Elizabeth Edersheim's Blog

Teach for America - Tomorrow's Effective Leaders

Tue, 29 Mar 2011 08:20:00 -0700

February 14th, 2011

Make more noise, be louder, push harder.

That’s the advice from feminist leader Gloria Steinman and civil rights leader John Lewis at this weekend’s Teach for America Alumni Summit, which drew 11,000 people.

The results Teach for America, their alumni, the enterprises they have launched, and their friends have accomplished is mind-boggling. Thanks to Teach for America , students who had been ignored are living dreams – completing college and breaking out of poverty. Schools built by alumni are breaking levels of performance that were assumed impossible. For example, Julie Jackson, the principle, at NorthStar Academy in Newark, has taken one of the worst performing schools in the state and is delivering results comparable to the best school in New Jersey.

Communities that had the poorest education standards in the country – New Orleans and Washington DC – are starting to rise from the dust, and even offering some lessons in what can be done right. In Baltimore, a new generation of public officials is emerging – people who have lived in a classroom. Colorado is passing promising legislation focused on teacher excellence after senators are visiting the TFA classrooms.

I would speculate that if we check out Facebook in 2020, TFA alumni will dominate the list of the most admired leaders, just as Peace Corps alumni did 30 years ago.

Across the country, teaching is getting renewed respect. Teaching jobs are now some of the most sought after positions by the best performing college students. TFA is the only institution that can consistently compete against Goldman Sachs and McKinsey for candidates and win. Parents who demand excellence of their sons and daughters are no longer questioning their children’s decision to go into teaching. President Obama and Secretary Arne Duncan recognize the new standards of possible. And for me, a business-person, the number and scope of entrepreneurial ventures that have been launched on efforts as diverse as training principals to providing one-on-one mathematical teaching with computers is nothing short of Silicon Valley.

It is the synergy and focus within this group that is making these leaders, leaders extraordinaire. As part of Teach for America, groups in a school meet and collectively learn from each other and mistakes, not unlike the Japanese education system. At this conference, the number of formal and informal meetings trading ideas and helping each other was a community collectively solving problems and creating new possibilities for education in America.

TFA believes that good leadership will lead to good teaching –- if you know how to lead and manage your classroom, it will lead to achievement gains with your students, regardless of their race or socioeconomic status. Effective leadership is creating a culture so that the impossible is possible. That is what this group is doing individually and collectively in and out of the classroom. The optimism, caring, commitment, and energy of the 11,000 people is contagious.

Teach for America’s challenge now is to scale fast without losing the focus on putting their core members in the high-need and hard-to-staff places. America’s challenge is that we can not afford not to. It is this community of 11,000 that have convinced me we will.

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China Today

Wed, 17 Nov 2010 11:19:00 -0800

China Today: Beautiful, Stressed, and Optimistic

August 20, 2010

I am returning from three weeks in Chinese cities, with a sense of optimism about this thriving country—strained by its rapid economic growth, urbanization, and environmental challenges. China stands a good chance of creating a vibrant future for itself and contributing to the world.

My family and I were impressed by the kindness of Qingdao, the rage of Nanjing’s and Hangzhou’s future leaders at its corruption, and the indefatigable commitment we saw in Shanghai to preserve the past while pursuing the unique opportunity China faces today.

The Beautiful

Qingdao, a city of eight million, is a village, even though it is the size of New York. Visitors and strangers are welcomed with a warmth reminiscent of America’s small towns. So many people took care of us. For example, we had arranged to rent bikes for a week; when we arrived in our hotel lobby to pick up them up, we learned that each bike rental would cost 160 RMB a day, or $24. The bell captain told me that we could buy bikes for $75 each, so we decided to rent for only a day.

The next morning when we came down at 5:45 a.m. to go to our daily Tai Chi class, a bellman raced over to us and said, “I came in early so you could use my bike,” as he gave the handlebars to my teenage daughter. He was not angling for a tip; they are prohibited by law. He was taking care of us. He said, “If you want to use it tonight, I will walk home. It is important that you enjoy your visit to Qingdao.” That afternoon, we returned the bike to him. The next morning, he was waiting for us again at 5:45.

Another example: I was waiting in a park as my daughter was busy working with the Tai Chi master. An elderly woman was stretching nearby in Music Square, a large paved area on the shore. She saw me watching and came over to invite me to stretch with her. She spoke no English. Over the next few days, I stretched with her every morning. On our last morning, I said goodbye and she said, in English, “Keep stretching—important.” She had found someone to teach her that phrase so that she could take care of me.

Yet another example: We were taking Mandarin lessons for a week. I was quoted a price and asked if I would pay in cash. I calculated the amount in RMB and brought it with me the next morning. The third day, our instructor told me that his price had been in RMB, not dollars; I had overpaid by a factor of six. He gave me a cash refund and urged me to put it away. After class, he escorted us to a taxi and paid the driver.

