Marina Gorbis's Blog, page 1330

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.

[image error]

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.

Further Reading







HBR Guide to Office Politics

Communication Book
Karen Dillon


19.95



Add to Cart





Save
Share

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.

[image error]

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?

[image error]

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.

[image error]

Survey: Have You Been Treated with Bias at Work?

Advice and Credibility Go Hand-in-Hand for Managers

Managers who seek and give advice effectively are also likely to wield soft power, our research shows. But you risk damaging your reputation if your behavior has even a hint of inauthenticity — if you use counsel to curry favor, for instance, or to advance an agenda. So tread carefully. It takes a long time to build trust and political capital, but you can lose credibility very fast.

Consider this example. The head of a business unit — we’ll call him Cal — was weighing three finalists for the open position of marketing VP, who would also report through a dotted line to the corporate CMO. Cal had a clear favorite; to ensure that she got hired and came in with high-level support, he sought “advice” from his head of sales and the CMO. Cal began these conversations with open-ended questions: What skills and capabilities do you think the position requires? Which of the candidates strikes you as best meeting those qualifications? After listening, he asked more pointedly, “If you were in my shoes, which candidate would you choose?”

Further Reading







HBR Guide to Office Politics

Communication Book
Karen Dillon


19.95



Add to Cart





Save
Share

But each time the head of sales or the CMO spoke in favor of one of the other candidates, Cal responded critically, diminishing them relative to his favorite. As a result, his “advisers” felt they’d just been lobbied, not heard. Worse yet, they felt manipulated and misled. They had thought their counsel was genuinely being sought, but they walked away with considerable distrust of Cal.

Though seeking advice when you make decisions can enhance your credibility and others’ trust in you — both crucial for increasing influence, effectiveness, and political support — you have to really want it when you ask for it. Otherwise, you’ll inadvertently train people to question your motives, which will damage your efforts to exercise influence in the future. That’s what happened with Cal. Both the sales head and the CMO were guarded around him after it became clear that he was looking for buy-in, not guidance.

Now consider another example — this one about giving advice. An executive we’ll call Astrid was asked by a peer how to handle a direct report who always delivered results, but alienated many of his colleagues in the process. After Astrid asked a few key questions (What was at stake for the company? What was at stake for the peer? Were there any other folks who could step up and take on the work?), she had a sense that her peer needed to do a better job managing his team (and his own insecurity) rather than move or fire the problematic direct report.

But instead of leaping to that conclusion, Astrid took a more nuanced approach. First she shared her understanding of the situation and the mistakes she might be tempted to make in her peer’s shoes. Then she offered a suggestion: “How about bringing the team together to say that the company is counting on everyone to work better together? That would help set the stage for a separate one-on-one conversation with your difficult employee. You could frame his development goal as a way of helping the team deliver on that larger mandate.” After sharing the rationale behind her advice, Astrid laid out two other options to think about: arranging for the direct report to transfer to another area or bringing in a seasoned supervisor to work closely with him.

Astrid’s peer responded with admiration and thanks. He felt heard, and he fully grasped the advice, appreciating both its wisdom and Astrid’s — all because she had shown empathy and offered alternatives alongside her proposed solution. Since Astrid had crafted her advice in such an open-ended fashion, her peer and others began to see her as “the person to go to with the tough stuff.”

Whether advice makes or breaks you politically has a lot to do with how pure your motives are for seeking it and how empathically you give it. Ironically, as a seeker or as an adviser, you stand to gain subtle, quiet influence by focusing less on securing power and more on opening yourself to others.

[image error]

Start-Ups Are Helping Consumers Make Better Health Care Purchases

For years, one prescription to health care woes in the United States has been to shift costs to consumers. The logic is simple: Because patients currently do not bear the expense of most of their decisions, shifting expenses to them will cause them to make more rational, cost-effective decisions and will ultimately help bring about a more functional health care market.

