Harvard Business Review - 2004.06.pdf

FROM THE EDITOREffective ImmediatelyARVARD BUSINESS REVIEW HASdove into their data and came up withhad the privilege of publishingUnderstanding PeoplePeople.InPeter Druckers work 23 times.Histhis article,they reveal that peoplesecond article for us,published in 1963skills take four forms-and that differ-was Managing for Business Effec-ent roles require them in differenttiveness.Four years later cameThecombinations.Meanwhile,psycholo-Effective Decision.This month,wegist Steven Berglass Chronic Timepresent What Makes an EffectiveAbuselooks at a darker side of work-Executive.The pattern is revealing.place life:people who,in one way orNo one in modern times has conanother,abuse their time and that oftributed more to the theory of manothers.Some time abusers are merelyagement than Drucker,but his work isdisorganized.Others have psycholog-really about the practice of manage-ical problems that wont yield to basicment.Like Frederick Winslow Taylor,tips and coaching.To help them,andanother brilliant thinker whose contributions to businessto work with them,you have to go deeper.theory grew from solving real,immediate problems,DruckerThis issue also contains two articles of urgent importance.has the gift of induction,of being able to arrange atoms ofOne isWill You Survive the Services Revolution?by UCLAdetail into luminous crystals of insight.And it doesnt hurtmanagement professor Uday Karmarkar.In an Americanthat he writes wonderfully.election year,the topic of outsourcing generates more heatHis latest article explores a mystery.Effective leadersthan light,particularly when jobs are scarce.Far more imcome in all shapes and sizes.There are number crunchersportant than the controversy is the business reality thatand orators,tough quys and gentle souls.But none of thosefuels it:a revolution in the service sectors of all developedtraits necessarily explain leaderssuccess;indeed,ineffec-economies.Karmarkar says five trends-outsourcing,offtive executives can display these same characteristics.Whatshoring,automation,customer self-service,and global com-makes the difference?Beginning on page 58,youll findpetition-have intersected to create for services the kind ofDruckers answer,distilled from his three-quarters of a cen-crisis that roiled manufacturing a generation ago.tury spent watching leaders work.He says there are eightAnd finally,what Peter Drucker is to management,Michaelthings effective executives think and do.Some of them,Porter is to strategy and competition.In this issue,Porter,youll notice,have to do with self-abnegation-thinkingof Harvard Business School,and Elizabeth Olmsted Teisbergwerather thanI.Some have to do with self-awareness,of the Darden School of Business,turn their extraordinarysuch as possessing the discipline to have only one numberanalytical skills to the U.S.health care industry.The cost ofone priority.Reading What Makes an Effective Executivehealth care is the number one headache for many execu-ought to be your first priority in this issue.tives in the United States.In Redefining Competition inBut dont miss the rest.The issue also contains a pair ofHealth Care,the authors demonstrate how the health caresplendid pieces about intangible assets:Baruch Lev,a pro-system is afflicted with a pathological form of competitionfessor of accounting and finance at New York Universitysthat inherently cannot produce value-and often destroys it.Stern School of Business,shows in Sharpening the Intan-The good news is,the problem can be fixed.Even better,gibles Edgehow accounting fails to describe the hard valuebusiness leaders can start on their own,without waiting forof expenditures on research and other intangibles.Anda magic elixir from Washington or anywhere else.human resources experts Dave Ulrich and Norm Smallwoodexplain inCapitalizing on Capabilitieshow to audit thesoft side of intangibles.Another pair of articles is rich with revelations about peo-ple.Over many years,Harvard Business Schools TimothyButler and Peregrine PartnersJames Waldroop have givenpsychological assessments to thousands of managers.TheyThomas A.Stewart10HARVARD BUSINESS REVIEWoret h o u g h tthat these suppliers shared its commitment toCONVERSATIONcorporate citizenship.In 2001,the companylaunched a pilot called the preferred supplierprogram to attract and reward farmers commit-Whats the Plan?ted to socially and environmentally responsiblefarming.The company reasoned that the farmsWhen organizations face the unknown,that took the best care of their employees anda plan can be a dangerous thing.land would be the most sophisticated,respon-sive,and responsible suppliers-just the sort tohelp Starbucks fulfill its aggressive growth plan.To become a preferred supplier,farmers mustapply to the program.Reviewers evaluate appli-cants on 20 measures to determine how wellthey adhere to sustainable environmentalpractices(procedures that protect the scarceLee Clarkereal estate on which high-quality coffee cangrow)and responsible social practices(meth-loves disasters.ods,for example,that reduce the risk that deliv-A sociologist at Rutgerseries will be compromised by labor unrest,cor-University who specializesruption,or legal violations).Suppliers accepted into the program arein organizations and disas-awarded points for meeting environmental,ters,Clarke has exploredsocial,and economic criteria;the more pointshow people respond to calamities-from earth-they earn,the more Starbucks pays them fortheir coffee.Preferred providers will typicallyquakes to oil spills to terrorist attacks.His workreceive a 5%premium on each pound of beansexamines the sociology of planning:how organiza-they sell.They can also win long-term contractstions use(and abuse)plans to cope with crises andto reduce market risk and receive credit to fundimprovements that promote sustainability.manage change.In his book Mission Improbable:With the recent expansion of the pilot programUsing Fantasy Documents to Tame Disaster(Univer-to all of its supply chain,Starbucks expects thatin five years 60%of its coffee will come fromsity of Chicago Press),Clarke advances a troublingpreferred suppliers.idea:Organizations encourage the proliferation ofStarbuckss idea is innovative and refresh-symbolic plans-plans that look good on paperingly proactive.But its clearly a gamble.Itsuncertain whether sourcing this way will paybut can be worse than useless when push comesoff,either by satisfying the companys critics orto shove.HBR senior editor Gardiner Morse spokeby assuring adequate supplies.While the juryswith Clarke about how companies unwittinglystill out,brand-driven companies may want totry this experiment:Put your brand managerspromote bad planning and what they shouldand supply chain people in a room together anddo about it.have them jointly develop a sourcing strategythats directly tied to growth.You might just hiton your next big idea.What do you mean by symbolic planningElliot Schrage(eschragecfr.org)is an adjunctand fantasy documents?senior fellow in business and foreign policy at theSymbolic plans are the ones that are a charade.Council on Foreign Relations.This article is basedTheyre touted as workable but,in fact,theyre noton a report to the Department of State,Promotingbased on actual expertise or experience and,by def-International Labor Rights Through Private Volun-inition,they overpromise.They can be as broad astary Initiatives,which is available on request froman unrealistic disaster-contingency plan and as narthe author.row as a naive product-launch strategy.OrganizaReprint Fo406Btions are rife with them,and they cause all sorts ofJUNE 200421