Marina Gorbis's Blog, page 1325

We Still Don’t Know the Difference Between Change and Transformation

It’s been almost 10 years since HBR published John Kotter’s classic article,”Why Transformation Efforts Fail.” And although his suggestions for how to improve the odds have been widely accepted, the success rate of major corporate change programs remains essentially unchanged — it still hovers at 30%.

Given the amount of research that business schools have dedicated to understanding change management, the number of books and articles published on the subject, and the investment that companies have made in consultants and training, one would think that we would be doing better by now.

Based on consulting experience with dozens of companies over many years, however, my sense is that there’s an underlying semantic problem, stemming from confusion between what constitutes “change” versus “transformation.” Many managers don’t realize that the two are not the same. And while we’ve actually come a long way in learning how to manage change, we continue to struggle with transformation.

Let me explain. “Change management” means implementing finite initiatives, which may or may not cut across the organization. The focus is on executing a well-defined shift in the way things work. It’s not easy, but we do know a lot more today about what to do.

For example, when a large technology firm integrated specialized engineers into its regional sales teams, there were shifts in roles, client coverage, compensation, goal setting, and teamwork. The change affected hundreds of people. By applying well-known change management principles and tools — such as making the business case, building a coalition of leaders, getting early results, engaging stakeholders, executing with discipline, etc. — the new sales approach was implemented successfully, and is generating improved results.

I could cite similar examples of other companies successfully executing discrete change initiatives, like introducing a new performance management system, shifting from decentralized to centralized marketing support, and utilizing new personal productivity tools. The point is that all of these initiatives were reasonably well-defined. The change management work focused on execution.

Transformation is another animal altogether. Unlike change management, it doesn’t focus on a few discrete, well-defined shifts, but rather on a portfolio of initiatives, which are interdependent or intersecting. More importantly, the overall goal of transformation is not just to execute a defined change — but to reinvent the organization and discover a new or revised business model based on a vision for the future. It’s much more unpredictable, iterative, and experimental. It entails much higher risk. And even if successful change management leads to the execution of certain initiatives within the transformation portfolio, the overall transformation could still fail.

I recently met with the senior leadership team of a large technology company that had been successful because one unique product constituted 90% of its sales. When competitors started developing a less expensive version of the product, it became clear that they could not survive as a one-product firm. As a result, the CEO launched a transformation strategy with the goal of figuring out a more sustainable business model. It included a number of major “must-do” initiatives: get more immediate revenue from the current product, create a leaner support organization, shift from internally-focused to externally-partnered product development, and ramp up the search for acquisitions and adjacencies. The transformation also called for a new set of cultural principles and a revised performance management approach aligned with these initiatives.

While each of these initiatives required change management disciplines, leaders also had to learn a broader set of transformational leadership capabilities, such as more flexible and dynamic coordination of resources, stronger collaboration across boundaries, and communication in the midst of uncertainty. And since so many people were engaged in the changes alongside their day-to-day jobs, managers also had to figure out how prioritize and stop lower-value activities. In doing this, most of the top 150 managers were treading through totally uncharted territory. And while they knew that the goal was to make the company look very different, nobody knew for sure what the final outcome would be. In other words, the transformation was as much a process of discovery and experimentation as it was of execution. Success wasn’t guaranteed no matter how effective the change management skills.

It’s easy to beat ourselves up over failures in change management and the various studies that show we’re not getting better at it. But we really do know how to execute discrete changes. What we know much less about is how to engineer a transformation. And if we want to get better, let’s at least start by being more clear about which one is which.

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Surviving in a Family Business When You’re Not Part of the Family

We see all kinds of office politics – the good, the bad, and the ugly – in family-owned businesses. Families can be intensely political organizations, and non-family executives must know how to play politics both in the business itself and in the dangerous borderland between the business and the family. After reviewing the work that our firm has done with more than 200 business families around the world, we’ve identified some winning political moves that non-family executives can make:

Play in your “room” only. We like to explain to client family and non-family members that family businesses are like a home: Different discussions should be held in different rooms. Non-family executives who survive and thrive are those who either know intuitively or learn through experience how to separate the business into the management room, the owners’ room, the family room, and the room for the board of directors. Successful non-family leaders stick to the “management room.” They understand that when it comes to the “family room,” the family has all the power; it’s never going to be a fair fight. Blood is usually thicker than water. Yet family squabbles do spill over into the management room, and non-family executives must be able to isolate the business from the family when family members can’t see past their own internal squabbling.

Ironically, it often turns out to be harder for the manager to stay out of the family room than one might think. That’s because many business families either deliberately or quite naively try to involve the non-family executive in family affairs. We worked with a client family whose patriarch was continuously trying to engage the very talented non-family CEO in a bitter family fight with his son. This was a losing proposition for the CEO who, to his credit, refused to take sides in family disputes. He was empathetic, but he firmly pushed back against being used as a pawn in a game that he could never win. He repeatedly told the patriarch, “That is a family room issue; please take it there.” So far at least, this non-family executive is turning out to be very successful.

Be highly discreet and competent. Restricting your influence to the management room does not mean that you are powerless as a non-family executive. Far from it. Given your position in the company, you typically have access to an enormous amount of privileged information, and information is power. As we noted above, the problem for many non-family executives is not that family members try to keep vital information from you, but rather that you are deluged by potentially explosive information. Woe to the manager who cannot keep confidences! Lose the trust of family members and your career will tank no matter how good you may otherwise be at playing the game of office politics.

