Member
|
Harvard Advanced Management Program
My experience at the Harvard Business School's AMP
HBS EXPERIENCE
I was one of the fortunate folks to be accepted at the Harvard Business School’s Advanced Management Program – class 194. Here I share some of my experiences with hopes they would help others exploring opportunities for leadership and management development. Needless to say, each and every person admitted to this prestigious program has spent months going thru’ the application process, is top-of-the-line in his or her respective organization with a potential to be the next Leader and it is time, finally, to embark on this journey!
The countdown to Boston begins with an extensive “check-list” published by HBS
Day -20
Long before the course start, accounting modules released on the HBX website. I almost felt going back to MBA with a flurry of good ol’ financial and managerial accounting courses.
The interactive HBX website was a great resource to take classes embodied with excellent illustrations and videos. Prof Narayandas who taught the classes virtually, was first rate.
Day 1 (Day after Easter)
Finally, the day arrives. I land at the Boston airport literally 1 hour before the inaugural lecture and it’s snowing in April. So scramble to find an Uber taxi to get to the campus. And of course, we get lost on the extensive HBS campus till we make our way to the Chao Center – I have one expression at his point “Wow”!
The course kicks off with an excellent introductory lecture by Prof Ranjay Gulati with references to the ancient Indian folklore of Akbar and Birbal – and how appropriately he homes in the concept of ‘self-reflection’. We left with the message of “you got to be ALL IN”.
We jump straight into the fire with our first case-study on RyanAir by Prof Jan Rivkin. Even though we had gone thru’ the case studies as part of our MBA training earlier, this was a unique experience debating on issues with fellow class members and the platform set directly by the professors who actually wrote these cases.
This is followed our first living group introduction – folks from all over the world – Australia, Malaysia, Israel, Scotland, Japan and of course, the US. We were all a bit shy but the ice broke right at the dinner table that evening over a glass of wine!
From Right to Left: Bobbie, Sarah, Brad, Ronny, Feisal, Petteri, Taro and myself
We were welcomed to the professionally appointed rooms at the Tata Hall (dedicated by none other than the respectable Ratan Tata, Chairman of Tata Group). Almost humbling knowing that he is an AMP alumnus – went thru’ this program in the 1970s.
Day 2
Prof Gulati wasn’t kidding when he mentioned we’ll be drinking straight from the fire-hose. The first official day begins with multiple case studies. Fortunately, had read some of these in the days leading to the program. As usual, I jumped right into the discussion without having to be cold-called!
We get our feet wet by understanding competitive strategies of Pepsi and Coke during the Cola wars, how to identify the right customer and market appropriately by discussing the battle between P&G and Colgate by Prof Moon. It was clear that the goal is not to win but to create win-wins.
We end the case studies by an impressive 1.5 hour marathon by Prof Vietor discussing the rise of Singapore from an unknown entity to one of the richest countries on the planet.
The evening is occupied by our first living group acceleration followed by one on one coaching. Needless to say, an exhausting day!
Day 3
We start off discussing the case of Rob Parson and grasping basics:
• Importance of honest appraisal.
• You just cannot over-communicate performance expectations. Equity gap usually biases us into thinking we are better than we are!
• Self-fulfilling prophecies as demonstrated by ‘Project Implicit’ at Harvard
We then dive into finance with Professor Gilson – who has a gift of turning complicated financial theories and ratios into easy to understand day-to-day operations.
• 2 main learnings: don’t run out of cash and maximize value.
• No Geneva convention for terms so people use different labels for the same ratios
• Too much strategy and no finance -> recipe for disaster
• How closely related are our personal finances and corporate finance – eg. buying a house on mortgage is nothing but LBO (leveraged buy out) or as Prof likes to call large bankruptcy opportunity!
• 3 main pillars of financial performance are profitability (income statement), financial structure (balance sheet) and liquidity.
• Balance sheet is a snap-shot of a Formula 1 racing car vs. income statement is a video of the fast racing car
The day ends with thought-provoking discussion on Google car which leads to a charged discussion on how far would disruption go!
• Importance of value creation and value capture
• How Google is able to charge massively for it’s ads. For instance, sponsored ads are charged 3 dollars per click!
