Marina Gorbis's Blog, page 1319

A Simple Way to Measure How Much Customers Love Your Brand

How do you measure love? Beyond the supermarket magazine or social media “quiz” that we’ve probably all taken, you really can’t. It’s a feeling. You just know.

But when thinking about a brand’s relationship with consumers, the marketer in me needs something more concrete. I need to know how many of my consumers are in love with my brand and the degree of their passion. To try and measure that emotion, I use a “Brand Passion Score” that ultimately shows how in love a consumer is with the brand, and more importantly, why.

To come up with your own scoring system, first talk to consumers and interview them about their affection for a series of brands, not just your own brand. In my experience, there are a few components to measure. These then build up to an overall Brand Passion Score, which provides a reliable measurement of consumer love for the brand. Often this can simply be in the form of an “agree/disagree” seven-point scale (strongly agree, agree, somewhat agree, neither agree or disagree, somewhat disagree, disagree, strongly disagree.)

While not an exhaustive list, here are three of the most effective statements that I’ve found to measure a consumer’s passion for a brand.

X is a brand for me. These are very powerful words. They immediately personalize the brand-consumer relationship. It becomes all about the brand understanding that the consumer is special, and the consumer feeling like the brand really has been designed for them. This creates a strong bond; in my experience, no one measure correlates more to future purchase intent than “is a brand for me.”

X is a brand I can trust. If a brand scores high on this measure, it has proven to the consumer that it has his or her best interests in mind. In our cynical society, it is becoming more difficult to achieve high scores for this measure. Brands that do have earned a special place in the consumer’s heart – the consumer genuinely believes that this brand will take care of them.

X is a brand I enjoy introducing other people to. In your own relationship history, do you remember when you first met “the one?” Did you want to keep it to yourself? Of course not! You wanted to tell the world! The same thing is true for consumers and brands. If a consumer is truly in love with a brand, they want to share that with those most important to them – their friends and families. Not only is it a great measure of brand passion, but marketers can also track the influence of consumers whose referrals are most influential.

How can you use the Brand Passion Score to grow your business? For starters, I see four immediate ways:

It serves as a critical variable in measuring our brand’s overall health. When taken in context with other brand health variables (sales, share, etc), such a score can let us see what’s driving our brand’s successes (or failures). If the score is relatively high and sales are low, there is an execution problem. If sales are high and the score is relatively low, we are either seen as a commodity and have no brand or are “buying” our volume through promotions and discounts — neither of which is optimal.


It helps us discover our brand’s relationship strengths and weaknesses. If you compare the components of our Brand Passion Score with each other, you immediate get insight into where your brand’s strengths and weaknesses are and, ultimately, where you should be focusing your marketing efforts. Maybe your brand is strong in consumption measures but weaker in word of mouth. If it is important for your brand to have a strong word-of-mouth presence, then clearly you know that you need to emphasize instances in which consumers want to introduce or share the brand with others in a social setting.


It helps us discover how our brand’s relationship is progressing over time. Implementing an ongoing, trended Brand Passion Score can help you identify when and where a relationship may be going off track — well before traditional market or consumer measures may indicate as much. Think of it as preventive medicine for the brand/consumer relationship.


It helps us benchmark against competitors. A critical factor is to compare our score with that of our competitors. Where do we have an edge in our relationships and where do they have an edge? We may even go beyond our category and look at “best in class” brands. These benchmarks will 1) clarify whether other competitors are doing something that is significantly increasing or decreasing their score or 2) reveal whether our brand may be facing potential problems bubbling under the surface that our competitors and best in class brands are not.

In summary, while we haven’t quite yet figured out a way to quantitatively measure the passion in our personal relationships, we do have the ability to use a relatively simple metric to monitor the strength of the relationships between consumers and our brands and ultimately make ourselves better marketers.

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Managing Your Professional Identity During a Gender Change

It can be complicated to change your name after getting married. With multiple social media accounts and years of Google search results behind you, it’s often a fraught transition for your personal brand, as I’ve . Jess Samuels, who wed in 2013 and took her husband’s name, wrote a about the logistics, including helpful tips like using the website Knowem, which allows you to check whether your preferred new username is available on various networks.

But if it’s challenging to change your name in the Internet era, it’s even more complicated to change your name and your gender­—a situation faced by Jess’s now-husband, Robbie Samuels, when he came out as transgender a decade earlier.

Robbie, whom I profile in my forthcoming book Stand Out, has a two-decade history of professional activism. “Some of my biggest accomplishments in my 20s are still tied to my birth name online,” he said. “I was bummed to lose this online history when I began to use a new name.” But coming out as transgender doesn’t mean you have to give up entirely on your past. Here are three strategies to help you tap into the full power of your personal brand:

Create a team of ambassadors. When Chris Edwards came out as transgender in 1995, he was a young creative executive at an ad agency. “I actually used what I learned from working in advertising to rebrand myself,” he says. Inspired by “evangelism marketing,” in which others spread the word about a product via word-of-mouth, he recruited 12 of his closest friends in various departments at the agency. “Since they would be acting as my brand ambassadors, I really took the time to explain what I was going through, educate them, and then coach them on how to tell others,” he recalls. “I asked them to keep it quiet until after I told the Executive Board. I wanted to be respectful to upper management—it was important that they hear it from me first, and not find out via the gossip mill.” He told leadership one evening at 5 PM, and “then gave my 12 evangelists the green light to start spreading the word. By 11 AM the next morning, my whole agency knew, and by that afternoon, all the other agencies in town knew.” Instead of a long and drawn-out coming out process, Edwards took care of it quickly and controlled the narrative by ensuring that his personally chosen allies spread the word.

Connect your past and present strategically. In an era where we’re constantly recorded and tracked (you can probably find clippings from your high school newspaper online), how do you connect your past identity with the one you’re moving into? As with those getting married, you’ll need to either open up new social media accounts or (where possible and desirable) change your name on existing ones. To counteract the loss of search engine results for your past professional accomplishments, it also pays to double down on your social media presence under your new name.

Some professionals—particularly those who transition later in their careers—may want to follow the example of astronomer Jessica Mink, who came out at 60. “I simply claimed all of my past accomplishments without saying anything about the change, except through a single, vaguely-worded link,” she says. Where questions may arise online, she links to this explanatory page, which begins, “I have not always had the same name and appearance. Here’s why.” She adds, “I’m also ready to answer questions from anybody who asks, which seems to help.” As Edwards notes, other people will treat your transition as less of a big deal if you frame it as a rebranding. “You’re not trying to hide your past; you’re simply evolving from it,” he says. “If there are no juicy secrets for people to uncover, then who cares?”

Embrace the advantages of your new brand. Every transition comes with benefits and drawbacks, and changing gender is no different. The disadvantages of coming out as transgender, such as the lack of legal protection against job discrimination in 32 states, are well known. But if you really want to own your brand, you have to embrace the positive elements.

Chris Edwards, who rose to one of the top positions at his advertising agency, believes that his transition actually set him up for success. He notes, “I was more comfortable in my own skin, which made me more confident, which in turn made me speak up more in meetings and be considered more of a leader.” Mink, a noted astronomer who helped discover the rings of Uranus in 1977, discovered her new ability to make a feminist mark. “This fall, I found myself as the only woman author out of eight on a paper, and it took me a while to realize that it was significant that the only woman was the lead author,” she says. And for Robbie Samuels, who was steeped in progressive activism long before coming out as transgender, his new identity—which meant he was generally perceived as a straight white male—gave him a new frontier in which to make a difference. “I try to always use my privileges…to create opportunities for everyone in the room to contribute more of their full selves,” he says, adding that he became involved in his local chapter of the National Organization for Men Against Sexism. “That’s a major element of my personal brand and may not have been fully realized if I had not had to grapple with this self-discovery as a trans man.”

When you come out as transgender, it may seem like a break with the past is necessary. In many ways, it’s even desirable: finally, a chance to reinvent your personal brand on your own terms. But you don’t have to get rid of everything. The real secret of personal branding is retaining the best parts of your past experience, while simultaneously creating the new identity you envision.

