UCLA Anderson School of Management Blog

Ogilvy & Mather's Shelly Lazurus on Leadership: "It's Not What You Say, It's What You're Willing to Enforce"

 

Ogilby & Mather's Chairman Shelly Lazarus recently joined UCLA Anderson Dean Judy Olian for a Dean's Distinguished Speaker series appearance. In the appearance, she spoke on a number of different qualities of great leaders. In the clip above, Lazarus talks about settling on a particular strategy, then sticking to it with conviction.

"Great leaders know they must pick a strategy and insist that everyone follow it. Which stratefy you follow is far less important than following it with complete conviction and consistency. 

"This was a new insight for me. I learned it from Lou Gerstner, who dragged IBM from the precipice of extinction as their CEO in the 90s. But I first met Lou when he was at American Express. One night after a long day spent launching a cause-related marketing campaign ... and, yes, American Express did invent cause-related marekting. A lot of people take credit for it, but it was American Express, I was there ... We were in yet another ballroom. This time in Miami. It was about ten o'clock at night and I was still searching for truth. I thought there was a right answer.

"How many think there is a right strategy? That you just have to keep looking at it, dissecting it, analyzing it and eventually you'll find the right strategy. Well, here was Lou, the brilliant strategist, who used to be the president of McKinsey. He's the strategy king.

"He said in this late night conversation, 'You can always make the case for two or three different strategies. There are some,' he said, 'that are just wrong. Those are easy to eliminate. But there are usually two or three that are valid. The important thing is to pick one with some dispatch and follow it vigorously. Which one you pick is much less important than consistency in carrying it out. You must take responsibility for deciding direction and then insist that everyone stick to it.' But please notice that I said 'insist.' This is not a polite suggestion from the leader. This is a 'we will in fact adhere to the strategy, conviction, strength, don't blink.'

"To quote David Maister, a former professor at Harvard Business School, 'It's not what you say as a leader that's important. It's what you are willing to enforce.' There's an interesting idea. It''s not what you say, it's what you're willing to enforce. A great leader knows how to use this and, believe me, everyone in an organization knows what the leader is going to enforce. They know what the fireable offenses are. 

"So you better be sure that you are actually aligning what people think about what's important with what's actually important."

To see the entire Shelly Lazarus appearance in the Dean's Distinguished Speaker series, click here. 

500 Words with Crispy Waffle and Frite

 

500 Words With is an ongoing feature of the UCLA Anderson Blog featuring the entrepreneurial ventures of UCLA Anderson students and alumni. 

Aarti Kanodia (’11) graduated from NYU with a finance degree and a taste for french fries. She went to work for Bear Stearns, then headed to L.A. to earn her MBA at UCLA Anderson. “Anderson was one of those places that was so entrepreneurial, everything from classes to the Entrepreneurs Association, just being around all those professors and classmates that were entrepreneurial ... I knew I wanted to start something of my own after (b-) school,” Kanodia told The UCLA Anderson Blog recently.

At this writing, Kanodia is poised to start something of her own: Crispy Waffle and Frite – a gourmet food truck specializing in “Belgian street food,” namely waffles and pommes frites. As this blog post hits the web, Kanodia’s truck is undergoing a final inspection by the health department and assuming all goals well, it will hit the street some time next week. Kanodia, who has no prior food industry experience and who does not consider herself a chef (though she loves to cook, inspired by her mother’s expertise), spoke to this blog about launching her business and her plans for world-wide french fry domination.

 “I’m originally from New York and I lived in Manhattan for eight years and my favorite place when I was at NYU was a place in the East Village called Pommes Frites. They only sell french fries with 30 different sauces and my friends and I would go all the time. My parents would joke, ‘This is a great business idea. If you put them around college campuses, you could make us lots of money.’

After arriving in L.A., Kanodia was possessed by the entrepreneurial spirit that permeates Anderson.

