Executive Interviews: Interview with Robert Salomon on Staying on Top, Always
July 2009 - By Dr. Nagendra V Chowdary

Robert Salomon
Associate Professor at the Stern School of Business, New York University.

• Many celebrated management techniques and tools have been propounded and a few of them continue to be used. For companies to stay on top always, which of the management tools and techniques, – strategic planning, scenario planning, scanning the periphery, competitor and industry analysis, vision and mission statements, BPR, diversification, Blue Ocean Strategy, etc., – do you think are desirable and must be practiced at any cost?
  First, I must say that I am not sure I believe it is possible to “stay on top always.” People do not live forever, dynasties do not remain forever, and companies do not last forever. The best we can hope for is to create a company that lasts a longer time than most, offers a high quality product or service to its customers, and produces consistent, above-average returns for its shareholders, …for as long as possible.

  I also do not believe that there are management tools or techniques that must be practiced at any cost, as many of these techniques are product of fad and fashion. That said however, I believe that there are some techniques that have a longer lifespan than others. For example, I see industry and competitive analysis as one that will likely endure for some time. It is of critical importance to understand the elements that define the competitive landscape in an industry. With a better understanding of the relationships among buyers, suppliers, customers, etc., a company can better predict how the industry is likely to evolve, better anticipate the needs of interested parties, better allocate its innovative effort, and better carve out a profitable niche.

• Why do good companies go bad, after all?
  We live in a Schumpeterian world of creative destruction, in which firms that dominate industries eventually become extinct. This is the natural order of things. Innovation is always pushing the boundaries, revolutionizing mature industries, creating new industries; and in the process, new winners and losers. A classic example is the newspaper business. It is being revolutionized by the availability and ubiquity of online content (whether via blogs, newsfeeds, video, etc.). This is posing a real challenge to the traditional newsprint business model. Innovation in information technology allowed this to occur, and purveyors of on-line content have eroded the profits of incumbent newspaper firms. It will be interesting to see how long the print newspaper business can survive.

  The Schumpeterian nature of innovation is fundamentally why I believe it is incredibly difficult for firms to “stay on top always.” The dynamics of industrial development just make it difficult, if not next to near impossible, to anniversary success ad infinitum.

• What is the role of business schools in preparing either great managers / great leaders for them to create great companies? Any interesting developments that you have observed either in European or American business schools?
  As I mentioned in a recent Op-ed for the IB Times (see Knowing What and How, Without Wondering Why), I think business schools, in addition to teaching fundamental business theory in the disciplines (finance, economics, management, marketing, accounting, etc.), ought to encourage students to think, and ask tough questions, about how the disciplines interrelate.We ought to focusmore on integrating across disciplinary boundaries to impart a greater understanding for how individual parts affect the whole.

  Business schools would be well served to shift the focus away from the specialist model of training, and toward a more generalist approach, favoring analytics over the simple memorization and execution of formulae. Our curricular efforts should therefore be focused on imparting broad managerial skills. In this way we can train more wellrounded students who know not only what to do when asked, but also, why itmatters. I think this is the key to training managers to become stewards of the corporation who manage in the best interests of all stakeholders.