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HBR Guide to Office Politics

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Karen Dillon


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This is not to say that family members always keep non-family executives informed of important business decisions that are in the offing. They don’t. But the best way to avoid being left out of critical conversations is to demonstrate your competence. We’ve seen this type of situation with another client family where major business decisions get made outside the office when the family gets together on Sunday afternoons. The non-family executives can’t force the family to involve them in these extra-office discussions, but in this case at least, one financial analyst is so good that the family invites her to all of these meetings. She has demonstrated her talent, her dedication, her discretion, and her commitment. She works extremely hard and has been careful not to align herself with any one family member or branch. She knows how to be professional in a family environment, and the entire family has come to respect her.

Avoid proxy wars. Alignment with one family member or branch is dangerous because families can act out their rivalries by “taking out” a relative’s favorite non-family executive. While proxy wars are hardly limited to family businesses, they can often be more intense in families due to volatile group dynamics. For example, we’re currently working with a client family member who is very vocal about his intent to break up the team of employees that is fiercely devoted to his sister, with whom he has a particularly contentious relationship. Our advice to non-family executives faced with this dilemma: Never hitch your wagon to just one star. Aligning yourself with a particular sibling or branch is always risky.

Give credit and invoke the family’s higher angels. In our experience, the non-family executives who survive the longest are those who know instinctively how to deflect credit from themselves to the family. While this is important for career success in all office environments, in family environments this tactic takes on far greater significance. Make a son look important in front of his father – a battle that child may have been waging all his life – and you will win the loyalty of that adult family member for life.

What’s more, most family owners are intensely proud of their companies. When negative family politics break out, you can nudge the family members to remember their family’s greatness. Do this with genuine respect for the family’s legacy, and you can go a long way toward helping them bridge their immediate political differences.

Make use of impartial outsiders. Giving feedback to executives about their performance can be tricky in a family business, where the sibling or cousin that you are evaluating may someday be the boss. Your instinct may be to step back and tell the truth, but to tell it “slant.” And, indeed, caution is the appropriate response. The fact is that you must deal with the reality of the power dynamics at play. Look for opportunities to make your feedback truly independent of you, and truly confidential. Encourage your business to conduct 360 reviews using an outside provider. Or find an honest broker – for example, a trusted, external board member – who can give constructive criticism without risking his or her career.

One of the most difficult political situations arises when a non-family employee has a genuine grievance against a family member who receives de facto protection because of the lack of any formal (or informal) channels for redressing the situation. Imagine for a moment what happens when a non-family employee with a complaint turns to the head of the business, who just happens to be head of the family and the father of the son who committed some egregious offense. This occurred at one client family where the son was making inappropriate sexual comments to several female employees. In this case, the power of the non-family executive to put an end to the situation was very limited; it took an outside advisor to step in, expose, and stop the harassment.

Know your genetic limits. Finally, to be successful in a family business, you must have a realistic sense of the destinations on your career path. Even the most masterful player of office politics is not going to get the top job if there is a family member in the leadership pipeline who is destined to assume the mantle of CEO. Don’t take it personally; it’s not about you. You are biologically disadvantaged and have to be savvy enough to recognize this fact. Always be thinking about the family tree and family dynamics when considering your own path up the career ladder.

In a family business, playing office politics successfully means having the humility — and the political shrewdness — to put the family first.

Some of the identifying details in this article have been changed to protect client confidentiality.

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Your Digital Strategy Shouldn’t Be About Attention

Are they talking about your brand? Around the clock? From Facefriend to Tweeter to Instapal?

Pssst.  

That’s probably not the right question.

Today, too many strategists believe that a clever plan to win the internet’s attention is a good digital strategy.

It’s not. Why? The painful truth is: attention itself isn’t worth as much as today’s marketers, boardrooms, and beancounters think. It’s not just that there’s good and bad attention — awe versus scorn, for example. Attention is a fickle, fleeting thing on which to build a business model, let alone a business, let alone an institution. Hence, attention without relation is like revenue without profit: malinvestment.

Institutions and leaders, obedient students of modern marketing, obsessively ask, “How do we get people to be loyal to us?” Meanwhile, they’re often (let’s be honest with each other for a painful moment) busy gleefully plotting to betray them at every turn. Hide the fees! Shrink the fine print! Why give customers cheese when you can sell them “cheese-like product”? Most “digital business models” are similarly sneaky — track their data! Make the terms and conditions impossible to understand! Why take the time to get to know your customers … as long as you can get them to use the corporate hashtag.

The real question — the one that counts for leaders and institutions today — isn’t “How loyal can we compel, seduce, or trick our customers into being?” It’s: “How loyal are we to our customers? Do we truly care about them?” Not just as targets consumers, or fans. But as people. Human beings. What every institution needs  —  and what every leader needs to develop  —  before a “digital strategy” is a human strategy. If you want to matter to people, you must do more than merely win their fickle, fleeting, frenzied attention. You must help them develop into the people they were meant to be. When you do, maybe, just maybe, they’ll reward you. With something greater than their grudging, wearied attention. Their lasting respect, enduring trust, and undying gratitude.

So here are my top four mistakes of digital strategy — and how not to make them.

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Making Money with Digital Business Models

Sponsored by Accenture


What successful companies are doing right

Titillating, not educating. It’s easy to win “clicks” by titillating people with Kim Kardashian’s naked behind or a list of the world’s cutest human-cat baby unicorn fairies. And it might lend a dreary day a moment of relieved escapism. But it won’t help anyone. To do that, you must educate. Not in the awful, misused corporate sense of the term: dully lecturing them about “product benefits.” But helping them develop the capabilities and skills they’re going to need to live better lives. What will your “digital strategy” help them become better at? Does it have a point? Skiing, dating, cooking, coding, creating, building? If the answer is no, you don’t have a strategy. You have a vaudeville show.

