leadership in management and organizational

8/13/2019 Leadership in Management and Organizational

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How leaders go wrong

Professor D. Quinn Mills

Harvard Business School


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Capital markets

The Capital Markets are an Engine ofProgressThe Social and Economic Utility of CapitalMarkets


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How some vcs and bankers ledentrepreneurs in the wrong direction

Having to go to the Venture FirmsPressure to Spend

A Strategys Limitations Like Sheep to the Slaughter Get-big-fast instead of Get-it-Right


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How venture firms changed

their criteria


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Building to flip

Venture CapitalRushing to an IPO

Exiting an InvestmentHow their own Rules were Changed by theVenture Capital FirmsThe Baby Goes out with the Bathwater


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Choosing the wrong people

Whom to BackGarden.com: A Mistake from the Get-go

Boo.com


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How banks inflated the bubble

The Banks Bend the RulesWho Brought Those Duds to Market?

Mass Hysteria or FraudWhat Did the Venture Firms Know?Did Wall Street Cross the Line?


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Influencing factors: where doesresponsibility lie?

What the Accountants Should Have Doneand Didnt The Hype MachineThe FED Was Also At FaultAlan Greenspan And The Great Bubble


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Systematic deception

What Was Going On? Corrupt Accounting Restatements CEOs Ask for Misrepresentation Hiding Relative Importance Just Like the Others

The Common Accounting Dodges SEC Oversight The Criminal Mind


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More than a few bad apples

Conflicts of Interest: The Core of the ProblemThe Conflicts of Interest Which Fed theScandals Awards for The Best in Corporate America


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Infectious greed: who got the money?

Shareholders Versus CEOs: The CEOsMake It Big

CEOs Made Fortunes Without BuildingCompanies Aligning CEO and Investor Interests

Stock Options Begin to Dominate CEOsPay Packages


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The role of the accountants

Peer Review Deceiving Investors Legally

An Insidious Dynamic Develops Other Commercial Ventures The Integrated Audit


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The failure of checks andbalances

Neither Prevent Nor Punish Rubber Stamps Boards of Directors

Protection for Deception: The Role ofthe Attorneys The Failure of the Regulators

What the Prosecutors, Courts, and theSEC Didnt Do What the Fed Didnt Do


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Ordinary business at the banks

Conniving with Corporations toDeceive Investors

Greasing the CEOs Palm via IPOAllocations


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The corruption of the analysts Use It or Lose It May Day Maybe 20 Percent Are Honest

Whats Said Isnt Whats Done


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The temptation to steal

The New Very Rich: CEOs How CEOs Get Rich

The Ignorant CEO So Strong a Temptation The Crucial Importance of LeadershipThe Courage to Speak Out


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The ethics of the gutter

Do Whats Right: Why Ethics Are VeryImportant What Are Ethics? The Failure of Ethics Programs in Companies The Push the Limits Environment The Role of the Business Schools


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An ethical or legal embarrassment canbe devastating to a firm

NyseMartha stewartCitigroups japan unit Merrill at enron

Citigroup at world com Aig, marsh mclennan, the hartford


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Restraining Self-Inflicted Wounds

Proposals to Strengthen Corporate Boards The Danger of Ineffective Reforms Power Struggle: What Will Happen with Governance

Reforms if the CEO Retains His or Her Power


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Why individuals are very important

President Bush, Alan Greenspan,Warren Buffet

all agreeFailures in business arise in the

individual executive and cannot be

successfully dealt with by law or boardprocess


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The limitations of conventionalapproaches

Four common mistakes made byexecutives promoting ethics in their

firms Believing that having corporate

compliance programs means higherethical standards in the company

Believing that increased communityinvolvement means higher ethicalstandards in the company


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The limitations of conventionalapproaches (2)

Confusing company culture withindividuals ethics paying lipservice tocorporate ethics doesnt necessarilytranslate into ethical behavior

Failing to recognize the limits of anethical code imposed from above

Focusing on others to the exclusion ofones self


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Sources of the decline of individualstandards

Overly tolerant acceptance of marketoutcomesBroader social endorsement of greedPreference for detailed rules rather thanethical judgmentsThinking of ethical issues as pubic relationsmattersSeeing ethics as purely instrumental itsvaluable to be thought ethicalThe push-the-limits environment


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Five basic impediments to ethicalbehavior

Human nature greed, dishonesty andhypocrisy

A polygot society in which there are fewcommon norms of ethical behavior multiculturalism

A large and varied society in which there is

no strong sense of community, so thoseoutside the group are fair play for sharpdealing


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Five basic impediments to ethicalbehavior (2)

Modern myopia about ethics a focus onsocial issues environment, etc socialresponsibility rather than personal ethicsThe widespread adoption of relativism eachperson has his or her own ethics, as his own

truth, so that there is no standard forchoosing among different approaches


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Individual behavior today

Complex and subject to disagreementDifficult for a company or an executive

to navigateDangerous to transgress


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Legality and right behaviorRelated, but different Something may be unethical and illegal, But Something may be legal and unethical And Something may be illegal and ethical


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Alternatives for what an executive sets asstandards

Whatever the law allows Avoid bad publicity

Set absolute standards Faith-based Fiduciary rule (the client benefits)

A universal standard the golden rule Borrow from a profession, like medicine

Do no harm (to customers oremployees)

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Key to coaching executives aboutbehavior

Dont deal in platitudes Deal with real issues

Challenges that arise in the business Problems that arise from different ethicalstandards of business and media andpublic

Problems that arise from different ethicalstandards of different people in the firm

leadership in management and organizational

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