WHARTON LEADERSHIP DIGEST 

November, 2006, Volume 11, Number 2 

CONTENTS 

Microfinance Comes of Age:  The New Leader of Women’s World Banking

It's Not About the Gizmo:  How Toyota Leads in Innovation 

Leadership at the Sharp End of the Rope:  Guiding Guides  

Insight on Oversight:  Thoughts on Recent Corporate Compensation Scandals 

Editor’s Picks:  Team of Rivals and Wikipedians
 

Microfinance Comes of Age:  The New Leader of Women’s World Banking

This year’s Nobel Peace Nobel prize went to Bangladeshi economist Mohammed Yunus and the institution he founded, the Grameen Bank. Yunus pioneered the idea of lending small amounts of money to impoverished women, using a model of peer accountability to ensure repayment. According to the bank’s most recent statistics, it has loaned more than $5.8 billion to 6.6 million Bangladeshis since its founding in 1976, with a repayment rate of 99 percent. The bank’s lending model has been replicated around the world.

Women’s World Banking, headquartered in New York City, has worked to professionalize this conscience-minded movement. With a network of more than 50 microfinance institutions worldwide that collectively reach 18 million customers, WWB has encouraged major commercial banks to engage in microfinance and helped develop performance standards for the industry as a whole.

Mary Ellen Iskenderian took over as CEO and President of WWB this September, after serving in various leadership positions at the International Finance Corporation (IFC), the private sector arm of the World Bank.

The Wharton Leadership Digest interviewed her last week – moments before she boarded a plane to West Africa – about her vision for the microfinance industry and the challenges of her new job.

Wharton Leadership Digest:  What was your reaction to the news about this year’s Nobel Peace Prize?

Mary Ellen Iskenderian: I was very excited for Professor Yunus personally, for the Grameen Bank as an institution, but perhaps more selfishly for the microfinance industry as a whole. The prize is a mark of microfinance’s coming of age and a recognition of the tremendous impact the movement has had on the world. The awarding of the prize also underscored the link between the alleviation of poverty and the prospects for peace. 

WLD: What attracted to you to microcredit and Women’s World Banking in particular?

ISKENDERIAN:  I have always been intrigued by the possibilities of microfinance, particularly as it has developed from a movement to more of an industry. When I worked IFC, it invested in microfinance entities as they were formalizing, transforming themselves from an NGO [non-governmental organization] structure to a more commercial structure. At WWB, I am seeing a broader range of organizational structures.

Many NGOs in our network are no less commercial than profit-driven financial institutions. Our affiliate in Columbia did a $100 million local bond issue the year before last. They are an NGO, an unregulated institution. The bond issue was twice oversubscribed when it went to market: That’s a serious amount of private capital they were able to raise. 

WLD:  On this spectrum between NGO and commercial structure, where would you put WWB?

ISKENDERIAN:  Within our network of affiliates, we have everything you can imagine along the spectrum. We have strictly NGO institutions; we have institutions that have already transformed and are now banks. We have affiliates that are in the process of transformation. We’re agnostic as to the model. We are all about operational and financial sustainability.

In the past, we’ve played an important role as an industry policy spokesman. Some of our most vital work has been working with regulators and policy makers in countries where our network members operate to make sure when regulation is necessary, it is done responsibility, without too heavy a hand.

WLD: What can commercial banks learn from the microcredit model?

ISKENDERIAN: Microfinance institutions are comfortable working with that very poor customer base; we reach a level of population that’s never been thought of as a customer before. Micro borrowers represent a class of risk that most commercial banks just don’t know how to approach. Banks have a great deal to learn about the risk assessment and lending technology of the microfinance industry, and WWB is uniquely positioned to make those linkages.

WLD: What are the most pressing challenges for your organization right now?

ISKENDERIAN:  One of the issues I’m most challenged by is the question of scale. There are somewhere between 90 and a 100 million microfinance customers in the world today, and yet the potential for borrowers is much greater. The numbers I’ve seen are in the range of 500 million. We’re going to have to be creative to make that leap. It’s going to take a lot of good practice and hard discipline, not just for WWB but for the microfinance industry as a whole. It can’t just be this precious little charitable movement any longer.

