Like most of Schumpeter’s weekly contributions this article is insightful and topical. The focus of the article is the appointment of a new Dean of Harvard Business School - Nitin Nohria – who will be the first non-American to take that role. Anyone who has worked in academia will find it worth reading just for the quote attributed to Henry Kissinger - that ‘academic politics are so vicious because the stakes are so small’.
However the stakes are not small at Harvard because it is such a well known brand and a powerhouse of business education; apparently four fifths of the world’s case study material comes from Harvard. This claimed proportion presumably refers to what has been published for general use and excludes all the tailored adaptations of the case study method that are a feature of many in-company programmes.
Harvard has taken a battering during the last few years for two reasons. First because so many of the villains of corporate collapses and the financial crisis were Harvard men (yes, men) and second because many case studies and Harvard Business Review articles praised those who caused the problems, with Enron as the most high profile example.
Nohria’s position as a non-American is regarded as a symbol of Harvard’s desire to change though the fact that he is an academic and Harvard insider may work the other way. He clearly accepts that there are problems of reputation as he talks about a period of ‘extraordinary innovation’ which he sees as necessary to bring things back on track. It seems that his strong belief that management should be more of profession – see review below – will be part of this push for innovation, a way of ensuring a more ethical approach. Schumpeter’s view – which I tend to share - is that this will be more likely to hold him back.
It is Nohria’s desire to make Harvard more international in its approach that is more likely to make his reputation. He also wishes to change the case study method to be more practical, focussing on current real life issues rather than being rationalisations of past successes and failures. The problem for Harvard however is that this is only copying what some other Schools – particularly those in Europe – have already been doing for some time; Schumpeter might also have mentioned that Learning & Development specialists in many top companies have also been operating this way on internal programmes for some time.
The article predicts that, despite the appointment of a non-American, Harvard will find it tough to stay on top of business education during the 21st century. It is hard to disagree.
Click here to read the article in full;
http://www.economist.com/node/16691433
Tuesday 31 August 2010
‘Putting a value on training’ by Jenny Cermak and Monica McGurk, McKinsey Quarterly, March 2010
I have not featured McKinsey’s respected publication before because it is unusual for their topics to include anything connected with management learning. Evaluation of training is a topic that I always try to feature because so many Learning & Development professionals are grappling with the issue. However, I have to confess that, because of the superficial nature of many of the articles on the topic, my enthusiasm and belief in this ‘holy grail’ is waning. This article did not do much to restore my faith.
The article starts promisingly by quoting some statistics from McKinsey’s research; that only 25% of companies believe that their training programmes increase performance in measurable ways and only 8% track ROI. My initial reaction was that, based on our own experiences, the level of 8% seems high, assuming that we are talking about a quantified financial calculation. On the other hand the 25% seems low because most companies believe in what they are doing, however difficult it may be to justify and quantify.
It was disappointing that the main case study of the article is based on a not for profit organisation – the Boys and Girls Clubs of America. This is not to suggest that such organisations do not have good management practices that we can learn from; it is just that you would have expected a consultancy with the reputation of McKinsey to produce an example from one of the world’s top companies.
As is usually the case with evaluation projects, the starting point was good and the intentions sound. They developed a training program for their local leaders following a 360 degree assessment of each person’s performance. They then used regression analysis to produce correlations between each leader’s 360 result and the KPIs used to measure their performance. This resulted in four key areas being isolated as fundamental to success and therefore the main topics of a leadership development programme.
I would like to have learnt more about the methodology of this analysis but at least it showed that the starting point was sound and that there were clear measurable objectives, always the necessary basis for any measurement process. However, it is the post programme measurement that is the difficult bit and this was less convincing.
