Marina Gorbis's Blog, page 1344

Cable Providers Win Even in an a La Carte World

When HBO and CBS announced that they’re going to go over the top (OTT), offering their programming to internet users who don’t have cable subscriptions, the news was greeted in some quarters as the beginning of the end of cable TV. Thomas Hazlett, a George Mason University economist and author who has been studying the cable business for three decades, tends to scoff at such predictions. But the news has at least made him sit up and pay attention.

“For some time, I’ve had trouble explaining the OTT phenomenon in terms that did not seem dismissive,” Hazlett says. “It’s been real, but very much on the margins. The cable/telco/satellite subscription model has held steady in subs and revenues, adjusted for macro-economics factors. Yet, with the HBO announcement, my reflex reaction is: now things are getting interesting.”

But for Hazlett, interesting doesn’t mean cable TV is facing its demise. If anything, he views HBO’s move less like sedition and more like uncertain hedging, and one that could help platform players ultimately continue to thrive.

It turns out that consumers of cable TV have a lot in common with the cable providers they love to complain about. You don’t like having to pay for huge bundles of channels no one watches? Neither does Comcast.

The real power players in the current arrangement are the cable channels.

Providers want to offer popular channels like ESPN and Discovery on a basic tier, because they get people to subscribe to cable. But content creators like Disney (ESPN’s owner) and Discovery tell them that to get those popular channels, providers must also bundle SoapNet, or the Science channel, and dozens of other channels. Oh, and they’ll have to pay a higher license fee for the main channel they want as well. All a network needs is one really popular channel to create that leverage.

This bundling system has been preposterously great for the content companies. Hazlett reports that the cable revenues were split 90/10 between cable providers and cable networks in 1990. By 2005 it was 50/50. Between 1999 and 2008, the number of cable networks doubled, but cable network revenue tripled to more than $42 billion. Cable providers have passed their increased programming costs on to consumers. Expanded basic cable costs 188% more than it did in 1995. (Drastically more than either inflation or wages in that time frame.)

Meanwhile, forcing dozens of channels into the basic tier also gets the programmers instant scale–110 million households–for advertisers. “The strong channels carry the weak ones,” explains Hazlett. “It’s a marketing ploy to get fledgling networks established.” Sometimes this doesn’t work (CNNfn); sometimes it works brilliantly (The History Channel).

And while the networks reach all those households, they don’t have to market to all of them. The service providers are doing that for them by selling subscriptions with their channels. “[Cable networks] don’t want to deal with the mass market,” Hazlett says. “They don’t want to sign up 100 million customers, they want to sign up 20 providers.”

So where does that leave the cable providers?

For them, change will be tougher. Hazlett says that platform players like Verizon and Comcast can’t mimic the a la carte strategy because of  the 1992 Cable Act, which mandates that all cable providers’ offers must start with a basic tier that includes the over-the-air channels, the so-called “buy through provision.” You have to buy through the basic tier; additional channels must be on top of that. Even if they wanted to sell you just a broadband pipe plus just ESPN or HBO, they can’t without a policy change.

Hazlett’s not convinced the providers want to do that anyway.

“People think the the service providers are in the programming business, but programming has always just been one of the main inducements to the platform.” he says. Even if you’re streaming shows over the internet, “you still need [internet] bandwidth coming to your house to get it onto your screens. And Verizon and Comcast and those guys are in the best position to sell you that, probably at a higher price than they do now. It will certainly be lower cost for them if they get out of or reduce their participation in the programming business, because there won’t be those massive license fees going out the back door.” That means that a new, a la carte world might be even better for cable providers than the current system.

If this ever happened, it wouldn’t be for a while. “Cable has legs left. The hip tech blogger view is that cable is a dinosaur. But if you look at subscriber numbers, there’s not a lot of migration away from cable.” Although, Hazlett concedes, “You’re seeing a lot of it with Millennials, yes.” They are the least likely to subscribe to a cable bundle and most likely to watch programming on different devices.

