Power for Africa

It’s not every day you get to design an electric supply system from scratch.  I am working with one of my colleagues from Nigeria to put together a model for development of the electric power supply system in his country.  Despite sitting on large deposits of coal, oil, and gas, there is virtually no central station power in the country, and what little there is operates literally only 20% of the time, so it is almost worthless.  The country is running on distributed generation (diesel gensets ) with costs so high that manufacturing is not cost effective, causing high imports and a lack of local jobs.  This project will create jobs and electricity.  (They are not worried about their carbon footprint just yet.)  I am also suggesting a cooperative business model J (couldn’t resist).

Peter Chou, CEO of HTC

Peter Chou, the CEO of HTC (the 4^th largest cell-phone company in the world with annual sales over $4 billion) visited our class to assist in teaching the HTC case study.   They are struggling with market positioning for their phones against Nokia and the Apple iPhone.  He said, “the last thing we want to be is like Apple.  We want to be the alternative to Apple.” 

His challenge to us?  “What advantages does your business have that you can leverage?”

It IS Rocket Science...

Today we reviewed the NASA Challenger disaster and the organizational dynamics that allowed NASA staff to ignore an ambiguous but real threat to crew safety.  We had the special privilege to discuss the case directly with NASA Chief Structural Engineer Rodney Rocha, who had been involved in the mission.

 

In Challenger, the shuttle managers ignored signs of an imminent threat, despite repeated warnings from engineering staff.  Mr. Rocha share his personal sense of loss and failure, “Until this year, not a single day passed that I didn’t think about the accident. . . I regret not pushing harder, not breaking the door down to get an answer.”

 

In future classes we will discuss ways to insure that our culture and organizational structure counteracts the human tendency to normalize deviations and underestimate ambiguous threats.

My Personal Case Study

I am sorry that this is a longer-than-usual post, but I have a lot on my mind to share.

I have selected a couple of items for my personal case study while here at Harvard.  I will be developing these cases as we complete our studies in the next five weeks.  This development will include a critical assessment of the plans from my learning group members (a diverse group geographically, culturally, and functionally) and also from the Harvard Business School professors.  The professors here are encouraged to take consulting assignments and to sit on boards (such as Coke, Apple, Intel, Shell, Polaris, etc) in order to give them real world experience, so I expect their input to serve as a very valuable “free” consultation.

I will be focusing on two areas.  The first is strategic:  how should Associated position itself to succeed in its mission, given the massive investment required for scrubbers, in light of the uncertainty of Carbon Regulation and New Source Review?  This strategic analysis will include a range of options with direct impacts on our coal-based units.

The second area of focus will address a pressing performance gap in the Power Production Division.  While we have made great strides over the years in improving the operation of our coal-based units, these performance gains are no longer keeping pace with our competitors.  In some cases, we are even losing ground in unit performance.  I believe that part of the reason for this is that our business processes, people skills and corporate culture have not changed to meet the increasing performance requirements.  In order to regain our position as a best-in-class utility, we must make an immediate turnaround.  The details of this turnaround plan will be developed in concert with my Harvard peers and professors.

The management methods that are being taught are not quick-fix “fads.”  Instead we are being trained in a solid process for the analysis of a problem and a development of solutions.  We will be looking at the impact of people, work processes, culture, norms, and organizational structure.  The method is not magic; it is systematic.  We start with the mission, proceed to the strategy, identify performance gaps (or opportunity gaps) and conduct root-cause analysis.  Following this, we go through each element of the organization, checking to determine if this element is in congruence with the desired changes.  If not, we develop the appropriate plans (people, processes, and tools) to support the needed change.  The case-study teaching method employed at Harvard allows us to test these concepts, three times a day, for 56 days.  Good stuff!

Today is Saturday, so what did we do?

We began by studying the Gucci company to learn how they managed brand positioning, which I guess is only somewhat applicable to electric utilities selling a commodity with a virtual customer monopoly.  Still, it was interesting.  I think the electric cooperative should offer premium branded electric power at a premium branded cost.  Wait a minute, we already do!  It’s called “green power.”  Maybe this Gucci thing will be useful, after all.  I’m sensing a need to return to Florence Italy with my special consultant, Lisa.