WLD:  What needs to happen to reach that goal of 500 million customers?

ISKENDERIAN:  Managerial capacity tends to be one of the biggest bottlenecks. WWB provides a whole range of technical services to our network members to help strengthen that capacity. We’ve recently developed a sophisticated financial risk management tool together with Citibank, and we’re now training both our network members and some of Citibank’s partner institutions. The training helps organizations move beyond the initial entrepreneurial vision and professionalize their businesses.

WLD:  Women’s World Banking has affiliates all over the world. What are the special challenges in leading an organization that is actually a global network? 

ISKENDERIAN:  Our global network is a huge value creator and differentiator for us. One of the big challenges is expanding our network, and I’m interested in Africa. We have some of the leading microfinance institutions on the continent as part of our network already, but there is so much more to be done. It’s our responsibility to expand there. Coming up with a viable expansion strategy is something I’m going to work through with my management team.

WLD: Why does microcredit focus primarily on women?    

ISKENDERIAN:  Microfinance has traditionally focused on the underserved and the un-banked – low-income women are that in spades, unfortunately. They also tend to be very, very good credit; they have extraordinary retainment records. Research also shows that when you make a dollar of loan funding available to a woman entrepreneur who is building her business, the multiplier effect on the community as a whole is far greater than a similar dollar of loan to a man. She turns any profits first back into her children’s education, secondly into healthcare for the community, and thirdly into housing. Loaning money to these women just makes good sense, not only from a business and retainment standpoint, but from a community standpoint.

WLD:  Is your CEO position a big change from your experience at IFC?   

ISKENDERIAN:  I was in senior leadership positions at IFC, which is a very large, bureaucratic organization. The move to becoming president of WWB – where the buck stops with me – has been exhilarating. It’s also a huge challenge. One of the most helpful books for me on making the transition has been You’re in Charge -- Now What?

WLD:  Did it feel like a big risk to leave the IFC for WWB?

ISKENDERIAN:  Right now is an amazing moment in the life cycle of the microfinance industry; the Nobel encapsulates that. So to have the possibly of taking the helm of a microfinance organization with such a strong reputation and impressive legacy just felt like all opportunity and not much risk at all.
 

IT’S NOT ABOUT THE GIZMO: How Toyota Leads in Innovation 

By Matthew May 

Mention innovation, and people immediately think “technology.” Wrong answer. Innovation is about satisfaction and value, not new gadgetry. Customers don’t want products and services, they want solutions to problems. When it comes to solutions, simple is better. Elegant is better still.

An elegant solution is one in which the optimal or desired effect is achieved with the least amount of effort. Engineers seek the elegant solution as a means of solving a problem with the least possible waste of resources. In a mathematical proof, elegance is the minimum number of steps to achieve the solution with greatest clarity. In dance or the martial arts, elegance is minimum motion with maximum effect. In filmmaking, elegance is a simple story with complex meaning.  

An elegant solution can be recognized by its juxtaposition of simplicity and power. Often, it’s a single tiny idea that changes everything. Elegant solutions are all around us, waiting to be discovered. But where do you begin? The starting point is often recognizing problems encountered in everyday life.  

That’s how Toyota began. As a young man of 20, founding father Sakichi Toyoda saw his mother slave all day to weave clothing on a loom, only to be forced to scrap a hard day’s work because of a single broken thread in the finished garment. It was a problem all the women in his village faced. Toyoda challenged himself to turn the situation around, and he used his carpentry skills to build a loom that would stop when one strand broke. It took him his entire adult life to perfect the notion, which culminated in Toyoda Automatic Loom Works, the successful precursor to Toyota Motor Company.  

The story of Sakichi Toyoda is not about invention, or about the technological development of the automatic loom in Japan. It’s about one man’s nearly spiritual quest to solve a very real problem facing the people around him. Read closely, his story reveals three guiding principles: Ingenuity in craft, the pursuit of perfection, and a fit with society. 

