Harvard Business Review

Why Management History Needs to Reckon with Slavery

Harvard Business Review - Tue, 11/13/2018 - 6:01pm

Caitlin Rosenthal, assistant professor of history at UC Berkeley, argues there are strong parallels between the accounting practices used by slaveholders and modern business practices. While we know slavery’s economic impact on the United States, Rosenthal says we need to look closer at the details — down to accounting ledgers – to truly understand what abolitionists and slaves were up against, and how those practices still influence business and management today. She’s the author of the book, Accounting for Slavery: Masters and Management.

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What Stan Lee Knew About Managing Creative People

Harvard Business Review - Tue, 11/13/2018 - 3:20pm
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Stan Lee hated to see an idle artist. The renowned comic book writer and publisher, who died this week at 95, thought idle talent was bored talent, and bored talent was easy to lose to the competition. It also personally bothered him that the people in his employ might be scrambling to earn enough money.  So Stan made sure to provide continuous employment, sometimes to the detriment of the company.

In one famous anecdote, Stan doled out more assignments than the company needed—and didn’t bother to tell boss Martin Goodman about the extraneous inventory. He stuffed the extra comic books into a closet, intending to use them when the time was right.  When Goodman saw the closet, he ordered Lee to fire everyone in the bullpen. Lee followed his boss’s orders. But he still felt it was a mistake—he needed to assign the extra stories, he argued, in order to invest in his people.

I studied Lee for my book, Superbosses. As I explained in HBR, a superboss isn’t just a really good boss. They don’t just build an organization or surpass a revenue target; they identify, train, and build a new pipeline of talent. The way Jon Stewart’s Daily Show launched the careers new comedians, or Alice Waters launched the careers of new chefs. Through spotting, nurturing, and developing talent, superbosses — like comic book superheroes — have an outsized impact.

Keep talent busy was just one of the lessons I took from Lee’s example. A second, but equally important lesson, was don’t censor talent. Lee preferred to let his talent sort out the creative details. He remembered working on a comic strip that used the word pogo stick in the punch line. The editor felt that pogo stick wouldn’t resonate with rural audiences, and he instructed Lee to change the gag so that the punch line had the word roller skates instead. It deflated the joke, but Lee changed it anyway. The strip was eventually dropped, and Lee said, “this type of censorship, to me, is almost indecent.” When you hire an artist to do a job, you let them do the job. Lee elaborated, “It seems to me that if a person is doing something creatively, and he feels that’s the way it ought to be done, you’ve gotta let him do it.”

Lee put his words into action years later when the Hulk, a Marvel franchise, became the subject of a popular primetime television show. He was amazed to see how the creative team transformed the Hulk for this new medium, and he was glad to stay out of their way. “I learned a helluva lot about TV from Ken Johnson during the many discussions we had about how to best adapt The Incredible Hulk to television. The success of that show, under Ken’s direction, proves beyond any doubt how important it is to put creative projects in the hands of truly creative people.” Lee enjoyed being fairly hands off as a boss, and extended that courtesy even to younger staffers, who more-traditional bosses might have said were too green.

A third lesson I took from Lee’s example: give credit where it’s due. It sounds so straightforward, but in reality, it’s very rare. One way Lee gave credit was by creating a credits page, written in a chatty tone. The credits page was unique in comics; up until then the artists drawing and inking the panels had remained anonymous. The credits might read something like this: “Written with Passion by Stan Lee. Drawn with Pride by Jack Kirby. Inked with Perfection by Joe Sinnott. And lettered with a Scratchy Pen by Artie Simek.”  He also talked about the staff frequently in his monthly newsletter The Bullpen Bulletin.  These shout-outs occasionally changed or shaped the careers of the people in his department. For instance, in the middle of his career, artist Jack Kirby was nicknamed the “King of Comics” by Stan Lee, and Stan reported that he was the “artists’ artist.”  To this day, Kirby is known as the King of Comics, or “King Kirby.” This kind of publicity was not only good for the artists, but made it possible for a young reader to become particularly devoted to their favorite artist. It branded certain artists as Marvel artists, enabled readers to feel another level of intimacy with the product, and allowed Lee to promote the careers and further the professionalization of the field, another passion of Lee’s.

Finally, Stan Lee’s example is a reminder to dream big. There’s no better way to motivate the best people. “We’re trying to elevate the medium,” he once said. “We’re trying to make [comics] as respectable as possible.” Lee felt that comic books had the power to make important social commentary, to be incisive and satirical and smart. He believed that a day would come when an intelligent adult wouldn’t be embarrassed to be seen walking down the street with a comic strip, and he constantly pushed toward that goal. He suggested that comics should be studied at the college level, saying, “If people are going to study movies, TV, opera, ballet, concert, sculpture, painting, and other media, they might as well study comic books because comic books are just as profound and strong a factor in shaping, and moving, and molding people’s thoughts.”  He argued there was no reason comics shouldn’t be seen as viable art. That attitude drew the best artists to want to work with him.

Lee wasn’t perfect—no person is. Ultimately, he repositioned comics, professionalized the industry, and launched the careers of dozens of proteges. It’s a legacy any boss would call super.

Why It’s Easier to Make Decisions for Someone Else

Harvard Business Review - Tue, 11/13/2018 - 11:00am
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Why is it easier to see the best solution to other people’s dilemmas than our own? Whether it’s about someone deciding to pursue a new job, or ask for a raise, or someone simply mulling over which ice cream flavor to choose, we seem to see the best solution with a clarity and decisiveness that is often absent when we face our own quandaries.

People have a different mindset when choosing for others: an adventurous mindset that stands in contrast to the more cautious mindset that rears when people make their own choices. In my research with Yi Liu and Yongfang Liu of East China Normal University in China and Jiangli Jiao of Xinjiang Normal University in China, we looked at how people make decisions for themselves and for others. We were interested in the process and quantity of information a decision maker uses when choosing for others versus choosing for the self. We wanted to know: Is more information searched in the process when people choose for others versus for themselves, and does the way they evaluate that information change based on whom they are choosing for?

To test our hypotheses, we performed eight studies with over a thousand participants. Throughout the series of randomized tests, participants were given a list of restaurants, or job options, or dating profiles — each with detailed information and then participants were asked to make choices for themselves or for someone else based on that information.

What we found was two-fold: Not only did participants choose differently when it was for themselves rather than for someone else, but the way they chose was different. When choosing for themselves, participants focused more on a granular level, zeroing in on the minutiae, something we described in our research as a cautious mindset. Employing a cautious mindset when making a choice means being more reserved, deliberate, and risk averse. Rather than exploring and collecting a plethora of options, the cautious mindset prefers to consider a few at a time on a deeper level, examining a cross-section of the larger whole.

But when it came to deciding for others, study participants looked more at the array of options and focused on their overall impression. They were bolder, operating from what we called an adventurous mindset. An adventurous mindset prioritizes novelty over a deeper dive into what those options actually consist of; the availability of numerous choices is more appealing than their viability. Simply put, they preferred and examined more information before making a choice, and as my previous research has shown, they recommended their choice to others with more gusto.

These findings align with my earlier work with Kyle Emich of University of Delaware on how people are more creative on behalf of others. When we are brainstorming ideas to other people’s problems, we’re inspired; we have a free flow of ideas to spread out on the table without judgment, second-guessing, or overthinking.

Upon reflection, these results should feel familiar. Think about the most recent time you asked for a raise. Many people are initially afraid to ask (employing a cautious mindset); however, these same people are often very supportive in recommending to others (such as their friends or colleagues) that they ask (employing an adventurous mindset). When people recommend what others should do, they come up with ideas and choices and solutions that are more optimistic and action-oriented, focus on more positive information and imagine more favorable consequences. Meanwhile, when making their own choices, people tend to envision everything that could go wrong, leading to doubt and second-guesses.

How can this research be applied? First, we believe that it suggests that everyone should have a mentor, or a blunt friend who can help people see and act on better evidence.

We should also work to distance ourselves from our own problems by adopting a fly-on-the-wall perspective. In this mindset, we can act as our own advisors—indeed, it may even be effective to refer to yourself in the third-person when considering an important decision as though you’re addressing someone else. Instead of asking yourself, “what should I do?” ask yourself “what should you do?”.

Another distancing technique is to pretend that your decision is someone else’s and visualize it from his or her perspective. This can be very easy when thinking of famous exemplars, such as how Steve Jobs would make your decision. By imagining how someone else would tackle your problem, people may unwittingly help themselves.

Perhaps the easiest solution is to let others make our decisions for us. By outsourcing our choices, we can take advantage of a growing market of firms and apps that make it increasingly easier for people to “pitch” their decisions to others. For example, people can have their clothes, food, books, or home decor options chosen for them by others.

Our research underscores a basic human desire: we want to feel like we’ve made a difference. We are wired for connection with others and an interesting part of making decisions for other people is that it is possible to have a bigger impact. Since managers and leaders are tasked with making decisions for others on multiple levels—everything from daily minutiae to personnel conflicts to long-term strategic planning—our results point the way to helping these employees find greater degrees of creativity, effectiveness, and fulfillment in their work.

Containing the Latest Ebola Outbreak

Harvard Business Review - Tue, 11/13/2018 - 10:00am
JOHN WESSELS/Contributor/Getty Images

Last month, a rebel attack in Beni, the epicenter of the ongoing Ebola outbreak near the eastern border of the Democratic Republic of Congo (DRC), once again halted the efforts of response teams working to contain the virus. With over 10 major episodes of violence since the outbreak was declared in August, insecurity and community mistrust has made it difficult to gauge the true extent of Ebola’s spread. Though the outbreak could still be limited, cases appear to be increasing — especially in Beni, where cases have doubled in recent weeks — with 80% of new infections arising among people with no link to “known transmission chains” (where everyone who is infected is known and you can track who has been exposed with some accuracy). This means that we might only be seeing the tip of an iceberg of hidden transmissions and the outbreak could spiral out of control and spread into neighboring countries. Given this danger, the current strategy for containing the disease needs to be adjusted.

Eastern DRC has been home to one of the deadliest and most intractable conflicts in modern history; over 50 armed groups are still active in the region. Originally formed to protect their communities, many of these rebel militias have become entangled in the messy web of politics, shifting allegiances, and underhanded mining deals that fuel the conflict.

This backdrop and the inability of the government or international agencies to assure basic safety, much less basic needs, has entrenched a distrust of formal institutions in the population. These dynamics have been made more complicated by the fact that DRC is supposed to hold elections in December that have already been delayed twice since 2016.

Given that outbreaks can grow quickly and exponentially, definitive action is needed now.

The current plan for stopping this outbreak is based on contact tracing (the identification and monitoring of people who were exposed to Ebola-infected individuals for the 21 days during which they may develop infection) and “ring” vaccination (immunizing these contacts and those close to them with an experimental Ebola vaccine). This approach efficiently contained an Ebola outbreak in western DRC just a few months ago but requires a comprehensive and precise understanding of who is infected and who their contacts are — something that necessitates having unimpeded daily access to their communities for months.

That has not been possible this time around: Areas affected by violence have been inaccessible for days at a time. Therefore, while contact tracing and ring vaccination should continue where transmissions can be tracked, mass vaccination of larger portions of populations should be considered in areas where that is not possible such as Beni, which has a population of about 230,000. Expanding vaccinations in this manner could immediately halt the spread of the disease.

While such a mass vaccination sounds ambitious, the World Health Organization (WHO) and others have executed much larger national campaigns  in over 40 low-income countries, including DRC, where millions of children were immunized against polio or measles within a single week. These campaigns were also implemented successfully during conflicts in Somalia, Afghanistan, and Liberia. Though a mass-vaccination effort targets an entire population, it need only reach the proportion required for “herd immunity” — immunizing enough people so that the virus cannot spread. Early studies of the Ebola vaccine found that it might be possible to achieve herd immunity by vaccinating as little as 42% of the population.