We talked at some length about how to address poor employee performance and conduct coaching, with special emphasis on the situation of the employee that is a high performer but just doesn’t fit the corporate culture.

We also talked about the issues surrounding 360 degree performance feedback systems, and how best to utilize them.  To this point, we will begin meeting with our individual performance coaches next week, and will each go over the 360 degree feedback that our peers provided before we left for this program.

On Monday we will review the organizational and leadership failures that contributed to the space shuttle Challenger disaster. Harvard has recruited one of the Challenger project managers from NASA to attend our class that day and answer questions. What a great opportunity for us to hear about the issues from someone who was there at the time.

New Poll

I want to show a Great American Movie to my non-American roomates in our dorm lounge this weekend.  What would you recommend?  Please respond to the poll at the right, or suggest your own movie by adding a comment below.

A Boston Perspective on Climate Change

I just finished debating one of my professors on the Cap and Trade program.  He wasn't persuaded to my position.  He thinks Missouri is going to fry!  However, despite this I think he is still going to invite me to speak at an energy forum that he is going to host on-campus next week.  We'll see.

Chick-fil-a Day

Ok, so this is not an intense learning issue, but one of our classmates is the CFO for Chick-fil-a.  She is hosting their products for our lunch tomorrow, so we will all get a taste of true American fast food.  I think I am having french-fry withdrawal so you'd better believe that I am looking forward to this.

What do I miss?

A coworker asked if I missed the Board meetings, staff meetings, plant outages and contractor negotiations.

I guess the answer is no, not too much.

This is a fantastic opportunity, and I am very fortunate to be able to attend this program. The professors are great, the students are great, and everything is very intellectually stimulating. I am getting exposure to many different points of view. The coffee is great and I don't even have to walk to Starbucks. The more I concentrate on my studies, the faster the time passes by. I now have only 40 days left. Only 40 days, imagine that!

What do I miss? I miss talking to Americans sometimes. My classmates tend to criticize Americans as greedy and wasteful, but I noticed that they don’t seem to mind living our lifestyle. I also notice that they all didn't decide to get their executive education in business management in Europe, or Asia, or Africa, or Australia, or South America.

I also miss talking to Midwesterners. Boston is great but it is not the heart of America.

I actually did "miss" attending the AECI board meeting. This was the first meeting I have missed in over 10 years, but I got over it pretty quick. I will only get one chance at being here and I am going to make the most of it.

I have explained what the abbreviation “MO” means about 130 times (it appears on my nametag). No, I don’t know how the post office came up with that one, but it does give me a chance to pull out my business card with the map on the back and explain just where in the U.S. is Missouri, and what we do, and why we do it. I have also enjoyed explaining the electric cooperative business model to my classmates. It is a real mind-bender for them to hear that we sell electricity at cost, and that we are regulated by our customers, not the government. This is foreign concept to most of them.

Tom, Scott, Brent, Steve, Barbara, thank you for covering for me. This is what I really miss . . . working with great people like you.

Global Economic Crisis Day!

Today was dedicated to understanding the Global Economic Crisis. We had three classes addressing the issue from different perspectives, and then concluded with a lecture from Harvard Economics Professor David Moss, a current advisor to President Obama. You should have heard the howls and objections from the international students as they pinned the blame for starting this mess on the greedy Americans.

I think that now even I could explain what happened; how financial firms turned sub-prime mortgages into mortgage-backed securities, collateralized debt obligations (CDOs), and CDO-squared, and in doing so spun straw into gold, turning a heap of near-default mortages into something that could be resold as mostly AAA-rated securities. This was an amazing feat of financial engineering! Well, maybe not so amazing as it almost sent the entire planet into a depression.

We also spent more time talking macroeconomics including the U.S. current-account deficit. Here we are borrowing money from China to finance our current consumption, and our kids and grandkids will (probably) have to pay the debt back sometime (unless we get lucky). The situation was equated to Climate Change and our burning of carbon fuels in the U.S., and it was mentioned that our kids will have to pay for that too. We have a special day coming up dedicated to Climate Change and I can hardly wait. I am wondering if I will be able to change any minds on this subject.

