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Graduate Schools

Sustaining a “Delicate Experiment”

July-August 2010

Nitin Nohria

Nitin Nohria

Photograph by Stephanie Mitchell/Harvard News Office

Chapman professor of business administration Nitin Nohria was appointed dean of Harvard Business School (HBS) on May 4, 2010. Excerpts from his speeches and writings appear below:

 

 

The Business School—and Business Education—at an Inflection Point

Excerpts from Nitin Nohria’s remarks to the Harvard Business School community upon the announcement of his appointment as dean, May 4, 2010

 

As our beloved institution enters its second century, there is so much to look back upon and feel proud of. Yet, as we look ahead, we have to work hard to sustain what has so aptly been called a “delicate experiment,” because HBS is and will always remain a work in process, sustained by our collective willingness to keep looking forward and remaining open to change. I believe that for HBS, the coming century can be the century of innovation.

During the search, one of the things President Faust heard most frequently is that Harvard Business School is at an inflection point. As business itself has lost society’s trust, so has business education. People are no longer sure we are educating leaders who have the requisite competence and character to fulfill the responsibilities that come with their positions of power and privilege. From my childhood, the example of my father, who managed a large company in India, led me to believe that business is a vital societal resource, that it plays an essential role in contributing to the prosperity of any society.

Now more than ever the world needs business leaders who can build great companies, generate new jobs, produce valued goods and services, stimulate innovation, and tackle common social challenges like healthcare, education, environmental sustainability, poverty, and peace and security. Just as we educated leaders who contributed so much in the last hundred years, we must educate leaders who will contribute greatly to humanity’s prosperity in the next hundred years.

Sustaining our mission of educating leaders who make a difference in the world will require building on many elements of what we do so distinctively. We will also need to identify areas that require change and where we must build new capabilities. I look forward to working with all of you to develop a shared vision and agenda that can guide us. Allow me, however, to take this occasion to pose some initial questions that I hope we can consider.

In what ways must we innovate so that we can remain the pioneers in business education worldwide? How can we think in fresh ways in our educational programs; in our research and its impact on practice; in our convening and publishing activities; and in our amazing library and physical and technological infrastructure? We must ask of ourselves, as we would ask of any of the organizations we study, what are the opportunities to embrace innovation in all that we do?

Beyond that, how can we become the model of an inclusive community, where everyone feels valued, where everyone learns, where everyone feels the opportunity to succeed, and everyone is committed to each other’s success? How can we draw strength from our differences and discover the commonalities that cut across them?

Next, in a world that is rapidly becoming more global, how can we best expand our international reach? How can we best bring the world to HBS? How can we best bring HBS to the world?

And as we look within the school, across the university, and out on the world, what will enable us to build integrative bridges across existing boundaries? How can we work across units, across disciplines, and across different parts of Harvard? How can we best take advantage of each other to do more than any one of us could do alone?

These are simply some initial questions to stimulate our thinking. Pursuing answers that draw on our distinctive identity and strength – and framing further, deeper questions that call forth our creativity and common purpose – will be our shared pursuit in the days and months ahead. I am looking forward to engaging with all of you, to learning from each of your unique perspectives. Our school has no greater strength than the extraordinary quality of the people it draws together. Let’s be inspired by each other’s ideas. Let’s each be catalysts for the thoughtful, imaginative change we want to bring about at the school whose vitality is entrusted to our care.

One of my dearest friends and mentors, Sumantra Ghoshal, who died too young, had this wonderful metaphor he called “the smell of the place.” He had grown up in Calcutta, and went back there every summer to spend time with his parents. Sumantra had boundless energy. Yet, when he went to Calcutta in the middle of the summer, he felt like the smell of the place just sucked all the energy out of him. Temperatures often exceed 100 degrees, and the humidity often approaches 100 percent. The air is so thick, you feel like you are in a steam bath. As hard as he tried, he just couldn’t find the energy to be his usual self. He felt listless and tired. He would contrast that experience with the smell of the place along the Charles River in the fall, or in Fontainebleau forest near INSEAD in the spring, where he went to teach after he left Boston. The temperature is perfect, the air feels crisp; everything feels vibrant and alive. It is hard not to feel a lift in your step, not to reach out and pluck a leaf from a tree.

Sumantra used this metaphor to exhort people he taught to change the smell of their place—to make sure that the smell of their own organizations was more like it is along the banks of the Charles in the fall or Fontainebleau Forest in the spring, rather than downtown Calcutta in the summer, because one energizes and the other enervates.

Since we have the advantage of sitting on the banks of the Charles River, let’s dedicate ourselves to creating a place where the smell of the place energizes and inspires us all each day—a place, as my colleague Linda Hill would say, to which we all want to belong, and all feel we do belong. Inspiration comes when you feel you are a part of something special, something bigger than yourself, something that makes a difference in our own lives and allows us to make a difference in the world.

