Stories
Stories
The second in a series of occasional reports on current research from some of the many faculty members whose classroom presentations to alumni have been a cornerstone of recent HBS reunions, this month we report on Professor Howard H. Stevenson's examination of predictability in the workplace and Associate Professor Willis Emmons's work in the area of government policy and business.
In Praise of Predictability
"It used to be that if you worked hard and kept your nose clean, you'd enjoy a good career," says Howard Stevenson, the School's Sarofim-Rock Professor of Business Administration. "Now it seems that if you work hard and keep your nose clean, they'll get rid of your division."
Stevenson believes that many of the remedies prescribed today for enhancing competitiveness - organizational innovations such as restructuring, matrix management, re-engineering, and continuous improvement - are wreaking havoc on the workplace. Reengineering, for example, destabilizes and changes the rules by which organizations operate, he says. "Many of these programs are actually designed to make life easier for top management without regard to how they affect other employees," Stevenson observes. "That is a big mistake."
Predictability allows everyone to know what the rules are, establishing an atmosphere of trust so that people can work together productively in an organization, Stevenson argues. Companies can provide more stable environments by, among other things, creating clear performance guidelines and encouraging employees to create value through long-term thinking - rather than by trying to follow the latest "flavor-of-the-month."
"Predictability is not certainty," Stevenson emphasizes. "It isn't about having a lifeless organization. It means simply that people can know what reasonably to expect. Nobody wants to play a game where they find out after the final whistle whether the high or low score wins."
Stevenson, who joined the HBS faculty in 1968, developed two real estate courses with a general management perspective before leaving the School in 1978 to become vice president, finance and administration, of the Preco Corporation, a privately held paper manufacturer. In 1981, he returned to the School to lead research and teaching in the field of entrepreneurship and the following year was named the first incumbent of the Sarofim-Rock chair, a professorship established to provide a continuing base for research and teaching in the field of entrepreneurship.
Stevenson teaches the elective course Entrepreneurial Management and the doctoral course Basic Readings in Administrative Theory. He is the doctoral program coordinator for the General Management area. From 1991 to 1994, he served as the first senior associate dean, director of financial and information systems, at HBS. He has coauthored five books and written nearly two hundred cases and articles.
The Managerial Implications of Deregulation and Privatization
Seldom a day goes by in the 1990s without some new sign of the apparent retreat of government in the face of the relentless power of free market forces. Yet, in reality, contends HBS associate professor Willis Emmons, international trends in deregulation and privatization do not imply that government will no longer play a critical role in shaping the business environment and, in turn, influencing performance at the industry and firm level.
Since joining the faculty in 1989, Emmons has conducted extensive research on the interaction between government policy and business interests both in this country and abroad. His elective MBA course, Capitalism Constrained: Public Policy and the Manager, examines the role of the state in five economic sectors: energy, communications, transportation, health, and the environment.
"Deregulation, with roots in the U.S. political economy of the 1970s, has spread to a growing number of industries and countries around the globe as governments have sought to spur competition, innovation, and reduction in prices to consumers," notes Emmons. "The term 'deregulation,' however, often obscures the complexity of the shifting role played by government."
For example, deregulation in the U.S. communications industry has entailed the gradual removal of protected monopolies and rate-of-return regulation. Yet, at the same time, new government policies have been adopted to require open access and nondiscriminatory pricing in areas such as local telephone networks and cable programming. Ironically, notes Emmons, the "deregulatory" Telecommunications Act of 1996 enhances the powers and responsibilities of the Federal Communications Commission in a number of key areas, while removing government restrictions in others. "From a managerial perspective," says Emmons, "government continues to play a critical, although changing role in determining constraints and opportunities in the communications sector."
Turning to the issue of privatization, Emmons explains that governments in both developed and developing countries have increasingly pursued sales of state-owned enterprises as a means for increasing economic efficiency and improving government finances. Yet, privatization does not imply the disappearance of government from the affected sector. In many cases," says Emmons, "the reduction in state ownership is accompanied by the establishment of new governmental bodies authorized to regulate the affairs of the privatized industry. In addition, the government often attaches various conditions while providing certain guarantees to buyers during the privatization process, which in turn implies ongoing public/private interaction following privatization.
Emmons's research on privatizations in Europe and Latin America has shown that governments are particularly concerned with maintaining control over the affairs of privatized monopolies. "For example, in the cases of electric utility privatizations in the United Kingdom and private highway concessions in Mexico, managers have faced ongoing scrutiny on the part of government regulators, who themselves experience a wide range of pressures from consumer and other advocacy groups."
Emmons argues that ultimately the notion that government is becoming less relevant to managerial strategy and performance is misguided at best and dangerous at worst. "While deregulation and privatization are indeed reshaping incentives and altering the competitive environment in many markets, the state is not 'withering away.' Success in deregulated and privatized sectors will ultimately be achieved not by those firms that ignore government," Emmons concludes, "but instead by those that design business strategies that account for the newly configured political and interest-group environment."
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