Marina Gorbis's Blog, page 1290

The Best Way to Hire from Inside Your Company

A few years ago, I started to notice an interesting trend: Frustrated with finding and integrating good external candidates, organizations were beginning to invest increasing amounts of time, energy, and money into developing their internal hiring capabilities.

There is reason to believe these investments will pay off. Recent research by my Wharton colleague Matthew Bidwell, for example, shows that internal hires routinely outperform external hires.

Internal hiring, however, is not foolproof. In fact, a study by the Corporate Executive Board found that 40% of internal moves involving high-potential employees end in failure. And these are presumably the employees whom the organizations should have the most detailed information about.

My colleagues and I started combing through the literature to better understand what, exactly, is going on here. We found that while advice and research about hiring from the outside is easy to find, information about internal hiring can be difficult to come by.

So we set out to find some answers by analyzing the two primary ways internal hires are made: posting and sponsorship.

Posting is a formal, market-oriented process in which a hiring manager posts an open job to an internal job board and invites interested internal candidates to apply. While less than half of companies posted anything other than blue-collar jobs in the mid-1980s, that figure rose to 60% in 1999 before exploding to over 95% in the mid-to-late-2000s.

However, few internal hires are made that way: Although many companies have adopted policies encouraging managers to post open jobs, few require it, and no state or federal laws require firms to post jobs internally. Managers therefore typically have the option of bypassing the posting process in favor of sponsorship, an informal, relationship-oriented process in which a hiring manager fills an open job with a candidate known through a personal connection. As a result, posting and sponsorship operate side-by-side as equally viable ways to identify potential internal candidates within most firms.

But does one of these processes result in better internal hires? We expected to find that sponsorship would, on average, yield higher-quality hires. After all, research has shown that people typically have better information on colleagues they know well than those they don’t, which should enable us to make better hiring decisions. This is one of the primary reasons organizations rely so heavily on referrals when hiring externally.

Surprisingly, we found the opposite. Using data on more than 11,000 internal hires made between 2007 and 2012 in a Fortune 100 firm, we found that candidates hired through internal postings outperformed sponsored internal hires on nearly every conceivable dimension of quality. They received higher competency and contribution ratings (two different measures of performance) during their first year on the job, and were both more likely to be considered top performers (rated in the Top 25% of the performance distribution of peers in similar jobs) and less likely to be considered poor performers (rated in the bottom 25%).

Moreover, internal candidates hired through internal postings were 20% less likely to quit or be fired during their first two years on the job than sponsored internal candidates.

Why does posting lead managers to make better internal hiring decisions? For starters, even the most connected managers in large organizations cannot be expected to know about every potential candidate for an open job. By enabling employees outside a hiring manager’s personal network to present their qualifications, the posting process reduces the likelihood an exceptional candidate will be overlooked.

In addition, while hiring managers do possess more information on candidates in their personal network, access to information alone is not enough to ensure a good decision; managers must still select which information to use and which information to ignore. Work by Max Bazerman and Dolly Chugh on the concept of “bounded awareness” has identified two common decision-making errors related to managers’ use of information. First, managers often overlook information that could improve their decision-making. The mechanics of posting require a manager to create a formal job description, which in turn establishes a set of criteria against which to evaluate potential candidates, whereas sponsorship lets managers informally mold the job requirements around their preferred candidate rather than evaluating the candidate against the requirements of the job. Having a set of formal evaluation criteria increases the likelihood that a hiring manager will be more likely to both recognize and seek out information that allows her to evaluate a candidate’s ability to perform well in the job.

Second, managers often allow information that is irrelevant to the decision at hand to influence their choice. For example, the fact that a candidate may share similar interests as the hiring manager may bias the decision even if it has little relevance to the candidate’s ability to do the job. Posting reduces the likelihood that this information will influence the hiring decision by embedding a unique form of accountability into the hiring process. And because it forces managers to rely on objective information, postings can help minimize any sense of unfairness that could decrease motivation among other employees.

Some of our other findings were equally interesting. We found, for example, that the posting process holds tremendous promise for transferring valuable knowledge across internal organizational boundaries. Posting is substantially more likely to facilitate moves across divisions, functions, states, cities, and even increases the frequency of moves across buildings within the same city. Employees also appear to feel more empowered to negotiate their salaries when moving through posting, which may help to reduce salary discrepancies between men and women.

While our work suggests that organizations should think seriously about expanding their use of posting to facilitate internal mobility, doing so might meet some resistance — but that might actually be a good thing. Cisco, for example, developed an in-house posting system called Pathfinder in the early 2000s. Many managers complained that this allowed their most valuable employees, employees they had spent substantial time developing, to leave for greener internal pastures. The company’s leadership, however, responded that if a manager didn’t want their best employees to leave, they should get better at managing them.

In other words, an added benefit to posting may be that it creates good bosses, too.

Hidden Suppliers Can Make or Break Your Operations

With the size and complexity of supply chains soaring, a daunting challenge is confronting companies: identifying the critical nodes hidden within the vast expanse of their supply networks. These are suppliers, or supplier sites, that might be in the second-tier or lower, which means the big buying companies would ordinarily have no contact and might not even know exist.

These “nexus suppliers” could be important for one or both of two reasons:

A disruption of its operation would have a surprisingly huge impact on the original-equipment manufacturer’s production. (A much-cited example is how an explosion at a German factory owned by Evonik Industries that supplied 70% of world demand for a type of nylon resin wreaked havoc in the auto industry.)
The supplier possesses critical market information. (For instance, LG Electronics learned by accident that the Taiwan Semiconductor Manufacturing Company (TSMC), which has connections to lots of industries, can provide early signs of changes in economic conditions and, as a result, supply and demand.)

We are the members of a research team at CAPS Research, a joint venture of Arizona State University and the Institute for Supply Management, that is on the verge of creating a way to identify these suppliers by doing three things: creatively applying network concepts, taking advantage of emerging large databases, and utilizing business analytics, the practice of methodically exploring data in an iterative fashion.

The field of operations is becoming more familiar with network concepts such as various types of node centrality measures — a gauge of how critical a node (each supplier) is to the network: e.g., its number of connections, the variety of industries from which these connections come, how quickly it can reach others in the network, and so on. If companies could get their hands on such data for all the members of their supply networks, they could compute centrality measures for all of their suppliers and identify the most critical ones based their scores. Yes, there could be thousands of these nexus suppliers, but we now have the computing power to identify how critical each is.

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Currently, generating a map of supply networks is a daunting task. Many companies and research centers have attempted it and found it to be labor intensive and time consuming. See this article for a description of one that’s being tested at Ford and this one for a sample supply network involving Honda that took several years to complete.

The good news is in the last few years, companies have begun selling large databases that can make this job much easier. We are using Bloomberg Supply Chain Database (SPLC), which keeps track of about 28,000 companies worldwide. Other potential databases include Capital IQ, FactSet Revere, and LexisNexis. For each company, SPLC provides a list of suppliers and customers, based on information revealed in a variety of sources (public filings, industry reports, etc.). For a given buying firm, we can identify all its suppliers, its suppliers’ suppliers, and continue iteratively. We can then use the collected supplier-customer relationships to construct an extensive supply network for the focal firm.