Making zombies, not superheroes. Too much of digital strategy is simply turned over to the marketing department. And modern marketing makes zombies. Most of the time, let’s face it: marketing is a tedious exercise in brainwashing. Or at least a poor attempt at it. See this toothpaste? If you use it, supermodels will fall at your feet! Or …  maybe your life will still be a bleakness punctuated by short moments of internet humor. Here’s the problem with creating marketing zombies. Sure, they might raid your malls. But once they’re done, they’ll probably try to eat your head. By that I mean that when all you do is earn people’s attention, without trying to earn their respect or trust, they can turn on you on a dime. Today’s viral hit is tomorrow’s laughingstock. Sorry, I mean the next nanosecond’s. That’s why making people zombies is a bad idea not just for the zombies … but for the mad scientists. Unless you happen to want to spend the rest of your life at war with the people formerly known as your customers. Creating an army of zombie customers is a terrible way to build a great brand.

When a company asks “how loyal can we be to our customers?” they don’t ask marketers to brainwash them, and they don’t ask customers to behave like zombies. Instead, they want their customers to be superheros with superpowers. Don’t track them on “God View,” for Christ’s sake. Instead, give them X-ray vision: let them see further and faster than before. Give them telepathy: help them understand the world better than they did before.

Infecting, not connecting. The holy grail of the digital marketing strategy is “virality.” But the goal of a digital business strategy is connection. One is shallow and fleeting; the other is deep and enduring. Connection means more than just gawping at your “content” when it’s trending. Connection means going beyond the strictures of marketing, and literally forging living, breathing relationships. It requires that you actually empower people to act as advisers, counselors, mentors to your customers … not just plastering your logo on digital billboards, or winning two more Facestagram hearts.

Consider Mr Porter, the man-cousin of Net-a-Porter. There, a fashion-challenged dork (a.k.a. yours truly) can ask experts for fashion advice, anytime, via internet chat. Or just learn how to make a great cup of coffee, if I’m not in the mood to buy anything. Reviewers have gushed over its ridiculously accurate sizing measurements and other little-luxury touches like a personalized label inside the shipping box and same-day delivery (in some cities). These may not sound like much … but they’re a tiny revelation when your world expands suddenly. Its rivals try to infect the entire internet with glamorous photoshoots studded with celebrities — something Mr Porter eschews completely. But those competitors are playing a losing game: trying harder and harder to win more and more uncertain gains in attention that last shorter and shorter. But what they won’t win is stable, less and less risky, long-run gains in trust, which endure and grow. Those must be earned; one connection at a time.

Communicating, not elevating. Digital tools have given companies the ability to communicate incredibly quickly with a ridiculously large number of people at low cost. But just communicating isn’t good enough anymore. The internet is full of sound and fury … signifying nothing. It’s full of trolls, haters, and loons, but they’re all communicating, aren’t they? The challenge isn’t merely communicating anymore. It’s elevating. Let me put it this way. You can use the latest, greatest social network as a tool to broadcast your crappy promise that no one really cares about. Or you can use it to build a book club, or a running group, a support group, a counseling center, a peer-funded scholarship. See the difference? One is about volume. The other about values. And creating value.

How do you build a digital strategy that rockets past loyalty through the horizon of marketing as we know it and into the wild blue yonder of trust, respect, and maybe even love? Simple. Forget about “building the brand.” Ignore the rules of communication. They were built to sell miraculously mass-made “product” to a stable, secure, sedated middle class forever ascending upwards into the plastic cornucopia of perfect prosperity.

Instead, focus on giving people what matters most to them — but what they feel cheated of, stymied from, and suffocated by at every turn. Improve their lives. Deliver lasting gains in their quality of life. Don’t just carrot-and-stick them into “loyalty.” Be loyal to them. Don’t win their attention  — give them your attention. And one tiny interaction at a time, help them live lives richer with meaning, happiness, and purpose. After all, they’re the only people that can help you find something greater, truer, and better than a strategy. A point.

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The Mistake Most Managers Make with Cross-Cultural Training

Mark is an HR director looking to improve his company’s cross-cultural skills, especially in Germany where his company is doing an increasing amount of business. After considerable research, Mark hires a firm to deliver a training solution that seems like just what the doctor ordered. It’s a tool that enables employees to discover their “cultural profile” and then compare that profile to those from a range of other cultures. The program — which is self-study and available on any digital device — also enables employees to click on a country and learn about its history, values, and cultural “assumptions.”

While the program looks great on paper, it ultimately makes no real impact on Mark’s employees’ behavior. The people who struggled before continue to struggle, and those who didn’t really need the program in the first place continue to thrive. Disappointed, Mark wonders what he and the company actually received for all the money they had invested.

If you’ve ever received any cross-cultural training — or even read a book on the subject — chances are, just like in the example above, it has focused on differences: differences in communication styles (like how Japanese workers are less direct than Germans) or differences in values (like how Americans have more individualistic values than those in China). It may have even focused on differences in etiquette — like how in the United States you can write on the back of a business card, but in Japan, that would be a taboo.

Knowing about differences can be quite useful. It can give you a sense of how you’re supposed to act in a foreign setting, especially when you have no idea where to start. It can also help you understand why others from a different culture behave as they do. But in my experience, the mistake many companies make is thinking that knowing cultural differences is enough — that discovering the key differences is all you need to master to be effective across cultures.

