The CEO Agenda
The real world and academia come together in a most unusual research project.
Published in the spring 2007 issue of LEAD magazine, a publication of the LeBow College of Business at Drexel University.
During a lengthy interview as part of the LeBow College of Business CEO Agenda research project, Amoore Group consulting firm president Renee Amoore revealed to Bert Rosenbloom that her business philosophy is "to manage like it's life or death."
"That could be the title of a good trade book," Rosenbloom, the Rauth Chair Professor of Marketing Management, told his colleagues during a project meeting in January, several months after the meeting with Amoore.
"Did you pick that up during the interview?" asked Jeff Greenhaus, the William A. Mackie Chaired Professor of Management.
"No, I didn't," Rosenbloom answered. "I didn't get it until I started going through the transcript."
Rosenbloom's fellow researchers nodded knowingly, as they realized together that their study was finally starting to bear fruit. After just beginning to analyze their interviews with 17 regional CEOs, the researchers - Rosenbloom, Greenhaus, Rolph Anderson, and V.K. Narayanan - were already starting to recognize trends and commonalities.
"The CEOs are seeing through the prism of their particular industry, but their observations, challenges and solutions can apply across industries," Rosenbloom said.
Again, the researchers quietly assented while reading through Rosenbloom's detailed notes. With the gleaming Cira Centre framed within the third-floor conference room window of the Academic Building, and the Comcast Tower rising in the distance, the distinguished professors talked about the next step in their unprecedented project.
"What role can Drexel play in helping some of these companies solve their problems?" queried Anderson, the Royal H. Gibson Sr. Chair Professor.
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The CEO Agenda is an unprecedented research project through which LeBow College of Business senior faculty members are studying interviews with powerful executives at prominent regional businesses. The goal of the project is to find out what obstacles and challenges these successful businesses have had to overcome and how they accomplished these feats; and further, the researchers are looking to see if those lessons can be applied to other companies and into course curricula.
The results of the project will be presented to the business community at large so that everyone will have the ability to benefit from the CEOs' insights.
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The CEO Agenda project was born out of a simple conversation Dean George Tsetsekos had with his senior staff.
"We were trying to see why certain companies, somehow, are very well suited to meet competition and to be global leaders where others are falling apart," Tsetsekos said. "Perhaps, we thought, it is because their CEOs understand the challenges better than others."
The dean said the next questions were, "How can we identify those challenges that they understood early on? How can we categorize those challenges? How can we provide a service to those who are falling apart or falling behind, and give them some motivation?"
His staff, led by Narayanan, Stubbs Professor and associate dean for research, quickly formed a wish list of CEOs in the Greater Philadelphia region with whom they were interested in speaking.
"There have been a lot of complaints about the kind of research business schools do," said Narayanan. "And that is that schools are completely devoid of real-life stuff. You just sit in your ivory tower and all. I've heard that for 30 years. It's not new in any sense."
While he argues that traditional research has great value, for this project the staff decided to take a completely different route.
"Why don't we just go out and find what their challenges are so that we can come back, talk about it and discover what research we should be mounting here?" Narayanan asked.
With this project, the college can take an even more proactive role in the business community.
"It's a very innovative method, from my point of view, and from the business school's point of view," Tsetsekos asserted. "You engage the constituency and you add value to all the great things that those executives do."
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The list of CEOs was pared down and appointments were made. In the end, 17 executives from a variety of industries - including financial, chemical, utility, food, cable, and insurance - were chosen to be interviewed. Interviews began in late 2005 and were concluded in 2006.
Each of the interview subjects was from a large, established company, such as PNC Financial and Hartford Insurance. Many of the companies represented are publicly traded on the New York Stock Exchange, examples being Aqua America and Reliance Standard. All of the companies - such as Comcast, Rohm and Haas and the Tasty Baking Company - are invested in the region.
The researchers have spent the intervening months dissecting the interviews and narrowing the results down to four levels.
At the first level are underlying themes - broad ideas, many of which have become commonplace. Each of the CEOs spoke generically about the challenges their companies face, including technology, government regulations, competition, and globalization.
"That level by itself is no longer the story," Narayanan pointed out. "In today's world, globalization means nothing because everybody understands what globalization means. It's a mega-trend."
The next category focuses on sub-themes.
"A sub-theme might be how it applies to a particular industry," Rosenbloom said. "If globalization is a general theme, a sub-theme, as it came up in one of the interviews, would be the creation of partnerships and strategic alliances - organizations from different companies working together and leveraging their skills and resources."
The first two categories involve issues that companies have been dealing with for some time, ideas that have been discussed, processed and analyzed.
"The third and fourth levels are where we can really tell the story," Narayanan said.
The third level is comprised of nuances.
"A nuance would be something like how that plays out in a particular company," Rosenbloom clarified. "One of the CEOs observed that, in her experience, you can't just send over a team of middle managers to lead overseas operations. You need to involve top management, even the CEO himself or herself, in order to do a global or strategic alliance. You need a top manager's involvement."
The problem is that personal issues play a larger role in making business decisions now, and some top executives are reluctant to live abroad for extended periods of time.
"Ten years ago, you simply say, 'We'll give you a huge package to relocate in China, and when you come back, we'll take care of you,'" Rosenbloom said. "What we discovered in this process is that that plan doesn't work anymore."
Some people don't want to move because they have families, he explained. They have a spouse who is working or they don't want to pack up the children and move.
"The social demographic situations that companies are faced with are very different from what it used to be even 10 years ago," he said.
