Executive Interviews: Interview with Robert Salomon on Staying on Top, Always
July 2009
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By Dr. Nagendra V Chowdary
Robert Salomon Associate Professor at the Stern School of Business, New York University.
Many celebrated management
techniques and tools have been
propounded and a few of them
continue to be used. For companies to
stay on top always, which of the
management tools and techniques, –
strategic planning, scenario planning,
scanning the periphery, competitor
and industry analysis, vision and
mission statements, BPR,
diversification, Blue Ocean Strategy,
etc., – do you think are desirable and
must be practiced at any cost? First, I must say that I am not sure I
believe it is possible to “stay on top
always.” People do not live forever,
dynasties do not remain forever, and
companies do not last forever. The
best we can hope for is to create a
company that lasts a longer time than
most, offers a high quality product or
service to its customers, and
produces consistent, above-average
returns for its shareholders, …for as
long as possible. I also do not believe that there are
management tools or techniques that
must be practiced at any cost, as
many of these techniques are product
of fad and fashion. That said
however, I believe that there are some
techniques that have a longer lifespan
than others. For example, I see
industry and competitive analysis as
one that will likely endure for some
time. It is of critical importance to
understand the elements that define
the competitive landscape in an
industry. With a better understanding
of the relationships among buyers,
suppliers, customers, etc., a company
can better predict how the industry is
likely to evolve, better anticipate the
needs of interested parties, better
allocate its innovative effort, and
better carve out a profitable niche. Why do good companies go bad,
after all? We live in a Schumpeterian world of
creative destruction, in which firms
that dominate industries eventually
become extinct. This is the natural
order of things. Innovation is always
pushing the boundaries,
revolutionizing mature industries,
creating new industries; and in the
process, new winners and losers.
A classic example is the newspaper
business. It is being revolutionized by
the availability and ubiquity of online
content (whether via blogs,
newsfeeds, video, etc.). This is
posing a real challenge to the
traditional newsprint business
model. Innovation in information
technology allowed this to occur, and
purveyors of on-line content have
eroded the profits of incumbent
newspaper firms. It will be interesting
to see how long the print newspaper
business can survive. The Schumpeterian nature of
innovation is fundamentally why I
believe it is incredibly difficult for
firms to “stay on top always.” The
dynamics of industrial development
just make it difficult, if not next to
near impossible, to anniversary
success ad infinitum. What is the role of business
schools in preparing either great
managers / great leaders for them to
create great companies? Any
interesting developments that you
have observed either in European or
American business schools? As I mentioned in a recent Op-ed for
the IB Times (see Knowing What and
How, Without Wondering Why), I
think business schools, in addition to
teaching fundamental business
theory in the disciplines (finance,
economics, management, marketing,
accounting, etc.), ought to encourage students to think, and ask tough
questions, about how the disciplines
interrelate.We ought to focusmore on
integrating across disciplinary
boundaries to impart a greater
understanding for how individual
parts affect the whole. Business schools would be well
served to shift the focus away from
the specialist model of training, and
toward a more generalist approach,
favoring analytics over the simple
memorization and execution of
formulae. Our curricular efforts
should therefore be focused on
imparting broad managerial skills. In
this way we can train more wellrounded
students who know not
only what to do when asked, but
also, why itmatters. I think this is the
key to training managers to become
stewards of the corporation who
manage in the best interests of all
stakeholders. |
The interview was conducted Dr. Nagendra V Chowdary, Consulting Editor, Effective
Executive and Dean, IBSCDC, Hyderabad. This interview was originally published in Effective Executive, IUP, OCT 2009. Copyright © OCT 2009, IBSCDC
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