Elizabeth Edersheim: Posts

The BP Culture's Role in the Gulf Oil Crisis

Robert Kuzma — Thu, 10 Jun 2010 14:00:49 GMT

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I've been watching BP carefully long before anyone heard of a "top kill" or "Lower Marine Riser Package Cap."

I lived in Cleveland in 1979, when BP was acquiring Standard Oil of Ohio and worried for my friends who worked there. But I got reassurance at the time from Marvin Bower, a founder of McKinsey & Co. He told me BP wanted Standard Oil's expertise in Alaska, along with their North American distribution system. Marvin emphasized that BP had a very human, non-hierarchical culture, respect for Standard Oil's people and careful style of doing business. "The executives at British Petroleum," he said, "are people of integrity."

Now, 31 years later, in 2010, that culture seems to be lost. Culture is an organization's operating system, the values that everyone lives by. The operating system helps humans communicate and make decisions. The operating system will not allow communication or decisions that could harm the values or purpose of an organization. It is like a translator.

In the case of BP, the culture didn't work effectively and now its failure is on full display. It is possible that the error messages were so frequent that everybody chose to ignore them. A good culture would, by default, close all the possible doors to viruses or malware. A good culture or operating system is always going to respect priorities that keep the system working with integrity. Has the culture given way to a voracious need for corporate profits or is the problem simply arrogance? Did management become so cocky that they forgot that drilling in 5000 feet of water means pushing the edge of technology?

BP's culture allowed extreme shortsightedness in pursuit of profit at the cost of safety or environmental stewardship. As the drill was planned, BP chose a cheaper casing seal, which reportedly contributed to the blow-up. Also, the company intentionally cut corners on procedural and safety. For example, last June, exceptions to BP safety standards were taken to senior executives who approved them. And according to a rig survivor interviewed on "60 Minutes," BP ordered partners to cut corners because their absurdly ambitious drill schedule was off by several weeks. Hours before the explosion, multiple warnings arose; yet all were ignored. So much for the values of Standard Oil and BP. Incredibly, these penny-pinching moves were made as BP racked up record-breaking profits!

Even worse, the broken values appear to appear to go on, thanks to the company and the government. Consider BP's attempt to disperse oil with Corexit, the dispersant already banned for 10 years in Europe. It's highly toxic, but it does get the oil to sink below the surface, where it can't be seen, thus decreasing the visual horrors as the goo comes ashore. It pushes the oil below the surface into the ocean column where it kills underwater sea life, and breaks it up into such tiny morsels that it can actually be absorbed into the skin of ocean and marsh-dwelling beings. BP snubbed the Environmental Protection Agency's suggestion to stop using Correxit. In response, the EPA blandly called for a "study" of other dispersants.

This fiasco has become more about public relations than public's right to know. Rather than releasing realistic figures of the volume of oil flowing into the environment, BP knowingly cited a very conservative estimate. They initially put up a video loop instead of live feed, until Rep. Ed Markey of Massachusetts forced a change. Their website excluded information about damages to fish and wildlife. Remember the Tylenol tampering scandal? James Burke and his team led a company culture that admitted the problem and set out to rectify it without pinching pennies. Along the way, they retained customers' loyalty. And they did the right thing. That's an example of a comapny culture leading the way forward and stands in stark contrast to what we see coming from BP today.

In the last couple of days, I called my old friends from Standard Oil of Ohio. One had retired, and lamented that the company's values had disappeared in the wildcatter '90s. The other just said, "It isn't Standard Oil anymore." How true.

Elizabeth Haas Edersheim founded NYCP, a management effectiveness firm, advises large and small businesses and not-for-profits and has written various management articles and books, including McKinsey's Marvin Bower, and The Definitive Drucker.

Category: Blogs

Published: 6/10/2010 4:00 PM

The Definitive Drucker

Warner Zipf — Wed, 16 Apr 2008 17:50:12 GMT

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I've been watching BP carefully long before anyone heard of a "top kill" or "Lower Marine Riser Package Cap."

Category: Books

Published: 6/10/2010 12:00 AM

2010 - The CORE Year: Change, Challenge, Opportunity, and Responsibility

System Account — Sat, 09 Jan 2010 12:25:51 GMT

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2010 - The C²ORE Year:

Change, Challenge, Opportunity, and Responsibility

As 2009 comes to an end, the sentiment that most immediately comes to mind is good riddance to what Time magazine dubbed the "decade from hell." Many Americans are suffering as a result of bad management, fraud and misguided policy - particularly in the financial sector. But let's remember that even painful change is the precursor of opportunity. Rather than wait for a new era, we must take an honest look and find ways to benefit from the incredible opportunities obscured amid the turmoil and wreckage.

Each of us has a rare chance to help define what will be; and the only constraint, beyond our financial situation, is our capacity to imagine. With this perspective, I share my optimism about the year and decade ahead while telling you about an unprecedented project that harnesses the expertise of people like you around the world.

THE CHANGE

Yes, the world has changed dramatically since 2000. Consider the industries that are now in flux: energy, health care, transportation, technology, and education. Not-for-profits have been decimated, just when the need for social services and support are ramping up. Even individuals with good incomes are less able to give. Throughout all of this, heavily indebted governments are falling behind on critical needs that were already neglected.

Now consider the advantages to the individual. We have unrivaled global access to information, combined with a transparency that never existed before. We have an ability to make intelligent choices as consumers, investors, entrepreneurs, and global citizens that our parents never even dreamed of. Ready or not, we are all now self-managers who can be as entrepreneurial in our outlook as we choose.

Our world is connected in ways never before seen. Even large companies need each other more than ever. AT&T's dependence on Apple's iPhone overshadows its dependency on its own products. The old-line media companies rely on Google for ad revenue. With the technology for borderless commerce, small companies can connect with customers globally without the conventional intermediaries. Governments and regions are reliant on one another for economic stability. We're seeing the positive and negative of the rise of Chimerica - a term coined by Niall Ferguson to denote the United States and China. America buys Chinese products; China lends us back the money. That relationship makes a military war unlikely, but a trade war may have already begun.

Finally, the connections among individuals have changed dramatically as well. As knowledge workers, we are more specialized and thus more reliant on the expertise of others outside our specialty, thus amplifying the need to be part of a whole that is greater than the sum of its parts. At the same time, as information-empowered people and micro-businesses, we are less dependent on conventional "outside" experts and organizations.

The world today is so different from the one at the beginning of the 21st century that sometimes it is dizzying. And certainly we are prompted to re-visit our assumptions:

§ Is Austria, a country I have always thought of as closed-minded, set to be more innovative than America? They have free day-care for all two-career families.

§ Is unemployment really up if I measure it using a global metric? Or should I think of the 16 to 24 year olds in Spain where unemployment for the group nears 43%?

§ Will the next generation ever again have the opportunity to earn more than their parents?

§ What is too big to fail today? Might it be every SMALL business?

THE CHALLENGE

Here in America, I think we have a unique challenge relative to a number of other countries that are more accustomed to the dynamics of rapid change and lack a long history of global dominance. Jim Collins tells the story of a Brazilian friend, who grew up with monthly inflation of 30%. Some days it was cheaper to take a taxi than a bus because the bus fare was paid up front. What we construe as today's disruptions and discontinuities, they view as relative stability and opportunity, not chaos. My friends from China have experienced extreme, rapid change for the past 25 years and find relief when visiting what they view as a slow-moving, unchanging New York City. Back at home, their GPS is unreliable because streetscapes are changing so quickly.

Not only are we uncomfortable with this ongoing economic roller coaster, we Americans are challenged by the very real threat to our long-standing position as the biggest, most dominant economy on the planet. Russia's GDP is only 4% of ours, but economists are projecting that China's will pass ours by 2027, and India's will pass us by 2031. This new reality brings into question how we think about democracies. Our democracy gives us freedom of expression and quality of life, but it also lets interest groups delay stem cell research and other innovations for years. Our two-party system has degenerated into partisan agendas that constantly delay vital innovations and entrepreneurial support. Meanwhile, Korea, China, and India are eclipsing us in energy development, scientific research, and industrial policy.

Are we paranoid enough, visionary enough, and courageous enough to reinvent ourselves and our world?