To be successful, the mass vaccination effort would require the buy-in of the communities and the Ebola response teams being able to securely access the areas in question for the day or two it would take to immunize everyone. Promisingly, a recent study showed that even communities with high levels of distrust appear to be open to vaccination.

Anthropologists are already on the ground working tirelessly to engage community leaders and armed groups. In areas not amenable to outreach, a neutral “white helmet” security force, ideally drawn from the African Union or other countries without past involvement in the DRC conflict, should be deployed with the sole mission of securing vaccination efforts. It should be made abundantly clear to the population that this force has no allegiance to any political or institutional actors and is there only to deter violence against responders. At the end of the day, communities and militias do not want their loved ones to die from Ebola and would respect such a presence if they were reassured its mission is strictly medical.

Mass vaccination will also require an adequate supply of the Ebola vaccine. Its manufacturer, Merck, has committed to maintaining a supply of 300,000 doses at all times. Doing so could become difficult if vaccination efforts are expanded, but at the current juncture, the number of people who would need to be vaccinated in order to stunt the outbreak still appears to be within the range of existing stockpiles. Nonetheless, production of the vaccine should be increased and the bottlenecks to doing so should be assessed and cleared to ensure an adequate supply.

It’s true that the Ebola vaccine is still experimental and its health risks are not yet fully known. However, for people living in areas where everyone who is infected is not known, the heightened risk of unknowingly contracting a fatal Ebola infection may, at this point, outweigh the potential danger posed by the vaccine.

After the West African Ebola epidemic spiraled out of control, many wondered why more aggressive measures were not taken sooner. We may be at a similar make-or-break point in this outbreak.

How We Help Employees Pay Down Student Loans and Save for Retirement at the Same Time

Harvard Business Review - Tue, 11/13/2018 - 9:00am
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A small percentage of U.S. companies — including PwC, Fidelity, and Aetna — have stepped up to help their employees cope with the education loans weighing them down by offering them cash to help them reduce their debts. While I applaud them, one downside of their approach is simply giving their workers cash raises their income taxes, diminishing the impact of their efforts.

To address this dilemma, Abbott, where I lead Human Resources, took a different approach. We introduced a program last August to contribute 5% of pay to a tax-deferred 401(k) plan for full- and part-time workers who direct at least 2% of their pay toward paying down their student loans. The Internal Revenue Service reviewed — and ruled favorably on — the 401(k) plan structure we came up with to make this possible.

In addition to the tax issue, our program — called Freedom 2 Save — helps tackle another problem: two-thirds of millennials aren’t saving for retirement. For every decade a person delays saving for retirement, the amount he or she ultimately needs to save doubles. Unless they start putting aside money now, many graduates will have to work into their 70s.

Over 10 years, an employee with a starting salary of $70,000 could earn $54,000 in his or her 401(k) account — assuming a 6% annual return and yearly pay increases of 3% — without contributing a dime toward retirement. Thanks to the power of tax-deferred investment returns, that amount could grow to hundreds of thousands of dollars by the time he or she turns 60.

Freedom 2 Save offers Abbott a number of benefits. We believe that it will easily pay for itself by helping us retain employees — a big deal in an era where millennial turnover alone costs businesses more than $30 billion every year. (Ninety percent of young workers say they’d commit to a company for five years if it gave them some loan relief, and workers with student debt stay at their jobs 36% longer if employers help pay off loans.) In addition, it will help take a load off of workers burdened by debt who say the resulting stress negatively impacts their job performance.

Americans are carrying a record $1.5 trillion in student loan debt, a sum that has more than doubled in the past decade and now surpasses our nation’s level of credit card debt. The typical graduate leaves school owing about $40,000. Many face larger burdens. About 2.5 million Americans have debt loads in excess of $100,000.

So far, 400 Abbott employees have signed up for the Freedom 2 Save program. Once it is well-established, we anticipate thousands will take advantage of it.

Although we’re the first company to work with the IRS to structure a program like this, it’s possible that more companies will be able to do something similar with time. (An employer group has asked the IRS commissioner to expand the ruling it gave us to all companies.)

There are no easy or universal solutions to America’s student debt crisis. But as employers, we are in a unique position to come up with innovative benefits that have a tangible positive impact on employees’ lives. By increasing our ability to recruit and retain the best people, such efforts are highly worth it.

5 Ways Smart People Sabotage Their Success

Harvard Business Review - Tue, 11/13/2018 - 8:05am
Shana Novak/Getty Images

Mark was always one of the smartest kids in his class. He’s done well in his career, but when he checks Facebook, he sees people he outperformed at school who have now achieved more. Likewise, there are colleagues at his firm who have leapfrogged him. Sometimes he wonders, “What am I doing wrong?”

Sound familiar? You might relate to Mark yourself, or have an employee or loved one who struggles with similar feelings. Raw intelligence is undoubtedly a huge asset, but it isn’t everything. And sometimes, when intellectually gifted people don’t achieve as much as they’d like to, it’s because they’re subtly undermining themselves. If you’re in this situation, the good news is that when you understand these foibles you can turn them around. Here are five I’ve seen smart people particularly struggle with:

1. Smart people sometimes devalue other skills, like relationship building, and over-concentrate on intellect. Very smart people sometimes see their success as inevitable because of their intellect, and don’t see other skills as important. For example, an individual who finds workplace diplomacy difficult might write this off as an irritation rather than as a core skill required for their role. Similarly, they might see it as critical for a secretary to be personable, but not an executive. Therefore they don’t invest time and effort in developing these skills.

These views don’t come out of nowhere. Most people have a natural bias towards wanting to capitalize on their strengths and, conversely, would prefer to avoid thinking about areas in which they’re not naturally as strong. Bright kids typically receive a lot of reinforcement throughout their early lives that their intelligence is valuable. They grow up being told they’re smart, and during their schooling, experience that success comes more easily to them than to others. It’s easy to understand why, as a result, they would continue to focus on their intellect as a adults.

But in most workplaces, you need more than raw intelligence to get ahead. And only focusing on your greatest strength, rather than also addressing your weaknesses, tends to be self-sabotaging.

Solution: Use your strengths to overcome your weaknesses. If you’re good at learning you can simply learn the skills that don’t come as naturally to you. You don’t need a personality makeover, you just need a game plan and a genuinely constructive attitude. For instance, identify three specific workplace diplomacy behaviors that would improve your success in that area. 

2. Teamwork can be frustrating for very smart people. When someone grasps concepts quickly and has high standards for their own performance it can create difficulties when working with others who take longer to process information and pick up concepts. If a person felt held back at school by being in a class with less smart kids, this frustration with teamwork can develop early — you know what this feels like if you routinely did most of the work on group projects, or got scolded for daydreaming during a class that was moving too slowly for you. These feelings can get re-triggered throughout life. When people develop an emotional raw spot as a child, they often have outsized internal reactions when that raw spot is rubbed in their adult life.

Smart people also sometimes find it difficult to delegate because of a sense they can do a task better (regardless of whether this is actually true.)  This is especially likely for those who have a perfectionist streak.

Solution: Be self-compassionate about your internal reactions and understand where they come from, but also learn to genuinely appreciate what diverse minds bring to a team.

3. Smart people often attach a lot of their self-esteem to being smart, which can decrease their resilience and lead to avoidance. If a lot of your self-esteem rests on your intelligence, it can be very difficult to be in situations that reveal chinks in your armor. That might be working with people who are even more skilled or intelligent, or receiving critical feedback, or taking a risk and failing. Any situation that triggers feeling not- smart is experienced as highly threatening. The smart person may even seek to avoid those situations, which ultimately holds the person back.

Solution: Take an objective view of the benefits of working with people who are, in some respects, smarter than you. If you’re surrounding yourself with smart people, you’re doing something right. Remember, iron sharpens iron. Develop relationships with people who you trust to give you help constructive feedback. The more you become accustomed to receiving critical feedback from people who believe in your overall talents and capacities, the easier it will become.

4. Smart people get bored easily. Being smart is not exactly the same as being curious, but if you have both these qualities you might find yourself becoming easily bored with executing the same behaviors over and over. Some types of success stem from creativity, but other types come from becoming an expert in a niche and performing a set of behaviors repeatedly. If you’re smart, curious, and have a love of learning, you might find you quickly lose interest in anything once you’ve figured it out. The execution side of performance might bore you, and you’d rather constantly be learning new things. This can end up being less lucrative than finding a niche and repeating the same formula, but that might seem too boring or unchallenging to you.

Solution: Try taking a 30,000-foot view of when it’s worth tolerating some boredom to collect easy wins when it comes to your overall success. Instead of attempting dramatic change, decide when tolerating short periods (a few minutes or hours) of boredom could have a very beneficial impact on your success. For instance, devoting 5 hours a week to an activity that’s monotonous but lucrative. Additionally, make sure you have enough outlets for your love of learning across the various domains of your life, including your work, hobbies, physical fitness, understanding yourself etc.

5. Smart people sometimes see in-depth thinking and reflection as the solution to every problem. Bright people are accustomed to succeeding through their thinking skills, but can sometimes overlook when a different approach would be more beneficial. For example, the smart person might attack every situation by trying to think it to death (over-researching every decision and ruminating over every mistake) when other approaches would be more fruitful.

Solution: Notice when thinking becomes an unhealthy obsession. Consider when strategies other than thinking are more likely to result in success. Experiment with taking breaks to get unstuck, and allow yourself to learn by doing rather than through exhaustive advance research. Expand your range of skills for reaching insights so that you’re not the person who sees every problem as a nail because their only tool is a hammer. Finally, whenever you find yourself ruminating (doing negatively toned overthinking), disrupt it by doing a few minutes of an absorbing activity (such as a puzzle). This can be a surprisingly effective strategy for breaking out of negative thinking.

Which of these five patterns do you identify with the most? Try rank-ordering them. Are there colleagues or other people in your life who seem to fall into these traps? Try to let go of any sense of shame or judgment — it’s not necessary or useful for overcoming these habits. For any of the tendencies you personally relate to, know that even longstanding and deeply psychological patterns can be turned around with the targeted, practical, problem-solving approach I’ve outlined here.

Your Parental Leave Stories

Harvard Business Review - Mon, 11/12/2018 - 5:26pm

We bring you three stories about parental leave, from listeners whose experiences with it changed them, for better or for worse. They talk about having to fight for more time off, go back to work before they were ready, care for sick babies, and try to hide their exhaustion and stress. Ultimately, they’re stories about how inadequate leave policies hurt families and companies.

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How to Tie Executive Compensation to Sustainability

Harvard Business Review - Mon, 11/12/2018 - 12:00pm
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The challenge of running a sustainable enterprise has taken center stage among shareholders. Last year, for example, Russell 3000 companies received 144 shareholder proposals requesting action on social and environmental issues. Meanwhile, in a survey of 89 institutional investors by Callan, 43% of respondents said they incorporate sustainability factors into their investment decisions — up 21 percentage points from 2013.

The dilemma for directors, however, is determining what aspects of sustainability, or ESG performance, should have priority — and should be linked to pay incentives. The UN, for example, has outlined 17 broad Sustainable Development Goals for 2030. Progress is measured with 169 targets. The goals include eliminating poverty, offering affordable and clean energy, achieving gender equality, protecting ecosystems, increasing responsible consumption and production, and much more. Meanwhile, a number of business organizations have created their own sustainability measures, including the Sustainability Accounting Standards Board, Sustainalytics, Bloomberg, and MSCI. And at many companies, sustainability efforts are measured with well over 10 internal metrics.