As this experiment plays out in real life, however, a different reality is unfolding. While patients are paying more and more out of pocket for care, key challenges stand in the way of them operating as effective consumers. Fortunately, a number of innovative start-up companies are arising to address this problem.

Three obstacles. The first reason shifting costs to patients alone won’t work is many care decisions have short-term financial implications and long-term health implications. In most other purchases, consumers receive some form of immediate feedback or signal about their decisions, good or bad. In health care, the decision to forgo a colonoscopy or use one medicine over another has implications that play out over several years, if not decades.

Second, most health care purchases are complex, and there still is a severe lack of good information on the quality of services and products. When information on outcomes is available, it often is hard to digest, focuses on volume rather than quality, or lacks specificity. A surgeon might perform more operations than his counterparts, but how do those operations relate to the one that I am having? Consumers may have more power, but they lack the information they require to appropriately exercise that power and have few ways to contribute their own insights to others.

Third, cost is still not transparent to patients. The complexity associated with deductibles and arcane benefit structures for different types of services means that consumers might be more empowered and cost sensitive, but no less confused about the impact of a decision on their personal bottom line.

Reconceive the market. To truly unleash the power of consumers in health care, we must reimagine the health care market — much in the way that Uber reconceived the transportation market. By this, I mean we must create platforms that allow patients to be more quickly rewarded for healthy behaviors and to provide feedback that leads to rapid improvements in services and products.

Rather than simply rewarding patients for seeking lower costs, we must reward them for making good decisions or taking actions that lead to such choices — for example, demonstrated understanding of their health care decisions and their personal implications, adherence to medications and care plans, and participation in high-value preventive services such as vaccines or colonoscopies. Patients must be engaged in rating and evaluating the quality of services they receive and sharing these insights with other patients.

Absent that linkage of reward and behavior, we might face a type of race to the bottom in which cost-sensitive patients forgo necessary care at the appropriate time (e.g., in the early stages of a disease that would reduce the costs of treating them over the long run). We would also fail to take advantage of one of the most powerful tools we have at our disposal to improve care: patient insights.

To be successful, this market also must be liquid in terms of both suppliers entering and exiting it and the incentives applied to different types of behaviors. (Health care currently suffers from stultified benefit designs and closed networks that prevent new entrants from offering services.) As insights are generated about what improves health, the market should adapt to reward those types of behaviors and make it easy for new entrants to freely enter and offer services. As data clarifies which suppliers and services lead to better health, the market should more clearly signal these data to consumers. Absent this type of mechanism, patients are left making blind decisions.

Finally, the market must make transparent the real cost of services to the patient in the context of his or her health plan benefits. Without this type of information, patients will continue to struggle to make cost-effective choices that result in the best health outcomes.

Innovative start-ups are leading the way. Fortunately a number of start-ups are beginning to work to chip away at the complex problems I’ve described. Here are three examples.

Castlight Health is beginning to make costs more transparent to patients, and there is evidence that this transparency is driving better decision making. A recent JAMA study showed that households that used the Castlight tool to select a site of care for imaging studies saved over $100 per study. In aggregate, such savings and true price competition could yield billions of dollars in real savings.

Better, the personal health assistant, aims to help patients navigate the true costs of care in the context of their insurance. Through a combination of automation and live access to nurses, patients receive a thorough review of insurance and their benefits and help in resolving problems with medical bills or insurance.

Vital, a company I have been advising, aims to “provide the right medicines to patients at the right time for the lowest cost.” Vital aggregates patients’ purchases of medications and negotiates with manufacturers and service providers to secure lower out-of-pocket costs for patients. It hopes to expand into other health care services. Vital also helps patients receive the monetary benefits of healthier behaviors now — as opposed to later when they accrue.

Remaking the health care market with the aim of optimizing the long-term health of the patient rather than just costs will be a difficult and will require flexible thinking — something that won’t come easy to an industry that is comfortable doing business as usual. But with the massive reform of the health care system that’s underway and the new emphasis on improving the amount and quality of health care data that’s available and the ease with which it can be shared, the time has never been better for entrepreneurs to tackle the challenge.