THE OPPORTUNITY

Whether we are self-managing knowledge workers in a large institution, small business owners/entrepreneurs, or CEOs of our own careers, we all have greater freedom thanks to access to information and the reality of borderless commerce. We can do many things without third-parties, and often without leaving the house. This is both reassuring and daunting, liberating and imprisoning. Collaboration is the linchpin of our interconnected Lego world. So, let's stop being spectators to our future and instead create it.

THE RESPONSIBILITY

From my long-time consulting and advisory work to management spanning many countries and the public and private sectors and my more recent work with Peter Drucker, I have become convinced that management effectiveness is the key to a proactive, smooth transition to a sustainable future.

To paraphrase one of my favorite Drucker quotes, our responsibility is to balance change and continuity. If we have no change, we risk atrophying in our irrelevancy. If we have too much change, we risk losing ourselves in chaos. The debacle of the last decade was not due to malice. It was due to people enjoying their greater freedom while failing to step up to their responsibilities individually and collectively.

To meet our responsibilities head on, we need to be skilled at management effectiveness, not constrained by our tunnel-vision focus on 'efficiency', or quarterly profits. Management effectiveness means having the perspective and judgment to be more right than wrong, to leverage the power of people and their creativity throughout the repeating cycle of vision, execution, and outcome. Management effectiveness requires synthesizing information from all sources, challenging and enhancing conventional wisdom, learning from mistakes, and balancing multiple, often competing, objectives in a manner that enhances individuals and society.

To paraphrase Spiderman's uncle Ben, with great freedom comes great responsibility.

LOOKING FORWARD

I'm excited about a project that took up much of my time in 2009. It's a pragmatic tool for helping promote management effectiveness -- the Elemental Table of Management. My team will continue to tap many of you for advice. When this project is fully operating, we hope to have positive impact on a hundred million managers in profit and service industries around the world.

We are targeting to have a beta version up by the end of February, and a pilot running by the end of March. We look forward to engaging with you in the testing, refinement, and launching of this effectiveness tool.

As Coleridge wrote, "Wisdom is common sense to an uncommon degree." Cheers to a wiser 2010 for all of us.

Category: Blogs

Published: 1/9/2010 1:23 PM

THE DRUCKER FORUM: Three Messages for Managers

System Account — Tue, 29 Dec 2009 11:36:18 GMT

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8:51 AM Wednesday December 9, 2009
by Elizabeth Haas Edersheim
(Originally posted: HBR Blog)

I recently returned from the Peter Drucker Global Forum Vienna, Austria, an event held as part of the centennial celebration of Peter Drucker's birth. Having studied and written about Drucker extensively, spent years infusing his thinking into my own management consulting work, and befriended him late in his life, I take three messages from the centennial celebrations.

1. Drucker's work is widely accepted as foundational in creating a theory of management as the foundation of a functioning society, despite not being widely taught in business schools. Leading scholars consistently see him as a source of insight and inspiration, many of whom credit Peter Drucker not only as the creator of the discipline of management but as the basis for their own work. Stephen Covey, author of The 7 Habits of Highly Effective People, said, "I can find everything I've written in Peter's work, 25 years before I thought of it." Professor Hideyuki Inoue of Keio University said, "Everything we know about knowledge worker productivity is built on the foundation Peter Drucker wrote about 50 years ago." Phillip Kotler, Distinguished Professor of International Marketing at the Kellogg School said, "If I am the father of marketing, Peter Drucker is the grandfather." Jim Collins was so bold as to state, "Peter Drucker contributed more to the triumph of freedom and free society over totalitarianism, as anyone in the 20th century, including, perhaps, Winston Churchill." Jim went on to explain that Drucker used his pen to, "rewire the brains of those who wield the swords." In fact, Churchill insisted that all his officers carry Drucker's book, The End of Economic Man, in their backpacks so they could remember why they were fighting the war.

2. Drucker created a new mindset in the practitioners who studied him, not only improving their skills but changing their lives. For example, Timotheus Sattelberger, currently a member of the board of Deutsche Telekom, found himself in a job where his values were at odds with the Chairman's, and he was miserable. After reading Drucker, he went to his boss and said, "This clown is leaving to find another circus. He will not work in this one anymore." Sattelberger continued, "It was the best move of my life. I assumed responsibility for my values." Similarly, Cheol-hui Park, the CEO of Korean startup Park Electronics, talked about how Peter Drucker gave him the courage to move home and create jobs in an emerging company.

3. The third message is becoming more pressing every day: Because the new world is already here, the old world must vanish. Nearly every speaker at the centennial events around the world echoed that message. The old world was described as Cartesian, as a reduction of society to economics, as scattershot tools and frameworks that have dominated the past half-century. We are in a new world. Craig Wynett, Chief Innovation Officer at Procter and Gamble emphasized the power and importance of creativity in this world when he spoke in Vienna at the Centennial celebration. He said we talk about innovation, but creativity is that weird guy that we sometimes talk to in the gym. We need to challenge our assumptions about creativity and contributions, CK Prahalad emphasized a second change in this world issuing a call for "a new social compact of business."

Drucker advocated a social compact by focusing on being effective managers. "Management Effectiveness" means having the perspective and judgment to do the right things, about leveraging the power of people and their creativity in doing so throughout the repeating cycle of vision, execution, and outcome. Far from blind execution of orders, effectiveness requires synthesizing information and stepping up to challenge conventional wisdom. Effectiveness is the wholeness of the decisions - it's synthesizing and balancing multiple, often competing, objectives in a manner that enhances individuals and society with no negative impact. Effectiveness also means the ability to make mistakes and learn from them.

That is our challenge as practitioners and as academics. It is a new world.

Elizabeth Haas Edersheim conducts case-study-based research on critical leadership issues -- often in collaboration with corporations and speaks frequently at management events.

Category: Blogs

Published: 12/29/2009 12:34 PM

THE DEFINITIVE DRUCKER

Warner Zipf — Wed, 04 Nov 2009 22:38:43 GMT

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By Elizabeth Edersheim

When the Leader to Leader Institute asked me to blog about my book, The Definitive Drucker, which was published three years ago, I thought, what would Peter Drucker have asked me about what I learned? I realized he’d have asked, what happened that was unexpected? And what did you learn?

The first unexpected result: The nature of the U.S. response to the book. I received numerous e-mails from readers in the United States, saying that the book changed their perspectives and practices. These came from doctors, lawyers, small-business owners, and executives with no business training, who happened to pick-up the book. The gratitude these letters expressed was overwhelming. One business owner wrote, “I run a wedding dress shop and never thought a management book could help me. I started reading it in a bookstore, and couldn’t put it down. Your book has changed how I make decisions and serve customers.” Many of the notes emphasized the universality of Peter Drucker, asserting that everyone can use his insights and thoughts.

The second unexpected result: I saw for myself that business frameworks, practices, and language are a great equalizer in a world divided into diverse religions, cultures, nations, political views, and peoples—and that Drucker’s thinking applies across the globe. The book has been translated into 32 languages and has taken me on an eye-opening global journey. I’ve visited seven countries in the last 12 months and corresponded with editors and readers in nine others. In Saudi Arabia, where women are forbidden to drive, a female business owner wrote to me with her thoughts on Drucker. In Japan, entrepreneurs are fascinated with Drucker, and a society has formed to study and promote his philosophies and practices. In China, one of the most respected CEOs, Zhang Ruimin, quotes Drucker religiously at Haier’s Saturday morning management meetings. The winners of Drucker innovation awards in Korea are global leaders and enduring benchmarks. What’s the strong attraction to Drucker in Vietnam, China, Korea, and Japan? Possibly the emphasis on people in Drucker’s philosophy, which mirrors the local cultures in some respects.

