Extreme Management: What They Teach at Harvard Business School's Advanced Management Program
Extreme Management: What They Teach at Harvard Business School's Advanced Management Program
eBook
Available on Compatible NOOK devices, the free NOOK App and in My Digital Library.
Related collections and offers
Overview
For the first time, these closely guarded secrets will be available to executives and management personnel everywhere. The book offers the chance to master the work models, the strategic perspectives, and visioning exercises that will turn good managers into revolutionary managers. Readers will learn how to create and sustain a competitive advantage in the global arena, manage for a world of changes yet to come, negotiate global transactions, establish enduring brand and corporate positioning, and much more.
Product Details
| ISBN-13: | 9780759527089 |
|---|---|
| Publisher: | Grand Central Publishing |
| Publication date: | 03/01/2002 |
| Sold by: | Hachette Digital, Inc. |
| Format: | eBook |
| File size: | 489 KB |
About the Author
Read an Excerpt
Introduction: A History of the Advanced Management Program
The Advanced Management Program can trace its roots back to 1939. In that momentous year, Robert Gueiroard, the son of a wealthy French publishing family, was deep into his MBA training at Harvard Business School. He assumed his days spent absorbing the intricacies of double entry bookkeeping, push-pull marketing, and the principles of corporate leadership on Harvard's bucolic campus would be just one glorious chapter in his life before he would transition into the privileged world of his family's business. But his days at the university were numbered.
Robert Gueiroard's life was redirected by the forces of history on September 1, 1939, when the Nazi threat turned to aggression and 1.5 million German troops, six panzer and four motorized divisions, and 1,600 state-of-the-art aircraft swarmed into Poland. Two days later Britain and France declared war on Germany. As Hitler set his crosshairs on France, Gueiroard was ordered by his government to return home and take up ranks with a French tank corps headed for the front. In an abrupt, disorienting change of lifestyle, Gueiroard moved from the intellectual preserve of Boston, Massachusetts, to the nightmarish violence of the battlefield. Gueiroard's elite unit was equipped with the best French military technology but was swiftly decimated by the Germans.
Although Gueiroard survived the Battle of France, the devastation of his fellow soldiers, his unit, and his country left a deep impression on the young officer and businessman-in-training. After the French were defeated, Gueiroard sought to resurrect his private life. He returned to Harvard but this time armed with a cautionary message for his American classmates. Writing an article in the school's alumni magazine titled "Blitzkrieg Tactics: A Warning to the United States," Gueiroard sounded an alarm that America's historic isolationist position could not hold up in a rapidly shrinking world. He issued a challenge that would have industrial as well as military implications: Could the United States match the German might, tank for tank, fighter plane for fighter plane, bomb for bomb, tactic for tactic, strategy for strategy?
Embedded in Gueiroard's warning was a disturbing message that the nature of warfare was being reinvented by the Nazis in a way that made all previous combat tactics and strategies outdated and highly vulnerable in the face of the German onslaught. For the United States to prevail, it would have to match German might on the battlefield.
"The best way and the only way to stop tank divisions is to use a larger tank division," Gueiroard wrote, "and the only effective active defense against a plane is another plane. If the Germans had no such superiority in the air, our troops would not have been submitted to such continuous destruction....
"...I wonder whether the people of this country are ready to accept the sacrifices which are required, if this country is to be saved?"
Gueiroard's question assumed increasing urgency as the Nazi machine rolled across Europe. Stunned by France's humiliating defeat, the United States began to quickly expand its military operation. As the nation assessed its ability to confront and halt the Nazi march, the American industrial sector-which had little experience in serving the extraordinary wartime demands for armament-loomed as the weak link. If the Americans were to win the war, this would have to change.
President Franklin Roosevelt set the pace in early 1940, when he announced a national goal of producing 50,000 airplanes a year. At the time, the aviation industry was pressing to meet a congressional mandate to produce 5,500 planes annually. Considering that only 46,000 planes had been produced in total in the two decades following the end of World War I, Roosevelt's quota seemed impossible.