The authors state that the next stage was ‘straightforward’ – which worried me a great deal because evaluating training is never straightforward – and involved ‘comparison of pre and post training results’. However they were very vague about how this crucial process was carried out. They looked to measure improvement in the relevant KPIs but they inevitably came up against the classic question; what other factors could have had an impact on performance improvement? They claim to have compared the post training results against a ‘control set of organisations’ which had similar characteristics but which had not gone through the training; they also factored in the ‘impact of external factors’. Finally they used interviews to make more qualitative assessments of behaviour changes.
Apart from a feeling that the authors were glossing over a highly complex process, I also began to wonder about the cost of the evaluation process itself and how this could be justified by the benefits. As is usually the case with attempts at evaluation, there is an assumption that it is an end in itself, with little attention to what will be done with the results once they have been evaluated.. The claimed outcome was that the ROI showed a return that was four times the investment but would this knowledge justify the time and cost of the process?
One interesting and positive feature of McKinsey articles is that they show on their website the feedback from readers, both favourable and otherwise. The responses generally shared my reservations and there was criticism of the ‘dated’ approach of talking about training rather than learning. One comment was, I thought, quite profound and applicable to many companies who do not think through a learning strategy; ‘Management is ready to spend millions on training but is not able to give its time’ …
Click here to read the article in full;
http://www.mckinseyquarterly.com/Organization/Talent/Putting_a_value_on_training_2634?gp=1#
The article starts promisingly by quoting some statistics from McKinsey’s research; that only 25% of companies believe that their training programmes increase performance in measurable ways and only 8% track ROI. My initial reaction was that, based on our own experiences, the level of 8% seems high, assuming that we are talking about a quantified financial calculation. On the other hand the 25% seems low because most companies believe in what they are doing, however difficult it may be to justify and quantify.
It was disappointing that the main case study of the article is based on a not for profit organisation – the Boys and Girls Clubs of America. This is not to suggest that such organisations do not have good management practices that we can learn from; it is just that you would have expected a consultancy with the reputation of McKinsey to produce an example from one of the world’s top companies.
As is usually the case with evaluation projects, the starting point was good and the intentions sound. They developed a training program for their local leaders following a 360 degree assessment of each person’s performance. They then used regression analysis to produce correlations between each leader’s 360 result and the KPIs used to measure their performance. This resulted in four key areas being isolated as fundamental to success and therefore the main topics of a leadership development programme.
I would like to have learnt more about the methodology of this analysis but at least it showed that the starting point was sound and that there were clear measurable objectives, always the necessary basis for any measurement process. However, it is the post programme measurement that is the difficult bit and this was less convincing.
The authors state that the next stage was ‘straightforward’ – which worried me a great deal because evaluating training is never straightforward – and involved ‘comparison of pre and post training results’. However they were very vague about how this crucial process was carried out. They looked to measure improvement in the relevant KPIs but they inevitably came up against the classic question; what other factors could have had an impact on performance improvement? They claim to have compared the post training results against a ‘control set of organisations’ which had similar characteristics but which had not gone through the training; they also factored in the ‘impact of external factors’. Finally they used interviews to make more qualitative assessments of behaviour changes.
Apart from a feeling that the authors were glossing over a highly complex process, I also began to wonder about the cost of the evaluation process itself and how this could be justified by the benefits. As is usually the case with attempts at evaluation, there is an assumption that it is an end in itself, with little attention to what will be done with the results once they have been evaluated.. The claimed outcome was that the ROI showed a return that was four times the investment but would this knowledge justify the time and cost of the process?
One interesting and positive feature of McKinsey articles is that they show on their website the feedback from readers, both favourable and otherwise. The responses generally shared my reservations and there was criticism of the ‘dated’ approach of talking about training rather than learning. One comment was, I thought, quite profound and applicable to many companies who do not think through a learning strategy; ‘Management is ready to spend millions on training but is not able to give its time’ …
Click here to read the article in full;
http://www.mckinseyquarterly.com/Organization/Talent/Putting_a_value_on_training_2634?gp=1#
‘No. management is not a profession’ by Richard Barker, Harvard Business Review, July- August 2010
It is interesting that, soon after the appointment of a new Dean who is a leading advocate of management as a profession, the Harvard Business Review should publish an outspoken and convincing article arguing strongly the other way; perhaps an example of vicious academic politics!
