Marina Gorbis's Blog, page 1285

Commerce Secretary Pritzker on the Economy, Worker Training, and Trade with Asia

America has emerged from the Great Recession wealthier and more productive than ever, but wages haven’t kept up. There are many theories as to why — globalization, technology, changes to public policy, and the decline in unionization — and just as many theories on what to do to help narrow the income gap.

In the U.S., the Secretary of Commerce represents “the voice of U.S. business within the President’s Cabinet.” The department is also tasked with promoting job creation and “improved standards of living for Americans.” I spoke to Secretary of Commerce Penny Pritzker about what she and her department are doing to encourage broader economic growth as well as about her views on trade deals with Asia and the rise of automation. An edited version of our conversation follows.

HBR: The commerce department is focused on economic growth, but also opportunity, something thought of more broadly as shared prosperity. How do you think about that mission, given the fact that wages and jobs seem to be struggling to keep pace with profits and GDP?

Secretary Pritzker: I think there are two things we have to keep in mind. We’ve had this enormous change in technology. We’re going through a transition similar to when we went from an agricultural to industrial age.

The other thing is we have globalization, also made available by technology. That presents both opportunities and challenges. You can be born global because of technology and transportation and globalization. So, that creates a lot of opportunity because we have such extraordinary computing power. The challenge, of course, is work is changing. What is work, and what are the skills I need to do the work of the 21st century?

So, what are we doing to think about opportunity in the administration? I think the complete answers have been yet to be written. The president has very much an all-of-the-above strategy. We’ve got to be trying different things and better understanding what do we need to do.

First is minimum wage. The president’s called for a [higher] minimum wage, a federal minimum wage.

The second is around skills, focusing on how do we make sure that our workforce has the skills that are needed for the jobs that are available and coming available in the 21st century, and that those jobs pay a good living. And there are many jobs out there that are sitting open that pay a good living, but what I’ve heard from the 1,700 CEOs that I’ve met with over the last 23 months is that they’re struggling to find the workforce that they need with the skills that they need. So, we have a bit of a training mismatch going on.

The third thing is infrastructure. We have underinvested in our infrastructure, I think to the tune of $2-$3 trillion dollars in the United States. We don’t have a long-term bill supporting investment infrastructure. One thing you and I both know: infrastructure’s not something that you fund in a month or two months. We need a long-term infrastructure plan. And that’s bridges, that’s railroads, but it’s also broadband, which ties to both innovation, as well as education, as well as this notion of how do we help small, medium size businesses.

[Also,] trade agreements – [it’s] extremely important that we expand the market opportunity for American-made goods and services. That will improve the quality, the experience, and benefit for the American worker. You might say: why? Because our free trade agreements today, unlike our previous free trade agreements, have labor standards in them. We’re insisting that people that we do free trade agreements with now have to have [a] minimum wage, have to have safe workplaces, have to have standards about forced labor, child labor — international labor organization standards — and that those standards are enforceable within those trade agreements.

We also have a whole effort around hiring veterans. Many of our unemployed have been veterans. These are obviously very capable people who are able to defend our country. Why are they unemployed? Often, that’s been an issue of translation of skills from what they’ve done in the military to what they can do in the private sector. And so, we’ve had a very focused effort in that area.

And then the president has had a call to action on hiring the long-term unemployed. We’ve actually gone out and said here are programs around the country that are working to take someone who’s been unemployed at least six or 12 months, which is what you consider long-term unemployed. What do they need in order to get back into the workforce? Sometimes we’ve found companies are unwilling to hire the long-term unemployed because why take that risk? Sometimes they need upskilling or reskilling. And so we’ve put in place programs, while working with local partners, to do that.

Let’s talk a little bit more about skills. What would you say to someone who would make the argument that there’s no need for government in this area? Private businesses will hire people and train them and the market would take care of itself.

The problem is the market’s not taking care of itself, and that’s what I’ve heard from almost every single CEO that I have talked to. I mean it’s not like this is something I hear in pockets. It’s been amazing in this job how consistent the drumbeat is on this. So, the question is how do you address that, and what are the processes that are needed? If you think about it, the federal government spends about $17 billion on workforce training writ large across the federal government. The private sector spends about $450 billion. Private sector ultimately knows it’s the big employer. They know what they need. They need to lead. So, our job in government is to work with the private sector, to say, OK, look, we need to support what you need, but you’ve got to lead. You’ve got to have a voice in this game.

The labor secretary and I are engaging with the private sector so that they’re playing a leading role. The Labor department and the Department of Commerce created a federal checklist. So, our $17 billion of the taxpayers’ money that we’re spending on training is being spent with a set of criteria that have to be met. It’s got to be known that this is not about train and pray, but instead we’re going to train towards jobs that employers need. The programs include the capacity to earn and learn, so that you could do on-the-job training or internships or pre-apprenticeships or apprenticeships.

We’re also using data. We’re trying to make smart choices with our money, so we’re trying to make sure we hold the grantees accountable. They’ve got to collect data, so that we understand what works and what’s not working.

You mentioned that business needs to play a leading role. There are some who argue that businesses are too focused on the short term, that they’re not making the kind of investments in training that they need to.

That doesn’t ring true to me because when I talk to business leaders they’re very aware of where they’re having challenges filling spots and they’re also quite aware of the arc of their employee base — how many retirements do they have coming, in what areas that are going to affect their business. So we’ve found that the business sector has been pretty receptive to this.

But solutions are not national. The solutions are local. And so that means to be effective from a national standpoint you’ve got to engage locally. So, for example, you need to have the employers, the universities, the community colleges, as well as the local government, and the training boards, come together and be working in concert with one another.

You just made a case about why trade is beneficial. At the same time, the Trans-Pacific Partnership that’s currently being debated has generated a lot of controversy. Why do you see continued pushback on this?

I think a lot of the pushback comes from historical experience 20 years ago, and it doesn’t recognize where we are today. Why are we pursuing the Trans-Pacific Partnership? First of all, the middle class in Asia is going from about 570 million customers to about 3.2 billion customers in the next 15 years. The world has never seen that growth in a marketplace before. And what we know is if our companies do not have access to those markets, do not have a fair ability to do business there, they’re going to get left behind. And today, we do not have equal access to those markets.

The second reason why I think it’s so important is because our trade agreements are setting standards that are not being set by other countries, in terms of labor standards, environmental standards, preventing state-owned enterprises from having unfair advantages, intellectual property protection, and on and on. The point being that our trade agreements will set the standard for trade in the 21st century and have us leading in the Asia Pacific, and then hopefully, with TTIP, in our engagement with Europe. That would be 65% of the world’s GDP trading on a set of level standards that, frankly, I think improve the competitiveness of the American worker.

Why? Because we live by those standards today. And if other countries, in order to trade with the United States, have to raise their standards, it means our workforce is more competitive.

One of the big fears around economic opportunity that is generating a lot of attention is the idea that technology could go from being our friend to our foe. There’s fear that automation is starting to potentially take away more jobs than it’s adding, and that that will only increase as we move into a world with artificial intelligence. Is that something that you worry about?

I tend to be an optimist about this and believe that work is changing and the challenge is for us to invest in the worker, so the worker and the machine can work together, which is what you’re seeing more and more happening around the world. And that’s definitely our future.

I don’t know that it means that we’re all going to be unemployed because that supports innovation, that supports creation of new jobs. I’m not afraid of it, though. I think we need to embrace this and say OK, what does that mean our role is in government, in the private sector, in NGOs, and in local government.

