Big Think Interview With Joe Bower | Big Think

Big Think Interview With Joe Bower

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A conversation with the Harvard Business School professor.

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Joe Bower:

Joe Bower is the Baker Foundation Professor of Business Administration at Harvard Business School. He is an expert on corporate strategy, organization, and leadership, and has devoted much of his teaching and research to challenges confronting corporate leaders in today’s rapidly changing hyper-competitive conditions. His forthcoming book, with H.L. Leonard and L. S. Paine is called "The Future of Market Capitalism."

Professor Bower has also been active in the development of various institutions and programs. Between 1968 and 1973 he helped establish the International Institute for Applied Systems Analysis in Vienna, Austria. In 1978, he founded the Program for Senior Managers in Government at Harvard’s JFK School of Government; and in 1995 he founded the General Manager Program at Harvard Business School. Currently he is helping to build the new joint MBA-MPP degree program offered by the Business School and the Kennedy School of Government.

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TRANSCRIPT:

Question: Why are "inside outsiders" the key to succession planning?

Joe Bower: In academia, in the beginning of the late ‘80’s and then into the ‘90’s, there was this idea being sold, particularly by organization economists that basically you could break up big firms and create more value because the corporate offices of these things was only overhead. And that seemed wrong because actually if you were – if you believed in markets, you looked around the world and you saw an awful lot of big multi-business firms and they were prospering. So, I thought I would spend some time exploring what I called corporate value added. And I did that and all of a sudden it occurred to me that one of the things that was most closely associated with the creation of real value and sustained over long periods of time was management of succession. And as soon as you say it, it’s pretty obvious that if you can continue to have good leadership, that’s going to be very important to a company, or to a nation for that matter. When we study history, we see the same thing.

So, I did begin to explore and I studied CEO succession and that led to the book, because that’s the way academics communicate once they’ve got a body of knowledge.

Question: What's in it for a current CEO to think about his or her successor?

Joe Bower: Well, one of the critical findings was that the way you manage succession is basically the way you manage the company and companies that have problems with succession usually also begin to have problems with their business. The two tend to go together. Companies that are able to manage succession well have been investing in the development of leaders of their people at the same time that they’re developing businesses. In any significant period of time, like several years—5, 10, it’s very, very hard to have a successful business without having great people running it. This is a tough world that we live in today, lots of competition. So, that emerged very clearly as one finding, and then there are lots of elements, which we can talk about if you want as to what it means to manage a company.

Question: How can boards evaluate candidates to succeed a CEO?

Joe Bower: Management succession begins with who you’re recruiting, how you bring them on board in the company, the career paths that are available for them, the training they get, the mentoring they get, the way in which they are developed. So, a critical question that comes up all the time is: "We have a critical job that’s opening up that needs to be dealt with. Who do we put in?" In the world you just described, the simplest thing is to find the person who can probably do the best job and put him or her in at that point. But that’s not what you really want to do. You really also want to say, who has a good crack at doing that job, but would really grow because they had done it? And that’s the story that is often used on this point is that of the career of Jeff Immelt. He was brought in to turn around the home appliance business during a period of a big recall, and it was a nightmare, but he often says in discussing this that he’d never be the CEO of GE had he not had that really tough particular experience.

Question: What is an "inside outsider?"

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