The author is a professor of Cambridge’s Judge Business School and argues that this move is a misguided attempt to develop a more ethical approach following the scandals of recent years. He suggests that the Harvard Business Review article that started the debate (by Nohria and Rakesh Khurana, another Harvard professor) is based on a misunderstanding of the differences between management and more conventional professions like law or medicine. Barker’s view is that the key difference is that management is more about the skills of integration; there is not a clear body of knowledge that needs to be acquired and certified. Learning about management is about broader experiences and this is what business educators should by trying to replicate.
He further argues that management does not have a clear code of ethics like other professions and, even if Harvard or any other body tried to develop one, there would be no means of enforcement. Ethics is rightly part of the management curriculum but has to be in context of each country and organisation; it cannot be taught in the same way as it can with the professions.
The further implication of these arguments is that business schools do themselves no favours by pretending that they can ‘qualify’ to be a manager by obtaining an MBA or attending a course. The message should instead be that management expertise requires lifelong learning and that business schools should look to position themselves as long-term learning partners rather than a ‘one stop certification shop’. They provide experiences and guidance which equip managers to deal with diverse environments; they are ‘incubators for business leadership’ rather than professional schools.
I found this argument convincing and it could be taken it even further. You could argue that this principle throws into question the effectiveness of all the generic, open enrolment programmes that business schools still see as their main foundation, particularly for those at an early career stage with limited experience to share. But I am sure that the author would not go that far and, taking a balanced view, neither would I; there will always be benefit from managers from different businesses learning and sharing together, as long as it is not seen as the only way.
The article is one sided but well-argued and after reading it, I am even more convinced that the move to professionalize management is doomed to fail. Even if the arguments were sound, Harvard and other advocates would have to decide how to set up the qualification process and everything that goes with it, and academic politics would raise its ugly head. Harvard’s rivals are hardly likely to let it lead the way and this article gives a flavour of the likely resistance. My advice to Harvard’s new Dean would be to leave this one alone and focus on the many other challenges of the post recession business environment.
Click here to read the article in full;
http://hbr.org/2010/07/the-big-idea-no-management-is-not-a-profession/ar/1
The author is a professor of Cambridge’s Judge Business School and argues that this move is a misguided attempt to develop a more ethical approach following the scandals of recent years. He suggests that the Harvard Business Review article that started the debate (by Nohria and Rakesh Khurana, another Harvard professor) is based on a misunderstanding of the differences between management and more conventional professions like law or medicine. Barker’s view is that the key difference is that management is more about the skills of integration; there is not a clear body of knowledge that needs to be acquired and certified. Learning about management is about broader experiences and this is what business educators should by trying to replicate.
He further argues that management does not have a clear code of ethics like other professions and, even if Harvard or any other body tried to develop one, there would be no means of enforcement. Ethics is rightly part of the management curriculum but has to be in context of each country and organisation; it cannot be taught in the same way as it can with the professions.
The further implication of these arguments is that business schools do themselves no favours by pretending that they can ‘qualify’ to be a manager by obtaining an MBA or attending a course. The message should instead be that management expertise requires lifelong learning and that business schools should look to position themselves as long-term learning partners rather than a ‘one stop certification shop’. They provide experiences and guidance which equip managers to deal with diverse environments; they are ‘incubators for business leadership’ rather than professional schools.
I found this argument convincing and it could be taken it even further. You could argue that this principle throws into question the effectiveness of all the generic, open enrolment programmes that business schools still see as their main foundation, particularly for those at an early career stage with limited experience to share. But I am sure that the author would not go that far and, taking a balanced view, neither would I; there will always be benefit from managers from different businesses learning and sharing together, as long as it is not seen as the only way.