People Remember What You Say When You Paint a Picture

When leaders communicate a vision of their organization’s future, they tend to emphasize ideals and ideology — the importance of “success,” “stewardship,” or “sustainability.”  Leaders are likely to emphasize this type of abstract rhetoric more as businesses become increasingly digital. Given that employees within the same organization increasingly possess distinct types of technical knowledge, it may appear that an abstract, general vision is appropriate in order to gain traction and prevent alienating different constituencies.

Yet this type of rhetoric undermines another core objective of vision communication: providing clarity about the future. Leaders must communicate strategies for growth that employees can clearly envision. Instead of invoking abstract ideals, the most effective leaders communicate their visions using image-based words.

What, exactly, is a vision with image-based words? It’s one that describes people with well-defined attributes (such as children) and observable actions (such as smiling and laughing). Image-based words convey sensory information to paint a vivid picture of the future, one that employees can easily imagine witnessing. Along these lines, visions with image-based words are more consistent with the literal meaning of the word “vision.” When leaders include vivid images in their communications, they’re transporting employees to the future by telling snippets of a compelling story — a story that captures events that have yet to unfold.

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Visions with image-based words enhance performance significantly more than visions with abstract statements. Along with Chad Murphy of Oregon State University and Jonathan Clark of Penn State University, I found that hospital leaders who communicated visions with image-based words triggered better patient outcomes than leaders who communicated visions abstractly.

Moreover, in a second study in which teams were tasked with developing a toy prototype, we determined that a vision communicated via image-laden words (“our toys…will make wide-eyed kids laugh and proud parents smile”) triggered stronger performance than a vision with similar content but without visual wording (“our toys…will be enjoyed by all of our customers”). We found that image-based words have a galvanizing influence — they inspire people to work together toward the same crystal-clear snapshot of the future.

Other research has demonstrated the benefits of image-based words. For instance, Purdue University’s Cynthia Emrich and her colleagues found that U.S. presidents who used image-based words in their speeches were considered to be more charismatic than those who didn’t.

You’ve heard image-based phrases: Some of the most inspirational speeches during some of the most critical junctures in history are united by their usage of imagery, from Winston Churchill’s snapshot of a future in which the Allied forces would “fight in the fields and in the streets” to John F. Kennedy’s vision of “landing a man on the moon” to Martin Luther King Jr.’s dream in which “the sons of former slaves and the sons of former slaveowners will be able to sit down together.”

Image-based words have also been used to spark revolutionary moments in business: think of Bill Gates’s vision of a world with a “computer on every desk and in every home” and Henry Ford’s dream of a car “large enough for the family” to enjoy “the blessing of hours of pleasure in God’s great open spaces.” In more recent times, a British chemical engineer named Paul Thomas pronounced a vision “that one day we will be able to detect a previously undetectable tumour metabolising inside a human lung simply by asking a patient to breathe into a device.”

As Chip and Dan Heath argue in their book Made to Stick, people find concrete messages intuitive because life is concrete. Life involves sights, sounds, and smells, and image-based words provide the best way to approximate this reality through language. My colleagues and I argue that the usefulness of words that mimic reality is especially pronounced when people are thinking about the long-term future because the future is typically so uncertain. Since the future hasn’t happened yet, people respond favorably when they hear it described not in terms of abstract aspirations such as “maximizing shareholder value” or “promoting superior customer service,” but in terms of what it will look, feel, and sound like.

But people aren’t well-equipped to craft vivid messages about the future. Nira Liberman of Tel Aviv University and Yaacov Trope of NYU have found that as we mentally project into the future, we tend to think more abstractly. For example, when people are asked to imagine the action of “reading a book,” they are more likely to describe it as “gaining knowledge” than “following lines of print” if they are asked to imagine doing it “next year” rather than “tomorrow.” Due to this tendency, my co-authors and I have found that more than 90% of leaders communicate visions without any image-based words.

When people are encouraged to counter this tendency by communicating more concretely about the distant future, they often set a specific numeric performance target, such as an increase in stock price, market share, or ROI. Of course, this type of quantification is essential for business success. We use data to convert complex phenomena into a more manageable form, compressing the messiness of reality into that which is measurable. We quantify reality in order to track progress. And research on goal setting has established the merits of specific numeric targets for increasing motivation, in large part because they increase clarity about expectations. The importance of quantification has only grown in the digital era.

Yet image-based words are likely to provide benefits that numeric targets cannot. In other research settings, rhetoric with image-based words has been shown to be superior to rhetoric with numbers in two key ways. Messages laced with data and statistics cannot be easily understood in the absence of stories (which typically have image-based words). And messages with vivid details are also more emotionally riveting than messages with statistics. For instance, Deborah A. Small of Wharton and her colleagues found that a story about a starving 7-year-old girl from Mali prompted people to donate more than twice as much money as a message that “food shortages in Malawi are affecting more than three million children in Zambia.”

These two principles are likely to translate to vision communication. First, consider comprehensibility. A company’s goal of increasing renewable energy usage by 25% requires that people understand the nuances of different forms of renewable energy and how to take stock of current usage. But a vision to create “a city with solar panels on every rooftop, biofuel in every car, and wind turbines on every hill” is instantly understandable for all recipients—regardless of their background or technical expertise.

To illustrate the second principle (emotional impact), consider VisionZero, New York City’s goal of reducing annual pedestrian fatalities from 200 to 0. The specificity of this target certainly renders it an effective benchmark. But an image-based vision could capture how life would be different if this goal were achieved, perhaps by referring to how 200 more people a year would have many years left to watch sunsets with their loved ones and laugh with their friends.

Numeric targets pose another problem. Since numbers are more specific than general notions such as “maximizing shareholder value,” it may be tempting to believe that they would bring to mind other forms of specific thinking, such as mental imagery. Yet contemplating numeric targets is likely to undermine the ability to conjure mental images. To understand why, briefly consider the anatomy of the brain. As explained by Seymour Epstein and his colleagues, we have two cognitive systems — one that thinks logically (the analytical system, or our “rational self”) and another that encodes sensory information about the external environment (the experiential system, or our “mind’s eye”). Numbers are processed in the analytical system. They do not trigger the formation of mental images. Alternatively, image-based words are processed in the experiential system. When we read or hear image-based words, they are instantly converted to verbal portraits in our mind’s eye.

It is difficult to engage both brain systems at once. When one system is primed, the other tends to lie dormant. Since quantitative information (data, statistics, metrics, and numeric targets) triggers the analytical system, the part of the mind capable of generating a vibrant snapshot of the future shuts off. Quantification is the imagination’s mortal enemy.

To convey an inspiring and memorable portrayal of an ideal world not yet realized, leaders should not communicate exclusively with abstract language and numeric targets. They should harness the power of image-based words.

An Inside Look at Facebook’s Approach to Automation and Human Work

Running the operations of Facebook is an enormous task. First, there’s the sheer scale of its global networks and the absolute priority it places on reliable service and satisfying user experiences. Then there’s the fact that just maintaining the current offerings isn’t enough: operations is expected to constantly create new flexibility and capacity for the business to pursue its broader innovation agenda. Looking forward, Facebook’s ambitious initiatives include its Connectivity Lab (a plan to bring internet access to those around the world who lack it), AI and deep learning, and virtual reality as a next generation computing platform.