The third unexpected result is Drucker’s ability to stand the test of time. Though my book is admittedly only three years old, it draws on work, writing, and relationships from throughout Drucker’s career. Every company, Drucker complimented has done well. Every controversy and caveat Drucker raised has visibly elevated its ugly head. And the book’s observations about companies have held up despite the fundamental shifts we’ve seen in the past three years:

For example:

Medtronic continues to be innovative despite all the healthcare debates and their impact on private companies in that sector.
P&G is the success story of the decade, with Lafley named CEO of the year by Fortune, Forbes, Business Week, and Leader-to-Leader. Of course, P&G has faced day-to-day challenges in the current recession. For example, they had to decided to compete with private label products, introducing Tide Basic without bells and whistles. It is a dangerous strategy but one that might be the right response to the new realities. The recession changed the market, and management listened to their customers. They didn’t insist that every Tide customer needed to pay 30 percent more for Tide’s high-quality features.
JetBlue, which we highlighted as a star player, hit a bump in the road. Their performance fell off during winter storms. They had grown beyond their system’s capabilities. They stepped back and fixed the system, and are doing well again.
Peter Drucker had predicted that GE’s Finance group would get in trouble, and said they should sell NBC. He praised Immelt for jumping into green energy before anyone else.
The Myelin Repair Foundation is in the process of commercializing new drugs ahead of schedule and is moving ahead to address new challenges with new collaborations. It continues to be an amazing story.

Looking back and re-reading the book, there are many other companies built on Drucker that can be written about, such as Haier, Yuhan, Kimberly-Clark, Park Electronics, and FirstService.

Knowing Peter Drucker and writing about his ideas changed the way I listen and think. I’m hearing more and asking more, with a new appreciation for helping others think. I am very grateful for the time I have spent with Peter Drucker, his family, and his disciples. It was and continues to be a great opportunity.

©Elizabeth Edersheim

Category: Blogs

Published: 11/4/2009 11:37 PM

INDIA ON THE MOVE - BACK TO SCHOOL

Warner Zipf — Wed, 30 Sep 2009 21:27:10 GMT

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by Elizabeth Haas Edersheim September 2009

As the school year gets going and I have a chance to gather my thoughts from a trip to Asia, I wanted to share with you the incredible effort I saw in India around education reform focused on bringing post high-school graduates into the 21^st century knowledge economy. It is quite a contrast to Bob Herbert’s comments on the status of the United States’ education reform, “In educating its citizens, we are now moving decidedly in the wrong direction"

Like the U.S., India faces a daunting education challenge—they need to make enormous improvements, immediately, in educating and training a very large and diverse population, with many of its people economically disadvantaged or living at a subsistence level. India has stepped up to the task, setting up a National Skill Council (NSC) to work with the Confederation of Indian Industry. They are rapidly innovating the entire concept of vocational and, in some sense management school, and revamping the country’s institutions, curriculum, and faculty.

India’s National Skill Council and the Confederation of Indian Industry believe that Polytechs—post-secondary vocational schools—are critical to the country’s future. By 2022, the government wants to train 500 million people to master a variety of skill—some entirely new—for the industries of tomorrow. Many of those people have only high school educations today.

They highlighted two primary challenges: (1) revamp a severely outdated curriculum and align it with the needs of industry, and (2) upgrade the faculty, ensuring that they have the knowledge to teach the skills of tomorrow and motivating them to continuously innovate.

Against these challenges, India is putting together two initiatives, both of them examples of the new Public-Private Partnerships.

Partnership 1 – The Indian government is moving the management of Polytechs to the private sector. Its rationale: industry knows exactly what they need, and knows how to manage a large institution. A radical change in governance is necessary to move forward.

The preliminary plan is that the private enterprise that takes charge of the contract will have no financial obligations but will need to make a number of commitments, including:

Involve senior management directly in the curriculum and teaching; every member of the senior team must commit 1-1/2 to 2 hours a month to lecture in the classroom
Modify curriculums to better support their own needs of tomorrow
Offer their own employees the opportunity to become students during 2% of their working hours every year
Create tighter links between faculty and industry – e.g., offer faculty training opportunities inside the company

This private sector engagement and commitment is expected to fundamentally shift the dynamics of Polytech education to the needs of tomorrow.

Partnership 2 –The government also announced a program for setting up new Polytechs—not in rural areas but in industrial centers. The government will provide land and set up residence halls so students can be brought to the industrial center from the countryside to go to school. Multiple companies located in the area will be engaged in the Polytech—setting the curriculum, training their current and future employees, and building state-of-the-art facilities.

Will these two initiatives meet all the educational needs of every citizen of India? Of course not. But they are bold efforts that will carry substantial educational and economic benefit to many, with the further benefit of fueling India’s burgeoning knowledge industries and boosting its international competitiveness. And they are going forward NOW.

We can all take a lesson from India. Washington and our local districts recognize the challenge. But are we just doing more of the same and not stepping back and asking what we need to do for tomorrow? Finding the solutions will require creativity and involvement of more than government. Our challenge—to be focused on what 21^st century students and their future employers really need, and more cognizant of every person’s need for lifelong learning.

©Elizabeth Edersheim

Category: Blogs

Published: 9/30/2009 11:18 PM

PREPARING THE GROUND FOR: 21st century management education that leverages Peter Drucker

Jose Antonio Morales — Sun, 11 Oct 2009 17:17:09 GMT

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Greenfielding Business Schools

As we all know, something is wrong with management education. Despite intense criticism by scholars, practitioners, and even students, demand has not abated. In fact, demand has actually been soaring – particularly in developing countries. People are hungry for management education and would rather get what they can than nothing. Yet they realize that something is missing and something is no longer relevant in what is being offered.

If we had the opportunity to build from scratch or Greenfield a management training institute, how would we get started?

I would suggest we begin by bringing what we have learned from Peter Drucker to this challenge. Drucker was all about asking the right questions. For this task, I believe the right questions are:

When we look out the window, what are the new realities?
What is a customer-centric theory of management education that fits with these realities and delivers value - both conevtional and novel- to the customer?
How can the culture of the enterprise and "the way things are done" support this theory and encourage smart actions on the part of tomorrow’s managers?
How can effective management best be practiced within this culture by members of this enterprise to deliver on the targeted theory of the management education?
What are the results that can be expected and what will be the mechanisms to correct and adjust the theory, culture, and practices as results deviate - Exceeding or falling short - from expectations?
How can we assure sustainability?

From my various discussions with leaders around these questions, it is clear that: (1) the Greenfield management school would be quite different than anything we know today; (2) Additional thinking is required to get it right.

Today’s conversation will contribute to pushing that thinking forward.

For more information regarding this event please click here.

1st Global Peter Drucker Forum Vienna 2009. November 19-20, Vienna, Austria

Category: Events

Published: 10/11/2009 12:00 AM

PETER DRUCKER DESCRIBE HOW SLOAN WOULD THROW A WRENCH INTO THINGS

System Account — Thu, 23 Jul 2009 11:31:46 GMT

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Peter Drucker describe how Sloan would throw a wrench into things

Category: Multimedia

Published: 1/9/2008 12:00 AM

LET'S TALK ABOUT: Reality - Testing Your Business Theory

Elizabeth Edersheim — Wed, 27 Dec 2006 14:48:49 GMT

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Peter first touched on the concept of "the theory of the business" in a 1962 article in Harper's Magazine, and 30 years later, he spoke exclusively to the topic in a 1994 Harvard Business Review article. "The Theory of the Business" is the passion of the company. It is the fundamental assumptions of purpose and rationale - why the business exists, what the business contributes, and why it will continue to exist. In today's world testing the veracity and living these assumptions constantly is critical. This need has been made more challenging with our rapidly altering 21st century landscape that can quickly turn assumptions into irrelevant "givens."

"There are indeed quite a few CEOs who have successfully changed their theory of the business...But for everyone of these apparent miracle workers, there are scores of equally capable CEOs whose organizations stumble."

Peter F Drucker
HBR Sept -Oct 1994, "The Theory of the Business"

Expert Thought

"To me, there's a bigger idea - The purpose of a company must be understood by the people. It must be worthy of followership. I have believed for a long time that most people only give to an employer enough of themselves to not lose their job. The percentage of a mere mortal's human capacity that is delivered to an average employer is very low. We should be shocked, absolutely shocked, by the number of people that work this way - employees, suppliers, ...The concept and purpose of a business if aligned with the leadership can directly elevate the motivation of everyone who is involved. Peer group satisfaction - this is where the horsepower is. My entire concept of leadership revolves around that which will elevate and sustain motivation. Inspiration, aspiration and perspiration. This creates the emotional fuel within a company that determines its level of success."

