WHARTON LEADERSHIP DIGEST 

May, 2003, Volume 7, Number 8

CONTENTS 

Leading with Integrity:  Wharton Leadership Conference on June 4, 2003  
Assurance and Innovation:  Over-Confidence in Introducing Risky Products
Learning Leadership in the Himalayas:  A Trek to Mt. Everest
Ethics and Leadership:  Unyielding Integrity


LEADING WITH INTEGRITY:  Wharton Leadership Conference on June 4, 2003  

The Wharton Leadership Conference focused on "Leading with Integrity" will be held in Wharton's Huntsman Hall in Philadelphia from 7:30 am to 5:30 pm on June 4, 2003.  Speakers include the CEOs of Lucent, Tyco, and Vanguard, and the president of the University of Pennsylvania.  Additional information on the conference can be found by clicking here, and online registration is available here. 
 

University of Pennsylvania President Judith Rodin; Vanguard Group Chairman and CEO John J. Brennan; Lucent Technologies President and CEO Patricia F. Russo;  Tyco International Chairman and CEO Edward D. Breen.  

Assurance and Innovation:  Over-Confidence in Introducing Risky Products 

Over-confidence is evident when managers believe that a decision outcome is more likely that factual information would truly predict.  Prior studies confirm that over-confidence is most prevalent when managers face new kinds of decisions or have received little feedback from their prior decisions.  

Drawing on those studies, researchers Mark Simon and Susan Houghton predicted that over-confidence would also prevail when managers are introducing radically new products to the market.  Since such decisions are pioneering, risky, and without prior experience, managers are likely to over-estimate the likelihood of their success. 

The researchers studied a number of product introductions of small firms in the computer industry.  They focused on 55 companies with fewer than 100 employees that launched a new software and/or hardware product near the time of the study, and they followed up 18 months after the launch to find if the products had been successful in the market.  They defined success to include good demand for the product, maintenance of quality standards in the product, control of expenses in making the product, and overcoming product challenges from other firms.  

Professors Simon and Houghton then assessed the extent to which the new product was  pioneering, defined to include the extent to which it differed from current offerings, required fresh distribution channels, and targeted new customers.  They found as anticipated that the more pioneering the new product, the more the product managers were over-confident about its likely success.  When their new product was more incremental, managers were more accurate in their forecasts of future success.  

By implication, a manager’s over-confidence may be important for getting an innovative product out the door – but may also heighten the likelihood of an unanticipated commercial disaster.  Managers and companies can work to minimize the latter by using such devices as devil’s advocacy against a product before the launch and a careful analysis of its real prospects after the launch.  The issue is not how to avoid risk, but rather how to optimally work with it.  

Source:  Mark Simon and Susan M. Houghton, “The Relationship between Overconfidence and the Introduction of Risky Products:  Evident from a Field Study,” Academy of Management Journal, 46, 2003, pp. 139-149.


Learning Leadership in the Himalayas:  A Trek to Mt. Everest 

By Alex Perkins 

I was looking forward to the Wharton Leadership Trek to Nepal for several reasons.  First, I wanted to spend time with my father, who had invited me to join him on the trip.  Second, I had previously trekked on my own in Africa and South America and had always hoped to hike in the Himalayas.  Third, I had recently – and somewhat abruptly – made a number of major personal and professional life changes and intended to use the trek to reflect upon this evolution.  Finally, I was interested in the leadership program and curious to see how a mountaineering model of leadership could be applied in a corporate context. 

We left Kathmandu in a 15-seat propeller plane and climbed higher and higher above the foothills and then flew among the peaks of the Himalayas.  Though new, beautiful, and amazing, the experience so far remained within the parameters of my expectations.  

Suddenly the small plane dropped its nose and began to dive.  Leaning out into the aisle and looking through the open cockpit doorway and the front windshield of the plane, I could see our destination – the Lukla airstrip.  A short swath of tarmac about the size of an aircraft carrier deck, the runway sat perched on the side of a mountain.  We continued our rapid descent.  Thirty seconds later, the small plane touched down and came to a halt 50 feet before the runway abruptly ended in a cliff.  As I exited the plane, I realized that the Wharton Leadership Trek to Nepal would include experiences beyond my wildest expectations, and over the next 11 days I was not disappointed. 

Trekking with my father was fulfilling, but much more so than I could have hoped.  Simply getting a chance to spend time together was satisfying.  But working together and relying on each other – as we scrambled up loose rocks to the 18,300 foot summit of Chukhung Ri with the rest of our team – made the time special and created a new source of strength in our relationship. 

The beauty of our surroundings was unbelievable.  Discovery Channel, National Geographic, and Outdoor Magazine cannot do the Khumbu Valley justice.  It is difficult to explain what it feels like to cross a 300-foot high suspension bridge, a river roaring below, the wind snapping at prayer flags all around you, with 20,000-foot cathedrals of snow and ice towering above.  Such awesome environs – experienced day after day – never lost their power and always brought a smile until your face hurt. 