Compensation committees often start by tying bonuses and long-term incentives to goals related to compliance and risk management. That approach pleases some stakeholders, but it may put the focus on issues far removed from the company’s core mission. For example, measures of regulatory fines gauge only a company’s environmental “hygiene,” which may reduce risk but doesn’t incentivize executives to increase the company’s broader environmental impact.

What’s a better approach? Have bonuses depend largely, or solely, on executives’ success in tapping big strategic opportunities related to sustainability. By pushing the top team to go on the offense strategically, this change brings the work of advancing sustainability from the periphery of the business to its heart.

Though not all businesses today are in a position to implement big strategic initiatives based on sustainable thinking, the opportunities to pursue them are growing fast. According to a survey by the UN and Accenture, 63% of executives believe that sustainability will cause major changes in their businesses in the next five years. And if that shift ends up determining which companies thrive in the future, then it’s likely that incentive goals must apply to bold business opportunities.

One major heavy-equipment manufacturer, for example, has 14 sustainability goals. Only one of them, however, stands out as big and strategic, with the prospect of significant returns: remanufacturing products and components, which can save customers money, extend product life cycles, and reuse materials. A logical measure for this goal — a measure to tie incentives to — would be growth in revenues from remanufacturing and rebuilding, or the percentage of revenues or profits derived from both.

By limiting the number of sustainability goals in its incentives, companies can wield huge power to change leaders’ behavior. An auto executive’s bonus might depend on advancing the company’s electric vehicle, connected and autonomous vehicle, or ride-sharing business. A financial services firm’s executives might be rewarded for the percentage of affordable capital that’s allocated to worthy sustainable projects, such as renewable energy or sustainable agriculture.

Boards should demand entirely new kinds of strategic thinking from management, the kind of thinking that not only makes the company more sustainable but also aids suppliers and customers in becoming so. If you’re a food company, can you produce healthy products that address the growing rates of obesity, diabetes, and heart disease? If you’re in agriculture, can you devise rice strains that grow in less water and yield more for farmers? If you’re in health care, can you improve care quality for the employees in the companies you insure?

To take this approach to heart, boards should ask several questions:

  • Where does the company have a unique opportunity to differentiate?
  • Does the company have the core competencies, or can it acquire them, to take advantage of the opportunity?
  • Is there an adequate return on investment over the long term to justify moving forward?

As a sign that many executives are thinking along just these lines, a recent McKinsey survey of retailers and consumer goods manufacturers found that almost half of those undertaking sustainability initiatives were pursuing new business or growth opportunities.

That doesn’t mean companies should abandon traditional strategies for reducing costs, mitigating risks, and preserving a “license to operate.” And when those strategies are core to the business, incentive plans should link bonuses to fulfilling them. If you need water for beverages — think Coca-Cola or PepsiCo — a bonus for preserving water sources would be strategic. If you need ore bodies to mine — think Rio Tinto or Teck Resources — a bonus for top-tier environmental protection would make sense. If you need to demonstrate appropriate labor practices — think McDonald’s, Dunkin’, and Nestlé — a bonus based on mitigating risks might be critical (as would a provision for clawing back bonuses if the risks are not discovered until after harm is done).

Directors should, of course, continue to monitor and disclose many other aspects of ESG performance. In fact, they should insist on seeing ESG metrics in corporate or individual scorecards — assuring that executives act responsibly, mitigate risks, and comply with regulations. The compensation committee can then use its discretion to adjust pay after the fact for sustainability performance in these areas. Alternatively, sustainability performance can be addressed in the objectives of individual executives or business units, rather than being used in company-wide objectives.

As with all targets for executive incentives, directors need to choose carefully to avoid unintended consequences. Do new targets motivate undesirable trade-offs? If executives hit sustainability targets at unacceptable cost, safeguards are needed to make payouts contingent on meeting core financials. Directors should remain focused, however, on isolating a limited number of sustainability goals that deliver the most value. And that value should be of such scale that it will energize executives to go after it, in turn yielding the biggest reward for shareholders, other stakeholders, and society.

Motivating Your Most Creative Employees

Harvard Business Review - Mon, 11/12/2018 - 11:00am
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In any team or organization, some individuals are consistently more likely to come up with ideas that are both novel and useful. These ideas are the seeds of innovation: the intellectual foundation for any new products and services that enable some organizations to gain a competitive advantage over others. However, organizations are often unable to put in place the right processes, leadership, and culture to turn creative ideas into actual innovations, which causes even their most creative employees to underperform. This mismanagement of innovation is further exacerbated by the fact that managing creatives tend to require special attention and consideration. Indeed, decades of psychological research suggests that creative people are quite different from others when it comes to personality, values, and abilities. In light of that, here are eight evidence-based recommendations to get the most out of your creative employees and to stop them from underperforming:

    • Assign them to the right roles: No matter what industry or job people are in, they will generally perform better when you can maximize the fit between their natural behavioral tendencies and the role they are in. This is why the same person will excel in some roles but struggle in others. Thus, if you want your creative employees to do well, you should deploy them in tasks that are meaningful and relevant to them. In fact, research shows that while creative people are generally more likely to experience higher levels of intrinsic motivation, they also perform worse when not intrinsically motivated. There is therefore a higher cost and productivity loss when your disengaged employees are creative; but the benefits of engaging them are also higher.
    • Build a team around them: It’s been said that there are “no statues of committees,” but innovation is always the result of coordinated human activity — people combining their diverse abilities and interests to translate creative ideas into actual innovations. Just try managing a team full of creatives and you will see that very little gets done. In contrast, if you can surround your creative employees with good implementers, networkers, and detail-oriented project managers, you can expect good things to happen — such are the benefits of cognitive diversity. Whether in sports, music, or regular office jobs, creatives will thrive if they are part of a team that is able to turn their ideas into actual products and services, freeing them up from implementation.
You and Your Team Series Thinking Creatively
  • Reward innovation: You get what you measure, so there’s no point in glorifying creativity and innovation if you then reward people for doing what they are told. Paying lip service to innovation will frustrate your creative employees, who will feel underutilized if you show indifference to their creative ideas and imaginations. Conversely, if you actually incentivize people to come up with new ideas, to think outside the box, and to devote some of their energy to improving existing processes, products, and services, you will notice that even those who are not naturally creative will attempt to do things differently and contribute to innovation.
  • Tolerate their dark side (but only up to a point): Everybody has a dark side, defined as his or her undesirable or toxic behavioral tendencies. Research has shown that creative individuals are naturally more irritable, moody, and hard to please. Furthermore, because of their imaginative disposition, creatives may come across as odd or eccentric, and they often specialize in making simple things complex, rather than the other way around. However, these non-conformist and individualistic tendencies also provide some of the raw ingredients for creativity: it is usually those who are likely to question the status quo and defy existing norms and traditions that push the most for innovations to happen. As the artist Banksy recently posted on Instagram when he made one of his art works self-destruct at a recent auction (just after the buyer spent over $1.3 million on it): “The urge to destroy is also a creative urge”. In contrast, if you only hire people who are well-behaved and do what you tell them, you can forget about innovation! However, it should be needless to say, no matter how creative employees are, there is no excuse for misbehaving or harming other employees and the organization.
  • Challenge them: Few things are more demotivating than being asked to do very easy and unchallenging work, and this is especially true when employees are creative. Data show that in the U.S., 46% of employees see themselves as overqualified for their jobs. This makes it critical to push your employees beyond their level of comfort. Failing to do so will significantly increase disengagement, turnover, and poor psychological health. Investigating this issue, researchers found that situational factors can mitigate these effects. Organizations that provide their most talented people with personalized development plans and mentoring opportunities, and that promote a culture of support and inclusion, will benefit from increased creative performance. Providing such opportunities may be a heavy lift for some organizations, yet failing to do so will risk losing their creative talent to competitors.
  • Apply the right amount of pressure: It is often said that necessity is the mother of invention — if a problem must be solved within a given timeframe, it probably will. Yet research shows that working in high-pressure environments can harm an employee’s well-being and in turn reduce their productivity. Yet, when it comes to maximizing one’s creative output, applying some pressure can be a good thing: indeed, scientific evidence indicates that there is an optimal amount of pressure to drive creativity. Not enough pressure will lead to a lack of motivation, and too much of it will create stress that inhibits one’s ability to think creatively. Managers must get this balance right and induce a moderate (optimal) amount of pressure by first defining resource boundaries and expected output, and then clearly communicating their support for the creative process.
  • Promote cognitive diversity: When organizations look to hire new employees, their “fit” with the culture is often an important selection criterion, and there is good reason for this (see again point 1). Evidence suggests that employees whose psychological profile and skills match the organization’s culture and mission are more motivated and productive. Yet, if organizations are pursuing innovation, they should in fact promote cognitive diversity amongst their teams. Specifically, leaders should build teams whose members have compatible, yet significantly different, psychological profiles. This is because teams that are cognitively diverse are more likely to view problems differently and produce better decisions. This rule also applies to leaders: if you want leaders to drive any sort of transformation or entrepreneurial activity, you are better off hiring moderate misfits than perfect fits!
  • Be humble: With narcissism on the rise, humility is an underrated virtue in today’s society. Narcissists often become leaders thanks to their charisma, charm and confidence, which helps them attract followers and persuade others that they are more competent than they actually are. Yet such leaders are rarely more creative, even when they manage to come across as innovative to others. In fact, leaders who want to produce a creative team should practice humility. A recent study found that a leader’s humility was a significant predictor of a team’s creative output, as they evoke feelings of safety, trust, and cooperation among their followers. To practice humility, leaders should become more willing to publicly admit their mistakes and limitations and become more forthright in displaying appreciation and giving credit where it is due (Elon Musk should take notes).

As individuals are increasingly turning to self-employment and entrepreneurship, organizations are at risk of losing the talent needed to drive growth and fend off disruption. The ability to successfully manage and retain creative talent is therefore critical. While stories of innovative and revolutionary breakthroughs speak of their organic and mythical origins, the reality is that turning creative ideas into an actual reality is hard — and it requires great leadership. Fortunately, there is enough evidence to help leaders develop an effective strategy to not just manage, but also leverage, their creative employees.

3 Business Models That Could Bring Million-Dollar Cures to Everyone

Harvard Business Review - Mon, 11/12/2018 - 10:00am

When the FDA issued its first approval for a gene therapy for an inherited disease nearly a year ago—a cure for a type of blindness—it was heralded as breakthrough, a moment decades in the making. With dozens of other genetically engineered therapies moving through clinical trials, the long-promised era of personalized, gene-based medicine seemed to be at hand.

But there was a catch: the one-time treatment, Luxturna from Spark Therapeutics, costs $850,000.

In a recent Goldman Sachs research report about the promise of gene therapies, analysts asked a question that gets to the heart of a growing dilemma for the healthcare sector: “Is curing patients a sustainable business model?” As this first wave of genetic treatments hits the market, industry leaders face a stark choice. These therapies could save or change lives, but they come  at unprecedented cost. Indeed, Novartis recently said that its life-saving gene therapy for spinal muscular atrophy would be “cost-effective” at $4 million to $5 million – hinting at the pricing the company has in mind. As the use of these expensive drugs grows, there seems to be no way traditional insurance models will be able to  pay for them without breaking the bank or requiring patients to assume a big chunk of the cost.

Insight Center

Consider what happened to Amsterdam-based UniQure. In 2016, the company had to pull its gene therapy for potentially fatal fat-processing deficiencies from the E.U. market. With a $1 million price tag, limited data on efficacy and just 700 potential patients in Europe, health systems were unwilling to pay for treatment. Biopharma companies now have 58 gene therapies and gene-modified cell treatments in Phase III clinical trials, with about 35 expected to be FDA-approved by 2022, out of about 1,000 candidates in the total pipeline. These new therapies could face a similar fate if prices can’t be brought down.  Something has got to give.