Richard Block, retired CEO of AGI, COACH and board member of Getting Out and Staying Out (A re-entry program for the population of Rikers Island)

How are the following kinds of business theory reality &ndash testing a routine and constant part of your work as CEO?

"Preventative" testing
1. Periodic challenging/abandonment of the status quo &ndash If you were not in it already (with "it" covering everything from end product, service, policy, distribution channel), would you do it today?
2. Robust study of non-customer &ndash typically, they are the first group where signs of fundamental change shows up
"Early diagnostic" to uncover critical warning signs
1. Objectives have been met &ndash it's time for new thinking
2. Rapid growth &ndash existing business theory is likely now outgrown
3. Unexpected successes
4. Unexpected failures

©ElizabethEdersheim

Category: Blogs

Published: 1/9/2008 4:05 PM

YOU AS A LEADER

Warner Zipf — Sat, 08 Mar 2008 18:13:25 GMT

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Brendan Calder, chairman of Coventree Inc and Adjunct Professor of Strategic Management at the Rotman School of Management, recently invited me to talk to a group of 26 students at the Rotman School. The topic was: Is Peter Drucker relevant?

In answering that question, I chose to create a dialogue around sections of a letter Peter wrote in 1974. By the end of my talk, virtually everyone in the room said, "yes. Peter Drucker is relevant to me today.

Let me share with you the excerpts drawn from Peter's 1974 letter. First, a bit of background. Peter was asked if he thought Robert McNamara would make a good president of the World Bank. McNamara had been one of the wiz kids serving in the combat analysis group during WWII, went on to become President of The Ford Motor Company, and then Secretary of Defense for President Kennedy. As you read Peter's excerpts on his sense of McNamara's personal and leadership strengths and weaknesses, think about yourself as a leader, how you might score on the characteristics discussed, and the reasons for your score.

Peter wrote:

" To me, the greatest strength of McNamara as a person is that he inspired admiration."

BUT PETER CONTINUED:

". . . his greatest weakness is that he did not inspire trust."

Do you inspire admiration from your colleagues and others in and beyond your organization? Do you inspire trust? Why or why not?

Peter wrote:

"The greatest strength of McNamara as an administrator was his ability and willingness to pick the very strongest people as members of his team. McNamara's greatest weakness as an administrator was that he had not the faintest idea how to make use of the strengths of his team, or even how to make a team out of them."

Do you pick truly stong people to join your team, even when their strengths may exceed your own? Do you encourage and fully leverage team work? Do you and your team members help make one another and hence, the collective team stronger (i.e., leverage each other's strengths while making each other's weaknesses irrelevant)?

Peter continued:

"McNamara's greatest strength as a manager was his realization of the need to think through strategy. His greatest weakness was that he always got caught up then in the minor points and the strategy became secondary to the way in which this or that specific "urgency" of the moment was being done.

McNamara lost one objective after the other by dictating how something should be done instead of saying ‘this is what we are going to do, you work out how to get there."

Do you value strategy? Can you communicate strategy effectively and in an engaging manner to your organization and other stakeholders? Are you able to stay true to your strategic objectives versus the flavor of the month? Are you an effective delegator, leaving the job of translating strategy into action and tactical to others? Do you track your results against strategic objectives?

Peter went on to say:

"McNamara's great strength as a leader was his realization that he had a role to play. His great, and I think ultimately self-destructive weakness was that he confused leadership with morality. Anyone who did not agree was an "enemy", and clearly had to be damaged, destroyed, or at least humiliated - and McNamara's willingness to humiliate people was, and is, I think, his one great character weakness and a very serious one.

He never learned to use disagreement as a source of understanding and conflict as a management tool. And this is the reason why, in the last result, I believe, he was a failure as Secretary of Defense, just as I think he is a failure now as head of the World Bank."

Can you easily and clearly articulate your role as a leader in your organization? Do you view your role as meaningful to and well-understood by your organization and other stakeholders? Are you a good listener? Do you encourage or discourage dissenting views and do you view conflict situations as an opportunity to learn? When was the last time that you publicly dressed someone down?

Fundamental to much of this letter is what I consider to be Peter Drucker's most valuable contribution to management thinking - namely that the critical role of a leader is to ask the right questions, make sure the organization understands why the questions are important and what the honest answers are, respect people and manage for results. The letter Peter Drucker wrote in 1974 is relevant to every leader today.

©ElizabethEdersheim

Category: Blogs

Published: 3/8/2008 1:00 PM

THE ROLE OF DIRECTORS

Warner Zipf — Wed, 16 Apr 2008 18:14:05 GMT

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You are cordially invited to view the complete article by following the link below, and to provide your comments and thoughts.

Drucker in the Boardroom

Category: Articles

Published: 4/16/2008 12:00 AM

THE 21ST CENTURY CEO

Warner Zipf — Wed, 16 Apr 2008 18:15:32 GMT

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You are cordially invited to view the complete article by following the link below, and to provide your comments and thoughts.

21st Century CEO

Category: Articles

Published: 4/16/2008 12:00 AM

THE DEFINITIVE DRUCKER

Warner Zipf — Wed, 28 May 2008 21:14:25 GMT

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http://www.ririsatria.net/2008/04/04/the-definitive-drucker-from-elizabeth-haas-edersheim/

Category: Recent Reviews

Published: 5/28/2008 11:12 PM

ENTERPRISE LEADERSHIP

Warner Zipf — Thu, 29 May 2008 20:11:32 GMT

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You are cordially invited to view the complete article by following the link below, and to provide your comments and thoughts.

Enterprise Leadership

Category: Articles

Published: 5/29/2008 10:10 PM

THE NEXT MANAGEMENT REVOLUTION: Investing in Social Assets

Warner Zipf — Wed, 16 Jul 2008 17:44:40 GMT

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You are cordially invited to view the complete article by following the link below, and to provide your comments and thoughts.

The Next Management Revolution

Category: Articles

Published: 7/16/2008 7:42 PM

MANAGEMENT 2010

Warner Zipf — Wed, 06 Aug 2008 20:26:27 GMT

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The new buzzword in management is sustainability.

Sustainability is vital to the 60-year-old founder of a company that has grown to $200 million whose board members are continually asking her, “What would happen if you were hit by a bus?” It is equally important to the principal of a Bronx school for gifted children who is continually raising money and worried about losing a major donor. Likewise, it is important to the Newsday reporter who is experiencing the third ownership change in 8 months. Sustainability is a company’s ability to adapt and thrive over time. It is a new, sometimes painful reality in a world that has been for far too long over-focused on quarterly numbers.

The average life of a corporation on the Fortune 500 list is just 4 years. Only slightly more than 50 percent of CEOs last more than 3 years. Less than half of the CFOs stay in their jobs for 3 years. The lifespan of players, companies, and even industry sectors has changed in the linked world. And, according to a recent McKinsey survey, the American public has less faith in management today than at any time in the last 50 years. Less faith than post-Watergate.

The linked world transmits errors and successes instantaneously and makes cost structures much more transparent. The time period from when an industry is born of an innovative market idea until the landscape becomes one of cost-competitive commoditization with multiple players chasing a once “proprietary” market has shrunk, by a factor of 10, according to the Gartner Group.

Sustainability is a big challenge that cuts across all types of enterprises – not-for-profits, businesses, and governments. The enterprises that appear set to sustain themselves seem to share three characteristics, which are in and of themselves challenging: (1) being disciplined and innovative; (2) targeting results that both contribute socially and run with sound financial underpinnings; and (3) focusing on long-term and short-term financial results simultaneously.

This blog will discuss the first of these three challenging characteristics. Let’s start with two stories.

Corning Inc. has always been an innovative organization with a history of successful investment in new technologies that take advantage of the company’s deep knowledge of glass, glass ceramics, and inorganic materials. For example, it developed a process for producing colored and unbreakable railroad signal lenses that made railroad crossings safe. In the 1970s, it invented the core of the catalytic converter, the basis for most automotive pollution control systems. More recently, Corning pioneered the development of optical fiber capable of effective transmission of digitized data.

