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Updated: 1 hour 28 min ago

What Not to Do When You’re Trying to Motivate Your Team

7 hours 13 min ago

H.Armstrong Roberts/ClassicStock/Getty Images

When I speak to large groups about leadership, one question I often ask is, “How many of you have ever received a compliment from your boss that actually offended you?” Without exception, more than two-thirds of the people in the room raise their hands. When I probe further on what people found offensive about their boss’s praise, the most common responses I hear are “It wasn’t sincere” and “They didn’t know what they were talking about.”

When leaders look like they are just applying some “motivational technique” they read about, people see right through the superficial, obligatory effort. It looks like they are checking off the “I motivated someone today” box. Motivation is not something you do to people. People ultimately choose to be motivated — when to give their best, go the extra mile, and offer radical ideas. The only thing leaders can do is shape the conditions under which others do, or don’t, choose to be motivated. But the final choice is theirs. 

Unfortunately, too few managers understand this, and so there is a gap between managers’ efforts and the results they’re getting. A 10-year study of more than 200,000 employees shows that 79% of employees who quit their jobs cite a lack of appreciation as a key reason, and according to Gallup’s 2017 “State of the American Workplace” report, only 21% agree their performance is managed in a way that motivates them to do outstanding work. Here are three of the most offensive forms of “motivating” I’ve seen managers employ, and three alternative approaches I’ve seen work wonderfully.

Drive-by praise. Busy managers often have to squeeze in their recognition efforts to already crowded schedules. So they’ll pop their heads into people’s offices on the way to other meetings and say things like, “Hey, great job this morning at the pipeline review.” Or they’ll send a text message saying something like, “Hey, sorry I wasn’t able to catch you before I left, but just read through the updated analytics and they look great. Thanks!” On the surface, these efforts seem innocuous, perhaps even positive. But to recipients, it can feel impersonal, uninformed, and inadequate if these drive-bys are the only form of recognition the manager offers.

Making stuff up. During a break from an executive team meeting I was facilitating, I watched one executive say to his direct report, “Just so you know, I was telling the big boss and his team this morning what an amazing job you’re doing,” and then give him what appeared to be an “I’ve got your back” wink. The only problem is that it never happened. And from the looks of it, the employee’s feigned smile — “Wow, you did that for me?” — suggested he didn’t buy it either. Employees know when their managers are being insincere or outright lying. Whether these made-up stories are well-intended or not, they erode the employee’s trust in the leader.

Guilt gratitude. It’s incredibly awkward when a manager who feels guilty tries to overcompensate with effusive expressions of appreciation. Leaders who may have asked for a sacrificial effort to meet a deadline will reflexively say things like, “You have no idea how much I appreciate this. I don’t know what I would have done if you hadn’t gotten this to me today. I owe you!” Or even worse, if their guilt is particularly intensified, they’ll do it in public, which feels especially manipulative. They’ll check off their “public recognition” box — a commonly suggested technique — by saying something like, “Can we all give Jennifer a round of applause for that killer presentation she pulled together?” A more truthful acknowledgement would have been, “Can we all give Jennifer a round of applause for that killer presentation she pulled together, which I neglected to ask her for until 8 PM last night because I forgot about this morning’s customer segmentation review?”

The common shortfall among these misapplied approaches is that they all serve the leader who’s giving the praise, not the recipient. If you want to direct your good intentions into more-meaningful expressions of recognition, consider these alternatives.

Ask for the story. Nothing affirms an employee’s great work more than a leader saying, “That was amazing. Tell me how you did it?” By asking for, and listening intently to, the story behind an accomplishment, you acknowledge that the contribution is an extension of its contributor and help them feel that they, and their work, really matter. By honoring the story behind the work, you honor the results as well as the employee who reached them. You also get a view into the person’s mind: how they problem-solve, where they have doubts, what parts of the work they love, and what makes them feel proud. Those insights become invaluable later. When you make assignments, you’ll know what will be most gratifying for that person.

Contextualize gratitude. Employees lower in an organization often can’t see how their efforts contribute to broader strategies. One survey shows that only 47% of employees can make the connection between their daily duties and company performance. Rather than taking for granted that those you lead fully appreciate the larger context into which their efforts fit, take the time to teach them. Tell them you appreciate their efforts not just because of how you benefit but also because of how the larger organization benefits. For example, say a manager gets his team to adopt a new technology platform as part of a beta test. You might explain that this effort is contributing to a broader change management initiative across the company and that it’s setting a great example for those resistant to the change.

Acknowledge the cost. No substantial contribution comes without personal cost to the one making it. Whether they sacrificed time with family, took on the emotional toil of doing something new, or bore the political risks of a highly visible project, let people know that you understand the toll it took. Most employees hide any struggle that accompanied their efforts for fear of looking weak or incompetent. Acknowledging the challenges they may have faced makes your gratitude more credible, and makes it safer for employees to be honest with you in the future when facing difficulties.

It’s a leader’s job to create a recognition-rich environment in which those they lead choose to give their best. That starts by ensuring recognition genuinely serves the needs of those you’re offering it to, not your own.

Categories: Blogs

Why Women Volunteer for Tasks That Don’t Lead to Promotions

7 hours 46 min ago

Helen King/Getty Images

Here’s a work scenario many of us know too well: You are in a meeting and your manager brings up a project that needs to be assigned. It’s not particularly challenging work, but it’s time-consuming, unlikely to drive revenue, and probably won’t be recognized or included in your performance evaluation. As your manager describes the project and asks for a volunteer, you and your colleagues become silent and uneasy, everyone hoping that someone else will raise their hand. The wait becomes increasingly uncomfortable. Then, finally, someone speaks up: “Okay, I’ll do it.”

Our research suggests that this reluctant volunteer is more likely to be female than male. Across field and laboratory studies, we found that women volunteer for these “non-promotable” tasks more than men; that women are more frequently asked to take such tasks on; and that when asked, they are more likely to say yes.

This can have serious consequences for women. If they are disproportionately saddled with work that has little visibility or impact, it will take them much longer to advance in their careers. Our work helps explain why these gender differences occur and what managers can do to distribute this work more equitably.

What Are Non-promotable Tasks?

Non-promotable tasks are those that benefit the organization but likely don’t contribute to someone’s performance evaluation and career advancement. These tasks include traditional office “housework,” such as organizing a holiday party, as well as a much wider set of tasks, such as filling in for a colleague, serving on a low-ranking committee, or taking on routine work that doesn’t require much skill or produce much impact.

What is non-promotable varies across fields and careers. For example, in industry, revenue-generating tasks are more promotable than non-revenue-generating tasks; in academia, research-related tasks are more promotable than service-related tasks; and for individuals, a task may be promotable for junior employees but non-promotable for senior-ranking managers.

Studies of industry and academia (by Irene De Pater and colleagues; Sara Mitchell and Vicki Hesli; and Joya Misra and colleagues, as well as many others) have shown systematic gender differences in how work is allocated, with women spending relatively more time than men on non-promotable tasks and less time on promotable ones. These differences matter because they help explain why, despite women’s significant educational and general workplace advances, we continue to find vastly different promotion trajectories for men and women. Women will continue to progress more slowly than men if they hold a portfolio of tasks that are less promotable.

Although what makes something non-promotable varies across occupations, there is typically agreement within an occupation about what tasks are non-promotable versus promotable. For example, in a survey of 48 Carnegie Mellon faculty, we found that 90% agreed that an assistant professor has a higher chance of promotion if they allocate spare time to research rather than to committee work (like being on the faculty senate). Separately, looking at data from a large public U.S. university, we found that when all 3,271 faculty were asked to volunteer for a faculty senate committee, only 3.7% chose to do so — but 7% of women volunteered, compared with 2.6% of men.

There are of course many reasons why women volunteer more than men. It may be that women are better at these tasks or enjoy them more than their male colleagues. To test these explanations we conducted a series of lab experiments at the Pittsburgh Experimental Economics Laboratory (PEEL). A total of 696 University of Pittsburgh undergraduates participated in the studies.

Who Volunteers, and Why?

We designed a simple decision exercise to examine who agrees to do non-promotable tasks. The design mimics the scenario we opened with, that of finding a volunteer for a project at a work meeting.

In the first experiment, we had male and female participants sit in front of a computer in the lab and make decisions in 10 rounds. In each round participants were sorted into new groups of three (they knew they were matched with other participants in the room, but not exactly who) and had to secure one volunteer from the group to click a button on the computer screen. The group was given two minutes to decide, with the round ending as soon as someone volunteered. If no one volunteered, each group member received a payment of $1. If someone volunteered, that person received $1.25, while the two other group members each received $2. So every group member was better off if someone volunteered, but the volunteer benefited less.

Overall, the participants were reluctant to volunteer. While 84% of groups succeeded in finding a volunteer, it typically did not happen until the final seconds of the 2-minute round. Importantly, the rate of volunteering was not the same for men and women. Averaging across the 10 rounds, we found that women were 48% more likely to volunteer than men, and we saw this difference in every one of the 10 rounds.

Because the volunteer task in this experiment was to click a button on a computer screen, we could rule out the possibility that women volunteered more because they were better at the task or enjoyed it more than men.

But gender differences in preferences may nonetheless contribute to the difference in volunteering. In particular, women may volunteer more because they may be more risk-averse or altruistic than men. To examine this, we looked at survey measures of participants’ agreeableness, altruism, nonconformity, and risk aversion. While some of these measures correlated with the decision to volunteer, none of them explained the gender difference.

To directly test the effect of preferences, we also conducted a second experiment, where instead of having both men and women participate together, we had groups of only men and only women.

If the difference in volunteering resulted from women being more risk-averse or altruistic than men, then we should have sees greater rates of volunteering in our all-female sessions than in our all-male sessions. But we found that volunteering rates were identical. Women were no more likely to volunteer than men when everyone was in a same-sex group.

This helped rule out the explanation that preferences caused the gender difference in volunteering in our mixed-sex study. These results instead suggest that the real driver was a shared understanding or expectation that women would volunteer more than men. In a mixed-sex group, men will hold back on volunteering while women in turn will volunteer to ensure that the task is done. But in single-sex groups, this changes — men and women volunteer equally. In these groups men know they have to step forward if they want to find a volunteer, and women expect other women to volunteer, making them less compelled to do so themselves. Interestingly, in women’s groups the volunteering ends up being shared equally across 10 rounds, while in men’s groups it tends to fall on the same men each time.

Who Is Asked to Volunteer, and Why?

To further confirm that people expect women to volunteer more than men, we conducted a third experiment, this time adding a fourth person, a manager, to the group. At the start of each round, the manager had to publicly ask one member of the new three-person group to volunteer. (The manager couldn’t personally volunteer. They saw pictures of the other members of their group and clicked on the picture of the person they wanted to ask.) The manager got $2 if someone in the group volunteered and $1 if no one volunteered. The rules for the group of three remained the same — $1 each if no one volunteered, but if someone volunteered, that person received $1.25 while the other group members each received $2. Managers were free to ask any member of the group to volunteer, but we expected they would be more likely to ask women than men.

This is precisely what we found: Women received 44% more requests to volunteer than men in mixed-sex groups. Intriguingly, the gender of the manager did not make a difference: Both male and female managers were more likely to ask a woman to volunteer than a man. This was apparently a wise decision: Women were also more likely to say yes. A request to volunteer was accepted by men 51% of the time and by women 76% of the time.

Can We Be More Fair?

Our studies demonstrate that although neither men nor women really want to volunteer for thankless tasks, women volunteer more, are asked to volunteer more, and accept requests to volunteer more than men. These differences do not appear to result from gender differences in preferences, but rather from a shared understanding that women will volunteer more than men.

