Most chief executives think of themselves as rational. Certainly, in the world of closely scrutinised listed companies, it would be unwise for corporate leaders to project any other image.
But, as Manfred Kets de Vries of Insead business school puts it in a new working paper, written with colleague Alicia Cheak, “our everyday lives consist of webs of constantly shifting and irrational forces that underlie seemingly ‘rational’ behaviours and choices – and life in organisations is no exception”. To lead successfully, he suggests, requires a “psychodynamic approach” that seeks to understand the hidden factors motivating teams. Read more
Managers are notorious for prioritising short-term demands when they clash with long-term goals. Research in the US has shown that most executives would shy away from a value-enhancing long-term project if it caused them to miss a quarterly earnings forecast.
How companies can manage such clashes was the subject of a “Strategy Live” debate organised by the Financial Times in London this morning. Chaired by management editor Andrew Hill, the session featured senior figures from finance and industry, who spoke on a non-attributable basis under the Chatham House rule.
Participants used the example of Barclays to launch a broader debate, examining its controversial decision to increase bonuses to its investment bankers even as it – seemingly paradoxically – tried to move to a less abrasive, more long-termist culture. Read more
When Ellen Kullman, chief executive of DuPont, asked a contract worker on the production line making Kevlar, the fibre used in bulletproof vests, what he was doing, she got an unexpected response: “We’re saving lives.”
In the dreary annals of presentations about corporate values, ABN Amro chairman Gerrit Zalm’s recent performance for the bank’s annual cabaret as his brothel-keeping “sister” Priscilla will take some beating.
There is one question I’ve been struggling to figure out about Sir Alex Ferguson’s decision to release his second memoir: why now? Of course, he has retired but for a manager renowned for protecting his players in public while berating them in the sanctity of the dressing room, publicly naming and shaming some of the club legends has generated lots of unflattering headlines.
Sir Alex certainly wants his legacy as a leader and manager to be recognised; his methods were recently the subject of a Harvard Business Review case study.
But another reason is hinted at in one of the most revealing quotes from the book, on the loneliness of being a manager: “In management you are fragile, sometimes. You wonder whether you are valued”. Read more
I recently spent time sifting strategic plans for seven non-profit organisations, drawn up by teams of MBA students for an FT competition, the winner of which will be announced this week.
To tour the Burberry flagship store on London’s Regent Street – with its beautifully stacked clothes, its “magic mirrors” that illuminate with runway images, its signs in Arabic for Gulf tourists and its “VVIP” room on the top floor – is to enter as sweet a world as Willy Wonka’s chocolate factory.
Silvio Berlusconi and Jack Ma do not have much in common. The 77-year-old Italian politician is at the end of his leadership path; at 49, the Chinese founder of ecommerce group Alibaba may be barely halfway along it.
Tim Armstrong, chief executive of AOL, has apologised for firing Abel Lenz, creative director at the company’s Patch, in front of 1,000 co-workers.
It comes on the heels of a leaked recording that was published by Business Insider, in which Mr Armstrong is heard dismissing Mr Lenz in strong terms followed by an awkward silence. The recording went viral. Read more
My local football club recently told fans about a candidate for the vacant post of manager. “Although I am 15 years of age, and lack much coaching experience,” his email read, “I am very skilled at the computer game, Football Manager . . . ”
“National interests in the sphere of strategic-level business have all but disappeared,” claims a senior executive of EADS in a new book. But the opinion of Lutz Bertling, chief executive of the group’s Eurocopter subsidiary, is now being tested in battle, as national governments wrangle over what a merger between EADS and BAE Systems would look like.
To be fair, the German executive’s chapter – “Commercial Top Strategic Leadership: A Helicopter View” – was written before the EADS-BAE talks became public. But the question of how Mr Bertling’s personal views might apply to the aerospace and defence merger was raised at Thursday’s launch of In Business and Battle, a “cross-cultural, cross-sectoral and international” anthology of insights into strategic military and civilian leadership. The discussion at London’s Royal College of Defence Studies – where Mr Bertling first presented his ideas – was non-attributable. But as one of the distinguished guests said: “Consolidation is right, but whether this is the particular merger that should be backed is still open to some debate.” Read more
In the annals of odd academic tasks, trawling through nearly six decades of obituaries for chief executives ranks highly. But, in doing so, Timothy Quigley of Lehigh University has disinterred interesting evidence that the all-powerful CEO is alive and well.
For a paper to be presented to next month’s Academy of Management annual meeting in Boston, Prof Quigley looked at the market’s response to 193 sudden CEO deaths (with causes from plane crash to cerebral haemorrhage) between 1950 and 2009. The magnitude of investors’ reaction, whether negative or positive, was greater in recent years than in the early part of the period. In fact, the share price rise (or fall) for deaths announced between 1990 and 2009 was more than double the reaction in the 1950s and 1960s. Read more
General Electric’s thinking on leadership has shifted, according to an article in Wednesday’s Wall Street Journal: from breadth to depth. The WSJ writes:
[GE] for decades had made a rigorously applied but generic management tool kit central to its identity. Like all companies, GE wants some of both traits in its leaders, but the balance has tipped toward expertise.
I’m doubtful that the shift is quite as earth-shaking as the WSJ implies. Expertise is one of several attributes GE has long sought in its leaders, along with External Focus, Clear Thinking, Imagination & Courage, and Inclusiveness. In his 2010 letter to shareholders, chief executive Jeff Immelt added some new ones – including the eccentric-sounding goal that its leaders should be “humble listeners”. It already adds up to a pretty demanding checklist, as I wrote at the time. Read more
Ricky Ponting has resigned as captain of the Australian national cricket team, but he intends to stay on as a player. If he were chief executive of a business, however talented, he would never try to pick up the threads of his earlier career as, say, a top salesman. Why not?
Ponting, 36, was the most successful international cricket captain ever, but he was widely perceived to have failed recently. His team just lost to India in the quarter-finals of the World Cup. Yet as a batsman, Ponting still has plenty left to offer. Indeed, the World Cup quarter-final saw him return to form, scoring a typically brave century. As he told the press in relinquishing the leadership:
Now that I won’t have all the extra responsibility of the captaincy, I think I can turn myself into a better player than I’ve shown in the last six months.
When it comes to his annual letter to General Electric’s shareowners, Jeff Immelt is no Warren Buffett. Not for him the jokey anecdotes and fables preferred by the Omaha billionaire in his own yearly communication. But the GE letter is still worth a read, if only because of the industrial group’s status as a training ground for future chief executives of global companies. Read more