If the problem your employees face is that they simply don’t understand cultural differences, a solution focused on defining cultural differences makes all the sense in the world. But if, like in most instances, the real problem is that your employees can’t adapt and adjust their behavior across cultures, these solutions focused simply on differences likely won’t give you the bang for your buck that you’re expecting.

So what can companies and managers do to help their employees take the next step in their cross-cultural training?

First, match the solution to the problem. If the real challenge your employees face is adaptability, don’t provide a solution that focuses only on identifying and memorizing differences. In Mark’s case, for example, I’m guessing it probably wasn’t that hard for his employees to learn about differences in German and American communication styles — that Germans tend to be more direct and frank than Americans. But what was likely much harder — and also not addressed by the differences approach — was how to actually adapt one’s own behavior and either deliver feedback in a German style or react to straightforward and often blunt feedback from German colleagues without taking offense. Research indicates that it can feel extremely uncomfortable acting against your natural style. People can feel anxious, embarrassed, inauthentic, and frustrated, and as a result, many individuals either avoid these situations altogether, or perform them ineffectively. So match your solution to the actual challenges your employees face, or else you’ll be disappointed with the results.

Once you match your training to the goal, don’t compartmentalize training into a manual, a webpage, or an off-site program. Develop training that is integrated with the actual work people do. Athletes do drills, but then practice in scrimmages and games. In the same way, make sure that your employees have ample opportunity to practice and hone their skills in the actual contexts they’ll ultimately need to use them. For example, when I train MBA students to develop global dexterity, I have them practice in real situations, such as in interactions with their bosses during their internships, or with student project groups working on real case-studies and classroom assignments. By practicing and honing skills in real settings, the skills have a much better chance of sticking.

Teaching people to adapt behavior across cultures isn’t a “quick hit” you can achieve in a two-hour session, or by handing someone a book, a website, or a manual. It’s a real skill that requires patience, practice, and perseverance. Smart companies are starting to realize this and adapt accordingly.

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The Capabilities Your Organization Needs to Sustain Innovation

Why are some organizations able to innovate again and again while others hardly innovate at all?  How can hundreds of people at a company like Pixar Animation Studios, for example, work together to produce blockbuster after blockbuster over nearly two decades – a record no other filmmaker has ever come close to matching? What’s different about Pixar that enables it not only to achieve, but also to sustain innovation?

It’s a crucial question. In recent years, many people have sought to understand how organizational innovation works, hoping to shed light on the broader and deeper dynamics and principles at play. They have debunked the myth of the lone genius, discrediting the idea that innovation is purely a solitary act or flash of insight in the mind of one creative individual.

Amidst this swirl of inquiry, however, there has been less attention given to the precise nature of organizing for innovation, the capabilities that drive discovery, and above all, how to lead innovation successfully. This has been our focus.

Consider Thomas Edison, perhaps the greatest American inventor of the early 20th century. From his fertile mind came the light bulb and the phonograph, along with more than 1,000 other patented inventions over a 60-year career. But he didn’t work alone. As many have observed, perhaps Edison’s greatest contribution was not one single invention, but rather his artisan-oriented shops – a new way of organizing for innovation that has evolved into today’s R&D laboratory with its team-based approach. Edison may get the credit for “his” inventions – it was his laboratory, of course – but each typically arose from years of effort that included many others.

Edison’s example illustrates the collaborative nature of the innovative process. Innovations most often arise from the interplay of ideas that occur during the interactions of people with diverse expertise, experience, or points of view. Flashes of insight may play a role but most often they simply build on and contribute to the collaborative work of others. Edison’s true legacy – and secret to success – was that he was equally an inventor and a leader of invention.

At Pixar, they – like Edison – recognize the importance of organizing for innovation. They truly believe that everyone has a slice of genius to contribute to the collective genius of the whole. Without the contributions of large numbers of people, the company simply could not make a computer-generated (CG) movie. Whether it is the artists who develop the story, the engineers who render the images, or those who mind the business, all are aware that they cannot succeed alone. Collaboration is a hallmark of Pixar’s approach. No individual can produce the final solution, but each contribution plays its part in creating a spectacular movie. As Ed Catmull, Pixar’s cofounder and president noted: “We’re not just making up how to do CG movies; we’re making up how to run a company of diverse people who can make something together that no one could make alone.” 

So how does it work?

Three Capabilities of Innovation

After studying masters of organizational innovation for over 10 years, we’ve identified three key activities that truly innovative organizations like Pixar are able to do well. First, the people and groups in them do collaborative problem solving, which we call creative abrasion. Second, they try things and learn by discovery, demonstrating creative agility. Third, they create new and better solutions because they integrate existing ideas in unanticipated ways, practicing creative resolution.

A large body of research points to the importance of these three activities in innovation. They might sound straightforward and relatively simple, but consider what each of them actually involves.

Creative abrasion. New and useful ideas emerge as people with diverse expertise, experience, or points of view thrash out their differences. The kind of collaboration that produces innovation is more than simple “get-along” cooperation. It involves and should involve passionate discussion and disagreement.

This creative collaboration produces innovation, but to many, this kind of engagement is hard and can be emotionally draining. The sparks that fly can sting or, at minimum, create tension and stress. To collaborate means making oneself vulnerable to hard questions and push-back. Not everyone wants to do that all the time. It’s no wonder that some and perhaps many people choose to remain silent rather than participate.

Creative agility. Almost by definition, a truly creative solution is something that cannot be foreseen or planned. Thus, innovation is a problem-solving process that proceeds by trial-and-error. A portfolio of ideas is generated and tested, then revised and retested, in an often lengthy process of repeated experimentation. Hence Edison’s famous definition of genius: “1 percent inspiration; 99 percent perspiration.” Instead of following some linear process that can be carefully planned in advance, it’s messy and unpredictable.