I sat down with Jay Parikh, the company’s Vice President of Engineering, to discover what his priorities might suggest more broadly about the future of operations. An edited version of our conversation follows.

HBR: When a given company thinks about “the future of operations,” it thinks mainly about how its own operations will change. Often that vision features automating a lot of work that humans do today. Is that true for Facebook?

Parikh: We use a lot of automation because the team has a lot of complexity to manage. We have an infrastructure that spans hundreds and hundreds of thousands of computers all around the world, we’re serving 1.44 billion people on the main app and hundreds of millions of people on the other apps, and there are thousands of engineers writing software that’s getting deployed all the time – changing features, making things more optimized, providing some new service so we can launch a new feature in Messenger or Instagram. So we have really had to focus a lot on orchestration and automation so that we can keep up with the scale and with the pace of product development that we want.

Could you give an example of work that was manually done, and is now automated?

We built a system we call FBAR, for Facebook Auto Remediation, to do a very basic set of hardware remediation tasks. Before, if a server had a hard drive failure or some hardware error, an alarm would go off and some human would have to log in, or walk to the computer, and try to debug or fix it. You’d do some things to try to fix it in software, you’d reboot the machine, you might try to reimage it. A lot of that software remediation and debugging is all automated now. No person has to be involved with that. The system will detect the error– it could be a disk drive, it could be a CPU, it could be a networking card or power failure—and can go ahead and do a bunch of things that it knows how to do.

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But these are really dumb things – things that are really, really trivial to automate. And thereby, it allows us to take that engineer we really worked hard to recruit, and trained to deal with higher-level things, away from doing something pretty remedial – work that is not fun, and they’re not growing or learning anything, yet it’s time consuming – and say: “Hey, help us figure out how to architect this new service. Go figure out how to make this thing run faster, or help build this new automation to tackle the challenges we have in mobile applications. Help us design our new data center.”

Do you have a disciplined process for spotting the next thing to automate, and constantly moving that human work upward?

We do. We generally watch a bunch of metrics, like machine counts and failures, to figure out the next thing to automate. And we’ve been on a steady march throughout the years. Another example has to do with our clusters – a cluster is just some number of servers doing a certain type of function in our infrastructure – and the process of “turning up,” or getting the thing ready to go. There’s a lot of configuration involved, installing software, and making sure the right things are talking to each other, and when I got to Facebook in 2009, it was all done manually. We literally would just write on a whiteboard: this is assigned to Jay, this is assigned to Bob, this is assigned to Sally, this is assigned to Phil — and then realize, “Oh wait, Phil can’t do his thing until Bob is done doing his thing,” and draw an arrow to show the dependency. It was time consuming, but more important, it was error-prone. And what if Bob was out and George substituted for him? Later we’d be scratching our heads: “Why does this thing behave a little bit differently?”

You don’t have to worry about that with automation, because work consistently gets done in the same way every time. And cluster turn-ups which used to take three or four months now can be done in the course of a week – sometimes in just a couple of days.

And, I presume, with fewer people.

On that point, a third example I’ll give has to do with “break/fixes.” We have this fleet of servers that is pretty large, and things do break in a data center. So we have done a lot of work on the software automation side of this, to the point that we only need one technician in the data center for every 25,000 servers. That is a ratio that is basically unheard of. Most IT shops have ratios of one to 200, or one to 500. But the point of all of this automation is that it allows us to take very simple but time-consuming tasks and move them off the plates of our really smart people. We’d rather have them thinking about the next two years coming than the last two years of stuff we’ve already built.

So this notion of augmenting your people and enabling them up to take on more interesting work – that is really what drives the automation agenda?

The reason why the automation is so important is that it does free up these teams to go think about and do things for the future. If you think about it, most tech companies in the world today are spending an incredible amount of time competing for the best of the best in the world. For a smart person in tech, there are just a lot of fun companies with fun problems to go work on. So once you’ve worked so hard to get people into the company and to ramp them up and to understand your environment, you want to keep them. You want to have them be engaged. You want them to grow and develop their careers and stay with you for this ride that is scale over a really long period of time.

I think one of the major ways you do this is by continuing to keep them out of their comfort zone. If they end up doing “humdrum” work for a long time, they’re not learning anything, yet they’re spending a lot of time doing it. That leads to burnout and unhappiness, and then they’re going to go somewhere else. So, I think, if growing your company depends on keeping these brilliant technologists engaged, the necessity is that you have to keep automating and rearchitecting your systems so that things don’t become boring, monotonous, and repetitive. Automation serves your talent objectives.

Usually engineering and operations leaders are more obsessed with efficiency – not so focused on maximizing people’s happiness.

A lot of companies also get very caught up in structures around operations. They say to one team: you have the keys to do this – but if you want to do this, you have to go to another team to do it. My belief is that you’ve just got to hire good people, and then break down those traditional organizational barriers to getting things done. If the people are really good, you can base your approach on the assumption that they’re all trying to do what’s best for the company. Put them together, give them some goals, and then just let them go.

Otherwise, you put them in a position where one team, in order to hit its goals, always wants to make changes, and another team only wants to make everything stable and cost-effective. Those two are completely opposed to each other. So you’re setting up tens, dozens, hundreds of people just to be constantly butting heads. Yet that is a very common org structure: Here’s the product teams, here’s the middleware and back-end engineering teams, here’s an operations team, here’s a security team, here’s an IT team. And it used to be that way at Facebook. When I showed up at Facebook in 2009, this is what I saw and I thought is was perfectly reasonable. It was this way when I was at Akamai, it was this way when I got to Ning.

I’m sensing you changed that.

We realized we had to demolish it all, because it was causing inefficiencies in our operations. It was slowing us down. We weren’t making the best decisions possible. Sometimes we were making decisions that were short-term cost based, when we should have been basing them on what we would need to be ready for a year from now. In other places, the focus on automation wasn’t there, because it wasn’t a team’s own responsibility. Questions about automation were being tossed to a small team of people who just weren’t going to keep up with this swarm of engineers that we were hiring. We had to rethink the entire organizational structure, and the types of people we were hiring, to break up all these different sort of walls.

Do you still separate the teams working on innovations from the teams maintaining today’s core business?

No, we come up with what we call big bets as a team, planning the investments in technology that will take one or two or three years to build. For example, we built a new compiler that runs the front end of our site. It took us a couple of years to build and that R&D effort was done in parallel, in the same team that was maintaining the existing run time that was running the live Facebook. It absolutely wasn’t that there was one team separate, working on the new thing, and another team stuck behind with the old thing.

Most management gurus tell you to separate that team, to give the innovation a chance to take off. That must have been hard to manage, having the two things going on at once.

It is hard to manage. There are interruptions coming in every day that want to take you away from that long-term goal. You really have to make sure you have the right team, with all the skill sets and the diversity you need. You have to be a little flexible on deadlines, and build in a little bit of wiggle room in case the interrupts don’t play in your favor.

But meanwhile there are so many benefits — starting with the fact that it’s done in a much more open way. No one likes it when there’s a team working in some secure undisclosed location “doing something really cool that is going to replace what you’ve got.” It’s a tough thing to manage on both ends. The innovation team worries: “We’re not making any impact now – they’ve just stuffed us in a corner and told us go deliver something great.” And the core business team you’re depending on to deal with problems and customer support issues and all the urgent things that come up, is saying, “When do we get to work on something cool? Are we second-class citizens or something?”