Then we can integrate complicated mathematical measures of centrality to create a nexus supplier index (NSI), which is an aggregate measure of criticality of a supplier in a buying firm’s supply network.

Once we have computed initial NSI scores for all suppliers, we can use business analytics to validate the scores. We have compiled the data for the top three tiers of a particular automotive company to its third-tier and identified over 8,000 suppliers. We have computed NSI scores for second-tier suppliers and are in process of compiling fourth-tier data to compute the NSI’s for third-tier suppliers. We plan to provide a formal CAPS Research report on our effort by September of this year.

Once a buying firm has identified and scored the nodes in its supply chain, it can group its nexus suppliers into different categories according to their distinct network positions and develop and implement suitable strategies to manage each type in order to achieve such objectives as minimizing costs, mitigating risks, increasing responsiveness, and discovering and accelerating the development of potential innovations. Then it can start monitoring its nexus suppliers and make use of the knowledge they can provide.

In an era when extended, complex supply chains pose unprecedented risks and opportunities, big buying companies cannot afford to be in the dark about suppliers far down their supply chains. Thanks to advances in knowledge about network modelling, databases, and analytics, they don’t have to be.

4 Reasons Managers Should Spend More Time on Coaching

Steven Moore

There are managers who coach and managers who don’t. Leaders in the latter category are not necessarily bad managers, but they are neglecting an effective tool to develop talent. We’ve been researching managers who coach and what distinguishes them. What has stood out in our interviews with hundreds of managers who do coach their direct reports is their mindset: They believe in the value of coaching, and they think about their role as a manager in a way that makes coaching a natural part of their managerial toolkit. These are not professional coaches. They are line and staff leaders who manage a group of individuals, and they are busy, hard-working people. So why do they so readily give coaching an important place in their schedule? Here are four reasons:

They see coaching as an essential tool for achieving business goals. They are not coaching their people because they are nice — they see personal involvement in the development of talent as an essential activity for business success. Most managers will tell you that they don’t have the time to coach. However, time isn’t a problem if you think coaching is a “must have” rather than a “nice to have.” Whether it’s because they are competing for talent, operating in a highly turbulent market place, trying to retain their budding leaders, or aiming to grow their solid players, they believe that they simply have to take the time to coach.

There are two assumptions behind this belief. First, that extremely talented people are hard to find and recruit. If you are known as a manager who will help those people thrive, they will gravitate to you. Second, that an organization cannot be successful on the backs of the extremely talented alone. You need solid players just as you need stars, and they will need a manager’s help to build skills and deal with the changing realities of their marketplace.

They enjoy helping people develop. These managers are not unlike artists who look at material and imagine that something better, more interesting, and more valuable could emerge. They assume that the people who work for them don’t necessarily show up ready to do the job, but that they will need to learn and grow to fulfill their role and adapt to changing circumstances. Coaching managers see this as an essential part of their job. They believe that those with the highest potential, who can often contribute the most to a business, will need their help to realize their often-lofty ambitions. As one manager told us recently, “Isn’t helping others to be more successful one of the key roles of a manager?”

The manager must adapt his or her style to the needs and style of each particular individual. This of course takes a good deal of work on the part of the manager, but again, this is perceived as being part of the job, not a special favor.

They are curious. Coaching managers ask a lot of questions. They are genuinely interested in finding out more about how things are going, what kinds of problems people are running into, where the gaps and opportunities are, and what needs to be done better. Typically, they don’t need to be taught how to ask questions because it’s a natural strength. This curiosity facilitates the coaching dialogue, the give-and-take between coach and learner in which the learner freely shares his or her perceptions, doubts, mistakes, and successes so that they together reflect on what’s happening.

They are interested in establishing connections. As one coaching manager stated, “That is why someone would listen to me, because they believe that for that time, I really am trying to put myself in their shoes.” This empathy allows the coaching manager to build an understanding of what each employee needs and appropriately adjust his or her style. Some employees might come to coaching with a “Give it to me straight, I can take it” attitude. Others need time to think and come to their own conclusions. A trusting, connected relationship helps managers better gauge which approach to take. And coaching managers don’t put too much stock in the hierarchy. As a coaching manager recently told us, “We all have a job to do, we’re all important, and we can all be replaced. Ultimately, no one is above anyone else. We just need to work together to see what we can accomplish.”

Achieving this mindset is doable. It comes down to whether the business case is sufficiently compelling to motivate a manager to develop a coaching mindset. Managers need to ask themselves a few questions: Does your organization (or group or team) have the talent it needs to compete? If not, why not? Have you done a poor job hiring, or are people not performing up to their potential? It’s really either one or the other. If the latter is true, it’s your job to help get them to where they need to be.

For managers who want to start coaching, one of the first steps is to find someone who is a good coach in your organization and ask her or him to tell you about it. What do they do? Ask why they coach. Listen and learn.

Second, understand that before you start coaching, you need to develop a culture of trust and a solid relationship with the people you will be coaching. In spite of your good intentions, all the techniques in the world will make little difference if those you are trying to coach don’t feel connected to you in some way. The relationship you develop is more important than the all of the best coaching methods that are available.

Third, learn some of the basic principles of managerial coaching that will help you develop your own expertise as a coach. One of the core lessons for managers is that coaching isn’t always about telling people the answer. Rather, it is more about having a conversation and asking good, open-ended questions that allow the people you are coaching to reflect on what they are doing and how they can do things differently in the future to improve performance.

Finally, the mindset should be focused on the people you are coaching. Always remember the main principle: coaching is about them, not about you.

Africa’s Maker Movement Offers Opportunity for Growth

In a glittering ceremony in Skhirat, Morocco, three African innovators emerged as winners in the annual Innovation Prize for Africa competition. The African Innovation Foundation, which organizes the event, focuses on identifying homegrown and scalable innovations that address local problems in Africa. From Foufoumix (a kitchen appliance to replace a mortar and pestle in fufu food preparation) to mimosa pudica solar (which generates electricity from a weed), they are cultivating a network of grassroots innovators of different levels of experience who offer new ways to fix problems in their communities.

Designers like these have been historically neglected by African policymakers because of the largely unconventional nature of their enterprises. So despite Africa’s recognition as a land of relentless ingenuity with revered tradition of local creativity, the records for taking those sparks of genius to the next level has been discouraging.

In the last few years, though, the continent has been experiencing a redesign across its major cities with strong civic participation in making and building things. These activities are happening in people’s homes, and places which the enthusiasts call makerspaces or hackerspaces. With ubiquitous computing power, freely available APIs, platforms on the web for sharing, and cheap tools like 3-D printers and lasers, the Afrimakers as they are called (or “makers” for short) are finding it easier to demonstrate their ideas. What is unfolding is a virtuoso system with a “started in Africa” mind-set that could potentially remake what Africans buy. This is especially exciting because it empowers people to use their local expertise, know-how, and hands-on skills to solve problems that exist in their daily lives.