Ingenuity in Craft 

Innovation is measured in terms of ideas at Toyota, and it’s well-known that over one million new ideas are implemented there each year.  At Toyota, you’re not hired to do a job, you’re hired to take your work to the next level, be it engineering, accounting or assembly. Like another great innovator, W.L. Gore, Toyota requires its associates to determine where and how they can best add value.  

Years ago, a young American professional named Thornton “Thor” Oxnard arrived at Toyota’s headquarters in Japan, where he received a month of obligatory indoctrination in the Toyota way. Then he was told simply to “dig his own job.” Oxnard, now a senior manager at Toyota, quickly realized that he had to create his own job by finding and solving problems.  

Likewise across the entire company, Toyota associates engage in the constant search for problems, the solutions to which demand designer-like thinking, rather than simplistic fix-it thinking. Problems at Toyota are not about things gone wrong, but about opportunities to close the gap – if only a little – between the present situation and perfection. 

Pursuit of Perfection 

While a handful of game-changing innovations can be traced to a stroke of genius, the vast majority of effective innovations result from a rigorous search for the optimal solution. The discipline of increments results in a deep and balanced portfolio of ideas that both minimizes risk and moves the organization ever forward. Small steps taken in the systematic pursuit of perfection can ultimately result in something new and valuable.

Toyota worked tirelessly at continuous improvement for over thirty years before launching Lexus. It then took less than ten years to displace BMW and Mercedes, entrenched for generations, as the top-selling luxury brand in the United States.  

Innovation isn’t an either-or proposition forcing a choice between small steps and big leaps. It’s about how to achieve big leaps through small steps. 

Fit With Society 

Great innovation fits within a larger system. It requires a fundamental ability to exploit the market and the demographic forces that shape it. Toyota has an uncanny ability to not only see the parade already in progress and but also get out in front of it.

Contrary to the popular notion that Toyota takes a “build it and they will come” attitude, Toyota exerts enormous energy in understanding and cultivating customers. They observe them, infiltrate them, and even become them. Before launching the youth-oriented Scion brand, Toyota executives learned about Generation Y by attending raves, urban art shows, and extreme sports competitions. Scion is now the brand of choice among 18 to 25 year olds, and it has ensured a future customer base for the company.  

Development of the successful hybrid Prius began in the early 1990s, when Toyota revamped their research and development approach to keep pace with a rapidly changing market. A theme of environmental consciousness emerged from early brainstorming sessions. When the Prius was introduced at the 1997 Kyoto Conference, Detroit types who test-drove the car – including one William Clay Ford – thought it was a fanciful notion without a business case. In fact, Prius was the first to tap into an enormous hunger for environmentally friendly vehicles. 

Ingenuity in craft, pursuit of perfection, and fit with society. These three principles – ingenuity in craft, the pursuit of perfection and a fit with society – continue to fuel the engine of innovation at Toyota. Indeed, they are the underlying principles of nearly every great innovation the world has ever seen. 

Author’s note: Matthew May is senior advisor to Toyota and director of Aevitas, a Los Angeles-based firm that partners with senior managers to guide change and drive innovation. This article is adapted from his new book, The Elegant Solution: Toyota’s Formula for Mastering Innovation (Simon & Schuster/Free Press, October 2006.) May, a graduate of the Wharton School, can be reached at matt.may@aevitas.com.
 

Leadership at the Sharp End of the Rope:  Guiding Guides  

By Chris Maxwell and Al Read 

Tie into the end of the rope, step off the ledge, and you are committed to the climb. All of your senses suddenly come into focus. The wind is louder in your ears, the rock rougher beneath your fingers, the smell of your own sweat sharper in your nostrils. Adrenaline flows, and you tingle with the thrill of meeting nature’s wildest challenges. You have voluntarily entered the realm of high adventure. 