That emphasis on openness seems appropriate for Facebook.

I think in younger tech companies like Facebook, the culture is more open. There are very few things that are done in secrecy. Mark [Zuckerberg] has always set up the company to be a very transparent and communicative team or environment. For example, he does a Q&A with the entire company every Friday, and encourages us to ask hard questions; he really wants to reinforce that we’re open, we’re one team. And of course it’s consistent with the mission of the company: to connect everyone on the planet. That has been there, consistent, for a long time and we really believe in it. So everything we talk about and do in operations needs to connect to how we’re going to get that done. It all needs to tie in.

Are the People Who Take Vacations the Ones Who Get Promoted?

Photo by Andrew Nguyen

Too many people limit their happiness and success by assuming that taking time off from work will send a negative message to their manager and slow their career advancement. But new research, says that the exact opposite is true. Taking a vacation can actually increase the likelihood of getting a raise or a promotion.

For the past two years, I’ve been partnering with the U.S. Travel Association to promote the business case for taking time off from work. Their new initiative, Project: Time Off, is one of the most robust examinations of how vacations affect companies and employees alike. Their analysis has found that Americans are taking less vacation time than at any point in the last four decades. Why? According to Gary Oster, Managing Director of Project: Time Off, “Many people don’t take time off because they think that it will negatively impact their manager’s perception of them. But, that isn’t the case at all.”

If you or someone you know needs to be convinced to use your vacation time, here’s a list of reasons why it just makes good business sense:

1. Taking a vacation increases your chances of getting a raise or promotion.

According to Project: Time Off, people who take all of their vacation time have a 6.5% higher chance of getting a promotion or a raise than people who leave 11 or more days of paid time off on the table. That percentage may sound small (and it is a correlation versus a causation), but it is the polar opposite of the idea that staying at work might mean getting ahead. It simply doesn’t.

2. A positive, engaged brain improves important business metrics.

In The Happiness Advantage, I describe research that shows that when the brain can think positively, productivity improves by 31%, sales increase by 37%, and creativity and revenues can triple. In fact, the conclusion of my HBR magazine article, “Positive Intelligence,” which was based on a decade of research, was that “the greatest competitive advantage in the modern economy is a positive and engaged brain.” To be truly engaged at work, your brain needs periodic breaks to gain fresh perspective and energy.

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But not all vacations are created equally. Consider research that shows that the average vacation yields no improvement in people’s levels of energy or happiness upon returning to work. In these cases, it wasn’t the time away that caused the negative or neutral impact, it was the travel stress. In a study of over 400 travelers from around the world, Michelle Gielan from the Institute for Applied Positive Research and I found a strong negative correlation between travel stress and happiness. However, we also found that 94% of vacations result in higher levels of happiness and energy if you 1) plan a month in advance and prepare your coworkers for your time away, 2) go outside your city (the further the better), 3) met with a local host or other knowledgeable guide at the location, and 4) have the travel details set before going. Smart vacations lead to greater happiness and energy at work, and therefore, greater productivity, intelligence and resilience.

3. Your manager will perceive you as more productive.

According to research done by the U.S. Travel Association, managers associate personal happiness with productivity. In fact, when asked what vacation time benefit would motivate managers to talk to their employees about using more vacation days, the top benefit was increased personal happiness (31%), followed by productivity (21%). Why does happiness win out? Because most managers understand that happy employees are more productive and collaborative.

4. Not taking time off means giving yourself a pay cut.

There’s no research necessary for this one; it’s just simple economics. If you’re a salaried employee, and if paid vacation is part of your compensation package, you’re essentially taking a voluntary pay cut when you work instead of taking that vacation time. Why would anyone do that? Four out of 10 employees say that they can’t take their vacation because they have too much work to do. But, think about it this way: Whether or not you take a vacation, you’re still going to have a lot of work to do. Life is finite, and work is infinite.

But what if you work in a culture that’s just not supportive of taking vacations? In that case, it’s time to come together with your coworkers and create a new social script that says: “Of course we take all our paid days off, because we want greater happiness and success at work.” This gives everyone license to benefit from time off. Once the social script allows it, your decision to become happier becomes much easier.

Start changing the conversation in your own company right now, simply by sharing this research. Then, start planning your next vacation. It’s good for you, and your career.

To Grow a Digital Business, Learn from the Startup Community

It’s becoming increasingly clear that in the second phase of digital transformation, you can’t go it alone.

By second phase, I mean the creation of entirely new offerings that are possible only because of digital technology. The second phase is distinct from the familiar first phase, in which traditional offerings such as print articles are digitized and, in many cases, offered online.

The second phase is proving much more unpredictable, even in segments such as books, newspapers, music, and movies that are most easily suited to digital transformation. Most of us couldn’t have foreseen many of those segments’ second-phase products: live blogs, interactive content, streaming music, playlists, and peer-to-peer banking services such as those offered by Transferwise and Zopa.

The conundrum for incumbent companies is that they can’t very well capitalize on change if they can’t envision what change will look like.

What seems certain is that if you’re managing an incumbent company, you cannot predict, much less invent, the future on your own. Your employees are held back by a predigital worldview, and for the most part they lack the skills to develop cutting-edge digital offerings. So companies are increasingly seeking ways to tap into the creative milieu of the start-up world.

One option is to buy your way in. WPP, the world’s largest marketing-services company, has bought more than 400 digital businesses over the past decade, and it gives them sufficient autonomy that they continue to grow; around 40% of the company’s revenues now come from digital offerings.

You can also try to buy digital talent, but for that approach to work you need to give the people you hire a compelling reason to work for you. The Guardian newspaper, for example, has done a good job of integrating newly hired “techies” with journalists and commercial teams to create interactive content on its website.

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The most ambitious approach is to work proactively with the start-up community — investing in new companies, working with entrepreneurs, and learning from them along the way.

Consider the Irish Times. As with other newspapers, its traditional sources of revenue were being eroded and it was on the lookout for new ways of attracting readers and advertisers to its web site. Its executives recognized that there was enormous scope to reinvent advertising online — to move beyond the traditional banner ads and pop-ups — but they didn’t know how to do it.

So in 2011, the publication launched a new model, called FUSION, for working with start-ups, welcoming a select group of new ventures into the Irish Times offices to help the company develop new digital offerings. The idea was that if you create cool user experiences online — a game, a search tool, a community-building site — then opportunities for new advertising inventory will follow. In 2012, the company selected five out of 105 applicants; in the subsequent year 20 were chosen out of 130. The start-ups were offered space inside the Irish Times buildings. A limited amount of financial and professional support was available, but there was no offer of equity investment from the company.

Johnny Ryan, the executive who created FUSION, saw it as a “validator” rather than an incubator: It forced the start-ups to face the hazards of the market, but with support from peers and mentors. For the Irish Times, it was an opportunity to get closer to the cutting edge of innovation in the advertising industry, and to act as a culture-change program for the established business. Several of the start-ups have now become viable businesses, new advertising inventory has been created for the Irish Times, and FUSION has been sold to Allied Irish Bank rebranded as the “AIB start-up academy.”

The Irish Times is not alone in working with start-ups to accelerate its own digital growth. Barclays Bank has invested in more than 20 start-ups in the last couple of years. Wells Fargo, Disney, and Microsoft have their own accelerators. In all these cases, investing in start-ups is a useful first step in making sense of a fast-changing digital world. Corporate executives are getting smarter and bolder in their approach to digital transformation.