In my conversations with these young people through my work in my nonprofit, we see a new generation of Africans inspired to take the future in their hands. They want development to be Africa-led and Africa-driven. They want to transform consumers into creators and replace, where possible, the usually foreign obfuscated products imported into Africa with homegrown alternatives. From Nairobi to Dakar, they are creating innovation ecosystems where people can congregate to design appropriate solutions for local problems. They are part of the global Maker Movement, a term for open-minded independent inventors, hobbyists, designers, and tinkerers with a convergence of computer hackers and traditional artisans, which has grown in sophistication from embroidery to robotics. This movement has fused more than 200 innovation hubs with thousands of enthusiasts going on their annual pilgrimages to Maker Faire Africa.

And it’s not just experienced workers who are getting involved. HacKIDemia has launched in Africa with a goal to enable makers, especially kids, to develop sustainable projects and use making to solve local challenges and create an exchange of best practices. HacKIDemia is awarding fellowships to some selected makers who will be expected to train others in their communities. All the projects are documented and freely shared in the community.

While it is very early to assess the impact, it is already clear that these makers offer a platform for a new economic system that taps into the brainpower of Africans to seed shared prosperity. The problems to solve in the continent are plentiful — clean water, energy, health care, and food processing. Makers want to create solutions that are appropriate for these challenges. If they succeed, Africa will exert greater importance in the world. Consider the wonders of Kenya’s seamless payment system, M-PESA, for example, that enables a mother to pay a child’s school fees on her way to the farm, instead of wasting hours in the bank — an issue that’s especially important to African workers who aren’t working in an office setting. Or look at BitFinance, a Zimbabwean start-up, that is building an ATM machine with an interface that allows mobile money, Bitcoin, and cash. This is an opportunity most Western innovators wouldn’t see; with mobile money adoption low in most western countries, it’s unlikely that typical ATM vendors would make such machines.

But the makers’ ideology goes beyond electronics and software. Last year while leading a cluster mapping project, I met a group of graduates who had mastered how to refine crude oil in Nigeria. They built a “refinery” inside a bush and through trial and error came up with the right temperatures to heat drums of crude oil for kerosene, diesel, and gasoline. The ingenuity was severely diminished because they had to illegally puncture pipelines to get the crude oil, and the government will destroy the “technology” once it is discovered. They believed if given a license, they will perfect their technologies over time and provide fuel to their communities where scarcity is common. Right there, I saw a significant challenge of the African makers: getting people to take them seriously — including governments and even their competitors.

We need to encourage and support these African innovators. An emerging era of collaborative and digital fabrication could reshape how products are made and sold in the continent, and the rise of Africa’s makers can affect lifestyles, commerce, and industry in the continent as a whole. It will enable people to appropriately employ themselves and earn better lives, instead of relying on subsistence-level occupations. The top-bottom enterprise model that mass produces and ships products into Africa without local consideration will be rethought. Increasingly the local players will have capacity to build things just as BitFinance Zimbabwe is doing for the ATM. Last, customers will become co-designers and co-producers for products they buy. The opportunity for African makers could be further customizations of already existing successful products in the market in areas and places they may not readily create their own.

As the continent looks for ways to diversify its economy, the makers offer a compelling platform for support. The industrial system with a company’s production and design centrally controlled in R&D houses are being reexamined, so that production can be more distributed and designs can incorporate the input of consumers. This global redesign provides opportunities for local makers who are hoping to shape the future with new products, new exports, new industries, and new possibilities that build a more sustainable African economy with shared prosperity. For companies that sell in Africa — especially the multinationals — they need to see working with the makers as part of a strategy to be competitive in Africa. The opportunities lie in forming partnerships with these makerspaces to get better insights for new products and how to efficiently reach new customers.

The makerspaces effervescence is real. Now’s the time to encourage and align with those efforts.

Win Community Approval for New Business Construction

Smart corporate real estate managers and property developers have discovered that winning local approval for their new, tax-paying, job-creating, profit-making projects is no longer possible without first building public support at the grassroots level.

Whether it’s an oil refinery in South Dakota, a large residential development in Hawaii, a shopping center in New York, a waste facility in California, or a casino in Massachusetts, many new uses of land find a steady and growing stream of those who are passionately opposed for economic or ideological reasons and who actively participate in the political approval process in an effort to stop it.

In U.S. national polls since 2006, our research has consistently shown that 72% of Americans or more prefer the status quo rather than new construction in their communities. And these polls show that the most likely NIMBY (Not in My Backyard) opponents of any new development are 55 to 74 year-old, home-owning, college-educated, politically-independent, high-earning individuals — the very local residents with the most local political clout to get something stopped.

Our polling also shows that those who are less educated, and less wealthy, and who live in rental housing, are more likely to support new development, but those supporters are less passionate than opponents and therefore are less likely to participate in the approval process.

So what happens? The vocal opponents of a project lobby their local elected officials to block it, while the less-passionate supporters fail to attend public hearings and other meetings in the approval process. As a result, the politicians assume everyone in town hates the project — and that they’ll suffer at the polls if they approve it. Even if the project isn’t outright defeated, developers and property managers can lose some or all of their investment due to delays.

To overcome these obstacles in the old days, project proponents often turned to PR flaks or lobbyists for help. But you cannot build a winning campaign for a development through marketing initiatives with fancy ads or brochures, nor can you count on a backroom deal, arranged by a lobbyist or political fixer, to stay in place once the elected politician witnesses the hostility of real voters who voice their objections.

These days, projects must be treated as if they were political candidates running for office. A full-blown campaign to identify, educate, organize, and mobilize supporters must be waged from the start.

First, reach out to neighbors before opponents do. Once a person signs a petition against a project or otherwise demonstrates his disapproval, he or she will never be convinced to support it. Reaching out can be done through digital methods (Facebook, Twitter, email, websites, and so on) as well as through door-to-door canvassing and direct mail. Nearby residents appreciate the efforts of developers who take the time to explain their plans and solicit feedback.

Your first inkling may be to get it over with all at once with one big community meeting. More projects have died the public meeting death than all “F” graded intersections combined. What community meetings do is put supporters and the people who have come for information, in the same room with your rabid opponents who will speak over people, scare people, and intimidate people to speak in favor. The undecided people will walk out thinking, “Wow, everyone is against this,” your supporters will walk out not daring to speak in favor, and the headline in the local paper the next day will likely be: “Entire Community Opposes Project.”

Large public hearings will be required by the city later in the process, but as you start, one-on-one meetings are far more productive and offer a less contentious atmosphere for productive discussions with those who may be impacted.

Also avoid offending city officials or neighbors by failing to reach out to them in a timely fashion. No one wants to first learn about a project by reading about it in the newspaper or worse, hearing about it from the opponents.

In addition, while known vocal opponents may never be convinced to change their minds, you must take the time to reach out to them and really listen to their objections and fears. City officials expect you to do that and what you learn may help you identify measures that can be taken to mitigate perceived problems.

Your outreach should also include using the latest tools like campaign management databases, video petitions, text messaging systems, and telephone town halls, as well as standard measures like canvassing and direct mail to find allies and educate them on the project’s benefits.

