Louis Barnes, on the other hand, conducts his lessons almost invisibly at times. He deftly eases students into the roles of those at odds in the case studies. As smoothly and naturally as a fire taking hold on the hearth, people begin to open up -- the personnel disaster in "the Peter Olafson case" applies to their own companies. "How did you handle it?" somebody asks. "I've been there too," chimes in somebody else. Such admissions, sometimes bordering on confessions, herald the meltdown of egos. They are also a sign of educational magic, for Barnes has wandered up behind the back row. It's been minutes since he last spoke; the orchestra is conducting itself.
The OPM program isn't boot camp -- communal living rooms on each floor include comfortable couches, two personal computers, two small refrigerators, even cordial glasses -- but emotions run high. A group of strangers come together under intensely challenging conditions. They live together, eat together, and come to trust one another. The formal instruction is good, but OPMers learn the most from one another.
The tightest bonds are formed in the initial study groups, which bring together the seven or eight students whose private rooms share a common living room. Some groups make liberal use of big scratch pads, outlining key points from the cases. Virtually all translate the initial we're-all-in-this-together feelings into genuine concern and downright neighborly sharing. It's not unusual for somebody to neaten up his class notes on the computer, print up a bunch of copies, and pass them out to everyone in his study group, if not the entire class.
Just as often, the sharing is one-on-one. When talk in one of Glen Johnson's study groups veers to employee-review techniques, Johnson listens hard. He shows special interest when Archie Roberts, president of Intex Construction Corp., in Edmonton, Alberta, explains what he does: the employee evaluates himself, then the supervisor fills out the same form. They compare notes and work up a set of goals for the coming year. Responding to Johnson's interest, Roberts calls his office and orders the form sent by fax to Harvard. Thus does Johnson have a copy to take home with him.
The study groups remix each week. So do the sections assigned to the two classrooms. Often, a classroom debate on ethics will reverberate throughout lunch -- the discussion made all the more riveting by firsthand insights. One entrepreneur explains he walked away from a major contract in Nicaragua because of implied payoffs. Another defends business with an Indian company that elicits his cooperation in falsely lowering invoices to cut import duties.
Professor Gordon Donaldson's finance class provides another set of challenges for Johnson. With Oakley's past and future growth of such concern, Johnson eagerly boots up a computer with a disk Donaldson has provided. The software allows Johnson to plug his company's vital statistics into some sustainable growth formulas. In the past, Johnson had fiddled with something much more basic on "a little sustainable-growth slide rule" from a bank. Then, he came up with 22%. Now, with some different data and a computer keyboard at his fingertips, he comes up with a sustainable growth rate of 35%. Suddenly, he perceives the real value of his 20-year leveraged buyout of the company from his father.
Johnson, who had previously ruled out additional borrowing, tests some other scenarios, upping his current 1:1 debt-to-equity ratio to 2:1, which he feels he might become comfortable with, and 3:1, which his bank would allow. In return he gets sustainable-growth rates of 30% and 48%, respectively. We can grow safely, he says to himself. Financing, anyway, is not the limitation.
A few days later, he spends an afternoon in the library, checking the Almanac of Business and Industrial Financial Ratios to get a better sense of his industry. Back in his office in Illinois he has a stack of index cards, on which he has printed the names, and in some cases his best estimates of the annual sales, of his competition. Here is much more useful information. According to the almanac, mill-work companies similar in size to his own, and only those showing a profit, averaged 1.7% net profit before taxes. The number drops to 0.3% if unprofitable businesses are also counted. Johnson smiles. Oakley made 6.5% last year -- after taxes. "I had always figured we were stronger than the rest, but this really confirmed it," he says. "I realize if we push the competition aggressively, most of them probably can't respond.'
He achieves another bit of enlightenment as he works on his yellow pad. Sitting in his dorm room one afternoon, he assesses his company. On the left side of a sheet of paper, he lists the company's strengths, on the right side, weaknesses. Now, Johnson sees that the strengths are all external. Moreover, 7 of the 10 weaknesses are internal. "Why," he asks himself, "don't we treat ourselves as good as we treat our customers?'
Bit by bit, the program pieces together a powerful mirror. The reflection it provides isn't sharply focused until the general lessons of the first three-week session have been amplified by the sessions in the two following years, which encourage students to develop and act upon specific marketing and strategic plans. But even long before then, the program provides its students many insights.
The 41-year-old CEO of a manufacturing company came by one of his insights publicly. One morning of the third week during the coffee break between classes, he mentions to Barnes the problem he's having with his vice-president of finance. The guy, he explains, is a long-standing employee "promoted not by me, but by my father before I took over the company, and promoted far beyond his management capabilities. He's a terrific technician, but stubborn and unbending.
"What should I do?" he asks Barnes, who asks if he would share his problem in tomorrow's class and engage in a little role-playing.
