The purpose is really about that cause-effect relationship when you have that approach. From the very beginning of even developing the intervention, we wanted to have an intervention that would be used in the schools that would be sustained, and so the way we structured our grant and our project was around that.
Seriously I think I was gonna read all these studies, that all of these studies are gonna to tell me what to do, what works to increase for, in this example, language comprehension. But actually, people are doing this every single day in the classroom, and they're having some effects and that's great, and we hope they are. So that's what's happening in the classroom now, and we would talk to teachers, we'd see what's happening, we'll say, "What's effective? Basic decisions that you think about are driven, when you're doing treatment research in traditional way, are really driven by convenience and what is already set up.
So if you're doing a treatment study and let's say you're working in the clinic, the kids can only come two days a week. So I'm gonna make the treatment two days a week, 45 minutes. Well, that's just not really what's happening in the schools and that's a big problem, I think, that's happening in the research. What's the critical factors associated with the implementation? And here's an example of decision. We decided we'd make the curriculum be a year. That was something we wanted and, frankly, had to do with budget.
But we had a lot of decision points within that year. So how many times were we administering this per week? It's a curriculum. We talk to the schools. What we realized very early on is that was unrealistic. So what we did is we said we have four lessons a week which gives one day where, inevitably, there's a field trip, there's a fire alarm, there's other priorities and so that you could fit in that room. The other adaptation we made is that we had four units to span the year and we realized very early on that the last unit had to be shorter.
So the last unit, instead of being seven weeks was only four weeks because there's end-of-year testing. So we couldn't fit it in to the whole year. So these are decisions we made right up front to try to give this intervention a better shot at being adapted and sustained within the schools. We also thought a lot about the materials we used and how attainable those materials were. We tried to think about schools that had lots of resources, schools that had little resources. We tried to think about, for instance, in the teacher training model to train up on the intervention, we created an online module because we realized that there could be schools in the future that aren't able to come.
And that takes a lot of person powers to do it. So when you're thinking about scale-up, we could create an amazing intervention that takes all these resources, it has a 1 on 1 training to get the intervention to fidelity. But that's not gonna work in the future because then the grant funding runs out and the scientist, to maintain their research productivity, to keep their jobs, continue on to do other grants. And that project is often left unless they have more funding.
And that takes time. And so, I think for me, to see how this played out in a real-life context was so informative. And I left because I didn't realize I was doing implementation science until I learned more about what it was. And I thought, "Oh, I am doing that. I did that. We wanted to empower teachers, train them to have the flexibility to implement these lessons, and we got so much pushback from the teachers, and they wanted scripting.
And it really felt dirty to us. Like, "Why are we going to tell you exactly what to say? We should have known. Teachers needed that scaffolding. They wanted scripting and then they could go off script a bit. But that scripting was need initially, especially. And we found something quite interesting early on is that we had five components of the lesson and we had an open hook, kinda hooking kids in. We had disclosed to wrap it up. In the middle, we had this gradual release responsibility "I do, we do, you do" common approach used in schools.
And what we learned is that if Inevitably, it was minute lesson but sometimes it would take longer. And what we learned is that if the teachers that would just skip ahead and go to the close, those outcomes for children were more effective than if they just stop abruptly. And these are the things that we learned by allowing some flexibility and talking to teachers and having those focus groups.
And so I have more of a sense of the idea that scientists have to change the way they think about treatment research right up front. It's not I thought implementation science was what you do at the end when I first thought about it, before I had this experience.
When you look at the traditional pipeline for research, it does go clinical effectiveness trials and then implementation science research. So not just waiting until the end. And I think that that is the key ingredient here because of the fact that, I think personally, that it's just a very hard pill to swallow that we think that if we create these wonderful interventions and then go tell clinicians about them that they're just going to be able to implement them to fidelity forever and always.
I think that the context of It's such a heterogeneous population. There's no way we can expect that the intervention, even if I did do it in a school, is going to be the same at school B down the street. It'll be a completely different context with different barriers and facilitators. And so there has to be this flexibility, this agility to these interventions or this potential for reinvention of these interventions and assessments because there's no way that it'll be able to just completely be a copy-to-copy from each school-to-school and that it'll work because everyone will have different contexts.
I think we've seen that this year, especially in the past year, with our work here with some of our local schools. We seek partners for our research programs and after being involved in several discussions with them, we did realize that we can not just go in and take a specific program practice and tell them, "This is what it is. This is how you apply it. So they have different things that they go through. They have different barriers and different facilitators. So that was, I think, a very good eye-opening experience for us because then, we had to step back and say, "Okay, how can we help you to take this evidence-based program and adapt it to your own context which goes back to the reinvention piece that you mentioned, and benefit students and the school staff.
