I was rather heartened by the fresh approach taken to illustrate business issues faced by executives, and in particular, a chief executive position in a weekend read of “Harder Than I Thought”, by co-authors Robert Austin, Richard Nolan, and Shannon O’Donnell.
Adopting a fictional slant, the book enacts character Jim Barton who has recently assumed pole position at an aircraft manufacturing company. Readers are treated to a delightful journey of his day-to-day agenda and decision making processes from both first and third person perspectives, along with reflections at the end of each chapter to recollect and instill some thoughts.
The authors did a good job at injecting life behind the interactions, including the occasional tension in the love-hate relationship between Barton and the calculative, crafty and svelte journalist Veronica Perez. The various portions and sections form learning points for students and executives alike as different aspects of a business from accounting, corporate financing to operations management and managerial economics come into play.
Taken within the context of the aircraft manufacturing industry, readers are exposed to managerial decisions ranging from use of composite materials that affect cost structures to human resource issues of bonus and remuneration. How should the R&D department for example be rewarded? Should Barton have ignored his PR director’s advice and gone that close to Perez in order to gain influence over her reporting? At the end of the book, readers have to ask themselves the implications of his decisions and how they would have done better if placed in the dilemmas presented.
1. The scenarios presented are a good reflection of real life situations. For example, the use of the aircraft manufacturing company has close semblance to the Dreamliner case that has seen 70% outsourcing of operations, which goes against the conventional grain of a 30% outsourcing.
2. Moral issues are played out, including intimate relations with a journalist. That gives a picture that is closer to reality as compared to purely perfect scenarios that executives may not necessarily deal with on a day-to-day basis.
In the attempt to cover a full suite of emotions and thoughts that encompass communication skills, personal vs private life, etc. the authors may have somewhat lost readers along the way. On the flip side, those side distractions may well be “perks” that keep easily bored readers interested.
Thursday, October 29, 1:48 p.m. . . . Sitting at his desk,Barton studied the SMA financial briefing book, preparing for a meeting with Clarke Gardner,the company’s chief financial officer. The book had been waiting on Barton’s desk when he’d arrived Monday morning,as he’d requested in advance. Tours and getting-acquainted sessions kept him from cracking the book open until today .But now he’d been able to spend more than forty-five minutes with it .He’d insisted on setting aside time for this in week one,both studying of the financials and the meeting with the CFO,for two reasons.
The first reason was practical: he needed to be sure he had a good handle on the company’s situation. Barton’s financial background made “the numbers”an important point of entry for him,a way of starting to form an overall picture that might offer him deeper insights and ideas. Having been a member of SMA’s board of directors,he knew quite a lot already but needed to drill down into the details. And he wanted to compare his interpretations with someone knowledgeable,someone who knew the numbers and had been closer to the action at SMA.
Barton had seen Gardner give presentations to the board on numerous occasions and considered him extremely knowledgeable. Based on limited interactions,Barton had formed a strongly favourable opinion of Gardner’s intellect and a belief that the CFO could be a huge asset.
Expertise and brainpower would not be Gardner’s shortcomings. But Barton feared that the CFO might just have another shortcoming,a potentially serious one. And that was the second and primary reason that Barton had insisted on rearranging his planned schedule to meet with the CFO in week one. SMA’s accounting practices under the previous CEO,Ed Frazier,had cost him that job.Technically,there’d been no wrongdoing.But the approach SMA had adopted,aimed at painting an optimistic picture of the company’s situation,had been too aggressive. Companies choose accounting practices that make them look good all the time,and everybody understands that. But under Frazier,SMA had gone too far. It had created an impression within the broader financial community of trying to present an overly optimistic picture of the company’s situations critics accused the company of engaging in “financial engineering”—a term that had taken on a pejorative meaning.The effect had been to undermine confidence in the company and its management.The outcome ofthis confidence issue made Barton’s challenges as the new CEO tougher. Now Frazier was gone (to the board of directors,unfortunately),but Gardner,the CFO who’d helped Frazier execute these questionable maneuvers,remained.What role Gardner had played—whether he’d recommended the questionable practices to his engineering-trained,not very financially savvy boss,or whether he’d advised against them and the blunder had been Frazier’s alone—Barton needed to know.
