The philosophy of a management guru - The responsible manager


BY C .K . PRAHALAD

The global financial crisis of the past two years has triggered an unprecedented debate about managers' roles. While discussions about managerial performance, CEO pay, and the role of boards have been fierce, scant attention has been paid to managers' responsibilities.

For the past 33 years, I have ended all my MBA and executive education courses by sharing with participants my perspective on how they can be- come responsible managers. I ac- knowledge that they will be successful in terms of income, social status, and influence, but caution that managers must remember that they are the cus- todians of society's most powerful in- stitutions. They must therefore hold themselves to a higher standard. Man- agers must strive to achieve success with responsibility.

My remarks are intended to serve as a spur for people to re-examine their values before they plunge into their daily work routines.

Take a minute to study them: · Understand the importance of nonconformity. Leadership is about change, hope, and the future. Leaders have to venture into uncharted territo- ry, so they must be able to handle in- tellectual solitude and ambiguity.

· Display a commitment to learning and developing yourself. Leaders must invest in themselves. If you aren't edu- cated, you can't help the uneducated; if you are sick, you can't minister to the sick; if you are poor, you can't help the poor.

· Develop the ability to put personal performance in perspective. Over a long career, you will experience both success and failure. Humility in suc- cess and courage in failure are hall- marks of a good leader.

· Be ready to invest in developing other people. Be unstinting in helping your colleagues realize their full po- tential.

· Learn to relate to those who are less fortunate. Good leaders are inclu- sive, even though that isn't easy.

Most societies have dealt with dif- ferences by avoiding or eliminating them; few assimilate those who aren't like them.

· Be concerned about due process.
People seek fairness--not favors. They want to be heard. They often don't even mind if decisions don't go their way as long as the process is fair and transparent.

· Realize the importance of loyalty to organization, profession, communi- ty, society, and, above all, family. Most of our achievements would be impos- sible without our families' support.

· Assume responsibility for out- comes as well as for the processes and people you work with. How you achieve results will shape the kind of person you become.

· Remember that you are partof a very privileged few. That's your strength, but it's also a cross you carry. Balance achievement with com- passion and learning with under- standing.

· Expect to be judged by what you do and how well you do it--not by what you say you want to do. Howev- er, the bias toward action must be bal- anced by empathy and caring for oth- er people.

· Be conscious of the part you play.
Be concerned about the problems of the poor and the disabled, accept hu- man weaknesses, laugh at your- self--and avoid the temptation to play God. Leadership is about self-aware- ness, recognizing your failings, and developing modesty, humility, and humanity.

Every year, I revisit my notes about the responsible manager, which I first jotted down in 1977. The world has changed a lot since then, but I haven't found it necessary to change a word of my lecture. Indeed, the message is more relevant today than ever.

Extracted from Harvard Business Review, January 2010


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Best practices get you only so far

BY C .K . PRAHALAD



Companies identify best practices, particularly those of market lead- t ers, and try to implement them. Such benchmarking has a role to play in business, but I'm not exactly a fan of the process. It may allow enterprises to catch up with competitors, but it won't turn them into market leaders.
Organizations become winners by spotting big opportunities and invent- ing next practices--as I've pointed out to CEOs for over two decades now.
Next practices are all about innova- tion: imagining what the future will look like; identifying the mega-op- portunities that will arise; and build- ing capabilities to capitalize on them.
Apple's Steve Jobs and Tata Motors' Ratan Tata do just that.

Most executives believe it's tough to identify breakthrough opportuni- ties. However, several are pretty obvi- ous; Peter Drucker once said that the best opportunities are “visible, but not seen.“ I help executives unearth opportunities by focusing them on big problems that their companies will benefit from by tackling. They must ask six questions: · Is the problem widely recognized?

· Does it affect other industries?

· Are radical innovations needed to tackle the problem?

· Can tackling it change the indus- try's economics?

· Will addressing this issue give us a fresh source of competitive advan- tage?

· Would tackling this problem cre- ate a big opportunity for us?

Inclusive development is an obvi- ous mega-opportunity by this (or any) yardstick. About 4 billion people on three continents are trying to join the organized economy. By focusing on low-income consumers in China, India, and elsewhere, smart compa- nies have come up with inexpensive products and services such as $2,000 cars, $100 laptops, $30 cataract sur- gery procedures, $20 hotel rooms, and cell phone calls that cost $0.002 per minute.

Sometimes, the sheer size of the market for an innovation creates fresh capabilities. For instance, an unprecedented 5 billion people will be using cell phones by 2015, and ubiquitous mobile connectivity is transforming industries such as financial services, retailing, media, ed- ucation, and health care. It has fos- tered the development of mobile ap- plications--such as financial transac- tions that can be executed by text messaging and remote diagnostics in developing countries. Not surprisingly, multinational gi- ants are rethinking their geographic focus. Unilever and Procter & Gam- ble, for instance, each project that by 2020, poor people in the developing world may account for around 50% of their global revenues. The focus on microconsumers and microproducers is forcing companies to confront the link between inclusive growth and sustainability. If the plan- et is in peril because of an industrial system that has served some 1.5 bil- lion people for two centuries, adding 4 billion consumers and producers will place unsustainable stresses on it in the future. Sustainable develop- ment is therefore another mega-op- portunity.

Sadly, many companies fail to “see“ these “visible“ opportunities. They view inclusive development as a cor- porate social responsibility--not as a path to growth. They don't try to use connectivity as an enabler of new business models or as infrastructure for engaging people in collective in- novation. And they insist on treating sustainability as a problem rather than an opportunity to innovate.

If you look for ways to develop next practices, opportunities abound. In fact, executives are constrained not by resources but by their imagination.

Extracted from Harvard Business Review, April 2010 Allcontentonthispagehasbeen providedbyHarvardBusinessPublishing www.hbr.org