The Future of Leadership Development
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1 The Future of Leadership Development
2 The Palgrave Macmillan IESE Business Collection is designed to provide authoritative insights and comprehensive advice on specific management topics. The books are based on rigorous research produced by IESE Business School professors, covering new concepts within traditional management areas (Strategy, Leadership, Managerial Economics) as well as emerging areas of enquiry. The collection seeks to broaden the knowledge of the business field through the ongoing release of titles, with a humanistic focus in mind.
3 The Future of Leadership Development Corporate Needs and the Role of Business Schools Edited by JORDI CANALS Dean, IESE Business School, Spain Palgrave macmillan
4 Selection and editorial matter Jordi Canals 2011 Individual chapters contributors 2011 Softcover reprint of the hardcover 1st edition All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6 10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act First published 2011 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number , of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin s Press LLC, 175 Fifth Avenue, New York, NY Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave and Macmillan are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN ISBN (ebook) DOI / This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress
5 Contents About the Authors vii Introduction by Jordi Canals ix Part 1: The Deans Perspective on Leadership Development and Business Schools 1.1 In Search of a Greater Impact: New Corporate and Societal Challenges for Business Schools 3 by Jordi Canals 1.2 Millennials and the Changing Landscape of Business Education 31 by J. Frank Brown 1.3 Collaborative Leadership: New Perspectives in Leadership Development 44 by Arnoud de Meyer 1.4 The Enduring Value of the MBA Degree 64 by Dipak C. Jain and Matt Golosinski 1.5 Business Schools and the Demands of Business Leadership 97 by Jay O. Light 1.6 The Contribution of Business Schools to the Twenty-first Century 109 by Pedro Nueno v
6 vi Contents Part 2: New Challenges in Leadership Development and Executive Education: The Scholars Perspective 2.1 From Action Theory to the Theory of the Firm 119 by Antonio Argandoña 2.2 A Humanistic Approach to Organizations and Organizational Decision-making 143 by Josep M. Rosanas 2.3 Bridging the Globalization Gap at Top Business Schools: Curricular Challenges and a Response 177 by Pankaj Ghemawat 2.4 Leadership Development in Business Schools: An Agenda for Change 218 by Jeffrey Pfeffer Part 3: The CEOs Perspective: What Companies Expect from Leadership Development 3.1 How to Develop and Promote Leadership from the Top 241 by Mireia Las Heras and Nuria Chinchilla 3.2 Managing Managers as Professionals: Leadership Development and Talent Transfer in a Global World 266 by M. Julia Prats and Remei Agulles Index 292
7 About the Authors Remei Agulles Research Assistant, IESE Business School, University of Navarra Antonio Argandoña La Caixa Professor of Corporate Social Responsibility, IESE Business School, University of Navarra J. Frank Brown Dean, INSEAD Jordi Canals Dean, IESE Business School, University of Navarra Nuria Chinchilla Professor, IESE Business School, University of Navarra Arnoud de Meyer President of Singapore Management University Pankaj Ghemawat Anselmo Rubiralta Professor of Globalization and Strategy, IESE Business School, University of Navarra Matt Golosinski Executive Editor, Kellogg School of Management, Northwestern University Dipak C. Jain Professor and Dean Emeritus, Kellogg School of Management, Northwestern University and Dean Elect, INSEAD Mireia Las Heras Assistant Professor, IESE Business School, University of Navarra Jay O. Light Former Dean, Harvard Business School, Boston, MA, USA vii
8 viii About the Authors Pedro Nueno Bertran Foundation Professor of Entrepreneurship, IESE Business School, University of Navarra and President of China Europe International Business School (CEIBS) Jeffrey Pfeffer Professor, Graduate School of Business, Stanford University M. Julia Prats Assistant Professor, IESE Business School, University of Navarra Josep M. Rosanas Credit Andorra Professor of Markets, Organizations and Management, IESE Business School, University of Navarra