Mountains have always had a strong allure and, more than ever before, novice climbers are hiring professional guides to help them ascend the summits of their dreams. For the climbers, mountaineering promises intense but rewarding challenges, as well as valuable lessons in self-discovery and teamwork. For the professional guides who lead the climbs, the task is to rapidly build and train teams of climbers who often have little or no experience climbing big mountains.

Creating an effective team requires a skill set very different from the technical skill set mountaineers need to scale a peak. Successful guides are not just talented mountaineers: they are also skilled leaders. To build a team that can reach a summit with just a few days training, a guide must be able to instill an appreciation for risk in an uncertain environment, build trust, communicate effectively, and teach during difficult moments. These four abilities are also critical for success in the business environment. 

Exum Mountain Guides, America’s oldest guide service and one of its best known, based in Jackson Hole, Wyoming, requires all new and second-year guides to complete an annual training program to build team leadership skills. This year’s guide training program was held high in the Teton mountain range in late June, just before the summer climbing season began. Fifteen aspiring guides, including one U.S. Marine Corps Force Recon veteran, climbed under the close supervision of senior guides.  

Ensuring Safety in an Uncertain Environment:  As a professionally guided climbing team ascends towards the summit, it’s the guide who leads, unprotected, at what climbers call “the sharp end of the rope.”  The primary responsibility for mountain guides is to ensure the safety of their charges – and themselves. Exum guides teach clients basic technical climbing techniques and also require them to tie into a rope and wear a helmet, a waist harness and climbing shoes with sticky rubber soles, according to Stephen Koch, one of Exum’s senior guides.  

 “Technical climbing requires each climber to demonstrate competence at belaying, which means protecting the climber above and below with the rope,” said Koch.  Guides may not take a belay in normal conditions on moderate terrain unless the weather turns harsh, bringing snow, lightning, high winds or rockfall; on difficult terrain, a belay is a must. A guide's most serious responsibility is protecting clients, which also means protecting him or herself, as a serious fall by the guide could be disastrous for the entire party. Dave Carman, another senior guide, reminded guides about their teaching technique high on the rocks: “Don’t turn your back to the edge. If there’s danger, you want to face it. You’re the leader – and you’re vulnerable all day.” 

Building Trust and Responsibility:  Jack Turner, senior guide, focused on the importance of the guide’s leadership in establishing trust among all members of the climbing team. In the uniquely American system of guiding developed at Exum over more than seven decades, an egalitarian spirit of client involvement based on trust and responsibility exists, and Exum works hard to maintain that tradition. “Climbing is a trust sport,” said Turner. “You need to trust your gear, your partners, your feet, and yourself.”  Guides demonstrate the importance of trust by teaching client teams to safely secure each other, for example, during multi-pitch climbs on ascents of the Grand Teton. Trust and responsibility are intertwined as a team progresses up the rock face: Each climber must place full trust in the climber ahead and take responsibility for the climber behind. The result? Teams that reach the summit do so with a sense of accomplishment and self-worth.  

Demanding Clear and Consistent Communication:  Evelyn Lees, senior guide, focused on the need for clear and direct communication in the mountains. All Exum guides instruct their clients to use the same verbal commands during climbing, with no exceptions: “That’s me, Jack!”  “Climb, Evelyn!”  “Climbing, Jack!”  The value of such simple and repetitive communication is easy to recognize when one climber on the rope is high above and out of sight. Add in wind and storm factors and clear communication between climbers roped together quickly becomes a matter of life or death. 

Developing Teaching Skills:  Exum guides spend a great deal of time teaching so that clients can take responsibility for each other on the summit climb. Client teams generally complete a two-day mountaineering school in preparation for a climb of the 13,770 foot Grand Teton. Turner notes, “Most of our climbers have just learned in school what we then ask them to do on the Grand.”  Andy Tyson, 37, a second-year Exum guide whose prior experience includes ten years as a mountaineering instructor with the National Outdoor Leadership School, said, “Exum’s core program really encourages guides to teach rather than just guide. That makes both parties happy. The client is engaged and contributing, and the guide gets to know the clients and understand their abilities better.” 