The article is one sided but well-argued and after reading it, I am even more convinced that the move to professionalize management is doomed to fail. Even if the arguments were sound, Harvard and other advocates would have to decide how to set up the qualification process and everything that goes with it, and academic politics would raise its ugly head. Harvard’s rivals are hardly likely to let it lead the way and this article gives a flavour of the likely resistance. My advice to Harvard’s new Dean would be to leave this one alone and focus on the many other challenges of the post recession business environment.
Click here to read the article in full;
http://hbr.org/2010/07/the-big-idea-no-management-is-not-a-profession/ar/1
‘The Decision Driven Organisation’ by Marcia Blenko, Michael Mankins and Paul Rogers, Harvard Business Review, June 2010
We brought this article forward from the last blog because we were then reviewing other articles from Harvard Business Review. As the authors are from Bain and Company, a leading strategy consultancy, we thought that their views should be worth sharing, particularly if the Harvard Business Review has agreed to publish.
The message of the article is powerful; when companies are looking to improve performance, particularly after the appointment of a new CEO, the temptation is to see reorganisation as the answer, without fully considering the decision making processes within the company. Such reorganisations are therefore often based on a superficial assessment of processes and people and can become turf battles rather than the basis for improvement.
Bain’s research shows that the main factor in driving performance is effectiveness in decision making and that changes to structure have little or nothing to do with it. I would like to have known more about the methodology of the research because it seemed to be based on executives’ subjective perceptions about the effectiveness of decisions and structure, which could well be influenced by the questions asked and the scoring system used.
Much more convincing are the examples of top company applications of the principles, though recent problems at Ford and BP causes one to have a few doubts about their inclusion. Ford’s CEO made as a first stage in his 2006 reorganisation the examination of the decisions that were critical to turning around the slide in market share. British Gas assessed the decisions in their various segments that created the most value and created structures that allowed such decisions to be taken effectively. Bain argue that, in addition to assessing value, it is also important to distinguish between different timescales, separating the one-off major investment decisions from the day to day judgments that need quick and flexible responses.
The BP case study was different and shows the other side of Tony Hayward, their recently resigned CEO. When he took over the job he found highly complex structures that had built up over the years as a result of numerous acquisitions and reorganisations. He led a simplification process based on removing layers of middle management and ‘returning decision rights’ to the appropriate people. This also had the benefit of reducing overheads by a third. Bain do not mention their involvement directly (because it is an Harvard Business Review article after all) but one assumes that their consultants supported this initiative, and no doubt contributed to the overheads that year!
Bain include in the article a short questionnaire that allows readers to assess their own decision processes with 10 questions ranked on a scale of 1 to 4, for example, ‘our leaders at all levels consistently demonstrate effective decision behaviours’. I was left wondering how many people would indicate ‘Strongly Agree’ or even ‘Agree’ to that proposition, unless they were wearing rose coloured spectacles about their fellow managers. It seems to me that such questions are meaningless without some kind of benchmark and its inclusion did not increase my faith in their research.
Nevertheless the article is worth reading by anyone who is interested in strategy and its link to performance. The message that ill-considered restructuring is not likely to improve performance is a powerful one that newly appointed senior managers would do well to follow.
Click here to read the article in full;
http://hbr.org/2010/06/the-decision-driven-organization/ar/1
The message of the article is powerful; when companies are looking to improve performance, particularly after the appointment of a new CEO, the temptation is to see reorganisation as the answer, without fully considering the decision making processes within the company. Such reorganisations are therefore often based on a superficial assessment of processes and people and can become turf battles rather than the basis for improvement.
Bain’s research shows that the main factor in driving performance is effectiveness in decision making and that changes to structure have little or nothing to do with it. I would like to have known more about the methodology of the research because it seemed to be based on executives’ subjective perceptions about the effectiveness of decisions and structure, which could well be influenced by the questions asked and the scoring system used.