• Importance of aligning business model (value creation/capture) with operating model (structure/processes/assets)
Day 4
Finally, a break from cases – but nevertheless a busy day – starts with a collaborative picture test administered by our wonderful coach Paul W. This is followed by experiential learning including the Everest Simulation ( yes, you read right – Everest as in Mount Everest, the challenge is to ascend to the Summit as a team by using business/strategy expertise!)
we learn about
• Operating Systems – closed, open, random
• Certainty vs clarity
• Team development lifecycle – forming -> storming -> norming -> performing
• Always depersonalize feedback – better to say ‘at the same time’ instead of ‘but’ (always a red flag when you hear but)
At last, some time to hit the gym at the awesome Shad Hall and walk across the Charles River to the pharmacy to get some stationery to store the exhaustive amount of accumulating literature. Still chilly – with wind chill about 20 degrees F and some claim we are still in April!
We then had a wonderful dinner at the Chao Hall with fantastic team members who are all opening up (with more Wine on the table ) sharing their life experiences quickly diversifying into a nice discussion about country specific tax rates, healthcare system and on and on…..
A welcome introduction at the Baker Hall by none other than the respected Dean Nitin Lohria, emphasizing the importance of HBS Mission Statement, “ to educate leaders who make a difference in the world.”
Day 5
We kick the day off with Professor Palepu discussing accounting.
• Great insights into IFRS vs. GAAP (vs. Steve Jobs’ metrics!)
• Stock price is a function of FCF (future cash flows)
• Apple and other giants approached the FASB to influence a change in the GAAP model to align better with IFRS
We then receive some excellent leadership lessons that would stick with us for the rest of our career:
• As a leader, you force the process, not the outcome
• Shake the tree – to alleviate information asymmetry
• People have confirmatory bias and usually risk averse
• Try to break group-think (the Abiline paradox)
• Conflict does not need to be your enemy
• Task conflict helps vs relationship conflict hurts performance
• Diversity if not managed properly leads to disaster
2nd day of Cartwright discussion continues:
As usual great insights connecting the Holy Trio – balance sheet, income statement and cash flow statement
Day 6
Quite selfishly, the most exciting (and reckoning) day so far as we discussed a case on India – get a selfie with Prof Dick Vietor dressed in an Indian flag tie.
The most amount of energy that I’ve seen thus far in the group – most Indian-origin AMPers than any other nationality and interestingly, most of them don’t live in India – but still relate to their roots. A proud moment. But lot of work to be done to alleviate income inequality, improve education and elevate standard of living.
We then shift to learning negotiation with Prof Guhan Subramaniam – kicks off with interesting exercise in groups of 4
My good friend Taro stole the show by scoring the max (and possibly cheating :)) The evening was a bit relaxing, some folks went over to the TD Stadium to watch Ice Hockey while I stayed back to organize my ultra-chaotic room with a piece of paper lining every square inch. Brought the complimentary HBS branded binders to use. Created a schedule for following week and completed the Coaching assignments. Embarked on a late evening stroll thru’ the campus in freezing 25 F and quite honestly, for the first time since arriving on the campus, relished being at THE Harvard!
Day 7
Caught up on sleep this lazy Sunday (slept a full 9 hours!!), hit the Shad hall gym for an hour and then back to work. Headed to the historic Baker library which was marked by serenity and lined with history – conquering 4 case studies in 5 hours. The book collection hosts the first ever NY Times edition ever published and a real, true, not an artifact, Nobel Prize!
Day 8
Asked to be the Living Group Leader for this week, I now have an opportunity to experiment some of my leadership skills and work on the weaknesses. I attempt to bring discipline and structure to our case-discussions. We open the day learning about an amazing story of the Swiss watch industry – Swatch which literally disrupted the market by bringing the Swiss legacy back to life.
• Idea innovation
• Scarcity can create urgency in market
• How effectively they added ‘emotion’ to the product
• Mediocre marketing is easy – brilliant marketing is more than hard
• The best shape-shifter of all times – Steve Jobs – understood the elements of surprise and innovation
The technology run continues as we discuss Nokia followed by Apple – evolution of smartphone industry:
• The difference between product (many) and platform (one)
• Nokia went thru’ one of the biggest destructions of value
• Platform can provide network effect, interoperability and positive reinforcement
• Important to recognize the Willingness To Pay (WTP) while deciding on price points.