Putting Lessons Learned Into Practice:  Business leaders, like guides, can build effective teams by helping others operate safely in an environment of uncertainty, fostering trusting relationships, communicating clearly and consistently, and teaching others during challenging experiences. For John Sims, a Merrill Lynch Global Private Client Vice President who reached the summit of the Grand Teton as a member of a guided team this summer, operating in the uncertain environment of his industry means giving his team members the confidence to work through complex financial models before challenging their assumptions and saving discussions for when the projections are delivered. “There are uncertainties inherent in trying to predict behaviors fifteen months out, so it’s about recognizing those unknowns exist,” Sims said. “People have to know they can come to you with a serious issue and trust you to help them resolve it. I have used the analogy of being roped together as a team, the constant cycle of trusting while climbing on belay then being responsible as the anchor, numerous times since I came back from Wyoming.”   

Sims acknowledged that communication with his team members is key. “A lot of my job involves interpreting the issue one of my team is explaining, then deciding how best to communicate it and to whom,” he said. By providing challenging experiences for junior staffers, which inevitably include making mistakes and learning from them, said Sims, “we’ve come full circle to the uncertain environment, and trust and communication issues I faced in climbing the Grand Teton.”    

Andy McGinnis, another Merrill Lynch Vice President and first-time Grand Teton climber, also sees the parallels between business and guiding. “Success in both business and climbing is achieved through a unique combination of individual contribution and teamwork,” he said. “Reaching the summit of the Grand Teton required our team to work seamlessly, as we belayed each other, checked each other’s equipment, and provided encouragement along the way. But each of us also had to climb to the top of the mountain under his or her own power. In my job, estimating my business’ earnings is very similar. To be successful, I must work with my colleagues across the business to obtain the best information possible. At the same time, my individual contribution to the final product will have a direct effect on the team’s success.”   

Climbing big mountains affords even novice climbers the opportunity to gain a new perspective on leadership and teamwork, and team members frequently reflect on these lessons long after the experience itself is over. Less often noticed is the way in which expert mountain guides help teams overcome the many challenges along the way. Guides, in fact, provide a new and useful model for leadership in business:  Leading like a guide means showing the way, at the sharp end of the rope, while building individual competencies and mutual accountability in each team member.  

Note: Chris Maxwell is Associate Director of Wharton’s Undergraduate Leadership Program. He directs an annual summer mountaineering leadership venture for Wharton undergraduates on the Grand Teton.  He can be reached at maxwellc@wharton.upenn.edu.  Al Read is President of Exum Mountain Guides and can be reached at exum@wyoming.com.

INSIGHT ON OVERSIGHT: Thoughts on Recent Corporate Compensation Scandals 

By Mark Hanna 

The stock option backdating scandals now afflicting corporate America have grown from a tiny trickle to a moderate-sized flood.  On Wednesday, October 11, 2006, computer security firm McAfee announced that Chairman and CEO George Samenuk had retired due to stock option discrepancies.  On the same day, CNet Networks said that Chairman and CEO Shelby Bonnie had resigned for the same reason. Then on October 15th, UnitedHealth Group announced that its Chairman and CEO, Dr. William W. McGuire, was stepping down due to likely stock option backdating and a conflict of interest with the chair of his compensation committee, William Spears. On October 31st, the Wall Street Journal reported that Monster Worldwide Inc’s founder, Andrew McKelvey, resigned from both the Chairman and CEO positions after declining to be interviewed by lawyers investigating his company’s backdating of options. [1-3] The companies caught up in the net of backdating scrutiny are well in excess of 150, and surely these companies represent only the tip of the iceberg. 