New business models

Our research on major innovations finds that when disruption occurs, technologies don’t replace technologies; systems replace systems. Put another way, product classes with fundamentally new performance profiles can’t be dropped into an existing business model and expected to work. The business model — how value is created, captured, and delivered — needs to be reinvented to support the new proposition.

When it comes to gene therapies, there’s a growing recognition that harnessing breakthrough science to cure diseases simply isn’t enough. Some industry innovators are creating novel payment models that share the risks and costs in ways that may help jump-start new markets and cure more patients. Some of these new models are already being rolled out — and others are more theoretical. But they illustrate the levers companies can pull in order to make therapies more affordable and accessible.

As Spark CEO Jeffrey Marrazzo says, “We are striving to bring the same level of innovation to the delivery of, and access to, this product” as  the company did in developing the treatment. To this end, Marrazzo has led an effort to develop a new business model under which Spark gets paid only if the cure is successful and endures over the long term, and payments for successful treatment are made in installments. Such a model will be more attractive to insurers as it eliminates the risk of paying for failed treatment, and it benefits Spark by increasing insurers’ willingness to pay for the expensive therapy. In addition, Spark will issue rebates to the payer if a certain measured outcome—in this case quality of vision—is not reached over time, with markers set at 1 month, 3 months, and 30 months.

Spark has entered into such a contract with Harvard Pilgrim Healthcare and is also negotiating with the Centers for Medicare and Medicaid Services (CMS) to put in place a model where payments can be spread out over years and only continue if the cure appears to be permanent.

New financial instruments

But such value-based models may not be enough. Part of what makes the economics of curing patients challenging is that the average U.S. consumer switches health plans every two or three years, due to job changes or their employer switching insurance plans. No payer wants to foot the bill for a lifelong cure only to lose the patient and let the next payer “free ride” on that investment.

Enter the concept of a “HealthCoin,” an approach that incentivizes insurers to reimburse for preventative measures and costly one-time treatments by generating credit that they can trade like a bond. At scale, and perhaps enabled by blockchain technology, HealthCoin solutions could help “securitize” measurable improvements in health, providing a transparent way to value small things like effective behavior change and big things like curative gene therapies. That value can then be passed from one stakeholder (such as an insurer) to another.

The solution was first proposed in a 2016 paper by University of Washington researcher Anirban Basu, with Pfizer researchers Prasun Subedi and Sachin Kamal-Bahl, as a way for ensuring that payers can capture the value they create.

For instance, the authors suppose, what if a genetic cure for Type 2 diabetes was developed? “The annual medical and indirect costs associated with the prevalent cohort of diabetes are approximately $218 billion in the United States alone,” the authors write. To overcome the free-rider problem—where an insurer could wind up covering the full one-time cost of a cure for a patient who then moves to another payer—the new payer would be required to purchase the HealthCoin of the patient. But since that bond would still retain value over years, they could resell the HealthCoin at a later date, recouping most or part of the cost.

Annuity-based models

Other payment systems are even more theoretical, though inspired by existing related models. For instance, consider the true case of Alex, a 30-year-old professional living in Boston. Recently, Alex used the 23andMe service for an analysis of his DNA and the test found an elevated genetic risk for Alzheimer’s. “This is a terrible, scary disease,” Alex said. Knowing what he now knows, Alex started donating money to a foundation supporting Alzheimer’s research, in the hope that a cure is found by the time he might need it later in life.

This willingness to pay well in advance of need leads to the idea of an annuity-based business model. People in their 30s or 40s could pay small monthly premiums in order to fund development of new treatments, and if such therapies prove successful, they’d collect dividends, not in the form of preferential access to the therapies but as an impact investor, like those who invest in cleantech companies.

Such a model might be a hybrid of condition-specific “venture philanthropy” funds (like the Juvenile Diabetes Research Fund’s T1D Fund, which invests in products and therapies for treating Type-1 diabetes) combined with rare-disease risk pools in single-payer systems. In Canada and the UK, for instance, the Canada Drug Insurance Pooling Corporation and the UK Cancer Drug Fund spread the impact of high-cost drug claims across all payers while also raising money from donors and dedicated government funding.

It’s unlikely that there will be a one-size-fits-all business model for curative gene therapies; the particulars of each drug, disease, patient profile, and health system will determine the types of innovation required to get transformative therapies to patients in need. But for the genetic revolution to truly pay off for patients as well as biopharma companies, leaders must put their innovation horsepower into creating new business models while they develop and test the therapies themselves.

How to Launch a Working Parents’ Support Group in Your Organization

Harvard Business Review - Mon, 11/12/2018 - 9:36am
Ariel Skelley/Getty Images

It finally happened: You got the buy-in to launch a (much-needed!) working parents’ network in your organization. You’ve sent out the blast announcement and secured a small budget. The kickoff cocktail party drew a crowd of parents eager for advice — and curious about this new resource. You’ve done everything needed to get this thing up and running. But as the energy and excitement from that first event fades, you’re left wondering: Now what?

And you’re not alone…because if you’re spearheading the effort to build a working parents’ group, two things are dead-certain:

1) The work you’re doing is important, necessary, and welcomed; and

2) There’s no template for it. No playbook, no best practices, no roadmap to success.

As a full-time consultant on working-parent issues, I’ve seen this dynamic play out time and time again. At their start, corporate working-parent affinity groups are greeted with enthusiasm. But what these groups should be doing longer-term — what value they should be providing their members, how their leaders should steer and contribute to the effort, and what types of events and services they should offer — is frustratingly hard to see, or agree on. As a result, network momentum — and credibility — can fizzle out quickly. As one of my clients, a VP in a technology firm, told me recently, “Getting the parents’ group launched was easy. But now our meetings consist of working moms and dads sitting awkwardly in a conference room, talking about how hard it all is. There’s so much goodwill, but nobody really knows how to make this thing work.” And when the working parents’ network itself isn’t working, it sends an unintended, negative message: This organization and working parenthood don’t go together. 

Fortunately, there’s a fix that any network leader, in any sized company, and in any industry, can use: A set of simple, practical techniques and approaches that can help turn your working parents’ network into an asset — one that improves overall morale and retention, and that provides tangible, practical benefit to individual employees, too. Take the following steps before and after your network is launched, and you’ll develop a network with a large following and with powerful, positive impact.

Build up from what works. Don’t spend time intuiting and hypothesizing what the network should do; scale up what’s already working. Every organization has an existing working-parent network — organic and unseen, perhaps, but functional. Maybe there’s an email chain through which new parents in the marketing department swap out gently used baby gear, and maybe Mary over in finance has a reputation as an “on top of it” mom — and ends up mentoring and informally coaching a disproportionate number of colleagues as a result. In ID-ing these kinds of under-the-radar peer-to-peer relationships, you’ll discover a lot about what employees want and need, how those needs can be met, and who can help meet them. This helps you build an agenda, or plan of action based on a proven approach. Make that email chain an Intranet page or Slack channel, available to all working moms and dads throughout the company. And then rope Mary in as a featured speaker at an early network event — and ask for her ideas on where you should focus future programming.

You and Your Team Series Working Parents

Be assertively inclusive. Working parents come in all packages. They’re male, female, biological, adoptive, gay, straight, from every conceivable background, and from all parts and levels of the organization. And as network lead it’s your job to make sure that every single one of those parents gets the message, loud and clear, that “You are welcome here. This if for you.” Start by ensuring the group’s leadership is demonstrably diverse; prospective members will want to “see themselves” in the network’s composition. Make sure to keep communications demographically neutral: In emails, for example, specify that “this group/seminar is open to every interested working parent at [organization name].”  And don’t be afraid to get personal: walk down the hall and invite that single, adoptive dad of a 16-year old to join you at the group’s next meeting. Remember: The broader and deeper your network is, the stronger it will be.

Align it to the organization’s mission — and DNA. At Kramer Levin, a leading law firm, the Working Parents Affinity Group features seminars on how to navigate legal issues important to new parents, like drafting a will. At Dana-Farber Cancer Institute, the “mission of the Working Parents Group is to improve conditions for the working parent” — just as the mission of Dana-Farber itself is to improve conditions for everyone touched by cancer. In these organizations, the working parents’ groups feel like natural and essential outgrowths of core operations. They’re easy for working parents to align themselves to and for senior leaders to get on board with.

Keep your figureheads relatable. In an effort to generate maximum visibility and “street cred” for a new network, you may have enlisted a working mother or father at the very top of the organization to serve as public face of the effort, or to speak at an early event. But if that person makes an enormous amount of money, has a large in-office team and three nannies on call at home, they’re going to be hard for most employees without those resources or advantages to identify with. Try tapping a broader pool of sponsors and speakers, ones who can address the day-to-day challenges most of your parent-colleagues are living. If you are fortunate enough to have the advantage of a C-suite supporter, help sensitize him or her to what’s really on other parents’ minds: Finding good day care, being able to work from home when their child is sick, figuring out how to save for college.

Have a curriculum that puts parents in control. At the network’s outset, and at the beginning of each year following, have a clear view of what you want members to learn — and be able to do for themselves. Whether it’s “to better manage time,” or “find greater flexibility,” or any other key working-parent skill, organize your events and programming around teaching it. Without that focus and narrative thread, the network’s activities risk becoming disjointed; you may end up with a “grab bag” of events and activities, each of which seemed like a good idea at the time, but which together don’t provide the punch of a more curated, planned-out effort.

Use internal experts and select “friends of the firm” as your faculty. The best way to create a rich and relevant curriculum on a limited budget? Use resources on hand. Have Rob from finance lead a seminar on tax-law changes that affect working parents, or on how to set up a college savings account. Ask someone on the IT support team to do a session on “the best apps and tech hacks for parents and caregivers.” Ask the outside law firm who your organization does a lot of business with to send over a Trusts & Estates partner to speak about how to set up wills and life insurance trusts. Scope the range and depth of expertise around you and bring it to bear for your membership.

Stay in the solutions frame. Working parenthood can be overwhelming, and it’s a natural tendency for working mothers and fathers to connect over — and take comfort in — comparing notes about challenges and pain points: Exhaustion, difficulties with their kids’ schools, long to-do lists, lack of flexibility. But as network lead, your job is to help move people forward: To help them find the ways to cope, to effectively manage through what they’re facing and to feel more empowered and positive while doing it. In other words, your job is to keep the network events, dialogue and members in the “Solutions Frame.” Do so by focusing group discussions — whether in person or online — around alternate approaches, hacks, and fixes. Start a network email thread on “best advice for back-to-school season,” or organize a group discussion on “effective ways to talk to your boss about flexibility.” You’ll be unearthing specific, actionable advice that helps fellow parents find new ways to handle common challenges.

Use it to help amplify other resources and benefits. It may be HR’s job to provide and manage your organization’s benefits offerings — parental leave, flexibility programs, family health care plans, and the like — but it’s the network’s mission to help keep those benefits accessible and top-of-mind. Hold a panel session for expectant fathers about what taking parental leave really involves from men who have already taken it. Lucky enough to have corporate back-up daycare? Organize a tour of the center your company has contracted with: have parents meet the care providers, help them with the enrollment paperwork, and walk them through what the drop-off process looks like. “Believe it or not” says Lindsay Bell, founder and CEO of Bell Family Company, a leading provider of corporate backup- and emergency childcare, “many families that already have these benefits don’t actually know how to start using them. To help them do so, organizations need to work closely with moms and dads — to educate and inform.”

