Blogs

Holidays Can Be Stressful. They Don’t Have to Stress Out Your Team.

Harvard business - Tue, 12/18/2018 - 10:08
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The festive spirit is everywhere during the holiday season. For some, each day feels like waking up to a holiday song — “children laughing, people passing, meeting smile after smile.” But, for others, it can be the loneliest and most stressful time of the year. According to a 2015 Healthline survey, 44% of people say that they are stressed during the holidays, with more than 18% reporting that they’re “very stressed.” Almost half the respondents cited finances as the main culprit for their tension, while being over-scheduled, choosing the right gifts, and remaining healthy also contributed to people’s holiday woes.

“The holidays are filled with both joy and stress,” shares Ellen Braaten, PhD, in Harvard Medical School’s blog, On the Brain. Dr. Braaten blames our increased multi-tasking during the holidays as the reason the brain’s prefrontal cortex goes into overdrive. Long-term, this high-level demand on the brain can decrease memory, halt production of new brain cells, and cause existing brain cells to die. On the bright side, seasonal stress is acute, so it can be remedied. But preventing it all together should be the real goal.

Coping with personal stress is already challenging, but when combined with workplace stress, it’s no wonder holiday cheers soon devolve into holiday sneers. The American Psychological Association found that 38% of people say their stress increases during the holidays — only 8% of people say they feel happier. Employees are often contending with shortened deadlines, meeting expectations for the end of the fiscal year, and coping with stressed-out customers, which are just a few of the reasons for their increased anxiety. The resulting costs for employers can be quite significant.

Based on an analysis by Peakon of more than 15,000 employees across the U.S., the UK, the Nordic countries (Sweden, Norway, Finland, Denmark, Iceland) and Germany, 7-10% of people reported reduced productivity for the entire month of December, with 30-40% reporting a fall in productivity by mid-December. Dr. Chris Rowley, Professor Emeritus at the University of London Cass Business School, writes in his article, “Festive Celebrations: Human Resource Impacts and Costs of Christmas,” that nearly one-half of the workforce hits “festive fizzleout” by December 18th, where they spend more time worried about the holidays than about work. Rowley claims that more than two-thirds of workers were less productive throughout December, with nearly one-half admitting that they did 10-20% less work. Reasons for reductions in output included a combination of exhaustion, lack of motivation, and even hangovers. Women tend to be hit the hardest, with nearly twice as many women reporting that they are more stressed about Christmas than men.

Unfortunately, the tools most employers use to improve company culture are backfiring. The annual holiday party is a great example. According to a 2017 survey by global outplacement consultancy Challenger, Gray & Christmas, Inc., 80% of companies plan to host a holiday party. However, according to new research from MetLife Employee Benefits, 37% of employees decline to attend the company Christmas party. The most cited reason for not attending was that the holiday parties, which are typically held in the evenings, clash with family duties at home. And, for those who do attend the holiday party, there is a 77% drop in productivity the next day, with more than half of the staff wasting the first four hours of the following day because they’re recovering from the night before — which is slightly better than the 20% who call in sick. And the U.S. isn’t the only country that struggles with this dynamic. For example, the festive fallout from employee stress and lost productivity cost U.K. companies roughly £11 billion in 2016.

So how can managers help combat stress and keep both productivity and spirits up during the holiday season? Here are a just a few ways:

Reach out. Ask your staff how they want to celebrate the holidays at work this year. Poll your team — there are plenty of online tools that make it easy to do a simple survey, such as Survey Monkey or Typeform.

Be inclusive. In an interview I conducted with Ben-Saba Hasan, SVP and Chief Culture Diversity & Inclusion Officer at Walmart Inc., he shared that leaders must recognize the different ways people celebrate the holidays. “As leaders, we need to create an environment where our team members feel comfortable and safe, so that we foster greater awareness among those in the dominant culture for those whose holiday observances look different from their own.”

Mini Khroad, Chief People Officer at Khan Academy, told me in a recent interview: “The holidays should always be an important time at companies. Ensuring that employees have the ability to recognize national or other holidays, at work and in their personal lives, helps to make the workplace enjoyable for everyone.”

Protect personal time. Why not offer one extra day off leading up to the holidays for employees to attend to personal needs like gift shopping, family demands, or down-time to regroup — whatever they need.  One mandatory day off can make all the difference in employee stress levels. These small but much-appreciated gestures increase loyalty and gratitude on your staff and offer long-term payoffs. Why does this matter? Research has proven that grateful staff are more engaged, community-minded, and happier at work.

Rebalance workloads. Competing demands sit at the top of employees’ stress lists. Work and home pressures converge at this time of year, and time seems highly compressed. Plan a review of the workload and see if some project deadlines can be extended into next year. “Periods of high stress such as the holiday season represent an opportunity for managers to treat employees as individuals by understanding and appropriately responding to their specific needs,” says David Almeda, Chief People Officer at Kronos. In a recent interview I had with him, he suggested that “tactics such as rebalancing workload among team members, or allowing atypical works hours for a set period of time, will deliver results, increase employee commitment, and materially decrease employee stress.”

Give time instead of gifts. Research by neuroscientists Dr. Jordan Grafman and Dr. Jorge Moll demonstrates that we are instinctually made to give. When the subjects donated to what they considered worthy organizations, brain scans revealed that parts of the midbrain lit up — the same region that controls cravings for food, and the same region that becomes active when money is added to people’s personal reward accounts. Ben-Saba Hasan connected this thinking back to his team as they bonded over volunteering in their community this season. “I believe one of the best ways to manage stress and care for yourself is when you turn your focus toward caring for others first.”

What is important for employees themselves to remember is this: most holiday-related stressors are self-imposed and preventable. Financial stress can be avoided by purchasing less, overcommitting can be averted by saying no, multitasking brains can be managed with reprioritization, and exclusion can be prevented by reaching out. Start today. Ask someone how they’re doing. Listen with compassion, empathy, and kindness. If needed, offer help.

As we head into the busiest part of the holiday season and stress levels increase, remember:  many of us are feeling this anxiety, and much of it can be made more manageable with the tactics above. Bringing more awareness to the increased pressure your employees are feeling at home and at work during the holiday season can go a long way toward helping to keep both productivity and employees’ spirits up.

Categories: Blogs

What Companies Can Do to Help Employees Address Mental Health Issues

Harvard business - Tue, 12/18/2018 - 09:00
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In November, Prince William joined a discussion on working in high-pressure environments at “This Can Happen,” the UK’s largest annual conference on mental health. Drawing on his experience as an air ambulance pilot, he noted that he had “worked several times on very traumatic jobs involving children” and that one in particular “took me over the edge.” His key to dealing with the incident: talking it through with colleagues. He pointed to the important role that leaders can play in supporting mental health by sharing their own stories — and making it safe for those who work in their organization to be open about their mental health challenges.

We at Accenture agree. We believe — and our research conducted on behalf of “This Can Happen” bears it out — that the number of people affected by such challenges is much greater than suspected or previously reported. For example, two-thirds of the UK workers we surveyed said they have experienced or are currently experiencing mental health challenges or have even had suicidal thoughts or feelings. And the vast majority, nine in 10, said they had been touched by mental health challenges in some way — affected either by their own health or by issues faced by a family member, friend, or colleague.

People are increasingly waking up to the magnitude of this issue and its importance in the world of work. It’s especially critical that people feel they can bring the issue out into the open without fear. But we see that change is slow. Just a quarter of workers said that they had seen any positive change in their workplace’s efforts over the past two years to show that mental health is important for everyone.

This matters not only for the individuals who are struggling but also for the organization. When employers create a culture that supports mental health, workers are more than twice as likely to say they love their job. They are also more likely to plan to stay with their employer for at least the next year.

What can companies actually do to take on this challenge? Research points to three keys.

Signal “it matters.” There’s a lot of concern about “opening up” at work. Many fear that doing so could limit their opportunities, get in the way of promotion, and generally be seen as a sign of weakness.

Senior leaders can make significant inroads in changing this perception by starting the conversation — talking about their own experiences and the company’s desire to actively help. In a study we completed earlier in 2018, just 14% of respondents had heard a senior leader talking about the importance of mental health. Just one in 10 had heard a senior leader talk about being personally affected.

Senior leaders can also ensure that employees at all levels are made aware of the services and support the company offers.

Raising awareness through training. It can be very hard, for both the speaker and the listener, to have a conversation about a mental health problem and then to know what to do next. Training in all forms is essential. Tools that the arsenal should contain include online training classes to help employees recognize signs of stress or mental ill health in themselves and in others, and webinars led by senior leaders.

Our own Mental Health Allies program includes both classroom-based and online training. In the UK alone, we have trained more than 1,700 employees — some 15% of Accenture’s UK workforce — to be “allies”:  colleagues others can approach in the knowledge that their discussion will be kept completely confidential. Each ally first took a short online course and then participated in a half-day classroom-based training session to increase his or her understanding of mental health challenges while building the confidence and skills to address common issues through role playing and scenario training. This training also explores the boundaries between the responsibilities of line managers, who must proactively intervene, having a duty of care to their people, and the role of a mental health ally.

Even small steps toward creating a more accepting and receptive culture can have a significant, positive effect. We found that most people who were able to talk to someone at work about the issues they faced were met with a positive reaction (one of empathy, support, kindness) from the first person they told. These individuals reported decreased levels of stress, decreased feelings of isolation, and increased confidence.

Curate and improve online tools. Most people are prepared to turn to online tools and applications for information and advice about mental health. It makes sense: They are available 24/7 and can be used anonymously. At Accenture UK, all employees have access to “Big White Wall,” a confidential, professionally managed chat environment in which they can remain anonymous.

Even companies with scarce resources to dedicate to these kinds of benefits can offer employees a curated list of the most trusted publicly available sources and provide access to those sources where possible. But it is one thing for an individual to seek support; it’s another for a company to shoulder the responsibility for curating (read: implicitly recommending) those resources to employees. More rigorous independent testing of available digital resources is needed; this would better enable companies and individuals to select those that are best suited to their needs.

The recently launched Mental Health at Work site is one exciting new resource that’s particularly valuable to smaller organizations that may not be able to offer a full range of support in-house. In one place, employers can find advice on everything from how to train line managers in mental health awareness to how to structure a full program of support.

One risk to bear in mind is the chance that an employee may over-rely on a tech resource when more direct and professional treatment is warranted. Business leaders need to ensure that they are also moving forward with in-person training and other initiatives that support mental health. And employees should understand what needs can be met online and when it’s important to get help from a medical professional.

Most employees we surveyed already actively manage their mental health and consider it at least as important as their physical health. Such a positive attitude toward managing mental health suggests that employees, and in particular millennials, are likely to welcome and embrace training and initiatives at work that help them thrive and recognize when they need help.

Much remains to be done. As Prince Williams says: “There’s still a stigma about mental health. We are chipping away at it, but that wall needs to be smashed down.”

As the lead for our mental health program in the UK, I love to run the training sessions for our new allies. As we explore the topic, one by one people tell their stories: a manager who has struggled with depression since his teens, an intern whose classmate at school took his own life, a new graduate living with a friend who has acute anxiety. A new joiner who had been caring for his girlfriend who has anorexia nervosa described being able to open up as an “utter relief” and “life changing.”

When I look around, I see how mental health challenges touch us all in some way at some time in our lives. As employers we have the power to help. To make it easier for people to talk, to help them get the support they need in the way that works for them, and to help them be their best selves at home and at work.

The author thanks Agata Dowbor, Dominic King, Dave Light, and Regina Maruca of Accenture Research for their contributions to this article.

Categories: Blogs

The 5 Things All Great Salespeople Do

Harvard business - Tue, 12/18/2018 - 08:00
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The best salespeople know they’re the best. They take pride in their art form. They separate themselves from the rest of the pack regardless of circumstance. So how do they do it? What’s their secret? Are you one of them?

I’ve spent 16 years in technology sales, with most of that spent in sales leadership at Salesforce and other technology companies. I’ve had the luxury of observing great sales professionals in tech and beyond and have observed that the top performers share some of the same patterns, habits, and characteristics. I’ve distilled them down into five major categories and have begun integrating them into my work life — practicing them, honing them, teaching them. As a result, my teams have finished consistently at or near the top of the leaderboard year in and year out. Here’s what I’ve observed:

The best salespeople own everything. I used to give a speech to new salespeople, earlier in my career, titled the “It’s your fault speech.” It was very raw and full of overconfidence (chalk it up to leadership in your twenties) but the point was simple: Your success depends on you. The sales profession exists within a meritocracy. Statistically, it is not a coincidence that the same people are at the top of the leaderboard year in and year out. Some may think it’s because certain people have it easier, or are given this, or fall into that. We all have our starting points. Regardless, the most significant difference between perennial top performers and everyone else is attitude. Elite salespeople approach their goals with a total ownership mindset. Anything that happens to them, whether or not it was their doing, is controlled by them. It may not be their fault, but it is their responsibility. In the research, psychologists call this the internal locus of control. That’s a fancy way of saying that you think the power lies inside of you instead of externally. And you know what they found? Having an internal locus of control correlates with success at work, higher income, and greater health outcomes.

You and Your Team Series Getting More Work Done

This area has been the hardest to coach in my career because it seems to be so deeply rooted in one’s personality. The best way to self-assess is this: Take your current situation — your accounts, your role, your earnings — and ask yourself these questions: How did I get here? Did I build the right relationships? Did I put in the extra work? Did I speak up? Did I blame others for my failures but take credit for my successes?

You must own everything.