And your one school could be different from the other school and from the other school. Your one clinical practice setting could be different from the other one. So you need to be open and ready to re-invent and be patient because it takes time to understand that context and apply that specific program to that specific context. So specificity, it's a key component here and we need to remember that. And I think as scientists, we have to think about what's our training and we tend to wanna gravitate to what makes us feel very comfortable.
We're comfortable writing research articles, we're comfortable writing grants that really test certain hypotheses. And that's taken so many years and we really hone a practice in that way. And then we also become enculturated to what gets us moving forward in our careers. And so, we have different currency than what is happening in the schools. So our currency as scientists is we have to publish articles, we have to find our doctoral students, we have to present at conferences, we have to get grants.
This is what we do to maintain our careers and we balance that with service and teaching. And so that's what we do on daily basis. But to contrast that with schools, if we're working on school-based intervention. So what they focus on a daily basis has a lot to do with school culture, understanding the State and Federal mandates. At the heart of it, of course, is improving student outcomes and developing children that are meeting their highest potential. And so it's easy to just separate yourself and say, "Well, I'm gonna do the science and that's what I'm gonna do.
I said, "I was just so surprised that people are doing this in the school. Have you thought about doing school-based studies? My job is to do this and then there will be other people that do the translation.
How We Make Decisions
Think about it from the beginning but also just become comfortable being uncomfortable, because it's such an uncomfortable experience to have to sit and really listen to all the stakeholders and to try to It's uncomfortable because learning is painful and you have to do new things. And it's also uncomfortable because you wonder if it's going to be a good pay-off in the end.
And frankly, doing this podcast was really uncomfortable but it met the purpose I had, which was to try to help bridge that gap in some possible way that meets the desire of the people I'm working with. So with students, they're the ones that convinced me to do this, and I'm glad I did, but it was something I hadn't thought of doing. So it's that kind of interaction, that two-way communication that made the biggest difference.
But I think that the newer generation of scientists yourselves, Crystle and Rouzana, are able to take this approach and incorporate it from minute one and still hopefully get that currency that you need, right? So you still get the publication, you still get dissemination, you're still getting funding but you're able to do this in a way that hopefully will write for a minute one, not take 17 years to get Oh, it's even more worse, to get it in the classroom.
So I think that's really important. And speaking of new investigators. I know you're involved in the committee. And we have a collection of different scientists in the field, as well as some who work clinically to actually come together and discuss the state of our field in terms of evidence-based practice. People kind of have always said, "Oh, yes, do treatment research, do intervention work, clinical practice research?
Hogan was just talking about in terms of, "You gotta get the funding, the publications out first, because intervention work can take such a long time. So in the traditional sense, that was kind of the framework that people thought about intervention work, and so the implementation science side is now kind of shifting that perspective that it doesn't have to take 17 years, that it can be shortened, that it can be done early career. So Chris really does have a mandate to try to get more PhD students, early career scientists, into clinical practice and implementation science work, so that we can start to close this gap, this research to practice gap, and there are several initiatives that they've done.
Primarily, if we think about the diffusion of innovation, at the awareness knowledge stage, we've been trying to get the word out. And then, we've also now started to support some funding mechanisms for trying to support this kind of work. I think they funded three or four of this last year, which is a new mechanism and then the DISTAnce award, which is actually trying to pair current CSD researchers who are interested in implementation science with implementation science researchers from other fields, some very big names who have kind of pioneered this work to go to a conference and essentially write proposals for implementation science work, because there are funding mechanisms for this work in implementation science, just not so much in our CSD field that tends to be in other medical and healthcare professional related mechanisms.
And so, it's just really It is like Dr. Hogan said about getting It's trying to kind of, again, find your place on the map for mobilizing change, that was the title of this lecture I gave for many years of you just kind of figuring out where do you fall in this kind of ecology of moving science forward to improve outcomes for our patients and clinicians. And so trying to decide how tolerant are you of risk-taking and uncomfortableness, what's your appetite for conflict and change, how deep are your ideological roots, and how open are you to questioning them. And that's okay. We need all the key We need all the categories of the doctors and we need all the different key players, and I'm just excited to be at the table to be talking about it, really.