While our results are disconcerting, they also provide a silver lining in suggesting how employees and managers can reduce the inequity in work tasks. The solution is not for women to decline more work requests — which would present problems for organizations and hold repercussions for women — but instead for management to find ways to distribute tasks more equitably. Rather than asking for volunteers or asking women to volunteer because they are likely to say yes, managers could consider rotating assignments across employees, for example. Understanding that women volunteer more simply because men are reluctant to do so should also lead men to volunteer more themselves and should empower women to demand fairer treatment.

Changing this dynamic should be a priority for any organization that wants to advance its most qualified employees. Workers who spend more time on non-promotable tasks are held back from demonstrating their full potential. If this burden falls disproportionately on women, not only is their advancement stymied, but also corporations miss out on capturing valuable talent.

Categories: Blogs

The Key to Preventing Generational Tension Is Remembering that Everyone Wants to Feel Valued

9 hours 38 min ago

Martin Barraud/Getty Images

I remember the first time I felt old as a manager — more than 10 years ago now. It was at a lunch with my new team, when I mentioned the first “45” I bought with my own money as a kid. One of my direct reports, who was 10 years younger than me, looked at me blank faced and asked, “What is a 45?” She had never seen the single-song vinyl record format. We came from different worlds. On the same team, I had another direct report who was 30 years older than me. She was quick to answer my question about her first 45, but I had never even heard of the song or the artist. Over the next couple of years, I had what I perceived as serious “generational issues” on my team. I learned a few lessons about managing across the generational divide.

The most important lesson I learned in managing people from different generations is to see past the stereotypes. Generational differences are real, but we tend to make too much of them. Some of the behaviors or attitudes you might attribute to a generational difference are simply the product of an employee being at a different age and stage than you. The 23-year-old employee might act much more like the 63-year-old once she’s worked for forty years.

Age and stage doesn’t explain everything, either. If you have multiple Millennials on your team, you’ll realize that neither generation nor age can explain how different the Millennials are from one another. The majority of differences among employees are driven not by generation, or by age, but by their unique personalities. The individual differences within a generation are much greater than the differences across the generations. Take some time to consider each of your direct reports as a whole person — a function of their generation, their age and stage, and their personality. Don’t make the mistake of pigeonholing someone because of the year they were born.

You and Your Team Series Conflict

Next, look beyond the simple stereotypes for clues as to why they might be challenging your leadership. If you feel resistance from them, instead of getting frustrated, try empathizing. If you’re managing someone much older than you, they might have legitimate concerns about your leadership because your style is counter-cultural or just different from how things used to be done (cue the “back when I joined the company” story). It’s also possible that their resistance isn’t about your leadership at all. Instead, they might be reacting to your youth because it reminds them that they have been lapped on the career track. That’s not easy to accept.

If you’re managing someone much younger than you, the challenge to your leadership might be completely different.  Maybe they experience your management style as slow and cautious, or even rigid. Don’t be surprised if they think your job looks easy and they’re frustrated that it is taking so long to get more opportunity. Regardless of the direction of the generation gap, ask great questions and listen carefully to what you learn from the answers. How are they feeling? What do they value? The more of these conversations you have, the more you will understand about how your team members are judging you and what your leadership is causing them to confront about themselves.

Judgment is a two-way street. Just as your employees are judging you, you are likely judging them. It’s critical to confront your own stereotypes about the generations. Until you shed these misconceptions, judgment will get in the way of building a strong relationship with your team members. For example, do you naturally assume that older workers are less tech-savvy?  My mom’s 84 now, but at 65, she studied digital publishing, so she could make her charity the first in the community to have a website. I left the old hapless technophobe stereotype behind long ago.

Take a moment to list all the generalizations and caricatures of older and younger workers you’ve developed over the years. Now go through each one and think of everyone on your team. Upon further inspection, you’ll see that those stereotypes don’t fit all that well. You need to manage each person based on their own unique strengths and weaknesses.

One thing you can count on is that regardless of age, everyone wants to be valued. If the way you are managing the older or younger members of your team is overtly or subliminally signaling that you don’t value them, you will see the symptoms of hurt feelings: resistance, disengagement, anger, or insubordination. Start by engaging each person in a conversation that demonstrates that you’re interested in their thoughts. For an older worker, try these options. “How have you seen the organization evolve during your time here?” “You know the culture well, what do you think will be the secret of success in this transformation?” “What worries you most about the new approach?” Then listen carefully to what you learn.

For a younger employee, capitalize on their youth and fresh perspective. “What was most exciting to you about joining the company?” “Where have you seen great ideas that we could apply here?” “What can you teach me that would help me keep up with the digital age?” If you listen openly, you’ll hear insights you can act on.

The point of these open conversations is not to suggest that your organization’s way of doing things is optional; it’s not. Instead, the point is to understand the potential resistance you might face and to tap into any source of strength and support that you can get. “Given what you’ve just told me, and what you know of the team, what advice would you give me to make this work?” “What do you see as the strengths you bring to the team given your perspective?” “What role can you play in supporting this change?” Each of these questions will give a resistant person a chance to contribute constructively. For most people, young or old, seeing their ideas in action will reduce the resistance and start to bridge the divide.

A small percentage of employees might choose not to engage. No matter what you try, they will still resist your leadership. If a Millennial, or a Gen-Xer, or a Baby Boomer resists your leadership, deal with it like any other performance management issue.

It’s time to stop thinking about problems as “generational issues.” If you have a problem with an entire generation, that’s your problem and your prejudice, not theirs. If you have a problem with one employee who happens to be of a different generation than you, then you have a problem with one employee, period. It’s time to stop using the generations as an excuse for the distance among us and start really communicating to bring us all closer together.

Categories: Blogs

The Supreme Court Has a Longevity Problem, but Term Limits on Justices Won’t Solve It

Fri, 07/13/2018 - 09:55

With the announced nomination of Judge Brett Kavanaugh to fill the vacancy created by the retirement of Justice Anthony Kennedy, President Donald Trump has the privilege of nominating a second Supreme Court justice in his first term. But it’s an opportunity that could become rare moving forward given that justices, like the rest of the population, are living longer.

The fact that people who make it to their senior years can expect to live beyond the age of 80 means the average Supreme Court justice’s tenure also will be longer. As a result, significantly fewer Supreme Court justices will be appointed over the next century than were appointed in the last. Justice Neil Gorsuch, whom Trump appointed at the relatively tender age of 49, could conceivably remain on the court through nine more presidential terms, given that he can expect to live another 36 years, our actuarial analysis shows.

And it’s not just Justice Gorsuch. The average tenure of justices is likely to increase to 35 years on the bench over the next century, compared with 17 years over the previous 100 years, based on the justices from Kennedy back to those on the bench in 1917. That means there likely will be only another 25 appointees over the next 100 years, starting with the Trump presidency and including Justice Gorsuch and the replacement for Justice Kennedy. This contrasts with the 47 appointments in the previous 100 years, beginning at the start of Woodrow Wilson’s second term in 1917 and ending with the last day of the Obama administration. There were 61 appointments in the 100 years from 1861 through 1961, the end of Dwight Eisenhower’s administration.

 

An anticipated decline in Supreme Court appointments should be seen as a concern by both political parties. With new justices being likely to serve 35 years, on average, the process of choosing a new justice is likely to become even more vitriolic. Presidents who don’t control the Senate may not be able to nominate anyone at all, leaving vacancies on the court. And presidents who have the opportunity to make multiple appointments may have disproportionate influence over constitutional interpretations of the law well beyond their time in office.

Yet there is comparatively little debate over whether or how the United States should address longevity on the Supreme Court. There should be. Reaching a solution to mitigate the challenges will be tricky and may take years.

One proposal being discussed is to limit justices’ terms to 18 years to mitigate the challenges longevity is creating. But when we modeled the impact of this term-limit proposal, new problems arose. When applied to all future justices as well as those currently on the Supreme Court, the plan increased the number of new appointees over the next 100 years to 49 from 25. But it also increased the chances that a president could appoint a majority of justices. In fact, instituting an 18-year term limit creates a 43% chance that a president serving two terms could appoint the majority of justices. In the history of the republic, only five presidents — aside from George Washington, who assembled the court from scratch — have been able to appoint more than five justices. The last president to do that was Eisenhower.

Our study suggests that a plan that staggers terms and attaches the limits to the specific seats justices occupy, rather than to individual justices, would be more likely to ensure sufficient turnover on the Supreme Court while preventing any single president from having too much influence. Under an approach where one seat comes up every four years during the second year of a presidential term, the number of new appointees over the next century would increase to 41 from 25. Just as important, there would be only a 12% probability that a two-term president could nominate a majority of new Supreme Court justices. This approach would also ensure that a president serving a full four-year term would be able to make an appointment.

While the need to deal with the increasing longevity of Supreme Court justices is clear, the best method to resolve the problem is less apparent. Given the potential impact a static court could have on our government’s essential system of checks and balances, there’s no time like the present to begin the discussion and examine the options.

Categories: Blogs

Great Leaders Are Confident, Connected, Committed, and Courageous

Fri, 07/13/2018 - 09:00

Pat LaCroix/Getty Images

Brad was leading a difficult turnaround of his company and had decided to fire his head of sales, who was a nice guy but wasn’t performing.

Three months later, he still hadn’t fired him.

I asked him why. His answer? “I’m a wimp!”

Brad (not his real name — I’ve changed some details to protect people’s privacy) is the CEO of a financial services firm and is most definitely not a wimp. He’s a normal human, just like you and me. And he’s struggling to follow through on an important, strategic decision. Just like, at times, you and I do.

No matter your age, your role, your position, your title, your profession, or your status, to get your most important work done, you have to have hard conversations, create accountability, and inspire action.

In order to do that, you need to show up powerfully and magnetically in a way that attracts people to trust you, follow you, and commit to putting 100% of their effort into a larger purpose, something bigger than all of you. You need to care about others and connect with them in such a way that they feel your care. You need to speak persuasively — in a way that’s clear, direct, and honest and that reflects your care — while listening with openness, compassion, and love. Even when being challenged.

And, of course, you need to follow through quickly and effectively.

In 25 years of working with leaders to do all the above, I have found a pattern that I share in my new book, Leading with Emotional Courage, consisting of four essential elements that all great leaders rely on to rally people to accomplish what’s important to them. To lead effectively — really, to live effectively — you must be confident in yourself, connected to others, committed to purpose, and emotionally courageous.

Most of us are great at only one of the four. Maybe two. But to be a powerful presence — to inspire action — you need to excel at all four simultaneously.

If you’re confident in yourself but disconnected from others, everything will be about you and you’ll alienate the people around you. If you’re connected to others but lack confidence in yourself, you will betray your own needs and perspectives in order to please everyone else. If you’re not committed to a purpose, something bigger than yourself and others, you’ll flounder, losing the respect of those around you as you act aimlessly, failing to make an impact on what matters most. And if you fail to act powerfully, decisively, and boldly — with emotional courage — your ideas will remain idle thoughts and your goals will remain unfulfilled fantasies.

Let’s apply this to Brad and identify precisely where and how he was getting stuck.

Confident in yourself. Brad struggled with this element, which might feel surprising since he was so successful in his career. But this is not uncommon. He worked tremendously hard, but it came from some degree of insecurity — he wanted to prove himself and please those around him. He became unnerved in the face of potential failure and was not particularly gentle or compassionate with himself when he did fail. He did have important strengths in this element: He saw the person he wanted to become and he worked toward that future, putting aside distractions and investing his energy wisely and strategically.

Connected to others. This was Brad’s greatest strength. He was well-loved and always took great care of his team. People clearly knew and felt that he trusted them, even when he disagreed with them. They appreciated his curiosity — about people and problems — and were grateful that he did not draw quick conclusions about them. All that said, even in this element, he had room to grow: He was not always direct with people and tended to procrastinate on difficult conversations.