The best salespeople are resourceful. MacGyver was a popular show when I was in fifth grade. My friends and I would try to emulate MacGyver by turning a paperclip into a knife or a key or something, but we basically just twisted it around until it broke — we weren’t exactly aspiring engineers. But if you remember watching MacGyver, the premise was that the lead character was put in an impossible situation with few to no tools or weapons or resources, with very little time, and had to get out of the situation using only his wits and whatever he could find in his pocket or laying around near him. MacGyver didn’t stop and complain about how he only had a paper clip to work with, while other people had a blowtorch. He didn’t lament how hard his position was. He simply assessed his strengths and resources and made something happen. Every week, he figured it out. And every week he saved the day.

The best sales people I have seen are like modern day MacGyvers, sans the life and death scenarios. They’re often faced with difficult situations and time pressures, having to negotiate seemingly arbitrary obstacles armed with only their wits and their phones. Elite salespeople almost always figure it out. Resourcefulness is as much a mindset as it is a skill. If you don’t start with the MacGyver mindset, then you will never fully develop the skills associated with being resourceful. As an exercise, seek out or fully embrace the next ridiculous or impossible situation you find yourself in and then put your phone down, close your computer, re-focus, and apply your energy to find multiple alternative routes to your desired destination. Find a colleague and draw it all out on a whiteboard.

Embrace your inner MacGyver.

The best salespeople are experts. Sales is less about selling and more about leading, which requires high levels of confidence, which in turn requires knowledge and experience. This concept can be expressed mathematically as Knowledge + Experience = Confidence to Lead. You can control the first part of the equation; the second comes with time. Gaining industry knowledge and a strong point of view about the products they’re selling should be the top priority for any aspiring salesperson.

Study. Learn. Form an opinion. Expertise leads to confidence, which leads to trust, which leads to sales.

The best salespeople help others. Regardless of where you are in your career, there is someone else you can help. There is something you know about a product, a process, or an industry that someone new or less tenured does not. The best salespeople I have observed regularly pass their knowledge on to less tenured or less experienced sales people with no expectation of anything in return. Coincidentally or maybe ironically, the act itself becomes a catalyst for building confidence within one’s self. And others take notice as well. Shawn Achor, author of Big Potential, found that people who are social support providers at work (“work altruists”) are a whopping 40% more likely to receive a promotion.

The best salespeople move quickly. The best salespeople don’t move recklessly, but they do have a sense of urgency. I’ve often been amazed throughout my career when I’ve encountered salespeople who were slow in getting back to their clients or customers — who delayed in delivering contracts or materials needed to make a decision. Most elite salespeople get things done, to quote Norton in The Shawshank Redemption, “not tomorrow, not after breakfast, now!”

Look at the top salespeople in your own company and see if they possess most if not all of these characteristics. My bet is that they do. And I also bet that they’d be willing to share their strategies with you.

Categories: Blogs

You Can Be a Great Leader and Also Have a Life

Harvard business - Tue, 12/18/2018 - 07:05
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Tesla and Space X CEO Elon Musk tweets that no one changed the world working 40 hours a week. He rarely sleeps or sees his kids and had a famously public meltdown. Apple’s Tim Cook is on email before the sun rises. And billionaire Mark Cuban worked until 2 am launching his first business and didn’t take a vacation for seven years.

These intense work styles are often celebrated as the only way to get to the top and be a super-productive leader. Indeed, surveys show that managers and executives describe the “ideal worker” as someone with no personal life or caregiving responsibilities. And a majority of leaders themselves — the ones who set the tone for organizations and model behavior for everyone else — think work-life balance is “at best an elusive ideal and at worst a complete myth.” In an interview, three CEOs rated as top performers by HBR said the job was 24/7 and admitted they weren’t great role models.

But does it have to be that way?

That’s a question Jessica DeGroot sought to answer nearly 20 years ago when she started the nonprofit ThirdPath Institute, an organization dedicated to helping people find time for work, family, and life. She formed a group of about two dozen men and women in senior management at law firms, public and financial service entities, small businesses, and Fortune 500 companies like Booz Allen Hamilton, Eli Lilly, Marriott, IBM, and Ford who wanted to challenge the notion that work-life balance is impossible for leaders. “We all wanted to do work and life differently,” DeGroot told me. “But weren’t sure how.” They had no role models. And few people she talked to, she added, thought they could.

In regular phone calls and meetings for nearly two decades, as well as a biennial Pioneering Leaders summit, the group has been helping each other figure out how to work more effectively so they could have time for their lives, sharing successful strategies and learning from failures. During one of their monthly webinars I observed, the group began by sharing photographs of their families and talking about their lives outside of work. Then the group launched into an intensive discussion of boundaries, episodic and chronic overwork, and how they’re managing their work-life balance in the face of work or life emergencies — and sometimes both. One man, juggling work with caring for a sick child, said he’s now reaping the benefits of all the years he’s communicated and modeled how work-life balance is one of his core values. “It’s enabled me to have a bond with my daughter now that’s really amazing,” he said.

It is part shared confessional with peers and part trading research, strategies, tips and lifehacks that DeGroot collects and analyzes for best practices. For instance, DeGroot noticed that a handful of the pioneering leaders were really good about taking vacation, being able to turn off work, connecting with their families and friends, and returning refreshed. Their strategies have since become the “Vacation Checklist” DeGroot shares with others at the nonprofit. Some of the most effective strategies, they’ve discovered include planning vacations, where possible, around the seasonality of work; delegating and reviewing essential team work two weeks before leaving; creating a “what can wait” list one week before vacation; and avoiding scheduling meetings and phone calls one day before and one day after vacation to concentrate on essential priorities.

She’s done the same for strategies to create concentrated quiet time to focus on priorities at work rather than be in constant firefighting mode of responding to e-mails, meetings and emergencies, for managing email overload, for setting priorities and other thorny issues. “We kept trying. We kept tweaking,” DeGroot said. “Then we started to see, ‘Oh, this is not only a better way for me to work, this is a better way for everybody to work.’ And when you get leaders to behave differently, it sends a signal to the rest of the organization that they can behave differently, too.”

For leaders to stand up to status quo pressures and make work-life balance a priority, DeGroot discovered, these pioneers had to cultivate skills around three relationships: learning to work differently with their teams at work, making a plan with their families to put home and family first, and shifting their own mindsets to not only believe change is truly possible, but to give themselves permission to try, and speak up about it.  The stories of three leaders exemplify how this can be done.

Learning to Work Differently. Like many men of his generation, Ivan Axelrod, 72, a managing director of a financial management firm in LA, spent most of his life climbing the corporate ladder as a work-focused primary breadwinner. It wasn’t until he became a grandfather that he decided to change. His own parents had died when his children were young and never knew them. He wanted something different for his own grandchildren. “I wanted them to know their grandfather.”

So, when his daughter began lining up child care and preparing to go back to work after a three-month leave, the two grandmothers offered to take two days a week each. Axelrod volunteered to be the caregiver for the fifth day. He had to sell the idea to both his family and the other managers at work. “I said, ‘I have good people here. I’m going to push more responsibility onto them, which should help them develop faster. I believe it’s going to work,’” Axelrod said. “Reluctantly, they said OK to me. That was in 2008. And I’ve been doing it ever since.”

As a result, Axelrod has worked to create a culture where everyone can have time for work and life, promoting flexible and remote work and opening an office closer to where people live to cut down on commutes – efforts which have reduced turnover and recruiting and training costs, and increased employee morale and productivity. “If you have a structure that allows people some flexibility, they will produce better results for the organization. I see it all the time,” He said. “The bottom line increases when you make these changes.”

On Mondays, Axelrod takes his two grandchildren, now 11 and 9 years old, to school, works at home, picks them up afterwards and takes them to activities like swimming lessons. “I’m heavily involved in their lives. It has been huge for me, and terrific for them,” he said. “When I’m gone, they’re going to have a lot to remember.”

Believing in Your Plan and Speaking up. With few role models, and cultural expectations arrayed against them, someone like Axelrod had to first imagine something new: how he really wanted to combine work and life. Then he had to believe that not only was it important enough to try, but also — through a series of trials and errors — actually possible to sustain over the long-term.

This was also true for Michelle Hickox. In 2004, Hickox was a certified public accountant in Texas and at a crossroads in her career. She loved her work and wanted to make partner, but the only role models she had were men with at-home wives, and one woman with round-the-clock nannies, all of whom worked all the time and rarely saw their families. “I didn’t want that,” she told me.

When her eldest daughter turned five, the transition from year-round child care to the traditional nine-month kindergarten schedule forced Hickox to think hard not only about how to manage child care in the summer months, but what she really wanted out of work and life. Her own parents had been teachers, and she loved the summers the family spent together. So she imagined something no one else had: taking summers off and staying on the partner track. She negotiated an 80% schedule and took 11 summers off in a row while her daughters were growing up, and still made partner. “I’m not sure when I first asked if I thought it would be successful,” said Hickox, now CFO of Independent Bank in McKinney Texas. “I learned I needed to speak up. That just because something didn’t exist meant maybe nobody had ever thought about it.”

None of this is easy. Like all leaders, Hickox has hit a wall. A few years ago, when her work had been intense and she was feeling completely out of balance, she almost didn’t come to the pioneering leaders summit I attended and first interviewed her for this piece. “I had such guilt. I thought, ‘Wow, I’m supposed to be one of these pioneering leaders and I have totally sucked this past year. I shouldn’t even be at this conference,” Hickox said. “But that’s when you need this stuff the most.” What she has found – and behavioral science research reinforces — is that having a supportive, like-minded network of peers via the summit and their regular conference calls makes it more likely for behavior changes to stick.

Hickox, now 51, has since become the kind of role model she was looking for. Flexible work, remote work, paying attention to performance, rather than when people come and go in the office have become the norm. When she discovered the bank didn’t have a paid family leave policy, a word to the CEO changed that. “The culture in the bank’s accounting and finance team has changed totally since I got here,” she said. “I don’t think you have to work like a crazy person to get ahead. I just think, in the time you are working, you have to learn to be effective.”

Making a Plan to Put Family First. Imagining a different way to work and live also means adopting a mindset that recognized both work and family were important. Will Rowe, 59, a principal at Booz Allen Hamilton in Washington, D.C., and his wife Teresa, a pediatrician, began their marriage with vows promising to be equal partners and to put family, faith, friendships and flexibility first. They both wanted important, but not overwhelming careers. Rowe’s parents were workaholics, he said, who rarely saw each other and wound up divorced. So once Rowe and his wife started a family of their own, the couple committed to spending as much time with family as possible. Will worked four days a week, Teresa an alternate three, and a neighbor cared for their two children one day a week.

The flexible schedule has allowed him to be active in his neighborhood and faith community, and gave him the courage to ask his boss for a six-month sabbatical to travel the country with his family. As his kids grew and he rose through the leadership ranks, Rowe continued to work a flexible schedule, deftly juggling conference calls in the school pick up line, and “time shifting” his work to accommodate both his clients and his family. Being clear on family priorities, routinely talking them through and planning together as a family have been keys to making his work and family life work. “I sit down every week and color code my calendar. Family events and activities are in green. If I find it competes with my work, I will cancel, delegate or move work around,” Rowe said. “Some things in life are more important than work.”

What we see — our role models — shape what we think is possible. And right now, so many of us are stuck in the workplace overworking because that’s all we see in our leaders. So perhaps, if we are to change, what we need are fewer breathless articles about inhuman and insane CEO schedules that ignore the costs to health, families, and ultimately, innovation and business productivity. And we need to hear more stories like that of Alexrod, Hickox and Rowe. More about CEOs like David Solomon, the new head of Goldman Sachs who takes yoga classes with his daughter, led an effort to reduce punishing work hours, calls colleagues when they’re working too much to tell them to stop, and regularly performs and records electronic dance music as DJ D-Sol. More about how leaders like YouTube’s Susan Wojicki can run a $100 billion company and still be home for dinner at 6 p.m. with her kids.

Perhaps the more we hear stories of leaders like these, the more the majority of us who tell surveyors that we want both time to do great work and live a great life, people may start believing it’s possible.

Categories: Blogs

How Western Multinationals Are Responding to the Escalating U.S.-China Trade War

Harvard business - Tue, 12/18/2018 - 07:00
Yuji Sakai/Getty Images

The furious reaction from China to the arrest of Huawei’s chief financial officer, Meng Wanzhou, in Canada at Washington’s request immediately raises the prospect of like-for-like retaliation against executives from North American companies, a fear reinforced by the arrests of a former Canadian diplomat-turned-NGO-researcher and a Canadian businessman.

Western business people are ensnared in low-level court proceedings in China far more regularly than is reported in the West, the risk remains low of a retaliatory move against a Western executive of similar status to Meng. It would undercut the high-ground that Beijing has occupied as self-appointed defender of “the rules-based international order.”

However, there are other ways for Chinese authorities to take reprisals against Western multinationals operating in China should they so choose. Day-to-day business operations can readily be interrupted through inspections, audits, and other tourniquets of red tape, and by the selective application of the letter of Chinese civil, administrative and criminal law. There’s also the possibility of travel bans on executives (including on those under unresolved court proceedings), and good, old-fashioned intimidation.

Add to this the current trade tensions between the U.S. and China and Western multinationals — such as the big U.S. technology companies — that use China as a source of assembly, semi-manufactures or components have an additional vulnerability: their value chain.

For every such company, especially those critically reliant on Chinese sub-contractors, their value chain is now actively at increased political risk. Local suppliers and their sub-contractors are susceptible to pressure to behave “patriotically” when authorities convey the message, however tacitly, that lack of cooperation with foreign multinationals is in the national interest. Something similar has occurred when Chinese consumers have on earlier occasions read the signals for when they were meant to boycott Japanese and South Korean products.

There are many ways to apply informal pressure along the value chain from delaying delivery to the easing of quality standards.  Suppliers and subcontractors could find themselves suffering sudden and “unexpected” shortages of inputs and disruptions from labour.