Background on Backdating Stock Options 

What’s all the backdating fuss about? When stock options were first employed in CEO compensation packages, top management quickly discovered that they could inflate the value of the options if they backdated them to a time when the stock was priced lower. There is nothing particularly wrong with backdating if certain conditions hold: (1) there was no forgery of documents involved, (2) shareholders (who pick up the tab) were properly informed, (3) the backdating was properly reflected in earnings and taxes. In practice, very few companies adhere to these strict standards, meaning that a vast majority of the options backdating going on is illegal. [4] 

And the backdating has been going on for a long time.  Back in 1997, NYU’s David Yermack published an article in the Journal of Finance in which he observed that stock prices tend to increase shortly after the grants. Yermack speculated that the phenomenon was probably due to peculiarities in grant timing.[5] Then in 2003, Erik Lie, an associate professor of finance at the University of Iowa, started a study of stock options, later published in Management Science in 2005, that confirmed David Yermack’s observations and provided strong evidence for the backdating explanation. [6]  Soon the SEC and the business press picked up on Erik Lie’s research, and the rest, as they say, is history. 

On Fiduciary Duty and Oversight 

While these backdating and compensation irregularities have the unfortunate effect of reducing shareholder value, their benefit is that they spotlight key lessons on board oversight and fiduciary duties. Here are a few. 

1. Be alert to the dysfunctional aspects of CEO entrenchment, which are more likely to occur when the CEO is also the Chairman.  The question of CEO duality—having the same individual act as both Chairman and CEO position, i.e., “unitary command”—is subject to some debate.  The U.K. corporate governance model of separating the Chair and CEO position stands in contrast to the U.S. model, which prefers to combine the two roles in one person, and each model has its own pros and cons. [7]  It is not even clear, as an empirical matter, that the presence or absence of CEO duality affects a firm’s financial performance. [8, 9] 

However, what is clear from agency theory is that CEO duality can result in both CEO entrenchment and a reduction of monitoring effectiveness. (For a review of agency theory, see Kathleen M. Eisenhardt’s 1989 article in the Academy of Management Review, [10].) In the McAfee, CNet, UnitedHealth Group, and Monster Worldwide  cases, the CEO was also the Chairman. It would be interesting to see if that same pattern holds for the majority of the remaining 150+ companies.

2.  Look under more than one rock.  The biggest bête noir right now seems to be option backdating, but that may not be the only abuse occurring in performance-based CEO compensation.  In a recent 2006 Journal of Financial Economics article, Daniel Bergstresser (Harvard) and Thomas Philippon (NYU) found “evidence that the use of discretionary accruals to manipulate reported earnings is more pronounced at firms where the CEO’ potential total compensation is more closely tied to the value of stock and option holdings.  In addition, during years of high accruals, CEOs exercise unusually large numbers of options and CEOs and other insiders sell large quantities of shares.” [11]   

Board members need to develop what Wharton’s George S. Day and Paul J.H. Schoemaker call “peripheral vision” to detect irregularities and “weak signals” happening off on the sidelines. Above all, board members need to become “vigilant leaders” [12]  not only in the broad environmental-scanning sense but in the internal monitoring sense as well.  

3. To improve vigilance and oversight, agents need to inform and principals need to ask. While it is true that senior management has a duty to inform the board of any improprieties and, in many of these cases, did indeed fail in their duties, board members as fiduciaries need to probe and ask questions, which falls under the category of duty of care.  [13, 14] 

The importance of asking questions is brought out in a 2005 article in The Wall Street Journal titled “Socratic Guidance for the Boardroom.”  In the article, John Krol of DuPont fame and board lead director for Edward D. Breen Jr.’s “new” Tyco states: “Directors do not manage a company.  Ideally, they try to provide Socratic guidance. (If they look like Socrates, that helps.)  In practice they ask the right questions, those that require management to prove that they have fully thought out their strategies and are aware of all potential consequences, intended and otherwise.” [15] 

4.  For optimal oversight, the inner and outer games of governance need to be aligned.  The outer game of governance is concerned with the external, structural aspects of directorship: having small boards, deciding on whether to have an executive or non-executive chair (or lead director), designing well-crafted committee charters, creating a decision table of “matters reserved for the board,” constructing an annual governance calendar, etc. The inner game is concerned with the principles and aspects of making quality decisions. [16-18] A large part of the inner game must be concerned with not only the psychological aspects of judgment and decision-making, but also the legal aspects of what constitutes a fiduciary relationship, with all the duties and obligations that relationship involves. [13] 

In summary, then, the inner and outer games of governance must be fiduciary in intent, aligned, and acting as one. 