But as Assistant Secretary of War Louis Johnson made it clear in a speech to the Harvard Business School Alumni Association, the impossible would have to become the possible. "Will any intelligent, patriotic American tell me," Johnson asked, "that we in the United States cannot equal Germany's effort?" Germany was already turning out four thousand planes per month and plans called for raising that output to six thousand. In this context, Roosevelt's quota appeared essential if Germany was to be defeated.
As daunting as the challenge appeared at the time, history indicated that America could rise to the occasion. The United States had entered the First World War with fifty-five airplanes and thirty-five pilots. By the time that war ended, the nation's air forces totaled 22,000 planes and 35,000 pilots. The precedent of engaging in a global war with minimal resources and emerging as a military powerhouse was established. But this time, the Nazi war machine raised the bar on the challenge and the risks associated with it. It was in this context that Secretary Johnson issued a warning: "It is my firm conviction,...the safety of this country is indeed in jeopardy.... Air forces have proven themselves in recent months to be controlling factors in the fortunes of war; and the fortunes of war, at the present stage of civilization, determine the freedom of nations."
For the United States to prevail, an elite corps of business and military leaders needed to be trained to serve as strategic partners with the military. Anything less would cripple America's response to the Nazi threat. In times of crisis such as this, visionary leaders must take brave, innovative actions, often violating the prevailing rules and precedents. So it was in the fall of 1940 that Harvard Business School dean Wallace Brett Donham took a major step. The school hoped to produce a new breed of business leader capable of providing powerful support to the war effort by introducing two war-related regimens: Industrial Mobilization and Economic Problems of National Defense. Both were created in response to the key question: Could Harvard Business School develop new courses designed specifically to address the business logistics-primarily defense-related production and procurement-of fighting a war? As far as Donham and much of the faculty were concerned, the answer was yes.
The new programs would become incorporated in a twelve-month course, Training for Defense Industries-which was later to be known as War Training at the Harvard Business School. Harvard Business School identified the purpose of the course this way:
"This country is confronted with a shortage of men trained in industrial administration and management. To help fill this need and accelerate its contribution to the national defense effort, the school is offering this twelve-month National Defense Plan for the duration of the emergency."
During this period the U.S. government's Division of Information-Office of Emergency Management launched a national public relations program, Give 'Em Both Barrels. The campaign stressed the importance of linking the military and industrial sectors in a combined assault on behalf of the war effort.
Harvard was positioning itself as the nexus for a new breed of can-do American-a military-corporate warrior capable of delivering a stunning competitive advantage on the world war battlefield. Harvard would assist the armed forces in developing new strategic and tactical skills that would enhance the war effort by training businessmen to help create a more productive and effective private sector as an indispensable partner in mounting a successful campaign to defeat the enemy.
Harvard's contribution would be multifaceted. In June 1941, the Army Air Forces was created as a centralized air combat entity designed to facilitate chain-of-command issues in an increasingly large and complex flying force. AAF chief General Henry H. "Hap" Arnold tapped Harvard to establish a new curriculum focused on statistics. The course was designed to guide air force decision-makers in diagnosing the wide range of scenarios they might face on the front lines, and how to take prompt and effective action. As the AAF's officers-in-training arrived at Harvard, in June, they were introduced to a powerful lesson: Not only were erroneous statistics dangerous, but accurate statistics applied erroneously could be equally dangerous. This was illustrated by Harvard's legendary case of the Umpteenth Fighter Squadron.
Early in the war two business school researchers visited a small air force base where a fighter squadron shared responsibility for keeping planes aloft at all times over the Roosevelt estate in Hyde Park, New York. The squadron commander at the base assured the Harvard researchers, just as he had assured Washington military officials, that he had thirty planes which could "fly, fight, and bomb" on a moment's notice. His analysis was based on the reports of crew chiefs who made their individual estimates assuming they had unlimited access to a limited common inventory of crew and equipment. But this was a fallacy, since no two planes could share a pilot, a propeller, or a weapon. In fact, the researchers discovered that the squadron commander at any one point in time had only a single plane he could depend upon to "fly, fight, and bomb."