Companies need to take urgent steps to measure their potential exposure. Doubling up value chains, including alternatives outside China, would mitigate the risk of political and regulatory disruption. (It would also have the added benefit of providing insurance against ever-more-frequent natural disasters.)  In our analysis and consulting work, we have come across some forward-looking companies that have started to reconfigure their value chains where possible – particularly those who are vulnerable to U.S. national security concerns because they incorporate Chinese technology into their end products.

Doing so is neither necessarily easy nor cheap. China has accumulated a vast manufacturing ecosystem servicing foreign companies, encompassing everything from hard infrastructure to soft skills. Its growth has accelerated in recent years as China has embraced automation as way to offset rising wages that could make it less competitive as an offshoring center.

For that reason, building up a parallel value chain is not simply about shifting to another low-wage country. Both the quality and quantity of China’s manufacturing skills, particularly in the areas of automation and robotics, deter companies from relocating from China to elsewhere in South or Southeast Asia. Lower-wage countries like Vietnam and Cambodia have little spare production or skilled human capacity left, even in relatively low-skilled sectors like textiles and garments, let alone the advanced precision tooling, materials handling, and process engineering and development skills that a U.S. technology company needs. Nor do those countries have the resources to develop them rapidly.

Tim Cook, chief executive of Apple, a company so committed to manufacturing in China that it labels many of its products, “Designed in California. Assembled in China” recently noted that if he called a meeting of all the tooling engineers in the U.S., he wouldn’t fill a room, whereas in China he could fill multiple football fields.

Regardless of these impediments, and even before the heightened trade tensions between China and the U.S., there was business logic to the case for value-chain diversification — and a parallel process of value-chain reconfiguration already underway in some sectors with a regional focus. Production of end-products and components — ranging from bicycle parts to computer hard drives — has started to relocate, with low-tech production shifting from China to Indonesia, Cambodia, Bangladesh, and India, and higher-tech ones moving to South Korea, Taiwan, Singapore, and Malaysia. Vietnam straddles the two.

Burgeoning middle-classes in South and Southeast Asia provide a growing market for China’s consumer and industrial goods, especially for non-luxury goods that do not need the cache of a U.S. or European brand. Countries such as India, Indonesia, Malaysia, the Philippines, and Thailand are all forecast to be among the 20-25 largest economies during the second quarter of this century. Moving production nearer to those markets makes sense.

At the same time, for other Asian nations, China is starting to look like the “market of last resort” for selling what they manufacture. The U.S. has been that market been since the Second World War. But the Trump administration’s “America First” policy, with its emphasis on domestically produced goods, seems to put that in doubt.

Chinese companies, too, will be compelled to seek alternatives to the U.S. in response to Trump’s tariffs, especially those that have become U.S.-reliant, further accelerating the changes to regional trade and the value chains that support it.

The overall effect will be that more value chains will begin and end in China rather than beginning in China and ending in the U.S. There will be fewer global value chains and more regional ones.

Regional value chains do have an advantage: they are shorter than global ones. As global value chains have gotten longer and leaner, they have also grown more fragile, just as the pressures on them are increasing from technological change — particularly AI, robotics and big data, shifting relative labor costs, environmental concerns, such as carbon footprints, and reputational exposures.

The Trump administration’s trade policies will provide new impetus to the developing patterns of multiple, shorter regional value chains, but the transformation will not happen overnight. Value chains cannot be reconfigured any more quickly than a manufacturing plant can be rapidly rebuilt. Companies will hesitate to jump into new developing markets where investment laws can be unclear or nascent — like Myanmar, Cambodia, or Vietnam — and where labor and environmental standards lax. Nor will it be easy to replicate established relationships with factories, suppliers, and governments.

Complicated electronics value chains, in particular, are so entrenched in China, it is unlikely that all business will shift away from the country as a result of the new tariffs alone. For its part, China itself is still dependent on specific imported technologies such as chipsets and sensors. This constraint will ease as China develops, with some urgency, local capacities in these technologies, not least because the U.S. is set on preventing the export of crucial U.S. technologies and blocking Chinese companies from gaining access to them through inward foreign direct investment.

One scenario is that the current U.S. counter to China’s “strategic competition” — tariffs and technology export and investment controls — will further fracture value chains as it will lead to a dual global technology world with one part running U.S. technology on U.S. technical standards and another running Chinese technology on Chinese standards.

There would be no certainty that the hardware, software, and services of these two worlds would be interoperable, and, once a market is locked into one or other of the systems, it would be difficult for users to switch. This would add complexity to value chains, making it more likely they would default to specializing regionally.

Categories: Blogs

What a Mechanical Shark Can Teach Us About Leadership and Innovation

Leadershipnow - Mon, 12/17/2018 - 11:32


ONE RECENT EVENING, exhausted after a long day of work, I collapsed into bed and turned on the television. On screen was the classic scene from “Jaws,” where actress Susan Backlinie is stalked by the unseen aquatic predator and then pulled underneath the dark water. The scene is famous for the way it terrified audiences without ever showing the titular shark.

But this wasn’t the film itself. It was a documentary on the making of the movie, all about the lengths that then 27-year-old wunderkind Steven Spielberg and his crew went to in creating a film that would define the summer blockbuster.

I soon learned that this scene – one of the best known in the entire film – isn’t what Spielberg initially had in mind. In his original vision, viewers would be treated to a gory scene of the mechanical shark visibly attacking the unassuming woman. But “Bruce,” the mechanical shark, kept malfunctioning, and so the director had to find another way to tell his story.

Spielberg could have insisted on the shot. After all, this was the scene he needed to “hook” the audience and keep their attention throughout the entire movie. He could have bawled out the engineers and technicians behind the mechanical prop, demanding that they somehow find a way to carry out his vision. But he didn’t. Instead, he brainstormed with the talented people around him and came up with a new vision – one that was just as compelling as the original, and with the added bonus that it would actually work.

The result: One of the most memorable scenes in cinema history.

This happened over and over again during the production of “Jaws,” with Spielberg and his crew forced to alter – or completely abandon – the director’s original vision to adapt to conditions on the ground. They had to improvise, making up major new scenes as they hit major new problems.

As I watched the documentary, I was struck by how closely the story mirrored case studies from the business world, and how perfectly it illustrated the points I try to emphasize in the leadership and innovation class I teach at MIT. In business, we tend to mythologize innovative leaders as those who have a revolutionary vision and stick with it, no matter what. But, as Spielberg’s mechanical shark illustrates, the truth is frequently far more complex.

In fact, an original, revolutionary vision isn’t innovation at all (and it certainly isn’t leadership). No, those fresh, once-in-a-lifetime ideas are examples of pure and raw creativity. And while these original sparks are surely important, they usually don’t stand up all that well to the pressures of reality. Anyone with experience with the unforgiving discipline of new product development can testify how exceedingly rare it is for even the best of ideas to emerge from that process unscathed. Creating something new is almost never a simple matter of dreaming a thing up and then building a physical representation of that vision. Nearly always, the process is an iterative one, full of trial-and-error, with more failures than successes. In one famous example, Thomas Edison had to teach himself thousands of ways not to make a light bulb before finding a way that worked.

Innovation, then, is less about having original ideas than it is about being able to execute those ideas. It’s about delivering what customers will buy or use. Friendster’s founders had a creative concept, for example, but it took the minds behind Facebook to turn a similar idea into what is now one of the world’s largest companies. Henry Ford didn’t have the creative spirit that led to the invention of the automobile, but his innovative leadership resulted in a level of execution rarely matched in the history of manufacturing. In fact, even the assembly line was inspired by Ford’s observations of the meat slaughtering process, and how workers in that industry were organized to divide up the whole animal into pieces. Similarly, Spielberg borrowed from his idol, Alfred Hitchcock, in exploiting the terror of the unknown.

One could, perhaps, cite these influences as dings against Ford’s and Spielberg’s creativity. But their willingness to lean on and learn from others’ ideas is a large part of what makes them such innovative leaders.

If innovation is really about execution, then execution itself is really about problem-solving. Inevitably, problems pop up that stand in the way of a leader’s original vision: The bulb won’t light up; the customers won’t buy; the mechanical shark won’t work. The difference between ultimate success and failure is the ability to solve these problems. In fact, I would go a step further and say that the mark of an innovative leader is often his or her ability to redefine the problem – to see it in a new way that presents previously unseen solutions. Spielberg’s genius lies in his ability to recognize that his central problem wasn’t how to make a mechanical shark work, but rather how to terrify his audience.

There’s a delicate balance at play here – what I sometimes call the “paradox” of leading innovation. On one hand, leaders must trust in themselves. They can’t be so wishy-washy that they’re willing to abandon an idea or strategy at the first hint of difficulty. But at the same time, they must be willing to surround themselves with talented people and place real trust in their teams to help them recognize problems and arrive at solutions. That’s what Spielberg did, staying up late with his crew night after night, devising new shots over beer and whiskey when the original storyboards had to be trashed.

In the documentary, Spielberg said that all of the accolades and big-budget movies that came to him throughout the rest of his prolific career (one that includes directing credits on “E.T.,” “Jurassic Park,” and “Schindler’s List”) were made possible by the success of “Jaws.” And that success was due to his willingness to be flexible – to modify his vision through collaboration on his way to redefining the summer blockbuster forever.

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This post is by Dr. David Niño is a Senior Lecturer in the Gordon-MIT Engineering Leadership Program at MIT School of Engineering. He has taught leadership since 1998 at the undergraduate, masters, doctoral and executive levels. He is currently the instructor for MIT Professional Education’s highly popular online course, “Leadership & Innovation for Technology Professionals.” Dr. Niño is also a founding officer of the Leadership Development Division of the American Society of Engineering Education and consults with professionals and executives around the globe in the areas of leadership and team development.

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Categories: Blogs

Fostering Employee Innovation at a 150-Year-Old Company

Harvard business - Mon, 12/17/2018 - 11:05
TheCrimsonMonkey/Getty Images

Bayer’s mission is “Science for a Better Life.” We want to enable discoveries to promote health and secure food supply. To achieve that goal, however, we must innovate not only in terms of science and R&D, but also in how we run our business. This means shifting the way we work so we’re able to match the pace of change happening in the wider world.  With more than 100,000 employees and 150 years of history, there is only so much we can learn from the usual Silicon Valley exemplars. “We cannot be like Google, but neither do we want to be,” says Kemal Malik, the board member responsible for innovation, “We need to plot our own path.”

Our solution – one transferable to other organizations pursuing innovation – has been to create an agile network of volunteer ambassadors and coaches throughout the company who have taken collective responsibility for making innovation happen and steering our organizational culture in the right direction.

The innovation agenda

The origins of our agile network can be traced back to an online idea forum called WeSolve that we launched in 2014 as a way of challenging Bayer employees to contribute solutions to specific technical or commercial problems. To help its implementation we appointed 40 WeSolve coaches: people from different offices around the world who were excited by the initiative and prepared to devote some discretionary time to it. Within 12 months, WeSolve had attracted 1,650 contributors and 23,000 Bayer employees had visited the site.

Its success confirmed the power of an informal network for shifting behaviors in our large company. So, in August 2015 we secured board approval to create an innovation committee of 14 top executives and a full-time innovation strategy team of five people, to orchestrate the portfolio of specific initiatives that would create a new way of innovating throughout the company. The first priority was to inspire people with stories of successful internal innovators at Bayer.  We then offered people the opportunity to learn new innovation methodologies and apply them to real business challenges. A third priority was to build more platforms like WeSolve, to help people collaborate and exchange information across the organization. Most importantly, cutting across all these initiatives, we created the network of senior and mid-level managers to connect and inspire people to get engaged in  innovation.

Building an agile network

In 2016, country and function heads were asked to identify innovation ambassadors for each of the markets we’re in: 80 people senior enough to connect innovation to strategy and make things happen. They then helped us identify innovation coaches who would be responsible for bringing ideas to life in their respective business units. More than 600 were selected. Inspired by John Kotter’s dual-operating structure model, we asked all of these employees to maintain their “day jobs” within the established hierarchy, while also using 5-10% of their time to  work on fast-cycle, informal innovation projects  across  silos.

We gave them a three-day on-boarding program – a broad overview of the agenda plus deep insight into one technique (Systematic Inventive Thinking) they could immediately use to support their colleagues. We also provided webinars and conference calls to explain our other offerings and to share learning. What do the innovation coaches actually do? One popular activity is the fast session – a short, structured workshop to address a specific problem.  A manager might be struggling with an overly complex process or a new digital competitor. The coach would quickly assemble a team of four to six people and, using tools from their training, create a simple workshop to address the problem.  In 2018, we counted more than 50,000 fast sessions across the company.  We put on a further advanced training course for highly active coaches (who have run at least ten fast sessions), and 49 have so far done gone to this extra level.

Innovation ambassadors, meanwhile, oversee the coaches, ensure that the initiatives in their respective countries are aligned with the priorities of Bayer’s senior leaders, and serve as cheerleaders for collaborative innovation.

Extending the network

By creating this volunteer network, we were able to make dramatic progress in developing other aspects of our innovation agenda.

For example, in 2017 we created the CATALYST fund, a combination of professional support (using Lean Startup principles) and money to explore larger business opportunities across the company.   By asking the innovation ambassadors, we were able to identify 120 specific challenges within two weeks. We put €50,000 behind 28 of them and by early 2018 we had three pilots: a new business model in animal healthcare, a digital solution for clinical operations, and a gamified education app.  We have also built on and reinforced the agile network through other activities, for example by getting them to run local innovation events, involving them in our open innovation funding platform, and our co-working Live Hubs in Boston, Berlin and Singapore.