9 Introduction JORDI CANALS, Dean, IESE Business School The recent financial crisis highlights several significant weaknesses of market capitalism in an integrated global economy, and the dangers of permanent international financial imbalances. It also stresses some forgotten dimensions in corporate finance and corporate strategy, such as the impact of financial leverage on firms valuations and the relevance of adequate risk management and control systems. Nevertheless, this crisis also sheds light on a deeper challenge for the corporate world: the quality of leadership. What we are witnessing today in many companies is a combination of reckless strategic decisions, excessive short-term focus and poor governance mechanisms. It is true that the sheer force of external shocks the housing bust and its impact on banks profitability and firms valuation, for example is impressive. However, the financial crisis raises some fair questions that senior business leaders and business schools have to ponder about: What could companies have done differently? Was there another perspective to assess risks and evaluate investment decisions? Were the goals and objectives set up by boards of directors realistic? What types of business leaders have companies asked for, and universities helped develop? These are some of the pressing questions that senior managers, board members and business schools, among others, have to think about. The challenge here is not so much to find the culprit, but to learn what could have been done differently, what the responsibilities of CEOs and board members are and, more important, where the focus of leadership development should be. In this context, leadership development was considered an appropriate subject for discussion in one of the academic conferences celebrated on the occasion of IESE s fiftieth anniversary. The conference was organized under the title of The Future of Leadership Development: The Role of Business Schools, and was held at IESE in Barcelona on April The speakers included deans of leading international business schools, ix
10 x Introduction management scholars, CEOs and heads of human resources management of international firms. The conference was attended by 500 senior executives and MBA students. Since its foundation in 1958, IESE has shown a strong commitment to improving the practice of management and leadership in the corporate world. While other business schools in the United States and Europe were created and developed with the purpose of developing management as a social science, IESE was oriented more toward leadership development and research with a specific focus: their impact on the practice of management. IESE was lucky to be able to count on Harvard Business School s support when launching in 1964 what became the first two-year MBA program in Europe. A joint committee was set up by the deans of Harvard and IESE, its purpose being to design the objectives and curriculum for that program and to plan other educational projects. This committee has been active since then, working on new projects and being influential in helping to develop business schools in Africa, Asia, Eastern Europe and Latin America. Structure of the Book This book aims to offer an interdisciplinary, multiperspective approach to the topic of leadership development in the corporate world, in the light of new managerial challenges, such as globalization and the 2008 financial crisis. It brings together the ideas of a group of experts who are critical agents in this process: business school deans, leading faculty members, CEOs, and heads of human resource management in international firms. Most of the papers were presented in the 2008 IESE conference. The book is organized in three parts. The first part is structured around the topic The Deans Perspective on Leadership Development and Business Schools. In my Chapter 1.1, entitled In Search of a Greater Impact: New Corporate and Societal Challenges for Business Schools, I deal with some relevant topics for leadership development, such as the purpose of the firm, the role of senior managers in a company, and the challenges of integration and globalization, among others. INSEAD s Dean, J. Frank Brown, discusses in Chapter 1.2, Millennials and the Changing Landscape of Business Education, the behavior patterns of a new generation of high potentials and their impact on issues such as employer employee relations, lifelong learning and program design. Arnoud de Meyer, President of Singapore Management University, presents a new model of leadership in Chapter 1.3, Collaborative Leadership: New Perspectives in Leadership Development. De Meyer discusses how some