Despite its history of transformative innovations, between 2000 and 2002 Corning began to fail because of a lack of discipline, as well as over-investment in the telecommunications industry. Management fought to recover by bringing in discipline and “protecting” innovation.

The senior team’s focus has been on creating discipline that nurtures innovation around keystone components. The discipline includes a new strategy and strategic planning process focused on innovation and made real by a willingness to invest huge amounts of money to take advantage of an opportunity. The process routinely taps into knowledge and experience of outsiders (academics, industry experts, advisers, consultants). In other words, the company no longer relies on occasional feedback from customers for inspiration. There is also a disciplined tracking process that facilitates course-correction when new ideas are missing targets. Corning management has taken this mindset beyond planning. It modified the company’s reward system to encourage risk taking.

There is a new training program for project leaders that focuses on simultaneous discipline and intuition. At a recent session, Wendell Weeks, the chairman, commented that, “information transparency lets the leaders make more mistakes, because they can correct faster and hence be more innovative.” He continued, “You can't really know how something works until you know why it doesn't work. And I expect you to learn how a lot of things don’t work.” The group meets for a week every quarter to collaborate on being innovative and disciplined.

The second story is about how Muhammad Yunus, the Nobel Peace Prize winner and the founder of the Grameen Bank in Bangladesh, pioneered micro credit, a program that provides poor people with small loans to launch a business. He tried to get traditional banks to lend to the poor. He found that, “the idea of lending to such people flew in the face of every rule the bankers lived by.” “Conventional” bankers’ discipline and risk-aversion would not let them try it. Muhammad intuitively knew this was an opportunity – knocking down institutional barriers that treat the poor as nonentities, but doing so with discipline. In 1983, he began building the Grameen Bank to have the discipline and innovation to be self-sustaining. Over time, what began as simply banking expanded to include training, exporting, and the provision of Internet, energy, and health care services. The system never collapsed. In 2006 and 2007, the bank paid $20 million in dividends to its owners, in this case the borrowers, while showing a strong sustainability profile.

We have all seen other enterprises struggle with this balance over the last few years. For example, at Bear Stearns, Ace Greenberg was both intuitive and disciplined. His handpicked successor, Jim Cane, ran a well-disciplined organization but appeared to lose the intuitive touch with the market. In 2008, the Fed and JP Morgan had to step in and rescue a failing enterprise. Steve Jobs was fired when discipline was required at Apple only to be replaced by John Scully who brought in discipline without innovation. That failed. Apple had time to adjust, and Steve Jobs returned as a more disciplined, seasoned executive. These are but a few examples of today’s reality – namely, sustainability of the enterprise needs both discipline and innovation.

Greg Brown, the new CEO of Motorola, is constantly reminded that neither of his two predecessors lasted 5 years – and, like Brown, every executive needs to build sustainability into his/her thinking and decisions. Sustainability is continually building tomorrow while solidly managing today. It is using discipline as a system of freedom and responsibility within a framework of innovation, intuition, and judgment.

The next blog will focus on the second characteristic shared by enterprises that are well positioned for sustainability – namely, targeting results that both contribute socially and run with sound financial underpinnings.

ÓElizabeth Edersheim

Category: Blogs

Published: 8/6/2008 10:24 PM

GM vs. DRUCKER: Management Science vs. Management Practice

Warner Zipf — Thu, 16 Oct 2008 19:00:43 GMT

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Alfred Sloan, the inventor of the modern corporation, and Peter Drucker, the father of management, had a 25-year running disagreement. We can resolve that disagreement today.

You are cordially invited to view the complete article by following the link below, and to provide your comments and thoughts.

GM vs. Drucker

Category: Articles

Published: 10/16/2008 8:53 PM

LEON SHIVAMBER'S BLOG

Warner Zipf — Fri, 17 Oct 2008 19:43:00 GMT

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http://shivamber.wordpress.com/

Category: Articles

Published: 10/17/2008 9:40 PM

LAURENT AMAR'S BLOG

Warner Zipf — Fri, 17 Oct 2008 19:46:44 GMT

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http://laurentamar.blogspot.com/

Category: Articles

Published: 10/17/2008 9:45 PM

HARVESTING THE OPPORTUNITIES OF THIS HARSH WINTER

Warner Zipf — Thu, 15 Jan 2009 15:12:48 GMT

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It is a harsh winter this year, one that presents us with opportunity unprecedented in recent memory. In the agrarian age, harsh winters broke the ground and enabled farmers to shift crops, enrich the soil, and change the routine; it killed the mold and mosquitoes. Even today, winters are about reflection and rebalancing. The harsh winter of 2009 can be an opportunity for us to rebalance and realign ourselves and our priorities, to prepare ourselves to thrive in a world that has changed and will not be the same again.

The financial and credit crisis was inevitable. Its magnitude was not. I’m in the camp that believes a significant part of the problem was the confident over-reliance on a complex mathematical model and the consequent suspension of good business judgment. Senior Finance managers thought that they did not need to fully understand what was actually in their portfolios because they had a single magic number, the Value at Risk (VaR), which “measured” the overall risk to the bank and was supported by global regulators. The VaR measures the risk over short durations, assuming normal markets; 99% of the time it is a measure of the downside for the next 24 hours. Developed in the 1990s at J.P. Morgan, the VaR quickly became the industry standard metric for risk. The history is well described in the Sunday New York Times of January 4, 2009) But as Taleb writes in The Black Swan, the greatest risks are never the ones you can measure, they are the ones outside the range of normal probability. It is worth noting that in December 2007, the executives at Goldman noticed that for 10 days in a row, their mortgage business lost more money than the VaR would have suggested; management judgment took over and they reduced their exposure. And as we know, many other institutions missed the warnings.

This is just one example of how we had gradually been lured—with affluence, with technology—into a world where insight and judgment seem to have evaporated; we got smarter and smarter about less and less. As home-owners we did not know to whom we were paying our mortgages (most of us still don’t). And the financial institutions betting on us did not know who was at the other end of their bet. As executives, we were paid and incented to focus on the current quarter, almost to the exclusion of the ongoing business and market environment. The 2009 strategy for a company in South Carolina, which was presented to their board, did not even mention competition or long-term positioning. The excuse – “The board is primarily interested in quarterly results.”

When such crises occur, leaders are jolted out of complacency, and societies are willing to try new things. New opportunity arises, and societies can take radical turns, for better or worse. Peter Drucker maintained, for example, that it was the Great Depression and the resulting economic dislocation that facilitated Hitler’s rise to power. Naomi Klein writes about this phenomenon globally in her book The Shock Doctrine. She argues that taking advantage of those moments of crisis and shock in countries and communities was at the heart of Milton Friedman’s philosophy. For example, after Katrina and the flooding in New Orleans, Friedman began writing about the need to throw out, not fix, the public school system. His prescription of vouchers was followed. Friedman believed that without the shock, vouchers never would have happened in New Orleans.

Despite the tremendous dislocations it has caused, the current crisis came at the right moment.. The basic model for economic entities—from sovereign governments to private enterprises, and everything in between—is changing. So much has changed in the past two decades, and we need this winter of discontent to reflect, to set our priorities straight and move forward through what will understandably be a challenging year.

What Is Different: Our Interconnectedness And Access

On Sunday evening in Rio de Janeiro, it is the middle of the night in Johannesburg, and, in both places, people are sitting on their computers trading stocks on diamonds, discussing the U.S. automotive crisis, and moving equity; these actions will affect financial markets tomorrow morning in London, Shanghai, and New York. The global flow of information, money, and ideas has made national and cultural boundaries so permeable as to threaten their very existence at every level:

Enterprise. More than simply communication, instant information has made possible a Lego world in which entities (businesses, not-for-profits, government, and academia) can join together to apply their different strengths to a business opportunity or social objective and decouple when it’s time to move on. So, manufacturers enter logistical partnerships with retailers, competitors team up to build a powerhouse approach to a single account, and Pro Mujer (a Latin American microfinance operation) works with Microsoft to provide PC training to its borrowers.

Commerce. Perhaps no business has changed as radically as retail. With my Google phone, I scan the UPC code of a camera I am looking at in Best Buy. In 20 seconds my phone identifies a store about 3 miles away where I can buy the same camera for $40 less and a website that offers it for $47 less.

