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Harvard Business Review December 2013
This issue represents a landmark for me in as far as it is my 100th issue to comment on
over 10 consecutive years. This issue has a focus on leadership. One key aspect it
proposes is staying focused and cultivating awareness of what truly matters. One
interesting article talks about Inequality in America and how democracy suffers when
big money has too strong influence on politics. Please find a few notes below.
The Hidden Benefits of Keeping Teams Intact by Robert Huckman and Bradley
Staats. Most managers underestimate the power of familiarity among team members
to drive performance.
How Diversity Can Drive Innovation by Sylvia Hewlett, Melinda Marshall and
Laura Sherbin. Diversity unlocks innovation and drives market growth which should
intensify efforts to ensure that executive ranks both embody and embrace the power
of differences. There are two kinds of diversity; inherent and acquired. Inherent
diversity involves traits you are born with such as gender, ethnicity, and sexual
orientation. Acquired diversity involves traits you gain from experience. Without
diversity women are 20 % less likely than straight white men to win endorsement for
their ideas; people of colour 24 % less likely. This costs their companies crucial
market opportunities, because inherently diverse contributors understand the unmet
needs in unleveraged markets. When at least one member of a team has traits in
common with the end user, the entire team understands that user. Leaders who give
diverse voices equal airtime are nearly twice as likely as others to unleash valuedriving insights and employees in a ‘speak-up’ culture are 3.5 times as likely to
contribute their full innovative potential.
Unwinding Inequality by Angus Deaton. When successful people –businessmen,
lawyers, traders, doctors – use their success to change the rules in their favour, by
lobbying or funding politicians, that success is no longer something to be celebrated.
When they push for what they see as important without perceiving that others have
different priorities – the rich have little need of public health care or public education,
for example – they undermine the provision of public goods on which the rest of us
depend. Justice Louis Brandes once said: “We may have democracy, or we may have
wealth concentrated in the hands of a few, but we can’t have both.”
The Focused Leader by Daniel; Goleman. Every leader needs to cultivate a triad of
awareness – and inward focus, a focus on others, and an outward focus. Focusing
inward and focusing on others helps leaders cultivate emotional intelligence. Focusing
outward can improve their ability to devise strategy, innovate, and manage
organizations. To be authentic is to be the same person to others as you are to yourself
– the opposite of pretentious. A child’s level of self-control is a more powerful
predictor of financial success than IQ, social class, or family circumstances. The word
attention comes from the Latin word attendere, meaning ‘to reach toward.’
Executives who can focus on others are easy to recognize. They are the ones who find
common ground, whose opinions carry the most weight, and with whom other people
want to work. They emerge as natural leaders regardless of organizational or social
rank. There are three kinds of empathy; cognitive empathy – the ability to understand
another person’s perspective; emotional empathy – the ability to feel what someone
else feels; empathetic concern – the ability to sense what another person needs from
you. Talking about positive goals and dreams activates brain centres that open you up
to new possibilities. The more distracted we are, the less we can cultivate the subtler
forms of empathy and compassion. Attention to social context helps us behave in
ways that put others at ease. A good leader knows who the influencers of opinion in
the organization are and enlist them. Focused leaders can command the full range of
their own attention: They can control their impulses, they are aware of how others see
them, they understand what others need from them, they can weed out distractions
and also allow their minds to roam widely, free of preconceptions. Too much
information can create a poverty of attention.
Analytics 3.0 by Thomas Davenport. Google, Amazon, and others have prospered not
by giving customers information but by giving them shortcuts to decisions and
actions.
How Google Sold Its Engineers on Management by David Garvin. Seldom did
employees accept top-down directives without question. There is a tight connection
between managers’ quality and workers’ happiness. Employees with high scoring
bosses consistently reported greater satisfaction in multiple areas, including
innovation, work-life balance, and career development. There is a lot of possible
career development besides traditional promotion.
Data’s Credibility Problem – management – not technology – is the solution.
Thomas Redman. The solution to data problems is better communication between the
creators of data and the data users; a focus on looking forward; and above all, a shift
in responsibility for data quality away from IT folks, who don’t own the business
process that create the data and into the hands of managers, who are highly invested in
getting the data right.
You May Not Need big Data After All by Jeanne Ross, Cynthia Beath and Anne
Quaadgras. Most companies don’t see return on their analytics investment. The
answer is to have good people use good data to make good decisions. Much of the
hype around big data focuses on getting more information and more people to analyse
it. But the opportunity presented by the information economy is best tapped by getting
all people to use data more effectively.
When Marketing Is Strategy by Niraj Dawar. You must shift your strategy
downstream, from products to customers. Redefining customers purchasing criteria is
one of the most powerful ways companies can wrest market leadership from
competitors. High failure rates for new products suggest that companies are
continuing to invest heavily in product innovation but are unable to move customers’
purchase criteria.
Why Conglomerates Thrive by J. Ramachandran, K Manikanandan and Anirvan
Pant. In emerging markets business groups continue to thrive. In a sense, the business
group liberates strategy from structure. Too often the need to pass up opportunities in
order to satisfy shareholders’ expectations has inhibited growth.
How Emerging Giants Can Take on the World by John Jullens. Great Wall began
in 1984 as a vehicle repair collective and grew by focusing on the manufacture of
pick-up trucks and SUVs for the Chinese market. Its approach has been “Be stronger
and then be bigger.”
Be Seen as a Leader by Adam Galinski and Gavin Kilduff. Anyone can achieve
higher status on a team, both at the outset and over time, by temporarily shifting his or
her mind-set before the first meeting.
Notes by [email protected] 24 Nov 2013
Harvard Business Review November 2013
The theme for this issue is 'How to Make Smarter Decisions.' I was again impressed
with the quality of the articles. Ideas in this issue include gender advice for women to
speak up, ask for that job, say why you qualify for it, and always put up your hand to
be counted. Business leaders can’t afford to be bystanders – they need to also address
social issues and commit to principled leadership. Don’t just please the finance
markets but pursue your unique way of value creation. Search for new people and
ideas – they don’t need to be the smartest but they need to be different, to represent
diversity. The GFC seems to be over with the system surviving more or less intact.
This may seem to be good thing but we may also have more learning experiences
around the corner. Banks generally need to reduce leverage by increasing equity.
Please find below a few notes from the November issue.
How To Move Beyond Gender Bias – Three remedies of gender bias – educate
workers about bias, create safe settings in which women can learn, and helping
women focus more on purpose and less on how they are perceived. Ketina
Chikwanda, senior engineer of WorleyParsons says: Women should realize that we
don't need approval or permission from our colleagues. We need to brand ourselves as
individuals and stand by our brand. We should work hard but see opportunities
instead of what stands in the way. Speak up, ask for that job, say why you qualify for
it, and always put up your hand to be counted. Rather than dwelling on biases we
should use our knowledge to counter them.
Wearables in the Workplace - about wearable technologies that capture
performance data. It is quite clear that in practice companies will use such devices to
judge, rank, and punish employees. Treating people in this way is likely to backfire as
creative energies are diverted away from improving working processes and toward
gaming the system. Further reliance on automation is likely to weaken social bonds
and diminish the pleasure of performing a good job for its own sake, thus reducing
intrinsic and social motivation. / Adam Wood, research scientist /
Make the most of Polarizing Brands by Xueming Luo, Michael Wiles and Sascha
Raithel. Learn to assess and exploit brand dispersion rather than relying on averages
(understand brand lovers and haters). Managers need to dig deep to understand the
full range of attitudes towards their products. Fuelled by social media, pockets of
haters can quickly develop and spread, even for brands that once enjoyed uniform
appeal.
The Incredibly Shrinking Information Sector by Hank Robinson. US job
shrinkages in the Information sector in the first decade of the new millennium:
Editors, ad sales agents, prepress technicians, reporters and correspondents shrank
about 25 %. Media outlets are using fewer people to generate more content. Customer
service representatives employment is down by 30 %. Equipment installers and line
installers fell by 39 %. Creatives on the rise – actors, entertainers, animators and
writers - is showing a small gain. Programmers, computer engineers and systems
analysts reduced by 19 %. This adds up to about one million less jobs in ten years in
the US.
The Reinvention Imperative by Miles D White. Pressure from Wall Street to deliver
the next quarter is a given, Your job as a business leader is to counter it with a point
of view on where the industry is headed in the next five to ten years. If your strategy
strikes outsiders as unexpected, that's fine. They don't know your business as well as
you do. Successes and failures come and go – it is courage that counts.
The Brain and Soul Capitalism by Nancy Koehn. Most leaders accept social and
civic responsibilities as indispensable to doing good business; their enterprises won't
survive if those responsibilities are ignored. A company's most important assets –
mission, reputation and people - are not on the balance sheet. If your sole goal is to
maximise profit, you are on a collision course with time. Business leaders cannot be
bystanders. To address social issues, business must experiment and innovate. In the
next decade we will see a decline of companies that cannot summon moral courage
demanded by principled leadership. Unilever's goal is to “stay close to society to
guarantee our future.”
Rakuten's CEO on Humanizing E-Commerce by Hiroshi Mikitani, founder and
CEO. Human beings need communication and connection. So instead of emphasizing
efficiency and convenience Rakuten tries to create a personalized, bazaar-like
shopping experience. The curators running our shops will become like friends to you
and will give you personal recommendations. Good prices, efficiency, speed,
accuracy – those things are important and we provide them. But if we can also
provide communication and interaction and a story behind the products, it becomes a
win-win relationship.
Strategy: The Uniqueness Challenge by Todd Zenger. CEOs need to decide whether
to maintain the course they have set or the one demanded by the market. In deciding
they often end up asking themselves, is my task simply to please the market, or is it to
be creative and clairvoyant, envisioning and executing a path to value creation that
investors cannot see? (It is important to conform and fit in, but even more important is
to gradually transform and lift the game; you need to succeed on both these score and
move from one to the other – my advice to students who are about to transfer to
working life)
Deciding How to Decide by Dan Lovallo and Carmina Clarke. In highly complex,
uncertain contexts, traditional decision support tools such as discounted cash flow
analysis are worse than useless. Nonetheless, executives use them all the time. Three
key factors for choosing the right approach are: how well do you understand the
variables that will determine success, how well can you predict the range of possible
outcomes and how centralised is the relevant information. It is easy to fall prey to our
biases and focus on a limited set of self-serving analogies that support our
preconceived notions. Make it a habit at your company to consciously decide how and
when you are going to make any decision.
You Can't Be a Wimp Interview of Ram Charan by Melinda Merino. Good CEOs
know it takes more than analytics, taking in a lot of information from many sources
and then crystallize a point of view. You need three keys to making better decisions:
Perceptual Acuity – searching the external environment for anomalies and
opportunities; cutting through complexity to identify a handful of variables; and
imagining how to combine these variable to create options for action; Quality
Judgement – build trustworthy, diverse social networks in and outside the company
and factor in their biases; move from big picture down to concrete specifics; think
through the second and third order consequences; and focus on the decisions you must
make and decide who should make the others; Credibility- If you don't have it your
decisions will never be accepted; listening to diverse and contradictory views,
building support among board, employees and others; and having the courage to make
the best decision even if it is unpopular. The most common reason for failure is
putting the wrong person in the job and then not dealing with the miss-match. One
CEO of a large Indian company has been bringing a lot of younger people into senior
jobs because of their digital experience. It's been hard for him to bypass some longserving executives, but he had the spine to make those decisions.
Beyond the Echo Chamber by Alex Pentland. Social explorers spend enormous
amount of time searching for new people and ideas – but not necessarily the best
people or ideas. Instead they seek to form connections with many different kinds of
people and to gain exposure to a broad variety of thinking. The best researchers
engaged in preparatory exploration – they proactively developed relationships and
connections with other experts and later tapped into them for help with completing
critical tasks. (if you first build friendships – help will be given willingly - but if your
call is impersonal and only to extract value from me I may be less enthusiastic, my
comment). The social networks of the star performers were more diverse than the
networks of the middling performers. The best decisions rarely come from deep
pondering in isolation. They happen when people learn from and draw on the
experience of others with diverse and independent minds.
What We've Learned from the Financial Crisis by Justin Fox. Seven years after the
crash of 1929, John Maynard Keynes published the most influential work to come out
of the era of turmoil – The General Theory of Employment, Interest and Money – yet
for at least another decade was it unclear how influential that book would be. After
the crash of 2008 three shifts of thinking stand out. (1) Macroeconomists are realizing
that it was a mistake to pay so little attention to finance. (2) Financial economists are
beginning to wrestle with some of the broader consequences of what they've learned
over the years of market miss-behaviour. (3) Economists' extremely influential grip
on a key component of the economic world, the corporation, may be loosening.
Countries that intentionally ran big fiscal deficits, such as the United States and
China, weathered the storm better than those who chose austerity, as the UK and The
Netherlands, or had it forced upon them. There is clear consensus that fiscal stimulus
had a positive effect. The question is when to switch from crisis fighting to sound
money and fiscal restraint – and it is remarkable how crude the answers are. Only by
grossly oversimplifying reality have economists been able to come up with theories
that have some predictive power.
All the research tells us is that financial markets are prone to instability. This instability is
inherent in assessing an uncertain future, and it isn't necessarily a bad thing in itself. But when
paired with lots of debt, it can lead to grave economic pain. If financial institutions funded
themselves with more equity and less debt, instead of the 30-1 debt to equity ratio that
prevailed on Wall Street before the crisis and still does at some European banks, they would
be less sensitive to declines in asset values. For a variety of reasons bank executives don't like
to issue stock tending to prefer to reduce debt. To make banks safer without a credit crunch,
regulators need to force them to sell more shares. (or retain more earnings)
A few scholars have been looking into whether there's a point at which the financial sector is
simply too big and too rich – when it stops fuelling economic growth and starts weighing on
it.
The banks and investment banks that got into the most trouble in 2008 were generally those
with the most shareholder friendly executive pay and governance. As equity account only for
a tiny part of many financial institutions balance sheets, shareholders had far less at stake than
creditors did. They were less owners than thrill seekers along for the ride – sharing in the
upside but only on the hook for a small portion if it failed. Shareholders often hold shares in
hundreds or even thousands of corporations; they can sell at a moment’s notice; they aren't
responsible for the debts and messes a failed corporation leave behind. Yet, successful
corporations thrive on loyalty, commitment, and goals that extend beyond enriching
shareholders.
The financial system has survived more or less intact. That seems like a good thing;
but it may also mean we'll be having more learning experiences soon.
Dismantling the Sales Machine by Brent Adamson, Matthew Dixon, and Nicholas
Toman. Selling today requires flexibility, judgement, and a focus on results – not
process. The new environment favours creative and adaptable sellers who challenge
customers with disruptive insights into their business – and offer unexpected
solutions. An organizational emphasis on the judgement of individual reps rather than
their compliance with protocols and a managerial focus, on providing guidance and
support rather than inspection and direction. Transforming a sales organization along
those two dimensions is crucial for giving the reps the latitude they need to win in the
new environment. Managers serve as coaches rather than enforcers; the work force
self-manages to a large extent and the group is judged on long term outcomes rather
than short term compliance with protocols. There should be a strong emphasis on
innovation and a sense of business ownership by sales people. Good sales managers
are experts at maximizing network performance in their teams.
“Wanted: critical thinkers looking for an opportunity to exercise judgement and
assume responsibility for business growth.” Autonomy and the opportunity to
generate value for customers are important. Hire the best employees, create an
empowering environment, provide the necessary tools and guidance and get out of the
way.
I try to Spark New Ideas with Christine Lagarde. What does it take to be a good
leader? First you have to believe in what you are doing – to feel comfortable with the
institution and its strategy. Next you have to give it your all, engaging completely in
the mission you've set for yourself. And finally, you have to care about your staff –
making sure you hear them and understand their take on the issues, making sure that
everyone feels part of the team and is drawing satisfaction from their work. Is there a
difference between masculine and feminine leadership? Studies show that certain
characteristics are predominant in female leaders, like the ability to listen, to desire a
form of consensus and an attention to risk, which is why women are good leaders in
times of crisis. Competitiveness is delivered either through price or quality. Never
give up on education and the development of the sciences, because that's where a lot
of productivity and competitiveness come from. Capitalism tends to move from crisis
to crisis. The same goes for governments. Short mandate periods is a big problem.
Delivering World Class Health Care Affordably by Vijay Govindarajan and Ravi
Ramamurti. Treatment in Indian hospitals cost about 5 % of similar treatments in
USA. Even when correcting for pay differences the cost in India is about 1/6 of the
cost in the US. To cut costs, US hospitals often eliminate low-skill staff jobs, which
forces doctors to spend more on routine tasks – resulting in the wrong kind of task
shifting. Part of Indian cost cutting is to prolong the working life of expensive
equipment through careful maintenance and repair. Senior managers often share small
offices, freeing space for mission critical areas such as operating theatres. Indian fixed
price model discourages doctors from ordering unnecessary procedures, while
protocols ensure that essential procedures aren't skipped. The US health system could
operate very differently if it were exposed to the kind of low cost innovation that
drives the best Indian hospitals.
Experience Agility by Susan David and Christina Congleton. How effective leaders
manage their negative thoughts and feelings. Emotional agility can help people
alleviate stress, reduce errors, become more innovative, and improve job performance.
Leaders who become increasingly adept to show and manage emotions are the ones
most likely to thrive.
Notes by [email protected] 1 Nov 2013
Harvard Business Review October 2013
The theme of this issue is how to engineer breakthrough ideas but as usual there are
many articles dealing with other issues as well. I liked the article which emphasized
the need for line managers to run their own HR. And the line ‘Don’t Spin a Better
Story, Be a Better Company’ resonates with me and my interaction with the finance
industry. Please find below a few notes from the issue.
People who have strong informal networks, not necessarily connections to corporate
hierarchy, are more successful at implementing change.
HR for Neophytes / A person who is new to a subject, skill, or belief/ by Peter
Capelli. When line managers are responsible for recruiting, performance management
and retention, companies are 29% more successful at those tasks. Getting the best
performance out of people often depends on putting them in the right job, with the
right boss.
More than 60% of all hires in large US firms are now filled by outside candidates
compared to 10% a generation ago. This is partly owing to a cultural shift from
lifelong employment to a more mobile work force, but it also results from poor hiring
decisions, lack of employee development, and the myth of the ‘A’ player. There are
three ways to meet talent needs. You can buy talent by hiring from the outside. You
can build it by developing existing employees. Or you can borrow it, by engaging
contractors or temporary workers.
Research showed that it took three years for the outside hires to perform as well as
internal hires – but it took seven years for the pay of the internal hires to catch up with
that of the outsiders. The article recommends outsourcing of the hiring function.
The skills in greatest demand - technical, sales and executive skills - can be learned on
the job. Work based learning is best done in stretch assignments, and it is best
managed by direct supervisors, who have the keenest sense of when an employee is
ready for a new task and have ready access to project work. If your employees want
classroom training, provide reimbursement programs – the most underused
development resource in business. Employers who offer tuition reimbursement attract
better applicants and have lower turnover than other firms.
The single best way to retain valued employees is to give them better opportunities
than they could find elsewhere.
Timing of conference calls. The best time for a meeting is early in the day with poor
results around mid-day and especially 3 – 4 PM mainly because of physical and
mental fatigue. In another study it was demonstrated that parole board rulings varied
by whether the case was heard just before or after lunch. / In my own case I get
restless if I think I could be doing something better than to be in the meeting – this is
for me the norm for repeat teleconferences and large meetings – thus also a need to
keep meetings short and sharp – rotating chairmanship of the meeting can help –
fighting fatigue, monotony and boredom /
Seven Reasons Why Africa’s Time Is Now by Jonathan Berman. 1 It is a huge
market opportunity. 2 It’s increasingly stable, 3 It will soon have the world’s largest
work force, 4 Mobile is exploding, 5 Intra-African trade is in its infancy, 6 Twenty
per cent of government spending goes to education, 7 It contains most of the world’s
uncultivated land. (And the article has a map showing the immense size of Africa and
how the combined area of the US, Europe, China and India could be fitted into
Africa.)
Don’t Spin a Better Story, Be a Better Company by Leslie Dach. Thinking you can
tell a better story without becoming a better company doesn’t work. “What if we used
our size and resources to make this country and this earth an even better place for all
of us? And what if we could do that and build a stronger business at the same time?”
Today every merchandise buyer’s annual objectives call for progress in sustainability
or in women’s economy empowerment. The principles are working for us (Wal-Mart)
and we are showing others that taking on large social issues can be compatible with
building a stronger business.
If a drumbeat of criticism starts up against your company, don’t rush to raise your
voice above it. Stop and listen. And commit to getting better. /these last lines would
seem to be relevant for much of politics as well/
Growing Start Ups Without Outside Investors by Hamdi Ulukaya.
The Strategy That Will Fix Healthcare by Michael Porter and Thomas Lee.
Providers must lead the way in making value the overarching goal. The six
components of the value agenda: Organize into integrated practice units; measure
outcomes and costs for every patient; move to bundled payments for care cycles;
integrate care delivery across separate facilities; expand excellent services across
geography.
Existing costing systems are fine for overall department budgeting, but they provide
only crude and misleading estimates of actual costs of service for individual patients
and conditions. Organizations that progress rapidly in adopting the value agenda will
reap huge benefits, even if regulatory change is slow.
This is an ambitious article over 20 pages recommended for all in the health care
industry.
Putting the Breakthrough back into Innovation by Regina Dugan and Kaigham
Gabriel. Traditional approaches to corporate research and development have difficulty
consistently delivering breakthrough innovations. Compromises made to reduce risk
or to avoid disrupting existing business result in evolutionary – but rarely
breakthrough – innovations. The solution may be a ‘special forces’ style research
group modelled after the Defence Advanced Research Projects Agency. Its key
elements include tackling projects that advance science and solve significant
problems; assembling the best minds from industry and academia for limited periods
of time to create diverse, agile, and scalable teams; and allowing independence from
the mainstream organization in project selection and execution.
Decisions should not be taken by committee. Breakthroughs do not lend themselves to
consensus.
Corporate Venturing by Josh Lerner. More and more smart companies are going VC
to find their next breakthroughs. Traditional R&D doesn’t do a good job of sniffing
out competitive threats. More and more corporates tend to focus on a narrow range of
projects, thus potentially neglecting disruptive advances that occur outside the
company.
Most of the problems are rooted in incompatibilities between two mind sets: that of
the risk-solving, sometimes ruthless venture-capitalist and that of the process bound
corporate executive.
A tortuous approval process inevitably burdens the fund with too many goals.
Well managed corporate venture funds can hold their own with independent VC
firms, and even outperform them.
Rethinking the Decision Factory by Roger Martin. Knowledge workers shouldn’t be
managed as if they were manual workers. A new approach can boost efficiency and
productivity.
Most companies make two big mistakes in managing knowledge workers. The first is
to think that they should structure the workforce as they do a manual workforce –
with each employee doing the same tasks day in and day out. The second (which
derives in part from the first) is to assume that knowledge is necessarily bundled with
the workers and, unlike manual labour, can’t readily be codified and transferred to
others.
Job descriptions are written as a collection of ongoing tasks that add up to one full
time job. But knowledge work comes primarily in the form of projects, not routine
daily tasks. The nature of project work is that it has peaks and throughs but as a carryover from managing manual workers, managers are often uneasy with down time,
thinking it is something to address and eliminate. Thus it is in every knowledge
workers interest to look busy all the time.
Professional service firms have grown so quickly in part because they’re organized
around projects rather than permanent jobs.
A company with 100 flat jobs is almost certainly obsolete. Some people are clearly
needed to solve the next new mystery. The key is to invest significant knowledge
worker resources in projects that move knowledge forward. Only then can
organizations avoid cycles of binge and purge while improving the productivity of
their knowledge workers.
Consulting on the Cusp of Disruption by Clayton Christensen, Diana Wang, and
Derek van Bever. The same forces that disrupted industries as steel and publishing are
starting to reshape the consulting industry, with profound implications for its future.
Established firms have traditionally relied on opacity and agility to maintain their
industry leadership, but those two advantages are disappearing in the increasing
transparent and sophisticated business environment. Now these firms are starting to
rethink their own service models and even to experiment with new models that could
prove disruptive to the core business. And organization’s capabilities becomes its
disabilities when disruption is afoot. No challenge is more difficult for a market
leader facing disruption than to turn and fight back – to disrupt itself before an upstart
competitor does. Every industry will eventually face disruption.
If you are currently on the leadership team of a consultancy and you’re inclined to be
sanguine about disruption, ask yourself: Is your firm changing (at least) as rapidly as
your most demanding clients.
Sir Alex Furguson’s Winning Formula by Anita Elberse. Allow yourself ample
time and room just to observe and don’t busy yourself with things others can do for
you. Explore any means of improving, continue to work hard and view every success
as your first.
Diaspora Marketing by Nirmalya Kumar and Jan-Benedict Steenkamp. Nearly a
quarter billion people live in countries where they were not born. Indian, Chinese, and
Vietnamese Americans reported median household incomes of $ 90 K, $ 66K and $
55 K respectively compared to the overall US median of $ 50 K. Chinese emigrants
now serve as conduits between their host countries and the mainland, while members
of the Indian diaspora help connect global entrepreneurs and knowledge workers to
the subcontinent.
Immigrants face the dual challenge of maintaining their distinctiveness and affiliating
themselves with the host culture. Compared with ethnic affirmers, bi-culturals are
better educated; have higher incomes, socioeconomic status, and self-esteem; and are
more involved in local social networks.
Be Yourself, but Carefully. How to be authentic without oversharing by Lisa Rosh
and Lynn Offerman. This article points out that it is easy to go over-board in
conviviality which has the potential to back fire.
Notes by [email protected] 28th September, 2013
Harvard Business Review September 2013
This issue is themed on gender biases and how to overcome them. I am not sure it
adds much new to the debate but it is good to keep the issue at the forefront given
how slow the progress is towards the equality a vast majority of people say they want.
I find the September issue providing yet again support for doing business in a more
humane and community oriented way. One would have to believe that business
started by people helping each other to satisfy needs and in the process improving
their own well-being. This seems such a natural basis for human action and
interaction that one wonders why it had to take 200 years of toil, meandering and
academic research to take us back to what looks like the starting point. If what we are
doing as a business doesn’t serve the community in some way we may well need to
rethink and adjust our approach. Please find below a few notes from the September
issue.
In corporate America women hold 15% of C-suite jobs and 17 % of board seats.
(According to a recent presentation I attended, NZ women hold 4% of all board seats,
meaning most boards have no woman).
CEOs with generalist skills – having a background in many functions- earn 19 %
more than their expert counterparts. (Experts should be on tap and not on top)
To reduce emails – start at the top. Reducing top executives’ message outflows
causes subordinates to cut back even more. Teach executives to be more deliberate in
their email use. Ask them to set a target for reducing the number of messages they
send, and include it in their performance goals. Give them weekly feed-back.
Triple-Strength Leadership by Nick Lovegrove and Matthew Thomas. We need
executives who can move easily among business, government, and social spheres. Trisector issues need to be incorporated in in formal academic and executive training;
mid-career leaders need to build inter-sector networks. Successful tri-sector leaders
typically have a strong sense of mission – the primary focus of non-profits. There
needs to be a strong desire to create ‘public value.’ It is inspiring to meet this kind of
leaders but the model is not the prevailing one in the USA or Europe. / To me this is
one of these articles stating the obvious– but it is still useful as business often lives in
a world of its own shielded from real life and common sense /
Women Rising: The Unseen Barriers by Hermina Ibarra, Robin Ely and Deborah
Kolb. Identifying biases can help women and men alike to understand what’s going
on. Often what is deemed assertiveness in men is seen as aggressive in women.
Great Leaders Who make the Mix Work by Boris Groysberg and Katherine
Conolly. People with different lifestyles and different backgrounds challenge each
other more. Diversity creates dissent, and you need that. Without it, you’re not going
to get any deep inquiry or breakthroughs.
When internal diversity and inclusion scores are strong, and employees feel valued,
they will serve customers better making the organization better off.
Many CEOs perceived that women are less political, less likely to define themselves
by their careers, more collaborative, better listeners, more relationship oriented, and
more empathetic and reasonable.
Practices that make a difference: Measure diversity and inclusion. Hold management
accountable. Support flexible work arrangement. Recruit and promote from diverse
pools of candidates. Provide leadership education. Sponsor employee resource groups
and mentoring programs. Offer quality models. Make the chief diversity officer count.
IKEA has a grandfathering/ grand mothering principle for recruitment – a hiring boss
has to have another manager say yes to a candidate before that person can be hired.
Half of CEOs interviewed said their most important role was to set the tone for the
organizations culture by demonstrating a commitment to inclusion.
How Women Decide by Cathy Benko and Bill Pelster. Women tend to treat proposal
presentations as opportunities for exploring opportunities, while men work to narrow
down options and close in on a decision.
Women In the Workplace, A Research Roundup. When women leave it is more
often due to work place problems than to care for the family. There is a motherhood
penalty – mothers are offered $ 11,000 p.a. less than single women.
Innovating for Shared Value by Marc Pfitzer, Valerie Bockstette and Mike Stamp.
Companies that deliver both social benefit and business value rely on five mutually
reinforcing elements: embedding a social purpose, rigorously defining a social need,
measuring the social and business value, creating the optimal innovation structure and
co-creating with external stakeholders.
Many global social issues represent technological challenges as well as market
opportunities. Social purpose helps a firm identify the needs it might want to address,
but the reverse is also true: As a company understands social problems more
thoroughly, employees’ commitment to its social purpose will increase. A deeply held
social purpose is also important for co-creation, forming the basis for trusted
relationships.
Notes by [email protected] 24 August 2013
In the last article commented on there is a reference to this article from Jan/ Feb 2011;
How to reinvent capitalism – and unleash a wave of innovation and growth by
Michael E Porter and Mark R Kramer
Capitalism is under siege. Diminished trust in business is causing political leaders to
set policies that sap economic growth. Business is caught in a vicious circle. The
purpose of the corporation must be redefined around Creating Shared Value.
Companies must take the lead in bringing business and society back together. The
recognition is there among sophisticated business and thought leaders, and promising
elements of a new model are emerging. Yet we still lack and overall framework for
guiding these efforts, and most companies remain stuck in a ‘social responsibility’
mind set in which societal issues are at the periphery and not at the core. The solution
lies in the principle of shared value, which involves creating economic value in a way
that also creates value for society by addressing its needs and challenges.
Businesses must reconnect company success with social progress. Shared value is not
social responsibility, philanthropy, or even sustainability, but a new way to achieve
economic success. This will drive the next wave of innovation and productivity
growth in the global economy. Learning how to create shared value is our best chance
to legitimate business again. Government and business have each assumed that the
other side is an obstacle to pursuing its goals and acted accordingly.
For decades business people have studied positioning and the best ways to design
activities and integrate them. However, companies have overlooked opportunities to
meet fundamental societal needs and misunderstood how societal harms and
weaknesses affect value chains. Our field vision has simply been to narrow.
Companies can create economic value by creating societal value. There are three
distinct ways to do this: by reconceiving products and markets, redefining
productivity in the value chain and building supportive industry clusters at the
company’s locations. Each of these is part of a virtuous circle of shared value;
improving value in one area gives rise to opportunities in the others. The concept of
shared value resets the boundaries of capitalism. By better connecting companies’
success with social improvement, it opens up many ways to serve new needs, gain
efficiency, create differentiation, and expand markets.
The new concept blurs the line between for-profit and non-profit organizations.
The congruence between societal progress and productivity in the value chain is far
greater than traditionally believed. Heightened environmental awareness and
advances in technology are catalyzing new approaches in areas such as utilization of
water, raw materials, and packaging, as well as expanding recycling and reuse. The
opportunities apply to all resources, not just those that have been identified by
environmentalists. Better resource utilization will permeate all parts of the value chain
and will spread to suppliers and channels.
The focus on holding down wage levels, reducing benefits, and off-shoring is
beginning to give way to awareness of the positive effects that a living wage, safety,
wellness, training, and opportunities for advancement for employees have on
productivity. Leading companies have learned that poor employee health costs more
than health benefits.
Profits involving a social purpose represent a higher form of capitalism – one that will
enable society to advance more rapidly while allowing companies to grow even more.
The result is a positive cycle of company and community prosperity, which leads to
profits that endure.
Most business schools still teach the narrow view of capitalism, even though more
and more of their graduates hunger for a greater sense of purpose and a growing
number are drawn to societal entrepreneurship. The results have been missed
opportunity and public cynicism. There is nothing soft about the concept of shared
value. These proposed changes in business school curricula are not qualitative and do
not depart from economic value creation. Instead they represent the next stage in our
understanding of markets, competition, and business management.
My comment: The Article should be read in its entirety. One thing the article doesn’t
talk much about is the increased energy and commitment levels achievable by giving
people a strong sense of value and purpose, beyond financial return. This in itself has
a great potential for increased organizational prosperity.
Harvard Business Review July-August 2013
This double summer issue is themed ‘influence, how to get it, how to use it.’ Perhaps
the main article is about leadership, suggesting demonstration of warmth must
precede competence. In many ways this is common sense and what I have thought for
decades but it is reaffirming to see the HBR telling its readers: first be human and
caring, then start to pursue growth, change and business objectives. The epoch of
making business a science run by experts has reached its use-by date, and what we
need going forward is thinking that serves the community and human needs. If you
want to serve customers well and satisfy them emotionally, you also must serve your
staff well and cater to how they feel. How has such a simple truth become so
muddled? The article ‘Connect – then lead’ deserves to be read in its entirety. Below,
please find a few notes from the summer issue.
One More Argument Against Cubicles. People who worked outside a 5 ft. x 5 ft.
cube got more correct answers on a test involving verbal creativity than did subjects
inside the cube. The superior performance of the subjects who worked outside it
shows that ‘enacting metaphors for creativity…enhances creativity.’
To Change The World, Invest in One Woman by Carly Fiorina. The correlation
between gender equality and national competitiveness is strong. Even in the most
developed economies, gross domestic product could be increased by as much as 16%
if the gender gap was closed. The imperative to take action is clear. Many companies
have a strong business case for supporting women. When Coca-Cola invests in
training thousands of women entrepreneurs in Africa, it directly benefits from a
stronger base of distributors and marketers. The single greatest point of untapped
leverage in the world today is a woman who could be an entrepreneur.
Building Sustainable Cities by John D Macomber. Over the next 40 years the
number of people living in cities will double to 6 billion. Yet even today many cities
lack sufficient clean water, electricity, reliable public transit, and other basic resources
needed to support their exploding populations and strengthen their economies.
Governments don’t have the political will, money, or managerial skill to solve this
problem on their own. A vast opportunity exists for the private sector to provide
products and services such as water desalination and incentive programs to smooth
spikes in electricity demand and combine sophisticated technology with financial
engineering. The necessary demand, capital and technologies exist. What is now
required is farsighted investors and businesses to organize the players.
Connect, Then Lead. To exert influence, you must balance competence with
warmth by Amy J.C. Cuddy, Matthew Kohut, and John Neffinger. When we judge
others, particularly our leaders, we look first to two characteristics: how loveable they
are (their warmth, communion, or trustworthiness) and how fearsome they are (their
strength, agency, or competence). These traits answer two questions: “What are this
person’s intentions towards me?” and “Is he or she capable of acting on those
intentions?” Most leaders today tend to emphasize their strength, competence, and
credentials in the work place, but that is exactly the wrong approach. Projecting fear
before establishing trust run the risk of eliciting fear, and along with it a host of
dysfunctional behaviours. The chances that a manager who is strongly disliked will be
considered a good leader are only about one in 2,000.
Warmth is the conduit of influence: It facilitates trust and the communication and
absorption of ideas. Evidence of trustworthiness is the first thing we look for in
others. When asked to choose between training programs focusing on competencerelated skills (such as time management) and warmth related ones (providing social
support, for instance) most people opted for competence-related ones for themselves
but soft skills training for others. In management settings, trust increases information
sharing, openness, fluidity, and cooperation.
Feeling a sense of personal strength helps us to be more open, less threatened, and
less threatening in stressful situations. When we feel competent and calm, we project
authenticity and warmth. Such leaders face troubles without being troubled.
People have a need to be included, to feel a sense of belonging. In fact, some
psychologists argue that the drive to affiliate ranks among our primary needs as
humans.
Before people decide what they think about your message, they decide what they
think of you.
Smile and mean it – when we smile sincerely, the warmth becomes self-reinforcing.
Feeling happy makes us smile and smiling makes us happy.
Once you establish your warmth, your strength is received as a welcome reassurance.
Your leadership becomes not a threat but a gift.
The Network Secrets of Great Change Agents by Julie Battilana and Tiziana
Casciaro. Change agents are more successful when they are central in the informal
network, regardless of their position in the formal hierarchy; when the nature of their
network matched the type of change they were pursuing; and when they had close
relationship with fence-sitters, or people ambivalent about the change. / from my
experience as a captain in the army one needs to identify mood setters – or (nonhierarchical) opinion leaders - and bring them on board to accelerate change and
action /
The Uses (and Abuses) of Influence, interview with Robert Cialdini. The six
principles of persuasion; Liking – If people like you, because they sense that you like
them, or because of things you have in common, they’re more apt to say yes to you;
Reciprocity – People tend to return favours; Social proof – people will do things they
see other people are doing; Commitment and consistency – people want to be
consistent – or at least appear to be; Authority – People defer to experts and those in
authority often more so than they are aware of; Scarcity – things perceived to be more
scarce are more highly valued.
If an organization chooses to be unethical with clients or suppliers, it will ultimately
be cheated by people who are happy to work in a dishonest culture. Eventually the
organization will pay for it on the bottom line.
6 Ways to Sink a Growth Initiative by Donald L. Laurie and J. Bruce Harreld.
Taking a start-up into uncertain terrain is fundamentally different from and tougher
than running a multibillion-dollar business with established controls. Consequently, a
company’s best, most experienced general managers should lead these initiatives. Big
companies often apply the same metrics and milestones to running their early-stage
businesses that they use in managing mature businesses. These are worse than useless
and actually harmful. Without appropriate leadership, funding, measurement
mechanisms, and governance, growth initiatives will fail.
Your Brain at Work by Adam Waytz and Malia Mason. Companies that maintain a
reasonable level of internal pay equity would do well to publicize that information
among employees. Conversely, widespread knowledge of sky-rocketing executive pay
is sure to turn off the reward network. But it is not just that fair pay matters. When
people feel out of strategy sessions despite being qualified to participate they become
demotivated. The withholding of information also creates an inequitable environment
between those in the know and those not in the know – which is why transparency is
so important.
Goals are good, of course, but it is important to note that the reward network seems to
respond more positively to less stringent ones. Highly specific, challenging goals can
actually be harmful because they curb curiosity and inhibit flexible thinking. When
GM set a target of 29 % of the American car market it lead to pouring inordinate
amounts of money into advertising and marketing, rather than funding innovations.
Overly precise goals often engender myopic responses like that, which endanger
companies’ long-term health. / My view is that goals should not be more than five for
any individual, the last one being, “using your best endeavour to further the interest of
the organization” /
Intrinsically interesting work of solving novel problems is also a great stimulus
making the work as satisfying as the reward. The employer can do many things ‘on
the cheap’ for motivation by fostering a culture of fairness and cooperation, offering
opportunities for people to engage their curiosity, and providing plenty of social
approval.
Notes by [email protected] 14 July, 2013
Harvard Business Review June 2013
The theme of this issue is Strategy for Turbulent Times. Quite a few interesting
articles here. The one that stuck with me is about alumni. It says what we perhaps all
know but few practice – it is worth a lot to have the people who leave your
organisation leave on a high and it is worth money and effort to keep them as positive
ambassadors for your company. When I have had to let people go from my
organisations I have always aspired to make sure they leave happy and well
supported. Spending time and effort on achieving this has a pay back. Perhaps the
essence of the articles on strategy in modern times is that strategy needs to be
reviewed every day and regular reinvention must be built into the plans. Move to
something new swiftly rather than trying to suck blood out of a dying horse. “The
challenge now is to perpetually innovate, creating a portfolio of advantages that can
be built quickly and abandoned just as fast.”
Please find below a few notes from the June issue.
Online video offers a way to achieve higher engagement with consumers for far less
money.
Companies whose top 4 non-CEO executives are appointees of the current CEO are
about 35% more likely to engage in fraud – and 20 % less likely to get caught – than
companies where none of the four were appointed by the present CEO (what isn’t
revealed is how prevalent CEO level fraud is – my guess is that it is very rare – if one
country has 1/ 100,000 committing suicide annually and another has 2/ 100,000 it is
100% more likely that you will commit suicide living in the second country? – small
numbers render the statements misleading).
E-mail is not dead, it is just evolving. People still spend half their working day
dealing with it, they trust it, and overall they are satisfied with it according to a survey
of 2,600 workers in the US.
Is the Business of America Still Business? by Niall Ferguson, history professor at
Harvard University. Graduates of Harvard Business School overwhelmingly favour
foreign over US locations for new investment. 607 Harvard alumni who were asked
favoured US investment only in 16 % of the cases. Asked why they favoured foreign
locations, the respondents listed the areas in which they saw the US falling behind the
rest of the world. The top 10 included effectiveness of the political system, simplicity
of the tax code, regulation, efficiency of the legal framework, and flexibility in hiring
and firing.
Crony capitalism used to be what Americans complained about in Asia. No longer. At
least seven Asian countries now score above the US on this measure. Many
development economists argue that poor countries can get richer if they improve their
institutions, particularly the rule of law. The converse also applies: Rich countries can
get poorer if their institutions deteriorate, particularly the rule of law. Today only
lawyers think the United States has the best legal system. Everyone else knows it has
become a nightmare of impossibly complicated statutes (example Dodd-Frank), open
ended liability tort costs are the highest in the industrialized world relative to GDP,
and eye watering billable hours. The World Justice Project’s Rule of law Index for
2012 – 2013 ranks the US 26th out of 97 countries on effectiveness of the criminal
justice system, 25th on fundamental rights, and 22nd on access to civil justice.
In only 21 countries has the ease of doing business declined. The sixth worst decline –
not as bad as Zimbabwe’s but worse than Burundi’s, Congo-Brazzaville’s, and
Yemen’s - is that of the United States.
The political debate in America today is all about symptoms, from slow growth to
large deficits, when it should be about the underlying malaise. Face it: The country
that used to have the best institutions in the world is suffering a great degeneration.
The chief business of America is no longer business. I fear it may be bureaucracy.
How I did it – Honeywell’s CEO on how he avoided layoffs by David Cote. When
the great recession hit, many companies ‘restructured’ and laid off thousands of
workers. By asking employees to take unpaid leave instead, Honeywell positioned
itself for the recovery. Most managers underestimate how much disruption layoffs
create; they consume everyone in the organization for at least a year. Managers also
typically overestimate the savings they will achieve and fail to understand that even a
bad recession usually end more quickly than people expect. People could see that
things would not stay awful forever so they generally hung in there. Most people
aren’t mercenary, and they want to be part of something successful that is bigger than
themselves.
Tours of Duty – The New Employer-Employee Compact by Raid Hoffman, Ben
Casnocha, and Chris Yeh. A workable new compact must recognize that jobs are
unlikely to be permanent but encourage lasting alliances nonetheless. The key is that
both the employer and the employee seek to add value to each other. Employees
invest in the company’s adaptability; the company invests in the employee’s
employability. Three simple policies can make this new compact tangible. They are 1)
hiring people for explicit ‘tours of duty,’ 2) encouraging employees to build networks
and expertise outside the organization, and 3) establishing active alumni networks to
maintain career-long relationships between employers and former employees.
Essentially you want to tell your workers, “We will provide you with time to build
your network and will pay for you to attend events where you can extend it. In
exchange we ask that you leverage that network to help the company.
Massachusetts companies typically preferred secrecy to openness and rigorously
enforced non-compete clauses to prevent employees from jumping to rival firms or
starting their own. Silicon Valley has long had a more open culture (and lacks
enforceable non-compete clauses), and this has permitted the development of much
denser and more highly interconnected networks – which make it easier for people to
innovate. The area even gave rise to a term, “coopetition,” that reflects the fact that
working with competitors can be mutually beneficial.
Just as an individual’s power rises with the strength of her network (I -We), a
company’s power rises with the strength of its employees’ networks value; each
person’s network and her ability to tap it for intelligence; make it an explicit,
acknowledged asset.
The first thing you should do when a valuable employee tells you he is leaving is try
to change his mind. The second is to congratulate him on the new job and welcome
him to your company’s alumni network. McKinsey & Co has operated an alumni
network since the 1960’s and now has 24,000 members including more than 230
CEOs of companies with at least $ 1 billion annual revenue. Booz Allen Hamilton has
38,000 people networked.
If the employee who’s leaving is one of your stars, you should provide an even higher
level of service (assuming he handles his departure professionally and doesn’t take the
rest of the organization with him). Such folks are likely to go onto great things and to
be the hub of their networks, which could prove very valuable to you. You need to
provide benefits if you expect to receive them. Most employees don’t leave because
they are disloyal – they leave because you cannot match the opportunity offered by
another company. The new compact is an alliance between an organization and an
individual that’s aimed at helping both succeed.
Transient Advantage by Rita Gunther McGrath. Achieving a sustainable competitive
edge is nearly impossible these days. To stay ahead you need to constantly start new
strategic initiatives, building and exploiting many transient competitive advantages at
once. Transient advantage is now the new normal. Often the very success of an
initiative spawns competition, weakening the advantage. In a world that values
exploitation, people on the front lines are rarely rewarded for telling powerful senior
executives that a competitive advantage is fading away.
Ask yourself which of these statements are true of your company: I don’t buy my
company’s products or services. We are investing at the same or higher levels and not
getting better margins or growth in return. Customers are finding cheaper or simpler
solutions to be ‘good enough’. Competition is emerging from places we didn’t expect.
Customers are no longer excited about what we have to offer. We are not considered a
top place to work by the people we would like to hire. Some of our best people are
leaving. Our stock is perpetually undervalued. If you nodded in agreement with four
or more of these it is a clear warning that you are facing imminent erosion.
When opportunities don’t fit the structure, firms often simply forgo them rather than
making an effort to reorganize. The notion of transient advantage is less about making
more money and more about responding to customers. Fall in love with the problem
you are trying to solve rather than with the solutions.
One of the few barriers to entry that remain powerful in a transient-advantage context
has to do with people and their personal networks. Avoid brutal restructuring and
learn healthy disengagement.
Great leaders figure out some key directional guidelines, put in place good processes
for core activities such as innovation, and use their influence over a few crucial
inflection points to direct the flow of activities in the organization. Strategy is more
important than ever – it just isn’t about the status quo any longer.
What is the Theory of Your Firm? by Todd Zenger. Focus less on competitive
advantage and more on growth that creates value. Despite strong position and a
successful strategy Walmart’s equity price has seen little growth over 12-13 years.
That is because investors seek evidence of newly discovered value – value of
compounding magnitude. A good theory incorporates foresight about an industry’s
future, insight into which internal capabilities can optimize that future, and cross-sight
into which assets can be configured to create value. Only when your company is
armed with a well-crafted corporate theory will its search for value be more than a
random walk.
The New Dynamics of Competition by Michael D Ryall. The article introduces the
Value Capture Model suggesting it as an explanatory, predictive power that no other
theory of competitive strategy can claim.
Dysfunction in the Boardroom by Boris Groysberg and Deborah Bell. Survey
results showed that women had to be more qualified than men to be considered for
directorships. Although boards say they like diversity, they don’t know how to take
advantage of it. Female directors tended to be younger than male directors. In
comparison to male directors, fewer female directors were married with children.
What was also striking was the higher percentage of women than men who named arts
and culture, travel, and philanthropy and community service as outside interests.
In response to the survey male and female directors repeatedly named open
communication, well-run general meetings, a candid but collegial tenor, and
productive relationships with senior management as attributes of a successful board.
Yet research suggests that too many boards ignore the need for those qualities, and
recent efforts to overhaul governance have clearly failed to address the question of
how to compose a knowledgeable, inclusive body that possesses them. The article
recommends: build and strengthen group dynamics; recruit more female and diverse
director candidates; develop more female and diverse candidates internally; and,
conduct rigorous and regular board assessments and evaluations.
It‘s All About Day One, How to give a new executive the best possible start by
Suzanne de Janasz, Kees van der Graaf, and Michael Watkins. This article points out
the importance of careful on-boarding for any executive /and others too/ to get onto a
good start – particularly when there has been a surprising choice, causing questions,
scepticism or envy/ anger.
Notes by [email protected] 9 June, 2013
Harvard Business Review May 2013
Due to irregular mail delivery I received two HBR issues two days apart. This plus
my aim to finish reading a book called GDP Gross Domestic Problem made for a
busy week end. Perhaps it was just as well that the weather was wet and grey. The
May issue has an outstanding article which all those managing people should read and
also all those who are being managed. It is called ‘Creating the Best Workplace on
Earth’ and it closely aligns with my experiences and ideals. Please find below a few
notes from the HBR May issue.
Ending the Wage Gap by Sudip Datta, Abhijit Guha, and Mai Iskandar-Datta.
Looking at 1600 CFOs across America females did well at starting point achieving
pay package of $ 1,552,000 average compared to males’ $ 1.339,000. But two years
later the males’ package was $ 2,677,000 compared to the females’ $ 1,898,000. The
article suggests four steps for females to keep on par. Move – or at least demonstrate
that you are willing to. Compete within the firm and show your willingness to take on
responsibility. Get it in writing – ensuring par with similar males. Do your homework
before discussing pay. /I guess all these levels are so high so as to make it hard for the
many discriminated women to relate to it/
Size Does Matter in Signatures by Nick Seybert. Companies led by CEOs who have
large signatures – an indicator of narcissism – perform worse than ones led by CEOs
with small signatures. Big signature CEOs will on average spend more on capital
goods, R&D, and acquisitions than industry peers, yet show worse sales growth over
the next three to six years. Narcisstic leaders often behave in ways that lead to poor
outcomes – for example by dominating discussions, ignoring criticism, or belittling
employees.
We also found a link between big signatures and higher pay. CEO’s with more
components in their signature /self-important/ presided over worse performance, on
average. Most people who have grandiose ideas about their own abilities and refuse
input from others make worse decisions. And even the most successful narcissists,
like Steve Jobs, leave collateral damage – frustrated employees, lost talent, and
damaged industry relationships – that can hurt their companies even if the financial
performance looks good.
Handling the Keys to Gen Y by Vineet Nayar. Management’s job is to support the
energetic efforts of young workers, enabling and coaching rather than deciding and
directing. They should provide greater access to knowledge and collaborative
networks. They should make it easy for employees to build horizontal networks that
span organizational boundaries and tap diverse areas of expertise. They should enable
employees to temporarily step out of formal lines of management and join forces
fluidly to respond to market opportunities.
In most businesses, true value is created in what I call the “value zone,” where
employees work directly with customers to solve their problems.
Figure it Out by Beth Comstock. We (GE) expect employees to thrive in uncertainty,
take initiative, and respond resiliently when their ideas fall short. Today, new
disruptions hit and capabilities change at a dizzying pace; figure-it-out jobs are the
building blocks for what will have to be figure-it-out careers. Forget your old job
descriptions, I tell my people in the marketing team. You should be as central a part of
the process of innovation as product managers and engineers.
Innovating for a Sustainable Strategy by Robert G Eccles and George Serafeim.
ESG (environmental, social and governance) strategy must address the interest of all
stakeholders: investors, employees, customers, governments, NGOs and society at
large. Four board initiatives are required to develop the kind of innovation programs
that create a sustainable strategy; Identify material ESG issues; Quantify the
relationship between financial and ESG performance; Innovate products, processes,
and business models; Communicate the company’s innovations to stakeholders.
Today corporations are larger than ever. Just 1,000 businesses now account for half
the market value of the largest 60,000 companies. The large companies will be under
increasing pressure to devise sustainable strategies, creating economic value in ways
that are consistent with the interests of customers, employees, and society at large.
This vast concentration of economic power gives companies the ability and the
responsibility to assume roles that were previously the provinces of nations. By
building sustainable strategies the world’s most innovative firms can pave the way to
a sustainable society, one that meets the needs of the current generation without
sacrificing those of generations to come.
What Entrepreneurs Get Wrong by Vincent Onyemah, Martha Pesquera and Abdul
Ali. Starting too late with getting feed back from buyers; Failing to listen to critique,
Offering early discounts undermining future pricing; Selling to family and friends
which can blind them; Failing to see strategic buyers. Other issues include efficacy,
credibility, small size, and price –being too eager to get the sales; Switching costs.
Early customer feed back is essential.
There are four more articles on Entrepreneurship which I will not comment on here.
Why the Lean Start-Up Changes Everything; Six Myths About Venture
Capitalist; How to Negotiate with VCs; and In Search of the Next Big Thing.
Although they are all interesting, they don’t lend themselves to easy summaries.
Creating the Best Workplace on Earth by Rob Goffee and Gareth Jones. We call
this ‘the organization of your dreams.’ In a nutshell, it’s a company where individual
differences are nurtured; information is not supressed or spun; the company adds
value to employees, rather than just extracting it from them; the organization stands
for something meaningful; the work itself is intrinsically rewarding; and there are no
stupid rules.
Highly engaged employees are 50% more likely to exceed expectations than the least
engaged workers. Companies with highly engaged people outperform firms with the
most disengaged folks – by 54 % in employee retention, by 89 % in customer
satisfaction, and by fourfold in revenue growth.
When companies try to accommodate differences they too often confine themselves to
traditional diversity categories – gender, race, age, ethnicity, and the like. Those
efforts are laudable, but the executives we interviewed were after something more
subtle – differences in perspectives, habits of mind, and core assumptions.
The ideal organization is aware of dominant currents in its culture, work habits, dress
code, traditions, and governing assumptions but makes explicit efforts to transcend
them – a culture where opposite types can thrive and work co-operatively.
Efforts to nurture individuality run up against countervailing efforts to increase
organizational effectiveness by forging clear incentive systems and career paths.
Competence models, appraisal systems, management by objectives, and tightly
defined recruitment policies all narrow the range of acceptable behaviour.
Part of my job as chairman is to prevent it from becoming totally orderly.
Waitrose strives to create an atmosphere where people feel comfortable being
themselves. Great retail business depends on characters who do things a bit
differently. Over the years we have had lots of them. We must be careful to cherish
them and make sure our systems don’t squeeze them out. When I was appointed CEO
my biggest concern was; would this job allow me to truly say what I think? I needed
to be myself to do a good job. Everybody does.
Some managers see parcelling out information on a need-to-know basis as important
to maintain efficiency. Others practice a seemingly benign type of paternalism,
reluctant to worry staff with certain information or to identify a problem before
having a solution. Some feel an obligation to put a positive spin on even the most
negative situations out of a best-foot-forward sense of loyalty to the organization.
A core team of facilitators (internal management auditors) with long organizational
experience now regularly visit all the company’s worldwide affiliates. They interview
randomly selected employees and managers to assess whether the company mantra is
being practiced / I strongly endorse this – I think external auditors should interview
many staff to assess culture and potential risk/ wrong doing – I have interviewed all
my staff (particularly non-direct report staff) 50- 100 people during my last 20 years
as a senior bank executive and it is amazing what you can find out and how many
improvements it can lead to – 10 questions 70 staff – 700 ideas for making things
better – my view is that managers who staff wouldn’t vote for if they had to be
confirmed in regular elections should not be kept in their jobs/
Executives should err on the side of transparency far more than instinct suggest. /Tell
all the staff the way it is and do everything possible to enlist support/
Elite organizations have all been adding value to valuable people for a very long time.
They do this in a myriad of ways- by providing networks, creative interaction with
peers, stretch assignments, training, and a brand that confers elite status on
employees. Not rocket science. Key is how much value can be instilled in employees
rather than extracted from them.
This is no place where we wriggle out of claims (New York Life). One man took out a
life policy, went home to write out a check which was on his desk when he died that
night. The policy was unpaid but we paid out the claim.
To make daily work make sense the aspiration cannot be fulfilled with bells and
whistles. It requires nothing less than a deliberate reconsideration of the task each
person performs. Do those duties make sense? Why are they what they are? Are they
as engaging as they can be? This is a huge undertaking. /I think it rests on culture – no
pretence, just adding real value/
Increasingly employees are sceptical of purely hierarchical power – of fancy job titles
and traditional sources of legitimacy such as age and seniority.
Growing successfully, making a difference – aims at achieving both financial growth
and social change. (E & Y UK) During the past 30 years employees have said: “I’ll be
home late – I’m working for a cure on migraine” “Still at work – the album we will
release tomorrow is brilliant.” “Very busy on the plan to take insulin into East
Africa.” Never have we heard this: “I’ll be home late. I am increasing shareholder
value.”
People want to do good work. They want to work in a place that magnifies their
strengths, not their weaknesses. For that, they need some autonomy and structure, and
the organization must be coherent, honest and open.
Work can be liberating, or it can be alienating, exploitative, controlling, and
homogenizing.
Living in the Future by Angela Wilkinson and Roland Kupers. This article is about
Royal Dutch – Shell’s scenario planning for the future. The process helps those
involved to keep in mind that the future cannot be forecast with certainty and
exploring a few ‘what if’s is useful.
Health Care’s Service Fanatics – How the Cleveland Clinic leaped to the top of
patient satisfaction surveys by James I Merlino and Ananth Raman. Doing the best by
patients means continually analysing what can be done better and then figuring out
how.
Understanding the Arab Consumer by Vijay Mahajan. The Arab world has 350
million people and if adding up the GDP it would be the worlds 8th largest economy.
Companies that gloss over the interplay between culture and religion ignore a critical
factor for success in the region. These are five pillars of Islam to consider: Shahada –
there is only one God. Foreign companies should distance themselves from anything
that could be construed as offensive to Islam. Zakat – Islam requires that Muslims
donate 2.5 % of their wealth every year. The estimate of the aggregates of this is
somewhere between US $ 3 and 25 billion. Sawm – fasting during the month of
Ramadan. Hajj – the hajj to Mecka - a duty that able bodied Muslims must carry out
if they can afford it. Yalla! Lets Go. You hear it everywhere in the Arab world and
despite the region’s political and social challenges, it encapsulates the vibrancy of the
marketplace.
Notes by [email protected] 5 May 2013
Harvard Business Review April 2013
Three Rules for Success is the headline for this issue. These rules are very simple;
Better Before Cheaper; Revenue before Cost; There Are No Other Rules. Reading this
particular article there is not much more to it which is good. Antoine de SaintExupery said: ‘perfection is not when there is nothing more to add but when there is
nothing more to take away’. And most of us are familiar with the Gettysburg Address
where the president’s speech after one of the world’s worst battles was less than a
page long. Or quoted from Deng Xiaoping: “Continue reform and opening, keep a
lean government, train young people, talk less, and do more.“ A few notes from the
April issue:
http://www.brainyquote.com/quotes/authors/a/antoine_de_saintexupery.html
Experts Who Beat the Odds Are Probably Just Lucky by Jerker Denrell. The
analysts who successfully predicted the highest number of unusual events (on interest
rates and inflation) had the lowest overall accuracy rates. In many contexts luck
breeds more luck. A firm that got lucky and had a great year starts the next year with
an advantage.
Women and the Economics of Equality by Booz & company. This article is built on
research from Booz $ Co – see link at and of this summary – and it says that if women
in US Japan and Egypt were employed at the same rate as men, the GDPs of those
countries would be higher by 5 %, 9 % and 94 % respectively. The article says the
country most supportive of women is Sweden and the most equal in pay are in
Norway and Australia with Finland, New Zealand and The Netherlands also among
the top countries. The report estimates than nearly one billion women could enter the
global work force in the coming decade. The world is changing. Half of the world’s
self-made female billionaires are in China.
http://www.booz.com/global/home/what-we-think/third_billion
The Two Most Important Words – Thank You! By Robert A Eckert. There are two
things people want more than sex and money – recognition and praise. Why not say
thank you more often and mean it. The author suggests these tips: Set aside time every
week for acknowledgements; handwrite thank you notes whenever you can; punish in
private – praise in public; remember to cc people’s supervisors; foster a culture of
gratitude. It is a game changer for sustainably better performance.
Using the Crowd as an Innovation Partner by Kevin J Boudreau and Karin R
Lakhani. The authors have studied dozens of interactions between companies and
crowds in a wide variety of industries, and have identified 4 ways in which to tap into
crowd-powered problem solving; contests, collaborative communities, complementors
and labour markets. Crowds are energized by intrinsic motivations, such as the desire
to learn or burnish one’s reputation in a community of peers. The crowd has become a
fixed institution available on demand. Recent experience and mounting research
suggests that we may just now be seeing outlines of a genuine expansion of
capabilities – one with important implications for solving the most enigmatic
problems, which might go unsolved if kept inside companies, and for taking care of a
number of more categorizable tasks. The management challenges, while real, are
hardly crippling. But they demand that we put as much energy and intelligence into
designing systems for organizing work outside company walls as we do for work
within them. / A good example of using the outside I guess is the Cloud and a good
example of drawing on crowds are democratic Elections. /
Now Is Our Time by Face Book COO Sheryl Sandberg. If we could get to a place of
true equality, where what we do in life is determined not by gender but by our
passions and interests, our companies would be more productive and our home lives
not just better balanced but happier. For the past decade women in USA have held
only 14% of C-suite jobs and 17 % of board director ships. More women need to sit at
the tables where decisions are made. “The most common way people give up their
power is by thinking they don’t have any.” Women are given messages all through
their lives that they shouldn’t lead. The struggles I write about are the ones all women
face: the struggle to believe in yourself, to not feel guilty, to get enough sleep, to
believe that you can be both a good professional and a good parent. I wear jeans to
work almost every day. It’s a great place for women, because it really is all about
what you build and what you do.
In the Company of Givers and Takers by Adam Grant. Your organizations success
depends on the generosity of your employees. The link between employee giving and
business outcome is surprisingly robust. The successful givers produced 50% more
annual revenue, on average, than colleagues who focused less on helping others. Bill
Gates at the 2008 Davos meeting: “There are two great forces of human nature – selfinterest, and caring for others.” In many organizations, those forces come together
with damaging effect. With thoughtful management, however, they can be yoked in
such a way that caring for others becomes the best strategy for the most ambitious.
Givers can become comfortable asking for favors as well as granting them. Time can
be spared for others’ projects but also protected for one’s own. Generosity can be
guided in the direction of greatest impact. And organizations can gain ever-increasing
benefits from the constant give and take.
What CEOs Really Think of Their Boards by Jeffrey Sonnenfeld, Melanie Kusin,
and Elise Walton. CEO wish lists for boards include: Focus more on crucial risks; do
your homework; bring broad relevant knowledge to the table; Challenge strategy
constructively; make succession less disruptive. Board members should police one
another in terms of disruptive personalities. You want it to be a minority group that is
doing it for the income. Bring character and credentials to the table – not celebrity.
There needs to be more younger digitally savvy directors.
Three Rules for making a Company Truly Great by Michael E Raynor and
Mumtaz Ahmed. Rule 1. Better Before Cheaper; 2. Revenue before Cost; 3. There
Are No Other Rules.
When you feel pressure to follow that path, use our research
to make the case that by and large, companies don’t become truly great by reducing
costs or assets; they earn their way to greatness. Exceptional companies often, even
typically, accept higher costs at the price of excellence. In fact, many of them have
developed quite a taste for spending and investment. These organizations put
significant resources, over long periods of time, into creating non-price value and
generating higher revenue. When companies are led astray by the seeming certainties
of short-run cost cutting or disinvestment, they are more likely to destroy what they
most want to enhance.
Notes by [email protected] 4 May, 2013
Harvard Business Review March 2013
The theme for this issue is Advertising That Works. This is a little outside my
expertise. My limited experience suggests that advertising doesn’t work. That it is too
scattergun and that it is very difficult to establish cause and effect and that much
advertising is building brand support which no doubt is valuable but hard to measure.
For someone more expert, the issue may be more useful. Please find below some
notes from this issue.
The editor quotes William Bernbach as saying: “Advertising is fundamentally
persuasion and persuasion happens to be not a science but an art.” It also says that
getting advertising right can lift marketing performance as much as 30%.
Smart Fundraisers skip the tote bags. Many charities offer donors small gifts as a
sign of appreciation. But new research suggests this is misguided. In experiments by
George E Newman and Y Jeremy Shen of Yale University, subjects asked to donate
to public broadcasting were willing to give 38% less on average, if they were offered
a pen in return. The researchers observed the same pattern regardless of the value and
desirability of the gift and the familiarity of the charity. Why? A thank-you gift
creates ambiguity in the donor’s mind about whether the donation is supporting the
charity or simply a quid pro quo for a product. When gifts were presented as having
an altruistic purpose (for example as raising awareness for the cause) donations rose
significantly.
Long CEO Tenure Can Hurt Performance by Xueming Luo, Vamsi K Kanuri and
Michelle Andrews. We studied 356 US companies from 2000-2010 measuring CEO
tenure and calculated the strength of the firm-employee relationship each year (by
assessing such things as retirement benefits and layoffs) and the strength of the firm
customer relationship (by assessing such things as product quality and safety). We
then measured the magnitude of the volatility of sticky returns. All this allowed us to
arrive at an optimal tenure of 4.8 years.
More Oestrogen, more accuracy by Lawrence J Abbott. Companies with at least
one female director are 38 % less likely to have to restate their financial performance
figures in order to correct errors compared to companies with all male boards. Gender
diversity may make boards more open to viewpoints that oppose the CEO’s and may
encourage a more deliberative and collaborative decision making process.
The Multitask Paradox: Stick to one thing at a time and you will get more done. The
optimal worker is efficient 85 % of the time with breaks amounting to 15 % of the
time. But the distracted procrastinator is unproductive up to 67% of the time by
allocating too much focus on digressions like music, video games, social networks
etc.
Big Bang Disruptions by Larry Downes and Paul F Nunes. Big Bang Disruptions
hold immense potential for those who can quickly learn the new rules of
unencumbered development, unconstrained growth, and undisciplined strategy. The
innovators that are threatening are not even trying to disrupt you – you’re just the
collateral damage. Your current business may be replaced by something more
dynamic and unstable but also more profitable. And the change will come not over
time but suddenly. In other words, not with a whimper – but with a bang! In the fight
against this kind of disruption, intangibles are your most valuable assets – and perhaps
the only ones you’ll want to take with you.
Advertising Analytics 2.0. by Wes Nichols. The days of correlating sales data with a
few dozen discrete advertising variables are over. Many of the world’s biggest
companies are now deploying analytics 2.0, a set of capabilities that can chew through
terra bytes of data and hundreds of variables in real time to reveal how advertising
touch points interact chemically. The results: 10% - 30 % improvements in marketing
performance. Companies that don’t adopt next generation analytics will be overtaken
by those that do.
For Mobile Devices, Think Apps and not Ads by Sunil Gupta. Smart marketeers
will create apps that enhance consumer’s live rather than annoying ads.
Advertising’s New Medium: Human Experience by Jeffrey F Rayport. In a media
saturated world, persuading through interruption and repetition is increasingly
ineffective. To engage customers, advertisers must focus on where and when they will
be receptive. The four domains of ads are public sphere, the social sphere, the tribal
sphere and the psychological sphere. Advertising successfully in each of these
domains requires that messages offer value and that consumers trust and welcome
them.
Making Sustainability Profitable by Knut Haaneas, David Michael, Jermey Jurgens
and Subramanian Rangan. Ready or not, we are moving to a world of scarce
resources, in which companies will increasingly need to consider their total return not
just on assets and equity but on resources. They will have to monitor how much
water, soil, and other natural resources they consume, as well as the payback they get
from them. Companies that fail to calculate this equation will find themselves at the
mercy of price increase and volatility, regulation, and social pressures, while those
that master it will enjoy competitive advantage and gain market share.
Know What Really Motivates You by Heidi G Halvorson and E Tory Higgins. Two
different personality types are the promotion focused ones and the prevention focused
ones. You may think your business should concentrate on creating new opportunities
for advancement, while your colleague thinks the emphasis should be on protecting
your relationships with existing clients – and both are right. These categories need to
co-exist to make a good organization.
The Silent Sex by Alison Beard. Nearly 2/3 of people feel the world would be a
better place if men thought more like women. According to a recent McKinsey study,
men hold 85 % of corporate board and executive seats in the US and (setting a few
Scandinavian countries aside) there is a similar imbalance in the world. Men account
for 90 % of the world’s billionaires, still control most of the world’s governments, and
continue to out-earn women with similar skills and education. In the book The Athena
Doctrine two male writers John Gerzema and Michael D’Antonio argue that
‘feminine’ traits like connectedness, humility, candor, patience and empathy are the
new keys to success. The author of this article asks for more balance, in the
endeavours to seek gender equality expressing concerns that men may be short
changed.
Notes by [email protected] 2nd March 2013
Harvard Business Review January - February 2013
Again an issue with several interesting articles and the theme this time is ‘the future
of knowledge work.’ Please find a few notes below.
Leadership is not something which is gained because of birth or tenure but rather
something that is practiced in every moment of opportunity. It is truly 20% technique
(tools, methods) and 80% actions (behaviours). The most productive companies
world-wide are those where the leaders have ongoing conversations across the
organization.
The Grass isn’t Greener On the Other Side by Evan Hirsh and Kasturi Rangan.
The capabilities that matter to an organization form over decades and may involve
millions or billions of dollars in human and financial capital. Firms that have moved
into and dominated new areas, such as Apple in online music and Amazon in
computer services, chose industries that took advantage of unique capabilities that
they already had. And hot companies often cool. Generally it is very risky to enter a
new industry at its peak. Be a good or great company in just about any industry, and
you won’t be looking for new businesses to enter – you’ll be popping champagne. As
long as you serve customers well and beat the competition you will do well.
Rethinking the Marketing by R Ettenson, E Conrado, and J Knowles. Marketing
mix usually include the 4 Ps – product, place, price and promotion. These under
emphasize the need to build a robust case for the superior value of their solutions. The
emphasis needs to shift from product to solutions, place to access, price to value, and
promotion to education – SAVE for short. The SAVE framework is the centrepiece of
a new solution-selling strategy.
The Kind of Capitalist You Want To Be by John Mackey. All businesses operate in
a broader system thick with interdependencies. Being a conscious capitalist means
that you don’t ignore those interdependencies by taking a narrow view on the impact
you make. You remain aware of the whole system. Firms of Endearment research
shows how conscious businesses outperform the market over time.
What would you be signing up for if you joined Conscious Capitalism? Mainly you’d
be resolving to create more value for the suppliers you buy from, the workers you
hire, the customers you trade with and the world in which you operate. You’d take a
stand against the too-common perception of business as exploitative and of business
people as selfish. You’d help people see that building a business can be good – often
heroic.
The capitalist haters see reform as putting lipstick on a pig and the capitalism
stalwarts will see any call for evolution as heresy. /In Sweden and Europe we don’t
view it as that black and white, realising that a good solution to anything usually
entails taking the best from many different points of view as pure capitalism and pure
socialism are equally flawed/
Advice from Robert B Zoellick former president of The World bank on how to
succeed in a public enterprise. Study the roots of your department’s mission and
culture. Reach out to Congress. Put good people in place. Work with the media and
external constituencies. Form formal and informal networks with colleagues in other
departments and with White House staffers. Accept the ‘process’ will dominate more
of your existence. Keep your eye on achieving results.
Redesigning Knowledge Work, How to free up high-end experts to do what they do
best by Martin Dewhurst, Bryan Hancock, and Diana Ellsworth. An example is that in
one hospital in Bangalore, the senior cardiac surgeon comes only after the patient’s
chest is open and the heart is ready to be operated on. This approach helps the hospital
provide care at a fraction of the cost of US providers while maintaining US level
mortality and infection rates.
Tasks that require scarce skills but do not depend on in-person interaction can be
shifted to people in less costly locations. Aggressive companies are shaking off
conventions about where, how and by whom knowledge work is done.