I think what's great about too, and we haven't emphasized it much yet, is that there is this relationship between the research and the clinician, so this is not where your clinicians in a passive role waiting for the researcher. Is, I think, many times can feel like they don't have a voice, and this is the opposite.
So the voice is loud and clear, and it's a two-way proposal. So let's say now people are hopefully interested after hearing this podcast and learning more about implementation science, Rouzana, what's out there in terms of initiatives that are existing outside of ASHA, and what are some more resources that people could go to to learn more about implementation science? So we do have a few of these in the United States. We also have the Active Implementation Research Network.
There's a global implementation science initiative that holds a yearly conference where international professionals who work in implementation science come together, and they share opinions and discuss about new directions. There's, I think, also an international journal on implementation science.
- Food stores: Using protected areas to secure crop genetic diversity!
- Effective Meeting Skills, Revised (Crisp Fifty-Minute Books) - - tyruvyvizo.cf?
- Core Strength Training.
- Electricity 4: AC/DC Motors, Controls, and Maintenance!
- Stakeholders' Perceptions of Ethical Leadership: Implications for Organizational Success.
- Remote Software Developer Jobs in September ?
- Daring Fireball.
To meet wartime product demands, IBM greatly expanded its manufacturing capacity. IBM was, at the request of the government, the subcontractor for the Japanese internment camps' punched card project. This equipment was critical to Nazi efforts to categorize citizens of both Germany and other nations that fell under Nazi control through ongoing censuses. This census data was used to facilitate the round-up of Jews and other targeted groups, and to catalog their movements through the machinery of the Holocaust , including internment in the concentration camps. As with hundreds of foreign-owned companies that did business in Germany at that time, Dehomag came under the control of Nazi authorities prior to and during World War II.
A Nazi, Hermann Fellinger , was appointed by the Germans as an enemy-property custodian and placed at the head of the Dehomag subsidiary. Historian and author Edwin Black , in his best selling book on the topic, maintains that the seizure of the German subsidiary was a ruse. He writes: "The company was not looted, its leased machines were not seized, and [IBM] continued to receive money funneled through its subsidiary in Geneva.
IBM responded that the book was based upon "well-known" facts and documents that it had previously made publicly available and that there were no new facts or findings. IBM had expanded so much by the end of the War that the company faced a potentially difficult situation — what would happen if military spending dropped sharply? One way IBM addressed that concern was to accelerate its international growth in the years after the war, culminating with the formation of the World Trade Corporation in to manage and grow its foreign operations.
Under the leadership of Watson's youngest son, Arthur K. A UNIVAC executive complained that "It doesn't do much good to build a better mousetrap if the other guy selling mousetraps has five times as many salesmen". The mantle of chief executive fell to his eldest son, Thomas J. Watson, Jr. The new chief executive faced a daunting task. The company was in the midst of a period of rapid technological change, with nascent computer technologies — electronic computers, magnetic tape storage, disk drives, programming — creating new competitors and market uncertainties.
Internally, the company was growing by leaps and bounds, creating organizational pressures and significant management challenges. Lacking the force of personality that Watson Sr. Watson Jr. Perhaps the most significant of which was his shepherding of the company's first equal opportunity policy letter into existence in , one year before the U. Supreme Court decision in Brown vs.
Board of Education and 11 years before the Civil Rights Act of Concerned that IBM was too slow in adapting transistor technology Watson requested a corporate policy regarding their use, resulting in this unambiguous product development policy statement: "It shall be the policy of IBM to use solid-state circuitry in all machine developments.
Furthermore, no new commercial machines or devices shall be announced which make primary use of tube circuitry. The emergence of the Cold War accelerated the government's growing awareness of the significance of digital computing, and drove major Department of Defense supported computer development projects in the s. Of these, none was more important than the SAGE interceptor early detection air defense system. The merger of academic and business engineering cultures proved troublesome, but the two organizations finally hammered out a design by the summer of , and IBM was awarded the contract to build two prototypes in September.
Working on this massive computing and communications system, IBM gained access to pioneering research being done at Massachusetts Institute of Technology on the first real-time, digital computer. This included working on many other computer technology advancements such as magnetic core memory , a large real-time operating system, an integrated video display , light guns , the first effective algebraic computer language, analog-to-digital and digital-to-analog conversion techniques, digital data transmission over telephone lines , duplexing , multiprocessing , and geographically distributed networks.
SAGE had the largest computer footprint ever, and continued in service until More valuable to IBM in the long run than the profits from governmental projects, however, was the access to cutting-edge research into digital computers being done under military auspices. IBM neglected, however, to gain an even more dominant role in the nascent industry by allowing the RAND Corporation to take over the job of programming the new computers, because, according to one project participant, Robert P.