Some industries, meanwhile, are way back on the learning curve. Business education — a field near to my heart — is one of them. B-schools and business-book publishers are creating digital offerings, such as MOOCs, but these are clearly part of the first phase of transformation, where standard products (lectures, articles) are converted to digital. I don’t think anyone knows what the future of business education looks like, and it seems highly unlikely that I or any of my academic peers will invent it. Do we have the courage to open up to outsiders to help us with the second phase of digital transformation?

Online Platforms Are Leveling the Playing Field for Global Job Seekers

LinkedIn, the world’s largest professional network, recently started asking members in non-English speaking countries if they’d like to take the EF Standard English Test (EFSET) and share their scores on their profiles. The pilot program, which launched this spring, aims to help professionals around the world certify and promote their English language skills.

This collaboration seems to be the latest development in a trend we’re calling the “democratization of credentialing.” This has emerged in the past few years, as both major universities and new education startups have begun to offer more online services for people looking to learn and certify skills. These are making it easier to acquire, develop, and promote new skills, and they are transforming how job seekers – especially in technology – get noticed and how companies recruit. Ultimately, this will affect the value placed on traditional credentials, such as college degrees and English language certifications.

While credentials are meant to signal what someone is able to do, they can also limit opportunities for job-seekers who have taken less traditional career paths, are looking to switch careers, or simply want to upgrade their technical skills for career advancement. The old-fashioned credentialing system also penalizes people who can’t afford formal education or don’t have access to it.

We know that credentials tend to be expensive. For example, a traditional English proficiency test, such as the IELTS or TOEFL, can cost upwards of $300. A college degree, of course, costs tens of thousands more. That’s not to say that getting a bachelor’s degree or taking a traditional standardized test isn’t valuable. But acknowledging only these experiences makes it challenging for people who perhaps couldn’t pay for a traditional credential and instead acquired skills through a different route, such as on-the-job experience. Plus, many people around the world don’t have access to certain courses, test-taking centers, and other educational resources. And then there’s the question of relevance. A computer science degree doesn’t have an exclusive relationship with coding ability. While it’s certainly useful, coders who have degrees don’t seem to end up making more than coders who don’t.

The democratization of credentialing has the potential to get rid of these barriers. There’s no intrinsic reason that high-quality credentials also need to be expensive and hard to access. Top technology firms are hiring graduates of new coding-oriented programs like General Assembly and Hack Reactor. Many employers are beginning to trust Coursera certifications, and the online education platform recently formed partnerships with a number of tech companies, including Google and Instagram, in order to offer more intensive microdegree courses. Udacity partnered with Georgia Tech and AT&T to launch an online computer science master’s program that costs just $7,000.

These kinds of programs do face challenges that will need to be addressed. Certain subjects are easier to teach online than others. Student retention can be poor. And online credentialing introduces opportunities to cheat—I can have a friend take a test or complete a course in my name.

In the long run, though, things like English proficiency or programming expertise are hard to fake. So we can’t let these challenges distract us from the opportunities. Most employers would agree that in today’s increasingly tech-oriented economies, only the skills should matter. Platforms like Coursera, HBX, EFSET, and LinkedIn do have the potential to usher in new, democratic forms of credentialing. The education and certification tools they offer tend to be free or low-cost, and they’re all available online, which grants access to a large, and rapidly growing, chunk of the world’s population.

All of this is good news for job-seekers — especially those who have the skills but lack the formal credentials — who want to get employers’ attention or acquire new skills in a more flexible way. As this trend continues, they stand to benefit from:

A more level playing field. Online credentials are available to millions of people who cannot access more traditional routes. The reasons for this — whether they’re financial, geographical, etc. —have little to do with talent or ability. So when more value is placed on a person’s skills, as opposed to his or her background, more applicants will have opportunities to get noticed.

More career advancement opportunities. Traditional credentialing methods rarely let you target a specific skill, and the costs can make them risky. The expansion of free online learning and credentialing tools, like LinkedIn’s collaboration with EFSET, makes it easier for people to pick up new skills and adapt quickly to changes in employer demand. They are more conducive to exploration, because they can be tailored to very specific skills—such as proficiency in English or facility with Ruby on Rails or mastery of comma rules. And since they’re free or low-cost, you can try something out with little cost if you fail.

New and reliable credential sources. It can be confusing to keep track of all the programs that offer credentials, both online and off. But as more trusted organizations follow LinkedIn’s lead and partner with online credential providers, they’ll winnow out less useful online resources, helping job-seekers and employers identify the best tools.

Democratized credentials open up new pools of talent. For companies and for job-seekers alike, the ultimate goal isn’t to collect gold stars. It’s to reveal what an individual actually knows, and what she’s able to do. Ideally, a credential isn’t an arbitrary gateway, but an opportunity.

Huawei’s Culture Is the Key to Its Success

Today, Huawei is the only Chinese company – out of the 91 mainland Chinese companies listed on the Fortune Global 500 list – earning more revenue abroad than in China. Huawei’s revenue from overseas markets exceeded that from the Chinese market for the first time in 2005. In 2012, Huawei surpassed Ericsson – at that time the world leader in telecommunications and networks – in terms of sales revenue and net profit, and this trend continued in the fiscal year of 2014 when Huawei reached an all-time high sales revenue of $46.5 billion and net profits of $4.49 billion (both in U.S. dollars).

What makes it so successful? As the saying goes, “Success has many fathers.” But as with many great companies, we find part of the solution to this puzzle by looking at the specific values that define the culture of Huawei. Having interviewed people working for Huawei, reading articles, letters and keynotes by the founder Ren Zhengfei, and finally interviewing Ren Zhengfei allowed us to understand the foundation of Huawei’s value-driven culture.

Customer-First Attitude

Strong leaders provide a sense of purpose to their people, and Ren Zhengfei is no exception. His first and foremost concern is the customer. Many companies adopt a customer-focused attitude, but how many of them truly live it? Huawei distinguishes itself from the competition in this regard. In our conversation, Ren Zhengfei mentioned repeatedly how in the early years of Huawei everyone in the company had to turn their eyes to the customers and their backs to the bosses. For example, several years ago an institutional investor delegation led by Stephen Roach, chief economist for Morgan Stanley, visited the Huawei’s headquarters in Shenzhen. Such visits were usually made by venture investors hoping to get a buy-in to Huawei. Ren Zhengfei asked Fei Min, his executive vice president of R&D, to entertain the delegation. Later, Roach said, in disappointment, “He was rejecting a team with $3 trillion.” The explanation by Ren Zhengfei was quite telling: he told us that he would meet any customer in person, no matter how small they were, but that Roach was not a customer.

Another example of this customer-first attitude comes from another early episode in their history that’s since become something of a company legend. In desert and rural areas in China, rats often gnawed the telecom wires, severing customers’ connections. The multinational telecom companies providing service at that time did not consider this to be their problem, but rather that of the customer. Huawei, in contrast, viewed the rat problem as one the company had the responsibility to solve. In doing so, they acquired extensive experience in developing sturdier equipment and materials – such as chew-proof wires — which helped them later on to gain several big business accounts in the Middle East, where similar problems stymied the multinational firms.

