This presentation reviews a few lessons learned in my recent Harvard adventure.

1. Harvard Advanced Management
Program
This a review of my key learning experiences from the Harvard University Advanced
Management Program, which I attended in September-October 2009.

2. Awareness Test
n http://www.youtube.com/watch?v=Ahg6qcgoay4

3. Why the video?
n The video is a metaphor for the lessons I
learned at Harvard. Because of the way your
mind works, sometimes you cannot see the most
obvious issues. In the eight weeks that I was
away I had the opportunity to question the ways
that I have approached issues in the past, and
reached some new conclusions about life going
forward.

4. Harvard’s Goals:
n Integrated Expertise and Knowledge
n Financial Management, International Economics, Team
Decision Making, Organizational Learning, Leading
Innovation, Corporate Accountability, Strategy Development,
Marketing, Negotiating
n Individual Development and Introspection
n 360 Feedback, Personality Profile, Executive Coach
n Action Planning
n AECI Case Studies: Availability, Project Management,
Strategic Planning
n Global Peer Network
These were the stated goals from Harvard for the program.
The individual development section provided good candid feedback on my own
performance. I had an individual executive coach with whom I met to craft a
personal development plan.
We were encouraged to develop personal case studies, applying what we were
learning to real-world issues back home.

5. Students from:
• Airbus, Avery Dennison, Biomerieux, Boeing, Chick-Fil-A,
China Petroleum, Credit Suisse, CSX, Ernst & Young, Federal
Reserve, Foster-Wheeler, Freemantle UK, Great Plains Energy,
Heineken, IBM, IKON, India TV, Itochu Corporation, LVMH,
Malaysia (PM, IP), Mitsubishi, Mitsui, MWH, Northrop
Grumman, Occidental, Ormat, Parker Hannifin, Serbian
Ambassador, Singapore (IP), South Africa Treasury, Stone
Energy, Sumitomo, Stryker, Telegraph Media, Toshiba,
Unilever, Vanguard, Zeppelin and others. 26
My peer network was 160 students from around the world. A few representative
companies are listed.

6. These were the industries represented by the participants in the program.

7. The “North America” part was almost entirely from the United States (there were a
few Canadians).

8. My Living Group:
n Banco Bradesco MD
n Kurraray EVP
n Costa Coffee CEO
n Proact CEO
n Pakistan Investment CEO
n Malaysia PM’s Office
Secretary of Development
n RS Asia COO
n Electric Coop Production
Director
We were divided into living groups of eight members each. We basically lived
together like college dorm-mates and shared a common kitchen/lounge area. Their
industries are listed on the slide.

9. My Blog
http://highleyunlikely.blogspot.com/
http://highleyunlikely.blogspot.com/
I kept a blog of my experiences, and if you really want to learn more about my daily
adventure you can yead it at http://highleyunlikely.blogspot.com
This was my most popular post, an image of Tom Cruise and family gazing at my
dormitory, snapped by one of my classmates. I think I got over 80 unique hits that
day. Most days averaged 20 to 40 unique visitors to the blog, so I know it wasn’t all
my mother!

10. Financial Management
One key area of study was Financial Management.

11. Financial Management
These were the four main areas of study in Financial Management. I really feel as if I
improved my understanding of finance in these classes.

12. Financial Management Lessons
n Importance of Appropriate Staffing
n One unnecessary employee can destroy $1 million in
shareholder value.
n Importance of ruthless cost control
n Value of Equity
I came away with three big impressions from the Financial Management case studies
and my interaction with my classmates.
1) We need to really watch staffing levels and keep them in check. I believe that my
Division has all the people it needs. Rather than add staff we can redeploy the
people we have.
2) We need to be more vigilant on cost control (a colleague at AECI suggested we
focus on “rate control’, which is even better because it implies a cost/benefit
evaluation).
3) We need to recognize the value of our member’s equity is greater than the cost
of our federally-subsidized debt rate.