These acts of kindness happened many times every day. The people of this city, act like villagers. It is a beautiful village. The kindness so many people showed toward us, and their comfort and confidence with helping us as Americans made me hopeful that China could one day be our country’s partner, rather than our rival.

The Stressed

As we sense from the U.S. media, China is not universally rosy. The rapid change that has so benefited the economy has also put traditional morality to the test, and in some instances it has failed. Corruption is now rampant. In both Nanjing and Hangzhou, I had opportunities to sit down with 24- to 30-year-olds, China’s future leaders, and ask about their lives. They were all proud to be Chinese and clearly excited to be part of a growing country. Yet they spoke angrily about corruption and the threat it poses to China’s survival. One doctoral student decried the corruption in the academic world, the one place she had hoped would be corruption-fee. She explained that except for professors over age 70, the faculty sold grades: on every exam, in every class. They wanted money.

A computer engineer who worked a second job as an on-line instructor, described with tears in his eyes the day he took his father to the hospital with pneumonia. He said that, had he not brought a wad of cash every day to pay the hospital staff, his father would have died. He described with show the doctors who refused to treat other patients because they did not have that extra cash.

One articulate 27-year-old explained to me, “It is a balancing act. Our job as citizens is to collectively push the government to do the right thing.” He added, “ In your country, the government regulates the corruption in the population. Here, the population regulates the corruption in the government.” He gave me an example. To get government support for hemophiliacs, citizens published reports comparing China to Taiwan in the treatment of hemophiliacs. The reports embarrassed the government, and they rapidly corrected the problem in the biggest, most visible cities. He continued, “We cannot push too hard, on too many places, or as individuals. ”

These future leaders expressed the fear that the corruption may encourage young talent to flee. Each one described friends who do not live in China because of the corruption, and will not return. They all said that it is not clear that China can rid itself of corruption in critical sectors such as education and healthcare. I heard that many government employees have sent their children to other countries or obtained for them alternative citizenship, so if corruption destroys China, they will have an escape route.

The Optimistic

Despite the dark clouds, China retains a rich heritage and fundamental values that may well carry it through. The message was clear when I visited several companies, then wandered through the Chinese Pavilion at the World Expo. The message: China’s past and future are in harmony. Its economic gains since it began opening itself to the world are its greatest pride. The exhibit begins with a short video on the last 30 years—the shifts in living conditions, sizes of homes, and people’s optimism about their lives and those of their children. It then moves to a hall of historic art. A wall 100 yards long displays a screen that looks like the Marauder’s Map from the Harry Potter films.

It is an image of an ancient scroll displaying village life on the day of the Qingming festival, which honors ancestors; but here, the characters and animals are moving. The images are projected from behind the wall, using state-of-the-art technology. Other exhibits of Chinese treasures, also strove to integrate ancient values with current technology. I continued to “The Land of Hope,” which emphasized homes, families, and communities. One film showed an apartment building with a basketball bouncing from home to home. I saw hundreds of children’s drawings of their hopes; extensive material on creative education; a dialogue on urban planning—architecture, transportation, landscaping, and more. The last hall displays a vision of China’s future. It is loaded with inventions and ideas for a sustainable future: a fully functioning car that runs on photosynthesis; urban plans for streets beneath streets, with no stop lights; sustainable living with plants on the outsides of buildings, geo-thermal heating and cooling, rainwater collection on the roof and so on. At the exit is an artwork that defines “harmony,” like a symphony with, many instruments playing a common melody. In harmony – socialism and capitalistic enterprises have resulted in one of the most sustained expansions in history.

One cannot leave China without optimism. It is now the world’s second largest economy, having passed Japan while I was blissfully doing Tai Chi in Qingdao. China leads the world in exports, having outstripped Germany this year, and has a military operation that is second to the United States in size. It is easy for Americans to fear China as an up-and-coming competitor. Yet I departed feeling optimistic that China will continue to be a great neighbor and friend, as well as a leading force in creating our common future. The best thing we can do is help the individuals collectively challenge corruption while encouraging China’s harmony.

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Creating America’s Future Economy

Wed, 17 Nov 2010 10:23:17 -0800

I will begin by saying what everybody would like to ignore or forget but which must nevertheless be stated, namely that our economic engine is absolutely broken. The discussion of how to help our economy is riddled with prescriptions for on undoing “mistakes,” freeing up capital for individual small businesses, bailing out troubled homeowners, and re-building infrastructure.

All that is piecemeal. It is wasteful and wrong. We cannot fix a broken economic engine by standing still, going backwards, or incrementalizing ourselves forward. The rest of the world is no longer there.