Keep all events on “working parent time.” Make gatherings short, and if possible, hold them outside of the morning and evening working-parent crunch times; the 30-minute brown-bag lunch can be your most powerful format. And always distribute summary notes to those who couldn’t make it, or had to leave early. (Remember, the network is about working parents giving each other a hand!)

Working parenthood is a gigantic challenge for those living it day-to-day — but it’s also a major challenge for organizations, too. People drive performance and they need to feel in control and supported. Luckily, with some advance planning and the right approach, you can create a working parents’ network that will help get them there.

The New Pressures Facing CMOs and How to Overcome Them

Harvard Business Review - Mon, 11/12/2018 - 8:05am
Julien Fourniol/Baloulumix/Getty Images

A new study out by Spencer Stuart shows an insane number of chief marketing officers who’ve been fired during 2018. But frankly, it’s not a surprise. I served as CMO for Deloitte Consulting and then Starwood Hotels & Resorts, and when I have coached executive teams through transformations, I’ve seen many teams at an impasse with their CMO.

There are lessons we can learn by exploring why so many CMOs get fired—and they can be useful to any executive working to navigate the radically interdependent world of business today.

Although the role of a CMO has been evolving and expanding, people on executive teams still seem to think the CMO must have expertise in every element of her role. In most cases that is a prescription for failure. Success comes, rather, by embracing a role as the facilitator of growth for the business and the four most important levers of that growth:

Brand: This is the traditional role of the CMO: the architect of the brand strategy and the one who establishes the brand’s position within the marketplace and relative to the competition. The CMO is the curator of the creative. She lays out the road map: where the brand has been, where it is going, and how it is going to move in that direction.

Product marketing: For this, the CMO pulls all of the analysis and insights from all of the customer-facing resources of the organization to support and co-design specific solutions with the product organization.

Data and analytics: This has been a fast-emerging competency, and one which is sometimes antithetical to the traditional role of the creative CMO. This role is more rigorous, more focused on numbers, and more focused on data sources—many of which didn’t even exist a few years ago.

Sales support: This has sometimes not been the purview of the CMO at all, but has been taken up and led by the sales team alone. This area is measured by the generation of leads and the support of the field marketing organization, which in turn directly supports and enables the sales organization. In many cases, the incapacity to successfully support the sales operations has been the downfall of a CMO. That is because of the simple truth that revenue and sales always win. In some instances, the sales organization ignores marketing altogether and takes over, leaving only the corporate brand to the marketer.

When faced with the evolving demands of the role, many CMOs steadfastly cling to the one thing they know best. Too often this is a co-creation with the CEO who hired them. For instance, when a refresh of a brand is called for, a CEO will often pursue a CMO from a big brand. After completing an expensive, celebrated brand reboot, everyone finds that the CMO is still beating the drum of “more money for bigger brand.” This just when market pressures are suggesting the CMO should shift to sales support and product marketing.

I have also seen CMOs who have been extraordinary at generating leads, but then struggle with transforming the brand. Because the CEO happens to have a strong point of view, they are reluctant to step up within the executive team and say what the CEO needs to hear. They fear that if they do, they invite trouble. I have also often witnessed a tug of war between the CMO and CEO, particularly in founder-led organizations where the brand is, in essence, a slice of that CEO’s perception of themselves.

What can we learn from watching the pattern of why CMOs get displaced? I see four big lessons:

1. Recognize your responsibilities. You may prefer spending time and energy on one or two of the areas outlined in your job description—the ones you feel especially good at. Nonetheless, you are responsible for all of them. This means that you must learn to successfully facilitate and orchestrate all of these critical areas, not necessarily accomplish them yourself. Most likely, if you try to achieve all of these competencies yourself, it will be your downfall. You don’t have to provide all of the leadership and direction in all of these areas. With good orchestration, the solutions will come from others. This may be a little galling, depending on the size of your ego. But a friend of mine used to say that in golf, nobody draws pictures on the scorecard. That’s because how you got there is irrelevant—what’s most important is that you got there.

2. Build a “team” around your role. So, who is on your team? It’s not the people who report to you. Rather, if you are a modern CMO, your “team” (in quotes deliberately) may include the chief product officer, the head of sales and sales support, the chief strategy officer, those responsible for data and analytics, and the most creative people in the company who have a sense of the brand. Oh, and of course the CEO themself.

Real success as an executive isn’t based on your direct reports—it’s based on your ability to build your “team” and then lead without formal authority and control.

I have more than one CMO friend whose job is on the ropes. One of them hits the ball out of the park in lead generation and field marketing support, and may even be effective at data analytics. But she is incompetent at co-creating innovative product solutions and strategies. This wouldn’t be a fatal weakness—if she were able to collaborate with the chief product officer to fulfill this part of her role. A lot of executives are in this position, unaware that what they lack isn’t a requisite skills, but the ability to partner with C-suit colleagues who possess it and can fill that gap.

3. See no boundaries. I’m working with too many organizations in which one executive or another is consistently seeking to increase their authority and control. These people often feel frustrated by running into boundaries. Here’s what I tell them: There are no “boundaries” in the growth of an organization, inside or outside the company! Boundaries don’t exist for bold and effective innovators—people who can see big possibilities, enlist talent, and navigate networks to make things happen. All that exists is your willingness to engage the individuals who will execute the most powerful solutions inside of your organization and out to the customer base. This is the definition of the organization design of the future.

4. Overcome the dynamics within your team. I have often seen CMOs fail and then blame the dynamics within the executive team. We have coached many sales organizations through transformations, and we inevitably find ourselves brokering negotiations between the head of sales, head of product, head of marketing, or others who are not enabling salespeople to deliver great solutions. It doesn’t matter who you think is getting in your way as a leader of growth, your job is to facilitate the transformation.

So what happens if the CEO, the head of sales, or the chief product officer is getting in your way? I don’t care. Sorry to be a downer, but it doesn’t negate your responsibility. Your job remains the same. These people are still members of your team. Recognize that you have a mix of individuals within your organization who need varying degrees of coaching, cajoling, and encouragement. Your job is still to enlist and engage your peers—without authority—and even to work with your CEO to achieve the growth your role and vision demands.

Sure, it’s easier to sit back and point fingers. “It’s the founder’s personality that’s getting in the way.” Or “It’s the head of sales’ ego and her disinterest in working collaboratively.” Truthfully, this is self-indulgent. Get over yourself and ask yourself what you can do. How can you reach out and enlist your team members with generosity and authenticity to co-create an extraordinary solution? How can you lead?

Sure, you can be “right,” but you can also be fired. Just ask the CMOs who’ve been pushed form their jobs so far this year.

If You Want to Get Better at Something, Ask Yourself These Two Questions

Harvard Business Review - Fri, 11/09/2018 - 12:00pm
Mike Hewitt /Getty Images

It was the last race of the ski season. My son Daniel, 10 years old, was at the starting gate in his speed suit, helmet and goggles, waiting for the signal.

“3… 2… 1…” The gate keeper called out and he was gone in a flash, pushing off his ski poles to gain momentum. One by one, each gate smacked to the ground when he brushed by. As he neared the end, he crouched into an aerodynamic tuck to shave a few milliseconds from his time. He crossed the finish line —48.37 seconds after the start — breathing hard. We cheered and gave him hugs.

But he wasn’t smiling.

48.37 seconds put him solidly in the middle of the pack.

I had coaching ideas. Ways I could help him get faster. While I am an executive and leadership coach, I coach skiing on the weekends and I was a ski racer myself at his age. But I held back my feedback, hugged him again and told him I loved him. That’s what he needed in that moment.

Later though, I asked him how he felt about the race.

“I never get in the top 10.”

This is delicate terrain — coaching your own kids — and I chose my words carefully.

“I have two questions for you,” I said. “One: Do you want to do better?”

If the answer is “no,” then to attempt to coach would be a fool’s errand (a mistake I have made in the past).

“Yeah” he said.

“Here’s my second question: Are you willing to feel the discomfort of putting in more effort and trying new things that will feel weird and different and won’t work right away?”

He was silent for a while and I let the silence just hang there. Silence is good. It’s the sound of thinking. And this was an important question for Daniel to think about.

You and Your Team Series Improving Yourself

I believe — and my experience coaching hundreds of leaders in hundreds of different circumstances proves — that anyone can get better at anything. But in order to get better — and in order to be coached productively — you need to honestly answer “yes” to both those questions.

Maybe you want to be a more inspiring leader. Or connect more with others. Maybe you want to be more productive or more influential. Maybe you want to be a better communicator, a more impactful presenter, or a better listener. Maybe you want to lead more effectively, take more risks, or become a stronger manager.

Whatever it is, you can become better at it. But here’s the thing I know just as clearly as I know you can get better at anything: you will not get better if 1) you don’t want to and 2) you aren’t willing to feel the discomfort of doing things differently.

One senior leader I worked with became defensive when people gave him feedback or criticized his decisions. He wanted to get better, he told me, and he was willing to feel the discomfort. So I gave him very specific instructions (learned from my friend Marshall Goldsmith): Meet with each member of your team and acknowledge that you have struggled with accepting feedback and tell them that you are committed to getting better. Then ask for feedback — especially ways you can be a better leader — and take notes. Don’t say anything other than “Thank you.”

“It took every restraint muscle in my body not to get into a conversation about their comments,” he told me afterwards. “Especially because I felt they misunderstood me at times. It was beyond uncomfortable. And I messed up a few times and had to apologize. But I did it — and they haven’t stopped talking about what a welcome change it’s been.”

Learning anything new is, by its nature, uncomfortable. You will need to act in ways that are unfamiliar. Take risks that are new. Try things that, in may cases, will be initially frustrating because they won’t work the first time. You are guaranteed to feel awkward. You will make mistakes. You may be embarrassed or even feel shame, especially if you are used to succeeding a lot —and all my clients are used to succeeding a lot.

If you remain committed through all of that, you’ll get better.

I now ask those two questions before committing to coach any CEO or senior leader. It’s a prerequisite to growth.

I sat silently with Daniel for long enough that I thought he might have forgotten my question. Sitting in the discomfort of that moment, I realized that this was a new behavior for me too. I’m used to jumping in and trying to help him. Now, I was sincerely asking him whether he wanted my help. I was honestly OK with whatever answer he gave me — and it felt a little weird. But the more I settled into the silence, the more comfortable I got with just sitting with him — which I found I loved doing.

Finally, he spoke up.

“I think so” he said, “but it’s the end of the season. Can we talk about it at the beginning of next season?”

“Sure,” I said, “I’ll ask you again then.”

Building a Culture of Transparency in Health Care

Harvard Business Review - Fri, 11/09/2018 - 11:00am
Blend Images/ERproductions Ltd Creative/Getty Images

In health care today, the conversation around transparency centers on the consumer. The consumer is empowered to ask for treatment options and costs, potential treatment risks, realistic outcomes, and much more. Health care providers must respond with as much information as possible to ensure appropriate care is delivered, quality and safety are top of mind, and patients and their care team can make thoughtful care decisions.

I believe it is impossible to have complete transparency with patients without first developing a strong culture of internal transparency — among all team members, at all levels, on all issues — throughout the health care organization itself.

When team members are open and honest with each other, without fear, it leads to mutual trust, collaboration, and sharing of best practices across disciplines. Patients are the ultimate beneficiaries.

Insight Center

Shining a Light: Safer Health Care Through Transparency, a 2015 report by the National Patient Safety Foundation’s Lucian Leape Institute, states that “if transparency were a medication, it would be a blockbuster, with billions of dollars in sales and accolades the world over.” The report defines transparency as the free, uninhibited flow of information that is open to the scrutiny of others.