Put simply,Barton had to know if he could trust Gardner.Quite apart from financial acumen,Barton had to know whether the man was fundamentally honest—ofsound judgment and substantial character— enough for Barton to rely on him in the months and years to come. Ifthe poor judgment had been Frazier’s,then knowing this would help Barton manage his relationship with the board.With Frazier still around,Barton also had to know where Gardner’s loyalties would lie in a crisis.Barton’s assessment would depend to a great extent on how forthcoming Gardner appeared in response to Barton’s questions.
Barton had not already decided to fire Gardner,though that was a possible outcome of the meeting. Gardner might well arrive at the meeting expecting to be let go. That would be a likely reason for a new CEO to insist on an early meeting with the CFO,especially given SMA’s recent financial history .And firing the CFO could have advantages; it would send a strong signal to the financial community that the new CEO would not tolerate the accounting practices of the recent past and perhaps begin restoring confidence in SMA.
Barton had intentionally made no effort to diffuse Gardner’s expectation that he might be sacked. It might be useful to see how Gardner would bear up under the stress of that worry.
Barton looked around the office,deciding how to use the space for the meeting.Offices on the executive floor ofthe SMA headquarters were well appointed and technically up to date,but didn’t possess the opulent, overdesigned quality ofBarton’s prior digs in a big-city,high-rise financial services headquarters.He’d seen all the offices on the floor by now,as first Krishnan had walked him around and then later he’d made a point of walking around by himself,looking in on members ofthe executive team to meet them,chat,or just say hello. Barton had noticed that pretty much everyone had great airplane models in their offices,a not-so-subtle way of showing off the programs they’d worked on,at SMA and elsewhere.Several had Boeing,McDonnell Douglas,or Airbus models,which he assumed conveyed particular credibility and experience with the industry “big boys.”
Barton had no models ofhis own,of course,but someone had thoughtfully placed some SMA models in Barton’s office,so he wouldn’t feel out ofplace (in this regard at least). Barton’s office contained a large desk,a pair ofnice chairs,a small table for informal meetings,and a large leather sofa that Barton thought he could comfortably sleep on.Through one door,just offthe main office,a formal conference room with a long table and a high-technology setup awaited.
Just beyond this and through another door,the CEO’s private dining room beckoned.Also offthe main office,tucked into a corner was a combination dressing room and bathroom,complete with a shower.Not quite as fancy maybe,but much bigger all together,than his former office at EFG. Barton decided he’d keep the meeting with Gardner informal,that they’d sit at the small table in the main office. On a notepad—paper,since he still hadn’t received his new electronic tablet—Barton began listing questions for Gardner.Most were standard questions,ones he tended to ask about any company.
First,he’d want to get at the big picture: Are we winning or losing? And: What do we need to do as a company over the next three years,for the good of our customers,shareholders,and employees? Then,in terms familiar within the CFO’s world: If we did these things,what would this look like in our pro forma financials?
And by extension: What would need to change from what we see today? From what Barton had been able to see so far,in the briefing book and in his wider research,there would be a cash problem,especially ifthe company planned to finish the development ofits new commercial cargo plane,which he understood to be key to any path forward.He added questions about this: How much funding do we need to finish development ofthe new plane? Barton reckoned they needed about $8 billion for this,but it would be interesting to see what Gardner thought,having worked through the numbers with Susan Akita’s engineering team.This demand for financing led directly to other questions: Where will we get the money? Some ofit,Barton and everyone else had concluded,had to come from adjusting the cost structure ofthe existing organization.SMA was paying for things it had needed historically as a military contractor,but wouldn’t need as a commercial aircraft company. People, organizations, services.
Adjusting cost would be difficult.Everyone—analysts,investors,journalists, anyone else who cared enough to form an opinion—had concluded that this would mean layoffs,outsourcing,and other measures unpopular with key organizational constituencies. Barton had to admit that he saw noway around such conclusions.The path to these outcomes appeared treacherous,paved with potentially explosive problems with employees, unions, partners, municipalities, and even elected officials.The potential for these problems led Barton to several more questions: Will we have cash flow problems? Other crises we can anticipate? If so, when? And what might we do to avoid them? Or at least schedule them in a manageable way?
Reprinted by permission of Harvard Business Review Press. Excerpted from Harder Than I Thought: Adventures of a Twenty-First Century Leader by Robert Austin, Richard Nolan, and Shannon O’Donnell. Copyright 2012. All rights reserved.
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