Committed to purpose. This was a mixed element for Brad. On the one hand, Brad was clear about what needed to get done to grow the firm, he engaged people in the early stages of work, and he was open and willing to ask for help. On the other hand, he was somewhat scattered. He wasn’t clear enough about the small number of things that would move the needle, and he didn’t have a reliable process for staying focused on the most important things, ensuring accountability and driving follow-through. Not firing his head of sales sent a mixed message to his team — was he really serious about the firm’s success?

Emotionally courageous. Brad had room to grow here, and it turned out to be an important element for growing his strength in the other three elements. Risks, by definition, make us feel vulnerable, and Brad avoided that feeling. He resisted the unknown and intentionally avoided uncomfortable situations. This made it hard for him to tell people hard truths and make hard decisions quickly, which stalled his actions.

So Brad’s strongest element was “connected to others,” followed by “committed to purpose.” He was weaker in “confident in yourself” and “emotionally courageous.”

Which puts his challenge in perspective: His connection to his head of sales was at war with his commitment to the success of his team and company. Meanwhile, his confidence in himself and his emotional courage weren’t strong enough to break the tie. That’s a recipe for inaction and painful frustration.

Just knowing what was happening helped him immediately. We spent some time strengthening his emotional courage by taking small risks while feeling the emotions he had been trying to keep at bay. Each time he followed through, regardless of whether he succeeded, he obviously survived and also felt the accomplishment of addressing the risk itself. Which, of course, built his confidence. Which helped him take bigger risks.

In a short time, he felt prepared (even though he may never have felt “ready”) to follow through on what he had known he needed to do for the past three months. With his natural care, compassion, and humanity, he fired his head of sales (who, by the way, and unsurprisingly, knew it was coming and said he felt “relieved”).

Brad was extremely uncomfortable going into the conversation — that’s almost always the feeling you’ll have when you do anything that requires emotional courage.

But using emotional courage builds your emotional courage. Brad emerged from the conversation stronger in all four elements: He was more confident in himself, more connected to his team (and even, believe it or not, his head of sales), more committed to purpose, and more emotionally courageous.

Author’s note: Curious about how you stack up? I’ve created an assessment on my website that will help you identify strengths and weaknesses in each of the four elements. Once you take it, you will have a good idea of where you have room to grow. It’s free to take. You’ll have to submit your email address, but we’ll only include you on our mailing list if you ask us to. 

Categories: Blogs

An Ebola Outbreak Has Just Been Stopped. Here’s What It Tells Us About Containing Epidemics.

Fri, 07/13/2018 - 08:00

Visuals Unlimited Inc/Science VU/Getty Images

After a month with no new cases, the Ebola outbreak in the Democratic Republic of Congo (DRC) appears to be under control and weeks away from officially ending. Less than three months since it was declared, and after only about 50 cases, this outbreak’s efficient containment is a remarkable achievement that stands in stark contrast to the West African epidemic that spiraled into a two-year global crisis with over 28,000 cases.

This time around, several factors have made it possible to rapidly control the spread of the disease. While the West African epidemic took place in areas with mobile populations and capital cities where Ebola was not expected, the current outbreak is happening in a relatively remote region of the DRC, the country where the virus was first discovered and where seven previous outbreaks have occurred. Global agencies, on high alert after the West African epidemic, leveraged lessons learned and efforts made since then to respond differently in several important ways.

Strong and clear leadership. In the West African epidemic, the initial response from the World Health Organization (WHO) was lethargic, and the lack of direction led to confusion and delays on the ground. In this outbreak the WHO immediately and unambiguously asserted leadership at the global level, deploying its most experienced personnel and routinely sending its top executives to the field. The WHO also ensured that its global role complemented and supported the DRC health ministry, which has had clear authority on the ground.

Effective deployment of new innovations. The use of a new Ebola vaccine likely played a pivotal role in controlling this outbreak. Other tools developed during the last epidemic also enhanced the response. GeneXpert, a lab-in-a-box that automates PCR, a diagnostic technique that ordinarily requires specialized laboratories that take weeks to set up, were deployed to new hot spots within days and reduced the turnaround time for testing from days to hours. OraQuick, a dipstick test akin to home pregnancy tests that can detect Ebola from a few drops of body fluid, was used for screening in harder-to-reach areas. Several experimental Ebola treatments were also quickly identified and put into play to see whether they could boost survival.

Transparency of data and action. During the West African epidemic there was often a lack of clarity on what was going on — sometimes even for agencies actively involved in the response. This lack of information sharing fostered distrust from local communities, which doubted whether Ebola was real, and national governments, which questioned the ability of global agencies to halt the epidemic after their weak initial response.

In this outbreak the WHO and DRC health ministry have consistently gone out of their way to make data available to everyone, including the general public, through Twitter and have held frequent press conferences to provide updates and discuss challenges fully and honestly.

Capitalizing on expertise from West Africa. The Ebola vaccine was administered to over 3,200 people within a matter of weeks, an impressive feat made possible by redeploying the same teams from West Africa who conducted the vaccine trial at the end of the last epidemic. Similarly, earning the trust of local communities was initially overlooked in the West African epidemic and became a major barrier. This time around, community engagement was prioritized from the get-go, with some of the same anthropologists involved in West Africa dispatched to ensure it was done effectively.

The rapid containment of this outbreak is a major accomplishment, and all involved, especially on the front lines, should be lauded. However, although this outbreak shows that we can respond effectively, it also reveals several vulnerabilities that might get overlooked because things worked out in spite of them.

Delays in recognizing the outbreak. Though declared in early May, the outbreak may have started months before, and possibly as early as December. That is why, within a week of the outbreak’s being recognized, cases were already present in three distinct locations separated by over 60 kilometers. One of these sites was a provincial capital with over a million people that sits on the Congo River, a major trade route linking several large cities in the region. It was only a matter of chance that Ebola did not disseminate more widely and into these cities before the outbreak was detected.

This delay exemplifies the challenge of detecting outbreaks in remote impoverished settings where health systems are weak or nonexistent. Patients have no place to go when they are sick, or they can seek care only at health facilities that do not have the capacity to make accurate diagnoses, particularly of Ebola and other epidemic threats that are difficult to tell apart from malaria and other common conditions without diagnostic testing. No matter how proficient we are in responding to outbreaks, this vulnerability will remain without stronger health systems.

Limited countermeasures for widespread transmission. If this outbreak did disseminate more widely, readily finding all hot spots and “chains of transmission” across Central Africa would have been difficult, and the conventional approach of monitoring those exposed — “contact tracing” — might not have worked reliably. There are currently few go-to strategies for reining in transmission once it becomes widespread in this manner. While we can now at least vaccinate against Ebola, for many epidemic threats, including novel diseases and human-made contagions, this would not be an option.

Additional strategies are needed for dealing with such scenarios. One potential approach is to use rapid tests, such as OraQuick, to decentralize and scale detection so that unrecognized hot spots can be quickly uncovered and newly infected patients diagnosed right away, before they have a chance to infect others.

Persistently high mortality rates. During the last epidemic, we saw that Ebola patients treated in high-income countries such as the United States and United Kingdom fared much better than those in West Africa. Despite new treatment guidelines and the use of experimental treatments, the death rate among Ebola-infected people during this outbreak was similar to that in past outbreaks. A likely driver of this ongoing disparity is the lack of intensive-care capacity in places such as West Africa and the DRC. This gap needs to be addressed if we are going to do better in limiting the toll from diseases like Ebola.

While we should celebrate the accomplishment and progress signified by the efficient containment of this Ebola outbreak, we should take note of the vulnerabilities that remain, and redouble our efforts to address them before the next epidemic.

Categories: Blogs

How Managers, Coworkers, and HR Pressure Women to Stay Silent About Harassment

Fri, 07/13/2018 - 07:00

HBR Staff/Douglas Sacha/Getty Images

Sex-based harassment is pervasive in the workplace, and it’s disproportionately experienced by women. It can include sexual harassment but is more broadly defined, including any behavior that derogates, demeans, or otherwise humiliates someone on the basis of their sex. One study of women in the military and law found that nine out of 10 had experienced gender-based harassment in their careers.

Most victims stay silent about their experiences. Studies suggest that victims stay silent because they fear consequences at work or feel that nothing will happen as a result of speaking up. What has been studied less is how this silencing occurs.

In 2016 we set out to learn about how female victims are silenced — who influences them and what exactly happens when they try to speak up. We interviewed 31 early and mid-career academics employed in business schools at nine research-intensive universities in the UK. We asked women whether they or others they knew had experienced insulting, hostile, and degrading attitudes that made them feel bullied, excluded, or both due to their gender. We encouraged them to describe events as vividly as possible and to reflect on how they and others they knew felt at each moment.

Our interviewees described a plethora of incidents that they or others they knew had experienced, including sexist remarks, harassment during pregnancy and after giving birth, gender-based bullying, and sexually motivated advances. We asked them whether they stayed silent about their experiences.

Contrary to what we expected, all of our interviewees told us they shared their experiences with line managers, HR personnel, and professional colleagues to make sense of and seek redress for what happened. Then they described how they were ultimately persuaded to move on and stop raising the issue.

We noted three barriers that victims encountered when they started to speak about experiences of sex-based harassment: First, they were told they had to prove that their experience was uncommon and significant; second, they were expected to “trust the system” to resolve their issues; and third, they faced severe consequences, such as a damaged reputation, when they challenged the system.

Proving an Experience to Be Rare and Significant

Victims were often told that their experiences didn’t amount to harassment — that they were common and insignificant — and that if they wanted to file a formal complaint, they’d need to show otherwise. One assistant professor we talked to, Alaina, explained how her line manager responded to her complaint about a senior colleague’s unwanted advances:

He was super nice in the beginning, but then he always wanted to do work in the evening over a drink. I was fine with this, but he kept complimenting me about the way I look, which made me quite uncomfortable. People were looking at us as if we were a couple. He was not bothered by it — it was good for his ego, a young woman on the side. My head of department was the only person I trusted, so I told him. He listened very carefully and laughed it off, saying that these kinds of things happen all the time, I shouldn’t take it so seriously. After all, this person has not forced himself onto me, and I agreed to go to all the places he invited me to. And so on. I ended up feeling embarrassed… He is the head of department; he should know what he is talking about, I guess. I don’t know what to do.

By suggesting that Alaina’s experience wasn’t serious, her manager positioned her as an individual who had misinterpreted her circumstances. He also hinted that she may have “encouraged” her perpetrator because she had agreed to meet him in various places, making her feel partially responsible for her fate and invalidating the importance of her claim.

As a result, Alaina felt deeply embarrassed. While she did not completely buy her manager’s verdict, his seniority in the organization somewhat legitimized his opinion — she felt that she had no case to challenge the system. Alaina reluctantly chose to stay silent.

Trusting the System to Resolve Issues

When women complained to HR, they were often urged to be patient and allow the issue to be quietly resolved. Senior researcher Neev explained what happened when she complained about a senior colleague who harassed her:

I wasn’t included in many things — there were several areas of work that I was stronger in than all of my group members, but I wasn’t asked to be involved. It was clearly a boys’ club. I felt that I was treated differently to everyone else in our group, and there was aggression too when I tried to complain about things. I couldn’t take it anymore, so I went to HR. They told me to calm down and said that they will look into things. They came back to me almost immediately and said that people speak very highly about this person. But then they were sympathetic about how I felt, they had talked to this manager, and they were very willing to help me to better integrate into my team. And that was it.