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How to Revive a Tired Network

On a scale of one to five, how important is having a good network to your ability to accomplish your goals? When I ask my executive students this question, most of them answer in the fours and fives. Even the most naive of them agree that, like it or not, relationships hold the key to both their current capac­ity and future success.

A Network Audit

Think of up to ten people with whom you have discussed important work matters over the past few months (you are not required to come up with ten). You might have sought them out for advice, to bounce ideas off them, to help you evaluate opportunities, or to help you strategize important moves. Don’t worry about who they should be. Only name people to whom you have actually turned for this help recently.

List their names or initials, without reading further.

The main strengths of my network as it exists today are:

The main weaknesses of my network as it exists today are:

What can a network do for you? It can keep you informed. Teach you new things. Make you more innovative. Give you a sounding board to flesh out your ideas. Help you get things done when you are in a hurry and you need a favor. The list goes on.

When it comes to stepping up to leadership, your network is a tool for identifying new strategic opportunities and attracting the best people to them. It’s the channel through which you sell your initiatives to the people you depend on for cooperation and support. It’s what you rely on to win over the skeptics. It protects you from being clueless about the political dynamics that so often kill good ideas. Your relationships are also the best way to change with your environment and industry, even if your formal role or assignment has not changed. Without a good network, you will also limit your own imagination about your own career prospects. Your network is also what puts you on the radar screen of people who control your next job or assignment and who form their opinion of your potential partly on who knows you and what they say about you.

But just because you know that a network is important to your success, it doesn’t mean you are devoting sufficient time and energy to making it useful and strong. In fact, few of us do. I know because I ask a second question: On a scale of one to five, how would you rate the quality of your current network?

My guess is that your second number is lower than your first. On average, my executive students answer this question in the twos and threes. Most admit that even by their own standards, their networks of connections leave much to be desired.

The good news is that you can change that. By managing the three key properties of networks that either propel you forward or hold you back—breadth, connectivity, and dynamism—you can develop a stronger network and use it as an essential leadership tool. This article will show you how to reinvent your network, by managing these three critical dimensions.

To start, assess the network you have today. The sidebar “A Network Audit” lets you conduct a quick-and-dirty audit of your present network. The questions represent a short version of the survey I use with my students.

As you’ll see, there are three basic sources of connective advantage that you will need to build into your network. As you read the next section, you may want to return to this network audit to assess if these properties of networks are working for you or against you.

The BCDs (Breadth, Connectivity, and Dynamism) of Networking Advantage

Your network’s strategic advantage and, therefore, the extent to which it helps you step up to leadership, depends on three qualities:

Breadth: Strong relationships with a diverse range of contacts
Connectivity: The capacity to link or bridge across people and groups that wouldn’t otherwise connect
Dynamism: A dynamic set of extended ties that evolves as you evolve

I call these three qualities the BCDs of network advantage, or A = B + C + D.

Breadth: How Diverse Is Your Network?

One of the first things that my students notice when they audit their networks is that the network formed by the people they talk to about important work matters is much more internally focused than it should be. As these managers start to concern themselves with broad strategic issues and organizational change processes, lateral relationships with people outside their immediate area become even more critical to the manag­ers’ ability to get things done. And in a connected world, build­ing stronger external networks to tap into the best sources of insight into environmental trends is also part and parcel of the leadership role.

Data compiled from the network surveys I give my participants shows that we are still not using networks to our best advantage. We build networks that are heavily skewed toward our own functional, business, or geographical group and fail to elicit or value the input and perspectives of peers from different functional or support groups. Moreover, we are still relying on networks that are mostly internal to our company, in a world where the rate of change outside is considerable.

As the descriptive statistics in the figure “External Network Diversity” show, the majority of my students’ contacts are inside their specialty, unit, and firm. On average, less than 43 percent of the people the executive students were discussing key issues with were located outside their unit or specialty; even fewer, only a quarter, were external to their company. But averages can be deceiving: the range of values shows that some of the managers in the survey have no contacts at all outside their specialty, unit, or firm.

You can also overdo diversity: the ranges also show that some of the executives have heavily external networks: up to 100 percent and 95 percent outside their specialties and units, respectively, and 88 percent outside their companies. That’s fine if an executive is looking to move elsewhere, as some of my participants were. But an exclusively outside network is not as useful if you are trying to bring an outside approach into your own company. You can’t bridge the outside to the inside if you haven’t established strong relationships on the inside.

Another common network blind spot consists of undervaluing the potential contributions of junior people. Managers striving to make their way up the leadership pipeline tend to manage up, forgetting that their connection to the layers below is often what makes them invaluable to seniors whose sponsorship they hope to attract. One manager explained it to me this way: “I would perhaps have been able to add even more value to my superiors if I had retained my links with more junior people. For example, recently we were in a meeting discussing the results of a global people survey. I was listening to all their comments, and I said, ‘You guys are looking at this from the perspective of very senior people; be careful about how you are interpreting the results. [People at a lower level] are saying something completely different.’ I knew that because I had been spending time with them.” Given a choice between a network heavily skewed to the power players in your firm and a good mix of diverse contacts, which would you choose? Research shows that you are better off with the latter. This is because networks run on the principle of reciprocity. The value of diverse relationships lies not only in what your contacts can do for you, but also on what you can do for them. Your senior leaders don’t need you to connect them with other seniors; they already know each other. Top management needs you to bring them the fresh ideas, insights, and best practices that you can only get elsewhere, outside, across, and below. As the figure “Network Diversity Across Levels” shows, too many managers lack the 360-degree perspective you can only get from cultivating relationships with a mix of peers, juniors, and seniors. Although the averages suggest that people focus their networking on approximately one-third of each group, the range of the scores shows that too many managers systematically exclude one of these groups. The sidebar “Why We Need Fresh Blood” explains how diversity on any team often produces the best results.

Why We Need Fresh Blood

Stefan Wuchty, Benjamin Jones, and Brian Uzzi, a multidisciplinary team of researchers, decided to use big data to learn what distin­guished ideas that had impact from those that didn’t. In a mas­sive study of the twenty million academic articles and two million patents cited over the past fifty years, which Wuchty and his col­leagues published in the prestigious journal Science, they found that the difference lies in the kinds of networks that produce the ideas.a

The study showed that the days of the solitary genius or lone inventor—think Newton or Einstein—are over. Creative and sci­entific work has migrated to teams and, more recently, to large, distributed teams like the hundreds of scientists that worked on the human genome project.

But being part of a team wasn’t enough for high impact, as measured by article and patent citations. The really great ideas were much more likely to come from cross-institutional col­laborations rather than from teams from the same university, lab, or research center. Not only that, but the most successful teams mixed things up. They avoided the trap of always work­ing with the same people, and successful groups brought to the team both newcomers and people who had never collabo­rated before.

Uzzi and another colleague, Jarrett Spiro, also discovered that this pattern held across sectors as disparate as the Broadway mu­sical industry and biotechnology.b Between 1920 and 1930, for example, 87 percent of Broadway shows flopped despite being attached to big names like Rogers and Hammerstein, or Gilbert and Sullivan. When well-known composers like these continued to work together without the benefit of fresh blood, their creations suffered, critically and financially. The most successful plays, in­stead, resulted from collaborations among diverse players. Leon­ard Bernstein’s West Side Story, for example, which went on to become a megahit, featured newcomer Stephen Sondheim and other new collaborators.

a. Stefan Wuchty, Benjamin F. Jones, and Brian Uzzi, “The Increasing Dominance of Teams in Production of Knowledge,” Science 316, no. 5827 (2007): 1036–1039.

b. Brian Uzzi and Jarrett Spiro, “Collaboration and Creativity: The Small World Problem,” American Journal of Sociology 111, no. 2 (2005): 447–504.

On making a list of their relationships, even highly experienced leaders find that they’ve failed to network with people who are different from them or to build bridges across and outside their organization’s lines. Check the diversity of your network by returning to the list you made in your Network Audit. To what extent are your relationships externally facing? Have you included a good mix of people occupying different levels and functions?

How Connective Is Your Network?