So far I haven’t. I am here with a broad cross-section of nationalities that largely believe that the U.S. is taking unfair advantage of the planet and should pay. Their number one suggestion, which I have heard several times, is that the US should increase its fuel tax. This would have several benefits: reduced oil consumption, reduced carbon emissions, reduced trade imbalance, reduced current-account deficit, a balanced federal budget and greater fuel efficiency. I have tried to explain that I don’t believe Oklahoma and Missouri consumers are ready to give up their dooley-pickup trucks, and they just can’t seem to understand. I’ll keep working on this, though

Coaching

All of you who had the chance to complete the 360 degree feedback on my performance will be glad to hear that I will soon be seeing the results.  Not just me, but me and my coach (gulp)!  That's right, I will get my own personal executive coach.  We will meet a number of times to discuss the changese I need to make to be more effective. 

I had the opportuntity to select one from a number of individuals based on their resumes.  The coach I have selected has experience in working in the energy business, including a recent coaching assignment with the CEO of a large electric utility system.  I don't want to say the name, but can you imagine a large utility system in the east?  Very large.  One that burns 10x more coal than Associated.  Their name starts with "A".  Got it?

Here's an idea - peer coaching.

Peer coaching.  How does it work?

Basically you design a set of key questions that you would like a trusted friend or mentor to ask you once per week.  These should be questions with simple answers, just yes or no or numerical answers.  Your friend is not to provide any feedback or judgment, just ask questions.  Your friend will probably also develop a list of questions for you to answer.

Examples of questions include:

How many miles did you walk this week?

Did you say something nice to your wife today?

Did you talk with each one of your direct employees this week?

You craft the questions based on goals you have set for yourself.  Your peer justs asks the questions to keep the goals before you.  The process forces change on your part because of the need to save face with your peer.

By asking these questions every day you may find that you start holding yourself to a new standard of behavior.  Will this work?  What do you think?

Remembering Doc Blackmore

Darwin “Doc” Blackmore passed away this week. I have learned about faith from a number of great people in my life, but Doc taught me as much as anyone could. I will always remember his example.

Doc worked at one of our power plants. Many years ago he was seriously injured in a bicycling accident, and left paralyzed from the neck down. He could do literally nothing for himself. He even relied on a ventilator to breathe (although in the last year he was making progress on a new “pacer” that allowed him to breathe a bit on his own for very short periods of time).

You would think that Doc would have a poor outlook on life. That he would feel sorry for himself. That he might even blame God, or ask “why me”? He did not.

Doc made it his life’s mission to witness to others about the incredible love of God. Can you believe that? He had so little that most of us would think to be thankful for. But he had a voice, and he used it, in between the puffs of his ventilator, to witness to others. In his last years he introduced a number of people to the Lord, and inspired scores of others to redouble their efforts, quit whining, and make the best of the life they have been given.

Every time I met with Doc I came away so uplifted. Do you think spending time with a paraplegic would be depressing, or difficult? Quite the opposite – I felt as if I had been walking with a prince, a man who knew he had a most precious inheritance awaiting him. He was truly rich.

His wife Cindy was also an incredible blessing, not just to her husband, but to hundreds of others who followed her monthly email updates. Again, wouldn’t you expect someone to complain or feel sorry for herself? Not Cindy. She used this opportunity to share the love of God and the many many blessings that she and Doc shared. Their cup truly ran over. How many of us could consider a tragic accident to be a terrific blessing?

Now Doc has been given his reward. He no longer struggles to breathe. And he has a perfect body (ask me how I know – I have a secret to share on this).

I thank God that I had the chance to know Doc Blackmore.

Saturday classes too...

China and the WTO.  Wow.  How are we ever going to pay off the debt to China?  When will China allow its currency to appreciate against the dollar?  Something bad is going to happen here.  It looks like some form of austerity is going to have to happen in the future - we are collectively spending our grandchildren's money.

Corporate Fiduciary responsibility - the bottom line - watch out, don't forget your responsibility is first to the corporation.

