptance of the fact that, while it may be viable for a high profile and high investment leadership programme, the use of such evaluation methods may not be practical in a wider context. And that any ROI calculation on the basis of the processes described has to have a health warning about assumptions and limitations.

To read this article go to:
http://www.trainingjournal.com/tj/2919.html

‘The industrialisation of informal learning’ by Vincent Belliveau and ‘How managers learn’ by Peter Casebow, Training Journal, July 2010

This is the other big bandwagon in learning circles and it is one that forward thinking learning professionals cannot ignore. The development of Facebook and similar networks has changed the way that people communicate with each other and this is something to be embraced rather than ignored.

I am combining my reviews of the two articles because they follow on from each other and have similar themes. The key argument is that most management learning comes from informal interactions with colleagues and this trend is increasing all the time. Therefore learning professionals need to change their mindset away from conventional formal approaches to training and become involved with the informal side.

My initial response is that, though the opportunities may have grown because of the Internet, informal learning has always been important and it has never caused more formal training programmes to be unnecessary. It is true that the earliest advocate of the more informal approach – Reg Revans, founder of Action Learning - said that other ways of training were a waste of time but this extreme view has never been accepted within the learning community. All that is happening now is that the informal learning opportunities are more varied and can be harnessed more easily; if Reg Revans was still alive, I am sure he would be arguing for action learning sets through Facebook or MSN. He would however also be stressing the importance of a good facilitator and the need for direction.

The two articles clearly illustrate the challenge of trying to harness and influence informal learning channels; the first article argues strongly that employees learn most from informal communication with each other but there is no reference to whether they are learning good practice. It is possible for one manager to influence another to treat staff unfairly or discriminate in recruitment, this is learning but it encourages bad rather than good practice.

The article also argues that the biggest barrier to the development of informal learning is the average Learning Manager’s mindset. The temptation is to try to define and control in the same way as they do with more formal approaches; instead they must be prepared to provide opportunities but relinquish power. However the argument is still based on one questionable assumption - that all informal learning is good. There is an attempt to counter this point by saying that bad advice is acceptable because the manager will realise and learn from it later but this strikes me as optimistic in the extreme.

The second article mentions how training managers may overestimate the positive impact of their formal courses but fails to mention that this is also possible with informal learning. And while evaluation of conventional courses may be challenging, it is many times more difficult when informal methods are used.

The dilemma is - how far can informal learning be influenced and to what extent should learning professionals try to grasp the nettle? These articles say that we should encourage an atmosphere and provide resources for informal learning to flourish but do not really address the issue of who is to provide direction and quality control.

To read this article go to:
http://www.trainingjournal.com/

‘Why it can pay to study abroad’ by Philip Delves Broughton, Management Today, June 2010

I chose this article because I much enjoyed the author’s book on his year at Harvard, which did not do too much for the image of Harvard or his fellow participants. The article was interesting but also disappointing, perhaps because of Management Today’s reluctance to give more than two pages to such an important topic.

The article starts with some surprising statistics; that 35% of Harvard students are from outside the USA and that most top business schools are trying to increase the proportion of overseas students. It then moves on to show the contrasting experiences of the non-USA students who attended Harvard – it was either ‘rave or despair’. For those in the rave category it was life-changing, developing language skills and sharing experiences that would never have been possible from a school in their own country. And the cachet of it being a school with Harvard’s reputation increased their status substantially.

The despair was from those who returned to find that the networks they had developed were of no use to them at home and they became estranged from local business contacts. I would like Broughton to have developed this point further with some analysis of why these contrasts were so marked. Was it to do with the country, the calibre of participants or their career ambitions?

The author rightly points out that the key factor is the perspective of employers. The fact that you have attended an overseas school will impress those looking for broader horizons and provide some evidence that the candidate is prepared to understand other cultures and work abroad. One powerful example is quoted, a USA student who studied at a UK school and found his experience of the NHS invaluable when later working within and providing challenges to the USA healthcare system.

Overall, an article that does no more than whet the appetite for the issue to be developed further. I hope he writes a second book on his post-MBA career.

To read this article go to:
http://www.managementtoday.co.uk/search/article/1004504/mba-business-education-guide-why-pay-study-abroad/

‘Why not use managers to train managers’ by Barry Johnson and Mandy Geal, Training Journal, July 2010

I have to confess to some inbuilt and self-serving prejudice against this article because, to some extent, MTP’s business depends upon managers not running internal finance and business courses and agreeing that specialist learning expertise is required. We have also found over the years that good managers do not necessarily make good trainers and that it is possible to be a superb trainer without much management experience.

Nevertheless some powerful points are made in favour of encouraging managers to train other managers, rather than bringing in specialists - internal or external - to do so. The first point is that it is developmental for the manager concerned and will improve his/her performance; it is impossible to deny this point because all trainers know that you learn more from every session. One challenge might be that a manager may learn even more from a joint session with an experienced trainer and the audience may do so too. One valid criticism of the article is that the choice is presented as ‘either/or’ and the authors do not raise the possibility of managers and specialist trainers working together; in our experience this is how the best sessions are often delivered.

Another powerful argument in the article is that the manager will know the company culture and will be able to provide specific examples of application of learning. This is clearly valid though our view is that the external trainer can, with experience, support and commitment, also get close to that ideal, while also providing an external perspective and, if required, a degree of challenge to the status quo..