In their view my problem was solved, and they hinted that I should not talk about these things to anyone because these are very confidential issues. They made me feel like an overly dramatic person and they then offered to help me to deal with my issues. That manager is now nice to me — but it is patronizing; it does not change what he did. I guess they would have to talk with him. I think I deserve some justice for what I went through. But after my experience with HR, I am confused. I feel that I have a point which has not been recognized, but they seem to think it has been solved. I feel really low and I don’t talk to anyone in the organization much unless I really have to.

The HR officers attempted to “solve” Neev’s issue by asking her perpetrator to be nice to her. As far as they were concerned, Neev was offered support and her issue was solved. But Neev felt extremely patronized and embarrassed for being seen as a “melodramatic” individual. She believed that she still wasn’t being treated fairly, and HR’s interest in archiving her complaint left her confused.

Suffering Consequences After Challenging the System

The women we talked to were also advised by well-meaning colleagues to not voice their discontent, because of career repercussions and social isolation that might ensue. Abbey told us how many people cautioned her against complaining about a senior colleague who harassed her:

He made my life miserable during maternity leave, hinting that I strategically chose to have children during the grant. But my team members were like, “Even if you leave the organization, getting the wrong person on your bad side can effectively ruin your career, especially if it’s someone in your area. So just keep quiet. You don’t want to be known as a parasite.” Of course I don’t want to be known as a parasite. So I am scared to open my mouth, to be honest, although I really want to.

Abbey’s maternity leave was not respected, but her close colleagues insisted that she should not raise the issue any further, because bringing it up would position her as a “troublemaker” and negatively affect her career. This instilled a sense of fear that led Abbey to stay silent.

Ending Complicity with Harassment

Based on our findings, we argue that sex-based harassment isn’t just a result of one individual’s actions: It’s accomplished by the complicity of various third-party actors. Each of these cases shows how managers, HR, and colleagues can be complicit in silencing people who experience harassment, encouraging them to trust the system and urging them to keep these experiences to themselves.

This complicity not only provided a safe haven for perpetrators to operate, as they were spared punishment, but also made victims feel confused, unsupported, and, ultimately, compelled to acquiescence. As victims felt demoralized, they disengaged from work and from the social fabric of the workplace, behavior that is known to hurt productivity, organizational commitment, and profit.

We offer a few recommendations for organizations and employees. First, it is important to legitimize complaints about sex-based harassment. Managers should proactively let people know that they can complain, and companies should introduce policies that protect employees who speak up.

Second, it is important not only to have channels for people to report harassment but also to have a policy that clearly defines what constitutes sex-based harassment, outlines the procedure for dealing with reported cases, and establishes mechanisms to support people through the grievance process and afterward.

Third, it is crucial to ensure that victims feel heard, their concerns are validated, and their complaints are taken seriously. They should be ensured action will be taken to hold culprits accountable and to prevent such cases from happening again. If people believe that injustice is covered up by the organization, this can negatively affect their commitment and motivation.

Finally, employees should reflect on how they respond to colleagues’ concerns. Their actions have repercussions. By encouraging individuals to remain silent, they contribute to creating a culture of harassment.

Categories: Blogs

When Generalists Are Better Than Specialists, and Vice Versa

Fri, 07/13/2018 - 06:05

HBR STAFF/wragg/Getty Images

What’s the best way to boost creativity on your team? There’s really no simple answer. Even the research is split on the best approach to take.

One view is that the key to creative breakthroughs is being able to combine or leverage different areas of expertise. After all, every innovation somehow recombines or reimagines things that already exist.

Many studies have found that the best ideas emerge from combining insights from fields that don’t seem connected. For example, Charles Babbage’s invention of computational machines powered by punch cards, the foundation of modern computers, was inspired by Babbage’s knowledge of the silk-weaving industry, which used cards with holes to create patterns in the silk fabric. Similarly, Henry Ford’s revolutionary idea of the car manufacturing assembly line was inspired by Singer sawing machines and meatpacking plants.

Based on this thinking, you might try to make your team more creative by encouraging employees to explore new fields or by hiring more generalists, people who have a variety of experience and expertise. They can connect dots where others don’t see a link.

But other studies have found that there are costs to generalizing. As the saying goes, jacks of all trades are masters of none. This line of research argues that specialists, with their deeper understanding of subject matter, can better spot and seize on emerging opportunities. For example, researchers Sarah Kaplan and Keyvan Vakili found that recombining ideas from one domain of specialization, as opposed to multiple domains, led to more novel innovations in the area of nanotubes. Specialists may also have an easier time collaborating because it’s clearer how the work should be split up.

These points would suggest you’re better off hiring employees who have very deep expertise in an important area or encouraging your employees to become true specialists in whatever they do.

There’s considerable evidence supporting both sides, so we reason that both are probably right. But there must be certain circumstances under which generalists shine and others under which specialists do. In a forthcoming paper in Administrative Science Quarterly, we studied what these are.

We theorized that the benefits of being a generalist are strongest in fields with a slower pace of change. In these fields (think oil and gas, mining), it might be harder for specialists to come up with new ideas and identify new opportunities, while generalists may be able to find inspiration from other areas. We also theorized that the situation flips for fields with a faster pace of change. In this case (think of quickly evolving fields such as quantum computers and gene editing), generalists may struggle to stay up to date, while specialists can more easily make sense of new technical developments and opportunities as they arise.

To test this, we needed to study an area where some fields experienced a sudden shift of pace while other fields remained stable. This is exactly what happened in theoretical mathematics after the collapse of the Soviet Union. In the 1980s Soviet mathematicians were largely ahead of their Western colleagues in some fields of theoretical mathematics (integral equations, for example) but not in others (commutative rings and algebras). As the Soviet Union collapsed, a large store of scientific advances suddenly became available to Western mathematicians. This increased the pace of change in fields where the Soviet Union was ahead of the West.

Theoretical mathematics is also a field that allowed us to distinguish between specialists and generalists. For example, the Italian Fields Medal winner Enrico Bombieri is known for bringing together insights from widely differing areas of mathematics. In contrast, French Fields Medal winner Laurent Schwartz spent most of his career working on distributions.

We compared mathematicians working in fields that experienced rapid change (mainly subfields of mathematical analysis, such as integral equations, partial differential equations, and Fourier analysis) with those working in less affected fields (mainly subfields of algebra and geometry, such as rings and algebras and combinatorics). We then tracked the performance of over 4,000 mathematicians across the period 1980–2000 — 10 years before and 10 years after the collapse of the Soviet Union — using an extensive data set of publication and citation data provided by the American Mathematical Society.

We quantified the specialization level of mathematicians based on their academic publications. We defined specialists as researchers who published in only one domain of theoretical mathematics and generalists as researchers who published in several domains. We measured changes in the creative output of generalists and specialists, in faster-paced and slower-paced fields, by the number of academic papers they published. Since publications vary in quality, we also adjusted for the number of citations publications later received.

Of course, theoretical mathematics is a unique setting, but it allowed us to precisely measure how an increase in the pace of change impacts the creative performance of specialists and generalists. The results from our analyses confirm our theory.

 

The Soviet collapse altered the pace of change differently for different fields of theoretical math. In fields that didn’t change much (slower-paced fields), specialists used to be slightly less productive than generalists, but this gap widened significantly after the collapse. Our regression estimates a 22% decrease in specialists’ citation-weighted publications per year, relative to generalists in the same slow-paced fields. (This number refers to average change in the productivity gap between the decade preceding and the decade following the Soviet collapse, and is obtained after controlling for changes in publication trends over time and for various individual characteristics such as age, gender, and education.)

In fields that were most affected (faster-paced fields), the opposite happened. Whereas before the collapse specialists were slightly more productive than generalists, after the collapse this gap widened, because specialists’ productivity increased while generalists’ decreased. More specifically, our regression estimates that specialists ended up publishing 83% more citation-weighted papers than generalists in the 10 years after the collapse, relative to the 10 years before.

Not only did generalists in faster-paced areas perform worse than specialists, but they also performed worse than generalists in slower-paced areas. Before the collapse, the productivity of generalists from the two areas was very similar. After the collapse, generalists in faster-paced areas decreased their productivity and published 37% fewer citation-weighted papers than generalists in slower-paced areas.

In other words, generalists appear to be relatively successful as long as the pace of change is not too rapid, but their productivity decreases when the pace of change increases. At the same time, specialists appear to perform better when the pace of change accelerates.

Our study suggests that two types of capabilities can improve creative performance. One is the ability to connect ideas across subject areas. This isn’t easy, as ideas that are successful in one area might not be successful in another, but it can pay off, especially if the field you’re working in is relatively stagnant. Another is the ability to efficiently build on progress in your field and seize opportunities emerging at the frontier, which may be particularly valuable when things are progressing quickly.

There is no one-size-fit-all strategy to promote creativity. But our study suggests that leaders should assess how many specialists and generalists they have on their teams. If the pace of change is slow, teams will likely benefit from employing generalists, who can challenge the industry’s taken-for-granted assumptions and bring in new ideas. If the pace of change is rapid, teams will benefit from specialists, who are more likely to help the team innovate.

Categories: Blogs

Family Businesses

Thu, 07/12/2018 - 14:12

Are you struggling with the complications of working in a family business? In this episode of HBR’s advice podcast, Dear HBR:, cohosts Alison Beard and Dan McGinn answer your questions with the help of Ted Clark, who runs the Center for Family Business at Northeastern University. They talk through advancing when you’re not a member of the family, managing up when your parents are your bosses, and whether it’s better to work for a family enterprise or a big corporation.

Download this podcast

Listen to more episodes and find out how to subscribe on the Dear HBR: page. Send in your questions about workplace dilemmas by emailing Dan and Alison at dearhbr@hbr.org.

From Alison and Dan’s reading list for this episode:

HBR: Surviving in a Family Business When You’re Not Part of the Family by Josh Baron and Rob Lachenauer — “Successful non-family leaders stick to the ‘management room.’ They understand that when it comes to the ‘family room,’ the family has all the power; it’s never going to be a fair fight. Blood is usually thicker than water. Yet family squabbles do spill over into the management room, and non-family executives must be able to isolate the business from the family when family members can’t see past their own internal squabbling.”

HBR: Avoid the Traps That Can Destroy Family Businesses by George Stalk, Jr. and Henry Foley — “An underappreciated problem is that families often grow more quickly than their businesses do. If a company founder has three children, each of whom marries and produces three more children, each of whom marries, within three generations there could be 25 people or more (including all the spouses) working or looking to work at the company. Many businesses simply don’t have enough work to employ every family member.”

HBR: Saving a Family Business from Emotional Dysfunction by Manfred F. R. Kets de Vries — “The most persistent complaints I hear are that members of the senior generation refuse to share power with their adult children; that there are family members put into management positions for which they are not qualified; and that it is impossible to have a truly professional relationship with someone in the family (father, mother, uncle, aunt, brother, sister, or cousin). And all too often, the powerholders in a family business fail to address such problems effectively.”

HBR: Leadership Lessons from Great Family Businesses by Claudio Fernández-Aráoz, Sonny Iqbal, and Jörg Ritter — “Leadership decisions, particularly at the very top, can be a minefield for family businesses. But our research shows that companies can navigate safely and prosper for generations if they establish good governance as a baseline, preserve family gravity, identify and develop high-potential executives both within the family and outside it, and bring the right discipline to their CEO succession and integration processes.”

Categories: Blogs

4 Ways to Create a Learning Culture on Your Team

Thu, 07/12/2018 - 09:00

Buda Mendes/Getty Images

Technology is disrupting every industry and area of life, and work is no exception. One of the main career implications of the digital revolution is a shift in demand for human expertise. For instance, LinkedIn’s talent research shows that half of today’s most in-demand skills weren’t even on the list three years ago.