I was sitting in Professor (Dan) Nathanson’s small business management class and it just kind of hit me one day, ‘I should pursue this whole french fry and waffle idea.’ Food trucks were getting big in L.A. (at that time). I started chasing them around, the Kogi truck, the grilled cheese truck … I realized it could be a perfect idea, take a cultural phenomenon in L.A. and mix it with a Belgian street food concept I started loving in New York City.

UCLA Anderson Team Takes Case Competition Top Honors at 2011 ROMBA Conference

A team of first-year UCLA Anderson students took top honors in the Case Competition at the 2011 ROMBA Conference held October 13-16 in Dallas, Texas. Reaching Out MBA is the annual conference of lesbian, gay, bisexual, and transgender (LGBT) graduate business school students. According to the conference web site, "the conference presents a dynamic line-up of industry speakers and workshop panelists representing all sectors of the business community, from finance and marketing to government and the arts." More than 1,000 MBA students attended the 2011 event.

The UCLA Anderson Blog spoke to Jim Mitchell ('13), who agreed to act as spokesman for his teammates Brad Sullivan ('13), Micha Lenard ('13) and Alisa Somer ('13). According to Mitchell, who is also a member of Out@Anderson (formerly "Section G") -- Anderson's LGBT network, the conference was "two days of panels, a career fair and social events." Mitchell says he particularly liked the way many companies who set up at the career fair also had their own private gatherings; a few handshakes with the McKinsey folks in attendance led to an invite to their cocktail reception. "Great conversation led to more conversations," said Mitchell.

(pictured left to right: Brad Sullivan, Jim Mitchell, Alisa Sommer, Micha Lamed. Photo courtesy Jim Mitchell.)

Uday Karmarkar Offers Offers His Thoughts on the State of Manufacturing In the U.S.

Bloomberg Business ran a piece last week suggesting that some factory work is returning to the United States. Chris Farrell paraphrased Mark Twain, writing "the demise of U.S. manufacturing has been greatly exaggerated." Technically, he's right, the U.S. remains a manufacturing powerhouse compared to other nations. But as UCLA Anderson Forecast Director wrote in his June Forecast report and continues to point out, the U.S. has lost 2.5 million manufacturing jobs and these workers have been "displaced by low wage foreign-workers, skilled robots and intelligent microprocessors." 

I don't think Farrell would disagree -- as he writes that manufacturing "activity doesn’t create as many jobs as it used to. Far from it: American manufacturers have been producing much more with many fewer workers. U.S. manufacturing output has grown by 2.5 times since 1970, even as employment shrank by 30 percent. Manufacturing jobs were decimated during the Great Recession and the anemic recovery that followed, plunging by 2 million positions, to 11.7 million jobs, from December 2007 to August 2011. (Manufacturing employment is up 2.5 percent, or 285,000, from its 2009 nadir; in keeping with the productivity story, however, manufacturing production has risen 13.2 percent from its 2009 low.)"

Farrell spoke with our own Uday Karmarkar, Anderson's own Los Angeles Times Chair in Technology and Strategy, whose research includes technology, global strategy and the "information economy." Karmarkar, who blogs for the Harvard Business Review, commented on the continual search for low-cost labor in manufacturing -- Farrell included him in the paragraph about "skeptics." Said Karmarkar:  “It has been a worldwide movement to the lowest-cost location. So it it’s not a simple picture.”

Having interviewed Karmarkar for an upcoming podcast, we knew he had much more to say on the topic of manufacturing. So, we exchanged a few emails with him yesterday, asking him to elaborate bit. This is what he wrote:

The movement to low-cost locations is hardly new.  As we well know, the first low-cost moves are to go from New York and Los Angeles, to lower-cost locations in the US.  Then, one looks farther afield – first Canada and Mexico, then further still to Europe, Latin America, then Asia.  Simultaneously, the low-cost producers (onshore and offshore) look for the biggest, richest markets and since the U.S. is an open market it’s a favorite destination.   

So if one looks at the U.S.’ biggest trading partners (two-way trade totals) Canada leads, China is second, Mexico third.  If we count the EEC as one trader, then it rises to the top; or else seen separately, Germany, the U.K., and others are still high on the big trading partners list.  China is unusual in its fast rise.  But the big issue with China  is that two-way trade is actually mostly one-way with a deficit that is by far the United States' largest. Much of that is due to an artificially low yuan.