Cultivate supporters among those living nearest to the project site first since they will have the most influence with elected politicians. Then seek out those who will directly benefit — those who will get employment from the project, sell their land to the project, or whose small business will benefit from selling goods or services during or after the project is built. Once you have finished reaching out to direct beneficiaries, seek the help of those who will indirectly benefit: perhaps teachers and parents whose schools will gain a larger budget from the increased tax base the project will bring.

As you build your database of supporters, keep them constantly informed and up to date on the process and give them talking points to use in supporting it. Keep track of all their contact information and how they say they could help. Will they come to a meeting? Send a letter? Post a yard sign? E-mail or write their officials? Encourage people to communicate their support to elected and appointed decision makers. At key points in the process, mobilize your support group and get them to attend open forums, town meetings, and pivotal elections.

Combining these approaches will help your get your project approved with more enthusiasm and local support.  For example, one grocery store chain seeking approval for a new store built a list of more than 2,000 local supporters who wanted to change the zoning to accommodate a new, larger store. Those supporters signed ads in the local newspaper, attended public hearings wearing t-shirts and hats that demonstrated their support, and ultimately called their elected council members at home and urged them to approve the project. The project prevailed. Help the community understand the benefits of your construction project and organize them to participate in the political approval process and yours will, too.

Planning Maternity or Paternity Leave: A Professional’s Guide

Taking any amount of time off work can be nerve-wracking, even if it’s for a happy event like having or adopting a baby. What’s the best way to get ready for your parental leave? How should you set boundaries? Should you check-in with your team while you’re out? And what do you do if you realize that you want to change your work schedule while you’re on leave?

What the Experts Say

Very few organizations have “a standard operating procedure” for employees taking parental time off, says Joan C. Williams, founding director of the Center for WorkLife Law at the University of California’s Hastings College of the Law. All too often they “Band-Aid together a solution every time someone needs to go on leave” letting the burden fall on the parent-to-be. The lack of parental leave plans in most US organizations “reflects the disconnect between people’s personal lives and their work lives,” says Lotte Bailyn, professor emerita at the MIT Sloan School of Management. “It should be easier than it is,” she says. “The fact is that people have babies; they go on National Guard leave; they get sick; and their parents get sick” — in other words, the need for leave is an inevitable fact of employment. The key is to assume a positive outlook. “It’s best if you assume it’s going to go well.” Here are some pointers.

Get a head start

You want to start thinking about how you will manage your leave — how much time you will take, whether you’ll be in contact, how you will transition back ­— well in advance. So before you go on leave — ideally before you’re even expecting — investigate your organization’s policies surrounding how much leave you’re entitled to. This information, depending on the size of your organization, is usually available online or in an employee handbook. If you’re unsure, contact your HR department. But be mindful about timing. “When you talk to HR depends on your organization’s culture,” says Bailyn. She says that some people worry that they will be “written off” once they announce their family plans. “Don’t wait until the last minute,” though. There is a considerable amount of paperwork and contingency planning that needs to happen and “it takes time for other people to figure out” how to manage your absence, Bailyn says.

Devise a transition strategy

About a month before your leave, ask your supervisor for help in creating a “transition-out plan,” says Williams. This memo “defines everything you do” for the organization, describes where each of your projects stands and identifies the specific colleagues or temporary workers who will “fill in for you during your leave,” she says. Without a plan like this, warns Williams, “your work will be abruptly dumped on others.” Bailyn recommends involving your colleagues. “You need to work collectively and creatively to figure out how the work will get done [in your absence],” she says. This should motivate others. “Team members will realize that if and when they need something, the group will support them, too.”

Further Reading




Reclaiming Your Turf After Maternity Leave

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Hilary Pearl

It’s all about preparation – and, when necessary, confrontation.




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Plan your return

In addition to the transition-out plan, you should create a “transition-back memo” to help set expectations and ensure an “appropriate flow” of work for your return,” Williams says. “It’s very common to come back from leave with either no work or an overwhelming amount of work — both of these are undesirable and a recipe for high attrition.” Also think about how you’d like to structure your return to the office. “Be realistic about whether you want to do a gradual return to work” — where you start out as part-time and work up to full-time, whether you’d like to negotiate to work from home one day or week, “or if you’d like to be permanent part-time,” she says. Then, depending on your relationship with your boss, explore those possibilities before you go on leave. “If it’s going to freak out your manager if you bring this up beforehand, don’t,” says Williams. “But if your manager is more chill, why not have the information?”

Establish boundaries

While it’s “illegal for a company to ask you to work on your leave,” says Williams, “it’s practical and considerate to let your colleagues know that you’re reachable.” She suggests saying something like: If you need a crucial piece of information from me, here’s how to get in touch, and I’ll do my best to get back to you as soon as I can. Just knowing that you’re there “if something important comes up will make everyone more comfortable,” says Bailyn. And if your leave is longer than three months, you might also consider having regular, planned meetings with your team “either in-person or by videoconference” at the three-, four-, and five-month mark, she says. “These meetings are a way to check in with your group and find how everything’s going,” which will help you when you return.

Identify childcare — ASAP

Bailyn suggests researching childcare options before your baby is born. Call agencies for recommendations or search online via parent list serves. Tour facilities near your home and office. Check references on the places you like best by calling other parents. “High-quality infant daycare is difficult to find,” she says. If you’re hiring a nanny, “secure her at least one month before you return to work,” recommends Williams. “It’s common for childcare to fall through at the last minute, and it puts your job in jeopardy,” she says. Besides, this month-long overlap is a good investment for your career and your peace of mind. It allows you to “see your childcare in action,” which will help you feel better about leaving your baby; and it also helps ensure that your transition back to work is seamless, Williams says.

Let go…

Don’t be tempted to keep tabs on work projects and office politics while you’re away. “You can’t say, ‘While I am out, I want to be involved in A, B, and C.’ You need to let go,” says Williams. Failing to do so will likely lead to frustration. “You’ll be torn between your very intense new responsibilities and very intense old responsibilities,” she says. Involving yourself with work projects while you’re on leave is also unfair to the colleagues filling in for you, says Bailyn. “Think about [your leave] as an opportunity to help other people develop,” she says. After all, “you should have defined and planned how projects will be dealt with [in your absence],” she says. “Have confidence that your people will handle things the way you would want them to be handled.”

…And then gear up

About two weeks before your leave is over, Williams recommends calling your boss to set up a one-hour meeting to review your transition-back plan. “You’re not legally obligated to do this — it’s a judgment call — but if it were me, I’d do it,” she says. The alternative to this preemptive meeting is waiting to discuss your return on your first day back which increases the likelihood you will “have either no work or too much work,” she says. It’s smart to check in with your team too before your official return, says Bailyn.

Be honest with yourself

This pre-return check-in is also the time when you’ll likely make final arrangements about your transition. Remember, though, it’s a fluid situation. “You don’t know [in advance] how you’ll feel physically and emotionally [about going back to work] so you can’t make hard and fast decisions [ahead of time],” says Bailyn. If you are having second thoughts about going back fulltime, think creatively about how you could make the situation work. Bailyn recommends bringing your team in on these discussions. “The problem with flexible arrangements is that they are often individually negotiated and kept in secret,” she says. A better option is to work out a proposed plan with your team that delineates “how the work would get done” if you went part-time and then “bring it to your manager,” she says. “It could be in the spirit of, ‘Let’s try this for two months and see if it works.’”