As a result, there is now a premium on intellectual curiosity and learnability, the desire and ability to quickly grow and adapt one’s skill set to remain employable. What you know is less relevant than what you may learn, and knowing the answer to questions is less critical than having the ability to ask the right questions in the first place. Unsurprisingly, employers such as Google, American Express, and Bridgewater Associates make learning an integral part of their talent management systems. As a Bersin report pointed out: “The single biggest driver of business impact is the strength of an organization’s learning culture.”

You and Your Team Series Learning

However, true learning cultures, defined by CEB as “a culture that supports an open mindset, an independent quest for knowledge, and shared learning directed toward the mission and goals of the organization,” are still the exception rather than the norm. Recent research found that only 10% of organizations have managed to create them, with just 20% of employees demonstrating effective learning behaviors at work. Research by Bersin examined the issue of learning culture in great detail and found that companies who effectively nurture their workforce’s desire to learn are at least 30% more likely to be market leaders in their industries over an extended period of time.

Here are four science-based recommendations to help you create a learning culture on your team or in your organization:

Reward continuous learning. It is impossible to trigger deliberate changes in your team’s or organization’s culture unless you actually put in place formal reward systems to entice them — and even then there is no guarantee you will achieve change unless the rewards are effective. Sadly, even when managers understand the importance of learning — at least in theory — they are often more interested in boosting short-term results and performance, which can be an enemy of learning. By definition, performance is highest when we are not learning. Equally, it is hard for employees to find the necessary time and space to learn when they are asked to maximize results, efficiency, and productivity. A report by Bersin found that among the more than 700 organizations studied, the average employee had only 24 minutes a week for formal learning. Note that rewarding curiosity is not just about praising and promoting those who display an effort to learn and develop; it’s also about creating a climate that nurtures critical thinking, where challenging authority and speaking up are encouraged, even if it means creating discord. This is particularly important if you want your team to produce something innovative.

Give meaningful and constructive feedback. In an age where many organizations focus their developmental interventions on “strengths,” and feel-good approaches to management have substituted “flaws” and “weaknesses” with the popular euphemism of “opportunities,” it is easy to forget the value of negative feedback. However, it is hard to improve on anything when you are unaware of your limitations, fully satisfied with your potential, or unjustifiably pleased with yourself. Although one of the best ways to improve employees’ performance is to tell them what they are doing wrong, managers often avoid difficult conversations, so they end up providing more positive than negative feedback. This is particularly problematic when it comes to curiosity and learning, since the best way to trigger curiosity is to highlight a knowledge gap — that is, making people aware of what they don’t know, especially if that makes them feel uncomfortable. Note that people are generally unaware of their ignorance and limitations, especially when they are not very competent, so guidance and feedback from others is critical to helping them improve. However, negative feedback must be provided in a constructive and delicate way — it is a true art — as people are generally less receptive of it than of praise and appreciation, especially in individualistic (aka narcissistic) cultures.

Lead by example. Another critical driver of employee learning is what you, as a manager or leader, actually do. As illustrated by the leadership value chain model, leaders’ behaviors — particularly what they routinely do — have a strong influence on the behavior and performance of their teams. And the more senior that leaders are, the more impactful their behaviors will be on the rest of the organization. Accordingly, if you want to nurture your team’s curiosity or unlock learning in your organization, you should practice what you preach. Start by displaying some learning and unlocking your own curiosity. It is a sort of Kantian imperative: Don’t ask your employees to do what you don’t do yourself. If you want people to read more, then read — and make others aware of your voracious reading habits (share your favorite books or most recent learnings with them). If you want them to take on novel and challenging tasks, then take on novel and challenging tasks yourself. For example, learn a new skill, volunteer to work on something unrelated to your main job, or take on tasks outside your comfort zone even if you are not good at it — you will be able to show that with a bit of curiosity and discipline you can get better, and this should inspire others. And if you want them to question the status quo and be critical and nonconformist, then don’t be a sucker for order and rules!

Hire curious people. Too often with big management problems, we focus on training and development while undermining the importance of proper selection. But the reality is that it’s easier to prevent and predict than to fix and change. When selection works, there’s far less need for training and development, and good selection makes training and development much more effective because it is easier to augment potential than to go against someone’s nature. Learning and curiosity are no exception: If you hire people who are naturally curious, and maximize the fit between their interests and the role they are in, you will not have to worry so much about their willingness to learn or be on their case to unlock their curiosity. Fortunately, meta-analytic studies provide a detailed catalogue of traits — and their corresponding measures — that increase an individual’s propensity to learn and develop intellectually, even after adulthood. And there is a well-established science to predicting people’s probability of displaying such traits (for example, personality assessments measuring openness to new experience, tolerance for ambiguity, critical thinking, and inquisitiveness). Likewise, decades of research into vocational interests show that aligning people’s drive and interests to the characteristics of the job and culture of the organization tends to increase not just their motivation to learn but also their performance.

In sum, if you want to nurture curiosity and learning in your employees, there’s no need to rely on your organization’s formal learning and development programs. Reinforcing positive learning behaviors, giving constructive and critical feedback to align employees’ efforts with the right learning goals, showcasing your own curiosity, and hiring people with high learnability and a hungry mind are all likely to create a stronger learning culture within your team and your organization.

Categories: Blogs

When Cost-Plus Pricing Is a Good Idea

Thu, 07/12/2018 - 08:51

HBR Staff/Image Source/Getty Images

Cost-plus pricing is a lot like the romance novel genre, in that it’s widely ridiculed yet tremendously popular. Almost every manager I know will claim they hate pricing based only on costs. Yet cost-plus pricing remains the most widespread pricing method, used to price everything from a bottle of beer in a bar to multibillion-dollar infrastructure projects.

The idea behind cost-plus pricing is straightforward. The seller calculates all costs, fixed and variable, that have been or will be incurred in manufacturing the product, and then applies a markup percentage to these costs to estimate the asking price. The markup is stipulated by the buyer, as is often the case with government contracts, or it can be chosen by the manager. (I have seen companies use markups ranging from 5% to 800%.)

Cost-Plus Pricing Has Justifiable Drawbacks

Among pricing experts, cost-plus pricing is reviled for some legitimate reasons. For stand-alone projects in particular, cost-plus pricing discourages efficiency and cost containment. When lower costs are quoted, the company earns lower revenue and total profit. A bloated cost structure, on the other hand, will raise prices and boost profit.

A second important deficiency arises from the fallacy that a cost-plus price is guaranteed to cover costs. This notion can make managers falsely complacent. In reality, because sales volume often has to be guesstimated beforehand, and fixed costs allocated to each unit based on that forecast, the cost-plus price can easily be too high or too low, resulting in a devastating miscalculation. Cost-plus prices provide no guarantee of covering costs or earning a profit.

Third, the cost-plus pricing calculation ignores both the customer’s willingness to pay and the competitors’ prices. When these factors are ignored, a pricing decision can be completely off base. For example, a competitor may enjoy a formidable cost advantage, in which case the company’s cost-plus price will be too high to be effective. In another case, a customer may be willing to pay far more, in which case the cost-plus price will be too low, letting profit go uncaptured. Value-based pricing, which explicitly accounts for these factors, is in vogue and is esteemed by many managers.

The Strategic and Tactical Benefits of Cost-Plus Pricing

Despite these limitations, there are sometimes strategic and tactical reasons to use cost-plus pricing. When implemented with forethought and prudence, cost-plus pricing can lead to powerful differentiation, greater customer trust, reduced risk of price wars, and steady, predictable profits for the company.

No pricing method is easier to communicate or to justify. Cost-plus pricing is inherently fair and nondiscriminatory to customers. What can be a more reasonable explanation for a price increase than to state, “Our input costs went up by 8% this year, so we are raising our prices by 8%”? Clothing retailer Everlane goes even further, using cost-plus pricing to make its value proposition of “radical transparency” come alive. For every garment it sells, Everlane provides a detailed breakdown of costs for materials, labor, duties, and transport, along with its markup. This way, customers can easily verify Everlane’s emphasis on paying fair wages to workers manufacturing its garments and actively endorse this company value by buying its products.

Cost-plus pricing is the very antithesis of value-based pricing, which seeks to discover differences between customers’ economic valuations and to exploit them by customizing prices. Just consider the consumer outrage generated by Uber’s surge pricing, Coca-Cola’s dynamic vending machine pricing based on outside temperature, or the variable rate pricing of electric utilities. In all these cases, many customers saw the seller’s value-based pricing moves as nothing more than gouging. Cost-plus pricers don’t face this risk. Sure, they may underprice their products for some customers, but they will sleep peacefully at night knowing customers consider their prices to be fair.

Another pragmatic benefit of cost-plus pricing is that it is simple to implement. Every frontline retail employee or bartender with a calculator can apply a markup percentage to wholesale costs and calculate the asking price, something that many mom-and-pop stores and bars appreciate.

If the major competitors in a market use cost-plus pricing, it stabilizes price levels. The amount of risk associated with pricing decisions is lowered for all players. Prices remain relatively stable, particularly when the higher-cost suppliers in the market offer higher-quality products and when lower-cost sellers offer lower-quality products. Companies are less likely to engage in price wars if they base their prices mainly on costs instead of competitors’ prices.

Cost-plus pricing can encourage shoppers to use factors other than price in buying decisions. When most of us walk into a discount mega-store, we expect to find low prices with lower service quality to match. By contrast, we expect higher service quality and more upscale and expensive products in high-end stores. When consumers believe prices reflect cost, they are more likely to factor quality into their decision, instead of just buying whatever’s cheapest.

A final and significant virtue of cost-plus pricing lies in executing a cost leadership strategy. When the company has unique competencies that allow for an advantageous cost structure relative to competitors, it can use cost-plus pricing to create and deliver the most enticing value proposition of all. It becomes a cost leader, and its low costs, the resultant low prices, and superior customer value become an integral part of its brand identity. Costco has maintained market leadership for decades by using this principle. The company mandates that nothing in its stores will be marked up by more than 14% (15% for its private-label products). It widely publicizes this pricing policy. When coupled with other cues such as a spartan store environment, limited assortments, and bulk buying, its cost-plus pricing creates a powerful image that the customer is going to get great deals at Costco.

Despite the ridicule heaped on it by managers, there is a gritty common sense and logic associated with cost-plus pricing that is difficult to dispute. For companies with a cost advantage or an interest in using price transparency as a differentiator, cost-plus pricing is a powerful strategic tool. For sellers interested in conveying that their prices are fair and building customer trust, cost-plus pricing is an effective tactic. In the herd-driven frenzy to adopt value-based pricing, managers shouldn’t throw out the cost-plus baby with the bathwater.

Categories: Blogs

7 Compensation Strategies for Cash-Strapped Startups

Thu, 07/12/2018 - 07:30

HBR Staff/Phatharapol Nopharat/EyeEm/Getty Images

As a startup founder, I’m constantly struggling to recruit top talent without breaking the bank. We can’t always match market salaries, but we need exceptional (read: expensive) talent in order to build from scratch. How do you recruit a developer making well into six figures, or an experienced salesperson with four kids in private school? At our company, Hatch Apps, we’ve learned to get creative.

Here are some of the strategies that we’ve used, which are hopefully helpful for your business whether it’s an early-stage startup with limited funding or a more mature organization that has a restricted budget. Many of the tips below aren’t free, but they’ll help you squeeze more value out of each dollar you spend on compensation, and minimize the cash at risk if your hires don’t quite work out.

Pay for performance. When we’re hiring someone who has a hard-to-match base salary at their current employer, we cushion our offer with a lucrative bonus structure, commission pay, or other performance incentives. That way, they get paid for the value they add, up to or beyond their current base salary. And it shrinks the gap between cash going out and coming in for the company since you’re often not paying out the money until the additional revenue is banked.