[image error]

Any Value Proposition Hinges on the Answer to One Question

Any strategy lives or dies on the basis of its customer value proposition. There are many typologies relevant to crafting a value proposition, because there are many ways to win customers. But the key issue is always: what is the center-of-gravity in our approach? Do we ultimately compete on the basis of our cost structure (e.g., Ryanair and Wal-Mart) or another basis that increases our target customer’s willingness-to-pay (e.g., Singapore Airlines and Nordstrom)? In other words, will we sell it for more or make it for less — and allocate sales resources accordingly?

Nearly all competitive markets confront firms with this choice. In retailing, there is Wal-Mart, Dollar General, and category killers. But there is also Nordstrom, Louis Vuitton, and many high-end boutiques. In pharmaceuticals, there are blockbuster drugs targeted at mass-markets segments. But there is also Soliris, a drug sold by Alexion to treat certain blood and kidney diseases that afflict relatively few people. Soliris costs $400,000 per patient annually. But insurers pay this price because Soliris is the only safe and effective treatment for these diseases and that price is less than the total cost of alternative treatments. Alexion has grown from $25 million in sales in 2007 to $1.5 billion in 2014.

Sell it for more. Here, your product or service provides better performance on attributes that are important to target customers and for which they are willing to pay a premium. This approach must continually avoid the following pitfalls:

Meaningless or false differentiation: the points of superiority are unimportant to customers or based on a false presumption of superiority.
Uneconomic or invisible differentiation: customers are unwilling to pay for additional performance or are unaware of the difference.
Unsustainable differentiation: the product or service features are imitated over time.

Make it for less. Here, your cost structure allows you to sell and make money at prices that competitors cannot. Realities in many industries typically allow only a few firms to compete successfully in this manner. Once they do, moreover, their scale advantages make it difficult for others to duplicate. To be a viable value proposition, therefore, this approach must avoid these pitfalls:

Price wars: any cost advantage is lost in price competition and no one extracts value.
Substitutes: you may have a cost advantage over competitors, but not over substitutes that are available to target customers.
Cost reductions versus lowest costs: lowering cost doesn’t necessarily mean your cost is lower than competitors and, in any market, there is only one lowest cost competitor. Never confuse these different cost positions.

You must be clear with your people about where your business falls along this spectrum.

If you’re not clear about this, your sales efforts will run into problems. Externally, there will always be someone out there who can beat you on cost and price, or someone else who tailors its operations and sales efforts to the performance and buying criteria of a segment better than you can. Depending upon your value proposition, sales will face different buyers and selling tasks and require different support processes to deliver value.

Internally, important organizational issues flow from the value proposition. Different assets will be needed for the cross-functional activities required for effective selling of a given value proposition. Different metrics are relevant for setting and evaluating sales performance. And basic HR issues are at stake whenever a firm is unclear about its value proposition: salespeople cannot be premium service sellers in the morning and cost hawks in the afternoon. It doesn’t work that way.

Strategy requires choice, clear communication, and coherent performance management practices, not just stirring metaphors, with the people who deal with customers. A moment of truth is the customer value proposition. Clarity about that will help your salespeople (and everyone else) focus more efficiently, qualify customers more effectively, and allow your firm to allocate resources more profitably.

[image error]

Why Social Networks Still Haven’t Cracked the Job Search Puzzle

Facebook is preparing a version of its site for the workplace designed, it’s suggested, to compete directly with LinkedIn. This is puzzling at first glance, since Facebook at Work seems geared toward letting people connect and collaborate with colleagues and peers at their current jobs, while LinkedIn is focused more on building professional connections with people outside the firm.

On the face of it, that seems to be two entirely different markets, with Facebook at Work playing in the workplace productivity market (competing with the likes of Microsoft Office, Webex, and project management software) while LinkedIn is part of the headhunting industry.

But look at the move in terms of the jobs customers are trying to get done (rather than the markets that these companies address) and the possible connections become much easier to see.