Crago, "we couldn't imagine where we could absorb two thousand programmers at IBM when this job would be over some day, which shows how well we were understanding the future at that time. In the five years since the passing of Watson Sr.
Friday, 20 September 12222
During this time, IBM transformed from a medium-sized maker of tabulating equipment and typewriters into the world's largest computer company. In IBM "unbundled" software and services from hardware sales. Until this time customers did not pay for software or services separately from the very high price for the hardware. Software was provided at no additional charge, generally in source code form.
Services systems engineering, education and training, system installation were provided free of charge at the discretion of the IBM Branch office. This practice existed throughout the industry. IBM's unbundling is widely credited with leading to the growth of the software industry. This transformed the customer's value proposition for computer solutions, giving a significant monetary value to something that had hitherto essentially been free.
This helped enable the creation of a software industry. Similarly, IBM services were divided into two categories: general information, which remained free and provided at the discretion of IBM, and on-the-job assistance and training of customer personnel, which were subject to a separate charge and were open to non-IBM customers. This decision vastly expanded the market for independent computing services companies. It became a recognized leader in corporate social responsibility, joining federal equal opportunity programs in , opening an inner city manufacturing plant in , and creating a minority supplier program.
It led efforts to improve data security and protect privacy. It opened one of the world's most advanced research centers in Yorktown, New York. Its international operations grew rapidly, producing more than half of IBM's revenues by the early s and through technology transfer shaping the way governments and businesses operated around the world. Its personnel and technology played an integral role in the space program and landing the first men on the moon in In that same year it changed the way it marketed its technology to customers, unbundling hardware from software and services, effectively launching today's multibillion-dollar software and services industry.
See unbundling of software and services , below. It was massively profitable, with a nearly fivefold increase in revenues and earnings during the s. For the first time since — nearly six decades — IBM would not have a Watson at the helm. Moreover, after just one leadership change over those nearly 60 years, IBM would endure two in two years. Cary, a year IBMer  who had earned his stripes running the fabulously successful data processing division in the s. During Cary's tenure as CEO, the company continued to dominate in hardware.
From a revenue perspective, it more than sustained the cash cow status of the Between and , IBM investigated the feasibility of a new revolutionary line of products designed to make obsolete all existing products in order to re-establish its technical supremacy. This effort was terminated by IBM's top management in But by then it had consumed most of the high-level technical planning and design resources, thus jeopardizing progress of the existing product lines although some elements of FS were later incorporated into actual products.
Winchester technology was adopted by the industry and used for the next two decades. Some s-era IBM technologies emerged to become familiar facets of everyday life. IBM developed magnetic stripe technology in the s, and it became a credit card industry standard in The IBM-invented floppy disk , also introduced in , became the standard for storing personal computer data during the first decades of the PC era.
IBM Research scientist Edgar 'Ted' Codd wrote a seminal paper describing the relational database — an invention that Forbes magazine described as one of the most important innovations of the 20th century. IBM's supermarket checkout station, introduced in , used holographic technology to scan product prices from the now-ubiquitous UPC bar code, which itself was based a IBM patent that became a grocery industry standard.
Also in , bank customers began making withdrawals, transfers and other account inquiries via the IBM Consumer Transaction Facility, an early form of today's Automatic Teller Machines. IBM had an innovator's role in pervasive technologies that were less visible as well. SNA is a uniform set of rules and procedures for computer communications to free computer users from the technical complexities of communicating through local, national, and international computer networks.
SNA became the most widely used system for data processing until more open architecture standards were approved in the s. In , IBM researcher Benoit Mandelbrot conceived fractal geometry—a new geometrical concept that made it possible to describe mathematically the kinds of irregularities existing in nature. Fractals had a great impact on engineering, economics, metallurgy, art and health sciences, and are integral to the field of computer graphics and animation.
A less successful business endeavor for IBM was its entry into the office copier market in the s, after turning down the opportunity to purchase the xerography technology. Although Xerox held the patents for the use of selenium as a photoconductor, IBM researchers perfected the use of organic photoconductors which avoided the Xerox patents. The litigation lasted until the late s and was ultimately settled. Despite this victory, IBM never gained traction in the copier market, and withdrew from the marketplace in the s. Organic photoconductors are now widely used in copiers.