In all of our daily lives. Electronic payment modes now enable us to breeze past a tollbooth and to pay for almost anything with a quick swipe of a card. The results of this electronic streamlining are not necessarily to our liking. In Chicago, video cams mounted in key intersections record every car that runs a red light and electronically generate and mail citations; last year hundreds of thousands of unsuspecting motorists received $100 tickets in the mail!

New impacts of our increased interconnectedness crop up every day, some of them surprising in nature. For example, truthfulness and integrity are increasingly seen as essential not for reasons of rectitude but because in this era of instant information, duplicity is difficult to conceal, and covering up a lie is so much work that, as McKinsey’s Marvin Bower used to say, telling the truth is the easy thing as well as the right thing to do. Trust is equivalent to time in the new world.

We have access to and can learn from the best solutions found anyplace in the world. We have broken generational poverty for millions of people around the world, with micro loans in Bangladesh, expanding businesses in India, a charter school in Harlem, and so on. We also have a new leader in the U.S. who seems not only open-minded but anxious to change the way we work. It is a great moment in our history.

How This Affects Our Lives: Motivating And Enabling A New Modes Of Collaboration

As we face the current economic crisis, we have unprecedented access to knowledge and information of every possible variety, and an increasing worldwide awareness of the global nature of our society, problems, and resources. We are part of a bigger globe and can collectively do something about it.

From the Lego world to the science lab to the telecommuting knowledge worker, our global interconnectedness enables unprecedented collaboration—e.g., healthcare, energy and resource management. New forms of collaboration are fundamentally changing scientific and medical research, which has long been not only solitary but highly competitive, with findings closely guarded to protect the discovery credit. Increasingly, however, research is moving beyond this competitive mindset into new realms of collaboration, with powerful results. For example, in 2003 the Allen Institute for Brain Science began to map an atlas of gene expressions in the mouse brain, which it completed in just 3 years and posted on the internet, making the atlas available to anybody for free. It took a while for people to trust the information, but it is now being used to research Alzheimer’s disease, bipolar disorders, Down syndrome, and Parkinson’s disease, among others. The institute’s efforts to post brain and spinal cord atlases have democratized the scientific landscape; more people are entering the conversations, and the result is a massive saving in research time. New incentive models are being tested. Open collaboration and data-sharing will speed up the process of understanding many of the diseases being investigated and devising treatments. And the Allen Institute is not an isolated instance. The power of collaboration is nothing short of mind-boggling.

T.J. Rodgers, CEO of Cypress Semiconductor Corp., recently unveiled Envirosystems, a smart thermostat application, and commented, “We need 10,000 other ideas like this to collaboratively solve the energy crisis,” adding that semiconductor technologies are now, more than ever, enabling new power-wise products, portable medical devices, battery-management devices for electric cars, solar panels, etc.

Our Opportunity And Challenge: Fostering collaboration worldwide and contributing to it

We have the access and interconnectedness required, but we still need to learn to be collaborative– not only to reap the best of collective thought and action but to be the most economically efficient in a financially-constrained world. It is a mindset, not a philosophy. For example, at P&G they assume that every problem has been solved already and seek to find who has solved it rather than try to solve it themselves.

At this point, many of us are independent members of collaborative teams trapped inside corporations still very focused on getting a bigger piece of the pie than anyone else, or inside departments vying for a larger slice of the corporate budget. Competition is a healthy social force and an intrinsic human instinct, but we can’t afford to let it eclipse collaboration. We need to change our mindset and rebalance our incentives so that collaboration can happen at every level—individuals, businesses and not-for-profits, and whole nations and cultures. We need to tap everyone’s ability—to focus on results with a broader view of what we are trying to accomplish and an honest appraisal of the ongoing impacts of our actions. Where to start?

For the individual: To step up to the challenge of collaboration, think of yourself as your own enterprise. Understand your strengths. Invest in yourself. Elevate your expectations of yourself and help others do the same. Find something you care about and then find out where and how you can join a collaboration of like-minded people. Do not hold back, thinking you need to come to the table knowing all the answers. Do not be afraid of being creative, of experimenting. One of my favorite role models in this regard is Sue Lehmann, who is passionate about educating all youth. She is collaborating with many like-minded institutions—New Visions, TeachforAmerica, YouthNoise, Harlem Children’s Zone. She continually brings in other collaborators, elevates the thinking, and contributes in a thousand ways. Or, as Malcom Gladwell might say, she is a maven, a connector, and a salesman for something she is passionate about.

For the enterprise: The challenge is to build a for-profit or a not-for-profit enterprise that works, to be a force for innovation, satisfaction, and progress. Shift your mindset and identity from being a product and/or service provider to serving as a marketplace that attracts ideas and people to create a mass that matters. Rebalance your mission to emphasize the non-financial, to refocus your people on what they’re accomplishing rather than what they’re getting. Be more open to new ideas, new resources, and new ways than you’ve ever been. Old habits are being repudiated, and it’s a great time to push new ideas. The Grameen Bank’s work with Groupe Danone is a great example of collaboration. As Frank Riboud, Chairman and CEO of Groupe Danone, explained to Muhammad Yunus, “We don’t want to sell our products only to the well-off people in developing countries. We would like to find ways to help feed the poor.” They are now collaborating on a journey toward that goal. In the new world we inhabit, the most open enterprises will be the most attractive and the most fun. We’ve all had our hats handed to us this past year, and leaders need to figure out ways for everybody to win.

For governments: Collaboration happens within your communities as well as globally. For example, the Yeong Deung-po ward was given a creativity award in Korea for developing a solution that enabled the community to manage construction sites collaboratively after a department store collapsed. The government had a history of being lackadaisical on public construction with tight budgets. The solution relied on remote cameras, rotating 360 degrees, to survey every construction site, with graphs and quality management to follow progress. Experts and the public have access to the cameras, and many third parties add useful comments. The community is able to watch the construction and feel certain that quality and safety standards are being met. Construction is faster, with higher standards and zero tolerance for faults. Delegations are coming over from Japan, Sweden, and Australia to benchmark the solution.

Despite decades of calls for greater international cooperation, we have barely tapped into the potential for collaboration among countries As Peter Drucker said to me in 2005, the biggest challenge for the United States in the years to come will be learning to be a player of influence, not the big gorilla. One highly productive way for us to do so is to be the force that brings the world together to address the challenges we face as a species and a planet. The world is open to dream, to embrace challenge. We will create our future collaboratively.

P.S. My New Year’s Resolution: Post at least one blog a month. Collaboration will continue to be the focus of my blog in 2009 – next month I hope to bring you some concrete examples at the individual, enterprise, and government levels that marry collaboration and economic efficiency.

ÓElizabeth Edersheim

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Notes from January's Blog

Some of the feedback and examples of 21^st century collaboration, I have learned about are included in the following:

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Neocollect -- Contributed by John Sallay

Description:

A new website for collectors of fine and decorative arts, antiques, and other high-value collectibles.
The password-controlled gate was just pulled down, so the public can now view collections.

Benchmark Characteristics:

Lets collectors display their items – it is almost like contributing to a museum.
Creates a community of collectors and facilitates shared collections and expertise.
Easy to use.

Website: www.neocollect.com

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First International Robiotics Corporation -- Contributed by Stephen N. Oesterle, M.D., SVP , Medtronic

Description:

Established to inspire kids to learn robotics, engineering, CAD, and business.
Envisioned by NASA, MIT, and inventor Dean Kamen (inventor of the Segway, among other things).

Benchmark Characteristics:

A great example of public/private collaboration.
3 years ago there were 2 teams, and this year over 1,400 high schools from around the world participated.
Competitors Medtronic and Boston Scientific co-sponsor events.

Website: www.usfirst.com

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Negotiating the Tokyo Round of Multinational Trade Negotiations -- Contributed by Al McDonald, Chairman & CEO Avenir

Description:

Was quite a contrast with regular non-collaborative negotiations.
In 1978, the trade negotiations were quite a contrast with historic negotiations. The economy was stressed and, rather than protect interests, countries collaborated for the whole. It was a remarkable meeting and resulting collaboration. Some sense of what went on at that meeting is reflected on the Japanese website.