The Third Wave of Virtual Work by Tammy Johns and Lynda Gatton. Experts
predict that within a few years more than 1.3 billion people will work virtually – i.e.
away from any office. At IBM more than 45 % of its 400,000 contractors and
employees work remotely.
Success in the new wave of work will also require that employers encourage and
support individual work preferences and customize approaches to engaging and
motivating different work personalities. This will entail a delicate balance between
best practices and flexible accommodations. Most work environments have
committed heavily to standardized HR practices in the interest of fairness and
efficiency, yet this one-size-fits-all assumption ignores the fact that wants and needs
vary even over the span of an individual’s career. As the impact and importance of
features such as flexible working hours, relocation, and travel wax and wane, the
ability to adapt to life’s changes is vital to workers and a significant value proposition
for an employer to offer.
Making Star Teams out of Star Players by Michael Mankins, Alan Bird, and James
Root. Across all the job types, we estimate that the best performers are roughly four
times as productive as the average performer. That holds in every industry,
geographical region, and type of organization. The conventional wisdom is that star
teams don’t work but this assumption needs to be revisited. For important issue and
with good leadership, star teams can be exceptionally effective and productive. Star
performers are in short supply and smart organizations utilize these people to the
maximum.
The Best Performing CEOs in the World By Morten T Hansen, Herminie Ibarra,
and Urs Peyer. HBR lists the best 100 CEOs based on a number of data, particularly
long-term performance of wealth generation and success. The late Steve Jobs of
Apple is ranked no 1 and Jeffrey Bezos of Amazon.com as no 2. Bezos focus on
consumers above shareholders has at times vexed Wall Street. But smart investors
have stayed with his company. In 16 years as CEO of Amazon, the online retail giant
he created, Bezos has delivered shareholder returns of 12,266% and the value of the
company has grown by $111 billion. He has all along clearly communicated to
investors that this is not a short term business. The highest ranking woman is
Margaret Whitman of eBay with a number 9 ranking, who over ten years have
generated 1,434% return and $ 40 billion increase of value. The average MBA ranked
40 places higher than the average non-MBA.
There is no direct link between doing good (socially and environmentally) and doing
well but there are several examples of role models who achieved both. This breed of
new leaders not only rejects the idea that financial markets demands are more
important than stakeholders’ needs but also demonstrates that companies can excel at
meeting both. These CEOs have shown the way, and others can learn from them. We
don’t foresee a time in the near future when measures of social performance will be as
objective as the measure of long-term financial performance. That said, we will
continue to track how CEOs are doing in the two areas, with the aim of encouraging
leaders to shine in both.
Negotiating with Emotion by Kimberlyn Leary, Julianna Pillemer and Michael
Wheeler. Emotions are facts of life whether your own or others’ and smart people try
to understand them and their role in building people and results. Being an effective
manager, a high-performance team member, or a skilled negotiator requires
attunement to one’s own emotions and the ability to relate affirmatively to the
emotions of others. Emotionally intelligent people have the ability to: Identify the
emotions they and others are experiencing; understand how those emotions are
affecting their thinking; use that knowledge to achieve better outcomes; productively
manage emotions to effect.
Why IT Fumbles Analytics – another article saying that IT should focus more on
Information and less on Technology or ‘don’t leave it to the techos’.
The Price of Incivility by Christine Porath and Christine Pearson. This article states
the rather obvious that things go better when people respect each other and are nice to
each other than when they are abusive. These positive aspects need to be radiated
360% as most people find rudeness offensive no matter who is the target of it. Rude
people – don’t hire them, don’t promote them. Just one habitually offensive employee
critically positioned in your organization can cost you dearly in lost employees, lost
customers, and lost productivity.
When the Crowd Fights Corruption by Paul Healy and Kathik Ramanna. This is an
article about endemic corruption in Russia. My comment is that these wrongs have
been going on for several centuries so they will not be easy to stamp out. Looking at
the U.S. the political decision process is almost at a stand-still because of vested
interests expressing themselves through lobbying which arguably is another form of
corruption and impediment to a functioning democracy. Corruption is also rampant in
many other parts of the world like China, India, Indonesia, Africa, etc. No doubt it
comes at a great cost to these societies.
Strategic Leadership Skills by Paul Shoemaker, Steve Krupp and Samantha
Howland. The six skills discussed are: the ability to anticipate, challenge, interpret,
decide, align and learn.
Notes by [email protected] 21st January 2013.
Harvard Business Review 2012
Harvard Business Review December 2012
The theme for this issue is surviving disruption. Interestingly I am just reading a book
called Resilience about the same issues. Perhaps the key message I take out of the
articles is that you need to start to compete with yourself as a corporation. Don’t
hunker down and close your eyes and hope that challenges will go away. Meet
challenges head on. Nurture what you have and make it as competitive as possible but
also have some of your best people separately and independently look at what might
replace your success formula by alternative solutions and ideas and allow internal
competition. Too many people focus too narrowly on efficiency and avoiding
duplication at the expense of experimenting and seriously challenging the status quo.
The concept earlier launched in HBR of pre-mortem often comes back to me. Premortem differs from post mortem in that threats are actively sought out and analysed
whilst the patients is still alive, whilst post-mortem can only deal with the obituary.
A few notes from the December issue.
The best leaders have short resumes. Unfiltered leaders are sometimes rejected by the
people doing the filtering.
Suggestions that social media is a cure all should be taken for what it is: the patter of a
snake-oil salesman. Social media will change nothing. Being social is just a (albeit
critical) part of the process of acquiring knowledge.
Before you launch your next cross-selling campaign, pause and ask yourself – do we
really want these customers? Cross-selling is profitable in the aggregate but one in
five cross-buying customers is unprofitable – and together this group accounts for
70% of a company’s ‘customer loss.’ /Excess virtue is a vice – any idea carried to far
starts to backfire/
The cell phone Industry is as large as the IT industry in India. As a tool of economic
empowerment, cell phones’ impact transcends the particular circumstances of India.
In any country the engagement of the masses is critical for overall progress, and cell
phones can put value producing power in everyone’s hands. /I believe the same is
now benefitting Africa/
Saving Economics from the Economist by Ronald Coase. Economics as currently
presented in textbooks and taught in the class room does not have much to do with
business management, and still less with entrepreneurship. The degree to which
economics is isolated from the ordinary business of life is extraordinary and
unfortunate. Economics needs to be reoriented to the study of man as he is and the
economic system as it actually exists.
How to Manage Disruption by Maxwell Wessel and Clayton M Christensen. The
right path for your business requires you to identify (1) the disrupter advantage, (2)
your own advantage and (3) how easily you might co-opt your advantage in the
future. Before leaders engage in reckless price competition or squander resources and
effort in the futile defence of lost causes, they owe it to their shareholders, employees,
and customers to take stock of the entire situation and respond comprehensively – to
meet disrupters with disruption of their own, but also to guide their legacy businesses
towards a healthy a future as possible.
Two Routes to Resilience by Clark Gilbert, Matthew Eyring, and Richard N Foster.
Sooner or later companies need to transform themselves in response to market shifts,
new technologies, or low-cost start-ups. This involves two separate efforts – adapt the
core business and create a new disruptive business yourself. For dual transformation
to work, each organization must operate as if the future of the company depended on
it alone. In 1958 the average tenure of a company on the S&P 500 was 61 years; by
1980 it had dropped to 25 years and today it is only 18 years. These numbers suggest
that as companies grow, they need to manage metamorphosis – a reliable process that
will enable them to shift gears without falling apart.
Who Can Fix the Middle Skills Gap? By Thomas Kochan, David Finegold, and
Paul Osterman. Currently 69 million people work in the US middle skills market
representing 48 % of the working population. It is estimated that 25 million or 47 %
of all new jobs will fall into this category. There is an acute shortage of trained people
to fill the vacancies. The remedy is collaborative programs that involve multiple
employers in a region or industry sector, educational institutions, and other players
such as unions and governments. By acquiring the skills to work in this sector
workers have increased their annual salaries by an average of $ 10,000.
4 Ways to Reinvent Service Delivery by Kamalini Ramadas, Elizabeth Teisberg and
Amy L Tucker. Radically inventing the delivery of a service requires deep insight into
clients’ needs and a reconsideration of ‘how we do things around here.’ These
innovations can create tremendous value for their customers and for them. One idea
presented is doctors seeing a group of up to ten patients, suffering from similar
ailments, at the same time increasing cost efficiencies and also perceived patient
value.
Reclaim Your Creative Confidence by Tom Kelly and David Kelly. Most of us are
creative until the environment takes it out of us. Key therefore is to help people
rediscover their creative confidence – the natural ability to come up with new ideas
and the courage to try them out. We need to move beyond the four inhibiting fears:
fear of the messy unknown, fear of being judged, fear of the first step, and fear of
losing control. Just get on with it!
The Primacy of Personality. In politics, business, effective leadership requires more
than the right skills and strategies. By Jeff Kehoe. Skills and positions, which can be
developed and changed, are important for key positions. But personality – biography,
character and charisma counts in spades – and that is not necessarily a bad thing. It is
therefore paramount to ask – who has the right personality for the job.
Notes by [email protected] 6 Jan 2013
Harvard Business Review November 2012
The theme for this issue is Change Faster. I again found a very useful issue of HBR
with great simple advice on key issues for success in any business. In most cases these
are intuitive as opposed to counter intuitive, but the prestige and research of HBR
helps me in arguing issues that I have considered important for a long time. There is
still so much old school and hierarchical thinking out there which causes demotivation
and lack of commitment partly because intelligent high achievers are put in leadership
positions for which they may have little training or acumen.
This year is the 90th anniversary of HBR. The editor in chief says in the leader: “As an
institution, HBR believes that effective management can be a force for good.
Otherwise we might as well just pack things up.”
Please find below a few lines from the November issue.
Strategy’s Scientific Method. Consumers are tired of pushy sales people – they are
ready to fight back or to leave the battle if a competitor will listen and show them
what they want.
Marketing is alive, whether in or out of social channels. What’s dead? The old hard
sell! What’s new? Buyer power! What’s the source of the buyer power? Saturated
markets combined with open access to information on the web. Customer engagement
is a fundamental marketing tenet that’s been around longer than you or I have been in
business.
Brands get recognition in the marketplace through customers’ physical interactions –
with displays, environments, unique buying experiences, and so on. These interactions
are what makes the difference between a brand’s succeeding or becoming stagnant
and washed-up. Offering a product is one thing, but allowing someone to experience
it is a whole different story.
The 40-Year-Old-Intern. ‘Returnships’ let companies audition professionals who are
resuming their careers. By Carol Fishman Cohen. Through eight week long
‘returnships’ companies can offer women who want to return to careers a chance to
show their ability to contribute. Despite high unemployment, companies often
struggle to find the right applicants. Returnships can attract highly educated,
experienced workers.
The Art of Developing Truly Global Leaders by Beth Brooke. Growing the
necessary talent is both an art and a science. In the leadership shortage we have often
focussed too much on the science and too little on the arts. Probably most leaders
believe they are inclusive. Diversity after all is a fact of life for any global enterprise,
and almost everyone accepts the idea that talented people come from all backgrounds,
genders, ages and experiences. But in practice, it takes time to listen to people express
ideas in unfamiliar accents or styles. It takes humility to accept that someone else
might have a better idea. It takes patience to mediate a clash of cultural assumptions.
Learning the science is useful but only by mastering the art will global companies
become giants.
Accelerate! By John P Kotter. The traditional hierarchical system needs to be
complemented with a second operating system, built on a fluid, network like
structure, to continually formulate and implement strategy.
Summary and prediction – Because a dual operating system evolves, it doesn’t jolt the
organization the way sudden dramatic change does. It doesn’t require the organization
to build something gigantic and then flick a switch to get it going. Think of it as a
vast, purposeful expansion in scale, scope, and power of the smaller, informal
networks that accomplish tasks faster and cheaper than hierarchies can.
The system offers a solution to problems we have known about for some time. People
have been writing for at least 20 years about the increasing speed of business and the
need for organizations to be quicker and more agile. But who has been able to pull
that off? The situation will not be improved by tweaking the usual methodology or
adding turbo charges to a single hierarchical system. That is like trying to rebuild an
elephant so that it can both be an elephant and a panther. It’s never going to happen.
People have been writing for 50 years about unleashing human potential and directing
the energy to big business challenges. But who, outside the world of start-ups, has
succeeded? So few do because they’re working within a system that basically asks
most people to shut up, take orders, and do their jobs in a repetitive way.
People have been talking for a quarter of a century about the need for more leaders,
because an organization’s top two or three executives can no longer do it all. But very
few jobs in traditional hierarchical organizations provide the information and the
experience needed to become a leader. And the solutions available – courses and
leadership, for example – are wholly inadequate, because most development of
complex perspectives and skills happens on the job, not in the classroom.
People have been grumbling for years about the strategy consulting industry, whose
reports fail to solve the problem of finding and implementing strategies to better fit a
changing environment. A consultant’s report – all thought and little heart, forecasting
where you can flourish in two or five or ten years, produced by smart outsiders, and
acted on in a linear way by a limited number of appointed people – has little or no
chance of success in a faster moving, more uncertain world.
The inevitable failures of single operating systems hurt us now. They are going to kill
us in the future. The 21st century will force us all to evolve toward a fundamentally
new form of organization. I believe that I have basically described that form here. We
still have much to learn. Nevertheless, the companies that get there first, because they
act now, will see immediate and long term success – for shareholders, customers,
employees, and themselves. Those that lag will suffer greatly, if they survive at all.
The Management Century by Walter Kiechel. Three eras punctuate the period from
1880s until today. In the first, the years until WWII aspirations to scientific exactitude
gave wings to the ambitions of a new, self-proclaimed management elite. The second,
from the late 1940s until about 1980 was manegerialism’s era of good feelings, its
apogee of self-confidence and widespread public support. The third and ongoing era
has been marked by a kind of retreat – into specialization, servitude to market forces,
and declining moral ambitions. But it has also been an era of global triumph,
measured be agreement of certain ideas, steadily improving productivity, the
worldwide march of the MBA degree, and general elevation of expectations about
how workers should be treated.
There has been an ongoing quest for the right balance between the things of
production and the humanity of production, between the numbers people and the
people people.
Peter Drucker laid out a vision of the corporation as a social institution – a social
network – in which the capacity and potential of everyone involved were to be
respected. Out with the concept of “boss,” “foreman” and look at the concept of
“employee.” Some 26,000 MBAs had been awarded in the US by 1970 and by 1985
that number had risen to 67,000.
In Search of Excellence by Tom Peters and Bob Waterman underscored the
importance of culture in organizations, an attack on strategy as merely quantitative
exercise, and a celebration of the human element in making a company successful.
Recovering or reimagining authentic, satisfying sources of executive authority will be
high on the to-do list for management’s next century. Because management is finally
about how to make humans and their organizations more effective – and because
humans stubbornly cling to their propensity to be human – there will never be a ‘best’
way but there will almost always be a better way.
Inventing HBR by Julia Kirby. A first mention of women in the work force in 1935
noted that companies employing them in large numbers might be models of
responsible wage policies. By 1953 they merited a full feature in Opportunities for
Women at the Administrative Level. Fast forward to 1980s and the voices discussing
the issue had become persistent and powerful.
Thoughtful leaders around the world are striving to be the best professionals they can
be. And HBR is there with them, still evolving, still growing.
What You Can Learn From Family Business. Focus on resilience, not short-term
performance by Nicolas Kachaner, George Stalk, and Alain Bloch. During good
economic times, family companies have slightly lower earnings, but during down
turns, they outperform their peers. What accounts for these counter cyclical results? A
focus on resilience – which influences seven strategic choices! There is no reason that
other companies can’t copy them – and in fact, many businesses would benefit from
managing themselves more like family businesses. The 7 key parameters listed are:
Be frugal in good times and bad. Keep the bar high for capital expenditure. Carry
little debt. Acquire fewer and smaller companies. Stay diversified. Be more
international. Be better at retaining talent than your competitors.
How Hard Should You Push Diversity? By Martin N Davidson
A corporate commitment to diversify as strategic imperative and a cultural reality
can’t be the goal of one person. It must be part of the corporate DNA. Even with this
mandate, it is always hard to attract, develop and retain world-class talent that mirrors
the market place.
Rather than fulfilling a quota the metric should be more subtle and valuable: how
many minority candidates have been positioned for success? This means leading
initiatives that recruit, identify, coach and mentor minority talent. The key is to
provide diverse associates with opportunities to improve their skills rather than
promoting them because they are members of a minority group. Also useful to have
all staff attend courses in cultural fluency to help highlight individual’s diversity blind
spots and erase the underlying nuances of discrimination.
In order to be receptive to diverse points of view, a company must have a climate of
respect for the individual that makes it safe for people to speak up. Employees know
the difference between a company that is simply telling them a good story and one
that is authentically supportive.
KPMG CEO says we’ve evolved from a mentoring culture to a sponsorship culture.
Mentoring can be passive whereas sponsorship is active by finding and creating
career-defining growth opportunities and assigning the individuals to the most
important clients. That way when it is time to consider someone for partner, everyone
knows that the promotion is based on the person’s experience and performance.
Notes by [email protected] 10.11.12
Harvard Business Review October 2012
Feature articles in this issue cover ‘Getting control of big data. How vast streams of
information are changing the art of management.’ Key message there is that it is
better to base decisions on what you know rather than what you think. Another is that
almost everything you need to know is out there, if you just know how to access it. A
large portion of the issue covers general management concerns. Please find below a
few high lights.
A New Guide to Selling- Potential clients do not buy things logically; they buy
things emotionally and justify their purchases logically. As sales professionals, we
must work to find out how these emotional decisions are made. It is important to
avoid ‘the death by data-sheet’ approach.
Why Top Young Managers Are in a Non-stop Job Hunt – the drive to jump ship is
tied to the desire to have more responsibility, to make more decisions. I want to do
more than sit in a cubicle and fill in spread sheets all day. And no amount of coaching
or mentoring is going to change that.
Businesses are just beginning to understand the power of ‘social norms’ by Steve
Martin. By appealing to people’s sense of civic duty saying: “We collect taxes to
make sure money is available to fund the public services that benefit you and other
UK citizens” and “Nine people out of ten pay their taxes on time” lifted the clearance
rate by 30%. People’s behaviour is largely shaped by the behaviour of those around
them – by social norms. Every manager’s tool kit should include an understanding of
the power of ethical uses of social norms.
The Life Cycle of CEO Compensation by Geoffrey martin, Luis Gomez-Mejia and
Robert Weisman. Issuing stock as compensation tends to make CEO’s cautious and
wealth preserving, issuing options tends to make the holder more risk oriented.
Executives with valuable accumulated holdings may be reluctant to execute daring
plans.
Great leaders don’t Need Experience by Gautam Makunda. Is experience a
predictor of mediocre performance? The ability to think differently and not feel
beholden to a certain way of doing things can lead to terrible results. Unfiltered
leaders are high risk, high reward. People who are effective in stable situations –
experienced leaders – are often unable to adapt to extreme sudden change or are
unable to disrupt the status quo, which an outsider feels freer to do.
You can be a great manager but you won’t have impact if there are 100 other great
managers who could do the same thing you would. If you want to grow to dominance
you need an unfiltered leader, someone who will think differently and take risks. You
can choose leaders who are likely to lead you to great wins or big losses, or you can
choose leaders who definitely will be good at their job but almost certainly won’t be
great.
The Unintended Circumstances of Good Ideas by Charles Handy. Two social
inventions – the joint stock company and limited liability – spurred unprecedented
economic innovation and growth, but they also put us on a dangerous course. By
effectively separating the theoretical ownership of a company from its management,
the first turned shareholders into something more like punters at a racecourse. Using
shares as betting slips on the nags of their choice, they behave neither like trainers nor
owners. As a result of the second, limited liability, managers gained their own license
to gamble, at no personal cost. Perhaps the next good idea would be to require
directors to obey the law and put the long term interests of the company as a whole
before those of themselves and their shareholders. They might discover that all of the
above were better served. And many years later we might find companies less opaque,
anonymous, and ominous to people passing by.
Building Resilience by Wasting Time by Jane McGonigal. Engaging in some
activities we assume are non-productive – as tiny exercises – may actually be a smart
way to spend time, especially at work. These practices can make people more
resourceful problem solvers, more collaborative, and less likely to give up when
things get tough. They can make people more resilient. Make it a personal goal to
waste at least four minutes every hour. / I have myself for 40 years practiced taking
five minutes off every hour to re-bout and stay alert/ Research shows that will power
gets stronger the more we exercise it.
Tackling a pointless but mildly challenging task, such as snapping your fingers
exactly 50 times is a scientifically backed way of improving focus and determination
– and thus mental resilience. In fact the more arbitrary the task, the better; without
external motivators, you have to will yourself to finish. Social resilience is about the
relationships that help us find resources when we need them. Develop habits that
connect you to others. Greater resilience will make you more capable and will benefit
your organization. / This is like crop rotation in agriculture – the system gets
exhausted from too much of the same – a clever mix of chores can make you much
more productive, my comment /
The True Measures of Success by Michael J Mauboussin. Most people use the
wrong performance metrics. Through proper statistical analysis a retail chain found
out that turnover of store managers, rather than turnover of all employee population,
had a great impact on profitability. Executives often resist abandoning existing
metrics in favour of more suitable ones. The two most popular measures of
performance – EPS and sales growth – have limited value in predicting shareholder
returns because neither is both persistent and predictive. The performance of a
company almost always depends on both skill and luck, and luck is difficult to
emulate.
Companies that bothered to measure a nonfinancial factor – and to verify that it had
some real effect – earned returns on equity that were about 1.5 times greater than
those of companies that didn’t take those steps. Exploiting the right statistics before
rivals do will be the key to seizing advantage.
Big Data – The management Revolution. Exploiting vast new flows of information
can radically improve your company’s performance. But first you’ll have to change
your decision making culture. By Andrew McAfee and Erik Brynjolfsson/
A couple of articles on how extracting the right date will help you manage better. Big
data’s power does not erase the need for vision or human insight.
Data scientist is one of the most important jobs of the 21st century.
Whatever Happened to Accountability? By Thomas E Ricks
It is the duty of the executive to remove ruthlessly anyone – and especially any
manager – who consistently fails to perform with high distinction. To let such a man
stay on corrupts the others. It is grossly unfair to the whole organization. An
interesting article on leadership, worth reading in its entirety!
No, You Can’t Have It All by Eric C Sinoway. It is hard for high achieving people to
accept that they can’t have it all. Instead you must focus on your long-term fulfilment
rather than short term success and, at various points in your life, think carefully about
your priorities.
Unleash Your Inner Odysseus by Kevin Evers. Success and discovery are not plan
oriented endeavours. They are the results of excessive tinkering and improvisation.
Our worst enemy is not randomness; it is our own hubris. Unfortunately we don’t
have absolute control of our success. Admitting this is crucial, and helps us endure the
rashes of bad luck we face.
Interview with Barbara Streisand by Alison Beard. One question was interesting:
You’ve been described as bossy and demanding. How do you respond to that? Those
words would never be applied to a man. I addressed this in a speech years ago, when I
said, “A man is commanding – a woman is demanding. A man is forceful – a woman
is pushy. He’s assertive – she’s aggressive. He strategizes – she manipulates. He
shows leadership – she’s controlling. He’s committed – she’s obsessed. He’s
persevering – she’s relentless. A man is a perfectionist – a woman is a pain in the ass.
I insisted on one thing early o when I did my records and TV shows – artistic control.
That is what mattered to me.”
Notes by [email protected] 6 Oct 2012
Harvard Business Review September 2012
The theme for this month’s issue is Strategy and strategic planning. My personal
experience of this process working for large organizations is that it has felt like a
compliance issue, a required piece of work that seldom yielded much benefit. I
wonder if some companies devolve strategic planning too widely; whether it isn’t best
centralized with structured input from line units. Having worked for many banks, I
recall one Swedish bank I worked for where the CFO said don’t worry about cost of
capital – I will worry about that. I thought this made a lot of sense, trying to reduce
worries for front liners and not ask them to consider every aspect of the business for
every single transaction.
Please find below a few notes from the September 2012 issue.
Effective Leaders Talk and Listen. Command-and-control leadership is a sign of
weakness – it’s hiding behind appointed status because you don’t have the courage to
engage openly and honestly with the staff. You are scared to ask people’s opinions, in
case they’re better than yours. A good leader consults the staff but still has the
confidence and gravitas to make decisions and take the lead. / Deborah Benson/
Think of Start-Ups as Shots on Goal. To make the argument that an economy
benefits from more start-ups, you need to make the assumption that some fixed
percentage of start-ups survive, a lower percentage thrive, and a vanishing small
percentage become Fords or Microsofts. If this probability of success is not fixed,
then what we need are better start-ups – and fewer doomed enterprises sucking
resources out of the economy. Income inequality has an effect on start-ups and once
people realize the game is rigged, few take the plunge. / Stephen Stanley/
Greased Palms, Giant Headaches. Bribery and how to resist it. By Dan Currell and
Tracy Davis Bradley. Companies with higher levels of “integrity capital” have lower
levels of misconduct along with higher levels of reporting when employees do witness
wrong doing. Companies should proactively solicit information from frontline
employees and use surveys or online tools to guarantee anonymity. The question is
not whether you have business units with elevated levels of bribery and misconduct; it
is which ones they are.
It is disheartening career moments when managers dismiss or sweep under the rug
credible reports of misconduct. Employees who have courage to call out wrong doing
should be praised. This is critical to employees’ perceptions of organizational justice,
and they can help head off or mitigate the damage from offences.
/This article caused me to write a letter to the editor saying: With reference to the
denouncement of Wiki leaks whistle blowing on U.S. government secrecy and wrong
doing, something which is quite manifest through slanted and untrue information/
propaganda, will it be possible to hold corporates to a higher standard?/
You’ll Feel Less Rushed If You Give Time Away by Cassie Mogilner. This
research suggests that spending as little as ten minutes helping others from time to
time can make you feel less time constrained. Giving time away makes you feel more
effective!
Use It or Lose It by Eamonn Kelly. This article makes the points that hoards of cash
in corporations need to be channelled into employment-creating initiatives and ideas.
If this doesn’t happen, government will make it happen through taxation or incenting
desired behaviour. It raises the issue to what extent corporations should be concerned
with overall societal problems – and if they fall short in this respect, regulators and
law makers may well do the thinking for them. If for example all are successful in
cutting staff and payroll, aggregate demand will fall and all will suffer from less
growth or economic contraction.
Prada’s CEO on Staying Independent. By Patrizio Bertelli. You could say that
work is about duties. People have a duty to work hard for me, but I have a duty to
respect them as individuals. Another duty I have is to help them learn. I don’t believe
in starting young managers off the bottom rung. They won’t learn a lot there and I
won’t benefit from what they know. When I hire young people it is because they have
something to offer.
The New Corporate Garage by Scott D Anthony. To encourage catalysts,
companies must embrace open and systematic innovation, simplify and decentralize
decision making, be learning focused and failure tolerant, and, above all, make
innovation purpose driven. Catalysts are mission-driven leaders who corral corporate
resources that are outside their traditional span of control to address sprawling
challenges. They form networks or coalitions within and outside the company and are
motivated by the desire to solve big, often global, problems.
Additional financial incentives can actually decrease performance on creative tasks.
The way to motivate creative people is to give them autonomy, provide opportunities
to develop mastery, and instill a sense of purpose in their work. Young innovators set
on improving the world should recognize that working for a large company isn’t
selling out – it can maximize their impact. Corporate leaders must critically examine
the degree to which their companies’ environments are hospitable to the work of
catalysts. Employees who find their innovation environment inhospitable should
consider whether another company would provide more fertile ground for catalytic
work.
The people changing the world today are as likely to be in corporate cubicles and
conference rooms as in Silicon Valley or at social-impact conferences.
Bringing Science to the Art of Strategy by A G Lafley, Roger L Martin, Jan W
Rivkin and Niclaj Siggelkow. Move from Issues to Choice – the team must produce
more than one possibility. It is useful to include individuals who did not create, and
are therefore not emotionally bound to, the status quo. This implies the participation
of promising junior executives.
Conventional strategic planning is not actually scientific. It lacks the creation of
hypotheses and the carful generation of tests. Move away from asking what is the
right answer - to asking: what is the right questions? Many are better at advocating
their own views than at inquiry.
Simple Rules for a Complex World by Donald Sull and Kathleen M Eisenhardt. Set
corporate objective, identify a bottleneck that hinders you, and create simple rules for
managing the strategic bottle neck. Let the users make the rules. Managers’ first
instinct is often to draft a set of rules to send down the chain of command. Big
mistake! The people who will apply the rules are best able to craft them. They also
can test the rules in real time to evaluate whether they are too vague, limiting or
cumbersome. Senior executives should select the team. Watch out for rules that use
abstract language (such as innovative or strategy) or management buzzwords (synergy
or convergence). If strategy in your organization lives in binders on shelves you have
a problem.
Other Articles Include: Your Strategy Needs a Strategy, Are You Solving The
Right Problem and Better Customer Insight In Real-Time.
Will Working Mothers Take Your Company To Court by Joan C Williams and
Amy J.C. Cuddy. This is an interesting article, perhaps most pertinent to the
American market. It demonstrates the legal risks with showing any kind of bias to
working mothers and how juries frequently award significant damages. Beyond the
legal aspects, the article points out how we need to act to eliminate overt and
subconscious biases. Well written and educational.
Working Mothers At a Glance: If a woman has a child, her chances of being hired
falls by 79%. She is 50% as likely to be promoted as a childless woman. Her salary
offer, on average, will be reduced by $ 11,000. (I would say this would not be the case
in Sweden and I believe New Zealand also is much better than that).
As with many managerial challenges, the first step is to create an awareness of the
problem. The second, to put it plainly, is to cut it out. It seems obvious, but in our
research and conversations with women in the workplace it’s become clear that some
managers still behave in a remarkably biased fashion. Leave your opinions at home.
Eliminate formal or informal flexibility stigma. Incorporate lessons on how to avoid
maternal wall bias into existing training programs. Consider fathers as well as
mothers. Men can’t be denied benefits that are offered to mothers in terms of child
care.
Finding the Profit In Fairness by Christoph H Loch, Fabian J Sting, Arnd
Huchzermeier, and Christian Decker.
More and more voters, not just in the US, are convinced that the financial system
benefits its institutions more than the consumers they serve. As a result, bankers and
other finance professionals in the US and Western Europe are bracing themselves for
waves of regulation. Banking can be both fair and profitable – in fact, fairness can be
a source of competitive advantage.
The particular bank in this article TeamBank in Germany has assembled a customer
council comprising 14 volunteer customers plus one representative of a customer
protection NGO, each of whom serve for three years.
/This article caused me to write a letter to the editor saying treating people fairly is not
good enough. It is better than treating people poorly but good companies should aim
towards treating people with care and affection. Airlines and Hotels would not win
much approbation by advertising that they are fair to all/
Notes by [email protected] 1 September 2012
Harvard Business Review July August 2012
Another useful issue of HBR. The theme of this issue is smarter sales. I have long been an
advocate for philosophy to be mandatory for business school students and I find HBR bears
that requirement out. If you understand or try to understand how people think and what
motivates them you will have so much more potential to do well and sustain your successes.
For a long time business and commerce in its teachings have been so mechanized and dry so
emotions and humanities that really drive people's behavior have been pushed aside. These
qualities need to be at the forefront of our reasoning and analysis. I perceive that this – i.e. a
degree of wisdom rather than skills - is coming through in the HBR articles. Please find below
a few notes from this issue:
Stars for Hire; Sometimes you need to cut out the middleman – your boss – and work
directly with the customer or client, to whom you are accountable.
Idea watch: Why Life Science Needs Its own Silicon Valley by Fariborz Ghadar, John
Sviokla and Dieter A Stephan. Studies have shown that having a high concentration of people
working on similar problems in the same location speeds progress. People run into each other
in hallways, cafes, and train stations, and during these encounters they often exchange ideas.
The collaboration and inspiration necessary for innovation are much easier on the ground than
in the cloud.
One factor seems to be very important for cluster creation: government support! A national
government will have to play a big role. The government of Iceland has fostered the
establishment of a national genomics data bank that draws on that country's unusually
extensive family records.
Why Top Young Managers Are in a Nonstop Job Hunt by Monica Hamori. Three quarters
of young high achievers sent out resumes, contacted search firms, and interviewed for jobs at
least once a year during their first employment stint. They left their companies on average
after 28 months. Each change of employer created a measurable advantage in pay; in fact, a
job change was the biggest single determinant of pay increases.
Dissatisfaction with some employers’ development efforts appears to fuel many exits. By
offering promising young managers a more balanced menu of development opportunities,
employers might boost their inclination to stick around.
In the Hot Finance Jobs, Women Are Still Shut Out. By Nori Gerardo Lietz. Relatively
few women work in the private investment sector and of those that do, most of them are in the
marketing, HR or other support functions. Of 283 firms studied, women accounted for 17 –
23 % of employees. Almost 60 % of these firms had no female investment professional at all.
Those who touch the money typically earn the most and run the firm. Change is not just a
matter of time but will require active efforts from all parties.
You'll golf better if you think Tiger Woods has touched your clubs by Sally Linkenauger.
People told they were using a pro's clubs scored better. They thought the whole was bigger
than it was and they made the puts. I guess this proves the old adage that if you think you can
do it for whatever reason you are much more likely to succeed.
Expanding the Entrepreneur Class by Carl Schramm. A system that leaves the education of
entrepreneurs to school teachers (whose choice of profession displays little appetite for
economic risk taking, and who thus may be ill equipped to convey what entrepreneurs
actually do) is inherently weak. We hang our hopes on too few start ups. Only about 400,000
people started business in America last year. This is less than the 1 % goal; in fact it is less
than 1 % of 1% of 1%.
What Good Are Shareholders? By Justin Fox and Jay W Lorsch. In the modern corporation
the role of outside shareholders is to provide money, information, and discipline. In recent
years they've done poorly on all three fronts. The rise of short term trading has brought
increased volatility and less-patient capital. The signals sent by market prices are masked by
so much noise that heeding them has proved problematic for corporations. Major growth in
shareholder activism and clout has failed to prevent managers from engaging in valuedestroying and pocket-lining behavior. Shareholder demands may have encouraged such
behavior. Improving corporate governance will require separating out patient shareholders
from short term traders and determining how others can step in to perform tasks that
shareholders can't. Today's shareholders aren't quite up to making shareholder capitalism
work.
And then seven articles on Smarter Sales.
The End of Solution Sales. Star salespeople now seek to upend the customer's current
approach to doing business. By Brent Adamson, Matthew Dixon and Nicholas Toman.
The superior reps have abandoned much of the conventional wisdom taught in sales
organizations. They evaluate prospects according to criteria different from those used by other
reps, targeting agile organizations in a state of flux rather than ones with a clear
understanding of their needs. They seek out a very different set of stakeholders, preferring
sceptical change agents over friendly informants and they coach those change agents on how
to buy, instead of quizzing them about their company's purchasing process. Reps must learn
to engage customers much earlier, well before customers fully understand their own needs.
Successful sales people seek out customers that are primed for change, challenge them with
provocative insights and coach them on how to buy. Key is to sell insights. And this will
much increase the chance of doing business.
Motivating Salespeople: What Really Works. By Thomas Steenburgh and Michael
Ahearne. Companies that take individual differences into account will realize better results
across the performance curve – and see a higher return on sales expenditures.
A Radical Prescription For Sales. The Reps of the future won't work on commission. By
Daniel H Pink. Commissions can sometimes do more harm than good and getting rid of them
can open a path to higher profits. ‘If-then’ rewards, as in 'If you do this then you get that'
work well with routine tasks social scientists dub 'algorithmic'. Those same if-then rewards
turn out to be far less effective for complex, creative, conceptual endeavors – what
psychologists call 'heuristic' work. Today the transactional aspects of sales are disappearing.
When routine functions can be automated, and when customers and prospects often have as
much data as the salesperson, the skills that matter most are heuristic: Curating and
interpreting information instead of merely dispensing it. Identifying new problems along with
solving established ones. Selling insights rather than items.
Selling Into Micro markets by Manish Goyal, Maryanne Q Hancock and Homayoun
Hatami. Micro market strategies work only if sales teams have simple tools that make them
easy to implement, in particular, tailored sales 'plays' for the opportunities similar micro
markets represent. These strategies require new types of cross-functional collaboration- for
instance, between sales and marketing, which have to function as a single team.
Tweet Me, Friend Me, Make Me Buy. Social networks is an exciting development for sales
reps. With a little managerial discipline, all that clicking, following, and sharing will win
more business. by Barbara Giamanco and Kent Gregoire. As you equip your people with a
social media tool kit, don't stop with the social media team or the marketing organization.
Don't even stop with sales. Make the whole workforce comfortable with the possibilities. It's
only a matter of time until your competitors do so. And once your customers have learned to
expect social network connections, it may be impossible to sell without them.
Teaching Sales. Great sales professionals are scarce and getting scarcer. Why aren't
universities working harder to create more? By Suzanne Fogel, David Hoffmeister. 39 % of
B2B buyers select a vendor according to the skills of the salesperson rather than the price,
quality or service features. Although sales is so crucial, only a small fraction of business
school graduates have been taught anything about it. There is a growing consensus that
professional sales has entered a new era, requiring skills that are scarce but teachable- and
best taught in a collegiate setting. Sales has become more about helping customers define the
problem they are trying to solve and assemble a complete solution. Annual staff turnover for
all sales positions averages 28%. What one requires are the analytical skills necessary to
understand a customer's value proposition, frame business issues, create customer insights,
and present direct solutions. New sales education programs need to partner with industry.
The View from the Field. Jim Koch of Boston Beer Company. From my years at Boston
Consulting Group I know how to interpret data on a spread sheet, but that can't compare with
the knowledge I get from being in the market talking to customers. Most of our ideas for new
products come during sales calls. If you listen to 40 smart customers, you learn more than you
would from any consultant's study. I've come to see making a sales call one of the most
challenging intellectual challenges there is – certainly more immediately challenging than
anything I did at BCG. The essence with selling is figuring out how what you are offering
will help customers accomplish their objectives- not your objectives, their objectives. Being a
street salesman can be very humbling. You don't get a lot of positive reinforcement and you
certainly don't get treated like a CEO.
James Farley Group VP of Ford. Marketing and Sales need to be aligned. Marketing experts
who are not measured on sales success is a mistake. Today the customers know everything.
Susan Silbermann, Pfizer's President of Vaccines. Your sales success rests in your ability to
build trust, adapt locally, and get close to your customers.
Duncan Mac Naughton, Chief Merchandising and Marketing officer of Walmart. We try to be
partners with our suppliers. We love to be involved with the upstream innovation and we
regard selling these products as a partnership. We think about running one store at a time, one
isle at a time – and that is the way to think about dealing with us.
Phil Guido IBM GM North America. Our credo is 'dedication to customer service and
excellence in all we do.' Our sales teams increasingly view themselves as consultants who
solve client problems. We think more about industry leadership and true consultative selling,
and about how to create synergies among the systems, software, and services we offer in
order to better meet the needs of our clients and their industries. Solution selling really starts
with listening.
Experience. Disrupt Yourself. Finding the career path you really want. By Whitney
Johnson. Zigzagging – moving between jobs and organizations can be very positive for
development and careering. If as an individual you have reached a plateau or you suspect you
won't be happy at the top rung of the ladder you are climbing, you should disrupt yourself for
the same reasons a company must. A core principle of disruptive innovation is that customers
control the resource allocation and they don't buy products but instead 'hire' them to fulfil a
need. As you look to disrupt yourself, don't think just about what you do well – think about
what you do well that most others can't. 'Search intelligence' – the ability to discern
connections across spheres and to see opportunities for cross-pollination is a key parameter. A
successful designer said his success came from veering from the traditional industrial design
path to study anthropology, ethnography, sociology, cultural theory, and art history – which
have become the bedrock of his work that blends design with customer insights and product
strategy. Be prepared to step back or sideways to grow. Personal growth often stalls at the top
of the classical S-curve. “The sideways moves accelerated my career by five years or more
each time.” 70% of all new businesses end up with a strategy different from the one they
initially pursued. 'If you want to succeed you should strike out on a new path, rather than
travel worn paths of accepted success.' / John D Rockefeller/.
The status quo has a powerful undertow, no doubt. Current stakeholders in your life and
career will probably encourage you to avoid disruption. When a company pursues growth in a
new market rather than an established one, the odds of success are six times higher and the
revenue potential 20 times greater. For many of us, though, holding steady really means
slipping – as we ignore the threat of competition from younger, more agile innovators, bypass
opportunities for greater reward, and sacrifice personal growth.
The most overlooked economic engine is YOU. If you really want to move the world forward,
you need to innovate on the inside – and disrupt yourself.
Other articles include: Cultural Change That Sticks; Do You Know Your Cost of Capital;
Points of Law: Unbundling Corporate Legal Services to Unlock Value; A Better Way To tax
US Business; The Growth Opportunity That Lies Next Door; Bonuses in Bad Times.
[email protected] 3.08.12
Harvard Business Review June 2012
This is another really great issue of HBR with a number of interesting articles. The
highlight for me was the interview of the Unisys CEO Paul Polman who answered all
the questions very inspiringly (and consistent with my own strongly held views). His
approach, totally aligned with trying to build the good society, is, I believe, the way of
the future. And because his company of 170,000 employees reaches two billion
consumers there is good hope he will impact the way business is done. Please find
below a few notes from the issue.
The Real Leadership of Steve Jobs. Steve’s approach to leadership can be
summarized in two words – Think Different! Different means “Drop all your theories
and preconceived ideas. Pay attention to the raw reality coming in through your five
senses and your mind. This is where you will find insight and wisdom.” /Jonathan
Rotenberg/
The Things Customers Can Do Better Than You by Bill Lee. It is time to redefine
customers. They’re more than the people who buy your products and services.
Customers are more knowledgeable, credible, and persuasive at convincing other
customers to actually buy your product than your company’s marketing efforts are. A
customer is someone with whom your firm engages in a mutual exchange of value.
Customers may not be able to articulate what they want but they may be able to
identify what is currently ‘wrong’ – what they are unhappy about.
The New Science of Building Great Teams. Communication more than collective
smarts or skill determines a team’s success. How we communicate is even more
important than what’s being communicated. An engaged team member will keep in
mind the goal of moving the group forward.
Short-Termism: Don’t Blame Investors (or analysts). Executives often complain
that investors’ obsession with short term performance forces them to make decisions
that hurt long-term returns. But this also works the other way around: Executives with
a short term orientation attract investors who are fixated on quarterly numbers. The
language a company uses when talking to investors is a meaningful indicator of its
orientation – and the investors listening in on calls that emphasize a short term
approach are a largely self-selecting group who like what they hear.
Think of Start-ups as shots on goal by Robert E Litan. The more start-ups there are,
the more ‘shots on goal’ an economy has to produce great results. Pre GFC some
500,000 – 600,000 new (U.S.) firms were launched and post GFC this plunged to
400,000. Legislation needs to go beyond entrepreneurs’ capital requirements and also
facilitate their access to talent and opportunity. We need immigration reform to attract
and retain high-skilled immigrants, particularly those who hope to start new
businesses right away. Start-ups drive growth!
Why Make Diversity So Hard to Achieve by John Rice. Culture change comes more
readily from a critical mass of diverse executives than from a series of diversity and
inclusion seminars, or one high-profile minority hire. Apply to diversity the same
rigor and results orientation that you apply elsewhere in your operations.
Managing Risks: A New Framework by Robert S Kaplan and Anette Mikes.
Despite all the rhetoric and money invested in it, risk management is too often treated
as a compliance issue that can be solved by drawing up lots of rules and making sure
that employees follow them. Many such rules, of course, are sensible and do reduce
some risks that could severely damage a company. But rules-based risk management
will not diminish either the likelihood or the impact of a disaster such as BP’s
Deepwater Horizon, just as it did not prevent the failure of many financial institutions
during the 2007-2008 credit crises.
Organizational biases inhibit our ability to discuss risk and failure. In particular, teams
facing uncertain conditions often engage in group think – particularly if the group is
led by an overbearing or overconfident manager who wants to minimize conflict,
delay, or challenges to his or her authority. Risk mitigation is painful, not a natural act
for humans to perform. It costs money and slows things down. The risks that
companies face fall into three categories: Preventable Risks; Strategy Risks; and
External Risks.
A firm’s ability to weather storms depends on how seriously executives take risk
management when the sun is shining and no clouds are on the horizon. Active and
cost-effective risk management requires managers to think systematically about the
multiple categories of risk they face so that they can institute appropriate processes
for each. These processes will neutralize their managerial bias of seeing the world as
they would like it to be rather than as it actually is or could possibly become.
Leadership Is a Conversation by Boris Groysberg and Michael Slind. The command
and control approach to management has become less and less viable. Smart leaders
engage with employees in a way that resembles an ordinary person-to-person
conversation more than it does a series of commands from on high. Four elements of
organizational conversation reflect the essential attributes of interpersonal
conversation: intimacy, interactivity, inclusion, and intentionality. Intimacy includes
listening to people at all levels of the organization and by learning to speak with
employees directly and authentically. For many executives and managers, the
temptation to treat every medium at their disposal as if it were a megaphone has
proved hard to resist. Create a welcoming space for dialogue.
If you are to reap the benefit of employees acting as brand ambassadors, executives
need to cede control over how the company is represented to the world. One-way
broadcast messaging is a relic, and slick marketing materials have as little effect on
employees as they do on customers.
Leadership Development In The Age of The Algorithm by Marcus Buckingham.
Even a decade after leadership training began to recognize different styles and
strengths, and even in organizations that have made cultivating high-potential talent a
priority, the content served up is generic. Your leadership program tells you that you
are part of your organization’s future, but it displays little understanding of you.
Companies should assess all developing leaders and feed each one customized tips –
tips drawn only from outstanding leaders who have similar strengths.
Pricing To Create Shared Value by Marco Bertini and John T Gourville. A firm’s
brand communication may say, “We value you as a person,” but its pricing practices
often say, “We value you as a wallet.” /that is why I always protested the concept
‘share-of-wallet’/ Any company who is not evaluating its pricing through a shared
value lens should think again.
Four Ways to Fix Banks by Sallie Krawcheck. Bank boards need simple ways to cut
through complexity; pay top executives with bank debt as well as stock and stock
options, to make them more sensitive to risk; pay dividends as a percentage of
earnings rather than as a set amount, to preserve capital in downturns; ignore net
interest income in judging bank performance, and pay much more attention to
customer satisfaction metrics; focus not on the most troubled business segments but
on those that are using the most capital. Income driven by satisfied customers is worth
much more long term than those achieved by trading, expense cuts and net interest
numbers.
Captain Planet – an interview with Unisys CEO Paul Polman. “Why don’t we
develop a business model aimed at contributing to society and the environment
instead of taking from them?” We think that businesses that are responsible and
actually make contributions to society a part of their business model will be
successful. For proper long-term planning you’ve got to take your externalities into
account, in order to be close to society. We abolished quarterly reporting to allow
more focus on the longer term. We also changed our compensation system with the
longer term in mind. I would recommend every company to get rid of quarterly
reporting.
We have to realize that our job isn’t just creating shareholder wealth. A myopic view
of driving shareholder wealth at the expense of everything else will not create a
company that’s built to last. We need to attract a shareholder base that supports our
strategy – not the other way around. The financial crisis has made a lot of people
think differently about how society needs to function. We need to fine-tune the system
and the way to do that is through socially responsible investment. It is unsustainable
to have 15 % of the world’s population using up 50% of its resources. Companies that
don’t want to be part of finding a solution to this risk being isolated by society.
Milton-freedman type thinking has brought us to where we are and we need
something more constructive.
Unfortunately politicians have become too short term in their thinking as well. Most
lack any courage and just want to get reelected. In the US in particular, politicians
seem to have a limited understanding of, and interest in, how the world functions.
Any compensation system where a few people get enormous benefits but the costs
and risks have to be borne by society is unacceptable. The answer to executive pay is
transparency.
There is so much ambiguity and change so your company needs to be agile – and you
have to make sure your company is a learning organization.
There are things I wish I had done sooner. I wish I had spent more time on diversity
of the work force. We are nowhere near where we need to be for tomorrow’s world.
Learning Charisma by John Antonakis, Marika Fenley, and Sue Liechti. Charisma is
rooted in values and feelings. To persuade others you must use powerful and reasoned
rhetoric, establish personal and moral credibility, and then rouse followers’ emotions
and passions. If a leader can do these three things well, he or she can than tap into the
hopes and ideals of followers, give them a sense of purpose, and inspire them to
achieve great things.
Research suggests a dozen key CLTs (charismatic leadership tactics). Nine of them
are verbal: metaphors, smiles and analogies; stories and anecdotes; contrasts;
rhetorical questions; three-part lists; expressions of moral conviction; reflection of the
group’s sentiments; the setting of high goals; and conveying confidence that they can
be achieved. Three tactics are non-verbal: animated voice; facial expressions, and
gestures. The word Charisma in Greek means special gift. Anyone can improve
his/her leadership skills! /I believe empathy is also important – to tune into the mood
of whoever you are talking to/
Notes by [email protected] June 17 2012
Harvard Business Review May 2012
The theme for the May issue is Innovation. Although perhaps not revolutionary in its
articles, there are still some interesting observations. “The goal is to manage total
innovation across the organization, rather than rely on ad hoc, stand alone initiatives
to somehow take a company productively forward.” Please find some comments from
the issue below.
Americas Challenge /Interactive /
The state of the world can be remedied in one of two ways: 1) revolution, or 2) if
principled leadership has the strength to give up much of its power, and empower
levels below. Helping business leaders understand that preserving and enhancing
people’s well-being – not any of our business culture’s current range of drivers –
should be the fundamental purpose of our organizations.
Rethinking School / Interactive/
We don’t need to send kids to school to have a curriculum delivered to them. Instead
we should be focused on helping kids become adept learners who, given the access
they have on the internet to the sum of human knowledge, will be asked to create their
own education rather than receive one parceled out in classrooms that in no way
resemble the world.
What Makes a Great Tweet by Paul Andre’, Michael Bernstein and Kurt Luther.
At last count, Twitter had half a billion registered users who together generate some
175 million tweets a day. New accounts are being added at a rate of 11 per second.
Ratings provide some useful tips for keeping your followers engaged. Be clear, not
cryptic or insider. Don’t overuse hash-tags, and don’t re-tweet one-on-one
conversations. 25 % of tweets are not worth reading, 36% are and 39% of tweets are
just ok.
The wisdom of your in-house crowd. By Thomas Devonport
Lives may not be at stake in the decisions most of us are party to, but similar
capabilities are being cultivated by enterprises, large and small. Gradually we are
learning not to rely on the personal judgment of only human leaders and to tap into
the superior judgment of organizations. / The book ‘The Wisdom of Crowds’ refers,
my comment /
Capitalizing on our Intellectual Capital by Iqal Quadir. This article makes the point
that education is a great export product and lever of future business growth. MIT
graduates’ start ups generate two trillion dollar annual revenue. Amazing!
The Best Executive and Professional Jobs May no longer be Full-Time Gigs by
Jody Miller and Matt Miller
In a global business climate that’s perpetually ambiguous – and that puts a premium
on companies’ ability to test new ideas and change course on a dime – knowing how
best to engage this low-risk, flexible and faster talent model (high powered temps) can
be a source of competitive advantage. In Europe, due to onerous labor laws,
temporary work is even better established than in the US. Talented people are going
independent because they can choose what to work on and with whom to work. Roger
works 80% of former hours and earns 80% of former pay and is very happy with that.
The advantage of being an independent consultant is to come in and work for 6-9
months and then take a breather. The people that work full time never get it. So it
really prevents burn out. A lot of full time work is like running a marathon and never
taking a break or a day off. Without the need to build teams they can tackle bigger
assignments. And no one tells an independent what to so they must be self-starters.
Muster the courage to set things up the way you want it!
Managing Your Innovation Portfolio by Bansi Nagji and Geoff Tuff.
This article argues there are three levels of innovation; Core-optimizing existing
products for existing customers; Adjacent- expanding from existing business into
‘new to the company’ business; and Transformational-developing breakthroughs and
inventing things for markets that don’t yet exist.
Firms that outperform their peers tend to allocate their investments in a certain ratio:
70% to safe bets in the core, 20% in the adjacent space and 10% in the
transformational. As it happens an inverse ratio applies to the returns. Although never
the dominant activity, transformational initiatives are vital to a company’s ongoing
health, and firms must recognize that they demand unique management approaches.
A study by the Corporate Strategy Board shows that mature companies fail as often as
99% of the time. This reflects the hard truth that to achieve transformation – to do
different things – an organization usually has to do things differently. It needs
different people, different motivational factors, and different support systems.
Transformational innovation tends to benefit when the people involved are separated
from the core business – financially, organizationally, and sometimes physically.
Without the distance they can’t escape the gravitational pull of the companies’ norms
and expectations, all of which reinforce an emphasis on sustaining the core.
In the early stages noneconomic and internal metrics are more important than
economic – just going down an exciting learning path may justify continuation.
The imperative is to identify and accelerate the most promising ideas and kill off the
rest.
The Trillion-Dollar R&D Fix by Anne Marie Knott
Traditional measures of R&D productivity are only loosely linked to profits and
market value. That makes it difficult for executives to know whether they’re spending
as much (or as little) as they should, let alone make improvements in the way they
spend. A new measure RQ or research quotient, derived from classic regression
analysis, allows managers to make these judgment calls. It also enables managers to
estimate the optimal amount they should spend. Getting this right has enormous
potential.
Six Myths Of Product Development by Stefan Thomke and Donald Reinertsen
Incorrectly assuming that product development is like manufacturing, many
companies try to apply zero-defect, efficiency-focused techniques to product
development processes. This mindset and other management misperceptions have
given rise to six fallacies that undermine product development. Six Fallacies: High
Utilization will improve performance; Processing work in large batches improves
economics of the process; Our plan is great, we just need to stick to it; The sooner the
project is started, the sooner it will be finished; The more features we put into a
product, the more customers will like it; We will be more successful if we get it right
the first time. Demanding that teams ‘get it right the first time’ just biases them to
focus on the least risky solutions.
Creating an Organic Growth Machine by Ken Favaro, David Meer, and Samrat
Sharma
Corporate leaders can kick start their companies’ internal growth engines by
following four rules. Keep and eye on the big picture; Help operating units fight
short-term business cycle pressures; Create a language for growth!
To Keep Your Customers, Keep it Simple by Patrick Spenner and Karen Freeman
For many consumers, the rising volume of marketing messages is overwhelming.
Rather than pulling customers into the fold, companies are pushing them away with
relentless and ill-conceived efforts to engage. Simplify and personalize!
Make Your Enemies Your Allies by Brian Uzzi and Shannon Dunlap
How do you best handle a situation where someone is hostile to you when you arrive
at your work place? This problem is very common, and the article suggests a way
forward leaning on the three Rs – redirection, reciprocity and rationality. And having
the insight that rivalries help no one. Redirect your rival’s energy away from you,
Reciprocity – do something nice for the other person, rationality – try to agree a
sensible way of co-operating.
Notes by [email protected] May 12, 2012
Harvard Business Review April 2012
This issue is themed around Great Teams and how to build them with a lot of
interesting ideas to improve the way we work together. Please find below a few notes
from the issue.
Good Data Won’t Guarantee Good Decisions by Svetank Shah, Andrew Horne and
Jamie Capella. Most companies have too few analytics-savvy workers. Here’s how to
help them. Analytical skills are concentrated in too few employees. IT needs to spend
more time on the “I” and less on the “T”. Reliable information exists but it is hard to
locate. Business executives don’t manage information as well as they manage talent,
capital, and brand. To overcome the insight deficit, Big Data – no matter how
comprehensive or well analyzed – needs to be complemented by Big Judgment.
Why His Merit raise is Bigger Than Hers by Stephen Benard. Managers in explicit
meritocracies consistently give women lesser amounts than men. Research shows that
wide-spread stereotypes – for example the notion that women are less productive than
men – often shape behavior unconsciously, even in people who disagree with them.
“Good” Companies launch More New Products by Xueming Lou and Shuili Du.
Companies in the top third in terms of CSR (corporate social responsibility) brought
out on average 47 new products a year, while companies in the bottom third brought
out only 12. In an era of open innovation and rapidly diversifying knowledge,
companies can no longer rely solely on internal resources; they must find ways to
bring external ideas into the firm. CSR can be a powerful catalyst for doing that.
What Keeps Global Leaders Up at Night. Most Urgent Risks in Each Category:
Economic – Chronic fiscal deficits; Environmental – Rising Greenhouse gas
emissions; Geopolitical – Terrorism; Societal – Water supply issues; Technological –
Cyber attacks. /It is interesting that in countries like Sweden, Germany and Japan,
terrorism wouldn’t even feature as a worry – is terrorism the mirror image of some
kind of oppression, real or perceived? my comment/
Top Global Risks in Terms of Likelihood - Severe income disparity; / Japan and
Sweden best in class – my comment/
Top 5 Risks in terms of Impact – 1st Major Systemic Financial Failure; 2nd Water
Supply Crisis; 3rd Food Shortage Crisis; 4th Chronic Fiscal Imbalances; 5th Extreme
Volatility in Energy and Agriculture Prices.
Celebrate Innovation No matter Where it Occurs by Nitin Nohira. Companies with
superior marketing and distribution capabilities and leaders who quickly recognize
opportunities will be the ones that capture value from innovations. In the face of a
jobs crisis and a stagnant economy, we as a planet should pray for the appearance of
more breakthrough innovations, regardless of where they arise. Ultimately the
creation of jobs and wealth has more to do with harvesting the value of innovation
than inventing it.
The New Science of Building Great Teams by Alex Sandy Pentland. How we
communicate is more important to success than what we communicate. The best
predictors of productivity are a team’s energy and engagement outside formal
meetings. Together, those two factors explained one-third of the variations in dollar
productivity among groups. The patterns of communication are what matter most –
more than skill, intelligence, and other factors that go into a team combined.
What managers’ sense as an ineffable buzz or esprit the corps in a good team is
actually observable, measurable, and learnable. The most valuable forms of
communication are face to face. E-mail and texting are the least valuable. 35% of the
variations in a team’s performance can be accounted for simply by the number of face
to face exchanges among the team members. We know as well that the ‘right’ number
of exchanges in a team is as many as dozens per working hour, but that going beyond
the ideal number decreases performance.
Social time turns out to be deeply critical to team performance, often accounting for
more than 50% of positive changes in communication patterns, even in a setting as
efficiency-focused as a call centre. The best performing and most creative teams seek
fresh perspectives constantly from all other groups (and some outside) the
organization.
When we spot low energy, unengaged people we dig down into their individual data.
Are they trying to contribute and being ignored or cut off? Do they cut others off and
not listen, thereby discouraging colleagues from seeking opinions? Do they face other
people in meetings or tend to hide from the group physically? Do they speak loudly
enough? Perhaps the leader of a team is too dominant; it may be that she is doing
most of the talking at meetings and needs to work on encouraging others to
participate. Energy and engagement maps can make such problems clear.
The ideal team players, natural leaders or charismatic connectors circulate actively,
engaging people in short, high energy conversations. They are democratic with their
time- communicating with everyone equally and making sure all team members get a
chance to contribute. They are not necessarily extroverts, although they feel
comfortable approaching other people. They listen as much as or more than they talk
and are very engaged with whomever they’re listening to. Spiritual as good teamwork
may seem, it can be rooted in evidence and data.
Teamwork On the Fly by Amy C Edmondson. Teaming is teamwork on the fly: a
pick-up basket ball game rather than plays run by a team that that has trained as a unit
for years. It is a way to get other experts in temporary groups to solve problems
they’re encountering for the first and perhaps only time. When companies need to
accomplish something that hasn’t been done before, and might not be done again,
traditional team structures aren’t practical. It is just not possible to identify the right
skills and knowledge in advance and to trust that circumstances will not change.
Under those conditions, a leader’s emphasis has to shift from composing and
managing teams to inspiring and enabling teaming. Teaming well can generate
important benefits. “Organizations exist to combine people’s efforts.” /James
Thompson/
Purpose is fundamentally about shared values; it answers the question why we (this
company, this project) exist, which can galvanize even the most diverse, amorphous
team. Emphasizing purpose is necessary even when the purpose is obvious. It reduces
the risk of egos and meandering.
A useful discipline for leaders is to force moments of reflection, asking themselves
and then others, “Is this the only way to see the situation? What might I be missing?”
Such exploration – even in the face of deadlines – is critical to successful teaming.
Taking the time to do this actually takes less time than allowing conflicts to follow
their natural course. Conflict can feel like failure. It can be frustrating not to see eyeto-eye with collaborators, but differences of perspective are a core reason for
teamwork in the first place, and resolving them effectively gives rise to new
opportunities. People who had worked on teams with greater task novelty and product
complexity, more diverse colleagues, and more boundary spanning learned more than
people on teams that faced fewer of those challenges.
Coming Through When It matters Most How great teams do their best work under
pressure by Heidi K Gardner. Pressure to perform drives people paradoxically toward
safe, generic solutions that can be justified because they’ve worked before. By setting
up their teams and measuring each person’s contribution more deliberately, ruthlessly
insisting that no one’s contribution can be marginalized, and framing new information
within familiar contexts, teams can escape the performance pressure paradox and keep
doing their best work when it matters most.
As teams push toward completion, they drive toward consensus in a way that shuts
down paths to critical information. Everyone unwittingly begins to defer to authority.
Everyone values shared knowledge more than unique expertise. That’s unfortunate
because one way customers judge the quality of a complex product or service is by
the extent to which the solution seems custom- made for them. Customers who detect
cut and paste job feel unloved. Teams feeling the heat of performance pressure rarely
take the opportunity for introspection. Put client experts on the team. Know that
everyone is supposed to contribute from the start. Check that everyone is actually
contributing. Take the time to get back on track. Make unique knowledge more
acceptable to the group.
The Real Leadership Lessons of Steve Jobs by Walter Isaacson. The people who
are crazy enough to think they can change the world are the ones that do. The author
who knew Steve Jobs well says these were the keys to his success: Focus: Deciding
what not to do is as important as deciding what to do. This is true both for companies
and products. He relentlessly filtered out what he considered distractions. What are
the five products you want to focus on? Get rid of the rest, because they are dragging
you down. They are causing you to turn out products that are adequate but not great.
Simplify: Simplicity is the ultimate sophistication. To be truly simple you have to go
really deep. Emphasize clean lines and functional design with no frills or distractions.
Take Responsibility End to End: The best way to achieve simplicity is to make sure
hardware, software, and peripheral devices are seamlessly integrated. When Behind,
Leapfrog: After the iPod became a huge success, Jobs spent little time relishing it.
Instead he began to worry about what might endanger it. One possibility was that
mobile phone makers would start adding music to their handsets. So he cannibalized
iPod sales by creating iPhone. “If we don’t cannibalize ourselves, others will,” he
said. Put Products before profits: Focus on making the product great and the profits
will follow. The products, not the profits, were the motivation. Don’t Be a Slave To
Focus Groups: Someone asked whether they should do some research to see what
customers wanted. No, said Jobs, “because customers don’t know what they want
until we show it to them. He invoked Henry Ford’s line “If I’d asked customers what
they wanted, they would have told me they wanted a faster horse.” Caring deeply
about what customers want is different from continually asking them – it requires
intuition and instinct about desires that have not yet been formed. Bend Reality: We
did the impossible because we didn’t realize it was impossible. Impute: People form
an opinion about a product or a company based on how it is presented and packaged.
People do judge a book by its cover. Push for perfection: If it isn’t perfect go back to
the drawing board. A good craftsman uses a good piece of wood even for the back
side of the cabinet. /my lieutenant platoon teacher said – a true gentleman also
polishes the back of his shoes, and my good friend from Tokyo tells me the lining of a
samurai coat got as much attention as the outside/. Tolerate only ‘A’ Players: “I
don’t think I run roughshod over people,” Jobs said, “but if something sucks, I tell
people to their face. It is my job to be honest.” “When you have really good people
you don’t have to baby them. By expecting them to do great things, they can do great
things.” Engage Face-To-Face; “We designed the building to make people get out of
their offices and mingle in the central atrium with people they might not otherwise
see.” He gathered his executive team every week to vent ideas without a formal
agenda, and spent every Wednesday afternoon doing the same with his marketing and
advertising team. He said “I hate the way people use slide presentations instead of
thinking. People who know what they are talking about don’t need power point
presentations.” Know Both Big Picture and The Details; Even as he was laying out
the grand visions, he was fretting over the shapes and color of the screws inside the
iMac. Combine the Humanities with The Sciences; Almost at every product launch
Jobs ended with a slide that showed a sign at the Intersection of Liberal Arts and
Technology Streets. Stay Hungry, Stay Foolish: Jobs made sure that his business
and engineering aspect of his personality was always complemented by a hippie nonconformist side from his days as an artistic, acid-dropping, enlightenment-seeking
rebel.
A Reverse Innovation Playbook by Vijay Govindarajan. This article just shows that
ideas and success can come from the periphery to the centre just as well as from the
centre to the periphery. This involves throwing out old organizational structures to
create new ones from scratch.
Wilderness Leadership On the Job by John Kanengieter and Aparna RajagopalDurpin. Our participants learn five key principles-practice leadership, lead from
everywhere, behave well, keep calm and disconnect to connect. Getting out into
nature achieves ‘attention restoration,’ i.e. it resets your brains allowing you to
analyze problems. Leave technology behind, take a walk, and let the natural world
work its restorative magic. /I have talked about crop rotation in my presentations –
just as the earth needs different challenges to produce optimally, so our brains and
bodies perform better by being exposed to novelty and variety- take a break, go for a
walk, mix arts and science – keep fatigue, tedium and monotony at bay - my
comment/
/ Notes by [email protected] 8 April 2012/
Harvard Business Review March 2012
This issue is a special on Reinventing America and there are some very insightful
articles again. It seems it is not only the outer world looking into America that feels
something has gone astray, the majority of people inside also see how the flaws have
been building up. “U.S. competitiveness is in grave danger. The erosion of U.S.
competitiveness began well before the Great Recession. A short term focus and
political gridlock have prevented the U.S. from taking the steps needed to meet the
challenge. Government will play a crucial role but business must lead the way.” No
matter how severe your predicament, there is always a best way forward and some
great thinkers are sharing their ideas. Many of the articles are well worth reading in
their entirety. Even if this issue is about the U.S. it concerns us all. Please find below
some notes from the issue.
First, Let’s Fire All the Managers by Gary Hamel
The term ‘manager’ is out-of-date, at the very least. Instead of supervising others, the
true role for managers is to lead and develop people. Very little of that is actually
occurring. It doesn’t mean we should eliminate all managers; rather, we should teach
the managers how to lead. /David Chard, president of Engaging Minds /
Old-school, command-and-control thinking gives money and status to those who
manage, not those who create. Senior business leaders would improve the morale and
productivity of their organizations if they removed the aura of managers who are
made to feel that they are better than their team mates. We need smarter more
insightful team members, not dictatorial managers. Change the way money is doled
out and you will change everything. /Roy Luebke, innovation consultant/
Ideally, an organization should not wait until someone becomes a manager to train
him in management. Develop everyone and promote those who show a flair for
leading and developing others. Or do away with the rigid structures and let their
leaders be anointed by their followers. / Stephen Booth, business analyst /
----
It takes two completely different kinds of thinking to create great products and create
great retail experiences, and only if a brand is confident can it master both. /Veena
Srinath IT marketing manager/
Not to decide is to decide. If we in business allow politicians to think that doing
nothing is ok, then that is exactly what they will do. If we are unwilling to put aside
individual wish lists and think about what is really important for the country, then we
are going to face a world with a lot of hurt. / Erskin Bowles/
There is nothing inevitable about the industrial decline of the United States. We need
to believe that we can design, develop and produce in the USA; that we can do it cost
effectively and that we can win. If we do, our workers will prove America’s potential.
/Jeffrey Immelt CEO GE/
When you are building an innovative team you need creative people but more
importantly you need a variety of cognitive types – including detail oriented and
conformists - for higher levels of innovation. / Ella Miron-Spektor, Miriam Erez, and Eitan
Naveh/
Why U.S. Competitiveness Matters to All of Us by Nitin Nohria
In times of anxiety it is natural to begin pointing the finger to blame others. Business
blames government for getting in its way; government blames business for acting
irresponsibly. Much of the public blames the rich and the elite for exploiting everyone
else. Parties on each side work hard to amplify these accusations, but their efforts do
nothing to solve the problem. They simply divide people, obscuring the fact that we
are all in this together. Let’s recognize that we are in a serious situation, one that
predates and goes well beyond the recent economic downturn. A multidisciplinary
approach of experts will deepen the awareness of the magnitude of our problems.
Solutions proposed must be inspirational and perceived to be realistic. Our problems
are huge, but not insurmountable.
The Looming Challenges to US Competitiveness by Michael E. Porter and
Jan W. Rivkin
U.S. competitiveness is in grave danger. The erosion of U.S. competitiveness began
well before the Great Recession. A short term focus and political gridlock have
prevented the U.S. from taking the steps needed to meet the challenge. Government
will play a crucial role but business must lead the way.
It is a nation’s ability to generate high output per employable person – not per
currently employed person – that reveals its true competitiveness.
A survey of 10,000 HBS alumni resulted in 71% foreseeing a decline in U.S.
competitiveness. Respondents perceived the U.S. as already weak and in decline with
respect to a range of important factors: the complexity of national tax code, the
effectiveness of its political system, basic education, macroeconomic policies, and
regulation. Unique strengths in entrepreneurship, higher education and management
quality must overcome growing weaknesses in many other areas.
In contrast, China has tapped virtuous cycles and has become a serious challenge for
the U.S. China has used surpluses to fund productivity-improving investments that
add to surpluses. China as a country has a strategy whereas the U.S. is lacking one. To
address the challenges America needs a strategy and a consensus on direction, not
self-interested steps promoted by single-issue advocacy groups.
A competitive nation exhibits a sound business environment (including modern
transport and communications infrastructure, high-quality research institutions,
streamlined regulation, sophisticated local consumers, and effective capital markets)
as well as strong clusters of firms and supportive institutions.
A Jobs Compact for America’s Future. Badly needed investments in human
capital are not being made. What can we do together to jump start the process? By
Thomas A Kochan.
Competing on – and investing in – human capital is often not in the short term interest
of individual companies. Strategies and practices aimed at achieving both high
productivity and high wages are not spreading widely across companies and
industries. Little constructive dialogue about elevating human capital as a source of
competitive advantage takes place among the stakeholder groups: the business
community, government, labor and others. Top business schools are perfectly
positioned to jump-start the effort of changing those realities, with investments in
apprenticeship programs, technology-education partnerships, and a variety of other
evidence-based ideas.
The business culture needs to move from shareholder only focus to stakeholder focus.
There is no panacea for the undervaluation of human capital in the U.S. But it is
possible to tackle the problem systematically – if we work together.
Rethinking School! For the U.S to remain competitive, its students need to learn
vastly more, much more quickly. New approaches prove they can. By Stacey
Childress
Over the past 30 years, nearly every labor intensive service industry in the U.S. has
seen a dramatic increase in productivity, whilst public education has become roughly
half as productive spending twice the money per student to achieve the same results.
Among 34 OECD nations American 15 year olds ranked 25th in math, 17th in reading
and 22nd in science. Chinese students took the tests for the first time in 2009 and blew
everyone away, ranking first in all three areas. More that 50% of China’s students
scored in the top two levels (out of six) in math, while less that 10% of U.S. students
did.
We must give our teachers and students the breakthrough tools they need so that next
generation of Americans will be better prepared to contribute to a stronger economy.
How to Make Finance Work! The U.S. financial sector has boomed, but that
hasn’t always been good news for the rest of the economy. By Robin Greenwood and
David S Scharfstein.