I would have warmed more to the author’s views if there had been some acknowledgement that much depends upon the objectives and the content of the training. If it is about compliance with internal company systems or a relatively instrumental process, the manager may be the best person to run the course. But if it is a more conceptual topic where maybe the company wants to challenge the validity of internal practices, the external view will be important. Existing managers may want to perpetuate their own way of doing things rather than looking for new ways to improve. There may also be problems that the ‘prophet in own country’ is, rightly or wrongly, not always listened to as much as the external facilitator, particularly for more senior programmes.

The final point which the article does not fully address is the fact that many managers do not have the time or inclination to train others and may not be able to do so effectively. Our experience of running Train-the-Trainer programmes is that managers are often concerned when they find out that running an effective course is not about presenting on PowerPoint but is about managing a series of challenging interactions; it requires a lot of preparation and commitment, and a willingness to persevere, even if the first session does not go well.

And there are bound to be some failures, which can be a dispiriting experience for all concerned; but it has to be appreciated that, just as many trainers do not make good managers, some managers, even after ‘Train-the-Trainer’ sessions, do not make good trainers. This article would have been more credible if it had presented a more balanced view; though maybe some readers might feel that the same applies to this review!

To read this article go to:
http://www.trainingjournal.com/

Book Review

The Wikipedia Revolution by Andrew Lih

I was looking forward to reading this book and hoped that it would be as fascinating as the book about that other Internet phenomenon, Facebook. I reviewed this book – The Accidental Billionaire - several months ago and described the dramatic story of a number of larger than life characters battling with each other as Facebook grew to take the world by storm. The nerdish Mark Zuckerberg outflanked his former friends - the glamorous Winklevoss twins of Olympic rowing fame - even if he had to pay them a fortune in compensation.

The Wikipedia revolution has no such glamorous characters and the style of writing does not match the innovative nature of the product and the way in which it has, like Facebook, changed the way that many of us live. The story of the site’s development is full of detail about the technology of the various innovations that led to the creation of Wikipedia and I was soon lost in the complexity of it all. One interesting gem from this section was the fact that a key technical development that made it all possible came from Steve Job’s one ‘failed’ computer venture NeXT, inbetween his spells at Apple.

In contrast to the Facebook story, there seems to be little personal conflict. Even when one of the early innovators Larry Sanger leaves the project, there is little angst or drama. I was left wondering whether this is because the book is hiding something or whether the principals really were that easygoing. I suspect it is the latter because the whole project requires people who are prepared to empower others and is driven by evangelists who are committed to the idea of sharing knowledge. The story of how the idea quickly changed from strict editorial control to more or less open access for volunteers is remarkable for its smooth transition.

There are some interesting stories of how this open access can go pear shaped, for instance the controversy over a picture of a naked child under the entry for a heavy metal band which led to access being blocked for a period; and the ‘professor’ who got a job at Wiki by falsifying his own Wikipedia entry!

I would like to have seen more of these anecdotes rather than the many pages about boring technical stuff, including long lists of the languages in which entries appear (I particularly hoped to hear more about the prank following the death of composer Ronnie Hazelhurst; someone changed his entry just after his death and fooled three broadsheet newspapers into including in their obituaries the false and hilarious claim that he had, in his latter years, written songs for pop group S Club 7).

Overall this was an informative rather than an entertaining read; a book for the committed nerd rather than the interested outsider.

Find out more about the book at http://wikipediarevolution.com/The_Book.html

iPad review

I bought the iPad while in the USA, partly because I liked the look of it, partly because I wanted to explore the option of changing my reading habits towards electronic media. I had heard from friends who have Kindle readers that the benefits are substantial, particularly for those who travel widely; my hope is that I will be able to avoid lugging books around when I go on my frequent trips to the USA.

The first thing to say is that buying books from the Apple iBooks store is very easy, particularly if you are already on iTunes. The visual appeal is brilliant, the books appear on a virtual shelf holding your personal library. The prices seem reasonable, slightly below what you might pay in a shop and many older books are offered free. My wife was delighted to be able to buy the complete works of Jane Austen for 49p.

However the breadth of selection is relatively poor, my searches for new titles and specific business books were not encouraging. It was then that an MTP colleague mentioned that there is an app which allows you to access all the books in the Amazon/Kindle library and this proved to be much more satisfactory; the selection is much wider even if the visual appeal is less sexy. And once you have downloaded your choice – which takes seconds – it is yours to carry around for ever without loading up your suitcase.

It takes some time to get used to holding the iPad rather than a book and reading in bed does not feel quite the same. However, once you get underway it feels fine, the page turning and bookmarks are excellent and you soon forget that it is anything different from normal. The one area where it seems to work less well is when you want to scan or browse a book as you might do in a bookshop; it is not possible to ‘flip through’ before you buy, though there are some useful brief descriptions of the content.

Reading outdoors has not proved to be a problem visually, though in very hot weather a warning appears telling you to take it back inside for a while. And there is also the multifunctional nature of the iPad, you can check your emails or access YouTube between chapters and then go back to your reading.

The final problem is that the engaging nature of the iPad means that other work colleagues and family members will start to play with it if you leave it lying around. This is a particular problem with children who seem unable to keep their hands off it. And the biggest surprise is that my wife – an avid reader of books – has become a complete convert to the iPad; perhaps it was the value of the Jane Austen purchase!

The result is that I am likely soon to need another iPad so that we can have ‘his’ and ‘hers’. This may seem extravagant but this experiment has convinced me that this is the way things are going. I am convinced that, over time, the impact will be the same as the iPod on CD sales; within ten years the book in paper form will be for a few traditionalists and everyone else will be using their latest iPad or Kindle.