Marina Gorbis's Blog, page 1333
December 19, 2014
Dealing with a Hands-Off Boss
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The 10 Most Important Sustainable Business Stories from 2014
It’s been an amazing 12 months in the world of sustainable business. From climate change to inequality, the scope of humanity’s biggest environmental and social challenges came into much sharper focus this year — as did the scale and range of opportunities to do something about them. And citizens, using new social media tools and old-fashioned marches, rose up to drive change. Both in response and pre-emptively, the world’s leading companies continued to aggressively pivot their businesses toward more sustainable and innovative ways of operating.
To make sense of all of this activity, I made a list of the year’s big themes, looking for the bigger story across multiple examples. But I also ran across a few specific company stories that were just really compelling or cool. So here is my admittedly subjective look at the top 10 sustainability stories and themes of the year, with sustainability broadly defined as encompassing people, planet, and profits:
1. The bad news — climate change is now.
The subtitle of this year’s summary could be “reports, reports, reports,” with important and fascinating (no, really) studies from economists, government agencies, scientific bodies, and business coalitions — all making a compelling case for action on climate change.
Over the last two years, the Intergovernmental Panel on Climate Change issued its fifth, multi-thousand-page assessment of global climate science. But some new, more layman-friendly voices are telling the science story and explaining how costly to business a hotter world already is. The American Association for the Advancement of Science (AAAS) issued the clearest document from scientists I’ve ever seen, a pithy report telling us that “What We Know” is the following: (1) “Climate change is happening here and now,” (2) the risks of irreversible, highly damaging impacts are high, and (3) the sooner we act, the lower the cost. Another report, the U.S. National Climate Assessment, led with the statement that climate change “has moved firmly into the present.”
Adding a business perspective, a group of heavy hitters, including billionaire Michael Bloomberg and former U.S. Treasury Secretaries Hank Paulson and Robert Rubin, issued the persuasive Risky Business Report. This short paper outlines how climate is “already costing local economies billions” and describes how hundreds of billions of property are at risk.
2. The good news — tackling climate change is getting much cheaper.
Two impressive pieces of analysis made the case that moving to a clean economy is profitable – both for society and for the private sector. At the macroeconomic level, the New Climate Economy report (issued by a group of CEOs, leading economists, and former country presidents) challenged the persistent, but incorrect, view that we have to choose between expanding prosperity for billions of people and protecting our shared asset base (that is, Earth and its climate). A key point: in a world that will spend $90 trillion on infrastructure over the next 15 years anyway, the additional costs to shift that build-out to a low-carbon path, with technologies we already have, will be minimal.
Second, a new coalition representing many of the world’s largest companies launched in September under the name We Mean Business and issued its own powerful study, offering substantial evidence of the direct business value of investing in low-carbon tech and energy efficiency.
But company coalitions aren’t just issuing reports — they’re making promises in line with the rapidly improving economics of renewable energy (which utilities can now obtain in many regions at prices below fossil fuels). An offshoot of We Mean Business, the RE100 group — which launched with founding members including Philips, Nestle, Mars, Swiss Re, and IKEA — committed to using 100 percent renewable power. Unilever U.S. also committed to 100 percent renewables by 2020 (Disclosure: I’m on advisory boards for both RE100 and for Unilever U.S.). A deep shift in how we generate and use power has begun.
3. The utility and energy businesses are changing fundamentally (well, some of them are).
It’s hard out there if you’re a utility. Distributed generation (meaning solar panels on my roof) is a direct threat to the business models of the large power plants that utilities know best. And investors are noticing: in May, Barclays bank downgraded the bonds of the entire U.S. utility sector. Seeing the writing on the wall, German utility E.On is spinning off its fossil fuel-burning assets and choosing to focus on renewables. In the U.S., the utility NRG – which gets the vast majority of its power from fossil fuels — set some remarkable public goals, committing to cut carbon emissions by 50% by 2030 and 90% by 2050.
But the old guard of the energy business made it clear that they aren’t planning to change. Exxon (and Shell) issued statements to answer concerns about their assets and reserves becoming worthless or “stranded” as the world moves away from fossil fuels. Exxon’s memo in particular is a thing of twisted beauty, daring the world to regulate the company and saying to investors, in essence, “nothing to worry about here, move along.” But the Bank of England begs to differ, saying that the “vast majority of reserves are unburnable.”
4. Serious legislation like a carbon tax — even in the U.S. — is seeming possible again.
The NGO Ceres has gotten an impressive array of companies to sign onto the Climate Declaration, which states that climate change is both a threat and a major economic opportunity. But this year, a smaller Ceres group, BICEP, which is calling for more aggressive policies like a tax on carbon, added some very mainstream companies such as General Mills, Kellogg’s, and Nestle (perhaps not coincidentally, General Mills announced early this year that its earnings were reduced by extreme weather).