By its nature, then, innovation requires activities and interim outcomes that make most organizations nervous. Experiments take time and patience. They produce false starts, mistakes, and dead ends along the way. Missteps and rework are inevitable and must be accepted, even encouraged. These realities don’t lend themselves to the preferred corporate approach of set a goal, make a plan, and work the plan. As a consequence, those who take this approach make themselves vulnerable to criticism and blame.

So, to avoid anything that looks like failure, most people don’t perform the experiments that produce real innovation. Instead, they simply generate a set of alternate solutions and then choose one and pursue it. Organizations that innovate not only attempt new things, but they invite failure as part of the cost of discovery.  And, nobody gets in trouble for trying something that doesn’t work.

As Ed Catmull told us, if Pixar had “no failures,” which he defined as a “less than spectacular outcome,” then that would suggest they had lost their appetite for doing bleeding-edge work. It’s part of Pixar’s culture that nobody gets penalized for trying something that didn’t work.

Creative resolution. Integrating ideas – incorporating the best of option A and option B to create something new, option C, that’s better than A or B – often produces the most innovative solution. However, the process of integration can be inherently discomforting, emotionally and intellectually.

The problem – and the leadership challenge – arises because options A and B are often incompatible, even completely opposable, ideas. To arrive at option C means people must keep both A and B on the table, and that is difficult to do. When faced with two seemingly mutually exclusive alternatives, the human impulse is to choose one and discard the other as soon as possible, or to forge a simple compromise. We crave the clarity provided by that kind of clean, assured decision-making. We crave it so much, in fact, that when a leader refuses to make a choice quickly, even when it can only be arbitrary or capricious, we grumble about the “lack of leadership around here.” It takes courage to hold open a multitude of possibilities long enough that new ways of combining them can emerge. There is often great pressure to make a choice, any choice, and move on.

Innovative teams, however, know that integrative decision-making often involves more than simply and mechanically combining ideas.  Rather, it requires a willingness to play with ideas and experiments until they “click.”  Discoveries emerge through constant iteration, through trying different approaches, including approaches that at first seemed inconsistent, through the involvement of lots of talented people, and through a willingness to wait and see what works and what doesn’t.

History – and not just Hollywood – is littered with star-studded teams that failed. We all know that it’s not easy to get people to collaborate on a straightforward task let alone to create something fresh and useful. Almost all cultures have some version of the saying, “Too many cooks in the kitchen.”

That’s why leadership is the key, cultivating the ability to keep testing possibilities before choosing one and moving ahead. But this is hard work. Given the difficulties, it’s not so surprising that people often choose not to innovate – or, more accurately, that they choose to avoid the challenging activities most likely to produce real innovation. The job of the person leading innovation is to create the conditions that allow and encourage all these things to happen again and again.

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Why Nordstrom’s Digital Strategy Works (and Yours Probably Doesn’t)

In a recent MIT CISR poll, 42% of our respondents said they expected to gain competitive advantage from social, mobile, analytics, cloud, and internet of things (SMACIT) technologies.

But guess what? That’s not going to happen. The most notable characteristic of those technologies is their accessibility — to customers, employees, partners, and competitors. Because they are so accessible, it is very difficult to generate competitive advantage from any of them. That doesn’t mean you can ignore them. But the truth is that, for the most part, they redefine minimum requirements for operating in a given industry — not advantages.

Only a small percentage of companies will gain competitive advantage from SMACIT technologies. Those that do will focus less on the individual technologies and more on how they rally all those technologies, in unison, to fulfill a distinctive purpose. We don’t mean a generic, high-concept purpose like “generating shareholder value.” Instead, we mean something much more down-to-earth – a strategic focus that directs their technology spending.

Take the large retailer Nordstrom.For nearly 100 years, Nordstrom’s purpose has been to provide a fabulous customer experience by empowering customers and the employees who serve them. To fulfill this purpose, as far back as the late 1990s, Nordstrom started looking for opportunities to invest in technologies that would further empower their famously empowered employees. These investments included Nordstrom.com and a perpetual inventory system that allowed Nordstrom to offer a consistent multi-channel experience by 2002.

Insight Center





Making Money with Digital Business Models

Sponsored by Accenture


What successful companies are doing right

Then, between 2004 and 2014, Nordstrom made an extraordinary series of investments, each aimed squarely at that same purpose of providing a fabulous customer experience. First came a new point-of-sale system that included personal book software so that salespeople could track individual customer requests and needs online. This was followed in quick succession by the launch of an innovation lab, the creation of Nordstrom apps, the introduction of popular social apps that created buzz as well as mobile checkout, support for salespeople texting, and ultimately the acquisition of a cloud-based men’s personalized clothing service.

Because Nordstrom.com and the Nordstrom app are integrated with the inventory management system, customers can find what they want in one place and have it delivered from somewhere else to a third place. Nordstrom’s engagement with popular social apps, like Pinterest, extends what Nordstrom’s employees know about their customers’ preferences. Items popular on Pinterest are tagged with a red tag bearing the Pinterest logo and prominently displayed in the store, linking their online and offline worlds. Their employees, famous for providing customer service, are now armed with information not only about what a customer has bought in the past, but what they like, and even what they shopped for but could not find. Mobile checkout makes it easier than ever for any employee to see a customer through the payment process and thank them, rather than sending them to a cash register.

They have not only introduced new channels, but they have integrated them in ways that empower employees and customers. Nordstrom hasn’t used SMACIT to develop a digital business model — they have further digitized their business model, and pursued their purpose, using SMACIT.