Barriers to internal transparency. A culture of internal transparency does not come about overnight. There can be many barriers, some of which can be quite complex. For example, employees may be reluctant to report safety issues or errors for fear of being reprimanded by their managers or shunned by their colleagues.

The Lucian Leape Institute report states that “from the quality and safety perspective, transparency is foundational for learning from mistakes and for creating a supportive environment for patients and health care workers.”

At Virginia Mason Medical Center in Seattle, for example, every employee is considered a safety inspector regardless of job or title. All our team members are expected and encouraged to file a patient safety alert whenever he or she sees anything that poses an immediate or potential safety risk. This level of internal transparency is necessary because leaders and team members cannot correct problems unless they know they exist.

Internal transparency is hindered when lessons learned aren’t shared freely across the enterprise. While many organizations have routine team huddles, it is critical to prioritize multidisciplinary huddles and encourage clinicians to break through silos by sharing information with their colleagues in other specialties and departments.

Providers are often hesitant to disclose mistakes to their patients even though a 2006 study in the Journal of General Internal Medicine concluded that full disclosure is associated with a lower likelihood of changing physicians, higher satisfaction, and greater trust.

Leaders must create a no-blame culture. The most effective way to build a culture of transparency begins with those in leadership positions. It is the responsibility of the leadership team to develop an atmosphere in which there is balanced accountability and continuous improvement and this is everyone’s shared duty. Leaders must lead by example.

A 2013 article in The Ochsner Journal, titled “Just Culture: A Foundation for Balanced Accountability and Patient Safety,” concluded that “a fair and just culture improves patient safety by empowering employees to proactively monitor the workplace and participate in safety efforts in the work environment.”

A new paradigm. When something isn’t working in health care, it can take a long time to change, but providers can reach their own unique breakthrough moment that serves as the catalyst for long-term transformation.

At Virginia Mason, we began nearly 20 years ago to create a culture in which our team members could believe zero-defect care is possible and have the tools to make this happen. We recognized that to achieve such a transformation, a paradigm shift was needed. Our management approach at the time was not nimble enough to keep up with the changing health care environment: We needed to eliminate wasteful elements from patient care, and we wanted to empower our employees to be stewards of patient safety, regardless of their job title.

To find an innovative way forward, we looked beyond our own industry because traditional approaches in health care management had not evolved much over the previous decades. In 2002, we implemented the Virginia Mason Production System (VMPS), a management method that employs basic principles of the Toyota Production System for eliminating waste (i.e., anything that lacks value from the patient’s perspective), improving quality and safety, and controlling cost.

This change did not happen easily. There were doubters and naysayers, as well as enthusiasts who were open-minded about exploring a new path. Some team members adopted a wait-and-see attitude. A few decided to leave our organization. There was a mix of optimism and a feeling of loss as it became clear that doing things as we’d always done them was no longer good enough.

By openly sharing information in employee forums and during one-on-one conversations over several months, we worked to help our team members understand that change was necessary for the future of the organization. We developed compacts with our physicians, board members, and leaders at all levels that clarified organizational expectations and what, in turn, they could expect from the organization. Our leaders — including department directors and managers — are required to practice VMPS methods and teach them to their teams. Completing a course in VMPS basics is an important part of the onboarding process for newly hired employees.  The result is a safer environment for patients and staff.

I believe all of us in health care have a moral imperative to make health care better and more affordable. Safety is the foundation of quality.

In 2004, one of our patients, Mary McClinton, died because of an avoidable error while she was in our care. That mistake shook us to our core as an organization. It also served as an inspiration to create an environment that is safe for every patient and team member, and to be open with our patients, staff, and the community about our work to continually improve safety. To honor Mrs. McClinton’s legacy, we created an annual award that recognizes a team that improves quality and safety through innovation. Their projects are shared broadly across the Virginia Mason organization so everyone understands how patients and care givers will benefit from the award-winning initiatives. Members of Mrs. McClinton’s family attend the award ceremony that is named for her.

In the United States, we have more information than ever about how to provide appropriate, high-quality care and keep patients safe. Transparency with internal and external stakeholders is essential for quality, safety, accountability, and informed decision making. As the Lucian Leape Institute report explains, transparency between clinicians and patients, among clinicians and health care organizations, and between health care organizations and the public produces safer care, better outcomes and more trust among all the involved parties.

If Your Innovation Effort Isn’t Working, Look at Who’s on the Team

Harvard Business Review - Fri, 11/09/2018 - 10:00am
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An all-star team is making headway with a new initiative that could alter the future of the organization. Spirits are optimistic and the team is successfully maneuvering through new, yet very promising, territory. Then, the results begin taking longer than anticipated to prove, and after too much time spent outside of their comfort zones, the team of high-achieving employees can’t seem to execute within the uncertain environment.

The team’s outlook shifts and it becomes clear that the group will not be able to weather the storm of uncertainty needed to realize this new organizational opportunity.

How could such a capable team fail?

At the heart of many organizations is a deeper problem that blocks transformation: product/function organizational structure. This structure works in well-understood environments, where maximizing delivery of a product or service is the goal, but transformative projects require the organization to return to a more malleable state. This challenge requires teams that are formed through a re-matching of resources and employee capabilities.

Further Reading

Transformation-capable teams are made up of people who are not only high performers, but who hold a unique balance of skills and mindsets that allow them to sustain focus, agility, and optimism in the face of uncertainty for prolonged periods of time. Ultimately, not all top-performing employees are equipped for this.

In our book, Leading Transformation: How to Take Charge of Your Company’s Future, we highlight certain capabilities to search for and cultivate while building a transformative team. Specifically, there are three unique characteristics that will play critical roles as a team takes on a breakthrough initiative.

Negative capability: being comfortable with uncertainty

The term “negative capability” was coined by the poet John Keats while describing writers like Shakespeare who were able to work within uncertainty and doubt. Keats was describing the ability to accept not having an immediate answer and to remain willing to explore how something may evolve before there is a clear outcome.

In the modern context, negative capability can be thought of as the ability to be comfortable with uncertainty, even to entertain it, rather than to become so anxious by its presence that you have to prematurely race to a more certain, yet suboptimal, conclusion. Whereas many people cannot stand the fuzziness of uncertainty, those who demonstrate negative capabilities can facilitate the exploration of new terrain and the discovery of an adjacent possible opportunity.

Individuals with negative capability remain curious and focused even when your project is far from the end goal. Chances are, they will even find this point of the project enthralling, rather than overwhelming, which is exactly what you want. They will also be able to suspend judgement about an end result and stay open to many possible outcomes, rather than become fixed early on to one version of success.

Chaos pilots: leading and executing in unfamiliar territory  

In 1991, Danish politician and social worker Uffe Elbæk took out a $100,000 personal loan to open an unusual business school called Kaospilot. The vision of the business school was inspired by a previous project of Elbæk’s, where he observed a new skill set in students for navigating uncertain problems and saw the opportunity to teach these skills to business leaders who needed to do the same. Chaos pilot is a perfect label for a specific persona needed on a transformative team.

Chaos pilots are people who can creatively lead a project through uncertainty. They have negative capability, but they also have other critical skills, such as the ability to create structure within chaos and take action. Leaders who are chaos pilots are able to drive a team forward on a project even as the environment around them fluctuates.

Although it may sound glamorous to be such a person, being a chaos pilot is hard — they are the colleagues working on ambiguous projects and frequently getting beat up in the process. People who aren’t capable of being chaos pilots quickly flounder when the environment around the project gets shaky.

Chaos pilots often care more about creating meaningful change than about climbing a corporate ladder or getting another star on their charts. Finding chaos pilots to join you can be challenging and requires observation and experimentation, though there are a few fertile places to look for good candidates.

For example, look for people who are getting mixed performance reviews, but who are still highly prized by the organization. Often, these people are getting mixed reviews because they make those around them uncomfortable — because the potential candidates often challenge the status quo — but they continue to succeed, because they perform so well.

Divergent thinking, convergent action, and influential communication

Finally, there are three neuropsychological traits to seek while building a transformative team. These three traits — divergent thinking, convergent action, and influential communication — all play a crucial role to succeeding in innovation and transformation. While many individuals hold one or two of these skills, finding a person with all three is more challenging, yet optimal.

The first of the three, divergent thinking, is the ability to uniquely connect new information, ideas, and concepts that are usually held far apart. People with this skill can match dissimilar concepts in novel and meaningful ways and uncover new opportunities that others may overlooked.

Convergent action, the second trait, is the ability to execute on these new ideas in order to create something tangible. Though many people can come up with great ideas, it is often those with convergent action who will move that new concept from idea to product. Last, having the ability to communicate ideas in a coherent, compelling, and influential way is paramount. This trait will inspire other leaders and decision-makers to believe, support, and act on a novel idea or opportunity.

Similar to how many transformative business opportunities are found in unlikely places, the same is true about where you may find the best-suited team members to drive forward a promising new initiative.

Each organizational project represents a moment of potential transformation, and each successful project helps an organization self-correct away from becoming a calloused machine executing on routine, and instead become what they need to survive: a malleable organization capable of capturing new opportunities.

How the U.S., the EU, and Japan Are Trying to Rein in China’s State Capitalism

Harvard Business Review - Fri, 11/09/2018 - 9:00am
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On November 12, the United States, European Union, and Japan will submit a package of proposals to the World Trade Organization’s Council on Trade in Goods that would significantly help curb China’s practices of heavily subsidizing its state-owned enterprises. They are also discussing ways to prevent China from forcing Western companies to transfer technology to Chinese firms. Hopefully, the Trump administration’s threat to escalate the tariffs war with China will persuade China to accept such reforms.

Subsidies. China announced it planned to provide $350 billion in subsidies to 10 key industries of the future such as robotics, electric vehicles and EV batteries, advance computers, and mobile devices under its ‘Made in China 2025’ policy. (Unlike economy-wide supports such as an R&D tax credit, WTO rules prohibit subsidies to specific companies because of the competitive advantage they confer.)  But under WTO rules, no country can obtain any remedy such as duties to offset the subsidies without hard evidence documenting these subsidies.

Although WTO members are obligated to give “notice immediately” when each subsidy program is created, the reality is many don’t. China has disclosed only a small fraction of its subsidies, usually several years after they were created. Moreover, China’s subsidies are shielded by unpublished government budgets, internal instructions, oral directives, and a law that allows commercial information to be treated as “state secrets.”

The U.S., EU, and Japan have already agreed to propose two changes aimed at pressuring abusers to disclose the subsidies:

  • Revise the rules to stipulate that a failure to give to give timely notice of subsidies would result in a presumption that the subsidy causes injury, which would make it far easier for the affected country to seek damages in a much shorter time frame
  • Introduce a system of escalating administrative sanctions that would reduce the offending member’s influence in the WTO and its access to information

The three have also agreed to seek an expansion of the WTO’s existing list of prohibited subsidies to state-owned enterprises (SOEs) to include the unlimited guarantees of financial obligations, subsidies to insolvent or failing companies with no credible restructuring plan, and preferential pricing for inputs such as raw materials and components.

Although the U.S., EU, and Japan are still trying to agree on the details, they also intend to seek “targeted remedies against subsidies to maintain or expand capacity beyond commercial consideration.” These subsidies are a major problem. For example, China is the largest producer and exporter of steel and the largest source of excess steelmaking capacity. Its excess capacity alone exceeds the total U.S. steelmaking capacity and, in an average month, China’s steel output equals total annual U.S. production.

SOEs themselves frequently provide subsidies to Chinese companies in the same manner as the government does. The U.S., EU, and Japan want to make such practices subject to the same rules as government subsidies to SOEs and to private firms but are still trying to reach a consensus on the best ways to do that.

