Harvard Business Review - 2004.10.pdf

FROM THE EDITORMaster ClassTWICE A YEAR,a dozen CEOsarrive on the Harvard BusinessSchool campus.Each is the head ofa company with$i billion or more insales;each is new to the job,eitherabout to take over or in office just afew months.For three days,they workintensively with three of HBSs(andthe worlds)most eminent businessthinkers:strategist Michael Porter,leadership expert Nitin Nohria,andjay Lorsch,the distinguished scholarof boards and governance.They goover all the elements that make a CEOs job uniquelychallenging-developing strategy,managing oneself andan executive team,dealing with boards,coping with WallStreet.Its businesss ultimate master class.In this months HBR,you can discover what these excep-tional students have taught their professors.While workingclosely with new CEOs,Messrs.Porter,Nohria,and Lorschhave learned that nothing in the executives past,nothingin their training or experience,prepares them for the real-ity of the position.No two companies are alike,and neitherare any two leaders,but there appear to be seven ways inwhich a new leader can almost count on being taken bysurprise.As the new boss,you may know that youll haveto give up some involvement with operations in order toattend to outside constituents,for example,but youll stillstruggle to deal with the feeling of being unmoored,of notknowing whats going on inside the company whose leaderyoure supposed to be.You may know not to be heavy-handed in exercising your considerable power,but youllalmost inevitably be startled to discover that even yourlightest touch can strike someone else like a haymaker.If these seven surprises add up to one lesson,its this:The more power you have,the more important it is to ex-ercise power collaboratively.You may get your way actingunilaterally-but almost always at a cost,and usually youhave a smaller stock of power the next time you need it.Power and political capital grow when you act throughothers-work with your board,build allies,avoid unneces-sary meddling in the responsibilities of subordinates andcolleagues.In sum,never compete where you dont have to.Thats a good lesson for corporations,too.Competition,one of the most powerful forces on Earth,is also one ofthe most dangerous.Certainly it is an extraordinary moti-vator,whether in sports or in office politics.The competi-tive struggle for existence drives alllife on the planet;it is the necessitythat mothers invention.The paradoxis that the most successful compa-nies compete by avoiding competi-tors.Competition is an anacondathat squeezes profits.Thats how itworks and why smart companiessguirm out of its coils.Competitionis crowded;smart companies preferwide-open spaces.As HuckleberryFinn says at the end of his adven-tures,I reckon I got to light out forthe Territory ahead of the rest,because Aunt Sally shesgoing to adopt me and sivilize me,and I cant stand it.I been there before.Over many years,Chan Kim and Rene Mauborgne haveargued,often in these pages,on behalf of the strategic logicof wide-open spaces.The authors,professors at Insead,callit value innovation-and their article in this issue,BlueOcean Strategy,elegantly and eloquently lays out both thelogic behind it and the ways by which senior managers cansteer their minds and their companies away from congestedred oceans,where competitive blood is in the water,tothose market spaces where the opportunities for profit areas limitless as the horizon.For the last several months,senior editors Leigh Buchananand Cardiner Morse and art director Karen Player haveworked with me on a new design for Forethought,the firstsection of HBR.Theyve done a wonderful job.Our purposehas been to focus more sharply on its mission-to surveyideas,trends,people,and practices on the business hori-zon.Youll still find the pointed conversations,managementinsights,and book reviews to which you are accustomed.Youll find also more emphasis on the fore in Forethought,as we work to provide you with early warning of ideas andresearch whose impact your business will feel in the future.10HARVARD BUSINESS REVIEWforethoughtA survey of ideas,trends,people,and practices on the business horizon.contributorsCharles M.Elson is the Edgar S.Woolordjr.,Chair in CorporateGovernance and the director of theJohn L.Weinberg Center for Corpo-rate Governance at the Universityof Delaware in Newark.Joe Labianca(joe_labiancabus.emory.edu)is an assistant profes-sor of organization and manage-ment at the Goizueta BusinessSchool of Emory University inAtlanta.Henry Petroski is the Aleksandar S.Vesic Professor of Civil Engineeringand a professor of history at DukeUniversity in Durham,North Car-olina.His most recent book is Push-ing the Limits:New Adventures inEngmeering(Knopf,2004).Amy Salzhauer()is founderand CEO of Ignition Ventures,aconsulting and new-venture creationfirm in Cambridge,Massachusetts,that specializes in commercializingbasic science research.Joan C.Williams(7 oonkV/Z/yworklifelaw.org)is a professor atAmerican Universitys WashingtonCollege