We need to move boldly to create the future. U.S. preeminence for at least half a century has rested on superior capabilities in computer science. Many of our most profound private sector innovations (such as microwave ovens, optical fiber, and video) were built off-of defense-related research and it is no coincidence that corporate innovators developed commercial applications.

When I spoke with Kimberly Clark’s head of R&D, he explained to me why they chose to move from Wisconsin to Seoul. “We are close to infotechnology, nanotechnology, and biomedical research.” He added, “We are close to Singapore, Hong Kong, and Tokyo. And access to those communities will drive our future.”

We need to put our energy into identifying the engines of economic growth where we can be global leaders—whether stem cells, nanotechnology, infology, or energy. The American future is not in automotive manufacturing. That is our past. We need to invest in building the capabilities, communities, and connectivity to become preeminent in key disciplines. And we need to do this together – right and left; private and public sector. Without collaboration, we will fail.

Success will happen like it happened in Silicon Valley when the public sector, the academic world, the private sector and the venture capitalist work together on creating a community of capabilities that draws in other capabilities and supports one another. It is more than being an incubator for start-ups --- it is creating a community and spirit that work together and grow in capabilities with common underpinnings. The public sector needs to be the standard-bearer and economic encouragement that crosses company bound and academic bounds.

The key issue is not which economic faction gets the tax cuts. The political squabbling does nothing to advance the effort to find the platform from which we can be a leader in the global economy. That’s what keeps me up at night. We are asking the wrong questions. Our goal is not to recover but create--not to regain our past strength but to build the strengths we'll need to create the future. Let us begin by defining those.

Originally posted here.

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The BP Culture's Role in the Gulf Oil Crisis

Wed, 17 Nov 2010 10:22:16 -0800

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.

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

Wed, 17 Nov 2010 10:22:00 -0800

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.

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THE DRUCKER FORUM: Three Messages for Managers

Wed, 17 Nov 2010 10:21:28 -0800

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.

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THE DEFINITIVE DRUCKER

Wed, 17 Nov 2010 10:20:31 -0800

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

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INDIA ON THE MOVE - BACK TO SCHOOL

Wed, 17 Nov 2010 10:18:00 -0800

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

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ADJUSTING MY LENS

Wed, 17 Nov 2010 10:17:51 -0800

by Elizabeth Haas Edersheim July 31, 2009

Last week I had the opportunity to participate in the Student Leadership Summit, the inaugural event of the Frances Hesselbein Global Academy for Student Leadership and Civic Engagement, at the University of Pittsburgh.

The academy’s mission is t

o inspire, develop, and reward accomplished student leaders to meet the challenges of tomorrow. We spent four days engaged in intense learning, discussion, and fun with 44 leaders of tomorrow—4 of whom are my mentees. The summit began with “The Wizard of Oz of Leadership” and took these up-and-coming leaders through love, a lion, learning, innovation, tennis-racket propellers, inspiration, communication, respect, inclusion, a scarecrow, values, service, a courageous MIT engineer, passion, ethics, understanding cultures, a tin man, a gigantic light bulb, listening, the color line, confronting challenges, growing talent, creating opportunities, living, loving, and leading.[1] They came away understanding that—like the scarecrow, tin man, and cowardly lion—they already have the courage, heart, and mind to be leaders; they just need to see that it is all there inside them. The summit was fantastic. I learned so much about the difference in perspective that young leaders bring to the table, and walked away with a new sense of hopefulness. Some observations:

1. The leaders of tomorrow emphasize collaboration in problem-solving, seeking ways to share what they have and meet the needs of the many rather than commanding scarce resources to benefit the few. The members of the crucible generation, as Warren Bennis calls them, really do have a more collaborative and less competitive orientation then we ever did. The differences came through every day as we watched them work. The most telling moment was the Ugli Orange Exercise: In essence, two competing pharmaceutical companies want the 4,000 Ugli Oranges right now. One company needs them to fight a new and deadly prenatal disease, the other to resolve a deadly gas leak. Participants are divided into teams of four, two representing each company. The speaker who presented this exercise has been using it for 20+ years. For 20 minutes the two companies typically argue over whose needs are more important and arrive at no solution or action plan. At the summit, all 11 teams rapidly discovered that one company needed the juice and the other the rind, and worked out a viable plan for moving forward. Some went so far as to plant the seeds for the next year’s crop! This has never happened before. In 1994 no team found a solution. At another group last year, out of 14 teams, 2 found solutions. This year at the summit, every team tried to figure out how everyone could be satisfied rather than how to win a fight. “What part of the orange do you need?” was the first question asked by one of my mentees. The question belies a collaborative mindset that asks different questions and seeks fundamentally different types of answers.