Since then, there have been other projects where Huawei experienced severe climate challenges, such as building the highest wireless communication base station in the world (6,500 meters high on Mount Everest) and building the first GSM network within the Arctic circle. These, too, have helped acquire useful knowledge. For example, when Huawei expanded their 3G market in Europe, they noticed that European carriers expected base stations to be more compact, easier to install, greener, and more energy efficient, while offering wider coverage. Based on these customer needs, Huawei became the first company to launch the concept of distributed base stations that enables radio access for large to small private networks. This innovation made it cheaper for carriers to deploy base stations, and was popular with European carriers.

Employee Dedication

Huawei emphasizes that the only way to obtain opportunities is through hard work. For example, in the early years of the company, every new employee was given a blanket and a mattress. Many of them would work late into the night, then sleep in their offices, perhaps taking a catnap during lunch again the next day. As one Huawei employee said: “The pads were to us a representation of hard work in the old days and this idea has now been translated into the spirit of being dedicated to do the best in anything we do”.

Knowing that a dedicated and committed work force makes companies more competitive is not a too difficult concept to understand. The way to promote dedication and make it accepted by its employees – as it is the case in Huawei – is, however, a more difficult nut to crack. Huawei does it in part with the type of incentive performance system the company employs. Huawei is not a public company, and is in fact owned by the employees. Ren Zhengfei’s shares account for nearly 1.4% of the company’s total, and 82,471 employees hold the rest (as stated in Huawei’s 2014 Annual report). This employee shareholding system is referred to within Huawei as the “silver handcuff.” It is a system that is different from the more common stock option arrangement, which is often termed the “golden handcuff.” The idea underlying this scheme is that Ren Zhengfei wants to share both responsibilities and benefits with his colleagues. As he puts it, he wants everyone to act like the boss. Important to note, however, is that that only those who perform well enough qualify to participate.

There’s a shared belief within the company that an IPO would result in only a few people getting very rich, and the majority losing their motivation. Ren Zhengfei has emphasized that avoiding an IPO and hewing to the current employee-ownership structure is what helps the company maintain a strong collective fighting spirit.

Long-Term Thinking

The employee-ownership arrangement not only helps Huawei attract and retain dedicated employees, but also allows the company to plan for the long term. Ren Zhengfei has also credited it with allowing them to stay close to their goals and long-term vision. For example, Huawei plans the development of the company by decade, whereas most of their competitors such as Ericsson and Motorola plan it by financial quarter or year. Being privately held has allowed Huawei to work on its 10-year plans, while its competitors struggle to follow near-term fluctuations of the capital market.

For example, Huawei has introduced the use of a rotating CEO system in which three deputy chairmen take turns acting as CEO for six months each. At the same, time Ren Zhengfei maintains his oversight role, acting as a mentor and coach for the acting CEO. This innovative management structure is inspired by a book on new leadership called Flight of the Buffalo (authors James Belasco and Ralph Stayer). While it will make the company less vulnerable if one chief fails or derails, it’s hard to imagine a publicly held company getting away with such an unusual plan.

Gradual Decision-Making

Ren Zhengfei is known for avoiding quick decisions and forcing himself to take time to reflect. His company reflects these traits. Again, he ties this in part back to their ownership structure: it keeps the decision-making power under company control – no outside investor will gain relative control over Huawei. As we’ve seen, they have much more freedom and less pressure from the market to consider their next steps to take. Their system of rotating CEOs helps support a gradual, more democratic decision-making process. It also helps Ren Zhengfei make a gradual decision about his ultimate successor.

Huawei also emphasizes what they call “the power of thinking.” The company philosophy is that the most valuable thing is the power to think. For example, efforts are made to ensure that intellectual exchange happens as a matter of routine. Executives are urged to read books outside their area of expertise and books have to be present in each office. Furthermore, ideas are communicated frequently to every employee by both senior executives and Ren Zhengfei. Importantly, however, and demonstrating the international character of a once-Chinese company, feedback is always invited across the company to improve those ideas that will ultimately feed the future vision of the company.

As many people know, Ren Zhengfei is a man with an army background – he served in the People’s Liberation Army – an experience he credits for his drive to fight and survive, qualities that are reflected in one of his favorite slogans in the early days of Huawei: We shall drink to our heart’s content to celebrate our success (ren sheng de yi xu jin huan), but if we should fail let’s fight to our utmost until we all die (ju gong jin cui, si er hou yi). So far, Huawei has had many successes to celebrate.

What the Media Industry Can Teach Us About Digital Business Models

It has been a great 20 years for U.S. media innovators, with hundreds of billions of dollars created by companies that are helping democratize content production and distribution while developing new ways to connect advertisers and customers. Google and its disruptive advertising model leads the pack with a $370 billion market capitalization, but consider also companies like Facebook ($225 billion), LinkedIn ($25 billion), Twitter ($24 billion), TripAdvisor ($11 billion), and Yelp ($3 billion).

Of course, for most traditional publishing incumbents, “great” is not the word that springs to mind. The U.S. newspaper industry has seen widespread bankruptcies and significant job losses. Only a handful of companies that primarily focus on traditional print publications still exist, such as The New York Times Company, E.W. Scripps, McClatchy, and A.H. Belo. The combined market value of those four companies? Less than $5 billion.

Why has this been the best of times for some in media and the worst of time for others? The answer reveals the critical role business models play in determining competitive winners in times of disruptive change.

Media executive Jeffrey Zucker once famously quipped that media companies embracing online disruption faced the unappealing prospect of “trading analog dollars for digital pennies” (Zucker now says it’s closer to quarters than pennies). The basic point was that online advertising was too small, and that transaction sizes were too insignificant to be anything other than a step down for companies used to rich cash flows.

But there is nothing inherently wrong with digital pennies, if you have the right business model. After all, media disruptors have shown paths to profits by amalgamating large numbers of small transactions – from Google Adwords to Facebook’s hypertargeted ads. Zucker’s dilemma only exists if digital pennies, nickels, dimes, or quarters are running through analog business models.

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And that’s the crux of the challenge that traditional media has faced: grappling with digital disruption requires reframing the challenge from a technological challenge to a business model one. Unfortunately, that makes the problem harder, not easier, as business models are often hard-wired in what our colleague Mark Johnson dubs an organization’s rules, norms, and metrics, making shifts difficult to execute.

Zooming in on the sales challenge helps to highlight the difficulty of business model innovation. Think about the highly successful model newspapers historically followed: Journalists would develop unique content to attract wide swaths of readers, and sales reps would sell advertising to people hoping to reach those readers. Those advertisements could be “display” advertisements to build a company’s brand, promote a particular product, or detail a limited-time discount, or they could be “classified” advertisements briefly describing an item for sale or an open job posting (as innocent as classified ads appear, for many newspaper companies they contributed a significant portion of profits).

Superficially, the disruptors do the exact same thing: draw users and serve advertisers. But the underlying way in which they create, deliver, and capture value is substantially different. Instead of having journalists developing content, disruptors largely feature platforms that simplify content creation and distribution. Rather than sell advertisements targeting broad groups, disruptors parlay sophisticated information about individual users into hyper-targeted promotions. Google, for example, doesn’t produce any original content. Its powerful search engine serves as a platform that instantaneously brings others’ content to users. Companies use its AdWords offering to bid for the right to tie advertisements to particular search words and pay Google based on the number of times users click on a link.

It seems logical to assume that all incumbents need to do is point their existing sales force in a disruptive direction. Unfortunately, it’s not that simple.