So far we’ve looked at who the people are in your network and how you are connected to these people. Now we’ll turn to how your contacts are connected and what that means for you.

The connectivity of your network is the basis for the famous six degrees of separation principle—the idea that we are rarely ever more than six links removed from anyone else in world through the friends of our friends—discovered by Harvard psychologist Stanley Milgram in the 1960s. As any LinkedIn user knows, the fewer degrees of separation between any two people in a network, the easier it is to access the resources you need.

In the original study, Milgram gave a bunch of people in Nebraska a letter destined for a stockbroker in Massachusetts—a man they didn’t know. Their job was to get the letter to him by sending it to someone they did know, who might then send it to someone else, ultimately reaching the stockbroker. Milgram found that it never took more than six links (thus the six-degrees concept) to reach the stockbroker, for those letters that actually arrived. But many of the letters never got there, because the first degree—the people his participants knew directly and contacted first—didn’t have networks that reached outside their local environment. So, many of the letters never got out of Nebraska. They only circulated inside the same circle of people who all knew each other.

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Something similar happens when you fall prey to the biggest trap in networking: everyone you know knows the same people you do, and the flow of information gets stuck in the same office, in the same industry, in the same neighborhood. Sociologists use the term density to describe this property of networks: it quantifies the percentage of people who know each other in a network. Density is an imperfect measure, but it is a quick way to check how much six-degree potential you have in your network. See the sidebar “Calculate Your Network’s Density.”

Calculate Your Network's Density

Go back to the list of up to ten contacts you made, and put their names into a copy of the grid provided here.

Using only the unshaded portion of the grid, place a checkmark to indicate which pairs of people know each other. If you are not sure whether two people know each other, assume they don’t.

Start with person 1, and run along the top row checking if per­son 1 knows persons 2, 3, 4, and so on. Then go to person 2, and do the same until you have considered all the people on your list.

Now, compute the density of your network following these steps:

Count the total number of people on your list (the maximum is 10), and write it down.
Take that number, and multiply it by the number minus 1. Then divide the result by 2, and write it down.
Count the total number of checkmarks on your grid (i.e., the number of links that exist between the various people on your list), and write that number down.
Take the number you obtained in step 3, and divide it by the number you got in step 2. This is the density of your network.

The lower your network’s density score, the less inbred your network (note that lower isn’t necessarily better because too low a density, as I explain below, can be problematic too).

If you are like many of the successful executives I teach, chances are that your density score is higher than it should be. When I conduct this exercise in class, the average density hovers above 50 percent, although it is significantly lower for professionals who work mostly with outside clients such as consultants, investment bankers, lawyers, headhunters, and auditors and for people who go back to school to orchestrate a career change. The range of scores always extends to 100 percent: when nearly everyone with whom you discuss important work issues knows each other, you have an inbred network. There’s no other way to put it.

To understand the problems of having an inbred network, let’s look at the effects of network density in a completely different context: the so-called obesity epidemic. Two previously unknown university professors, Nicholas Christakis and James Fowler, became overnight celebrities when they showed that being overweight can be contagious.

Christakis and Fowler analyzed the health records and social relationships of twelve thousand Framingham, Massachusetts, residents from 1948 to the present. Using advanced visualization techniques and careful statistical controls, they showed that overweight people tend to hang together socially, while thin people tend to be friends with other thin people. But this is not a mere correlation showing that birds of a feather flock together: being connected socially to people who are overweight, even indirectly, seems to make a person overweight. The researchers concluded that thin and overweight people tend to live their lives within different and unconnected social clusters—“microclimates,” so to speak— within which different social norms about what is normal and desirable have developed. Political views also hang by cluster. Tightly connected members apparently had no external perspective on the world beyond their immediate group.

At work, when we surround ourselves with people like us and with whom we’ve worked before, the network creates an echo chamber in which no new information circulates because everyone has the same sources. That’s how groups become mired in consensus, and after a while, everyone thinks and acts alike. The sidebar “The Innovator’s Network Dilemma” presents convincing data that bears out this observation.

The Innovator's Network Dilemma

A study by University of Chicago sociologist Ron Burt demon­strates the cost of inbred networks.

When Burt studied managers in the supply chain of Raytheon, the large electronics company and military contractor based in Waltham, Massachusetts, he discovered that the company had no trouble coming up with good ideas but considerable difficulty turn­ing these ideas into reality.

Burt asked the managers to write down their best ideas about how to improve business operations, and then he asked two ex­ecutives at the company to rate the quality of these ideas. He then mapped out the network of who consulted with whom. Burt was looking for what he calls “structural holes,” gaps between cohesive groups of people with dense patterns of informal communication among them and few ties outside their circle.

His many years of research have shown that people whose net­works span these holes reap the greatest network benefits. These people see more and know more. They have more power because other people have to go through them to connect outside their group.

Not surprisingly, the highest-ranked ideas came from managers who had contacts outside their immediate work group. Most man­agers, however, overwhelmingly turned to colleagues already close in their informal discussion network to bounce ideas off (think “in­bred circle”). The result was that their ideas were not developed.a

a. Ronald S. Burt, Structural Holes: The Social Structure of Competition (Cam­bridge, MA: Harvard University Press, 1995); Ronald S. Burt, “Structural Holes and Good Ideas,” American Journal of Sociology 110, no. 2 (2004): 349–399. See also Gautam Ahuja, “Collaboration Networks, Structural Holes, and Innovation: A Longitudinal Study,” Administrative Science Quarterly 45, no. 3 (2000): 425–455.

This state of affairs also limits significantly how valuable you are to your network, since you bring nothing unique that the net­work members can’t get elsewhere. Your comparative advantage— how you differentiate yourself from others who are as smart, hardworking, or expert as you are—depends on your capacity to connect people, ideas, and resources that wouldn’t normally bump into one another.

Some research suggests that there’s an optimum level of density, about 40 percent. But of course, that depends a lot on what a person’s job is. When your network gets too sparse, you lose connectivity. You are a “visitor” to many networks but a “citizen” of none. You may have access to lots of ideas and people, but you can’t put them to use inside your organization (or any other group to which you belong), because you lack inside information about how to pitch your ideas, who might be opposed to them, and how to win people over—all critical parts of leading change.

Too sparse a network, and you might also lack credibility and visibility with important gatekeepers, who might not know you well but who implicitly evaluate you on the basis of who you know that they also know (the principle on which professional networks like LinkedIn work). This is often a problem when you are the minority in a group. People are apt to have relationships with people like them, so minorities and majorities and profes­sional men and women are unlikely to have highly overlapping networks. In a study of boards of directors, for example, James Westphal found that minority directors tend to be more influen­tial if they have direct or indirect social network ties to major­ity directors through common memberships on other boards. These overlapping networks serve as a form of social verifica­tion and increase the likelihood that the minority’s ideas will be heard.

In sum, as Malcolm Gladwell illustrated in his book The Tipping Point, networks run on “connectors,” people who are linked to almost everyone else in a few steps and who connect the rest of us to the world. Connectors can see a need in one place and a solution in another, a vacancy in one area and a talented person in another, a discovery from a different discipline and a problem in their own, and so on, because they’re just one or two “chain lengths” away from the issues. That is, you can reach connectors through someone you already know or through someone who knows someone whom you already know.

How Dynamic Is Your Network?

One of the biggest drawbacks of a poorly managed network is that it quickly becomes a historical artifact, the residue of man­ager’s past rather than a tool to move into the future. We change jobs, firms, and even countries, but our networks lag behind our new responsibilities and aspirations and therefore pigeonhole us just when we need a fresh perspective or seek to move into something different. Joel Podolny, former head of Apple’s human resources, calls this tendency of our networks to evolve more slowly than our jobs “network lag.” We’re exceptionally slow to build relationships that allow us to perform in a new position or prepare us for future roles.