The recent crisis was in part the consequence of a shift from traditional deposit based
banking to a market-based system, without adequate regulatory adjustments. The key
functions of a financial system are to facilitate household and corporate saving, to
allocate those funds to their most productive use, to manage and distribute risk, and to
facilitate payments.
Over the past three decades the U.S. financial system has grown much faster than the
overall economy causing three problems: The financial system is less stable than it
was 30 years ago. Second, the financial sector has steered trillions of dollars into
residential real estate and away from other, more productive investments and third,
the cost of professional investment management is simply too high.
In a recent competitiveness survey of HBS alumni, respondents listed the capital
markets as an enduring strength of the U.S. economy. Yet aspects of the financial
sector have distorted the allocation of talent and capital and have left the economy
vulnerable to crisis. In the end, the financial sector should be judged not on its
profitability and size, but on how well it promotes a healthy, more competitive
economy over the longer term.
Macroeconomic Policy and U.S. competitiveness. A reformed fiscal policy is
vital to renewing America’s productivity. By Richard H K Vietor and Matthew
Weinzierl
The United States is on a glide path to fiscal disaster, with experts projecting that the
federal government will take in far less money than it spends – indefinitely. Many
public goods provided by the government contribute directly to productivity.
Spending on improving education can increase human capital and spending on
infrastructure can increase physical capital. Publicly funded R&D, effective
regulation, and incentives for private sector innovation can lead to a more efficient
use of human and physical capital.
Currently U.S. fiscal policy is deeply worrisome on several dimensions. The evidence
suggests we are not investing enough in infrastructure and education. Policy makers
looking to reduce deficits may hinder – rather than support – the ability of companies
to compete. Spending on the public goods essential for competitiveness ought to be
protected from cuts, and tax revenues ought to be increased through instruments (such
as VAT) that don’t discourage productive activity and investments.
Green Rules to Drive Innovation by Daniel C Esty and Steve Charnovitz.
It is increasingly clear that investing in sustainability can enhance national
competitiveness. Consider that the 10 highest ranked countries on the Environmental
Performance Index all sit in the top half of the World Economic Forum’s 2011 Global
Competitiveness Index and six are in the top quartile. Fully 95 % of the world’s
largest 250 firms regularly report on their environmental performance, highlighting
their commitment to sustainability as a tool for reducing risk, improving efficiency,
driving innovation and building intangible value. The article lists ten proposals for
future energy and environmental policy. This includes a carbon tax more funding for
research.
The Incentive Bubble. Outsourcing pay decisions to financial markets has skewed
compensation and with it, American capitalism. By Mihir Desai
Nothing is more important for a market economy than the structure of incentives for
managers and investors. Unfortunately, the idea of market-based compensation is both
remarkably alluring and deeply flawed. The result has been the creation of perhaps the
largest and most pernicious bubble of all: a giant financial-incentive bubble. These
changed incentives and rewards have contributed significantly to the twin crisis of
modern American capitalism; repeated governance failures, which lead many to
question the stewardship abilities of American managers and investors, and rising
income inequality. Remedying these distorted incentives and restoring faith in the
fairness of American capitalism will require that we pop the financial-incentive
bubble by exposing the intellectual flaw behind it, restructuring compensation
contracts and separating legitimate investment activities from systemically important
financial institutions.
Financial markets cannot be relied upon in simple ways to evaluate and compensate
individuals because they can’t easily disentangle skill from luck.
The corporate governance crisis in the past 15 years had many roots; large stock
option grants and the distorted incentives they provide loom large among them. The
entire premise of financial-markets-based compensation is that returns are
extraordinary only after the risks undertaken have been accounted for.
Inefficient risk taking engendered by incentive contracts has widespread
consequences for the allocation of capital in our society. Talent will continue to be
misallocated in the economy as long as outsize rewards are available in certain
professions. Thirdly, it caused the surge in income inequality, which is troubling
many people. The transformation of investment banks into risk hungry institutions is
connected to the growth of financial-markets-based compensations.
Markets are powerful, but they are not a panacea when monopolies are present and
when agents aren’t serving their captive principals.
The turn to restricted stock and vesting based on long-term accounting metrics is best
practice at some leading corporations today. Board members must continue the move
more toward subjective, long-term, accounting-and finance based measures of
compensation.
Awakening our monitors to their responsibilities and to the flaws of market-based
compensation provides the best hope for correcting these misallocations and
strengthening the US economy for the challenges of this century.
Fixing What’s Wrong with U.S. Politics. By David A Moss
60% of Harvard alumni say that the U.S. political system is less effective than that in
other countries. Policy making in America is approaching all out war, where victory is
paramount, “compromise” a dirty word, and virtually any issue or development can
become a weapon for bludgeoning the other side. Business leaders can take four steps
to make a difference. Speak out for democracy. Clarify public priorities. Invest in
History. Stand up for civics.
Enriching the Ecosystem by linking innovation, enterprises and jobs by Rosabeth
Moss Kanter.
The key to Stanford and MIT successes has been strong industry ties and networks,
connecting faculty, entrepreneurs, and funders. Competitiveness requires the unique
capabilities and involvement of companies in collaborations that produce innovative
solutions and innovative growth business. An enriched business ecosystem moves
ideas into use, strengthens enterprises that create jobs and educates people to be jobready. This is good for individual business, the economy and society.
Shattering the Myths about U.S. Trade Policy. Stop blaming China and India.
A more active trade policy can lead to a stronger U.S. economy. By Robert Z
Lawrence and Lawrence Edwards.
Surveys show a majority of Americans believe trade is bad for the U.S. because it
leads to job losses and lower wages. Erecting higher trade barriers would be
misguided, impractical and unwise. Misguided because there are substantial gains
from trade; impractical because the intertwining of domestic and foreign production
in supply chain networks makes withdrawal difficult and costly; and unwise because
doing so could prompt retaliatory responses that endanger the fragile world economic
recovery and make everyone worse off. Freer trade, not protectionism may be a better
option.
New Project? Don’t Analyze –Act. Entrepreneurs make small quick steps to get
initiatives off the ground. You can do the same in your organization by Leonard A
Schlesinger, Charles F Kiefer and Paul B Brown.
(Nike’s ‘Just Do It’ and Tom Peter’s ‘Ready, Fire, Aim’ refers)
Entrepreneurs forecast, plan and model only when they have to. These rules are
suggested: Use the means at hand; Stay within your acceptable loss; Secure only the
commitment you need for the next step; Bring along only volunteers; Link your move
to a business imperative, and produce early results; Manage expectations. In the face
of positive results, move quickly. Embrace negative surprises as useful learning.
Notes by [email protected] 11 March 2012
Harvard Business Review January, February 2012
The theme of this issue is ‘The Value of Happiness’ - How employee Well Being
drives profits. I think it a great issue and have always sought to create happy
environments where personal growth and satisfaction are central and are seen as
preconditions to good business results. Common to all business in my view is that
they are about delivering units of happiness (and satisfaction) or alleviating agony
such as in medicine and pharmaceutical business. It is obvious to me that this goal
cannot be fully achieved unless the whole production chain – be it in goods or
services – is characterized by happiness and happy participants. This is now being
scientifically proven. You can of course argue why it should be necessary to prove
that happiness is worth striving for when it is such a central human aspiration.
However, for those who can’t see the value, some solid proof may perhaps be
helpful. A few notes from the issue:
How Leaders Spark and Sustain Change by Peter Fuda and Richard Bradham. In
studying how ineffective CEO’s transformed themselves into successful leaders, the
authors found common themes, which they describe with four metaphors. Fire
represents burning ambition, a motivator that is far more important than fear. A
snowball should be a cycle of mutual accountability that creates momentum for
change. Naming your mask or revealing the persona you believe conceals your flaws,
allows you to be authentic. The movie metaphor captures the idea of self-reflection:
You should view, replay, direct, and edit your behavior continuously.
Social Strategies That Work – George Eberstadt. Successful social media is like the
difference between teaching a class and hosting a party. In both cases all the
participants are in the same room, but the dynamic could not be more different. In the
class room the teacher (the brand) dominates the conversation, and the flow is hub
and spoke, with the teacher at the hub. At the party the guests (customers and
prospects) may or may not interact directly with the host, spending most of their time
with one another. But since most of the guests know and like the host, most of the
comments are likely to be favorable. Even though the host cannot control exactly
what is said, the guests at the party are every bit as likely to go home with positive
feelings towards the teacher.
How much inequality is necessary for growth? By Fuad Hasanov and Oded Izraeli.
Reducing inequality has clear benefits over time: It strengthens people’s sense that
society is fair, improves social cohesion and mobility, and broadens support for
growth initiatives. Policies that aim for growth but ignore inequality may ultimately
be self-defeating, whereas policies that decrease inequality by say boosting
employment and education have beneficial effects on the human capital that modern
economies increasingly need.
When naming a CEO, Ignore the Market Reaction by James M Citrin. This article
shows how appointments which lead to first day share price hikes often end up in
disappointments. And appointments that lead to first day falls work out to be long
term successes. This may reflect investor’s imperfect understanding of the highly
specific challenges facing companies, their unrealistic expectation that new leaders
will act as saviors, and their unawareness of the nuanced capabilities of many new
CEOs.
Candor, Criticism and Teamwork by Keith Ferrazzi. Lack of candor leads to
longer cycle times, slow decision making and unnecessarily iterative discussions! A
too polite veneer often signals an overly politicized workplace; People who are afraid
to speak honestly to people’s faces do it behind their backs. This behavior exacts a
price. Remedy; 1. Break meetings into smaller groups. 2. Designate a Yoda – one or
two to be the official advocates of candor. 3. Teach “caring criticism.”
Stop Tying Pay to Performance by Bruno S. Fray. Unlink pay from performance.
The evidence keeps growing that pay for performance is ineffective. It also may
induce executives to take company-killing risks. There are other ways to motivate
employees that yield better results at lower cost. In USA CEO compensation has skyrocketed while its correlation with actual corporate performance has remained as
weak as ever. All variable-pay-for-performance suffer from four inescapable flaws: 1.
In a modern economy, where new challenges emerge constantly, it’s impossible to
determine the tasks that will need to be done in the future precisely enough for
variable pay for performance to work well. 2. People subject to variable pay for
performance don’t passively accept the criteria. They spend a lot of time and energy
trying to manipulate the criteria in their favor, helped by the fact that they often know
the specifics of their work better than their superiors do. 3. Variable pay for
performance often leads employees to focus exclusively on areas covered by the
criteria and neglect other important tasks. 4. Variable pay for performance tends to
crow out intrinsic motivation and thus the joy of fulfilling work. Such motivation is of
great importance to business, because it supports innovation and encourages beyondthe ordinary contributions.
Variable pay for performance, while it may seem attractive in theory, creates more
problems than it solves. There is no proof that it helps achieve its intended purposes,
and other approaches not only work better but also strengthens employee loyalty.
Runaway Capitalism by Christopher Meyer and Julia Kirkby. Any manager who
has had to design a compensation scheme knows this; as often as not, bonuses end up
rewarding behavior contrary to the organization’s espoused mission and values.
There is no more powerful question in the US corporation than “What’s the ROE on
that?” Social media spending? Wellness checkups? Better working conditions?
Elimination of bribes overseas? Return-on-equity hurdles threaten them all.
Conversely, why market cigarettes? ROE justifies the means. The overall objective of
commerce in society must be to better people’s welfare! Enormous political weight is
given to GDP and GDP per capita, but very little to the many other indicators of value
creation. Rankings of crime, education, health, and happiness have only recently
become available, and no one’s bonus depends on them.
Please note that no firm actually wants to compete. Individually, all firms seek a socalled sustainable advantage, which is to say the relief from competitive pressure that
allows for ample margins, innovation on their own schedule, the pick of the
graduating class, and many other perks. In our competition-obsessed business culture,
the way to defend oligopoly is to spend money to deter entry by new competitors.
Fixation on competition leads to failure to notice – and to cultivate and preserve – an
equally rich source of innovation in our newly connected world: collaboration.
With some simple shifts in perspective, capitalism can evolve and centre on new
pursuits that reflect society’s broader goals – and doing so, bring its selection process
back into alignment. Capitalism can adapt and continue to thrive. Competition, still
very much part of the system but unseated from its central position, moves over to
allow for collaboration. Or suppose the pursuit of financial gain were not really the
heart, much less the soul, of capitalism. Suppose capitalism really centered on the
pursuit of value – the greatest good for the greatest number.
It is almost impossible to change habits of mind in an incumbent firm, even when
there’s a compelling logic to do so. People tend to cling to the rules they grew up
with.
In 2000 more than ¾ of world GDP was accounted for by the rich countries. By 2050
that number is expected to fall to 32%. With 85% mobile phone ownership and
spectacular population growth emerging economies are likely to dominate the world
scene in 2050. Those of us who believe capitalism can adapt and should not succumb
to the excesses that are crippling it will keep looking for new markers of fitness and
sharing the new rules. Collectively we are capable of setting the new rules of
capitalism.
The Economics of Well-Being, Have we found a better gauge of success than
GDP by Justin Fox. GDP is under siege for three main reasons. One is that, even on
its own terms, it is flawed: It misses lots of economic activity (unpaid household
work, for example) and, as a single-number representation of vast, complex systems,
is inevitably skewed. Another is that it fails to factor in economic and environmental
sustainability. Finally, existing, readily available measures – educational achievement,
life expectancy, and so on – may reflect well-being far better than economic output
does. Top Countries by Human Development, adjusted for inequality: Norway,
Australia, Sweden, Netherlands, Iceland, Ireland, Germany, Denmark, Switzerland
and Slovenia.
The Science Behind the Smile by Daniel Gilbert. Happy people are more creative
and more productive. Has there ever been a human being whose misery was the
source of his creativity? I know of no data that says that anxious fearful employees
are more creative or productive. People blossom when challenged and wither when
threatened. If I wanted to predict your happiness and could know only one thing about
you, I would not want to know your gender, religion, health or income. I’d want to
know about your social network – about your friends and family and the strengths of
your bonds with them. Achieving happiness requires the same approach as losing
weight. To lose weight you need to eat less and exercise more. You don’t have to eat
much less or exercise much more – you just have to do it consistently. Over time it
adds up. Happiness is like that. The things you can do to increase your happiness are
small and take just a little time. But you have to do them every day and wait for the
results.
Creating Sustainable Advantage by Gretchen Spreitzer and Christian Porath. If you
give your employees the chance to learn and grow, they will thrive – and so will your
organization. Thriving people reported 16% better performance and 125 % less
burnout (self-reported) than their peers. They were 32% more committed to their
organization and 46% more satisfied with their jobs. They also missed much less
work and reported fewer doctor visits, which meant health care savings and less lost
time for the company. Companies generate vitality by giving people a sense that what
they do on a daily basis makes a difference. People who are learning are likely to be
more confident about their future growth.
Southwest Airlines is a well-known story, largely because of the company’s
reputation for having a fun and caring culture. Flight attendants are often eager to
sing, joke around, and in general entertain customers. They also radiate energy and
passion for learning. (Southwest has consistently outperformed all competitors for a
long time).
How the Growth Outliers Do It by Rita Gunther McGrath. Only 8 % of 4,793
companies (in a worldwide sample of companies with sales exceeding one billion
USD) grew their revenues by at least 5 % a year and only 4 % achieved income
growth of 5 % in each of last five years. Over ten years, only 10 qualified and only
five grew both revenues and income by 5 % each year. There is a great contrast
between what investors and observers expect and what the vast majority of companies
deliver. The data suggest a need to rethink assumptions about corporate performance.
Steady consistent growth is difficult to achieve even at modest rates, never mind by
double digits that corporate leaders are fond of promising. (in his book ‘Exile on
Wall Street’ the author Mike Mayo says that the two banks with the highest growth
ambitions, Citi and First Third, had the poorest stock price performance – my
comment)
The growth outliers do a tremendous amount of experimentation and innovation. They
develop and deploy technologies, move into new markets, explore new business
models, and even open up new industries. They take on acquisitions and aggressively
seek input from people and organizations quite unlike their own. They rapidly adjust
and readjust resources and are comfortable moving executives and other employees
from one role to another. Outliers favor adaptability over pure efficiency, even though
it occasionally leads to less-than-perfect outcomes. They focus management attention
on culture and shared values. “When we decide to get out of something, we slow
down allocating resources to it. You don’t need to chop it off – you need to let it live
its life. Since we are in talent business, it is easy for us to repurpose the leadership and
the talent.”
The outliers keep their senior leadership stable. All ten companies had internally
promoted CEOs; there were no white knights or outside-the-industry saviors.
Interestingly - and consistent with the findings of other researchers over the years –
these CEOs kept a low profile. They were respected, known to have made major
contributions, and somewhat visible in the press, but not charismatic (or narcissistic).
The five leaders we had the pleasure to meet with were all low-key, courteous and
attentive.
Some companies are investing in their workers and reaping healthy profits by
Zeynep Ton. Almost one-fifth of American workers have bad jobs. They endure low
wages, poor benefits, schedules that change with little, if any, notice, and few
opportunities for advancement. Highly successful retail chains have demonstrated
that even in the lowest-price segment of retail, bad jobs are not a cost driven necessity
but a choice. Many retailers see staff as a cost driver rather than as a sales driver and
therefore focus on minimizing its costs. When retailers view labor not as a cost to be
minimized but as a driver of sales and profits, they create a virtuous cycle. Investment
in employees allows for excellent operational execution, which boosts sales and
profits, which allows for a larger labor budget, which results in even more investment
in store employees.
Dividing attention deliberately by Cathy Davidson. We all know the story of
contemporary distractions. In the past decade the world has gone from a total of 12
billion emails a day to 247 billion, from 400,000 texts messages to 4.5 billion, from
individual weekly 2.7 hours on the net to 18 hours. Research shows that accident,
disruption, distraction, and difference increase our motivation to learn and to solve
problems, both individually and collectively. The key is to embrace and even
encourage interruptions. In future, continuous partial attention will perhaps be seen
not as a problem but as a critical new skill. And maybe we won’t call it multitasking –
we’ll call it multi-inspiring.
Notes by [email protected] 14 Jan 2012
Harvard Business Review December 2011
The December issue has a brilliant article by management guru Gary Hamel called
‘First, Let’s Fire all the Managers.’ Practices described may be a little extreme but
there is a lot for any and all companies/ organizations to consider and incorporate. In
addition there are some interesting articles on good retailing integrating online and
store activity. Please find below a few notes from the issue.
First Let’s Fire all the Managers by Gary Hamel
Management is the least efficient activity in your organization. A hierarchy of
managers exacts a heavy tax on any organization. An organization with 100,000 staff
and one manager per ten staff needs not only 10,000 managers but 1,111 managers to
manage the managers. In their eagerness to exercise authority, managers often
impede, rather than expedite, decision making. The problem isn’t the occasional
control freak; it is the hierarchical structure that systematically disempowers lower
level employees. For example, as a consumer you have the freedom to spend $20,000
on a new car, but as an employee you probably don’t have the authority to requisition
an office chair for $ 500. Narrow an individual’s scope of authority, and you shrink
the incentive to dream, imagine and contribute.
I am driven by my mission and my commitments, not by my manager.
What strengthens my resume is more responsibility, not a bigger title. Moving up is
about competency and reputation, not the office you hold.
Advantages with self management include; lower cost, deeper expertise, more
collegiality, better decisions, greater initiative, increased flexibility and higher loyalty.
As many as 50% of seasoned hires leave within two years because they have a hard
time adapting to a system where they can’t play god.
Everyone is a manager here. Morning Star’s (the company profiled) long running
experiment suggests it is both possible and profitable to syndicate the task to just
about everyone. When individuals have the right information, incentives, tools, and
accountabilities, they can mostly manage themselves.
Morning Star runs with hierarchies of influence, not of position, and they are built
from the bottom up. No one believes that everyone should have an equal vote on
every decision, but neither does anyone believe that one person should have the last
word simply because he or she is the boss.
With a little bit of imagination it is possible to transcend the seemingly intractable
trade-offs, such as freedom versus control that have long bedeviled organizations. We
don’t have to be starry eyed romantics to dream of organizations where managing is
no longer the right of a vaunted few but the responsibility of all.
Reinventing Retail – three interesting articles on how retailers must act and think
to survive.
The Power of Collective Ambition by Douglas A Ready and Emily Truelove.
Standard Chartered Bank articulated its new brand promise: to stay around for the
long term and do good for communities. SCB has also begun to bake ‘Here for Good’
into its core business processes. For example, a loan applicant must write a paragraph
about why SCB should trust that they, too, will be here for good. We recommend that
you put purpose at the heart of your company’s story. Purpose is the center around
which vision, strategy, brand, values, and leaders behaviors must orbit.
The path to excellence is not terribly complicated. Commit to collaborating to shape a
powerful story about why people should come to work and how they can pull together
to build a future. The glue and the grease – combined with a dose of good old fashion
discipline – will allow the team to unleash your company’s collective ambition.
Who Really Makes the Big Decisions in Your Company by Bob Frisch
Acknowledge that the nameless decision making exists, and ask how you can make
more deliberate use of them.
Much of the ambiguity about corporate decision making stems from the
misconception that an org chart reflects how a company is run.
Having regular dialogue about the senior team’s world view is one hallmark of a
strategically well-managed business.
Whichever approach a CEO chooses, the goal is not necessarily to win the consent,
real or resigned, of all members of the executive committee but instead to base a
decision on the best possible input. The enterprise does well by freeing itself from the
tyranny of the org chart, and leaders can create structures that let them manage best.
[email protected] 21 November 2011
Harvard Business Review November 2011
Another very interesting issue. The thrust (again) really is on aligning business with
societal value. “Great companies create value for society, solve the world’s problems,
and still make money, too.” This key sentence is already on the cover of this issue. It
also harmonizes with what has come out of HBR the last five years. Profits, happiness
and success will ensue when what you are doing also makes sense for the people –
employees, customers and the general public. Please find a few notes from this issue
below.
People don’t need a profit motive to innovate by Eric von Hippel
User innovation by people and firms who invent things intending to use them rather
than to sell them is increasing. Many costs associated with innovating have fallen
precipitously because of advances in technology. Users are finding it cheaper and
cheaper to develop exactly the products they want for themselves. Unlike commercial
developers, users are motivated by the private return they get from using their
innovations. Monopolies created and supported by the patent system increase prices
and retard follow-on innovation.
Corporate Boards for S&P 500 by Spencer Stuart
37% of directors are over 64 years old. 83% of boards have 12 or less members. 84%
of directors are independent. 9% of boards have female directors and 16.2% of
corporate directors are female. Average board retainer plus meeting fees per director
is $ 95,000.
Co-opt the Old Boys’ Club: Make it Work for Women by Ilene H Lang.
Women who highlighted their achievements advanced further, were more satisfied
with their careers, and had greater compensation growth than women who failed to
blow their own horns. The strategy of appraising your manager of your
accomplishments, seeking feedback and credit appropriately, and asking for well
deserved promotions – was the only one associated with compensation growth.
The Good Company (theme with several articles)
How Great Companies Think Differently by Rosabeth Moss Kanter
Instead of being mere money-generating machines, they combine financial and social
logic to build enduring success. It is time that beliefs and theories about business
catch up with the way great companies operate and how they see their role in the
world today. Great companies work to make money, but in their choice of how to do
so, they consider whether they are building enduring institutions. As a result, they
invest in the future while being aware of the needs of people and society. Meaning
making is a central function of leaders, and purpose gives coherence to the
organization. Social purpose needs to be at the forefront of everyone’s mind and
organizational values must be used as a guide for business decisions.
In companies that think of themselves as social institutions, work is emotionally
compelling and meaning resides in the organization as a whole rather than in less
sustainable cult of personality. IBM’s CEO, Samuel Palmisano, circumnavigates the
globe six or seven times a year to meet with national and regional officials, discussing
how IBM can help their countries reach their goals. This is not sales or marketing; it
is a high level conversation to demonstrate the company’s commitment to furthering
the development of countries it operates in.
The more interested that top leaders are in external relations, the more likely they are
to involve others and reward them for building relationships with the nation or the
community. Although relatively few people might hold formal responsibility for these
external interfaces, a great many might perform institutional work by volunteering,
attending public meetings, and participating in community service.
Managers in great companies understand that formal structures can be too general or
too rigid to accommodate multidirectional pathways for resource and ideas flows.
Rigidity stifles innovation. Job descriptions nowadays document only part of what
people do; performance reviews and salary bands capture only some of the activities
through which people might add the most value for the company.
A logic that justifies treating employees as self-determining volunteers – in essence,
as true professionals who care about high performance because they believe in the
company as an institution – makes it important to have a motivating purpose and
values to provide coherence and common identity. Great leaders already use an
institutional or social logic to supplement economic or financial logic in guiding and
growing their enterprise. Leaders in great companies can tell a different story about
the basis for their decisions. In so doing they are able to produce new models for
action that can restore confidence in business and will change the world we live in.
Trying to be India’s Most Respected Company? N R Narayana Morthy
If you seek respect from customers you must deliver what you promise. If you seek
respect from employees, you must treat the fairly and with dignity. If you seek respect
from investors, you must operate with transparency and accountability. If you seek
respect from vendor-partners, you must deal with them on merit. If you seek respect
from governments, you must never violate any laws. If you seek respect from society,
you must live in harmony with it and create good will. If we can do all that we would
attract customers, employees, vendors and investors; revenues, profits, and market
capitalization would follow.
Let the good news take the stairs, but make sure the bad news take the elevator.
Our parents taught us the importance of education, hard work, decency, courtesy,
honesty, respect for others, and putting the community’s interest ahead of that of the
individual. Our external role models were our teachers, both in school and university,
who taught us to be inquisitive, analytical, articulate, and team oriented.
It takes time to benefit from putting values first. You feel the pain immediately and
you reap the gains only in the long run. Values cannot be just part of the strategy
process, they need to be second nature for everything in the organization.
Five companies are presented whose success is built on responsible
business practices; Royal DSM, Southwest Airlines, Broad Group, Potash
Corporation and Unilever.
The For Benefit Enterprise by Heerad Sabeti
For profit businesses are tackling social and environmental issues, nonprofits are
developing sustainable business models, and governments are forging market-based
approaches to service delivery. Better to call not-for-profit for benefit.
The companies that move fastest can often operate within competitors’ decision
cycles, so competitors are always responding to them.
Social Strategies That Work by Mikotaj Jan Piskorski
Many companies seem to want to build social strategies, with vastly different
outcomes. Those who failed in the effort focused on their business goals and paid less
attention to customers’ unmet social needs. These strategies didn’t effectively help
people with relationships, so they were unwilling to do jobs for the company.
Creating social strategies will require fundamental changes in the way companies
approach strategy development. As social platforms become even more central to
customers’ lives, companies that don’t figure out how to appropriate their value and
create true social strategies will find it harder and harder to compete with those who
do. Starting this process even in small steps, is both a critical defensive and offensive
move.
/ Surveys show 40% of people suffer from loneliness – being lonelier than they would
want to. And being bored is more common than being stressed. Up to 2/3 of almost
any grouping of people are either lonely or bored or perhaps both. Business that can
attach an antidote against loneliness and boredom onto their service or product
offering has a vastly greater chance to build business – I have had this as a core
message of my presentations the last three years – remedies; try to offer out genuine
friendship on all levels and operate with humor and delight as much as possible /
Cloud Computing by Andrew McAfee
This article argues the merits of Cloud Computing, i.e. This is likely to lead to
corporate computing environments very different from today’s. The only way to start
to learn about it first hand is to start moving into the cloud.
Notes by [email protected] 4th November 2011
Harvard Business Review October 2011
The theme of this issue is ‘The Talent Issue.’ There are two concepts or rather choice
of words which I don’t like. One is share of wallet as an expression of how much of
any one customer’s need you are satisfying. Share of wallet to me sounds self serving
as if you are trying to steal your customer’s money, rather than being exited about
what you can do for your customer. It is like the difference between a customer
focused organisation and a shareholder Wall Street/ analyst focused organisation. For
sustainability your energies should go into what you can do for the world and your
customers, not into what you can suck out of them. The other issue is ‘war for talent’.
Business is not war. Business is a dance or should be like one. War is about suffering
and death and destruction. Keep all war analogies away from the discussion please.
We have far too much war in real life and in entertainment to allow it to also infect
the way we do or think about business. Otherwise, as always, there were a lot of
interesting thoughts in this issue, a few notes below.
If You Want Your Team to Win Tell Them They Are Losing (a Little) by
Jonah Burger
Most energy is brought to the fore by people who are in second place but see it as
within their reach to move up one notch. Bonus structures typically reward the best
performers but there better ways to motivate people.
The Cure for Horrible Bosses by Rosabeth Moss Kanter.
It is not insults that cause the greatest harm, but rather callousness about other
people’s time. The best cure for horrible bosses is wonderful colleagues.
The Sustainable Economy by Yvon Chouinard, Jib Ellison and Rick Ridgeway.
The value of many vital aspects of our world, traditionally considered priceless, are
being quantified, so that they can be factored into economic equations. Socially
responsible investing has matured beyond negative screening to become a valueseeking discipline and positive impetus for change. Industries are converging on
standard indices by which to rate products’ sustainability and seek improvements
throughout their value chains. Progress in each area spurs progress in the others, to the
extent that the long-sought alignment of a firm’s prosperity with the best interest of
the planet seems not only possible but inevitable.
The Art and Science of Finding The Right CEO by A G Lafley; foreword by
Noel M. Tichy
Four core responsibilities of the board are CEO succession (and executive leadership
development) followed by strategic oversight at the corporate level, overall
governance, and enterprise risk.
P &Gs criteria for senior executives: Character, values and integrity / Proven track
record: business, financial and organization performance / Capability and capacity
builder / High energy and high endurance / Visionary and strategic leader / Inspiring,
courageous, and compassionate / Productive relationships with colleagues, partners,
and other external stakeholders / Embraces change. Leads transformational change /
Calm, cool, and resilient in the face of conflict or criticism / Institution builder.
Prioritizes greater good and longer-term health of the company.
How to Hang On to Your High Potentials by C Fernandez-Araoz, B Groysberg
and N Nohria.
The desire to have an impact on others for the good of the organization is a key
predictor of executive potential.
/ this is the article which uses the concept ‘war for talent’ which in my view should be
the ‘quest for talent’ – it also talks about ‘making the list for talent’ – my view is you
have to be very careful with publicly elevating the expectation of a select few as it
may be a put off for others – it all needs to be done subtly and with diplomacy – a
successful company needs energy and commitment from all, not just some chosen few
/
Horses for causes – a firm focused on emerging markets needs flexible people who
can handle the unfamiliar; a low cost firm needs disciplined people.
Make sure you don’t overload people. There is a fine line between a challenging
assignment and an overwhelming one.
Making Yourself Indispensable by J H Zenger, J R Folkman, and S K Edinger
Good leaders can become exceptional by developing just a few of their strengths to
the highest level – but not merely doing more of the same. They need to engage in the
business equivalent of cross-training – that is to enhance complementary skills that
will enable them to make fuller use of their strengths. Adding communication skills to
technical skills can be very enhancing.
/ the concept of bimetallism or alloys refers... Alloys usually have different properties
from those of the component elements – new combinations can prove superior to the
qualities of either component on its own – the art of combining things, often counter
intuitively to have superior results – for example when sanding a winter road to make
it less slippery, adding water can improve the results – my comment/
Often executives complain there are not enough good leaders in the organization. The
challenge is not to replace bad ones with god ones; it is to turn people who are
hardworking and capable and reasonably good – into something excellent.
/the analogy here is from card games – some people constantly complain they are
given bad cards – there is no such thing as over time it equals out – what separates
winners from losers is not what cards you are dealt but how you play your cards – my
comment/
The Toyota Principles can also be effective in operations involving
judgment and expertise by Bradley Staats and David Upton
Conventional wisdom holds that the Toyota Production System’s approach to making
operations lean cannot be applied to knowledge work which unlike car assembly is
not repetitive or easily defined. The article suggests that even though knowledge jobs
involve expertise and judgment, they can be made lean if organizations draw on six
principles:
Continually root out all waste / Strive to make tacit knowledge explicit / Specify how
workers should communicate / Use the scientific method to solve problems quickly /
Recognize that a lean system is work in progress / Have leaders blaze the trail /
Often even advanced workers are solving the same problem over and over. How many
emails clutter your in-box because someone cc’d you unnecessarily? How long did
the meeting have to wait because people trickled in? How many reports are created
that nobody reads?
Turning a knowledge operation which has fewer repetitive codifiable processes than
manufacturing into a lean operation is difficult. But it can be done, and it is very
difficult to for any competitor to replicate. This is its power.
Hot or Not? Attractive people are more successful at work. Should we do
anything about it? by Alison Beard
The article comments on three books ‘Erotic Capital,’ ‘Beauty pays,’ and La
Seduction.’
/ It is obvious that the more positive qualities you have the better. However, there are
always ways of increasing your ‘attraction’ through building self confidence, energy,
ingenuity and trying to be a caring and an ‘interesting person.’ Beauty resides not
only in the skin deep qualities but just as much in what kind of person you are. My
comment /
Notes by [email protected] 12.10.2011
Harvard Business Review September 2011
In the face of dubious quality of much that hits the news about American government
and policy, the HBR comes through with consistency in terms of visionary high
quality thinking and articles. The September 2011 issue is no exception. Key ideas
that stuck with me are: Put Teddy bears in board rooms and try to ensure and
formulate your organizations contribution to society. Please find below a few notes
from this issue.
Are you a collaborative leader – comment by Kare Anderson
At least one person in the group must be able to speak credibly to the sweet spot of
shared interest to pull people into seeing the same situation. The group’s members
must agree on a few rules of engagement to provide comforting boundaries for
enthusiastic innovation. The team needs to overcome the inevitable friction that
happens when members with different talents and temperaments attempt to work
together. A diverse group of people is best for collaboration, but its members must be
motivated to work through differences, to understand one another, and to trust that the
effort to develop an ‘us’ feeling and behaviors is worth it.
Disrupting higher education comments
If universities are in the business of delivering information, they are doomed. What
about learning to think, learn, collaborate, and communicate?
Are the best schools producing the best graduates simply because they admit the best
students, not because they deliver education to the highest quality? Are they thriving
primarily because of the reputation they have earned? In a world where disruption is
routine, past glory is at best en ephemeral thing to rely on.
Why Your It Project May Be Riskier Than You Think by Bent Flyvbjerg and
Alexander Budzier
67% of companies failed to terminate unsuccessful projects; 61% of managers
reported major conflicts between project and line organizations; 34% of companies
undertook projects that were not aligned with corporate strategy; 32% of companies
performed redundant work because of un-harmonized projects
Adults Behave Better When Teddy Bears Are in the Room by Sreedhari
Desai
Adults are less likely to cheat and more likely to engage in ‘pro-social’ behaviors
when reminders of children, such as teddy bears and crayons are present. The number
of people who cheated dropped by 20% when subjects were near children’s toys or
engaged in children’s activities. The best thing HBR could do for pro-social behavior
is to put a Teddy bear on the cover.
http://www.youtube.com/watch?v=a-fJlykpGjY&feature=related
Management a Profession? Where’s the Proof? by Jeffrey Pfeffer
Before management can be considered a profession, its practitioners will have to see
themselves as part of a larger purpose. But it took more than high aims to move
medicine beyond quackery. It took science and its application to practice. In a world
afflicted by complex problems, we should have more assurance that managers will
also draw on knowledge greater than their own.
Innovating the Business for Social Change by Pierre Omidyar (ebay’s founder)
Many people don’t distinguish between charity and philanthropy. The former is about
alleviating immediate suffering but philanthropy is much more. It comes from Latin
and means ‘love of humanity.’ One of the things I have learned in more than a decade
of this work is that you really can make the world a better in any sector – in nonprofits, in business, or in government. It is not a question of one sector struggling
against another, or of ‘giving back’ versus ‘taking away.’ That is old thinking. A true
philanthropist will use every tool he can to make an impact. Today business is a key
part of the equation, and the sectors are learning to work together.
How to Solve the Cost Crisis In Health Care by Robert S Kaplan and Michael
E Porter
Providers of health care lack understanding of how much it costs to deliver patient
care. Thus they lack the knowledge necessary to improve resource allocation, reduce
delays, and eliminate activities that don’t improve outcomes. A new approach
measuring cost at the level of the individual patient with a given medical condition
over a full cycle of care – and compare those costs to outcomes – can be demonstrated
to have a transformative effect.
US health care costs exceed 17 % of GDP and continue to rise. We are struck by the
sheer size of the opportunity to reduce the cost of health care delivery with no
sacrifice in outcomes. Accurate measurement of cost and outcomes is the previously
hidden secret for solving the health care cost crisis.
Learning to Live with Complexity by Gokce Sargut and Rita Gunther McGrath.
We are hampered by cognitive limits: Most executives think they can take in more
information than research suggests they actually can. In an unpredictable world,
sometimes the best investments are those that minimize the importance of predictions.
By taking steps to mitigate risks, making measured trade-offs that keep early failures
small, and gather diverse thinkers who can deal creatively with variation, we can
approach decision making in our complex organizations with more confidence and
increase our chances of success.
Smart Rules: Six Ways to Get People to Solve Problems Without You by
Yves Morieux
In complicated organizations, managers spend 40 % of their time writing reports and
30 – 60% of their time in meetings.
Real cooperation is not a matter of getting along well; it’s taking into account the
constraints and goals of others.
Smart rules allow companies to manage complexity not by prescribing specific
behaviors but by creating a context within which optimal behaviors occur – even
though what is optimal cannot be defined in advance. This approach leads to greater
organizational diversity, because voluntary frontline cooperation breads creative,
customized solutions to problems.
Embracing Complexity by Michael J Mauboussin
We tend to listen to experts, although it has been well documented that expert
predictions are quite poor. But they are authoritative, so we listen to them even when
we know these people are predicting something that’s fundamentally hard to predict.
A difficulty is coming up with different skills and experiences because we have a
natural inclination to hang out with people who are most like us.
Key is to make sure that as a leader, you are not just tapping, you’re actually
extracting this unshared information from everybody and putting it on the table to be
evaluated. And that’s where a lot of organizations fail. One rule is that no one speaks
twice until all have had the chance to speak once. It is important to constantly learn
and expose yourself to diverse points of view. If you can find areas or markets where
there is lacking diversity it almost always represents an opportunity for successful
competition.
The Higher Ambition Leader by Nathaniel Foote, Russell Eisenstat, and Tobias
Fredberg
A small group of CEOs share a higher ambition: to create a long term economic
value, generate wider benefits for society, and build robust social capital within their
organizations all at once. As they are pursuing this ambition, they are realizing more
of their organization’s potential. Shared values, strong emotional attachment, and high
levels of mutual trust and respect enable organizations to operate at levels long
enough to allow these visions to take root and come to fruition.
It is very important that you don’t talk about Frenchmen as Frenchmen, or Americans
as Americans. You need to talk about them as brilliant development engineers.
The article suggests that organizations lead by people who think of benefits beyond
self and shareholders and their organization will on balance be more sustainable and
successful. It is motivational for staff, customer, suppliers and all traditionally
identified stakeholders to see that the organization takes its ability to contribute more
to society seriously (my comment).
Global Capitalism at Risk, What are you doing about it? By Joseph L
Bower, Herman B Leonard, and Lynn S Paine
To preserve market capitalism, business leaders must spearhead entrepreneurial
activity on a massive scale.
Business leaders asked to identify issues of deepest concern to them pointed to forces
that could disrupt the global market system in the coming decades: inequality of
income within countries and across regions, migration, deterioration in the
environment, a fragile financial system, and the inability of local, national, and
international institutions to mitigate the problems. Neither governments nor
international institutions are set up to deal with systemic failure.
We believe that if business does not lead the mitigation of the forces disrupting our
market system, then we may well lose it.
How to Cultivate Engaged Employees by Charalambos A Vlachoutsicos
To be successful, managers must see themselves more as catalysts for problem
solving than as problem solvers per se. Six rules to consider: Be modest; Listen
seriously and show it; Invite disagreement; Focus on the Agenda; Don’t try to have all
the answers; Don’t insist that a decision must be made. All these six points show,
your behavior as a manager can reinforce or destroy a sense of mutuality with your
employees. Stop trying to control your subordinates and instead engage, empower and
motivate them to contribute their knowledge and experience to a consensus approach.
[email protected] 28 Aug 2011
Harvard Business Review July-August 2011
This issue of HBR is a double issue coinciding with the holiday season in the northern
hemisphere. I found it an exceptionally worthwhile issue with several great articles.
The issue focuses on building a culture of trust and innovation. COLLABORATE.
The whole business climate needs to change to one where the need for and the desire
to collaborate must be recognized and encouraged. The assumption over last century
that people are self maximizers, driven essentially by financial incentives is a
stereotype which is less and less useful and accurate. There is a great opportunity to
win on all fronts by encouraging transparency, communication and collaboration.
Smart organizations will align structures and strategies to open collaboration and reap
rewards when well implemented. I expect one article to be high among HBR classics
and encourage all to read it in its entirety. And the irony is that it only says that which
many of us have known for a long time, but even the obvious sometimes need to be
backed up with scientific research, lest the power of status quo win the day.
Please find below a few notes from his issue.
CEO Pay is up…is that good? By Adi Ignatius, editor in chief.
Disney CEO Robert Iger made US$ 28 million last year in salary, bonus and stock
options but conceded there is too much emphasis on short-term stock results, and
remunerations committees should rethink their approach. Wall Street’s fixation on
quarterly earnings – and on consensus market expectations concerning them – distorts
how a company’s performance is viewed and creates dangerous incentives for
executives.
What’s Your Social Media Strategy? By H James Wilson, PJ Guinan Salvatore
Parise, and Bruce D Weinberg
With everything else being equal, the social transformer strategy can have the largest
impact on an enterprise, affecting everything from R&D and operations to channel
partners and customers. Twitter and Face book are only five and seven years old,
respectively. Who knows what new technologies lay ahead? The future requires an
understanding of how company strategies are evolving to use social media to guide
managers as they adapt to platforms developed in the years to come.
Collaboration for the Common Good by Thomas J Tierney
Collaboration among competitors is an unnatural act – but sometimes it’s the best way
to reduce cost, leverage strength, accelerate scale, or amplify influence in order to
generate results. When peer organizations honestly embrace shared goals and clearly
articulate how they will achieve them, collaboration works. Most important is
believing that a group – even of ‘competitors’ – can accomplish what no one member
could do alone.
Making Financial Markets Work for Consumers by John Y Campbell, Howell
E Jackson, Brigitte C Madrian and Peter Tufano.
This is a great article with advice to the new US regulatory agency The Consumer
Financial Protection Bureau and anyone active in consumer or retail finance will do
well to read and consider this advice. The mirror image of the things the authors
suggest be monitored and controlled is what lenders should beware of, such that they
act ethically and with integrity at all times to avoid the risk of significant financial or
reputation losses.
Prioritize problems that put large numbers of households at material financial risk.
You should be concerned when the consumers routinely misunderstand the terms.
When a number of consumers regret the decision they have made this indicates need
for more education. Certain consumer behaviours are so widespread and so contrary
to best practice that they should attract your attention. Naive (poor and uneducated)
customers often end up subsidizing sophisticated customers. Beware of rip-offs.
The Age of Hyper Specialization by Thomas W. Malone, Robert J. Laubacher, and
Tammy Johns
Hyberspecialization will force managers to master a new set of skills: dividing work
into assignable micro tasks; attracting specialized workers to perform them; ensuring
acceptable quality; and integrating many pieces into whole solutions. It resembles
today’s web, except that instead of enabling the exchange of information and goods, it
will convey a pulsating, world spanning flow of knowledge work.
Are You a Collaborative Leader? By Hermina Ibarra and Morten T Hansen
Leaders need to shed the command-and-control and consensus styles in favour of
collaborative leadership. Collaborative leaders need to do four things well; make
global connections that help them spot opportunities, engage diverse talent from
everywhere to produce results, collaborate at the top to model expectations, and show
a strong hand to speed decisions and ensure agility.
Many companies spend inordinate amounts of time, money and energy attracting
talented employees only to subject them to homogenizing processes that kill
creativity. The chance for new ideas is much greater when you have people from
different countries and backgrounds in the same room. Leaders need to make a
concerted effort to promote this mix: left to their own devices, people will choose to
collaborate with others they know well or who have similar backgrounds. Static
groups breed insularity which can be deadly for innovation.
Performance goals often induce people to favour tasks which will make them look
good over tasks that will help them learn. A shift towards learning goals will make
managers more open to exploring opportunities to acquire knowledge from others.
There must be an expectation that people will openly disagree with each other in
meetings. Politics must be kept to a minimum, allowing real teamwork to take hold.
You also need to beware not to overdo collaboration such that it turns from being the
oil that greases to the sand that grinds things to a halt.
The world has become much more interconnected, and if executives don’t know how
to tap into the power of those connections, they’ll be left behind.
The Unselfish Gene. We are more co-operative and less selfish than most people
believe. Organizations should help us embrace our collective sentiments. by Yochai
Benkler This is an outstanding article which I encourage all to read.
”Those of us who have looked at self interest of lending institutions to protect
shareholders’ equity – myself especially – are in a state of shock and disbelief.” Alan
Greenspan.
The way the modern web organizations work flies in the face of the assumption that
human beings are selfish creatures. For decades, economists, politicians, legislators,
executives and engineers have built systems and organizations around incentives,
rewards, and punishments to get people to achieve public, corporate, and community
goals. Yet we see all around us people co-operating and working in collaboration,
doing the right thing, behaving fairly, acting generously, caring about their group or
team, and trying to behave like decent people who reciprocate kindness with kindness.
Through the work of many scientists, we have begun to see evidence across several
disciplines that people are in fact more cooperative and selfless – or behave far less
selfishly – than we have assumed. Perhaps humankind is not so inherently selfish after
all.
After years of arguments to the contrary, there is growing evidence that evolution may
favour people who cooperate and societies that include such individuals. That is
perhaps why using controls or carrots and sticks to motivate people isn’t effective.
People who think they are acting in a context that reward self-interest behave in a
manner consistent with that expectation; participants who feel they are in a situation
that demand a pro-social attitude conform to that scenario. Some people want to
cooperate because it feels good; people are rewarded when they trust others. Many of
us are, by a combination of nature and nurture, and the interactions between us, much
better and less selfish than our standard models predict.
People care about doing the right thing, whatever that is. Clearly defined values are
crucial to cooperation; discussing, explaining, and reinforcing the right or ethical
thing to do will increase the degree to which people behave that way. In order to
foster cooperation, it is critical to set up systems that appeal to participants’ intrinsic
motivations – that is, what they want to do from within – instead of systems based on
monitoring people and rewarding or punishing them according to their behaviour. We
shouldn’t try to motivate people by offering them material payoffs; we should also
focus on motivating them socially and intellectually by making cooperation social,
autonomous, rewarding, and even – if we can swing it – fun.
Why does the self-interest myth still dominate? It is not entirely wrong, sometimes
there are trade-offs. The cold war juxtaposed socialism vs. capitalism, the collective
interest vs. self-interest. The end of the cold war era has made it possible to see new
scientific observations for what they are: progress rather than a threat to capitalism.
Human beings tend to seek simple and neat explanations to complex problems.
Almost two generations of human beings have been educated and socialized to think
in terms of universal selfishness.
Bringing Minds Together by John Abele
The default mind-set should be inclusive and questioning, confident and humble. Set
the stage for collaboration and employ ritual, symbolism, or humour to disarm and
inspire. Recognize that diversity is an antidote to groupthink. When will all these
approaches start catching on in boardrooms, mayor’s offices, and universities? Look
around you. They already are.
Building Collaborative Enterprise by Paul Adler, Charles Heckscher, and Laurence
Prusak.
Collaborative communities encourage people to continually apply their unique talents
to group projects – and to become motivated by a collective mission, not just personal
gain or the intrinsic pleasure of autonomous creativity. By marrying a sense of
common purpose to a supportive structure, these organizations are mobilizing
knowledge workers’ talents and expertise in flexible, highly manageable group-work
efforts.
Interdependent process management is explicit, flexible, and interactive. Processes are
carefully worked out and generally written into protocols, but they are revised
continually as the demands of the work and clients change. They are shaped more by
the people involved in the task than by those at the top. People support what they can
help create. It is only by involving your key people that you can be confident that you
have good procedures that have credibility in the eyes of their peers.
Businesses need a lot more than minimal cooperation and mere compliance. They
need everyone’s ideas on how to do things better and more cheaply. They need true
collaboration. Today reliability is no longer a key competitive advantage, and we are
at a new turning point. The organizations that will become the household names of
this century will be renowned for sustained, large-scale, efficient innovation. The key
to that capability is neither company loyalty nor free-agent autonomy, but rather a
strong collaborative community.
Who Moved My Cube, creating work spaces that actually foster collaboration by
Anne-Laure Fayard and John Weeks.
Casual interactions between workers promote trust, cooperation, and innovation, and
companies have devised open plans and common areas to encourage them. Three
factors need to be prevalent; proximity, privacy and permission to interact. Keeping
virtual offices open 24/7 conveys permission to use them informally.
Technology, Tradition and The Mouse Disney’s CEO Robert Iger interviewed.
There is a need to respect the past, but it is a mistake to revere your past. You have
got to be an optimist. You can’t be a pessimist. When you come to work, you’ve got
to show enthusiasm and spirit. You can’t let people see you brought down by the
experience of failure. It is the CEO who determines strategy, who is its major
proponent, and who says, “This is where we are going.” When I was at Harvard
Business School a few years ago they were doing a study on Disney’s Pixar
acquisition. They did a really good analysis. But they didn’t understand the emotion
that entered into the decision. That’s something you can’t measure at a business
school and you can’t learn until you do it. I have a great job. We are in the business
of delivering fun. We entertain.
Notes by [email protected] 04.07.2011
Harvard Business Review June 2011
This issue is about unleashing innovation which is a difficult subject. I believe there needs to
be an atmosphere free of fear with tolerance and diversity, where young people thrive and
where progress and curiosity are key drivers as opposed to financial incentives. Hierarchy,
bureaucracy and too many rules are enemies of innovation. “Bureaucrats play by the rules,
innovators play with the rules.” Please find a few notes from the June issue below.
The editor says HBR has become a conversation rather than a lecture – the difference I think
is important and a more open ended approach is probably useful in management / staff
relationships too.
What makes a team smarter? More women! by Anita Woolley and Thomas
Malone.
There is little correlation between a group’s collective intelligence and the IQs of its
individual members. But if a group includes more women, its collective intelligence rises.
What is really important is to have people who are high in social sensitivity, whether they are
men or women. What do you hear about great groups? Not that they are really smart, but that
they listen to each other. They share criticism constructively. They have open minds. They
are not autocratic. Groups that had smart people dominating the conversation were not very
intelligent groups.
Before You Make That Big Decision…by Daniel Kahneman, Dan Lovallo and
Oliver Sibony.
The people recommending a course of action will have delved more deeply into the proposal
than the executive has time to do. Inevitably, lapses in judgment creep into the recommending
team’s decision-making process, because its members fell in love with a deal, say, or are
making a faulty comparison to an earlier business case. Questions that should be asked are; Is
there any reason to suspect motivated errors, or errors driven by the self-interest of the
recommending team? Have the people making the recommendation fallen in love with it?
Were there dissenting opinions within the recommending team? Could the diagnosis of the
situation be overly influenced by salient analogies? Have credible alternatives been
considered? If you were to make this decision again in a year, what information would you
want, and can you get more of it now? Do you know where the numbers came from? Can you
see a halo effect? Are the people making the recommendation overly attached to past
decisions? Is the base case overly optimistic? Is the worst case bad enough? Is the
recommending team overly cautious?
Procter and Gamble experience suggests six lessons for leaders looking to build new-growth
factories: Coordinate the factory with the company’s core businesses, be a vigilant manager,
start small and grow carefully, create tools for gauging new businesses, make sure the right
people are doing the right work, and nurture cross-pollination. Although individual creativity
can be unpredictable and uncontrollable, collective creativity can be managed.
Customers Can Rally Your Troops by Adam M Grant
Leaders who connect employees with end users motivate higher performance. Gratitude from
end users is a powerful reminder of the value of continued quality improvements. Show
pictures, circulate inside stories, and share outside stories! When customers, clients and
patients describe how a company’s products and services make a difference, they bring a
leader’s vision to life in a credible, memorable way. Employees can vividly understand the
impact of their work, see how their contributions are appreciated by end users, and experience
a stronger concern for them.
Segmenting the Base of the Pyramid by V. Kasturi Rangan, Michael Chu, and
Djordjija Petkoski.
To succeed you need to link your commercial interests with your constituencies’ well-being.
As companies make money, the communities in which they operate must benefit by, for
example, acquiring basic services or growing more affluent. (this article deals with business
approach to poor third world people, but the principle stated should in my view be universally
pursued, regardless of the state of development)
The Paradox of Excellence by Thomas J DeLong and Sara De Long.
High achievers often undermine their leadership by being afraid to show their limitations.
Long term goals can withstand minor setbacks, so look at the big picture and give yourself the
latitude to make some missteps along the way. (what comes to my mind here is the military
and the dominant military the last 70 years has been the US. Even when it is obvious that an
undertaking is flawed and unwinnable, the military will never admit that anything is beyond
their ability – with known tragic and financially ruining consequences)
Notes by [email protected] 26.05.2011
From ’How
Good Do We Have to Be’ by Harold S. Kushner
People like you more when you are less perfect, less obsessed with perfection and
more human. What we should seek is not perfection but integrity. When you
compromise your integrity, you lose everything. Being human can never mean being
perfect, but it should always mean struggling to be as good as we can and never
letting our failures be a reason for giving up the struggle. To be whole means to rise
beyond the need to pretend that we are perfect, to rise above the fear that we will be
rejected for not being perfect. And it means having the integrity not to let the
inevitable moments of weakness and selfishness become permanent parts of our
character. The challenge of being human is so great so no one gets it right all the time.
Harvard Business Review May 2011
The May issue of HBR is about how to get more done; i.e. productivity. There is an
article ‘The Wise Leader’ by two Japanese authors which I found excellent. This
article together with ‘How Will You Measure Your Life’ from July August 2010 and
‘How to Reinvent Capitalism‘ from January-February 2011 provide convincing
evidence that to be run well and sustainably, business need to be based on good values
and be obsessed with serving the community and making the world a better place to
live. Please find below a few notes from the May issue. (my notes from the two
previous two articles mentioned are available on request.)
The Wise Leader by Ikujiro Nonaka and Hirotaka Takeuchi
Discontinuity is the only constant in our times. Above all, in these times, leaders find
it tough to ensure their people adhere to values and ethics. Rather than ask what’s in it
for me, employees need to ask ‘What’s good, right and just for everyone?’ The
purpose for business is business, many believe, and greed is good so long as SEC
doesn’t find out.
The gulf between the theory and practice of ethics exists in business for several
reasons: There is a big difference between what top management preaches and what
front line people do. There is a philosophical tendency in the West, following Plato, to
conclude that if a theory isn’t working, there must be something wrong with reality.
People behave less ethically when they are part of organizations and groups.
Individuals who may do the right thing in normal situations behave differently under
stress.
Wall Street firms thought they could manage greater risk by using numbers, data, and
scientific formulas, instead of making judgments about loans, one at a time. The same
holds for the US automotive industry, which relies on offering financial incentives,
rather than understanding customer needs.
All social phenomena – including business – are context dependent, and analyzing
them is meaningless unless you consider people’s goals, values and interests along
with the power relationships between them.
Creating the future must extend beyond the company; it must be about pursuing the
common good. CEOs need to ask if decisions are good for society as well as for their
companies; management must serve a higher purpose.
No company will survive over the long run if it doesn’t offer value to customers,
create a future that rivals can’t, and maintain the common good.
Maximizing shareholder wealth can lead to goodness as can making a profit. But the
sight must be set higher: Your actions should also have a moral purpose. The former
president of Toyota Eji Toyoda said: “To do what you believe is right, to do what you
believe is good. Doing the right things, when required, is a calling from on high. Do it
boldly, do as you believe, do as you are.”
Management must make judgments for the common good, not for profits and not for
advantage. Says Tadashi Yanai, CEO of Fast Retailing. Not only does a company
need to live in harmony with society but it must contribute to society.
Wise leaders can grasp the essence and create shared contexts. Mitsui’s president
started kurumaza or sitting in a circle meetings open to any employee.
Wise leaders communicate the essence in a way that everyone can understand. To
succeed here you must use stories and metaphors and other figurative language.
Everyone at Cannon has to back up the numbers with a narrative. ‘That’s how skills
are cultivated and our people grow.’ To use metaphors and stories effectively, leaders
must learn to see the relationships between one thing and another, between
themselves and someone else, or between the present and either the past or future. The
best way to do that is to read as many novels as possible in all genres including
romance, satire, comedy, and tragedy and to attend theatre. Effective communication
touches people’s hearts and minds. Communication is critical to bringing dreams to
life.
Good leaders also need to understand all the contradictions in human nature – good
and bad, civility and incivility, optimism and pessimism, diligence and laziness – and
synthesize them as situations arise. As F Scott Fitzgerald pointed out, ‘The test of a
first rate intelligence is the ability to hold two opposed ideas in the mind at the same
time, and still retain the ability to function.’ In these days of discontinuity, these
qualities matter more than ever.
Doing the same thing year after year is synonymous with falling behind.
Today’s knowledge-creating company, we believe, must metamorphose into the
wisdom practicing company of tomorrow. That demands a new kind of leader – a
CEO who is many things at the same time: a philosopher who grasps the essence of a
problem and draws general conclusions from random observations; a master
craftsman who understands the key issues of the moment and acts on them
immediately; an idealist who will do what he or she believes is right and good for the
company and society; a politician who can spur people to action; a novelist who uses
metaphors, stories, and rhetoric; a teacher with good values and strong principles,
from whom others want to learn.
CEOs cannot be content to analyze situations using empirical data and deductive
reasoning; they must also make inductive jumps according to their ideals and dreams.
Capitalism for The Long Term
The Anglo-American model of capitalism is due for an enormous shake out. We
should look at the European model (seen in the Scandinavian countries, Germany,
France and the Netherlands) where the strength of society is maintained through a
degree of social mobility based on merit, social cohesion, and social services that help
smooth out the differences between those who have and those who have not.
/ Kenneth Arimitage/
The idea that growth can be infinitely sustainable is the mathematical and physical
impossibility upon which our entire economic system is based. Nature has no system
that can support this kind of growth; the closest example of something that can is
cancer. Unfortunately, once the host has been devoured, the cancer is also destined to
perish. / Richard Chrenko/
Trying to convince companies to do what is right is the same as saying they can
continue to choose between being good and being bad. And to claim that tough
regulations would stifle entrepreneurship is to argue that entrepreneurial companies
thrive only in sleazy environments. If that is true, then capitalism deserves to perish.
/ Shivakumar Kunapuli/
Customers don’t mind so much waiting if you keep them abreast of where things are.
The Power of Small Wins by Teresa M Amabile and Steven J Kramer
Of all the things that can boost emotions, motivation, and perceptions during a work
day, the single most important is making progress in meaningful work. And the more
frequently people experience that sense of progress, the more likely they are to be
creatively productive in the long run. The power of progress is fundamental to human
nature, but few managers understand it or know how to leverage progress to boost
motivation.
A central driver of creative, productive performance is the quality of a person’s inner
work life – the mix of emotions, motivations, and perceptions over the course of a
work day. How happy workers feel; how motivated they are by an intrinsic interest in
the work; how positively they view their organization, their management, their team,
their work, and themselves – all these combine either to push them to higher levels of
achievement or drag them down.
The most common event triggering a best day experience was any progress in the
work by the individual or the team. Catalysts for motivation include setting clear
goals, allowing autonomy, providing sufficient resources and time, helping with the
work, openly learning from problems and success, and allowing a free exchange of
ideas.
If you facilitate staff’s steady progress in meaningful work, make the progress salient
to them, and treat them well, great performance will follow. And they will love their
jobs.
Being More Productive interview of David Allen and Tony Swartz
To perform at our best we need positive emotions, gaining control of our attention,
and, at the spiritual level, it is about defining purpose. We need to manage our work/
rest ratios. After 90 minutes of focused work we need a break.
The Cosmopolitan Corporation by Pankaj Ghemawat
Global firms must adopt a cosmopolitan approach of understanding and working with
differences rather than against them. Sympathy is much fainter than our concern for
ourselves, and sympathy with persons remote from us much fainter than with persons
near and contiguous. Management needs to have a global mindset but local business
adaptation is key for success.
The Frontline Advantage by Fred Hassan
Frontline management is typically 50 – 60% of a company’s management and they
control 80% of the work force. This critically important group needs to be
communicated directly to, in person, by the CEO. They need to understand the
strategy as they are the ones carrying it out. It is important to expose senior
management to frontline perspectives, to define a higher purpose, and also in the
process not undermine the middle. Never use the information you learn from frontline
managers to discipline of punish the bosses.
Notes by [email protected] May 7th 2011
Harvard Business Review April 2011
The HBR April issue is all about failure, how to understand it, learn from it and
recover from it. The theme is that anyone who ventures into the unknown is likely to
meet with failure at some stage. Failure tends to sharpen the senses more than
anything else and thus failure provides opportunity for fast and valuable learning.
How fast you recover from failure is very much an issue of attitude and preservation
of self confidence and esteem in the face of adversity. A few notes from the issue;
Cultivate a Culture of Confidence by Rosabeth Moss Kanter
One difference between winners and losers is how they handle losing. The ability to
recover quickly and get back on course is crucial. Nothing succeeds for long without
considerable effort and vigilance. Winning streaks end for predictable reasons:
Strategies run their course. New competitors emerge to take on the industry leader.
Ideas get dusty. Technology marches on. Complacency sets in, making people feel
entitled to success rather than motivated to work for it. Losing produces temptations
to behave in ways that make it hard to recover fast.
Entrepreneurs and the culture of failure by Daniel Isenberg
Anxiety is dysfunctional, but fear can be good. It helps protect us from things that are
dangerous – such as risk taking. It is important to train entrepreneurs to fail small, fast
and cheaply. Failure is a normal aspect of venturing into new business.
Ethical Breakdowns by Max H Bazerman and Ann E Tenbrunsel
Many practices serve to derail even the best-intentioned managers.
Goals that reward unethical behavior; Conflicts of interest that motivate people to
ignore bad behavior; Overlooking dirty work that’s been outsourced to others; An
inability to notice when behavior deteriorated gradually; A tendency to overlook
unethical decisions when the outcome is good. Beware as a leader of your own blind
spots, which may permit, or even encourage, the unethical behaviors you are trying to
extinguish.
Why Leaders Don’t Learn From Success by Francesca Gino and Gary Pisano
When we succeed, we’re likely to conclude that our talents and our current model or
strategy are the reasons. Success increases our self-assurance. Faith in ourselves is a
good thing, but too much can make us believe we don’t need to change anything.
There is a tendency to not investigate the causes of good performance systematically.
We blew our opportunity to change the world by Roger McNamee
America has enormous creative energy, but its industries are dominated by lawyers
and accountants, not product people. Thirty years of financial engineering and shortterm profit optimization has impaired the ability of American companies to innovate.
I Think of My Failures as a Gift by former Procter and gamble CEO A G Lafley.
What is the single biggest reason that leaders stop developing and growing? They stop
becoming adaptable; they stop becoming agile. That is the end of a leader. We learn
much more from failure than from success. Failures are not the opposite of success.
Failures is about how you can do things better.
How to Avoid Catastrophe by Catherine Tinsley, Robin Dillon and Peter Madsen
Two forces conspire to make learning from near misses difficult. Cognitive biases
make them hard to see, and, even when they are visible, leaders tend not to grasp their
significance. Thus, organizations often fail to expose and correct latent errors even
when the cost of doing so is small – and so they miss opportunities for organizational
improvement before disaster strikes. This tendency is itself a type of organizational
failure – a failure to learn from cheap data. Surfacing near misses and correcting root
causes is one of the soundest investments organizations can do.
Can You Handle Failure by Ben Dattner and Robert Hogan.
When failure has occurred, don’t respond impulsively. It’s not always possible to
right the wrong, but it is almost always possible to make things worse.
Constructive confessions by David Silverman
While it is tempting to think that each tale of entrepreneurial woe would be unique,
that is not the case. As a failed American dreamer myself, I saw in all the books,
chapters, and posts the same core set of mistakes: I didn’t have enough experience –
now I know; I thought I knew everything – I did not; I thought it was going to be easy
(selling product) – it was extremely hard; People are reluctant to change what they’re
used to – I didn’t sell anyone anything; I forgot to make money.
Failure happens; it’s what you take from it that makes the difference between a fall
and a stumble.
[email protected] 3 April, 2011
Harvard Business Review March 2011
Move up and step up – leader by Adi Ignatius
The talents now in vogue include strong communications, empathy, collaboration, and
trust building. The perennial problems that never seem to be addressed are excessive
short term thinking, misguided CEO pay and ineffective boards.
Don’t get blinded by the Numbers. – Roger L Martin
The new approach requires completely new capabilities. The successful strategists of
the future will have a holistic, empathetic understanding of customers and the ability
to convert somewhat murky insights into a creative business model that they can
prototype and revise in real time. To do all that they’ll have to be good
communicators, comfortable with ambiguity and ready to abandon the quest for
certain, single-point answers. This is what business school deans have to work on
teaching in the future.
Landing the Next Big Job by Boris Groysberg, Kevin Kelly and Brian McDonald.
For top jobs, functional and technical expertise is less important than understanding
business fundamentals and strategy. Top team members have more in common with
their executive peers than with the people in the functions they lead. Going forward
C-level executives will be active members of the firm’s senior leadership who advice
the CEO on key decisions. There is a greater need for team-orientation, continuous
multitasking and leading without rank, and ability to resist stress and look after
subordinates – and all this needs to be done with a big smile in an open plan office.
Capitalism for the Long Term by Dominic Barton, MD of McKinsey
Business leaders face a choice - reform the system or watch as the government exerts
control. Returning to business as usual post GFC simply is not an option.
There are three essential elements of the shift required. First business and finance
must jettison their short term orientation and revamp incentives and structures in order
to focus their organizations on the long term. Second, executives must infuse their
organizations with the perspective that serving the interest of all major stake holders –
employees, suppliers, customers, creditors, communities, the environment- is not at
odds with the goal of maximizing corporate value; on the contrary, it is essential to
achieving their goals. Third, public companies must cure the ills stemming from
dispersed and disengaged ownership by bolstering boards’ ability to govern like
owners.
New era leaders need to move some degree of focus from absolute numerical yields
and also asses the approach that delivered the result. A vast majority of executives
and investors believe that environmental, social and governance initiatives create
corporate value in the long term. Capitalism depends on public trust for it’s legitimacy
and it’s very survival. Companies should create real risk for executives. If we merely
paper over the cracks and return to our pre-crisis views, we will not want to read what
the historians of the future will write. The time to reflect and act is now.
Notes by [email protected]
Harvard Business Review January/ February 2011
The theme for this issue is How to Fix Capitalism and unleash a new wave of growth.
An article with this title appears, written by Michael Porter and Mark Kramer. I think
it is an important article which through experience and research by the writers
suggests that business needs to be much more aligned to societal goals and aspirations
to secure success in this day and age. Although obvious to a few, many yet need to get
this insight, and hopefully the article will help influence the shift to a better order. A
few notes from the January issue;
How Businesses Behave / editorial by Adi Ignatius
The Globe’s new challenges require companies to pursue ‘shared value’- that is,
organizations must innovate and create economic value in a way that also addresses
society’s needs. It starts with companies redefining their purpose around creating
products and services that generate social benefit. In the process, business can earn
the respect of society again.
How to reinvent capitalism – and unleash a wave of innovation and growth by
Michael E Porter and Mark R Kramer
Capitalism is under siege. Diminished trust in business is causing political leaders to
set policies that sap economic growth. Business is caught in a vicious circle. The
purpose of the corporation must be redefined around Creating Shared Value.
Companies must take the lead in bringing business and society back together. The
recognition is there among sophisticated business and thought leaders, and promising
elements of a new model are emerging. Yet we still lack and overall framework for
guiding these efforts, and most companies remain stuck in a ‘social responsibility’
mind set in which societal issues are at the periphery and not at the core. The solution
lies in the principle of shared value, which involves creating economic value in a way
that also creates value for society by addressing its needs and challenges.
Businesses must reconnect company success with social progress. Shared value is not
social responsibility, philanthropy, or even sustainability, but a new way to achieve
economic success. This will drive the next wave of innovation and productivity
growth in the global economy. Learning how to create shared value is our best chance
to legitimate business again. Government and business have each assumed that the
other side is an obstacle to pursuing its goals and acted accordingly.
For decades business people have studied positioning and the best ways to design
activities and integrate them. However, companies have overlooked opportunities to
meet fundamental societal needs and misunderstood how societal harms and
weaknesses affect value chains. Our field vision has simply been to narrow.
Companies can create economic value by creating societal value. There are three
distinct ways to do this: by reconceiving products and markets, redefining
productivity in the value chain and building supportive industry clusters at the
company’s locations. Each of these is part of a virtuous circle of shared value;
improving value in one area gives rise to opportunities in the others. The concept of
shared value resets the boundaries of capitalism. By better connecting companies’
success with social improvement, it opens up many ways to serve new needs, gain
efficiency, create differentiation, and expand markets.
The new concept blurs the line between for-profit and nonprofit organizations.
The congruence between societal progress and productivity in the value chain is far
greater than traditionally believed. Heightened environmental awareness and
advances in technology are catalyzing new approaches in areas such as utilization of
water, raw materials, and packaging, as well as expanding recycling and reuse. The
opportunities apply to all resources, not just those that have been identified by
environmentalists. Better resource utilization will permeate all parts of the value chain
and will spread to suppliers and channels.
The focus on holding down wage levels, reducing benefits, and off-shoring is
beginning to give way to awareness of the positive effects that a living wage, safety,
wellness, training, and opportunities for advancement for employees have on
productivity. Leading companies have learned that poor employee health costs more
than health benefits.
Profits involving a social purpose represent a higher form of capitalism – one that will
enable society to advance more rapidly while allowing companies to grow even more.
The result is a positive cycle of company and community prosperity, which leads to
profits that endure.
Most business schools still teach the narrow view of capitalism, even though more
and more of their graduates hunger for a greater sense of purpose and a growing
number are drawn to societal entrepreneurship. The results have been missed
opportunity and public cynicism. There is nothing soft about the concept of shared
value. These proposed changes in business school curricula are not qualitative and do
not depart from economic value creation. Instead they represent the next stage in our
understanding of markets, competition, and business management.
My comment: The Article should be read in its entirety. One thing the article doesn’t
talk much about is the increased energy and commitment levels achievable by giving
people a strong sense of value and purpose, beyond financial return. This in itself has
a great potential for increased organizational prosperity.
Reinvent Your Business Before it is Too Late. By Paul Nunes and Tim Breene
Companies that successfully reinvent themselves 1) Focus on the edges, 2) Shake up
the top team, 3) Maintain surplus talent. High performance companies need up-andcomers who can grow a new business, not just manage an old one.
If strategy making is t remain on the edge, it cannot be formalized. Although low and
average performers tend to make strategy according to the calendar, high performers
use many methods and keep the timing dynamic to avoid predictability and to prevent
the system from being gamed.
One sign that a company is investing enough in talent: Employees have time to think
on the job.
The CEO’s Role In Business Model Reinvention by Vijay Govindarajan and
Chris Trimble.
A forward looking CEO needs to do three things: manage the present, selectively
forget the past and create the future. Most companies are stuck in the first of these
three. If organizational memory is not tamed, it gets in the way of creation. Before
you can create, you must forget. Thirty percent of participants in any strategy
discussion should be younger than age 30, because they are not wedded to the past.