Reading List

We were told by the business school faculty that this week was a light week for reading.  Here is what we covered:

A briefing paper on Capital Investment Project Valuation
General Mills company case (Growth Strategy)
The General Mills Annual Report
Crown Cork & Seal (a classic case study)
Cooper Industries (an Acquisition case)
Briefing paper on how to value a Business Acquisition
Oracle vs. Peoplesoft (dissecting a hostial takeover)
Singapore's growth strategy
International Monetary Principles
A Macroeconomics textbook (I almost have this one finished, its actually pretty fun reading.  We meet the author for lunch next week.)
Analysis of Balance Of Payments accounts for selected countries
How Political Forces have shaped India's development
a Micro-Electronics firm in disarray (a study on corporate strategy and managerial focus)
China and its relationship with the World Trade Organization
China's growth strategy
Legal briefs on several cases involving Corporate Governance and Fiduciary Responsibilty
Psychology of Negotiation along with several negotiation simulations

Tea anyone?

Today we have the priviledge of taking "tea" with the CEO of Whitbread, the UK's largest hotel and restaurant company.  One my roommantes works for him, so he has arranged for the eight of us to have afternoon tea together.

Negotiations and Love Songs

The negotiation unit continues, and I'm proud to say that our team continues to set the bar for (literally) best-in-class performance.  We completed another exercise last night and will see the results this morning.  We aer learning lots of good stuff (beyond the book "Getting to Yes", which the professor dismissed as elementary).

I think some of our contractors have had the same training. :-)

Business Life Cycle (Where are you?)

I liked this summary.

The typical life cycle of a business:

Business is created.

Growth occurs through CREATIVITY.
A Crisis of Leadership occurs as the business grows and creativity is not longer enough, structure is needed.

Growth continues through DIRECTION. Often this involves adopting a Functional structure to the organization.
A Crisis of Autonomy occurs as the business is hindered from further growth by too much structure.

Growth continues through DELEGATION. Often this involves adoption a Decentralized structure in the organization.
A Crisis on Control occurs as the business is hindered from further growth due to a lack of coordination among the decentralized units.

Growth continues through COORDINATION. Often this involves a Segmentation or Matrix structure.
A Crisis of Red Tape occurs as the business is hindered from further growth due to an overwhelming burden of policies, procedures, and processes.

Growth continues through a return to BASICS and the process repeats all over again.

The question is, where is your organization on this continuum?

Back to School

Ok, it looks like the virus stuff is all over now, and I can get back to blogging without selling drugs online. What are we learning this week? We have just completed an intense unit on Accounting, cramming a complete graduate accounting course into three days. Actually, we probably only cover the parts that the average graduate student REMEMBERS after graduation. Ratio analysis. Profitability analysis. Maximum sustainable growth rate. Today we completed a section on finance and capital project analysis - all kinds of arguments on the most appropriate way to conduct analysis of cash flow, net present value, internal rate of return, working capital management, management of trade payables, etc. Generally fun stuff. Seriously.

We also spent some time on the current financial crisis, the subprime houseing market, and credit default swaps. This was a new learning area for me.

Today we started a fascination negotiation unit. We covered research on the psychology of how people approach negotiation. We learned how to analyze the proper time to tender an offer, how to handle another party's early offer, how to analyze their fall-back position. We will continue this unit for two more days, with lots of practice exercise (we practice role playing with each other). By the end we should all be master negotiators. Or at least pretty good. Or at least better than before we started.

I did well in the first exercise, achieving a sales price for my simulated firm that set the bar for our class. I sure hope I can keep this up because now I have a reputation to preserve.

Tomorrow our learning group (seven guys I live with) will be having lunch a professor that is a frequent Wall Street Journal contributor and author of a business strategy book. We have invited several of the professors to meet us this way during the program.

Virus in the blog

This blog got hit with a virus.  I'm trying to eradicate it, but so far no luck.

Thought for the day

One of my learning team members provided an interesting metaphor today that is apparently a popular concept in India. I found it illustrative in many dimensions, both in a managerial sense and as a Christian metaphor.

Imagine a person as a tree. Now imagine that a very successful person is a tree bearing much fruit. We know that when a tree is heavy with fruit, it bends down toward the ground. This is an illustration of that person's humility, in bowing low to the ground, and also of their generousity, since the tree heavy with fruit bends low, making it easier for people to pick the fruit and enjoy it.

To me this sounds like, "to those to whom much is given, much will be expected..." Luke 12:48

On my bookshelf, Harvard recommended reading...