One complicating factor is that disruption almost always changes how to make money. Imagine a New York Times sales rep with a $1,000,000 target. Historically, she might get there by pushing full page, color advertisements in the weekly magazine, which cost about $100,000 each. Getting to $1,000,000 online might require 10,000 customers who pay $100 each. Executives face a no-win situation. If they shift incentives away from today’s business, they hasten its decline and threaten investment-supporting profits. If they don’t, they miss meaningfully participating in tomorrow’s profit streams.

Second, the buyer can change substantially. Today, digital advertising increasingly involves mastering complex algorithms and engaging with an emerging ecosystem of players such as real-time bidding platforms that continuously update prices. A sales rep might at best lack relationships with more analytically sophisticated buyers, and at worst might lack the skills and training to connect with and serve these buyers.

It’s also possible that the entire paradigm of a “sales force” is wrong. As Google’s popular search-based advertising began to take off about a decade ago, many newspaper executives said they were unworried because they had something Google didn’t: “feet on the street” in local markets. However, one of Google’s big advantages was a self-service platform that allowed small business owners to easily customize campaigns. Innosight has been a customer of Google’s for more than a decade and has never spoken to a human being.

Focusing on the sales and distribution challenge highlights a broader issue incumbents face when they encounter developments. It is natural and appropriate to seek to leverage existing assets and capabilities. But never forget that every corporate capability comes with a corresponding disability. Retooling your existing sales or content capability may be less effective ultimately than building new parallel capabilities designed specifically to pursue digital strategies; what feels like a redundant investment might be a critical enabler of successful competitive response.

So, what to do in the face of digital disruption? The knee jerk reaction is to give new digital units significant autonomy. Indeed, a persistent finding across the newspaper industry is that top performing digital units almost all have substantial autonomy, both in terms of how content is created and perhaps even more importantly, in terms of their sales and distribution channel. But the answer is more complicated than that. Our experience dealing with disruption across a range of industries suggests four recommendations to leaders:

Don’t choose between using digital technologies as a way to improve existing operations or using digital as a platform for new growth. Rather, use digital both to optimize today (what we have previously called “Transformation A”) and to create tomorrow (“Transformation B”).
Sketch out blueprints of the ideal business model for both A and B based on the job the customer needs to get done, not on your current set of capabilities.
Develop an honest capabilities balance sheet, highlighting both strengths and weaknesses, and compare it to your blueprinted business models. Some assets, like a brand, might make sense to use across A and B. Others, like sales representatives, might need to be duplicated. Historical strengths, like content creation, might need to be radically reconfigured or shared across organizations only with a great deal of care. New strengths, such as data analytics, might need to be built or acquired.
Be prepared to actively arbitrate between A and B. Without active intervention, even well-intentioned efforts can result in unintentionally replicating the past, versus creating the future.

There’s a reason Innosight Advisor Clark Gilbert, who demonstrated the value of this approach as he transformed the Deseret News and Digital Media, calls this the toughest problem in business today. It’s also the greatest opportunity in business today, because disruption always grows markets, even as it reconfigures business models.

Your Company’s Networks Might Matter More than Its Strategy

In a classic Harvard Business Review article, Abraham Zaleznick contrasted two very different styles of authority.  Managers, he argued, take a rational approach and seek order and control.  Leaders, on the other hand, are more emotionally driven and seek to drive change.

Every organization needs both.  Managers provide the continuity needed to execute efficiently and leaders drive the kinetic energy needed to respond dynamically to the needs of the marketplace.  The best CEOs, like Steve Jobs and A.G. Lafley, are both great managers and great leaders.

Today, however, the most important capabilities and resources often lie outside of an organization.  So executives need to leverage platforms in order to access ecosystems. Therefore, the ability to manage operations and the capacity to inspire employees is no longer enough.  Today, we must learn how to shape networks around a shared purpose.

Consider the case of Blockbuster, whose CEO John Antioco had proven himself as both a manager and a leader.  Starting his career as a trainee at 7-11, he worked his way quickly through the ranks, gaining a reputation for operational excellence.  Later, he pulled off impressive turnarounds at Circle K convenience stores and Taco Bell before taking the top job at Blockbuster.

He was also innovative.  By convincing the movie studios to share rental revenues rather than paying them upfront, he effectively turned them into partners and transformed the economics of the industry.  Once again, he had turned around a struggling company, transformed its business model and made its operations hum.

When Netflix emerged as a disruptive threat, Antioco met it head on.  He eliminated the late fees that alienated customers and invested heavily in a digital platform that could compete head on. Before long, Blockbuster was gaining nearly half of all new subscribers in the online rental market.

He then launched Total Access, a service that allowed customers to use the Web and retail stores interchangeably.  It was something Netflix couldn’t match and Blockbuster’s online membership doubled in six weeks. Now, Blockbuster had the superior model but, as Antioco explained in an article in Harvard Business Review, it was all for naught.

The problem wasn’t that the Blockbuster couldn’t compete, but rather that its internal networks rejected the changes. Franchisees, fearful of the risk to their livelihoods, and investors, disappointed by decreasing margins, balked.  Antioco was fired, late fees were reinstated, investment in the digital platform was all but eliminated and the company went bankrupt in 2010, three years later.

Around the same time that John Antioco was battling it out with Netflix, General Stanley McChrystal was facing his own disruptive threat.  Although, as Commander of the US Special Forces, he led the world’s most capable force, he was losing the war to AQI (Al Qaeda in Iraq), a ragtag bunch of extremists.

The problem wasn’t that AQI had capabilities that his organization lacked—or that they had a greater will to fight—but that the battlefield had changed.  It was no longer enough to operate effectively, his forces now had to adapt—in real time—to an enemy that seemed to be able to change form at will.

As McChrystal describes in Team of Teams, the challenge wasn’t so much that he needed to develop new resources, but that he had to access surveillance and intelligence assets —many of which were not under his direct control—more effectively.  All too often, valuable information would sit for days, or even weeks, before anyone even took a look at it.

Even worse, like his own teams, partner agencies had their own cultures, procedures, objectives and esprit de corps.  In isolation, these factors led to operational excellence, but they also created barriers to collaboration.  If he was to succeed, McChrystal knew that he not only needed to change how his own forces operated, but outside agencies as well.

To do that, he would need to integrate operations at a scale no one had thought possible.  As the General himself put it, “It takes a network to defeat a network.”

The key to McChrystal’s eventual success lay in a series of studies done by Solomon Asch in the 1950’s.  Faced with an overwhelmingly majority opinion, subjects would conform their own views even if it was clear that the prevailing view was wrong.  Further, he found that this conformity effect broke down quickly when exposed to a diversity of opinions.

Effective execution is not wholly dependent on capabilities and procedures, but also a set of beliefs.  Close-knit teams learn to see things in terms of their own challenges.  So McChrystal’s teams, as well as those of his partners, were optimized to perform against their own objectives, yet often failed to take into account the broader mission.

In order to effectively integrate the disparate units into an effectively integrated “team of teams,” each had to go beyond its own share of the task “see the system.”  McChrystal understood that no amount of planning or strategy could achieve that; it had to come through personal contact.

So he designed a series of initiatives to do just that. The physical command space was transformed to encourage interaction and collaboration.  He began to embed highly trained commandos with intelligence analysts—and vice versa—for six-month stints. Liaison officer positions—previously neglected—were now only given to top performers.

As in the Asch studies, when exposed to new relationships, long held beliefs began to change and a new outlook began to emerge, this time based on the overall mission rather than internal rivalries.