The key point is the network has now reached a critical mass, making our job at the center much easier.  We have a waiting list of about 200 people who want to become innovation coaches. This allows us to be selective about who takes on the role. We get them involved informally at first and talk to their line managers to make sure they can add this work to their existing responsibilities.

We now have around 80 ambassadors and 700 coaches across 70 countries, and more than 80% are actively engaged, even though their innovation work is in goes beyond their official job. They in turn have mobilized others:  more than 5,000 people have taken part in innovation events, 5,000 have taken part in webinars and innovation training events, and more than 38,000 people are using Youniverse, the online hub for all our innovation activities.

Three key insights

Our experience in changing the way we work to hasten innovation has given us three key insights:

Innovation is a social activity, and connectivity is an asset. The image of the lone inventor is alluring, but almost always wrong.  Innovation actually happens in teams, in cross-functional workshops, and through the involvement of many.  It is also a highly contagious.  After we introduced the fast session concept, there were some countries where it took off, with fast sessions every week, and everyone wanting to get involved.   This happened not because of a central directive, but because of the energy and skills of a few key individuals.

The dual-speed model needs a new mindset.  The notion that people should spend 5- 15% off their time working on fast-cycle projects, while the rest of their work is conducted at a slower clock-speed, is attractive but requires a lot of adjustment. Fast-cycle work is about experimentation, tolerance of ambiguity, and openness to failure, and these qualities do not come naturally to those who have spent their entire working lives at Bayer.  This isn’t a challenge we have completely resolved. We are still working on defining the right metrics, putting the right leaders in place, and building the necessary level of understanding across the company.

Volunteers need to be refreshed and reinforced.  Now that we’ve built the agile network and created a portfolio of activities to support them, we move on to the next,  arguably  harder, step of institutionalizing the new behaviors across the company. For this to happen, we need to actively replenish our agile network. We’re heartened by the rising number of people signing up to get involved, but we’ll need to keep expanding the team to maintain its impact over time.

Categories: Blogs

When a Country is Facing Political and Human Rights Issues, Should Businesses Leave or Stay?

Harvard business - Mon, 12/17/2018 - 10:00
Steve Bronstein/Getty Images

After the murder of dissident Saudi journalist Jamal Khashoggi, many companies had to urgently decide whether to attend Saudi Arabia’s Future Investment Initiative, a global business conference scheduled to take place just days after news of Khashoggi’s killing broke.

Questions like this involving issues like politics, human rights, or equality often present themselves sooner or later for any business operating in global markets. “I’ve had at least five instances where decisions like that had to be made,” the longtime CEO of Tupperware, Rick Goings, told me. The examples sound familiar: South Africa during Apartheid, China after the Tiananmen protests, Venezuela since the Chavez era, Egypt during and after the Arab Spring, and parts of Mexico today.

Over the course of the last few decades, multinationals have entered and left “frontier markets” like Venezuela, Cuba, Iran, Vietnam, Myanmar, and others. How did they, and how can they, make decisions about entering or leaving these markets, knowing it is never certain when a political, financial, or diplomatic crisis will happen?

Keep a long term focus 

A decision based on short-term financial or legal motives alone is destined to end in problems. It doesn’t matter whether that short-term motive is to make profits or to avoid losses, to follow sanctions or to evade them.

First, consider short-term profits and sanctions, and the cautionary tale of French bank BNP Paribas. According to Reuters reporting, until a few years ago the bank operated in Sudan, a country whose government was under U.S. sanctions for its “continued support for international terrorism, ongoing efforts to destabilize neighboring governments, and human rights violations – in particular with respect to the conflict in Darfur.” To do business in such an environment, as in many other places struck by unrest and turmoil, could still be profitable. According to the Manhattan District Attorney, who later investigated the bank’s practices there for violating U.S. sanctions, that was also the reason why BNP Paribas continued operating in the East African nation: it made financial sense. The compass that was guiding the bank was a financial one.

But that focus on short-term profit was short-sighted – even on purely financial terms. In the case of dealing with Sudanese authorities, BNP Paribas never really made a clear-cut choice when sanctions hit. It continued to operate in the country, even as international pressure on the Sudanese government mounted. It cost the bank dearly: in 2014, the investigating U.S. attorney slapped the bank with a record fine of nearly $9 billion, partially for its dealings in Sudan, partially for its activities in other countries facing U.S. sanctions, like Iran. Its short-term motives led to deep losses.

Leaving a country in order to prevent short-term financial losses isn’t a panacea either. The companies that know this best are those who have been around for a long time, like 152-year-old Nestle. “Financial criteria are very important,” Nestle Chairman Paul Bulcke told me, “but it doesn’t mean financial results today.” The company was and remains present in troubled markets like Cuba, Myanmar, Syria, and Venezuela. In the latter it has “no financial reasons” to be present, Bulcke said. “But Venezuela has been important to us and will one day make a comeback. People continue to eat. Our allegiance is to them. They remember the companies that left, and those that stayed. If you add the perspective of time, it’s not that dumb to stay. It’s an investment.”

Finally, consider the case of a company that adheres strictly to sanctions, but immediately re-enters a country when those sanctions end. The problem with this short-term legalistic approach is that sanctions come and go, but the underlying problems may remain. Cuba, Libya, Iran, and Myanmar in recent times saw sanctions come and go (and in some cases, come back again). A company can’t simply treat a sanction regime as a traffic light. If sanctions are dropped for diplomatic or geopolitical reasons but the beliefs or values of a country’s leaders haven’t changed, issues may surface again. A company’s presence may then backfire. More on that below.

Which decision factors provide a better “true north,” then? Here are a few tried and tested methods, that worked for companies in the past.

First, Do No Harm 

For business executives with a medical background, the Latin maxim “Primum non nocere” will be a well-known and non-negotiable rule. It can be of great help in deciding whether to enter or leave a country facing difficulties as well. For a consumer goods company, it might be easier to see in the Sudan example above why staying in the country despite selective sanctions on the government could be the right decision. All else being equal, a multinational producing milk, bread, or cereals might want to stay in business in a country with a corrupt or authoritarian regime to ensure the population continues having access to food. The alternative — leaving and therefore not supplying those things — may cause more harm to the population.

One country where this equation is particularly relevant today is Venezuela. The country, ever tighter in the grip of a government that erodes human rights guarantees and arbitrarily arrests opponents, has nationalized many companies, and seen many more leave. But consumer goods companies like Polar, Nestle, and Johnson & Johnson so far clung to their presence there, even if they increasingly must cut back production. “We have a connection with the consumers, not the government” Nestle Chairman Bulcke told us. “As long as we can serve them, we do that.” The same is true for Tupperware, CEO Rick Goings said: “If you see how much weight people lost on average, my first concern is: how do we not abandon them? We had to come up with lower priced product, and source locally, but we never left them.” That could be a good “true north” argument for others, too.

Who Benefits?

A second Latin phrase that can offer respite to business executives face with an ambiguous situation is “Cui Bono,” or “Who stands to gain?” In judicial matters, this question is considered to help determine who may have committed a crime. Business leaders providing services that benefit both a suffering population and a profiteering government could ask themselves this question, too. Weighing the interests of both their clients and the government, who stands to gain from us being here, and who stands to lose? If a Swiss engineering company is contracted in a junta-led Myanmar to advise on building a dam that provides electricity to hundreds of thousands of families, should it accept, because it benefits the population? Or should it decline, because the dam benefits the military junta? In this case, the company in question decided to move forward.

For U.S. companies in Myanmar, the dilemma didn’t pose itself for a long time, as there had long been sanctions on the Burmese government. But when opposition leader Aung San Suu Kyi came to power, the sanctions were gradually lifted, and companies could enter the “final frontier”. In 2013, executives from large tech companies, including Google, Cisco, Microsoft and Intel hopped on a trip organized by USAID. That same year, my own organization, the World Economic Forum, organized a major international meeting in Nay Pyi Taw, a city north of Yangon. But even if the largest government and international organizations greenlight a country, it’s important to make your own assessment about who benefits from your entry. Those that did not got a wake-up call this year. Suu Kyi, a heroine of human rights just years before, herself came under fire for the military and government intervention in the Rakhine state. One of the companies that came under scrutiny because of the events was Facebook. Members of the military were believed to have used to platform to spread hatred under the population. The claim is that they benefited from Facebook’s presence, and used it as a weapon against the Rohingya population.

Why Are You There?

A third reflection companies could make in assessing difficult markets, is what their “raison d’etre” is. For a profit-seeking company, profitability should at least be a theoretical possibility when they open a new foreign subsidiary. In a country whose currency in a given year is in free fall, like Argentina’s and Turkey’s this year, it may be non-sensical for a company that is not yet active there to make a large dollar-denominated investment to start operations. Similarly, while consumer goods companies may have a reason to stay in crisis-ridden countries like Venezuela, service firms may no longer see the point of being there. “We left Venezuela. There was no business there for us, and no future,” Patrick De Maeseneire said. He is the CEO of Jacobs Holding, a Swiss long-term investment firm, but talked about Adecco, the largest HR services firm in the world, which he previously led. “Our clients had left, and our leadership – mostly expats – went to Colombia.”

The raison d’etre can also differ per industry. For a services firm, De Maeseneire said, the calculation is different than for a manufacturer: services firms have fewer fixed assets to look after, and their clients often are fellow multinationals. They themselves leave when a crisis strikes. Conversely, companies with long term assets, like factories or buildings, may have an even stronger incentive to stay in troubled markets, but equally should think twice before entering a market.

But when circumstances change and the reason to operate returns, a company should also not hesitate too long to enter. “The first mover has an enormous advantage in growth markets,” De Maeseneire said. “You can capture market share and put up a barrier to entry for others.” When he was CEO of Barry-Callebaut, the world’s largest chocolate producer, he often was among the first to build a factory in Russia, China, and certain countries in Latin America and Africa, like Cote d’Ivoire, Cameroon, and Ghana. With the network of private schools he currently looks after for Jacobs Holding, he equally eyes expansion in emerging markets. “You have to dare to invest,” he said. “We’re in it for the long run. You have to learn to deal with volatility. Business survives politics, fortunately.”

What Are Your Values?

Finally, consider your own and your company’s values, and the priorities you put on each of them. That can be helpful in case a snap decision needs to be made about new events that need responding or emerging crises. Nestle got in such an emergency situation when its plant producing Maggi Bouillon in Syria was bombed and burned down in 2013. As a consequence, the company was forced to shut down its operations in the country. “If we cannot guarantee the safety of our employees, or the quality of our products, we cannot continue to function,” Bulcke told us. In other words, safety and quality is a red line for Nestle. He applied the rule in Congo as well, where he was forced to shut down a factory that he had himself opened many years earlier. But even when the company ceases operations it tries not to cut ties with a country all together. Nestle keeps some 100 people on the payroll in Syria, for example. “Our pain limit is high, and I’m proud of that” Bulcke said, referring to the company’s preparedness to accept short-term financial losses. “We respect ourselves, the other, and the future. Those are our values.”

Others go even a step further. As an executive at Avon in the South Pacific, and later as CEO of Tupperware, Rick Goings decided to remain active in countries that were seen in the West as flaunting human rights. To reconcile this ambiguity, Goings was both principled and pragmatic. In Apartheid South Africa, Tupperware decided to apply the Sullivan Principles, a set of corporate social responsibility rules aimed at putting pressure on the government to end Apartheid, while allowing the company to not “exit and abandon”. “The majority of our salesforce and workforce was black. If we left the country in protest, we took the food off their table, he said” In China, he followed a more pragmatic logic. “I lobbied Congress for Chinese membership of the World Trade Organization,” he said. “It later earned me the Marco Polo Award in Beijing, a rare honor for a foreigner. But because of my lobbying, I was able to protest [the government’s actions on democracy] directly rather than having to abandon.”

Ultimately, each board, and each executive team will need to make its own set of principles and rules to decide whether and when to enter or leave turbulent markets. But the personal compass of decision makers matters. “We can’t live in Fantasyland. Profits matter,” Goings said, summarizing his views. “But you need to be able to look back, put your head on the pillow, and say: wow, this is a good thing we do.”

Categories: Blogs

Help Your Team Overcome Digital Distractions to Be More Innovative - SPONSOR CONTENT FROM WORKFRONT

Harvard business - Mon, 12/17/2018 - 08:30

Alexander Graham Bell once noted that “the inventor … looks upon the world and is not contented with things as they are.” I could say the same of most business leaders I’ve met. With rare exception, they’re not satisfied with the status quo and are driven to innovate and change.

And yet that drive for innovation fails to reach most people on their team — at least not in a way that employees can act on. 58% of knowledge workers say they’re so swamped with tasks that they don’t have time to think beyond their daily to-do list, according to Workfront’s State of Work report. And the average knowledge worker says they spend just 40% of their time doing the job they were hired to do.

This isn’t a new issue, either. We’ve been surveying workers for five years, and the response remains consistent: workers are so busy with distractions that they don’t have time to focus on their primary job, much less invent the future.

Why do we let this happen? If I were the CFO of a manufacturing company and was asked by the board for my manufacturing capacity utilization and I said I didn’t know or that it was only 40%, I’d probably get released to ‘pursue other opportunities.’ And yet many executives who employ knowledge workers accept that there’s no choice but to fly blind and keep putting their people in a work environment that results in them devoting less than half their time to their real work.

That’s crazy. Digital technology should be freeing us up to be more innovative and productive. Instead our technology leads to over communication, a glut of distractions, and the tyranny of the urgent. At the same time, the complexity of modern business causes today’s leaders to struggle to get insight into what’s happening across their company.

What we’re talking about here is a digital work crisis. We’re over-instrumented, yet underserved. We’ve become so real-time we don’t have real time.