The persistent digitization of Nordstrom’s business has allowed the company to grow revenues by more than 50% in the last five years. The company is growing sales in both full-price and off-price businesses through both online and traditional channels.

Nordstrom’s digital capabilities make complete sense for Nordstrom. What makes them important is that they are tightly integrated with all the parts of the business that ultimately serve the customer. This is not a matter of having the best apps, analytics, or social media tools. Instead, it’s a matter of tending to the details of building integrated digital capabilities, one at a time, making the right data accessible, and simplifying processes. Most retailers will struggle to do this because they haven’t architected their product or customer data for easy access by the new digital capabilities. Without those core capabilities, integration with and among new digital capabilities is virtually impossible.

Most companies will struggle to achieve this kind of integration. They will end up with a bunch of clever but isolated SMACIT applications, attempting to compete with companies who own an innovation engine that constantly raises the bar for delighting customers.

It’s time to get serious about defining the purpose of your digital business model. Don’t worry about developing a strategy for social, mobile, cloud, or any other technology. Develop a strategy for succeeding in the digital economy—a purpose that leverages your unique capabilities and responds to market opportunities. Then grab every technology that takes you there.

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4 Strategies for Women Navigating Office Politics

The politics of office life seldom fail to flummox and frustrate the top female executives my partners and I coach and train. In 2013, we conducted a number of interviews and surveyed 270 female managers in Fortune 500 organizations to determine what they liked and disliked about business meetings. Politics was one of the things that repeatedly fell into the dislike column. In fact, both men and women said that women are more likely to become nervous and uncomfortable in meetings when interpersonal conflicts and other political challenges arise. We’ve observed time and again in 360-degree feedback surveys that women executives believe politics present a particular dilemma for them. On one hand, they feel uncomfortable engaging in quid-pro-quo behavior and political maneuvering. On the other, they acknowledge that it’s all but impossible to operate above the political fray.

With that in mind, I’ve combed our recent consulting files to identify four of the most effective practices that help the women we coach become more politically savvy.

Get yourself an agent.  Gail was in her fifth year at a large finance firm when she recognized a disconcerting pattern. She was repeatedly passed over for choice assignments. According to Gail’s manager, she had a solid reputation, and her work was considered to be impeccable. The problem? She wasn’t lobbying as loudly for assignments as her colleagues. Gail was uncomfortable singing her own praises. Unwilling to waste her time on personal propaganda, Gail did something that worked even better for her. She recruited an “agent” to lobby on her behalf.

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Gail was liked and admired by her peers—in part because she did her job well without waiting for public recognition.  So it wasn’t difficult to find a number of highly regarded colleagues who were willing to mention her name when the next great assignment was up for grabs. “It’s like having a sports agent looking out for my career,” she said.

This type of peer advocacy is a win-win proposition. The individual being referred gains the direct benefit without resorting to self-promotion; the “agent” enhances his or her own reputation by appearing selfless and making an excellent referral. While it’s is a given that female executives need to be comfortable stepping up to ask for what they want, Gail’s strategy is a smart workaround that anyone can use.

Let planning trump politics. One of the reasons politics makes so many of us uneasy is that complex situations are difficult to read and impossible to control. When personalities and motivations intertwine, anything can happen. An intrepid energy industry executive we know takes a novel, planning-based approach to managing politics, and we’ve taught the same method to many female executives over the years.  To inject some predictability into the most crucial of organizational interactions, he uses scenario planning to map out strategies.

His company has its share of challenges when it comes to politics—it’s a multinational organization with dozens of managers vying for resources and lobbying for outcomes specific to their own regions. To keep up with the players and be in a position to advocate for his own agenda, this executive maps out potential scenarios according to three separate quadrants—personalities, motivations, and variables.

For example, he attends an annual planning meeting that is fraught with politics. So he does his homework. He maps out the personalities involved to help him anticipate how each individual might react to his agenda. He adds in their motivations to analyze and compare what he believes each person expects to accomplish. Finally, he takes the time to identify other relevant variables so he can anticipate factors that might sway individuals in real time as the meeting plays out. Thinking along these lines can help women create options, feel prepared, and remain agile in fluid political situations.

Turn your mentor into a sponsor. While mentors are important allies for navigating through political minefields, sponsors are absolutely crucial. Having an influential ally who publicly backs your agenda, your career, and gives you air cover, can fuel success. And yet, research indicates that sponsors are hard to come by—especially for women. One way we coach women to secure sponsorship is by “promoting” their mentors to sponsorship status.

A woman we coach, Sheryl, told us how she used this strategy to good effect. When her longtime sponsor left the company, she elevated her mentor to become a sponsor. To encourage genuine sponsorship, mentors need both to be invested in your success and to see that you are working on their behalf as much as they are working on yours. This entails clearly demonstrating how they can benefit from your advancement by aligning your agenda with theirs and highlighting the important overlap. In general, it is what you do rather than what you say that encourages mentors to advocate for you in a more active way. In Sheryl’s case, she asked to be put on a number of projects with her influential mentor and essentially made herself indispensable. They got to know each other better, and her efforts earned her a powerful sponsor.

Make politics less personal. Without people there would be no politics. And while it’s impossible to remove humans from organizational interactions, it is possible to take political situations less personally. The female executives we know who can look upon politics like a game—win some, lose some—tend to be more resilient and have smarter responses when a political interaction takes them by surprise.

One executive we coach uses this simple strategy to depersonalize politics: when a political situation starts to feel too personal, don’t look your opponent in the eye. In many business situations eye contact is crucial, but in this case averting her gaze, she says, helps her remain calm and avoid the fight-or-flight impulse that comes when she feels under attack. Remaining on an even keel, in general, enables her to keep talking and regain control of the situation. Regardless, taking politics less personally removes the sting when the political tide turns against you.