Shifting from an objective to an emotional path, Prof Tom DeLong brought everyone to tears by talking about issues faced by high achievement driven individuals. One effective remedy is to express gratitude. Especially to parents, significant other and our children. Easier said and as simple as it may sound, something most of us don’t do enough. I call my parents the same night.
We then begin a series of optional lectures, first led by Claudio Fernandez-Aroaz, a highly successful executive recruiter – helps recruit folks at top levels in top organizations.
• Learnt the difference between performance and potential.
• Elements of executive potential – Curiosity, Insight, Engagement and Determination
Day 9
We start learning about classification of assets (something that produces future benefit) and expenses (if only in this period) using the example of a hypothetical company called Polymedica.
Assumptions are usually tested by Auditors, Investors (thru’ Analysts) and the SEC
Important to connect business model to financial reporting choices
Importance of voluntary supplemental disclosure – to create credibility and make investors understand your strategy/execution
Then a crash course in NPV and IRR. We look at the profit formulas
• Net Income (NI) = Sales – Cost – Depreciation – Interest – Taxes
• EBIT = S – C – D
• EBITDA = S – C (simplest and most commonly used in healthcare)
• EBIAT = S – C – D – T
• Most analysts use all 3 of these
• Generally speaking, if a project returns positive NPV – OK to invest
• NPV is nothing but the sum of all cash-flows adjusted to the value of today’s dollar – the # you use to back calculate or adjust is called the Discount factor or rate
• In other words, this is the rate of return by investing your cash in an equally risk alternative investment
• More risky cash-flows warrant a higher discount rate (that’s why rates of more than 30-40% in venture investment world)
• Also, IRR is just a hypothetical rate, NOT a rate of return on investment!
China – The Power Has Emerged! The New Normal has arrived under the leadership of President Xi Xinping as they move to increase consumption and reduce leverage from exports. Also trying to bolster services.
We then do a debrief on Negotiation – I only made 100k Important concepts learned:
• FOTE (Full open truthful engagement)
• Try never to mention price first
• Anchoring – framing
• BATNA was coined at Harvard (best alternative to negotiated agreement)
• ZOPA (Zone of Possible Agreement)
• Bluffing is a part of negotiation (no pun intended)
• Research shows that we unknowingly leave 1/3rd of the pie on the table
One-one coaching- work to do on a few aspects like Affect, Assertiveness and Team building – can only go so far alone.
What a way to end the evening with Wine and Cheese – exquisite Italian wine, cheese, jam and bread. An opportunity to share grievances and support each other!
Day 10
We start the day with watching a movie in class, seriously “12 angry men”. Lessons learnt:
• Importance of interpersonal influence and persuasion
• Important to ask questions instead of giving answers
• Socratic leadership style -> appear neutral and calm; know how to bring out questions
• Inquiry over advocacy
We then talk with Professor Joe Bower about the JP Morgan Chase revamping the city of Detroit after their bankruptcy - the four pillars off their strategy
• small business
• jobs and skills
• neighborhood
• financial health
Professor Gilson – at his best in this finance tutorial – IRR is still one of the best measures to evaluate venture investments
We then had a talk with the former delta CEO Mr. Joe Mullin who made partners at McKinsey at the age of 29, now an global advisor to Goldman Sachs – an awe inspiring story
• lesson learned always listen to the wife!
• leaders need to have followers
• many careers take off by taking some risk and running towards a problem
• great opportunities come with huge problems
• expect major ups and downs
• he almost lost his job due to issues with people skills always focus on shining your team vs. your individual shine
Day 11
General Neller – 37th commandant Marine Corps speaks at our Plenary session
Striking to see how humble he was with middle class beginnings now manages $40 million budget
• talked about diversity and leadership lessons and the importance of technology
• went to the Singularity University - either you disrupt your self or someone else will disrupt you
• change is hard there is always resistance
• failure is mine success is ours
After watching the movie, we now play a game – Speed Ventures –
• Never discount the emotional factors and gut feeling/instincts while making a decision. Always consider the non-economic variables – lesson learnt from the Space Challenger explosion where the team was advised of issues with ambient temperature ahead of time.
