Friday, February 17, 2012

Companies without managers?

Can we have companies without managers, including top management? Sounds unthinkable. But one such company, Morning Star, is the subject of a cover story by Gary Hamel in a recent issue of HBR. The idea is not as crazy as it sounds. There has been a general movement toward flatter companies. Morning Star carries the process to its logical extreme. We have very flat organisations in academia; investment banks have a few layers; manufacturing tends to be more layered. Morning Star is a manufacturing company that has abolished layers. The company works entirely through self-directed mission statements and objectives and peer reviews.And it has delivered performance for several years now.

Can we extend this to larger organisations? Will it work for complex operations such as aircraft manufacturing? Hamel answers in the affirmative. My point would be that it is not necessary to replicate Morning Star in full. It is the underlying principle that is important: abandon the notion that decision-making is the privilege of a few at the top and involve more people in decision-making. A Brazilian firm, Semco, has done that. It does have managers but the managers are evaluated by their subordinates!

I have long wondered how it is that while  more and more societies have tended to embrace democracy, the most democratic societies have corporations where a few people call the shots. Is there anything more to it that managerial vested interest?

More in my ET column, Managing without managers.

Thursday, February 02, 2012

America's universities turn to the market

In a recent book, Creating the Market University, Elizabeth Popp Berman argues that America's universities have move towards creating new products themselves instead of merely producing knowledge that helps create products. The move towards the market, she contends, is driven, not by the need for funds or even by ideology, but by the shared interest among university and political leaders to retain America's edge in innovation.

I read the book with interest but find that the case is not fully made. It does appear that there is more applied research than before. This helps augment university finances and it makes faculty richer, so it's win-win for both. But I doubt that this involves any shift in focus from theoretical to applied research- the book does not document such a shift with figures.

My guess is that younger faculty, on their way to tenure, would still be resolutely focused on publications. More senior faculty, with their reputations to back them, would get into commercial ventures. In other words, tenured faculty may have found new and more lucrative ways of making money but this would not compromise the universities' basic mission of producing knowledge.

More in my ET column, Universities as growth engines.

Wednesday, February 01, 2012

Larry Summers on remaking higher education

Very little has changed in the pedagogy or contents of higher education for decades or even centuries. It's still the teacher facing students and trying to impart something. Larry Summers, former president of Harvard (among other things), proposes ways in which this might change. Here is a summary:

1. Education will be more about how to process and use information and less about imparting it.

2. An inevitable consequence of the knowledge explosion is that tasks will be carried out with far more collaboration.
3. New technologies will profoundly alter the way knowledge is conveyed.

 4. More focus on active learning compared to passive learning.

5. Mastering  a foreign language  will be less important (for American students) since English is becoming more widely used.

6. Greater focus on data analysis.

(Thanks to colleague Shailendra Mehta for sending me the link).

Ex- RBS chief loses knighthood

You could call it British PM David Cameron's concession to populism. Former RBS chief Fred Goodwin is to be stripped of his knighthood on account of the losses inflicted on it towards the end of his tenure. FT reports:

The man knighted in 2004 for his “services to banking” presided over a breakneck acquisition spree that ultimately led to the collapse of RBS in 2008; he then courted further controversy by initially refusing to give back any of his £16.9m pension pot.....his tenure ended with RBS recording a loss of £24bn – the largest in British corporate history – and being forced into the world’s biggest bank bail-out, with the injection of £45bn of government equity.
 Goodwin has not been convicted for any wrongdoing nor has he invited any regulatory action. But he has become something of a lightning rod for anger against bankers, not least because of his failure to express any sort of regret in public. 
Is the anger against bankers itself overdone? Schumpeter hints this might be so and points to the good things one associates with bankers:
Great financial centres have often been great artistic centres—from Florence in the Renaissance to Amsterdam in the 17th century to London and New York today. Countries that have chased away the moneylenders have been artistic deserts. Where would New York’s SoHo be without Wall Street? Or the great American universities without the flow of gold into their coffers?
 Well, yes. But the man in the street does think that there is something wrong with bankers wrecking the world economy and walking away with huge bonuses. Banking needs drastic changes. If demonising bankers is the only way to get them to embrace change, it's hard to complain about the current rage against the likes of Goodwin.