While formal structure and traditional lines of authority stayed very much in place, operating principles changed markedly. The transformation wasn’t immediate, but soon personal relationships and shared purpose replaced rules, procedures and internal rivalries.  Even those resistant to change found themselves outnumbered and began alter their views.

That allowed McChrystal to also change the way he led.  While in traditional organizations information is passed up through the chain of command and decisions are made at the top, McChrystal saw that model could be flipped.  Now, he helped information get to the right place and decisions could be made lower down.  As a result, operating efficiency increased by a factor of seventeen.

Successful movements don’t just convert, they connect and that’s what drives lasting change.  It is never enough to gather together a small group of true believers, because to achieve anything of any significance, larger networks must be brought to bear.

And that, in the final analysis, is the difference between John Antioco and Stanley McChrystal.  Where Antioco had to overcome resistance to his plan for change, McChrystal networked his organization so that it could adapt to change.  Because he forged a shared purpose among various constituencies, he didn’t need to drive transformation, merely facilitate it.

In the Blockbuster case, a successful CEO was faced with a disruptive threat and came up with a successful market strategy.  However, because the networks within his organization (e.g. franchisees and investors as well as, to a lesser extent, internal operations people), the plan failed.

McChrystal, on the other hand, focused on creating a shared purpose among his internal networks and the strategy took care of itself.  In effect the structure, rather than the plan, was the strategy.

McChrystal writes that “the role of the leader was no more that of controlling puppet master, but of an empathetic crafter of culture,” and there’s more than a little truth to that.  But it was his ability to shape networks that allowed that culture to spread and, in doing so, enhanced his ability to both manage and lead.

How to Manage Your Team’s Vacation Requests

There are words that no manager wants to hear from his most valued employees:  ‘’I missed the deadline, ‘’ ‘’I’m being wooed by our top competitor, ‘’ or… ‘’I’m planning my vacation.’’

Few managers might admit that that last statement can cause the same temporary panic as the first two, but all too often it’s true.  I will confess that as a new manager, years ago, my heart always sank just a little bit when someone on my team told me they were hoping to plan a long vacation.  The ugly reality of being one or — gasp! — two, key players down during any crucial time was difficult for everyone.  Few companies today are overstaffed or have budget money allocated for temporary employees so that vacations don’t take a toll on the team. The work still needs to get done and that often involves everyone, including  the vacationing employee, who might be asked to “check in” or work extra hard before taking off  to make sure all their work is covered. The employee handbook may encourage vacation, but managers send all kinds of subtle signals to our teams that it would be easier if they didn’t make that a priority. How many people do you know who have a continual vacation “carry over” balance because they never get around to taking what they’re entitled to? A Glassdoor survey found that only 26% of Americans take all their vacation time.

But with time and experience, I realized becoming a better vacation manager was actually far more important than the challenges of enduring a temporary gap in staffing.  Not only are employees entitled to the time off, but research shows that taking it is critical for both their engagement and to avoid long-term burnout.  ‘’It really does build resilience,’’ observes Monique Valcour, a professor of management at EDHEC Business School in France whose research, teaching, and consulting focuses on helping companies and individuals craft high-performance, meaningful jobs, careers, workplaces, and lives.

My own sense is that the older generations are far more reluctant to take all of their entitled vacation days than Millennials, who seem to recognize that vacations are a critical part of their desired work-life balance.  But even highly motivated, high potentials benefit from time away from the office, even if they don’t always realize they do. ‘’We need to restore and rejuvenate,’’ says Stew Friedman, the practice professor of management at Wharton Business School and former head of Ford Motor’s Leadership Development Center. ‘’It’s important.’’

You and Your Team



Vacation

Make the most of your time away.

As a manager, I also realized that figuring out how to cope with the ebb and flow of vacations actually forced me to make sure my team was collaborating and cross-training. In the long run, we were far stronger as a group if no one person was so critical to the mission that we couldn’t afford to lose them, either temporarily for a vacation or permanently to another job. As Valcour says, “You don’t want to have anybody with the illusion that they’re the one person who is irreplaceable or that they’re incapable of delegating.’’ If we built in overlap and backup, we were far better positioned for future curve-balls, I learned. And, as it turns out, sometimes giving an employee a slightly different set of tasks provides a welcome change of pace or the taste of areas they’d like to grow.

But even if you want to be a pro vacation manager, it’s still difficult to know how to do that fairly for your entire team. What if one employee wants a bucket-list vacation to Asia at the same time another is planning a dream wedding? Employees with school-aged children start with limits that may make those with more life flexibility feel that they always get the short straw. How can you get the balance right and be fair to everyone? Friedman and Valcour advise:

Plan vacations collectively. ‘It doesn’t make sense to have one person, a supervisor, approving or disapproving alone in his or her office,’’ Valcour observes. Instead, engage your entire team in working through the problem together. ‘’It’s messier, but it brings the process out into the daylight. You have to make sure the message is that you value vacations and you want everybody to enjoy them, [e.g.] ‘Let’s figure out how we can support each other’s needs for renewal and wellness and avoid anybody feeling resentful.’”  If everyone feels that they’re solving the problems jointly as a team – and that the team will help ensure they get their time off, too – you’ll usually find people willing to step up to make things work.
Don’t be judgmental about how people spend their time off. The employee who is deeply involved in competitive dog shows will be just as recharged by spending a week doing that than the employee who wants nothing more than to sit by a pool at a pricey resort. As a manager, it’s not your job to judge or prioritize how people choose to spend their time off.
Consider a rota system. Use a list to determine who gets to choose their days off first. Next year, the top couple of people go to the bottom of the list, and so on, so that everyone tops the list over time.
Consider a full-scale shutdown. There’s no picking “favorites” if everyone has to take two weeks off at the end of July because the company shuts down – a tactic historically employed by manufacturing plants and European companies, but increasingly American companies are experimenting with the technique as well.
Consider other forms of repose and restoration. As a manager, you might be able to deliver many of the same benefits over the course of the year by looking for other ways for your employees to recharge. ‘’The key is to recognize that one size, as usual, does not fit all. And it can change over the course of your life,’’ says Friedman. “The important thing is to have conversations about what individuals would benefit most from and then how well that fits with the collective interests of your team.’’ When Friedman was head of Ford’s leadership development center, he negotiated that he could spend one day a month out of the office doing something other than his day job. ‘’I’m going to be of more value to you and this business if I’m out in the world, exposed to new ideas, new people, and continuing to grow. I’ll have a richer perspective – and will enrich my sense of trust and commitment to my boss.’’ He tried, in turn, to ensure that the employees who reported to him had opportunities to do the same thing. For some employees, it might be equally powerful to ensure that they had the flexible time to train for a marathon or appear in a community play. The key is figuring out what matters to them and supporting that, as a team.
Take vacation yourself! Remember, as a manager, there are no small gestures. Managers who think they convey the idea that vacations are important for staff, while neglecting their own, actually have the opposite effect. ‘’It’s very important for managers to set the standard,’’ Valcour says. ‘’I’ve heard so many managers say, ‘I support a healthy lifestyle for my staff, it’s just that I, personally, am a workaholic.’ But doing that increases anxiety in your staff. It suggests that people who put in longer hours are more committed than those who don’t. It’s so insidious.’’  Everyone, including you, will be better off if your employees know that you care about their long-term well-being.