Managing Corporate Change Syllabus 2016
Changing an organization is one of the hardest things to do in life. Driving change is the defining moment of many, if not most, careers. How do you do it? Indeed, can you do it? That is what this course explores. Technology-driven change has been a constant for five decades, and its effects have hit every industry, and it only seems to be increasing. The rise of AirBnb and Uber proves that almost nothing is beyond reach.
The quickest to exploit change often have been entrepreneurial start-up firms founded by individuals able to envision years ahead how this change would unfold and the resulting discontinuities. Witness Uber and AirBnb. There are nearly 1,000 FinTech firms trying to restructure financial services right now. In turn this has given rise to a robust venture capital industry. Declining returns elsewhere have driven fund managers to allocate ever larger shares to private equity and venture capital.
The pace of change is actually increasing. Larger organizations in general have not been leaders but adopters, some earlier than others, using deals with innovators to capture the benefits for themselves. This may simply reflect human capital realities that the talent will not work for large companies. Some corporations have used their own venture funds with widely varying success rates, generally poor. Private equity firms make a living by buying firms that should change but cannot, making the changes and then selling at a profit, sometimes handsome profit.
Why is change so hard? What is the right strategy? Innovate yourself? Invest actively in technology change to be an early adopter? Do deals with winners after they emerge? The instructor has spent forty years living these options, and this course will examine what has worked and not worked, where and why. For this reason the selection of topics is a bit eclectic, but the goal is to evolve a general understanding of what a successful executive needs to do to be the disrupter rather than the disrupted. While technology is an underlying theme, this is a course on organizational and human resource strategy, not technology.
I try to recruit guest speakers for each class, but I cannot guarantee availability matching schedule with class dates. In the past years, I have been quite successful. I may rearrange topics to match speaker availability.
I list some readings below by class. If there is one book I would like you to read, it is the Steve Jobs biography. He has become an icon for change, and I think the book explores well how he did it. I am not sure he is model for anyone else, however, as someone who did multiple deals with him over two decades. But he did drive change. Recently, The Alliance by Reid Hoffman and Ben Casnova has gotten a lot of attention, as has Zero to One by Peter Thiel.
Tentative Class Schedule
Monday, March 21. Is the failure to innovate really just a failure to manage well? How do you manage for change? How should you reward and compensate people? For two decades, Sun Microsystems changed repeatedly throughout its history successfully: scientific workstations to corporate datacenter servers to Internet backbone. It then tried and failed in trying to change again to being the leader in open source software solutions. How do you drive change in a large organization? How do you need to manage? How do you manage when you live in a stream of constant change such as the media industry? The professor was at Sun from $1B to $14B and at times was chief strategy officer, chief financial officer, chief information officer, vice president of human resources and vice president of corporate planning and development. Outside speaker.
Reading on Medium: William J. Raduchel, Managing Change, Sun Microsystems, c. 1997. This is a presentation we used to give to others who wanted to know how we managed and why. It is not profound but it does give a good introduction to the challenges.
Reading on Medium: William J. Raduchel, “Modern Theory of the Firm”, Journal of Business Administration. Although a bit dated, this article lays out some of the challenges faced in managing a technology-driven firm and most of them are people-related.
Monday, April 4. The most obvious answer is to just innovate. This class looks at two iconic companies: Xerox and Apple. Thirty years ago students in a class like this would be told to look at Xerox as the hallmark of innovation. Its famed research centers, especially the Palo Alto Research Center, created many of the product innovations we take for granted today. It carefully planned a migration from analog to digital, from standalone to network. Along the way, an upstart company, Apple, seized the opportunity and built on Xerox innovation a business and a culture that continues to be a leader today, albeit with many missteps in between. Is it all because of one man? Steve Jobs? One recent perspective is in this recent post http://bit.ly/1QQoQfQ.
Reading: Walter Issacson, Steve Jobs, ISBN 1451648537
Background: Douglas K. Smith and Robert C. Alexander, Fumbling the Future: How Xerox Invented, then Ignored, the First Personal Computer, ISBN 1–58348–266–0
Background: Andy Hertzfeld, The Insanely Great Story of How the Mac Was Made, ISBN 0–596–00719–1
Monday, April 11. Why do startups do so well at innovation? Is buying them a viable strategy for innovating? Cisco for decades was held up as the gold standard in doing this. It routinely bought companies and grew and grew. However, its later acquisitions were not nearly as successful, and the formula turns out to have more narrow applicability than you might think. Now, Cisco faces huge threats from software defined networking and the Internet giants. Facebook is posing a serious threat. Why do startups work? Can big companies exploit them as a strategy? Guest speaker.
Reading: Daniel Pink, Drive!, ISBN 1594484805
Monday, April 18. No industry has been so much in the news for so long around change as the music industry. Napster burst on the scene and forever changed the world. Since Napster, music industry revenues have halved. The industry still struggles to find itself. It had such a world of privilege in the 1990s and seems unable to find its way back to a new reality. What were the vectors of change? What could they have done differently along the way? Guest speaker.
Background: Steve Knopper, Appetite for Self-Destruction, Free Press, 2009, ISBN 978–1416552154
Monday, April 25. If change is coming and you are not ready, can you save yourself with a mega-merger? AOL defined the online industry in 2000, although as dominant as it was its numbers look tiny today: Forty million users would be a small Internet venture today. It saw threats coming from two directions and decided it had to move first. Its target was Time Warner, a company that had tried to innovate multiple times without success, led by a frustrated CEO who worried too that the future was about to pass him by. The resulting deal was hailed and then panned. It is now conventional wisdom that it was wrongly conceived and poorly executed, though the facts are far more complicated. As time goes on, it looks increasingly brilliant though very, very early. Guest speaker.
Reading on Medium: William J. Raduchel, Media and Technology, BBC, 2008. This is a summary of decades of technology change interacting with media and advertising (they are very symbiotic). It is meant as an easy read but we will come back to its themes multiple times during the course.
Monday, May 4. The ultimate vector for change is to the capital structure. Change ownership. Why is there an opportunity for private equity to earn the returns they deliver? Why can’t public corporation management deliver the same? Is selling the corporation always the right answer at some point?
30% Class Participation. Please come to class prepared to engage and participate. Above average contributions will be rewarded. Passivity will cost. I will take attendance even though it is against my nature, because it is not fair not to do that.
70% Paper: John Chambers retired in June as the CEO of Cisco, though he remains as executive chairman. He grew Cisco into a massive giant that supplies the networking technology for much of the world. For two decades, their growth was driven by encouraging startups and then buying the successful ones for stock, making their P&L look good at the expense of their balance sheet. Juniper began to erode them at the high end. Led by Facebook, the Open Compute Initiative now joined by Microsoft and Google is eroding their business by converting it to an open source supplier of commodity hardware as software defined networking takes over the world. Snide observers suggest their time has come and gone. What is the corporate DNA at Cisco? What does it need to be? How do you make that change? Remember you have shareholders, activist investors and key employees and customers. (8–10 pages). Please apply the lessons of the class. How do you manage talent? What should the compensation structures be? You can include acquisitions and divestitures as appropriate. Culture should be a major focus. Please submit via email no later than midnight, Sunday, May 10.
To be honest, your grade will depend primarily on the paper, but class participation will help or hurt on the margin as I have to fit grades within the required distribution.