Making Your Network Future Facing

A financial services firm executive, Pam, realized that she was unpre­pared when her job became more externally facing. “I was fairly well networked internally and within my region,” she told me, “but I had no external network or external points of connectivity, and I don’t think I understood the value of those external points.” Never one to give much thought to whom she knew, she realized the time had come to build a new network systematically. Here are the steps she followed:

Identify twenty to twenty-five key stakeholders you wish to stay connected to in a meaningful way.
Assign these contacts into key categories:

Most-senior clients
Most-senior people in your company
Most-senior hedge fund people and competitors
Most-senior service providers (e.g., lawyers, accountants)
Most-senior women in financial services


For each category, select the three to five people you want to stay connected to.
Decide how frequently you will reach out to each contact.

When asked about the strengths of their network, most people think first about the quality of their relationships. They value most their strong ties, because trust is essential when it comes to getting things done, and we trust most the people we know best. But as we have seen, the people we know best are not necessarily those who can prepare us for stepping up. To make your networks future facing, you’ll need to build and value your weak ties—that is, the people and groups that are currently on the periphery of your network, those you don’t see very often or don’t know so well (see the sidebar “Making a Network Future Facing”). What’s important about these contacts is not the quality of your relationship with them (just yet), but the fact that they come from outside your current world. These contacts tend to be several levels removed from you or circulate in different circles.

That makes reaching out harder. Getting to know your weak ties or getting to know them better usually requires an explicit plan and strategy—these relationships will never evolve naturally, because you have no common context in which to develop them. Nevertheless, these are the ties from which you stand to gain the greatest outsight.

Another problem with relying exclusively on your strong-tie network is that it limits your capacity to rethink yourself. In my study of thirty-nine midcareer man­agers and professionals considering major career changes, I ob­served directly how much their old networks can “bind and blind” them. All of them were told by a friend, family member, or close coworker that they must be out of their minds for thinking about quitting their jobs or leaving their organizations. The people close to you may mean well, but they are often not helpful when you are trying to stretch yourself. Despite their good intentions, they hold restrictive views of who you are and what you can do. So, they are the people most likely to reinforce—or even desperately try to preserve—the old identity you are trying to shed.

Getting Started: Experiments with Your Network
In the next three days, talk to three people outside your busi­ness unit or company; learn what they do, how it helps the company, and how it may apply to your work.
In the next three weeks, reconnect with people outside the com­pany who may shed useful light on your work, industry, or career. Have lunch.
Make a list of five senior people you need to get to know better. Figure out ways to strengthen your relationship over the next three months.

These three sources of network advantage—the diversity of your contacts, your connectivity within the network, and your network’s dynamism—are obviously interrelated. Without these advantages, you never meet new people and the circle closes; over time, you lose relevance.

Return to the network audit that you completed, and check what you listed as the strengths and weaknesses of your current network. Which of the following weaknesses that we discussed above are true for you?

Birds of a feather: Your contacts are too homogeneous, all like you.
Network lag: Your network is about your past, not your future.
Echo chamber: Your contacts are all internal; they all know each other.
Pigeonholing: Your contacts can’t see you doing something different.

Practical Steps to Expand Your Network
Spend time at a start-up within your business sector. Consider why incumbents rarely lead the way in new products and services.
Attend a conference you have never before attended. Meet at least three new people. Follow up with them afterward.
Start a LinkedIn or Facebook group. Be the connector for this group of people.
Spend a day with a millennial in your company. Learn more about how she uses social media.
Get in touch with a venture capitalist. Find out how he thinks about leadership and innovation.
Teach a course at a university or local college. Learn from your students.
Be a guest speaker at a local or national event. Use it to build or strengthen your brand around a particular area of expertise.
Go to lunch with a peer from a competing company. Learn more about your market value.
Start a blog. Find out who reads it.
Take advantage of your next business trip to connect with someone you’ve lost track of. Have this person help you con­nect with someone new.


Summary

✓ As you embark on the transition to leadership, network­ing outside your organization, team, and close connections becomes a vital lifeline to who and what you might become.

✓ The only way to realize that networking is one of the most important requirements of a leadership role is to act.

✓ If you leave things to chance and natural chemistry, then your network will be too inward-facing and not diverse enough.

✓ You need operational, personal, and strategic networks to get things done, to develop personally and professionally, and to step up to leadership. Although most good managers have good operational networks, their personal networks are disconnected from their leadership work, and their stra­tegic networks are nonexistent or underutilized.

✓ Network advantage is a function of your BCDs: the breadth of your contacts, the connectivity of your networks, and your network’s dynamism.

✓ Enhance or rebuild your strategic network from the periph­ery of your current network outward as a first step toward increasing your outsight on your self:

Seek outside expertise.
Elicit input and perspectives of peers from different func­tional or support groups.

This article is adapted from the Harvard Business Review Press book Act Like a Leader, Think Like a Leader.

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7 Steps to Deliver Better Customer Experiences

A surprising thing happened during a recent brainstorming session I led for a retail client. We were supposed to be coming up with ideas for improving the company’s customer experiences, but the head of operations could not think of a single new customer service idea to explore. And the development leader failed to identify any new ideas for store layout or building features. And the merchandising vice president had difficulty understanding why “product” was one of the categories we were discussing.

Each of these executives offered plenty of ideas when the discussion turned to promotions, social media tactics, and marketing messages. But apparently none of them understood that generating new customer experience ideas would involve his domain. They seemed to think that designing and managing the customer experience is a marketing function, as if the customer is only associated with marketing, and the store only with operations. They were happy to maintain the age-old silo between marketing and operations.

I was stunned. How could such a misconception of customer experience have developed? After all, it’s been 10 years since Don Peppers and Martha Rogers, in their seminal book, Return on Customer, declared the customer experience the single most important factor for business success. And since then, countless case studies and analyses have been published about the importance of optimizing a business around the customer experience. If such confusion can exist at a high-growth, $2.5 billion public company, how many other organizations could be struggling to understand and manage customer experience appropriately?

I’ve discovered that most companies are using an incomplete definition of customer experience, and have incomplete tools and approaches to design and manage it.

While customer experience can be defined as the sum of all interactions a customer has with a company, most people operate with a narrower view. Some understand it as customer service or service excellence — without recognizing that service is only one element of the entire experience. Others, like my client, consider it to be customer marketing — that is, the communications and promotional activities used to attract and retain customers. Again, these activities represent only a fraction of the interactions between company and customer — and as it’s been said time and again, what an organization says in its advertising has far less impact on customer perceptions than what it does in reality.

Even with the correct, complete view of customer experience, it’s still possible for companies to mismanage it because they lack the proper tools to help them design and manage their approach. The most common mistake in mismanaging the customer experience is starting with customer data. Using data and analytics as a starting point fails to recognize the importance of coherence between customer experience and brand identity. (By brand identity, I mean the defining values and attributes that distinguish a brand.) Delivering on the brand promise, expressing the brand personality, and bringing the brand attributes to life should be the primary objectives when designing the customer experience. Some companies drive their customer experience with conversion rate and customer lifetime value targets, then end up delivering experiences that are unmemorable and undifferentiated.

Other common tools, like journey maps, are also incomplete because multiple customer journeys usually exist for a single organization. Most companies target more than one customer segment with more than one need or driver, and today’s customers engage in more than one channel or sequence of channels.

A more thorough approach to designing and managing customer experience is to use a customer experience architecture. It’s a framework for designing and delivering the optimal experiences to different customer segments in different business segments with different business objectives. The “architecture” is similar to other strategic architectures that are used as planning tools, like a brand architecture or an information architecture — or a structural architecture for building a house.

To develop a customer experience architecture, follow these steps:

1. The brand platform — First, define or reaffirm the overarching ideas that represent the brand.   REI’s brand platform is the excitement and adventure of the outdoors; Chick-fil-A’s is exceeding customers’ expectations with a servant’s spirit.

2. Customer experience strategy — Then describe the desired customer feelings and perceptions of the brand across all interactions with the organization. An electronics website might want to create a “place” for customers to discover and be delighted by innovations. A hotelier might want customers to feel pampered by legendary service.

3. Business segmentation — The next step is to break down the business into discrete units. For a new brand, segmenting the business by traffic vs. trial vs. transition might be an illuminating approach; a restaurant company might segment by service mode, e.g., eat-in vs. drive-thru vs. carry-out; and a product-line segmentation might be appropriate for a manufacturer. The objective is to identify the different experiences the organization delivers and to articulate the requirements and objectives of each.