2. Despite perceived progress, the color line, with all its ramifications, is still an active force limiting the participation and potential of millions in our society. In another exercise, everyone in the room answered a survey featuring questions about isolation in everyday situations and scored their answers. One of the questions was “Can I swear, or dress in secondhand clothes, or not answer letters without having people attribute those choices to the bad morals, the poverty, or the illiteracy of my race?” At the end of the exercise, we lined up in order of our scores. The predominance of black faces among those feeling most isolated was shocking. It really brought home to me how far we still have to go toward achieving an inclusive society – even here, among the nation’s most engaged, highest-achieving students. The recent arrest of Henry Louis Gates, Jr., in Cambridge has once again brought this concern into the headlines. The presence of the Obamas in the White House – although inspiring and empowering for many – has not even begun to resolve the issue of how we diminish the defining quality of race in American society, how we bring people of color to the table as full participants. One of the leaders of the future spoke about how many people asked her if they could touch or feel her hair. There has been progress, but no magic; much more must be done.

3. The power of a fresh, independent perspective cannot be underestimated. On our third day, each group of four went to a not-for-profit organization in Pittsburgh to help address an issue facing the organization. Their reports back to the group were astounding. My group went to help the Ladies Hospital Aid Society (LHAS) think through how to revitalize their donor base. My team’s first question about achieving that goal was, What is the constraint? They felt that one significant constraint might be the name of the organization. This created a lively discussion with the president and two board members. Finally one board member said that when she has to tell people what LHAS stands for, she often bites her tongue. It is not a name she is proud of, but she had assumed that, as the historical identity of the organization, the name could not be changed. A young man on my team was quick to challenge this boundary condition, pointing out that the organization’s name had originally been the Hebrew Ladies Hospital Aid Society and could potentially be changed again. I was reminded of why McKinsey hires very smart people with little or no business experience—because their lack of preconceptions enables them to push the envelope and cast a wider net in seeking solutions to problems. My team discussed the need for diversity in the images of the organization and on its website, pushing LHAS to redefine its image to draw in more potential donors. Now the board is engaged in reading the Harvard Business School case about the Girl Scouts. The boldness the students showed in their recommendations was surprising, as was the rare opportunity for senior executives to listen to the leaders of tomorrow and discuss solutions with them.

4. The older generation has a significant contribution to make—in mentoring. Jim Collins, the dinner speaker on the final day of the summit, talked about how each of us needs a personal board of directors. That is particularly true for the crucible generation, even though its members scored higher on every academic test than we did and have been developed and programmed to succeed throughout their young lives. They are emotionally young. They have grown up with more supervision than we had, and less freedom to experiment. They are operating in a very uncertain world, where the norm is relentless challenge and unclear expectations. After working hard practicing and performing all their lives, these young people are now faced with the task of deciding how to change the world and making those sweeping changes happen. They do need mentors and people to think with—people who believe in them. When I came home, the first thing I did was call two young people I have worked with recently; I listened to their thoughts and encouraged their ambitions. I hope to be in touch with each of my mentees for a long time to come. Each of them is a fantastic person with a tremendous amount to teach me. To quote Peter Drucker, “Knowledge work requires continuous learning on the part of the knowledge worker, but equally continuous teaching on the part of the knowledge worker.”

5. The leaders of tomorrow define success in terms of making a difference by serving others. Our final exercise was for each leader of the future to define a mountain they want to move, the barriers to moving it, and a plan for how they will get started. To a person, their goals are geared to making this a better world (rather than individual enrichment or achievement) and are all about service. For example, Michael, a graduate student in pharmacy, wants everyone to have available comprehensive information about regulated and unregulated drugs and foods that impact their bodies. He doesn’t want to be a pharmacist – he wants to help people improve their health. Alyssa, an aspiring orthodontist, wants to serve children who might not otherwise be served and help them feel better about themselves. Celeste, a student of Sport Science, wants to help other people accomplish things they never dreamed they could have. Minh, an aspiring ophthalmologist, wants to break down walls and be available to patients where and how they need their doctors. Although it is possible that this youthful idealism will devolve into relentless self-interest, as happened with so many of the baby boomers, the strong emphasis on practical service to others makes me hopeful.