Much more convincing are the examples of top company applications of the principles, though recent problems at Ford and BP causes one to have a few doubts about their inclusion. Ford’s CEO made as a first stage in his 2006 reorganisation the examination of the decisions that were critical to turning around the slide in market share. British Gas assessed the decisions in their various segments that created the most value and created structures that allowed such decisions to be taken effectively. Bain argue that, in addition to assessing value, it is also important to distinguish between different timescales, separating the one-off major investment decisions from the day to day judgments that need quick and flexible responses.
The BP case study was different and shows the other side of Tony Hayward, their recently resigned CEO. When he took over the job he found highly complex structures that had built up over the years as a result of numerous acquisitions and reorganisations. He led a simplification process based on removing layers of middle management and ‘returning decision rights’ to the appropriate people. This also had the benefit of reducing overheads by a third. Bain do not mention their involvement directly (because it is an Harvard Business Review article after all) but one assumes that their consultants supported this initiative, and no doubt contributed to the overheads that year!
Bain include in the article a short questionnaire that allows readers to assess their own decision processes with 10 questions ranked on a scale of 1 to 4, for example, ‘our leaders at all levels consistently demonstrate effective decision behaviours’. I was left wondering how many people would indicate ‘Strongly Agree’ or even ‘Agree’ to that proposition, unless they were wearing rose coloured spectacles about their fellow managers. It seems to me that such questions are meaningless without some kind of benchmark and its inclusion did not increase my faith in their research.
Nevertheless the article is worth reading by anyone who is interested in strategy and its link to performance. The message that ill-considered restructuring is not likely to improve performance is a powerful one that newly appointed senior managers would do well to follow.
Click here to read the article in full;
http://hbr.org/2010/06/the-decision-driven-organization/ar/1
‘Ten out of ten or could do better?’ by David Freedman, Training Journal, August 2010
This article is one of the best I have seen in the area of virtual learning, mainly because it doesn’t focus on the technology but looks at the way that learning takes place. It is a welcome contrast to another article on the same topic in the same edition (‘Technology aiding better training’ by Eddie Kilkelly).
Perhaps the reason why I appreciate the article so much is because it is in harmony with MTP’s own views and experiences as we have moved some of our programmes to virtual delivery. We were initially sceptical about the extent to which we could bring the features of ‘face to face’ programmes into a virtual environment but soon became convinced that you can achieve most of the same benefits; this article goes even further by claiming that virtual learning even has other advantages, apart from avoiding travel and associated costs.
The author, David Freedman, is the Sales Director of Huthwaite International and his specialisation is sales training and negotiation, which one might think is an unlikely candidate to be in the vanguard of virtual training. He challenges this perception by stating that it is no longer valid to think of on-line learning being confined to the ‘push’ style of training, where knowledge is communicated one way to unseen audiences. This mindset has been changed by the potential of virtual classroom technology to allow high levels of interaction.
There are occasions when the author’s evangelism for virtual learning goes a little over the top. For instance he suggests that there are benefits from avoiding the social interactions of conventional courses and that carrying out role plays with audio only is better because it allows you to discount the distraction of body language. At MTP we would not go that far but we would agree that role plays that reproduce ‘meetings’ by conference call are not only highly effective but are in line with the way that business is moving.
Much else of what the author says is common sense and in line with our own experiences. He is very strong on a principle which is often difficult to communicate to those who are in the traditional e-learning mindset; that for interactive virtual programmes you need small numbers to allow effective interaction. We would normally go a little higher than the 8 to 12 range that is suggested but that may reflect the different topics we cover.
The other important principle that is not always recognised is that, for effective virtual training, the facilitator needs the same design and delivery skills as face to face, and more. Facilitators must not get sucked into being technology driven; they must always think of the participants and their learning environment. You do not have the benefit of seeing when you are losing participants’ engagement; you have to develop new skills to ensure that they are fully engaged and have not started checking emails or succumbing to other distractions.