U.S. manufacturing is indeed huge – the largest manufacturer in the world until last year and for a hundred years; only to be overtaken by China this year.  But manufacturing is indeed declining and jobs in manufacturing are also declining because of sustained productivity gains.  The manufacturing picture in the U.S. is a bit odd;  almost 75-80% of product is exported.  Then we turn around and buy a lot more back.  The exports pay for about 2/3rds of the imports.   So exports are crucial for importing, but still not enough.

What’s the solution? 

If China revalues the yuan, they will both import more (assuming relatively open trade) and export less.  If the dollar falls, the U.S. will import less and export more.  Costs in the U.S. will rise under both scenarios.   Will that mean inflation overall?  Perhaps not, since most of the U.S. economy is in services not products, whether one looks at purchases or wages.  Jobs in the U.S. will go up, but not by much.  U.S. manufacturing output will tick upwards.  But not for things like apparel, low end, high-labor content products and sectors like consumer electronics, where there are a lot of other low-cost producers in Asia.  Look to India, Bangladesh, Vietnam, Indonesia, Thailand, and Latin American sources to pick up what the Chinese drop.

At the end of the day, jobs in the U.S. largely (85 - 90% or more) come from services today, and will tomorrow.  The balance is shifting from “physical and material” to “information intensive” services but right now they are about even.   Wages are higher in the latter by quite a bit.

Richard Rumelt: Steve Jobs Enforced Excellence In Design

Steve Jobs, co-founder of Apple Inc., passed away on October 5. Thanks to a tip, we've come across a blog post authored by UCLA Anderson's own Richard Rumelt, which Rumelt posted to his Strategy Landblog just weeks before Jobs' death, but after Jobs stepped down from his post as Apple's CEO. Rumelt, whose latest book is "Good Strategy, Bad Strategy," (in which he writes about Apple and is on the Financial Times Goldman Sachs Business Book of the Year shortlist) blogged this about Jobs:

Steve Jobs contribution to Apple has been profound. Steve Jobs is not an engineer himself, yet he has guided Apple into being one of the great engineering companies, in the true sense of what it means to “engineer.” Apple did not invent personal computers, or the mouse and windows interface, nor did it invent digital music players, smartphones, or tablets. What it has done is to engineer products in these categories that are uniquely beautiful, efficient, easy to operate, and a joy to own and use.

Later on in the post, Rumelt notes:

I believe that in trying to learn from Steve Jobs and Apple it is very useful to pay attention to what he did not do. In compiling this short list, I have used ideas and phrases in common use by managers and business consultants:

• He did not “drive business success by a relentless focus on performance metrics.” Success came to Apple by having successful products and strategies, not by chasing metrics.
• He did not “motivate high performance by tying incentives to key strategic success factors.” Apple did not run a decentralized system based on pressuring individuals to deliver targeted business results.
• He did not have a strategy “built through participation by all levels to achieve a consensus which resolves key differences in perspectives and values.” Strategy at Apple is essentially driven from the top.
• He did not waste time on the delicate distinctions among “missions,” “visions,” and “strategies.”
• He did not use acquisitions to hit “strategic growth goals.” Growth was the outcome of successful product development and accompanying business strategies.
• He did not seek to engineer higher margins by chasing rust-belt concepts of “economies of scale.” He left such antics to HP.

The UCLA Anderson Blog recommends its readers click here to read Professor Rumelt's entire post about Jobs. More of Rumelt's thoughts about Jobs and Apple are found here at the Voice of America web site.

Richard Rumelt's "Good Strategy, Bad Strategy" at Amazon.com, found here. 

Other UCLA Anderson Blog posts about Rumelt and "Good Strategy, Bad Strategy" here, here and here. 