BICEP was joined in its call to price carbon by the institutional investors, 1,000 companies, and 70 countries that signed the World Bank Price on Carbon, and even by Goldman alum and Republican Hank Paulson, who penned a surprising op-ed comparing climate change to a financial bubble. Adding to the momentum, Google publicly cut ties with climate-change-denying lobbying group ALEC, saying that the organization was lying about the science.
Regulatory and executive branch actions also made waves this year, especially in the U.S. and China. President Obama’s EPA issued new rules on carbon and coal and new ozone pollution regulations. And China took serious action, setting a cap on coal emissions by 2020, which will help it reach the goals of the carbon agreement with the U.S. (a pact that’s not good enough to match what science tells us, but monumental just the same).
5. A powerful social movement on climate takes shape.
My family and I joined hundreds of thousands of people at the climate march in New York City in September. We were little cogs in a 162-country, 2,600-event public cry for global action. While the march was too anti-business to be as unifying a rallying cry as it should’ve been, it still signaled a major societal shift.
Another arm of this growing social movement, led by 350.org, has been the campaign to divest university and institutional funds from the fossil fuel industry. This campaign got a major symbolic boost when the Rockefeller Brothers Foundation — which can trace its money back to the original oil titan John D. Rockefeller — said it would divest from fossil fuels.
6. Strategy and mission start to gain the upper hand on short-termism.
In one of the most fascinating corporate moves in years, the big drugstore chain CVS . A few others, like Target, had done it years earlier, but the intensity of the shift to put health and well-being at the center of the company’s strategy made it an important story. And it’s a fantastic example of what I call a Big Pivot. Giving up $2 billion in annual sales because it doesn’t fit your strategy and mission of improving people’s health — a core part of the “people” arm of the people/planet/profit sustainability model — is something most short-term investors would ridicule. So in this quarterly-earnings-obsessed world, it’s a brave and unusual move. And it’s also good business.
In another move to fight immediate pressure, Apple’s CEO Tim Cook told anti-environment investors to get out of the stock if they didn’t like the company’s green and/or longer-term investments (all of which are in fact profitable). In his pushback, Cook made a larger point about not being a slave to ROI. These companies are taking a broader view of a company’s purpose and focus.
7. Rivals embrace radical collaboration.
In the wonky, trendy vocabulary of working together, “collaboration” isn’t exciting enough without the now-hot modifier of “pre-competitive” (meaning: stuff fierce rivals can do collectively that doesn’t diminish their ability to compete). Walmart and Target demonstrated how this works by convening a Personal Care Products Sustainability Summit. All the major players in the personal care product value chain — the giants of consumer products, chemicals, and fragrances — were there (as was I). The general topic was how this group could reduce the physical and chemical impacts of all those gels and liquids we use on our bodies, and the group will continue to work together and convene to tackle thorny issues in the value chain.
Other great joint efforts this year included a business/government pledge to eliminate deforestation by 2030, the Natural Capital Business Hub, and the new Closed Loop Fund. The latter is a $100 million pool of money invested by Goldman Sachs, J&J, Pepsi, P&G, Unilever, Walmart and others to expand waste handling and recycling infrastructure.
8. The absurd amount of food we waste gets more attention.
The food and agriculture system takes up 40% of the world’s land and produces at least 30% of greenhouse gas emissions. That might not be so bad if we used it all, but the UN’s Food and Agriculture Organization estimates that we waste 1.3 billion tons of edible food at a cost of $750 billion annually. Throwing out 30-40% of our food clearly has serious impacts, and is a problem across the value chain — from the farm to our refrigerators and garbage cans.
To help address this challenge, the French supermarket chain Intermarche developed an incredibly clever campaign to sell the “ugly” fruits and vegetables that growers and stores throw out because they don’t look perfect. Offering these unloved items in juices or as-is for 30% off has been a big winner for the company. This kind of innovation around food waste is part of the larger discussion going on in many sectors, from apparel to electronics and metals, about how we can build a more circular economy with zero waste.
9. A teenager pressures Cola-Cola and Pepsi – and wins.
There are many reasons companies might rethink their product formulations. But when both Coca-Cola and Pepsi decided to remove brominated vegetable oil (which contains bromine, also used in flame retardants) from their drinks, the New York Times gave much of the credit to Sarah Kavanagh, a teenager from Mississippi. Starting when she was 15 years old, Sarah used change.org over a couple of years to gather a quarter million signatures pressuring the drink giants to eliminate the controversial ingredient.
New levels of transparency — What’s in this? Who made it and how? — combined with the tools to do something with the information, are changing business profoundly. Citizens can use the exponentially rising levels of connectivity not just to share rides or rooms, but also to share information and demand change. It seems that social media has outgrown its “look at me and my selfie” babyhood phase and is now growing some teeth.