Some people look at this digital work crisis and say we will solve it by embracing incremental change and stretching existing platforms to do more than they were made for. So far, this approach has only failed. You can see this in research that found companies spending $1.3T on digital transformation, 70% of which will not achieve their stated objectives. Fortune 500 companies that stuck to antiquated approaches are not just suffering — they are vanishing.

A new generation of leaders know that confronting the digital work crisis isn’t just about surviving. It’s about learning to thrive by embracing a new way to work — an operating model that combines cultural changes and digital technologies in an integrated, well-planned approach to improve revenue, customer experience, and cost.

When it comes to cultural changes, this new model of work requires less hierarchy and more empathy. As I write in Done Right: How Tomorrow’s Top Leaders Get Work Done, the more a leader trusts their team to solve problems, the more their employees will own solutions and invest in securing successful outcomes. This approach gives people freedom to make mistakes and believe that they come to work to do their best. It’s about empowering people to speak their minds and then really listening to the wisdom in the room. In an era as complicated as today, no single leader can possibly have all the answers.

For instance, at Workfront we use a collaborative approach to identify our key initiatives. One way we do this is by gathering teams together and handing each person a stack of sticky notes. Then we set a timer for two minutes and ask everyone to write down one idea per sticky note that might help us accomplish our primary goal. At that point, each person sticks their notes to the wall in random order. We then divide into two teams and invite each team to take half the sticky notes off the wall and group them into four to six clusters or themes.

Every time I’ve done this I’ve found that one or more of the clusters are very similar across the two teams. These clusters become our key initiatives for accomplishing our primary goal. Since these key initiatives arise from the wisdom in the room, they come with team buy-in from the outset, making our chances of innovation and success far more likely.

This new model of work is also built on a system of record that tracks all activity across an organization, provides accurate reporting on what’s happening at each level, and integrates with the myriad of software tools used in an enterprise. Just as businesses use a financial system of record such as SAP, a customer system of record such as Salesforce, and an HR system of record such as Workday, they also use an operational system of record to conquer their digital work crisis. This way they bust down work silos, spend less time in useless status meetings, and free up time to innovate.

No leader today would say they want people to work more and accomplish less. But that’s exactly what’s happening with knowledge work around the globe. Unless today’s leaders figure out a way to successfully navigate their digital work crisis, they’ll be stuck with a workforce that doesn’t have time to innovate. And that’s a shame, because work matters. With an operating model that includes cultural changes and an operational system of record, modern leaders can overcome the digital work crisis and release a team that is able to do their best work.

To learn more click here.

 

 

Categories: Blogs

When Managers Break Down Under Pressure, So Do Their Teams

Harvard business - Mon, 12/17/2018 - 08:00
Anthony Lee/Getty Images

As a leader, much of what you do is relatively forgettable. We don’t mean to insult, but your routine actions on routine days are experienced by your direct reports as, well, routine.

But for non-routine days — the days when you are under the gun, feeling the heat, or pushed to your limits — how you respond under the pressure makes an indelible impression on the people around you. Our latest research shows that your temperament in these crucial moments has a tremendous impact on your team’s performance.

When the hammer comes down, are you calm, collected, candid, curious, direct, and willing to listen? That would be ideal, wouldn’t it? Or would your direct reports describe you as upset, angry, closed-minded, rejecting, or even devious?

We asked more than 1,300 people in an online survey to describe their leader’s style under stress and the impact of that behavior on their work. We found that a large majority of managers and leaders buckle under pressure. Specifically, respondents reported that, when under pressure:

  • 53% of leaders are more closed-minded and controlling than open and curious.
  • 45% are more upset and emotional than calm and in control.
  • 45% ignore or reject rather than listen or seek to understand.
  • 43% are more angry and heated than cool and collected.
  • 37% avoid or sidestep rather than be direct and unambiguous.
  • 30% are more devious and deceitful than candid and honest.

One executive we worked with was adamant and deliberate about creating a fun and supportive atmosphere where his team felt safe to try new things. He saw his role as supporting people and developing talent. And yet, to his surprise, most of his team labelled him a “jerk.” As we described a time when his team found him to be extra “jerky,” he said, “I know what you’re thinking: you’re thinking I’m some sort of hypocrite. But I’m not. Ninety-five percent of the time, I’m the fun, supportive guy I’ve described. It’s only five percent of the time when I lose my temper or forget what I should be doing and I say stupid things like that. Those statements are not an accurate reflection of who I am.”

And while his team agreed he was great 95 percent of time, this non-routine behavior left a lasting impression. His team felt it was those few moments — the five percent of moments when stakes were high, and the heat was on — that revealed the truth about who he really is.

And there’s more to the story. The research found that when leaders buckle under pressure, it doesn’t just hurt their influence, it also hurts their teams. Respondents said that when their leader clams up or blows up under pressure, their team members have lower morale; are more likely to miss deadlines, budgets, and quality standards; and act in ways that drive customers away.

Our research reinforced this. One out of three leaders were seen by their direct reports as someone who can’t talk or engage in dialogue when the stakes grow high. And when leaders fail to practice effective dialogue under stress, their team members are more likely to consider leaving their job than teams managed by someone who can stay in dialogue when stressed. Team members are also more likely to shut down and stop participating, less likely to go above and beyond in their responsibilities, more likely to be frustrated and angry, and more likely to complain.

A leader’s brash communication style also has a domino effect on team morale and psyche. One employee of a large multinational company told us that his direct leaders were terrible in high-stakes conversations, and the more he tried to speak up and engage, the more verbally violent his leaders became. He and his front-line colleagues grew increasingly silent. It was so bad that people adopted the attitude: “They pay me just enough not to leave, and I work just hard enough for them not to fire me.” They also adopted the saying, “$1000/week for hide and seek.” It wasn’t that they were just a little disengaged; they deliberately avoided management, contributed as little as they could get away with, and picked up their check at the end of each week.

Our research reinforced this. One out of three leaders were seen by their direct reports as someone who can’t talk or engage in dialogue when the stakes grow high. And when leaders fail to practice effective dialogue under stress, their team members are more likely to consider leaving their job than teams managed by someone who can stay in dialogue when stressed. Team members are also more likely to shut down and stop participating, less likely to go above and beyond in their responsibilities, more likely to be frustrated and angry, and more likely to complain.

You and Your Team Series Communication

Let’s walk through an example to see how a few simple skills can help a leader be at their best even when the pressure is on. Imagine you’ve just come from a meeting with a customer, your boss, and your boss’s boss – and it didn’t go well. You thought your company’s agreement with the customer stipulated a 15-day order delivery. But that wasn’t what the contract actually specified. The timeframe was 10 days so you and your team have been missing the mark every time. Your boss and her boss were embarrassed and angry and as they left the meeting, put the onus on you to fix the situation ASAP. Now, you have to go back to your team, including the contract officer who originally misunderstood the contract, and get them to put in the evening and weekend work it will require to meet this week’s deadlines.

  • Determine what you really want. You’re humiliated and angry and you blame your contracting officer for the mistake. But before you allow your emotions to take over, stop and ask yourself, “What is it I really want long term, for myself, for the contracting officer, and for the team?” The answer to this question becomes your North Star, the purpose that guides your actions. In the moment, you might feel like proving to the contracting officer that you’re angry, but is that productive over the long term? Instead, focus on a positive destination like “Showing my best self” or “Making sure the team understands my appreciation for the sacrifice I’m going to ask them to make,” for example.
  • Challenge your story. It would be easy to make the contracting officer the villain. Not only does it sound plausible, but it would also make you blameless — a victim, even. You would feel justified in your anger. However, the best leaders challenge their stories. So you could ask, “Why might a rational, reasonable, and decent person make the mistake that she made?” and “What role did I have in allowing her mistake to go unnoticed and uncorrected?” These questions move us from angry judge to curious problem solver, and make us far more effective as leaders.
  • Start with facts. When we’re angry, we lead with our emotions, instead of with the facts. Skilled leaders tamp down the temptation to level accusations, and gather the facts. Specifically, focus on what you expected: the commitments, standards, policies, or targets that were missed. Then, add what you observed: the specific actions with dates, times, places, and circumstances as necessary. Don’t add your conclusions, opinions, or judgments. Because facts are neutral and verifiable, they become the common ground for problem solving.
  • Create safety. When you’re under pressure with your job or reputation on the line, how do you light a fire under your team without showing them your anger? Can you get your team to put in the overtime you’ll need from them without threatening them? The short answer is yes. Our study showed that teams work harder and more effectively if a boss doesn’t lose their temper with them. So you don’t have to threaten. Share your positive intent by saying something like, “This is not about blaming, it’s about fixing. I want us to focus on how we can solve our immediate problem. Then we can circle back to find ways to prevent it from happening again.” By framing your intent, you get your team focused on what they need to do, and not on how they are being mistreated.

When the heat turns up at work, most of us aren’t at our best. If you’ve lost your temper in the past, be easy on yourself. You may do it again. But don’t be discouraged – or complacent. Ask yourself, “When it matters most, who am I?” While it isn’t easy to step up to your best self under pressure, it is incredibly important. These are defining moments for you and for your team.

Categories: Blogs

A Look into Microsoft’s Data-Driven Approach to Improving Sales

Harvard business - Mon, 12/17/2018 - 07:00
Orbon Alija/Getty Images

Companies are beginning to utilize their employees’ behavioral data — generally known as people analytics — to better understand and improve their sales operations, with strong results. Microsoft, where we work, is no exception, and B2B sales is one of the areas where we are seeing the most value. Our findings, and the ways we came to them, can be useful to other sales organizations looking to make internal changes of this type or optimize how their salespeople relate to customers.

In mid-2017, we executed a major redesign of our sales organization in response to what our customers needed from us, and to better align our selling approach with cloud services sales model (in this model, customers pay based on usage versus a traditional fixed licensing deal). We knew we needed a fast and effective transition to the new model without dropping the ball with our customers, but the undertaking was daunting and the stakes were high: With a complex sales organization of 20,000-plus salespeople covering large enterprises to small business customer segments, and spanning 100 countries, it was important to see how these changes impacted our customer collaboration and partnerships. We needed to get answers to some of our biggest questions, including:

  • Are we spending enough time with our most important customers?
  • Are new hires ramping up and collaborating with customers as quickly as expected?
  • Are they growing their internal and customer networks?
  • Are salespeople collaborating with one another effectively?
  • How is all this impacting our customers’ own business success?

Our hunt for answers started by using our own Workplace Analytics product to aggregate de-identified calendar and email metadata for thousands of enterprise salespeople. We then combined that with organizational and customer relationship management data to determine how the people selling via the cloud sales model were collaborating with their internal teams, customers, and partners. The next step was to correlate sales outcomes with these behaviors to identify the patterns that correlated with better results. These analyses were done in part to help us through a massive transformation and in part to better align us in responding to our customers’ needs and expectations. To date, the analyses revealed several actionable insights, which we came to with the help of our colleagues Ben Boatman, Chris Moss, Gabriel Zhou, Jared Baker, and Fabio Correa.

1. Networks are vital — and a reorg could destabilize them. One of the first things we learned is that salespeople with larger, more inclusive networks tended to have better outcomes. This is consistent with a number of other similar studies. Based on this finding, we initiated a program to coach our sales teams to focus on efficiently building and growing their internal and external networks. By looking at network size relative to tenure within the company, we were further able to establish that it typically takes roughly 12 months for most people to build these networks.

This underpins the importance of stability in roles over that time period, and beyond. It also left us concerned that the reorganization was forcing the salesforce to rebuild their networks from scratch, which could be costly and sub-optimal for our customers. To mitigate this cost, we rolled out programs to emphasize manager coaching and invested in facilitating rapid network growth for new hires.

2. We engage very differently with high-growth accounts. Another key aspect of the re-org was to ensure continued growth of our business and the right level of engagement with customers. Looking at the amount of time teams spent interacting with each of their accounts, as well as the number of individual contacts they were connecting with, allowed us to identify statistically significant differences in how teams engaged with the different account segments. On average, teams engaged with twice the number of customer contacts in our higher growth accounts, and collaborated double the amount of time with these customers as compared to lower growth accounts.

To make sure this wasn’t just a one-time anomaly, we also confirmed that this pattern was consistent month over month. Correlation vs causation is always an open question with an initial finding like this: are the accounts higher growth because we spend more time with them? Or do we spend more time with them because they are higher growth? Deeper analysis showed that investing more time and energy into partnering with some of these lower growth accounts could improve them. As a result, we adjusted our sales coverage models to enable more face time with these previously underserved customers.

3. Relationship investments correlate with customer satisfaction. It was important that the new sales model also drives happier customers and partners. Therefore, our next step was to look for patterns associated with customer satisfaction. We found that customer satisfaction is directly correlated with customer collaboration time (email and meetings) across all Microsoft roles and teams engaging with customers, including product engineering and marketing teams.

In the enterprise segment specifically, satisfied customers are the ones we spend the most time with and the least satisfied are the ones we barely keep in touch with. This and other findings encouraged our sales leaders to revamp internal business processes such as business reviews and forecasting meetings to be more efficient. We also reduced the number of enterprise accounts per seller to allow for more customer interaction. This enabled our sales teams to spend more time building and maintaining relationships across their entire account portfolios. We also observed behavioral differences in different countries — some use email more frequently than others, for example U.S. and Canada sellers directly schedule meetings with customers through Outlook, while in Japan customer meetings are more formal and scheduled via executive assistants. This confirmed our understanding of various cultural norms and collaboration patterns which was an important input to our analysis.

4. Customer satisfaction (and churn) can be predicted. As part of our ongoing organizational efforts to better understand our customers, one of our teams built a machine learning model that uses more than 100 features to predict customer satisfaction. We worked closely with this team to add the behavioral data about collaboration we gathered into the model. After our analysis, we discovered that collaboration became the top feature in predicting customer satisfaction, and helped increase the accuracy of the model from 78% to 93%.