Let’s work together to forge a vision for Harvard Business School to assure it will be a beacon for business education for the next hundred years. Let’s work together to usher in a new century of innovation at Harvard Business School, challenging ourselves to contribute to a more enlightened and prosperous world.

I feel a tremendous sense of excitement and anticipation as we embark on this journey together. Thank you for all that you already do. And thank you in advance for the work I know you will do to make this wonderful institution even better.

Read the full text of the speech.


 

 

"An Incredible Capacity" to Deny Obvious, Inexorable Trends

From Changing Fortunes: Remaking the Industrial Corporation, by Nitin Nohria, Davis Dyer, and Frederick Dalzell (Wiley, 2002). [From Chapter 9, “The Industrial Corporation in a Post-Industrial Age]

 

As inexorable and relentless as these trends—slowdown in demand, combined with continuing gains in productivity—appear to be, the history of change during the last several decades reveals an incredible capacity on the part of executives to deny them. They postpone cost cutting, consolidating, and downsizing until they have no choice. They try to diversify themselves out of their troubles, only to find themselves in new businesses that they barely understand. In due course, most of these new acquisitions are divested as well.

Eventually, most industrial executives recognize necessity and acknowledge that during periods of decline, the invisible hand of markets gains the upper hand over the visible hand of management. Rather than fight market forces to protect organizational forms that are the legacy of long periods of growth, executives must embrace market forces and be willing to transform their organizations. The transformation must occur along multiple dimensions. Rather than craft strategies that enable revenue growth, executives must focus on strategies that cut costs and increase productivity. Rather than build ever more elaborate hierarchical multidivisional structures, they must constantly downsize and create flatter, more permeable, network-like structures. Rather than rely on centralized control systems, they must depend on distributed information systems. Rather than build long-term bonds of loyalty between the company and its employees, they must forge relationships that enable mutual flexibility. In short, executives must be willing to dismantle the M-Form organization that was ideally suited to achieve growth through the visible hand of management and replace it with an N-Form organization that is more open to market forces and better suited to increasing productivity.

The earlier a company recognized and dealt with the imperative to change, the better its choices about its future. The contrasting tales of GE and Westinghouse with which we started this book illustrate this point vividly. Under Jack Welch, GE confronted this necessity early and entered the twenty-first century as one of America’s most valued and vibrant organizations. Westinghouse denied necessity until the 1990s and eventually lost its very identity. A part of Westinghouse may have a promising future as Viacom, but the now-scattered core businesses are casualties of the era of transformation, just as the small family farm all but disappeared in the transition from an agrarian to an industrial economy.

The pattern just observed—of sequential stages of denial, grudging acceptance, then determined (perhaps forced) acceptance and action—is characteristic in contexts of long waves of decline. Although the relative decline of industrial output began in the United States as early as the mid-1950s, it was consciously recognized only after the oil shocks of the 1970s. Moreover, as salient as this decline became during the last quarter century, it is important to recognize that it is not over.…

There may also be a lesson here for the pioneers of the post-industrial economy—the providers of IT hardware and software, telecommunications, pharmaceuticals, financial services, and retail stores. They may soon approach precisely the same point that industrial corporations reached during the 1950s—at their peak, unaware of their imminent decline. They too may soon have to confront the necessity of contraction, of making choices as they slowly, yet inevitably give way to the next economy—whatever that might be.

 

 

 

"When Does Leadership Matter?"

From Handbook of Leadership Theory and Practice: An HBS Centennial Colloquium on Advancing Leadership, edited by Nitin Nohria and Rakesh Khurana (Harvard Business Press, 2010). [From Chapter 1, “Advancing Leadership Theory and Practice,” by Nitin Nohria and Rakesh Khurana]

 

This edited volume has one primary purpose—to stimulate serious scholarly research on leadership. At a time when societies around the world are crying out for more and better leadership, when our current leaders (especially in business, but also in government and other spheres of public life) have lost legitimacy, questions are being asked, sometimes angrily, of the institutions that school these leaders: What kinds of leaders are these institutions developing that have caused so much hardship for so many? Are these institutions developing leaders who have the competence and character necessary to lead the web of complex institutions that have become so vital to the collective health of modern societies? What is the vision or model of leadership that animates the curriculum and developmental models in these institutions? If there is such a model, does it need to be revisited, reexamined, and revised in light of the widespread failures in leadership? Do we really understand what it takes to develop better leaders? What advice can scholars give leaders who are entrusted with the challenges of leading organizations and ensuring their continued viability and prosperity?