Website: www.mofa.go.jp/policy/other/bluebook/1978/1978-3-2.htm .com

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Category: Blogs

Published: 1/15/2009 3:58 PM

UNCONVENTIONAL SOLUTIONS FOR UNCONVENTIONAL TIMES

Warner Zipf — Thu, 12 Mar 2009 23:55:54 GMT

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by Elizabeth Haas Edersheim

March 3, 2009

In identifying and designing solutions to help turn around the U.S.'s rapidly degrading situation, the Obama Administration would benefit from the Drucker approach. Peter Drucker, known as the father of modern management, suggested that when we focus on investing in problems, we miss opportunities. The Obama administration needs to follow Drucker by first defining the results we want and then work back from there to identify programs that will work.

We have an opportunity to create vibrant communities of people with the skills and the infrastructure they need to thrive in the 21st century. That is the result we want. Achieving it will involve finding unconventional solutions for these unconventional times. Here are four ways to start.

1. Revitalizing the Flow of Credit.

Goal: Unfreeze the loan system to create many new jobs.

What to do: Collaborate with community banks that can channel federal investment to small businesses – the entrepreneurs and community-based enterprises that create more than 70 percent of the new jobs in our country. This is the most efficient investment we can make, and the businesses that will benefit are those that reside in our communities. It is a great form of public-private collaboration that really works. These small businesses employ local people and serve them as customers; they are the building blocks of vibrant communities. The community banks, unlike the large commercial banks, are focused on helping our economic engine thrive. Note to Congress: Their chairmen don’t travel on private jets. Often they walk.

2. Investing in Undervalued Homes.

Goal: Keep people in their homes and avoid mortgage defaults, rather than having families displaced and creating a large stock of vacant housing that depresses everyone’s housing prices.

What to do: Support and provide financing to entrepreneurs, venture capitalists, and community-based public-private collaborations that will buy the foreclosures, thereby limiting the supply of housing available on the market. The entrepreneurs can employ construction workers to fix-up the homes, then rent them to people who might eventually own them via a rent-to-buy program. They can hold on to the houses and manage the market supply over the next five years, so that the market is not flooded. With inherent demand and population growth, the houses will gradually increase in value. A house that sold for $500,000 three years ago may be worth $250,000 today and may sell for only $125,000 at auction after foreclosure. In five years, that house might possibly sell for $250,000 again.

3. Restoring the Health of the Stock Market.

Goal: Increase medium- and long-term investment in the market, rather than quick speculation, to increase available capital.

What to do: Enact a rule that new investments made in the stock market over the next 18 months and held for at least five years are exempt from capital gains tax. Help people think about investing. Let people choose which companies they believe in and want to hold onto for some time. The program should bring substantial new capital into the stock market, and as the market improves, the taxable gains that result will more than pay for this real stimulus.

4. Building skills for the 21^st century.

Goal: Re-engage and open doors for the new unemployed, including many white-collar workers over age 40.

What to do:

· Pay degreed people to go back to school and encourage colleges to offer programs in green architecture, web skills, biotechnology technician training, community banking, teaching for tomorrow, and other skills geared to the 21^st century. Pay people while they are attending school and reimburse them the tuition for classes they complete. Encourage life-long learners for the world of tomorrow.

· Help them determine how to apply their skills to benefit their communities, and create a Volunteer Corps focused on community-based efforts. Volunteers could help many people navigate the system and attain new mortgages, health care, health insurance, etc. Other volunteers could contribute to education, health care support, child-care, green community projects, coaching for owners and employees of local companies, and advising small businesses and entrepreneurs. And the Volunteer Corps need not be strictly “volunteers”; participants could be paid in lieu of collecting unemployment.

Only when we let go of the past can we embrace, imagine, and build tomorrow.

Category: Blogs

Published: 3/13/2009 12:51 AM

THE AUTO INDUSTRY TODAY: An Opportunity Inside a Responsibility, Wrapped In a Disaster

Warner Zipf — Wed, 01 Apr 2009 21:32:09 GMT

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By Elizabeth Haas Edersheim

March 13, 2009

While the collapse of the U.S. auto industry is a disaster of global proportions, it is a great opportunity for companies and countries.

It is an opportunity to redefine the rules and make them global, reset the boundaries and work with energy and alternative transportation companies, and redesign the ground transportation system, rethinking everything from the fuel stations on the street corner to the size of parking spaces at the train station.

There exist today the cost-effective technology and widespread public concern to make it possible to develop cars that are low-cost, energy-efficient, and practical for everyday use—to make real progress on environmental issues while contributing to global prosperity rather than dampening it.

The automobile makers and governments around the world have a unique chance to create an effective model for trans-national-industrial partnerships. This type of collaboration is uncharted. Rather than operating on their own, Toyota, Honda, Tata, Tesla, Geely, Ford, and General Motors could find common ground with Exxon, CSX, Aichi Kokuki, Indianrail, and academics to design a standard for energy-efficient and environmentally sound transportation. Imagine the global automotive industry embracing this standard rapidly without putting consumers through years of confusion and skepticism—will it be hydrogen, solar, hybrid? Will I be able to refuel on the highway? It would be like skipping over eight-track tape music players, cassettes, and CDs, and going right to MP3 players.

Imagine governments collaborating to fund global development of that new transportation standard while individually investing in the local infrastructure—for example, modified fueling stations in a format common around the world. At the same time governments can create financial incentives for consumers to replace conventional vehicles with the new green cars. Imagine 400 million of the world’s 800 million vehicles being replaced with green cars by 2025. It is possible, if we respond to the decline of GM and its American counterparts as the very real opportunity it is.

Handling the current crisis means rethinking the way industry operates and becoming collaborative, innovative, and strategic—thinking big with a long time horizon. Autoworkers and taxpayers would agree that we haven’t gotten very far in the past two decades by being insular, conventional, and tactical.

Auto manufacturers are expected to sell 9 million vehicles in the U.S. this year, down 50 percent from 2007. The Big Three have about 44 percent of that market, an all-time low. Yes, GM has updated many of its plants and made them more flexible, but it has a long way to go to match Hyundai’s Alabama plant. Yes, Ford’s cars were recently ranked third in reliability by Consumer Reports, the first time in over 5 years that a U.S. company made the top three, but their website section on quality doesn’t even discuss the reliability of the engine.

GM is now asking for help one nation at a time. Toyota views itself as a Japanese company and is seeking support solely from Japan’s government. Consumers are also insular. In Korea, 95 percent of the cars purchased are domestic. In America, where the auto industry drives about 1 in 10 jobs in the U.S., consumers view this as a “Detroit problem.”

As GM goes, so goes Chrysler, and possibly Ford. By the playbook of traditional strategy, the day GM declares bankruptcy, Toyota, Honda, and the others will unload the docks and cut prices on their vehicles by $3,000 to $8,000, offering unprecedented discounts. They may have more than 1 million vehicles on docks already—enough to boost their combined market share more than 10 percent, sending U.S. companies’ share to a new low that may make the Big Three unsustainable no matter what kind of bailout Washington offers.

Even if global competitors step up and do what is right—give The Big Three some breathing room so that they can recover—will the American companies and unions learn from this disaster and re-engineer the entire business? They better. If not, they will die a slow and painful death that all of us will feel.

Institutional courage, bold thought, respectful collaboration, and a collective belief in tomorrow are required.

Category: Blogs

Published: 4/1/2009 11:29 PM

AACSB CONFERENCE

Warner Zipf — Wed, 22 Jul 2009 20:31:39 GMT

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Academics to Address Sustainable Business Practices and Corporate Responsibility at AACSB'S Sustainability Conference in Minneapolis

Category: Events

Published: 7/22/2009 10:30 PM

ELIZABETH EDERSHEIM ON COMPETITORS (The Drucker institute - YouTube Channel)

System Account — Mon, 10 Aug 2009 11:11:51 GMT

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Elizabeth Edersheim on competitors

Category: Multimedia

Published: 8/10/2009 1:09 PM

WORKING TOGETHER TO HEAL

System Account — Thu, 30 Apr 2009 15:22:59 GMT

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Accelerating Medical Progress Through A More Collaborative Research

by Elizabeth Haas Edersheim

April 30, 2009

In 2005, as we were working together on his biography, The Definitive Drucker, Peter told me to keep an eye on a most innovative collaboration that we both admired—The Myelin Repair Foundation.