4. Customer segmentation — Different target segments have different needs — some customers may value convenience over price, others may be looking for an entertaining experience — so their desired experiences vary. Describe each segment with a profile and a needs inventory, including key drivers of purchase decisions and brand perceptions.

5. Prioritization — Create a grid with the business segments as columns and customer segments as rows. Each business/customer intersection represents a discrete experience to design and deliver. They should be prioritized in order to focus design and management. Prioritization criteria include profit potential, fit with long-term strategy, competitive advantage and differentiation, resource requirements, and how the experience affects and/or reinforces brand values and brand position.

6. Experience design — Determine how to meet the segment-specific needs in each business segment, either by improving existing approaches based on new insights from the architecture or by developing entirely new ones. All the levers of customer experience — product, service, content, channels, touchpoints, pricing, facilities, sensory engagement, etc. — should be considered and described in the design.

7. Assessment and integration — Now the architecture is ready to be inspected for integrity and coherence. Is the brand platform expressed throughout every experience? Do the discrete experiences contribute to the overall customer experience strategy? Do experiences complement and enhance each other, or do they conflict or detract from each other?

Developing a customer experience architecture isn’t rocket science, but it requires accepting a broader, fuller definition of customer experience and committing to a robust planning tool and process.

Companies that develop their own architecture will find it breaks down organizational silos, addresses the diversity of customers and their needs, and produces unique and compelling experiences.

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Increase the Odds of Achieving Your Goals by Setting Them with Your Spouse

Do a quick Google search of “work-life balance” and over 260 million results will flood your screen. But the current conversation often treats “work” and “life” as separate and, all too often, in tension. We make annual resolutions, detailed daily plans, and to-do lists, but we do so as individuals — generally not sharing those plans or planning jointly with those closest to us. And we often think of our personal and professional goals as occupying distinct and separate spheres. But what if the work and home “spheres” could merge and actually improve the odds that we’ll achieve our goals?

Research shows that it’s easier to achieve our goals when we’re not trying to go it alone. One recent research paper found a positive correlation between participation in digital communities and reaching fitness goals. Similarly, a study of rowers found that their working together in training heightened their threshold for pain.

For many of us, our closest and most trusted companion is a spouse. Couples in committed, long-term relationships often see each other every day, but rarely plan or set resolutions together. By not doing so, couples may actually be making it harder to achieve their goals. This January, we fully integrated our personal planning for the year for the first time. We’ve always informally mentioned our goals to each other, but this time around, we talked with intentionality about why we were chasing those goals, and how we planned to get there. By including each other in the process, we invited the other to not only be aware of what we plan to accomplish this year, but also to hold us accountable as we strive to reach these goals. And our experience combined with research we’ve evaluated and other couples we’ve consulted with have led us to a few tips for effective planning as a couple.

First, start with an annual board meeting. Several years ago, we attended a seminar where speakers Rick and Jill Woolworth introduced the idea of an “annual meeting” for families — taking time at the end of each year to evaluate that year and plan for the next. Establishing this as a family norm assures that goal-setting happens on a set schedule rather than haphazardly or in isolation. For us, this happened over the holidays between Christmas and the new year, and included a discussion of the past year, how we performed against our goals, and how we felt about life as a couple and individuals. We wrote out our specific goals for the year and the habits we hoped to develop. Then we discussed them and how each of us could help the other achieve each goal. These annual meetings provide accountability, but more importantly, lay a vision for the year ahead. Then, as so many have advised, break these annual goals into habits, monthly and weekly goals, and daily to-dos.

By talking about your goals with your spouse and writing them down, you’ve already improved your odds of success. In Yes!: 50 Scientifically Proven Ways to be Persuasive, authors Robert Cialdini, Noah Goldstein, and Steve Martin explain how making an active commitment directly affects action. In one of the studies they reference, researchers found that of a group of individuals who passively agreed to participate in a volunteer project, only 17% showed up to participate. Contrast that with those who agreed to volunteer through active means (writing it down, signing a contract, etc.), 49% appeared as promised. Writing down specific goals and sharing them with your partner is like signing a contract. This not only increases social accountability, but it also allows your partner to think about specific ways in which they can act to support you in achieving your goals.

The second essential component of annual planning as a couple is setting joint goals. What do you hope to achieve as a couple or (if relevant) for your children? What habits do you hope to develop together? According to one source, for example, only 30% of people surveyed felt they had achieved work-life balance despite it being second only to compensation among factors that lead to job satisfaction. The person with whom you share your life is likely the best person to help you plan for balancing it. And joint goals can assure that your personal and professional pursuits are more fully aligned.

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Once you’ve made your plans, help hold each other accountable. When you invite someone to join you in setting and striving for goals, you are not only asking them to cheer you on when you reach certain landmarks, you are also empowering them to point out when you are unfocused or off track. This requires recognizing that constructive feedback can be hard to hear from a partner, and letting go of some ego and pride.

Finally, in addition to conducting an annual meeting, check in on progress at the end of each month. While it is admirable to set aside time to do annual planning as a couple, this isn’t enough to really make things happen. Allow yourself regular checkpoints throughout the year in order to see where you are in developing habits and reaching your goals. Make it fun. Schedule a babysitter and go out on a date night. Keep the focus of the conversation on the progress and setbacks of the month and how you might continue that progress where things are going well and intervene where a goal or habit is off course. Some couples might be tempted to do this weekly — but often monthly feedback is about the right balance for a couple to bear.

Planning for both professional and personal goals with your partner can help you better care for one another, assure that you’re both focused on the issues that matter most, and enlist your biggest supporter in helping you to achieve your goals and get things done.

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What Research Tells Us About Making Accurate Predictions

“Prediction is very difficult,” the old chestnut goes, “especially about the future.” And for years, social science agreed. Numerous studies detailed the forecasting failures of even so-called experts. Predicting the future is just too hard, the thinking went; HBR even published an article about how the art of forecasting wasn’t really about prediction at all.

That’s changing, thanks to new research.

We know far more about prediction than we used to, including the fact that some of us are better at it than others. But prediction is also a learned skill, at least in part — it’s something that we can all become better at with practice. And that’s good news for businesses, which have tremendous incentives to predict a myriad of things.

The most famous research on prediction was done by Philip Tetlock of the University of Pennsylvania, and his seminal 2006 book Expert Political Judgment provides crucial background. Tetlock asked a group of pundits and foreign affairs experts to predict geopolitical events, like whether the Soviet Union would disintegrate by 1993. Overall, the “experts” struggled to perform better than “dart-throwing chimps”, and were consistently less accurate than even relatively simple statistical algorithms. This was true of liberals and conservatives, and regardless of professional credentials.

But Tetlock did uncover one style of thinking that seemed to aid prediction. Those who preferred to consider multiple explanations and balance them together before making a prediction performed better than those who relied on a single big idea. Tetlock called the first group foxes and the second group hedgehogs, after an essay by Isaiah Berlin. As Tetlock writes:

The intellectually aggressive hedgehogs knew one big thing and sought, under the banner of parsimony, to expand the explanatory power of that big thing to “cover” new cases; the more eclectic foxes knew many little things and were content to improvise ad hoc solutions to keep pace with a rapidly changing world.

Since the book, Tetlock and several colleagues have been running a series of geopolitical forecasting tournaments (which I’ve dabbled in) to discover what helps people make better predictions. Over the last six months, Tetlock, Barbara Mellers, and several of their Penn colleagues have released three new papers analyzing 150,000 forecasts by 743 participants (all with at least a bachelor’s degree) competing to predict 199 world events. One paper focuses solely on high-performing “super forecasters”; another looks at the entire group; and a third makes the case for forecasting tournaments as a research tool.

The main finding? Prediction isn’t a hopeless enterprise— the tournament participants did far better than blind chance. Think about a prediction with two possible outcomes, like who will win the Super Bowl. If you pick at random, you’ll be wrong half the time. But the best forecasters were consistently able to cut that error rate by more than half. As Tetlock put it to me, “The best forecasters are hovering between the chimp and God.”