The Harvard Business School program helped develop a new AAF statistical control system that had a powerful impact on the war effort. "Through a system of new and modified reports, new types of information were generated. A much improved daily report on aircraft status, for example-the so-called 110 report-enabled strategists to know with great precision which planes could indeed 'fly, fight, and bomb.'" (This model of statistical control, furthermore, was adopted after the war by numerous companies. Perhaps the best-known example is the Ford Motor Company, which employed former Stat School researcher and faculty member Robert S. McNamara in precisely this capacity.)
From the outset, the leaders of Harvard's War Training program recognized the need to simulate the impact of war and the threat it posed to the nation. This imbued the participants with the realization that although they were preparing for a new kind of corporate battle on a college campus, the threat they were protecting the nation from was real and immediate.
As part of its war-related efforts, Harvard Business School launched a program designed to retrain experienced business executives to make the conversion from peacetime to wartime employment. The course opened its doors to 121 men between the ages of thirty-five and sixty. All were subjected to an intensive fifteen-week program designed to make them essential components of the war effort by providing them with a strong production background and a working knowledge of finance and organization structures.
This course of study served as a foundation for the elite training program that was emerging on the Harvard campus. Unlike business school curricula, which were either function-specific or broad-based and philosophic, the program provided a holistic view of the management function fused with a pragmatic, hands-on, results-driven orientation.
This approach dovetailed with the work of the War Manpower Commission, a governmental agency whose mandate was to make sure there were sufficient workers in the important war industries. The commission sanctioned Harvard's War Production Training. And chairman Paul McNutt described the course this way:
"With its broad curriculum and objectives, its supervised study, and case method of presentation, it is nowhere duplicated in the country. Never has the country needed administrative talent with a broadened outlook more than now."
"Broadened" is the key word. From the very beginning, Harvard's training was designed to expand perspectives by exposing participants to issues, challenges, and solutions beyond the limited skill sets, knowledge base, and ambitions they brought with them into the course. As Harvard professor Franklin Folts put it, "They are shaken out of grooves." The 1943 summer issue of Modern Industry magazine reflected this theme, noting that graduates gained an airplane view of business-an overall view that might otherwise take them years to acquire.
The War Training program at Harvard created an elite class of business managers with knowledge of providing war matériel and a strategy for winning under the most severe conditions. In the aftermath of the war, both Harvard and the business community recognized the enduring value of a high-caliber training regimen that would create an executive brain trust and keep participating companies at the vanguard of free enterprise.
In September 1945, a class of forty candidates-including fifteen demobilized veterans and five entrepreneurs-entered the newly christened Advanced Management Program. A new era in peacetime managerial training had begun.