The EU is proposing a clarification of the WTO rules to determine what constitutes a “public body,” which would help establish whether an SOE is performing a government function or is furthering a government policy, and the adoption of criteria for establishing whether a member country exercises meaningful control over an SOE.

The U.S. is suggesting rules that would force SOEs to provide detailed disclosures that could facilitate challenges by injured members. These include a listing of all SOEs on a public website and disclosure of the percentage of government shareholding in the SOE, titles of government officials who are officers or on the board of the SOE, annual SOE revenues, and detailed facts on any policy or program that provides subsidies to the SOE.

Either option would significantly increase opportunities to restrain SOE abuses.

Forced technology transfers and theft. The U.S., EU, and Japan are also tackling steps inside and outside the WTO to combat forced technology transfers both in China’s domestic market and, through mergers and acquisitions, abroad.

For the Chinese market, the group favors limits to requirements that foreign companies form joint ventures with a Chinese partner, foreign equity caps, administrative reviews based on unclear rules with wide discretion, and pressure on foreign companies to license their technologies to Chinese companies on bargain terms.

Because WTO rules on cross-border investments are limited, the U.S. is sharing information with the EU and Japan on U.S. laws for screening foreign investments. For example, the Foreign Investment Risk Review Modernization Act (FIRRMA), which became law last August, mandates that the U.S. government conduct far-reaching inquiries into the impact of such investments on national security. Twelve of the European Union’s 28 member states currently lack any system for reviewing foreign investments.

The EU has recently proposed a new screening mechanism that would clarify the scope of each member’s review of incoming investment. It would help spot SOE investments that are problematic.

These measures would be useful steps.

Now let’s turn to the forced transfers or theft of digital technologies. In May, the U.S., EU and Japanese trade ministers issued a strong statement condemning “government actions that support…theft from computer networks of foreign companies of commercial information and trade secrets” to use them  for commercial gain. The three also agreed to seek a rule that would stop WTO members from requiring companies to disclose their source codes, highly competitive core technology that is produced at great expense. While the ministers have not yet agreed on tools to achieve these goals, their accord to pursue them is promising.

Expansion. The U.S., EU, and Japan agree that the expansion of their group is essential. The most likely candidates to join soon are Australia, New Zealand, Canada, and Mexico. Among the many reasons I think the Trump administration should ease up on its attacks on the WTO is the fact that they are making it more difficult to recruit developing-country members, even though many share U.S. concerns about China. Indeed, China has missed no opportunity to use the U.S. attacks to portray itself as a defender of the WTO trade system.

The U.S., EU, and Japan should also lobby China to join their reform process. That might seem like a wild idea, but given that any single WTO member can block proposed rule changes, it would be far better to involve China early in these efforts.

Why would China ever agree to such reforms? One reason is it cannot afford to be isolated from the major industrial economies: It depends on access to their technology to achieve its Made in China goals. Another is increased isolation could kill the trade goose that enables China’s leaders to produce the prosperity on which their legitimacy depends.

China’s subsidies and tech-transfer practices pose a major threat to the global trade order. They must be reined in. If ultimately adopted by the WTO, the proposals that the U.S., EU, and Japan have agreed to or are hammering out would represent a big step toward achieving that end. As one savvy senior EU trade official recently told me, the U.S. should exploit the leverage from the tariffs war to bring China to the table.

What to Do If Your Career Is Stalled and You Don’t Know Why

Harvard Business Review - Fri, 11/09/2018 - 8:05am
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A CEO whom we’ll call Melissa was exasperated. Having delivered seven years of breakthrough performance and nearing retirement, she was eager to select and prepare her successor. Members of her executive team were strong in their current roles but none was quite right for the top job.

As we considered a broader group of potential candidates, the CHRO chimed in with an idea: “What about Tom? He is very strategic and his teams would take the hill for him. He might be worth looking at as an option.” Then the CHRO paused for a moment and added, “Of course there is this issue of his executive presence. Tom often hogs the spotlight in meetings unaware of how that alienates his peers. And…well…I don’t know how to put this, but he has noticeable body odor that’s a real turnoff.” Melissa agreed: “Tom is a brilliant business mind, but I just can’t see him representing our company.” As it turns out, for eighteen years Tom had received stellar performance reviews and top bonuses on the strength of his performance. “Executive presence” was mentioned in several reviews as an improvement area, but without any specifics, Tom had no idea what the real issue was and how damaging it could be to his career.

Having assessed over 2,000 CEOs and over 18,000 C-suite leaders since 1995, we are struck by how often careers of talented executives stall or even derail because of seemingly trivial issues, many of which are utterly fixable. We call these types of issues “pandas.” Pandas look innocent, but their powerful jaws deliver a bite stronger than a jaguars’. Pandas can be painfully costly to individuals whose careers stall for reasons unbeknownst to them and to organizations and managers unable to develop talented leaders to their full potential.

To better understand this phenomenon, we analyzed a sample of 113 strong performers who were finalists for C-suite roles but got turned down in the final decision round. In reviewing detailed assessments of their capabilities, we uncovered that 62% had at least one “panda” issue and 10% had more than one. Furthermore, for 35% of these executives, “pandas” were considered among the top three risks identified with respect to this individual’s fit to a role. Often these pandas live on for years, seemingly innocent, but ultimately gnaw at the career trajectory of otherwise talented leaders.

Our analysis uncovered the most common types of “pandas”:

  • 36% of pandas related to executive presence
  • 28% related to communication style
  • 29% related to peer-level relationships
  • The remaining 7% included excessive optimism and perfectionism

We’ll now examine each.

Executive presence. This is an ill-defined catchall for a multitude of issues from the seemingly trivial but career damaging body odor, to deeper challenges, such as when someone doesn’t carry herself/himself in a way consistent with company culture. Often executives who fail to appear confident get comments about lackluster executive presence. Dismiss this panda at your peril: Our research shows highly confident executives were 2.5 times more likely to be hired.  This reminds us of Brian, a brilliant investment professional at a top firm who was passed over for promotion to partner due to his poor executive presence. Asked to coach Brian, we gathered extensive feedback from his colleagues and external parties. It turns out that while respected for his intellect, Brian showed up as meek and understated, leaving others with a perception that he was junior and not ready to represent the firm as a partner. We helped Brian identify and address the specific behaviors that created this perception and today he is a highly profitable partner at the firm.

Communication style. Complaints about communication style usually concern how one speaks up (or doesn’t) in various forums. One’s communication style shapes first impressions and can have a significant impact on career trajectory. Lagging on communication effectiveness showed up as a risk area for 28% of executives we analyzed. Take Jim, a front-runner CFO candidate for a leading medical device manufacturer on the verge of an IPO. Jim’s resume checked all of the boxes (and then some), but his Achilles’ heel was a long-winded, almost philosophical communication style — more befitting a cerebral academic than a bottom- line-oriented CFO who can drive performance and credibly represent the company with the investment community.

Our research shows that candidates who used more esoteric, intellectual, or “ivory tower” vocabulary were, eight times less likely to be hired compared to candidates who used more colloquial language. Down-to-earth storytelling, drawing on memorable results, is vastly more powerful than a cerebral, academic style.

Another common communication pitfall has to do with use of “we” and “I.” The weakest candidates for C-suite roles used “I” at twice the rate of the rest of the sample. The most successful candidates are clear about their individual contributions without overusing “I.” Candidates who go on and on with their own accomplishments impress decision makers less than the ones who say, “My proudest achievement was the moment the team began to knock it out of the park” — and then clearly explain their role in the group’s achievement.

About the Research

This article is based on research conducted over 10 years in support of our recently published book, The CEO Next Door (Currency, 2018). ghSMART has assembled a data set of assessments of over 18,000 C-suite executives across all major industry sectors and company sizes. Each executive assessment includes detailed career and educational histories; performance appraisals; and information on patterns of behavior, decisions, and business results. This data was gathered through structured interviews with every executive.

Finally, we were disappointed to uncover that CEO candidates for United States-based companies who had a significant accent were 12 times less likely to be hired. While in-group bias is a deep and persistent issue in hiring, we found that at least for some of these executives their insufficient language fluency lead them to be perceived as less competent than they were and that as this bias was brought to light and they worked to improve fluency and reduce the accent, their career trajectory improved.

Peer relationships. We often see talented executives hitting home runs in their own division and striking out with their peer group. Take Denise, a talented marketing executive who has helped reinvigorate some of the world’s most iconic retail brands. What ultimately cost Denise a coveted CMO job was a pattern of poor peer relationships. Her performance reviews were filled with praise from her bosses and her direct reports for her excellent results and relentless passion, but her peers believed that her own advancement mattered more to her than a team win. Individuals like Denise often do extremely well in the middle management ranks but stall out on the path to the C-suite, because they seem unable or unwilling to think beyond their own division or function. This is easier said than done, especially as powerful corporate incentive systems often reward achievement of individual targets. Furthermore, structural conflicts across functions are common in large complex organizations, leaving peers to fight for finite resources or at odds over projects and issues. Yet, leaders with the highest potential find ways to deliver on their target while also playing for the team.

Our CEO Genome research uncovered that stronger candidates for leadership positions are more effective at persuading others, including their peers. We also found that high-performing CEOs are more likely than lower performers to treat others with respect (73% of the high-performing versus 59% of low-performing). They may break glass when needed to deliver results but over the longer term they build strong followership and the reputation for doing what’s right for the business.

So, why do these dangerous pandas go unaddressed for so long? The problem is both on the giving and receiving side of feedback. For a manager delivering feedback, these issues seem so personal and almost trivial that it’s hard to raise them directly, especially with a strong performer. It is easier to skirt the problem, especially when it doesn’t hinder current performance. And as a receiver of feedback, we often dismiss pandas as unimportant “nice to haves” or at times contradictory to our values. I should be judged on my performance, not on airtime in a meeting! Unfortunately, as we have seen in our research, avoiding these difficult conversations or not acting on the feedback will damage the careers of talented individuals.

As a manager, your responsibility is to develop your team by delivering candid feedback with caring courage. By dodging it, you are actually doing a disservice to your direct report and to your team as a whole. No matter how uncomfortable, you need to be clear about the feedback. Offer specific examples and describe the impact one’s actions — or inactions — have on the individual’s ability to reach their goals in the current role as well as on his or her upside potential.

As a feedback recipient, don’t be misled by the innocent appearance of a panda. If one appears in your review, ask clarifying questions to get to the root and specifics of what you are doing, as well as how it is impacting your performance and other’s perceptions of your performance and potential. If you are still not getting a straight answer from your manager, engage a third party to provide candid expert feedback. Don’t let the dangerously innocuous pandas maul your career.

Is Your Company Ready to Protect Its Reputation from Deep Fakes?

Harvard Business Review - Thu, 11/08/2018 - 11:34am
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After a public outcry over privacy and their inability — or unwillingness — to address misleading content, Facebook, Twitter, and other social media platforms finally appear to be making a real effort to take on fake news. But manipulative posts from perpetrators in Russia or elsewhere may soon be the least of our problems. What looms ahead won’t just impact our elections. It will impact our ability to trust just about anything we see and hear.

The misinformation that people are worried about today, such as made-up news stories or conspiracy theories, is only the first symptoms of what could become a full-blown epidemic. What’s coming are “deep fakes” — realistic forgeries of people appearing to say or do things that never actually happened. This frightening future is a side effect of advances in artificial intelligence that have enabled researchers to manipulate audio and video — even live video.

The end result of this manipulated reality may be that people no longer believe what they hear from a world leader, a celebrity, or a CEO. It could lead to “reality apathy,” when it is so hard to distinguish truth from lies that we stop trying altogether. This means a future in which people believe only what they hear from a small circle of trusted friends or family — more similar to a conflict region than to a modern economy. Try factoring that into your quarterly earnings call or televised speech.