Being able to predict satisfaction of each of our customers at any given time with this level of accuracy was a groundbreaking discovery for us. Further, having a deeper understanding of how our team’s interactions influence customer satisfaction by segment has huge upsides: it enables us to intervene in time to change high-risk customers into low-risk ones, and to offer new opportunities to highly satisfied customers. Our ability to predict customer satisfaction with this level of accuracy will help us keep an ongoing pulse on our transformation and intervene in a timely manner to ensure customer satisfaction at all times.

What’s next. Our goal is to arm each seller with these four insights on an ongoing basis, setting them up to be as successful as possible in creating value for our customers. We are currently testing a prototype in which a customized and automated email is sent monthly to each seller to help guide them toward behaviors that drive higher outcomes. Importantly, the data sent to each seller is set up for their eyes only; to protect everyone’s privacy and retain trust in the system, no one else, not even upper management, can see anyone else’s data.

Salespeople are provided the following every month:

  • Predicted satisfaction scores for their customers
  • Reminders to connect with customers they’ve lost touch with
  • Internal and external network size in comparison with benchmarks in their local areas
  • Recommendations on how to grow their customer networks through LinkedIn Sales Navigator
  • Time spent with each of their customers as compared to addressable market
  • Top internal collaborators and reminders to connect with other sales roles that are also working with their customers

We believe this information will empower our sellers with nudges and recommendations that are simple, actionable, and effective. Early reactions are extremely positive. If we continue do our jobs well, our sellers will be empowered to be as successful as possible, and will get better and increasingly connected to customers over time.

We also learned a few things along the way that were critical in helping us shape the story and vision to drive business impact.

  • Executive sponsorship is critical, and we couldn’t have gotten our analysis off the ground without it. Their support helped us get the right level of visibility for continuous analysis and digging deeper, which ultimately got us to something more meaningful and actionable.
  • Investment in business analyst, data science, and data engineering talent was essential. It takes a real commitment to unlock and operationalize the most powerful insights, and it takes a lot of people to do it. We believe bringing the right people onboard is worth it.
  • Freeing data from silos and cross-team collaboration was key to our success. As for any analytics project, we needed to source data from multiple sources across the company to correlate behaviors with sales outcomes. Without this, our efforts would be fruitless.

We’ve invested a lot of time and resources in building out our behavioral data capabilities, and they’re already generating tremendous value. However, we believe we are still in the very early phases of uncovering what’s possible. We have a long way to go, but so far, our transformation is working. Pushing the envelope on behavioral analytics has been a key ingredient to our success, and hopefully our insights can help your salespeople, too.  

Categories: Blogs

When You and Your Friend Both Want the Same Promotion

Harvard business - Mon, 12/17/2018 - 06:05
Gemma Escribano/EyeEm/Getty Images

Research generally shows that having friends at work can increase productivity and engagement. However, a new study by Wharton researchers Julianna Pillemer and Nancy Rothbard finds that there can be a dark side to having friends at work, especially if what’s best for the friendship conflicts with what’s best for the organization.

Take this example: Suppose two colleagues, let’s call them Lata and Andreshave worked on the same team for over five years and are close friends. They’ve supported and coached each other whenever work challenges come up for one of them. They get together with their families on weekends. And they both cherish having a close friend who is also a colleague.

Recently, however, a point of tension came up for Lata and Andres. Their supervisor told Lata that they were both being considered for a major promotion and whoever received the job would end up managing the other. While both were excited about this possibility, they also felt uncomfortable. Their relationship had always been mutually supportive not competitive. And they both had good reason to want this promotion. Lata’s aging parents had moved in with her family, so she’d recently bought a bigger house — and now had a large mortgage to pay off. For Andres, as a single parent with three children, this promotion would mean he would be doing more team management and less client-related travel, allowing him to spend more time with his kids.

After a grueling round of interviews, Lata was selected for the promotion. Andres felt disappointed. While he was happy for Lata, his self-esteem had taken a hit. His closest friend at work was now his manager, which meant a new awkwardness between them which inevitably impacted their ability to work together.

What do you do when a work friend and you are both up for a promotion — or in any other competitive scenario where one of you stands to “win” while the other stands to “lose”?

First, emotional balance and perspective are critical. Remind yourself that this is just one of many promotions that will come up in your career trajectory. It’s easy to focus on the trees and not the forest and lose perspective — especially when you’re caught up in an emotional situation. Brain-imaging research shows that, when you are stressed or anxious, reason and logic are negatively impacted. Taking a step back, gaining perspective and seeing things from a broader point of view can help. After all, how much better is it to have a manager who respects, likes, and understands you than a stranger who may not “get” you as well? Given research that shows that our heart health is directly linked to our relationship with our boss, having a leader you like and who likes you can be a huge advantage. A supervisor who appreciates and cares about you is likely to help support your career. For example, Andres knows Lata will always vouch for him.

You and Your Team Series Friendships

Perspective will also help you realize that your friendship is probably more important to you than the promotion. Research shows that social connection is one of our greatest needs after food and shelter. We are happier and more engaged at work when we have positive social relationships with the people we work with (even more so than when we receive a large paycheck). Loneliness, on the other hand, can harm both our psychological and physical health, as leading loneliness psychologist John Cacioppo, coauthor of Loneliness: Human Nature and the Need for Social Connectionhas shown in his work. Friends at work lead to a host of benefits for us both personally and professionally, including higher performance and lower burnout rates. Rather than dwelling on his own unhappiness with the promotion outcome, Andres might remind himself of how delighted he is for Lata. That social connection is more beneficial for Lata than dwelling on what he’s lost.

Second, keep your feelings of self-worth in check. The outcome of the promotion selection is not a judgment on you. Promotions can often be arbitrary and subjective. It’s not always about who is better for the job. For example, research shows that people get ahead at work due to relationships more than technical skills. We all know that “politics” almost always plays a role in these sorts of decisions as well. In the West, we mistakenly overemphasize situations as being about us. As pioneering cultural psychologist Hazel Markus has written about in her book Clash!: How to Thrive in a Multicultural World, if you’re from an individualist country like the U.S. or many European countries, you (erroneously) tend to think that you are solely responsible for your successes or your failures. People from collectivistic cultures like East Asian countries have a more holistic view: understanding that whether or not you win has to do with many more things than your own merit. The decision to promote (or not promote) you may have little to do with your actual skill, and more with factors outside of your control.

Third, communication and planning are key. Talk to your friend about the situation to diffuse the tension. Discuss your discomfort. Share your determination not to let this work situation impact your friendship. Andres and Lata would benefit from discussing what they would like their work relationship to look like and how to make sure the imbalance of power doesn’t impact their personal relationship. Even before a decision is made, it would help both Andres and Lata to think through the possible outcomes and how they would maintain their friendship.

The upsides of having friends at work are undeniable. But, of course, there are tricky situations to navigate. The key is to use your emotional intelligence to make sure you — and your friendships — can survive despite what happens in the organization.

Categories: Blogs

Proven Retention Strategies to Help Reduce Employee Turnover

Hr Bartender - Sun, 12/16/2018 - 02:57

It’s no surprise that recruiting is a challenge. On some level, finding the right talent is always a challenge. So it’s logical that, once organizations find the right employees, they want them to stay. I mean no one says, “Hey, let’s hire Leonard. He’s not going to be very good and he’ll leave in a few months.”

The first thing that organizations need to realize is that employee retention is everyone’s responsibility. Turnover and retention are not “HR issues”. The factors that influence retention extend beyond human resources. The entire organization needs to buy-into making retention part of their role. 

And if you’re wondering what those factors are that influence turnover, I did a survey here on HR Bartender about why employees leave companies. The common wisdom is that that employees leave bad managers.  But the top reason may surprise you! Businesses need to be ready to address the issues. Here are a few popular posts from the blog that might help:

Reduce Turnover: Develop an Employee Experience Strategy

The employee experience drives turnover. Start with a great candidate experience and continue through the employee lifecycle. 

What Employers Should Do When an Employee Resigns

When an employee resigns, employers should have a process in place to transition them properly. Here are some things to consider. Employees should be able to leave the organization with respect. 

According to a survey from Korn Ferry, ninety-eight percent of senior leaders believe that structured onboarding programs are the key to employee retention. Making sure the company’s onboarding program is best-in-class only makes sense. 

How to Assess Your Company’s Onboarding Program

Onboarding is more than just orientation. Done right, it helps retain and engage new hires. So, we need to assess our onboarding program for maximum effectiveness.

Companies Should Include Feedback Training in Onboarding

Feedback is an essential tool for maximizing employee engagement. So, include feedback training in your onboarding.

How to Evaluate the Success of Your Company’s Onboarding Program

Good onboarding is the key to new hire success. To evaluate the impact of your onboarding program, here are five effective data and feedback methods.

New Hire Onboarding: Take a Pulse to Increase Employee Retention

Employee retention is critical today. A pulse survey can help during onboarding to structure and receive effective feedback.

Organizations hire employees and want to retain them. But that means having the right processes and programs in place, so the employee is successful. It also means making employee success an organizational priority – not an HR program.

The post Proven Retention Strategies to Help Reduce Employee Turnover appeared first on hr bartender.

Categories: Blogs

VIDEO: Listen to Your Inner Voice

John Baldoni - Fri, 12/14/2018 - 12:29

All of us need to pay attention to our instincts. So often what we think is a good choice may indeed be the right choice.

Such a decision may not be deliberative, but it was the right call. And I think the lesson for leaders is that we need to trust ourselves to make the right call in the moment.

On the other hand, spur-of-the-moment decisions can be disastrous. Deciding to buy a house you cannot afford, quitting your job because you are mad, or marrying a partner after a first date may not be sound decisions. They may work out, but chances are they will not.

Your inner voice no doubt will point you in the right direction.

First posted on SmartBrief on 3/10/2017

Categories: Blogs

Fostering Trust Between Managers and Employees (HBR)

John Baldoni - Fri, 12/14/2018 - 12:28

A colleague told recently me a story about a sales professional he knew who was struggling.

He was not making his draw and as a result was feeling tremendous pressure. His job seemed to be in jeopardy, save for one thing: his sales manager believed in his talent. The manager sat the young man down and told him to forget about not making the draw or repaying it. Focus on the customer. The young man did and, within weeks, his sales improved. Soon, he was the company’s top performer.

Stories such as these fuel the sales profession, but they have implications far beyond the sales transaction, including to those of us who have not sold anything except candy for a school fundraiser. The nut of the story demonstrates a key aspect of developing your people. Trust. We speak often of how managers need to earn the trust of those who report to them, but we don’t talk as much about how managers and employees need to trust one another. Here are some tips for fostering trust in the workplace.

Communicate openly. Just because you can speak doesn’t mean that you’re communicating. All of us are so pressed for time that we listen only when we are pushed against the proverbial wall. That’s too bad because when you take the time to listen — managers to employees, and employees to managers — you learn what’s really going on. Often you learn about problems before they occur; you may also learn ways to do things more simply and cost effectively.

Go with your gut. As with the story about the trusting sales manager, instinct plays a huge role in fostering trust. Managers who’ve been in the saddle for a couple of years soon learn to separate the strays from herd. They know who’s putting forth the effort and who’s just clocking time.

Tune your antennae. Watch for the warning signs – absenteeism, tardiness, and missed deadlines. But also watch for the positives – staying late, helping colleagues, and volunteering ideas and projects. Too often we focus on the negative (that’s our culture) to the detriment of looking for the good things people are doing.

Following these guidelines will help you foster mutual trust, but such pointers will not make up for the missed call. More than one manager – in fact most managers – have been burned by putting too much trust in an individual who did not deserve it. Your gut can deceive you, especially if you’re dealing with a crafty employee who knows how to pull one over on you. They know how to play you like a con-man coming in for a score. They specialize in emotional blackmail, getting the boss to feel bad for the employee’s inability to do the job.

As a result of these types, managers take a jaundiced eye at any employee, failing to provide them with the support they may need to succeed. It’s important to remember that the overwhelming majority of employees want to do a good job – chiefly because it’s in their best interest to do so – but also because their desire to succeed is grounded in their perception of self.

My advice to managers is simple: don’t let one or two connivers cause you to downplay the intentions and contributions of the people who really do work hard.