[From Chapter 2, “When Does Leadership Matter?” by Noam Wasserman, Bharat Anand, and Nitin Nohria]

Does it matter who the CEO of a firm is? This simple question has received rather different answers in the literature on leadership. “Conventional” management theorists, to use Thomas’s (1988) term, posit that CEOs can have a significant influence on the performance of their companies. From their perch at the top of an organization, CEOs are able to actively direct which opportunities the firm will pursue (Barnard, 1938), and in turn shape the firm’s strategy, structure, and culture. In contrast, more recently, other scholars—notably organizational ecology researchers—have argued that CEOs are so constrained by their environments that they have little ability to affect company performance. For instance, a company’s culture, the structure of its industry, and its fixed assets are all inertial forces that reduce the CEO’s ability to take actions that will impact the company (Hannan and Freeman, 1989).

This paper presents a “contingent opportunities” view of leadership that reconciles these divergent views and tests the resulting predictions in a large sample. The core difference in approach is that rather than frame the question of CEO impact in black-and-white terms (“Does leadership matter?”) we ask instead “When does leadership matter?”

 

 

 

"Contextual Intelligence" Matters

From In Their Time: The Greatest Business Leaders of the Twentieth Century, by Anthony J. Mayo and Nitin Nohria (Harvard Business School Press, 2005). pages 354–359 [From the Epilogue; the authors offered these key factors, plus explanatory narrative accompanying each, omitted here.]

 

As we analyzed the interaction between context and great business executives over the course of the twentieth century, a number of key lessons emerged.

  1. Context matters—moving beyond the “great man” theory
  2. Different paths to greatness
  3. Great leadership is a function of context plus personal characteristics plus adaptive capacity
  4. Betting on the right person for the right time
  5. Betting on the right company at the right time
  6. The importance of business history
  7. Enhancing your contextual intelligence, becoming a “first-class noticer”

 

 

 

Management as a Profession: An Ambition Unrealized

From “It’s Time to Make Management a True Profession,” by Rakesh Khurana and Nitin Nohria, Harvard Business Review (October 2008).

 

Managers have lost legitimacy over the past decade in the face of a widespread institutional breakdown of trust and self-policing in business. To regain society’s trust, we believe that business leaders must embrace a way of looking at their role that goes beyond their responsibility to the shareholder to include a civic and personal commitment to their duty as institutional custodians. In other words, it is time that management finally became a profession.

True professions have codes of conduct, and the meaning and consequences of those codes are taught as part of the formal education of their members. A governing body, composed of respected members of the profession, oversees members’ compliance. Through these codes, professional institutions forge an implicit social contract with other members of society: Trust us to control and exercise jurisdiction over this important occupational category. In return, the profession promises, we will ensure that our members are worthy of your trust—that they will not only be competent to perform the tasks they have been entrusted with, but they will conduct themselves with high standards and integrity. On balance we believe that a profession, with well-functioning institutions of discipline, will curb misconduct because moral behavior is an integral part of the identity of professionals—a self-image most are motivated to maintain.

The idea of management as a profession is not new. It was launched in the United States with great hope a century ago with the founding of the nation’s university-based business schools. A vanguard of institutional entrepreneurs, both academics and enlightened business leaders, saw the rise of the large corporation as a profound challenge to the existing social order. When large corporations began to sell shares of their stock to the public, thereby dispersing ownership and control, myriad stakeholders (shareholders, labor groups, government officials) all proclaimed the right to direct these powerful new entities.

The business school, in turn, was conceived as a way of legitimating another claimant’s right to control the publicly owned corporation: a new group known as managers. The strategy for advancing management’s claim was to ally the leaders of the business school movement with three institutions viewed as the pillars of the Progressive Era: science, the professions, and the new American research university. The leaders of the business school movement proposed to ensure that the large corporation would be run in the interests of society by turning the occupation of management into a bona fide profession, with the educational underpinning, certifications, and code of conduct that go along with it.

That ambition has so far gone unrealized. The claim that managers are professionals does not withstand scrutiny when you compare management with true professions such as medicine and law. Unlike doctors and lawyers, managers don’t need a formal education, let alone a license, to practice. Nor do they adhere to a universal and enforceable code of conduct. Individual companies may write and enforce corporate codes or value statements, but there’s no universally accepted set of professional values backed up by a governing body with the power to censure managers who deviate from the code.

In principle, there’s no reason why management couldn’t strive to become a profession. The institutional arrangements are known and easy enough to put in place. What’s more difficult is determining whether to push in that direction. Would formalizing management education make individual managers more effective? More generally, how would creating a professional pool of consistently trained managers affect the entrepreneurial activity that drives economic growth? Could we reach a consensus on a set of common standards that would be plausibly enforceable? Would having such a code have any impact on behavior? In the following pages we explore the differences between management and the true professions, describe how a professional management system might work, and examine whether such a system would be desirable.

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