6. Including and respecting young leaders is an essential step to helping them grow and develop. Including people in the group while acknowledging each one’s unique contributions and needs is an enormous part of leadership development—and that is the unique genius of Frances Hesselbein. Frances Hesselbein graciously introduces people to each other so they can make connections, broaden their view of the world, adjust their lens, and grow as leaders. She introduced Tamara Woodbury—a colleague from the Girl Scouts of America whose interest in leadership and organization development was pushing her toward business school—to Peter Drucker, who insisted that business school would be a colossal waste of her time and offered her a different perspective on social enterprises. As a result, Tamara came to change her focus and redirect her impact. As Jim Collins says, “If you are a plant, Frances is the ultimate ultraviolet light—she helps each of us see things differently. For me, the opportunity to talk with military leaders about leadership was a new and eye-opening experience. I learned about President Clinton’s courage in inviting and addressing contrary opinions, about the thinking behind his decision to send troops to Bosnia when only 36 percent of Americans approved of it, because it was the morally right thing to do for millions of innocents. And then when General Randy Fulhart offered to give me some feedback on my writing, a wide smile went across my face…that hasn’t left.

This summit adjusted all of our lenses. Thank you, Frances.

[1]

As described by Charles J. O’Connor III, Retired Air Force Colonel, Senior Vice President, Fidelity Investments.

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

©Elizabeth Edersheim

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CREATING WEALTH-PRODUCING INNOVATION -- OUR URGENT NEED FOR PROACTIVE AND PRODUCTIVE PUBLIC-PRIVATE PARTNERSHIPS

Wed, 17 Nov 2010 10:16:33 -0800

By Elizabeth Haas Edersheim

June 24, 2009

In 1964, Peter Drucker wrote,

“The first indicator of the need for major innovation is one with which economists have been familiar for well over a century: Declining productivity.”

We constantly assume that the private sector is the engine of innovation. But we need to rethink even that. Many of the requirements of innovation -- the patience to wait for results, the willingness to take significant risks -- are difficult for companies to meet. Companies systematically under-invest in R&D, especially for exploratory research and technology development. Start-ups systematically focus on very narrow segments.

2008 global productivity growth was the worst it has been for 20 years, and 2009 does not look much better. Despite large investments in innovation during the past decade, this effort has failed to deliver beyond a few high profile internet areas -- Google, Facebook. This failure may be contributing to our economic difficulties.

Innovation, as defined by Drucker, is new wealth-producing capacity. With that definition, gene therapy, alternative energy, biotech, micromachines, etc., have not yet delivered.

It is an opportune time for public-private partnerships. They can make a difference in the speed and scale of innovation and the patience of startups.

The public sector -- governments and not-for-profits -- needs to help support long-term investment by large and small companies alike. Then it needs to accelerate adoption of innovations. When public-private partnerships are disciplined, they can create a new community of businesses and institutions, and foster many wealth-producing innovations.

For purposes of conversation, let’s focus on the most productive of government roles in fostering wealth-producing innovations via public-private partnerships.

Role 1: Assumption Busting. The first step in any meaningful innovation is to abandon assumptions. The government’s regulatory power enables it to radically alter conventionally held assumptions about the nature of competition in an industry.

Some cite government regulation as the most important factor in America’s success in information technology. The trustbusters made AT&T lease its lines to others and eventually broke up the giant. Later they forced IBM to separate its hardware and software businesses. In both industries, these actions challenged assumptions about the level of investment and integration required to compete. It also fostered innovation by replacing stodgy monoliths with smaller, specialized companies that joined forces with other, similar companies with complementary capabilities. The result -- tremendous innovation and the emergence of new standards to support the collaborations.

Governments can also protect outdated assumptions, often with disastrous results. As Drucker said, the worst thing a government can do is hinder the movement of capital and people to new products, technological solutions, and modes of competition. A stark example of this is the U.S. government’s role in the terminal illness of the U.S. automobile industry with its support of mediocre mileage standards, work-arounds, and low gas prices.

Similarly, in Japan, the government's failure to force new assumptions and passive acceptance of the status quo may have contributed to the country’s lost decade.

Role 2: Spotlighting An Opportunity. Governments can greatly increase the likelihood of an innovation’s success through strong public policy signals. And they can coax results with money. For example, NASA in the U.S. created decades of innovations, not only through funding but by sustained attention to the aerospace industry and its innovations.

China now is trying to shine a light on the electric car, as the Chinese market gears up. The Economist predicts that, in 40 years, China will have as many cars as the whole world does now. The government’s vision is for the Chinese auto market to bypass internal combustion engines for new buyers and go directly to the electric car as soon as possible.

China's Ministry of Industry and Information Technology and the government of Wuhan are working with Nissan in Shanghai on a pilot electric-vehicle program. Nissan is expected to provide free electric vehicles to Wuhan and to help develop a network of vehicle-charging stations. The ministry is also working on new facilities for their electric vehicles, joining forces with Beijing and BYD, the battery company that acquired a car company from the state. Beyond the auto companies, the ministry is working with a myriad other companies including grid intelligence companies, fueling, and network companies.

Role 3: Facilitating the Growth of Cutting-Edge Capabilities To Support Innovations. This role focuses on underlying capabilities needed for innovation vs. directly on the innovation. As an example, let’s look at the state of Maine’s boat building industry.