When You’ve Made Enough to Make a Difference by William Foster and
Susan Wolf Ditkoff
Society is blessed with ambitious philanthropists and promising ideas. To address the
world’s most pressing problems, donors must ask themselves if they truly understand
what it takes to make change happen, beyond just a great program or idea, and if so,
how they can position themselves – through their role, resource, and relationships – to
support that change. Without a fully integrated picture, philanthropists can’t
effectively communicate and coordinate with other donors, collaborate with grantees
and beneficiaries, and improve their decisions. They become vulnerable to wishful
thinking and unrealistic expectations. Developing a clear investment model does not
have to be complicated or expensive, just deliberate- and the model evolves as
philanthropists learn from their experiences. No external force will make donors do
this – only self-discipline and a relentless drive for results.
Notes by [email protected] 9th Jan 2011
Harvard Business Review December 2010
This issue is focused on Branding. Everything you do including corporate culture
really is part of branding. The key message from the branding articles is the need to
use new approaches, particularly to be active on the net. Most marketing success is
mouth to mouth rather than broadcasting/advertising. So much happens on the net
nowadays and no-one can afford to ignore it or not to respond to it. There were some
other interesting articles, particularly one about Robert McNamara, previous US
defense secretary. Robert McNamara was seen as the ultimate manager/ leader as he
used numbers and analysis to try to get better decisions. In the end he recognized that
this is not enough. You also need to add a dimension of what is right, ethical, and
desirable for any numbers to make any sense. Robert McNamara realized that the
Vietnam War was a great mistake as it was built on the wrong premises. It was not
primarily communism vs. capitalism; it was at its core a people wanting to run its own
affairs free from Western (or other) interference and influence. A people fighting for
its basic rights and freedom cannot easily be beaten on the battlefield.
Please find below a few notes relating to the December issue.
The Hidden Advantage of Quiet Bosses by Adam M Grant, Francesca Gino
and David A Hoffman
Extroverted leaders have important strengths. However they also tend to command the
centre of attention and take over discussions. In a dynamic, unpredictable
environment, introverts are often more effective leaders – particularly when workers
are proactive, offering ideas for improving the business. Such behavior can make
extroverted leaders feel threatened. In contrast, introverted leaders tend to listen more
carefully and show greater receptivity to suggestions, making them more effective
leaders of vocal teams.
While it is often true that extroverts make the best bosses and proactive employees
make the best workers, combining the two can be a recipe for failure. Soft spoken
leaders may get the most out of proactive employees – so save the outgoing, talkative
managers for the teams that function best when they are told what to do.
The Case for Professional Boards by Robert C Pozen
To improve governance, companies need to move to a model of professional
directorship: Board service would be the primary occupation of independent directors,
and not an ancillary avocation. The new model would address chronic deficiencies of
corporate governance by taking the following measures: Reduce board size to seven
members to improve decision making effectiveness; Require that most directors have
industry expertise to allow them to better guide today’s complex businesses; Require
directors to devote sufficient time to properly understand and monitor the company’s
operations.
Branding in The Digital Age, You’re Spending Your Money In All the Wrong
Places by David C Edelman
Shoppers now rely heavily on digital interactions, evaluating a shifting array of
options, remaining engaged with the brand through social media after a purchase.
Smart marketers will study this consumer decision journey for their products and use
the insight gained to revise strategy, media spend and organizational roles.
Up to 90 % of spend goes to advertising and retail promotions. Yet the single most
powerful impetus to buy is often someone else’s advocacy.
The One Thing You Must Get Right When Building a Brand by Patrick
Barwise and Sean Meehan
Brands should use new media to deliver on 4 basics: offering and communicating a
clear customer promise; building trust by delivering on it; continually improving the
promise; and innovating beyond the familiar. Try to gain customer insight rather than
to sell. Carefully follow the unwritten rules of customer engagement online.
Robert S McNamara and the Evolution of Modern Management by Phil
Rosenzweig
Every generation of managers wrestles with questions about its purpose. In the 1950s
and 1960s, to be an able manager was to do four things well: plan, organize, direct
and control. Leading business thinkers conceived of managers as rational actors who
could solve complex problems through the power of clear analysis. That view shaped
the developing profession, but many questions were left unanswered. Planning and
directing were essential, yes, but towards what ends? Organizing and controlling, of
course, but in whose interest?
Chastened by the debacle of the Vietnam War he recognized the limits of data and
came to appreciate the intangible and the irrational in human affairs. Reflective in old
age he embraced the importance of empathy and remained an idealist.
The final measure of a manager, more than amassing wealth or seeking to follow an
oath, may be the willingness to examine one’s own actions and seek a measure of
wisdom.
What is the hard Return on Employee Wellness Programs? By Leonard L
Berry, Ann M Mirabito and William B Baun
A comprehensive, strategically designed investment in employees’ social, mental, and
physical health pays off. J & J leaders estimate that wellness programs cumulatively
have saved the company $ 250 million on health care cost over the past decade
suggesting a return of $ 2.71 for every one dollar spent. The most successful programs
have six pillars; strategic alignment with the company’s identity and aspirations; a
design that is broad in scope and high in relevance and quality; broad accessibility;
internal and external partnerships; and effective communications. Rewards have been
reaped in the form of lower health care costs, greater productivity, and higher morale.
[email protected] 5th December 2010
Harvard Business Review November 2010
Some interesting points made in this issue. I liked the brief article on creating beauty.
”Creating beauty is difficult, whether it is the tangible beauty of a brilliant innovation
or the intangible essence of exceptional leadership. Beauty exists in an elegant and
novel approach to a problem.” I have come to think that aesthetics is as important as
ethics. Please find below a few lines from the November issue.
Gender gap and new leadership skills There is a gender gap in leadership, but
the reason for it isn’t lack of sponsorship; it’s the skills we look for in leaders.
Leadership values are at the beginning stages of a transformation. We are starting to
see a strong appreciation for trust, authenticity, purpose, empathy, devotion, curiosity
and mindfulness – and some argue that these are crucial skills for tomorrow’s leaders.
They are also innate skills in women leaders, which is why we will see the gender gap
reduced in the near future. /Dawna Maclean Consulting/
Wealth and Jobs, the broken link by Nitin Nohria
Executives and politicians must find new ways to link value creation and job creation.
If they don’t, business leaders will continue to lose legitimacy in society, especially if
they keep prospering, where people around them are struggling. Instead of a virtuous
circle, the relationship between business and society will become a vicious circle.
When society is angry at business, the risk that government will enforce overreaching
regulation is real. Moreover, that anger distances citizens from the source of answers
to many of our most urgent issues. None of the major problems that face society today
– sustainability, health care, poverty, financial system repair – can be solved unless
business plays a significant role. But to do that, business must restore its stature and
help to address the anxiety about job creation.
To Win, Create What’s Scarce by Seth Godin
What is difficult? Creating beauty is difficult, whether it is the tangible beauty of a
brilliant innovation or the intangible essence of exceptional leadership. Beauty exists
in an elegant and novel approach to a problem. Maybe it’s catapulted in a simple
device that works intuitively, reliably and efficiently or in an effective solution – a
‘beautiful’ solution to an organizational dysfunction. And it exists in the fact of
connecting with and leading people.
Leading change is difficult. It’s difficult to find, hire, and retain people who are eager
and able to change the status quo. It is difficult to stick with a project that everyone
seems to dislike. It is difficult to motivate a team of people who have been lied to or
had their spirits dashed.
People who can do difficult work will always be in demand. And yet our default is to
the easy work, busywork, work that requires activity, not real effort or guts. That’s
true of individuals, and it is true of companies. That’s because we see our roles as
cranking out average stuff for average people, pushing down price, and, at best
marginally improve value. That used to be the way to grow an organization.
No longer. The world will belong to those who create something scarce, not
something cheap. The race to the top has just begun.
Leadership Lessons From the Military – 4 articles
This issue has four articles suggesting that leadership can be learned from the
military’s way of doing things. Being an army captain myself I have no doubt that this
is true. Similar leadership principles apply and to be effective you need to be decisive,
caring and respected by your team. Out of the articles came a few dos and don’ts
which I thought made sense;
1 IMPLEMENTING STRATEGY - GET THE BIG PICTURE
Avoid assuming
- you have all the facts: Look it’s obvious that….
- the other side is biased and you are not
- the other side’s motivations and intentions are obvious and probably nefarious
Instead
- Be curious: “help me understand how you see the situation.”
- Be humble: “what do I have wrong?”
- Be open-minded: “is there another way to explain this?”
2 UNCOVER AND COLLABORATE
Avoid
- Making open-ended offers: “What do you want?”
- Making unilateral offers: I’d be willing to…”
- Simply agreeing to (or refusing) the other side’s demands
Instead
- Ask “Why is that important to you?”
- Propose solutions for critique – here is a possibility, what might go wrong
with it
3 ELICIT GENUINE BUY-IN
Avoid
- Threats: “you’d better agree, or else…”
- Arbitrariness: “I want this because I want it.”
- Close-mindedness: Under no circumstances will I agree or consider..”
Instead
- Appeal to fairness: What should we do?”
- Appeal to logic and legitimacy: “I think this makes sense because..”
- Consider constituent perspectives: How can we explain this to our colleagues?
4 BULID TRUST FIRST
Avoid
- Trying to buy a good relationship
- Offering concessions to repair breaches of trust, actual or perceived
Instead
- Explore how a break down in trust may have occurred and how to remedy
- Make concessions only if they are a legitimate way to compensate for losses
- Treat counterparts with respect, and act with integrity
5 FOCUS ON PROGRESS
Avoid
- Acting without gauging how your actions will be perceived
- Ignoring the consequences of a given action for future negotiations
Instead
- Talk not only about the issues but about the process
- Slow down the pace; this warrants further exploration.
- Issue warnings without making threats; unless you are willing to negotiate in
good faith I can’t spend any more time negotiating
Four Lessons in Adaptive Leadership by Michael Useem
A culture of adaptability is vital to survival in the armed services. As business
executives cope with increasing adaptability, they can take a page from the military’s
book.
1) Create a personal link with every employee – individually or in gatherings. A direct
connection reinforces your message.
2) Act fast – don’t shoot from the hip, but don’t wait for perfection.
3) Make organizational interests your top priority- don’t let others falter as you
prosper
4) Set a direction but don’t micromanage – give people the freedom to improvise
Winning in the Green Frenzy by Gregory Unruh and Richard Ettenson
Don’t let your competitors control what ‘sustainable’ means in your industry.
Unless you are engaged in the debate and in shaping the rules, you risk being assessed
against sustainability standards you can’t meet. Successful companies leverage
opportunities to become an influential or dominant force in the green-standards battle.
That requires understanding existing standards and also your own green capabilities.
The race to shape sustainability standards will transform the competitive landscape
and the social and environmental practices of companies in every industry.
Notes by [email protected] 13 Nov 2010
Harvard Business Review October 2010
I find that more and more focus in HBR is on life and soul issues, on the why and how
we do things, rather than on what we are doing. The Descartes’ quote comes to mind;
‘Man is not a means to an end, he is himself the end.’ Only when people thrive, see
the reason and purpose for what they are doing, and identify with the reason and the
purpose will things be done well. I welcome this trend as it aligns with what I think is
important and crucial for sustainable, premium performance. The head line of the
leader in this issue is “A Strategy for One’s Life.’
A few notes from the October 2010 issue;
Fire your marketing manager and hire a community manager.
We can no longer afford to separate marketing from customer experience and
interaction enabled by social media. Social media has become so important that
companies must have someone on board whose sole purpose is monitoring,
participating in and engaging customers on Twitter, face book, message boards –
wherever people meet online.
Reading the Public Mind, As technology destroys traditional survey methods, it
offers hope for new accuracy by Andrew O’Connell
Phone surveys are outdated, but web panels aren’t ready. It is fiendishly hard to get
cooperation from the people you would really like to draft for your surveys, and the
traditional methods of doing so are losing their effectiveness and defensibility. As a
result the entire opinion industry needs to be remade.
Can You Open-Source Your Strategy? By Barry Newstead and Laura
Lanzerotti
The approach can help firms align their activities with the interest of their
communities. Many businesses today can benefit from opening up strategy – at least
in part – and this idea has relevance whether you make wikis or widgets.
Commercials Make Us Like TV More by Leif Nelson
It is not the commercial itself that makes us like it more, it is the interruption. (I have
found that a five minute break every hour enhances my focus and performance. It is
like starting afresh avoiding reduced clarity and speed from lethargy)
It Is Time to Take Full Responsibility by Rosebeth Moss Kanter
In the future you will be held accountable for the supplies you use and where they
came from, what their customers do with their purchases and benefits to the
communities and countries touched along the way. Leaders will be assessed not only
on immediate results but on longer term impact, the ultimate effects their actions have
on societal well being. Once the new metrics are out of the box, there will be no
turning back.
Competing on Talent Analytics by T Davenport, J Harris, and J Shapiro
Google says there are three reasons people stay – the mission, the quality of the
people, and the chance to build the skill set of a better leader or entrepreneur.
Future organizational performance is inextricably linked to the capabilities and
motivations of a company’s people. Organizations that have used data to gain humancapital insights already have a hard-to-replicate competitive advantage. Others too can
draw on these new techniques to improve their business results. (I am a little bit
sceptical to this being a metrics numbers game, believing that values and engagement
and good leadership at all levels are the key components)
Don’t tweak your supply chain – rethink it end to end. By Hau L Lee.
A piecemeal approach to sustainability needs to be replaced by a broader structural
change, identifying opportunities that span the supply chain, reinventing
manufacturing processes, and even linking up with competitors to tackle challenges of
scale. We must manage sustainability as a core operational issue.
Sustainability is no longer a secondary issue. It has become a competitive concern and
should be handled accordingly. The core managers overseeing the supply chain, not a
peripheral CSR group, must own and tackle it as aggressively as they tackle cost,
quality, speed, and dependability. They must engage their entire supply chain as they
seek breakthroughs and try to minimize risks. Companies that take such a holistic
approach will steal a march on reactive competitors. They will be sustained.
Peter Senge “They may not say this but most companies act as if sustainability is
about being less bad.” (I have thought the same about ethics – that companies see it
as stop being bad, rather than striving to be good.)
The Transparent Supply Chain by Steve New
Let your customers know everything about where your products come from before
they discover it first.
At each stage of the chain, a new rule will apply: The only acceptable products are
those with a clear, comprehensive provenance.
It May Be Cheaper to Manufacture at Home by Suzanne de Treville and Lenos
Trigeorgis.
Discounted Cash Flow models undervalue flexibility and management impact; what
looks like lean and mean may in fact end up being higher cost than nearer at home
solutions.
Building the Co-Creative Enterprise by Venkat Ramaswamy and Francis
Gilbert
Give all your stake holders a bigger say, and they’ll lead you to better insights,
revenues, and profits. A small number of companies have invited customers to
participate directly in the design of products and services. People are inherently
creative and want to shape their own experiences. In co-creation, strategy formulation
involves imagining a new value chain that benefits all players in the ecosystem.
Ultimately, co-creation is about putting the human experience at the centre of the
enterprise’s design. The time has come for a democratic approach, in which
individuals are invited to influence the future of enterprises in partnership with
management.
How to Save Good Ideas by John P Kotter
Look at the curriculum at business schools – compare the amount of time spent
coming up with an idea that solves the problem with the amount of time spent
thinking about how we can take this idea and communicate it, get enough people to
understand it, support it, and then go on and make it happen. The ratio in most MBA
programs would be 80:20. The article lists 24 idea stopper attacks that need to be
thought through and overcome to bring ideas to successful implementation.
[email protected] 5th October 2010
Harvard Business Review September 2010
Many thought provoking articles in this issue. One strong trend I perceive that comes
through in the issue is how business and community are identifying opportunities to
work together for mutual benefit. As business continues to move from manufacturing
to service orientation positioning the business in the community becomes increasingly
important. It seems both wise and offering significant growth and profit opportunity
to consider what is socially desirable how we can be more inclusive in who
participates in the markets. Two billion people are waiting in the wings to get proper
homes and lives and business that can focus and tap into this huge potential demand
may well reap good harvests. When thinking about entrepreneurship it is easy to think
in terms of scientific innovation and manufactured. Going forward entrepreneurship
will be even more social and service oriented.
CEOs with Headsets by Andrew Zimbalist
Analysis of college coach compensation shows how hard it is to align pay with
performance. From 2007 – 2009 college football coaches’ salaries rose 46% to an
average of US$ 1.36 million. If the NCAA were to place say a $ 400,000 limit on
coaches’ compensation packages, it would not materially affect the quality of
coaching or schools’ ability to attract talent. Some coaches earn five to ten times what
University presidents earn. It is clearly in the business interest of colleges and
universities to better align their coaches’ pay with the institutions’ strategic goals,
performance of the teams, and revenue potential.
Be a Better Manager, Live Abroad W Maddux, A Galinsky, and C Tadmor
(This resonated with me having lived and worked in seven countries. I think working
in several places helps bring perspective on issues and can also increase humility and
confidence.) People with international experience are more likely to create new
businesses and products and to be promoted. The more expats interact with locals and
local institutions, the more creative and entrepreneurial they’ll become.
When Emotional Reasoning Trumps IQ by R Gilkey, R Caceda, and C Kilts
People associate strategy with rational thinking and other high-level functions of the
prefrontal cortex but the best strategic thinkers show more activity in parts of the
brain linked with emotion and intuition. Their nervous systems may even repress
rational thought to free those areas up. Of course IQ based reasoning is valuable in
both strategic and tactical thinking – but it’s clear that managers integrate their brain
processes as they become better strategists. When companies realize that, they may
approach strategy and execution more holistically.
It’s Not Unprofessional to Gossip at Work by professor Labianca.
If I could take one word out of our lexicon it would be unprofessional. When
managers warn us not to be unprofessional, they’re really saying that when we show
up for work, they expect us to leave behind the emotional and social parts of our
humanity at the door. We react to things emotionally, we form bonds with people, we
gossip. To pretend otherwise makes things worse.
Redefining Failure by Seth Godin
Failure is often defined as doing something which goes wrong. The more common
failure is not doing anything with engrained unsustainable processes and behaviours.
A few types of failure often overlooked are; design failure, failure of opportunity,
failure of trust, failure of will, failure of priorities, failure to quit, and failure of
respect!
Want People to Save? Force them! by Dan Ariely
In Chile, by law, 11% of every employee’s salary is automatically transferred into a
retirement account allowing employees to choose their own level of preferred risk.
This resonates with my letter to the editor of The New Zealand Herald in August 2010
speaking for compulsory superannuation savings:
There is something right about putting away resource in good years to help provide
sustenance in leaner years. Most intelligent people around the world understand this
as do also many animals. NZ is the odd one out not having some compulsion on super.
Being involved in and building a personal value stake may also help people’s
sense of participation in the economy and value creation. This country has been
seriously lacking in this respect for many years and perhaps now is the time to correct
that and create more capital and savings in the process. If people save during a 40 –
45 years’ working career, small amounts of money invested monthly build up
to significant amounts over time. Let’s not delay but start now!
The Judgment Deficit by Amar Bhide’
Statistical model have deprived the financial sector of the case-by-case judgment that
makes capitalism thrive. That must change. Discerning the appropriate balance
between top-down command and control, on the one hand, and individual initiative
and judgment, on the other, will always be a challenge for our society and our
organizations. But at least we are aware of the conflict and have experience to manage
it.
What finance needs in particular is a return to judgment.
Eventually big business ran up against the limits of extreme centralization. Telling
workers exactly what to do was de-motivating – Henry Ford famously paid high
wages, but that did not buy him great loyalty. Unlike airplane fleets or chess pieces,
people don’t passively submit to control. They learn to game programs that seek to
direct their behavior. The half-life of an effective mechanistic model to control human
action is quite short. Loan officers made way for mortgage brokers. At the height of
the housing loan boom in 2004, some 53,000 mortgage brokerage companies
employed 419,000 employees who originated 68 % of all residential loans in USA.
Less than a third of all loans were originated by the actual lender. We must learn to
harness and control all the models, not just submit to them.
Can Entrepreneurs Save the World? By Rasika Welankiwar
Working together, corporations and social entrepreneurs can reshape industries and
solve the world’s toughest problems. We are witnessing a seas change in the way
society’s problems are solved. By forming hybrid value chains the for-profit and
citizen sectors can together remake global economies and create lasting social change.
Business offers scale, expertise in operations, and finance. Social entrepreneurs offer
lower costs, strong social networks, and a deeper understanding of customers and
communities. India’s home deficit has been estimated conservatively to 25 million
homes, perhaps the largest potential building market in the world – this is a trillion
dollar housing market. It is time for the finance industry to develop smart ways for
clients to invest in the world and the people who want to change it. The more eyes we
have on society’s problems and opportunities, the better our chances of coming up
with viable solutions.
Making Social Networks Work by J Thompson and I MacMillan
Five guide lines can help you build profitable, socially beneficial new businesses in
the face of daunting uncertainty. 1 Define the ballpark – or the scope of the venture; 2
Attend to socio-politics; 3 Emphasize discovery–driven planning; 4 Plan
disengagement; 5 Try to anticipate unintended consequences.
The High Intensity Entrepreneur by A Habiby and D Coyle
Entrepreneurs in emerging markets start 25% more companies than their US
counterparts do, and their firms have a higher survival rate. Emerging-market
ventures are proficient incubators of other entrepreneurs. We may be on the verge of a
global entrepreneurial heat wave. High-intensity entrepreneurs are beginning to
flourish in unlikely places, generating new product-market combinations with
unbounded potential. For multinationals and investors, they represent immediate
channels for growth. For governments and foundations, this new breed of innovators
provides the path to progress and prosperity.
Why Men Still Get More Promotions Than Women by H Ibarra, N Carter and
C Silva.
High potential females need more than just well meaning mentors. More women get
mentored 83 % as opposed to 76 % for males. Mentoring provides more benefits to
men than women – 72 % of men received promotions subsequent to mentoring
against 65 % of women. There is a special kind of relationship called sponsorship – in
which the mentor goes beyond giving feedback and advice and uses his or her
influence with senior executives to advocate for the mentee. Women mentors have
less organizational clout. 78 % of men had CEO or direct report as mentors but only
69 % of women. Women are still perceived to be risky appointments for senior roles
by often male dominated committees. The first critical step is to stop over mentoring
and start accountable sponsoring of both sexes.
Mistakes Leaders Keep Making by Robert H Schaffer
1 Failing to set proper expectations; 2 Excusing subordinates from the pursuit of
overall goals; 3 Colluding with staff experts and consultants; 4 Waiting while
associates prepare, prepare, prepare. The seven deadly Sins of Setting Demands:
1 Establishing too many goals; 2 Not requiring a plan for how and when goals be
achieved; 3 Failing to push for significant improvement for dear that people are
already overwhelmed; 4 Not assigning clear one-person accountability for each key
goal; 5 Signalling an unspoken ‘if you possible can’ at the end of a statement or
expectation; 6 Accepting reverse assignments; 7 Stating goals in ways that may not be
definable or measurable.
A Cautionary Tale for Emerging Market Giants by Stewart Black and Allen
Morrison Japanese companies suffer from being too Japanese and Chinese society has
the same shortcoming. If you sell in diverse markets your capabilities and executives
also need to be diverse. Research suggests that if your companies sales is more than
50 % international but fewer of 25 % foreign executives, it is time to get nervous
about the future.
The paradox of globalization is that initial success can set up an organization to fail
once it reaches the final hurdle. Having a team of people who all think alike will
rarely create long term success. Long-term commitments to develop and motivate
talented people from all cultures and put them into meaningful roles are essential to
the success of global strategies.
The Boss as Human Shield by Robert Sutton
Good leaders protect their employees from lengthy meetings, meddlesome superiors,
and a host of other road blocks to doing real work.
Bridging America’s Income Gap by Justin Fox
Incomes have sky rocketed for the top 0.1 % of Americas earners while income
growth is going nowhere for the bottom 90 %. It is politics and not the economy that
produces this skewed result. Why is there no sensible economic or industrial strategy
on this? Because corporate lobbyists keep us from having one.
Notes by [email protected] 5th September 2010
Harvard Business Review July-August 2010
An interesting special double issue! Three articles drew my interest. One on the
purpose of life, one on management is not a profession, and one on strategy. Please
find a few notes below.
Power Point is Evil by David Silverman
If people expect PowerPoint to be an effective all-in-one tool for effective
communication, they are asking too much of it. When we rely too much on these tools
we become complacent. They create a false sense of urgency and most often don’t
come close to effectively communicating valuable ideas and compelling reasons for
buy-in. We need to trade in PowerPoint bullets for real action. People change because
they are shown a truth that influences their feelings, not because they were given
endless amounts of logical data. You need to tap into people’s minds and hearts.
The Early Bird Really Does get the Worm by Christoph Randler
People whose performance peaks in the morning are better positioned for career
success, because they’re more proactive than people who are their best in the evening.
The author lists Morning People as Agreeable-optimistic-stable-proactiveconscientious-and satisfied with life and Evening People as Creative-intelligenthumorous-extroverted-neurotic-and depressed (Research study on 367 university
students) (Being a morning person I sympathize with the outcome, but feel it is a
generalization with limited reliability.)
How Will You Measure Your Life? By Clayton M Christensen
This is a great article on how skills acquired are only half of who you are (at the
most) and unless you know to what use to put them and what you want to achieve with
your life all the skills in the world may be almost meaningless. Schools need to also
emphasize this aspect and help put learning in perspective. I am of the opinion that
the study of Philosophy should be mandatory for universities and business schools.
Instead of teaching people what to think we should teach how to think such that they
can reach their own informed conclusions.
How can I be sure that I’ll be happy in my career? How can I be sure that my
relationship with my spouse and my family become and enduring source of
happiness? How can I be sure I will stay out of Jail? Though the last question sounds
light hearted, it is not. Two of the 32 people in my Rhodes Scholar class spent time in
jail. Jeff Skilling of Enron fame was a classmate of mine at HBS. These were good
guys – but something in their lives sent them off in the wrong direction.
The powerful motivator in our lives is not money; it is the opportunity to learn, grow
in responsibilities, contribute to others, and be recognized for achievements.
Management is the most noble of professions if it is practiced well.
Having a clear purpose in life is essential. Spending an hour every night reading and
thinking rather than learning new techniques is a way to allow room for purpose
which gives every day meaning. If you don’t know what you are about you will just
sail off without rudder and get buffeted in the very rough seas of life. If you study the
root causes of business disasters, over and over you will find that they relate to the
disposition toward endeavours that offer immediate gratification.
Don’t worry about the level of individual prominence you have achieved; worry about
the individuals you have helped become better people. Think about the metric by
which your life will be judged, and make a resolution to live every day so that in the
end, your life will be judged a success.
No, Management Is Not a Profession by Richard Barker
Although managers can be formally trained and qualified and their social status is
similar to that of doctors and lawyers, management is not a profession. Management
is about integration which is learned rather than taught. Business education should be
collaborative rather than competitive.
Whatever you teach students at business schools it doesn’t qualify them to manage,
the way a medical or law degree can qualify professionals to exercise their profession.
In general, the professional is an expert, whereas the manager is a jack-of-all-trades
and master of none – the antithesis of a professional.
The corporate leaders we interviewed indeed produced an extensive list of qualities
they desired in future recruits, but almost none involved functional or technical
knowledge. Rather, virtually all their requirements could be summed up as follows:
the need for more thoughtful, more aware, more sensitive, more flexible, more
adaptive managers, capable of being moulded and developed into global executives.
In terms of its usefulness in their careers, alumni valued the learning environment of
their university above the curriculum itself. They ranked learning that took place
outside the business school classroom, and more broadly in the university, as the most
useful.
Key is to recognize that integration is not taught but learned. It takes place in the
minds of students rather than in the content of program modules. The student
themselves link the various elements of the program. Thus it is vital that business
schools understand themselves primarily as learning environments, where individuals
develop attributes, rather than as teaching environments, where students are presented
with a body of functional and technical content. It follows from this that effective
business education cannot be delivered online, because online delivery is a technical
mechanism, not a learning environment. Business education and business schools
should be a life-long learning partner and not a one stop certification shop.
We should not be surprised that an academic grading system cannot reliably predict
managerial ability.
Assessment of these softer areas is problematic in two respects: It is difficult and thus
perhaps arbitrary, and it risks being counterproductive because it can damage a
learning environment, in which the myth is maintained that the best future business
leaders will score the highest grades, dysfunctional behaviour inevitably results. Why
learn collaboratively if doing so helps your competitor score higher grades? Why
develop attributes of leadership, of interpersonal impact, if you are graded on
individual performance in functional subjects? Why immerse yourself in the learning
environment if you can get better grades by immersing yourself in a text book? How
can business schools embrace the diversity of candidates’ prior experiences and
learning opportunities f everything comes down to performance under a homogenized
grading system. Business schools are not professional schools – they are incubators
for business leaders.
Drawing the line between strategy and execution almost guarantees
failure by Roger L Martin
The idea that execution is distinct from strategy has become firmly ensconced in
management thinking over the past decade. This enhances the division we think – you
do. You don’t have to think, we don’t have to do. To best enable individual decisions,
choice makers upstream should set the general context for those downstream. From
there, employees need to use good judgment to make the best decisions possible.
When workers are made to feel empowered, the whole organization wins.
Stop Trying To Delight Your Customers. To really win their loyalty,
forget the bells and whistles and just solve their problems. By Matthew
Dixon, Karen Freeman and Nicholas Toman
Service organizations must focus on mitigating disloyalty by reducing customer
effort.
Singapore Airlines balancing Act by Loizos Heracleous and Jochen Wirtz
How Singapore Airlines combines being best on service and a cost leader.
Powerlessness Corrupts by Rosabeth Moss Kanter
Power corrupts but so does powerlessness.
Going to Extremes for Customers. By Tony Hsieh
Most of our growth over the last few years is due to focusing on: Customer service,
Company culture and Employee training and development
Power Play by Jeffrey Pfeffer
Any new strategy worth implementing has some controversy surrounding it and
someone with a counter agenda fighting it. When push comes to shove you need more
than logic to carry the day. You need power.
We Had to Own Our Own Mistakes interview of Starbucks CEO Howard
Shultz. Key is to make sure people realize the deep level of respect we have for the
work they do and how they act. This rather than getting bigger or more profitable is
the key.
Notes by [email protected] 7th August 2010
Harvard Business Review June 2010
C K Prahalad in memoriam – Leadership is about self awareness, recognizing
your failings, and developing modesty, humility, and humanity.
Turning doctors into leaders by Thomas H Lee. Healing comes from patients
being heard and understood. Listening to a patient makes much of the expense
associated with medicine unnecessary. Leadership is about taking people to a place
that they would not go on their own.
The More People Want Something, the Less They’ll Like It by Uzma Khan.
Is the assumption that we want what we like and we like what we want flawed? When
a product is hard to obtain, do we lust after it more but like it less once we get it? A
strong desire for something builds up expectations which often cannot be met.
Why Is It So Hard to Tackle the Obvious by C K Prahalad. To change systems
faster than their rivals can create new modes of competition, enterprises must:
Articulate the emerging competitive reality and its implications for the bottom line;
Identify gaps in skills and fill them quickly; Change IT systems because they usually
represent old business models. During the corporate transformation, the forgetting
curve is sometimes more important than the learning curve.
You Are What You Measure by Dan Ariely. To change CEO behaviour we need
to change the numbers we measure. Anything you measure will impel a person to
optimize his score on that metric. What you measure is what you will get. Stock value
metrics that focus on the long term are a start, but even more important are new
numbers that direct leaders’ attention to the real drivers of sustainable success. It is
not very useful to measure that which is easy to measure rather than that which is
relevant.
How to Start an Entrepreneurial Revolution by Daniel J Isenberg. Nine
prescriptions for creating and Entrepreneurship Ecosystem. 1 Stop emulating Silicon
Valley; 2 Shape the eco system around local conditions; 3 Engage private sector from
the start; 4 Favour the high potentials; 5 Get a big win on the board; Tackle cultural
change head on.; 7 Stress the roots; 8 Don’t over engineer clusters – help them grow
organically; 9 Reform legal, bureaucratic, and regulatory frameworks.
Strategies for a Changing World. The new normal means constant change.
Companies must reinvent themselves if they want to survive.
The decision driven organization – forget the org chart – the secret is to focus on
decisions, not structure by Marcia Blanko, Michael Mankins and Paul Rogers.
A study showed that less than one third of reorganizations produced any meaningful
improvement in performance. An army’s success depends at least as much on the
quality of the decisions of its officers and soldiers make and execute on the ground as
it does on the actual fighting power. If you can align your organization’s structure
with its decisions, then the structure will work better, and your company’s
performance will improve. Ultimately a company’s value is no more (and no less)
than the sum of the decisions it makes and executes. Its assets, capabilities and
structure are useless unless executives and managers throughout the organization
make the essential decisions, and get those decisions right more often than not. In
reorganizations, the focus should be decisions rather than structure.
The Productivity Paradox – how Sony Pictures Gets More Out of people
by Demanding Less by Tony Schwartz.
(I have long believed that ‘crop rotation’ is not only useful in agriculture but also for
human beings and the human brain. Doing similar things for a long period of time
makes you exhausted and lessens creativity. Therefore it is useful to take a short break
every hour and a longer brake after a few hours and a couple of days off after a
prolonged period of extraordinary commitment. This prevents monotony, boredom
and exhaustion and fosters sustainability.)
People perform at their peak when they alternate between periods of intense focus and
intermittent renewal. If companies allow and encourage employees to create rituals
that prevent boredom and exhaustion they will be rewarded with a more engaged and
focused work force.
Change for Change’s Sake by Freek Vermeulen; Phanish Puranam; Ranjay
Gulati. A seemingly healthy, well performing company can be more vulnerable than
you might think because of a build-up of corporate cholesterol: natural human
dynamics that limit communication, creativity, and efficient resource allocation.
Rather than wait for the heart attack to strike, executives should consider changing
their forms structures, rewards, and processes while performance is still good.
Surveying the work force can help executives determine how urgent the need is for
change and what kind of change to contemplate. Periodic changes help companies
avoid coronary-inducing reorganizations.
Are You a High Potential? By Douglas Ready, Jay Conger and Linda Hill
Anatomy of High Potential; Deliver strong results – credibly; Master new types of
expertise; Recognize that behaviour counts. High potentials have: A drive to excel; A
catalytic learning capability; An enterprising spirit; and Dynamic sensors. What
companies are looking for is a manager who can move from being an acknowledged
value creator to being a game changer.
The Coherence Premium – Is your company disciplined enough to focus intensely
on what it does best? by Paul Leinwand and Cesare Mainardi
Most companies fail to pay sufficient attention to capabilities. Cost-cutting for
example, is usually an across the board exercise, rather than a considered reallocation
of resources. Wall-Mart achieves maximum efficiency by integrating four
capabilities: aggressive vendor management, expert point-of-sale data analytics,
superior logistics, and rigorous working capital management. Every one of these
capabilities supports the others and supports the company’s strategic purpose to
deliver ‘everyday low prices’ to consumers.
Growing Green – Three smart paths to developing sustainable products by
Gregory Unruh and Richard Ettenson.
The three paths are; Accentuate existing latent attributes; Acquire someone else’s
green brand; or Architect green offerings. Beware that activists will not hesitate to
point out green washing when they see it. Companies that ultimately succeed in
growing green will be distinguished by their commitment to corporate wide
sustainability as well as the performance of their green products.
Leap into the future by Vineet Nayar, CEO of HCL.
Vineet Nayar got employees to acknowledge the crisis, pioneered a unique ‘employee
first’ culture, kindled people’s passions – and danced. Customers didn’t talk much
about our products, services or technologies; they spoke about our employees.
Turn the job you have into the job you want by Amy Wrzesniewski, Justin
Berg and Jane Dutton. Your job comprises a set of building blocks that you can
reconfigure to create more engaging and fulfilling experiences at work. To win
support for your job crafting, focus on creating value for others, building trust, and
identifying the people who will accommodate you. Make sure you are shaping your
job, not letting your job shape you.
Notes by [email protected] 30 May, 2010
Harvard Business Review May 2010
The HBR May issue seemed a little thinner that its predecessors. Perhaps the key
message in this issue is:
Sustainability is an emerging business mega-trend, like electrification and mass
production, which will profoundly affect companies’ competitiveness and even their
survival. Like the IT and quality mega-trends, sustainability will touch every
function, every business line, every employee. The options are to embrace and adopt
or be left by the wayside.
A few notes attached;
Study after study has shown that exemplary corporate performance doesn’t last. We
all might take a different approach to the work we do at all levels of an organization if
we consider that nothing does (or should) last forever. We have a tendency to get so
caught up in the excitement and sophistication of business that we overlook one key
ingredient: our humanity! Ancient sagas have warned us for millennia of the cyclical
nature of human behaviour. We struggle to the top, usually as a result of hard work,
discipline, and diligence, only to fall prey to hubris and self-aggrandizement.
Companies are only organizations of human beings. Why would their journey be any
different?
Back to the City by Ania Wieckowski
To put it simply, the suburbs have lost their sheen. Young and old want to live in
densely packed, mixed-use communities that don’t require cars, i.e. cities or
revitalized outskirts in which residences, shops, schools, parks and other amenities
exist close together. In the last US census 2/3 of 25 – 34 year old said they first
choose a city and then look for a job. Corporates who understand this trend will have
an advantage. CEO’s understand that without a vibrant central city, their region
becomes less competitive.
Need Speed – Slow down! by Jocelyn Davis and Tom Atkinson.
Simply increasing the pace of production often leads to decreased value over time.
Ultimately strategic speed is a function of leadership. Teams that become comfortable
taking time to get things right, rather than plough ahead full bore, are more successful
in meeting their business objectives. That kind of assurance must come from the top.
Executive Pay: Time for CEOs to Take a Stand by A G Lafley ex Chair
Procter and Gamble.
It is time for CEOs to speak up about unacceptable and inappropriate amounts and
forms of compensation. If we don’t take the lead, Congress and others will, in ways
that will be I no one’s best interest. A meaningful portion of equity should be held
into retirement. And equity should be the lion portion of a CEO’s retirement package.
The Sustainability Imperative – lessons for leaders from previous gamechanging mega-trends. By David Lubin and Daniel Esty
Business history is marked by periods of relative stability punctuated by fundamental
shifts in the competitive landscape that create inescapable threats and game-changing
opportunities. Sustainability is an emerging business megatrend, like electrification
and mass production, which will profoundly affect companies’ competitiveness and
even their survival. Over the past ten years, environmental issues have steadily
encroached on businesses’ capacity to create value for customers. Companies that
excel in sustainability make shifts in five key areas, moving from tactical, ad hoc, and
siloed approaches to strategic, systematic, and integrated ones.
Like the IT and quality megatrends, sustainability will touch every function, every
business line, every employee. On the way to this future, firms with a clear vision and
the execution capabilities to navigate the megatrend will come out ahead. Those that
don’t will be left by the wayside.
Attaching a price tag to embedded carbon could transform global trade. /Jeffrey
Frankel of Harvard’s Kennedy School /
How to Keep Your Top Talent by Jean martin and Conrad Smidt
If you want to keep your rising stars on track – Don’t just assume they’re engaged –
Don’t mistake current high performance for future potential – Don’t delegate talent
development to line managers – Don’t shield talent – Don’t keep young leaders in the
dark – Don’t fail to recognize achievement.
Improving your firm’s ability to give honest, timely and useful feed coaching will
benefit employees of all ages.
Beating the Odds When You Launch a New Venture by Clark Gilbert and
Matthew Eyring
New venture formation will always be fraught with risks. Quickly determine what’s
right and what’s wrong with key assumptions and then making speedy adjustments
often means the difference between failure and success. As entrepreneurial managers
learn to do this, they bend the risk-reward curve in their favour and beat the odds.
Notes by [email protected] 9th May 2010
Harvard Business Review April 2010
Why Good Spreadsheets Make Bad Strategies by Roger Martin
We must consider the possibility that if we can’t measure something, it might be the
very most important aspect of the problem. The notion that ‘if you can’t measure it, it
doesn’t count’ is flatly false. You can manage through fear and intimidation, role
modelling, love, random eccentricities or mantras. None of those require
measurement.
Education, especially in business schools, has gotten itself tied up in metrics knots.
We have lost sight of the language of emotion, motivation, and meaning. What we’ve
got instead is a model of humans a rats chasing cheese in a maze, all in the name of
measurability.
Welcome to the false recovery by Eric Jensen. Make yourselves
comfortable. We’re going to be stuck here for a while.
Post crisis consumers look for products that retain value – they’ll invest in rather than
consumer goods – and make fewer show-off purchases.
Increased savings will firstly subsidize the previous boom, which was built on debt.
The recovery will come as a series of starts and stops: promising progress, periods of
retreat.
If the savings rate fails to stay high enough long enough for consumers to pay off
debts and save up real spending money, the economy will end up treading water for
years.
Why Employees Won’t Innovate by Feirong Yuan and Richard W
Woodman
People whose roles don’t explicitly call for innovation believe that co-workers will
think negatively of them if they try to come up with better ways of doing things. In
some cases they are even afraid they will provoke anger among those who are happy
with the status quo. The key is to create a sense of psychological safety.
Imitation is more valuable than Innovation by Oded Shenkar
98 % of the value of innovations goes to imitators.
Best Practices Get You Only So Far by C K Prahalad
Trying to emulate will never get you into a leading position. Next practices are all
about innovation: imagining what the future will look like; identifying mega
opportunities that will arise; and building capabilities to capitalize on them. Unilever
and Procter and Gamble, for instance, project that by 2020, poor people in the
developing world will account for approx 50 % of their revenue.
Leadership in the age of Transparency by Christopher Meyer and
Julia Kirby
Companies have long prospered by ignoring what economists call ‘externalities.’
Now they must learn to embrace them. (To me it is obvious that unless you invest in
general good will you are doing your company a disservice – not understanding this
is tantamount to narrow mindedness or stupidity) Whatever we do has an impact on
global issues including the environment and unless this is factored in you run a great
risk of being singled out as bad news or a destroyer of environment and generally
acceptable values. Compliance isn’t good enough, you need to demonstrate forward
thinking – and if you don’t staff and customers will opt for better alternatives. Any
assumption that shortcuts and unethical behaviour will bring advantage is surely
misconstrued.
As the boundaries between businesses and the non-profit sector erode, adversarial
relationships will become cooperative. A consensus will emerge that we are all
responsible for our world and must work together to make it better – and we’ll all
wonder how we could ever have thought otherwise.
Five interesting articles on Health Care /Turning Doctors into Leaders/
Medicine Needs a New Kind of Hero/ Fixing Health Care on the front Lines/
Premium Price, Poor Performance/ Five Reasons Why Costs Are so High and How to
Tackle Them.
Most hospitals are designed for the nineteenth century. Most doctors don’t know how
to share power. Most patients with complicated problems don’t receive coordinated
care. It is time for a revolution led from within.
Health care delivery is fragmented and chaotic, principally because of an explosion of
knowledge and technological advances. Taming this chaos requires a new breed of
leaders at every level. Health Care’s new leaders must organize doctors into teams;
measure their performance not by how much they do but by how their patients fare.
Working in teams does not come easily to physicians, who still often see themselves
as heroic lone healers.
The Acceleration Trap by Heike Bruch and Jochen Menges.
It’s not just individuals that burn out – companies do too.
Ideally a company is powered by what we call sustaining energy – a joyful urgency
among employees that never burns out. But don’t demand the same level of urgency
every day or the energy may fizzle and performance sink, despite employees’ heroics.
Don’t drive your company constantly to its limits. Relentless acceleration leads to loss
of focus, an uncontrolled flood of activities, organizational fatigue, and burnout.
Is It Too Late to Enter China? By Edward Tse
Yes it is a difficult market but you cannot afford not to be there. Of the fortune 500
companies 480 are already in China – and have to battle for survival. Asia may be the
source of 50% of global GDP by 2030. By 2020 60 % of China’s population will live
in cities compared to 40 % today. This will transform markets afresh.
Building a Company Without Borders by Bart Becht
Conflict is good. We don’t care about consensus. Not having it doesn’t slow us down
and doesn’t mean that people aren’t aligned. We make decisions fast and then all
stand behind them. Get 80% alignment and 100% agreement to implement. And move
quickly.
Notes by [email protected] 4 April 2010
Harvard Business Review March 2010
Another interesting HBR issue with a few new ideas…
Women in management – Delusions of progress. By Nancy Carter and
Christine Silva. New Research show we are a lot further from achieving parity than
we thought. What went wrong?
Among graduates of elite MBA programs around the world, women continue to lag
men at every single career stage, right from their first professional job. On average
women earned $ 4,600 less as starting salary which was compounded over time. Men
reported higher career satisfaction than women. We need renewed efforts to combat
systemic gender inequity. Not soon but now.
Engaging people by Katie Truss and Emma Soane.
Five principles for increasing employee engagement: Keep people informed, listen,
set clear objectives, match the person to the job and create meaningful work. Also try
to tailor engagement programs to reach different types of workers. This enhances
performance.
The Mere Thought of Money Makes You Feel Less Pain by Kathleen D.
Vohs.
People who counted cash before dipping their hands in extremely hot water rated their
pain two levels lower (on a scale from 1 – 9) than those who counted slips of paper.
Cash gives people an inner strength and can reduce their physical and emotional pain.
In fact, simply the idea of cash has this effect. We found that money makes us want to
work alone and not ask for help. But we also found that people became more selfsufficient because of money. The marketing implications are huge. If a flight is
delayed – give them cash and not vouchers. And for bonuses cash is more impressive
than direct deposit.
Think Outside the Building, not only outside the box by Rosabeth Moss Kanter
The greatest future breakthroughs will come from leaders who encourage thinking
outside a whole building full of boxes. The new P&G CEO’s strategy is ‘purposeinspired growth’ finding growth opportunities by identifying more needs of more
people in more places more completely.
To foster innovation and transformation, leaders should focus on impact, not inputs.
They should identify unresolved problems, map the wider system influencing results,
and determine weak links to strengthen or gaps to fill. But to do all that effectively,
they must first jump out of the box and leave the building.
Who Do These Bankers Think They Are? Joseph E Stiglitz
Had our bankers been serious about designing an efficient incentive system, pay
would have been linked to relative performance, not to the vagaries of the stock
market. The predatory lending and deceptive credit card practices cast and even
darker shadow. In the end the financial system failed to perform its key roles:
managing risk, allocating capital, and keeping transaction costs low. Instead it created
risk, mismanaged capital, and generated huge transaction cost. There was too a
misallocation of human capital, as many of Americas most talented people succumbed
to the lure of the money. In some cases these were brilliant minds that in another era
might have improved society with genuine discoveries or innovations.
Funding Eureka by Nathan Myhrvold.
An Industry dedicated to financing inventors and monetizing their creations could
transform the world. The world needs a capital market for invention like the venture
capital market for start-ups and the private equity market for revitalizing inefficient
companies.
A functioning invention capital market and industry can enable inventors around the
globe to create hundreds of thousands more inventions each year than are being made
today. Many will go nowhere but the top 1 % will make our lives vastly richer and
better.
Roaring Out of Recession by Ranjay Gulati, Nitin Nohria and Franz
Wohlgezogen
Even when things go well, top executives must constantly inject urgency into the
organization – but not by running around setting and putting out fires. They must do
so by attracting a steady flow of people hungry to prove themselves; setting objectives
that are almost, but not quite, impossible to achieve; giving middle managers latitude
to exercise judgment and creativity in hitting those targets; and ultimately, aligning
the efforts of employees throughout the organization on what really matters.
Leadership Lessons from India by Peter Cappelli, Harbir Singh, Jitendra V Singh
and Michael Useem.
Although India’s competitive environment is relatively new, company leaders have
brought to it long standing tradition of business largess – a commitment to social
goals fuelled by enlightened self-interest.
Unlike the feel-good statements that Western companies make about, say, improving
customers’ lives, the social mission of Indian companies are integral to their strategy
and often the route to profits. Western leaders would do well to understand the
managerial approaches that have fuelled the rise of India’s largest companies, and
mindfully adopt them.
My view has long been that ‘Philosophy’ should be part of a business education and
the Indian understanding and commitment to spiritual values would be a valuable
component in any business organization. By establishing and emphasizing a deeper
sense of purpose and relationship between people who interact, new valuable energy
can be harnessed and the risk of mistakes and wrongdoing be reduced. One must
question if the US Capitalist model hasn’t lost its moral compass by overemphasizing
personal gain and short term returns with little concern for alignment with the well
being of the general public.
There is an interesting article on how BMW is trying to adjust jobs to an aging
workforce. Spending time and energy on aligning tasks to the ability of the work force
makes sense.
Giving up the CEO Seat – an article encouraging stepping aside when you think
someone else can do it better. Few people can stay at the front in the same position
more than five years. And yet it takes clear-voyance and courage to move over.
MBA and Executive Education by Karen Edelman.
If there was ever need for proof, this recession offered unequivocal evidence that we
are all connected – technologically, economically, and personally Courses focusing on
the global business landscape, Asia, and building cross-cultural acumen continue to
grow. More and more leaders are being asked to work with heads of non-profits and
government leaders to tackle some of the bigger societal issues, such as sustainability.
Executive education programs are growing to build these critical cross cultural
leadership and project management skills.
[email protected] 12th March 2010
Harvard Business Review January/ February 2010
Quite a rich issue of HBR, the January 2010 one! Even if not too much new came out
of it, there still are some pertinent points so quite good value all the same.
Beware that the surging volume of available information doesn’t adversely affect
personal well being, decision making and productivity. However, rightly used
information will be crucial. You and you alone decide where to place your attention.
It all depends on the quality of your habits. / Francis Wade, president Framework
Consulting /
Success Gets into Your Head – and Changes It. By Scott Berinato
If you get a reward, the brain remembers what it did right. Failure has no impact.
A Map to Healthy – and Ailing – Markets by Grail Research
The economic crisis will influence business long into recovery. As strategists target
global investments, they need to understand the effects of bailout and stimulus
programs. Calculating these interventions as percentages of GDP helps identify which
economies will be stressed and which will have the resources to bounce back.
Combined effect of bailouts and stimulus were highest in Iceland 76 %, Ireland 48 %,
China 47 %, USA 42 %, Russia 21 %, and UK 20 %, and rest of Europe less than 5
%, Japan 14 % and Australia 8 % - all percentages of GDP. The article suggests that
high number countries will take longer to recover than others.
We Can Measure the Power of Charisma by Alex Pentland
The more successful people are more energetic. They talk more but they also listen
more. They spend more face-to-face time with others. They pick up cues from others,
draw people out, and get them to be more outgoing. It is not just what they project
that makes them charismatic; it is what they elicit. The more of these energetic,
positive people you put on a team, the better the teams’ performance. Researchers
knew that attitude and positivity mattered but didn’t want to deal with them because it
was squashy, feel good stuff. But now we can quantify it. Now it is science.
We think face time with colleagues is vital, as much as 2.5 times as important as
additional access to information. We think we can increase productivity by 10 % at no
cost just by arranging the environment to promote more employee interaction.
The Responsible Manager by C K Prahalad
Managers must remember that they are the custodians of society’s most powerful
institutions. They must therefore hold themselves to a higher standard.
Key values to incorporate and understand are;
1. Understand the importance of non-conformity and how to deal with ambiguity
2. Display a commitment to learning and self development
3. Show humility in success and courage in failure
4. Help your colleagues realize their full potential
5. Learn to relate to those less fortunate
6. Commit to due process – people want fairness, not favours.
7. Realize the importance of your friends and supporters – you can’t do it alone
8. How you achieve results will shape the kind of person you become
9. Balance achievement with compassion and learning with understanding
10. You will be judged by what you do and not by what you say
11. Accept human weaknesses, laugh at yourself, and don’t try to play God.
The Long-Term Effects of Short-Term Emotions by Dan Ariely. Avoid
making decisions in the heat of the moment. Wait until you have cooled off. Sleep on
it.
What Really Motivates Workers by Teresa Amabile and Steven Kramer
Top motivator for performance is progress. On days when workers feel they are
making headway in their jobs, their emotions are most positive and their drive to
succeed is at its peak. So managers should celebrate progress, even the incremental
sort.
The Technology That Can Revolutionize Health Care by Ronald Dixon.
The number of hospital or doctor visits can be reduced by up to 60 % by a smart
remote communications system – email, telephone, etc.
Hacking Work – Learn to love the rule breakers by Bill Jensen and Josh Klein
Many in the work force are coming to the conclusion that they need to take matters
into their own hands in order to get the job done. The illusion of corporate control is
being shattered in the name of increased personal efficiency.
Spotting Bubbles on the Rise by Sendil Mullainathan
Will Rogers had sage advice on investing: “Buy some good stock and hold it till it
goes up, then sell it. If it don’t go up, don’t buy it.” The guidance we get today
regarding economic bubbles is just about as helpful: If it bursts, it was a bubble.
Bubbles can through behavioural finance research be identified as they form. We
can’t prevent earthquakes or hurricanes, but there are ways to minimize their damage.
The Age of Consumer Capitalism by Roger Martin
It is time to discard the popular belief that corporations must focus first and foremost
on maximizing value for shareholders. The idea is inherently and tragically flawed. A
better idea is to make customer value the top priority. This proves a better way to
generate returns than shareholder value maximization.
Shareholders get overly excited about good prospects and overly despondent about
bad prospects. Most executives understand that shareholder value creation and
destruction are cyclical and, more important, not under their control. They can push
shareholder value up in short bursts, but in due course, prices will fall again. So
executives invest in short term strategies, hoping to get out before the inevitable
crash, and often later criticize their successor for failing to avoid preordained declines.
Because they can’t win the game they are asked to play, CEO’s translate the rules into
a game that they can win.
Accelerating Corporate Transformation by Robert Miles
Transformation launches must be bald and rapid to succeed. Yet, imbedded in most
organizations are six kinds of speed brakes that can slow things down to a grinding
pace. During business-as-usual periods, these brakes may be benign, but in transition
they may be able to cause derailment. The six are Cautious management culture/
Business-as-usual management process / Initiative gridlock / Recalcitrant executives /
Disengaged employees and Loss of focus during execution. As the excitement wears
off, some executives may lobby for old, familiar methods that are more to their liking.
Strategy Tools for a Shifting Landscape by Michael Jacobides
In an age when nothing is constant, strategy should be defined by narrative – plots,
subplots, and character – rather than by maps, graphs, and numbers. Words are more
powerful than numbers because they allow a company to focus on the underlying
causes of change, enable it to update strategy constantly, and alert it to the idea that it
can change the business.
Characteristics of good play scripts. Imaginative – play scripts should explore all the
opportunities that exist, whether within or beyond the sector / Outward facing – they
should focus on the links a company has with other entities, the way it connects with
them, and how others perceive it in the market / Robust – They should not depend on
too many assumptions about other actors’ behaviour, but instead focus on the actions
that lead to the creation and capture of value / Plausible – Companies should consider
why they, rather than some other player, would be able to make a play script succeed.
How to Bounce Back from adversity by Joshua Margolis and Paul Stoltz
Three types of questions will help shift the focus from the cause of the impasse to the
active thinking about how best to respond. Specifying questions help identify ways to
intervene; Visualizing questions help shift attention from the adversity to a more
positive outcome and Collaborative questions help in reaching out to others for joint
problem solving.
Rethinking Marketing by R T Rust, C Moorman and G Bhalla
Because companies can now interact directly with customers, they must radically
reorganize to put cultivating relationships ahead of building brands. The new
approach looks at customer profitability, customer lifetime value, customer equity and
customer equity share. Being customer centric will soon be the only competitive way
to serve customers.
Managing alliances with the balanced score card by R S Kaplan, D P Norton
and B Rugelsjoen
For cross-entity collaboration to yield the highest rewards, the partners must agree on
strategy and then design metrics to determine how well the strategy is being
implemented. They must communicate a common vision and offer incentives that
motivate all employees to improve collaboration and deliver results. They also need a
process that allows them to talk candidly about difficulties, resolve disputes, share
information, and continually adapt the strategy to evolving external conditions as well
as to newly created capabilities. The balanced scorecard management system provides
a frame work for partners to work collaboratively and productively to achieve benefits
that neither could accomplish on its own.
Five ways to bungle a job change by Boris Groysberg and Robin Abrahams
The average baby boomer will switch jobs ten times, according to the US Bureau of
labour statistics.
The most common missteps – Not doing enough research / Leaving for money /
Going from rather than to / Overestimating yourself / Thinking short term / Time
pressure.
Perhaps the best protection against career- management mistakes is self awareness.
Notes by [email protected] 17 January 2010
Harvard Business Review December 2009
To Be a Better Leader, Give Up Authority by A D Amar, Carsten Hentrich,
and Vlatka Hlupic
Companies reliant on knowledge and innovation must abandon the traditional
structure in which decisions are reserved for people at the top. Leadership is not really
about delegating tasks and monitoring results; it is about imbuing the entire work
force with a sense of responsibility for the business. All companies can benefit from
having employees who feel more empowered and engaged. If abdication of authority
is to yield value, individuals need to be self motivated. Leaders shouldn’t dictate
vision or strategy; instead they should enable employees to create a common vision
through, for examples, off-sites for discussion of strategic issues and regular feedback
and education.
Meeting Sustainability Goals, conversation with Herman Miller CEO, Brian
Walker by Josette Akresh-Gonzales
Business people often want to believe that answers in strategy can be looked up in a
book and you can write them down and add them up and they equal something. It is
not like that. Often you simply start with a belief or maybe just an inkling and if you
are lucky, the evidence starts to pile up that you were right. In hindsight people
outside the company think you had a great business plan, but all you had was a belief.
Our belief was that sustainability was going to have a growing importance both to us
and our customers. The evidence, I’m thankful to say, is piling up.
Closing the Customer Feedback Loop by Rob Markey, Fred Reichfeld, and
Andreas Dullweber
It has never been more important to keep the customers you already have – it is much
cheaper than acquiring new ones. But elaborate customer research may be beyond this
year’s budget. Many companies have succeeded at retaining customers by asking
them for simple feed back – and then empowering front line employees to act swiftly
on that feed back. You can’t fix problems you don’t know you have. Each transaction
is an opportunity to create a new promoter.
How To Pick a Good Fight by Saj-nicole A Joni and Damon Beyer
Forget the past and power struggles that are history, and don’t bother apportioning
blame. Leaders in viable, vibrant organisations spend most of their time and energy
looking at the road ahead, not in the rear view mirror. That’s easier said than done.
Our research shows that senior leadership teams around the globe typically devote
85% of their time to the wrong fight. They examine their past numbers, try to figure
out what went wrong or dissect what went well, and assign blame or recognition – but
they spend virtually no time talking about the future. They waste energy, brainpower,
and resources that they could instead be investing in future returns. If business leaders
could redirect the conversation so that people spent even half their time talking about
the future, companies could see incredible improvements in performance.
A good future facing fight has three qualities: It speaks to what is possible, it is
compelling, and it involves uncertainty. It also connects people with a sense of
purpose beyond self-interest. Good leaders seek ways to push people to the point
where they find their energy sweet spot, without subjecting them to unbearable
tension.
The Innovator’s DNA by Jeffrey H Dyer, Hal B Gregerson, and Clayton M
Christenson
Five key aspects of Innovation –
1. Associating – the ability to successfully connect seemingly unrelated
questions problems or ideas
2. Questioning – finding the right questions is crucial
3. Observing – discovery-driven executives produce uncommon ideas by
scrutinizing common phenomena, particularly the behaviour of potential
customers
4. Experimenting – experimenters construct interactive experiences and try to
provoke unorthodox responses to see what emerges
5. Networking – devoting time and energy to finding and testing ideas through a
network of diverse individuals gives innovators a radically different
perspective.
Innovative entrepreneurship is not a genetic predisposition, it is an active endeavour.
Create Three Distinct Career Paths for Innovators by G C O’Connor, A
Corbett and R Pierantozzi
Discovery – create and identify opportunities in the marketplace. Explore fit between
technological capabilities and marketplace needs.
Incubation – Experiment in order to create a new business that delivers breakthrough
value to customers and to the firm.
Acceleration –Nurture the business until it can stand on its own
Let the Response Fit the Scandal by Alice M Tybout and Michelle Roem
Assess the incident – Adopt the customers’ point of view rather than management’s
perspective
Acknowledge the Problem – Avoid premature statements related to the cause, focus
on the process of investigation, and prevent further harm
Formulate a response – Evaluate the benefits and costs of the response in terms of
customer relationships over the long run
Implement the response – Align scandal communications with customers’ perception
of the brand’s function.
A New Philanthropy For a New Economy by Janice Fioravante
Learning how to do more with less in the new economy requires a new approach to
giving. If they have less to give, they want to make sure it is given well. It has interest
in mission-related investing as a way to do good while potentially getting your money
back or earning return.
The ability to make micro loans to poor entrepreneurs lets givers apply the best
elements of the for profit world to maximize social return. Venture philanthropy
draws on the lessons of strategic investment management, choosing a cause and
making a substantial, long-term commitment to an organization, often using the
discipline of private equity to assess a business, looking for social impact and
expecting social return.
In entrepreneurial philanthropy, the business owner or financier who has taken the
risks and been successful wants to get involved and see the impact of their giving.
George Soros in allocating $ 1.1 billion to clean energy technology insisted that
investments make a real contribution to solving climate change.
Many clients want their philanthropy to operate in a more business like way. Many
want to roll up their sleeves and be part of solving problems, not just offer support.
Negotiation? Auction ? A Deal Maker’s Guide by Guhan Subramanian
If you think you can get a sufficient number of the buyers you want to participate, an
auction makes sense – unless you expect valuations to vary widely. If the asset has the
potential to create a lot of value, or a relationship or service is important, a negotiation
usually works better.
Don’t Integrate Your Acquisitions, Partner with Them by P Kale, H Singh
and A P Raman
Bucking conventional wisdom, some emerging multinationals are preserving the
identity of companies they’ve taken over. By allowing them operational autonomy,
they are reaping rewards. The partnering approach can embody the best of both
alliances and acquisitions.
Notes by [email protected]
Harvard Business Review November 2009
The best guide through rough waters is a clear and meaningful purpose.
The continuing relevance of the Drucker perspective, by Rosabeth
Moss Kanter
Drucker always pointed to the underlying system as the source of problems and
solutions rather than assigning managers accountability for challenging the system.
He saw the people as assets to be empowered, not machines to be controlled. When
things are in a flux, a set of common sense of purpose and a set of common values
enable people to work together effectively. If the twentieth century gave rise to
knowledge workers with deep expertise, the twenty-first century will require leaders
who can foster integrative thinking and collaboration across fields and specialties.
Collaboration, not co-ordination, will be the task of management. Drucker was not a
passionate advocate of outcomes; he was a teacher of process.
Not for profit organizations are necessary ingredients in producing a good society,
one in which business can thrive. Civil society works to complement government in
meeting human needs.
Fair value Accounting for the financial crisis? By Robert C. Pozen
This was the most interesting article in this edition. Well worth reading in its entirety.
What was the primary cause of the current financial crisis? Subprime mortgages.
Credit default swaps, or excessive debt? None of those, says Steve Forbes, Chairman
of Forbes Media. In his view, mark-to-market accounting was “the principal reason”
that the US financial system melted down in 2008.
A battle is raged about which assets should be ‘marked to market’ in quarterly
financial statements, as opposed to reported at historical cost. Some executives blame
marking to market, which is generally advocated by investors, for the final melt down.
Myths are being propagated by both sides in the argument. But it’s not true that
historical cost accounting can disregard permanent changes in current market value or
that most assets of financial institutions are marked to market.
Solutions that serve everyone’s needs are possible. If accounting and capital
requirements were substantially unlinked, marking to market would not usually have a
negative impact on a bank’s regulatory capital. Income volatility would be better
understood if banks published two EPS figures – one with assets recorded at fair value
and the other without. And the fair value accounting approach of ‘marking to model’
could gain some credibility with investors if they were given assumptions underlying
these models.
Fair value accounting did not cause the current financial crises, but the crisis may
have been aggravated by common misperceptions about accounting standards. Some
investors incorrectly assumed that most bank assets would be valued at market prices,
as bond prices were nose diving. Other investors failed to realize that the sharp mark
downs of bond available for sale would not put banks in violation of regulatory capital
requirements. If we can make these accounting complexities clearer by adopting a
multidimensional approach to financial reporting, both companies and investors
should be better equipped to respond intelligently when financial markets are next
thrown into turmoil.
What Every Leader Should know About Real Estate by Mahlon
Apgar
Idea in brief:
Real estate is the largest or second-largest asset on the books for most companies, yet
senior managers rarely pay attention to it. They should follow these principles: Think
of real estate holdings as a portfolio, not a set of discrete properties. Pay a little extra
for a lease or a purchase if it buys flexibility. Collect data to assess the portfolio’s
performance. Work with real estate service providers that offer expertise and
efficiency. Embrace sustainability; it is here to stay.
As business enters a new era of more responsive and responsible capitalism, real
estate will become even more central to a company’s global presence, competitive
strategy, and availability to retain top talent. The fact is, real estate is never neutral. It
can multiply shareholder value or diminish it; help an organization achieve its
mission, implement its strategy, and compete effectively; or hinder its market
position, organizational development, and long term growth. Real estate compels
leaders’ attention – and their mastery of the issue and principles behind their largest
assets.
Make Better Decisions by Thomas H Davenport
In recent years decision makers in both public and private sectors have made an
astounding number of poor calls. For example, the decisions to invade Iraq, not to
comply with global warming treaties, to ignore Darfur, are all likely to be recorded as
injudicious in history books. And how about the decisions to invest in sub-prime
mortgage loans, or to hedge risk with credit default swaps? Those were spread across
a number of companies, but single organizations, too, made bad decisions. Tenneco,
one a large conglomerate, chose poorly when buying businesses and now consists of
only one auto parts business. General Motors made terrible decisions about which
cars to bring to market. Time Warner erred in buying AOL, and Yahoo in deciding
not to sell itself to Microsoft.
Why this decision- making disorder? Firstly, because decisions have generally been
viewed as the prerogative of individuals, usually senior executives! The process
employed, the information used, the logic relied on, have been left up to them, in
something of a black bow. Information goes in, decisions come out – and who knows
what happens in between? Secondly, unlike other business processes, decision making
has rarely been the focus of systematic analysis inside the firm. Very few
organizations have ‘reengineered’ their decisions. Yet there are just as many
opportunities to improve decision making as to improve any other process.
Smart organizations can help their managers improve decision making in four steps:
by identifying and prioritizing the decisions that must be made; examining the factors
involved in each; designing roles, processes, systems, and behaviour to improve
decisions; and institutionalizing the new approach through training, refined data
analysis, and outcome assessment.
If you don’t know which of your decisions are most important, you won’t be able to
prioritize improvements. If you don’t know how decisions are made in your company,
you can’t change the process for making them. If you don’t assess the results of your
changes, you’re unlikely to achieve better decisions. The way to begin is simply to
give decisions the attention they deserve. Without it, any success your organization
achieves in decision making will be largely a matter of luck.
[email protected]
Harvard Business Review October 2009
The October issue is a bit thinner than the September issue with a focus on Risk. A
few choice notes;
When individuals don’t matter by Michael J. Mauboussin
Ants aren’t smart – ant colonies are. You can’t understand the behaviour of a complex
system, let alone manage it, by analyzing a few individuals. Changes in one
component of a complex system may have unintended consequences for the whole.
There is a tendency to prize a few stand out individuals whilst ignoring how much
they draw on their surrounding system for support.
The Myth of the Rational Market (book) by Justin Fox
The academics by and large argued that the markets very randomness showed just
how efficient it really was: The market was so big and open and adaptive that no
investor could game it. They developed a growing confidence in its peculiar wisdom
and built upon that bedrock, rational models for managing uncertainty. Then, on the
basis of nothing more than a plausible assumption, they could erect a superstructure of
seemingly scientific conclusions about how companies should invest. That
superstructure, not just corrupt and irresponsible mortgage brokers, let to the financial
crash.
Risk managers are eager for useful models, so they’re likely to jump at any concept
that promises to make their lives easier. What appealing but false models might be
blinding your risk managers?
The Simplest Way to Reboot Your Brain by Robert Stickgold –
www.health.hbr.org
A few minutes of shut-eye at work could be good for business. How does an
organization implement a pro-nap policy? Some companies have nap-rooms; others,
like Google, offer nap pods that block out light and sound. Google says its pods are an
extension of the company’s flexible schedule policy – people work in ways that best
suit them. If that sounds expensive, you can simply announce that it is ok to take
quick naps because they make people more productive. Given the millions of dollars
spent on trying to improve productivity, this small low cost experiment is worth
doing.
How GE is Disrupting Itself by Jeffrey R. Immelt, Vijay Govindarajan, and Chris
Trimble.
This I found to be a very interesting article about Globalization – globalizing by
stepping up from a local level success. For decades, GE has sold modified Western
products to emerging markets. Now, to pre-empt the emerging giants, it is trying the
reverse.
The model that GE and other industrial manufacturers have followed for decades –
developing high end products at home and adapting them for other markets around the
world – won’t suffice as growth slows in rich nations.
To tap opportunities in emerging markets and pioneer value segments in wealthy
countries, companies must learn reverse innovation: developing products in countries
like China and India and then distribute them globally.
While multinationals need both approaches, there are deep conflicts between the two.
But those conflicts can be overcome. If GE doesn’t master reverse innovation, the
emerging giants could destroy the company.
GE now has more than a dozen local growth teams in China and India. In the midst of
a severe global recession, GE’s business will grow 25 % this year. The big smart
solution in the West might be replaced by something smaller and less capable but still
highly useful and suitable for improved performance in emerging economies. Such
solutions are often best pursued by expertise and manufacturers in the market they are
intended to serve.
Managing Risk in the New World Robert with S. Kaplan, Anette Mikes,
Robert Simons, Peter Tufano, and Michael Hoffman – moderated by HBR David
Champion.
One of the problems is that shareholder return has been seen as economically and
morally justifiable regardless of context. When systemic risk arises, then all the
traditional risk-return analysis in the world won’t help. Bank analysts referred to the
‘Greenspan put.’ Whatever risks the banks took on were hedged by society, because
the fed would bail them out in order to save the system. Risk correlations change in
response to external events making it hard to create solid balanced reward incentives.
Lastly, don’t believe it is easy to eliminate risk. When you buy insurance for example
all you are doing is moving the risk to a new party. We are seeing a change in how we
define a healthy balance sheet. In banks we are talking about conditional capital
requirements which will apply in down turns. Regulators traditionally focus on
individual firms. The challenge is to connect the dots at the systemic level. Banks
should be regulated more like utilities than like entrepreneurial firms.
The Six Mistakes Executives Make in Risk Management by Nassim N
Taleb, Daniel G Goldstein, and Mark W Spitznagel.
We think we can manage risk by predicting extreme events / We are convinced that
studying the past will help us manage risk / We don’t listen to advice about what we
shouldn’t do / We assume that risk can be measured by standard deviation / We don’t
appreciate that what’s mathematically equivalent isn’t psychologically so. / We are
taught that efficiency and maximizing shareholder value don’t tolerate redundancy.
The biggest risk lies within us. We overestimate our abilities and underestimate what
can go wrong. The ancients considered hubris the greatest defect, and the gods
punished it mercilessly. Many generals have died for not recognizing their limits. Any
corporation that doesn’t recognize its Achilles’ heel is fated to die because of it.
[email protected]
Harvard Business Review September 2009
The September HBR is a very interesting issue and focuses on a couple of points
which I have considered top priority for many years. It is refreshing to see a business
magazine take such independent and sound positions, ostensibly free from industry
and other perceived specialty interests. Anywhere where the truth is suppressed and
not tolerated things can only decline. And conversely we need to identify true trends
and call things by their proper names. The two issues are; embrace green trends or pay
the consequences (go out of business) and the tremendous power of the feminine half
of the world (with bigger spending power than China and India combined) still largely
ignored by most companies.