Our views on maximum duration are also similar. We started by accepting the conventional wisdom that 60 to 90 minutes is the maximum for a single virtual module but we have found that, with the right design and interaction, four hour sessions are possible. Huthwaite suggest a structure of four hour blocks on successive mornings over a week, which is very similar to the design that has worked well for our Business Acumen programme for Hewlett Packard.
The other area in which we are in harmony is cost; the author argues that interactive virtual training should cost no less than face to face, apart from the savings on travel and accommodation. We would agree with one proviso; if two sessions can be organised on the same day with the same facilitator – for instance in different time zones – this can justify a lower cost than face to face, and even higher value.
The author suggests that a new mindset is necessary to change perceptions and make Learning & Development specialists see that interactive virtual training is much closer to face to face training than it is to conventional e-learning. The messages in this excellent article are just what is required to make the change.
Click here to read the article in full;
http://www.trainingjournal.com/feature/2010-08-01-ten-out-of-ten-or-could-do-better
Perhaps the reason why I appreciate the article so much is because it is in harmony with MTP’s own views and experiences as we have moved some of our programmes to virtual delivery. We were initially sceptical about the extent to which we could bring the features of ‘face to face’ programmes into a virtual environment but soon became convinced that you can achieve most of the same benefits; this article goes even further by claiming that virtual learning even has other advantages, apart from avoiding travel and associated costs.
The author, David Freedman, is the Sales Director of Huthwaite International and his specialisation is sales training and negotiation, which one might think is an unlikely candidate to be in the vanguard of virtual training. He challenges this perception by stating that it is no longer valid to think of on-line learning being confined to the ‘push’ style of training, where knowledge is communicated one way to unseen audiences. This mindset has been changed by the potential of virtual classroom technology to allow high levels of interaction.
There are occasions when the author’s evangelism for virtual learning goes a little over the top. For instance he suggests that there are benefits from avoiding the social interactions of conventional courses and that carrying out role plays with audio only is better because it allows you to discount the distraction of body language. At MTP we would not go that far but we would agree that role plays that reproduce ‘meetings’ by conference call are not only highly effective but are in line with the way that business is moving.
Much else of what the author says is common sense and in line with our own experiences. He is very strong on a principle which is often difficult to communicate to those who are in the traditional e-learning mindset; that for interactive virtual programmes you need small numbers to allow effective interaction. We would normally go a little higher than the 8 to 12 range that is suggested but that may reflect the different topics we cover.
The other important principle that is not always recognised is that, for effective virtual training, the facilitator needs the same design and delivery skills as face to face, and more. Facilitators must not get sucked into being technology driven; they must always think of the participants and their learning environment. You do not have the benefit of seeing when you are losing participants’ engagement; you have to develop new skills to ensure that they are fully engaged and have not started checking emails or succumbing to other distractions.
Our views on maximum duration are also similar. We started by accepting the conventional wisdom that 60 to 90 minutes is the maximum for a single virtual module but we have found that, with the right design and interaction, four hour sessions are possible. Huthwaite suggest a structure of four hour blocks on successive mornings over a week, which is very similar to the design that has worked well for our Business Acumen programme for Hewlett Packard.
The other area in which we are in harmony is cost; the author argues that interactive virtual training should cost no less than face to face, apart from the savings on travel and accommodation. We would agree with one proviso; if two sessions can be organised on the same day with the same facilitator – for instance in different time zones – this can justify a lower cost than face to face, and even higher value.
The author suggests that a new mindset is necessary to change perceptions and make Learning & Development specialists see that interactive virtual training is much closer to face to face training than it is to conventional e-learning. The messages in this excellent article are just what is required to make the change.