Performance pay isn’t just for your sales team — you can bump your marketing person’s bonus if he doubles his qualified leads, or an engineer’s salary if the product she builds goes live for customers on time. When negotiating an offer, you can discuss what’s achievable, and agree on what that prospective hire should end up making if they’re as excellent as you think they are. A caveat here: Make sure that incentives align with metrics over which the employee has control. Otherwise, you’re setting them up for a disappointment with could lead to their resignation.

Exceptional hires are often energized by performance-based pay, especially if it means that they could end up making more over time. Another benefit? Performance-based pay often scares away less competent employees who know they’re unable to deliver on what they’re promising. 

Cover expenses before taxes. Parking, metro passes, gym memberships, hardware, snacks, the occasional lunch — over the course of a year, these costs add up for an employee. In our building, for example, parking alone can easily exceed $300 per month. By paying these expenses out of your corporate account (or even out of pre-tax earnings if you’re in the U.S.) you can stretch limited dollars. At Hatch Apps, we’ve covered laptops, metro passes, parking spaces — even grocery store gift cards.

In the U.S., you can often make this easy for yourself by going through your payroll provider or professional employer organization, both of which are often plugged in with local transit administrations or other benefits providers. They can also help you avoid making costly mistakes on taxation of fringe benefits — you don’t want your employees to be hit with unexpected phantom income taxes for free perks.

Reduce risk in case of turnover. You can cushion or reduce your risk with a signing bonus or quarterly retention bonuses, both of which are swiped if an employee leaves the company too soon. A signing bonus can also be used to poach an executive from her current company prior to an annual bonus or ahead of a stock vesting schedule — the cash upfront is a form of reimbursement for what she’ll be leaving behind. The initial outlay for you can be worth the cost savings of retaining good talent.

Invest in training and professional development. Pitch a prospective hire on the opportunities they’ll have to grow and advance in their career at your company. Successful professionals have invested in their career and want to continue to do so. At Hatch Apps, we encourage our team to take time during work to develop new skills or to speak at conferences — even though we’re a small company, we ask employees to set goals and report on professional growth during our quarterly reviews. It may cost us a few hours of productivity per month, but we’ll earn that time back as our employees leverage new skills or networks to be more efficient at their jobs.

We’ve seen other startups create a formal mentorship program where they match junior employees with senior ones, and pair senior executives with external advisors or investors. At our company, we’ve connected employees to experts in their field for one-on-one coffees, and instituted weekly “lunch and learns” where we bring in interesting people from our industry to share their experiences with the full team or teach us something new. These programs don’t have to be expensive, especially if you’re a small company, but showing that you’re invested in helping people grow can be a big draw during the recruitment process.

Leverage equity compensation or profit sharing. At startups like ours, stock options are often a major component of compensation packages. We give each incoming employee an equity grant which vests over four years with a one-year cliff, so if a new hire leaves within the first year, she’s also leaving behind her shares. When we grant these options, we explain what they might translate to in cash as the company grows, and we discuss how that employee can contribute towards increasing the stock price. Some companies instead leverage profit sharing, whereby all eligible employees take home a set proportion of cash proceeds at the end of each quarter. In both scenarios, your team does well when the company does well, thereby aligning incentives for performance.

Promote balance and flexibility. You can adopt other non-cash incentives such as generous vacation and leave policies, flex time, remote days, half-day Fridays in the summer, or sabbaticals for veteran employees. At Hatch Apps, we have an unlimited vacation policy with a requirement that our team members take at least 3 weeks off over the course of the year. We also allow folks to work from home, and we don’t mandate set work hours. Many of these perks are especially attractive to those of us with family obligations — being able to work remote when your kid is sick at home can dramatically simplify an employee’s life.

Reward with a job title. Some hires can be compensated with a title that’s a step up from their last gig (as long as you’re not messing with your organizational structure, or breeding jealousy among other employees). A lofty title doesn’t dent your wallet, but it’ll make a big difference for that employee when they think about next steps in their career. That said, it’s important that her job description match the moniker, or she’ll likely start looking for a role at another company with that same title and more responsibility.

Above all, what’s most important is giving your employees meaningful work, and then providing them with the resources they need to be successful. A thoughtful compensation plan makes your team feel valued, and that can be done with pay, non-cash incentives, and many other contributors to workplace happiness. Just remember that good pay with a couple perks won’t stop folks from leaving an otherwise miserable job. Compensation goes hand-in-hand with corporate culture. Build a great one, and employees will be eager to join your team — and stay.

Categories: Blogs

How to Use Mindfulness to Increase Your Team’s Creativity

Thu, 07/12/2018 - 06:05

Panayiotis Tzamaros/NurPhoto via Getty Images

There’s a fundamental contradiction when organizations ask employees to maintain a fast pace of work and be creative. What often happens in hectic workplaces is that employees resort to autopilot or habitual ways of working. When they don’t have the time or space to incubate novel and clever ideas, they may miss out on opportunities to reframe a problem and see new possibilities for potential solutions.

How do you help your team develop their creativity? Research has found that a short period of mindfulness training can have a positive impact on creative output. To explore this idea further, we conducted a study with a midsize U.S.-based real estate firm to examine whether a mindfulness training program could influence a team’s creativity.

In our study, we split up a team of 10 people into a meditating group and a control group. To start, we gave all 10 people a creative task: to brainstorm as many unusual uses for a brick as they could think of. Then we administered a 10-minute mindfulness exercise and afterward asked them to continue brainstorming the creative task. We found that seven out of 10 people increased the number of creative ideas they had in only 10 minutes. This experiment corroborates previous studies and went a step further to see how the team as a whole was affected by a weekly mindfulness intervention and training. With this same group of people over the course of five weeks, we administered a group creative task and found that the meditating group identified double the number of creative ideas as the control group. The group process was noticeably different, where the meditating group was 121% more able to build on the ideas of others. When we create group dynamics that are in flow, where one person’s idea spurs another person’s, the idea develops to a point that it wouldn’t have on its own.

You and Your Team Series Thinking Creatively

With mindfulness techniques we have an opportunity to strengthen the creativity of our work teams. We know that mind training can nurture key areas in the creative process. The burgeoning research suggests that people who practice mindfulness have more cognitive flexibility, are able to see beyond what they’ve already done, and are better at solving problems requiring insight. This facilitates what creativity experts refer to as the incubation and insight stages of the creative process. Mindfulness requires time and attention, or nonconceptual awareness, where a person does not get stuck thinking about ideas they have had in the past and observes everything as if they are seeing it for the first time, which contributes to turning off the autopilot driving thoughts and actions. The research indicates that people are open to more-original ideas after just a brief meditation practice. And when we apply this to a team of people, we begin to magnify this effect.

Both the research mentioned above and our own research suggests that to foster a culture of innovation, leaders need to give greater attention to their employees’ mindsets and consider championing mindfulness practices throughout their organizations. By cultivating milieus where employees are encouraged to be creative, they’re able to move past a mere focus on organizational efficiencies and to develop ways of working and thinking that haven’t been seen before.

Companies such as Google and Aetna offer corporate-based mindfulness programs to strengthen their employees’ emotional intelligence and well-being. Other firms are following suit to either develop their own mindfulness programs or hire a consulting firm to help integrate mindfulness into their cultures.

What else can companies do to develop mindful teams and cultures? Here are some steps they can take:

Connect mindfulness to corporate values. Demonstrate a deliberate intention to develop a mindful culture by linking the mindfulness benefits to the organization’s stated values. For example, if “embrace and drive change” is a value, as it is at Zappos, highlight how mindfulness practice facilitates greater awareness of cognitive and emotional reactions to change. Through this awareness employees can become cognizant of their fear of the unknown, see more objectively, and react less habitually to create greater opportunity for change.

Create corporate-based mindfulness programs. Train employees in mindfulness practices and in how to apply the benefits to daily life. For instance, ask employees to consider: (1) which habits support efficiency and which habits get in the way of considering something new, and (2) how the creative process works and what methods can integrate that process into the workplace.

Supplement in-house leadership development programs. Offer a condensed version of the corporate-based mindfulness program during routine leadership training sessions.

Allow for mindful moments. Offer opportunities for employees to slow down, to incubate, and to see with fresh eyes. In meetings, for example, kick off with a brief settling-in period. Offer people the opportunity to become fully present to the agenda at hand. By taking a deep breath, invite employees to leave past concerns and future worries aside until the meeting is over. This contributes to developing an attentive mindset.

You can also provide quiet places in the office where employees can meditate. We call these “wellness rooms.”

Provide the proper resources. Offer employees resources for developing their creativity and mindfulness practice: webinars, meditation aids, lunch and learns, speaker series, retreats, and so on.

Organizations have an opportunity here. Simple mindfulness practices can begin to shift their teams’ levels of creativity and can be a necessary tool for addressing the complexities of today’s workplaces.

Categories: Blogs

What You Need to Know About California’s New Data Privacy Law

Wed, 07/11/2018 - 08:56

pm images/Getty Images

Late last month, California passed a sweeping consumer privacy law that might force significant changes on companies that deal in personal data — and especially those operating in the digital space. The law’s passage comes on the heels of a few days of intense negotiation among privacy advocates, technology startups, network providers, Silicon Valley internet companies, and others. Those discussions have resulted in what many are describing as a landmark policy constituting the most stringent data protection regime in the United States.

Much of the political impetus behind the law’s passage came from some major privacy scandals that have come to light in recent months, including the Cambridge Analytica incident involving Facebook user data. This and other news drove public support for a privacy ballot initiative that would have instituted an even stricter data protection regime on companies that deal in consumer data if the state’s residents voted to pass it in November. But after intense negotiation, especially from leading internet companies and internet service providers, the backers of the ballot initiative agreed to drop the initiative and instead support the passage of the law.

The new law — the California Consumer Privacy Act, A.B. 375 — affords California residents an array of new rights, starting with the right to be informed about what kinds of personal data companies have collected and why it was collected. Among other novel protections, the law stipulates that consumers have the right to request the deletion of personal information, opt out of the sale of personal information, and access the personal information in a “readily useable format” that enables its transfer to third parties without hindrance.

The law notably establishes a broad definition of “personal information,” drawing in categories of data including a consumer’s personal identifiers, geolocation, biometric data, internet browsing history, psychometric data, and inferences a company might make about the consumer. The protections over this data are to be enforced by the state’s attorney general, though consumers will maintain a private right of action should companies fail to maintain reasonable security practices, resulting in unauthorized access to the personal data. (The data breach protection applies to a set of personal data that is narrower than that protected in the more general privacy protections.)

Perhaps the primary issue that firms are contending with is that the law’s requirements could threaten established business models throughout the digital sector. For instance, companies that generate revenue from targeted advertising over internet platforms — such as Facebook, Twitter, and Google — must, as the law is currently written, allow California residents to delete their data or bring it with them to alternative service providers. This restriction could extend to internet service providers such as AT&T and Verizon, which collect broadband activity data (web browsing data) and could attempt to use it to generate behavioral profiles to enable digital advertising. These measures might significantly cut into the profits these firms currently enjoy, or force adjustments to their revenue-growth strategies. They could also further impact any businesses that advertise on digital platforms, as the service they are purchasing — highly targeted advertising — might become less precise as a result of the new protections afforded to individual consumers.

Some firms stand to lose even more. Data brokers such as Acxiom, Epsilon, Experian, and Oracle, for example, generate profits by collecting quantities of data on individual consumers and selling it to third parties — be they ad networks, marketers, retailers, or any other type of interested business. These are precisely the kinds of practices that are directly threatened by the consumer’s rights to deletion and to opt out of sale of data.