A few notes from the September issue:
The cover has these headlines – How Green will save us and Why your next business
model must be green.
The leader says: Companies won’t innovate successfully – and as a result won’t grow
– unless they throw themselves whole hog into green initiatives. Smart companies
now treat sustainability as innovation’s new frontier. Although women make far more
purchase decisions than men do, they feel badly serviced by companies they buy
from. The financial service industry is the least attuned to women. / Adi Ignatius / (his
name reminds me of reading Ignatius Loyola and finding much profound wisdom –
attached at the end)
Doing Business in a Post Growth Society by James Gustave Speth
Soon, developed countries will begin the move to a post growth world where working
life, the natural environment, communities, and the public sector will no longer be
sacrificed for the sake of mere GDP growth, and where the illusory promise of ever
more expansion will no longer provide an excuse for ignoring compelling social
needs.
If the market is going to work for the betterment of society, environmental and social
costs should be fully incorporated in the price.
A great imperative countries will face in the years ahead is building a new, sustaining
economy. Sustaining people, communities, and nature must henceforth e seen as the
core goals of economic activity, not the hoped-for by-products of growth, market
success, and modest regulation. The challenge is to reinvent the economy, not just
restoring it.
What service Customers Really Want – by Dave Dougherty and Ajay Murthy
Customers are looking for a satisfying experience. Companies that provide it will win
their loyalty. In evaluating service, managers should measure across all channels the
percentage of customer problems resolved within the first contact, determine what is
the root of problems not settled in one call, and make any necessary changes.
Energize Employees with Green Strategy by Andrew Winston
In times of high economic stress and lay-offs, it can be difficult to maintain employee
morale. Greening your business and involving everyone in the process, can keep
people motivated and help your company ride out the storm. They will respond even
more enthusiastically if the organization is getting lean and green for the dual
purposes of environmental concerns and profit. And here is the best part, given the
severity of the downturn: increasing employee excitement and changing behaviour
can cost very little.
Getting employees excited about new, low cost ways of operating – or about creating
products and services that help customers reduce their environmental impacts – will
engender extremely loyal work force.
“I’ve never seen an issue galvanize people in a company like sustainability.”
The Female Economy by Michael S. Silverstein and Kate Sayre
Globally they control about $ 20 trillion in annual consumer spending, and that figure
could climb as high as $28 trillion in the next five years. Their $13 trillion in annual
earnings could reach $18 trillion in the same period. In aggregate women represent a
growth market bigger than India and China combined. Given these numbers it would
be foolish to underestimate the female consumer.
Despite women’s dominant buying power, many companies continue to market
mainly to men and fail to explore how they may meet women’s needs. Companies
that can offer tailored products – going beyond making it pink – will be positioned to
win when the economy recovers.
Women make the decision in the purchase of 94% of home furnishings; 92 % of
vacations; 91 % of homes; 60% of automobiles; and 51% of home electronics.
“The costliness of clothing was another sore point for the women in our survey. That
explains why respondents to Sweden-based H&M. Its stores offer inexpensive, fun,
trendy clothes and, with a rapid turnover of stock, an element of surprise each time
shoppers visit. Women value the ability to buy a new outfit without breaking the
bank. Perhaps contributing to H&M’s success is the fact that nearly 80% of the
company’s employees, 77%of store managers, and 44% of country managers are
women. So are 7 of 11 board members.”
Despite setbacks in the economy, private wealth in the United States is expected to
grow from some $ 14 trillion today to$ 22 trillion by 2020, and 50% of it will be in
the hands of women.
Women are still far more burdened than men by household tasks; according t this
survey, about one-third of men don’t help their spouse or partner with chores. In
Japan women receive the least support, with 74 % getting little or no help from their
spouse. At the other extreme, 71 % of Indian husbands pitch in on household chores.
Already women own 40% of business in the USA and their business is growing at
twice the rate as business in general.
Brands that directly or indirectly promote physical and emotional wellbeing, protect
and preserve the environment, provide education or care for the needy, and encounter
love and connection will benefit.
Understanding and meeting women’s needs will be essential to rebuilding the
economy; therein lies the key to breakout growth, loyalty, and market share.
Why Sustainability is now the key driver of innovation. By ram Nidumolu,
C.K. Prahalad, and M.R. Rangaswami
There is no alternative to sustainable development. Even so, many companies are
convinced that the more environmentally friendly they become, the more the effort
will erode their competitiveness. Our research shows that sustainability is a mother
lode of organizational and technological innovations that yield both bottom line
returns. Becoming environmental friendly lowers cost because companies end up
reducing the inputs they use. In addition, the process generates additional revenues
from better products, or enable companies to create new businesses. Smart companies
now treat sustainability as innovation’s new frontier.
By treating sustainability as a goal today, early mover will develop competencies that
rivals will be hard pressed to match. That competitive advantage will stand them in
good stead, because sustainability will always be an integral part of development.
It is tempting to adhere to the lowest environmental standards for as long as possible.
However, it is smarter to comply with the most stringent rules, and to do so before
they are enforced. This yields substantial first-mover advantages in terms of fostering
innovation.
Contrary to popular perception, conforming to the highest standard globally actually
saves companies money. When they comply with the lowest standard, managing
component sourcing, production and logistics becomes much more complicated.
Companies in the vanguard of compliance naturally spot business opportunities first.
Companies should ask: What are the milestones on the path to our desired future?
What steps can we take today that will enable us to get there? How will we know that
we are moving in the right direction?
What led to our advanced service economy is that someone asked: Can we create a
carriage that moves without horses pulling it? Can we fly like birds? Can we dive like
whales? By questioning the status quo, people and companies have changed it.
When a company’s top management team decides to focus on the problem, change
happens quickly. Recent research suggests that three-fourths of work force entrants in
the USA regard social responsibility and environmental commitment as important
criteria in selecting employers. People who are happy about their employer’s position
on those issues also enjoy working for them.
Other articles are:
Creating value in an Economic Crisis by Bill Clinton Being a good corporate
citizen requires investments in society and the environment
How Strategy Shapes Structure – Instead of letting the environment define your
strategy, craft a strategy that defines your environment.
Death by Information Overload – It takes 24 minutes to get back on task after
opening an email
Are You having Trouble Keeping Your Operational Focus – growth can dull
your operational edge.
The Coming Battle Over Executive Pay – the attention will continue but no
easy answers.
How to manage Your negotiating team – the biggest challenge may lie on your
side of the table.
Notes by [email protected] 18th Sept 2009
Harvard Business Review July/ August 2009
This summer issue for 2009 is full of interesting articles trying to outline what the
future scope looks like. The only thing we know about the future is that it is unknown
but once we realize this, a few scenarios can be stimulating for thought and action.
The message comes through in many of the articles that business needs to be more
than shareholder return and three month focus. In this day and age mature and
competent people want to promote something worthwhile in their daily activity. This
issue covers two months and it really is twice as deep as a normal issue. Well done
HBR! Please find below a few notes from the articles.
One that would have the fruit must climb the tree.
Heed the Calls for Transparency by Sam Wilkin
Rather than hoping that public pressure will go away, banks and asset management
firms should embrace transparency. Doing so will help them rebuild their reputations
more quickly. The last thing the financial industry needs is politicized legislation
made hastily while public anger is at its highest.
Just how healthy is your global partner? By Josh Green
Routinely ask for your partners sales projections / Request third party validation of
the partner’s financial health and its sales or operations history / Ask to see references
from other or past partners / Create ongoing processes for tracking trading-partner
risks / Develop back up options for each important partner / Prepare to provide more
information to partners than ever before / Learn to sell yourselves to potential partners
by demonstrating your own stability and long-term strength
The New Face of Protectionism by Regina M Abrami
Today protectionism isn’t practical; every country depends on imported goods and
foreign markets. Free trade agreements allow countries to be ‘preferentialist’ instead
of downright protectionist. The challenge is no longer access to foreign markets but
figuring out how to access them wisely.
Conversation with architect Ellen Dunham-Jones
Fewer than a third of US households today have kids. This is projected to reduce to a
quarter. The current level of retail space cannot be sustained going forward. Retailers
will have to figure out how to reach a mix of workers and residents and integrate
discretionary goods with those that meet everyday needs. Retailers and manufacturers
alike should emphasize fundamental quality over quantity, focus on weaving retail
into community life, and get creative about retooling for the neighbourhood general
store of the future.
Predicting the Present a conversation with science fiction writer Cory Doctorow.
Little brother is about the intense joy that you experience when you discover that
there are millions of people out there just like you, whom you can work with to try to
change society, or try and get something done.
My greatest fear is that entrenched power will take control over the internet because
they fear that a free internet will disrupt their ability to stay in charge.
The universal access to all human knowledge is the realization of one the most
important dreams of humanity and complaining about it is morally indefensible.
Banning copying criminalizes the majority of internet users, because we all copy all
the time.
Arts is an economically irrational activity. That’s as true in the twenty-first century as
it always has been. There’s no question that the internet does a better job than any
other system of allowing people to be heard. The majority of people who don’t buy
my book are those who haven’t heard about it.
The Descent of Finance by Niall Ferguson
Bank of America’s leverage ratio was 73.7:1 The federal debt will soar to 146 % of
GDP by 2019. In weeks the liquidity crisis became a solvency crisis, claiming Bear
Sterns as its first victim.
One consequence of the new expenditures will be a huge increase in the federal
government’s budget deficit now at 12 % of GDP or 4 % of total outlays.
Who will buy $ 1.75 trillion of freshly printed government bonds? Goldman Sachs
says Chinas GDP might equal that of USA by 2027 rather than as previously
calculated, 2040.
The Trends You Have To Watch by Eric Beinhocker, Ian Davies and Lenny
Mendonca
Resources feeling the strain / Globalization feeling the fire / Trust in Business
Running out / A bigger role for government / Management as a science / Shifting
Consumption patterns / Asia Rising / Industries taking new shape / Innovation
marching on / Price stability n question.
Running out of trust - why should this concern strategists? Because a low-trust
environment makes everything about doing business more difficult! For an individual
company, loss of trust leads to higher transaction costs, lower brand value, and greater
difficulty attracting, retaining and developing talent. Ultimately it can mean boycotts,
negative publicity, and unwanted regulation. Regaining trust also means dispensing
with the view that the only objective of management is to increase shareholder value.
Leadership in a (Permanent) Crisis by Ronald Heifetz, Alexander Grashow, and
Marty Linsky.
To keep yourself from being corralled by the forces that generated the crisis in the
first place, you must be able to depart from the default habits of authoritative
certainty. Taking care of yourself both physically and emotionally will be crucial to
your success. You can achieve none of your leadership aims if you sacrifice yourself
to the cause.
Give yourself permission to be both optimistic and realistic. Find sanctuaries where
you can reflect on events and regain perspective. Reach out to confidants with whom
you can debrief your work days and articulate your reasons for taking certain actions.
Bring more of your emotional self to the workplace. Don’t lose yourself in your role.
(This much aligns with my own thinking. Goals are never really reached, they just
provide direction because as you are nearing any goal you already have revised your
aims to something bigger and more distant. Therefore, only a fool is determined to
find the end of the rainbow. And thriving in the pursuit of improvement is very
important in order to ensure that the pursuit is shared and able to be taken up by
successors and others.)
How Gen Y & Boomers Will Reshape Your Agenda by Sylvia Hewlett,
Laura Sherbin, and Karen Sumberg
Two large surveys suggest that the oldest and youngest groups in the workplace have
in common a desire to contribute to society through their labour, seek flexible
working arrangements, value social connections at work and loyalty to a company,
and prize other rewards of employment over monetary compensation. This has
significant implications on the design of work environments.
(Don’t be surprised if you lose talent if you are not catering to staff needs, physical
and spiritual – two different approaches 1. This is how we go about things and if you
work here you must adjust and 2. We are committed to make every effort to cater for
your reasonable individual needs and aspirations – shareholder centric and people
centric).
The End of Rational Economics by Dan Ariely
Your company has been operating on the premise that people – customers, employees,
mangers – make logical decisions. It is time to abandon that assumption. By adopting
an experimental approach, firms can discover the truth underlying their assumptions
about customers, employees, operations, and policies.
Once the understanding of irrationality is embedded in the fabric of the organization,
a behavioural economics approach can be applied to virtually every area of the
business, from governance and employee relations to marketing and customer service.
It is probably most useful in the relationships between compensation and
performance, risk and reward, loyalty and consumer habits, and pricing and
purchasing behaviour. As companies become more willing to question their
assumptions, discover something about their stake holders’ predilections, and share
the result of their learning, they will no doubt become a great deal wiser.
Shareholders First, Not So Fast by Jeffrey Pfeffer.
CEOs are rediscovering ‘stakeholder capitalism’- respecting the needs not just of
investors but also of customers, employees, and suppliers. In the end shareholder
returns are just an outcome of management practices that respect all constituencies.
Maybe this time CEOs will get it. If they don’t, we’ll be travelling back to the future
once more, with yet more rounds of scandal and recession.
Government in Your Business by Robert B Reich
(Europe has been criticized for large government sectors and involvement. However,
there is a positive side to this. In Sweden (and France and Japan) for example it has
long been prestigious to work for the government and on balance lots of talented
people are attracted to this sector bringing high levels of competency. Generally there
is trust between the two sectors rather than the distrust prevailing in USA and many
other countries. It seems a reasonable proposition that with government being
responsible for 25 – 50 % of GDP, trust and constructive co-operation will achieve
more than popular disdain and disrespect. Often government is seen as regulators in
the main, but with a more proactive approach it can be a useful partner for sustainable
business operations).
The article suggests that we need to break out of the tired ideological debate about
whether we want more or less government and focus instead on what we need
business and government to achieve together.
Understanding the Post-Recession Consumer by Paul Flatters and Michael
Willmott.
Four key trends are being accelerated by this recession: consumer demand for
simplicity, a call for ethical business governance, a desire to economize, and a
tendency to flit from one offering to another. Green and ethical consumption are
likely to slow but pick up again post recession. Some consumers may return to boom
time consumption patterns in the coming decades, but millions of people under age 35
entering this recession may well retain simplicity-seeking, thrifty, green yet mercurial
consumers who will hold business to very high standards. Companies would be wise
to understand what these consumers want and be prepared to deliver it.
Rebuilding Companies as Communities by Henry Mintzberg
Beneath the current economic crisis lies another of far greater proportions: the
depreciation in companies of community – people’s sense of belonging to and caring
for something greater than themselves.
Government stimulus programs and the rescue of the biggest and sickest corporations
will not alone resolve the problem. Companies need to reengage their people. The
practice of both management and leadership needs to be rethought.
We are social animals who cannot function effectively without a social system that is
larger than ourselves. This is what is meant by “community” - the social glue that
binds us together for the greater good. Community means caring for our work, our
colleagues, and our place in the world, geographic and otherwise, and in turn being
inspired by this caring. ‘Communityship’ is not a word in the English language but it
should be – to stand between individual leadership and collective citizenship.
Maybe it’s time to wean ourselves from the heroic leader and recognize that usually
we need just enough leadership – leadership that intervenes when appropriate while
encouraging people in the organization to get on with things.
A healthy society balances leadership, communityship, and citizenship.
Notes by [email protected] 8th August 2009
Harvard Business Review June 2009
The June issue focuses on the new type of leadership required post the financial meltdown just experienced. It is really quite simple and straightforward. We need leaders
who understand that life is bigger than business and family and management at top
level is about doing the right thing and serving the community first and making a
living off it second. You don’t have to be particularly avant-guard or intelligent to
understand this. In some ways it is puzzling that it has taken so long. Business has
lived its own isolated life and that just isn’t good enough anymore. It is ok to make
money and be profitable but it has to be in ways which align with and harmonize with
citizenship and society at large. We all have a mandate – explicit for politicians, and
implicit for everyone else, to carry on as long as we are committed to the good of the
multitude. If we operate at loggerheads to these criteria we will sooner or later run
into trouble and wise investors, staff and customer will stay away.
A few lines from the issue….
Too big to fail by Duncan Watts – should really be too big to exist – i.e. nothing
should be too big to fail. Government intervention is required to prevent markets from
destroying themselves, and the relevant question is what kind of intervention is
effective. Firms should not be allowed to grow too big to fail.
Conversation with Paul Krugman…The idea that you need to give executives a
stake in company profits – in order to give them the right incentives – has been very
influential, and arguably it has caused a lot of damage.
How to be a good boss in a bad economy…by Robert I Sutton…. When operations
are going haywire and people are rattled, it is especially hard to get new ideas to take
root or to teach new behaviours of any complexity. Your job as a boss is to design
messages that will get through to people who are distracted, upset, and apt to think
negatively given any ambiguity.
When it comes to internal communications, your mantra should be “Simple, concrete,
and repetitive.” If you aren’t saying the same things over and over again, and aren’t a
bit bored with yourself, it may be that you aren’t relating yourself enough or your
messages are overly complex.
Provide predictability, increase understanding, afford control and show compassion.
Predictability: give people as much information as you can about what will happen
and when. If shocks are preceded by fair warnings, people not only have time to brace
themselves but also get chances to breathe easy.
Understanding; explain why the changes you’re implementing are necessary – and
don’t assume you need to do so only once.
Control; take a bewildering challenge and break it down into ‘small win’
opportunities. In situations where you can’t give people much influence over what
happens, at least give a say in how it happens.
Compassion; put yourself in the other person’s shoes. Express empathy and – when
appropriate – sorrow for any painful actions that have to be taken.
Win or lose, if your people believe you are always on their side, it will come back to
help you – but if they believe you are willing to sell them out at the drop of a hat, it
can haunt you down the road.
Rebuilding Trust…by James O’Tole and Warren Bennis
The new metric of corporate leadership will be closer to the extent to which
executives create organizations that are economically, ethically, and socially
sustainable.
Tell the truth/ Encourage people to tell the truth / Reward contrarians / Practice
having unpleasant conversations / Diversify your sources of information / Admit your
mistakes / Build organizational support for transparency / Set information free.
The Buck Stops (and starts) at Business School by Joel M Polodny
This article argues that the old adage of focusing on monetary maximization and
returns is not good enough for any academic institution, which many of us have
sensed for a long time. The goals need to be aligned with ethics and environment and
contribution to society.
I am angry at the inattention to ethics and values-based leadership in business schools.
We didn’t need the current meltdown to tell us things weren’t right; the Enron and
WorldCom scandals proved it more than seven years ago. I am angry at the
disciplinary silos in which business schools teach management. I am angry that many
academics aren’t curious about what really goes on inside companies. They prefer to
develop theoretical models that obscure rather than clarify the way organizations
work.
The time has also come for business schools to develop codes of conduct for MBAs
and to withdraw the degrees of those who break the manager’s code.
A lack of trust results when your expectations about how a person should behave
aren’t met. Laws and regulations help address those situations by acting as effective
deterrents. In contrast, distrust arises when you believe that another person’s value
system is different from your own. N those situations, legal remedies, which are
impersonal and binding, only exacerbate the problem. In order to reduce people’s
distrust, business schools need to show that they value what society values. They need
to teach that principles, ethics, and attention to detail are essential components of
leadership, and they need to place a greater emphasis on leadership’s responsibilities
– not just its rewards.
Academics capable of teaching soft skills such as leadership, values and ethics are in
distinct minority at most business schools. Goals need to be formulated in nonnumerical terms including expectations of post business school incomes and life.
Schools must be able to say that they promote behaviour that is consistent with
society’s values. To this end, business schools need to reinvent themselves.
Rethinking Trust by Roderick M Kramer
Despite deceit, greed and incompetence on a previously unimaginable scale, people
are still trusting too much. To survive as individuals we need to learn to temper our
trust. To trust wisely we need to re-adjust our mindset and behavioural habits
following these basic rules: Know yourself; Start Small; Write an escape clause; Send
strong signals; Recognize the other person’s dilemma; Look at roles as well as people;
Remain vigilant and always question.
Why You Didn’t Get That Promotion by John Beeson
This is a great article about how those who do seemingly well don’t get promoted.
How often subtle factors hold people back, perhaps the most important of which is not
picking up the cues and wanting to learn and change. “Colleagues complained that he
tended to get locked into his own opinions, that he lacked openness to other
perspectives and shut down creative alternatives. Some considered him arrogant” – all
very common. The article talks about Key Factors in Executive Advancement as
being 1) Nonnegotiables – factors absolutely necessary to be a contender; 2) Deselection Factors - characteristics that prevent you from being considered as a serious
candidate; and 3) Core Selection Factors – capabilities that breed others’ confidence
in your ability to succeed at the senior level.
Also two interesting articles on Innovation In Turbulent Times (pair left and right
brain thinker for success) and Audit Committee’s New Agenda (not just ensuring
viability but also restoring public confidence).
[email protected]
Harvard Business Review May 2009
What Only the CEO Can Do. By A G Lafley, CEO of Procter and Gamble
The CEO is the link between the Inside that is ‘the organization,’ and the outside of
society, economy, technology, markets and customers. Inside there are only costs.
Results are only on the outside (Peter Drucker).
We won’t succeed without a deep understanding of external stakeholders and their
competing interests, and how those interests correspond with the capabilities and
limitations of the organization.
Linking the outside with the inside comes down to four fundamental tasks.
1. Defining and interpreting the meaningful outside.
2. Answering, time and again, the two-part question; what business are we in and
what business are we not in?
3. Balancing sufficient yield in the present with necessary investment in the
future.
4. Shaping the values and standards of the organization
So many employees are glued to their computers and spend so many hours in internal
meetings thereby losing touch with the consumers. You need to be out there in the
competitive pressure cooker called the market place. Too often time is spent on
initiatives consumers don’t want, incurring cost that consumers should not have to
pay for. The consumer is the boss. We must win the consumer value equation every
day in making the customer chose our product and then be delighted in using it.
Need Cash – Look inside the Company by Kevin Kaiser and David Young
1.
2.
3.
4.
5.
6.
Don’t manage to the income statement
Don’t reward staff for growth alone
Don’t overemphasize production quality
Don’t tie receivables to payables
Don’t manage by current and quick ratios
Don’t benchmark competitors
In the right environment performance indicators are not blindly and unquestionably
followed. There needs to be a participative culture in which all employees feel
responsible for creating value. This will help ensure your capital is working
efficiently.
The Definitive Guide to Recruiting by Caludio Fernandez-Araoz, Boris
Groysberg and Nitin Nohira
With a proactive hiring process companies can not only acquire the best talent but
retain their stars longer than less prepared competitors.
Is Your Growth Strategy Flying Blind by Mehrdad Baghai, Sven Smit and
Patrick Viguerie
Companies can get much more out of their growth strategies by digging deeply into
micro markets – typically ranging from $50 – 200 million in value, than from looking
at the overall picture. Many companies look at themselves on the basis of too
aggregated data. Look out for where the growth markets will be – not where they are
right now.
Why Teams Don’t Work by Diane Coutu interviewing Richard Hackman,
professor of Social and Organizational Psychology at Harvard University.
Teams often underperform due to problems with co-ordination and motivation. Often
the CEO is responsible for the fuzziness of team boundaries. Fearful of seeming
exclusionary – or, on the other end of the spectrum, determined to put people on the
team for purely political reasons – the CEO frequently creates a dysfunctional team.
In truth, putting together a team involves some ruthless decisions about membership;
not everyone who wants to be on the team should be included, and some individuals
should be forced off.
Every team needs a deviant, someone who can help the team by challenging the
tendency to want too much homogeneity, which can stifle creativity and learning. In
many cases deviant thinking is the source of great innovation. For a team to work well
the team needs coaching as a group.
Many people act as if being a team player is the ultimate measure of one’s worth,
which clearly it is not. (My comment: Self serving and self aggrandizement is always
negative and the concept ‘team player’ is often used to differentiate against such
corrosive behaviour – someone who refuses to pass the ball lets the team down).
There are many cases where collaboration, particularly in truly creative endeavours, is
a hindrance rather than a help. The challenge for a leader then is to find a balance
between individual autonomy and collective action.
[email protected] 30th May 2009
Harvard Business Review April 2009
After missing out on last month’s edition of HBR I found this one quite interesting.
Perhaps key messages are listen to your adversaries and see their comments as feedback and you have to have the guts to accept opposition and sincere (contrary)
opinion from your team if you want strong leadership. One person’s ideas, strategy,
and execution will never be as good as that of a competent team. Another pointer is
that much of success is quite random and trying to extract learning from it is often
futile. Copies will never be as unique as the original. Several articles also remind me
of Bertrand Russell’s line that ‘excess virtue is a vice.’ Things like teamwork,
cooperation and alliances and even happy staff can all be overdone such as to bring
negative effects on viability and progress. Please find below a few notes from the
issue.
Are great companies just lucky? By Michael Raynor, Mumtaz Ahmed and
Andrew Henderson
Many of the great companies are in fact nothing special; consequently the researchers
are simply imposing patterns on random data. That’s not science – its astrology. It is
easy to succumb to the temptation to ‘explain seemingly significant outcomes that are
entirely random. Success stories should be treated not as how-to manuals but as
sources for inspiration and fuel for introspection.
What do customers really want by Erik Almquist and Jason Lee points out that it
is quite complex to find out and trade-offs need to be understood. Some of the
greatest marketing success stories relate to giving customers something they didn’t
know the needed or wanted.
How Toxic Colleagues Corrode Performance by Christine Porath and
Christine Pearson.
Common and generally tolerated antisocial behaviour at work is far more toxic than
managers imagine. Berating bosses; employees who take credit for others’ work,
assign blame, or spread rumours; and co-workers who exclude teammates from
networks – all of these can cut a swath of destruction that’s often visible only to the
immediate victims. Targets of bad behaviour become angry, frustrated, and even
vengeful. Job satisfaction falls, and performance plummets. Some employees leave.
But those who stay take a bigger toll on the organization. They can and do sit in the
boat without pulling the oars and that can be worse than leaving (presenteeism is a
greater problem than absenteeism). The effects of incivility on those on the receiving
end were…
48% decreased their work effort; 47 % decreased their time at work; 38% decreased
their work quality; 66% said their performance declined; 80% lost time worrying
about it; 63% lost time avoiding the offender, and 78% said their commitment to the
organization declined.
As companies slash workforces and depend on the staff left behind to do more, they
can’t afford to let a few noxious employees corrode everyone else’s performance.
Uncivil behaviour should be penalized and repeat offenders should be cut loose.
Go Ahead, Have Regrets by Michael Craig Miller, MD
Life can only be understood backwards, but it must be lived forwards (Soren
Kirkegaard) Use regret to improve decision making and clarify values. Don’t worry
alone, especially if you are drowning in regret. If misery loves company, it is because
perspective helps.
Leadership Lessons from Abraham Lincoln Doris Kearns Goodwin
Lincoln surrounded himself with people, including his rivals, who had strong egos
and high ambitions; who felt free to question his authority; and who were unafraid to
argue with him. One success factor for great leadership is the ability to relax so that
you can replenish your energies for the struggles facing you tomorrow. Everyone
remarked on Abraham Lincoln’s extraordinary sense of humour, and he was widely
admired as a storyteller.
How to Market in a Downturn by John Quelch and Katherine Jocz.
Understand recession psychology. Divide customers into 4 groups based on their
emotional response to the recession: a hard-hit slam-on-the-brakes segment, which
curtails all spending; a pained-but-patient segment, which selectively economizes; a
comfortably-well-off segment, whose high-end purchasing continues, if less
conspicuously; and a live-for-today segment, whose spending remains largely
unchanged. Next, assess how each segment allocates its purchases among the
following categories: essentials, treats, postponables, and expendables.
Reassuring messages that reinforce an emotional connection with the brand and
demonstrate empathy are vital. Marketers should prepare now for a possible long-term
shift in consumers’ values and attitudes.
What’s your Google Strategy – looks like an interesting article but beyond my
expertise. The article points out that it is easy to make mistakes and the dynamics are
such that frequent reassessment is crucial.
When Internal Collaboration is Bad for Your Company by Morten Hanson
Too often a business leader asks: How can we get people to collaborate more? That’s
the wrong question. It should be, Will collaboration on this project create or destroy
value? To collaborate well is to know when not to do it. Collaboration costs are those
arising from the challenges involved in working across organizational boundaries –
across business units, functional groups, sales offices, country subsidiaries,
manufacturing sites. Cross company collaboration typically means traveling more,
coordinating work, and haggling over objectives and the sharing of information. The
resulting tension that can develop between parties often creates significant costs:
delays in getting to market, budget overruns, lower quality, limited cost savings, lost
sales, damaged customer relationships. Whether because of enthusiasm for
collaboration or the natural optimism of managers, many companies place a
mistakenly high value on collaboration.
Decoding Resistance to Change by Jeffrey Ford and Laurie Ford.
Resistance is a resource. Ask yourself two questions: “Why am I seeing this
behaviour as resistance?” and “If I viewed the resistance as feed-back, what would I
learn about how to refine the change effort?” Once you have honestly answered those
questions you can begin to see resistance as a resource – as energy to be channelled
on behalf of the organization. Even difficult people can provide valuable input when
you treat their communication with respect and are willing to reconsider some aspects
of the change you are indicating. Frustrating though it is, resistance can lead to better
results. Buy in can be a simple matter of being heard. Resistance properly understood
as feed-back, can be an important resource in improving the quality and clarity of
objectives and strategies at the heart of a change proposal. And properly used it can
enhance the prospects for successful implementation.
Getting Brand Communities Right by Susan Fournier and Lara Lee
Embrace conflict, resist the urge to control, forget opinion leaders – and build your
own brand. Many companies that try to turn their customers into a cohesive ‘brand
community’ falter because of serious misconceptions, for instance, they relegate
community building to the marketing department instead of treating it as a high-level
strategy, or they assume that an interactive website will do the trick.
To build and maintain strong brand communities, companies must understand the
individual and social needs of members and so do everything possible to support and
engage them on their own terms. By managing their communities with a light, open
touch – and sustaining them with corporate-level commitment – firms can build fierce
customer loyalty, increase marketing efficiency, and enhance their brand. Although
every brand can benefit from a community strategy, not every company can pull it off.
It takes fortitude to meet people on their own terms, cede control, and accept conflict
as part of the package. When you get community right, the benefits are irrefutable.
[email protected]
Harvard Business Review February 2009
Into February already and HBR is endeavouring to help readers cope with the
recessionary outlook. A couple of key pieces of advice is manage for cash rather than
profit, stay lean, and don’t forget improvements and the future to be well positioned
when things normalize. Talent and good ideas come from everywhere and open
systems are better able to take advantage of this than closed ones. A few notes from
the issue;
The leader says; Put your financial house in order; maximize cash, tightly manage
customer credit, control working capital, and strengthen your balance sheet. Second
tackle operations: Reduce cost, manage the top line aggressively, rethink your product
mix, divest noncore businesses, and rein in nonessential investments. Seize
opportunities!
Consumer safety for consumer credit by Elizabeth Warren and Amelia Tyagi.
Applying basic safety standards to this segment would provide badly needed security
for consumers, investors, and the global economy.
Just because I am nice, don’t assume I’m dumb by Amy Cuddy. Personal
warmth and competence aren’t opposites. Mothers, like the elderly, are chronically
stereotyped as les competent (although warmer) than other workers and as a result are
under promoted and underpaid.
Forget Citibank – Borrow from Bob by John Sviokla. Lending clubs are starting
to be an alternative to banks able to give personal loans at better rates. Considerable
growth expected. www.lendingclub.com
The Ikea effect – When Labor Leads to Love by Michael Norton. Things that
people have fully or partly constructed themselves they overvalue. Managers should
keep in mind that ideas they have come to love because they invested their own labor
in them may not be as highly valued by their co-workers – or their customers.
Beware global Cooling by Peter Swartz. Global warming is real but not straight
line. Each new high about every ten years – with some cooler years in between – is
higher than the previous high
The Dynamic of Personal Influence by Nicholas Christakis. A person is 15%
likelier to be happy if his or her friends are happy. / I believe that the goal of happy
customers is unattainable unless staff are happy – a necessary but not sufficient
condition/
Western Union World by Marcelo Suarez-Orozco. In 2007 expatriates remitted
some $350 billion – more than OECD annual development aid – to relatives left
behind. Immigrants tend to know much more about their new country than the new
country knows about them. They are not even on the radar screens of many marketers
in their adopted lands.
Should You Outsource Your Brain by Thomas Davenport and Balia Iyer. With a
shortage of analytical skills in the USA and Western Europe and a ready supply in
India, Eastern Europe, and China, it’s perhaps not surprising that organizations are
now outsourcing these more cerebral functions.
Seize Advantage in a Downturn by David Rhodes and Daniel Stelter
Inaction is the riskiest response to the uncertainties of an economic crisis. Rash
scattershot action can be nearly as damaging. Do a thorough but rapid assessment of
your vulnerabilities and then move decisively to minimize them. This will position
you to seize future competitive advantage. To seize advantage companies must make
farsighted investments, identify opportunistic and potentially transformative mergers,
and consider possible redefinitions of their business models.
Why Good Leaders make Bad Decisions by Andrew Campbell, Jo Whitehead
and Sydney Finkelstein. Managers need to find systematic ways to recognize the
sources of bias – what the authors call ‘red flag conditions’ – and then design
safeguards that introduce more analysis, greater debate, or stronger governance.
Sometimes decisions made by intelligent, responsible people with the best
information and intentions are hopelessly flawed. We are particularly bad at revisiting
our initial assessments.
Moon Shots for Management by Gary Hamel
Tomorrow’s organizations must be adaptable, innovative, inspiring and socially
responsible, as well as operationally excellent.
Eliminate the pathologies of formal hierarchy. Hierarchies need to be dynamic, so that
power flows rapidly toward those who are adding value and away from those that
aren’t.
Reduce fear and increase trust. Mistrust demoralizes and fear paralyzes, so they must
be wrung out of tomorrow’s management systems.
Reinvent the means of control. Leverage the power of shared values and aspirations
while loosening the straitjacket of rules and strictures.
Leaders will need to become social architects, constitution writers, and entrepreneurs
for meaning.
Expand and exploit diversity – a prerequisite for long-term corporate viability.
Executives and experts must admit that they’ve reached the limits of management 1.0
– the industrial age paradigm built atop the principles of standardization,
specialization, hierarchy, control, and primacy of shareholder interests. They must
cultivate their dissatisfaction with the status quo. Why should the first impulse of
management be to avoid the responsibilities of citizenship rather than to embrace
them? All too often scholars have been content to codify best practices instead of
looking beyond it.
Ensure that the work of management serves a higher purpose than maximizing
shareholder wealth. It is not specific or compelling enough to spur renewal. We must
focus on the achievement of socially significant and noble goals.
Highly collaborative systems will outperform organizations characterized by
adversarial win-lose relationships.
Reinvent strategy as an emerging process. Create the conditions in which new
strategies emerge.
Large organizational units that encompass hundreds of thousands of employees pose
another danger, as they often lead to groupthink on a grand scale. (Citicorp/ GM).
Companies must reorganize themselves into smaller units and create fluid, project
based structures.
Building new incentive systems that focus executive attention on creating long term
stakeholder value must be a critical priority for management innovation.
Many companies institutionalize a sort of creative apartheid. Instead – equip people
with innovation tools and allow them to set aside time for creative thinking.
Deeper soul stirring ideals such as honour, truth, love, justice, and beauty have long
inspired human beings to extraordinary accomplishment and can no longer be
relegated to the fringes of management.
Control is critical but all too often it comes at the expense of initiative, creativity and
passion – essential building blocks of organizational success.
The aim of management 2.0 is to make every organization as genuinely human as the
people who work there. Tragically the technology of management frequently drains
organizations of the very qualities that make us human: our vitality, ingenuity, and
sense of kinship. Creating organizations that are genuinely human has become an
inescapable business imperative. (Full article available on request)
Notes by Frank Olsson Feb 2009
From: Frank Olsson [mailto:[email protected]]
Sent: Wednesday, 4 February 2009 5:12 p.m.
To [email protected];
Subject: Fw: HBS and the global economic crisis
To Dean Jay O. Light" <[email protected]
Dear Jay - I read your attached letter of November 08 and found it well composed and
thought through. However perhaps the more important question now is what did HBS
forget to teach all those who created the mess. I am not suggesting that HBS is
responsible for the mess - but I do think that curricula and teaching should be
reviewed and adjusted to reflect the enormous cost that decision makers, many
educated at the finest schools in America, have caused society by lack of vision or
commitment to values, or working towards a common purpose rather than personal
financial gain. I think this a very important issue and I would expect your prestigious
school would take a lead role in this analysis.
Thank you,
Frank Olsson
20 Russell Street, Freemans Bay, Auckland, New Zealand
ph +64 9 3781277 mobile +64 21 989 414 fax +64 9 3781272
www.olsson.co.nz
Harvard Business Review January 2009
The cover of the January HBR issue says: Transforming Leaders. This ignited my
interest but after reading the issue I don’t feel much wiser. It is hard to write about
leadership. Perhaps a little like trying to teach people to play golf or get more out of
sex by way of research articles. The fact is, I believe, that leadership development is
so intertwined with doing, experimenting and experiencing that writing about it can
make but only a small contribution to understanding and improving the outcomes. Far
too many people put in leadership positions have not been allowed the space and time
to learn leadership on the ground. Far too many are elevated to management/
leadership positions after being a good individual performer. The essence of
leadership is to enthuse others to achieve great things – not to do all or most of the
things yourself. My observation is that a majority of promoted high performers
stumble already on this basic point.
One of the articles talks about women leaders/ managers. It suggests that women are
as good or better as men on nearly all measures with the exception of being visionary
and forward looking. Women manage and lead from facts and reason the article says.
To me it seems that this is contrary to natural inclinations. Women have traditionally
been seen as more emotional and more willing to go with their judgment rather than
by scientific fact. Because this is an established bias, women perhaps react the other
way, and show that they can also be scientific and fact based. Whereas the best
visionary men are those who show typical female characteristics, asking how do I feel
about this, how do all my stakeholders and the community feel about this. Unless you
are in tune with and understand how people feel you will never be a good leader.
Another article suggests that outgoing CEO’s should be contracted to be advisers or
mentors to incoming CEO’s. I don’t think the article, supported by a lot of research, is
very convincing. Generally I would think it better to be mentored by someone other
and less involved than your outgoing predecessor. It is great if the outgoing CEO is
available and it may be ok that his retention as an adviser is part of the exit package,
but actual usefulness depends on personal appreciation and harmony between the two
individuals and that cannot be by command or instruction.
A few notes from the January issue:
It is a challenging time to do business in the global economy – but a perfect time for
great leaders to emerge.
Leaders must ask, “What’s new?” “What’s next?” “What’s better?” but they can’t
present answers that are only theirs. Constituents want visions of the future that reflect
their own aspirations. So how do new leaders develop this forward-looking capacity?
First they must carve out time from urgent but endless operational matters. But
secondly, they must not put too much stock I their own prescience. If people are
involved in creating the goals and vision the end vision can be arrived at together. /To
Lead, Create a Shared Vision – by J M Kouzes and B Z Posner /
Start networking right away, even if you hate it by W C Byham. Many executives
spend about an hour a week maintaining their networks, but greater effort yields
greater payoff. One marketing manger claims he spends two hours a day at it. (I think
I spent that amount of time all thru my career as well – including networking with
your own team. What comes through loud and clear in so many articles is that the
winners are those that are able to enlist help and support from people outside of the
immediate team – through the internet that outside can reach to all the corners of the
world – there is so much knowledge out there and so many people willing to help just
for the sake of making a contribution)
Picking the right transition strategy by M D Watkins. What worked for you in the
past may not be suitable in your new position. Moving into new roles necessitates
understanding the situation at hand and adapting to it. Five common situations,
requiring different approaches are discussed: start-up, turnaround, accelerated growth,
realignment, and sustaining success.
The Quick Wins Paradox by M E van Buren and T Saffersone. The essence of this
article is that when you come in as a new leader somewhere, the best you can do is to
make the group or team look good, not making yourself personally look good. The
power of collective quick wins: Make people believers, not bystanders; Understand
uncertainty; Show humility; Learn about your team. The five traps to avoid are:
Focusing too heavily on details; Reacting negatively to criticism; Intimidating others;
Jumping to conclusions and Micromanaging. Build transition capability, not just
position capability.
Women and the vision thing by H Ibarra and O Obodaru. The challenge facing
women is to stop dismissing the vision thing and make vision one of the things they
are known for. In a senior leadership role, it’s the best use of their time and attention.
It’s a set of competencies that can be developed. And of all the leadership dimensions
we measured, it is the only thing that holds women back.
How not to Lose the top job by M Goldsmith. The greatest CEOs are the ones who
continue to build and maintain support among all their key stakeholders. Practicing
this behaviour before you get the job will only help you after you get the job. You
should do all these things not because it helps your career but because it is the right
thing to do. The effort you make in building relationship will make you a better leader
and a better person – and that is good for you and good for the company, whether you
become CEO or not.
The Last act of a Great CEO by T J Friel and R S Duboff. This article suggests that
exiting CEO’s should be drawn upon much more to ensure a smooth transition.
Leaders and organizations know it is imperative that the new executive gets off to a
strong start – and that process begins with the transfer of CEO level knowledge.
What can coaches do for you by D Coutu and C Kauffman. An interesting article
suggesting that coaching has gone from being something offered problem manager to
being offered successful operators in order to secure continued success. Coaching as a
business tool continues to gain legitimacy, but the fundamentals of the industry are
still very much in flux. In this market, and in so many others today, we have to
conclude that the old adage still applies: buyers beware.
How GE Teaches Teams to Lead Change by S Prokesch. In 2006 GE launched its
Leadership Innovation and Growth (LIG) program in support of CEO Jeffrey
Immelt’s priority of achieving corporate growth primarily by expanding businesses
and creating new ones. Immelt: “Keep the company safe and keep building the
future.” ‘You’re going to have to make some tougher choices than you had to make in
good times, but we have to keep investing in innovation and growth.
Notes by [email protected] 11 January 2009
Harvard Business Review December 2008
The December issue is a bit thinner than usual but containing some quite interesting
and relevant articles. A few notes from the issue:
Staying Calm at the Centre of a Storm - leader
It pays to keep decision making transparent and consultative, even for the big tough
calls. Regardless of shifting market sands, all businesses eventually have to reinvent
themselves or suffer the consequences.
Inflation plus subsidies = an explosive mix by Ian Bremmer
Ultimately, countries that remove subsidies will help themselves, and the foreign
investors in them, by making their economies more efficient. Although it is the poor
who take to the streets, it is the rich who take most of the subsidies. According to an
IMF study in selected emerging market countries, the richest one-fifth of households
receives almost half of subsidies; the poorest fifth receive only 10%.
What best business practice challenges the conventional wisdom
about what to do in a downturn?
Try to find advantage in a general recession by reconfiguring customer segment
portfolios. /Ian McMillan and Larry Selden /
To help companies preserve and strengthen their strategic programs we developed a
new expenditure category – strategic expenditure or StratEx to supplement the
traditional capital and operational expenditure categories. These need to be protected
from the traditional down turn approach of slash and burn cost regarded as
discretionary. /Robert Kaplan and David Norton/
Try to reduce the stress level. The more attention you pay to employees’ lives beyond
work, the more you will get out of them at work – especially during times of great
stress. / Stewart Friedman/
Use downtime to enhance skills. Employees at all levels can be sent for training to
improve their team building, collaboration, process ownership, and other skills –
which pays off when economic normalcy returns. These are luxuries you cannot
afford not to engage in. /BV Krishnamurthy/
‘Give me the ball!’ is the wrong call. Instead of hogging the ball during a downturn,
CEOs ought to tap the ideas and the energy of the entire organization. When times are
tough leaders should ask great questions, build trust across the organization and
Challenge the status quo. Downturns are no time to tighten control. They are
opportunities to inspire your people to become more spontaneous and creative. Pass
the ball! /Tamara Erickson/.
Discounts can be dangerous – often the more people pay, the more value they ascribe
to a purchase. If you discount prices purely to boost sales, buyers might start to
question that value. The goal must be to enhance the iconic value of the brand. If you
inadvertently shatter your brand’s mystique, re-establishing the value proposition to
consumers may be tougher than you expect. / Jeffry Stibel and Peter Delgrosso /
The best way to predict the future is to invent it. /Alan Kay, computer pioneer/
The freedom to fail gives you the freedom to succeed. A lot of what can be imagined
can be invented. / Vinod Khosla /
Fiat’s Extreme Makeover by Sergio Marchionne
Unfortunately our senior management team wasn’t used to taking responsibility, and
when you have been working for years in a well defined status quo, it is almost
impossible to change. In many cases I had little choice but to lay people off; they had
too many of the old habits ingrained in them. The further I got from the centre, the
more autonomous management became, and I soon realized that we had plenty of
hidden leadership potential.
My engagement with ‘potentials’ is mostly very informal. I am texting them or calling
them at odd hours to talk about the business or their careers. They know I care about
what happens to them. If the organization can feel that kind of connection with its
leadership, you are going to get a pretty sound culture aligned around strongly held
common values.
I immerse myself in the business not so that I can make decisions in my corner office
but so that I can guide the folks on the ground to make the right decisions.
Fiat was appalling at manufacturing. When you walked around the plant, you could
feel the waste. It wasn’t just the mess on the factory floor, it was the way people
moved and worked.
I encourage our high potentials to wear several hats at once. I have to wear many hats
myself and I shouldn’t be the only one.
I am a conduit for change but it is the people in my organization who actually make
the change happen. I derive my greatest satisfaction from seeing them succeed.
Reinventing Your Business Models by Mark W Johnson, Clayton M
Christensen, and Henning Kagermann
Apple’s true innovation with its successful iPod was to make downloading digital
music easy and convenient. To do that the company built a ground-breaking business
model that combined hard-ware, software and service. Over 50 % of executives
believe that business model innovation will become even more important for success
than product or service innovation.
A business model consists of four interlocking elements that taken together create and
deliver value. The most important by far, to get right is the first: Customer value
proposition (CPV); Profit formula (we found it most useful to start by setting the price
required to deliver the CPV and then look backwards from there to determine what
the variable costs and gross margins must be); Key resources; and Key Processes.
The most important attribute of a customer value proposition is its precision; how
perfectly it nails the customer job to be done – and nothing else. Don’t offer value
propositions that communicate ‘we are all things to all people.’
These questions will help you evaluate whether the challenge of business model
innovation will yield acceptable results:
1. Can you nail the job with a focused, compelling customer value proposition?
2. Can you devise a model in which all these elements – the CPV, the profit
formula, the key resources and the key processes – work together to get the
job done in the most efficient way possible?
3. Can you create a new business development process unfettered by the negative
influences of your core business?
4. Will the new business model disrupt competitors?
Venture capitalists often fail when backing technology. Where we succeed is where
we back new business models. / Bob Higgins of Highland Capital Partners/
Which Kind of Collaboration Is Right for You? By Gary P Pisano and
Roberto Verganti
The new leaders in innovation will be those who figure out the best way to leverage a
network of outsiders. Collaborative innovation is not a single approach but takes a
wide variety of forms. As companies increasingly team up with outsiders to innovate,
they confront critical and complex choices about whom to join forces with and how to
share powers with them. A simple framework, which can help managers make these
decisions, focuses on two questions: How open or closed should membership in your
network of collaborators be? How flat or hierarchical should the network’s
governance structure be?
Delivering on the Promise of Nonprofits by Jeffrey L Bradach, Thomas
J Tierney and Nan Stone
Nonprofits need to rigorously answer several interdependent questions, suggested by
the authors as a framework for change: Which results will we hold ourselves
accountable for? How will we achieve them? What will our results really cost, and
how can we fund them? How do we build the organizations we need to deliver
results?
Notes by [email protected] 7th December 2008
Harvard Business Review November 2008
This issue was a little thinner than previous issues. A few notes attached:
See The Future First – Leader. Successful employers depend on a sterling
reputation, an idealistic mission, and accelerated career opportunities.
Failing to plan is planning to fail.
Time to rethink capitalism? by Michael Yaziji. Those who take the greatest
risk should be the controlling owners and receive the residual profits for reasons of
both ethics and competitiveness. Today the big risk takers are labour and not capital.
The same logic of ethics and competitiveness that once supported shareholders value
maximization now leads to the conclusion that firms should focus on maximizing
returns for labour.
Interestingly, competitive algorism theory also aligns with the mainstream strategic
thinking that says that only firms with unique and valuable resources or capabilities
will gain and maintain competitive advantage.
The Visa Crisis by Ian Macdonald.
The US will find it far more difficult to
maintain its competitive edge over the next 50 years if it excludes those (foreigners
seeking to move to the US) who are able and willing to compete.
The Best advice I ever got by Maureen Chique.
To lead effectively and
achieve real business results as the head of any enterprise you have to listen. You’ve
got to constantly ask questions and seek out diverse opinions, and remain humble
enough to change your mind – whether about a product or a person.
Supervisor work/ life training gets results. By Ellen Kossek and Leslie
Hammer. Teaching managers to be more supportive of their direct reports’ work/life
issues can be a simple and effective route to improving employee health and
satisfaction, according to our multiyear study of hundreds of front line workers and
supervisors. (This is rather obvious and something I have practiced all my career)
A Framework for attracting and retaining talent:
Purpose: Guiding mission and Values/ Global Citizenship/ Committed to
the region
Culture: Authenticity / Meritocracy / Connection/ Talent centricity
Opportunity: Challenging work/ Accelerated career track/ Continual
training/ Competitive pay.
Brand: Known for excellence/ leading global company/ Inspirational
leadership
Teaming up to crack Innovation and Enterprise Integration by
James Cash, Michael Earl, and Robert Morison
Scouting for ideas with potential for the company
Constantly scanning the external environment for emerging technologies
and their application.
Facilitating participation – the online marketplace for problem solving.
Act as a centre of innovation and expertise advising of innovation
initiatives
Publicize promising innovations and their progress sparking creativity by
example.
Create a home for developing pilots or prototypes of promising
innovations.
How to become an authentic speaker by Nick Morgan
If your spoken message and your body language are mismatched, audiences will
respond t the non-verbal message every time.
Authenticity requires four different aims: to be open, to connect, to be passionate and
to listen
Focus not on what you want to say but on why you are giving the speech and how you
feel about that. Let the underlying emotion come out.
In listening to audiences, pay attention both to their body language and their words.
Notes by [email protected] 16th November 2008
Harvard Business Review October 2008
Another HBR with some interesting ideas! Particularly two key ideas stuck with me
from reading this issue.
One idea is to open up your organization to better incorporate all the knowledge that
is out there with your customers and suppliers and also the general public. There is a
huge potential to draw on knowledge and curiosity (and benevolence) from people not
on the payroll but who would see it meaningful to help out for a multitude of reasons.
The ability to capture this force may well be the difference between winners and
losers.
The other idea is that ‘return to shareholders’ as the sole and overriding idea for
corporate purpose is hopelessly out of date. One article argues that managers should
be professionals like doctors or lawyers with explicit commitment to professional
standards such as honesty and integrity and acting in the interest of all stake holders.
(My comment: It has perhaps become especially obvious in these times that this
should apply to banks as they operate under license from society and time and again
have we seen how taxpayers need to provide crucial support to banks that they be able
to stay in business. Thus the requirements that corporates need to act in the greater
interest of society and display good citizenship will grow much stronger subsequent to
the current crisis. And so it should.)
A few notes from this month’s issue:
The difference between Russian and Chinese entrepreneurs by At Batjargal.
Don’t try to be more Chinese than the Chinese or ore Russian than the Russians. You
will always be perceived as a foreigner and expected to be different. Trying too hard
may undermine the trust you are trying to build.
(I thought this piece of advice useful for dealing with foreign countrymen. Often it is
made into something very difficult which it is not. Just be courteous, open-minded,
interested, personable and kind and you have the characteristics for building strong
relationships)
The Contribution Revolution – Letting Volunteers Build your Business
by Scott Cook
We spent time with the executives to come up with ways that people outside the
company could volunteer their time, energy and expertise to make life better for our
customers. If you are not conducting an exercise like that, you risk missing the boat
on a sea change that’s transforming business.
You need to build a contribution system – i.e. a method for aggregating and
leveraging people’s contributions or behaviours in ways that are useful to other
people.
The challenge for executives is twofold. First you must learn how to spot
opportunities for creating value from user contributions. Second – and here’s the
difficult part – in acting on these opportunities, you must overcome natural
organizational resistance to the idea of relinquishing significant control to people
outside the company.
The potential gains include: Cost advantage, Scalability advantage, and competitive
advantage.
Where can Contributory Systems help your company? In Customer Service,
marketing, Employee support, capital resources, Design and development, and
Production.
Why do Contributors Contribute? Your habits provide intelligence for the company’s
future; to suggest practical solutions, to be part of a community (social rewards),
reputation and public recognition, self-expression, and altruism.
Since our initial meeting the activity of teams working on user contribution has
increased from a tide to a torrent around the company. And this is just the beginning.
It’s time to make management a True Profession by Rakesh Khurana
and Nitin Nohria.
A rigorous code of ethics will make you a better manager and society will benefit too.
On balance we believe that a profession, with well functioning institutions of
discipline, will curb misconduct because moral behaviour is an integral part of the
identity of professionals – a self-image most are motivated to maintain.
The claim that managers are professionals does not withstand scrutiny when you
compare managers with true professionals such as doctors and lawyers. Unlike in
medicine and law, managers don’t need a formal education, let alone a license, to
practice. Nor do they adhere to a universal and enforceable code of conduct.
The harm to society that untrained managers could cause – particularly in a more
complex, globalized world – cannot be underestimated.
It is best for managers to have a higher-order purpose – viewing society as their
ultimate client and society’s interest in vibrant, sustainable, value creating enterprises
as their foremost objective.
Who would argue with the requirement that managers provide fair opportunity to all,
free from bias, as a measure of their respect for the basic equality of all human beings.
Freedom of opportunity is not only emblematic of a just society; it is also at the heart
of an economic vibrant society. Managers must wield their power with humility and
respect – ensuring that the interest of those who do not have power are protected and
the voices of those who may not enjoy decision rights are heard.
The article suggests a Hippocratic Oath for managers;
I recognize that any enterprise is at the nexus of many different constituencies, whose interest can
sometimes diverge. While balancing and reconciling these interests, I will seek a course that enhances
the value my enterprise can create for society over the long term. This may not always mean growing
or preserving the enterprise and may include such painful actions as its restructuring, discontinuation,
or sale, if these actions preserve or increase value.
I pledge that considerations of personal benefit will never supersede the interests of the enterprise I am
entrusted to manage. The pursuit of self-interest is the vital engine of the capitalist economy, but
unbridled greed can be just as harmful. Therefore, I will guard against decisions and behaviour that
advance my own narrow ambitions but harm the enterprise I manage and the societies it serves.
I promise to understand and uphold, both in letter and in spirit, the laws and contracts governing my
own conduct, that of my enterprise, and that of the societies in which it operates. My personal
behaviour will be an example of integrity, consistent with the values I publicly espouse. I will be
equally vigilant in ensuring the integrity of others around me and bring to attention the actions of others
that represent violations of this shared professional code.
I vow to represent my enterprise’s performance accurately and transparently to all relevant parties,
ensuring that investors, consumers, and the public at large can make well- informed decisions. I will
aim to help people understand how decisions that affect them are made, so that choices do not appear
arbitrary and biased.
I will not permit consideration of race, gender, sexual orientation, religion, nationality, party politics,
or social status to influence my choices. I will endeavour to protect the interests of those who may not
have power, but whose well-being is contingent on my decisions.
I will manage my enterprise by diligently, mindfully and conscientiously applying judgment based on
the best knowledge available. I will consult colleagues and others who can help inform my judgment
and will continually invest in staying abreast of the evolving knowledge in the field, always remaining
open to innovation. I will do my utmost to develop myself and the next generation of managers so the
profession can continue to grow and contribute to the well-being of society.
I recognize that my stature and privileges as a professional stem from the honour and trust that the
profession as a whole enjoys, and I accept my responsibility for embodying, protecting, and developing
the standards of the management profession, so as to enhance respect and honour.
(Although I am not sure this is the solution, I think the article is onto a very urgent
and significant problem, that of suboptimal incentive systems that don’t recognize the
value of ethics and what is beneficial for the general public – if our business is run
contrary to these two issues we must are on a trajectory of failure)
Creativity and the Role of the Leader by Teresa M Amabile and Mukti
Khaire
One cannot manage creativity. One can manage for creativity. Even in today’s
networked world, organizations fail to take full advantage of internet technologies to
tap into the creativity of many smart people working on the same problem. Superstars
in any organization should be defined as those who help others succeed. In larger
organizations you have to ask, how do you get lift from adding layers, instead of
weight? One suggestion is investment in infrastructure that makes collaboration
easier.
Beware of efficiency trying to avoid duplication – in creative work you need to have
people approaching a problem from different angles.
A manager’s guide to increasing innovation:
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Remember that you are not the sole fount of ideas
Enable collaboration
Enhance diversity
Map the stages of creativity and tend to their different needs.
Accept the inevitability and utility of failure
Motivate with intellectual challenge
Management must create an environment of psychological safety, convincing people
that they will not be humiliated, much less punished, if they speak up with ideas,
questions or concerns, or make mistakes. Providing the setting for good work means
work that is technically excellent, meaningful and engaging to the worker, and carried
out in an ethical way.
The Incumbent’s Advantage by Ian C Macmillan and Larry Selden
Most companies are sitting on a gold mine of unrealized potential in their current
customer base. Why should you start prospecting in unchartered areas while leaving
the gold on your own territory for other to mine?
If you are a large company with major market share, you probably already have
customers from practically every relevant segment. Not to know them, not to
understand them, not to understand their unmet needs, and not to invest resources
based on those needs is to cede one of your most important assets to potential
challengers. Failing to capitalize on incumbent advantage is to invite, sooner or later,
almost certain competitive disruption.
Notes by [email protected] 12 October 2008
Harvard Business Review September 2008
This issue was full of very interesting articles. I just couldn’t put it down before I had
read most of it.
New Thinking for a New Financial Order by Diana Farrell
Clearly risk management has lagged behind innovation in the financial system,
requiring regulatory frameworks to be updated. Success depends on updating our
thinking, not just our rules.
Lessons from the Oxford Cambridge Boat Race by Mark Rond
The eight strongest are unlikely to make the fastest combination. They need to be put
thru seat racing, i.e. co-row with all to see where the strongest team performance
appears. This also means they need to co-operate with someone who was previously
their competitor.
The Best Advice I ever Got by Linda Mason
Your passions don’t have to be extracurricular. They can be central to your life.
Unleash them, and you’ll help other people unleash theirs. Put your passions first and
try to back them up with good financial numbers. When you put passion first, you
attract the right people, who all naturally head in the right direction. Purpose first,
returns will follow.
Emphasize meaning first and functionality second; remember that people
simultaneously want to feel like individuals and be part o something bigger than
themselves; and understand that successful brands often build a mass audience by
cobbling together smaller ones.
Winners and Losers in a Carbon-Constrained World
Know your carbon exposure; take action; influence policy and check if you have the
right players with the required skills. You are only as green as your supply chain.
Collective Creativity by Ed Catmull
The initial idea for a movie – what people in the movie business call ‘the high
concept’ – is merely one step in a long, arduous process that takes four to five years.
The director and other creative leaders of a production do not come up with all the
ideas on their own; rather every single member of the 200- 250 production group
makes suggestions. Creativity must be present on every level of every artistic and
technical part of the organization. If you want to be original you have to accept
uncertainty even when it’s uncomfortable, and have the capability to recover when
your organization takes big risks and fails. The key to being able to recover is talented
people. What is equally tough is to get talented people to work effectively with each
other. If we get teamwork right, the results is a vibrant community, where talented
people are loyal to each other and their collective work.
If you give a great idea to a mediocre team they will screw up, and if you give a
mediocre idea to talented people, they will either fix it or throw it away and come up
with something that does work.
People’s overwhelming desire to make sure their work is good before they show it to
others increases the possibility that their finished version won’t be what the directors
want.
Strong leadership is essential ensuring people don’t pay lip service to the values, tune
out the communications, game the processes, and automatically discount new comers’
observations and suggestions.
Ask each group to list five things they would do again and five things they wouldn’t
do. That takes the stigma out of talking about what went wrong.
Social Intelligence and the Biology of Leadership by Daniel Goleman
and Richard Boyatis
Leading effectively is less about mastering situations – or even mastering social skills
sets – than about developing a genuine interest in and talent for fostering positive
feelings in the people whose cooperation and support you need.
Leaders should continue to be demanding but in ways that foster a positive mood in
their teams. Top performing leaders elicited laughter from their subordinates three
times as often, on average, as did mid performing leaders. Being in a good mood
helps people take in information effectively and respond nimbly and creatively.
Laughter is serious business.
7 Ways to Fail Big by Paul B Carroll and Chunka Mui
Of the 750 biggest US business failures in the past quarter century, nearly half could
have been avoided. These are the seven most common ‘blunders’. The synergy mirage
/ faulty financial engineering / Stubbornly staying the course / Pseudo-adjacencies /
Bets on the wrong technology / Rushing to consolidate / Roll-ups of almost any kind /
Focus on strategy, not the process. Reviewers should ask for a written description of
the strategy – not spreadsheets or slides. The latter make it easy to gloss over the
details and leave much to reader interpretation. It is amazing how many elements of a
deal that seemed clear in PowerPoint can fall apart when they’re subjected t prose. A
memorandum demands clarity about who exactly is cross-selling to whom – and how
and why. The purpose of the review is not to suggest alternative approaches.
Whereas the vast majority of business research focuses on successful companies,
companies that failed can provide equally important information.
Harvard Business Review July 2008
Leaders in Denial by Richard s Tedlow.
Every product or service has two components: the core (the product’s primary
purpose) and the augmented (additional functions and features). In every industry the
border between the two inevitably shifts over time.
Managing Yourself by Robert S Kaplan.
Career Counsel: managing your own career is 100% your responsibility and you need
to act accordingly. Be wary of conventional wisdom. Have faith that, although justice
may not prevail at any given point in time, it should generally prevail over time.
Otherwise confident executives sometimes overestimate the career risk of speaking up
and meaningfully underestimate risk of staying silent.
The Competitive Imperative of Learning by Amy C Edmondson
A focus on getting things done, and done right, crowds out the experimentation and
reflection vital to sustainable success.
The best organizations have figured out how to learn quickly while maintaining high
quality standards.
Fostering an atmosphere in which trust and respect thrive, and flexibility and
innovation flourish, pays off in most settings, even the most deadline driven. When
managers empower, rather than control; when they ask the right questions, rather than
provide the right answers; and when they focus on flexibility, rather than insist of
adherence, they move to a higher form of execution. And when people know their
ideas are welcome, they will offer innovative ways to lower costs and improve quality
– thus laying a more solid foundation for their organizations success.
Employee Motivation – A Powerful New Model – I was not impressed with
this article. (When presented in HBR an article looks so sophisticated and sensible
even when it is not) I see motivation as driven by functionality, friendliness and fun –
i.e. you need to engage in something that works and makes a difference (adds value to
somebody) and the relationship and offering need to have strong characteristics of
friendliness and /or fun (trust and/or delight). This is motivational for customers and
staff alike and promotes staff retention and customer loyalty. (Money can only be a
means and not a goal)
Harvard Business Review June 2008
When new products are concerned, design thinking begins not at the drawing board
but with an anthropological devotion to what customers do and want to do. It is about
crafting every interaction between a company and its customers in a way that gives
them the experience the company intends. Every strategy is the residue of design. /
Thomas A Stewart, editor/
Stopping the exodus of women in science by Sylvia Ann Hewlett, Carolyn
Buck Luce, and Lisa J Servon
Why do women leave science, engineering and technology careers? First and
foremost the hostility of the workplace culture drives them out. Second is the
dispiriting sense of isolation that comes when the woman is the only female on her
team or at her rank – a problem exacerbated for others when she in turn leaves. Third
there is a strong disconnect between women’s preferred working rhythms and the
risky ‘diving catch’ and ‘fire fighting’ behaviour that is recognized and rewarded in
these male dominated fields.
Extreme jobs with long work weeks and punishing travel schedules are particularly
relevant in science, engineering and technology companies. Women tend to find
themselves shunted into roles as executors or helpers while men occupy the more
illustrious creator and producer roles.
Cisco decided to develop a game changer that within 18 months will come to
represent 25% of the senior management team, designed to create critical mass of
senior women in one swoop.
(my comment – when men (traditionally) say that whoever comes on the board must
be qualified, I think – who is to judge and what does qualified mean? If qualified
means looking like existing male directors, then I think this is a big cop-out. If there
are no women on the board, almost anyone who is introduced to represent 52 % of
mankind not previously represented would add value to the existing constellation. Too
many boards have too many similar directors who are likely to see things dangerously
similarly)
The fatal flaw in pay for performance by Ben W Heineman Jr.
Pay for performance is seriously inadequate unless it is pay for performance with
integrity. If the values and ethics side is not entered into the equation it is dangerously
flawed. The company’s top ranks need to be filled with managers who live the
principles and practices of performance with integrity – and thus help the company
avoid debilitating risks and secure the trust that is vital to doing business.
The most important CEO job is to be custodian of talent / Anna Pringle /
Good article on the benefits of Microfinance by Vikram Akula founder of SKS Micro
finance.
The Contradictions that drive Toyota’s success by Hirotake Takeuchi,
Emi Osono, and Norihiko Shimizu
This was the best article I have read in HBR for a long time in the sense that it
describes one of the best companies in the world, and deflates so much of
conventional wisdom (malpractice). Recommended read!
Toyota succeeds we believe because it creates contradictions and paradoxes in many
aspects of organizational life. Employees have to operate in a culture where they
constantly grapple with challenges and problems and must come up with fresh ideas.
That’s why Toyota constantly gets better. The hard and the soft innovations work in
tandem.
Toyota heavily invests in people and organizational capabilities, and it garners ideas
from everyone and everywhere: the shop floor, the office, the field.
The company’s roots are in a rural suburb of Nagoya called Mikawa, and they run
deep, accounting for its managers’ humility and strong work ethic. By any standards
the company pays executives very little. In 2005, Toyota’s top executives earned only
one-tenth as much as Ford’s and lower than their counterparts at the ten largest car
companies save Honda.
Despite the enviable performance, senior executives constantly hammer home
messages such as ‘never be satisfied’ and ‘there’s got to be a better way’ and ‘reform
business when business is good.’
Toyota has a strict hierarchy but it gives employees freedom to push back – ‘pick a
friendly fight’
Toyota prevents rigidity from creeping in by forcing employees to think about how to
reach new customers, new segments, and new geographic areas and how to tackle the
challenges of competitors, new ideas and new practices.
Paint goals with broad strokes – that allows freedom to researchers to open new
avenues of exploration; procurement to look for new and unknown suppliers who
possesses needed technology; and sales to consider the next steps needed to sell their
products.
The fact that the original Prius would be an interim solution didn’t deter Toyota. They
believed the project was worth the investment because Toyota would learn a lot in the
process.
The original Toyota values include the mindset of continuous improvement (kaizen);
respect for people and their capabilities, teamwork; humility; putting the customer
first; and the importance of seeing things first hand (genchi genbutsu).
Four simple believes have kept the company from losing its way: Tomorrow will be
better than today. Everybody should win. Genchi genbutsu. Customers first, dealers
second – and manufacturers last. Every single person is the main actor on the stage.
Each individual in Toyota is expected to act according to what he or she thinks is
right.
My comment: Toyota is arguably the world’s most successful auto maker and
company. Humility and respect for all involved in the process are cornerstones. Also
their obsession with customer satisfaction and customer value as opposed to executive
bonuses or shareholder return! Toyota puts its soul into what they offer and financial
results come from doing the right thing. Detroit auto manufacturers (like many major
American firms) seem to be obsessed by returns rather than by giving customers
exceptional value. The results of these different approaches speak for themselves. One
going from strength to strength and the other approach leading to huge losses and
questions about survival.
Harvard Business Review June 2008
I didn’t find very much in this issue. However there is an interesting book review;
Why Women Mean Business. Understanding the Emergence of Our
Next Economic Revolution by Avivah Wittenberg-Cox and Alison Maitland
Gender is – along with the internet and the environment – one of the key issues
business leaders will face in the decades to come. Companies that understand women
will be better led and closer to their customers.
What is especially valuable with this book is the authors’ analysis of where
companies go wrong in managing women. In a lot of countries, particularly the
United States, the advancement of women in society has taken place in the legal and
political framework of equal rights. Many of the landmarks of women’s rights are
court victories over companies and public bodies that discriminate against women.
This emphasis on discrimination, the authors argue, has encouraged companies to
focus their gender strategies on empowerment, to help women surmount the barriers
raised by history and take their places next to the men who already hold positions of
power.
That approach forces women to compete in an environment created by and for men.
The women who get ahead tend to be those who exhibit stereotypically male
leadership traits and behaviours, such as pushing for promotions by over selling their
abilities. The immediate result is that companies fail to advance many talented women
who do not display those characteristics, which may explain why some
companies(consulting firms are and example) lose most of their women after just a
few years on the job. Firms with successful gender strategies, the authors argue, don’t
make this mistake. Rather than trying to help women succeed in a man’s world, they
encourage men to learn about women.
Allowing men to see through women’s eyes is what the book does – not by offering a
tool-kit for implementing a gender strategy – but rather by presenting statistics and
testimony. Companies might benefit if male executives recognize women’s “more
modest and relationship oriented” way of interacting as a valid communications style.
Reading the book will make male executives smarter about the women they manage,
report to, sell to, and buy from.
My comment:
Our customers are 50: 50 men/ women
Our headcount is 50: 50 men/ women
Our owners are 50: 50 men/ women
Our potential customers are 50: 50 men/ women
Our politicians are approaching 50: 50 men/ women
Our graduates are 50: 50 men/ women
Business leadership and board composition: 95: 5 men/ women
Spot the anomaly!?
I have often heard directors say that it is difficult to find competent women. This is
less and less true. Competent doesn’t mean looking like the existing or average
director as we have come to know them. Competent is more about bringing a fresh
and different view and not only capturing upside but also limiting downside by
staying on course. Defined like this I would like to think there are as many qualified
women as men, particularly after the tremendous growth in number of tertiary
educated women.
/ [email protected] 19.07.08 /
Harvard Business Review April 2008
I found this issue a bit average although I know that sometimes for whatever reason I
am less receptive to management articles than at other times. Sometimes the articles
are too different from your own background and expertise to be appealing, sometimes
they are too similar. Thus I am sure that two people can have a very different view of
the value of a set of articles.
The tourism time bomb by Paul F Nunes and Mark Spelman
Tourist visits are expected to double from 800 million in 2008 to 1.6 billion in 2016.
The skyrocketing demand for ravel will lead to a ‘scarcity of place’ causing escalating
prices in popular spots, waiting lists and expansion of destinations. Although Europe
will continue to be the biggest taker of international tourists, Asia and the Pacific will
show the greatest growth.
Can You Say What Your Strategy Is? By David Collis and Michael Rukstad
It is a dirty little secret that most executives cannot articulate the objective, scope, and
advantage of their business in a simple statement. If they can’t, neither can anyone
else.
MISSION –why we exist; VALUES – what we believe in and how we will behave;
VISION – what we want to be; STRATEGY – our competitive game plan with
objective/ ends, scope/domain and advantage/means; BALANCED SCORECARD –
how we will monitor and implement that plan.
The strategic sweet spot of a company is where it meets customer’s needs in a way
that rivals can’t, given the context in which it competes.
The value of rhetoric should not be underestimated. A 35-word statement can have a
substantial impact on a company’s success. Words can lead to action. Spending the
time to develop the few words that truly capture your strategy and that will energize
and empower your people will raise the long-term financial performance of your
organization.
The Right Way to Manage Unprofitable Customers by Vikas Mittal, Matthew
Sarkees, and Feisal Murshed
Has the company misunderstood or mishandled customers, regardless of their
profitability – REASSESS THE RELATIONSHIP
Are the customers inclined to understand the company’s position – EDUCATE THE
CUSTOMER
Can the customers and the company find new ways to reap value from each other –
RENEGOTIATE THE VALUE PROPOSITION?