Click here to read the article in full;
http://www.trainingjournal.com/feature/2010-08-01-ten-out-of-ten-or-could-do-better
‘How they blew it’ by Jamie Oliver and Tony Goodwin, published by Kogan Page
Though the two books reviewed this month have a common theme of failure, they are in other ways many miles apart. This first one, written jointly by a UK journalist and an entrepreneur, is an easy read with some interesting stories but does not go into the depth that a serious business reader would hope for.
Each chapter examines a case study of a particular entrepreneur who fell from grace and the choices do not seem to follow any specific pattern; at one extreme there is Kenneth Lay, Chairman of Enron and the other a small time player called Christopher Foster, whose main claim to fame was the tragedy of his suicide after murdering his wife and daughter. Yet each of these characters is dealt with in chapters of about ten pages, which leads to much superficiality. One suspects that the choice was motivated by the easy availability of press cuttings and published material rather than any consistent theme.
This is not to say that the stories are not interesting and I discovered some characters that I had not come across before and learnt more about others where my knowledge was sketchy. But it is only in the last chapter on ‘conclusions’ that there is anything to make you think more deeply about the topic of business failure. Though the conclusions are not always justified by reference to the stories, there are some interesting suggestions of common characteristics of those who rise and fall, the most convincing of which were:
• They are big picture types who are bored with detail and cannot wait to get on to the next deal
• They are much less intelligent than they think they are and than other people think they are, because they can talk a good game
• They often succeed because of good fortune but put it down to their own abilities
• They are sucked into competing with other entrepreneurs who have achieved even more success
• The focus becomes their own social status rather than their customers and they fail to adapt to new market trends
After reading these conclusions, I felt that I could have skipped the stories and just read that last chapter; but then I would have missed the anecdotes and the sensational titbits. Perhaps it is a well balanced book after all; the stories are a good holiday read purely for entertainment and the final chapter is where the learning takes place.
http://www.koganpage.com/products/how-they-blew-it/BusinessandManagement/B/Leadership/B010/1003693/9780749460655/
Each chapter examines a case study of a particular entrepreneur who fell from grace and the choices do not seem to follow any specific pattern; at one extreme there is Kenneth Lay, Chairman of Enron and the other a small time player called Christopher Foster, whose main claim to fame was the tragedy of his suicide after murdering his wife and daughter. Yet each of these characters is dealt with in chapters of about ten pages, which leads to much superficiality. One suspects that the choice was motivated by the easy availability of press cuttings and published material rather than any consistent theme.
This is not to say that the stories are not interesting and I discovered some characters that I had not come across before and learnt more about others where my knowledge was sketchy. But it is only in the last chapter on ‘conclusions’ that there is anything to make you think more deeply about the topic of business failure. Though the conclusions are not always justified by reference to the stories, there are some interesting suggestions of common characteristics of those who rise and fall, the most convincing of which were:
• They are big picture types who are bored with detail and cannot wait to get on to the next deal
• They are much less intelligent than they think they are and than other people think they are, because they can talk a good game
• They often succeed because of good fortune but put it down to their own abilities
• They are sucked into competing with other entrepreneurs who have achieved even more success
• The focus becomes their own social status rather than their customers and they fail to adapt to new market trends
After reading these conclusions, I felt that I could have skipped the stories and just read that last chapter; but then I would have missed the anecdotes and the sensational titbits. Perhaps it is a well balanced book after all; the stories are a good holiday read purely for entertainment and the final chapter is where the learning takes place.
http://www.koganpage.com/products/how-they-blew-it/BusinessandManagement/B/Leadership/B010/1003693/9780749460655/
Too big to fail’ by Andrew Ross Sorkin, published by Penguin Books
This is an altogether different class of book, twice the size at 600 pages and much more impressive. The length seems daunting at first until you get into it and find that it reads like a novel. It uses the technique of assumed dialogue very effectively though at times it made me wonder how the author could possibly have known what (for instance) Henry Paulson said to Barack Obama at the height of the global financial crisis. I also wondered how many of the numerous characters featured would challenge what they are supposed to have said.
