01 Dec 1997
Banking on HBS
World Bank Executive Development Programby Garry EmmonsTopics:
Since his arrival in 1995 as its new president, James D. Wolfensohn (MBA '59) has set in motion sweeping cultural and operational changes at the World Bank. One of Wolfensohn's early initiatives, undertaken together with HBS and several other academic institutions, was to establish the World Bank Executive Development Program (EDP), a special executive training course for the Bank's upper-level managers.
"I felt that the World Bank's top people should have an intensive exposure to the latest ideas and techniques in the management of global organizations," explains Wolfensohn, who came to the Bank after a distinguished career as a Wall Street investment banker. "I wanted a program that would stimulate their thinking and make them aware of different approaches to problem solving and implementation of alternative courses of action."
A key early supporter and informal advisor to Wolfensohn during the intellectual evolution of EDP was former HBS Dean John H. McArthur, an MBA classmate of Wolfensohn's, who today continues to devote significant time to the World Bank. Senior Associate Dean of Executive Education W. Earl Sasser, Jr., who oversaw the formal development and implementation of EDP, calls it "the most ambitious customized executive education program the School has ever undertaken."
The program consists of three two-week modules - one conducted at HBS, the other two in Washington - spread out over approximately six months. A seventh week must be spent in the field, living in a project in a village or poor area within a developing country. Participants are drawn from a pool of one thousand top managers at the Bank Group and on the outside from other public institutions, such as the International Monetary Fund, as well as representatives from the private sector, client countries, and nongovernmental organizations. EDP cohorts typically consist of some 120 participants; the first cohort completed its work in March 1997.
Sasser lists several reasons why HBS decided to take a leadership role in organizing and implementing EDP. "The program has energetic CEO support in the person of Jim Wolfensohn, a focus on top-rank managers, and a global orientation," he explains. "It provides a splendid opportunity for conducting research and developing course material - to date, fourteen cases have been developed in the context of the program, several of which have already been used in both the MBA and Executive Education Programs."
HBS Dean Kim B. Clark cites the heightened collaboration and shared learning among HBS and its EDP partners - Stanford Business School, INSEAD in France, IESE in Spain, and Harvard's Kennedy School of Government. "EDP has helped create a working relationship between institutions with a truly global point of view," says Clark. "The Bank and the academic institutions will all benefit greatly from the synergies created by working as colleagues on this project."
"And last but by no means least," Sasser adds, "EDP gives our faculty the very rewarding sense that they are contributing to improving an organization whose only mission is to help poor people and developing nations help themselves."
Meeting the Challenge
Indeed, the Bank's stated mission is to reduce poverty and improve living standards by promoting sustainable growth and investments in people. To those ends, it provides loans, technical assistance, and policy guidance for its member countries throughout the developing world.
But when Wolfensohn took the Bank's helm, both the institution's image and the morale of its employees were poor. Critics contended that Bank projects often brought more harm than help to client-country populations and ecosystems and that the Bank was irrelevant and obstructionist in an age of heightened private-sector capital flows. They charged that mismanagement, stemming from a bloated bureaucracy, lack of accountability, and an unwillingness to adapt to a rapidly changing world, was widespread.
Wolfensohn and his team are responding in a number of ways to correct these and other shortcomings. Perhaps his single largest reform initiative is the Strategic Compact. Its goals are to make the Bank more user-friendly and client-responsive by moving more resources, personnel, and budgetary and decision-making power into the field. Along with this decentralization, reductions in managerial staff and increased institutional agility are also priorities. In addition, Wolfensohn wants to create a "Knowledge Bank," to take advantage of new technology as a repository of the Bank's decades of accumulated data, information, and know-how that could routinely be drawn on by development projects around the world. New networks linking Bank managers and staff will facilitate internally the sharing of expertise and best-practice techniques.
EDP Facilitates Change
EDP's three modules are separated by one to two months. The first module, held at the School and chaired by HBS professor Michael Y. Yoshino, considers strategy formulation and implementation. The second module, with INSEAD professor Kasra Ferdows as chairperson, looks at the internal processes of organizations. Finally, the third module examines larger leadership and cultural issues, with HBS professor John P. Kotter playing a major role in this phase along with Stanford Business School professor Charles O'Reilly.
The case method is the primary learning tool; overall, cases used in EDP range from an examination of General Electric CEO Jack Welch's management style, to agricultural development in Zambia, to improving police performance in Bolivia, to an energy project in India. Classroom discussion is supplemented with workshops (including a four-day finance workshop), study groups, and out-of-class projects. The week-long Poverty Module, established by the Bank, puts EDP participants directly in the communities to which they are providing development assistance. Its purpose, explains an internal Bank document, is "to get us closer to our client and to inform our appreciation of the challenge of poverty reduction and of the importance of partnership in that venture."
The Classroom and the World
For participants, EDP is proving effective on several levels. Nina B. Shapiro (MBA '76), a senior official at the World Bank, completed the program in August. As director of the Project Finance and Guarantees Department, she is in charge of implementing the Bank's effort to catalyze private investment in developing countries by guaranteeing long-term debt from the market against government contractual obligations.
"A big lesson I took away from the course," Shapiro says, "is the importance of gaining internal acceptance for specific change, even when almost everyone acknowledges that change in general is needed. I became more aware of the need to work early on with other managers to complement their current programs. These are valuable insights, particularly as my department tries to incorporate a new Bank instrument."
And the push for changing the Bank's institutional mindset - a Wolfensohn priority - also appears to be bearing fruit, according to feedback from participants. In a concluding session of EDP, one participant's comments, addressed to Wolfensohn as well as EDP professors and administrators, spoke volumes: "You have given us leadership - vision, motivation, a sense of purpose, and the potential for a quantum leap into the future. You are waiting for us to act! We now understand. You have empowered us to lead change at the Bank."
The World Bank at a Glance
The World Bank is actually five institutions, formally known as the World Bank Group. Its workforce consists of some 10,000 people (including nearly 2,000 Ph.D.'s), most of whom are employed at its Washington, D.C., headquarters. Although the United States controls only 17 percent of the Bank's votes, by tradition the Bank's nine presidents have all been Americans. (Australian-born James Wolfensohn, the Bank's current head, became a U.S. citizen in 1980.)
- Established at the Bretton Woods conference of world leaders in 1944 and today consisting of 180 member countries, the International Bank for Reconstruction and Development makes low-cost, long-term loans (with funds derived from capital-markets borrowings) to developing countries for projects in areas such as agriculture, public works, and social programs. Loans total some $17 billion annually.
- Using capital donated by wealthy countries, the International Development Association, founded in 1960, provides some $6 billion annually in long-term, interest-free loans to the world's poorest countries.
- The International Finance Corporation invests some $2.5 billion in private-sector enterprise in developing nations.
- The Multilateral Investment Guarantee Agency encourages outside investment in developing countries by insuring investors against noncommercial risk factors, such as government privatization.
- The International Centre for Settlement of Investment Disputes facilitates settlement of investment disputes between governments and foreign investors.