Principles to Remember

Do

Talk openly with your coworkers about how best to divide your responsibilities
Consider how you’d like to structure your return to the office and explore options before you go on leave
Let colleagues know how to reach you while you’re away; you’re not obligated to do this, but it’s considerate

Don’t

Wait until the last minute to find high-quality childcare — research options as soon as possible
Forget to make a plan for your transition back to the office so as not to return to either too little work or an overwhelming amount of it
Keep tabs on work projects while you’re away; it’s unfair to the people filling in for you

Case Study #1: Give team members time to process what will be expected of them

Johnathan Modisett, a senior manager at Ernst & Young in Atlanta, began planning his parental leave soon after he and his wife, Kristi, found out they were expecting a second child. Kristi, also a senior manager at EY, planned to take four months off after the baby was born and Johnathan planned to take two weeks of paternity leave, and then another four weeks parental leave once Kristi went back to work.

For the initial two-week leave, Johnathan blocked off his work calendar around the time of Kristi’s due date and alerted his team not to plan on his attendance at meetings. “I told them that if anything important came up, they could get in touch,” he says. “We work so collectively and collaboratively that even though the baby arrived ten days early, it was an easy transition.”

The month-long leave required more forethought. “People need lead time — you can’t just come in on Wednesday and say, ‘I am going to be out for a month.’” Johnathan closed out his highest priority projects and he worked with each of the ten members of his team to create detailed lists and plans for what they should be doing during his month away.

During his leave, Johnathan enjoyed time with his baby; his older child was mostly at daycare or being looked after by grandparents. He says he checked email every couple of days. “Some of the younger members of my team occasionally reached out saying, ‘I hate to bother you but…’ If I could give them a quick answer, I did. But if their question required a more in-depth response I [forwarded it on] to another manager.”

His baby is now seven months old. And Johnathan’s return to work has been, for the most part, uneventful. “Part of the reason I was able to re-energize and reinsert myself back into work was that I was checking emails during leave; I knew that I didn’t have a month’s worth of email waiting for me,” he says. “I jumped right back in.”

Case Study #2: Work collaboratively with your team on a workload plan

Erin Quinn-Kong, the editor-in-chief of Austin Monthly, found out she was pregnant only a couple of days before her company’s new publisher started on the job. She decided to hold off sharing her news until she was 16 weeks pregnant.

“I have been here five years, but I had a brand-new boss — I wanted to establish a relationship with him before I told him I was pregnant,” says Erin, who is due in early July.

By the time she told her publisher, Erin had already mapped out a plan for how she would structure her leave and also provided suggestions for how her staff could do the work while she’s away. She also talked to her team. “We discussed potentially bringing in someone new at the bottom, but the other editors here decided they wanted to handle it themselves,” she says. “We have planned as far in advance as possible, and we’re all working hard now to get ahead.”

During her leave — which will consist of eight weeks disability pay and an additional four weeks of both paid and unpaid time off — Erin says she will “go dark” but be reachable to her staff in the event that something important comes up. “I trust them. I know they’re good at their jobs, and they’re not going to call me for ‘in the weeds’ type stuff. They will figure it out. It will be a good learning experience for them.”

It has also been a good learning experience for Erin. “I’ve gotten better at delegating since I announced I was pregnant,” she says.

When her maternity leave is over, Erin plans to return to her job full-time but will work Wednesdays from home — an arrangement she has already worked out with her publisher. (She started this flex-time arrangement at the beginning of her third trimester, which has “really helped with the transition.”)

Her daughter will be in daycare, one block away from Erin’s house. “I will do drop off, and my husband will do pick up,” she says. “That’s the plan.”

Influence People by Leveraging the Brain’s Laziness

Discussions of influence are almost always focused on messages and information, the assumption being that the best route to drive people’s actions is to get them to understand the course of action that is best for them and then to pursue it.

But another stream of work on influence has also noticed that the environment affects people’s actions. Over the past decade, proponents of the work described in Nudge by Richard Thaler and Cass Sunstein have focused on small changes that can be made to the environment that have a big effect on behavior. The classic example from this work is that changing the default option from opting in to a retirement program to opting out of one can have a significant affect on how much people save.

In all of this work, though, there is still an assumption that the environment is treated as a reflection of information that should drive preferences. For instance, it’s assumed that people tend to stick with the default option because they do not know enough to change it.

This view of decision-making assumes that information is always at the core of the cognitive economy. But in fact, energy is the key currency that the cognitive system seeks to preserve. The human brain is roughly 3% of people’s body weight and yet it uses 20-25% of our daily energy supply. This energy is required to keep the brain running regardless of exactly what the brain is doing. That means that time spent thinking about a choice is highly correlated with the amount of energy consumed by the brain.

A better way to think about the role of the environment, then, is to recognize that people want to minimize the amount of time and brain energy they spend thinking about a choice and also minimize the amount of time and bodily energy they expend toward carrying out actions after the choice is made. The simplest way to do both is to simply take the actions the environment is conducive to. In other words, people are not treating the environment around them as information in most deliberative processes. Instead, they are performing the easiest actions with as little thought as possible.

You and Your Team



Persuasion

You need influence to succeed.

So if we want to influence other people’s behavior, we must make desirable behaviors easy and undesirable behaviors hard. Take the design of your grocery store, where impulse purchases are often displayed on the endcaps or in the checkout aisle. You’re not spontaneously purchasing those items because you have more information about those non-necessary products, but based on a combination of what the environment makes easy to do, the habits people have learned from past actions, and the results of previous deliberations about a decision.

Consider a consumer preparing to buy toothpaste. As a child, her parents used Colgate, though she tried Crest and Aquafresh at friends’ houses while growing up and saw plenty of commercials over the years. In college, when she began to make her own toothpaste purchases, she would typically search for the Colgate, but if another common brand was in easy reach, she selected that instead. A promotion that placed a toothpaste she liked in a special display would lead her to grab that as she charged through the store. She was frequently frustrated by the number of times that toothpaste manufacturers changed their packaging, making it more difficult to select one of the brands she typically bought.

In this example, none of these decisions involved significant deliberation. Instead, there were small preferences for brands based on prior exposure and a number of selections based on what was easy to do. Indeed, one thing that brands often do that blocks this low-effort behavior is to change their packaging, which forces the consumer to put in effort to find the familiar brand in an unfamiliar box.

This orientation to the environment can change or reinforce all kinds of behaviors. As I discuss in Smart Change, one of the most successful public health campaigns of the last half-century is the effort in the United States to reduce the number of smokers. One of the most important factors that decreased smoking rates among adults from roughly 50% in the 1960s to about 20% now is the environment. It is no longer possible to smoke in public buildings in most places in the United States. Some businesses no longer allow smoking on their entire campuses. This change to the environment makes an undesirable behavior difficult.