Perhaps most notably, top predictors managed to improve over time, and several interventions on the part of the researchers improved accuracy. So the second finding is that it’s possible to get better at prediction, and the research offers some insights into the factors that make a difference.

Intelligence helps. The forecasters in Tetlock’s sample were a smart bunch, and even within that sample those who scored higher on various intelligence tests tended to make more accurate predictions. But intelligence mattered more early on than it did by the end of the tournament. It appears that when you’re entering a new domain and trying to make predictions, intelligence is a big advantage. Later, once everyone has settled in, being smart still helps but not quite as much.

Domain expertise helps, too. Forecasters who scored better on a test of political knowledge tended to make better predictions. If that sounds obvious, remember that Tetlock’s earlier research found little evidence that expertise matters. But while fancy appointments and credentials might not have correlated with good prediction in earlier research, genuine domain expertise does seem to.

Practice improves accuracy. The top-performing “super forecasters” were consistently more accurate, and only became more so over time. A big part of that seems to be that they practiced more, making more predictions and participating more in the tournament’s forums.

Teams consistently outperform individuals. The researchers split forecasters up randomly, so that some made their predictions on their own, while others did so as part of a group. Groups have their own problems and biases, as a recent HBR article explains, so the researchers gave the groups training on how to collaborate effectively. Ultimately, those who were part of a group made more accurate predictions.

Teamwork also helped the super forecasters, who after Year 1 were put on teams with each other. This only improved their accuracy. These super-teams were unique in one other way: as time passed, most teams became more divided in their opinions, as participants became entrenched in their beliefs. By contrast, the super forecaster teams agreed more and more over time.

More open-minded people make better predictions. This harkens back to Tetlock’s earlier distinction between foxes and hedgehogs. Though participants’ self-reported status as “fox” or “hedgehog” didn’t predict accuracy, a commonly used test of open-mindedness did. While some psychologists see open-mindedness as a personality trait that’s static within individuals over time, there is also some evidence that each of us can be more or less open-minded depending on the circumstances.

Training in probability can guard against bias. Some of the forecasters were given training in “probabilistic reasoning,” which basically means they were told to look for data on how similar cases had turned out in the past before trying to predict the future. Humans are surprisingly bad at this, and tend to overestimate the chances that the future will be different than the past. The forecasters who received this training performed better than those who did not. (Interestingly, a smaller group were trained in scenario planning, but this turned out not to be as useful as the training in probabilistic reasoning.)

Rushing produces bad predictions. The longer participants deliberated before making a forecast, the better they did. This was particularly true for those who were working in groups.

Revision leads to better results. This isn’t quite the same thing as open-mindedness, though it’s probably related. Forecasters had the option to go back later on and revise their predictions, in response to new information. Participants who revised their predictions frequently outperformed those who did so less often.

Together these findings represent a major step forward in understanding forecasting. Certainty is the enemy of accurate prediction, and so the unstated prerequisite to forecasting may be admitting that we’re usually bad at it. From there, it’s possible to use a mix of practice and process to improve.

However, these findings don’t speak to one of the central findings of Tetlock’s earlier work: that humans typically made worse predictions than algorithms. Other research has found that one reliable way to boost humans’ forecasting ability is to teach them to defer to statistical models whenever possible. And the “probabilistic training” described above really just involves teaching humans to think like simple algorithms.

You could argue that we’re learning how to make better predictions just in time to be eclipsed in many domains by machines, but the real challenge will be in blending the two. Tetlock’s paper on the merits of forecasting tournaments is also about the value of aggregating the wisdom of the crowd using algorithms. Ultimately, a mix of data and human intelligence is likely to outperform either on its own. The next challenge is finding the right algorithm to put them together.

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Bringing an Entrepreneurial Mindset to the World’s Failing Systems

A white-haired clergyman leans forward in deep, intent conversation with a lady with a shaved head. To the right, three shiny-suited investment bankers cluster around a banking reform activist in his twenties. Over the course of the evening, 60 people drink red wine and laugh together in the heart of London as they watch an improvisational opera singer sum up the findings of the day: the characteristics of a financial system they would collectively be proud to put their name to.

This is not a surreal scene painted by Salvador Dali, but rather a workshop convened by The Finance Innovation Lab (which Rachel co-founded). The purpose? To capture the energy created by the financial crisis to bring together people who don’t normally talk to one another to design a new financial system. This group knew that unusual solutions were needed — ones that acknowledge the complex interconnected issues that make a failing system so hard to transform.

It can be a daunting task. After all, when a disaster like the financial crisis hits, which problem do you tackle first? Bankers’ bonuses? The failure of legislation? Consumers’ over-reliance on credit cards? It’s clear that a focus on one problem in isolation will be ineffective. To address this complexity there is a growing breed of experts who identify the root causes of problems and set about finding long-term and long lasting solutions. We call them “systempreneurs.”

Systempreneurs focus on addressing some of the largest, most complex challenges of our time — from healthcare to food to politics — by taking on our most entrenched and broken systems. Consider this example: the Future of Fish. To tackle the growing problem of overfishing, they mapped the current supply chain, identified entrepreneurs who are working to fix failing parts of the process, and then supported them to succeed. Another example is the Finance Innovation Lab, which hosted the meeting of unusual suspects mentioned above. To create a system that is more democratic, responsible, and fair, they run an accelerator program that supports new business models that could bring diversity to the financial system. To break down barriers to new entrants they also build coalitions of civil society players to jointly lobby for policy change, recognizing the importance of this stakeholder group to open the door for new financial models to emerge.

The range of activities systempreneurs undertake is broad and heavily dependent on the system they are working on, but there are some common themes in how they get their work done:

1. They create pathways through seemingly paralytic complexity.

Systempreneurs avoid playing the “blame game” and instead point at root causes, highlighting the interconnection between problems. Masters of translation, they use language that connects people to a larger purpose and dissolves sides. They are conveners rather than activists, careful not to align themselves with positions that would harm neutrality, but they often sweep in after public discussion to bring together people who have been disturbed by a debate and turn that energy into action.

Systemprenuers are experts in using quick feedback loops to correct the direction of their work. They acknowledge how delicate new projects, new business models, new strategies feel during the creative process so they create safe spaces where pioneers can meet, test, and refine their ideas over and over before being released into the world.

2. They host “uncomfortable alliances” amongst friends and foes.

Systempreneurs are skilled hosts, bringing together unusual suspects. They identify the right people to bring to a party – carefully considering the individual’s personal qualities, rather than just a job title. They often have limited power themselves and rely on their role as a trusted, neutral, and honest peer to facilitate difficult conversations between people who don’t agree. They never want to be the star of the show, but they aim to cultivate the conditions for meaningful conversations.

They act with humility and welcome people with style, dignity, and gratitude. Systempreneurs appreciate that the process of convening is as important as the content discussed and go to great lengths to empower people who hold potential solutions. They are notorious for their hours spent thoughtfully connecting people by email and know that the secret is to nudge business partners to become friends, encouraging bonds to form in a deeply human way.

3. They create groundswells around new solutions.

As Buckminster Fuller said: “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”

Systempreneurs make things happen. They may spend their time:

Supporting entrepreneurs who run businesses that play a particular role in the system. For example, the Civic Foundry, which supports citizens to launch new services to create stronger local communities and economies;
Experimenting with building more effective public services and embedding the most promising results back into incumbent public service systems, as Participle does working on topics like ageing;
Building projects that support the emergence of a new market, as Criterion Institute does by promoting gender lens investing; or
Supporting activists to develop new campaign strategies that can build the capacity of NGO’s, as Campaign Lab does in the U.K.

Many of our current systems — energy, finance, food — were designed at a different point in history when we didn’t consider how limited resources are. All of these systems now need to be redesigned with sustainability in mind. Systempreneurs are playing a critical role, experimenting with how to change these outdated, incumbent systems and strengthening them to fit our current reality, but this small but growing group aren’t yet getting the support they need.

What would boost their chances of success? For starters, we need to find ways to bring the global community of systempreneurs together. They know from their own work that a sense of camaraderie and a place to connect, learn, and share challenges can accelerate success. Yet this group hardly know one another.