First posted on HBR.org 9/26/2008

Categories: Blogs

The Best Leadership Books of 2018

Leadershipnow - Fri, 12/14/2018 - 11:54


The Mind of the Leader: How to Lead Yourself, Your People, and Your Organization for Extraordinary Results
by Rasmus Hougaard and Jacqueline Carter

(Harvard Business Review Press, 2018)

The Mind of the Leader offers a radical, yet practical, solution to solve the leadership crisis. Organizations need to put people at the center of their strategy. They need to develop managers and executives who lead with three core mental qualities: mindfulness, selflessness, and compassion. (Blog Post)




Leap: How to Thrive in a World Where Everything Can Be Copied
by Howard Yu

(PublicAffairs, 2018)

In today's competitive environment, where latecomers can copy almost any product or service, companies can no longer just be good at what they do. Is the displacement of early pioneering companies an inevitable fate in the modern economy? Outlasting copycat competition in any industry is difficult; doing so over decades is nearly impossible—unless you leap. (Blog Post)




Reinforcements: How to Get People to Help You
by Heidi Grant

(Harvard Business Review Press, 2018)

Asking for help makes most of us uncomfortable and we often go to great lengths to avoid doing it. We fear rejection. We fear that people we think less of us. We believe people don’t really want to help. But the truth is we need the help and support of others to succeed. To be sure, leadership is fundamentally about asking people for help. (Blog Post)




Never Stop Learning: Stay Relevant, Reinvent Yourself, and Thrive
by Bradley R. Staats

(Harvard Business Review Press, 2018)

What did you learn today? We often think of learning as something we are doing all of the time. But we aren’t. Mostly we are repeating or reinforcing what we already know. And that gets in the way of learning. Like most things worthwhile learning must be deliberate. (Blog Post)




What Happens Now? Reinvent Yourself as a Leader Before Your Business Outruns You
by John Hillen and Mark D. Nevins

(SelectBooks, Inc., 2018)

The ability to reinvent yourself is core to your success as a leader. As you take on more responsibility, the demands on you as a leader change. If disrupting yourself isn’t part of who you are, you will get left behind. If you are just doubling down on what you’ve always done, you will miss the opportunities. When conditions change, you have to change too. (Blog Post)




The Dichotomy of Leadership: Balancing the Challenges of Extreme Ownership to Lead and Win
by Jocko Willink and Leif Babin

(St. Martin's Press, 2018)

So much of leadership is managing tensions. Leaders must know when to adapt. After the publication of their first book, Extreme Ownership, many people latched on to the aggressive implications of the word “extreme” and missed the more nuanced balance that a leader must have. “Leaders must find the equilibrium between opposing forces that pull in opposite directions.” The Dichotomy of Leadership is meant to help leaders find that equilibrium. (Blog Post)




Professionalizing Leadership
by Barbara Kellerman

(Oxford University Press, 2018)

Over the last 40 years, the leadership industry has grown exponentially. Yet leadership education, training, and development still fall far short. Moreover, leaders are demeaned, degraded, and derided as they never were before. Why? Leadership in the first quarter of the present century is different from what it was even in the last quarter of the past century - which is why leadership taught casually and carelessly should no longer suffice.




Dear Founder: Letters of Advice for Anyone Who Leads, Manages, or Wants to Start a Business
by Maynard Webb with Carlye Adler

(St. Martin's Press, 2018)

What began as a project to provide guidance to a select group of founders in the Webb Investment Network has been expanded and offered to founders of all types and those who need to have a founder’s mindset. The result is Dear Founder. (Blog Post)




This Is Day One: A Practical Guide to Leadership That Matters
by Drew Dudley

(Hachette Books, 2018)

This is Day One is about choosing to lead. Everything worthwhile in life begins with a Day One. “If you want to be a leader, chose to be a leader today. Repeat that choice every day. It doesn’t matter if you failed to do it yesterday or if you’ve done it every day for a decade: every new day begins with a recommitment to that choice.” (Blog Post)




ICONIC: How Organizations and Leaders Attain, Sustain, and Regain the Highest Level of Distinction
by Scott McKain

(St. Martin's Press, 2018)

“Iconic organizations and leaders have become such universal symbols of distinction they are not only irresistible to customers in their marketplace, they compel interest and admiration across a wide spectrum.” How do you attain iconic status? The answer is explained in detail in this book. (Blog Post)




Five Stars: The Communication Secrets to Get from Good to Great
by Carmine Gallo

(St. Martin's Press, 2018)

“Your ability to communicate persuasively is the single greatest skill that will set you apart in the next decade.” There is so much in this book that will help you perform better in all of your communication. If only read one book on communication this year, this is it. (Blog Post)




Burn the Business Plan: What Great Entrepreneurs Really Do
by Carl J. Schramm

(Simon & Schuster, 2018)

If you are thinking of starting a business—and apparently nine million Americans are currently thinking about it and only about 500,000 actually do each year—you will want to read Burn the Business Plan. (Blog Post)




Powerful: Building a Culture of Freedom and Responsibility
by Patty McCord

(Silicon Guild, 2018)

When it comes to recruiting, motivating, and creating great teams, Patty McCord says most companies have it all wrong. Powerful is a book of advice gained from her experience at Netflix. She began working with Reed Hastings to identify the behaviors that they wanted to see become consistent practices and worked to instill the discipline of actually doing them. When established they were communicated over and over again and eventually became known as the Netflix Culture Deck. (Blog Post)




The Meaning Revolution: The Power of Transcendent Leadership
by Fred Kofman

(Currency, 2018)

Fred Kofman's approach to leadership has little to do with the standard practices taught in business school and traditional books. Bringing together economics and business theory, communications and conflict resolution, family counseling and mindfulness mediation, Kofman argues in The Meaning Revolution that our most deep-seated, unspoken, and universal anxiety stems from our fear that our life is being wasted--that the end of life will overtake us when our song is still unsung. Kofman claims that transcendental leaders, wherever they are in the hierarchy, are able to put aside their self-interests and help others to feel connected with others on a team or in an organization on a great mission and part of an ennobling purpose.




Questions Are the Answer: A Breakthrough Approach to Your Most Vexing Problems at Work and in Life
by Hal Gregersen

(HarperBusiness, 2018)

The questions we ask determine our outcomes in leadership and life. The key to success is asking a different question. Gregersen explains the conditions we can create in our lives that will give rise to better questions—life-changing questions—that will provide us with better answers.





Biographies:


Connecting the Dots: Lessons for Leadership in a Startup World
by John Chambers with Diane Brady

(Hachette Books, 2018)

Since stepping down as CEO of Cisco in 2015, John Chambers founded the venture capital firm JC2 Ventures specializing in startups. That experience has led him to write Connecting the Dots as a way to help others to learn from the key events in his life and career as they navigate business and life. It has always been true, but it is worth repeating: “What will differentiate the winners from the losers won’t be technology or capital but leadership and a willingness to learn.” (Blog Post)





Entrepreneurial Leader: A Lifetime of Adventures in Business, Education, and Government
by William H. Donaldson with Karl Weber

(Greenleaf Book Group, 2018)

Donaldson and Karl Weber extract relevant lessons for leaders in Entrepreneurial Leader. The thread that runs through his career is the entrepreneurial mindset. That mindset is “about the application of creative thinking and prudent risk-taking to build innovative, long-lasting organizations in any sector of the economy.” (Blog Post)




Leading Matters: Lessons from My Journey
by John L. Hennessy

(Stanford University Press, 2018)

Leading Matters is about the journey. The stories Hennessy tells here are revolve around the ten elements that shaped his journey and how he relied on these traits in pivotal moments. The elements are relevant to any leader at any level. As he observes, the higher up you go the crises just get bigger and come faster. (Blog Post)




Leadership In Turbulent Times
by Doris Kearns Goodwin

(Simon & Schuster, 2018)

In this well-structured study, Goodwin begins by looking at the lives of Abraham Lincoln, Theodore Roosevelt, Franklin Delano Roosevelt, and Lyndon Johnson in turn, when they first entered public life. Unremarkable at this stage of their life they, like most young leaders, made mistakes stemming from inexperience, cockiness, lack of caution, outright misjudgments, and selfishness.” But more importantly we “see the efforts made to acknowledge, conceal, or overcome these mistakes.” This of course, is a key to their eventual success. (Blog Post)



Related Interest:
Best Leadership Books of 2017
Best Leadership Books of 2016
Best Leadership Books of 2015

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Categories: Blogs

Stopping Data Breaches Will Require Help from Governments

Harvard business - Fri, 12/14/2018 - 10:00
Martin Child/Getty Images

Not a month goes by without a major corporation suffering a cyber attack.  Often state-sponsored, these breaches are insidious, difficult to detect, and may implicate personal information relating to millions of individuals. Clearly, the current approaches to safeguarding sensitive data are insufficient. We need to reorient expectations for the role of the private sector in cybersecurity.  As the risk of cyberattacks has become better appreciated, we see an increasingly punitive focus on holding corporate America solely responsible.

Multiple, overlapping laws at the national and state level require companies to have “reasonable” security, a concept that is largely undefined and elusive, especially given that threats and available defensive measures constantly evolve. And regulatory enforcement actions and lawsuits in the wake of cyberattacks declare any exploited security vulnerability to be de facto “unreasonable,” without a meaningful assessment of the company’s overall security program or acknowledgement that the company has been the victim of a crime.

This approach is premised on an unreasonable expectation that every company in the United States has the resources and capability to defend itself against even the most sophisticated cyber actor.  We should move away from laws that focus on finding companies at fault, rather than as victims of criminal cyber activity.  This framework is neither fair nor effective in improving our collective cybersecurity.

In our experience, despite increasing security spend, most companies face significant obstacles to successfully managing cyber risk.  Although some industry security standards have emerged, they are  vague, and available security solutions are seldom turnkey.  Rather, effective security requires application of significant judgment in the context of unique and complex corporate network architectures, as well as the ability to adapt as security solutions and threats evolve.  Unfortunately, the talent pool with the requisite cyber experience and knowledge is limited.  It is simply not possible, at present, for every company in America to have sufficient internal cyber expertise to manage the risk.

The challenge is compounded by the resources and sophistication that state and criminal cyber attackers can bring to bear.  In no other arena do we expect every business to defend itself from foreign intelligence and military agencies or sophisticated criminal threats.

Although there has been a significant focus on sharing threat information, both within the private sector and between the government and the private sector, such sharing remains incomplete at best, particularly when it comes to the techniques, tactics, and procedures that particular actors are employing.  As a result, companies often lack sufficient knowledge of the specific threats they face so they can best defend themselves.

Given these and other factors, companies that suffer cyberattacks are, and should be treated primarily as, victims.  When a bank suffers a physical robbery, we do not think of blaming and shaming it – even though there is almost always some additional precaution the bank could have taken that might have helped prevent the attack (such as a police officer stationed at every teller window or limiting customer access to tellers).  While banks are expected to implement some security measures, there is no expectation that those measures will prevent criminal attacks entirely, and banks are not vilified if they did not have every available precaution in place that might have prevented them.  Yet in the cyber context, a company that suffers a breach faces a substantial risk of multiple regulatory investigations and class action lawsuits, all focused on assigning blame to the organization for having inadequate security measures to defeat the criminal attack perpetrated by others – no matter the strength of the company’s overall security program or the amount of the investment it has made in security.

That perspective is not only unfair, but counterproductive.  Instead of focusing on remediating the incident, restoring operations, improving security going forward, and mitigating potential harms, a company in the midst of a cyber breach also needs to worry about the record that is being created – what is being written down, whether lawyers are sufficiently involved in the forensic investigation, and other considerations bearing only on protecting against liability.  Moreover, the fear of potential downstream liability constrains what information a company is willing to share – it may not disclose the incident at all, let alone how and why the intruder was able to evade existing security measures, depriving the broader community of the opportunity to learn lessons from the incident, as happens in aviation and other industries.

Although the Cybersecurity Act of 2015 provided some protections, they are narrow and have not resulted in a material increase in information sharing.  As a result, our collective cybersecurity is diminished:  we do not harness the enhanced security or efficiencies that a more collaborative approach to threat intelligence and defense would yield.

We need to reorient our cybersecurity focus.  We should place less burden on individual companies by focusing more on systemic ways to address cyber threats.  In part, that approach would require the federal government to take a more active role in cyber defense.  The government has a number of comparative advantages over the private sector, such as the ability to collect and exploit intelligence and to coordinate internationally with other governments and law enforcement agencies.  The government should do more to give the private sector the benefit of these advantages.

For example, the government should devote more resources to collecting intelligence about potential cyber-attacks against private entities, particularly from nation-state actors, and then take steps to help prevent them — not merely notify companies believed to be at risk and then leave them alone, with imperfect and incomplete information, to investigate and respond.   As the Department of Homeland Security takes on greater responsibilities for identifying and minimizing cybersecurity risks to the U.S. economy it should issue pragmatic, cost-effective operational guidance to companies on how to defend against evolving risks.

We also need to focus more on incentivizing security improvements at points in the cyber ecosystem that can have a scale effect and protect large groups of users and companies, rather than leaving each one on its own.  We are collectively better off the more that software providers can use secure coding practices and thereby prevent a vulnerability – rather than requiring every user to install a patch somewhere down the line.  We will also be better served if more Internet service providers mitigate the effects of a botnet by filtering traffic to limit IP-spoofing – rather than requiring every target to fend off a denial of service attack.

Legal and policy reforms are likely needed to achieve these goals and encourage companies to collaborate with the government on these initiatives.  Such collaboration is unlikely unless the law provides greater confidentiality and liability protections than those presently available for companies that take actions to aid our collective cyber defense.  But with the right protections, companies may be more willing to join forces with the government in this way and others to reduce cyber risk.

While we are not challenging that it makes sense to impose some cybersecurity obligations on individual companies, those obligations should be reasonable and clear. Companies that meet a defined set of risk-based requirements, which could be developed through a collaborative, multi-stakeholder process, should have a safe harbor from liability – recognizing that they are victims, not perpetrators, of malicious cyber activity.

Categories: Blogs

Digital Growth Depends More on Business Models than Technology

Harvard business - Fri, 12/14/2018 - 09:00
Yagi Studio/Getty Images

For startups, 2009 was a good year. More than 20 companies launched at that time, including Uber, Slack, Pinterest, and Blue Apron, eventually achieved $1 billion-plus valuations. Given that those companies were all venture-financed and emerged from Silicon Valley, you might assume that the key ingredients that have ensured their success were cutting-edge technologies, digital platforms, and customer bases that were chiefly made up of digital natives. You would be wrong.

Yes, those companies had great technologies, platforms, and demographics, but the secret of their success turns out to be much more prosaic. Each was able to satisfy real customers who needed real jobs done — and by jobs, I mean a fundamental problem in a given situation that needed a solution. In other words, they had great business models.

Every successful company, whether it knows it or not, owes its success to its business model. I explained this in an article that was published in Harvard Business Review in 2008, before any of those companies began, and, now, 10 years later, that still holds true, as more and more of the business discourse is focused on digital transformation. A digital platform, or a digital solution, may enable a new epoch of transformative growth, but when you get under a company’s hood and look to see what’s really driving it, the engine of transformation turns out to be its business model.