And that means the recent HBO and CBS announcements are less a harbinger and more of a hedge. Or as Hazlett calls it, “a straddle.”

Get the Millennials who don’t have cable to subscribe to HBO. If their media consumption habits stay unbundled over time, or if the world moves that way, you got ‘em. If they get married, have kids, move to the ‘burbs and sign up for cable — young families have always been the target demographic for the cable providers, they’re too busy to worry about managing their media habits — well, you still have contracts with the providers so you still got ‘em.

Ultimately Hazlett keeps coming back to the notion that the favorable economics of cord-cutting aren’t necessarily sustainable. Before streaming services were even a thing, in 2006, he argued in a paper cleverly titled “Shedding Tiers for a la Carte” how regulation and other market conditions made it such that “restricting the basic tier… to just those…channels a given subscriber prefers is actually more expensive than providing the large tier to all.”

OTT services like Netflix and HBO Go seem to have changed that calculus by coming in with a lot of content at a much lower cost, but they still rely on the internet bandwidth going into the house, cable providers have priced, thus far, as all you can eat. That means that the favorable economics of paying only for the content you use relies, ironically, on cable providers not pricing internet bandwidth that way, because if it were, some of the heaviest users would be paying much more for it. “Consumers say it’s unfair that they can’t pay for only what they use when it comes to programming,” Hazlett says, “but if you tell them they’re going to pay for bandwidth by getting charged for what they use, they say that’s unfair, too.”

What Hazlett doesn’t see right now is any one company or model with the inside track on the future of TV. “It’s all in flux. No one knows really where it’s going to go,” he says. “There’s a graveyard of failed experiments and it’s growing. And we’re going to see Apple TV, Roku, Google, Sony, Samsung, and others we’ve never heard of all take more shots at this. No one’s gotten it right, and that includes Netflix, which I think may be in the most precarious position of all.

“All these players are trying to get in there, get a spot on the food chain. There’s intense competition everywhere. This is capitalism. It’s fun to watch.”

The Sectors Where the Internet of Things Really Matters

The Internet of Things is emerging as the third wave in the development of the internet. While the fixed internet that grew up in the 1990s connected 1 billion users via PCs, and the mobile internet of the 2000s connected 2 billion users via smartphones (on its way to 6 billion), the IoT is expected to connect 28 billion “things” to the internet by 2020, ranging from wearable devices such as smartwatches to automobiles, appliances, and industrial equipment. The repercussions span industries and regions.

At Goldman Sachs, we see numerous triggers turning the IoT from a futuristic buzzword to a reality. The cost of sensors, processing power, and bandwidth to connect devices has dropped low enough to spur widespread deployment. Innovative products like fitness trackers and Google’s Nest thermostats are demonstrating the potential for both consumers and enterprises. And corporate alliances are taking shape to set the standards needed to integrate the wide array of devices in a cohesive way.

While these enablers make the IoT possible, its long-term success depends on the use cases that help realize the economic potential of connecting billions of devices, either to improve quality of life or save money. We focus on five key verticals where the IoT will be tested first: Connected Wearable Devices, Connected Cars, Connected Homes, Connected Cities, and the Industrial Internet.

Early adopters in these verticals are using the IoT to pioneer new product areas and to find efficiencies that save money or reduce demand for resources. In wearable devices, new consumer categories are emerging in fitness bands, action cameras, smart watches and smart glasses. Cars are becoming more connected with each new model, driven by infotainment, navigation, safety, diagnostics, and fleet management. Consumers in these verticals are able to see the internet extended beyond desktops and mobile devices.

Connected Homes are perhaps the clearest next proving ground for the IoT, combining both the potential to spawn new lines of products and services in areas such as security cameras and kitchen appliances, and the chance to reduce energy use and costs through smart thermostats and HVAC systems.

