01 Aug 2001

Cleveland Global Alumni Conference a Sold-Out Success

Re: Don Hastings (MBA 1953); Ray Gilmartin (MBA 1968); Alec Machiels (MBA 2001); Ann Fudge (MBA 1977); Bill George (MBA 1966); Gary Pisano; Myra Hart; Clayton Christensen; Kim Clark; Michael Porter
by Julia Hanna


"Build it and they will come," announced Donald Hastings (MBA '53), chair of the HBS Global Alumni Conference held May 15-18 at the Renaissance Cleveland Hotel. Greeting a record-breaking crowd of more than one thousand participants, he recalled that many alumni snickered when Cleveland was announced as the 2001 conference site. After two days packed with dynamic breakout sessions and inspiring keynote addresses by HBS faculty and some of the world's leading business executives, however, no one was laughing.

The conference, "Leading in a Changing World: Innovation, Transformation, and Growth," followed four tracks of inquiry: managing innovation, information technology and competitive strategy, transforming the enterprise, and entrepreneurship. "Ours is an era of organizational experimentation," observed Professor Gary Pisano , the conference's faculty chair, in his opening remarks. In a rapidly changing landscape that presents increasingly complex management challenges, leadership skills are even more essential to a venture's success, Pisano said. "A good business model is necessary but not sufficient," he stated.

Raymond Gilmartin (MBA '68), chairman, president, and CEO of Merck & Co., kicked off the first plenary session with a quick overview of factors contributing to the U.S. pharmaceutical industry's success in competing in the global market. Among other ad- vantages, Gilmartin cited the U.S. government's investment in biological research, a legal system that emphasizes the importance of intellectual property rights, and the "fairly transparent and efficient" nature of the FDA. Maintaining this competitive advantage, he noted, requires the reversal of two alarming trends: a decline in the number of trained scientists and engineers and decreasing educational investment in math and physical sciences. Moving on to challenges Merck has faced, Gilmartin explained that new drug discovery tools have increased the speed at which its competitors can introduce new products to the marketplace, even as patents for some of the company's best-selling drugs expire. "We had to undertake a complete transformation of how Merck operates," he said, outlining strategies that included stepping up resources devoted to scientific research and marketing, integrating divisions of the company, and heading off problems in the clinical process by involving manufacturing and marketing in the early stages of a drug's development.

In a lunchtime address, Jacques Nasser, president and CEO of Ford Motor Company, touched on a number of experiences from his 33 years at the auto giant, including what he referred to as "the tire issue" involving the Ford Explorer and Bridgestone/Firestone. "That was a tremendously difficult period for our customers and for us as a leadership team," recalled Nasser, before adding that Ford's commitment to consumers made it an easy decision to replace some 13 million tires on Ford vehicles. Globalization and increased competition require a departure from a traditional, "top-down" management style, Nasser continued. "Every employee must be a teacher, learner, and leader," he said.

Later in the day, Professor Myra Hart led a breakout session on the topic of "Start-Up Challenges" that included a presentation by Alec Machiels (MBA '01) on Potentia Pharmaceuticals, winner of this year's HBS Business Plan Contest (see pages 6-7). When creating a successful venture, said Hart, basics such as scalability, sustainability, adaptability, and profitability are key components of any new business - to say nothing of the entrepreneur's own motivation, capability, and commitment. "The most important part of the opportunity is you," she emphasized.

Professor Clayton Christensen expanded on his research concerning disruptive innovation in an afternoon plenary session that examined how industries have been transformed through new technologies. He suggested that the health-care industry is also ripe for disruption. Technological innovations such as improved testing and diagnostic equipment and more targeted drugs could soon break down the existing hierarchy between specialists, family care physicians, and nurse practitioners, Christensen said, in some cases even enabling patients to treat themselves. Resistance to such a scenario is strong in the rules-based world of medicine, he conceded. "Disruptive innovation has been ignored or opposed by the leading institutions in their industries for perfectly rational reasons," he said, but the health-care system will only improve if professionals in the field "embrace change."

The next morning, Dean Kim Clark sounded a similar theme, noting that new technologies, dramatic shifts in markets and customers, and intense global competition have created a dynamic, turbulent era with radically different structures, processes, and systems. In such an environment, he stressed, the School's mission to educate leaders continues to be of utmost importance. Highlighting alumni such as Ann Fudge (MBA '77), group VP of Kraft Foods; Frank Batten (MBA '52), former chairman of Landmark Communications and creator of The Weather Channel; and Bill George (MBA '66), chairman of Medtronic, Clark cited a "pattern of broad and deep leadership" that is global in perspective, entrepreneurial in spirit, literate in information technology, and grounded in strong values and high standards.

The call for leadership was taken up later in the day by Professor Michael Porter. "Inequality is probably the single biggest problem facing America," he stated in a talk titled "Inner-City Renewal." Noting that the economic plight of inner cities is often categorized as a social issue, Porter called for a more inclusive viewpoint, observing, "There is no inherent conflict between capitalism and the needs of society." More specifically, he continued, the inner city must be brought into the mainstream economy, not classified as an area in need of subsidies and special considerations. "Economic development in inner cities must be approached from a competitiveness perspective and be based on business opportunities in the inner city that are genuinely profitable," Porter said. "The suburban era is over," he declared. "Inner cities are an axis of innovation, transformation, and growth."

In an entertaining lunchtime address peppered with anecdotes and one-liners, Cleveland native Tom Coughlin returned to his hometown to share some of his insights as president and CEO of Wal-Mart Stores Division. When he joined the company in 1978, Coughlin noted, sales were at $678 million. In 2000, sales reached $190 billion; projections for 2001 are forecast at a whopping $215 billion. "Every company is interested in growth, but it doesn't just happen," he said, stressing the need for innovation, direct communication, and close customer contact. "Sam [Walton] was a fanatic about talking to people in stores," Coughlin commented, referring to Wal-Mart's founder. "Our growth has come from our ability to innovate and transform our organization into what customers expect."

Weather for most of the conference was overcast and rainy, but the spirit of sun, surf, and fun was very much in evidence at a Beach Boys concert held at the Rock and Roll Hall of Fame and Museum on the second night of the conference. The following evening, alumni traded their tie-dyed T-shirts for more formal attire to attend a performance of The Cleveland Orchestra at Severance Hall. And as the conference came to a close, another musical event — a dramatic tango demonstration — offered an elegant preview of the 2002 conference, "Redefining Distance: Opportunities & Challenges," to be held March 19-21 in Buenos Aires, Argentina.

— Julia Hanna


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