Throughout this period, IBM was litigating the massive anti-trust suit filed by the Justice Department in But in a related bit of case law, the landmark Honeywell v. Sperry Rand U. The patent for the ENIAC , the world's first general-purpose electronic digital computer, was found both invalid and unenforceable for a variety of reasons thus putting the invention of the electronic digital computer into the public domain. Further, IBM was ruled to have created a monopoly via its patent-sharing agreement with Sperry-Rand. Opel became CEO in IBM wished to avoid the same outcome with the new personal computer industry.
IBM immediately became more of a presence in the consumer marketplace, thanks to the memorable Little Tramp advertising campaign. Though not a spectacular machine by technological standards of the day, the IBM PC brought together all of the most desirable features of a computer into one small machine. It had kilobytes of memory expandable to kilobytes , one or two floppy disks and an optional color monitor. And it had the prestige of the IBM brand. Reassured by the IBM name, they began buying microcomputers on their own budgets aimed at numerous applications that corporate computer departments did not, and in many cases could not, accommodate.
Typically, these purchases were not by corporate computer departments, as the PC was not seen as a "proper" computer. Purchases were often instigated by middle managers and senior staff who saw the potential — once the revolutionary VisiCalc spreadsheet, the killer app , had been surpassed by a far more powerful and stable product, Lotus Customers feared becoming overdependent, however, and Datamation and others said that IBM's continued growth might hurt the United States, by suppressing startups with new technology.
By competitors and analysts speculated that IBM would again be sued for antitrust. Its computer revenue was about nine times that of second-place DEC, and larger than that of IBM's six largest Japanese competitors combined. However, the company soon lost its lead in both PC hardware and software, thanks in part to its unprecedented for IBM decision to contract PC components to outside companies like Microsoft and Intel.
Up to this point in its history, IBM relied on a vertically integrated strategy, building most key components of its systems itself, including processors, operating systems, peripherals, databases and the like. In an attempt to accelerate the time-to-market for the PC, IBM chose not to build a proprietary operating system and microprocessor. Instead, it sourced these vital components from Microsoft and Intel respectively. Ironically, in a decade which marked the end of IBM's monopoly, it was this fateful decision by IBM that passed the sources of its monopolistic power operating system and processor architecture to Microsoft and Intel, paving the way for rise of PC compatibles and the creation of hundreds of billions of dollars of market value outside of IBM.
During the s, IBM's significant investment in building a world class research organization produced four Nobel Prize winners in physics, achieved breakthroughs in mathematics, memory storage and telecommunications, and made great strides in expanding computing capabilities. In the company partnered with Sears to develop a pioneering online home banking and shopping service for home PCs that launched in as Prodigy. Despite a strong reputation and anticipating many of the features, functions, and technology that characterize the online experience of today, the venture was plagued by extremely conservative management decisions, and was eventually sold in the mids.
The IBM token-ring local area network, introduced in , permitted personal computer users to exchange information and share printers and files within a building or complex. But within five years the company backed away from this early lead in Internet protocols and router technologies in order to support its existing SNA cash cow, thereby missing a boom market of the s.
Still, IBM investments and advances in microprocessors, disk drives, network technologies, software applications, and online commerce in the s set the stage for the emergence of the connected world in the s. But by the end of the decade, IBM was clearly in trouble. It was a bloated organization of some , employees that was heavily invested in low margin, transactional, commodity businesses. And then the back-to-back revolutions — the PC and the client server — did the unthinkable.
They combined to dramatically undermine IBM's core mainframe business. The PC revolution placed computers directly in the hands of millions of people. Both revolutions transformed the way customers viewed, used and bought technology. And both fundamentally rocked IBM. Businesses' purchasing decisions were put in the hands of individuals and departments — not the places where IBM had long-standing customer relationships. Piece-part technologies took precedence over integrated solutions.
The focus was on the desktop and personal productivity, not on business applications across the enterprise. A brief spike in earnings in proved illusory as corporate spending continued to shift from high profit margin mainframes to lower margin microprocessor-based systems. In addition, corporate downsizing was in full swing. Akers tried to stop the bleeding — desperate moves and radical changes were considered and implemented. As IBM assessed the situation, it was clear that competition and innovation in the computer industry was now taking place along segmented, versus vertically integrated lines, where leaders emerged in their respective domains.
Examples included Intel in microprocessors, Microsoft in desktop software, Novell in networking, HP in printers, Seagate in disk drives and Oracle Corporation in database software. IBM's dominance in personal computers was challenged by the likes of Compaq and later Dell. Recognizing this trend, management, with the support of the Board of Directors, began to implement a plan to split IBM into increasingly autonomous business units e. IBM also began shedding businesses that it felt were no longer core.