In April 2007, a delegation of boat builders from Maine headed to Shanghai for the China International Boat Show, where they were treated by the national government as honored guests. Maine’s success in international boat building was made possible largely by public-sector efforts to build the state’s competency through a series of deliberate steps. It is an example of how government can fund collaborations across institutions to build competencies not achievable by any one company.

Maine's boat building industry was flat from 1980 to 1994 with the closure of a local naval base and declining productivity threatening to kill it entirely. Recognizing that the future of the state’s boatbuilding industry rested on its ability to harness innovation capabilities in composites and nanotechnology to compete globally, several different types of institutions formed an alliance to create an advanced engineered-wood composite center -- a university, workforce training centers, private companies, trade associations, economic development agencies, and investment organizations.

Government investments made participation in the center possible for many of these institutions -- and paid for the trip to China. As a result of this coalition, Maine’s boatbuilding industry has more than doubled in the last 10 years and is at the cutting edge of innovation -- taking a 400-year coastal heritage of skilled craftsmanship to a new level.

Role 4: Supporting Entrepreneurs And New Businesses To Build Innovation Communities. Government regulations, tax policy, and economic incentives are all tools that can be employed to help form innovation communities often dominated by the small businesses that create the most jobs and get the most patents per capita.

In my visit to Korea, a newspaper reported that young Koreans do not want to take the risks involved in starting businesses, or even work for small businesses. When I spoke with some entrepeneurs, they indicated that it was virtually impossible to hire talented people unless they were brought from the U.S.. People are afraid of small companies and are used to the security, as well as the health insurance and pension benefits, associated with the larger companies.

Government action can reverse such a trend, helping communities embrace start-ups with bankruptcy laws and small business loans, and creating community awards and recognition for businesses that contribute substantially to innovation communities.

The United States’ Small Business Administration (SBA) understands the importance of entrepreneurs and a continuing pipeline of new businesses. Its goals align with this critical need:

– Continue to get loans out to small businesses

– Revitalizing the agency itself, which was reduced and lost its focus over the last eight years

– Making the SBA the strongest possible voice for small business in the U.S.

Certainly other public sector and non-profit entities can also play these four roles very successfully, with similar impact on the speed and scale of innovation. For example,The William J. Clinton Foundation supports a number of public-private partnerships. One worth following is the Clinton Climate Initiative, dedicated to environmental innovation. The Climate Initiative was launched in May 2006, when the former president’s advisor, Ira Magaziner, met with Ken Livingstone, then-mayor of London. Ken knew that the Clinton Foundation had joined forces with 60 different African countries to get a low-cost drug for HIV/AIDS brought to market, which none of them could have done independently. Ken suggested that the foundation undertake a similar project with large cities -- which are huge contributors to greenhouse gas emissions -- to advance some innovative-driven climate initiatives.

One such initiative is Clinton Climate Initiative’s C-40 project, which brings 40 cities together creating new economies-of-scale in demand for energy-efficient technologies -- from the 367 million people that live in those cities -- and linking demand with sources of supply. The C-40 project is a catalyst in accelerating market development for such innovations as clean-technology vehicles, energy-efficient lighting, chillers, solar control window films, and “cool” roofing that will help to lower the costs of building retrofits. These beneficial technologies all face a fundamental barrier to adoption: No customer is big enough to justify investing in cost-efficient scale production, and no company is ready to bet that future demand will approach that scale.

The Climate Initiative works with vendors to determine the volume necessary to fundamentally change their economics, using economic and life-cycle modeling to understand and think creatively about when and how a new technology can become attractive. The foundation then works with the C-40 cities and gains commitments to deliver that volume. They have broken through barriers that only a public-private partnership could. Hybrid buses, which first appeared in a few cities with big public subsidies, have been updated with newer technology and purchased for use in locations that manufacturers would not have approached for years. Already, many cities in India and Brazil are the world’s largest users of hybrid buses.

When I asked Magaziner to describe his biggest barrier, he responded that he is pushing everyone’s comfort zones. People can’t sit around waiting for the usual lag time from the usual circumstances – excessively long government time lines when it comes to ordering equipment from private suppliers, the hesitancy of entrepreneurs to push the envelope farther than they ever have, and so on. He’s right. Usual just doesn’t cut it under unusual situations like today’s productivity performance. Public-private partnerships can be significantly more agile than the usual contracts between state agencies and corporations. They are the right vehicle to speed the delivery and elevate the scale of innovations in the face of our critical needs.

Elizabeth Edersheim

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WORKING TOGETHER TO HEAL

Wed, 17 Nov 2010 10:15:17 -0800

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.

Please click here to download the article in PDF format.