Might the customer be profitable for subsidiaries or other providers – MIGRATE
THE CUSTOMER?
Is the value incompatibility between the customers and the company truly beyond
repair – TERMINATE THE RELATIONSHIP?
The complex ever-evolving relationship between a company and its customers
requires active management. Customers are not commodities that can be acquired or
disposed of at will. They deserve better than a simplistic decision by management to
either retain or reject them. Compromise options abound, and our framework is a
logical one for exploring them. Customer divestment is a viable strategic option, but it
must be exercised sparingly, mindfully, and cautiously. Your customer base, even if
unprofitable, is not a resource your business can afford to squander.
Be a Better leader, have a Richer Life by Stewart D Friedman.
People try the Total Leadership program for a variety of reasons. Some feel
unfulfilled because they are not doing what they love. Some don’t feel genuine
because they’re not acting according to their values. Others feel disconnected, isolated
from people who matter to them. They crave stronger relationships, built on trust, and
yearn for enriched social networks. Still others are just in a rut. They want to tap into
their creative energy but don’t know how (and sometimes lack the courage) to do so.
They feel out of control and unable to fit in all that’s important to them.
The four way wins – work/home/community and self – are there for the taking. You
have to know how to look for them and then find the support and the zeal to pursue
them. No matter what your career stage or current position, you can be a better leader
and have a richer life – if you are ready and willing to rise to the challenge. The
article provides a blue print helping people pursue a better balance.
Notes by [email protected] 25th April 2008
Harvard Business Review March 2008
I found this issue a bit thin on interesting articles but made a few notes and
reflections.
In the leader Thomas A Stewart says: ‘A company stops growing if it stops
dreaming’, and ‘no company can grow without enough of the right people learning
and doing the right things’.
Mega regions: The Importance of Place by Richard Florida
Nations have long been considered the fundamental economic units of the world, but
that distinction no longer holds true. Today the natural units – and engines – are mega
regions, cities and suburbs in powerful conurbations, at times spanning natural
borders, forming vast swaths of trade, transport, innovation and talent.
I have long thought that national thinking and focus often is too narrow. The three
small countries where I have lived for longer periods are Sweden, Singapore and New
Zealand. With Swedish and New Zealand agencies I have been involved with working
groups focused on ‘How can we promote Swedish or New Zealand issues?’ and I
have often reflected that this question is misleading. The customer centric way of
looking at trade with China for example is: How can we help China succeed and
thrive? What is it we can do that will help them take big strides towards their
development and success? Admittedly this is just the other side of the same coin in
terms of how can we promote Swedish or New Zealand interests but it is a very
important and subtle difference to focus on what you can add rather than what you
can extract. The same issues are realities for corporates. Detroit car makers seem to
focus on ‘how can we make more money’ whereas the more successful Toyota (and
others) focus on how can we deliver a better product and improve customer
satisfaction. In this context countries are irrelevant – coming up with a good idea for
partnering in mutually successful endeavours is the real issue. Singapore, perhaps
naturally, is better at this. Because of the small geographical size of Singapore, it is
much easier to grasp how irrelevant it is as a country, allowing for more focus on
things that make a difference.
In E-commerce More is More by Andreas B Eisingerich and Tobias Kretschmer
The article asks the question ‘What engages online shoppers most?’ and the answer is:
First: Information on related products and services, second: in depth information on
product or service, and third: personalized shopping, and fourth: clear categorization,
and fifth: order tracking.
I feel that similarly to the first article commented on, this is a ‘think outside the box’
issue. The trick is to try to understand what goes on in the customer’s mind. Just
because I am in banking or travel doesn’t mean that the customer is 100% banking or
travel when he sees me. He or she is still 1/3 family, 1/3 work/career and 1/3 other
issues and availing understanding and /or enhancements in several or all of these
three will tie the customer closer to me. In my case I am much more likely to transact
with people I like than people I don’t like and often it comes down to having similar
values or outlooks on areas seemingly irrelevant to the transaction at hand. If all you
are trying to do is sell something to me I will be suspicious. If you look happy and
generous and look like you have a concern for my happiness and well being, then I
am more likely to listen, engage, and do repeat business with you.
The Best advice I ever got by Kris Gopalakrishnan
I constantly seek ways to get my love for this business across. When I display
enthusiasm, employees are more likely to listen to what I say and draw extra energy
from mine. Second, in talking with employees, I seldom focus on numbers but instead
on big ideas and their role. I don’t think that talking about revenue targets or market
share projections will get people inspired. I try to get people to focus on the future in
which their unique contribution has an impact. The essence of my job is: to motivate
one individual at a time.
I agree with these lines. I think the intrinsic ‘spiritual’ motivation is grossly
underestimated. We all know it is there, but many, if not most, companies seem to only
incent by money or other financial means. This fails to enlist the ultimate contribution
and also tends to increase risk as my success may pay me a significant bonus but the
cost of my total failure is borne by the organization/ employer. ‘Heads I win – tails
you lose’ is a very risky formula.
[email protected] 21 03 08
Harvard Business Review February 2008
I found this issue quite interesting, a few interesting passages cited below.
To help readers navigate the future there is HBRgreen.org where a 12 weeks
discussion on the most important environmental issues facing business leaders. This is
to help readers embrace the opportunities and manage the risks associated with a
carbon-constrained world.
Tasks, Not Time: Profile of a Gen Y job by Tamara J. Erikson
At Best Buy’s headquarters more than 60 % of the 4,000 staff are now judged only on
tasks or results. Salaried people put in as much time as it takes to do their work.
Hourly employees in the program work a set number of hours to comply with federal
labour regulations, but they get to choose when. Those employees report better
relationships with family and friends, more company loyalty, and more focus and
energy. Productivity has increased by 35 %, and voluntary turnover is down 3.2 %.
Employees say they don’t know whether they work fewer hours – they’ve stopped
counting. Perhaps more important, they’re finding new ways to become efficient: “Do
we really need this meeting?” Going forward we can devise a better model of how
define work: think task – not time.
 Articulate the results you expect – and tie accountability to getting the job
done.

Make physical attendance in the office, including meetings, optional

Gauge performance on the quality of the work performed

Help managers and employees learn to measure dedication other than by face
time

Use today’s networking capabilities to allow employees to work from
anywhere

Support the changes by creating drop in centres, team spaces, and open work
areas
Shift your definition of work from a place your employees go for a specific period of
time to something they do – anytime anywhere, Task, not time – a model that
dominated employment until a century ago – is a powerful way to draw the newest
crop of workers.
Food For Thought by John J. Medina
You learn 20 % faster immediately after exercise than after sitting still. An active life
style reduces the risk for Alzheimer’s disease, dementia, anxiety, and depression –
and for hospital visits. It doesn’t take a brain scientist to see the inverse relationship
between exercise and health care cost. Study participants jog for 30 minutes two or
three times per week for 12 weeks improve their cognitive performance. When they
stop the exercise regimen, the cognitive benefits evaporate.
How Star Women Build Portable Skills by Boris Groysberg
When star performers change firms, both the star and the new firm usually loose out.
The exception is when women stars change jobs. The explanation is that the female
(analysts) appear to have built their franchises on portable, external relationships with
clients and the companies they covered, rather than on relationships within their firms.
By contrasts, male analysts built up greater firm and team specific human capital,
investing more in internal networks and unique capabilities and resources of the firms
were they worked. Second, women took greater care in assessing a prospective
employer.
Most female analysts who become stars have had mentors; in fact the most
conspicuous difference between star and non-star women in equity research is access
to a supportive mentor. But star women reported difficulty forging such relationships.
They were less likely than their male counterparts to have mentors, and those who did
have mentors received less support from them than male stars did.
Midlife Change by Carlo Strenger and Arie Ruttenberg
Roll up your sleeves – midlife is your best and last chance to become the real you.
As a physician once told us: “If you are 50 and nothing hurts, you’re most likely
dead!”
The notion that possibilities slip away with age is built on a false premise. By midlife
for most people the pressures have lost most of their urgency. No longer riddled with
the anxiety that they may not be good at anything or by the need to prove that they are
good at everything, they have the freedom that only self-knowledge can impart. They
are also generally in less of a hurry. Most executives who consider a career change do
not need to act immediately. They have the time to listen to themselves, map their
possibilities in the world, and create their new lives with care. The journey can take
odd twists and turns before they end up in a satisfying place.
Without dreams we are unlikely to make any changes, but getting lost in fantasies is
not only a waste of energy but can also become an impediment to actual change.
Companies should help executives prepare for a second life as a matter of policy.
Everyone over 45 should have periodic meetings with coaches or consultants to help
plan their second careers. The business world must collaborate with institutions of
higher education to develop programs and courses geared towards that end.
Self-actualization is a work of art. It must be achieved through effort, stamina and
skill.
The Biosphere Rules by Gregory C. Unruh
Nature employs production processes that are surprisingly efficient, environmentally
sound – and widely imitable.
Companies can emulate three of the rules governing the natural operating system.
First, instead of relying on industry’s infinite supply of synthetic materials, they can
make recycling easy by striving to use as few raw materials as possible. Second they
can practice up-cycling – planning beyond the end of the product’s life cycle for its
incarnation as a new product. Finally, they can leverage general purpose platforms,
such as Microsoft leverages Windows.
In following these three rules, companies can free themselves from the vagaries of
raw material markets, shrink their vendor count, lower costs, foster profitable returns
on products that appeal to ecology- oriented customers, and ensure the environmental
sustainability of their products.
Astonishingly, of more than 100 elements, nature chose to use just four, carbon,
hydrogen, oxygen, and nitrogen – to produce all living tings. Add a little sulphur and
phosphorus, and you can account for 99% of the weight of everything on the planet.
The more perfect nature is, the fewer means it requires for its operation – Less is
More!
There is one overriding reason to emulate nature’s parsimony: It makes recycling
easy. Nature suggests that the potential for inventive uses of easily recycled materials
is huge.
Biological obsolescence – otherwise known as death – plays a vital role in the
biosphere. The unceremonious process of ushering out the old and ushering in the
new allows change; without it the biosphere could not evolve. In the context of
biosphere rules, planned obsolescence can become sustainability, leading a company
toward environmentally superior designs. To make virtuous recycling work, managers
should plan at the beginning of design for the end of their product’s life. The buyer –
supplier relationship needs to be rethought.
Reducing the number of materials is fundamental to recycling cost-effectively. Up to
75 % of steel and 50% of Aluminium are recycled because doing so uses a fraction of
the energy needed to produce virgin material.
Sustainability is in the end nature’s best secret. By reusing the same material in an
ever compounding cycle of evolutionary growth, the biosphere has sustained itself on
planet Earth for billions of years. With luck, following the biosphere rules may help
sustain business for a billion years or so.
And I got this letter to the editor published in the February issue:
Women and the labyrinth of Leadership....
Perhaps the traditional trade-offs that women face, addressed by Eagly and Carli, are
not forced but voluntary. The top performers in U.S. industry more often than not lead
very unbalanced lives because their work demands an almost inhuman level of
commitment: The CEO of a major corporation is on call 24 hours a day, seven days a
week. And executives are encouraged to minimize cost relentlessly, even in areas
such as payroll and customer service. Does any amount of money justify throwing
human concerns overboard to reach a goal? And if so, will ethics and environmental
issues be next? With CEO compensation up to 500 times greater than that of workers,
achieving team spirit between the boss and the people – perhaps one of the greatest
rewards of leadership- - is out of the question. This amounts to a lower quality of life
and is sustainable neither for the individual nor for the corporation.
Would the world be better off with leaders who have a more balanced view of life?
One wonders whether a female president would have embarked on the costly war in
Iraq or if Enron would have met the same scandalous demise with female top
management. I believe that female characteristics and qualities are greatly needed in
the corporate world. Stereotypical male aggression should not be held up as desirable.
/ Frank Olsson, NZ /
Harvard Business Review January 2008
The theme for this issue is leadership and strategy. Please find below a few lines from
some interesting articles.
Doing well by doing good? Don’t count on it. By Joshua Margolis and
Hillary Elfenbein
While doing good doesn’t appear to destroy shareholder value, we found only a small
correlation between corporate behaviour and good financial results (the exception
being public misdeeds, which had a discernible negative impact).
Doing good is unlikely to cost shareholders. Companies can do good and do well,
even if they don’t do well by doing good. None of this is to suggest that companies
should not engage in activities that generate social good. However, they should not
expect to be handsomely rewarded. Doing good may be its own reward.
Transforming Giants – What kind of company makes its business to make the
world a better place? by Rosabeth Moss Kanter
Employees once acted mainly according to rules and decisions handed down to them,
but they now draw heavily on their shared understanding of mission and on a set of
tools available everywhere at once.
When giants transform themselves from impersonal machines into human
communities, they gain the ability to transform the world around them in a very
positive way.
Shared values, principles and platforms. To compete effectively, large corporations
must respond quickly and creatively to opportunities wherever they arise, and yet
have those dispersed activities add up to a unified purpose and accomplishment. The
companies that meet this challenge rely in part on clear standards and disciplines,
including, at the most basic level, standardized processes.
Getting close at a distance – the payoff for companies that have embedded values and
principles in their guidance systems comes in many forms.
Empowerment in the field – Common values and standards also allow people at the
front lines to make consistent decisions, even under pressure and in the company’s
most culturally and geographically disparate locations.
A stronger basis for partnering – companies that have established strong guidance
systems find themselves more effective in selecting and working with external
partners – increasingly a necessity for competitive success. A more outward- and
forward-looking definition of purpose encourages exploration of partnership
opportunities that extend well beyond the formal boundaries of the company. It causes
people in the company to think about end-to-end responsibilities to the whole
ecosystem, from suppliers’ suppliers to customers’ customers and beyond – to society
itself.
Fire in the belly – if values and standards served no other purpose in a company, they
would still serve as motivational tools. They offer people a basis for engagement with
their work, a sense of membership, and an anchor for stability in the midst of constant
change.
Key criteria for the successful operating model is the effect of commonly held values
translating into operations through clear standards and processes – values and
standards that are embraced by individuals because they allow autonomy, flexibility,
and self-expression.
** this reminded me of a passage in Rousseau’s Confessions where he says that he
came to work wanting to do well but because of constant mistreatment he got into a
habit of stealing and constantly trying to get even by adopting various practices of
miss-chief. The golden rule works both in the negative and the positive.
“My master’s tyranny at length made the work, of which I should have been very fond, altogether
unbearable, and filled me with vices which I should otherwise have hated, such as lying, idleness and
thieving. The recollection of the alteration produced in me by that period of my life has taught me,
better than anything else, the difference between filial dependence and abject servitude. Naturally shy
and timid, no fault was more foreign to my disposition than impudence; but I had enjoyed an
honourable liberty, which hitherto had only been gradually restrained, and at length disappeared
altogether. I was bold with my father, unrestrained with M. Lambercier, and modest with my uncle; I
became timid with my master, and from that moment I was a lost child. Accustomed to perfect equality
in my intercourse with my superiors, knowing no pleasure which was not within my reach, seeing no
dish of which I could not have a share, having no desire which I could not have openly expressed, and
carrying my heart upon my lips, it is easy to judge what I was bound to become. In a house in which I
did not venture to open my mouth, where I was obliged to leave the table before the meal was half
over, and the room as soon as I had nothing more to do there. Incessantly fettered to my work, I saw
only objects of enjoyment for others and of privation for myself; where the sight of liberty enjoyed by
my master and companions increased the weight of my servitude; where in disputes about matters as to
which I was best informed, I did not venture to open my mouth; where, in short, everything that I saw
became for my heart an object of longing, simply because I was deprived of all. From that time my
ease of manner, my gaiety, the happy expression which, in former times, when I had done something
wrong, had gained me immunity from punishment – all were gone.
In this manner I learnt to covet in silence, to dissemble, to lie, and lastly, to steal – an idea, which, up to
that time, had never even entered my mind, and of which since then I have never been able to cure
myself of completely. Covetousness and weakness always lead in that direction. This explains why all
servant are rouges, and why all apprentices ought to be; but the latter, in peaceful state of equality,
where all that they see is within their reach, lose, as they grow up, this disgraceful propensity. It is
nearly always good, but badly directed principles, that make a child take the first step towards evil.”
Working with extended networks of partners across inter- and extra-company
boundaries requires large numbers of people to serve as connectors among activities –
not as bosses but as brokers, network builders, and facilitators.
When large groups of people are subject to management by values, aspirations, and
open boundaries instead of management by traditional controls, their energies and
passions are engaged. Social contributions are no longer an afterthought – a luxury
enjoyed only by those who are already profitable – but a starting point that helps
companies find profitable growth. The interplay of corporate standards and local
conditions puts companies in a position to influence the ecosystem around them
(especially in emerging markets) and to generate innovation. If these vanguard
companies lead others to adopt their way of working, then we will see a new, and I
think more promising kind of capitalism. And if it flourishes, not only will that be
good for business, it will also be good for the world.
The Five Competitive Forces that Shape Strategy by Michael E.
Porter
This article deals with the five competitive forces 1) Rivalry among Existing
competitors, 2) Threat of new entrants, 3) Bargaining power of buyers, 4) Bargaining
power of suppliers, 5) Threat of substitute products or services.
A well written article that doesn’t really lend itself to meaningful summation.
Innovation Killers – How financial tools destroy your capacity to do new things
by Clayton Christensen, Stephen Kaufman and Willy Shih.
The authors point out three financial tools that often stifle innovation: Discounted
cash flow and net present value, fixed and sunk-cost conventional wisdom, the
emphasis on short term earnings. These are not bad tools and concepts in and of
themselves, but the way they are used to evaluate investments creates a systematic
bias against successful innovation.
My own reflection is that most measures are focused on tangible value, whereas for
most companies the majority of value sits in the intangible value. If 90 % of our
measures of performance and staff go into measuring 1/3 of the total value (creation)
only 10 % remains to understand, measure and analyse the 2/3 that pertain to
intangible (brand) value. I believe there is a huge potential here to better understand
what drives sustainable value in corporations and to promote people and practices that
build brand value as opposed to those who look good superficially and short term, but
are negative or high risk for sustainable value.
Giving Great Advice – Interview of Bruce Wasserstein by Thomas Stewart and
Gardiner Morose
How do you develop individual talent? We have and want to attract a network of stars
– people who communicate and co-operate but are entrepreneurial and stand out as
quality individuals, who are not the cogs in the a corporate machine. Quality people
must be managed with customized approaches. The idea is to create a hothouse where
young talent is nourished by our culture and people are encouraged to think
creatively, think deeply – but above all think. I want them to reflect on what they are
doing and why, and then wonder, ‘Can we do better?’ Management’s role is to help
them.
Good advice is at least as qualitative as it is quantitative. A firm may have people
churning out reams of statistics, providing a detailed analysis showing margins of this
company versus that company. But are they asking, ‘What’s the point?’
Why Mentoring Matters in a Hypercompetitive world by Thomas
DeLong, John Gabarro and Robert Lees.
We found that many formerly modest-size outfits – including law firms, consulting
firms, accounting firms, investment banks, marketing agencies, hospitals, money
management firms and universities – are becoming ‘corporatized’ as they grow
rapidly in size and complexity. Professionals are starting to think that they are merely
cogs in a wheel. In order to survive they must revive mentoring, an institution that has
been the victim of hyper-competitiveness and rapid growth in these types of firms. 20
years ago new hires were treated as protégés whereas today it is more impersonal and
fluid.
At law firms with fewer than 100 professionals, attrition rates are 50 % lower than at
larger firms. High attrition comes at a high cost. Firms that lack collegiality and a
sense of genuine partnership they had in their early days will struggle to recruit – let
alone retain – the talent they need to survive. Deloitte alone predicts that it needs to
recruit 50,000 professionals in the next five years just to keep up with the normal
demand and attrition. Partners must listen, inquire, and show interest. An e-mail, or a
nod of appreciation goes a long way.
Mentoring is not just about promotion – it’s much more about developing your
potential as a professional and as a human being. If you want a mentor, start acting
like you do.
Seniors need to build time into their schedules to nurture all their associates, not just
the ones most like themselves.
Notes by frank@olsson 20th January 2008
Harvard Business Review November 2007
Leaders do many things: They inspire and motivate; they set strategy; they wield
power; they align people; they set an example; they represent the organization to
outsiders. More than anything else, however, leaders help the people around them
makes sense of the world in which they find themselves. Inspiring, strategizing and
acting all depends on sense-making / Thomas Stewart, editor /
To create the company I wanted I had to look into the future and pretend I was
already there. I had to stop treating the infrastructure of the company like some
necessary evil, invest in it more than I thought possible, and trust the investment
would work. /Fred Carl, CEO of Viking Range/
Cognitive Fitness New research in neuroscience shows how to stay
sharp by exercising your brain by Roderick Gilkey and Clint Kilts.
Step One – Understand how experience makes the brain grow.
Step Two – work hard at play. Another one of the most effective ways you can
promote your cognitive health is t engage in the serious business of play. As the
philosopher Henri Bergson wrote, “To exist is to change, to change is to mature, to
mature is to go on creating oneself endlessly.” To do this well requires consciously
drawing on one of the great legacies of childhood – our ability to play, which lies at
the heart of our capacity to imagine and invent.
Joy provides what has been described as “emotional fuel,” which helps the brain
develop and expand its synaptic networks. Play is not only a psychological precursor
of social and emotional maturity I adulthood; it is a psychological one as well. As you
go about the hard work of your career, it is critical to remember to play. Play
improves our ability to reason and understand the world. Our most brilliant thinkers
and leaders know this. (Einstein ‘Imagination is more important than knowledge’)
Some organizations go out of their way to let people experiment and play. In
companies that stifle play, brainpower may decrease as it does in children with
failure-to-thrive syndrome, a condition created by experientially deprived or abusive
environments.
A big challenge in finding the right environment for your brain to thrive is striking a
balance between risk and security. You must have a stake in the game you play if you
are to really engage in it; risk alerts the brain and activates capacities for both reason
and imagination. If you don’t allow for some risk in your career, you may become
like an overprotected child who fails to explore the world with any autonomy and thus
never fully achieves his potential. But too great a personal stake in the game can
create stress limiting the brain to survival mode.
Step 3 Search for Patterns. The power of pattern recognition, a critical competence of
the executive brain, can be seen in the capacity to simplify, without being simplistic.
Avoid filling the team with people who’ve all followed the same path upward. This
advice may sound obvious but in many companies one route upward dominates.
Step 4 Seek Novelty and Innovation. The people who remain engaged in life
consistently display an attitude of openness to new and unexpected experiences.
Have an open attitude and a willingness to step back from prior knowledge and
existing conventions I order to start over and cultivate new options – a challenge that
typically activates right-hemisphere cognitions.
We also advocate adopting a protégé. While it is widely known that being a protégé
benefits rising executives, an ongoing stream of research reveals that the person who
often gets the most value from a mentoring relationship is the mentor, who is exposed
to information, queries and ideas from which she may otherwise be too remote.
Solve the Succession Crisis by Growing Inside-Outside Leaders by Joseph
L Bowler.
A critical difference between companies that manage succession well and those that
don’t is the understanding that succession is a process and not an event.
There is no better way to reverse the long-term destruction of shareholder value than
for companies to commit themselves to growing executives from inside the company
who are prepared to lead through good times and bad. Simple? No. The right thing to
do? Absolutely! Consider the four skills that the new CEO needs to drive a company
forward and produce the goo results.
1. Judge where the world and the company markets are headed, and frame a
vision of how the company should reposition itself
2. Identify (and if needed recruit) the talent that can turn the vision into reality.
3. Understand, in the deep and substantive way, the problems the company faces.
4. Know, comprehensively, how the company really works – in other words, be
plugged into its administrative inheritance and know key players well.
We found that the greater proportion off experts a team has, the more likely it is to
disintegrate into non-productive conflict or stalemate. / From Ways To Build
Collaborative Teams by Lynda Gratton and Tamara J Erickson /
Notes by [email protected] Nov 11, 2007
Harvard Business Review October 2007
This edition has some great articles about the environment and global warming.
Thomas Stewart, the editor, says in the leader “The bad news is that climate change
happens slowly, by degrees, literally – and humankind might sit there, like the frog in
the fable, till it’s too late. The good news is that climate change happens slowly, and
humankind has time, to get some purchase on the problem and fix it. While doing
nothing about climate change put people and populations in great peril, there are
fortunes to be saved by those who take steps to prevent and mitigate it.”
“We don’t know precisely how climate change will alter the planet, but two things are
certain: Its complex environmental impact will directly affect business, society and
ecosystems; and governments will seek to mitigate its effects with far-reaching
regulations. Until recently, companies have for the most part freely emitted carbon,
but they will increasingly find that those emissions have a steep price, both monetary
and social. As a result, businesses that continue to sit on the sidelines will be badly
handicapped relative to those that are now devising strategies to reduce risk and find
competitive advantage in a warming, carbon-constrained world. There will be winners
and losers. Companies that get their strategy right will find vast opportunities to both
profit and create social good on a global scale.”
A Strategic Approach to Climate Change by Michael Porter and Forest
Reinhardt
While individual managers can disagree how immediate and significant the impact of
climate change will be, companies need to take action now. Companies that persist in
treating climate change solely as a corporate social issue, rather than as a business
problem, will risk the greatest consequences. The effects of climate on companies’
operations are now so tangible and certain that the issue is best addressed with the
tools of the strategist, not the philanthropist.
Business leaders need to start to treat carbon emissions as costly, because they are or
soon will be, and companies need to assess and reduce their vulnerability to climate
related environmental and economic shocks. Every company needs to get those basics
right as a matter of operational effectiveness. Implementing best practices in
managing climate related costs is the minimum required to remain competitive.
Business leaders need to look “inside out” to understand the impact of the firm’s
activities on the climate and “outside in” at how changing climate (in both its physical
and its regulatory manifestations) may affect the business environment in which the
firm competes.
If new regulations put a price of, say $ 10 a ton on emissions, would that put a
significant dent in the profits or even swallow them altogether? A company needs t
understand the emissions it causes its business partners to produce, as well as those it
generates itself: Both types are important targets for reduction.
Wall-Mart seems to be making a strategic bet that it can reduce its carbon exposure
more than competitors can and keep it lower.
While property insurers’ own carbon emissions may be low, for example, carbon
exposure may be high for companies that insure or reinsure costal real estate that is
threatened by rising sea levels.
Periodically, major new forces dramatically reshape the business world – as
globalization and the information technology revolution have been doing for the
several past decades. Climate change, in its complexity and potential impact, may
rival them both. While many companies may still think of global warming as a
corporate social responsibility issue, business leaders need to approach it in the same
hard headed manner as any other strategic threat or opportunity.
Investing in Global Security by Peter Swartz
In the coming decades we can expect to see sea levels rise and more extreme
droughts, storms, and flooding. These events become security concerns for businesses
when people are forced to flee, infrastructure is destroyed, ecosystems fail, agriculture
is disrupted, economic volatility increases, and some regions become uninhabitable.
The most vulnerable will be places where, for example, the state has limited capacity
to respond, the local ecosystem is fragile, urbanization is accelerating with few social
services, and the water supply is already stretched. Haiti is perhaps the most extreme
case, India, the Philippines, and parts of Central America are all at risk. In such a
stressed system, a severe prolonged weather event could launch a crisis of
interconnected events from which recovery might be impossible.
Multinational firms prepared to take the long view can avoid the worst consequences
of climate change and perhaps help business build a stronger reputation as a powerful
agent of social well being.
What Stakeholders Demand by Daniel C Esty
Last year more than 50 US investors with a combined total of $ 4 trillion under
management called on the US Congress to enact legislation to curb carbon emissions.
In a statement, the signatories, including investment funds for labour unions, state
pensions, insurance companies, and major asset managers wrote: “In the current
unpredictable national climate policy environment, it is exceedingly difficult and
risky for businesses to evaluate and justify the large scale, long term capital
investments needed to seize existing and emerging opportunities…” Dozens of funds
now screen companies for environmental and sustainability factors, including
emissions reporting, and exclude poor performers. In July, for example, Citigroup
downgraded coal stocks across the board, explaining in an equity research report that
coal company productivity/ margins are likely to be structurally impaired by new
regulatory mandates applied to a group perceived as landscape-disfiguring global
warming bad-guys.
Beyond responding to stakeholder pressures, careful tracking and management of
emissions prepares companies to manage climate change challenges systematically.
Those who fail to monitor, report, and mitigate emissions face the prospect of
mounting competitive disadvantage.
Conversation with Alyson Slater, Global Reporting Initiative’s director of
strategy
It is the fiduciary duty of any company to ask, Is this issue important to our
stakeholders? Today it is very difficult for a company to say that greenhouse gas
emissions are not a subject of material interest to stake holders.
Companies quickly realize that reporting cannot happen without strategy
development. As firms start the process of putting a report together – talking to
shareholders, examining core businesses – they’ll have to back up and ask, What is
our strategy on climate change anyway?
Companies’ natural instinct, which we’ve seen across the board, is to avoid public
disclosure on potential risks, whether it is green house gas emissions or something
else. But we’ve also seen how reporting creates a communications avenue through
which companies can effectively and accurately position themselves with their stake
holders – investors, customers, regulators and so on.
It is a primary responsibility of the board and the CEO to determine the implications
of their company’s future climate risks and (a) report them and (b) mitigate them.
Companies are adept at assessing their financial performance but too many are afraid
to look in the mirror and face potential risks that could damage their business.
If You’re not at the table, You’re on the Menu by Andrew J. Hoffman
To shape policy to your advantage, you must start by monitoring pending regulations
and understanding how they may affect your business objectives.
Investors hunger for Clean Energy by Theodore Roosevelt IV and John
Llewellyn
Investors have been waking up to the opportunities of the new environmental era over
the past several years. Institutions were amongst the first to put money into
sustainable energy companies. Lately, hedge funds – some of which had already
entered this space – have aggressively increased their pursuit of environmental
investments. And there has been overwhelming demand from private equity investors
and wealthy individuals.
Worldwide investments in sustainable energy (including wind, solar, and water
power) more than doubled from 2004 to 2006, to $ 70.9 billion, according to a 2007
report by the United Nations Environment Program and the firm New Energy
Finance. Venture capital and private equity investments in sustainable energy
increased by 69 % in 2006 to $ 8.6 billion.
If a company can show that it has diversified its energy sources to include those that
produce little or no emissions and that it has shrunk its per-employee power use, the
capital markets will respond favourably.
The desire for green investments is so intense, and the supply currently so limited,
that if investors aren’t disciplined, the excess demand could cause a bubble in the
future.
The pricing of greenhouse gas emissions will create an economic transformation of
the first order, with the potential to be even larger than globalization. Investors now
recognize that the impact on the world and national economies will be enormous. The
companies that will be most successful in attracting green capital will be those that
share investors’ view of the importance of this change. Investors will not expect all
companies to be experts in climatology, but they will expect every company to see
and understand a trend of this magnitude and make sure the firm does not get left
behind.
Walking the Talk at Swiss Re by Mark Way and Britta Rendlen
Fostering the company’s credibility is crucial because of the central role that trust plays in the
business model. By 2003 Swiss Re became the first major financial services provider to
pledge to become greenhouse neutral. The company pays for up to 50 % of a number of
defined investments that staff can make for the benefit of the environment.
Place Your Bets on the Future You Want by Forest L Reinhardt
The firms that come out ahead when emissions cost money will be those that make bold
moves now, refocusing strategy and operations to take advantage of the opportunities and
skirt the dangers raised by the prospect of climate change.
For centuries the North Atlantic cod fishery fed millions of people, but there were no property
rights controlling access to fish in the sea, so fishermen didn’t treat the resource as scarce. In
the early 1990s the fishery collapsed. Governments have since established sensible systems of
tradable catch permits that seem likely to prevent the collapse of other species, but it was
apparently too late to resurrect the cod fishery. The atmosphere’s ability to absorb emissions
is now similarly limited, precisely because we thought that could never happen. A system in
which we pretend that carbon emissions cost nothing subsidizes, at our children’s expense,
every producer and consumer of energy today. To be efficient, we need to eliminate those
subsidies. This means pricing carbon.
Strong business leaders should want a transparent system that prices the right to generate
carbon emissions as though it were any other scarce resource and lets firms get on with the
business of competing.
/ notes by [email protected] 14 October 2007 /
Harvard Business Review September 2007
After a rather full summer issue of HBR I found the post summer one of lesser
interest. There was one article on Women and their career struggles but I didn’t think
it brought out much new and perhaps I think an important point is omitted as
explained below.
A few notes from the September issue:
Performing a Project Pre-mortem by Gary Klein
A pre mortem is the hypothetical opposite to a post-mortem. A post mortem in a
medical setting allows health professionals and the family to learn what caused the
patient’s death. Everyone benefits except of course the patient. A pre-mortem is a
business setting comes at the beginning of a project rather than at the end, so that the
project can be improved rather than that autopsied. Unlike a typical critiquing session,
in which project team members are asked what might go wrong, the pre-mortem
operates on the assumption that the ‘patient’ has died, and so asks what did go wrong.
The team members’ task is to generate plausible reasons for the project’s failure.
A typical pre-mortem begins after the team has been briefed on the plan. The leaders
start the exercise by informing everyone that the project has failed spectacularly. Over
the next few minutes those in the room independently write down every reason they
can think of for the failure – especially the kinds of things they ordinarily wouldn’t
mention as potential problems, for fear of being impolitic. Next the leader asks each
team member, starting with the project manager, to read one reason from his or her
list; everyone states a different reason until all have been recorded. After the session
is over, the project manager reviews the list, looking for ways to strengthen the plan.
Although many project teams engage in prelaunch risk analysis, the pre-mortem’s
prospective hindsight approach offers benefits that other methods don’t. A good premortem may be the best way to avoid a subsequent post mortem.
Women and the Labyrinth of Leadership by Alice H Eagly and Linda L Carli
This article argues that there are still a myriad of little things that hold women back
including biases that because of other commitments like children and home they will
be less committed than men. This may well be true but trend wise it seems that the
problem is reducing as female participation in education and the work force is getting
significant and close to the numbers for males.
It may well be that these are not just forced tradeoffs but voluntary tradeoffs. The top
performers/ office holders in US industry more often than not lead a very unbalanced
type of life where work perhaps demands an unreasonable amount of focus and time
commitment. This in itself may lead to a lower quality life and a riskier leadership
profile, sustainable neither for the individual nor for the corporation.
This begs the question if the world isn’t better off with more female characteristics
leaders with a more balanced view and life experience. One would have to wonder if
the hugely costly war in Iraq would have been embarked upon by a female president
or if Enron would have experienced the same scandalous demise with female top
management. This century holds out good hope that gender and other type of
discrimination will diminish and even disappear.
The article has these suggestions to encourage female progression. Work to dispel
prejudice towards female leaders; change the long hours norm; reduce the subjectivity
of performance reviews, use recruitment agencies for objectivity; ensure there is a
critical mass of females in executive positions, not just one; help shore up social
capital (networking), prepare women for line management; establish family friendly
human resource practices; welcome women back; encourage male participation in
family-friendly benefits.
I think many if not all of these can be useful tools to get the desired balance which is
not only a matter of idealism but a way to prepare for the future and operate more
sustainably.
The article caused me to send this letter to the editor…..
To: HBR_Letters
Sent: Monday, October 01, 2007 7:52 AM
Subject: Re: Labyrinth of Leadership
Dear Sirs
I read the article Labyrinth of Leadership in the September issue of HBR with interest. The article
argues that there are still a myriad of little things that hold women back including biases that because
of other commitments like children and home they will be less committed than men. This may well be
true but trend wise it seems that the problem is reducing as female academic qualifications and
participation the work force are getting significant and close to the numbers for males. Change in this
respect is visible everywhere.
It may well be that the traditional multitasking that women face are not just forced tradeoffs but
voluntary tradeoffs. The top performers/ office holders in US industry more often than not lead a very
unbalanced type of life where work perhaps demands an unreasonable amount of focus and time
commitment. This in itself may lead to a lower quality life and a riskier leadership profile, sustainable
neither for the individual nor for the corporation.
This begs the question if the world isn’t better off with more female characteristics leaders with a more
balanced view and life experience. One would have to wonder if the hugely costly war in Iraq would
have been embarked upon by a female president or if Enron would have experienced the same
scandalous demise with female top management. This century holds out good hope that gender and
other type of discrimination will diminish and even disappear.
To get to the very top you need an almost inhuman commitment that throws out any chance of leading
a balanced life. I enjoy tennis but do I want to play ten hours a day for the prospect of playing at
Wimbledon? One to two hours a day every other day is enough for me. To be at CEO level of a major
corporation you work or are on call 24 hours seven days a week. And often you are incented to
minimize cost including what staff are paid and cost of customer service. Does any amount of money
justify spending your life like that? And if you are ready to throw all other human concerns over board
to reach your goal will the issues of ethics and the environment also seem expendable. With CEO paid
up to 500 times workers compensation the chances of ever achieving team spirit between the boss and
the people - perhaps one of the greatest rewards of leadership - are out of the question.
My view is that female characteristics and qualities are in great need in the corporate world. The world
is screaming out for a more caring attitude as key leadership criteria - and stereotypical male
aggression and war analogies should not be held up as desirable.
I thought this verse by Robert Louis Stevenson pertinent.
Business and Idleness
Extreme business, whether at school or college, kirk or market,
is a symptom of deficient vitality, and a faculty of idleness implies
a catholic appetite and a strong sense of personal identity. There is
a sort of dead-alive, hackneyed people about, who are scarcely
conscious of living except in the exercise of some conventional
occupation….they cannot be idle, their nature is not generous enough;
and they pass those hours in a sort of coma, what are not dedicated
to furious moiling in the gold mill.
Robert Louis Stevenson 1881
Frank Olsson
Investigative Negotiations by Deepak Malhotra and Max Bazerman
Principle 1. Don’t just discuss what your counterparts want – find out why they want
it.
Principle 2. Seek to understand and mitigate the other side’s constraints.
Principle 3. Interpret demands as opportunities.
Principle 4. Create common ground with adversaries.
Principle 5. Continue to investigate even after the deal appears to be lost.
Notes by [email protected]
Harvard Business Review July – August 2007
This issue is about managing for the long term. There are many interesting articles
that deserve to be read in their entirety. So what did I learn by reading the issue? I am
not so sure a lot was new but the points have largely been made before. Don’t get
trapped in the three months’ perspective. Spend time looking out. Medium term
clarity may be a better bet than futuristic analysis as the former is easier to convert to
action than the latter. Incentive systems often skew things to the near future. It is wise
to look at environmental impact of all you do. This has the potential to save a lot of
money and also will assist you in surfing through big waves that may otherwise be
lethal to your business.
Please find below a few notes from the articles in this month’s edition.
Productivity Is Killing American Enterprise by Henry Mintzberg
Get the analysts off the back of the corporations. Companies can’t be managed from a
securities analyst’s office. Great enterprises are built slowly and thoughtfully by
people who are fully engaged. Let’s begin by getting rid of quarterly earnings. Who
ever came up with the absurd notion that the fortunes of great enterprises can be
discerned from one three-month period to the next? Quarterly reports keep
management myopically focused on immediate measurable results instead of on
products, services and customers.
Take corporate governance seriously. Keep the mercenaries out of the executive suits.
Treat the enterprise as a community of engaged members, not as a collection of free
agents.
American enterprise needs to get out of the impossible state it is in now. For the sake
of American society, as well as the American economy, it is time to get past
productivity.
Be A Socially responsible Corporation by Marianne Barner, director corporate
communications, IKEA.
We have to reflect what our customers and other stakeholders value.
So far our biggest problem in embedding CSR (corporate social responsibility) has
been communicating to our people what we are doing. Like most large retailers, we
have a high staff turnover in the stores. And the plight of third world children can
seem remote. But when it comes to climate change, I think everyone will get engaged.
It hits us all so directly. We offered screenings of Al Gore’s film ‘An Inconvenient
Truth’ in some of our units and the interest was incredible. No company will be able
to shirk social responsibility. My advice to managers is that becoming socially
responsible corporations takes longer than you think and involves not a giant leap but
thousands of small steps.
Four Principles of Enduring Success by Christian Stadler
1. Exploit before you explore – emphasizing existing assets and capabilities over
exploring for new ones
2. Diversify your business portfolio – great companies know when to diversify.
They are careful to maintain a wide range of suppliers and a broad base of
customers
3. Remember your mistakes – tell of past failures to ensure they are not repeated.
4. Be conservative about change – great companies seldom make radical changes
– and take great care in their planning and implementation
Few people today would dispute that conglomeration is a poor strategy. But the
antidote – firms focusing on a single business or set of capabilities – does not seem
much better when viewed from a long term perspective. Firms with multiple but
related business fare better.
We sometimes think we live in the most revolutionary of times. But recalling
challenges of the past should remind us that every generation thinks it lives in the
most revolutionary of times.
Lessons from Toyota’s Long Drive – interview of Katsuki Watanabe, Toyota’s
65 year old president.
Toyota’s market capitalization at US $ 186.71 billion is almost six times the
combined market cap of GM and Ford. This year marks the 70th year of Toyota’s
founding and 50 years of exporting to the USA.
We must make problem issues visible. Hidden problems are the ones that become
serious threats eventually. If problems are revealed for everybody to see, I will feel
reassured. Because once problems have been visualized, even if our people didn’t
notice them earlier, they will rack their brains and find solutions to them.
We have been humble; that has been the traditional Toyota character. Now, of course,
we constantly remind ourselves, don’t be arrogant.
There is no genius in our company. We just do whatever we believe is right, trying
every day to improve every little bit and piece. But when 70 years of very small
improvements accumulate, they become a revolution.
Focus on the middle term by Geoffrey A Moore
Strategy’s no-man’s land lies between the budget and the long-term plan. The scarcest
resource in Horizon 2 is a leader who knows how to build business to a level where
existing operations can take it over. Only by focusing on the horizon 2 challenge will
the horizon 3 investments provide support in horizon 1.
Building a leadership brand by Dave Ulrich and Norm Smallwood
You want your leaders to be the kind of people who embody the promises your
company makes to its customers. To build this capability, follow these five principles.
1. Nail the prerequisites of leadership. 2. Connect your executives’ abilities to the
reputation you’re trying to establish. 3. Assess leaders against the statement of
leadership brand. 4. Let the customers and investors do the teaching. 5. Track the long
term success of your leadership brand efforts.
If brands are built over years, why are they managed over quarters? By
Leonard M Lodish and Carl F Mela.
By focusing consumers’ attention on extrinsic brand cues such as price instead of
intrinsic cues such as quality, promotions make brands appear less differentiated.
Brand management today is like trying to drive a car by looking only a few feet
ahead. The drivers can change direction rapidly, but they’re not necessarily on a path
that will take them where they want to go. Mounting evidence suggests that shortterm orientation erodes a brands ability to compete in the market place. Accordingly,
managers are well advised to refocus their attention on the basic principles that once
made their brands ascendant.
The Making of an Expert by Anders Ericsson, Michael Prietula and Edward
Cokley
What does correlate with success? All the superb performers have practiced
intensively, have studied with devoted teachers, and have been supported
enthusiastically by their families throughout their developing years.
The journey to truly superior performance is neither for the faint of heart nor for the
impatient. The development of genuine expertise requires struggle, sacrifice, and
honest, often painful self-assessment. There are no short-cuts. It will take you at least
a decade to achieve expertise and you will need to invest time wisely, by engaging in
deliberate practice – practice that focuses on tasks beyond your current level of
competence and comfort. You will need a well informed coach not only to guide you
through deliberate practice but also to help you learn how to coach yourself. Forget
the folklore about genius.
Many people are naïve about how long it takes to become an expert. Leo Tolstoy once
observed that people often told him they didn’t know whether or not they could write
a novel because they hadn’t tried – as if they only had to make a single attempt to
discover their natural ability to write.
Mozart was not born an expert – he became one. His musical tutelage started before
he was four years old, and his father, also a skilled composer, was a famous music
teacher and had written one of the first books on violin instruction.
Six Rules for Effective Forecasting by Paul Saffo
The primary goal of forecasting is to identify the full range of possibilities, not a
limited set of illusory certainties. Whether a specific forecast turns out to be accurate
is only part of the picture – even a broken clock is right twice a day. Above all, the
forecaster’s task is to map out the uncertainty, for in a world where our actions in the
present influence the future, uncertainty is opportunity.
The consumer of the forecast must understand enough of the forecast process and
logic to make an independent assessment of its quality – and to properly account for
the opportunities and risks it presents.
The best way to make sense of what lies ahead is to forecast for yourself.
A Road Map for Natural Capitalism by Amory Lovins, Hunter Lovins and Paul
Hawken
The journey to natural capitalism involves four major shifts in business practices, all
virtually interlinked.
1.
2.
3.
4.
Dramatically increase the productivity of natural resources
Shift to biologically inspired production models
Move to a solutions based business model
Reinvest in natural capital
Hypercars and their cousins could ultimately save as much oil as Opec now sells.
Indeed, oil may well become uncompetitive as a fuel long before it becomes scarce
and costly.
Whether through better design or through new technologies, reducing waste
represents a vast business opportunity. The US economy is not even 10% as energy
efficient as the laws of physics allow. Just the energy thrown off as waste heat by US
power stations equals the total energy use of Japan. Materials efficiency is even
worse: only about 1 % of all materials mobilized to serve America is actually made
into products and still in use six months after sale.
Numerous case studies show that companies leading the way in implementing
changes that help protect the environment tend to gain disproportionate advantage,
while companies perceived as irresponsible lose their franchise, their legitimacy, and
their shirts. A strong environmental rating is a consistent predictor of profitability.
The logic of economizing on the scarcest resource, because it limits progress, remains
correct. But the pattern of scarcity is shifting: Now people aren’t scarce but nature is.
This shows up first in industries that depend directly on ecological health. Here,
production is increasingly constrained by fish rather than by boats and nets, by forests
rather than by chain saws, by fertile top soil rather than by ploughs. Moreover, under
the traditional factors of industrial production – capital and labour – the biological
limiting factors cannot be substituted for one another. In the industrial system, we can
easily exchange machinery for labour. But no technology or amount of money can
substitute for a stable climate and a productive biosphere. Even proper pricing can’t
replace the priceless.
Natural capitalism addresses those problems by reintegrating ecological with
economic goals. Because it is both necessary and profitable, it will subsume
traditional industrialism within a new economy and a new paradigm of production,
just as industrialism previously subsumed agrarianism. The companies that first make
the changes we have described will have a competitive edge. Those that don’t make
that effort won’t be a problem because ultimately they won’t be around.
Notes by [email protected] 2nd September 2007
Harvard Business Review June 2007
The theme of this issue is how successful leaders think. And the main point in
displaying greatness in this context is to not look for this or that i.e. either or – but to
look for the ability to combine ideas and capture the strong points from opposing
propositions and ideas. Good leaders tailor – they keep all possibilities alive, rejecting
none. Good leaders listen widely and well – they want to find the smartest person in
the room – not to be that person.
If you love your information – set it free.
How Successful Leaders think by Roger Martin
Leaders with exemplary records seem to have the predisposition and capacity to hold
in their heads two opposing ideas at once. And then without panicking or simply
settling for one alternative or another, they are able to creatively resolve the tension
between those two ideas by generating a new one. By forcing a choice between the
two we disengage the opposite mind before it can seek a creative solution.
Scorched Earth – Environmental Risks in China by Elizabeth Economy and
Kenneth Liebertahl.
Many multinationals think they understand, have tried to mitigate, the serious risks
posed by operating in China – intellectual property rights violations, corruption, lack
of transparency, potential political instability. Yet one of the highest risks of all –
China’s massive environmental degradation – is barely discussed in corporate
boardrooms.
Already 400,000 people die every year as a result of air pollution. Access to usable
water is becoming increasingly problematic for several hundred million people. 40 %
of China suffers from soil erosion. The Chinese dessert, already covering one quarter
of its land –is expanding at a rate of 1,900 square miles per year. On the positive side,
forest coverage has increased from 16.6 % to 18.21 %
Despite the challenges, multinationals can’t afford not to do the right thing. Chinese
government leaders, NGOs, and the media expect the international community to take
the lead. Environmental degradation, moreover, is producing risk and providing
opportunities that must be factored into corporate strategies. In approaching this
issue, companies must also consider the challenges and opportunities posed by
China’s political economy. On the plus side, though, multinationals can often
profitably leverage efforts made in China in other markets.
The bottom line is that environmental factors can seriously affect China’s overall
future trajectory. Ho well multinationals address environmental issues will affect their
fortunes in one of the most important growth economies in the world.
The New Deal at the Top by Yves L. Doz and Mikko Kosonen
Authoritative CEOs find the new deal particularly difficult, because it requires them
openly to accept – even encourage – challenges to their thinking.
The Old Deal and the New
The Old Deal
1.
2.
3.
4.
5.
Individual responsibility for unit performance.
Independent units pursue separate business strategies
Financial measurements and controls; deregulation of strategic choices
Functional and unit specific expertise
Results oriented: emphasis on outcome control
The New Deal
1. Collective responsibility for corporate performance
2. Interdependent unit heads integrate corporate strategy and value creation
3. Transparent measurements demonstrating how interdependencies improve
performance; substantive strategic dialogue by the top team
4. Overlapping experience and responsibility
5. Values oriented: emphasis on normative control (promoting internalized rules
for behaviour)
Work together – focus on corporate issues, keep the dialogue informal, make time for
reflection, keep a fresh perspective, put the CEO in a subordinate role, establish
transparent accounting and performance measurements.
New deal companies prize diversity and debate - not only at the top but all the way
down the organization. Far from seeking to diminish the authority of senior
executives, they try to extend it across the corporation.
[email protected] 24th June 2007
Harvard Business Review May 2007
Not the greatest of HBR issues but some interesting articles! A few notes attached.
Service with a big smile: If managers want employees to deliver service with a big
smile they can do better than command it. They could create an environment that
encourages genuine smiles and also try to hire happy people.
My comment: If we want the customer to be happy we should ensure our staff is. If
you have anything but happy staff you represent an opportunity cost. The happiness
virus cannot be transmitted from someone not having it.
A larger language for Business by David Whyte
There is a temptation to say: “I’d much rather inhabit the 5% of reality where I am in
control than the 95% where I don’t know what the hell is going on. Ask yourself,
what is the courageous conversation I am not having, but need to have to take the next
step?
In the revival of Marks and Spencer three things were in focus: Improve the product;
Improve the stores, and Improve the service. If you can do these three you are away.
Surviving your new CEO by Kevin P. Coyne and Edward J Coyne SR
It may be tempting to wait and see what the new CEO wants of you instead of taking
the initiative to talk about your responsibilities, but this is the wrong approach. Most
of the CEOs we interviewed indicated that too many executives doomed themselves
from the start simply by failing to manifest a willingness to be part of the new team.
“Managers do not realize how much the CEO is looking for team mates on day one. I
am amazed at how few people come through the door and say ‘I want to help. I may
not be perfect, but I buy into your vision.’ That alone makes a huge difference. It is
naïve and stupid for managers to hold back and e guarded. Ask the new CEO some
intelligent questions about how to work together. If managers put themselves into the
new CEOs position they could often improve of the chances of success. The new boss
will be looking for constructive suggestions on actions that she or he can take quickly.
Can you help? The best way you can improve your standing quickly is to take on a
project in which you must interact extensively with the new leader. It is important not
to appear self serving.
Make your personal decision about whether the new guy’s style, vision and business
practices are ones that you want to live with. Then commit or get out. Otherwise
everyone’s life will be hell. And the result will be the same anyway.
Inner work life by Teresa M. Amabile and Steven J Kramer
Positive emotion is tied to higher creativity. People are over 50% more likely to be
creative when in a positive mood. The single most important criteria for perceiving it
a good day is connected to a sense of being able to make a difference in your work.
As the proportion of time that is claimed by work rises, inner work life becomes a
bigger component of life itself. People deserve happiness. They deserve dignity and
respect. When we act on that realization, it is not only good for business. It affirms
our value as human beings.
Strategies to Crack well guarded markets by David J Bryce and Jeffrey H.
Dryer
Smart Companies use three fundamental approaches, usually combining at least two
of them, to break into profitable markets.
Leverage existing assets; Companies use what you already have, often supplementing
their asset and resources with a partner’s, to overcome entry barriers.
Reconfigure value chains; Entrants change the activities or the sequence of activities
they perform to deliver value to customers.
Establish Niches; Enterprises develop offerings with features that don’t initially
appeal to mainstream customers but attract customers in a fringe segment
Notes by [email protected] June 3, 2007
Harvard Business Review April 2007
One of the more interesting issues with several articles well worth reading in their
entirety like ‘Finding Your Next Core Business,’ ‘The Essence of Execution,’
‘Avoiding Integrity Land Mines,’ and ‘Human Due Diligence.’
One message that comes across loud and clear is ‘carve out enough time to think.’
There is often such a strong ‘can do’ and ‘just do it’ mantra that people don’t leave
enough time to see where they are going. Thinking time may look passive and
unproductive, but without it, minor and major mistakes are bound to increase. The
urge to look and be busy must not be allowed to drive out good thinking.
This verse from 1881 by Robert Louis Stevenson (which I came across a few years
ago) refers:
Business and Idleness
Extreme business, whether at school or college, kirk or market,
is a symptom of deficient vitality, and a faculty of idleness implies
a catholic appetite and a strong sense of personal identity. There is
a sort of dead-alive, hackneyed people about, who are scarcely
conscious of living except in the exercise of some conventional
occupation….they cannot be idle, their nature is not generous enough;
and they pass those hours in a sort of coma, what are not dedicated
to furious moiling in the gold mill.
I am not suggesting that being idle and thinking are the same thing but if too busy, it
is hard to think clearly. Please find below a few notes from the April HBR issue:
Book reviewed: The Halo Effect by Phil Rosenzwig
What leads to high performance? Since people love being on winning teams, it may
be that it’s the great financial results that are creating positive vibes in hall-ways
rather than the other way around. The Halo-effect distorts the judgment of analysts
and journalists – and in turn the findings of management. Particularly management
scholars would benefit from reading this book.
Why didn’t we know? By Ralph Hasson
This article emphasizes the need to be transparent and communicate bad news and
wrong doing early to allow issues to be kept in the bud. Few organizations have that
kind of trust and openness. Management needs to encourage ethics and free
communication.
Preparing for the perfect product launch by James P. Hackett
If you ask most people what it means to execute well, they usually say “getting things
done.” Boards tell CEO’s that they want to get things done. We tell our managers to
get things done, and they make sure everyone who reports to them gets more things
done. Companies celebrate their ‘can-do’ culture. (Incidentally, this is what Robert
McNamara said was one of the major things that wrong with the Vietnam War too –
that the Military always was ‘can-do’ instead of using sufficient critical thinking.)
Later on, after the errors show up, we all wish we had been more rigorous in scouting
out the territory before we sprinted down the execution path. Many organizations
make the mistake to put all the energy into execution before the idea is properly
thought through. When people tell you the one thing they could use more of is time,
what they are really saying is that they need more time to think. Critical thinking
has four phases:
 THINK, ponder, query, read and research, network, document.
 SET THE POINT OF VIEW, conduct a collegial open discussion, determine
the direction, assign an owner for the point of view, stay the course.
 PLAN IMPLEMENTATION, clarify, refine, consider all stakeholders,
practice, practice, practice.
 IMPLEMENT, select a spokesperson, play to win, celebrate the victory.
It takes a great deal of courage and confidence for people anxious to take the world by
storm to slow down, think explore all the possible options, and be ready to pull the
plug if the information points away from success. Key is to understand the difference
between getting things done and getting things done the right way. By bringing
thinking and doing into proper balance we will be better prepared to meet the future.
What Your Leader Expects of You by Larry Bossidy.
Get Involved. There is no excuse for not getting involved when you see a
problem growing. I count on my direct reports to take the blame for things that
go wrong and give credit for positive developments to their employees. And I
expect them to have the courage to deliver bad news. If you’ve got to close a
plant, go to the plant and tell those employees yourself. Good managers generally
step in under three types of circumstances: when somebody is falling behind in
her commitments; when important staff matters arise, particularly if there is
conflict; and in a crisis. Just because you are an executive vice president doesn’t
mean you don’t have to work anymore.
Get Ideas. Somebody suggested we hire a band, put out hamburgers and hot dogs
at midday, and make lots of noise, so the employees would feel there was a
reason for optimism. A lot of people said it was corny and wouldn’t work – but it
did and it became an annual event. When sales of a particular liquid declined, one
manager proposed we paint the canister bright colours instead of industrial grey
we had been using. The idea was met with derision, but we tried it, and it made a
difference.
Be willing to collaborate. You must be willing to help the next division even if it
means some slight set-back for yours. (my comment: This line from Sir Thomas
Moore’s Utopia refers: You are high in my reverence and estimation, if you can find it
in your heart so to appoint and dispose yourself, that you may apply your wit and
diligence to the profit of the weal public, though it be somewhat to your own pain and
hindrance.) People who don’t co-operate or communicate cannot be tolerated.
Be willing to lead initiatives. Step up to challenges.
Develop leaders as you develop. Too many people are selfish about their
development. Take as much interest in your ‘subordinates’ careers as in your own.
Stay current. Know what’s going on in the world in which we operate.
Anticipate. Don’t work so hard that you don’t have time to look up to spot the
iceberg.
Drive your own growth. Seek perpetual education and development.
Be a player for all seasons. Keep your energies and drive in adversity.
What the leader owes his direct reports.
Set goals and objectives; Give frequent, specific and immediate feedback; Be decisive
and timely; Be accessible, Demonstrate honesty and candor, Offer an equitable
compensation plan.
Much of what is commented on has to do with keeping the bureaucracy at bay
Bureaucracy is self-perpetuating, and cutting through it is a constant battle. You can
never truly get rid of it.
Finding Your Next Core Business by Chris Zook
Good article that derives a full read. It says that in 80 % of companies examined, a hidden
asset was at the centerpiece of the new strategy. Business leaders are acutely aware of these
waves of change and their ramifications. In 2004 my colleagues and I surveyed 259 senior
executives around the world about the challenges they faced. More than 80% of them
indicated that the productive lives of their strategies was getting shorter. 72 % believed that
their leading competitor would be a different company in 5 years. 65 % believed that they
would need to restructure the business model that served their primary customers. As the
focus-expand-redefine cycle continues to pick up speed, each year will find more companies
in that fateful third phase, where redefinition is essential. For most, the right way forward will
lie in assets that are hidden from view – in neglected businesses, unused customer insights,
and latent capabilities that, once harnessed, can propel new growth.
Promise – Based management by Donald N. Sull and Charles Spinoza
Promises are the fundamental units of interaction in business. They coordinate organizational
activity and stoke the passion of employees, customers, suppliers, and other stake holders.
While they hold an organization together, they are as fragile as they are crucial. Individual’s
divergent worldviews and objectives tug constantly at the filaments of promises, and
unexpected contingencies can tear precarious agreements. Leaders must therefore weave and
manage their webs of promises with great care – encouraging iterative conversation to make
sure commitments are fulfilled reliably. If they do, they can enhance coordination and
cooperation among colleagues, build the agility required to seize new business opportunities,
and tap employees’ entrepreneurial energies.
Avoiding Integrity Land Mines by Ben W. Heineman, Jr,
A thunderous message is sent when a senior leader is removed not for failing to follow key
rules but for failing to create the right culture. Ultimately it is a company’s culture that
sustains high performance with high integrity.
Notes by [email protected] 12th May 2007
Harvard Business Review March 2007
Getting the Most out of Top Talent.
Leader: Truly talented people start to suffocate if they are not learning. Your return
on people is becoming the crucial measure. Things like leadership development, job
design, and knowledge sharing have a profound impact on your bottom line and
sustainability.
Pursuit of happiness: Ideally businesses improve lives by creating things people
want. At the very least, companies produce wealth (which at the individual level, is an
imperfect but passable proxy for happiness). A Global Projection of subjective wellbeing shows a map suggesting the highest levels are to be found in US and Canada,
Scandinavia and Switzerland, The Emirates and Australia - New Zealand. See further
http://www.le.ac.uk/pc/aw57/world/sample.html
The Ethical Mind a conversation with Psychologist Howard Gardner.
A US Roper poll in 2005 revealed that 72 % of respondents believed wrongdoing was
widespread in industry. Only 2 % felt that leaders of large firms were “very
trustworthy” (a drop from 3 % in 2004), and the pattern is “not improving.”
Meanwhile, the public increasingly demands that companies take batter care of their
employees, communities, and the environment.
A study conducted by Duke University recently found that 56 % of students in the
United States pursuing a master’s degree in business administration admitted to
cheating – the highest rate of cheating in graduate student groups. If you are a very
ambitious MBA student and the people around you are cheating on their exams, you
may assume that cheating is the price of success (similarly with corruption – my
comment). You might even come to think of ethical behaviour as a luxury .
In the end, you need to decide which side you’re on. There are so many ways in
which the world could spiral either up toward health and a decent life for all or down
into poverty, disease, ecological disaster – even nuclear warfare. If you are in a
position to tip the balance, you owe it to yourself, to your progeny, to your
employees, to your community, and to the planet to do the right thing.
Leading Clever People – by Rob Goffee and Gareth Jones
In research there aren’t economies of scale, there are economies of ideas. If clever
people have one defining characteristic, it is that they do not want to be led. This
creates a challenge for you as a leader.
If you try to push cleaver people you will end up driving them away. As many leaders
of highly creative people have learned, you need to be a benevolent guardian rather
than a traditional boss. You need to create a safe environment for your clever
employees; encourage them to experiment and play and even fail; and quietly
demonstrate your expertise and authority all the while. Give them the space they need
to be productive.
Competitive Advantage on a Warming Planet by Jonathan lash and Fred
Wellington
Our belief is that global warming does in fact pose a serious problem to the earth. The
build up of green house gases in the atmosphere is changing the earth’s climate at a
rate unprecedented in history. Ignoring the financial and competitive consequences of
climate change could lead a company to formulate an inadequate risk profile. 76 % of
Americans believe global warming is a serious problem and one half believe it is a
very serious one. Other countries report an even greater concern on the part of
residents. There is great potential for consumer or shareholder backlash particularly in
environmentally sensitive markets.
The most successful efforts for firms to develop suitable strategies include four steps.
1. Quantify your carbon foot print. Quantifying your footprint sends a strong signal
that you recognize the importance of climate change as a business risk – and an
opportunity. 2. Assess your carbon related risks and opportunities. 3. Adapt your
business in response to the risks and opportunities. Moves range from the obvious
reductions in energy consumption and carbon emissions to sometimes wholesale
reinventions of parts of your business. 4. Do it better than your competitors. Doing
well by doing good is no longer enough. You have to be better at it than your
competitors. And that means bating them in both areas: reducing exposure to climate
related risks and finding business opportunities within those risks. Detroit’s failure to
develop innovative low-carbon technologies may be their greatest obstacle to their
recovery.
Realizing What You’re Made Of by Glenn E. Mangurian.
Wisdom from adversity – the author one day permanently lost movement in both his
legs.
You can’t know what happens tomorrow – and it is better that way. Engage with the
present. You can’t control what happens, just how you respond. Successful people
are accustomed to being in control, but adversity strikes unannounced. Adversity
distorts reality but crystallizes the truth. Adversity shows you what is important to
you, who your friends are and what you are capable of. Loss amplifies the value of
what remains. It pushes you to take stock of what you have, allowing you to liberate
yourself from petty or irrelevant matters and celebrate your assets. It is easier to create
new dreams than to cling to broken ones. Your happiness is more important than
righting injustices. Attempting to seek justice or to assign blame is draining and
usually futile.
Notes by [email protected] 10th March 2007
Harvard Business Review February 2007
I found this issue of HBR particularly interesting and useful. The issue is called
Breakthrough ideas for 2007 and many articles are worth reading in full. I particularly
liked the brief article ‘The Leader from Hope’ and In Praise of the Incomplete Leader.
Please find below a few notes from key articles.
Entrepreneurial Japan: Japan’s rebound is being fuelled by emerging companies in
knowledge-intensive industries – companies led by entrepreneurs in their twenties and
thirties. A newly entrepreneurial Japan, something that once would have seemed
oxymoronic, may ultimately overshadow the much touted start-up cultures in China
and India.
Young Japanese workers today have no expectation of lifetime employment or career
advancement based on seniority; they focus on furthering their careers through
switching jobs or acquiring advanced degrees.
From 2001 – 2005, 747 Japanese companies went public (compared to 617 in USA).
96 % of these opened their first day trading above offering price. Chinese and Korean
companies are increasingly looking at floating their shares in the Japanese market.
The Japanese market is still the second largest in the world, representing more than
half of the entire Asian economy.
The Leader from Hope: What is hope? Something more than wishful thinking but
short of expectation. A rejection of cynicism and dispiritedness. And a state, we
believe, quite central to the work of a leader. Most business leaders, we’ve discovered
in our three year’s worth of interviews on the subject, shy away from the word.
Perhaps talk of hope comes uncomfortably close to faith and spirituality – or perhaps
declaring that one’s organization needs home feels defeatist. “If I set out to instil
hope,” one might wonder, “am I admitting that our situation is next to hopeless?”
Yet work connected to the positive-psychology movement has made hope discussable
in new ways. Hope has been shown to be the key ingredient of resilience in survivors
of traumas ranging from prison camps to natural disasters. Many studies have shown
that people who score higher on measures of hope also better cope with injuries,
diseases, and physical pain; perform better in school; and prove more competitive in
sports. Our contribution has been to outline the elements of hope – possibility,
agency, worth, openness, and connection – in a way that guides efforts to nurture it in
the workplace.
The first two are central to the definition of hope: People must see that change is
possible and how they can engage personally in that change. The remaining elements
have to do with how hope is cultivated in organizations: Hopeful work groups are
most often composed of individuals whose worth to the organization has been
affirmed, who perceive an openness on the part of management, and who enjoy an
authentic sense of connection with their colleagues and with the organization’s
mission. Even so briefly described, these elements suggest why hope can be an
energetic force for positive change to a degree that, say, optimism alone could never
be.
Our study of effective executives has uncovered many ways in which their decisions,
words and actions make the people they lead more hopeful. Collectively, these
practices are the basis of a leadership tool kit for building and sustaining hope. But the
most important changes come when a leader is simply more mindful of this vital part
of her or his mission. Much can be accomplished in a reflective pause to ask:”Is what
I am about to do or say likely to be destructive or accretive of hope?” It is useful to
notice how people express a sense that things might change for the better: they often
say of some key actor, “He gives me hope” or “Se gives me hope.” If you are an
executive trying to lead an organization through change, know that hope can be a
potent force in your favour. And it is yours to give.
My note: I have always thought in relation to my staff that any directive, statement or
utterance must be tested for: Is this motivational or de-motivational. If as a manager
you are told to issue certain /harsh or negative/ instructions that are not motivational,
don’t do it – go back to the instructor and argue it must be changed or repackaged
lest staff be alienated and precious good will and loyalty be lost. If you are conveying
ideas you don’t believe in as gospel your credibility is lost.
User-Centered Innovation: 70 – 80 % of new product developments that fails do so
because of a failure to understand users’ needs. The emergence of user-centered
innovation clearly shows that the near exclusive focus on technological advance is
misplaced.
The Folly of Accountabalism: We have been lured by the myth of precision.
Because accountability suggests there is a right and a wrong answer to every question,
it flourishes where we can measure results exactly. It spreads to schools – where it is
eating our young – as a result of our recent irrational exuberance about testing, which
forces education to become something that can be measured precisely. Social systems
are incapable of anything close to perfection, so if something goes wrong in one, that
may not mean that the system is broken. Accountabalism bureaucratizes and atomizes
responsibility. While claiming to increase individual responsibility, it drives out
human judgment. When a sign-off is required for every step in the work flow, those
closest to a process lack the leeway to optimize or rectify it. Accontabalism tries to
squeeze centuries of thought about how to entice people toward good behaviour and
dissuade them from bad into simple rules by which individuals can be measured and
disciplined. It would react to a car crash by putting stop signs at every corner.
Bureaucratizing morality or mechanizing complex organizations gives us the sense
that we can exert close control. But grown-ups prefer clarity and realism to
superstition.
In Praise of the Incomplete Leader by Deborah Ancona, Thomas Malone, Wanda
Orlikowski and Peter Senge.
It is time to end the myth of the complete leader: the flawless person at the top who’s
got it all figured out. The sooner leaders stop trying to be all tings to all people, the
better off the organization will be. In today’s world the executive’s job is no longer to
command and control but to cultivate and coordinate actions of others at al levels of
the organization. Only when leaders see themselves as incomplete – as having both
strengths and weaknesses – will they be able to make up for their missing skills by
relying on others. No one person could possibly stay on top of everything. But the
myth of the complete leader (and the attendant fear of appearing incompetent) makes
many executives try to do just that, exhausting themselves, and damaging their
organizations in the process.
Incomplete leaders differ from incompetent leaders in that they understand what they
are good at and what they’re not and have good judgment about how they can work
with others to build on their strengths and offset their limitations.
Engage in sense making: 1. Get data from multiple sources: customers, suppliers,
employees, competitors, other departments and investors. 2. Involve others in your
sense making. Say what you think you are seeing, and check with people who have
different perspectives from yours. 3. Use early observations to shape small
experiments in order to test your conclusions. Look for new ways to articulate
alternatives and better ways to understand options. 4. Do not apply existing
frameworks but instead be open to new possibilities. Try not to describe the world in
stereotypical ways, such as good guys and bad guys, victims and oppressors, or
marketers and engineers.
Herb Kelleher, the former CEO of Southwest Airlines excels at relating. He said:
We’re not afraid to tell staff, “We love you.” “Because we do!” “With this emotional
connection comes equitable compensation and profit sharing.”
Once leaders diagnose their own capabilities, identifying their unique set of strengths
and weaknesses, they must search for others who can provide the things they are
missing. Leaders who choose only people who mirror themselves are likely to find
their organizations tilting in one direction, missing one or more essential capabilities
needed to survive in a changing world.
Even the most talented leaders require the input and leadership of others,
constructively solicited and creatively applied. It is time to celebrate the incomplete –
that is, the human – leader.
Dialogue is the basic unit of work in an organization. The quality of the
dialogue determines how people gather and process information, how
they make decisions, and how they feel about one another and about the
outcome of these decisions.
Reputation and its Risks by Robert Eccles, Scott Newquist and Roland Scatz:
Executives know the importance of their companies’ reputations. Firms with strong
positive reputations attract better people. They are perceived as providing more value,
which often allows them to charge a premium. Their customers are more loyal and
buy broader ranges of products and services. Because the market believes that such
companies will deliver sustainable earnings and future growth, they have higher priceearnings multiples and market values and lower cost of capital. In an economy where
70 – 80 % of market value comes from hard-to-assess intangible assets such as brand
equity, intellectual capital, and good will, organizations are especially vulnerable to
anything that damages their reputations.
Three things determine the extent to which a company is exposed to reputational risk.
The first is whether its reputation exceeds its true character. The second is how much
external beliefs and expectations change, which can widen or narrow this gap. The
third is the quality of internal co-ordination, which also can affect the gap.
Understanding Customer Experience by Christopher Meyer and Andre Schwager.
Customer dis-satisfaction is widespread and, because of customer empowerment,
increasingly dangerous. Although companies know a lot about customer buying
habits, incomes, and other characteristics used to classify them, they know little about
the thoughts, emotions and states of mind that customers’ interaction with products,
services, and brands induce. Yet unless companies know about these subjective
experiences and the role every function plays in shaping them, customer satisfaction
is more a slogan than an attainable goal.
Discovering Your Authentic Leadership by Bill George, Peter Sims, Andrew
McLean and Diana Mayer.