Every working professional knows that at least 50% of all available job openings are never advertised. Hence, all of them have a job to do – something along the lines of,  “Do I have the right network so, in case something happens, I would know about these hidden offers?”  LinkedIn addresses this job directly, by allowing you to create and build an exclusively professional network among its 300 million+ members.

In this regard, Facebook looks a lot like LinkedIn, but bigger – with 864 million active users, almost three  times bigger. So one way to view this is as a battle between two powerful networking companies with similar digital business models that are both able to keep getting bigger and bigger by linking people to more people in relentless geometric progression.

Looked at that way, Facebook’s size doesn’t look like much of an advantage, since job seekers can already list their professional credentials on its site. And when Facebook at Work is launched, job hunters can simply tap into both Facebook’s and LinkedIn’s networks, for free.

But here’s the important point – neither Facebook nor LinkedIn are doing the “let me know about hidden employment opportunities” job well enough yet.  Facebook introduces too much variability, with all the information in your profile that’s not related to your professional experience and aspirations. And LinkedIn is more oriented toward the job of  “advertise the candidate” than “advertise the opportunity.” That is, it works best for companies checking out people’s credentials than for people trying to check out potential employers.

Insight Center





Making Money with Digital Business Models

Sponsored by Accenture


What successful companies are doing right

While an internal work productivity site doesn’t seem to address that job any better (and even does it arguably worse), it is a job that many people need done, and one that isn’t yet being done very well. That’s the definition of a potent business opportunity, and a powerful incentive for both parties to direct resources to fulfill that need before some clever third party, say an aggregator or data crawler, steps in.

That essentially makes it a resource arms race, and in a resource arms race, Facebook has the clear advantage. After all, Facebook’s $7.87 billion in 2013 revenues is more than five times larger than LinkedIn’s $1.52 billion. That not only gives it more resources but more urgency to apply them, since Facebook needs to find much bigger markets to sustain its growth. What’s more, professional networking is a natural extension of Facebook’s original operating model, sussing out and serving the needs of the relatively homogeneous community of college students. Working professionals are another such market of fairly homogeneous users, and the market is remarkably big – by some accounts more than three times as big as the student population.

So maybe the right question to ask here isn’t which titan will win but, rather, with these two companies converging on fulfilling the same job-to-be-done in a market of enormous size, and given Facebook’s greater need to sustain its growth in 2015, will it compete – or simply acquire?

[image error]

Workers Are Bad at Filling Out Timesheets, and It Costs Billions a Day

You probably spend a huge amount of your time at work on email — most of us do. And we’re pretty aware of the costs: distraction, intrusion into our personal lives, and so on. But for consultants, lawyers, and others who work in professional services, there’s often another, more direct cost: the loss of billable hours.

That’s the conclusion of a recent study from AffinityLive, a company that specializes in professional services automation. Surveying 500 workers last summer, the firm calculated that each person lost $50,000 per year in revenue due to insufficient tracking of emails with clients and others. In total, “almost 40% of respondents reported never tracking time spent reading and answering email,” with only 33% of respondents saying they “always” or “often” do. Consider these numbers when you realize that “more than half of survey respondents indicated that their employer directly uses timesheets to bill clients hourly or determine retainer amounts.”

Taking into account the size of the professional services sector, the company estimates that the U.S. economy is losing 50 million hours, or $7.4 billion a day, in productivity.

The research, and AffinityLive’s plan to deliver automated tracking solutions, derived from conversations CEO Geoff McQueen was having with others in the professional services industry (he ran such a business at the time). “Their problems were the same,” he says. “They would be working harder and longer and wouldn’t know whether or not it had been financially worthwhile until a couple of weeks after the end of the month.” And while it was sometimes easy to identify early on the projects that were big winners or major disasters, everything in the middle was muddy. “We really had no visibility as to what the heck was going on,” according to McQueen.