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

Wed, 17 Nov 2010 10:13:02 -0800

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.

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UNCONVENTIONAL SOLUTIONS FOR UNCONVENTIONAL TIMES

Wed, 17 Nov 2010 10:11:06 -0800

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.

©Elizabeth Edersheim

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HARVESTING THE OPPORTUNITIES OF THIS HARSH WINTER

Wed, 17 Nov 2010 10:09:55 -0800

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.

Elizabeth Edersheim

__________________________________________________

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:

_________________________

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

____________________________

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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MANAGEMENT 2010

Wed, 17 Nov 2010 10:08:22 -0800

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.

Elizabeth Edersheim

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YOU AS A LEADER

Wed, 17 Nov 2010 10:07:08 -0800

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.

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

Wed, 17 Nov 2010 10:07:01 -0800

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

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The editorial in the Times

Wed, 17 Nov 2010 10:05:39 -0800

I just read an editorial in the Times, "The Geography of Hate." The editorial explained that the increase in Noose incidents since the Jena La event, were the result of a new social reality - "a renewed march toward racial and social justice, but a surprisingly broad and deep white backlash against the gains of black America." The article also documented the level of crimes in the United States as more than 190,000 incidents per year.

After reading Drucker, it is clear that there is another explanation for the rising hate crimes noted. In Peter Drucker's first book, The End of The Economic Man (1937), he linked an increase in hate activity to a decline in economic opportunity and a concomitant diminished respect for the individual. Extreme income inequality during the Weimar Republic, Drucker argued, fueled Hitler's rise to power. Elsewhere he noted the increase in hate crimes in America during the Great Depression. For Drucker, economic stability and opportunity were always requirements for sustaining a democracy.

Could the spike in hate crimes be linked to the record pessimism Americans feeling about the economy? Has the polarization of incomes over the last 10 years led Americans to question the viability of their opportunities? Drucker felt this polarization was dangerous to the fabric of our society, and a responsibility of corporate executives. Let's hope both for more sensible corporate leadership and federal policies, so that Americans in all economic strata can regain optimism.

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Cecilia Regueira - Instituto Hartmann Regueira

Wed, 17 Nov 2010 10:04:41 -0800

The Drucker Institute recently hosted a global symposium. A number of leaders at the symposium noted the way their own relationships with Drucker influence their business decisions and strategies. Really, they were talking about so much more - an organization's need to educate and care, and its people's need to learn and commit.

I thought I would share one of those stories with you in this blog.

Cecilia Regueira - Instituto Hartmann Regueira

A family therapist, Cecilia lived for over 20 years in Weston, Connecticut. In 1990, she and her husband decided to return to Brazil, where she had been born. Cecilia was not licensed to practice in Brazil. When she arrived, she was invited by the secretary of education to help deal with the pervasive problem of violence in the schools.

The homeless and hopeless children she saw shocked her. She learned that in Rio de Janeiro alone 50 children drop out of school every week and join the streets. That is more than the number of Americans who die in Iraq every week. In effect, that is a death sentence because many do not survive. She decided that she needed to somehow volunteer and reach these kids in the streets rather than spend her time in schools from which many of them already had fled.

On visits to the streets, however, she quickly realized that she'd chosen an inefficient and even dangerous way to solve the problem. Over the next 15 years Cecilia built an organization, with a staff of 25, to reach out to kids on the edge. She convinced a telephone company to donate a mobile unit to each of these kids so that she can send them messages. If she knows there is a job at a shoe factory and she knows that a child is interested, she messages that she has set up an appointment. On certain days, she lets kids know that there is a free movie.

As Cecilia was building this organization, she needed to convince people that transforming people brought results. She realized that she had no management skills, so she went back to school and read Drucker over and over again. Cecilia is convinced that understanding Drucker helped her put fire in the belly of everyone in her organization and make the whole work. As she told me repeatedly, "We need values, we need accountability - we need a different kind of work."

Her organization is seen as a pioneer in Brazil - an NGO with explicit management practices partnering with the government. Now she is looking to help transform her own society. As such, she has set up an organization to strengthen the third structure and train other NGOs in the Drucker philosophy. Her tools include Drucker's seven modules for self assessment:

Commitments and accountability,
Financial management,
Network and partnerships,
Monitoring and evaluation,
Human capital,
General management, and Governance.

Cecilia holds workshops with the NGOs 12 times a year. She then visits the NGOs to help them apply all the learning in the seven modules, and her organization monitors the impact on the NGO - in 2 years, 3 years, and then in 5 years. (See www. institutohr.org.br). In short, Cecilia is just starting.

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One of the action steps from the global symposium is the creation of a website for a global conversation around social responsibility. This site is targeted for launch in early September. If you would like to be alerted when the site is running, please register here.