The researchers discovered that the perfect executive to relocate to China, for instance, would be a Chinese-American who is currently a part of the business - a person who has loyalty to the company and ties to the foreign location. Finding qualified, top-level employees with such particular qualities is difficult and time consuming.
"But that is the kind of solution we've heard about," Rosenbloom said.
Narayanan said that several CEOs stressed the importance of having executives abroad who understand the culture of the foreign locales.
"The way we do things here in the U.S. probably doesn't work elsewhere," he said. "If you have a manufacturing plant in California, you can call up the guys and say, 'Here is the problem, why don't you solve it?' That is job enrichment, allowing people to spend their time finding solutions to problems. You try that in India and nothing will happen. At 5:00, they'll all go home."
The challenge is to find leaders who can motivate the workers beyond their traditional means and can also satisfy the home office.
"These are the really interesting trends that no one is really talking about," Narayanan said. "What do you do? You have to find new methods of managing people."
Another nuance about which the researchers learned is an idea one CEO termed "de-coupling."
With older, senior-level employees retiring, there is a sense of losing the institutional memory of the company, the researchers were told.
There is no guarantee that long-time clients will be retained as long-time workers leave the company. And with so many employees reaching retirement age now, the ramifications could be disastrous.
A new arrangement, the CEO pointed out, is for companies to allow senior employees to retire, but then to retain their services as contractors.
"You get them off the payroll but bring them back in," Greenhaus said.
"There are no benefits [for the employee] and you retain loyalty. You keep that linkage to the past."
The fourth and final level of understanding is the idiosyncratic - the insights and random remarks provided by the CEOs.
"An idiosyncrasy would be something that is associated just with their company or from their particular viewpoint," Rosenbloom said.
At this point, the idiosyncratic ideas are merely random comments that may or may not be of any assistance to those outside the specific company, he added.
"They are ideas that just fell out of their mouth," Narayanan said.
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Nicholas DeBenedictis, chairman, CEO and president of the Bryn Mawr-based utility company Aqua America, participated in the project because he felt his personal observations might provide the students with an unusual point of view.
"I wanted to give a perspective to the students on how important, in today's world, the government is in running your business," said DeBenedictis, a former Greater Philadelphia Chamber of Commerce president, a Drexel University alumnus and current University trustee. "Start with Sarbanes-Oxley, then pricing and FDA approval for the drug companies."
He delved beyond the underlying theme of government regulation to find nuance-level solutions: businesses need to understand the role of governing entities and have working relationships with them.
"When you really look at it, everything is driven by government policies," DeBenedictis said.
Health care benefit costs are a major underlying theme with which companies are still trying to learn how to cope, he said.
"It used to be that health care was 3 percent of your payroll, so who cared?" DeBenedictis remarked. "You go to Blue Cross and get an indemnity plan. Now it's 10, 12 percent and you really start to analyze it as it becomes a major feature in your payroll administration. The defined benefit will force a lot of companies, because of the new accounting rules, to go negative net worth because of the future liabilities they owe that are unfunded. It's huge."
Projects like the CEO Agenda, he said, may help businesses handle such obstacles.
Stan Silverman, the former president and CEO of PQ Corporation, spoke to the researchers about the importance of establishing the right corporate culture, especially in this era following the CEO scandals at WorldCom, Enron and Tyco.
"You need to lead by example," he said. "Did the CEOs of these companies think the people within their organizations didn't know what was going on? Everyone knew. And they've set a low standard for the people below them."
Silverman served as the CEO of the 176-year-old, Philadelphia-based, global chemical and engineered glass material company for five years until it was purchased by JP Morgan Partners. He is a trustee of Drexel University and serves as a guest lecturer at universities and companies on the subject of executive leadership.
"Sarbanes-Oxley ensures that financial transactions are properly recorded and effective checks and balances are in place," he said. "Most important, in my point of view, is the CEO's tone at the top, which communicates his expectations and the moral compass of the company. Establishing proper values helps create the right corporate culture," Silverman said.
"When a CEO talks before his employees, they know what he stands for and they know that he wants them to do the right thing because that is the only thing that is going to be tolerated," he said. "That's just as important as doing all the legislative stuff."
Doing the right thing is the key, he said, and in the end it will lead to stronger performance and better results for the company, no matter what the industry is.
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"This is consistent with our mission, as an institution that brings together theory and practice, and it is consistent with our educational mission because we can bring those recommendations in front of the eyes of the students," Tsetsekos said. "But it is also part of our engagement with the community because we can take those findings and present them to the business community."
The researchers will be meeting over the next few months to pore through the data and search for trends. It is time for deep content analysis.
Tsetsekos is hoping that the project will be completed and ready to present by the end of 2007. The concluding event will likely be a panel discussion in which the interview subjects will be invited to speak before students, faculty and guests.
"The students can become aware," Tsetsekos explained. "This would be of considerable value to them."
He is hoping that the project spurs faculty to find timely, relevant research topics, and he's hoping that it brings funding dollars to the school.
On a grander level, Tsetsekos is hoping to franchise the project so that it can be adopted and applied in markets across the country and around the world, with Drexel University's LeBow College of Business getting credit in each location.
"I think this is one of the wonderful case studies where a business school takes the lead, developing a creative way of bringing the business school and the community together," the dean said.
Narayanan agreed, saying, "If you do this at a high level, you can take it out on the market and say, 'This is what the world is saying. This is what we should be paying attention to.'"
Tsetsekos said the research will likely be ongoing, with more CEOs interviewed and more companies' practices analyzed.
The researchers may even revisit the original test group.
"It would be nice to know," Tsetsekos mused, "whether, over time, those challenges remain, or if they have changed."