Copyright (c) 2001 by Mark Stevens
Table of Contents
| Prologue | xiii | |
| Introduction: A History of the Advanced Management Program | xvii | |
| The Principles of the Advanced Management Program | xxvi | |
| About This Book | xxxii | |
| The Inner Sanctum: Behind the Curtain of the Advanced Management Program | xxxiv | |
| 1. | First Strike Leadership: Mastering the Art and Science of Making Decisions and Motivating People | 1 |
| Avoiding the Trap of Management by Fashion Trend | 5 | |
| Private Lists Can Provide Road Maps for Managerial Action | 11 | |
| Good Leaders Rewrite the Rules of Their Leaders | 13 | |
| Micromanagers Beware: Self-Protection Is Really Self-Limitation in Disguise | 16 | |
| In Business, Even War Heroes Have to Put Away the Sword | 20 | |
| The Quest for Perfection Is a Sure Sign of a Small Thinker | 23 | |
| First Find Your Comfort Zone--Then Find a Way Out | 25 | |
| Enlightened Leadership: The Power of the Perpetual Student | 27 | |
| 2. | Tuning the Stradivarius: Building World-Class Organizations | 31 |
| Leveraging the Change Equation: D [times] M [times] P > Cost | 33 | |
| Bottom-up Learning: How Employee Criticism Can Make You a Better Manager | 37 | |
| Place Yourself in a Fishbowl: Emerge a Better Leader with the Organizational Fitness Profile | 38 | |
| Evolution + Revolution = Solution | 46 | |
| Leadership 101: The Jack Welch Way | 49 | |
| Three-Point System for Linking Strategy to Action | 55 | |
| Draw a Straight Line from Where You Are to Where You Want to Be | 58 | |
| Make Lists to Target Organizational Goals | 60 | |
| Motivate Subordinates to Embrace Change | 64 | |
| 3. | The Mind Is Mightier Than the Sword: Competitive Strategies and Tactics That Win | 68 |
| Quality Is Good--Strategy Is Better | 69 | |
| In the Art and Science of Negotiating, the Heavyweights Start at the End and Work Backward | 76 | |
| War Games Make Your Business Battle-Ready | 81 | |
| Leveraging the Power of Critical Opposites | 84 | |
| Competing the Hewlett-Packard Way | 86 | |
| The Power of Organizational Strategy: Mastering the 7-S Model | 91 | |
| How to Pick and Manage Markets Competitors Can't Penetrate | 102 | |
| The Art of Making Your Business Stand Out from the Crowd | 112 | |
| Action Plan for Leveraging the Power of Learning | 115 | |
| 4. | The Discipline of SWAT Team Service | 119 |
| The Ultimate Synergy: Leveraging the Service-Profit Chain | 121 | |
| In Poorly Managed Companies, People Are Problems ... In Well-Managed Companies, People Are Problem-Solvers | 126 | |
| How to Turn Angry Customers into Loyal Patrons | 132 | |
| The Paradox of the Satisfied Customer | 135 | |
| 5. | Unlocking the Black Box of Finance | 140 |
| Mastering the DuPont Formula and Other Tricks for Decoding Financial Statements | 142 | |
| Exploring the Apple Tree Analogy | 145 | |
| When It Comes to Global Currency Hedging, the One Sure Way to Lose Money May Be to Insure Against It | 150 | |
| In Business, the Best Time to Perform an Autopsy Is When the Patient Is Still Alive | 152 | |
| Creating Successful Business Models: It's All in the Numbers | 154 | |
| Epilogue | 158 | |
| A Global Perspective--Recent Advanced Management Program Sponsoring Companies | 161 | |
| Advanced Management Program Commanders | 163 | |
| Sources | 167 | |
| Index | 171 |
Introduction
Robert Gueiroard's life was redirected by the forces of history on September 1, 1939, when the Nazi threat turned to aggression and 1.5 million German troops, six panzer and four motorized divisions, and 1,600 state-of-the-art aircraft swarmed into Poland. Two days later Britain and France declared war on Germany. As Hitler set his crosshairs on France, Gueiroard was ordered by his government to return home and take up ranks with a French tank corps headed for the front. In an abrupt, disorienting change of lifestyle, Gueiroard moved from the intellectual preserve of Boston, Massachusetts, to the nightmarish violence of the battlefield. Gueiroard's elite unit was equipped with the best French military technology but was swiftly decimated by the Germans.
Although Gueiroard survived the Battle of France, the devastation of his fellow soldiers, his unit, and his country left a deep impression on the young officer and businessman-in-training. After the French were defeated, Gueiroard sought to resurrect his private life. He returned to Harvard but this time armed with a cautionary message for his Americanclassmates. Writing an article in the school's alumni magazine titled "Blitzkrieg Tactics: A Warning to the United States," Gueiroard sounded an alarm that America's historic isolationist position could not hold up in a rapidly shrinking world. He issued a challenge that would have industrial as well as military implications: Could the United States match the German might, tank for tank, fighter plane for fighter plane, bomb for bomb, tactic for tactic, strategy for strategy?