10. The fight against inequality finds new business allies.
In January of 1914, Henry Ford doubled the daily wage of his workers. Yes, he was facing labor strife, but the strategy was also about creating a thriving middle class filled with people who could afford to buy his cars. A century later, Gap Inc. raised wages to $9 an hour (and they’ll be $10 in 2015), and in June IKEA lifted its minimum wage by 17%. These leaders joined others like Whole Foods, Costco, Ben & Jerry’s, and QuickTrip that are not waiting for legislators to ensure that workers earn a living wage.
And here’s what to watch out for in 2015:
Political winds shifting. Will the change in power from the US midterm elections affect the sustainable business momentum, or the quest to tackle climate change? My gut says it won’t matter too much. The forces driving change are too powerful and with all the filibustering and gridlock, Congress wasn’t helping much anyway.
Business, taxes, and society. This year, a cover story in Fortune magazine called out companies that avoid taxes through financial schemes like “inversions” (the process of magically making themselves foreign companies). Will naming-and-shaming about paying a fair portion of shared infrastructure continue?
Systems thinking and the merging of issues. More companies are seeing the connections in everything. The intersection of food, energy, and water should continue to command attention (even with oil prices plummeting late in 2014).
Financing the clean economy. As the Economist said this year about the fast-growing green bonds market, sometimes “a market appears out of nowhere.” Will 2015 be a boom year for finding new ways to bring capital to clean energy?
Tough choices. I believe more companies will be challenged about how committed to fighting climate change they really are, and what they’re willing to do to make the pivot toward the clean economy. Companies as diverse as GE and Edelman faced some hard questions about their deep ties to the fossil fuel industry this year (ok, some of those questions were from me).
But as journalist Marc Gunther suggested, channeling folk singer Pete Seeger, the right question to ask companies about climate change (and, I’d argue, the role of business in society in general) might be, “Which side are you on?”
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What’s Missing from Annual Reports
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As a shareholder of several companies, I receive many updates and reports. Even though I know how to dissect the financials and pull out any relevant ratios, I’m not satisfied with the story that these reports tell me. Nor, I’d suggest, are most shareholders. Many choose not to receive an annual report at all, online or in hard copy — and few of those who do actually read what they get. Who can blame them?
What we want to know simply isn’t in there. We want assurance that our investments are secure, of course. But more than that, we want to know the health of the companies we’re investing in. We’re looking for a holistic view, just as we are when visiting the doctor for a check-up. And to get that, we need more than the financial equivalents of blood pressure and temperature readings.
Though there’s been a push toward greater disclosure in several countries — such as the U.S., the UK, and South Africa — shareholders have a right to demand even more. An annual report should show what the company is doing for and getting from each group of key stakeholders (within the bounds of commercial sensitivity). Some companies are starting to share finer-grained results, which helps, but they need to go further.
Take the example of Harvey Norman, an Australia-based household-goods retailer that operates under various brands and has stores in several countries. Its revenue comes from franchises ($AU4.77 billion) and, to a lesser extent, company-owned stores (about $AU2.55 billion). The company’s 2013 annual report contained the usual statements on income, changes in equity, and cash flows — standard stuff. The report neatly summarized all this in a “Financial Highlights” table with 14 measures and covered “operating and financial review” in a page and a half. That was in keeping with the Corporations Act of 2001.
Then, after the Australian Securities and Investments Commission (ASIC) released a new set of guidelines, Harvey Norman published its 2014 annual report, which devotes nine pages to the operating and financial review. Discussed here are topics much more germane to the company’s future than last year’s financials — business strategies, risks, and likely prospects.
Much better, but the reporting still has a way to go. For instance, I want to know more about the franchisees, given how central they are to the company’s success — not just how much revenue they bring in, but also how profitable they are. And I’d really like to know how satisfied franchisees are with factors that matter to them, such as the amount of support they receive from the head office. What I’m seeking, in this desperately competitive environment, is an answer to this question: Are the franchisees likely to keep sustaining the company? The number of franchisees fell this year from 696 to 677. Was this due to dissatisfaction? What’s the story?
Numbers about and for customers are equally important. What are the margins? How is the company measuring customer satisfaction with service, product range, prices, and the like? How has that ebbed and flowed? Australia’s second-largest internet service provider, Iinet, offers a Net Promoter Score to report on customer satisfaction — which is a start, but it’s certainly not a holistic view.
Likewise with employees. What are the productivity and employee retention numbers? On the other side of this two-way street, what does employee satisfaction look like? Whole Foods Market in the U.S. provides data on voluntary turnover of full-time staff. In industries such as mining, employee safety is now reported in detail, through an injury frequency rate. Again, companies are making some progress in their reporting, but we’re still missing those comprehensive scorecards.
Research shows a direct link between stakeholder engagement and market value. Since company health and wealth are at stake, it’s critical not just to build strong relationships with your key stakeholders but also to track how well the organization is meeting their needs. Metrics that tell you that are leading indicators of future performance — exactly the kind of information savvy investors should expect.