We believe this segment could generate meaningful revenue in the near term. Samsung said at its 2014 investors forum it expects the global Smart Home Device market to reach $15 billion in 2015, almost doubling from 2013’s $7.8 billion. Samsung expects the bulk of this opportunity to be driven by the U.S., U.K., Australia and China.

In connected cities, the U.S. has emerged as a leading adopter of smart meter technology for power utilities, approaching 50% penetration of 150 million total endpoints. The initial foray into connected cities was catalyzed by over $3 billion in stimulus funding and support for smart grid technology as part of the 2009 American Recovery and Restoration Act. Government initiatives are likely to drive growth internationally as well. In Europe there is a target for 80% of households to have smart meters by 2020.

Smart meters and the grid network architecture lay the foundation for further connectivity throughout cities, including smart street lighting, parking meters, traffic lights, electric vehicle charging, and others. According to The Climate Group, a non-profit organization dedicated to reducing carbon use, combining LED lamps in streetlights with smart controls can reduce CO2 emissions by 50%-70%.

Within the vast Industrials sector, the IoT represents a structural change akin to the industrial revolution. Equipment is becoming more digitized and more connected, establishing networks between machines, humans, and the internet and creating new ecosystems. While we are still in the nascent stages of adoption, we believe the Industrial IoT opportunity could amount to $2 trillion by 2020. Included within this Industrial category are numerous sectors, from transportation to health care to oil and gas, each of which will be affected.

Specifically, we expect IoT to impact three main areas within industrials: building automation, manufacturing, and resources. Factories and industrial facilities will use the IoT to improve energy efficiency, remote monitoring and control of physical assets, and productivity.

With several infrastructure booms coming to an end and rising cross-border competition, industrial companies are looking for new sources of growth. Fixed investment is moving away from traditional capital goods equipment, creating new business models that more seamlessly integrate hardware and software, which support recurring revenue streams and greater customer stickiness.

As with any gold rush, the early winners from the IoT are likely to be the suppliers selling the “shovels” to make the connections possible and to process the vast amounts of data. But in the long run, the ultimate impact of this third wave of the Internet depends on the adopters in these proving grounds finding gold in connecting billions of devices into an intelligent network.

This article is drawn from a series of Goldman Sachs research reports on the Internet of Things that has included contributions from more than 20 analysts across multiple sectors.

Design a Workspace that Gives Extroverts Privacy, Too

Some of the most unlikely people have confessed to being introverts lately. One recent acquaintance–while chatting amiably during a pre-event networking session– leaned over to quietly tell me that she is actually an introvert. She felt she had to learn more extroverted behaviors to succeed in her career. And she’s not the only one.

It seems like everyone is talking about where they are on the introversion spectrum these days, and for good reason. Since Susan Cain, author of Quiet: The Power of Introverts in a World that Can’t Stop Talking delivered her TED talk in 2012, the public has become more aware of this important aspect of our personalities, and how it impacts our behaviors, emotions and decisions. We now know that introverts aren’t shy, they simply respond to stimulation with greater sensitivity. They are thoughtful people who don’t dominate a conversation or command attention, but their preference for solitude leads to deep insights and creativity. Being an introvert is no longer a problem to be solved or covered up – it’s become kind of cool. And businesses are looking for ways to offer introverts the solitude they crave at work.

Extroverts, meanwhile, seem to be getting a little less attention. Because they love socializing and comfortably spend large chunks of their day interacting with others, working in open spaces seems ideal. In our workplaces at Steelcase it’s pretty easy to spot an extrovert. You can almost always find them in open, community spaces like our Work Café, which is a place that blends the vibe of a coffee shop with a range of work settings where people can collaborate, work individually, or chat with coworkers. It’s the hub of our campus and a great place to see or be seen — an extrovert’s paradise.