Despair: MS Research in 2005

MS was no closer to a cure than in 1975; the conventional academic research model had stalled completely. To push for more effective research with substantive near-term results, businessman Scott Johnson—head of a start-up, a former senior executive at FMC, and a Multiple Sclerosis (MS) sufferer himself—spearheaded a new, more collaborative research model targeted at myelin repair. Does he think MRF will provide him with a cure? "I don’t think so, but it will help other, more recently diagnosed individuals and next-generation sufferers." Noting that MS often runs in families, Scott continued, "I don’t want anyone to have to experience what I have for the last 30 years; that is why it matters to me."

The Launch of The Myelin Repair Foundation

The Myelin Repair Foundation’s (MRF) research program was launched in late 2004 with the goal of licensing its first target for commercial development in 2009—10 to 15 years sooner than most thought possible. With an organizational design modeled on the Manhattan Project, MRF seeks to break down the traditional barriers of secrecy in academic research and to expedite breakthroughs in drug discovery. Their objective is to accelerate medical research dramatically and potentially stop this heretofore "incurable" degenerative disease that runs in families. The underlying idea was that the best scientists could make more and better progress if they worked together in collaboration rather than separately in competition, and if they focused on a very clear and specific research objective.

The shocking story of medical research including publicly funded efforts, is that the very labs that are supposed to work for the common good are often more interested in doing their own thing. They don’t want to cooperate with others, whom they may perceive as competitors, because they fear losing their exclusivity, their competitive edge, and ultimately their funding. Maddened by this inefficiency, Scott Johnson created MRF to pioneer a new model for medical research. In essence, MRF is a virtual research lab that links together institutions with diverse specialized expertise and focuses the world’s greatest MS researchers on solving a very well-defined problem: to find a way to repair myelin and thus reverse the progress of the disease. The foundation simply ignored counterproductive research practices and conventions, abandoning the notion that a research institution has to do everything itself, echoing ideas Drucker wrote about in The Post-Capitalist Society.

To establish this unprecedented "horizontal" collaboration, Scott Johnson brought together five leading neuroscientists from high-powered research universities—McGill, Stanford, Case, Northwestern, and the University of Chicago—former competitors in the race for new myelin discoveries. He provided robust financial incentives and communications infrastructure for these five universities to break from conventional practices and collaboratively participate in the effort. Johnson also committed funding for the principal investigators and created a working culture that facilitated the collaboration of the scientists.

Johnson’s new model, the Accelerated Research Concept (ARC), goes beyond the virtual research lab, with a multitude of formal and informal connections among the scientists which include quarterly meetings, collective planning, and cross-university telephone conferences and e-mails, sometimes daily.

MRF manages for results and bridges the academic and the commercial, working across organizations, institutions, and disciplines to create a powerful focus and success rate. The process has built trust between the former competitors and a shared emotional commitment to the results. They have vastly accelerated the progress of MS research.

For more information on the MRF organizational model, see The Definitive Drucker (New York: McGraw-Hill, 2007) and visit their website http://www.myelinrepair.org/

What is Myelin?

Multiple Sclerosis (MS) attacks myelin, a fat and protein compound wrapped around axons, the fibers that sprout out of nerve cells and carry nerve signals. Think of myelin as a form of insulation. As the myelin insulation is eaten away, scar tissue forms in its place, and nerve signals are slowed, distorted, or halted. These splutters and failures create the symptoms of MS. Johnson believes that repairing myelin will address these symptoms, much as insulin does for diabetes.

What the Myelin Repair Foundation Accomplished in 4-1/2 Years

Nothing illustrates the power of collaboration like results. As of April 2009, The Myelin Repair Foundation, and its scientists and partners, have:

Been awarded one patent, with eight more patent applications pending—at approximately one-quarter the cost per patent of academic institutions
Published more than 50 articles in scientific publications, with an unprecedented number of them co-authored by scientists from multiple institutions
Identified more than 40 discoveries—targets, pathways, and tools, including a battery of measuring tags to assess precisely the state of a patient’s myelin and the progress of re-myelination. This tool should greatly accelerate the validation of clinical testing
Remained ahead of schedule in achieving the goal of having a myelin repair target licensed by a pharmaceutical company within the foundation’s first 5 years
Defined the next round of targets and launched the research to achieve them
Set up a Drug Discovery Advisory Group to spearhead the foundation’s collaboration with the commercial world. This group helps outline the strategy for the next set of milestones, e.g., determining whether the academic myelin repair solution can be converted into a therapeutic for patients, devising a systematic flow stream to validate that targets are reproducible with industrial rigor
Initiated a target validation process with Contract Research Organization partners. MRF’s goal is to complete this validation process for two of its programs by late summer this year.

If you want to assist an organization that is curing disease, relieving human suffering, and changing the conduct of medical research in the process, consider supporting the Myelin Repair Foundation.

The Challenges Facing the Myelin Repair Foundation in 2009

Having achieved so much, MRF must build on its success and push its research results through the pharmaceutical development pipeline and out to MS patients. In so doing, MRF expects to benefit financially from the commercialization of new therapies. By reaping these rewards, MRF can become a sustainable social business (to use the term coined by Peter Drucker). Meeting the goal of sustainability could take 3 to 5 more years and poses two substantial challenges for MRF today:

Challenge #1: Motivate pharmaceutical companies to work on drug discovery based on MRF’s research—to spur them to invest in targets for MS that did not exist 5 years ago. By intensifying its collaboration with pharmaceutical companies, MRF is bridging "the valley of death." There is an enormous gap that prevents discoveries made in academic labs from being commercialized by private pharmaceutical companies. MRF and its academic labs are in conversation with multiple players regarding drug development and are seeking to establish at least two sound research partnerships with pharmaceutical companies this year. These partnerships will bring pharmaceutical investment into MRF and get the foundation’s scientists in touch with the industry’s drug development infrastructure. If their joint research proves successful, MRF’s efforts will have a real therapeutic impact on patients, and will be the foundation will gain an ongoing revenue stream. Commercial success is by no means guaranteed, and the time required to achieve it is not predictable. MRF is bringing the academic and commercial worlds together in a way that nobody else has.

Challenge #2: Attract the short-term funding needed to complete the journey to a commercial solution and fund a second round of MRF research. Although MRF will become self-sustaining as its research solutions are commercialized, the foundation faces an immediate need to raise funds to continue its efforts in the interim. These are challenging times for development and fundraising; many philanthropies have been crippled by the current economic crisis. Scott Johnson has responded by intensifying his own effort. He‘s literally in 6-1/2 days a week burning the midnight oil.

MRF has secured a $10 million pledge—$5 million for 2009 and $5 million for 2010—contingent on MRF finding matching funds. Scott is bringing to this fundraising effort the same creativity that has marked the foundation’s efforts since its inception.

* * *

Imagine a world in which accelerated scientific discoveries are rapidly streamed into the drug pipeline and delivered to patients who can’t afford to wait. It begins with collaboration.

Does a relative have MS? You may also be at risk.

Although environmental factors may play a central role in triggering MS, the disease clearly has a genetic component. In the general population, the incidence of MS is about 1 in 1,000. The identical twin of a person with MS has a 1 in 3 chance of getting it; a sibling, about 1 in 25. The child of a person with MS has a 1 in 40 chance of getting it. A niece or nephew of a person with MS has a 1 in 60 chance of being diagnosed with MSMark.

Many believe that possibly 100 genes may be involved with MS, but only a handful has been identified to date. MS is NOT considered a hereditary disease, in which there is a 100% chance that a family member will get the disease if he or she has the gene. However, family members of MS patients do have a "genetic predisposition" or increased likelihood (1 to 3 percent) of getting the disease. MRF reports that in several of its supporter families, siblings have been diagnosed, and one individual’s father and grandfather both had MS. MRF believes that early diagnosis and myelin repair therapeutics are the best ways to stop the disease’s progression.

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Category: Blogs

Published: 4/30/2009 5:15 PM