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Stop Using Battle Metaphors in Your Company Strategy
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The economist Fritz Machlup wrote an essay about weaselwords: “words concealing voids of thought . . . used to avoid commitment . . . which destroy the force of a statement as a weasel ruins an egg by sucking out its content.” Machlup was talking about how economists often use words like “structure” instead of empirical cause-and-effect linkages. Ironically, after years of books, articles, and MBA programs dedicated to strategic thinking, that’s the danger with how strategy is used in business meetings. It’s too often a way of sounding smart or leader-like and used to avoid necessary choices.
Machlup explained how this can happen: when an economist uses the word “labor,” no one “will ever think of the painful muscle contractions preceding childbirth, and if we say ‘capital’ he may not know precisely what we mean, but he will rarely confuse it with the seat of government in a state or country.” But when multiple words used to refer to different aspects of complex phenomena have overlapping meanings, then “the context [cannot] be relied upon to indicate which meaning is intended [and] the writer or speaker has a moral duty, I would say, to state what he means.” So let’s first clarify what strategy is not.
The word strategy comes from the ancient Greek for a “general” in a military campaign. Strategy gurus constantly use analogies with battle plans for “competitive advantage” versus the enemy. But the metaphor is not suitable because business, unlike a war or battle, is not primarily about defeating an enemy. Business is primarily about customer value: targeting customer groups and tailoring products, sales and other activities to serve those groups better or differently than others. You don’t learn much about that from studying Caesar, Napoleon, Sun Tzu, or whoever your favorite general is.
The analogy is also used selectively and inconsistently. A repeated example is Hannibal’s defeat of the larger Roman army at Cannae by his pioneering use of flanking tactics. But we don’t often hear about Fabius Maximus, a Roman general nicknamed “The Delayer,” who simply wore down Hannibal’s invading army by avoiding pitched battles. Hannibal lost that war. Or another favorite, von Clausewitz, tells us that detailed planning is everything but drop the plan once the shooting starts. Which is it? We already know that business, like other mortal activities, is uncertain. As Damon Runyan said, “All life is six-to-four against.” So what gain really comes from the military analogy?
And there should be a gain to justify the common loss. People conflate business strategy with the aggregation of tactical plans à la Napoleon at Waterloo or Lee at Gettysburg (those geniuses of “military intelligence” also lost, didn’t they?). “Wait for the element of surprise” becomes double the R&D budget; “take the right flank” becomes increase production capacity; “provide air cover” becomes globalize; and “charge!” is a motivational sales meeting. But studies show that a big problem with strategic planning processes is that the resulting “strategy” is a bland compilation of capital budgets that, in turn, are a compilation (not integration) of separate functional initiatives.
I support our troops as much as the next person. But let’s demobilize and drop the battle metaphors. As Peter Drucker emphasized, “The purpose of a business is to create a customer.” That’s also the purpose of any business strategy: make customers, not war. In my experience at strategy meetings, most executives spend too much time discussing competitors and not nearly enough time discussing customers: who they are, their key concerns, how they buy, why, and where.
Companies rarely get blind-sided by their direct competitors. Look at the now hallowed examples of “disruptive innovators” (mini-mills versus integrated steel makers, online versus full-service brokerages, and so on). Most are substitutes, not current competitors, entering the business and finding alternative ways to solve customer problems.
So, what is strategy? It’s fundamentally the movement of an organization from its present position to a desirable but inherently uncertain future position. The path from here to there is both analytical (a series of linked hypotheses about objectives in a market; where we do and don’t play among our opportunity spaces; and what this means for the customer value proposition, sales tasks, and other activities) and behavioral (the ongoing coordinated efforts of people who work in different functions but must align for effective strategy execution). And the trail always begins with customers. As the impresario Sol Hurok once put it, “When the customers don’t want to come, nothing can stop them!”
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Case Study: Can One Business Unit Have 2 Revenue Models?
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As two of his business units were completing their merger, Peter Noll, chief of the Diagnostics division at the Frankfurt-based Scherr Pharmaceuticals, felt it was time to address a nagging issue: The combined entity had no overarching revenue model.
This deficiency had been weighing on him for a year, ever since the merger had been approved by the CEO, the executive team, and the board. Although the two units had similar products, they relied on different strategies to earn their money. Their sales forces sometimes even called on the same customers, leaving potential buyers confused by the reps’ differing offers. “How does it make any sense?” he frequently asked. The only real issue seemed to be which legacy revenue model he should allow to prevail and which he should gracefully kill. But he couldn’t deny that the flexible, inventive models the two units had followed for years had served them well. Was he being too focused on strategy — too rigid — in this unique situation?
(Editor’s note: This fictionalized case study will appear in a forthcoming issue of Harvard Business Review, along with commentary from experts and readers. If you’d like your comment to be considered for publication, please be sure to include your full name, company or university affiliation, and e-mail address.)