Second, we need to get them funding. Systempreneurs are still pretty rare, funders often don’t know about them, and their projects don’t fit the typical funding profile. Their strategies are emergent and the outcomes of their projects cannot be easily predicted making it difficult to assess their effectiveness. But funding is critically needed to get these projects off the ground and to sustain them. We need to continue to build a pipeline of these systems changers. And while systempreneurs often incubate others’ efforts as part of their strategies, there are currently no intensive incubators designed specifically for systempreneurs. This group is so busy running their projects that they rarely have a chance to write down what they’re learning, but we need to capture and share their best practices.

Changing the status quo sometimes feels impossible. Systempreneurs bring a breath of fresh air to that challenge. They create spaces outside of the current system with a “can do” attitude. They dodge the same-old power dynamics and focus on building solutions that work.

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Priorities for Jumpstarting the U.S. Industrial Economy

The factory floor at Pittsburgh’s Aquion Energy doesn’t look much like the steel mills that once populated this Rust Belt city. Retooled industrial-age machinery sits alongside robotic-manufacturing equipment. Science and engineering professionals work closely with experienced technicians to produce next-generation batteries, not forged metal.

But just as U.S. Steel did in an earlier era of manufacturing, Aquion and innovative firms like it are spearheading economic and employment growth across the country. Spun out of Carnegie Mellon’s materials science research department in 2008, Aquion now employs 130 workers, manufacturing batteries to store electricity generated by intermittent renewable resources. This is the kind of technology—and the type of firm—that will make renewable energy more efficient and more cost-effective.

Aquion is a modern success story for American industry. But in order to create and foster more such firms, we need to recognize that today’s most cutting-edge industrial players are not monolithic; they straddle the lines between manufacturing and services, and production and innovation. Indeed, in a world where globalization and rapid technological changes are the norm, manufacturing, high-tech development, and innovation clearly require a different level of support.

To account for this shift, we believe a more holistic approach is needed to identify the highest-value, most strategically important industries that will drive U.S. competitiveness and growth in the 21st century. We call this super-sector “advanced industries.”

The defining characteristics of companies in this super-sector are a commitment to innovation and a focus on science, technology, engineering and math (STEM) skills in the workforce. The industries that we deemed “advanced” are those with research and development spending that exceeds $450 per worker and a workforce with greater than the U.S. average (20%) of highly intensive STEM occupations. Applying this standard, we identified 50 U.S. industries: 35 advanced manufacturing industries such as automotive and aerospace manufacturing, pharmaceuticals and semiconductors; three energy industries including electric power generation; and 12 service industries, from software design to telecommunications.

Together, these industries have an outsized impact on the U.S. economy. They employ 12.3 million people, or 9% of total U.S. employment, and they generate $2.7 trillion in output annually, adding up to 17% of GDP. Advanced industries are our most globally competitive industries, accounting for a full two-thirds of U.S. exports. And, critically, after years of decline, these industries have led the economic recovery—employment and output growth since the recession have been 1.9 and 2.3 times higher, respectively, than all other industries combined.

Increasing employment in advanced industries means not just more jobs, but better jobs. Average compensation in 2013 across the advanced industries sector was $90,000—nearly double that of workers in other industries. And at a time when wages have been stagnant for many, earnings in advanced industries are increasing—from 1975–2013, inflation-adjusted earnings in this set of industries grew 63%, while earnings in other industries grew only 17 percent.

Still, output and employment are not the only—and perhaps not even the main—contributions of advanced industries. Companies in this sector account for 80 percent of private-sector R&D investment, and so they are disproportionately responsible for the development of disruptive technologies that have affected the entire economy, decreasing transaction costs and waste, and increasing productivity and standards of living. A recent report from the McKinsey Global Institute identified a series of these disruptive technologies—from advanced materials to big data—that the firm projects will transform how we do business and live our lives. Many of these technologies are the direct products of advanced industries, even though their economic impact will radiate throughout a much more diverse set of industries.

Yet, there is a problem. Although the United States maintains world leadership in many advanced industries, that leadership position is eroding. Not only has the national government’s commitment to R&D investment become questionable but the nation’s skills pipeline—particularly for STEM workers—has become glaringly insufficient. At the same time, decades of off-shoring and neglect has left our network of regional high-tech and industrial supplier ecosystems patchy and thin.

So, what should the nation do to defend and expand its advanced industries? The first priority must be a renewed commitment to innovation. Federal investment in basic research cannot continue on its current downward trajectory, and Congress should act to establish something akin to a capital budget for R&D that prevents these critical investments from becoming a political bargaining chip. A recovering economy should also allow firms to reinvest in innovation. Ambition is crucial: Research from McKinsey finds that most low-performing research-intensive U.S. firms are merely “sleepwalking” through their R&D investment decisions, simply maintaining their existing R&D initiatives, unwilling to incur greater risk. New investment decisions should place more value on “open innovation,” which demands multichannel partnerships among firms, universities, and research labs. General Electric provides a good example of how this approach can work: It has partnered with the University of Louisville to create FirstBuild, an open-source factory for building next-generation appliances. Students, researchers, designers, engineers, and programmers gather under one roof to experiment with product concepts and tinker with everything from design to rapid prototyping. In a world in which consumer preferences and technological change are evolving more rapidly than ever, this open innovation model is intended to get new ideas from concept to product more quickly.

Equally important are bold reforms in workforce education and training systems. Despite the recent slack in the job market, signs still point to a stubborn STEM skills gap. To respond, industry must be more involved in shaping business-led, sector-specific regional training programs. Consider the program Pacific Gas & Electric (PG&E) has launched. According to some estimates, 50 percent of workers in the utility sector will soon be eligible to retire amid acute shortages of trained people to replace them. PG&E responded by developing the PowerPathway program, a partnership with local community college systems in selected U.S. markets. PG&E has co-designed curricula, offered direct instruction, and donated equipment for hands-on training of welders, technicians, and engineers. Through its leadership the company is making the ideal of industry-led regional training consortia real. Targeted government policy could encourage similar initiatives..

Shoring up innovation and skills systems, however, is just the start. We must also strengthen regional ecosystems that can facilitate and enhance industrial performance. These ecosystems improve productivity by gathering in one place cutting-edge suppliers, top-notch service-providers, and crucial innovation and workforce institutions. And yet, years of offshoring and industrial decline have hollowed out many of our manufacturing clusters: Since 1980, the number of metropolitan areas with more than 10% of their workforce in advanced industries has decreased from 59 to just 23. It’s time to replenish the nation’s industrial commons.

One promising strategy is the nascent National Network for Manufacturing Innovation—a federal initiative that offers seed money to chosen consortiums of universities, research organizations, and manufacturers to establish market-oriented research institutes. One recipient, the American Lightweight Materials Manufacturing Innovation Institute (ALMMII), recently opened its doors in Detroit, hoping to draw on the Motor City’s established auto-building ecosystem to accelerate innovation in materials manufacturing. ALMMII was cofounded by Ohio State University, the University of Michigan, and Edison Welding Institute, and counts Alcoa, Boeing, and Chrysler among its partners.

Defining and measuring the location of America’s advanced industries is just one step on the road toward an economic renewal; it’s also likely the easiest. With strong private-sector commitment; smart federal, state and local policy; and lots of collaboration, the nation can move to shore up and expand the advanced industries sector that will be a prerequisite of any rebuild of the U.S. economy.

 

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Don’t Ask for New Ideas If You’re Not Ready to Act on Them

Companies that focus on innovation often worry about how to encourage people to contribute ideas. But what happens when you ask people to participate in an innovation effort, and then get flooded with too many suggestions?

That’s the dilemma that one of my clients described not long ago. Faced with a declining market and needing to ramp up growth, the company decided to tap into employees’ collective brainpower. Using an intranet-based crowdsourcing approach, management asked employees to suggest ideas for new products and services, how to increase sales, and how to improve customer satisfaction. A communications campaign also encouraged people to use the platform to comment on and “like” others’ input. Within a few days, hundreds of ideas and discussion threads came in. When the submission period ended, the company had well over a thousand ideas.