Part of this difficulty derives from the fact that the way we work now makes it trickier to track exactly how much time we’re spending on projects. McQueen points out that, prior to email, correspondence would generally come in via mail or fax. “You’d spend 15 or 20 minutes reading this letter and thinking about what you’re going to do,” he says. “Then you might draft your reply, which might take 45 minutes to an hour. You’re basically dealing with a round-trip time of an hour. If it took you, let’s say, two minutes to keep track of that, you’re basically dealing with 3% overhead time to keep track of the work you did.”

This model changed entirely with email, McQueen argues. People often deal with a couple hundred emails a day, with most interaction taking 20 to 30 seconds, and occasional longer responses of around five minutes. “If it then takes you three minutes to go into your timesheet program to record the time, you’ve gone from spending 3% of the work unit in administrative overhead to spending 60% in overhead.” Not to mention the fact that it’s entirely impractical to log activity bit by bit every time you answer an email. It is, as the AffintyLive report states, “a disconnected afterthought and not part of any other systems people use to get their work done.”

McQueen says many people deal with this by spending Friday afternoons trying to remember what they did over the course of a week in order to fill out their timesheets. This is obviously not a very accurate method. Data collected by AffinityLive shows that people who fill out timesheets once a day reported being more accurate in their record-keeping than those who fill them out once a week or less. (And the people who said they don’t track their time? They’re required to submit timesheets by their company but are essentially guessing at whatever they did that day or week.)

According to Sanford DeVoe, an associate professor of organizational behavior and HR management at the Rotman School of Management, it’s especially difficult to recall time spent on email for a couple of reasons. “Email occupies that liminal space between tasks, and it hurts a lot that we often write and receive personal emails while we’re reading or composing a response to a client. That integration between the personal and professional makes it seem like it’s not a task you’re supposed to keep track of,” he says. “If we spend time writing an internal memo, it’s much clearer in our mind that we’re spending a specific amount of time on a work task.”

When it comes to why we’re stuck between a new way of working and an old way of recording it, McQueen places a lot of blame on the technology sector and, particularly, the user-unfriendliness of enterprise software. Not surprisingly, he points to his company’s software as a potential solution. It basically automates a lot of the inputting for you based on what’s in your calendar and who you’re emailing, using these signals to construct a record of a person’s work during the day. In the future, he imagines being able to detect whether a cell number is a client or if you’re meeting with a client based on your geographic location. The software would then automatically log the number of minutes you’re on the phone or in a client’s office.

If it seems far-reaching when it comes to employees’ privacy, he says the software only takes into account things you do using your work email account and with work contacts. And it has the side effect of exposing people who have “become really good at convincing their organization that they’re doing work when, in fact, they’re not.”

But are there any pitfalls to this type of tracking minutiae? Maybe, if you don’t approach the task thoughtfully and with the right technology. “The biggest danger with having managers or employees focus too much on how they are spending their time is that activities that aren’t ‘billable’ are given short shrift,” says DeVoe. “There is a large academic literature attesting to the importance of organizational citizenship behavior — all the things that technically aren’t part of your job but are nevertheless key to organizational success.”

In addition, being too attuned to how employees are spending their time can be psychologically problematic, explains DeVoe. “When people are billing their time at high rates, laboratory experiments I’ve conducted show that we become much more impatient with our time. This obviously has negatives in terms of greater time stress, but inducing impatience can have downstream effects across a wide set of domains, such as making people more financially short-sighted.”

Lastly, it can have an impact on your personal life and worldview. “Having this monetary value on time can make you more stingy with your free time, less likely to stop and smell the roses, and more likely to focus on economic factors when you’re evaluating your overall life satisfaction,” he says.

Technology can help, says DeVoe, because it can precisely and unobtrusively measure your activity without many of the psychological pitfalls. As a best practice, companies should “explicitly consider monetary value when they are making habitual or permanent decisions about how people will spend their time in the organization, but avoid practices that repeatedly remind them of the monetary value of their time.”

In other words, you want the right information to help you allocate the organization’s time, without the daily psychological burden of gathering it.

[image error]