But even extroverts get worn out by the amount of stimulation everyone faces. We’re bombarded with information: according to The Happiness Advantage author Shawn Achor, people receive over 11 million bits of information every second, but the conscious brain can only effectively manage about 40 bits. Our technology allows work to follow us everywhere, even into places like the bedroom and bathroom that used to be non-work sanctuaries. We’re collaborating with teammates for longer stretches of time – sometimes the whole workday – requiring longer hours to handle our individual tasks. Even in countries like France and Germany that have long valued the separation of work and life, our jobs have seeped into nights and weekends. The pace of work has intensified everywhere. Which means that everyone – including extroverts – needs access to private places to get stuff done, or simply take a breather.

As humans we need privacy as much as we need human interaction. But too often our workplaces are designed with a strong bias toward collaboration and social connections, without adequate and varied spaces for concentration and rejuvenation. Distractions are troubling for all of us, but extroverts can find them irresistible. We found a number of design strategies to support extroverts’ need for privacy. Here are some ideas:

Extroverts are drawn to social interactions. Create “quiet zones” for individual work that reduce the temptation to interact with others. Orient the furniture to avoid conversations and eye contact.
Create private areas that have frosted glass or other treatments that allow light in, but manage distractions. Situate these in low-traffic areas that limit the temptation for extroverts to look up and engage with passers-by.
Provide enclosed private areas with strong acoustic properties to keep noise out. Extroverts are enticed by conversations, so make sure there are sound seals that minimize or eliminate voices, allowing extroverts to stay focused.
Schedule “quiet time” for everyone to focus on their individual work. The social convention of this practice will help extroverts allocate time that is “interaction-free.”
Help extroverts shield themselves from visual distractions with opaque walls or movable screens.
Extroverts need respite from the intensity of work. Create places with soothing textures, sounds and vistas, where they can seek solitude and rejuvenate.

For these ideas to work, organizations need to embrace the notion that seeking privacy is not anti-social, but part of an essential balance in our workday. Extroverts, as well as introverts, need permission to seek alone time when they need it to do their best work.

When It Comes to Data, Skepticism Matters

Managers should rarely take an important analysis at face value. They should almost always dig into the data and develop a deeper understanding of the hidden insights that lie within. Sometimes there are real gems awaiting discovery. Other times the data contain some truly snarky beasts, and failing to spot them soon enough presages real danger.

Consider a (hypothetical) company that is trying to drive traffic — especially mobile traffic — to its website. Once people arrive, it wants to keep them there. So two statistics of interest are the number of unique visits and the number of additional page views. The figure below presents results over a four-month period for both variables.

According to the graph, the trends look great, and it’s easy enough to conclude that whatever the company is doing is working, and it should keep it up. One may even be tempted to predict that these efforts will yield even better results in the future.

But not so fast! Recall this company has a special interest in mobile platforms, so a deeper look is needed. The next figures provide that look. The first breaks total unique visits into its mobile and desktop constituents, respectively.

It is easy enough to see the terrific growth in desktop traffic. Mobile traffic is also growing, but much more slowly. It is a positive result, but not the most desired one. What’s going on? Could it be that efforts to drive traffic are reaching desktop users, but not mobile users? Or maybe visitors using the mobile platform find something compelling and then visit from their desktop later, when there is more time? Or maybe users don’t like the mobile platform? Could there be some external factor (not related to company efforts) that is causing people to use their desktops? We can’t tell from these data — clearly a deeper look is needed to understand root cause.

Now let’s look at those additional page views, once people are on the site. The next results are downright mysterious. The figure below shows that, while average additional page views per visit is going up overall, they are going down for both mobile and desktop platforms. This is both surprising and counterintuitive! How can a statistic be trending down for both groups and up overall?

The answer to that question involves Simpson’s paradox. Here, during the first month, mobile traffic was a full 25% of the total. But desktop traffic is growing faster so, by month four, mobile traffic was only 19% of the total (see the figure below). Since desktop visitors view a full additional page, on average, as the months go by they drive the overall average up.