• The Ladder of Inference – we typically spend more time on Conclusion and Inferences and less time on Assumption and Evidence
• Good people can make bad decisions especially when placing too much emphasis on Data
• Humans are not as rational as we think
• Fear of pain is greater than the joy of gain
We learn about the industry of analysts – sell side (investment banks like Goldman/BOFA – we usually see these) and buy side (asset management companies like Black Rock, Vanguard – we usually don’t see these as used by pension funds)
There is usually a huge variation in estimates from different analysts – perception matters (eg. Tesla – car company vs self-driving tech company)
Main issue is Conflict of Interest as the same analysts who rate companies also provide other financial services to them. This would considered illegal in healthcare (Stark law!)
Stock valuation methods
• Accounting valuation
o Book value – strictly calculated by A, L, SE
o Market value – more accurate as takes into account future earnings potential – but Balance sheet needs to be estimated
• Market multiples – like EPS, PE ratio
• Discounted cash flow – capital gain is a measure of future potential for dividends. Terminal value calculation is crucial
We met several of other AMP participants during the Pre-rotation dinner – awesome wine and dinner. An opportunity to step outside of our enclosed living groups and socialize across Tata Hall.
Day 12
US current account deficits - gotta do something soon before its too late and bubble bursts……..or should we?
NIIP is negative
Too high of consumption fueled by easy credit, culture, lack of savings, things cheaper due to exchange rate and low labor costs outside
Paradoxically, other countries have to maintain value of US dollar so they can continue to sell to the US
If deficit continues to rise, we might be mortgaging out childrens’ future. So what can US do to address this?
• increase taxes
• incentivize savings
• increase tariffs on weak industries (selectively)
• increase productivity
• devalue US dollar
Fitbit – a fashionable brand but suffered from having no customer focus. Used a spray-paint approach
FB – has become too powerful with all the data they have harnessed. Cambridge Analytica might just be the beginning of things to come. They have effectively created value using their network and captured value.
Professor Rivkin
Finally, we have our first healthcare talk delivered by Mr. Warner Thomas – CEO of Ochsner Health system – and a healthy discussion ensued about innovation and disruption.
………and US launches missile strike on Syrian chemical weapons facilities in breaking news and I place a bet with my friend Brad on the US Dollar exchange rate (I bet it will drop in the short run and be paid an Amstel Light from the fridge – it just happens the situation was fortunately curtailed and we ended up splitting a bottle of wine)
Day 13
Start the day with a Letter from Prison and an awesome lecture on calculating valuations
It’s been 2 weeks since arrived in Boston but sure does feel like ages. That afternoon we drive over to the Fenway Park to watch Boston battle Baltimore. Of course Boston won and so did we as we indulged in Hot dogs and Beer and Camaraderie of colleagues. But freezing so fled right after the 7th innings!
Left to Right: Mike, Raj, Mike, Brad, Leonard, Shaun
Day 14
Back to the Sunday drill – preparing for cases for the next week.
Day 15
The usual drill with cases, studied Starbucks’ challenges, threat of Amazon marketplace to vendors and got to meet THE Prof Bob Kaplan behind the world famous Balance Scorecard in person
Day 16
Awe inspiring lecture with Anne Mulcahy, former CEO of Xerox on how she led the turnaround of Xerox and saved it from bankruptcy – the importance of human connections and emotional intelligence
Interesting swing on negotiations – multiaspect deals
Lecture by Ray Mabus – former secretary of Navy – former Governor of Mississippi
Day 17
Ant financial is taking over the world – would you invest in it?
Talk by Lori Heinal, Global Chief of State Street
Day 18
Excellent talk by Larry Culp, CEO of Dannaher – how he built a company based on a unique culture and business model, returning more than the market for years in a row
Interesting talk by prof Nicholas Burns of Harvard Kennedy Law School, on international geopolitics prediction
Rotation dinner and drinks to get to know more folks in the program
Day 19
great plenary session by Harish Manwani – former COO of Unilever group and now Global Advisor to Blackstone group. Not a single powerpoint slide – great orator and visionary – EVERY industry is being disrupted whether it is visible or not.
great way to end the evening with a dinner at the Harvard faculty club with an excellent presentation by young Harvard vocalists.
Day 20
right after the lectures, we begin a series of regional dinners (Indian, Singapore/Malaysian, Chinese) and to top it all, Rafael organizes an awesome “tequila party” in their living group presenting 9 different types of tequilas imported direct from Mexico!
|