In the workplace, there are many ways to set up the environment to drive people toward desirable behaviors. For example, many companies set up databases of prior projects and their outcomes as a way of capturing organizational knowledge. However, these databases are often difficult for employees to access and have clumsy user interfaces that make it hard for people to find what they need. To make the archives more useful, they need to be accessed quickly from people’s computers, and the user interface needs to make it easier to find past reports than it is to ask a few random colleagues if they know of any related projects.

Similarly, if your aim is to get people to schedule shorter meetings, organize the office calendar program in which the default meeting length is 15 or 30 minutes rather than an hour and needs to be adjusted to be longer if necessary. Although people will still end up scheduling a number of hour-long meetings, the need to expend energy to override the standard option will shorten many of the items that end up on people’s schedules.

Anyone interested in influence should start by focusing on the environment of the individual they are trying to affect. Analyze that environment and find ways to make desirable actions easy and undesirable actions difficult. Remember that the human cognitive system aims to get the best possible outcome for the least possible energy cost.

Capture Your Creativity with a Digital Notebook

When we talk about the problem of driving innovation, we often focus on how to foster creative thinking. But much of the time, the challenge isn’t that we lack creativity — it’s that we fail to capture the bursts of inspiration we do have, or fail to recall our great ideas in the moments and contexts where they can actually be useful. Once you have the right system for capturing your moments of inspiration, and for finding that inspiration when you need it, you can create a virtuous circle in which inspiration fuels inspiration.

I first got serious about capturing my own moments of inspiration in my early twenties, when a friend encouraged me to start writing down what he called my “Alex ideas” — mainly because he was tired of having to listen to them, I suspect. This was back in the prehistoric era before even Palm Pilots had been invented, so I carried around a tiny little notebook and made a habit of writing down my bolts from the blue. There was only one problem: unless I bothered to flip through it later — and was miraculously able to decipher my own handwriting — the ideas went into that notebook, never to return. Most of the time, I forgot my moments of inspiration had even occurred: I might struggle for a great example to put in a document, but it wasn’t until months later, when I was flipping through my notebook for some totally unrelated reason, that I’d recall that great example had been waiting for me all along.

Digital Notebook Apps

My favorite digital notebook program is Evernote, but other people swear by Microsoft OneNote, and some people now use Google Keep. Each of these systems has its advantages, but Evernote works on the widest range of devices: every major operating system (even Linux), most mobile phones and tablets and even (as of last month) on the Apple Watch. It also offers optical character recognition (the ability to recognize text that’s been photographed rather than typed in) no matter which device you’re using to capture a note. You can get up and running with a digital notebook system (or get smarter about how to use the program you already have) with the guidance in my new book, Work Smarter with Social Media, just released by Harvard Business Review Press.

Fast forward to 2015, and there’s now a solution for that very problem: cloud-based digital notebook programs. I’ve written before of my exasperation with people who still use print notebooks because they’re wasting everyone’s time. But you’re not just losing out on efficiency: you’re also missing out on other benefits.

With a note-taking program you can create an inspiration or innovation system: a process for capturing your ideas wherever and whenever they occur, and even more important, for bringing them back to you at the moment when they’re most likely to be useful. If you keep your digital note-taking application open all the time, and install it on all your devices, it becomes easy to capture anything, because you don’t have to open a new application or even a new document to jot down an idea or a bit of information. Then tags and full-text search mean that it’s easy to find the ideas you’ve captured, just when you need them, on any computer or mobile device.

To tap into all these benefits and harness your own creativity, first set up your innovation system, then use it to capture and then retrieve your ideas when you need them:

Setup

Here’s how to to set up Evernote (or your preferred notebook app) as the repository for all your great ideas:

Install your notebook app on all your devices. The best way to ensure that you can always capture or access your ideas it to ensure that your notebook is running on the computers and mobile devices you use most regularly.


Set up an innovation file within the app. You can create a dedicated “ideas” notebook, but that’s not even necessary if you just use a consistent tag on any note that contains an idea, wherever that note lives. I use the tag “idea” for most things (keep it simple!) and “blog idea” for things I want to write about.


Create an inspiration button to speed up capture. I’m a big fan of If This Then That, a service that lets you coordinate how different software programs work together. IFTTT recently introduced a set of mobile apps that make it even easier to capture inspiration to your digital notebook. The Do Note app lets you click a button to quickly type or dictate a note and send it to the application of your choice, tagged and ready to go. Do Camera does the same kind of thing, but using a photo. Once your ideas make it into Evernote, it can be useful to clean them up by adding a quick summary of each idea in the note title, so you can see it when you scan through Evernote, but at least you’ve already captured them in the moment.


Add capture to as many devices as you possibly can — not just your computer and phone. Since I’m currently enjoying a love-in with my new Apple Watch, I also enabled Do Note on my watch so that I can dictate a quick idea without even picking up my phone. (Though unlike Apple CEO Tim Cook, I’m too scared to shower with my watch on, so there’s still a few minutes a day when inspiration might go un-captured.) My hope is that Amazon’s Echo could solve that problem, if I’m willing to leave a $200 device in the bathroom and if Amazon expands the integration options for IFTTT.

Capture

Now that you’ve got all the pieces in place that make it easy to record your ideas, you actually need to develop the capture habit.

Capture ideas as you go. In addition to using the Evernote mobile app, I often use voice dictation to get a quick idea into my phone. Or, if I already have my email app open when inspiration strikes, I dictate it as an email, address it to my Evernote email address (make sure to add that email address to your address book) and include the phrase “#idea” in my subject line so that my note gets tagged “idea.”


Tag your ideas. In addition to tagging each thought with the word “idea,” tag it with the project or subject it relates to, or take a few minutes once every few days to file all your latest ideas in the appropriate project notebook. I regularly review all my “ideas” notes so that blog post ideas go in my blogging folder, research ideas go in my “survey research” folder, and other ideas get into the appropriate project or planning file. That way, when I’m looking at a project notebook, I see all my ideas along with my project notes and web clippings.


Convert paper ideas to digital. Sometimes you have to resort to actually writing down your idea with a pen, because you don’t have a digital device handy. (If the shower really is your top spot for inspiration, keep a waterproof bathtub crayon handy.) But you can still get those handwritten ideas into your inspiration file, simply by taking a snapshot of your written note (or the shower wall) and adding it to Evernote with your “idea” tag.


Share ideas. If you work closely with a set of trusted colleagues, it can be enormously productive to create a shared digital notebook where you all contribute your moments of inspiration. Trust is the key here: it’s hard to share half-baked ideas with people who are going to judge you on them. That’s why you’re best capturing ideas to your own inspiration folder, and then moving into a collaborative notebook when you’re ready to share them.


Borrow inspiration. I don’t just capture my own ideas in my innovation file; I also include blog posts, web pages, and screenshots of things that inspire me — for example a cleverly written survey question, a blog post with a structure I want to emulate, or an infographic that does a brilliant job of presenting complex information. I collect these using the Evernote web clipper (an extension that captures web content) and Skitch (an app that takes screenshots and saves them to Evernote). I tag these “inspiration,” and file them in the notebook were they’re most likely to be relevant in the future.

Retrieval

This should be the easiest part of the process, but it’s the step we often forget: actually looking at our past notes and ideas when we need an “aha!” moment.