Embedded in Gueiroard's warning was a disturbing message that the nature of warfare was being reinvented by the Nazis in a way that made all previous combat tactics and strategies outdated and highly vulnerable in the face of the German onslaught. For the United States to prevail, it would have to match German might on the battlefield.
"The best way and the only way to stop tank divisions is to use a larger tank division," Gueiroard wrote, "and the only effective active defense against a plane is another plane. If the Germans had no such superiority in the air, our troops would not have been submitted to such continuous destruction....
"...I wonder whether the people of this country are ready to accept the sacrifices which are required, if this country is to be saved?"
Gueiroard's question assumed increasing urgency as the Nazi machine rolled across Europe. Stunned by France's humiliating defeat, the United States began to quickly expand its military operation. As the nation assessed its ability to confront and halt the Nazi march, the American industrial sector-which had little experience in serving the extraordinary wartime demands for armament-loomed as the weak link. If the Americans were to win the war, this would have to change.
President Franklin Roosevelt set the pace in early 1940, when he announced a national goal of producing 50,000 airplanes a year. At the time, the aviation industry was pressing to meet a congressional mandate to produce 5,500 planes annually. Considering that only 46,000 planes had been produced in total in the two decades following the end of World War I, Roosevelt's quota seemed impossible.
But as Assistant Secretary of War Louis Johnson made it clear in a speech to the Harvard Business School Alumni Association, the impossible would have to become the possible. "Will any intelligent, patriotic American tell me," Johnson asked, "that we in the United States cannot equal Germany's effort?" Germany was already turning out four thousand planes per month and plans called for raising that output to six thousand. In this context, Roosevelt's quota appeared essential if Germany was to be defeated.
As daunting as the challenge appeared at the time, history indicated that America could rise to the occasion. The United States had entered the First World War with fifty-five airplanes and thirty-five pilots. By the time that war ended, the nation's air forces totaled 22,000 planes and 35,000 pilots. The precedent of engaging in a global war with minimal resources and emerging as a military powerhouse was established. But this time, the Nazi war machine raised the bar on the challenge and the risks associated with it. It was in this context that Secretary Johnson issued a warning: "It is my firm conviction,...the safety of this country is indeed in jeopardy.... Air forces have proven themselves in recent months to be controlling factors in the fortunes of war; and the fortunes of war, at the present stage of civilization, determine the freedom of nations."
For the United States to prevail, an elite corps of business and military leaders needed to be trained to serve as strategic partners with the military. Anything less would cripple America's response to the Nazi threat. In times of crisis such as this, visionary leaders must take brave, innovative actions, often violating the prevailing rules and precedents. So it was in the fall of 1940 that Harvard Business School dean Wallace Brett Donham took a major step. The school hoped to produce a new breed of business leader capable of providing powerful support to the war effort by introducing two war-related regimens: Industrial Mobilization and Economic Problems of National Defense. Both were created in response to the key question: Could Harvard Business School develop new courses designed specifically to address the business logistics—primarily defense-related production and procurement—of fighting a war? As far as Donham and much of the faculty were concerned, the answer was yes.
The new programs would become incorporated in a twelve-month course, Training for Defense Industries-which was later to be known as War Training at the Harvard Business School. Harvard Business School identified the purpose of the course this way:
"This country is confronted with a shortage of men trained in industrial administration and management. To help fill this need and accelerate its contribution to the national defense effort, the school is offering this twelve-month National Defense Plan for the duration of the emergency."
During this period the U.S. government's Division of Information-Office of Emergency Management launched a national public relations program, Give 'Em Both Barrels. The campaign stressed the importance of linking the military and industrial sectors in a combined assault on behalf of the war effort.
Harvard was positioning itself as the nexus for a new breed of can-do American—a military-corporate warrior capable of delivering a stunning competitive advantage on the world war battlefield. Harvard would assist the armed forces in developing new strategic and tactical skills that would enhance the war effort by training businessmen to help create a more productive and effective private sector as an indispensable partner in mounting a successful campaign to defeat the enemy.