11 Introduction xi major changes in the business world, such as alliances and innovation, should be introduced into new leadership development models. Former Kellogg s Dean, Dipak Jain, and Editor, Matt Golosinski, reassess in Chapter 1.4, entitled The Enduring Value of the MBA Degree, the unique contribution that good MBA programs make to graduates, companies and societies. In Chapter 1.5, headed Business Schools and the Demands of Business Leadership, the former Dean of Harvard Business School, Jay O. Light, considers the main issues around management education and leadership development in the USA and how schools will have to change to face new realities. In Chapter 1.6, on The Contribution of Business Schools to the Twenty-first Century, Pedro Nueno, Bertran Foundation Professor of Entrepreneurship at IESE and President of the China Europe International Business School (CEIBS), China, offers his views on the main contribution of business schools in recent decades, and how they need to reinvent themselves for continued success. Part 2 of the book is organized around some horizontal issues of special relevance in business education and leadership development. Chapter 2.1, by La Caixa Professor at IESE, Antonio Argandoña, and entitled From Action Theory to the Theory of the Firm, discusses the main limits of the traditional view of the firm and presents guidelines for a more useful model. This topic is picked up by Josep M. Rosanas, Credit Andorra Professor of Markets, Organizations and Management at IESE, in Chapter 2.2 A Humanistic Approach to Organizations and Organizational Decision-making. While Argandoña deals with the theory of the firm, Rosanas discusses the limits of modern decision-making and how to consider a more realistic hypothesis of human behavior. In Chapter 2.3, entitled Bridging the Globalization Gap at Business Schools: Curricular Challenges and a Response, Pankaj Ghemawat, Anselmo Rubiralta Professor of Globalization and Strategy at IESE, discusses the progress business schools have made in integrating globalization in their programs, and some steps they can take to improve it. In Chapter 2.4, Leadership Development in Business Schools: An Agenda for Change, Stanford Professor Jeffrey Pfeffer argues that leadership development is an important challenge for business schools, and that more evidence on its impact has to be found if they want to have a deeper impact. Part 3 is organized around two papers prepared by faculty members who introduced and moderated business leaders panels at the 2008 Conference. Those papers introduce some practical ideas for leadership development and organize and present some of the speakers main experiences. Chapter 3.1,
12 xii Introduction How to Develop and Promote Leadership from the Top, by IESE Professors Mireia Las Heras and Nuria Chinchilla, deals with some specific guidelines and actions that CEOs can provide to help develop leadership in organizations. In Chapter 3.2, Managing Managers as Professionals: Leadership Development and Talent Transfer in a Global World, by IESE Professor M. Julia Prats and Research Assistant Remei Agulles, reflect on how to help the flow of ideas and talent development in companies with an international scope. Both papers benefited from the ideas and experiences of a unique array of very distinguished speakers: Alejandro Beltrán (McKinsey, Partner and Head of the Iberian Office), Rolf Breuer (Deutsche Bank, former Chairman), Angel Cano (BBVA, CEO), Luis Cantarell (Nestlé, board member and CEO America), Andrea Christenson (Käthe Kruse, CEO), Carlos Costa (The Boston Consulting Group, Managing Partner), Julie Fuller (Avon Products, Executive Director, HR, formerly PepsiCo, Global Head Leadership Development), Franklin Johnson (Asset Management Inc., Chairman), Hans Ulrich Maerki (ABB, board member, and former Chairman of IBM Europe, Middle East & Africa), Ellen Miller (LBS, Executive in Residence, and former European Head of Leadership Development at Lehman Brothers), David Moon (Merck, Executive Director, Leadership Development), Rafael del Pino (Ferrovial, Chairman), Marc Puig (The Puig Group, CEO), Anna Ruewell (British Petroleum, Head of Talent Development), Alfredo Sáenz (Banco Santander, CEO), Nicholas Schreiber (Tetra Pak, former CEO) and Gildo Zegna (Ermenegildo Zegna, CEO). I am very grateful to the authors of the different chapters for their excellent contributions and suggestions on how to make the book more relevant and interesting. I want to thank Stephen Rutt, Palgrave Macmillan Global Publishing Director, and Eleanor Davey Corrigan, Palgrave Macmillan Assistant Editor, for their interest in this project and the excellent guidance they offered me during the preparation of this work. Keith Povey did an outstanding job in editing the book. Professors Luis Palencia, Juan Roure and Eric Weber, and Henri-Christian Hartloff and Alex Herrera provided great help in organizing the conference. Assumpció Cabré, Miriam Freixa and Ana Vericat provided very efficient support. Many participants in the 2008 Conference shared with the authors their knowledge, experience and expertise on this subject and offered terrific inputs for the book. I am very grateful to them all.
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