1. Swartz, J. Options trip up CEOs at two tech companies. USA Today  2006, October 11  [cited October 28, 2006]; available here.

2. UnitedHealth Group Inc., 8-K Filing, Securities Exchange Commission, 2006, October 15.

3. Bandler, J. and M. Maremont, Monster's Founder Quits Board Amid Options Probe. The Wall Street Journal, 2006, October 31: p. A3.

4. Lie, E. Backdating of Executive Stock Option (ESO) Grants.  2006  [cited 2006 October 28]; available here.

5. Yermack, D., Good timing: CEO stock option awards and company news announcements. Journal of Finance, 1997. 52(2): p. 449-476.

6. Lie, E., On the timing of CEO stock option awards. Management Science, 2005. 51(5): p. 802-812.

7. Lorsch, J.W. and A. Zelleke, Should the CEO be the chairman? MIT Sloan Management Review, 2005. 46(2): p. 71-+.

8. Dalton, D.R., et al., Meta-analytic reviews of board composition, leadership structure, and financial performance. Strategic Management Journal, 1998. 19(3): p. 269-290.

9. Baliga, B.R., R.C. Moyer, and R.S. Rao, CEO duality and firm performance: What's the fuss? Strategic Management Journal, 1996. 17(1): p. 41-53.

10. Eisenhardt, K.M., Agency Theory: An Assessment and Review. The Academy of Management Review, 1989. 14(1): p. 57-74.

11. Bergstresser, D. and T. Philippon, CEO incentives and earnings management. Journal of Financial Economics, 2006. 80(3): p. 511-529.

12. Day, G.S. and P.J.H. Schoemaker, Peripheral Vision: Detecting the Weak Signals That Will Make or Break Your Company. 2006, Boston, MA: Harvard Business School Press.

13. Useem, J. and J. Badaracco, Managerial Duties and Business Law, #9-395-244 [Based on the American Law Institute's 1992 legal guidelines]. 1995, Harvard Business School: Boston, MA.

14. Dunfee, T.W., et al., Chapter 35: The Agency Relationship, in Modern Business Law and the Regulatory Environment. 1996, McGraw-Hill: New York. p. 639-651.

15. Falvey, J., Socratic Guidance for the Boardroom, in The Wall Street Journal. 2005, December 6. p. B2.

16. Useem, M., Corporate Governance is Directors Making Decisions: Reforming the Outward Foundations for Inside Decision Making. Journal of Management and Governance, 2003. 7: p. 241-253.

17. Useem, M., How Well-Run Boards Make Decisions. Harvard Business Review, 2006. 84(11): p. 130-138.

18. Useem, M. and A. Zelleke, Oversight and Delegation in Corporate Governance: Deciding What the Board Should Decide. Corporate Governance: An International Review, 2006. 14(1): p. 2-12.

Editor’s Picks:  Team of Rivals and Wikipedians 

This month the Wharton Leadership Digest introduces a new feature, “Editor’s Picks,” a highlighting of new and recent books and articles touching on leadership and change.   

Team of Rivals: The Political Genius of Abraham Lincoln, by Doris Kearns Goodwin, Simon and Schuster, 2005, available here.  

President Abraham Lincoln is one of the towering figures of American history, but his leadership came in part because he brought his arch political rivals into his wartime cabinet.  By appreciating and working with their personalities and predilections, he assembled a talented team of rivals that enabled him and his country to preserve the Union.   

“The Hive: Can thousands of Wikipedians be wrong? How an attempt to build an online encyclopedia touched off history’s biggest experiment in collaborative knowledge,” by Marshall Poe in the Atlantic Monthly, September, 2006, available here.  

This article answers all your questions about Wikipedia – Does anyone monitor it?  How can it possibly be accurate? – and raises some interesting new ones:  Can anyone successfully lead an organization that is comprised of thousands, if not millions, of independent individuals?