Two Models
Peter had been head of Diagnostics for a relatively short time. Many years had passed since Scherr’s acquisition of Siiquent, a DNA-sequencing start-up, and Teomik, a provider of research equipment, both of which held valuable patents on genetic diagnosis and research, so he had missed the golden years when their IP was protected. Siiquent sold everything that hospitals and big diagnostic labs needed for gene-based diagnosis; Teomik provided everything that research labs and universities needed for gene-based studies; and both offered comprehensive services such as customized training, workflow optimization, and hotline support from teams of PhDs in case of equipment failure. No other company was providing anything comparable.
Over the years Scherr had made a couple of halfhearted attempts to merge the two units because they sold similar instruments and supplies. Each time, the idea was dropped, because both businesses had carved out lucrative niches for themselves and were doing quite well. There seemed little point.
But all patents expire.
Competitors had been waiting for that moment. First one and then two companies took aim at each unit’s market, aggressively selling products at lower prices. Siiquent and Teomik had begun to lose customers, and Scherr’s CEO had brought Peter in to tackle the nascent problem. Peter had been appalled by what he found in both units: weak strategic thinking.
Siiquent’s head, the brilliant former researcher Isolde Kraft, had responded almost flippantly when Peter asked what revenue model her unit’s strategy was based on. “Our revenue model?” she retorted. “We make money. Lots of it.”
By contrast, Teomik’s head, the former Olympic shot-putter Emanuel Geiger, wasn’t at all defensive about Peter’s question and proceeded to draw elaborate diagrams on his office whiteboard. But rather than illustrating a simple revenue model, the diagrams showed that over time he had adjusted his pricing policies to address customer demands, internal accounting guidelines, and competitive threats.
“Basically, you just do what’s needed to make money, right?” Peter asked pointedly.
Emanuel responded that he was proud of his unit’s flexibility — in fact, he said, he saw that as his unit’s single greatest competitive differentiator.
In a series of daylong offsite meetings, the two unit heads came to a better understanding of each other’s businesses. Isolde, with her quick mind and flair for pithy expression, got the basics right away and explained them to Emanuel.
“Like a lot of business-to-business companies,” she said, “we both sell two things: machines and stuff that the machines use. My unit makes its money on the stuff. It’s the classic razor-blade model: Sell the shavers at cost and make money on the blades. Your unit makes money on the machines, and it’s less relevant whether customers buy the stuff from you or from low-price competitors.”
Peter was amused to see Emanuel struggle with the description of his sophisticated research instruments as “machines” and his vast array of chemical and biological consumables as analogous to disposable razor blades. But Isolde was essentially right, and Peter could see how the two units, despite their similarities, had evolved such different approaches to making money.
The Value of Service
When a team of Nobel Prize–winning scientists had launched Siiquent, they’d been ready and willing to sell the company’s gene-based diagnosis technology to all comers. But the procedures and equipment had turned out to be too costly for all but Germany’s biggest hospitals and diagnostic labs, and even those institutions were under such intense budgetary pressure that proposed purchases were frequently vetoed by high-ranking officials. Realizing that Siiquent had little hope of earning high margins on test instruments, its executives decided to seek sustainable profit from biological and chemical compounds, test kits, and other consumables.
Siiquent had figured out how to provide these consumables for a bit less than the fixed reimbursements the hospitals and labs got from insurers and the national health service, so it was able to position itself as a revenue generator for the hospitals. Customers also loved the company’s high level of maintenance, which minimized downtime. Siiquent also won business by providing a valuable free service: Its customers were bound by an exacting regulatory framework that required them to follow specific procedures and use specific compounds, and Siiquent helped them dot every “i” and cross every “t.”
In fact, Siiquent prided itself on constantly seeking input from customers and adjusting to their wishes. When they complained about the inefficiency of opening a whole bottle of reagent to run a single test with a very small quantity and then having to throw the rest away, the company offered to let them pay by the number of tests performed and committed to providing whatever reagents and equipment they needed to conduct the tests.
Teomik’s path was different. It had been selling biological research equipment and materials for a half-century, so when it acquired patents on gene-based scientific technologies, in the early 2000s, it continued to focus on the research market. Since there were numerous providers of compounds to these customers and few regulatory restrictions, it had to compete on price, and margins were slim. But the Max Planck Institutes and other big funders of genetic research didn’t balk at high instrument prices, so Teomik was able to earn fat margins on patent-protected devices that helped scientists do their genomics studies and aim for glory in prestigious scientific journals. Although Teomik didn’t need to offer its customers regulatory assistance, it provided expert support when things went wrong along with free advice on a wide range of topics.
Thus, as Isolde said, Siiquent earned its profits on stuff, and Teomik earned its profits on machines, while neither made money from the extensive customer service it provided.