 

September Ceridian-UCLA Pulse of Commerce Index Indicates Trucking Activity Drops 1%, Third Month In a Row The Index Has Fallen; Late September Readings Were Worse, Suggesting October Will Be Weak as Well

Barron's did a story over the weekend about the latest Ceridian-UCLA Pulse of Commerce Index^TM (PCI).  Under the headline "Say It Ain't So: A Recession Progression?," Barron's writes the following:

In September, the Ceridian-UCLA Pulse of Commerce Index, which tracks real-time trucking activity, fell for the third month in a row, this time by 1%. The result hit Ed Leamer, a professor of economics at UCLA (should read: UCLA Anderson) who was one of the index creators, like a "slap in the face." The index fell 1.4% in August and 0.2% in July. All told, the second-quarter decline came to an annualized rate of 10%. That rate of decline was exceeded only in the deep recession of 2008 and 2009, and was equaled only once outside of a recession, in March 2000 ... Moreover, the reading for the end of September was worse than the beginning of the month, which indicates the first part of October will be weak.

Here is the video that accompanied the release of the September PCI:

 

At the 1:17 mark, Leamer says:

"We've been very resistant to the notion that we're going to have a second recession or double-dip, basically for two reasons. First of all, the critical sectors which are homes and cars are either not positioned or not suggesting that they're going to contribute to an economic turndown any time soon. 

"And, secondly, the traditional indexes that we rely on for warning us that a recession is coming, namely business permits, weekly hours in manufacturing and the slope of the yield curve -- not one of those three critical indicators is signaling that a recession is going to be here any time soon.

Nonetheless, our trucking index provides what we think is really reliable and very material evidence that our economy has softened very substantially since the middle of June and another month or two of this is going to remove all doubt that the U.S. is actually experiencing a recession, not necessarily an extreme one, but certainly a mild one."

We asked Leamer for a clarification on whether or not he'd "call a recession" based only on the PCI and he responded by email:

"A recession will require indexes beyond the PCI to signal a downturn, which so far they are not.  But another down month would be extremely worrisome."

For more on the Ceridian-UCLA Pulse of Commerce Index, click here.

Happy Birthday Coach Wooden

"Success is peace of mind which is a direct result of self-satisfaction in knowing you made the effort to become the best that you are capable of becoming."

-- Coach John Wooden

Today marks what would have been Coach John Wooden's 101^st birthday.

At UCLA Anderson, we continue to celebrate and find inspiration in Coach's words and wisdom. 

Official Website of Coach John Wooden

UCLA Anderson's John Wooden Global Leadership Progam

Maia Young Examines the Managerial Mystique of Managers Vision, Charisma and Magnetism

There is a very simple reason why magician's don't reveal the secrets of their illusions: I you knew how the trick was done, it wouldn't be magic, would it?

Of course, we know that the magician on the stage doesn't really possess magic powers. We're able to enjoy the performance anyway, happily attributing that which we don't understand to some mystical quality possessed by the man in the cape and top hat. Then the lights come on.

In her latest paper, UCLA Anderson Associate Professor Maia Young (and her co-authors Michael Morris of Columbia University and California State University, Long Beach's Vicki Scherwin) examines a type of real-world mystical quality, a perceived charisma imparted by others, including colleagues and subordinates. Inc. recently gave the paper coverage. The UCLA Anderson Blog had the opportunity to sit down with Young to discuss the work.

We wondered if the research suggested that charisma did not exist at all, that it was simply a "mystical" quality. Young assured us that some leaders (and others) do possess charisma; the paper deals more with the way others describe a charismatic leader and what other inputs imform their perceptions.

Through a series of studies, all of which made it clear that the person being discussed was highly successful, Young and company found that the less others knew the details of a leader's/person's success, the more they attributed that success to charisma or some other intangible talent. In other words, lacking knowledge of the hard work, long hours and attention to detail a successful leader applies to a successful project or projects, the more those around them attribute that success to their charisma -- they just get things done.