Politics are an inevitable part of the back-and-forth mechanics of decision-making, and the right strategies can make dealing with political situations much easier.

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Prevent Your Star Performers from Losing Passion for Their Work

When Mohamed El-Erian abruptly resigned from his high-profile, and highly lucrative, position as Pimco’s co-chief investment officer a year ago, most observers were shocked. I wasn’t.

As a researcher and consultant to executives across diverse industries, I know how common it is for successful, high-performing people to lose their passion for work — and their commitment to their organizations — over time. I call this phenomenon “executive brownout” and the details of El-Erian’s departure (not to mention more recent reporting on the conduct of his co-CIO Bill Gross, who has also since resigned) only confirmed my opinion that he was very likely suffering from it. El-Erian said he decided to leave after receiving a note from his 10-year old daughter outlining 22 milestones  in her life that he had missed.

Brownout, a term also used to describe part of the life cycle of a star, is different from burnout because knowledge workers afflicted by it are not in obvious crisis. They seem to be performing fine:  putting in massive hours in meetings and calls across time zones, grinding out work while leading or contributing to global teams, and saying all the right things in meetings (though not in side-bar conversations). However, these executives are often operating  in a silent state of continual overwhelm, and the predictable consequence is disengagement.

Virtually every executive client with whom we engage is by all outward measures a superstar of their firm, but that status comes with consequences. They tell us they worry about:

Feeling drained from continuous, 24/7 obligations.
Physical deterioration due to years of sub-optimal sleep and self-care.
Tenuous relationships with immediate family members.
Distant relationships with old friends.
The atrophy of personal interests.
A diminishing ability to concentrate in non-business conversations.

While these are clearly “personal” issues, the effects to a company are quietly, but perniciously, toxic because they inevitably bleed into professional behavior. We’ve seen leaders in brownout spread the malaise by, for example, subconsciously protecting their own turf, shutting down brave new ideas for growth, losing track of talented staff (especially “B” players), and by being a role model that the next generation grudgingly respects, but finds deeply unappealing.

How can organizations begin to address this problem?

More money won’t cut it. Bigger payouts will either make it easier for these executives to leave — as in El-Erian’s case — or, for those in less senior roles, create incentives to “hang on” in a  state of passive disaffection.

Companies must instead provide a new kind of currency to engage their professionals – one we call “active partnering.” The first step is to create a system that allows executives to talk candidly with their managers about what is most important to them professionally and personally and how their organizations might support these goals given their key work responsibilities. A natural time for this to be positioned is during the annual review process. Personal objectives might range from the sublime (adopting a child, writing a book, reconnecting with a disenfranchised family member, starting a non-profit) to the prosaic (running a 10K, coaching a child’s soccer team, volunteering as a mentor.) Professional objectives might include initiating a new product or service, building more powerful relationships, or tackling a business-critical need in the organization. The point is to foster a dialogue that allows bosses (and therefore businesses) to build true partnerships with their most important people.

When firms do so, it dramatically increases the commitment and impact of its stars. Think about it: if I’m your boss and, in addition to helping you develop professionally, I also actively support you in adopting a child, or becoming fit, or taking a service trip with your daughter to Africa, I have profoundly changed the nature of our relationship and your advocacy for and loyalty to our team and organization.

Naysayers will dismiss this idea as too unwieldy to implement, but elite managers are already doing it on an ad hoc basis, and we’ve seen it work to powerful effect on a systemic scale.  For example, a Big 4 professional services firm engaged us to provide a year-long holistic executive development program focused on work excellence, health, and family success to 473 senior leaders. During the process, more than 60 of these high performers confidentially identified themselves as either actively planning to leave the firm or considering a departure in the year ahead. But following their participation in our active partnering plan, which involved one-on-one coaching sessions over several months, only two departed within the next five years. Several of the 62 went on to attain even more elevated positions at the firm.

The company retained its experienced executives and their deep institutional and market knowledge. These professionals were revitalized in the ways that were most important to each of them — and newly equipped to sustain high performance in today’s ultra-challenging business environment. As one example, we worked with a rising-star 40-something executive, who had reached a career crisis — feeling deeply unhappy at work (despite being fast-tracked and assigned to critical firm initiatives) and underappreciated at home. He had also suffered from weight gain brought on by continual travel and client work. After an active partnering development process, he had shed 40 lbs and had a clear vision of how to take his performance and contribution to the next level. Ten years later, he was the global CFO of his firm.

Could Pimco have worked with El-Erian to develop a more sustainable strategy for success – one that would have enabled him to be successful in both his personal and professional life?  Yes, of course. A better question is: Why doesn’t every organization do that for its key executives?

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Employee Engagement Depends on What Happens Outside of the Office

Companies spend over $720 million each year on employee engagement, and that’s projected to rise to over $1.5 billion. And yet, employee engagement is at record lows — 13% according to perennial engagement survey leader Gallup. What’s wrong here?  Perhaps human resources leaders are spending their money in the wrong places. Or the modern workforce is demanding more. Either way, our models and surveys aren’t working, and we’re making very little progress.

As a former HR leader for a Fortune 500 company, I’m all too aware of how flawed the system is. There are just too many external influences that affect employees’ performance. In fact, as my current team at exaqueo reviewed client data to help them address their problems with engagement, we confirmed that most employee engagement models are centered around the work experience and not on the employees.