In my article, I identified the four interlocking elements that, taken together, create and deliver value to both companies and its customers:

Customer Value Proposition (CVP), which is a way to help customers get a job done. The more important the job, the lower the level of satisfaction with other companies’ attempts to solve it, and the better and cheaper your solution is than theirs, the more potent your CVP.

The second is a Profit Formula, or how you create value for yourself while providing value to a customer. There are four essential elements to the formula: revenues, cost structure, margins, and resource velocity. The best way to create a profit formula is to work backwards, either starting with the price for lower cost businesses that is required to deliver the CVP, and then determining what the cost structure and other factors need to be or in highly differentiated businesses, start with the needed cost structure and margins that leads to the required price.

Key Resources are the assets that are required to deliver the CVP to the customer at a profit, meaning the people, technology, products, facilities, equipment, channels, and brand.

Key Processes are the operational and managerial capabilities that allow a company to deliver value in a way that can be repeated and scaled. These include manufacturing, budgeting, planning, sales and marketing, and customer service.

Successful business models have an exceptionally strong CVP, and a stable, scalable system in which all the elements mesh together seamlessly while complementing each other. As simple as this framework may seem, its power lies in the complex interdependencies of its parts. Major changes to any one of these elements affect the others and the whole.

Mature companies often look wistfully at successful startups like 2009’s class of unicorns and wonder if they can reinvigorate themselves by adding a digital component to their existing business model, in the way that clamping an outboard motor onto a rowboat makes it go that much faster. But what made each of those companies so valuable wasn’t their digital auspices — it was their powerful Customer Value Propositions, which investors believed they could deliver at profit and at scale. Being able to hail a car with your smart phone (a car that is driven by a self-employed contractor, who pays for most of the overhead him or herself). An instant messaging system that also allows for collaboration at work. A social media site that allows its users to visually share their interests with each other (and with advertisers, who sponsor content and pay for user data).

For an example of digitally-enabled business model transformation, consider Domino’s Pizza, which has experienced a massive turnaround since 2010. Forbes hailed it as a veritable case study “on how digital transformation leads to business value.” That Dominos has undergone a transformation cannot be disputed — an investor who bought $1,000 worth of Dominos shares in 2008, when it was on the brink of bankruptcy, would be able to sell them for more than $80,000 today. By comparison, $1,000 of Chipotle stock purchased the same year and sold at its peak in 2015, before the e-coli scare, would have only been worth about $5,000.

Along with introducing product innovations such as improved recipes and new menu options, Domino’s improved its processes around ordering and delivery by bringing its e-commerce technology in-house. Today, more Domino’s pizzas are ordered via digital devices than by phone.

But digitization was just the first step in Domino’s transformation. As it improved its online and mobile platforms, it introduced heavily-advertised features such as pizza profiles, which allowed users to order more easily, and loyalty programs, which boosted frequency of use. Domino’s transformation was enabled by its online storefront, but it worked because it successfully attracted and retained new customers while turning occasional customers into dedicated fans, at the same time that it extracted more value from each transaction.  More than that, it changed its branding and its relationship to its customers by making the experience of ordering pizza fun — which was the missing piece in Dominos old CVP. Now customers can play “Pizza Hero” on their iPhones after entering their personalized orders, or watch a clock click down the time to their pizza’s delivery.

Building its own digital platform was a game-changer for Dominos, but it’s not what changed its game. It did that by strengthening its CVP (adding more in the way of both convenience and fun), its Profit Formula (by increasing its volume and its resource velocity), and by upgrading the resources and processes that it needed to support them.

Any consumer or service company that doesn’t have a digital component certainly should; this is 2018, after all. But the key to transformational growth is still a powerful and coherent business model.

Categories: Blogs

Building a Direct-to-Consumer Strategy Without Alienating Your Distributors

Harvard business - Fri, 12/14/2018 - 08:00
Three Images/Getty Images

Companies increasingly use digital technologies to circumvent distributors and enter into direct relationships with their end-users. These relationships can create efficient new sales channels and powerful feedback mechanisms or unlock entirely new business models. But they also risk alienating the longstanding partners that companies count on for their core business.

The auto industry is a case in point. Porsche’s Passport program allows consumers to subscribe via a phone app to a range of vehicles for a fixed monthly fee. Your chosen Porsche is delivered to your house with insurance and maintenance as well as unlimited miles and flips to other models included. But if you’re a Porsche dealer, how do you like this idea? Now consider that similar subscription services are being offered by Volvo, Lincoln, BMW, and Mercedes, with more to follow.

These direct-to-consumer offers threaten the very livelihood of dealerships, who historically have owned the customer relationship. And many dealers are pushing back. The California New Car Dealers Association lobbied for a law that required subscriptions to go through dealers. Volvo’s program has elicited so much criticism that dealers have mobilized the Indiana state legislature to outlaw the business model.

This is but one example of the digital Catch-22, the dilemma that most manufacturers and service companies face when creating new distribution channels. As a result, many B2B companies remain stuck in a stalemate. Writing in the Sloan Management Review, Boston College professor Gerald Kane noted that 87% of executives surveyed indicated that digital technologies will disrupt their industries to a great or moderate extent. Yet fewer than half felt that their companies were doing enough to address this disruption.

We frequently find that executive teams understand the potential of a reinvented distribution strategy; however, they are unclear on how to proceed. While the opportunity is compelling, so is the potential to upset existing distribution partners and thereby damage the core business. Disgruntled distribution partners may retaliate in ways such as switching to rivals, favoring competing products, or even lobbying for legislative remedies.

How can companies position for the future without putting their current business in jeopardy? Here are three strategies for developing digital distribution approaches that minimize risk:

Embrace Stealth

In the past, companies looking to test new business models could quietly enter a new geography free from restrictive distribution contracts that limit their ability to go direct in their traditional geographies. But that is harder to do in the digital age, as customers and partners anywhere can easily see what you’re doing online.

Alternatively, the company can operate in stealth mode by targeting customer segments that have been poorly served or ignored by traditional distributors.

Recently, Verizon quietly launched a startup called Visible which offers no-contract mobile phone service subscriptions for a $40 flat fee and is only available for purchase through an app. This model competes mainly with smaller-brand, low-end providers and may not be seen as a direct threat by Verizon’s massive distribution network of company-owned, partner, and authorized reseller stores that are selling higher-margin services.

Sometimes, an entirely new product provides the right entry point. Starting in 2011, Mercedes chose to develop direct distribution capabilities for electric bicycle sales under its Smart brand.

Mercedes’ strategy preserves its traditional distribution network for its major lines of vehicles, while enabling the company to build the capabilities and infrastructure needed to support a reinvented distribution strategy — selling to consumers rather than through traditional dealerships.

Create Hooks

Distribution partners willingness to retaliate can be minimized if companies are able to create hooks that compel and reduce their negotiating leverage. There are many ways to build hooks, including bundling products, monopolizing a category, or developing features that are indispensable to a subset of customers.

For example, Cree Inc. made a splash when it introduced affordable consumer LED lightbulbs in the early 2010s. For several years the company was both a cost and product feature leader in the category. This enabled Cree to command significant shelf space in Home Depot, while simultaneously building a direct-to-consumer business. During this period, Home Depot was compelled to carry Cree products. This dual distribution strategy resonated with both consumers and investors — as Cree’s stock price tripled from 2011 to 2013.

In 2012, with the launch of the Surface product line, Microsoft began directly competing with the manufacturers and OEMs who had been its distribution partners for decades. Microsoft was able to do so largely due to its monopolization of the desktop operating system market. Traditional Microsoft partners such as Acer, Lenovo, HP, and Dell were already hooked on Windows and had little choice but to accept Microsoft’s direct-to-consumer strategy.

In fact, many of Microsoft’s partners, at least publicly, were supportive of the Surface. In 2012, Acer’s founder, Stan Stinh, indicated that he believed the Surface was only intended to stimulate market demand and that “once the purpose [was] realized, Microsoft [would] offer more models.” Today, the Surface product line has a greater share than Acer does in the U.S. market for personal computers.

Minimize Pain

Supporting downstream partners’ business can also reduce the risk of retaliation.

The heavy equipment manufacturer Caterpillar, for example, introduced a vehicle management platform that provides customers with insights on vehicle utilization, health, and location. The platform is sold directly to customers — frequently removing downstream partners from the sales process. Ultimately, though, the platform benefits partners because it alerts customers when they need to get their equipment serviced by these local partners — a key revenue stream for Caterpillar’s distributors.

UnitedHealth Group, one of the largest health insurers in the U.S., is on the verge of becoming the nation’s largest employer of physicians. But under its subsidiary Optum, UnitedHealth Group has pursued an aggressive M&A strategy to build its direct-to-consumer capabilities while being careful to not upset traditional healthcare providers. For example, Optum has continued to accept over 80 types of health insurances across its facilities and has avoided restricting United insurance customers to Optum-owned providers. Optum’s deliberate strategy has caught the industry’s attention, but to date has avoided direct retaliatory actions by incumbent healthcare providers.

Digital represents a significant opportunity for many B2B companies, but also risk. Failure to act enables competitors and new entrants, while action risks retaliation from existing partners. To break this stalemate, leadership should align on the imperative to act, acknowledge the risks of action, and identify the right strategy with which to move ahead. Your long-term partners are more likely to stand by you if they see your direct-to-consumer move not as an act of aggression but as a plan for growth.

Categories: Blogs

Study: When Leaders Take Sexual Harassment Seriously, So Do Employees

Harvard business - Fri, 12/14/2018 - 07:00
thatsval/Getty Images

When it comes to the issue of sexual harassment in the workplace, employees demand leadership accountability. Consider the recent Google walkout, which employees staged to protest the lofty exit packages paid to men accused of misconduct. In response, Sundar Pichai, Google’s chief executive, and Larry Page, chief executive of its parent company, Alphabet, apologized.

Business leaders want to do better. The high costs of sexual harassment are evident, from employee outrage to the loss of worker productivity and employee attrition. One study estimated that for each employee who was sexually harassed, the company lost an average of $22,500 in costs associated with just lost productivity. Yet, solutions are hard to come by.

Our research points to a single step that leaders can take to help reduce sexual harassment: communicate to employees that preventing it is a high-priority issue for their companies. In just a few sentences, this signals to others how much they should prioritize the issue and sets a culture in which sexual harassment is not tolerated.

This messaging is critical because, more than any other aspect of a company, it is organizational climate that best predicts the occurrence of sexual harassment. When the climate toward sexual harassment is lenient, members feel that there are few consequences – that those who engage in sexual harassment will be protected, while those who report it will be disregarded or even penalized. Such a climate characterized the environments in which recent high-profile sexual harassment cases like those of Harvey Weinstein and Charlie Rose happened. In contrast, in a climate intolerant of sexual harassment, people perceive that their organization takes a strong stance against it by taking complaints seriously and holding perpetrators responsible.

Our interest in the impact of leader messaging arose from our own experiences working in higher education. In 2015, many universities around the country conducted surveys to measure the incidence of sexual violence on campuses nationwide, and university presidents then issued statements outlining the findings. As the media picked up the statements, we noticed a great deal of variation in how they were written. Some expressed outrage; others brushed off the disturbing survey results. We wondered if the different responses shaped how students came to think about sexual assault on their respective campuses. So we conducted a national experiment to explore the impact of leader messaging more broadly.

In that newly published research, we found that the way leaders communicate can indeed shape peoples’ attitudes toward sexual harassment. In our experiment, 618 online study participants in the US read a brief statement from a fictional company about the results of a sexual harassment survey taken by its employees. For some participants, the statement included a quote from the CEO emphasizing the severity of the problem, such as: “The results of the survey are alarming.” Others read a CEO quote downplaying the issue, such as: “We are skeptical that the survey represents an accurate rate of sexual harassment at Soldola.”  The factual information about the survey was the same for all participants.

This simple difference in leader communication turned out to be powerful. Those who read the “skeptical” statement were less likely to rate sexual harassment a high-priority problem at the company, while those who read the message about the leader taking sexual harassment seriously were more likely to rate it a high-priority problem. This pattern held no matter the participants’ gender or political affiliation.

While our study showed that leaders can raise the level of concern about sexual harassment, some might argue that it is not in the best interests of a company. Why acknowledge that sexual harassment is a problem and risk damaging the company’s reputation?

First, downplaying the issue may result in more damage to a company’s reputation. As we have seen in many cases this year, when a leader signals to her or his employees that sexual harassment is not taken seriously, those who are victimized may ultimately turn to the media, and, as we noted above, negative coverage of these scandals can have profound and expensive consequences, including leadership and employee turnover, reduced productivity, walkouts, and even boycotts. The public perception of a toxic culture can have long-lasting effects on the corporate brand, making it difficult to attract and retain not only customers but also employees who want to work in a safe, fair environment.

Second, ignoring the problem amounts to institutional betrayal, which can compound the trauma suffered by victims of sexual harassment. People who are sexually harassed already experience negative health consequences; and research shows that when institutions fail victims of sexual violence, their negative health outcomes are exacerbated.

If leaders do nothing, they are not just acting neutrally. They may be fostering a culture where sexual harassment will become more prevalent. But if a leader instead identifies sexual harassment prevention as an issue that the company prioritizes, our research shows that this stance will push other people in the organization to take it seriously as well.  Of course, leader communication alone will not solve this issue. Companies that wish to eradicate sexual harassment must follow words with actions, taking steps to bring transparency and accountability to policies and investigation processes. However, setting the right tone with a clear zero-tolerance message is an important first step.

Categories: Blogs

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