An obvious scenario, one that some companies might find themselves dealing with in the not-too-distant future, is a faked video of their CEO making racist or sexist comments, or bribing a politician. But equally damaging could be a video about, for example, corporate spending.

Imagine an authentic-seeming video of a CEO saying their company will donate $100 million to feed starving children. This surprise announcement — which never actually happened — leaves the company with a stark choice: go ahead with the donation or publicly state that you don’t care that much about starving children after all.

As corporate leaders grapple with the question of how to prove something is (or isn’t) real, they will need to invest in new technology that helps them keep one step ahead of bad actors. And they will have to do it quickly. A company won’t be able to stay ahead of determined, tech-savvy manipulators if it has a yearlong procurement cycle.

One crucial step is for the social media platforms to incorporate real-time forgery detection into all of their products, building out systems that can adapt with improvements in the technology. But that technology is still in its early stages, and as it develops you can be sure that bad actors will be working on ways to defeat it.

It may also be possible to create software that can timestamp video and audio, showing when they were created and how they have been manipulated. But relying on the tech sector to quickly address societal challenges like this without accountability from regulators and users hasn’t worked all that well in the past.

Corporate marketers and communicators, as the people who supply platforms with the money that is their lifeblood, are in a strong position to push for faster action. Last year P&G pulled $140 million in digital ad spend, in part because of brand safety concerns that arose when its ads were placed next to questionable content.

You can bet this got the attention of social media companies. But it worked only because P&G was willing to back up its words with action. Platforms are more likely to take proactive measures if they know that inaction will hurt their profitability. Industry pressure helped push YouTube, for example, to reevaluate its content policies and dramatically increase its investment in human moderation.

Industries often form coalitions to influence the government on regulations affecting their business interests. With some of the biggest tech companies starting to rival governments in their reach and power, the same model could be employed here, using the threat of lost ad revenue. These coalitions may find it helpful to partner with consumer groups and NGOs to amplify their message. Pushing these platforms to take the future of misinformation seriously would be good not only for corporations but also for society at large.

In addition, companies must begin to factor deep fakes and other reality-distortion techniques into their crisis-scenario planning. Reputation protection in this new world will require adding a new layer to a company’s rapid response and communications strategies. Executives must be prepared to communicate the facts quickly and to correct the fictions before they spread too far.

Communicators should make sure they have the right tools in place to deal with a fast-moving manipulated-reality crisis. New companies are forming that use technology, open-source intelligence techniques, and crowdsourcing to quickly discern what’s real and what’s not. The key to uncovering a falsehood may lie in someone using geolocation, or simply their own knowledge, to recognize that a street sign in a faked video isn’t really at that location. As with any crisis, social-media analytics tools are critical when it comes to tracking the spread of misinformation. These tools can help executives see whether a story is gaining traction and identify the most-influential people spreading the misinformation, whether wittingly or unwittingly.

It is crucial that individual companies learn to understand and mitigate their particular risks — but that alone will not protect them. Our information ecosystem is like a game where deceivers have a massive edge; a company may lose even if it “plays” perfectly. That’s why we need to fix the rules. We all must pitch in to support cross-company, cross-industry, and even cross-sector efforts to turn the tide. It will be incumbent on everyone with a stake in a reality-based society to work together to ensure that we can continue to discern fact from fiction.

Under-Management Is the Flip Side of Micromanagement — and It’s a Problem Too

Harvard Business Review - Thu, 11/08/2018 - 11:13am
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Micromanagement gets most of the attention, but under-management may be just as big a problem.

This is the term I’ve given to a constellation of behaviors that I’ve seen occurring together often during my 24 years in management: weak performance management, a tendency to avoid conflicts with employees, and generally lackluster accountability. As the name suggests, there’s just not quite enough management being done—and results often suffer as a result. But under-management can often fly under the radar because the managers who have these tendencies aren’t necessarily incompetent; on the contrary, they often know their business well, are good collaborators, and are well-liked.

One HR executive I spoke with about the problem estimated that some 10% to 25% of her company’s managers were under-managing. And I well remember one of my own company’s Human Resource VP’s exclaiming in frustration, “The trouble with our managers is that too often they just don’t manage!”

Take Jamie, a product development manager (he’s not a real person, but a composite of numerous people I’ve known). He knew the technical details of his team’s products well and got along well with other department heads in his division. He was a good communicator—unlike several other product development managers in the division, who were stronger on the technical side than in dealing with human beings—and his team liked working for him. They reported above-average morale, unlike many teams in the company.

But his team struggled to deliver results. For example, on large projects they had persistent trouble meeting deadlines. When this came up with Jamie’s boss and peers during management team meetings, he maintained his team couldn’t be working any harder—though other managers didn’t always agree. When Jamie’s boss or other members of the management team pressed Jamie about members of his team who might possibly be weaker links, Jamie strongly defended them. There are no weak links on my team. In baseball parlance, Jamie was “a player’s manager.”

There are several intertwined causes behind this phenomenon. Too strong a desire to be liked can get in the way of fully productive management because it can make you reluctant to do the things you need to do. Conflict avoidance is a related element of the equation; conflict is inherently stressful and unpleasant, and it’s easy to think that if one can get by with less of it, so much the better!

True, pushing your people and holding them accountable for strong performance won’t win you any popularity contests, and it requires some level of comfort with conflict. But while maintaining positive relationships with your own employees is a good thing, over the long run your priority is to deliver results.

If you think you might be under-managing, here are three tangible steps to take. The good news is that it’s possible to improve one’s performance in these areas; though it takes practice these are primarily issues of will, rather than ability: you need to commit to them first.

Don’t be a conflict-avoider. Let’s start with the handling of conflict. Early in my management career I was fortunate to have a mentor who took me aside and told me straight-out that if I was going to succeed in management, I needed to become more effective in my handling of conflict. I still remember his exact words. He praised my abilities (my knowledge of our business and my work ethic), but added, “Frankly, I don’t know if you want to handle conflict. I don’t know if you have the stomach for it.” I realized that if I was going to be successful in management, this was a problem area and I was going to have to work on it. So I did — diligently. I became highly conscious of conflict and not ducking it. Truth be told I still don’t like dealing with conflict (most people don’t), but I recognized it was a vital part of the management role and over time I became more comfortable with it and competent at it.

View goal-setting as mission-critical. If you’re not delivering the results you need to, which is the risk at the heart of under-management, first make sure the goals your employees need to achieve are well-conceived and clear. Most managers don’t spend nearly enough time on goal setting; too often we approach it as a nettlesome bureaucratic exercise (why is Human Resources torturing me this way, making me fill out these endless forms?). But thoughtful goals that are agreed to by employees can be a manager’s best friend because you can manage to them: they become a roadmap to guide your work with your team all year.

“Is this work the absolute best you can do?” This is a simple but powerful question I learned from a longtime colleague and friend who was a retired U.S. Army colonel, who had picked it up from one of his officers. Asking it when someone hands in an assignment will make them aware that they’re being held accountable. (It’s also a good question to ask yourself if you suspect you are under-managing as an exercise in self-accountability. Is this work the absolute best you can do? Are you doing all you can to set appropriate goals, hold people accountable to them, and deliver the results you need to?)

Ultimately, rising above under-management is the proverbial win-win situation: better for your organization—and for your career.

Using Analytics to Align Sales and Marketing Teams

Harvard Business Review - Thu, 11/08/2018 - 9:59am
gremlin/Getty Images

Many companies struggle to deliver a consistent and easy buying experience for their customers.

Consider the following scenario: A manager wants to purchase some computer software for her business. She asks an analyst on her team to do an online search for information. The analyst recommends a particular software company’s solution. The manager peruses that company’s website and requests more information by entering data about her needs through a webform. The software company emails relevant materials which the manager reviews before reaching out to an inside salesperson with questions.

But then things begin to break down. The inside salesperson hasn’t seen the webform data, so the manager must repeat much of the information she had already entered. Furthermore, some of the advice the inside salesperson shares contradicts what the manager recalls reading on the website. The manager decides to meet with a field salesperson to get clarity and to work out some details for a quote. Then, just days after receiving the quote, the manager gets an unsolicited email from the software company’s marketing team offering a better deal. The mounting number of inconsistencies and redundancies confuse and frustrate the manager. At the same time, the software company has wasted time and resources on duplicate, uncoordinated, and ineffective marketing and sales outreach.

As customers have begun interacting with sellers through websites, emails, texts, social media posts, print and TV ads, and salespeople, it’s become difficult for companies to synchronize these communications. (The profusion of independent information sources, such as customer reviews and price comparison sites, adds to the confusion.) When it’s time to actually buy, customers may do so via purchasing portals, internet chat reps, call centers, field salespeople, or other sources.

Customers move frequently and unpredictably between these various channels when buying. For simple purchases, they might buy online exclusively. For complex purchases, they might start with online information, then talk with salespeople, and then return to online sources to validate what the salespeople said. The buying process is no longer linear or consistent.

For companies that sell to businesses, meeting the buying needs of today’s customers requires a mindset shift.  Companies need an orchestrator to ensure marketing and sales outreach is well-coordinated and aligned with customer buying needs. In some cases, the orchestrator is a computer system. In other cases, the orchestrator is a person enabled by data and analytics.

Amazon is a prime example of a company using a computer system to effectively orchestrate customer buying. Amazon’s analytics use data to make inferences about what products each customer might buy. The analytics also suggest an automated–yet coordinate–way to reach each customer with the right offer at the right time. For example, Amazon makes customized purchase suggestions on its website. If a customer clicks on a suggestion but doesn’t purchase, Amazon can follow up with a reinforcing email or post on the social media platform the customer uses. Companies are using computer-based orchestration frequently with business customers, especially for smaller accounts and simpler purchases.

For larger accounts and more complex purchases, companies are giving account managers responsibility for orchestrating marketing and sales outreach to customers. In their expanded role, account managers decide what the company should offer each customer, along with the best message timing and delivery channel (e.g. digital message, phone call, personal visit). Account managers are more effective when they are armed with insights from data and analytics.

For example, a telecom company used predictive analytics to help account managers orchestrate outreach to under-performing, high-potential customers. The analytics found “data doubles” for these customers – i.e. similar customers who were buying much more. The company shared insights with account managers about which customers had significant unrealized opportunity and what sales strategies had worked previously for their data doubles. The insights helped account managers offer the right products with the right sales messages, thus increasing sales at under-performing accounts.

In another example, a pharmaceutical company used a computerized suggestion engine to help account managers orchestrate the sharing of prescription drug information with physicians. The company provided physicians with information through various sales team members (e.g. account manager, reimbursement specialist, medical science liaison) and marketing channels (e.g. emails, podcasts, mobile apps, invites to conferences, company website). By examining data about each physician’s situation and preferences, the suggestion engine told account managers which actions, and the timing of those actions, were likely to produce the best results. This allowed account managers to tailor communication to each physician’s needs. For example, an account manager might get a message on his tablet: “Dr. Jones just logged on to the company’s website to investigate drug side effects. Suggest visiting Dr. Jones to discuss her concerns.” During the visit, Dr. Jones asks about drug effectiveness and mentions she hates receiving unsolicited email. The account manager updates Dr. Jones’ profile to stop marketing emails and asks a company medical science liaison to call Dr. Jones to answer her questions. By tracking physician preferences, behaviors and results, and sharing insights with account managers, the company continually improved its relationships with physicians.

More companies and industries are taking on the challenge of orchestrating marketing and sales outreach to align with modern customer buying needs. As the volume, variety, and velocity of business data escalate, analytics (including artificial intelligence) will play an even bigger role in the effort to improve the customer buying experience.


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