Both companies had been attractive acquisition targets for Scherr. But after their patents expired and the competition became heated, the idea of merging them made sense: Consolidating their sales forces and operations would reduce costs. There was another factor, too: The line separating the two units’ markets had grown fuzzy. Some of the diagnostic labs in Siiquent’s niche had begun functioning like the research institutions in Teomik’s, investing heavily in their own research to create specialized tests. The labs’ new research push allowed them to get around some health-care-related regulatory restrictions and buy compounds from Teomik — at prices lower than what Siiquent had been offering. They got a helping hand from Teomik’s salespeople, who took a certain pride in undercutting Siiquent, seeing it as an internal competitor.
So the Scherr board was quick to approve the merger, and the units now faced a wedded future. Isolde and Emanuel had been made co-leaders, but everyone knew that one of them would eventually become the sole chief and the other would depart — a gloomy prospect for Peter, who liked and respected both.
Everyone also knew, because Peter had announced it, that only one revenue model would be needed going forward. Peter expected that the new entity, dubbed Siiquent-Teomik, would make its money either on stuff or on machines. Scherr’s leaders had let it be known that they were neutral on this question, so the choice was up to him.
A United Front
A planner and strategist through and through, Peter relished the challenge. He was looking forward to hearing Isolde and Emanuel debate about which model should prevail. He called a meeting to kick off the discussion. When the two walked into his office, their body language surprised him.
Below a big abstract painting of black and white lines, Isolde and Emanuel settled in on the couch like friends meeting for tea. They chatted for a moment before turning their attention to Peter, and he detected something defiant in their faces.
“Stuff or machines,” Isolde stated, “is a false dichotomy.” Emanuel nodded in agreement.
Peter was stunned.
“What matters to us is customers, competitors, and employees,” Isolde continued. “We give customers what they want; we respond to competitors’ initiatives; and we listen to employees. That’s how we conduct business. That’s how we move forward. You may say it lacks structure. You may call it unstrategic. You may say we need to adhere to a single revenue model. Well, I like logic and consistency as much as the next person, but our ingenuity has served us superbly in a rapidly changing market. Siiquent’s and Teomik’s legacy revenue models have morphed into a way of doing business that is marvelously flexible.”
She added, “I would like to see Siiquent-Teomik maintain its current revenue model, which is really an ever-changing mix of models, and to have the authority to shift to new strategies and tactics as circumstances dictate.”
Emanuel chimed in, his voice more forceful than usual: “Business-to-business relationships are a complicated thing, Peter, and imposing an either-or choice on us would be counterproductive.”
“Counterproductive?” Peter asked.
“Think about our customer service,” Emanuel replied. “Our team of PhDs is critical to maintaining our differentiated brand image. Service is a crucial part of relationship building — customers rave about it. Yet it’s not officially part of our revenue model. So why does it matter if one part of our business makes money from machines and not compounds, while the other makes money from compounds and not machines?”
Peter scrambled to collect his thoughts. “OK, then let’s put services on the table as yet a third possible source of revenue,” he said. “Why not make money on services?”
“This is what we mean when we say we listen to employees,” Emanuel responded, glancing at Isolde. “We’ve found that our salespeople don’t like to sell services. When they try, the only part that customers hear is the hotline support — they don’t seem to grasp the value of our advice and training before they’ve experienced them. Our reps don’t want to be explaining that sometimes even the best equipment breaks and even the best compounds fail. So services won’t work as a profit driver.”
“OK, forget services for now,” Peter said. “But you can’t really be arguing that a no-strategy approach is best for your unit. I’ve never heard of such a thing. Without an established revenue model, you can’t know how to select customers or deal with the competitive landscape.”
“Our strategy is to respond to the market, and a single revenue model would be stifling,” Isolde said. “Think about the pay-per-test innovation: We invented it in response to customer complaints, and it won us fantastic loyalty and retention.”
“And also created a moral hazard,” Peter said. “As you well know, the unintended consequence is that customers no longer have any incentive to be careful or efficient in their use of equipment or materials. There’s a lot of waste and damage — we still don’t know the extent to which that will eat into profits.”
He added, “Don’t you see that both of you are constantly wriggling away from your revenue models to meet this or that customer need or to respond to competitors? This random reactivity is crazy.”
“The only thing crazy,” Isolde replied, “is imposing a single, rigid structure that’s going to hamstring us when we need to be nimble, flexible, and ingenious to keep up with a dynamic marketplace.”
Peter looked from Isolde to Emanuel. The two were perfectly united, and they were speaking from long experience. That tiny voice of doubt in his mind was growing louder.
Question: Should Peter impose the structure of a single revenue model or let Siiquent-Teomik continue on its flexible way?
(Please remember to include your full name, company or university affiliation, and e-mail address.)
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How to Write a Resume That Stands Out
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The resume: there are so many conflicting recommendations out there. Should you keep it to one page? Do you put a summary up top? Do you include personal interests and volunteer gigs? This may be your best chance to make a good first impression, so you’ve got to get it right.