Harvard's contribution would be multifaceted. In June 1941, the Army Air Forces was created as a centralized air combat entity designed to facilitate chain-of-command issues in an increasingly large and complex flying force. AAF chief General Henry H. "Hap" Arnold tapped Harvard to establish a new curriculum focused on statistics. The course was designed to guide air force decision-makers in diagnosing the wide range of scenarios they might face on the front lines, and how to take prompt and effective action. As the AAF's officers-in-training arrived at Harvard, in June, they were introduced to a powerful lesson: Not only were erroneous statistics dangerous, but accurate statistics applied erroneously could be equally dangerous. This was illustrated by Harvard's legendary case of the Umpteenth Fighter Squadron.
Early in the war two business school researchers visited a small air force base where a fighter squadron shared responsibility for keeping planes aloft at all times over the Roosevelt estate in Hyde Park, New York. The squadron commander at the base assured the Harvard researchers, just as he had assured Washington military officials, that he had thirty planes which could "fly, fight, and bomb" on a moment's notice. His analysis was based on the reports of crew chiefs who made their individual estimates assuming they had unlimited access to a limited common inventory of crew and equipment. But this was a fallacy, since no two planes could share a pilot, a propeller, or a weapon. In fact, the researchers discovered that the squadron commander at any one point in time had only a single plane he could depend upon to "fly, fight, and bomb."
The Harvard Business School program helped develop a new AAF statistical control system that had a powerful impact on the war effort. "Through a system of new and modified reports, new types of information were generated. A much improved daily report on aircraft status, for example—the so-called 110 report—enabled strategists to know with great precision which planes could indeed 'fly, fight, and bomb.'" (This model of statistical control, furthermore, was adopted after the war by numerous companies. Perhaps the best-known example is the Ford Motor Company, which employed former Stat School researcher and faculty member Robert S. McNamara in precisely this capacity.)
From the outset, the leaders of Harvard's War Training program recognized the need to simulate the impact of war and the threat it posed to the nation. This imbued the participants with the realization that although they were preparing for a new kind of corporate battle on a college campus, the threat they were protecting the nation from was real and immediate.
As part of its war-related efforts, Harvard Business School launched a program designed to retrain experienced business executives to make the conversion from peacetime to wartime employment. The course opened its doors to 121 men between the ages of thirty-five and sixty. All were subjected to an intensive fifteen-week program designed to make them essential components of the war effort by providing them with a strong production background and a working knowledge of finance and organization structures.
This course of study served as a foundation for the elite training program that was emerging on the Harvard campus. Unlike business school curricula, which were either function-specific or broad-based and philosophic, the program provided a holistic view of the management function fused with a pragmatic, hands-on, results-driven orientation.
This approach dovetailed with the work of the War Manpower Commission, a governmental agency whose mandate was to make sure there were sufficient workers in the important war industries. The commission sanctioned Harvard's War Production Training. And chairman Paul McNutt described the course this way:
"With its broad curriculum and objectives, its supervised study, and case method of presentation, it is nowhere duplicated in the country. Never has the country needed administrative talent with a broadened outlook more than now."
"Broadened" is the key word. From the very beginning, Harvard's training was designed to expand perspectives by exposing participants to issues, challenges, and solutions beyond the limited skill sets, knowledge base, and ambitions they brought with them into the course. As Harvard professor Franklin Folts put it, "They are shaken out of grooves." The 1943 summer issue of Modern Industry magazine reflected this theme, noting that graduates gained an airplane view of business—an overall view that might otherwise take them years to acquire.
The War Training program at Harvard created an elite class of business managers with knowledge of providing war matériel and a strategy for winning under the most severe conditions. In the aftermath of the war, both Harvard and the business community recognized the enduring value of a high-caliber training regimen that would create an executive brain trust and keep participating companies at the vanguard of free enterprise.
In September 1945, a class of forty candidates—including fifteen demobilized veterans and five entrepreneurs—entered the newly christened Advanced Management Program. A new era in peacetime managerial training had begun...