The scenario is similar in India. As higher education became available to the
lower middle class and the socially deprived due to government subsidy and
sponsorship, more "outsiders" are getting into managing Indian business.
Ambanis lead Reliance but "outsiders" run the Reliance business units.
I have a question - what happened to the DCM group? Were they taken over by
another company? I don't hear much about the ShriRam family anymore.
Dilip
=============================================================
From the Harvard Business School news-letter :
Research & Ideas
Who Rises to Power in American Business? Q&A with: Anthony Mayo
Published: January 8, 2007 Author: Sean Silverthorne
Executive Summary: Business leaders in the United States have usually
been white men who were blessed with the right religion, family, or education.
But "outsiders" have also created their own paths to leadership, a trend on the
rise today. Paths to Power is the first book in fifty years to exhaustively
analyze the demographics of leadership and access in business in the U.S., and
how the face of American leadership might be changing. A Q&A with Anthony J.
Mayo. Key concepts include:
Paths to power in American business have followed two tracks: The inside
track favors white males with the right connections. The outside path is forged
by individuals who overcome significant odds to achieve success.
Over the last seventy-five years, education has become more critical in
creating a path to power; religion and family ties less so. Access to power
appears to be widening.
In the future, individuals who can operate and lead in a complex global
world will be at an advantage in gaining leadership positions.
About Faculty in this Article:
Nitin Nohria is the Richard P. Chapman Professor of Business Administration
at Harvard Business School.
More Working Knowledge from Nitin Nohria
Nitin Nohria - Faculty Research Page
About Faculty in this Article:
Anthony Mayo is a lecturer in the Organizational Behavior unit at Harvard
Business School.
More Working Knowledge from Anthony Mayo
Anthony Mayo - Faculty Research Page
Who achieves success and power in the United States? In the twentieth
century, the easiest path to power was available to certain individualsmainly
men, mainly whitewho were otherwise favored with the right religious, family,
geographic, and educational ties. But a significant number of "outsiders," such
as Elizabeth Arden, created their own road to success, overcoming significant
odds.
The new book Paths to Power: How Insiders and Outsiders Shaped American
Business Leadership explores the demographics of leadership in the U.S. over
time and offers lessons for the next generations. What doors are opening? Which
remain closed?
The book, written by Harvard Business School's Anthony J. Mayo and Nitin
Nohria, and Boston College's Laura G. Singleton, is the second in a trilogy on
leadership and leaders from the HBS Leadership Initiative.
In this Q&A, Mayo discusses what their research tells us about who makes it
to the top of the American business ladder, how access to power appears to be
widening today, and how the face of leadership might change in the future.
Sean Silverthorne: Your research suggests that for the first three quarters
of the past century, the Horatio Alger stories had it wrongaccess to positions
of power and leadership in America was not available to all equally. Who was
favored during that time?
Anthony Mayo: It's not that the Alger stories were wrong, it's just that the
focus has always been on the individual who overcomes seemingly intractable
obstacles to achieve great success.
What is often overlooked or forgotten in the Alger stories is that the
individuals who "came up from their bootstraps" did so with the assistance of
an important and influential benefactor. Yes, they often possessed incredible
perseverance and determination, but the benefactor helped to channel that
energy into an opportunity with potential. In a sense, this personal network or
connection helped to facilitate access to others in positions of influence
which in turn provided opportunities for advancement. In the early decades of
the twentieth century, social networks played a significant role in who had
access to power in business. Social networks were defined by who you were (your
race and gender), where you were born, what religion you practiced, and how
wealthy you were.
In almost all cultures, there is a pervasive sense that some individuals have
won the "ovarian lottery." These winners or insiders have the right parents,
obtain the right education, have the right skin color, are the right gender,
and belong to the right institutions. Doors open. Opportunities emerge. Success
seems predestined. While there are no real guarantees, being born as an insider
increases the odds and likelihood of success.
Conversely, those who did not win the "lottery" are often outsiders looking
in. They have the wrong parents, the wrong skin color, the wrong nationality,
the wrong birthplace, and the wrong gender. They don't belong to the right
organizations. Doors do not open. Opportunities are beyond their grasp. The
number of people who actually surmount the odds is so low that it is little
wonder that their achievements and successes (e.g., Horatio Alger) are
celebrated.
Wealthy, white, Protestant (especially Episcopalian or Presbyterian) men from
the industrialized centers of the Northeast had the greatest advantages and
opportunities for reaching the pinnacle of success in business in the early
decades of the twentieth century. Being the "right" type of person in a
thriving economic hub opened many doors. During this time, education as a
prerequisite for success in business was more ornamental than practical.