These efforts failed to halt the slide. A decade of steady acceptance and widening corporate growth of local area networking technology, a trend headed by Novell Inc. The computer industry now viewed IBM as no longer relevant, an organizational dinosaur. Gerstner, Jr. For the first time since IBM had recruited a leader from outside its ranks.
Recognizing that his first priority was to stabilize the company, he adopted a triage mindset and took quick, dramatic action. His early decisions included recommitting to the mainframe, selling the Federal Systems Division to Loral in order to replenish the company's cash coffers, continuing to shrink the workforce reaching a low of , employees in , and driving significant cost reductions within the company. Most importantly, Gerstner decided to reverse the move to spin off IBM business units into separate companies.
He recognized that one of IBM's enduring strengths was its ability to provide integrated solutions for customers — someone who could represent more than piece parts or components. Splitting the company would have destroyed that unique IBM advantage. These initial steps worked. Stabilization was not Gerstner's endgame — the restoration of IBM's once great reputation was.
To do that, he needed to devise a winning business strategy. The company regained the business initiative by building upon the decision to keep the company whole — it unleashed a global services business that rapidly rose to become a leading technology integrator. Crucial to this success was the decision to become brand agnostic — IBM integrated whatever technologies the client required, even if they were from an IBM competitor.
Ubuy Kuwait Online Shopping For crisp in Affordable Prices.
Another high margin opportunity IBM invested heavily in was software, a strategic move that proved equally visionary. Starting in with its acquisition of Lotus Development Corp. Content to leave the consumer applications business to other firms, IBM's software strategy focused on middleware — the vital software that connects operating systems to applications. The middleware business played to IBM's strengths, and its higher margins improved the company's bottom line significantly as the century came to an end.
Not all software that IBM developed was successful. While IBM hardware and technologies were relatively de-emphasized in Gerstner's three-legged business model, they were not relegated to secondary status. The company brought its world-class research organization to bear more closely on its existing product lines and development processes.
While Internet applications and deep computing overtook client servers as key business technology priorities, mainframes returned to relevance. IBM reinvigorated their mainframe line with CMOS technologies, which made them among the most powerful and cost efficient in the marketplace. IBM also regained the lead in supercomputing with high-end machines based upon scalable parallel processor technology.
Equally significant in IBM's revival was its successful reentry into the popular mindset. Part of this revival was based on IBM technology. Instrumental to this popular resurgence was the chess match between IBM's chess-playing computer system Deep Blue and reigning world chess champion Garry Kasparov. Deep Blue's victory was a historic first for a computer over a reigning world champion. Also helping the company reclaim its position as a technology leader was its annual domination of supercomputer rankings  and patent leadership statistics. These collapses discredited some of the more fashionable Internet-driven business models that stodgy IBM was previously compared against.
Another part of the successful reentry into the popular mindset was the company's revival of the IBM brand. The company's marketing during the economic downturn was chaotic, presenting many different, sometimes discordant voices in the marketplace. This brand chaos was attributable in part to the company having 70 different advertising agencies in its employ.
Although the main returns of active board service are emotional and intellectual, as well as the insights that can be carried over to other professional activities, pay is obviously another motivating factor. As a result, more companies are offering directors restricted stock or stock options in addition to or in lieu of retainers and meeting fees. Performance pay also ought to be contingent on a threshold level of corporate performance. If boards are to provide better governance, provisions must be made for the departure of directors who no longer pull their weight.
Rather than stipulating a mandatory retirement age for directors, Dayton-Hudson has adopted this approach: it limits length of service on the board to 12 years in order to encourage fresh thinking. Other companies have a policy that board members must submit a resignation if they change their principal employment on the grounds that a change of jobs could alter their suitability as directors. Although such a review of qualifications is better than no review at all, it takes an unpredictable event to trigger the process.
As with CEO evaluations, boards must institute periodic, formal reviews of directors. But at what point should a director whose opinions on important matters are ignored or consistently overruled resign? Although circumstances may vary, most directors in this bind, including myself, would feel obliged to alert stockholders and others to the actual reasons for resignation.
Sometimes a single voice does rise against the management of a company, as in the case of Roderick Hills of Oak Industries, who had his own ideas about corporate direction and ultimately ousted management. The company, a chain of fitness centers, was turning in consistently good profits.