"The more someone wants to be seen as charismatic, the more they must try to keep their hard work hidden," Young said of the study's most important practical impacts. It's not suggested that those who are charismatic don't work hard, but rather the less that is known about their hard work, the more charisma is assigned a signficant role by those around them. Another take away of the study dealt with how people are described by others, for example, in a job recommendation. The more of the practical details one reveals when describing someone -- the less charismatic they may seem. "When we don't know how someone (achieves their successes)," Yound said, "the more we are likely to perceive them as charismatic." 

The paper suggests that there is a value to be seen as charismatic, as those who fit that description are also believed to have "visionary" qualities. The paper's third study revealed that managers described as "visionary," as opposed to "diligent," are judged to be charismatic and ultimately magnetic. 

Company's with a charismatic leader or managers do also deal with the downside of the perception. Since the tangible or mechanical details of such leader's success are not well-known, it is more difficult for the company to replicate their success when faced with succession. 

Inc. coverage of Professor Young's work

Download Managerial Mystique: Magical Thinking in Judgments of Managers’ Vision, Charisma, and Magnetism here

Susan Feldman ('83) & Alison Pincus ('02) Created One Kings Lane; Long-distance Partners are Pioneers in Flash-Sale Home Shopping

 Susan Feldman ('83) and Alison Pincus "02) attended UCLA Anderson nearly 20 years apart. That they met at all is mere happenstance. But together they've created One King's Lane, "the world's top home decor brands and designers at up to 70% off retail."

R.A. Feld has written a new feature about Feldman and Pincus, the article posted today on the UCLA Anderson web page. Here is an excerpt: 

"I had been working in the apparel industry my entire career and was becoming increasingly interested in the home space," recalled Feldman, who had held senior sales positions at various luxury and fashion brands such as Polo Jeans and Lauren Ralph Lauren Sleepwear. "I felt there was a void, with no place to shop online for unique items at great prices. Then I became aware of the flash-sale model and thought it could definitely work for the home market."

As it happened, her husband met the founder of BlogHer.com, Lisa Stone, who loved the idea for the business and introduced Feldman via email to Pincus, who had a web and media background, and held digital marketing and business development positions at The Walt Disney Company, NBC and Hachette Filipacchi. With Feldman based in Los Angeles and Pincus in San Francisco, extended conversations over email and telephone began, outlining a business idea to bring together the definable market for specialty home items with brands looking for new channels to market and sell their item.

Feldman finally said, "Ali, I think you should come to Los Angeles, because if we are going to do this, it would be a good idea if we actually met!"

It was the height of the recession and a difficult time to start a business, but they decided to ignore that fact, and Pincus hopped on a plane. They spent the day together and discovered a natural chemistry that has allowed them to build a company, though they are almost never in the same city.

Leo Bursztyn Examines Green Industrial Policy; Paper Suggests Temporary Interventions and R & D Subsidies Work Best

UCLA Anderson Assistant Professor of Economics Leo Bursztyn's paper "The Environment and Directed Technical Change" recently attracted the attention of The Economist. He and his co-authors (Phillipe Aghion and David Hemous of Harvard University) and Daron Acemoglu of the Massachusettes Institute of Technology) studied the various ways government interventions might impact growth and innovation in industies that potentially degrade the environment.

With a bit of whimsy, the authors named some of the various approaches to government policy. The Nordhaus approach suggests that "only limited and gradual government inverventions are necessary and that optimal regulations should only reduce long-run growth by a modest amount; The Stern/Al Gore approach is less optimistic, calling for "more extensive and immediate interventions, and argues that these interventions need to be in place permanently and will likely reduce long-run grwoth as the price for avoiding an environmental disaster; and the more pessimistic Greenpeace answer is that "essentially all growth needs to come to an end in order to save the planet."

Yesterday, Bursztyn spoke to the UCLA Anderson Blog about the work.

Bursztyn said that much of the prior literature was lacking in analysis of how economic structure of innovation responds to change in ecomomic policy in that there were cost-benefit analysis of envirionment policies in which people assumed that the structure of economic progress is a given, that there is only one type of economic progress. This paper created a framework that took at theorerical look at different responses to different economic policies.