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• Case | HBS Case Collection | November 1993 (Revised September 2018)

  Rudi Gassner and the Executive Committee of BMG International (A)

  Linda Hill and Katherine Seger Weber

  Explores the roles of CEO Rudi Gassner and the 9-person executive committee in leading BMG International. BMG International is the international music subsidiary of Bertlesmann, a German company that is the second-largest media conglomerate in the world. Describes a 1993 decision that Gassner and the executive committee must make about whether or not to change managers' business plans and bonus targets as a result of a newly negotiate reduced manufacturing cost. Allows for discussion of a number of timely and important issues: 1) the complexities of managing and growing a large global business; 2) the tensions between centralized corporate control and decentralized local management in a global organization; 3) the impact of leadership style on corporate culture and performance; 4) the challenges of leading a senior mangement team; and 5) the final decision by CEO Rudi Gassner and the subsequent actions taken by the members of the executive committee.

  Keywords: Managerial Roles; Management Teams; Decision Making; Business Plan; Growth and Development Strategy; Global Strategy; Leadership Style; Organizational Culture; Business Subsidiaries; Business Conglomerates; Cost Management; Change Management; Music Industry; Media and Broadcasting Industry; Germany;

  Citation:

  Hill, Linda, and Katherine Seger Weber. "Rudi Gassner and the Executive Committee of BMG International (A)." Harvard Business School Case 494-055, November 1993. (Revised September 2018.)  View Details

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• Case | HBS Case Collection | July 2005 (Revised August 2018)

  The U.S. Current Account Deficit

  Laura Alfaro, Rafael Di Tella, Ingrid Vogel, Renee Kim, Matthew Johnson and Jonathan Schlefer

  Investors and policymakers throughout the world were confronted with the risk of painful economic consequences arising from the large U.S. current account deficit. In 2007, the U.S. current account deficit was $731 billion, equivalent to 5.3% of GDP. The implications of the deficit were debated with intensity. At one extreme, it was argued that large deficits would eventually resolve themselves smoothly, even if they persisted for many more years. Former Federal Reserve Chairman Alan Greenspan was among those expecting a "benign resolution to the U.S. current account imbalance." Other analysts, such as economists at the World Bank, believed the large deficits raised the risk of a sharp and disorderly fall of the dollar and that necessary macroeconomic adjustment could be painful, for the United States as well as for the rest of the world. The Financial Times asked: "How long will foreigners be prepared to make such generous 'gifts' to the US?" In this environment, Berkshire Hathaway, run by legendary investor Warren Buffett, postulated that current account imbalances would lead to "some chaotic markets in which currency adjustments play a part" and announced to shareholders a plan to increase investment in overseas companies to protect against this risk. It remained to be seen what the short- and long-term implications of the current account deficit would ultimately yield.

  Keywords: Macroeconomics; Borrowing and Debt; Currency; Foreign Direct Investment; Business and Government Relations; United States;

  Citation:

  Alfaro, Laura, Rafael Di Tella, Ingrid Vogel, Renee Kim, Matthew Johnson, and Jonathan Schlefer. "The U.S. Current Account Deficit." Harvard Business School Case 706-002, July 2005. (Revised August 2018.)  View Details

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• Article | Harvard Business Review

  The Board's New Innovation Imperative: Directors Need to Rethink Their Roles and Their Attitude to Risk

  Linda A. Hill and George Davis

  As firms scramble for competitive advantage, boards—once the cautious voices urging management to mitigate risk—are now calling for breakthrough innovation. Indeed, avoiding risk is now seen as the riskiest proposition of all. In speaking with CEOs and board members from a range of industries, the authors identified four common obstacles most boards face in governing innovation: an outdated risk agenda, insufficient time, lack of expertise, and a relationship with management that needs retuning. Embracing innovation and its inherent risks requires that boards and senior management develop new ways of working together. To bolster out-of-the-box thinking at their companies, boards should promote diversity among members. They should foster "creative abrasion" to keep ideas flowing and rethink traditional methods of governing. And they must learn to embrace and encourage risk.

  Keywords: Governing and Advisory Boards; Innovation Leadership; Risk and Uncertainty; Corporate Governance;

  Citation:

  Hill, Linda A., and George Davis. "The Board's New Innovation Imperative: Directors Need to Rethink Their Roles and Their Attitude to Risk." Harvard Business Review 95, no. 6 (November–December 2017): 102–109.  View Details

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