What the Experts Say
“There’s nothing quick or easy about crafting an effective resume,” says Jane Heifetz, a resume expert and founder of Right Resumes. Don’t think you’re going to sit down and hammer it out in an hour. “You have to think carefully about what to say and how to say it so the hiring manager thinks, ‘This person can do what I need done,’” she says. After all, it’s more than a resume; “it’s a marketing document,” says John Lees, a UK-based career strategist and author of Knockout CV. Heifetz agrees: “The hiring manager is the buyer, you’re the product, and you need to give him a reason to buy.” Here’s how to write a resume that will be sure to win attention.
Further Reading
How to Write a Cover Letter
Business Writing Article
Amy Gallo
Focus on why you’re right for the job and how badly you want it.
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Open strong
The first 15-20 words of your resume are critically important “because that’s how long you usually have a hiring manager’s attention,” says Lees. Start with a brief summary of your expertise. You’ll have the opportunity to expand on your experience further down in your resume and in your cover letter. For now, keep it short. “It’s a very rich, very brief elevator pitch,” says Heifetz. “You need to make it exquisitely clear in the summary that you have what it takes to get the job done.” It should consist of a descriptor or job title like, “Information security specialist who…” “It doesn’t matter if this is a job title you have or ever did,” says Lees. It should match what they’re looking for. Here are two examples:
Healthcare executive with over 25 years of experience leading providers of superior patient care.
Strategy and business development executive with substantial experience designing, leading, and implementing a broad range of corporate growth and realignment initiatives.
And be sure to avoid clichés. Using platitudes in your summary or anywhere else in the document is “basically like saying, ‘I’m not more valuable than anyone else,’” explains Lees. They are meaningless, obvious, and boring to read.
Get the order right
If you’re switching industries, don’t launch into job experience that the hiring manager may not think is relevant. Heifetz suggests adding an accomplishments section right after your opener that makes the bridge between your experience and the job requirements. “These are main points you want to get across, the powerful stories you want to tell,” she says. “It makes the reader sit up straight and say ‘Holy cow, I want to talk to her. Not because of who she is but because of what’s she’s done.’” Here’s a sample mid-career resume that does this well (source: John Lees, Knockout CV).
After the accomplishments section (if you add it), list your employment history and related experience. See below for exactly what to include. Then add any relevant education. Some people want to put their education up top. That might be appropriate in academia but for a business resume, you should highlight your work experience first and save your degrees and certifications for the end.
And that ever-popular “skills” section? Heifetz recommends skipping it all together. “If you haven’t convinced me that you have those skills by the end of the resume, I’m not going to believe it now,” she explains. If you have expertise with a specific type of software, for example, include it in the experience section. And if it’s a drop-dead requirement for the job, also include it in the summary at the very top.
Be selective
It’s tempting to list every job, accomplishment, volunteer assignment, skill, and degree you’ve ever had. But don’t. “A resume is a very selective body of content. It’s not meant to be comprehensive. If it doesn’t contribute to convincing the hiring manager to talk to you, then take it out,” says Heifetz. This applies to volunteer work as well. Only include it as part of your experience — right along with your paid jobs — if it’s relevant.
So what about the fact that you raise angora rabbits and are an avid Civil War re-enactor? “Readers are quite tolerant of non-job related stuff but you have to watch your tone,” says Lees. If you’re applying for a job at a more informal company that emphasizes the importance of work-life balance, you might include a line about your hobbies and interests. For a more formal, buttoned-up place, you’ll probably want to take out anything personal.
Share accomplishments, not responsibilities
“My rule of thumb is that 95% of what you talk about should be framed as accomplishments,” suggests Heifetz. “I managed a team of 10” doesn’t say much. You need to dig a level deeper. Did everyone on your team earn promotions? Did they exceed their targets? “Give people a sense of your management style,” says Heifetz. Lees agrees: “Give tangible, concrete examples. If you’re able to attach percentages or dollar signs, people will pay even more attention.” Here’s a sample senior executive resume that does this well (source: Jane Heifetz, Right Resumes). Of course, you can’t and shouldn’t quantify everything; you don’t want your resume to read like an accounting report.
Make it readable
Stop fiddling with the margins. Lees says the days of a one-page resume are over: “It used to be that you used a tiny font size and crammed in the information to make it fit.” Nowadays, two or three pages is fine, but that’s the limit: “Any more than three and it shows that you can’t edit.” Heifetz agrees: “I’ve never met a resume that fit on one page, even for a recent graduate. If you’re going to tell a compelling story, you need more space.” You can supplement what’s on the page with links to your work but you have to “motivate the hiring manager to take the extra step required. Don’t just include the URL. Tell them in a brief, one-line phrase what’s so important about the work you’re providing,” says Heifetz.
And stick to the most common fonts. “It’s not how fancy it is. It’s how clear, clean, and elegant it is in its simplicity,” says Heifetz. Vary the line length and avoid crammed text or paragraphs that look identical. The goal is to include enough white space so that a hiring manager wants to keep reading. For example, the opening summary could be three or four lines of text or two or three bullet points. “It doesn’t matter as long as it’s easy to read,” says Heifetz.
