Ahead of the Curve: Two Years at Harvard Business School by Philip Delves Broughton

Author:Philip Delves Broughton [Broughton, Philip Delves]
Language: eng
Format: epub, pdf
ISBN: 9780143115434
Amazon: 014311543X
Publisher: Penguin Books
Published: 2009-06-29T04:00:00+00:00

Chapter Ten

ETHICAL JIHADISTS

Business is the activity of making things to sell at a profit—decently.

—EDWIN GAY,

SECOND DEAN OF

HARVARD BUSINESS SCHOOL

espite the onslaught of recruitment, there was still a course of academic study

to pursue. Besides more finance, the second semester would introduce us to

D strategy, negotiations, entrepreneurship macroeconomics, and business

ethics. Strategy was taught by a Swiss professor, Felix Oberholzer-Gee. He looked like

the quintessential academic, with round glasses, hair brushed forward, and an

absentminded gaze when he walked across campus. But he had spent five years in the

injection-molding business in Switzerland and then another five in the economics

department of an investment bank. He brought a wry worldliness to the classroom

and quickly became a favorite of the section.

Harvard prided itself on its strategy department, not least because it was the core

of the general management program. Establishing and executing a strategy was

precisely what a general manager did. We were not being trained to be excellent

financiers or operations managers but rather good generals. We were learning how to

marshal disparate forces and resources to pursue the goals of creating and capturing as

much value as possible. Strategy was not about filing the right accounts or making

sure the machinery worked. It dealt with the big picture: building and managing a

business to make superior returns over the long term.

The first thing to understand about strategy, we learned, is that it is not

operational efficiency. You could run the best laundry in the world, but if what you

were doing was quite simple and thousands of others could do it, you were not going

to make any money. You lacked, as Felix liked to say, “a great strategy.” A beautifully

run restaurant with the greatest chef in the world could be an economic disaster,

while owning a few grubby fast-food franchises could make you a millionaire. Being

very good at doing something was absolutely no guarantee of financial success. I

recalled Steenburgh in marketing telling us, “A good product alone won’t get you

there.” So the first challenge for the strategist was picking the right thing to do.

Designed by Trung Pham Tuan -

124

- http://phamtuantrung.tk

What They Teach You at Harvard Business School

Felix showed us a graph of the distribution of returns on equity of major American

companies over the past twenty years. Most returned between 10 and 15 percent a

year. But a few had returns on equity over 20 percent. What were they doing that

enabled them to do this? The most profitable companies year after year tended to be

in a few sectors: pharmaceuticals, high-technology, financial services, discount

department stores, and oil. The worst major industry to be in was airlines. There were

exceptions, such as Southwest, which had done phenomenally well. But even

Southwest, we had to assume, would eventually struggle to escape the broader trends

of its industry. Picking the right industry, one with a sound structure, where your

chances of making a profit were highest, was where good strategy began.

In 1980, a Harvard Business School professor called Michael Porter published an

article, “What Is Strategy?,” that laid out the five forces he believed determined a

company’s ability to capture value. They are: barriers to entry, supplier power,

customer power, substitutes, and rivalry.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.