A Thousand Days
John F. Kennedey in the White House

Another book recommended by Harvard

What are we studying?

This morning we are dissecting the Nike company and evaluating their growth problems and leadership practices. Surprising similarities can be found within our own organization. More later.

My Living Group

At Harvard we are divided up into small groups to facilitate discussion of our business case studies. They intentionally seek maximum diversity among the group participants, to allow us to learn from each other while we are here and to avoid group-think. I share a living group with the following great individuals:

The CEO of an investment company in Pakistan,
the Managing Director of the largest bank in Brazil,
the Managing Director of the 2nd largest coffee company in the world (no, not Starbucks),
the Malaysian Undersecretary of Finance & Development (works for the government),
the Manager of Planning for the largest producer of plastic films used in flat-panel televisions, headquartered in (guess where) Japan,
the CEO of the largest computer-services data-storage company in Europe, headquartered in Sweden,
and the CEO of an Asian trading company specializing in growing vehicle and generation sales and services in recovering post-conflict eastern countries.

An international mix of participants

There are 169 participants in this class - massive!

This is how they break down by numbers:
8 Aussies
5 from Brazil
1 Australia
1 Belgium
5 Canadians
3 Chileans
7 from China
2 Denmark
4 England
4 France
3 Germany
1 Hungary
7 India
4 Israel
10 from Japan
1 from Kenya
3 from South Korea
1 from Kuwait
4 from Malaysia
3 from Netherlands
2 Kiwi's from New Zealand
3 from Nigeria
1 from Norway
2 from Pakistan
1 from Peru
1 from Philippines
3 from Portugal
1 from Qatar
1 from Romania
1 from Russia
1 from Saudi Arabia
7 from Singapore
4 from South Africa
2 from Spain
1 from Sweden
5 from Switzerland
4 from Thailand
1 from Turkey
33 from the U.S.A.
1 from Ukraine
3 from United Arab Emirate
9 from the United Kingdom
1 from Venzuela
1 from Vietnam

Maybe I'll learn some new languages!

Arrival at Harvard Business School Gate

The gate guard was shocked when I drove up. He staggered out of his booth and said, "never in six and a half years, never in six and a half years have I seen a motorcycle at this gate." He was almost speechless.

I now have a very nice secure parking spot in a high-security parking garage. It is so secure I can hardly get it. You have to keep your head down if you are on a motorcycle because the ceiling is so low.

A Japan participant said in our group said, "Wow, 1600 miles by motorcycle with your wife right behind you, that must be very romantic!" I said that it was.

Let's get started

I love you darling, goodbye.

So ends a 1600 motorcycle journey across America's heartland.

And so begins an eight-week educational sabbatical at the world's highest-rated business school.

So if this is a learning journey, what have I learned so far?

First, trust in God. He answered prayers for safe travels. He provided great weather for the trip. I should trust him more. Like the song, "let us ever trust in Jesus."

I saw a sign this afternoon near Harvard Square at the Lutheran Church – it said "God is in the midst of the City" – Psalm 46. God is indeed with us.

I am learning an ever-greater respect for my wonderful wife Lisa. She is a fantastic life partner and friend, one with whom I can share every fear and every dream, and on this trip she also proved that she can keep up with the best iron-butt riders around. You never heard a single complaint from her in over 1600 miles of riding. Not one complaint! She is incredible.

I learned how important the heartland is to America. America is not defined by her great cities, although they are impressive indeed. (Especially approaching them by motorbike). I believe that America is best defined by her land and her people; those that were up at the early hours, farming, delivering, and even feeding their chickens. We got to see this first-hand.

I learned I can ride 1600 miles without too much trouble. It was exhausting, yes. Would I do it again – YES! We saw it all, not from behind a car windshield, in a climate-controlled cube, but out in the open, where we could touch it at any moment.

We smelled it all - the musty swamps of Kentucky near the Mississippi River, the maturing corn fields in Indiana and Ohio, the faint smell of coal in Pennsylvania, the smell approaching rain in Indianapolis, the stench of the inner city, and the wonderful smell of evergreen trees in the Catskills.

We would have missed it all in a car.

And what will I learn in the weeks to come? We’ll have to see how that all develops.