13. Organizational
Learning
Another area of emphasis was leading “organizational learning”.

14. Safety - OSHA Incident Rate - Coal
AECI
12
ork
10
ber of Incidents/200k W
4Q
8
6
TH
4 Coal Avg.
NM
Num
2
1Q
0
2003 2004 2005 2006 2007 2008
Our safety performance at AECI was the subject of a personal case study in
Organizational Learning

15. In one case, the incidence of incorrect prescriptions was analyzed for several
hospitals. You would think you would want to send your child to Memorial 3, right?
But actually, Memorial 1 was the “safest” hospital. Their high reporting numbers
reflect an environment where employees feel free to report each and every
inconsistency and non-conformance to procedure. As a result, their performance
continues to improve. Locations with low reported numbers are not necessarily
safer, especially if employees are reluctant to report due to the threat of reprisal.

16. A new manager arrived in 1999, and encouraged greater reporting of non-
conformance. As a result, the number of reports went up, allowing improvements to
be made. After some time, the system actually improved, with fewer non-
conformance events, leading to lower reported incidents. This is the classis “worse-
before-better” problem.

18. Fundamental Attribution Error
n The bias of attributing the observed behavior of
an individual to personality factors rather than
external situational factors.
n e.g. laziness instead of lack of training
This is a classis human response to any non-conformance.

19. Developing Psychological Safety
n Don’t waste a good crisis!
n Failure is an opportunity for learning.
n Respond to a failure as if it were data instead of
sabotage.
n (Power Production expanding the use of Intelex,
considering MOSS as an alternative)
We are attempting to begin this practice in our Division. It is already well-established
in our safety and environmental compliance areas. We want to take the same
process-oriented philosophy and apply it to plant non-conformance events such as
forced outages and equipment failures.
(MOSS is the acronym for Microsoft Sharepoint.)

20. Negotiation
Another area in which I really improved my understanding was negotiation
techniques.

21. Negotiation
n Evaluate BATNA, ZOPA
n Underestimation of variance
n Influence of anchoring
n Leverage loss aversion (losses loom larger than gains)
n Status Quo bias (default agreement is sticky)
n Token, unilateral concessions (norm of reciprocity)
n Aggregate losses, disaggregate gains (lots of small wins,
one lump-sum loss)
n Make multiple simultaneous offers
n Assess real options
n Deal with differing expectations via contingent settlements
n Seek post-settlement settlements
post-
These were some key issues we covered. Its all covered in Max Bazerman’s book
“negotiating genius”.
I have seen others successfully use these techniques against us in negotiations. Now
I want to deliver them back.
These topics are based on solid research studies into human interactions.
I was particularly intrigued by the concept of post-settlement settlements. Once the
gloves are off and we’ve shook hands on an agreement, we should offer to revisit our
respective cost curves to see if a better agreement can be crafted between us.

22. Team Decision
Making
Another good area of study was the human dynamics of Team Decision Making

23. We studied Mt. Everest climbers that perished on the mountain, even when there
was clear evidence that they should turn back. We studies the NASA Challenger
disaster (and were visited by their chief engineer to discuss the case in detail). By
studying how teams can fail in decision making, we can better identify our own
weaknesses. We had a number of examples from this page occur during our
Norborne discussions.

24. Team Decision Making Lesson
n Encourage conflict and dissent in
decision making
n Insure that dissenting opinions have
a voice (observed a great example
at Thomas Hill)

25. Strategy Development
This was another key learning area.

26. This has occurred in our division. We once set the bar for others, now we have
regressed to just “average”. The Red Queen refers to Alice Through the Looking
Glass, in which the Red Queen states that one must run faster and faster, just to stay
in the same place.

27. Porter’s “Five Forces” Analysis
1. Supplier Power
2. Buyer Power
3. Barriers to Entry
4. Threat of Substitutes
5. Rivalry (Competition)
6. Complements
Of course Harvard has had to improve upon their own very successful “five forces”
analysis model to expand to a sixth competitive dynamic force. Michael Porter
himself served as guest lecturer to our class.