No one can be authentic by trying to imitate someone else. You can learn from other’s
experiences, but there is no way you can be successful by trying to be like them.
People trust you when you are genuine and authentic, not a replica of someone else.
When the 75 members of Stanford Graduate School of Business’s Advisory Council
were asked to recommend the most important capability for leaders to develop, their
answer was nearly unanimously: self-awareness. Yes many leaders, especially those
early in their careers, are trying so hard to establish themselves in the world that they
leave little time for self exploration.
Authentic leaders realize that they have to be willing to listen to feed back –
especially the kind that they don’t want to hear. “I have had enough success in life to
have that foundation of self respect, so I can take the criticisms and not deny it. I have
finally learned to tolerate my failures and disappointments and not beat myself up.
Leadership principles are values translated into action. A value such as ‘concern for
others’ might be translated into a leadership principle such as ‘create a work
environment where people are respected for their contributions, provided job security,
and allowed to fulfil their potential.
The only way to avoid getting caught up in materialism is to understand where you
find happiness and fulfilment.
Authentic leaders build extraordinary support teams to help them stay on course.
Size is no protection against failure if you are not able to fill each
employee with vitality / Zhang Ruimin /
This statement reminds me of what Tolstoy says in War and Peace before the major
battle against napoleon outside Moscow: Koutouzow (the Russian commander) knew
that it was neither the plans of the commander, nor the placing of the troops, nor the
number of guns, nor the amount of slain which decide the victory, but that
imponderable force called the Spirit of the Army, which he tried to control and guide
as far as possible.
Notes by [email protected] 11th Feb 2007
Harvard Business Review January 2007
Moments of Truth – by global executives.
Nokia president Olli-Pekka Kallasvuo. Humility is a vital quality in a leader, just as
it is for a company. Nokia, if it is to continue to prosper has to be externally oriented.
It must have the kind of humility that makes it listen to customers and seek ideas from
the outside. It has to be humble in the face of complexity. Especially today, as the
convergence of mobility and the Internet has everyone guessing, Nokia can’t be so
overconfident as to believe its predictions are the best. Instead, we need to perceive
changes as they occur and react the fastest. In a management team, that
responsiveness is a product of diversity – managers must humbly accept that their
own perspectives need to be broadened by others. Having humility does not mean that
you are quiet or that you lack the courage to say what you think. Courage and
humility are more complementary than contradictory. People who have been humbled
by being down and out can have more courage when things get tough. They have been
there already, and they understand that things are not always easy. But having
humility does mean that you put your own contribution in perspective. It means that
you know that as CEO your role is really to serve the company.
Blackwater USA president Gary Jackson To keep the spirit entrepreneurial we run
100-day projects. Anyone at any level in the company who has an idea for making or
saving money is given free rein to pursue it, so long as the pay off can be realized
within 100 days.
Rolf Group owner Sergey Petrow
When you see that something is wrong you have
a choice. Either you convince yourself that everything is all right and become a moral
invalid, or you resist.
It is difficult for most people to see the system they are part
of for what it is, and perhaps that is one test for a leader. The same lack of perspective
often keeps people from seeing how their own mentality might be a constraint. We
need to have our perspectives challenged.
Firing Back – How great leaders rebound after career disasters.
In every culture, the ability to transcend life’s adversity is an essential feature of
becoming a great leader. In an acclaimed study, Stanford University’s mark
Granovetter discovered that those individuals who landed jobs through personal
contacts, only 16.7 % found them through people they saw at least twice a week; 55.6
% found positions through acquaintances seen at least once a year. But 27.8 of job
candidates found work through distant acquaintances, whom they saw less than once a
year – old college friends, former work mates, or people known through professional
associations. In other words, more job contacts will come from people you see less
than once a year than from those you see twice a week. That’s because close friends
share the same network as you do, whereas acquaintances are more likely to introduce
you to new people and contacts.
How you build relationships has a huge impact on your prospects for career recovery.
The capacity to bounce back from adversity to prove your inner strength once more
by overcoming your shattered confidence – is critical to success.
This article caused me to send a …..Letter to the editor, Harvard Business Review Re:
'Firing Back, How Great leaders rebound After Career Disaster' In the January 2007 Issue.
Dear Sirs, I read with interest the article 'firing back'. Although well written and interesting I
am surprised over the one-sided assumption that someone who has done well and earned a lot
of money should want to continue doing the same things at 70 - 80 hrs a week just to be a
'hero'. Wouldn't it be better to look for alternative 'careers' such as charitable purposes like
music, arts, travel or education to enrich life? Is it a sign of health or mental deficiency to
always want to be cherished as a hero? Why doesn't the article also show some who stepped
out of their hero status and became a little more human?
Quite another issue is that on all levels people will experience set backs and disappointments
and developing an ability to work through such situations and come back will always be
useful. That is more a matter of retaining harmony and sanity than always looking for 'hero'
status.
Frank Olsson
What to ask the person in the mirror by Robert Kaplan
A key characteristic of highly successful leaders is not that they figure out how to
always stay on course, but that they develop techniques to help them recognize a
deteriorating situation and get back on track as soon as possible. The best way to do
this is to step back regularly – say every six months – and honestly ask yourself some
questions about how you are doing and what you may need to do differently.
It is surprising how often business leaders fail to ask themselves: How frequently do I
communicate a vision and priorities for my business? Would my employees, if asked,
be able to articulate the vision and priorities?
(In my case I have interviewed (all) staff regularly and asked them – Do you feel that
Communication, meets your expectations here – and if not what changes would you like to
see? Quite often something more will be suggested – but also this does to some extent bring
about a shared responsibility for the quality of communication in the sense that active
participation and feed back is sought – it is not consistent with good ethics to say you are
happy with things and then later complain to others that you are not – I have found this works
rather well)
Failing to communicate your vision and priorities has direct costs in terms of time and
business effectiveness.
Professional development is far more effective when coaching and direct feed back is
given to employees throughout the year – well in advance of the annual performance
review process.
As a leader you are watched closely. During a crisis your people watch you with a
microscope, noting every move you make. Many leaders behave in a very composed
and thoughtful manner the great majority of the time. But many when under stress
react in ways that set a very negative tone.
A business career is a marathon, not a sprint, and if you aren’t true to yourself,
eventually you are going to wear down.
Companies need their leaders to express their strongly held views rather than mimic
what they believe to be party line.
A self questioning process conducted on a periodic basis will help you work through
leadership challenges and issues that you invariably must tackle over the course of
your career.
Notes by [email protected] Jan 20, 2007
Harvard Business Review December 2006
This issue had one article I found particularly interesting and useful.
Strategy and Society: The Link Between Competitive Advantage and
Corporate Social Responsibility. By Michael E. Porter and Mark R. Kramer
Many companies have already done much to improve the social and environmental
consequences of their activities, yet these efforts have not been nearly as productive
as they could be – for two reasons. First, they pit business against society, when
clearly the two are interdependent. Second, they pressure companies to think about
corporate social responsibility in generic ways instead of in the way most appropriate
to each firm’s strategy.
Gro Harlem Bruntland (ex Norwegian PM) defined sustainability as ‘meeting the
needs of the present without compromising the ability of future generations to meet
their own needs.’ The notion of license to operate derives from the fact that every
company needs tacit or explicit permission from governments, communities, and
numerous stakeholders to do business. Reputation is used by many companies to
justify CSR initiatives on the grounds that they will improve a company’s image,
strengthen its brand, enliven morale, and even raise the value of its stock.
The principle of sustainability appeals to enlightened self-interest, often invoking the
so called triple bottom line of economic, social, and environmental performance. In
other words companies should operate in ways that secure long term economic
performance by avoiding short-term behaviour that is socially detrimental or
environmentally wasteful. The principle works best for issues that coincide with a
company’s economic or regulatory interests. DuPont for example saved over $ 2,000
million from reduction in energy use since 1990. Changes to the materials
McDonald’s use to wrap its food have reduced its solid waste by 30%. These were
smart business decisions entirely apart from their environmental benefits.
Successful corporations need a healthy society. Education, health care, and equal
opportunity are essential to a productive workforce. Safe products and working
conditions not only attract customers but lower the internal cost of accidents. Efficient
utilization of land, water, energy, and other natural resources makes business more
productive. Good government, the rule of law, and property rights are essential for
efficiency and innovation. Strong regulatory standards protect both consumers and
competitive companies from exploitation. Ultimately, a healthy society creates
expanding demand for business, as more human needs are met and aspirations grow.
Any business that pursues its ends at the expense of the society in which it operates
will find success to be illusory and ultimately temporary.
At the same time, a healthy society needs successful companies. No social program
can rival the business sector when it comes to creating jobs, wealth, and innovation
that improve standards of living and social conditions over time. If governments,
NGOs, and other participants in civil society weaken the ability of business to operate
productively, they may win battles but will lose the war, as corporate and regional
competitiveness fade, wages stagnate, jobs disappear, and the wealth that pays taxes
and supports non-profit contributions evaporate.
Choices must benefit both sides. If either a business or a society pursues policies that
benefit its interests at the expense of the other, it will find itself on a dangerous path.
The most strategic CSR occurs when a company adds a social dimension to its value
proposition, making social impact integral to its overall strategy. Adding a social
dimension to the value proposition offers a new frontier in competitive positioning.
Integrating business and social needs takes more than good intentions and strong
leadership. It requires adjustments in organization, reporting relationships, and
incentives. Few companies have engaged operating management in processes that
identify and prioritize social issues based on their salience to business operations and
their importance to the company’s competitive context. Even fewer have unified their
philanthropy with the management of their CSR efforts, much less sought to embed a
social dimension into their core value proposition. Doing these things requires a far
different approach to both CSR and philanthropy than the one prevalent today.
Companies must shift from a fragmented, defensive posture to an integrated,
affirmative approach. It is a matter of shifting from corporate social responsibility to
corporate social integration.
Comment: A useful article worth reading in its entirety. I believe trying to align
corporate activities a little more with the goals of society and the needs of people has
the potential to humanize corporations and management methods, increase loyalty and
energy among staff and also to appeal to customers and therefore be rewarding for
shareholders. It will also typically reduce reputation risk as acting more caringly is
encouraged. As unprecedented levels of affluence have been achieved in more and
more countries, a one-sided pursuit of further profit growth without due concern for
social well being and general quality of life seems downright anti-social and
uncivilized.
How Many Women Do Boards Need?
by Alison Konrad and Vicki W.
Kramer.
Only about 15% of Fortune 500 board members are women – a conspicuously low
figure. There are many reasons why this matter. Women directors make three
contributions that men are less likely to make; they broaden discussions to better
represent the concerns of wider stakeholders, including employees, customers, and the
community at large. They can be more dogged than men in pursuing answers to
difficult questions possibly because men feel a gender obligation to act as if they
understand everything. And they tend to bring a more collaborative approach to
leadership, which improves communication among directors and between the board
and management.
Reaping the value of these contributions depend of having the right number of
women. Solo women on boards often feel isolated and marginalized. A clear shift
occurs when boards have three or more women. At that critical mass women tend to
be regarded by other board members not as ‘female directors’ but simply as directors,
and they don’t report feeling isolated or ignored. Three women or more can change
the dynamic on an average size board.
Extreme Jobs – The Dangerous Allure of the 70-Hour
Workweek by Sylvia Ann Hewlett and Carolyn Buck Luce
This article points out that in some businesses extreme work weeks is a pride. Those
who work those hours are normally well paid and love their work. But over time that
may change as such focus comes with a lot of social draw backs.
The culture that celebrates the extreme ethos today may tire of it – quite literally –
tomorrow. At a minimum, senior executives should think carefully about the work
behaviour they are rewarding, encouraging or requiring. More than anything, the
signals they send will determine whether jobs become extreme – and if so, whether
those jobs remain exhilarating or simply become exhausting.
Managing the Right Tension by Dominic Dodd and ken Favaro
Three pairs of conflicting parameters stand out; profitability vs. growth, short term vs.
long term, and the whole organization vs. the parts. Often too much focus is given one
of these pairs when all have to be taken into account. No matter how difficult it is to
do, working hard to strengthen the common bond in your company’s lead tension is
the only truly reliable route to improving performance for all your stakeholders.
Harvard Business Review November 2006
This issue is about innovation. I didn’t find too much new said about this topic which
is perhaps one that by its very nature doesn’t easily lend itself to academic analysis. It
is a matter of experimenting and doing and to ensure that the climate is such that fear
or bureaucracy doesn’t hinder free flow of ideas and experimentation. One article
points out that many small changes and improvements can be just as useful as
something more unique and major.
As affluence and educational levels go up, and corporate ‘fear’ declines, the rate of
innovation should go up. I am pretty sure that is the case. Customer communities i.e.
closer and more intensive interaction with customers is good for innovation.
In an interesting brief article it is demonstrated (through thorough research) that new
moon creates better share markets than full moon. See
http://ssrn.com/abstract=281665.
One article, ‘How Well Run Boards Make Decisions’ by Michael Useem, gives some
advice on how to bring more structure to board work. It suggests that it is useful to
make a Board’s Annual Calendar such that every board meeting has a theme and deals
with one key issue besides inevitable ‘routine matters.’ It is also useful to be very
specific about what the board is expected to decide on.
And finally an article on IT says that management can’t afford to treat IT as some
technical network aside from the business but it must be viewed as reflecting and
promoting the core of what the company is and does. Muddled thinking and
organization cannot be sorted out by IT. Once structures and business methods and
ideas are clear, IT can help in making delivery and organizations function more
effectively.
Harvard Business Review October 2006
Sleazeball and privateering ghouls! Is that what business is about? Or is it about
earning a legitimate (even a great) reward for legitimate work? Is it about ‘what’s in it
for me?’ Or is it about the value we create for one another, our customers, and
communities? Is it about greed or about ambition?
Two great articles in this issue – please find a few notes from them below.
Sleep Deficit: The Performance Killer. A conversation with Harvard
Medical School Professor Charles A Czeisler
In the past five years driver fatigue has accounted for more than 1.35 million
automobile accidents in the United States alone, according to the National Highway
Traffic safety Administration. The general effect of sleep deprivation on cognitive
performance is well known: Stay awake longer than 18 consecutive hours, and your
reaction speed, short term and long-term memory, ability to focus, decision making
capacity, math processing, cognitive speed, and spatial orientation all start to suffer.
Cut sleep back to five or six hours a night for several days in a row, and the
accumulated sleep deficit magnifies these negative effects. Sleep deprivation is
implicated in all kinds of physical maladies too, from high blood pressure to obesity.
Encouraging a culture of sleepless machismo is worse than nonsensical; it is
downright dangerous and the antithesis of intelligent management. While corporations
have all sorts of policies designed to prevent employee endangerment – rules against
smoking, drinking, drugs, sex harassment, and so on – they sometimes push
employees to the brink of self destruction. Being ‘on’ pretty much around the clock
includes a level of impairment every bit as risky as intoxication.
We know that 24 hours without sleep or a week of sleeping four or five hours a night
induces an impairment equal to a blood alcohol level of 0.1 %. We would never say:
this is a great worker; he is drunk all the time! And yet we continue to celebrate
people who sacrifice sleep. The analogy to drunkenness is real because, like a drunk,
a person who is sleep deprived has no idea how functionally impaired he or she truly
is. Their efficiency at work will suffer substantially, contributing to the phenomenon
of ‘presenteeism’ – being there in body but not in spirit.
A good sleep policy is smart business strategy. People think they are saving time and
being more productive by not sleeping, but in fact they are cutting their productivity
drastically.
Ideas as Art, an interview with James G March
You liked to begin your classes at Stanford each year saying’ ‘I am not now, nor have
I ever been relevant.’ What did you mean?
It was a signal to students that it would not be fruitful to ask me about the immediate
usefulness of what I had to say. If there is relevance to my ideas, then it is for the
people who contemplate the ideas to see, not for the person who produces them. For
me, a feature of scholarship that is generally more significant than relevance is the
beauty of the ideas. I care that ideas have some form of elegance or surprise – all the
things that beauty gives you.
For trust to be anything truly meaningful, you have to trust somebody who isn’t
trustworthy. Otherwise it is just a standard rational transaction.
You have written about the importance of a ‘technology of foolishness.’ What does it
mean?
That paper focused on how you make interesting value systems. It seemed to me that
one of the important things for any person interested in understanding or improving
behavior was to know where preferences come from rather than simply to take them
as given.
So for example, I used to ask students to explain the factual anomaly that there are
more interesting women than interesting men in the world. They were not allowed to
question the fact. The key notion was a developmental one: when a woman is born,
she is usually a girl, and girls are told that because they are girls they can do things for
no good reason. They can be unpredictable, inconsistent, illogical. But then a girl goes
to school, and she is told she is an educated person. Because she is an educated
person, a woman must do things consistently, analytically, and so on. So she goes
through life doing things for no good reason and then figuring out the reasons, and in
the process, she develops very complicated values system – one that adapts very much
to context. It is such a value system that permitted a woman who was once sitting in a
meeting I was chairing to look at the men and say, ‘As nearly as I can tell, your
assumptions are correct. And as nearly as I can tell, your conclusions follow from the
assumptions. But your conclusions are wrong.’ And she was right... Men, though, are
usually boys at birth. They are taught that, as boys, they are straightforward,
consistent, and analytic. Then they go to school and are told that they’re
straightforward, consistent and analytic. So men go through life being
straightforward, consistent, and analytic – with the goals of a two-year-old. And that’s
why men are both less interesting and more predictable than women. They do not
combine their analysis with foolishness.
Temporary foolishness gives you experiences with a possible new you – but before
you can make the change permanent, you have to provide reasons.
A lot of happiness comes from dealing with complexity.
The rhetoric of management requires managers to pretend that things are clear, that
everything is straightforward. Often they know that managerial life is more
ambiguous and contradictory than that, but they can’t say it. They see their roles as
relieving people of ambiguities and uncertainties.
In the end we are very minor blips in cosmic history. Aspirations for importance or
significance are the illusions of the ignorant. All our hopes are minor, except to us;
but some things matter because we choose to make them matter. What might make a
difference to us, I think, is whether in our tiny roles, in our brief time, we inhabit life
gently and add more beauty than ugliness.
Harvard Business Review September 2006
Although I didn’t find too much in this issue, I made a few notes as per below:
Marketing in an unpredictable world by Duncan J Watts and Steve Hasker.
1. Increase the number of bets and decrease their size. 2. Focus on detection,
measurement and feed back. 3. Follow up with flexible marketing budgets. 4.
Exploit naturally emerging social influence. 5. Build flexibility into supply chains
and contracts.
What Men think they know about executive women by Dawn s Carlson,
Michelle Kacmar and Dwayne Whitten
Overall attitude toward women management is favorable. 1965 women 80%, men
30%; 2005 women 82% men 82%
I would feel comfortable working for a woman. 1965 women 80%, men 25%; 2005
women 80 % and men 75%
The Business Community will never wholly accept Female Executives. 1965 women
45%, men 62%; 2005 women 38%, men 18%
A woman has to be exceptional to succeed in business today. 1965 women 90%, men
90%; 2005 women 70% men 30%
Executive men may be saying the right things, but if the gender composition of the
typical boardroom is any indication, they’re probably not behaving accordingly.
The Decision to Trust by Robert f Hurley
Working environments characterized by low levels of trust are stressful, threatening,
divisive, unproductive, and tense. High levels of trust environments are fun,
supportive, motivating, productive, and comfortable. Clearly companies that foster a
trusting culture will have a competitive advantage in the war of talent: Who would
choose to stay in a stressful, divisive atmosphere if offered a productive supportive
one?
10 Ways to create Shareholder Value by Alfred Rappaport
1. Do not manage earnings or provide earnings guidance. 2. Make strategic decisions
that maximize expected value, even at the expense of lowering near-term earnings. 3.
Make acquisitions that maximize expected value, even at the expense of lowering
near term value. 4. Carry only assets that maximize value. 5. Return cash to
shareholders when there are no credible value-creating opportunities to invest in the
business. 6. Reward CEO and other senior executives for delivering superior longterm returns. 7. Reward operating-unit executives for adding value superior multiyear
value. 8. Reward middle-management and front line employees for delivering
superior performance on the key value drivers that they influence directly. 9. Require
senior executives to bear the risks of ownership just as shareholders do. 10. Provide
investors with value-relevant information.
Notes by [email protected] 8th October 2006
Harvard Business Review July – August 2006
This particular double issue of HBR is focused on Sales. It points out that it is through
sales that it all happens. Too often top management is expert on everything but sales.
This issue tries to help readers understand sales a little better. I think sales is simple
and complex at the same time and that it is hard to generalize to cover all sorts of
products and services and customers, i.e. my belief and experience is that it is as much
an art as it is science.
One article points out that buyers often are so much more informed than they used to
be because of the Internet. Another dynamic is that decisions more often are
committee based rather than by one individual. One of the best salesmen ever, quoted
in the magazine, says that he relies on love. I like that. It is not as corny as it sounds.
If you love getting up in the morning, if you love the opportunity to meet people, if
you love making new friends, if you love to try to help, if you love a satisfied
customer, and if you look like you love life, people will seek out you, helping you
make a difference. Wanting to make a difference for the people you interact with is
one very useful ingredient in sales success.
I think that as a successful sales person you need to credibly convince the customer
that your first, second and third priorities are to exceed his expectations/ make him
happy. And if you are managing a sales force you have to credibly make each
individual team member believe that your first, second and third priorities are his/ her
personal success and growth. There are other requirements as well but this is in my
experience the cornerstone to success. We have all read about Maslow’s hierarchy of
needs and I think it is important to establish where your customer is (personally) in
the hierarchy and adjust your approach accordingly.
Below, please find a few comments from the issue.
Love your customer by Joe Girard
When you bought a car from me you didn’t just get a car. You got me. I would break
my back to service a customer; I’d rather service a customer than sell another car.
After a few years, there was a pandemonium outside my office, there were so many
people waiting to see me. So I started seeing people by appointment only. And the
reason people were willing to wait a week for an appointment rather than go buy from
someone else right away is because they knew that if they got a lemon, I would turn it
into a peach.
Look after all those people (service people) in the organization that help form the
customer experience. Draw on care and generosity (love) to ensure you are the kind of
person people want to talk to and want to help.
Leveraging the Psychology of the sales person; A conversation with Psychologist and
anthropologist G. Clotaire Rapaille
Whatever your culture you cannot be a sales person without losing most of the time,
so the successful ones have to be those who are happy when they lose. They don’t
develop low self-esteem or lose hope or get destroyed by the losses.
Understanding what your sales manager is up against by Barry Trailer and Jim Dickie.
For a sales person, a steady stream of worthy leads is practically nirvana. About 20 %
of sales people’s time is spent prospecting. The value of freeing up some of that time
for pursuing already defined opportunities is obvious. Also, when the flow of leads is
more robust, the qualification of those leads tends to be more rigorous; the candidates
that do make it into the sale pipeline tend to have shorter sales cycles, higher
contributions to profits, fewer complications, and higher customer satisfaction ratings.
Early efforts focused primarily on efficiency improvements – doing things faster.
Today’s efforts focus more on effectiveness – doing things better.
Leading change from the top line; Fred Hassan interviewed by Thomas Stewart and
David Champion.
We have adjusted the salary and bonus ratio in the compensation package to give a
relatively high salary component, which reduces the kind of hyperactive selling that
undermines long-term trust building.
The Ultimate Accountable Job, Leading today’s Sales Organization by Jerome A
Colletti and Mary S Fiss.
After a certain period of time, a customer stops buying your product and starts buying
your strategy. Instead of selling simple products or services, companies should sell
‘solutions.’ If the solutions selling process from start to finish are not right, then profit
margins are likely to suffer.
Low Pressure Selling by Edward C Bursk
This article essentially suggests that by positioning the sales process right and not
rushing it, you can make the customer want to buy rather than trying to sell him
something. (I have used this by saying to customers: In a similar situation as you, this
is how I would reason, this would seem to make sense to me – inviting the customer
to see the merits of your reasoning (with his/her interests at heart) or not make the
trade. This all makes more sense if you have actually had the role the customer is in,
which in my case was true when trying to sell banking services to CFO’s.)
What makes a good salesman by David Mayer and Herbert M Greenberg suggests
that the two key qualities are empathy (with the customer) and drive to achieve a sale.
Harvard Business Review June 2006
Tell a manager to cut costs by 10% and he‘ll know exactly what to do. Tell him to
grow the business by 10 % and he will be on alien ground. / Thomas Stewart, Editor. /
One article in this edition particularly attracted my interest: Leadership Run Amok by
Scott W. Sprier, Mary H. Fontaine and Ruth. L. Malloy. (I liked this article and think
it aligns with Bertrand Russell’s saying – ‘excess virtue is a vice.’ Driving any issue
or goal too far, i.e. being too singular in our pursuits, always leads to opportunity
costs. There is also a risk of outstanding performance by individuals without due
consideration to or with disregard of how it affects the whole. Incentive systems are
often loop sided and reward people who may not be in the company’s long term
interest to retain. Overall balance and diversity are essential for sustainable success –
and these concepts are often sidelined in the relentless pursuit of that marginal extra
dollar revenue.) I recommend that this article be read in its entirety. Here are a few
extracts.
If you believe too many executives think, “It’s all abut me,” you’re right: Research
shows that an ethos celebrating individual achievement has been shoving aside other
motivations, such as the drive to empower people, that are essential for successful
leadership.
In the short term, through sheer drive and determination, overachieving leaders may
be very successful, but there’s a dark side to the achievement motive. By relentlessly
focusing on tasks and goals - revenue or sales targets, say – an executive or company
can, over time, damage performance. Overachievers tend to command and coerce,
rather than coach and collaborate, thus stifling subordinates. They take frequent
shortcuts and forget to communicate crucial information, and they may be oblivious
to the concern for others. Their team’s performance begins to suffer, and they risk
missing the very goals that initially triggered the achievement-oriented behaviour.
While profits and innovation have risen during the past decade, public trust in big
business has slid. In our executive coaching practice, we’ve seen very talented leaders
crash and burn as they put ever more pressure on their employees and themselves to
produce. At the extreme leaders like Enron’s Jeffrey Skilling, a classic overachiever
by most accounts, driven by results regardless of how they were achieved. He pitted
manager against manager. For every Skilling, there are dozens of overachieving
managers who don’t make headlines but do cause significant harm.
Be less coercive and more collaborative. Influence rather than direct. Focus more on
people and less on numbers and results. The most effective leaders are primarily
motivated by socialized power. They channelled their efforts into helping others be
successful.
In our research we have identified six styles of leadership that managers and
executives use to motivate, reward, direct, and develop others. These are directive,
which entails strong, sometimes coercive behaviour; visionary, which focuses on
clarity and communication; affiliative, which emphasizes harmony and relationships;
participative, which is collaborative and democratic; pacesetting, which is
characterized by personal heroics; and coaching, which focuses on long-term
development and mentoring.
There is no best style of leadership. Each has its strengths and limits. The directive
approach, for instance, is useful in crises or when a leader must manage a poor
performer, but overuse stifles initiative and innovation. The affiliative approach is
appropriate in certain high-stress situations or when employees are beset by personal
crisis, but is most effective when used in conjunction with the visionary, participative,
or coaching styles. Pacesetting can get results in the short term, but it’s demoralizing
to employees and exhausting for everyone over the long haul. The most effective
leaders are adept at all six leadership styles and use each when appropriate. Typically,
however, a manager defaults to the styles he or she is most comfortable using, a
preference that reflects the person’s dominant motive combined with the level of
pressure in the work place. People motivated mainly by achievement tend to favour
pace-setting in low pressure situations but to become directive when the pressure is
on.
What are conferences for by Richard Saul Wurman. Have stories about passion, ideas
and failures. Don’t spoon-feed information and talk down to audiences. Put people in
a receptive mood and ask unrehearsed questions. I don’t want agendas. I want to be
surprised. And hopefully the participants will talk about it for years afterward.
Growth as a process. Interview with Jeff Immelt CEO of GE. The interview focuses
on GEs goal to grow 8 % per annum or twice the growth of the economy. A couple of
tool kits useful for achieving this are attached. I liked this line from Immelt: “I tell
people: Start your career tomorrow. If you had a bad year, learn from it and do better.
If you had a good year I have already forgotten about it.”
There is also an article titled ‘Building the Green Way’ by Charles Lockwood. In
summing up it says: The green future is here. Like the dramatic, occasionally
unsettling, and ultimately beneficial transformations wrought by the introduction of
electric lights, telephones, elevators, and air-conditioning, green building principles
are changing how we construct and use our workplaces. Armed with the ten rules
discussed above, corporations no longer have an excuse for eschewing sustainability –
they have tools that are proven to lower overhead costs, improve productivity, and
strengthen the bottom line.
Harvard Business Review May 2006
This issue spends a lot of space and time on the bird flue and how to plan for avoiding
the effects of it. To me it seems a bit esoteric and so many million man years goes
towards planning for unlikely events and my own view is that it is better to train
agility and flexibility so the capability to deal with the unforeseen is there rather than
have a special program and policy for each unlikely scenario.
The five messages Leaders must manage by John Hamm. The real job of leadership is
to inspire the organization to take responsibility for creating a better future. Effective
communication is a leader’s single most critical management tool for making this
happen. When leaders take time to explain what they mean, both explicitly by
carefully defining their vision, intentions and directions) and implicitly (through their
behaviour), they assert much-needed influence over the vague but powerful notions
that otherwise run away with employees’ imaginations. By clarifying amorphous
terms and commanding and managing the corporate vocabulary, leaders effectively
align precious employee energy and commitment within their organizations.
When leaders take it for granted that everyone in their organization shares their
assumptions or knows their mental models regarding key result areas, they lose their
grip on the managerial levers. Leaders must try to separate their egos from their jobs.
The power of clear communication is really the game of leverage.
Winning in the aftermarket by Morris A. Cohen, Narendra Agrawal, and Vipul
Agrawal. This article points out that the importance and profitability of the
aftermarket is grossly underrated. Up to 45 % of all profit can be derived from the
aftermarket. There is a direct correlation to stock price and companies’ abilities to
capitalize on the after market. Most organizations squander their potential in this area.
Notes by [email protected] 11th June 2006
Harvard Business Review April 2006
For change to be deep and lasting the interaction between people – at all levels – need
to focus on the right outcomes and consistently produce the right conversation and
decisions. Neither leadership nor tools nor incentives are sufficient to get you there.
You must find a way to manage culture directly.
“A Chairman of a board of directors who simultaneously holds executive functions
cannot independently exercise the task of ultimate supervision of the persons
entrusted with management,” asserted the Ethos Group in a 2005 proposal to Nestle
shareholders.
Home Depot’s Blueprint for Culture Change by Ram Charana
Home Depot is one of the business success stories of the past quarter century.
Founded in 1978 in Atlanta, the company grew to more than 1100 big box stores by
the end of 2000; it reached the $ 40 billion revenue mark faster than any retailer in
history. The company’s success stemmed from several distinctive characteristics,
including the warehouse feel of its orange stores, complete with low lighting,
cluttered isles, and sparse signage; a “stack-it-high, watch-it-fly” philosophy that
reflected primary focus on sales growth; and extraordinary store manager autonomy,
aimed at spurring innovation and allowing managers to act quickly when they sensed
a change in local market conditions.
We wanted to build on the best aspects of the existing culture, particularly people’s
unusually passionate commitment to the customer and the company. But we wanted
them to rely primarily on data, not on intuition, to assess business and marketplace
conditions. And we wanted people to coordinate their efforts, anathema to many in
Home Depot’s entrepreneurial environment. We wanted people to be accountable for
meeting companywide financial and other targets, not contemptuous of them. We
wanted people to deliver not just sakes growth but also other components of business
performance that drive profitability.
One of the hardest things for a leader to do is to look somebody in the eye and be
honest with them about their performance.
Metrics were used to promote a savvier understanding of the business. For example,
with standardized, detailed business data, people could see the relationship among
revenue, margins, inventory turns, cash flow, and other measures from store to store
and region to region. Getting managers throughout the company to look beyond sales
as the sole business goal spurred them to make better decisions.
Employee surveys showed a rise in various aspects of job satisfaction from one point
below industry averages to eight points above. The composite measure includes
engagement in the business, enjoyment of the employee’s existing role, support for
the leadership, and confidence in the company’s future.
We are running a business today. If someone has a great idea we want to hear about it
today. In the game of change, velocity is your friend. When someone suggested they
should pace the change being proposed, the CEO was quick to respond: good idea – I
will call our competitors and ask them to slow down for us!”
When Should a Leader Apologize? by Barbara Kellerman
This is a reasonable article – albeit a little too formal and scientific for my taste about apologizing. My own view is that most people are too slow to apologize and to
not do so for reasons of legal positioning is generally wrong and may well prove to be
very costly in terms of lost good will.
Corporate Leadership for Energy Efficiency / special advertising
section.
We’ve known for some time that we’re living in the twilight of the age of cheap
energy. In the late 1990s the falling price of oil led some to think we’d been given a
reprieve. But trends and events over the past two years – including developing
countries accelerating demand for oil, the war in Iraq, and the disruption to the oil
production and refining supply chain caused by hurricane Katrina and Rita – have
swept away the last issue of denial. GE’s and China’s announcement signify that
black gold has given away to green gold; the search for cleaner, resource conserving
energy is now a necessity.
Cradle-to-cradle thinking does not just focus on minimizing toxic pollution and
reducing natural resources waste. It goes a big step further, demanding that companies
redesign industrial processes so that they don’t generate pollution and waste in the
first place.
The typical building is scandalously inefficient. Two-thirds of the energy used to heat
goes up the chimney. Moreover, buildings are responsible for 41 percent of energy
consumption in the USA and 43 % of the nations carbon dioxide output. In green
building designs, the goal is to create structures that produce more energy than they
consume, store solar energy, and purify their own waste water, releasing it slowly
back to the environment.
The US internal combustion/ electric hybrid vehicle market has grown from two
models and fewer than 10,000 vehicles in 2000 to 11 models and 212,000 vehicles
last year. This represents slightly more than 1 pct of the total car market, but for an
unconventional technology, it’s a good start. Toyota, the market leader, sold 110,000
Priuses in the USA and Canada in 2005, double the volume from 2004. By the end of
this year all six of the top-selling car companies in the US will offer a range of hybrid
cars and trucks.
Although conservation and all the other initiatives are to be applauded, the only
technology ready to fill the gap and stop carbon dioxide loading of the atmosphere is
nuclear power. Although still an anathema in many places, for some countries nuclear
is seen as a key solution to their increasing demand for energy. The smaller, newgeneration reactors are high yield, use low-cost fuel, and their pebble-bed design
makes them virtually meltdown proof. They offer the best avenue to a ‘hydrogen
economy,’ combining high energy and high heat in one place for optimal hydrogen
generation.
The Unexpected benefits of Sarbanes-Oxley by Stephen Wagner and Lee
Dittmar
This article essentially argues that the disciplines brought in by the SOX act should be
welcomed as being good and useful to most companies.
Good governance is a mixture of the enforceable and the intangible. Organizations
with strong governance provide discipline and structure; instil ethical values in
employees and train them in the proper procedures; and exhibit behaviour at the board
and executive levels that the rest of the organization will want to emulate.
In our presentations at business seminars and conferences, we are often asked why we
emphasize the control environment so heavily. Our questioners seem to believe that
good internal control is predicated on the controls themselves – the cross-checking,
the reconciliations, the data verification. We reply that without a strong control
environment helps ensure that the controls themselves are the second and third lines
of defence, not the first. Employees who have been made to understand that it’s not
all right to strike side deals with customers, to recognize revenue prematurely, to
conceal possible conflicts of interest, or to look the other way when these types of
activities are going on won’t be busy circumventing the control system at every turn.
Some executives feel they need to tie every action back to the bottom line. To them
we say: most investor rating services include an assessment of the control
environment as part of their overall evaluation of the company. Scores from these
services can have a significant impact – either positive or negative – on investor
sentiment and the company’s cost of capital.
Controls fall into two broad categories. Preventive controls designed to eliminate
lapses either intentional or inadvertent, and Detective controls designed to identify
errors.
Clearly defining who’s responsible for which business process is a key element of an
internal control program and facilitates training, oversight, and performance
evaluation. A lot of steps we assumed were being taken – account reconciliations and
internal calculations and data integrity checks – actually weren’t.
Standardization is also a bottom line issue. Having a lot of ad hoc procedures for the
same entries is very cost inefficient. Further benefits accrue when internal and
external auditors come knocking, since standardized processes can be evaluated more
quickly and cheaply.
Asking most auditors what is the weakest point of internal controls and they will tell
you – “manual processes.” The human beings charged with carrying them out may
be fatigued, distracted, stressed, malicious, or absent. Automated controls, if properly
designed and implemented aren’t susceptible to such pitfalls. Yet, in our experience
most controls are still manual.
Notes by [email protected] 9th April
Harvard Business Review March 2006
This month’s issue has several interesting and well written articles. Please find a few
notes below.
The Greening of the balance Sheet by Anthony White
Clearly investors are becoming aware how greenhouse gas emissions – or at least the
impact of regulations designed to curb them – can affect value. And so should CEO’s
if they want to hold on to their jobs.
Leadership in Literature, a conversation with Business Ethicist J. L. Badaracco,
Jr.
MBA students perhaps need a little less in the way of quantitative tools and a little
more in the way of good judgment and self-knowledge, as well as a deeper
understanding of human nature.
Ceaseless efforts to meet other’s standards and success, deadens one’s emotional life
and moral instincts.
How can men and women pursue success and achievement without being pulled into
powerful, dangerous currents that overwhelm them? One answer lies in the peculiar
idea that we have serious moral obligations not just to others but to ourselves.
The best reflection involves dialogue with others. Solitary, self-designated geniuses
are a prescription for disaster.
Connect and Develop by Larry Huston and Nabil Sakkab
By identifying promising ideas throughout the world and applying its own capabilities
to them, Procter and Gamble realized it could create better and cheaper products
faster. Now the company collaborates with suppliers, competitors, scientists,
entrepreneurs, and others (that’s the connect part), systematically sourcing the world
for proven technologies, packages and products that P & G can improve, scale up, and
market (in other words develop), either on its own or in partnership with other
companies.
Connect and Develop strategy is far superior to incremental development. Companies
that fail to adapt to this model won’t survive the competition.
Inside the Chinese Consumer by William McEwen, Xiaoguang Fang, Chuanping
Zhang and Richard Burkholder.
Consumer survey in China shows changing attitudes. In surveys conducted 1994 and
2004 responses changed as follows: Work hard and get rich 68% vs 53 %; I don’t
think of money or fame but try to live a life that suits my own taste 10% vs 26 %.
Instead of worrying about the taste or availability of the next meal, the increasingly
affluent Chinese worker is thinking about the taste of life itself.
The 2004 survey found that 68 % don’t feel engaged; that is they don’t approach their
work with passion or feel a personal connection to their jobs. These employees have
essentially checked out; they are sleepwalking through their work days. And a further
20 % of employees hate their jobs to the point of active disengagement. They may
well act out their unhappiness, undermining what their engaged co-workers
accomplish. The survey also suggests that the larger the organization, the less
employees feel personally connected to the work place.
Households with DVD players rose from 7 % in 1997 to 52 % in 2004. The number of
households with computers grew from 2 % in 1994 to 13 % in 2004 and mobile
phones from 10 % to 48% in 2004. What does all this mean for a company planning
to do business in China? First, it is clear that aspirations are growing, that desire is
outstripping ability, and that the traditional bellwethers of modernization don’t
necessarily apply. Chinese consumers want more than just function. This is one
reason why Nokia, which has emphasized fashion over function, has seen its cell
phone sales in China rocket past those of Motorola and Ericsson. If a company wants
sell vacuum cleaners or washing machines in China it had better pay attention to
emotional needs as well as physical ones. And if it is selling microwave ovens, air
conditioners, and TVs, it should be sure those products are as fashionable as they are
reliable.
Despite the many thousands of years of Chinese history, China’s longest journey in
some ways has just begun. We are not only witnessing a new millennium there but a
new era in which the emotions, attitudes, and perceptions of the man and woman on
the street, in the home, and in the factory increasingly matter.
Managing Middlesence by Robert Morison, Tamara Erickson, and Ken
Dychtwald
According to a 2005 Conference Board survey, the largest decline in job satisfaction
over the past ten years occurred among workers between the ages of 35 and 44, and
the second largest decline was among those aged 45 – 54. In short, far too many midcareer employees are working more, enjoying it less, and looking for alternatives. We
have become convinced that the problem of burned-out, turned-off employees who
stay is even more threatening to corporate productivity than the problem of turnover.
Making current work more enjoyable and enriching and reengaging employees can be
very profitable.
Sources of frustration include: Career bottleneck, Work/life tension, Lengthening
horizon (having to work more years), Skills obsolescence, Disillusionment with
employer, Burnout, Career disappointment.
You’ve got to have passion for the job to add value every day. If you find yourself
just going through the motions, do something different. We all have strengths; find
yours and play to them.
It is true that the responsibility for career moves belongs primarily to the individual.
But the fact is, organizations create the conditions under which career initiatives
flourish or fade. It is in the enlightened self-interest of the organization to remove the
institutional barriers to individual fulfilment and ambition, to pay the attention and
devote the resources needed to keep new possibilities open and revitalize careers. This
isn’t paternalism – or a return to employment practices of yesterday. It is good
management.
The actions we recommend are largely a matter of paying closer attention to the often
silent majority – the mid-career employees who form the heart and backbone of your
work force.
Customer Value Propositions in Business Markets by James C Anderson,
James A Narus, and Wouter van Rossum.
‘Why should our firm purchase your offering instead of your competitors?’ Is a more
pertinent question than ‘Why should our firm purchase your offering?’
Without a detailed understanding of the customer’s requirements and preferences, and
what it is worth to fulfil them, suppliers may stress points of difference that deliver
relatively little value to the target customer.
To make customer value propositions persuasive, suppliers must be able to
demonstrate and document them. Each value proposition must be: distinctive,
measurable and sustainable
Customer value propositions can be a beacon as well as a cornerstone for superior
performance.
Diversity Now: Real Results, New Opportunities by Michael Wheeler
Diversity makes dollars and sense. Diversity profoundly affects your company’s
profitability, efficiency, and its ability to innovate, achieve cost reductions and gain
market share. Diversity has a direct impact on product development, business strategy
and even shareholder value. As profit-generating and cost-saving opportunities occur
quite literally at every human interaction, diversity influences every single business
transaction, process, goal and objective. People should be held accountable for
diversity results. Diversity is not an obligation but an opportunity. To make a
difference a company must keep its eyes open to different ways of thinking.
Why It’s So hard to Be Fair by Joel Brockner
Everyone knows that being fair costs little and pays off handsomely. Then why do so
few executives manage to behave fairly, even though most want to?
Some managers wrongly believe that tangible resources are always more meaningful
to employees than being treated decently. Doctors often refrain from apologizing for
mistakes for because they fear that admitting them will anger their patients, who will
them be more likely to file malpractice suits. In fact the opposite is true.
It is not enough for executives to be fair. They also need to be seen to be fair.
Essentially this article says what I strongly believe – it pays to take the time it takes to
be up front with individuals and tell them face to face ‘the bad news and the reasons
for it. It pays to care and try to help people out on a limb. Unless we ‘live care’ in
relation to our employees why should our staff care about our customers and why
should customers believe we care. And if we don’t care – surely we cannot expect to
run a sustainable business. I wrote a letter to the editor with reference to this article:
Dear Sirs,
I thought this a well written article and I liked the content. However I think it is not so much a
matter of being fair as it is to care. Unless managers and employees alike care, how are they
ever going to convince customers that they are important. Showing care goes beyond being
fair. Whereas being fair means not mistreating anyone, showing care goes further. Who wants
to be around people who don't care? What kind of response does that invite? When someone
is about to be exited all colleagues 'die a little’ with her (or him). We are all potential firees
and we all take cue from how such process is handled. At some future date it may well be me.
I have recently worked for two major Australian banks and both had a company policy to not
allow reference letters. Someone may have worked for your company for many years and
now needs to look for another job, and you won't provide a letter of reference? How
caring is that? What kind of response and attitude does such non-caring invite?
As a general manager I complained about this rule and frequently broke it, thinking the rule
inhuman and not in the best interest of the employer. Later I got smarter and wrote a 'Letter of
Appreciation' to the employee with the same content as a reference letter and achieved the
same thing without breaking the rule.
It is not only being fair but more about care. Respect and Humility need to go with it. From
Plato's Phaedo I quote this line by Socrates: "If you are still doubtful about the argument, do
not hesitate to say exactly what you think, and let us have anything better which you can
suggest; and if I am likely to be of any use, allow me to help you." If you
as a CEO or senior manager have the courage and courtesy to tell your staff - this is the
situation we are facing, this is what I think we need to do and I have thought long and hard
about it, please tell me if you see it differently? - then you may or may not get another bright
idea, but what you will always get is respect.
Sincerely, Frank Olsson
Harvard Business Review February 2006
This issue has a few interesting articles. Particularly it asks to what extent being a
‘nice person’ is good or bad on CEO level. The obvious answer is that too stern and
too nice are equally ineffective and the trick is to strike the right balance. But perhaps
a little tougher and harsher than we like to think is better for progress and value
creation. Perhaps it also suggests that there is no ‘one set fits all’ formula but that
different situations and staged require different approaches. From school days we
have all, I think, experienced teachers who were harsh and demanding to the benefit
of our learning, but also those who so loved their subject and art that they encouraged
more and better learning. Perhaps the least leaders are those who inspire neither fear
nor love.
The Why, What, and How of Management Innovation by Gary Hamel.
Why has it taken America’s automobile manufacturers so long to narrow their
efficiency gap with Toyota? In large part because it took Detroit more than 20 years
to ferret out the radical management principle at the heart of Toyota’s capacity for
relentless improvement! Unlike its Western rivals, Toyota has long believed that firstline employees can be more than cogs in a soulless manufacturing machine; they can
be problem solvers, innovators and change agents. While American companies relied
on staff experts to come up with process improvements, Toyota gave every employee
the skill, the tools, and the permission to solve problems as they arose and to head off
new problems before they occurred. The result: Year after year, Toyota has been able
to get more out of its people than its competitors have been able to get out of theirs.
Such is the power of management orthodoxy that it was only after the American car
makers had exhausted every other explanation for Toyota’s success – an undervalued
yen, a docile work force, Japanese culture, superior automation – that they were
finally able to admit that Toyota’s real advantage was its ability to harness the
intellect of ‘ordinary’ employees.
‘Whole Food’s’ very successful CEO says his goal was to create an organization
based on love instead of fear by creating a ‘community of people working together to
create value for other people. At Whole Foods the basic organizational unit is not the
store but small teams that manage departments such as fresh produce, prepared foods,
and sea food. Managers consult teams on and all store-level decisions and grant them
a degree of autonomy that is nearly unprecedented in retailing. Each team decides
what to stock and can do new hires. Bonuses are paid to teams, not to individuals, and
team members have access to comprehensive financial data including the details of
every co-worker’s compensation. Believing that 100:1 salary differentials are
incompatible with the ethos of the community, the company has set a salary cap that
limits any executive’s compensation to 14 times company average. 94 % of company
stock options have been granted to non-executive level. Rivals can do little more than
shake their heads and wonder.
When De Hock and his team built Visa they spent months coming up with a set of
principles to guide their work:
Power and function in the system must be distributed to the maximum degree
possible. The system must be self organizing. Governance must be distributed. The
system must seamlessly blend both collaboration and competition. The system must
be infinitely malleable, yet extremely durable. The system must be owned cooperatively and equitably.
The quest for greater standardization often leads to unhealthy affection for
conformance; the new and the wacky are seen as dangerous deviations from the norm.
Elaborate planning and control systems lull executives into believing the environment
is more predictable than it is. A disproportionate emphasis on monetary rewards leads
managers to discount the power of volunteerism and self-organization as mechanisms
for aligning individual effort.
To beat back the forces of commoditization a company must be able to deliver the
kind of unique customer value that can only be created by employees who bring a full
measure of their initiative, imagination, and zeal to work every day. The problem is
there is little room in bureaucratic organizations for passion ingenuity and selfdirection. The machinery of bureaucracy was invented in an age when human beings
were seen as little more than semi-programmable robots. Bureaucracy puts an upper
limit on what individuals are allowed to bring to their jobs. If you want to build an
organization that unshackles the human spirit, you’re going to need some decidedly
un-bureaucratic management principles.
Passionate organizations are more like a community than a hierarchy. People are
drawn to a community by a sense of shared purpose, not by economic need. In a
community, the opportunity to contribute isn’t bounded by narrow job descriptions.
Control is more peer based than boss based. Emotional satisfaction, rather than
financial gain, drives commitment. For all those reasons, communities are amplifiers
of human capability.
Is there any reason to believe we can challenge the well entrenched orthodoxy? Sure.
Look at Google. Its top team doesn’t spend a lot of time trying to cook up grand
strategies. Instead, it works to create an environment that spawns a lot of
‘Googlettes’: small grassroots projects that may one day grow into valuable new
products and services. Google looks for recruits who have off-the-wall hobbies and
unconventional interests – people who aren’t afraid to defy conventional wisdom –
and, after it hires them, encourages them to spend up to 20 % of their time working on
whatever they feel will benefit Google’s users and advertisers.
Key questions for reviewing each relevant management process:
Who owns the process? Who has the power to change it? What are its objectives?
What are the success metrics? Who are the customers of this process? Who gets to
participate? What are the data or information inputs for this process? What analytical
tools are used? What events and milestones drive this process? What kind of decisions
does this process generate? What are the decision-making criteria? How are decision
communicated and to whom? How does this process ling to other management
systems?
You may find that your company’s strategic process is too elitist in that it gives a
disproportionate share of voice to senior executives at the expense of new ideas from
people on the front lines. This severely limits the variety of strategic options your
company considers. Perhaps the hiring process over-weights technical competence
and industry experience compared with lateral thinking and creativity. Other human
resource processes may be too focused on ensuring compliance and not focused
enough on emancipating employee initiative. The results? Your company is earning a
paltry return on its investments in human capital. A deep and systematic review of
your firm’s management processes will reveal opportunities to reinvent them in ways
that further your bold objectives.
Although we sometimes affix the dinosaur label to chronically underperforming
companies, the truth is that every organization has more than a bit of dinosaur DNA
lurking in its management processes and practices.
The Great Intimidators by Roderick M Kramer
This article suggests that intimidators often make good leaders. Another article in the
edition disagrees. At the end of the day it may be a matter of degree and depend on
circumstances. A little bit of fear and apprehension may sharpen the focus. Key is that
intimidators not cross the line between demanding and abusive.
But the article also points out that because intimidators may be so adept to bending
others to their will, that they win even arguments that they should lose. Often wrong,
never in doubt people often said of Carly Fiorina
Harvard Business Review January 2006
The January issue is largely on decision making. One article stood out from the rest.
The contest between rationality and gut instinct pervades the research on decision
making. Good decision making depends foremost on accountability. Whose decision
is it? And every decision has an ethical dimension.
Evidence based management by Jeffrey Pfeffer and Robert I. Sutton
If you want to have an operation, ask a surgeon if you need one. People tend to
recommend what they are good at.
It is important to remember that if you only copy what other people or companies do,
the best you can be is a perfect imitation. So the most you can hope to have is
practices as good as, but no better than, those of top performers – and by the time you
mimic them, they’ve moved on. This isn’t necessarily a bad thing, as you can save
time and money by learning from the experience of others inside and outside your
industry.
The players of successful sports teams will tell you that the most important factor in
their success was the communication, mutual understanding and respect, and ability to
work together, that made the difference. Performance suffers when there is a big
spread between the worst- and the best-paid people – even though giving the lion’s
share of rewards to top performers is the hallmark of forced ranking systems. The
greater the gap between top management’s pay and that of other employees, the lower
the product quality! Forced ranking results in lower productivity, inequity, scepticism,
decreased employee engagement, reduced collaboration, damage to morale, and
mistrust in leadership. Players in teams with greater dispersion in pay had lower
winning percentages, gate receipts, and media income.
Over 15 years research of the auto industry shows that lean or flexible production
systems – with their emphasis on teams, training and job rotation, and their deemphasis on status differences among employees – built higher-quality cars at lower
cost.
Companies that want to promote more evidence based management should get in the
habit of running trial programs, pilot studies, and small experiments, and thinking
about the inferences that can be drawn from them. It is better to put something out
there and see the reaction and fix it on the fly after getting feedback.
At least since Plato’s time, people have appreciated that true wisdom does not come
from the sheer accumulation of knowledge, but from a healthy respect for and
curiosity about the vast realms of knowledge still unconquered.
An experiment at the University of Missouri compared decision making groups that
stood up during the 10-20 minutes meeting with groups that sat down. Those that
stood up took
34 % less time to make decisions.
[email protected]
Harvard Business Review December 2005
The December issue of HBR had several great articles that attracted my interest.
Please find below a few notes from five of them. If you have any interest in the area
covered by these articles I strongly recommend reading the full article.
Self Management – Heartless Bosses by Travis Bradberry and Jean Greaves
How could it be that the very people who need emotional intelligence the most seem
to have it the least? It appears that companies are still promoting executives
principally on the basis of what they know or how long they have served the company
rather than on their ability to lead. Yet, for every job we’ve studied, emotional
intelligence is a better predictor of performance than technical skills, experience, or
intellect. If you are in the rarefied ranks of corporate suite executives, your
subordinates are probably more emotionally intelligent than you are. That’s not good
for you or your company. A decade of research shows that emotional intelligence can
be honed – that’s the good news – but first you have to recognize the need.
Strategy and Your Stronger Hand – by Geoffrey A. Moore
There are two ways of doing business, and any given company is as adroit at the one
as it is awkward at the other. Understanding your own organization’s ‘handedness’
will guide you to the right strategic moves.
Oscar Wild once wrote, ‘Men marry because they are tired; women because they are
curious. Both are disappointed.’ We can repurpose that statement to shed light on the
business of strategic acquisitions.
There are two distinct business models – the complex-systems model and the one that
competes on volume operations. Both as they grow and are successful are tempted to
expand into the more volume-oriented business on the one hand or more up-market
complex-systems area on the other, depending on the starting point. The article
explains why this so often fails.
In Research for example, the complex business system model has a qualitative bias
because each customer constitutes a market reality unto itself. By contrast, the
volume -operations model is all about the uniformity and scalability of transactions.
With complex systems no one member of the value chain can provide all the products
and services end to end. The focus on marketing, therefore, is on aligning properly
with partners and allies, not to mention the various customer constituencies that must
collaborate in order to bring complex systems into fruition. The most valuable
marketing asset a company has in this context is the relationships it can create that
give it permission to lead and make others want to align with its efforts. In a volumeoperations model the entire offer is inside a package, the entire value chain is preassembled and the only variable to mage is consumer choice.
Such differences are also in the areas of Design, Source, Manufacture, Selling and
Service as described in the article.
In general, communications between the two models are difficult. In complex-systems
models customer intimacy connoted deep domain expertise and developed
relationships with decision-making executives in key accounts. In volume operations,
the same term refers to the kind of pseudo-intimacy you get from you’re my Yahoo
portal or Amazon.com’s book recommendations.
Organizations that attempt to be ambidextrous create points of contention wherever a
handoff crosses the boundaries of the value-creation platform. At each of these
junctions, the interfacing processes must stretch to accommodate the values of the
other.
No wonder strategic acquisitions often prove so disappointing. When you pair
opposite-handed organizations, the hand of the acquiring company normally
dominates the merger, putting the other hand at a huge disadvantage. The result is that
the acquired party, already on probation by virtue of its being on the block, sees its
performance deteriorate further because it is being asked to meet standards that are
inappropriate to its design. Failing to meet the standards causes the acquiring
management team to intervene, leading to further deconstruction of the very processes
and values that made the company worth acquiring in the first place. The end result is
a complete mess because neither management team ever really understands the other.
Rather than try to solve this problem, the smart move is to avoid it altogether. That’s
why companies planning strategic acquisitions should think in terms of shaking hands
– merging right-handed with right, or left handed with left – rather than holding hands
– merging right-handed with left-handed.
A typical failure happens when the enterprise’s dominant hand dictates inappropriate
behaviours to the other hand and then complains about that group’s inability to meet
standards. The problem, of course, is that the standards are biased toward the
dominant hand.
Recognition that organizations have a ‘handedness’ – a deep-rooted predilection for
either volume operations or complex systems – can help us manage more effectively.
A better understanding of these issues may help management teams pull together.
Marketing Malpractice by Clayton M. Christensen, Scott Cook and Taddy Hall
To build brands that mean something to customers you need to attach them to
products that mean something to customers. And to do that you need to segment
markets in ways that reflect how customers actually live their lives.
People don’t want to by a quarter inch drill. They want a quarter inch hole. / Theodore
Levitt /
Marketers often solve the wrong problems improving their products in ways that are
irrelevant to their customers’ needs. The problem is that customers don’t conform
their desires to match those of the average consumer in their demographic segment.
The prevailing methods of marketing make new product innovation a gamble with
horrifyingly low odds of winning.
If a marketer can understand the job, design a product and associated experiences in
purchase and use to do that job, and deliver it in a way that reinforces its intended use,
then when the customers find themselves needing to get that job done, they will hire
that product.
Making it easier and cheaper for customers to do things they are not trying to do
rarely lead to success.
With few exceptions, every job people need or want to do has a social, a functional,
and an emotional dimension. If marketers understand each of these dimensions, then
they can design a product that’s precisely targeted to the job.
When surveys of individual customers are averaged with those of other customers in
the targeted demographic segment – it leads to one-size-fits-none product.
Marketers who are stuck in the mental trap that equates market size with product
categories don’t understand whom they are competing against from the customer’s
point of view. Notice that knowing how to improve the product did not come from
understanding the ‘typical’ customer. It came from understanding the job.
This should trigger an action item on every marketer’s to-do-list. Turn off the
computer, get out of the office and observe.
Marketers who brake with the broken past will be rewarded not only with successful
brands but with profitably growing businesses as well.
Managing Authenticity by Rob Goffee and Gareth Jones
Try to lead like someone else and you will fail. Employees will not follow a CEO
who invests little of himself in his leadership behaviours.
Too much conformity can render leaders ineffective; too little can isolate them.
To influence others, authentic leaders must first gain at least minimal acceptance as
members of their organizations.
Does Your Company’s Conduct Meet World-Class Standards? by Lynn
Paine, Rohit Deshpande, Joshua D. Margolis and Kim Eric Bettcher
This article discusses and sets out guidelines for Global Business Standards Codex
based on eight principles; Fiduciary principle, Property Principle, Reliability
Principle, Transparency Principle, Dignity Principle, Fairness principle, Citizenship
principle and Responsiveness Principle.
By adopting its own code, a company can clarify for all parties, internal and external,
the standards that govern its conduct and can thereby convey its commitment to
responsible practice wherever it operates.
Company codes have a myriad of other practical purposes. A code can help
employees from diverse backgrounds work more effectively across geographic and
cultural boundaries. It can also serve as a reference point for decision making,
enabling companies to operate with fewer layers of supervision and to respond
quickly and cohesively in times of crisis. It can even aid in recruitment, helping attract
individuals who want to work for a business that embraces world-class standards. It
can also help a company manage risk by reducing the likelihood of damaging
misconduct. And as part of managing their own brands, some companies examine the
codes of their potential suppliers and partners. Given all the legal, organizational,
reputational, and strategic considerations, few companies will want to be without a
code.
Regarding employees, the codes consistently mandate that companies protect workers
from injury and illness in the work place, avoid discrimination, provide equal
employment opportunity, and respect their dignity and human rights. Provisions
forbidding retaliation against employees who report misconduct are also widespread.
Various codes mention open communication, responsiveness to suggestions and
complaints, fair and reasonable compensation, and assistance in developing skills.
Citizenship includes a willingness to deal with public authorities in good faith and
may even imply some additional contribution by way of charity, civic support, or help
in addressing broad societal problems.
The modern corporation is a relatively recent invention, and the idea that business
should observe a set of ethical standards is even more recent.
We urge business leaders to heed the rising chorus and take steps now to ensure that
their companies’ practices are, in fact, up to code.
We offer the codex not as a minimum code but as a reference that companies can use
to assess their current code or to craft a new one.
[email protected] 11 December 2005
Harvard Business Review November 2005
Are you working too hard? A conversation with Mind/ Body Researcher Herbert
Benson
Essentially this article demonstrates scientifically the usefulness and need to divert
energy and thinking completely, particularly in times of pressure and stress, to avoid
exhaustion and overload. I think this has been well known for a long time. Taking a
brake, physical exercise, yoga often make a significant difference and enhances well
being and performance. Another example of where real life experiences can get
substantiated by research. (experience preceding the idea – it is more common that
people will act their way into new thinking than think their way into new acting).
Smart employers and employees make sure such thinking is understood and adhered
to.
40 % of all workers feel over worked. 60% of doctors’ visits relate to stress. Stress is
good up to a point beyond which it decreases productivity. You can tell when you
have neared the top of the curve when you stop feeling productive and start feeling
stressed.
Innovation Complexity by Mark Gottfredson and Keith Aspinall
What is too much of a good thing? The article basically says keep things as simple as
possible. Excessive complexity can hinder growth and raise cost.
Leadership in your midst by Sylvia Ann Hewlett, Carolyn Buck Luce, and Cornel
West
Minority professionals often hold leadership roles outside work, serving as pillars of
their communities and churches and doing more than their share of mentoring. It’s
time their employers took notice of these invisible lives and saw them as sources of
strength. It might well be transformative – of individuals, of companies, and of
society.
Lehman Brothers has a sizeable diversity bonus pool – an incentive that recognizes
individual managers and teams for their innovative diversity initiatives, prompting
investment bankers to take diversity seriously.
At Time Warner there is a policy that for any hire at the vice-president level or above,
the slate of candidates must be diverse.
Hiring for Smarts by Justin Menkes
It is all very well to be kind, compassionate, and charismatic. But the most crucial
predictor of executive success has nothing to do with personality or style. It’s
brainpower.
The Skills that make up Executive Intelligence:
Regarding Tasks: intelligent leaders…..
1.
2.
3.
4.
5.
6.
Appropriately define a problem and differentiate essential objectives from less relevant
concerns
Anticipate obstacles to achieving their objectives and identify sensible means to circumvent
them
Critically examine the accuracy of underlying assumptions
Articulate the strengths and weaknesses of the suggestions or arguments posed
Recognize what is know about an issue, what more needs to be known, and how best to obtain
the relevant and accurate information needed
Use multiple perspectives to identify probable unintended consequences of various action
plans
Regarding People: intelligent leaders….
1.
2.
3.
4.
5.
6.
Recognize the conclusions that can be drawn from a particular exchange
Recognize the underlying agendas and motivations of individuals and groups involved in a
situation
Anticipate the probable reaction of individuals to actions or communications
Accurately identify the core issues and perspectives that are central to a conflict
Appropriately consider the probable effects and possible unintended consequences that may
result from taking a particular course of action
Acknowledge and balance the different needs of all relevant stakeholders
Regarding Themselves: intelligent leaders…
1.
2.
3.
4.
5.
Pursue feedback that may reveal errors in judgments and make appropriate adjustments
Recognize their personal biases or limitations in perspective and use this understanding to
improve their thinking and their action plans
Recognize when serious flaws in their ideas or actions require swift public acknowledgment
of mistakes and a dramatic change in direction
Appropriately articulate the essential flaws in others’ arguments and reiterate the strengths in
their own position
Recognize when it is appropriate to resist others’ objections and remain committed to a sound
course of action
It is not the strongest of the species who survive, nor the most intelligent, but the ones
most responsive to change. / Charles Darwin. /
[email protected] 18th Nov 2005
Harvard Business Review October 2005
Not too much of interest in this issue / Frank
Harvard Business Review September 2005
An issue rather thin on nutrients. One interesting article is called
A Stake in The Business by Chris T. Sullivan, which tells the story of the success
of the Outback Steakhouse restaurants. I have extracted a few lines and thoughts from
the article.
Almost all of their managers have come up through the ranks; they have done every
front-of-the-house and back-of-the-house job there is. They have taught those jobs to
others, and they have instilled in them our ‘principles and beliefs’ (P&B). Of the
categories Customers, employees and the Community we decided that none would
take precedence over the others, not even customers. Our analysis revealed that for
those strongly committed to our beliefs, five times as many customers (of these
people) were likely to return. And the strongly agreeing group’s restaurants had 8.9%
higher revenue, 26% higher cash flow, and pre tax profit was 48% higher.
Our managing partners (branch managers) must invest $ 25,000 of their own money –
not because Outback needs the money but because their financial contribution makes
them committed investors in the business they’ll be running. They must also sign a
five year contract, and they are granted 1,000 shares of restricted stock, which vests
only at the end of the contracts. In return, managing partners can keep 10 % of the
cash flow their restaurants generate each year.
The restaurant is only open for dinner in order to create focus and not drag out
working hours too much for staff. Lunch is in different districts and dinner is more of
an experience. Key is to look after staff to achieve low staff turnover. Look after your
staff the way you would like to be looked after – a simple application of the golden
rule.
In addition to this article I found the letters to the editor regarding the need to change
business schools interesting. They point to the challenge to get the right mix between
research, academia and practical application and experience. The conclusion is
perhaps that schools need to constantly review the programs and methods to seek to
stay relevant and there is no one-size-fits-all model.
[email protected] 24th September 2005
Harvard Business Review July/ August 2005
I find the HBR issues quite different. Sometimes they are full of useful comments and
sometimes rather bare. This issue was rather thin I felt, in spite of being a two
months’ issue. A few notes I made…..
Happy companies are all alike; each unhappy company is unhappy in its own way.
(This is the lead in sentence by the editor-in-chief and it reminds me of the first line of
Anna Karenina to which the editor leaves no reference: “All happy families are alike;
each unhappy family is unhappy in its own way.” Personally I think the last sentence
of Anna Karenina even more important: ‘My life now, my whole life, regardless of
what might happen to me, every minute of it, is not only not meaningless, as it was
before, but has the unquestionable meaning of the good which it is in my power to put
into it.”)
Toward a theory of High Performance by Julia Kirby
In order to be a high performance company it is necessary to create a collective state
of mindfulness. Three building blocks need balancing, aligning and renewing: market
focus and position, resulting in better decisions; Distinctive capabilities, resulting in
better practices; High performance anatomy, resulting in better mindsets.
Turning Great Strategy into Great performance by Michael C. Mankins and
Richard Steele.
Seven rules for achieving great performance: Keep it simple, make it concrete; Debate
assumptions, not forecasts; Use a rigorous framework, speak a common language;
Discuss resource deployment early; Clearly identify priorities; Continuously monitor
performance; Reward and develop execution capabilities.
Moments of Greatness, Entering the Fundamental State of Leadership by
Robert E. Quinn.
These four qualities – being results centered, internally directed, other focused, and
externally open – are at the heart of positive human influence, which is generative and
attractive. A person without these four characteristics can also be highly influential,
but his or hr influence tends to be predicated on some form of control force, which
does not usually give rise to committed followers. By entering the fundamental state
of leadership, we increase the likelihood of attracting others to an elevated level of
community, a high performance state that may continue even when we are not
present.
We must move from being comfort centered to being results centered. This may be a
painful process but one with great potential to make a positive impact on our own
lives and on the people around us.
Manage your Human Sigma by John H. Fleming, Curt Coffman, and James K.
Harter.
The employee-customer encounter is the factory floor of sales and services. If
organizations are going to achieve meaningful operational improvements, the
employee-customer encounter must be managed with great care.
It is important not to think like an economist or an engineer when you’re assessing the
employee-customer interaction. Emotions, it turns out, inform both sides’ judgment
and behaviour even more powerfully than rationality does.
The employee-customer encounter must be measured and managed locally, because
there are enormous variations in quality at the work group and individual levels.
It’s possible to arrive at a single measure of effectiveness for the employee-customer
encounter; this measure has a high correlation with financial performance.
To improve the quality of the employee-customer interaction, organizations must
conduct both short-term, transactional interventions (such as coaching) and long term,
transformational ones (such as changing the process for hiring and promotion.) In
addition, the company’s organizational structure often must be adjusted so that the
employee-customer encounter can be managed holistically.
Recent work suggests that emotion may play a larger role than analysis.
Our research suggests that for all kinds of companies, fully engaged customers – those
who score in roughly the upper 15 – 20% on our measure – deliver a 23% premium
over the average customer in terms of share of wallet, profitability, revenue, and
relationship growth. Actively disengaged customers – those who score in the bottom
20% - 30 % - represent a 13% discount on the same measures.
Ask any chief executive to list his or her most pressing business challenges, and you
will no doubt hear concerns about customer and employee retention, authentic and
sustainable growth, eroding margins, and cost efficiencies. Clearly, there is no single
solution to those challenges. But we are confident that measuring and managing two
simple factors – employees and customer engagement – can lead to breakthrough
improvements in all aspects of your business.
Managing for Creativity by Richard Florida and Jim Goodnight.
Artists are inspired by the desire to create beauty. Salespeople respond to the thrill of
the hunt and the challenge of making their quotas. After eight hours you are probably
just adding bugs. Creative people can be relied upon to manage their own work loads;
their inner drive to achieve, not to mention accountability among colleagues, compels
a high level of productivity.
Strategic Intent by G Hamel and CK Prahalad
The goal of the strategic hierarchy remains valid – to ensure consistency up and down
the organization. But this consistency is better derived from a clearly articulated
strategic intent, than from inflexibly applied top-down plans.
Notes by [email protected] 4th Sept 2005
Harvard Business Review June 2005
Asking the Right Questions by Thomas A. Stewart
Many managers partly and intuitively understand that controls they have might not be
right for their business. For example, they know it’s not especially meaningful to
measure the return on assets for a company like Microsoft which has relatively few
assets (apart from cash). They understand that economies of scale are a big deal in the
automobile industry but that scale effects are markedly smaller in advertising, law, or
hotel management. They know that some familiar levers seem irrelevant; they may
complain, “The stock market doesn’t understand us.” They are less clear on why this
is so and what they can do about it.
The Surprising Economics of a “People Business” by Felix Barber and
Rainer Strack
People – intensive companies and business units ought to be managed and measured
in ways that reflect their unique economics. Some standard practices can lead you
dangerously astray.
In order to identify where and how value is being created – or squandered – peopleintensive business need performance metrics that are as financially rigorous as
economic profit but that highlight the productivity of people rather than of capital.
The distinct but generally unappreciated economics of people-intensive business call
not only for different metrics but also for different management practices. For
instance, because even slight changes in employee productivity have a significant
impact on shareholder returns, “human resource management” is no longer a support
function but a core process for managers.
Companies mistakenly focus on capital productivity rather than employee
productivity and rely on capital-oriented metrics, such as return on assets and return
on equity. These aren’t much help in assessing a people business, as they tend to mask
weak performance or indicate volatility where it doesn’t exist.
The critical resource of most businesses is no longer capital – that is, assets that a
company owns and utilizes at as high a level as possible. Rather, the critical resources
are employees whom a company hires and must motivate and retain. The fact that
companies don’t own their employees, as they do their capital assets, is why methods
for valuing “human capital” on balance sheets are so tortuous.
Because employees represent both the major cost and the major driver of value
creation, people management moves that lead to even small changes in operational
performance can have a major impact on returns.
Given the high financial stakes, people management needs to be a core operational
process and not solely a support function run by the human resource department. Line
managers have a vital role to play in improving employee productivity.
Employee satisfaction and engagement are more likely to be destroyed by conflicts at
work than by conflicts between work and life.
Companies with strong performance typically pay their employees better than their
competitors.
Large people businesses don’t necessarily have cost advantages over smaller
competitors – indeed quite often the reverse.
Competent Jerks, Lovable Fools, and the Formation of Social Networks
by Tizana Casciaro and Miguel Sousa Lobo
Personal feelings played a more important role in forming work relationships – not
friendships at work but job-oriented relationships – than commonly acknowledged. If
someone is strongly disliked, it is almost irrelevant whether or not she is competent;
people won’t work with her anyway. By contrast, if someone is liked his colleagues
will seek out every little bit of competence he has to offer.