Go find the idea you need! Type “idea” into Evernote’s search box and choose Notes tagged “idea” from the dropdown menu, then voila! all the random ideas you’ve had show up in one easy-to-scan list. If you’re looking for something more specific – an idea you jotted down, or all the ideas related to a specific project – add in a memorable phrase you remember from your note, or simply drop the name of your client or project into the search box. And if you’re not diligent about tagging all your notes, but you include the word “idea” in the notes themselves, you can always do a full-text search for anything in Evernote that includes the word “idea,” and narrow that down with a few words related to the specific topic you’re working on.


Be proactive about being inspired. We don’t always realize when we’re in need of that extra burst of creativity: it’s all too easy to plod along, cranking out the same old B or B+ work products. Make a habit of scanning your innovation file at the start of any new project or deliverable, or even on your phone during the commute into work. Prime your brain with ideas from months or even years ago, and you’re likely to see new possibilities in the quick note you jotted down or the image you captured.


Get inspiration from your search results. When I’m searching for inspiration, I often turn to Google. Thanks to Evernote’s Chrome extension, my own notes pop up in my Google search results. That turns out to be a great way of rediscovering my ideas, because long-forgotten ideas often boomerang back to me in the sidebar of a Google search on a related topic.

The best part of a complete setup, capture and retrieval system is the way it feeds on itself. The more you capture and review your ideas, the more they will flow. That is partly because your ideas can build on one another: looking at a couple of ideas you had weeks apart may suddenly suggest fresh interconnections and possibilities. And it’s partly about learning to recognize and value ideas when they strike, which is a lot easier to do if you’ve got an easy system for capturing them.

But it’s even more a function of getting and staying in a creative frame of mind. When you get in the habit of capturing all your ideas, no matter how small or half-baked, you get away from the self-criticism that is arguably the greatest enemy of creativity. So stop judging your ideas, and start capturing them — and then watch them pile up in your digital notebook.

How to Use Your LinkedIn Profile to Power a Career Transition

Kenneth Andersson

Are you raring to change careers? Break into a whole new line of work that makes you leap out of bed, happy to go to work every day? Parlay personal passions into professional endeavors? Or focus on a different clientele, type of product, or service?

We all know the power of LinkedIn for job hunting and networking. But how do we use it to help change careers—to make sure we’re found by the right recruiters, hiring managers, colleagues—not ones from our past, but from our future careers?

It’s tempting to create an “everything under the sink” profile that makes you look qualified for both the job you have and the one you want or for a variety of new functions, industries, or roles. But that’ll just confuse your readers and send them running—to others’ LinkedIn pages.

Instead, focus your profile on your new career direction, just as you’ve tailored your resume to specific jobs. In both cases, you highlight your most relevant experiences and minimize or omit the rest. Here’s how to do that on LinkedIn:

Headline. Focus first on your headline. LinkedIn auto-populates this field with your current position, but don’t let it. Instead, use the 120 characters to write your own eye-catching headline.

Why is this so important? If I’m searching for someone like you on LinkedIn, my search results will reveal only your name and headline — and I could easily overlook you. But if you write an irresistible headline, I’ll take the time to click to your entire profile.

Let’s look at how one mid-careerist uses her distinctive headline to attract the right people and opportunities.

Kristi Sullivan’s been a successful marketing executive for over 15 years. While still very committed to her current Marketing VP role, she also wants to add a new direction to her career path: marketing small businesses in the health and wellness industry. And she’s a devoted yoga practitioner and instructor. So this is her two-part headline:

Holistic health/yoga instructor, consultant, connecter * Marketing executive for small businesses & nonprofits

She immediately distinguishes herself from other marketers by putting health and yoga first. And she attracts people needing help with their holistic health and yoga businesses.

Check to see how distinctive your headline is by searching LinkedIn for people like you. Kristi found lots of “marketing executives” but no one else with holistic health and yoga in their headlines—a very good sign.

Summary. Now that your headline has attracted the right people, keep them reading. Tell a compelling story and write it in the first person. Unlike resumes, your LinkedIn summary gives you much more space (up to 2000 characters) to highlight past accomplishments and connect them to what you want to do next.

This is especially important if you’ve changed careers before. Craft a cohesive narrative that pulls together what might otherwise appear to be fragmented pieces of your professional past. This will avoid leaving your profile reader wondering what the heck you’re trying to do now—or why you appear scattered and unfocused.

Here’s how Kristi accomplishes this. She stitches together three areas of her professional and personal endeavors: marketing small businesses/nonprofits; women’s business success; and holistic health/yoga instruction and business consultation.

She immediately hooks her profile readers with this opening statement:

I am devoted to and excel in three areas—each area strengthening the others: marketing small businesses and nonprofits; women’s business success; and holistic health and yoga. Let me expand a bit on each:

She makes it easy for readers to quickly skim her summary by including headers that call out each of the three areas. And she introduces each area with a sentence that ties it to the others. For example, in the Women’s Business Success section, she connects to her 15 years of marketing at the economic development resource center where she’s been working:

Because I’m passionate about enabling women to make positive differences in the workplace and the economy at large, I launched the Farmington Valley chapter of B.I.G. (Believe, Inspire, Grow).

And then in the Holistic Health/Yoga Instructor and Consultant section, she makes connections to her work in economic development and women’s business by noting:

I see holistic health as a critical component of individuals’, organizations’, and communities’ wellbeing.

Finally, she ends her summary with an invitation to specific types of people:

I’m always interested in hearing from holistic health business owners and women entrepreneurs, as well as economic development professionals. Please contact me via InMail.

Experience. Once you’ve nailed your headline and summary, tailor each of the positions in your experience section. Here’s how:

Continue to write in the first person—to provide continuity with your first-person summary.


Focus on accomplishments, not responsibilities, as you would in any resume or profile. But highlight only the accomplishments most relevant to the new type of work you’re seeking. Make those accomplishments concrete by noting the problem you solved, how, and the specific results you generated.

Here’s an example of how Kristi focuses on some of her most relevant accomplishments—fund raising, client acquisition, and social media:

I’ve brought in $.75M in new funding and over 20 new clients… I established this Connecticut nonprofit’s presence on Facebook, Twitter, LinkedIn and YouTube, growing its followers by 150% in the first year. I also conceived an e-newsletter, blog and vlog to enhance our social media presence and website…

Recommendations. As with any LinkedIn profile, sparingly add recommendations to selected positions — the ones most relevant to the new type of work you’re seeking. Invite one or two people to recommend you. And don’t hesitate to direct their testimonials; you’ll make it easier and faster for them, and more effective for you. Tell them exactly the type of positions you’re now targeting and the skills you’d like them to highlight.

Images and Media Samples. Again, as with any LinkedIn profile, use images and media samples to draw attention to your most impressive accomplishments. Add them only to the positions you want your new profile readers to focus on. For example, Kristi added her colorful business card to her summary section, a video screen shot and link to her presentation about internal social media strategies, and a photo of her teaching yoga on a stand-up paddleboard.

When you’re trying to get into a new line of work you have to prove that you have skills in a new area when you’ve always focused your career elsewhere. With a targeted profile that catches readers’ attention you’ll position yourself well to make that change.