28. Professor David Yoffe’s “common pitfalls of strategic planning”.

29. AECI Application
n Scenario Planning
n Include a “stress test”
n Sustained recession and limited growth
n Return to fast growth
I recommend adoption of scenario planning. To learn more, see
http://en.wikipedia.org/wiki/Scenario_planning
The chart is from my analysis of avoiding scrubber installation. Red is bad, Green is
good. If gas prices are low relative to coal, and a carbon tax of some type is enacted,
then an investment in scrubbers cannot be economically justified. (the analysis is
very simplistic)

30. Strategy
n What are the key drivers of change?
n Look at data
n Can we predict structural change?
n What needs to change? (congruence analysis)
n One sentence strategy:
n What, why, where, when, how
n In a safe, ethical, and environmentally responsible manner,
become and remain the low-cost producer for our members
by relentlessly improving generator performance, reducing
expenses, and maintaining strategic alliances with key
suppliers.
The bottom bullet is a proposed one-sentence strategy statement for our division.

31. Leading Innovation
The most useful area of study I encountered was Leading Innovation

32. Congruence Analysis
n Mission, Vision, Values
n Measure Congruence in:
n POP Culture (©Scott Crise)
1. People (competence, confidence, caring)
2. Organization (structure)
3. Processes
4. Culture
The concept of congruence analysis suggests that one examines the four areas listed,
and determine if each one is congruent with the organization’s stated mission, vision,
and values. Scott Crise came up with the “pop culture” acronym.

33. People: Influence of Tenure on
Team Performance
Are our people skills (competency, confidence, and caring) congruent with excellence
in achieving our mission?
Performance of a team in innovation increases dramatically in the first couple of
years of its existence, flattening out in the middle few years, and then diminishing as
the teams mean tenure increases. This research has been repeated in several
industries; the chemical process industry is shown here. For some industries the
time frame may change, but the tendency for people to get accustomed to business
as usual and to cease to be open to new ideas is universal. We need to think about
how we rejuvinate teams to stop the “red queen” effect discussed earlier, and to
allow us to continue innovation. So how do we maintain innovation in an aging
industry such as ours?

34. Organizational Structure Analysis
I examined the formal organizational structure of our division, in order to determine
if it were “congruent” with an organization that is focused on operating power plants
with high availability to meet our vision of the low cost producer. I think some
changes are needed to improve that focus.

35. Also in the area of people, here is the “informal” organization chart of an actual
organization. Number 50 is the CEO. Who has the most influence in this
organization? Probably number 52 and 59. We are conducting this mapping exercise
in our own organization now.

36. Another example…

37. Business Process Analysis
Our business processes must be examined. Are they congruent with excellence in
plant availability?
In our division we have already established an excellent process-based system for
managing safety and environmental compliance. It allows us to track assignments
and insure that important tasks are not overlooked. It forces accountability for
project tasks. This is a model that I wish to export to our plant availability effort.

38. The most important of the four items People, Organization, Process and Culture is
Culture. You can execute the first three perfectly but still find your change effort
failing if the cultural issues are not addressed. Cultural issues can be relatively easy
identify but they are the hardest to modify. It takes lots of listening, questioning, and
communicating to create an aligned culture. We spent the full eight weeks talking
about the impact culture can have, and various ways for dealing with culture. It was
my single biggest take-away from the course work.