A little extra likeability goes a longer way than a little extra competence in making
someone desirable to work with.
We like people who are similar to us; people we are familiar with; people who have
reciprocal positive feelings about us; and people who are inherently attractive, either
in their appearance or their personality – that is, they are considerate, cheerful,
generous and so on.
Physical proximity strongly affects the degree to which people like each other.
Leverage the likable by capitalizing on their personal qualities and have them play the
role of ‘affective hubs’ bridging gaps between diverse groups that might not otherwise
interact.
It is easy to be mistakenly dazzled by a high performer, even if his expertise is never
tapped or shared because people don’t want to work with him. And too many
managers fail to appreciate the benefits that a likable person can offer an organization,
particularly if those benefits come at the expense of some measure of performance.
Building an environment in which people like each other – whether by creating
situations that making liking people easy, by fostering those likable people who can
play the role of affective hub, or by improving the behaviour of competent jerks – can
help all employees work more happily and productively and encourage formation of
strong and smoothly functioning social networks.
The Madness of Individuals by Laurence Prusak
If the collective decisions are often demonstrably better than individual ones, why do
we embrace the single-person, rational-actor model? I think the answer lies in
evolutionary psychology. An instinctive faith in the reliability of hierarchical
leadership is baked into our genes.
It’s time to acknowledge that it’s impossible for any individual to make fully
informed decisions about running vast entities like large firms and nations. Leaders
do, of course, have a role to play – inspiring the troops, building teams, representing
the organization. But when it comes to organizational decision making, maybe
America’s national motto, E Pluribus Unum, can be used to new effect. From many
voices, one better decision.
Little Decisions Add Up by Frank Rohde
How well rank-and-file employees make thousands of small decisions influence
everything from profitability to reputation.
Harvard Business Review May 2005
How Business Schools Lost Their Way by James O'Toole
When applied to business - essentially a human activity in which judgements are
made with messy, incomplete, and incoherent data - statistical and methodological
wizardry can blind rather than illuminate.
Most business issues facing leaders are, in the final analysis, questions of judgment.
What looks like a straightforward financial decision - say to cut costs by relocating a
service centre - often has implications for marketing, sales, manufacturing, and
morale that can't be shoehorned into an equation.
In business research, the things routinely ignored by academics on the ground that
they cannot be measured - most human factors and all matters relating to judgment,
ethics and morality - are exactly what make the difference between good business
decisions and bad ones.
By allowing the scientific research model to drive out all others, business schools are
institutionalising their own irrelevance.
Do they believe that the regard of their peers is more important than studying what
really matters to executives who can put their ideas into practice? Apparently so.
Business professors too often forget that executive decision makers are not fact
collectors; they are fact users and integrators. Thus what they really need from
educators is help in understanding how to interpret facts and guidance from
experienced teachers in making decisions in the absence of clear facts.
Professors often know more about academic publishing than about the problems of
the work place.
Business management is a profession and professions have at least four key elements:
an accepted body of knowledge, a system for certifying that individuals have
mastered that body of knowledge before they are allowed to practice, a commitment
to the public good, and an enforceable code of ethics.
We cannot imagine a professor of surgery who has never seen a patient, or a piano
teacher who doesn't play the instrument, and yet today's business schools are packed
with intelligent highly skilled faculty with little or no managerial experience.
Business education is devoted overwhelmingly to technical training. This is ironic,
because even before Enron, studies showed that executives who fail - financially as
well as morally - rarely do so from a lack of expertise. Rather they fail because they
lack interpersonal skills and practical wisdom; what Aristotle called prudence.
In practice, business schools need a diverse faculty populated with professors who,
collectively, hold a variety of skills and interests that cover territory as broad and deep
as business itself. The task is one of re-legitimizing pluralism.
Your company's Secret Change Agents by Jerry Sternin
Bridging the gap between what is happening and what is possible is what change is all
about. The traditional process for creating organisational change involves digging
deep to uncover the root causes of problems, hiring experts or importing best-of-breed
practices, and assigning a strong role to leaders to champion change. There is a better
method, one that looks for indigenous sources of change. There are people in your
company or group who are already doing things in a radically better way. Seek to
bring the isolated success strategies of these positive deviants into the mainstream.
The key is to engage the members of the community you want to change in the
process of discovery, making them the evangelists of their own conversion
experience.
Step 1 - Make the group the guru. Learn from the people, plan with the people.
"When the task is accomplished, the people all remarked we have done it ourselves." Lao Tsu. Step 2 Reframe through facts. Enlist the people by agreeing what needs to
be done. Step 3 - Make it safe to learn. Some problems can be solved only by those in
the trenches. Step 4 - Make the problem concrete. Step 5 Leverage social proof. Step
6 Confound the immune defence response.
The positive deviance approach requires a role reversal in which experts become
learners, teachers become students, and leaders become followers. Leaders must
relinquish to the community the job of chief discoverer. Instead of being CEO - Chief
Expert Officer - the leader becomes CFO - chief facilitation officer - whose job it is to
guide the positive deviance process as it unfolds.
People are much more likely to act their way into new thinking than think their way
into new acting.
Practice makes perfect
Old line companies should set up business laboratories, running many small
experiments to discover and incubate new ideas and business models. Start with what
works in practice, build a hypothesis about why it works, and then test the hypothesis.
Culture matters most by Gregory T Carrott.
Changing a company's culture is best achieved by continually hiring people who
represent the direction in which you are headed.
Creating a living brand by Venkat Bendapudi
Wawa and QT (convenience stores) demonstrate the power - even in minimum-wage
businesses, of investment in employees to create a positive customer experience. QT
insists on hiring 'nice people' who like people, because that's a tough quality to teach;
it is either present or not. Other key qualities for QT hires include the ability to work
in teams, the humility to learn from others, and an appreciation for diversity. Wawa
and QT get more from their people because they expect more. One way they
communicate expectations is through training.
Investments in people go well beyond the initial hire. Wawa encourages its people to
pursue degrees in a field of study - philosophy, biology, history - and reimburses
tuition at three colleagues with which it has relationships. The emphasis on learning
helps Wawa be an employer of choice even though its pay is only on par with other
companies in its market.
Depending on tenure, employees receive ten to 25 days of vacation, plus ten days of
sick pay, and they can purchase an extra two weeks of vacation.
"The people who work at the stores seem to be glad to be there, and they seem to like
one another."
Both companies have strong commitments to local charity causes.
At first glance. the investment that Wawa and QT make in their living brands may
seem excessive. Executives are quick to agree that both organisations spend more
than their competitors. "How can they afford to do that?" The leaders of these two
companies wood reply: "How can you afford not to?"
Harvard Business Review April 2005
The Quest for Customer Focus. by Ranjay Gulati and James B. Oldroyd
RBC (Royal bank of Canada) thought that making banking as convenient as possible
was a key customer desire. But a customer survey clearly showed, customers want a
bank that demonstrably cares about them.
RBC has learned to reorient its focus of its entire organization away from products
and distribution towards the real needs of the customer.
Customer focused companies consistently embrace three concepts. First they know
they can become customer focused only if they learn everything there is to learn about
their customers, at the most granular level, creating a comprehensive picture of each
customer's needs - past, present and future. Second, they know that this picture is
useless if employees cannot or won't share what they learn about customers, either
because its inconvenient or because it doesn't serve their interests. Finally they use
this insight to guide not only their product and service decisions but their basic
strategy and organizational structure as well.
Over time these companies enable and enforce coordination between internal units at
progressively more sophisticated levels, they find new ways to manage the flow of
information, they develop routines for decision making that incorporate customer
preferences, and, ultimately, they shift the locus of their customer-focused efforts
away from a centralized hub to a more disbursed set of activities that spans the entire
enterprise.
Harvard Business Review March 2005
Six key points from six good articles!






It is profitable/ beneficial to retain your female talent. This may require a new
degree of flexibility and ensuring the job is worth going to, particularly as far
as non-monetary factors are concerned.
Networking is crucial and requires alignment of incentives and work
management practices for successful implementation
Everybody needs positive feedback, even though some of our team tried to
pretend they didn’t. We want a culture that makes people stick around for
reasons other than money. /Dell/
Internal friction is often caused by unaddressed strains within an organization
requiring setting up methods to track conflict and examine its causes.
Is what you measure relevant for the customer? If not, change the way you
measure. Are you really about trying to make your customer succeed?
Great managers discover what is unique about each person and then capitalize
on it. Average managers play checkers while great managers play chess.
[email protected]
Off-Ramps and On-Ramps, by Sylvia Ann Hewlett and Carolyn Buck Luce
I have taken an interest in Diversity for some time. I think this article is a very
important piece of work. Fostering diversity by making conditions for women to
continue their careers has huge potential to contribute to business success. This article
and my own observations also suggest that being onto something good – i.e. treating
each other well and doing well to customers and to the community and building a
strong positive community feeling around the brand will be increasingly important.
37 % of highly qualified women report that they have left work voluntarily at some
point in their careers, usually with some reason related to ‘care’
40 % of women felt that husbands created more work in the home than they
performed.
17 % of women say the quit because their job wasn’t satisfying
6 % only left because the job was too demanding
When women feel hemmed in by rigid policies or a glass ceiling they are much more
likely to respond to the pull of a family
32% of women cited the fact that one income was enough for our family to live on as
a reason contributing to ‘off-ramp’
24 % of men ‘off-ramp’ usually for switching careers, obtaining training or to start
their own business.
93 % of women who are ‘off-ramped’ want to return to their careers
46 % of these cite reasons for wanting to return relating to having their own income
Only 74 % of ’off-ramped’ women who want to return to their careers manage to do
so. ‘Off-ramps’ are around every curve in the road, but once a woman has taken one,
‘on-ramps’ are far and few between and extremely costly. Two thirds of women find
flexible work arrangements very important to them.
Like it or not, large numbers of highly qualified women need to take time out. The
trick is to help them maintain connections that will allow them to come back from that
time without being marginalized for the rest of their careers.
54 % of women looking for an ‘on-ramp’ want to change their careers from corporate
sphere to the not-for-profit sphere
58 % of collage graduates are women and nearly half of professional graduates.
CEOs are wondering how they will find enough high-calibre talent to drive growth.
The winning strategy revolves around the retention and reattachment of highly
qualified women. The talent is there. The challenge is to create the circumstances that
allow business to take advantage of it over the long run.
A practical Guide to Social Networks by Rob Cross, Jeanne Liedtka and Leigh
Weiss
Executives can do a tremendous amount to create an environment that allows
networks and collaboration to emerge in a productive fashion. This is a holistic
challenge. Simply introducing a collaborative technology, tweaking incentives, or
advocating cultural programs to promote collaboration is usually insufficient. Rather,
leaders must also align work management practices, technology, and human resource
practices. And beyond organizational architecture, specific cultural values and
leadership behaviour can have a striking effect on patterns of collaboration.
Execution Without Excuses an interview with Michael Dell and Kevin Rollins.
We are pretty complimentary. We’ve learned over the years that each of us is right
about 80 % of the time, but if you put us together, our hit rate is much, much higher.
We each think about a slightly different set of things, but there’s a lot of overlap. /
Dell/
Michael and I also went through a 360-degree feedback process. Our executive team
told me that I sometimes acted as though I had all the answers and that I could come
across as arrogant an aloof. /Rollins/
They told me I didn’t give enough positive feed back. That was because I’ve never
required a lot of personal recognition myself. I’ve already gotten way more than I
need. I am actually suspicious when I get positive feed back. /Dell/
This was a blind spot for both of us, because personally we’ve never needed a lot of
outside validation. And we created a management team that didn’t need it because we
never gave it to them. We thought, “If you need to have someone tell you you’re
good, you probably don’t belong at Dell. You’re obviously not strong enough to be
here.” /Rollins/
I also learned from the 360-degree reviews that I needed to do a better job of
connecting with people – relating to people as human beings who wanted connection
and recognition, not mere abstract objects doing work. I’ve always enjoyed business
problems and didn’t feel as much need for connection as our team clearly wanted. It
took me a while to see how important this quality of relationships is in building
loyalty to the company. /Dell/
We just didn’t get it. That was a mistake, because obviously everybody needs positive
feedback, even though some of our team tried to pretend they didn’t. /Rollins/
We want to have leaders that other companies covet. We want a culture that makes
people stick around for reasons other than money. We ant Dell to be such a great
place to work that no one wants to leave. /Rollins/
Want Collaboration – Accept and Manage Conflict by Jeff Weiss and
Jonathan Hughes
Most companies respond to the challenge of improving collaboration in entirely the
wrong way. They focus on the symptoms (“Sales and delivery don’t work together as
closely as they should”) rather than on the root cause of failures in cooperation:
conflict. The fact is you can’t improve collaboration until you’ve addressed the issue
of conflict.
Because internal friction is often caused by unaddressed strains within an organization
or between an organization and its environment, setting up methods to track conflict
and examine its causes can provide an interesting new perspective on a variety of
issues.
Market Busting, Strategies for Exceptional Business Growth by Rita
McGrath and Ian MacMillan
Changing your unit of business, or radically changing your key metrics, can be a
powerful engine for growth, particularly for early movers. If you can figure out
quickly how to help and improve a customer’s core performance the constraints that
tied you down in the past can melt away. You can begin to price your products based
on their value to your customers, not according to low-margin commodity pricing.
You can be more proactive; your business and your incentives will be aligned with
what your customers care about. In the best case, you can create new shareholder
value for your company because you are expanding the pool of problems that your
company can address.
More often than not, companies are moving away from selling pure product and
toward selling a product-service mix or even a pure service.
Identify your unit of business and associated key metrics. It should be easy to
determine what your current unit of business is. What do you charge for? When you
send customer invoices, what do you bill for? Try to spell it out in the simplest terms
possible: “We make money by billing our customers or clients for ________.”
Next be critical. Does what you sell really reflect the value you create for customers?
If you sell a product, could you redefine it to reflect the benefits or service yielded by
that product? If you sell a unit of time, could you instead sell the outcome that the
customer wants? A good general guideline is to try to align your unit of business with
some performance outcome that is relevant to your customer.
What Great managers Do by Marcus Buckingham
Great managers discover what is unique about each person and then capitalize on it.
Average managers play checkers while great managers play chess. The difference? In
checkers all the pieces are uniform and move in the same way; they are
interchangeable. They all move at the same pace, on parallel paths. In chess each type
of piece moves in a different way, and you can’t play if you don’t know how each
piece moves. Great managers know and value the unique abilities and even the
eccentricities of their employees, and they learn how best to integrate them into a
coordinated plan of attack.
What you need to know about each of your direct reports: What are her strengths?
What are the triggers that activate those strengths? What is her learning style?
Harvard Business Review February 2005
Springboard to a Swan Dive by Ajit Kambil and Bruce Beebe
One of the most important questions before joining a new board is: “Do I have the
time to do it justice?” In today’s business world your reputation and prospects are
only as bright as the performance of the last board you served on. Board members
tend to be judged on their collective actions, regardless of their individual attempts to
do the right thing.
The decision to join another company’s board is as momentous as the decision to
enter into a joint venture with that company. Both can put a person’s and company’s
reputation at future risk. Asking questions that management does not want to hear is
necessary for being a good director.
Even in today’s business environment, directors who put in the time, act in good faith,
and have the skills necessary to understand the company’s business incur minimal risk
of personal liability. They also realize intangible benefits from their board service,
some of which can be quite valuable.
Ending the CEO Succession Crisis by Ram Charan
In CEO succession it takes a ton of ore to produce an ounce of gold. CEO tenure
continues to shrink. Booz Allen Hamilton reports that the global average is now just
7.6 years, down from 9.5 years in 1995. And two out of every five new CEOs fail in
the first 18 months. The problem isn’t just that more CEOs are being replaced. The
problem is that, in many cases, CEOs are being replaced badly. 55% of outside CEOs
who departed were forced to resign compared with 34 % of insiders.
There is nothing intrinsically wrong with charisma, though some criticize it as the
sheep’s clothing in which hubris lurks. But too often directors become so focuses on
what candidates are like that they don’t press hard enough to discover what candidates
can and cannot do.
Directors should personally get to know the company’s rising stars. The choice of the
successor belongs not to the CEO but to the board. The key responsibility for boards
is CEO succession.
Breakthrough Ideas for 2005
Flipping without flopping by Roderick M. Kramer
Leaders and the public must recognize that changing one’s mind does not signal an
inability to lead. Rather it signals an ability to learn. Changing ones mind is a way of
saying I am wiser today than I was yesterday.
Everybody into the Gene Pool by Julia Kirby
An organization works the way it does mainly due to the interaction of four key
elements: structure, decision rights, motivators, and information.
Companies can improve through sustained effort. This is what the company must
learn to do better: Balance the managerial demands of today and tomorrow; create
talent multipliers that amplify people’s contributions to produce a superior return on
salary investments; apply technology strategically rather than for incremental
productivity gains; focus on a select few (but diverse) aspects of the business that are
critical to success; and continuously review the organization’s vitality.
Demand –Side Innovation by Jeffrey F. Rayport
Demand side innovation is a different animal and companies need to manage it
differently. It is not about product features of functions but about how a company
orchestrates its customers’ interactions and relationships. Its innovation with respect
to how companies go to market, as opposed to what they bring to market. Of course,
every manager considers these questions today, but few companies have thought
through the implications deeply. As demand side innovation becomes the central
innovation process within most companies, managers can no longer relegate it to a
secondary role. How companies go to market will determine who wins and loses the
game.
Seek Validity, Not Reliability by Roger L. Martin
Corporations believe that they face problems of ethics and credibility, but the
underlying issue may well be a crisis of meaning. CEOs complain that investors only
care about quarterly earnings - not about companies' long term health or the broader
role they play in society. That's not all. Customers feel disappointed by the lack of
warm, human connection with the companies that supply them. Employees,
particularly young ones, worry that there's nothing meaningful about their work that
it's only about the money. In addition, social activists excoriate businesses, especially
transnational corporations, for their lack of conscience. Yet companies pay little
attention to the issue of how people find meaning in economic matters. Businesses
have only themselves to blame. Corporate processes and systems have created and, in
fact, exacerbated the lack of meaning.
Six Sigma, CRM, Sarbanes – Oxley, and most other corporate systems have one thing
in common: They are reliability – oriented processes. They are intended to produce
identical or consistent results under all circumstances, often by analyzing objective
data from the past. For instance, a perfectly reliable poll would be able to produce the
same result from ten random samples of voters. By contrast, a perfectly valid poll
would be able to predict an election’s winner.
Companies don’t realize that when they make systems more reliable, they render them
less valid or meaningful. In other words, the processes produce consistent outcomes,
but the result may be neither accurate nor desirable. That’s because, to make their
process more reliable, companies have to reduce the number of variables and
standardize measurements. To achieve high validity, however, systems must take into
account a large number of variables and subjective measurements. Adding squishy
variables and using gut feel allows for outcomes that are more accurate, even if the
process may not be able to deliver accurate results consistently.
While it would be optimal to achieve both validity and reliability, companies have
mostly favoured reliable processes, for two reasons. First, valid systems require the
use of subjective or qualitative data, and companies have an aversion to biases.
Second, reliable processes result in claims that are provable because they are based on
past data; only the future can provide confirmation of a process’s validity.
Unfortunately, companies’ obsession with reliability hasn’t prevented them from
getting on the wrong side of consumers or being ambushed by new rivals. Indeed, the
quest for greater reliability has created corporations that make little effort to consider
the purpose or meaning behind the business results that are endlessly crunched out.
A company that produces reliable, predictable, but meaningless results is not unlike a
well-tuned car that runs full speed off a cliff. To save themselves, corporations will
have to figure out how to become more welcoming for people who are comfortable
handling fuzzy data, using their judgment, and creating a sense of purpose in the
workplace. For instance, CEOs should go out and talk in person to customers, even if
the sample size isn’t statistically significant market research. Rather than focusing on
managing corporate earnings, CFOs should concentrate on helping managers better
understand the economics of their business.
Senior executives also need to stop promoting managers based on the consistency of
their track records and start promoting them for braking out of the box. Boards must
get used to approving plans based on the logic of what might be rather than on
regression of what have always been. They need to understand that variability in
outcomes is as likely to be sign of creativity as a sign of bad management and that the
more they drive out variability, the more they ensconce mediocrity. Finally, stock
analysts must realize that when they insist on reliable earnings, they drive out the
creativity, innovation, and emotional connection with consumers and employees that
together produce long-term growth in those earnings.
Wanted: A Continuity Champion by Thomas Stewart
On the one hand, leaders who spend too much time midwifing change may neglect
traditional core business. On the other hand, the defenders of status quo too often
appear to be – and are – knee-jerk naysayers who champion the wrong continuity.
It is true that without change a company goes nowhere but down. Also, corporate
revolutionaries need all the help they can get, especially in large organizations. For
one thing, the employees who are drawn to big companies are likely to value stability.
For another, big company processes by their nature slow change to a walking pace.
But the role of the champion of continuity is every bit as challenging. The job is to get
maximum effectiveness in coping with change, combined with minimum disruption
of the business that, after all, got you to where you are today.
Define what lies outside the reach of change. It may be a business, like mainframes; it
may be a process, like leadership development; it may be a belief, like Johnson and
Johnson’s credo. Every business worth working for has something worth fighting for,
even in the teeth of tremendous pressure for change.
A Taboo on Taboos by Leigh Buchanan
The worst thing with elephants in the room is that if you ignore them long enough,
they become invisible. That’s what happens when companies avoid subjects because
they are politically dangerous, socially unacceptable, or just too dire to contemplate.
The result can be failure to anticipate predictable developments and consequent errors
in strategy.
Toward a New Science of Services by Henry W. Chesbrough
Consider than in shifting from products to services, a supplier does more for the
customer than it used to and thereby allows the customer to off-load some work and
thus do more for his own customer. In a phrase favoured by high-tech executives, the
customer moves “up the stack” in the value-added chain. The result is enhanced
standard of living and prosperity – an extremely important outcome in an advanced
economy.
Don’t Believe Everything You Read by Jeffrey Pfeffer
Be alert for half-truths – ideas that are partly or sometimes right but also partly or
sometimes wrong. Many ideas fall into this category, such as the importance of
financial incentives and the notion that work is so distinct from the rest of life that
people can’t be themselves on the job. Advice is more likely to be good when it
acknowledges its own downsides and suggests ways to cope with them. The risk may
be worth taking and the management approach may be useful, but in order to make
sensible judgments, you need to know the whole story.
Understand cognitive biases. One such bias is the desire to hear (and deliver) good
news; another is to prefer ideas we agree with and people who agree with us. Both of
these come into play when we work with consultants. However, people benefit most
from constructive criticism that actually teaches them to do things better. The best
management advice need not be downright painful. But like diet advice, if it doesn’t
cause at least a bit of discomfort, it is probably not going to have much impact.
Notes by Frank Olsson 19th February 2005
Harvard Business Review January 2005
This is a Leadership / management oriented issue with many interesting articles.
Managing Oneself by Peter Drucker
Most people think they know what they are good at. They are usually wrong. More
often people know what they are not good at - and even then more people are wrong
than right. And yet, a person can perform only from strength.
A planner may find that his beautiful plans fail because he does not follow through on
them. Like so many other brilliant people, he believes that ideas move mountains. But
bulldozers move mountains; ideas show where the bulldozers should go to work.
Manners - simple things like saying 'please' and 'thank you' and knowing a person's
name or asking after her family - enable two people to work together whether they
like each other or not. Bright people, especially bright young people, often do not
understand this.
It takes far more energy and work to improve from incompetence to mediocrity than it
takes to improve from first rate performance to excellence. And yet most people -
especially most teachers and most organizations - concentrate on making incompetent
performers into mediocre ones. Energy, resources, and time should go instead to
making a competent person into a star performer.
Do not try to change yourself -you are unlikely to succeed. But work hard to improve
the way you perform. And try not to take on work you cannot perform or will only
perform poorly.
"Yes I will do that. But this is the way I should be doing it. This is the way it should
be structured. This is the way the relationships should be. These are the kind of results
you should expect from me, and in this timeframe, because this is who I am."
In the late 1960's no one wanted to be told what to do any longer. Young men and
women began to ask, what do I want to do? And what they heard was that that the
way to contribute was to 'do your own thing.' Very few people who believed that
doing one's own thing would lead to contribution, self-fulfilment, and success
achieved any of the three. But still, there is no return to the old answer of doing what
you are told or assigned to do. Knowledge workers in particular have to learn to ask a
question that has not been asked before: What should my contribution be? To answer
it, they must address three distinct elements: What does the situation require? Given
my strengths, my way of performing, and my values, how can I make the greatest
contribution to what needs to be done? And finally, what results have to be achieved
to make a difference?
Today, most work is knowledge work, and knowledge workers are not 'finished' after
40 years on the job, they are merely bored.
It is important to develop a second major interest (maybe philanthropic) early (say
late 30's). No one can expect to live very long without experiencing a serious setback
in his or her life or work. In a society where success has become so terribly important,
having options will become increasingly vital. In the knowledge society we expect
everyone to be a success. This is clearly an impossibility. For a great many people
there is at best an absence of failure.
Managing one-self demands that each knowledge worker think and behave like a
chief executive officer. To shift from manual workers who do as they are told to
knowledge workers who have to manage themselves profoundly challenges social
structure.
Almost Ready, How Leaders Move Up by Dan Ciampa
More organisations go outside their own ranks to hire designated successors - but
disturbingly, once hired, only one-quarter of these candidates were successful at either
being named CEO or at staying in the CEO job for more than two years.
Although 40% of the polled chairmen and CEOs planned to retire within four years,
55% of the ones aged 61 or older had not settled on a succession plan.
CEOs receive little actionable feed back once they become designated successors, so
they must sharpen their self awareness as well as their sensitivity to the wants and the
needs of bosses and influential peers; they must learn to conduct themselves with a
level of maturity and wisdom that signals to boards as well as CEOs that they are
ready - not just almost ready - to be chief executive.
He is unlikely to reach his goals until he stops blaming others and considers what he
did or did not do to cause his predicament. Many candidates neglect to see that they
need other people's help to succeed at this level and that the test is to embrace a new
culture, finding value in it, and appreciating perspectives other than your own.
Understanding who must be won over to your point of view is a key part of managing
the succession process.
He didn't understand that it was more important for him to develop a relationship with
his boss than it was for his boss to create one with him. He needed to be perceptive
and flexible enough to adapt to his boss's style.
She was just jumping in to solve the problems rather than making sure her people
solved them. Doing things herself was the way she had gotten ahead, but she didn't
understand that at this level it was going to drag her into too much detail.
You need to be concerned with what is best for the whole company.
High-level managers give credit to others involved in successes without diminishing
their own recognition. Being a leader among peers is what all senior executives have
done to get where they are; elite executives have learned how to do it so that their
peers become better performers.
How to Play to Your Strengths by Laura Morgan Roberts & Co-writers.
While people remember criticism, they respond to praise. The former makes them
defensive and therefore unlikely to change, while the latter produces confidence and
the desire to perform better.
You may have more to gain by developing your gifts and leveraging your natural
skills than by trying to repair your weaknesses.
Compose your own self portrait which you can use as a reminder of your previous
contributions and as a guide for future action.
Once you discover who you are at the top of your game, you can use your strengths to
better shape positions you choose to play - both now and in the next phase of your
career.
The new road To the Top by Peter Cappelli and Monika Hamori
Only 26 % of the top Fortune 100 1980 were still there in 2001. Loosing
industries were Automotive 6.9% - 2.4%, Manufacturing 17.3% - 1.1%; Steel 5.4% 0.7% and winners were Financial services 0% - 16.6%, Retail 2.6% - 14.4%, Health
Care 0.7% - 5.3%, Computers 2.6% - 8.9% and Communications 3.4% - 9.1%.
While women filled just 11% of executive positions in 2001, that's a substantial
improvement; in 1980 the figure was zero.
There are huge advantages to work for a growing firm. Executives are much more
likely to be promoted in firms with healthy growth rates than in stagnating companies.
Younger firms offer faster advancement, perhaps because of their tendency to have
flatter hierarchies.
Through the 1970's, marketing was the preferred track into the executive suit, but the
results here suggest that finance now offers by far the best path.
Research suggests that the odds of advancement fall as a person's tenure in a job
grows.
The most important experiences and the hardest to get) will increasingly be those that
involve hands-on responsibility for profit and loss.
Managing your boss by John I. Gabarro and John UP. Kotter
Effective managers make a point of seeking the information and help they need to do
a job instead of waiting for their bosses to provide it.
Managing a situation of mutual dependence among fallible human beings requires the
following:
1. You have a good understanding of the other person and yourself, especially
regarding strengths, weaknesses, work styles, and needs.
2. You use this information to develop and manage a healthy working relationship one that is compatible with both people's work styles and assets, is characterized by
mutual expectations, and meets the most critical needs of the other person.
Managers who work effectively with their bosses seek out information about the
boss's goals and problems and pressures.
The boss is only half of the relationship - you are the other half, as well as the part
over which you have more direct control.
Bosses don't have unlimited time, encyclopaedic knowledge, or extrasensory
perception; nor are they evil enemies.
Overloaded Circuits / Why Smart People Underperform by Edward ME.
Hallowell
Modern office life and an increasingly common condition called "attention deficit
trait" are turning steady executives into frenzied underachievers.
When the frontal lobes approach capacity and we begin to fear that we can't keep up,
the relationship between the higher and lower regions of the brain takes an ominous
turn. Thousands of years of evolution have taught the higher brain not to ignore the
lower brain's distress signals. In survival mode, the deep areas of the brain assume
control and begin to direct the higher regions. As a result, the whole brain gets caught
in a neurological catch-22. The deep regions interpret the messages of overload they
receive from the frontal lobes in the same way they interpret everything: primitively.
They furiously fire signals of fear, anxiety, impatience, irritability, anger or panic.
These alarm signals shanghai the attention of the frontal lobes, forcing them to forfeit
much of their power. Because survival signals are irresistible, the frontal lobes get
stuck sending messages back to the deep centres saying, 'Message received. Trying to
work on it, but without success.’ These messages further perturb the deep centres,
which send even more powerful messages of distress back up to the frontal lobes.
Meanwhile, in response to what's going on in the brain, the rest of the body particularly the endocrine, respiratory, cardiovascular, musculoskeletal, and
peripheral nervous systems - has shifted into crisis mode and changed its baseline
physiology from peace and quiet to red alert. The brain and body are locked in a
reverberating circuit while the frontal lobes lose their sophistication, as if vinegar
were added to wine. In this state, EF reverts to simpleminded black-and-white
thinking; perspective and shades of grey disappear. Intelligence dims. In a futile
attempt to do more than is possible, the brain paradoxically reduces its ability to think
clearly.
The neurological event occurs when a manager is desperately trying to deal with more
input than he possibly can. In survival mode, the manager makes impulsive
judgments, angrily rushing to bring closure to whatever matter is at hand. He feels
compelled to get the problem under control immediately, to extinguish the perceived
danger lest it destroy him. He is robbed of his flexibility, his sense of humour, his
ability to deal with the unknown. He forgets the big picture and the goals and values
he stands for. He loses his creativity and his ability to change plans. He desperately
wants to kill the metaphorical tiger. At these moments he is prone to melting down, to
throwing a tantrum, to blaming others, and to sabotaging himself. Or he may go in the
opposite direction, falling into denial and total avoidance of the problem attacking
him, only to be devoured. This is ADT at its worst.
The more isolated we are, the more stressed we become. The bottom line is this:
Fostering connections and reducing fear promote brainpower. When you make time at
least every four to six hours for a 'human moment,' a face to face exchange with a
person you like, you are giving your brain what it needs.
Take physical care of your brain. Sleep, a good diet, and exercise are critical for
staving off ADT. Though this sounds like a no-brainer, too many of us abuse our
brains, by neglecting obvious principles of care.
Sleep deprivation engenders a host of problems, from impaired decision making and
reduced creativity to reckless behaviour and paranoia.
The complex carbohydrates found in fruits, whole grains, and vegetables are good for
you.
Physical exercise induces the body to produce an array of chemicals that the brain
loves, including endorphins, serotonin, dopamine, epinephrine, and norepinephrine, as
well as two recently discovered compounds, brain-derived neurotropic factor (BDNF)
and nerve growth factor (NGF). Both these promote cell health and development in
the brain, stave off the ravages of aging and stress, and keep the brain in tip-top
condition.
To stave off the symptoms of ADT while you're at work, get up from your desk and
go up and down a flight of stairs a few times or walk briskly down the hallway. These
quick, simple efforts will push your brain's reset button.
Helping people work to their strengths is not just a mark of sophisticated
management; it's also an excellent way to boost worker productivity and morale.
What's Your Story? by Herminia Ibarra and Kent Lineback
Creating and telling a story that resonates also helps us believe in ourselves.
Every effective story must elicit: "What happened next?"
Telling them well involves baring some emotion. You have to let the listener know
that something is at stake for you personally.
We must invite questions about who we are and whether we can be trusted.
If you can make your story of change and re-invention seem coherent, you will have
gone far in convincing the listener.
Coherence is the solid ground under our feet. Failure to acknowledge a large degree
of change will put off listeners and undermine trust. Incorporate learning and selfdiscovery into life stories. Be damn sure that you are doing what you want to be
doing.
If you can create a sense that your life hangs (and will hang) together, you'll be free to
incorporate the dramatic elements of change and turmoil and uncertainty into your
story that will make it compelling.
The Best advice I Ever Got by Daisy Wademan
People are the only thing that matters, and the only thing you should think about,
because when that part is right, everything else works.
Real happiness comes from striving to do something that isn't easy - and then
succeeding in doing it.
Trust in others is implicit in all of my interactions; I don't run around doubting the
people who work with me. Trust brings out the best in people: If they sense they are
trusted, they will rise to the occasion.
Do Your Commitments match Your Convictions by Donald N. Sull and Dominic
Houlder
Many successful people feel a disconnect between their daily activities and their
deepest desires.
If your values and your day-to-day commitments are closely aligned, we congratulate
you: many people find it difficult to strike and consistently maintain this balance.
Some of us experience commitment creep. We often commit ourselves without really
thinking about what we are taking on.
Notes by Frank Olsson 24th January 2005
HBR December 2004
Best way forward by Jeffrey F Rayport and Bernard J Jaworski
It is about face. As the focus of competition shifts from what companies do to how
they do it, the new frontier of competitive advantage lies in the quality of interactions
and relationships companies can establish with their customers and markets. So it is
indeed fortunate that frontline service is undergoing a revolution of its own. Advances
in service technology have opened up new possibilities for how companies can create
value not only through improvements in productivity but through better interactions
with their customers.
Now with both motive and means, businesses must change fast to embrace these new
realities. Reengineering the front office will eliminate and displace many jobs, but it
will also inevitably create new opportunities for human labour. Getting the balance
right will require business leaders to develop a subtle understanding of how to
manage the intelligent division of labour between people and machines. A company’s
interface system works best when it combines the best of what people and machines
can do. This task of managing interfaces and interface systems will prove strategic
imperative for many companies. Those who crack the code of interface systems will
own the competitive future.
Leading Change When Business is Good. IBM CEO Samuel J. Palmisano
interviewed by Paul Hemp and Thomas A. Stewart.
You just can’t impose command-and-control mechanisms on a large highly
professional work force. I am not talking about our scientists, engineers, and
consultants. More than 200,000 of our employees have college degrees. The CEO
can’t say to them, “Get in line and follow me.” Or “I’ve decided what your values
are.” They’re too smart for that. And as you know, smarter people tend to be, well, a
little more challenging; you might even say cynical.
IBM was traditionally viewed as large, successful, “well managed” company. That
was a compliment. But in today’s fast-changing environment, it’s a problem. You can
easily end up with a bureaucracy of people overanalyzing problems and slowing down
the decision making process. The challenge has shifted. Instead of galvanizing people
through fear of failure, you have to galvanize them through hope and aspiration. You
lay out the opportunity to become a great company again. If most people in our
company get dedicated to our values and what we are trying to accomplish I can be
confident about the future.
The key values are: “1. dedication to every client’s success; 2. innovation that matters
– for our company and for the world; 3. trust and personal responsibility in all
relationships.”
The Path to Corporate Responsibility by Simon Zadek.
The five stages of Organisational learning. 1. It is not our job to fix that. (Denial) 2.
We will do just as much as we have to. (Compliance) 3. Incentives and measures need
to be ‘environment’ friendly. (Aspiring to look good) 4. It gives us a competitive
edge. (making it work for you) 5. We need to make sure everybody does it.
(responsible practices important for the whole industry).
How to Grow Great Leaders by Douglas A Ready
Competition has changed as has customer expectations. Leadership development has
not kept pace. Many companies have created new organisational structures to
accompany the need for a broader perspective on the business, but the vast majority of
leadership development initiatives still take place in the very silos the organisations
are trying to transform. When people are trapped in business units, functions, or
regions, they’re at risk of becoming prisoners of zero-sum thinking.
The responsibility for solving problems rests primarily with a company’s senior
executives. Only they have their hands on all of the necessary levers to change. Top
managers must work tirelessly to break down their silos and forge imaginative career
paths. They must create robust venues for managers to openly discuss the tensions
that are a natural by-product of managing complexity. They must realign reward
systems and motivate managers to lead according to the realities of today’s
competitive environment. And they must acknowledge that there will be no easy
answers and take decisive action instead of running from the ambiguity surrounding
the challenge.
The Things They Do for Love by Leigh Buchanan.
Some organisations are enjoying up to 20 % higher levels of employee performance
not because they pay more or provide better benefits but because they let each
employee know how important they are to the success of the business, give them lots
of opportunity to contribute, and help them believe in the worth and credibility of the
organisation. Employee engagement is not only crucial to building a high-performing
work force, it is also an essential defence against attrition for all companies worried
about tightening labour markets.
HBR November 2004
Go for a business that any idiot can run - because sooner or later any idiot probably is
going to run it. Peter Lynch - ex manager of Fidelity's Maggellen Fund.
Enough Leadership by Henry Mintzberg.
Good leaders care more than they cure, they connect a lot more than they control, they
demonstrate a lot more than they decide - not least through their own compensation
and the retention of their people. These leaders are not perched on the top. They work
throughout. We talk so much about knowledge workers and networks yet remain so
enamoured with top management. A manager who sits on top of a network is out of it.
Unhappy is the land that has no heroes," says a character in a Bertol Brecht play.
"No," replies another. "Unhappy is the land that needs heroes." It is time to bring
management and leadership back together and down to earth.
Getting past the Yes! Negotiating as if Implementation mattered by Daniel Ertel.
To be successful, negotiators must recognize that signing a contract is just the
beginning of the process of creating value. The very person everyone thinks is crucial
to the deal - the negotiator - is often the one that undermines the partnership's ability
to succeed. The real challenge lies not in hammering out little victories on the way to
signing on the dotted line but in designing a deal that works in practice.
People who view the contract as the conclusion and see themselves solely responsible
for getting there behave very differently from those who see the agreement as just the
beginning and believe their role is to ensure that the parties involved actually realise
the value they are trying to create. These two camps have conflicting opinions about
the use of surprise and the sharing of information. They also differ in how much
attention they pay to whether the parties involved actually realize what they are trying
to create.
Being a good deal maker means being a good closer. Frequently a signed contract
represents a commitment to work together to create value. When that's the case, the
manner in which parties 'get to yes' matters a great deal.
A New Mind set.
Five approaches can help your negotiation team transition from a deal maker
mentality to an implementation mind-set.
1. Start with the end in mind.
Imagine the deal 12 months out: What has gone wrong? How do you know if it's a
success? Who should have been involved earlier?
2. Help them prepare too.
Surprising the other side doesn't make sense because if they promise things they can't
deliver, you both lose.
3. Treat alignment as a shared responsibility.
If your counterpart’s interests aren't aligned, it is your problem too.
4. Send one message.
Brief implementation teams on both sides of the deal together so everyone has the
same information.
5. Manage negotiations like a business process. Combine a disciplined preparation
process with post negotiation reviews.
Most competitive runners will tell you that if you train to get to the finishing line, you
will loose the race. To win you will have to envision your goal as just beyond the
finishing line so you will blow right past it at full speed. The same is true for a
negotiator. If signing the document is your ultimate goal, you will fall short of
winning the deal.
The product of negotiations isn't a document; it's the value produced once the parties
have done what they agreed to do. Negotiators who understand that prepare
differently than deal makers do. They don't ask: "What might they be willing to
accept?" but rather "How do we create value together?" They also negotiate
differently, recognizing that that value comes not from a signature but from real work
performed long after the ink has dried.
The most expensive deal is one that fails.
Bringing Customers into the Boardroom by Gail J McGovern, David Court, John
A Quelch, and Blair Crawford.
Most corporate boards are completely in the dark about their companies' marketing
strategies. A simple series of management reports can give them the light they need.
In a survey of large US companies, more than one-third reported their boards spend
less than 10% discussing marketing or customer-related issues. It is the board's
responsibility to expose inadequate marketing, direct management to address the
problem, and monitor management's progress. The brand and the company depend on
it. Popular metrics such as customer satisfaction, acquisition, and retention have
turned out to be very poor indicators of customers' true perceptions or the success of
marketing activities.
The board of directors needs to welcome the company’s customers and marketing
strategies into the board room and pay careful attention to them. And marketers need
to start thinking of themselves as general managers who can drive the business fwd
rather than as functional specialists who are isolated from the company's strategy.
Organisations take their cue from the top. When the board turns its attention to the
company’s customers, the entire organisation will become more market driven, more
customer-centric, and more focused on generating organic growth.
HBR October 2004-10-14
Master Class by b Thomas A. Stewart
The more power you have, the more important it is to exercise power collaboratively.
You may get your way acting unilaterally—but almost always at a cost, and usually
you have a smaller stock of power the next time you need it. Power and political
capital grow when you act through others—work with your board, build allies, avoid
unnecessary meddling in the responsibilities of subordinates and colleagues. In sum,
never compete where you don’t have to.
Seven surprises for New CEO’s
by Michael E. Porter, Jay W. Lorsch, and Nitin Nohria
The more power you have, the harder it is to use. While several of the challenges may
appear familiar, we have discovered that nothing in a leader’s background, even
running a large business within his company, fully prepares him to be CEO.
Through our work with new chief executives of major companies, we have found
seven surprises to be the most common. They are important not just for CEOs but for
executives at any level and in any size organization.
Surprise One: You Can’t Run the Company
Almost every new CEO struggles to manage the time drain of attending to
shareholders, analysts, board members, industry groups, politicians, and other
constituencies. CEOs hired from outside struggle to learn how their new company
operates, but those promoted from within work equally hard to separate themselves
from operations and learn the terrain of their outside constituencies. CEOs are
apprehensive about, as one put it, managing the dual roles of Mr. Inside and Mr.
Outside.
The CEO learns often to his shock, that he has to let go of a lot of responsibility—not
just for operating the company but even for knowing what’s going on in it. The
CEO’s greatest influence shifts from direct to indirect means—articulating and
communicating a clear, easily understood strategy; institutionalizing rigorous
structures and processes to guide, inform, and reward; and setting values and tone.
Equally important is selecting and managing the right senior management team to
share the burden of running the company.
Surprise Two: Giving Orders Is Very Costly
The CEO is undoubtedly the most powerful person in any organization. Yet any CEO
who tries to use this power to unilaterally issue orders or summarily reject proposals
that have come up through the organization will pay a stiff price. Giving orders can
trigger resentment and defensiveness in colleagues and subordinates. Usually, power
is best used indirectly.
It is rarely a good idea to unilaterally overrule a thoughtful decision that has cleared
several other organizational hurdles. Indeed, a key indicator the CEO subsequently
used to judge the health of the company’s management processes was how
enthusiastically he could approve the decisions that came his way. The need to
overrule something is a sure sign of a broader organizational failure. A new CEO
must be willing to share power and trust others to make important decisions. The most
powerful CEO is the one who expands the power of those around him.
Surprise Three: It Is Hard to Know What Is Really Going On
Immediately upon appointment, the CEO’s relationships change. Former peers and
subordinates who used to constitute an informal channel—those who could read
between the lines and who really knew what was happening at the ground level—go
on their guard
Several new CEOs stressed the importance of continuing to seek information from
deep within the organization—from employees closest to the front line—even though
that approach might not sit well with managers in the middle.
Surprise Four: You Are Always Sending a Message.
The first big message is in the CEO’s appointment itself. People develop assumptions
and expectations based on the CEO’s background and previous experiences.
Once in the job, the new CEO can no longer afford to have speculative discussions
with employees, because any half-baked idea he puts forth runs the risk of being
latched onto as a good one. A simple, clear message, repeated often and illustrated
with memorable stories, is the best way for a new CEO to master the communication
challenges of the job.
Surprise Five: You Are Not the Boss
Even if the relationship (with the board) isn’t contentious, it’s become a bigger drain
on the CEO’s time and energy. Even if he was promoted from within and was
previously on the board, their interaction with him was probably infrequent and brief.
He has to spend time letting members get to know him and develop confidence in his
ability and judgment. In our experience, it is almost always a bad idea for a
predecessor to remain on the board. At the end of the day, the board—not the CEO—
is in charge. A new CEO who is open with—and creates the opportunity to
collaborate with—his directors will be more likely to garner support from these
bosses.
Surprise Six: Pleasing Shareholders Is Not the Goal
Upon taking office, new CEOs often mistakenly believe that their primary
responsibility is to keep the shareholders happy.
The problem is that defining one’s goal as shareholder approval may not be in the
company’s best interest. Actions and strategies favoured by shareholders (and
analysts) may not benefit the ultimate competitive position of the company. A high
stock price will eventually collapse without the underpinnings of fundamental
competitive advantage. Instead of looking to shareholders for strategic direction, the
CEO must develop and articulate a clear strategy to distinguish the company from
others and address industry fundamentals. But a CEO with the courage to develop and
articulate a sound strategy, even if it is currently unpopular on Wall Street, will
eventually attract the right shareholders—those who buy and hold the stock because
they believe in the big-picture strategy.
Surprise Seven: You Are Still Only Human
Too often, we view CEOs in the cinematic image of indefatigable superhero. Yet they
remain bound by all-too-human hopes, fears, and limits. Invariably CEOs have had to
come to terms with the fact that they can’t do everything well. They have found it
difficult and ego-bruising to accept gaps in their expertise and admit that the job is
more physically and emotionally taxing than any others they have held.
It is essential for new CEOs to make a disciplined effort to stay humble, to revisit
their decisions and actions, to continue to listen to others, and to find people who will
be honest and forthright.
Implications for CEO Leadership
First, the CEO must learn to manage organizational context rather than focus on daily
operations.
Second, he must recognize that his position does not confer the right to lead, nor does
it guarantee the organization’s loyalty.
Finally, the CEO must not get totally absorbed in the role. Even if others think he is
omnipotent, he is still only human. Failing to recognize this will lead to arrogance,
exhaustion, and a shortened tenure. Only by maintaining a personal balance and
staying grounded can the CEO achieve the perspective required to make decisions in
the interest of the company and its long-term prosperity.
HBR July – September 2004
Editorial by Thomas Stewart
The vast majority of top management teams spend too little time together and fritter
away too much of it on hodgepodge of incidentals. Seemingly urgent problems get the
most attention while important issues get pushed to the next meeting.
The problem of dealing with demanding people, such a senior executives, is often
linked to the impossible task of herding cats. The comparison is misleading though, if
you take it to mean ‘you can’t do anything about cats.’ Herding isn’t the same as
managing. Cats can be managed – they just can’t be managed as you would cattle.
Perhaps the most important problems in business are ‘managing cats’ problems.
Getting senior teams to focus on the right issues is one. Another is sharing knowledge.
Stop Wasting Valuable Time
Michael C Mankins
Companies routinely squander their most precious resource - the time of their top
executives. In the typical company, senior executives meet to discuss strategy for only
3 hours a month. And that time is poorly spent in diffuse discussions never even
meant to result in any decision. The price of misused executive time is high. Delayed
strategic decisions lead to overlooked waste and high costs, harmful cost reductions,
missed new product and business development opportunities, and poor long-term
investments. But a few deceptively simple changes in the way top management teams
set agendas and structure team meetings can make an enormous difference in their
effectiveness. Efficient companies use 7 techniques to make the most of the time their
top executives spend together. For example, they make sure they have considered all
viable alternatives before deciding a course of action. And they insist that once a
decision is made, they stick to it.
Seven techniques to control the agenda
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2.
3.
4.
5.
6.
7.
Deal with operations separate from strategy
Focus on decisions, not on discussions.
Measure the real value of every item on the agenda
Get issues off the agenda as quickly as possible
Put real choices on the table.
Adopt a common decision making process and standards.
Make decisions stick.
Diversity as a Strategy
David A Thomas
By the time Lou Gerstner took the helm in 1993, IBM had a long history of
progressive management when it came to civil rights and equal opportunity
employment. But Gerstner felt IBM wasn't taking full advantage of a diverse market
for talent, nor was it maximizing the potential of its diverse customer and employee
base. So in 1995, he launched a diversity task force initiative to uncover and
understand differences among people within the organization and find ways to appeal
to an even broader set of employees and customers. This article stresses that 4 factors
are key to implementing any major change initiative: 1. strong support from company
leaders, 2. an employee base that is fully engaged with the initiative, 3. management
practices that are integrated and aligned with the effort, and 4. a strong and wellarticulated business case for action. All 4 elements have helped IBM make diversity a
key corporate strategy tied to real growth.
‘We made diversity a market based issue. It’s about understanding our markets, which
are diverse and multicultural.’ By deliberately seeking ways to more effectively reach
a broader range of customers, IBM has seen significant bottom line results.
This was a significant philosophical shift – from a long tradition of minimizing
differences to amplifying them and to seizing on the business opportunities they
present.
The sponsor for the white men’s task force was a woman; the sponsor for the
women’s task force was a man. There were certain advantages in having sponsors
who didn’t come from the groups they represented.
Overall, the findings made it clear that workforce diversity was the bridge between
the workplace and the marketplace – in other words, greater diversity in the work
place could help IBM attract a more diverse customer set A focus on diversity was, in
short, a major business opportunity.
It became clear the IBM wasn’t well positioned in relation to the market’s fastest
growing entrepreneurial segments – female and minority owned businesses.
The MD’s efforts have directly translated into hundreds of millions of dollars in new
revenue. And the MD has elevated the company’s overall level of cultural
competence as it responds to the needs of IBM’s diverse customer base.
IBM insisted that the task force create a link between the diversity goals and the
business goals – that this be good business – not good philanthropy. The entire effort
was designed to help the company develop deeper insights into major markets. IBM
needed to get closer to its customers and become more externally focused. It also
needed to focus on talent – attracting, retaining, developing, and promoting the best
people. On both measures, the company has come a long way.
HBR July – August 2004-07-26
Turn Your Budgeting Process Upside Down by Robert A Howell
Budgeting in many organisations is negative, reactive, and depressing. But call it a
“value creating plan,” and the process could be positive, proactive and uplifting.
Many companies use the terms “strategic plan” and “long range plan” when they’re
addressing the longer term future, but when they start to put the numbers together for
next year, they revert to the term “budget.” Not surprisingly, managers think
expansively during the planning effort, but when the budgeting process begins, all that
is pushed aside. Their focus narrows to achieving the desired annual net income.
Funding Growth in an Age of Austerity by Gary Hamel and Gary Getz
A company cannot outgrow its competitors unless it can out innovate them.
A careful analysis of hyper efficient innovators reveals five imperatives for
dramatically boosting innovation efficiency, each of which can be encapsulated in a
simple ratio:
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Raise the ratio of innovators to the total number of employees. The greater the
percentage of employees who regard themselves as innovators, whatever their
formal job descriptions may be, the greater the innovation yield.
Raise the ratio of radical innovation to incremental innovation. The higher the
proportion of truly radical ideas in a company’s innovation pipeline, the higher
the innovation payoff.
Raise the ratio of externally sourced innovation to internally sourced
innovation. The better a company is harnessing ideas and energies from
outsiders, the better its return on innovation investments.
Raise the ratio of learning over investment in innovation projects. The more
efficient a company is at exploring new opportunities, learning much while
risking little, the more efficient its innovation efforts will be.
Raise the ratio of commitment over the number of key innovation priorities. A
firm that is deeply committed to a relatively small number of broad innovation
goals and consistent in that commitment over time, will multiply its innovation
resources.
Get radical! For most companies the issue is less “Are we investing enough in
innovation?” and more “Are we investing enough ideas with the power to make a real
difference to our competitive performance?”
An idea is radical if it meets one or more of three tests:
It changes customer expectations and behaviours. For example, PayPal’s userfriendly service has changed the way people send money to one another.
It changes the basis of competitive advantage. The proliferation of digital cameras, for
instance has altered the basis for competition in the photographic film industry.
It changes industry economics. For example, with its simplified route structure, nofrills service, and flexible work practices, South West Airlines has dramatically
changed the traditional cost structure of airlines.
It is what we think we know already that often prevents us from learning. To generate
radical ideas, you have to teach people to look beyond the conventional.
What are the deep changes in our world that our competitors have underestimated or
ignored?
It is not enough to skimp, scrimp and save. To become a growth champion, your
company must augment, compound, and multiply. It must parlay meagre resources
into radical, growth-generating innovation. It must learn to innovate boldly and
consistently on the cheap.
Middle Managers as Innovator by Rosabeth Moss Kanter
Because middle managers have their fingers on the pulse of operations, they can
conceive, suggest, and set in motion new ideas that top managers may not have
thought of.
Lack of power creates managers who are more concerned about guarding their
territories than about collaborating with others to benefit the organisation.
Creative managers listen to a stream of information from superiors and peers and then
identify a perceived need.
The most successful innovations derive from situations where a number of people
from a number of areas make contributions.
To tackle and solve tricky problems, people need both the opportunities and the
incentives to reach beyond their formal jobs.
HBR June 2004
What makes an Effective Executive by Peter Drucker
Eight practices need to be followed by effective executives:
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They ask: "What needs to be done?"
They ask: "What is right for the enterprise?"
They develop action plans.
They take responsibility for decisions.
They take responsibility for communicating.
They focus on opportunities rather than problems.
They run productive meetings.
They think and say 'we' rather than 'I.'
The answer to the question 'What needs to be done?' almost always contains more
than one urgent task. But effective leaders must focus. They may pick two tasks.
Never more. Other tasks no matter how important or appealing are postponed.
Ask which top task you are best suited to pursue. Concentrate on that. Other tasks you
delegate.
Enterprises perform if top management performs - and don't if it doesn't.
A decision that isn't right for the enterprise will ultimately not be right for the
stakeholders.
The executive must ask: What should the enterprise expect from me over the next 18
months to two years? "What results will I commit to?” “With what deadlines?" "Is the
course of action legal, ethical and compatible with the mission, values and policies of
the organisation?"
The action plan is a statement of intentions rather than a commitment. It must not
become a straitjacket. Without an action plan the executive becomes a prisoner of
events.
Studies of decisions about (appointing) people show that only one-third of choices
turn out to be successful. One-third are likely to be draws - neither successes nor
outright failures. And one-third are failures, pure and simple. Effective executives
know this and check up (six to nine months later) on the desired results, they don't
conclude that the person has not performed. They conclude instead that they
themselves made a mistake. In a well-managed enterprise, it is understood that people
who fail in a new job, especially after promotion, may not be the ones to blame.
Executives owe it to the organisation and to their fellow workers not to tolerate
nonperforming individuals in important jobs. It may not be the employees’ fault that
they are underperforming but all the same, they have to be removed.
Allocating the best people to the right positions is a crucial tough job that many
executives slight, in part because the best people are already too busy. Systematic
decision reviews also show executives their own weaknesses, particularly the areas in
which they are simply incompetent. In these areas, smart executives don't make
decisions or take actions. They delegate. Everyone has such areas; there is no such
thing as a universal executive genius.
Good executives focus on opportunities rather than problems. Problem solving,
however necessary, does not produce results. Exploiting opportunities does.
Staffing is another important aspect of being opportunity focused. Effective
executives put their best people on opportunities rather than on problems.
Top executives are with other people more than half of the business day.
Good follow up is as important as the meeting itself.
Listen first, speak last.
The demand of effective executives is far too great to be satisfied by extraordinary
talent. Effectiveness is a discipline. And like every discipline, effectiveness can be
learned and must be earned.
Intangible Assets by Baruch Lev
The non-management of intangibles has measurable costs. To manage is to choose;
the first role of senior executives is to decide where to compete and invest, how to
allocate resources among many alternatives, and how to share the proceeds among the
people who put up the money and do the work.
The soft side of business needs auditing just as much as, and perhaps more than, the
hard side. Measuring human capabilities and performance will (and should) never be
done in precisely the same language as accounting for assets, liabilities and equity. (If
physicians reported the results of their examinations according to general accepted
accounting principles, fat would be an asset). But if the language is different, the rigor
should not be.
(My Comment: Just as we need to audit organisations for intangible value we need to
audit and check individuals for how they either contribute to or subtract from
intangible value.)
Capitalising on Capabilities by Dave Ulrich and Norm Smallwood
Intangible capabilities - the collective skills, abilities and expertise of an organisation
- are the outcome of investments in staffing, training, compensation, communication,
and other human resources areas. They represent the ways that people and resources
are brought together to accomplish work. Organisational capabilities emerge when a
company delivers on the combined competencies and abilities of its individuals.
How to perform a capabilities Audit
Talent - Do your employees have the competencies and commitment required to
deliver the business strategy in question?
Speed - can we move quickly to make important things happen fast?
Shared mind-set and coherent brand identity - Do we have a culture or identity that
reflects what we stand for and how we work? Is it shared by both customers and
employees?
Accountability - Does high performance matter to the extent that we can ensure
execution of strategy?
Collaboration - Are we good at generating new ideas with impact and generalizing
those ideas across boundaries?
Leadership - Do we have a leadership brand that directs managers on which results to
deliver and how to deliver them?
Customer connectivity - Do we form enduring relationships of trust with targeted
customers?
Strategic Unity - Do our employees share an intellectual, behavioural, and
procedural agenda for our strategy?
Innovation - How well do we innovate in product, strategy, channel, service, and
administration?
Efficiency - Do we reduce costs by closely managing processes, people and projects?
Notes by Frank Olsson 13th June 2004
Harvard Business Review May 2004
Alpha Bets – about alpha males and their success…
It is rare for star performers to shine as brightly after they move from one company to
another. It turns out that a lot of their achievement is based on firm specific human
capital – individual skills that are more valuable in one context than in others. Much
of a star’s brightness is really the reflected light of colleagues. Take her out of her
constellation and she turns out to be only faintly like what she appeared to be.
How To Restore The Fiduciary Relationship… (Interview with Eliot Spitzer)
There must be zero Tolerance for infractions of a real ethical mandate. One violation
and you’re gone. Second, conflict of interest can be bad for business. Thirdly
Executive compensation needs to be reviewed. As long as the public sees what it
believes to be greed there is a problem. Often through compensation committees there
is a rigged marketplace.
The Risky Business of Hiring Stars
When (Wall Street) firms hire stars, the share market views it as value destroying, i.e.
the perception is that they are overpaid and the share price goes down. Clearly, when
companies try to grow by hiring stars it doesn’t work.
Most of us have an instinctive faith in talent and genius, but it isn’t just that people
make organizations perform better. The organization also makes people perform
better. In fact, few stars would change employers if they understood the degree to
which their performance is tied to the company they work for.
Everyone is familiar with the individual factors that contribute to performance: innate
abilities, education (including professional training) and a person’s external networks
(industry contacts and some clients). But most companies underestimate the degree to
which stars depend on the following company specific factors: Resource and
capabilities; Systems and Processes; Leadership; Internal Networks; Training and
Teams.
A little prodding is sometimes necessary to engrain team mentality in the
organization: Lehman Brothers stipulated in 1992 that every analyst presentation had
to refer to at least two compatriots. Goldman Sachs legendary co-leader 1976 – 85,
John Whitehead, once cautioned an analyst: “At Goldman Sachs we never say I.”
The magic bullet in interviewing people was asking yourself whether the interviewee
was someone people were going to like. If he or she wasn’t we would let them go.
Jack Rivkin who was Lehman Brothers research director was empathetic about whom
he would not hire: “I have a no-jerks policy. To me a jerk is someone difficult to
manage, marching to his own drummer, not interested in what is going on in the
department and the firm. We are not going to have people like that here.
The first step in winning the war for talent is not to hire stars but to develop them.
(HBR April 2004 didn’t have any article catching my fancy and imagination.)
Harvard Business Review March 2004
How's Your return on people? by Laurie Bassi and Daniel McMurrer
Recent studies suggest that layoffs destroy shareholder value. And research shows
that treating employees as the assets they are - by investing in their development boosts returns over long term.
A growing body of empirical research shows that organisations that make
extraordinary investments in people often enjoy extraordinary performance on a
variety of indicators, including shareholder return.
Reclaim Your Job by Sumantra Ghoshal and Heike Bruch
Fully 90 % of managers observed wasted their time and frittered away their
productivity, despite having well defined projects, goals, and the knowledge
necessary to get the job done.
The ability to seize initiative is the most essential quality of any truly successful
manager.
Successful managers break out of their perceived boxes, take control of their jobs, and
become more productive by learning to manage demands, generate resources,
recognize and exploit alternatives. They map out ways around constraints by
developing and acting on long term strategies, making trade offs, and occasionally
breaking rules to achieve their goals.
Once mangers command their agendas and sense their freedom of choice, they can
come top relish their roles. They begin to search for situations that go beyond their
scope and enjoy seizing opportunities as they arise. Above all, effective managers
with a bias for action aren't managed by their jobs; rather the reverse is true.
Breakthrough ideas for 2004…..HBR February 2004
(my own reflection is that these are all pretty obvious and have been understood by
ordinary people for a long time – without any Harvard mba. Perhaps business schools
in their current form are reaching their use-by dates.)
You got a license to run that company?
Managers must serve a higher purpose than just maximizing shareholder returns.
Self-interest backed by the power of the highly abstract and systematic ‘science of
economics’ is a very troublesome backdrop for business, given its control over
material and human resources
No Monopoly of Creativity.
To achieve growth the three T:s need to be prevalent: technology, talent and
tolerance.
To determine if a place has a culture of tolerance we look at the concentrations of gay,
“bohemian,” and foreign-born people and the degree of racial integration. The
tolerance and openness implied by these concentrations form a critical element in a
place’s ability to attract different kinds of people and generate new ideas. (Sweden as
a country came out highest in a table on creativity index with some regions in the
USA rating very highly – Austin – San Francisco – Seattle – and Boston. Other
research indicates that Canada – Australia and New Zealand have built dynamic
creative climates.)
More Trouble Than They Are Worth
Companies need to enforce the ‘no-assholes’ rule.
Tyrants, bullies, boors, cruel bastards, or destructive narcissists should not be
tolerated.
The MFA is the new MBA
Corporate recruiters have begun visiting the top arts grad schools. An arts degree is
now perhaps the hottest credential in the world of business. The reasons are two fold –
supply and demand. The supply of people with basic MBA skills is expanding and
therefore driving down their value.
Businesses are realizing that the only way to differentiate their goods and services in
today’s overstocked, materially abundant marketplace is to make their offering
transcendent – physically beautiful and emotionally compelling.
Accentuate the positive
Positive organizational scholarship is inspiring researchers to look at work in a whole
new light – and they are finding that happiness does pay. It’s beginning to look as if a
positive workplace atmosphere is worth developing, and not merely for its own sake;
it may be the foundation for true success.
Biological block.
Terrorism and fraud requires an immune system, not a series of firewalls, for effective
protection. Success will come when every cell of the body politic has the capability to
detect problems in the offing and the ability to trigger lethal immune response.
The Loan Ranger
Why does poverty persist in so many parts of the world? Because poor countries need
trade and instead get aid! The United States puts a tariff on imports from Bangladesh
that is nearly ten times higher than that on imports from France. At the same time rich
countries spend nearly 1 bio dollars a day subsidizing the part of their economies
where poor countries may have a real competitive advantage. European countries and
Japan do the same.
Solving the problem requires a fresh focus on the actual bottleneck. What is it that
keeps rich countries’ governments from living up to their rhetoric about free trade?”
Just this: a limited number of special interests that lobby aggressively on the part of
dying industries.
Success that lasts
No one has unreserved success, not even the most obvious winner. Each person needs
to understand and develop his or her unique definition of success over time.
The article suggests that enduring success has four components:
Happiness – feelings of pleasure or contentment about your life
Achievement – accomplishments that compare favorably against similar goals others
have strived for
Significance – the sense that you’ve made a positive impact on people you care about
Legacy
– a way to establish your values and accomplishments so as to help
others
find future success.
These four categories form the basic structure of what people try to gain through the
pursuit and enjoyment of success. Take away any one component, and it no longer
feels like ‘real’ success. If you were wildly wealthy because you had mastered a
certain business problem but couldn’t experience pleasure, for instance, would you
consider yourself successful? If building your power base kept you from being there
for others, would your success feel morally right? If you left your career to be a fulltime parent, would you have enough of an outlet for your talents? Just as a steady diet
of the same four foods would hardly be satisfying over the long term, the four
components of success cannot be satisfied by the presence of a single flavor in each
category.
To get more wins on the various important measures that make up your notion of the
good life, success has to rest on a paradigm of limitation in any one activity for the
sake of the whole – or on the reasoned pursuit of just enough. This flies in the face of
the popular opinion that success is more about breaking through limitations, than it is
about having more, being more, doing more. Research shows that the high-powered
people who experienced real satisfaction achieved it through the deliberate imposition
of limits. Instead of feeling you need to make a negative trade off – see it as a way of
seeking what needs most attention. One of the biggest causes of failure is an over
reliance on one’s greatest strengths.
The favored candidate for ‘running things’ is often the achievement driven
maximizer, but too often, that approach runs the business (and the leader) into the
ground. This neglect creates costly success pathologies such as greed, lack of loyalty
or commitment, burnout, insensitivity, and the demoralization of knowing that your
work isn’t making a positive contribution to society.
Leading by feel….HBR January 2004
This issue is dedicated to ‘Leadership’ Leaders need to manage the mood of
organizations.
1. BE REALISTIC.
Emotional intelligence is usually defined as a loose collection of personal traits, such
as self-awareness, optimism and tolerance.
Emotional Intelligence is (from a scientific rather than popular view) the ability to
accurately perceive your own and others’ emotions. To understand the signals that
emotions send about relationships; and to manage your own and others emotions.
2. NEVER STOP LEARNING
Emotional intelligence is the ability to build up the social capital needed to pull the
best out of people under pressure. One problem often with newly appointed leaders is
lack of empathy and concern for other people.
3. WATCH THE LANGUAGE
Pick up when people are ‘off’ and try to be supportive.
4. GET MOTIVATED
The central issue when change isn’t occurring isn’t lack of ability to change but lack
of motivation.
5. TRAIN THE GIFTED
Having a genuine interest in other people’s experiences and mental worlds is an
absolute prerequisite for emotional intelligence.
6. ENGAGE YOUR DEMONS
From the Greeks we have learnt that every leader must learn to control his own
passions before he can hope to command the passion of others.
7. LET YOUR GUARD DOWN
Be willing to float unformed and uninformed ideas – open up and encourage others to
think freely and improvise. Elicit the group’s collective creative thinking.
8. FIND YOUR VOICE
Authentic leadership begins with self-awareness, or knowing yourself deeply. Selfawareness is your understanding of your strengths and weaknesses, and purpose in
life, your values and motivations, and how and why you respond to situations in a
particular way.
Managers and Leaders – are they different? by Abraham Zaleznik
Leadership has the essential elements of inspiration, vision and human passion.
Managers embrace process, seek stability and control, and instinctively try to resolve
problems quickly – sometimes before they fully understand a problem’s significance.
Leaders in contrast tolerate chaos and lack of structure and are willing to delay
closure in order to understand issues more fully. Business leaders have much more in
common with artists, scientists, and other creative thinkers than they do with
managers. Creativity and imagination must be allowed to flourish.
Understanding Leadership. by W.C.H Prentice
As long as you work for me, I am going to see that you get every opportunity to use
your last ounce of potential. Your growth and satisfaction are part of my job. The
faster you develop into a top contributor to this company, the better I will like it. If
you see a better way to do your job, do it that way; if something is holding you back,
come and see me about it.
My own view…….
My own view on leadership is that you know it when you see it but that it doesn’t lend
itself to any absolute formula. It may also be a bit different depending on who is to be
‘lead’ and what is to be achieved. Like life, it is a bit like playing the trombone – no
fixed positions for anything but rather a search for and gradual achievement of the
skill to play well and stir music in people’s souls. You need to touch people on their
inside in as far as the power to turn on enthusiasm and energy and commitment rests
with each individual and is an act of will. Leadership appeals to and mobilizes that
will. Care and compassion are essential ingredients in this formula. Leadership is
doing the things you wish others to do and having the ability to influence others to
join in the pursuit of progress.
Frank Olsson 6th January 2004.
And a few earlier articles………………
Managing in the Cappuccino Economy
HBR article March 2000
Most of the advice on organizational learning, transformational change, and employee
commitment does not work and, worse, often leads to counterproductive results.
Although the academics, change consultants, and executives providing or
implementing this advice are sincere and honest, “professionally they are very good at
being wrong.” Not only are these people blind to the gaps and inconsistencies in their
advice, they are unaware of their blindness.
The goal is to win as an enterprise, rather than as an individual.
Critics tend to underestimate the virtues of capitalism, expecting it to promote
destructive greed, when market pressures actually discourage that in the long run. And
they expect too much participation in the democratic process, when government
actually works better with minority rule and majority acquiescence so that the rich are
co-opted rather than alienated. (Capitalism, Democracy.. book by John Mueller)
Character will continue to play a role: the ability to review ones own performance and
strive to learn and change has always been the mark of superior character and
managers.
All other things being equal, managers who choose to tolerate challenges and share
power will build organisations filled with people who learn faster and act smarter than
their competitors.
It is better to work with great managers who have an OK idea than to work with
mediocre managers who have a great idea.
Leadership that gets Results
HBR article March 2000
Leaders who used styles that positively affected the climate had decidedly better
financial results than those who did not.
Extreme top-down decision making kills new ideas on the vine. People feel so disrespected that they think, “I won’t even bring my ideas up – they’ll only be shot
down.”
People who like one another a lot talk a lot. They share ideas; they share inspiration.
And the style drives up flexibility; friends trust one another, allowing habitual
innovation and risk taking. Flexibility also rises because the affiliative leader, like a
parent who adjust the household rules for a maturing adolescent, doesn’t impose
unnecessary strictures on how employees get their work done. They give people the
freedom to do the job in the way they think most effective.
Leaders need to be sensitive to the impact they have on others and seamlessly adjust
their style to get the best results.
The first task in change management is to listen to key people.
Goodbye Career, Hello Success
HBR March 2000
A passion driven career is good for the companies you work for because you’re there
for the love of the work.
The non-career doesn’t involve much marching. Instead, when opportunity calls, you
leap. Fit your career around your life rather than the other way around.
Let go of the notion of a linear, logical career path. More important is to attach
yourself to great people, great teachers.
People will deliver the impossible if you inspire them. Inspiration is a subtle art – a
mix of empathy, respect, and love.
In society we call obsessive-compulsive behaviour a disorder. People take medication
to combat it. But when we demonstrate obsessive-compulsive behaviour at work and
making money, it is considered completely normal and is amply rewarded.
Part of letting go of career chasing is also letting go of status. Let your lifestyle be
dictated by what you need to be happy, not what society prescribes as the trappings of
success.
Doing what you love to does, drive by passion may not get you up any ladder, but it
will make your trip more interesting. It is up to you to define your life’s parameters.
Notes by Frank Olsson 7/3/00
Cash flow comes from customers, not from Wall Street