While the law, which is set to come into effect at the start of 2020, technically applies only to California residents, it will most likely have much broader implications. Most major companies that deal in consumer data, from retailers to cellular network providers to internet companies, have some Californian customers. That will leave those companies with two main options: either reform their global data protection and data rights infrastructures to comply with California’s law, or institute a patchwork data regime in which Californians are treated one way and everyone else another. That last option can be more expensive for companies, and could disgruntle non-Californian customers should they be given fewer data privacy options by the service provider. Indeed, similar questions about Americans’ data rights arose during Mark Zuckerberg’s congressional testimony in regard to Facebook’s compliance with new European regulations.

Critically, the legislature has left open the door to amendments to the new law. We can also expect the state attorney general to work with public stakeholders to develop more specific compliance guidance for the industry over the months ahead. In the time before the law is enforced, we are likely to see more debate among industry leaders, consumer advocates, and everyone in between — all of whom will wish to affect the law and its enforcement to their own benefit.

Categories: Blogs

The Industrial Era Ended, and So Will the Digital Era

Wed, 07/11/2018 - 07:47

Tara Moore/Getty Images

In a famous scene in the 1967 movie The Graduate, a family friend takes aside Dustin Hoffman’s character, Benjamin Braddock, and whispers in a conspiratorial tone, “Plastics… There’s a great future in plastics.” It’s seems quaint today, but back then plastics really were new and exciting.

If the movie had been set in another age, the advice to young Braddock would have been different. He might have been counseled to go into railroads or electronics or simply to “Go West, young man!” Every age has things that seem novel and wonderful at the time, but tepid and banal to future generations.

Today digital technology is all the rage because after decades of development it has become incredibly useful. Still, if you look closely, you can already see the contours of its inevitable descent into the mundane. We need to start preparing for a new era of innovation in which different technologies, such as genomics, materials science, and robotics, rise to the fore.

To understand what’s happening, it helps to look at earlier technologies. The rise of electricity, for example, began in the early 1830s, when Michael Faraday invented the electric dynamo and motor. Still, it wasn’t until 50 years later that Edison opened his first power plant, and then 40 years after that, during the 1920s, electricity began to have a measurable impact on productivity.

Every technology follows a similar path of discovery, engineering, and transformation. In the case of electricity, Faraday uncovered new principles, but no one really knew how to make them useful. They first had to be understood well enough that people such as Edison, Westinghouse, and Tesla could figure out how to make things that people would be willing to buy.

However, creating a true transformation takes more than a single technology. First, people need to change their habits, and then secondary innovations need to come into play. For electricity, factories needed to be redesigned and work itself had to be reimagined before it began to have a real economic impact. Then household appliances, radio communications, and other things changed life as we knew it, but that took another few decades.

Our world has been thoroughly transformed by digital technology. It would be hard to explain to someone looking at an IBM mainframe back in the 1960s that someday similar machines would replace books and newspapers, give us recommendations on where to eat and directions for how to get there, and even talk to us, but today those things have become matters of everyday habit.

And yet today there are several reasons to believe that the twilight of the digital age is upon us. (Importantly, I’m not arguing we’ll stop using digital technology — after all, we still use heavy industry, we just no longer refer to ourselves as being in the Industrial Age.)

I see three main reasons that the digital era is ending. First is the technology itself. What’s driven all the excitement about computers is our ability to cram more and more transistors onto a silicon wafer, a phenomenon we’ve come to know as Moore’s Law. That enabled us to make our technology exponentially more powerful year after year.

Yet now Moore’s Law is ending and advancement isn’t so easy anymore. Companies such as Microsoft and Google are designing custom chips to run their algorithms because it is no longer feasible to just wait for a new generation of chips. To maximize performance, you increasingly need to optimize technology for a specific task.

Second, the technical skill required to create digital technology has dramatically decreased, marked by the rising popularity of so-called no-code platforms. Much as with auto mechanics and electricians, the ability to work with digital technology is increasingly becoming a midlevel skill. With democratization comes commoditization.

Finally, digital applications are becoming fairly mature. Buy a new laptop or mobile phone today, and it pretty much does the same things as the one you bought five years ago. New technologies, such as smart speakers like Amazon Echo and Google Home, add the convenience of voice interfaces but little else.

While there is limited new value to be gleaned from things like word processors and smartphone apps, there is tremendous value to be unlocked in applying digital technology to fields like genomics and materials science to power traditional industries like manufacturing, energy, and medicine. Essentially, the challenge ahead is to learn how to use bits to drive atoms.

To understand how this will work, let’s look at the Cancer Genome Atlas. Introduced in 2005, its mission was simply to sequence tumor genomes and put them online. To date, it has catalogued over 10,000 genomes across more than 30 cancer types and unlocked a deluge of innovations in cancer science. It has also helped inspire a similar program for materials called the Materials Genome Initiative.

These efforts are already greatly increasing our ability to innovate. Consider the effort to develop advanced battery chemistries to drive the clean energy economy, which requires the discovery of materials that don’t yet exist. Historically, this would involve testing hundreds or thousands of molecules, but researchers have been able to apply high-performance supercomputers to run simulations on materials genomes and greatly narrow down the possibilities.

Over the next decade, these techniques will increasingly incorporate machine learning algorithms as well as new computing architectures, such as quantum computing and neuromorphic chips, that function very differently than digital computers do.

The possibilities of this new era of innovation are profoundly exciting. The digital revolution, for all of its charms, has had a fairly limited economic impact, compared with earlier technologies such as electricity and the internal combustion engine. Even now, information technologies make up only about 6% of GDP in advanced economies.

Compare that to manufacturing, health care, and energy, which make up 17%, 10%, and 8% of global GDP, respectively, and you can see how there is vastly more potential to make an impact beyond the digital world. Yet to capture that value, we need to rethink innovation for the 21st century.

For digital technology, speed and agility are key competitive attributes. Techniques including rapid prototyping and iteration greatly accelerated development and often improved quality, because we understood the underlying technologies extremely well. Yet with the nascent technologies that are emerging now, that is often not the case.

You can’t rapidly prototype a quantum computer, a cure for cancer, or an undiscovered material. There are serious ethical issues surrounding technologies such as genomics and artificial intelligence. We’ve spent the last few decades learning how to move fast. Over the next few decades we’re going to have to relearn how to go slow again.

So while the mantras for the digital age have been agility and disruption, for this new era of innovation exploration and discovery will once again become prominent. It’s time to think less about hackathons and more about tackling grand challenges.

Categories: Blogs

Research: The Average Age of a Successful Startup Founder Is 45

Wed, 07/11/2018 - 06:05

Patricia de Melo Moreira/bloomberg/Getty Images

It’s widely believed that the most successful entrepreneurs are young. Bill Gates, Steve Jobs, and Mark Zuckerberg were in their early twenties when they launched what would become world-changing companies. Do these famous cases reflect a generalizable pattern? VC and media accounts seem to suggest so. When we analyzed founders who have won TechCrunch awards over the last decade, the average age at the time of founding was just 31. For the people selected by Inc. magazine as the founders of the fastest-growing startups in 2015, the average age at founding was only 29. Consistent with these findings, Paul Graham, a cofounder of Y Combinator, once quipped that “the cutoff in investors’ heads is 32… After 32, they start to be a little skeptical.” But is this view correct?

Debunking the Myth of the Young Entrepreneur

Our team analyzed the age of all business founders in the U.S. in recent years by leveraging confidential administrative data sets from the U.S. Census Bureau. We found that the average age of entrepreneurs at the time they founded their companies is 42. But the vast majority of these new businesses are likely small businesses with no intentions to grow large (for example, dry cleaners and restaurants). To focus on businesses that are closer in spirit to the prototypical high-tech startup, we used a variety of indicators: whether the firm was granted a patent, received VC investment, or operated in an industry that employs a high fraction of STEM workers. We also focused on the location of the firm, in particular whether it was in an entrepreneurial hub such as Silicon Valley. In general, these finer-grained analyses do not modify the main conclusion: The average age of high-tech founders falls in the early forties.

These averages, however, hide a large amount of variation across industries. In software startups, the average age is 40, and younger founders aren’t uncommon. However, young people are less common in other industries such as oil and gas or biotechnology, where the average age is closer to 47. The preeminent place of young founders in the popular imagination may therefore reflect disproportionate exposure to a handful of consumer-facing IT industries, such as social media, rather than equally consequential pursuits in heavy industry or business-to-business sectors.

 

But what about the most successful startups? Is it possible that companies started by younger entrepreneurs are particularly successful? Among the top 0.1% of startups based on growth in their first five years, we find that the founders started their companies, on average, when they were 45 years old. These highest-performing firms were identified based on employment growth. The age finding is similar using firms with the fastest sales growth instead, and founder age is similarly high for those startups that successfully exit through an IPO or acquisition. In other words, when you look at most successful firms, the average founder age goes up, not down. Overall, the empirical evidence shows that successful entrepreneurs tend to be middle-aged, not young.

In part, the dominance of middle-aged founders in starting the highest-growth companies reflects the propensity of middle-aged people to start ventures. Middle-aged people take many more bites at the apple. However, when you look at success rates conditional on actually starting a company, the evidence against youthful entrepreneurial success becomes even sharper. Among those who have started a firm, older entrepreneurs have a substantially higher success rate. Our evidence points to entrepreneurial performance rising sharply with age before cresting in the late fifties. If you were faced with two entrepreneurs and knew nothing about them besides their age, you would do better, on average, betting on the older one.

 

Why might this be? Although there are many other factors that may explain the age advantage in entrepreneurship, we found that work experience plays a critical role. Relative to founders with no relevant experience, those with at least three years of prior work experience in the same narrow industry as their startup were 85% more likely to launch a highly successful startup.

But What About Steve Jobs?

Although we have looked at extraordinarily successful firms — the top 0.1% by growth as well as the rare outcome of successful acquisition or IPO — one might still wonder if even more extreme outlier firms are started by the very young. Interestingly, however, when you study notable outliers such as Bill Gates, Steve Jobs, Jeff Bezos, or Sergey Brin and Larry Page, the growth rates of their businesses in terms of market capitalization peaked when these founders were middle-aged. Steve Jobs and Apple introduced the company’s most profitable innovation, the iPhone, when Jobs was 52. Jeff Bezos and Amazon have moved far beyond selling books online, and Amazon’s future market cap growth rate was highest when Bezos was 45. These prominent founders may not have peaked when very young. Extremely talented entrepreneurs may have unusual acumen — allowing them to succeed when they are very young — yet still see greater success as they age. Thus there is no fundamental tension between the existence of great young entrepreneurs and a general tendency for founders to reach their peak entrepreneurial potential later in life.

Why Do VC Investors Tend to Bet on Young Founders?

In light of this evidence, why do some VCs persist in betting on young founders? We cannot definitively answer this question with the data at our disposal, but we believe that two mechanisms could be at play. First, many VCs may operate under a mistaken belief that youth is the elixir of successful entrepreneurship — in other words, VCs are simply wrong. Though it is tempting to see age bias as the leading explanation for the divergence between our findings and investor behavior, there is a more benign possibility: VCs are not simply looking to identify the firms with the highest growth potential. Rather, they may seek investments that will yield the highest returns, and it is possible that young founders are more financially constrained than more experienced ones, leading them to cede upside to investors at a lower price. In other words, younger entrepreneurs may be a better “deal” for investors than more experienced founders.

The next step for researchers is to explore what exactly explains the advantage of middle-aged founders. For example, is it due to greater access to financial resources, deeper social networks, or certain forms of experience? In the meantime, it appears that advancing age is a powerful feature, not a bug, for starting the most successful firms.

Categories: Blogs

How Some Companies Beat the Competition… For Centuries

Tue, 07/10/2018 - 13:42

Howard Yu, Lego Professor of Management and Innovation at IMD Business School in Switzerland, discusses how the industrial cluster in the Swiss city of Basel is a unique example of enduring competitive advantage. He explains how early dye makers were able to continually jump to new capabilities and thrive for generations. He says the story of those companies offers a counter-narrative to the pessimistic view that unless your company is Google or Apple, you can’t stay ahead of the competition for long. Yu is the author of LEAP: How to Thrive in a World Where Everything Can Be Copied.