However, unlike ‘How they blew it’, this book on the global financial crisis has been well and painstakingly researched by a journalist from the New York Times who has previously won awards for his business and finance writing. It is written around the key personalities involved in the crisis and this makes it highly readable, a complete contrast to the boring book by Vince Cable on the same topic that I reviewed earlier in the year.
The overall impression of the book is that these ‘masters of the universe’ were, despite their wealth and reputation, just as pathetic and helpless as we mere mortals would have been when faced with unparalleled financial calamity. And, with only a few exceptions, they all thought first of saving themselves and their companies rather than thinking of the greater good of the global economy.
You are also left feeling a little bit sorry for that villain of the piece Dick Fuld, CEO of Lehmann Brothers, because he was the one who was left for the wolves whereas others who were just as guilty – AIG, Freddie Mac and Fannie Mae – were bailed out by the US government. You are also reminded how close those other financial powerhouses – JP Morgan, Merrill Lynch and even Goldman Sachs – were to bankruptcy and their futures were only secured by various types of rescue from, respectively, Mitsubishi, Bank of America and Warren Buffett.
There are surprising and impressive references to Alistair Darling and Gordon Brown which make you think that perhaps they were not after all exaggerating their role in the crisis. We are reminded that Darling was instrumental in the collapse of Lehmann because he rightly refused to underwrite a Barclays bail out at short notice; and Brown’s call for injections of equity capital into the banks really did set an example that was followed by the world. Perhaps this partly explains why Brown finds it so hard to understand how the country could reject him.
This is a great read for those who are interested in knowing what really happened behind the scenes during the panicky days of late 2008 when the global financial system was in danger of collapsing. It shows how near we were to a domino effect that would have driven all the major US financial institutions into bankruptcy. The quality of the final product reflects the excellent research that went into it; it is high calibre writing.
http://www.penguin.co.uk/nf/Book/BookDisplay/0,,9780141043166,00.html
However, unlike ‘How they blew it’, this book on the global financial crisis has been well and painstakingly researched by a journalist from the New York Times who has previously won awards for his business and finance writing. It is written around the key personalities involved in the crisis and this makes it highly readable, a complete contrast to the boring book by Vince Cable on the same topic that I reviewed earlier in the year.
The overall impression of the book is that these ‘masters of the universe’ were, despite their wealth and reputation, just as pathetic and helpless as we mere mortals would have been when faced with unparalleled financial calamity. And, with only a few exceptions, they all thought first of saving themselves and their companies rather than thinking of the greater good of the global economy.
You are also left feeling a little bit sorry for that villain of the piece Dick Fuld, CEO of Lehmann Brothers, because he was the one who was left for the wolves whereas others who were just as guilty – AIG, Freddie Mac and Fannie Mae – were bailed out by the US government. You are also reminded how close those other financial powerhouses – JP Morgan, Merrill Lynch and even Goldman Sachs – were to bankruptcy and their futures were only secured by various types of rescue from, respectively, Mitsubishi, Bank of America and Warren Buffett.
There are surprising and impressive references to Alistair Darling and Gordon Brown which make you think that perhaps they were not after all exaggerating their role in the crisis. We are reminded that Darling was instrumental in the collapse of Lehmann because he rightly refused to underwrite a Barclays bail out at short notice; and Brown’s call for injections of equity capital into the banks really did set an example that was followed by the world. Perhaps this partly explains why Brown finds it so hard to understand how the country could reject him.
This is a great read for those who are interested in knowing what really happened behind the scenes during the panicky days of late 2008 when the global financial system was in danger of collapsing. It shows how near we were to a domino effect that would have driven all the major US financial institutions into bankruptcy. The quality of the final product reflects the excellent research that went into it; it is high calibre writing.
http://www.penguin.co.uk/nf/Book/BookDisplay/0,,9780141043166,00.html