Breaking the Death Grip of Legacy Technologies

Technologies like 3-D printing, robotics, advanced motion controls, and new methods for continuous manufacturing hold great potential for improving how companies design and build products to better serve customers. But if the past is any indicator, many established firms will be slow to adjust because of a formidable obstacle: legacy assets and capabilities that they are reluctant to abandon. Why are older incumbent firms slow to adopt new technologies even when the economic or strategic benefits are clear?

The literature on this subject is enormous. Much of the early work focused on the adoption rate of new technologies following an S-curve, with some users going early, a lot in the middle, and some following late. These models assume that it takes a while for companies to find out about new technology and, once they do, for their employees to assimilate and use it. Robotics is a good example: It’s obvious that it can increase productivity, but it takes some know-how to put robots to work.

Organizations develop processes through repeated problem solving. When a firm gets started, its founders solve problems for customers, and as they grow and establish routines, these ways of working come to embody their organizational capabilities. Managers constantly try to fit new market needs to existing processes and routines. Sometimes they are a fit, but often they are not. They can even require cultural change, which is difficult for established organizations.

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U.S. automakers took decades to adopt lean production methods despite the obvious benefits from increased productivity and lower work-in-process inventory. Even General Motors, which had a bird’s eye view of the Toyota Production System from its joint venture with Toyota at New United Motors Manufacturing Inc. (NUMMI) in California, did not deploy lean manufacturing across the company for decades despite the clear advantages. A former GM chairman told me that while his company learned much from NUMMI, implementing it across the GM manufacturing network was slow going.

Robert Abernathy and Kim Clark categorized technology shifts as competency-enhancing or competency-destroying. The latter are troublesome because the knowledge base and skills required to operate in the new realm are so fundamentally different. From the perspective of how the resources in an organization are deployed and how its processes are organized, this makes sense. The more fundamental the break from the previous technology, the greater the switching costs.

And then we have Clay Christensen’s work on disruptive innovations: how a new technology that is initially not good enough for mainstream customers, initially gains a foothold with a set of low-end customers who are happy with a less expensive, “good enough” product. And then the innovators improve the technology steadily over time, allowing it to serve more and more of the overall market, which causes great trauma for incumbents who stuck to their legacy ways of doing things. One of Christensen’s favorite examples is steel minimills, whose electric arc furnaces used scrap steel as their feedstock. While the quality of the steel that they initially produced was poor because of their inability to control the alloy contents due to contaminants in the scrap, technological advancements progressively eliminated this difficulty and increasingly made their lower-cost products viable substitutes for steel made from virgin materials.

But the legacy integrated steel makers in the United States were in trouble even before the low-end disruption from the minimills. They had fallen behind firms in Germany, Japan, and other countries in adopting new technologies for making steel from virgin ore and materials (e.g., the basic oxygen process and continuous casting). These weren’t really that fundamental a technology change, but making the transition did require massive capital expenditures.

This is a great example of how, thanks to the financial tools that companies widely use, previous investments that have not been fully depreciated can get in the way of new investments. And once investments are fully depreciated, they have a habit of hanging on by virtue of marginal costing. One of my CFOs once told me that the return on new capital investment is long term and the success rate has a high variance, while the return on “maintenance capital investments” required to keep existing production facilities running is short term and has a low variance. Paralleling Jim March’s classic analysis of “exploration vs. exploitation,” short term crowds out long term here as well.

Sometimes circumstances make it easy to walk away from old technology and established routines. World War II left the German and Japanese steel industries in ruins. So when they were rebuilding, it was easy for them to opt for basic oxygen furnaces, a technology developed in Europe in 1948 that reduced capital costs and process time, and improved labor productivity. Similarly, companies in countries like Taiwan, South Korea, and China that entered industries late have been able to grab the lead in many industries for a simple reason: They bought their capital equipment later and were able to leapfrog existing players technologically. For the same reasons, entrepreneurial start-ups have been quick to adopt cloud computing and new service-oriented architectures because they didn’t have any installed base of legacy applications.

So what should established companies saddled with conventional equipment do when new technology appears?

The first thing they should do is distinguish between “functional” and “economic” obsolescence. Functional obsolescence occurs when an asset does not support competitive capability. Economic obsolescence means your depreciation schedule, which is set by local tax law, says the asset is at the end of its accounting life. The challenge is not to let residual book values of equipment get in the way of having the most competitive capabilities. Several U.S. commercial airlines and automakers failed to address this challenge along the way and ultimately had to resort to an extreme measure — bankruptcy — to deal with their obsolete assets. Clearly, this is not an exemplary approach.

In contrast, foreign airlines like Emirates and Singapore Air hold on to their fleets for much shorter times. Their younger average fleet age gives them a more competitive product.

Other alternatives are leasing or aggressively selling older equipment. Still another is moving the older equipment to less-demanding applications or to plants in emerging markets. One plastic products maker I visited did this with their conventional, hydraulic-drive injection-molding equipment when a new generation of electric-drive technology that allows for more precise control and better quality appeared. A major semiconductor firm I know cascades older equipment to less-demanding, trailing fabs.

But sometimes you just have to bite the bullet. When I was working in optical disk manufacturing, I took over management of a business unit that was just setting up a new factory. We had brand new equipment, much of it still in crates. What I didn’t know at the time was that a European supplier had come out with a continuous-flow production system that had much lower capital costs. This reduced the entry barriers in the market, which was then flooded with product. I was faced with undertaking a massive restructuring and write-downs to get the unit back to a competitive position. Hard call? Our survival depended upon it.

Obviously, it is critical for established firms to track technological innovations in their industries and to understand their sources. How much of it is driven by your tool suppliers? How much of it comes from complementary materials processed by these tools or how you apply them? More importantly, managers need to monitor the tool innovation roadmap. Capital-equipment makers invariably have such a roadmap, and managers of companies that use their products need to make it their business to understand when new capabilities will arrive.

Managers also need to think differently about production systems. How can they be designed so they can be easily upgradable? That means building in a little flexibility on the plant floor and learning to adapt to variable production quantities.

Capturing the full benefit advanced tools requires making investments in complementary assets like the tooling (for example, molds and inserts for injection molding). In some areas like 3-D printing, innovation in the materials processed is just as important as the tools themselves. GE Aviation, both directly and through its acquisition of Morris Technologies, was an early explorer in laser sintering for 3-D printing of metals. It experimented extensively with sintering super alloys and is now moving into production on fuel injectors for its LEAP engine for the Airbus A320neo and Boeing 737MAX.

Finally, established companies should encourage experimentation with new tools and methods. This “exploration” is critical to the early formation of new capabilities. In his book From the American System to Mass Production, 1800-1932, business historian David Hounshell talks about how Henry Ford encouraged his production engineers to experiment extensively, even encouraging them to scrap processes and machine tools that no longer met their fancy. Ford’s pioneering moving assembly line was a direct result. Managers need to strike the right balance between exploration and exploitation.

Keeping a firms asset base up to date and flexible is an important way to ensure that “legacy” doesn’t turn into a liability in today’s hypercompetitive environment.