However, the directors noticed that in one small respect performance had declined: the number of clients who entered the facilities every day had dropped. The board confronted the CEO and suggested that instead of continuing to do what the company had previously done well, perhaps it was time to try something else—for example, a change in marketing strategy. In this case, the directors stimulated the CEO to bring in a consulting firm, which looked hard at established practices. To stay on the alert, boards must take measures to build trust among members.
Group trips to corporate facilities at a distance from headquarters can help. Just as malfunctioning boards rarely suffer from a single malady—allowing the CEO to pick new directors, for example—no single change will make directors more effective. This now-familiar argument suggests that managers fail to make sound business decisions, such as investing in research and development, in order to ensure that their quarterly earnings please Wall Street analysts. To solve what is probably an imaginary problem, Porter and others propose replacing American-style corporate governance systems with those used in Japan and Germany.
In this highly centralized system of decision making and control, corporate governance decisions are made in quiet and discrete meetings free from public disclosure. Second, though there really is no convincing proof to go with the rhetoric about short-term orientation, movements in and out of stocks are not necessarily bad.
Americans are responsive, mobile, and flexible. Therefore, it should not be much of a surprise that the same is true of American investors and our capital markets. The German and Japanese corporate governance models, while well-suited for those countries, are not appropriate to U. The closed nature of governance under those systems contradicts U. Limiting information about corporate successes and failures to a handful of people behind closed doors would not likely improve either the economy or our competitive position.
To enhance our competitiveness, we need to strengthen corporate accountability and corporate democracy, not do away with them. The proxy reforms recently approved by the SEC will make it easier for investors to understand corporate incentive systems, as well as to debate policies and to elect independent candidates to the board. These reforms are designed to give the owners of dysfunctional corporations the option of internal reform rather than simply selling their shares.
By strengthening our system of independent directors and reinforcing their accountability, the reforms will encourage boards of directors to step in earlier to address persistent problems of corporate efficiency. Recent forceful board actions at General Motors and Sears, though painfully slow in coming, reflect the type of actions that can reinforce competitiveness without seeking to eliminate public investors.
Giving shareholders greater clout to insist on good results will promote meaningful management accountability. We can therefore improve competitiveness by strengthening rather than weakening market forces in the corporate governance system. Strengthening broad-based participation in corporate governance in a reasonable manner will help ensure that we have both a strong and open investment market and prompt and meaningful managerial accountability for consistent profitability and growth.
Greater owner involvement, not fewer owners, is the way forward. As anyone who has read the papers knows, executive compensation has taken center stage in the ongoing corporate governance debate. Everyone, it seems, has weighed in with a solution—including most recently the Securities and Exchange Commission, who responded to the clamor with new rules governing compensation disclosure in proxy statements. In the past, the SEC has required companies to disclose the amount of money paid to executives.
The new SEC regulations go far beyond that requirement, mandating disclosure of the process by which executive pay determinations are made. While arguing against increased disclosure of executive compensation practices is politically incorrect these days, the initiative concerns me. And they require a detailed explanation of any adjustments that were made to reprice outstanding options held by the CEO or any of the other four most highly compensated executives.
In the past, board directors have not been obliged to provide the rationale for an executive pay—or for any other—business decision they make. But they do so at a significant cost: increased liability concerns and new unnecessary intrusion into the boardroom. These last few years have seen a dangerous change in the way our securities markets function.
Without fanfare and with no public debate on the consequences, state, city, and, to a lesser degree, private pension funds have sharply distorted the mission of our financial institutions. Even more worrisome, we are headed straight for bureaucratic control of corporate America if this trend continues.
Pension funds run by state, city, and private entities have bought large blocks of shares in American companies. Historically, if a company did not perform as expected, stockholders sold their shares and reinvested in something else. When millions of shares are in the hands of a single fund, however, immediate buyers are not always available. Therefore, in recent years, institutional investors have focused on influencing corporate policy, in the hopes of improving investment returns and performance.
The result of this increased influence on corporate management remains to be seen. It may have shaken up somnolent management, but the problem is that, in large part, these fund managers have no history to justify the exercise of that kind of power. I do not know of a single state or municipal pension fund that employs personnel who have a background in major corporate management.
In fact, if the pension fund bureaucrats possessed the skills necessary for running great corporations, they would not be satisfied with government salaries, no matter how high, but would bless the corporate world with their extraordinary insights. The people in charge of these pension funds do not actually own the shares, they are simply the trustees for the beneficiaries.