That’s the core problem. When we only try to understand and affect what happens at work, we ignore the most basic tenet of person-organization fit: employees bring their whole selves to work. What happens after the workday may be just as important as what happens during it.

To better learn how to measure this, exaqueo developed what we call the Whole Self Model and applied it to ethnographic research we were already doing for a number of different clients. Specifically we used interviewing and focus groups to find out whether many of the root causes of engagement are actually found outside the workplace. The answer? A resounding “yes.”

In addition to the “work” part of engagement, we broadened our data set to include three additional components to round out the whole self: the internal self, the external self, and relationships. Each involves a different, specific question:

Work: What preferences and patterns do employees exhibit in performance, engagement, and job satisfaction?

Relationships: What people and relationships most influence employees inside and outside of work?

Internal self: What are the values that govern the lives and decisions of employees?

External self: Where do employees expend their energy outside of work?

As you might expect, employees don’t always commingle work and life. In fact, we found a strong correlation between increased age and an increased desire to keep work and life separate. Most Gen Xers and Baby Boomers are anxious to finish work for the day and focus on their home lives and families.

We also found that the behaviors and values employees cultivated outside work had an intense impact on how they behaved at work. When employees pulled into their driveways at the end of a commute, the events and activities that happened next governed their behaviors the following day.

One of our clients was a $1 billion services company with a plan to grow to $5 billion. They had a detailed strategic plan in place that included increased collaboration and innovation necessary to grow the business. The company was already introducing activities in the workplace to increase collaborative behavior but it wasn’t taking hold.

So in our research we asked employees, many of whom were individual contributors, where they spent their energy outside of work — the external self portion of the model.

Without fail, over 90% of respondents cited individual activities: cooking, running, knitting, cycling, reading. Outside of family time, few engaged in collaborative, group-minded activities, or really wanted to. Combine this with their roles as individual contributors during the workday and it’s clear why adapting to a more collaborative workplace wasn’t easy or comfortable for them. One employee summed it up this way: “Everyone’s in their own little world here.”

No engagement survey could reveal this insight so concisely. Understanding more about these employees’ lives outside work also meant it was easier to address the problem through change management, performance management, and recruiting strategies. Launching new collaborative initiatives and expecting them to stick just wasn’t going to cut it.

At an Inc. 500 marketing company, we used the model to help leaders understand the root cause of what the CEO defined as a toxic culture. He was putting a great deal of effort into perks and benefits and yet relationships between co-workers were strained, to put it mildly.

In our research we asked employees about influential connections inside and outside work — the relationships portion of the model. First, while the workforce was comprised mostly of women, their relationships outside of work were often with female friends. They cited the difficulty of dealing with some of the emotional issues female friendships often involve and then coming to work and experiencing the same kinds of things. Not only was it taxing, but many people started dealing with work issues using the same strategies they’d use with close female friends, leading to workplace blow-ups that were impeding work performance in significant ways.

We also found that due to the geographic location of the business, employees tended to have a laid-back lifestyle outside work. The CEO assumed that employees wanted this to translate into the office in terms of dress code, mannerisms, and hours.

But employees felt differently. They actually wanted to complement their casual outside-work activities with process, rules, and rigor inside the office. This meant a completely different workforce strategy — one the CEO wouldn’t have uncovered through satisfaction survey data. In fact, he called the transformation “significant and measurable.”

Understanding employee engagement isn’t just about current employees, however. In one case, a Fortune 500 technology company was losing recruits to newer companies like Google, Facebook, and SAS.

In this case we looked at both internal, high-potential employees and potential recruits who fit the same profile but hadn’t or wouldn’t consider working for the company. This time, one finding that stood out was a difference in the personal values of high-performing employees and the hard-to-woo recruits — the internal self portion of the model. While both sets of individuals cited honesty and transparency as key values they held high, external recruits also more heavily valued integrity and loyalty, something that the company wasn’t doing a good job of promoting. Companies like Google were actively touting their values and being recognized for them in the press, but the candidates who were choosing not to apply knew very little about the values of our client company and its leaders. And because the company was older, with a less modern and innovative reputation, they were dubious about the promises it was making to be more innovative and forward-thinking.

Another key difference was that the prized potential job candidates were continually honing their technology skills outside of work and wanted to work for companies that encouraged and supported side projects and personal endeavors. In contrast, the company’s high-performing employees transitioned away from technology completely at the end of the day.

Using this holistic approach to understanding employees doesn’t have to be an expensive or arduous task. There are two key ways you can begin to adopt this at your own company:

Find new insights using the data you already have. Knowing that people are disengaged is just the beginning when it comes to making workforce decisions. Use the quantitative engagement and satisfaction data you’ve already gathered to determine areas worth probing. For example if early morning or late afternoon standing meetings are driving significant disengagement, it could be the case that the majority of employees have long commutes. And if your employees are hesitant to take vacation, it may be the case that they’re saving it for more personal issues like childcare struggles. If you can’t do this type of work on your own, unbiased and experienced research partners can help you dig into the “why” and “how” behind the statistics.


Start asking different questions. Take a hard look at what you’re asking your employees. If all of your surveys and other interventions are focused on work, expand the question set to understand employees’ lives outside work. Consider broader influences like internal values, but also more granular issues like family needs, commuting time and methods, and personal interests.

The lessons here are clear. Just as a shopper’s purchase decision doesn’t start and end in the grocery store, an employee’s decision to take a job, engage and contribute isn’t confined to the workplace. It’s easier for HR departments to rely on surveys and workplace data — and those are still a good starting place. But the insights that lead to real improvements in engagement arise when we consider the whole person.

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Survey: Have You Been Treated with Bias at Work?