Get help
It can be hard to be objective about your own experience and accomplishments. Many people overstate — or understate — their achievements or struggle to find the right words. Consider working with a resume writer, mentor, or a friend who can help you steer away from questions like, “Am I good enough for this position?” and focus on “Am I the right person for the job?” At a minimum, have someone else check your resume for logic, grammar, spelling, and punctuation.
Tweak it for each opportunity
Don’t think you can get away with having just one resume. “You can have a foundational resume that compellingly articulates the most important information,” says Heifetz, but you have to alter it for each opportunity. Of course, you may need to write the first version in a vacuum but for each subsequent one, you need context. “Research the organization. Talk to someone — or ideally two or three people — who’ve worked there before, work there now, or otherwise know the organization. Then tweak it for the position, the industry, etc.,” says Lees. Heifetz says to ask yourself: What words or experiences do I need to highlight? What can I get rid of because it’s not relevant? “They don’t have to be radically different but they need to do the job for each situation,” she says.
Align your LinkedIn profile
Your LinkedIn profile is just as important as your resume. Don’t have one? Put one up immediately. Don’t cut and paste from your resume, says Lees: “It makes you look lazy.” But do make sure you’re presenting yourself in the same way. “You don’t have to use bullet points; you can be more narrative, and even more casual,” says Heifetz. You also want to tweak the tone. “There’s a greater expectation that you’ll demonstrate personality,” she adds. “For example, the summary section should be written in the first person. It gives you the opportunity to present yourself as a living, breathing human being.” Here’s Jane Heifetz’s LinkedIn profile as an example.
Principles to Remember
Do:
Start with a short summary of who you are and why you’re the right person for the job
Emphasize accomplishments over responsibilities
Create a new version of your resume for every opportunity
Don’t:
Use clichés — explain what makes you a good candidate in concrete, specific words
Cram text in or use a small font size — it has to be readable
Cut and paste your resume into your LinkedIn profile
Case study #1: Tailor your resume to each job
When Glover Lawrence was searching for his next job in the fall of 2013, he started by dreaming up the ideal position. “I asked myself what attributes, roles, and responsibilities I wanted,” he explains. He even crafted a job description for that made-up role using snippets of actual postings he’d seen, then drafted a resume to fit it.
As a senior executive, he doubted he’d find work through help-wanted ads or job boards. “It was going to happen through my network,” he says. So he also created a one-page version of his resume to use in networking meetings and to send to contacts who had offered to help him. It included a one-line summary, five notable accomplishments, a list of the companies where he’d worked for and the titles he held at each, one line about his education, and then a brief “Career Focus” section that described the types of jobs he was seeking.
He also developed a longer, more traditional resume to use when he formally applied for a position. “I tailored it to the company based on where I was in the process, what I knew about the people there, and the company culture,” he says. “Having the right resume for each specific opportunity, as tedious as it was, was important to me.” For his LinkedIn profile, he created yet another version, presenting the same information but in a more conversational tone. Over his months-long search, Glover sent out over 50 resumes and met with over 100 people. In early 2014, he landed a job very similar to the one he’d dreamed about.
Case study #2: Get an outside perspective
Several months into her previous job, Claire Smith* realized that she needed a change. “The job, the industry, and the institution were not the right fit for me. It just wasn’t where I wanted to be in my career,” she explains. She started to look at job descriptions, honed in on positions or organizations that were interesting to her, then decided to work with a professional resume writer. “I tried to do a little changing and reshaping on my own at first but it didn’t feel all that different from where I began,” she says. Working with someone else helped her see that the resume was not about explaining what she’d done in her career but why she was the best person for a particular job.
Claire started with one resume and then tailored it to each position. “You have the same raw materials — the accomplishments, the skills, the results you achieved over time — but you have to pick and choose to shape those things into a different narrative,” Claire says. The summary, which on her resume consisted of three bullet points, was the element she tweaked the most. For example, when she applied to be an editor, the first bullet point read:
Versatile writer and editor committed to speaking directly to readers’ needs.
But when she applied for a marketing position, she tweaked it to emphasize her ability to recruit customers and be a brand champion:
Innovative brand champion and customer recruiter in marketing, product development, and communications
Then, before launching into a chronological list of her jobs, she highlighted “selected accomplishments” related to each point in her summary. For example, under “writer and editor,” she included three achievements, including this one:
Based on customer data and email performance metrics, wrote new email series to provide prospective students with more targeted information about Simmons and to convert more of them to applicants. Improved performance over past emails producing average open rates of more than 20%.
Claire equates collaborating with a resume professional to working with a personal trainer. She felt challenged to keep rewriting and improving. And the hard work paid off. She recently landed a full-time job, which she starts next month.
*Not her real name
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