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Categories: Blogs

How to Mentor Someone Who Doesn’t Know What Their Career Goals Should Be

Tue, 07/10/2018 - 09:00

HBR Staff/Richard Newstead/Getty Images

“Tell me about your career goals.” How often have you said this to a person you’re managing or mentoring, only to get a blank stare in return? Perhaps the person confides that they don’t know what their goals should be, or even whether there are opportunities to advance at your company. How do you begin to provide support?

Career dissatisfaction is a growing challenge in today’s world, which is why we’ve decided to do things differently at Weight Watchers, with the help of LifeLabs Learning. The results of CEB’s 2015 employee survey capture the problem well: 70% of employees surveyed (across many industries) reported being dissatisfied with career opportunities at their company — a disturbing figure given that it is one of the biggest drivers of engagement and retention. At the same time, 75% of organizations said they expected to face a shortage of necessary skills and knowledge among their employees. So, on the one hand, employees feel they can’t advance fast enough, and on the other, companies believe employees are growing too slowly. How can such a blatant and dangerous contradiction exist? And what can we do about it?

Before offering solutions, we’d like to propose a radical diagnosis: The problem lives not in a lack of career opportunities, but rather in the very concept of a career. We are suffering from the career myth — a delusional belief in the outdated idea of linear career progression.

Consider the etymology of the word “career.” It comes from the 16th-century word for “road.” When we envision a career, we imagine a direct path with a final destination. And not long ago, this concept was useful. Career growth meant attaining incremental increases in prestige and compensation. You could look at the past and use it as a gauge of the future — taking the steps that others took to get to where they got. This vision of career growth no longer matches reality. We no longer need to be good at predicting the future; we now have to succeed when the future is unpredictable. We have to abandon the career myth and create a new framework for personal and professional growth.

Let’s return to the employee who needs direction and feels stuck and confused about their career. If you can’t point them toward a reassuring career ladder, what can you do to support their growth and increase their impact on the company? Here are some of the steps we’re taking at Weight Watchers to help employees move beyond the career myth:

Dispel the career myth. First, we tell employees that it is fine and even preferable not to have a concrete career path in mind. Being overly attached to a specific path can turn into a career trap — blinding us to nonlinear opportunities for growth. We recently launched biannual growth conversations between managers and employees. Rather than job titles, employees discuss experiences, responsibilities, and lifestyle changes they might want.

Good questions to ask: “What problems excite you?” “What strengths can you build on?” “What types of work do you want to do less of and more of?” “What would you do differently if you quit your career?”

Focus on transferable skills. We train our managers to help their direct reports develop transferable skills, not climb a ladder. These are skills that increase employability because they can be applied to a variety of roles and situations now and in the future (for example, communication, self-management, writing, public speaking). Rather than investing in one path, we tell employees, they should diversify their career capital. To provide some direction, we also want managers to advertise the skills that are most wanted on the team.

Good questions to ask: “Of the skills we’re looking to grow on the team or in the company, which interest you most?” “What skills would help you gain more influence in your current role?” “What skill gaps are standing in your way or holding you back?”

Create milestones. One of the perks of an old-school career is the title progression that delineates advancement. As organizations become flatter, and growth nonlinear, we have to put extra effort into making milestones that mark progress. One way we’ve done this is to create badges that demarcate growth. For example, when managers receive training, they receive a certificate. To get their next badge, they must complete an advanced program. A badge system can demarcate skills, knowledge, and achievements — creating a portfolio of accomplishments rather than a traditional résumé. Another milestone solution we’ve implemented is a quarterly conversation focused on tracking goals employees set for themselves, aligned with company-wide priorities. Next, we’ll develop more visible recognition platforms so that employees can celebrate their accomplishments and share their knowledge.

Good questions to ask: “What do you want to achieve next? How will you know you’ve achieved it?” “Let’s gamify this goal. What’s level 1? How about level 2?” “What do you want to name this next milestone?” “How might you share what you’ve learned?”

Encourage small experiments. The growing complexity and unpredictability of work means we need to run many small experiments to discover what suits us best. To fuel a spirit of experimentation, we’ve launched opportunities for employees across the world to get training in topics they are curious to explore. We’re also helping managers encourage experiments among their reports and equipping them with skills to give clear, actionable feedback on their reports’ progress.

Good questions to ask: “What areas of the business intrigue you?” “How might you design a short experiment to test your interest level?” “Who might you want to collaborate with?” “What have you discovered about yourself from your past experiments?”

The scary thing about accepting the career myth is acknowledging that you don’t know what comes next. The wonderful thing about it is realizing that every experience you’ve collected thus far has merit. Every job you’ve held and every relationship you’ve forged is a kind of key that can unlock a future opportunity. The keys don’t have to make sense together. There doesn’t need to be a clear, linear narrative to explain how you got from A to B. And if your employees still worry that they don’t have a clear path in mind, lean on the wisdom of Lewis Carroll: “If you don’t know where you are going, any road will get you there.”

Categories: Blogs

Purchasing Managers Have a Lead Role to Play in Cyber Defense

Tue, 07/10/2018 - 08:00

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There is a crying need for companies to enlist their supply chain management departments in the fight against cyberattackers. According to our research, over 60% of reported attacks on publicly traded U.S. firms in 2017 were launched through the IT systems of suppliers or other third parties such as contractors, up from less than one-quarter of attacks in 2010. A number of the high-profile attacks on large companies — including Equifax, Netflix, Best Buy, and Target — occurred this way.

Consider the 2014 attack on Target, which caused an estimated $162 million in damages. The supplier was a small, privately held HVAC company called Fazio. After the attackers infiltrated Fazio’s firewall, they stole Fazio’s credentials to break into Target’s system.

To mitigate this type of risk, firms should take the following actions.

Embed cybersecurity measures in contracts with third parties. Our research suggests that many procurement professionals do not consider vendors’ cybersecurity capabilities to be an important factor in selecting or developing top-tier suppliers. This must change, and purchasing and IT departments should work together closely to make it happen. Key suppliers should have to meet performance and training standards and then should be regularly assessed to ensure that they are meeting them. Firms can design their own standards or use common existing ones such as GDPR or NIST standards.

We believe that a supplier’s cybersecurity practices should be treated similarly to its quality or delivery performance. If one cannot meet sufficient levels of performance, supply managers should be empowered to end the relationship.

Limit suppliers’ access to IT systems. Working with the IT department, supply managers should much more stringently limit suppliers’ access to the purchasing firm’s systems. They should then segment suppliers based on which ones need access to which parts of the purchasing firm’s back-office systems (for example, warehouse management, inventory, or point of sale). Those suppliers that must be allowed to penetrate more deeply into the network would be classified as A-level, and supply managers would ensure that they’re credentialed and monitored accordingly.

Target and Walmart both worked with the HVAC supplier that the cyberattackers used to breach Target. But Walmart came through unscathed because it had appropriately categorized its suppliers and limited the access of the one in question to its back-office system.

Work with competitors. Attackers will take the path of least resistance to the biggest possible payoff. Consequently, they often focus on suppliers that are linked to multiple firms housing valuable data. The cellphone location data of AT&T, Sprint, and Verizon users was compromised through a bug in the website of LocationSmart, a supplier to all three companies. Other firms, including Starwood and Hilton Hotels, lost customer data when their common point-of-sale system (Oracle’s Micros platform) was compromised.

The lesson: Instead of regulating suppliers individually, supply managers should collaborate with their counterparts at competitors to generate industry-level security standards. Any supplier hoping to conduct business with the industry leaders would have to comply with them. Competitors might even consider taking this cooperation a step further and implement programs through which they share vendor security ratings and flag potential issues.

Hold supply managers accountable. To help ensure that these activities succeed, top management must make supply managers responsible for the results. Traditionally, procurement professionals’ key performance metrics have revolved around cost reductions, quality, and assurance of continued supply. They haven’t been incentivized to make supplier cybersecurity a key metric in supplier scorecards or in the supplier selection process. They should be.

Procurement must be put on the front line in the battle against cyberattackers. They must be empowered to take cybersecurity as seriously as they now take quality, sustainability, and dependable delivery. They can and must play an important role in the effort to keep companies safe.

Categories: Blogs

Why Do Toxic People Get Promoted? For the Same Reason Humble People Do: Political Skill

Tue, 07/10/2018 - 07:00

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Sometimes the wrong people get promoted. They might be deceitful and unscrupulously manipulative (what psychologists call “Machiavellian”); or impulsive and thrill-seeking without any sense of guilt (psychopathic); or egotistically preoccupied with themselves, having a sense of grandiosity, entitlement, and superiority (narcissistic). Employees with one or more of these three personality traits, known as the “dark triad,” are more likely to cheat, engage in fraudulent or exploitive workplace behavior, and make unethical decisions. It can be frustrating for honest and humble people to watch these employees get ahead. Why, given their toxicity, do they rise through the ranks? How do such people manage to succeed?

In a recent research study published in Personality and Individual Differences, I looked at the influence of political skill among employees. Political skill is defined as a positive social competence that helps people network, influence others, demonstrate social astuteness, and appear sincere in their dealings with others.

I surveyed 110 employees in Singapore in a variety of industries and positions, asking them how they viewed their political skill in the workplace. I also determined their scores on the H-factor of personality. High scores on the H-factor indicate honesty-humility. Low scores are practically identical with the common core of the dark triad. Finally, I also surveyed these employees’ bosses.

I noticed that toxic employees whose political skills were highly rated by their supervisors were more likely to have a high performance rating. In other words, while not all toxic people possess political skill, those toxic people who use political skill effectively in the eyes of their bosses are seen as better performers. And as we all know, those who are seen as top performers are more likely to be promoted.

Is there a way to prevent toxic people from moving up? Organizational psychologists who are knowledgeable in personality and behavioral assessments may help identify toxic personalities early, but if the employee possesses political skill, this task is difficult. Bosses could also check with an employee’s colleagues and subordinates before making a promotion, as toxic people may behave differently toward colleagues and subordinates than toward bosses who have decision power.

But it’s also worth remembering that sometimes these difficult personality types can be useful for the organization. Imagine you need that James Bond–like figure for a difficult task to be executed fearlessly, logically, and emotionlessly. For example, a failing firm may need to downsize if it has any hope of surviving. While the need to fire employees can create a heavy emotional burden for most managers, for a manager low in empathy it is much less traumatic. Or maybe you absolutely need a technical specialist, even though they are a bit of a narcissist. Good managers figure out how to deploy these kinds of people while limiting the damage they do to other employees.

How about the honest and humble people — will they always lose out to these dark personalities? Not necessarily. It’s just that some toxic people are able to use political skill for their own purposes and are successful in it. In my research I found that once political skill was controlled for, there was no difference in the average task performance ratings between toxic and honest-humble employees. And when it came to a task such as team facilitation, honest-humble employees received higher ratings than their toxic peers (again, when I controlled for political skill). This data helps explain why there are plenty of nontoxic people who rise through the ranks.

If you are one of these honest and humble people who feel left out, this research suggests you can make a run for the same promotion by acquiring political skill. Build your network with diverse groups of key people inside and outside the organization. Show genuine interest in other people (in a way that is apparent to them; it doesn’t help if others do not notice). Actively listen to others, and ask them about their professional and personal interests. If you are able to establish good rapport with others, they will also listen more to your suggestions.

While demonstrating political skill is easier for some, it can be learned. When you use it for healthy personal and organizational goals, it can increase both your performance and your company’s.

Categories: Blogs

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