Fortunately, the deeper look revealed the snarky beast. This company now knows that efforts to increase additional page views per visit are not working for either the mobile or desktop platform — even though the first look showed great promise. They must adjust their plans.

What should managers take away from this example both as they seek to understand results brought by others and dive more deeply into data themselves? First, it is too easy to be seduced good news. If something looks too good to be true, it probably is. So be skeptical — very skeptical. Always make sure that important results hold up to a deeper look and, if they do not, get the full explanation.

Second, don’t be satisfied with “analyses of the average.” Here, for example, mobile and desktop comprise distinct subpopulations. Look for them and develop an understanding of how they differ from one another.

Third, if an analysis violates the conventional wisdom, expect some tough (but fair) questions, spirited debate, and even a certain measure of hostility. Dig as deeply into the data as you can, make sure the data can be trusted, and make sure you understand not just the data but the real-life processes that produced them. When you can, seek confirmatory data and develop completely different ways to explore the conventional wisdom.

Fourth, these points aside, don’t be consumed by analysis paralysis. When the time comes to make a decision, do so. See what happens and reevaluate constantly.

Keep in mind, though, that you can’t just question the positive. I could just have easily told a story that started with a negative result, camouflaging the good news underneath. Sometimes you have to reverse these questions.

The bigger and more complex the business problem/opportunity and analyses, the more important these lessons. I’ve crafted this example to be as simple as possible — there’s no bad data, random fluctuation, time pressure, or hidden agenda obscuring the issues. These forces rear their heads in the hurly-burly of real life, and it takes hard work and more courage to follow them. Of course, this is when it matters most.

Successful Innovators Don’t Care About Innovating

Successful innovators care about solving interesting and important problems — innovation is merely a byproduct. If this distinction seems like hair-splitting, it isn’t. The two focuses create vastly different realities.

Focusing on innovating — as a worthy goal unto itself — tends to be born from self-centered motives: We need to protect ourselves from competitive forces. We need to ensure we have a growth engine. We need to keep up with other companies. To do all these things, we need to innovate. This is often a CYA perspective coming from an executive suite looking to protect its turf. It isn’t inherently bad. It’s just that this focus tends to create a culture where customers are on the sidelines, not in the center of the dialogue.

By contrast, focusing on solving interesting and important problems tends to be born from customer-centered motives: What’s going on with this set of customers? Where are they ecstatic? Where are they upset? Where do they feel good? Where do they hurt? How can we better serve them? These types of questions pull customer problems front-and-center and create a culture where that’s expected. And since people naturally want to solve problems, it pulls for innovation.

To illustrate, consider paint maker Sherwin-Williams, a company that has long been obsessed with solving painting contractors’ problems.

Twenty-five years ago while doing customer research, Sherwin-Williams uncovered an important insight: Contractors tend to make paint-buying decisions based more on proximity to job site than brand of paint. To them, time is money. This led to a hypothesis that saturating a market with stores to ensure there’s a store close to any job site will produce outsized market share growth. This was a new and innovative idea in a pre-Starbucks-on-every-corner world. Sherwin-Williams tested the hypothesis in four markets and it worked. But as they tried to roll it out to more markets, competitors quickly caught on. Suddenly it became a race for real estate and competitive advantage was lost.

Fast forward 20 years. During the 2009 recession, Sherwin-Williams’s competitors started shuttering stores in order to cut costs. Despite strong shareholder pushback, Sherwin-Williams did the opposite, opening 60–100 stores per year during the downturn. It was a risky bet, but they didn’t want to miss the opportunity to be close to customers when the market inevitably rebounded. When it did rebound, revenue growth far outstripped that of competitors. Sherwin-Williams’s stock price has quadrupled in the past five years.

So what’s the takeaway? Market saturation was an important distribution innovation, but it wasn’t what drove success for Sherwin-Williams. Success came from an unrelenting focus on solving contractor problems. That focus generated the initial innovation, but more importantly it generated the conviction to stick with the innovation when the going got tough.