39. The problem (culture)
Management Quality Feedback Index
Plant Attribute Overall Departments
New Madrid Lab Electric/Inst Mechanical Operations Yard
>10 Years service 9 31 67 45 59 14 39
1 Overall Satisfied 11 67 67 27 66 78 77
2 Poor Man agement 13 15 0 33 0 12 25
3 Dissatisfied + Change Seekers 17 32 33 73 33 23 23
4 12-month Progress 19 75 67 45 63 90 75
More work than I can finish 27 20 17 36 25 12 46
5 Your morale 29 59 50 18 50 71 62
6 Department morale 29 37 17 0 17 56 23
AECI morale 29 35 33 0 25 48 31
7 Satisfaction with supervisor 30 64 50 27 50 85 46
Satisfaction with Plant Mgt 31 71 50 27 59 90 70
Satisfaction with HQ Sr staff 31 64 60 55 58 77 50
8 Commitment to Integrity/Ethics 50 50 9 25 62 70
Composite of 8 measures 63 59 28 55 76 63
Plant Attribute Overall Departments
Thomas Hill Lab Electrical Instrument Mechanical Operations Yard
>10 Years service 9 48 20 33 57 57 34 68
1 Overall Satisfied 11 50 90 67 43 48 49 38
2 Poor Man agement 13 33 0 22 17 30 33 50
3 Dissatisfied + Change Seekers 17 50 10 33 57 52 51 62
4 12-month Progress 19 39 80 44 29 20 31 44
More work than I can finish 27 27 60 22 0 19 25 32
5 Your morale 29 43 80 33 0 55 44 35
6 Department morale 29 11 30 22 0 5 6 15
AECI morale 29 6 10 0 0 0 8 12
7 Satisfaction with supervisor 30 52 70 100 14 57 57 29
Satisfaction with Plant Mgt 31 31 70 33 14 14 27 37
Satisfaction with HQ Sr staff 31 40 67 51 50 18 33 47
8 Commitment to Integrity/Ethics 37 60 33 43 22 38 35
Composite of 8 measures 44 75 56 32 41 43 36
We have a fantastic tool for beginning our cultural assessment: the annual employee
survey. This is an excerpt of our internal analysis of the survey data. This has
provided clues to areas we can address in culture.

40. Congruence Analysis of
Performance Gaps
n Root cause analysis
n Why, why, why
n Some questions to ask
n What’s important around here? (culture)
n How are you rewarded? (culture)
n How is your time spent? (culture)
n How is our organization structured? (organization)
n What practices need to change? (process)
n What skills are needed to succeed? (people)
n How do people react to you? (people)
Some more thoughts on how to analyze the congruence of an organization with its
stated goals.

41. Leading Change Framework
We are now firmly in phase one, and moving into phase two of our change effort on
plant availability. The change effort on project cost management is just entering
phase one.

42. Explore vs. Exploit – an “Ambidextrous” organization
We need to continually exploit our existing strengths and assets, while
simultaneously cultivating a group that continually explores the horizon for other
new opportunities. This is the concept of the ambidextrous organization.

43. Social Networks and
New Media
One final area of study that I believe offers great opportunities for our company is
social networks and new media. They offer more ways to communicate our goals
and objectives while seeking feedback from our employees. They are very effective
at “flattening” the organization. No one mode of communication is perfect for
everyone. Some people will read a printed flyer, while others prefer email. Some
want a voice mail, some want an email. Some would turn first to Facebook or
Linkedin. Some would read a blog; others wouldn’t touch it. For us to be effective
we have to embrace all of these forms.

44. New Media
n Wikipedia pages – internal Wiki?
n Innocentive – internal innocentive?
n Communication Tools
n Twitter
n Facebook
n Linkedin
n Blogs
n Sharepoint!
Sharepoint!
n AECI needs to manage these media
If we don’t manage these media, someone else will.

45. For example, we have a corporate page on Linkedin, but we aren’t currently
managing it.

46. Corporate
Accountability
(Governance & Ethics)
Our final major area of case studies involved governance and ethics.

47. There’s that “culture” idea again, you just can’t get away from it.

48. Who owns the problem…
I had eight weeks to look in the mirror. Many of the difficult issues we currently face
are a result of my own decisions. Let’s learn from our shortcomings and try to make
the future better. It is within our power to change the future!

49. 8 Weeks Summarized
n Become a Force for Change. If not you, who?
n Waiting just delays improvement.
n Ruthless pursuit of cost reduction (a.k.a. rate
reduction)
n Importance of culture
n Importance of accountability/measurement
n You can’t over-communicate