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Drucker vs. GM: Management Science vs. Management Practice

Wed, 17 Nov 2010 10:03:25 -0800

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

Sloan was the visionary behind General Motors, who believed that management was a science. He saw General Motors' success as a result of the company's ability to optimize its distinctive economies of scale, manage the flow of money and investments, and provide an expansive dealer network that encouraged trade-ins while selling new cars.

Peter Drucker, meanwhile, always believed that management was a practice, like medicine or law. The practitioner's job was to continually challenge the theory and bounds to redefine the "what," not the "how.&rdquo Peter Drucker believed that General Motors' success was due to its management practices, in particular its people-centric ethos.

At the time of Sloan's death, in 1964, it wasn't clear who was right. By the time of Drucker's death, in late 2005, we had come to see that in business and not incidentally in public policy and politics - practice trumps science. Or as Drucker wrote, the "what" supersedes the "how.&rdquo The most powerful management skill in the 21st century is the ability to step back and rapidly assess and modify "what" your enterprise is doing.

By failing to reassess its "what," GM is just a sickly shadow of the robust corporation that Sloan built and that thrived for 70 years. In the post-Sloan period, GM continued to adapt strategy to his "science," without the support of Sloan's innate people and management skills.

The "what" of General Motors is not just a car. The "what" Sloan defined was built on customers from different income levels being loyal to different GM brands, and the prestige of a new car. GM built itself around servicing this market - from factories to dealers. Their market share in the US exceeded 55 percent through 1960. Today it is less than half of that. In 1980, GM was still the most sought after company to work for by college engineers, according to MIT's placement office. Today it is not even in the top 10.

What happened? Customer's values changed to reflect major shifts in society, taste, and culture. Americans adopted convenience, safety, fuel efficiency, and commuting comfort. Rather than listening and connecting with these customers, GM invested in quicker patches, solutions built from their old way of doing business, while the company continued to lose marketshare.

Meanwhile, Toyota quietly used the Peter Drucker approach, continuously redefining their approach to "what." That includes being part of the local community. Who would have foreseen a Japanese auto running in NASCAR? Toyota entered last year. Also last year, Toyota passed GM last year as the number one automobile company in the world; it's expected to become number one in the US market this year.

Why is getting the "what" right so critical today? In the global information age, managers are inundated with a nonstop flow of real-time information. This information flow brings about change at a breakneck speed unlike anything businesses have experienced before. To move deftly amid so much change, a company needs to keep questioning. What does the customer considers value? How can that value be enhanced? The company must challenge the "what." Opportunities come from redefining "what" the company should be doing.

The best companies are doing just that. Google's breakthrough didn't come from the science of the algorithms, but from the fundamental concept that users wanted a search engine - the "what.&rdquo Management quickly stepped back and asked, given this access to millions of searchers across the world, what other value can be provided? Google's "what" continues to change both in terms of additional services, and accessing the network of connections.

It is time for Google to challenge the "what" and ask what would make its search function more user-friendly? One that doesn't provide 10,000 access points, but rather logically helps pinpoint the best one or two sources through a series of menus. Google's agility at keeping ahead of the competition at re-inventing the business will be the ultimate test of whether it becomes just another General Motors.

Many companies have failed to challenge the "what" of their business, by shying away from asking their customers about what they value. In our conversations, Peter Drucker indicated that this failure is probably the single greatest cause of corporate death. It is what killed Polaroid. It is what killed Wang Laboratories who in the early 1980's had cornered the market for word processing and completely missed the PC boat. It is what almost killed AT&T. This week, Circuit City announced that the "what" of its business has changed. It is no longer competing with other retailers. Its competition is Apple, Dell and HP. It's too early to tell if Circuit City can reconfigure and survive.

We are seeing all sorts of companies challenge their "what." Nintendo challenge the definition of "what" a game is when they introduced WII. Cognizant changed their "what" from a small in-house technology facility for Dun & Bradstreet to one of the most successful global outsourcing companies. When Jeffrey Immelt announced that GE would focus on alternative energies, he changed the "what" of a corporate giant. Rubert Murdoch is challenging the definition of a news company. In our conversations, Peter Drucker suggested that Sony needed to get out of the film business. He indicated that the company's strength comes from the delivery mechanisms and consumer interface, not from making thrillers and sitcoms.

From the 1940s into the 21st century, Peter Drucker advised management to consistently seek the answers to these forward-looking questions:

1. What is different in the world around us and what of my business still fits with realities?

2. What are our opportunities and what boundaries should we be challenging to create/leverage those opportunities?

3 What results should we expect in 6 months?

4. What competencies do we need to act on these opportunities? Are we building and properly investing in these competencies?

Failure to do so is not a sustainable alternative.

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