Every day on the trail something new and unplanned occurred.  We encountered Rob Hall’s 1996 Everest Base Camp chief Sherpa, for instance, and spent 30 minutes listening to his assessment of what caused that season’s great disaster.  Jim Whittaker, the first American to summit Mt. Everest, was trekking on a similar route to our own, and he spoke with us about his experience on the way to the top.  We received a private audience with the abbot of the monastery at Tengboche, who talked about his selection as a reincarnate lama at the age of five, his role in the spiritual life of the region, and his views on leadership.  While at our highest campsite at 14,150 feet, we met Dennis Brown, a trip doctor on a highly publicized 1999 expedition where the youngest climber ever to summit Everest died on the descent.  

Our leadership discussions using the mountaineering model readily translated into the corporate context.  We drew out the leadership lessons from both successful and failed attempts of Mt. Everest, K2, and Annapurna – and from our own experiences in trekking and climbing Chukhung Ri and the 19,000-foot peak of Chukhung Tse.  Because of the varied makeup of our 21-person group, at least one individual and often four or five reaffirmed the same lessons from their own work experience.  

One simple but important leadership lesson that I took away from the trip relates to communication and the importance of knowing your team and how they receive and relay information.  Each day of the trip, three trekkers rotated into leadership of our trek, and they were charged with keeping tabs on the health of our group among other responsibilities.  Because of the weather, the physical exertion, and especially the increasing altitude as we headed higher and higher, people often operated under substantial physical and mental stress.  Most of us had never been up to 18,000 feet before.  

I noticed that the best daily leaders were those who were able to appreciate the varied communication styles of our team members so that the leaders could get an accurate handle on how each individual was faring.  This meant listening for distinct cues:  one person's "ok" was another person’s "absolutely miserable."  In the same way, company managers must be able to take the pulse of team members, and one method applied to all will not be effective with many.  A manager must come to know the team and appreciate what communication style elicits the most accurate information from its members.  You have to know what a response really means:  One employee's "I'm fine" is another employee's "I am completely overwhelmed.” 

Personally, I learned more about good leadership on the trek than I had learned in my entire career up to this point. 

Note:  Alex Perkins can be reached at aperkins@deanforamerica.com, and the itinerary and other information on his leadership trek to Mt. Everest can be found by clicking here.   Alex is a policy and research analyst for the U.S. presidential campaign of Vermont Governor Howard Dean.


Ethics and Leadership:  Unyielding Integrity 

By Kate Faber 

As more and more business corruption has come to light in the form of accounting improprieties and executive malfeasance, a shine that once adorned the world of business has darkened.  A generation that trusted the stock market with their retirement funds is now eagerly awaiting a restoration of that luster.  To assist the process, University of Michigan business school professors Noel Tichy and Andrew McGill have assembled a number of original essays on how to create more ethical leadership in business and beyond. 

Entitled The Ethical Challenge: How to Lead with Unyielding Integrity, the book is centered on a set of lectures delivered at a business school forum in 2002, including those of former U.S. secretary of state James A. Baker III, General Electric CEO Jeffrey Immelt, and Focus: Hope co-founder and executive director Eleanor Josaitis. 

Tichy and McGill provide a framework for integrating the lectures with two capstone chapters on teaching leadership.  They emphasize that: 

o  Knowledge creation and organizational learning are strongest when leaders – including the CEO – view themselves as teachers who share their points of view and deem the teaching process as an essential part of their leadership. 

o  The initial teachings from the top breed further teaching down through and back up the organization, producing a virtuous cycle of leadership development. 

o  The teaching and learning spreads knowledge throughout the organization, better preparing all managers for higher-impact leadership roles in the future. 

o  The more intensively the teaching-learning cycle engages people, the more it is capable of conveying the essential ethical dilemmas they are likely to face as well as informed steps for coping with them. 

The book’s contributors offer their personal perspectives on resolving to workplace ethical dilemmas.  James Baker, for instance, urges that individuals respond forcefully but also judiciously to the widely publicized ethical breaches in 2001-02.  An over-regulation of industry in the wake of Enron and WorldCom’s disasters could serve to create more harm than good by fostering a legalistic mindset rather than ethical culture. 

General Electric CEO Jeffery Immelt reports that he focuses on four areas that he deems essential for widespread leadership development:  company strategy; continuous learning; the alignment of heart, and wallet; and personal values.  Immelt sees himself as not just the strategic leader of the company but also its moral guide, and he works to build strong personal values and complete operating transparency throughout the firm. 

Focus: Hope founder and executive director Eleanor Josaitis reminds the book’s readers that a persistent commitment to the highest values of an enterprise is essential for achieving its ultimate aims.  In 1968, its first members agreed upon a compelling covenant:  

“Recognizing the dignity and beauty of every person, we pledge intelligent and practical action to overcome racism, poverty, and injustice, to build a metropolitan community where all people may live in freedom, harmony, trust, and affection – black and white, yellow, brown, and red, from Detroit and its suburbs, of every economic status, national origin, religious persuasion.” 

Now, 35 years later, Focus: Hope continues its unyielding commitment to strengthening the social fabric of the Detroit region.  

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