Morten Hansen on “How Great Leaders Make Their Own Luck”

Morten Hansen is a professor at University of California, Berkeley, and at INSEAD, France. He was previously a professor at Harvard Business School for a number of years. Prior to joining Harvard University, Hansen obtained his Ph.D. from the business school at Stanford University. In addition to his academic career, Hansen was a management consultant with the Boston Consulting Group in the London, Stockholm and San Francisco offices. He was part of the research teams for the international best-selling books Built to Last and Good to Great. Hansen’s research on collaboration has won several prestigious awards, including the best article awards from Sloan Management Review and Administrative Science Quarterly, the leading academic journal in the field. Several of his Harvard Business Review articles have been bestsellers for a number of years. He regularly consults with companies on collaboration and gives keynotes at leadership conferences. His new management book is Collaboration: How Leaders Avoid the Traps, Create Unity, and Reap Big Results (Harvard Business School Press, 2009) and, more recently, Great by Choice: Uncertainty, Chaos, and Luck–Why Some Thrive Despite Them All, co-authored with Jim Collins (HarperBusiness, 2011). A native of Norway, Hansen holds a Master’s degree in finance from London School of Economics, and a Ph.D. in Business Administration from Stanford University where he was a Fulbright scholar.

To watch an interview of Morten during which he shares his thoughts about “How Great Leaders Make Their Own Luck” please click here.

To read my interview of Morten and Jim Collins, please click here.

 

 

 

American Schools Are Still Ahead—Way Ahead

Vivek Wadhwa

Opinions are divided (sometimes sharply divided) as to the relative quality of precollegiate education in the United States. Vivek Wadhwa says America has an inferiority complex about its education system. He believes that America’s alarm about international rankings of students overlooks some critical components of our education system.

Here is an excerpt from his article written for Bloomberg Businessweek magazine online (January 12, 2011). To read the complete article, please click here.

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You hear the sirens every year, when the OECD Program for International Student Assessment (PISA) releases its annual test results. Finland, South Korea, and Singapore usually come out on top; we start blaming our K-12 teachers for not teaching enough mathematics and science; we begin worrying about the millions of engineers and scientists China and India graduate.

This year the big surprise was that Shanghai garnered first place in the PISA rankings. Then The Wall Street Journal ran a story on the home page of its website titled “Why Chinese Mothers Are Superior.” The Journal article [written by Amy Chua] claimed that Chinese (and Korean, Indian, etc.) parents raise “stereotypically successful kids”—math whizzes and music prodigies.

They do this by not allowing their children to attend sleepovers; have a playdate; be in a school play; complain about not being in a school play; watch TV or play computer games; choose their own extracurricular activities; get any grade less than an A; not be the No. 1 student in every subject except gym and drama. The article went on to recount as typical a series of acts that would be considered child abuse in the U.S. (and aren’t the norm in India and China).

The Journal article was simply bizarre, yet it is true that education in China and India is very challenging and fiercely competitive. Children are brought up to believe that education is everything, that it will make the difference between success and starvation. So from their early years they work long and hard. Most of their childhood is spent memorizing books on advanced subjects.

AMERICAN STEREOTYPES

Meanwhile, the perception is that American children live a relatively easy life and coast their way through school. They don’t do any more homework than they have to; they spend an extraordinary amount of time playing games, socializing on the Internet, text-messaging each other; they work part time to pay for their schooling and social habits. And they party. A lot. These stereotypes worry many Americans. They believe the American education system puts the country at a great disadvantage. But this is far from true.

The independence and social skills American children develop give them a huge advantage when they join the workforce. They learn to experiment, challenge norms, and take risks. They can think for themselves, and they can innovate. This is why America remains the world leader in innovation; why Chinese and Indians invest their life savings to send their children to expensive U.S. schools when they can. India and China are changing, and as the next generations of students become like American ones, they too are beginning to innovate. So far, their education systems have held them back.

My research team at Duke looked in depth at the engineering education of China and India. We documented that these countries now graduate four to seven times as many engineers as does the U.S.The quality of these engineers, however, is so poor that most are not fit to work as engineers; their system of rote learning handicaps those who do get jobs, so it takes two to three years for them to achieve the same productivity as fresh American graduates.As a result, significant proportions of China’s engineering graduates end up working on factory floors and Indian industry has to spend large sums of money retraining its employees. After four or five years in the workforce, Indians do become innovative and produce, overall, at the same quality as Americans, but they lose a valuable two to three years in their retraining.

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Vivek Wadhwa is a visiting scholar at University of California-Berkeley, senior research associate at Harvard Law School, and director of research at the Center for Entrepreneurship and Research Commercialization at Duke University. Follow him on twitter—@vwadhwa and check out his research by clicking here.

Profits are Booming. Why Aren’t Jobs?

Michael Powell responds to that question in an article that appears in The New York Times (January 11, 2011). If you wish to read the complete article and check out others, please click here.

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To gaze upon the world of American corporations is to see a sunny place of terrific profits and princely bonuses. American businesses reported that third-quarter profits in 2010 rose at an annual rate of $1.659 trillion, the steepest annual surge since officials began tracking such matters 60 years ago. It was the seventh consecutive quarter in which corporate profits climbed.

Staring at such balance sheets, you might almost forget that much of the nation lives under slate-gray fiscal skies, a place of 9.4 percent unemployment and record levels of foreclosures and indebtedness.

And therein lies the enduring mystery of this Great Recession and Not So Great Recovery: Why have corporate profits (and that market thermometer, the Dow) spiked even as 15 million Americans remain mired in unemployment, a number without precedent since the Great Depression? Employment tends to lag a touch behind profit growth, but history offers few parallels to what is happening today.

“Usually the business cycle is a rising-and-falling, all-boats-together phenomenon,” noted J. Bradford DeLong, an economics professor at the University of California, Berkeley, and a deputy assistant secretary for economic policy in the Clinton Treasury Department. “It’s quite a puzzle when you have this disjunction between profits on the one hand and unemployment.”

A search for answers leads in several directions. The bulls’ explanation, heard with more frequency these days, has the virtue of being straightforward: corporate profits are the economy’s pressure cooker, building and building toward an explosive burst that will lead to much hiring next year.

The December jobs numbers suggest that that moment has yet to arrive, as the nation added just 103,000 jobs, or less than the number needed to keep pace with population growth. The leisure industry and hospitals accounted for 83,000 jobs; large corporations added a tiny fraction.

Consumers appear to have put a toe or two back into the water, as holiday spending rose (although it fell short of analysts’ forecasts) and families began to replace the ailing refrigerator or the aging minivan. Car sales are rising.

But relatively few economists, even those who see signs of an improving economy, sound particularly buoyant, a concern shared by liberals and conservatives alike. Jobless recoveries followed on the heels of the last two recessions, but neither prefigured the depth of the trouble this time. After the 1990-91 recession, it took 23 months to add back the jobs lost. After the 2001 recession, it took 38 months. (And it’s worth keeping in mind that one of the great housing and credit bubbles in American history fed that hiring; no economist expects that to repeat itself).

At the current rate, the economy will need 72 to 90 months to recapture the jobs lost during the Great Recession. And that does not account for the five million jobs needed to keep pace with a growing population.

None of this has slowed the unprecedented rise in corporate profits. The reasons are many.

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Michael Powell is an economics reporter for The New York Times. To read several of his articles, please click here.