Unfortunately, our client hadn’t expected this kind of response, and the small team charged with orchestrating the innovation event was quickly overwhelmed. It took them over a week just to sort the ideas into categories. The summary document that they put together for the senior executive committee was 30 pages long, with demographic and functional breakdowns of where ideas had come from. By the time the committee reviewed and discussed it, almost a month had passed since the end of the crowdsourcing event. It then took a couple more weeks before management finally thanked everyone and announced that senior executives would follow up on specific ideas to pursue.

The good news from this case, of course, is that employees were engaged. People from across the company logged onto the site and contributed ideas. The bad news is that senior management wasn’t prepared for the onslaught of suggestions — and in the absence of timely and effective follow-up, the event didn’t actually produce substantial results. The lack of follow up also potentially made employees more cynical about future innovation efforts.

There are several key lessons that can be derived from this story. The first is that innovation requires more than just coming up with ideas. In fact, ideation may be the easiest part of the process, particularly when new platforms and tools make it easy for people to contribute. Filtering and selecting the right ideas, and then prototyping, pivoting, piloting, and ultimately scaling them, in the midst of competing priorities and limited resources, is much more difficult. So if you’re going to start an innovation effort, think about how to orchestrate the process after you have ideas to work with. Another key lesson is to be more specific about the focus and criteria for submitted ideas. If the parameters are too general, it becomes difficult to sort out the wheat from the chaff.

In another company, for example, management knew, based on past experience, that an innovation challenge could generate lots of ideas that were all over the map — so they needed to be prepared. First they focused the challenge on several specific operational processes, and made it clear what would need to go into a successful submission. They also selected a dozen high-potential managers from across the business to be “idea champions” and put them through training about how to help employees sharpen their inputs, how to sort ideas into categories, how to rank the ideas in terms of impact and achievability, and how to provide feedback to contributors.

Throughout the challenge, the hundreds of ideas that came in were quickly divided amongst the champions, who used common criteria to sort and select those that could create the most business value. By the end of the challenge period, the champions had identified a small portfolio of ideas that were worth pursuing. Each champion was then paired with a more senior manager to create a plan for testing, prototyping, and driving the idea forward (or failing fast). In this way, everyone in the organization not only knew the outcome of the challenge very quickly, but also understood that ideation was only the beginning of a much longer process.

The final lesson here is that real innovation requires clear communication and careful calibration of people’s expectations. With the right encouragement, people will submit ideas. But they’ll want to know that their “brilliant” ideas are given full consideration — and if they’re not chosen or implemented, they’ll want to know why. Managing these messages in a personalized way, when hundreds of people are involved, can be logistically challenging. But without this kind of feedback, ideation can be demoralizing, sort of like dropping an idea into a suggestion box and then being ignored. To counter this, the idea champions mentioned above also had the responsibility of providing quick “thank you’s” and feedback to people who sent in ideas. And for the ideas that were selected, the champions encouraged the originators to become part of the implementation team.

Getting lots of ideas is a key part of innovation and a great way to engage employees. But unless you have a process to manage these ideas, you run the risk of wasting not only the content, but also the good will that comes with it.

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The Rise of Social Graphs for Businesses

If you’re a savvy social media user then you’ve already figured out that the knowledge a tool like Facebook is able to gather about your social connections is not only valuable to you. For you, Facebook’s ability to depict your network of friends and the varying strengths of those relationships supports all your mutual information sharing. For others — third parties — this “social graph” makes it possible to make personalized recommendations to you, and everyone else. For example, TripAdvisor leverages Facebook’s social graph to ensure that, when you are looking for reviews of hotels, restaurants, and so forth, any reviews posted by people you know appear right at the top.

For the social network companies, it didn’t take long to realize that the latter form of value creation should be the real focus of their business models. Early ventures like MySpace primarily focused on the social activity among their account holders, working to provide better tools to help them manage their relationships. Today’s social networks see social tools not as their end product but as a means for acquiring data. Facebook, in particular, saw the big opportunity in the “information exhaust” produced by all that user activity to produce a higher-level intelligence layer that would be useful to other businesses. Having graphed its users’ relationships and interactions, it could offer anyone else interested in those users the insight to reach them with highly targeted services.

Let’s say, however, that you are a business that would like to see that kind of social graph of the interactions among enterprises and not just individuals – perhaps because you sell to business customers, or perhaps because of your need to deal with suppliers. All businesses operate within their own networks of vendors, partners, clients, competitors, and other entities — the favored term these days is to talk of their “ecosystems.” Wouldn’t that be a valuable space to map?

This is the next step in the evolution of the social graph — let’s call it the emergence of the “commercial graph” — and it is happening now. Commercial graphs depict relationships between businesses, based on their actual interactions as they are captured digitally. And they support highly relevant information sharing, analogous to the TripAdvisor example above. Commercial graphs will help businesses manage their own partner relationships better, and also help third parties to those ecosystems understand them and spot ways to make targeted offers to those within them.

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Of course, businesses already use supplier and customer relationship management tools to manage their commercial relationships. We might see these as analogous to the MySpace era of social networks. The tools help individual businesses manage their interactions, but they do not generate a higher layer of intelligence to aid with new business development or new supplier discovery. They offer no visibility into another enterprise’s connections with other businesses, or its reputation based on a track record in dealing with others. By adding this new level of insight, commercial graphs will allow businesses to connect far more efficiently.

Commercial graphs visually display three things: the companies in an ecosystem, the relationships among them, and the reputations they have earned through their mutual dealings. As with social graphs, the depiction of the nature and strength of relationships between companies is based on actual interaction data. Unlike with a social graph, a company does not have to explicitly opt to join a network for it to be included in a commercial graph. Instead, its connections to others can often be derived from interactions recorded by other companies.

The commercial graph’s ability to depict each party’s earned reputation is its main source of value. A company’s reputation score is based on its performance across multiple business relationships. Think of TripAdvisor and Yelp, both of which have by now gathered input on so many different experiences with a given hotel or restaurant that they can present reputation scores, and indeed generate an entire reputation layer for hotels and restaurants. Importantly, however, commercial graphs don’t rely on explicitly stated (and subjective) opinions submitted through social mechanism. Instead, they rely on implicit indicators of quality and performance, which can be objectively observed in the business interactions between companies, and consistently weighted in the scoring. Universally disliked experiences such as slow turnaround, late delivery, or defaults on payments drive reputation scores lower.

When aggregated across an industry, these data add up to commercial graphs which can help companies assess the performance of their business relationships vis a vis industry averages. They help managers identify new partners and suppliers who are likely to outperform current ones. And they help companies benchmark their own performance against peers.

Let’s turn now to the opportunity this represents for the first developer of the commercial graph — the equivalent of Facebook — for a given industry. That business becomes a powerful platform provider, and establishes a strong, sustainable advantage. Yes, the software can be easily replicated, and better user experience and easy data portability can potentially pull users away to a new platform provider. But with the creation of a commercial graph, powerful network effects kick in. Because the value of the tool rises for everyone with every addition of a new participant, there is a shared interest in converging on one platform rather than allowing two to coexist.

Thus we see the various software providers that already provide the tools to manage business interactions (like procurement and invoicing) moving rapidly to capitalize on this opportunity. Companies like TradeShift, Procurify and SPS Commerce already capture interaction data through their workflow management tools. Much like Facebook, they are recognizing that the software is not the end product, and instead seeing it as a means for acquiring the data to produce valuable commercial graphs.

These software as a service (SAAS) providers are powering the first few instances of the commercial graph today. But they are not the only ones eyeing this new opportunity. LinkedIn’s Sales Navigator shows the company’s intent to move beyond connecting professionals to connecting companies. Payment startups like Square and cash-flow management startups like Pulse App also capture transaction data that can help them map out commercial graphs for small businesses.

Keep watching this space. In a world where commerce flows on networks, and business people increasingly devise strategies with an eye to their broader ecosystems, the rise of commercial graphs will be rapid. We need them to create the layer of intelligence for more efficient market interactions and healthy business relationships.

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