They can act without consulting the owners. The SEC has now given them a limited privilege of banding together and changing management by acting in concert. If a group of corporations in the same business decided to consult with one another and act as one, the prison doors would open wide. The potential damage to the structure and function of corporate America is enormous. I doubt it. From a public policy, economic, and management perspective, we must acknowledge that everyone, including a corporate director, does better when his or her performance is monitored and evaluated by someone with the power to take corrective action.
Shareholders alone have both the economic interest to monitor corporate performance and the legal power to replace directors who fail to perform adequately. These charges, however, fail to recognize all the facts. Yes, some shareholders have made, and probably will continue to make, their investment decisions based on a short-term perspective. This is not true, however, of those shareholders who control the largest amount of corporate stock. Indexing, which is becoming the dominate investment strategy for the bulk of institutional money, is inherently long term.
Pension funds, whose obligation to provide benefits to members spans many generations, have a particularly long-term outlook. So what? They do, however, have every prerogative to exercise the legal rights of shareholders. Many of the questions faced by the corporate director involve much the same type of economic inquiry used regularly by investment analysts. Moreover, institutional investors have the resources to consult with the best minds in the country; so even though investors may not know how to make better widgets, they can certainly find someone who does.
Deborah J. The respondents to date hold positions on boards of all sizes in a variety of industries and with a full range of financial performance. Based on our preliminary analysis, we find these results intriguing. To make sure that pay really does reflect performance, directors are intent on taking three actions:. The directors we surveyed said they received most of their information about company performance through:.
Jay W. The key to effective corporate governance is a properly functioning board of directors. We have put forward a comprehensive proposal for improved corporate governance that can be implemented voluntarily by business corporations and their boards, without changes in law, regulations, court decisions, or shareholder behavior. A key element of our proposal is the concept of a lead outside director. In these British companies, a nonexecutive outside director is the chairperson. The chairperson sets the agenda for the board, presides at the meetings of the board and of shareholders, and frequently, individually or together with the CEO, speaks for the company.
The CEO manages the company. In the United States, the opposite approach prevails. The vast majority of U. While we have reservations about the validity of some of these arguments, we see no need to face these issues directly. Instead, we recommend that companies without a nonexecutive chairperson designate one of the outside directors as the lead director. The lead director would have neither a corporate title nor an office at the company headquarters. The lead director would not set the agenda nor preside at meetings of the board or of shareholders. Nor would the lead director act as a spokesperson for the company itself.
The lead director would be consulted by the chairperson-CEO on 1 the selection of board committee members and chairs; 2 the board-meeting agendas; 3 the format and adequacy of the information directors receive; and 4 the effectiveness of the board-meeting process. The lead director would also coordinate an annual evaluation of the chairperson-CEO by the outside directors. Finally, if the outside directors were confronted by a crisis because of the incapacity of or failure of performance by the chairperson-CEO, they would have a designated leader in place and would not lose time in organizing to deal with the problem.
While the immediate reaction of many chairperson-CEOs to this proposal is negative, we believe it is critical to making boards more effective. In fact, we believe that in many boardrooms today, such a leader is already recognized by management and the outside directors. This is a natural concomitant of responsibility for audits, compensation, and nominations being placed in the hands of committees composed of only outside directors.
The chair of one of these committees usually emerges as a leader of the outside directors. In other cases, it may be the director with the most seniority or the one who is most respected by the other directors. Our proposal recognizes and gives form to what in many cases has emerged on a de facto basis but does not compromise the leadership prerogatives of the chairperson-CEO. On balance, we think that these risks should be accepted. Effective leadership of the outside directors is essential to enable the board to discharge its monitoring function properly. Providing such leadership far outweighs the damage perceived by some chairperson-CEOs.
Further, the risk of having a lead director is reduced by having 1 a smaller board with all members participating fully; 2 a term limit for directors; 3 a mandatory retirement age; and 4 most important, careful selection of outside board members. Finally, the risk can be virtually eliminated by fixing term limits for the lead director. In fact, since the committee was formed, public interest in corporate governance issues has grown sharply, not least because of the Maxwell and BCCI affairs.
Our proposals for corporate boards have generated the most interest and are set out in a Code of Best Practice. Following are some of our major recommendations. British-based public companies will not specifically be required to comply with the code, but the committee recommends that companies should inform their shareholders whether they are complying and provide reasons for any areas of noncompliance.
The London Stock Exchange, in fact, is likely to make this recommendation a continuing obligation of listing. But it is the shareholders who must ensure that a company takes appropriate steps. The committee is primarily looking to such market-based regulation to turn its proposals into action.