Education generally further showcased one's social standing, especially for
those attending prestigious institutions. Education was not considered
essential for success in business until the middle decades of the twentieth
century.
In Paths to Power, we trace seven factors that either provided easy access to
an insider track to power or functioned as obstacles to success. These include
birthplace, nationality, religion, education, social class, gender, and race.
Those from privileged families have always had an easier path to traditional
power. Those on the outsideforeigners, women, African-Americans,
non-Protestant religious affiliationsoften pursued other paths to power. When
doors were closed, outsiders created their own paths. Sometimes that path meant
relocating to a new part of the country where opportunity and access were more
open. Sometimes that path involved significant educationin essence, building
social mobility through professional credentials. Sometimes the path involved
entrepreneurship. With access to traditional opportunities blocked, founding a
company to serve an affinity constituency was often the only choice for success
in business.
Q: How has that situation changed today? Do paths to power mirror trends and
values in society at large?
A: There are still inside and outside paths to power in business; however,
there has been a gradual opening of access. The most significant contributor to
an opening of access has been education. The impact of the GI Bill after World
War II was important in providing education to a new generation of leaders. The
GI Bill put education within reach for individuals from all socio-economic
backgrounds. In turn, that education helped to facilitate new social
networksthe opportunity to associate with individuals of influence and access
to new career prospects. The Civil Rights and Affirmative Action legislation of
the 1960s and the Title IX provision of the 1970s Education Amendment provided
similar opportunities for women and minorities.
While there are no real guarantees, being born as an insider increases the
odds and likelihood of success. In our research, we saw education supplanting
religion, birthplace, and nationality as a more important factor for success by
the late 1950s. Education was often a key lever in compensating for an outsider
status. As part of the professional credential process discussed previously,
many of the outsiders in our research were far more educated than insiders.
The MBA as a prerequisite for success in the top tiers of business became
increasingly important from the 1970s through the end of the century, and as a
result, we have seen a massive proliferation of MBA programs. Despite the
significant leveling of undergraduate education, the proliferation of the MBA
has, in some ways, functioned as another test for outsiders. MBAs from elite
institutions have far greater access to opportunities. But, who has access to
these elite programs? Are they simply part of a long feeder system for the
privileged class that starts in private nursery schools? Are they truly open to
all?
Education has thus had a paradoxical impact on accessat the undergraduate
level, more access and more opportunity. At the elite graduate institutions,
there may be less accessin essence, a closing of the funnel.
Q: In what areas do paths to power still appear to be closed today? Who is
being excluded?
A: The three areas that are still part of the outsider path are social class,
gender, and race. There has been some progress, but there is still a long way
to go. Less than 5 percent of the Fortune 500 companies are headed by a woman
or non-white man. We expect that to change in some significant ways as the
population who has benefited from the legislative actions of the '60s and '70s
are coming into positions of power. Women now represent 40 percent of MBA
degree recipients, which should impact the composition of the most senior
business leadership positions.
A diverse perspective at the top may be a key to unleashing talent and fresh
opportunities throughout the firm. The most intractable issue is probably
social class. The composition of leaders who overcame poverty to achieve the
pinnacle of success in business changed very little over the course of the
twentieth century. While the GI Bill helped to level educational opportunities,
the systemic issues of poverty often prevented many from taking advantage of
that opportunity. As society becomes more and more polarized, it will be
increasingly difficult for those from the lower socio-economic class to achieve
parity. Some elite institutions are now beginning to do more outreach, but this
area has seen the least progress and the least visibility in society and
legislation.
Q: What does your research suggest about American business leadership in the
future?
A: Businesses that will succeed in the twenty-first century will be those
that embrace the diversity of their workforce, that can compete in a global,
competitive landscape, and that can differentiate their products and services
for a more discriminating customer base. The changes in the social context of
business will require leaders (both men and women) who have a global
perspective and who can harness talent and sustain innovation.
The factors that paved the inside path to success in the twentieth century
have shiftededucation is far more important today. Going forward, a global
perspective will be increasingly vital. Managing this level of complexity
requires a broader viewone that is not restricted to a single gender, race, or
nationality. In fact, a diverse perspective at the top may be a key to
unleashing talent and fresh opportunities throughout the firm.
Q: What is the relationship between business leadership and power that the
title of your book suggests?
A: Paths to Power is the first book in over fifty years to comprehensively
analyze the demographics of leadership and access in business in the United
States. The last comprehensive studies were published in 1955: (1) Mabel
Newcomer's The Big Business Executive, the Factors that Made Him, 1900-1950
(Columbia University Press), and (2) W. Lloyd Warner and James C. Abegglen's
Big Business Leaders in America (Harper and Brothers).
One of the reasons that big business executives were studied fifty years ago
and are increasingly analyzed today is simply based on the impact that business
has on our lives. Business pervades all aspects of society from what we do to
what we use to how we spend our time.
Q: What do you think is the single most important finding from the research
that went into the book?
A: At first glance, the composition of CEOs in America seems to have changed
little in 100 yearsit's mostly comprised of white men. But digging deeper, it
is apparent that the composition has changed in some dramatic ways. There are
more foreign-born CEOs today, religion is no longer a barrier to entrance,
education has helped to level the playing field for some from less advantaged
backgrounds, etc. Our research traces who has had access to elite business
opportunities, what important factors influenced access, and what obstacles
still remain.
Q: What are you working on now?
A: The HBS Leadership Initiative's Great American Business Leaders Database
was the foundation for Paths to Power and its precursor work, In Their Time:
The Greatest Business Leaders of the 20th Century. The third book in this
trilogy of research based on the database is tentatively called Soaring Hubris.
In this book, Nitin Nohria, Mark Rennella, and I take our previous study of
context and apply it to one industry. In this case, we're taking a deeper dive
into the airline industry, looking at how its leadership changed during the
course of the twentieth century and how contextual intelligence or lack thereof
influenced industry evolution. We are particularly interested in the
co-evolution of industry structures and leadership approaches.
Excerpt from Paths to Power: How Insiders and Outsiders Shaped American
Business Leadership, by Anthony J. Mayo, Nitin Nohria, and Laura G. Singleton
For the true insider, the benefit of personal networks is obvious. The most
advantaged players were born into or married into families that already
controlled a successful business or were otherwise wealthy or influential.
While we can readily track the parentage of leaders, their marital networks are
virtually impossible to map fullymarital networks played a role in many
stories we tell and doubtless figured in many others. Marriage could expand a
leader's personal network, but because, particularly early in the century,
marriage partners were typically chosen from others of similar status and
religion, marriage was unlikely to turn an outsider into an insider overnight.
In other words, marriage was mostly an avenue that helped the rich get richer.
Not surprisingly, individuals with high-status backgrounds and personal
networks commensurate with that status showed signs of dominating business
interests by the 1920s. Family ties and money even constituted barrier
breakers powerful enough to bring leadership opportunities to relative
outsiders such as foreign-born men and white women in eras when the presence of
either group in top corporate circles was quite extraordinary.
For a person without the advantage of blood ties to powerful networks, links
to success might be made in other ways. The exceptionally bright student might
attend a prestigious educational institution, even on scholarship, thus winning
classmates as friends and gaining credibility with fellow alumni. During both
world wars, military service mixed individuals of different classes in ways
that promoted such networks of loyalty and helped break through religious or
status barriers. Involvement in politics at a grassroots level, where the field
is open to volunteers from a variety of backgrounds, could result in friends in
high places for those lucky enough to back a winning candidate. All these
upward paths into networking, however, were decidedly more open to, and in the
earlier part of the century almost exclusively benefited, native-born white men
who shared the religious affiliation and ethnic characteristics of the insider
majority.
At first it may appear that outsiders had no networks to leverage, except
networks formed with insiders through schooling, wartime service, or political
involvement. The stories of those who found success suggest otherwise, however.
Immigrants or members of religious minorities often capitalized on contacts and
business partnerships within networks of their co-affiliated communities.
African Americans also began businesses by offering products or services to
members of their minority group who were underserved or not served at all by
established companies. Female entrepreneurs early in the century paralleled
this practice, marketing in sectors where women were the primary consumers. The
profit potential of a niche business was limited, however, by the prospects for
widespread adoption of its products and services. If the offerings suited the
needs of those in the majority culture, and if the outsider status of those who
sold them posed little deterrent to majority
acceptance, large-scale success was possible. Among outsider groups, white
women thus generally faced the best possibilities to establish prominent
businesses, and did so in arenas like cosmetics, food, and fashion. The
constraints on the reach of businesses started by Jewish, Catholic, or
foreign-born leaders likewise diminished over the century, but enterprises
begun by African Americans were most likely to be restricted in size by this
barrier.
Excerpted by permission of Harvard Business School Press from Paths to Power:
How Insiders and Outsiders Shaped American Business Leadership, by Anthony J.
Mayo, Nitin Nohria, and Laura G. Singleton. Copyright 2006 Harvard Business
School Publishing Corporation; all rights reserved. To order, please call (800)
988-0886 or purchase online:
http://www.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=1983.
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