When I asked Bob Wells, the Sherwin Williams SVP who shared this story with me, what he felt has driven the company’s success over the years, the word “innovation” never came up. But the word “customer” did — a lot.

“We’ve always looked at business more like dating than war,” Wells noted. “It’s a theme that runs through our 140-year company history. In war, you’re focused on beating the competition. In dating you’re focused on strengthening a relationship. That difference of perspective has a million knock-on effects for how decisions get made.”

Wells’s comment points to a truth so often missed in today’s let’s-get-some-innovation-in-here-quickly climate. Successful innovation is a mindset before it’s a process or outcome. It’s characterized by a dogged determination to see the world through your customers’ eyes. That mindset drives all the little details and decisions that can’t be captured in a process.

So how can you foster this mindset if it’s not already present in your organization? The simple answer is you just start doing it, even if you’re the only one. Disabuse yourself of the notion that innovation is some high-minded creative process reserved for a certain class of people. Remember that most great innovations have been developed by regular people inspired by a problem.

Get out of the building and talk to your customers. Listen to their challenges. Come up with back-of-the-envelope, harebrained ideas about how you can help them. Get comfortable with the idea that you’ll throw 99% of those envelopes in the trash. When you lose your motivation, go back to the problem statement. Never stray from the problem statement. Let it inspire you. Let it lead you. Also, stay mindful that problem statements shift and move. Never stray too far from your customers either.

Before long you’ll embody a customer-centered, problem-focused mindset. You’ll inspire others to start embodying it too. That’s the only way innovation ever really happens. Before all the fancy processes, there’s always a few people with a fire in their belly put there by a problem they can’t help but solve.

Counterfeiting as a Form of Free Advertising

In a study of a 1995 surge in counterfeiting in the Chinese shoe market, Yi Qian of the University of British Columbia found that the entry of fakes had the effect of increasing sales of high-end authentic shoes by 63%. The arrival of counterfeits on the market affirmed the value of the brands in consumers’ minds and in many cases introduced the brands to new customers. At the low end, however, counterfeits merely ate into the brands’ sales.

Ignore Emotional Intelligence at Your Own Risk

Call it Grant vs. Goleman. Two academic heavyweights face off on a topic that every student of leadership and HR cares — or at least hears — a lot about: emotional intelligence. Wharton professor Adam Grant kicks it off with a LinkedIn blog post, “Emotional Intelligence Is Overrated,” arguing that “it’s a mistake to base hiring or promotion decisions on it” and that “even in emotionally demanding work, when it comes to job performance, cognitive ability still proves more consequential than emotional intelligence.” Daniel Goleman, the psychologist credited with coining the term EI (and, full disclosure, a friend), issues his rebuttal, “Let’s Not Underrate Emotional Intelligence,” questioning the specific assessment of EI used by Grant, and referring to the various studies conducted by “The Consortium for Research on Emotional Intelligence.” And the comments fly.

I have huge respect for both men, and I’m not an academic. But as a privileged practitioner, who has helped companies around the world make sound hiring and promotion decisions for the past three decades, I thought I would offer my perspective to the debate. Working as an executive search consultant at Egon Zehnder, I’ve personally led more than 500 senior appointments and been involved in many more, interviewing more than 20,000 candidates. And, as the leader of our firm’s management appraisal practice, professional development, and intellectual capital creation, I’ve also carefully studied various assessment approaches and their performance impact.

My conclusion about emotional intelligence based on this experience? I can’t emphasize enough the crucial importance of EI-based competencies for success in leadership roles.

Back in the late 1990s I did my first quantitative analysis on the subject, using information on 250 managers I had personally hired or recommended for promotion to our clients, mostly in Latin America in those days. I analyzed the correlation of three main candidate variables (experience, IQ, and emotional intelligence) with the person’s performance once on the job and was amazed with the results. When the appointees excelled in experience and IQ but had low emotional intelligence, their failure rate was as high as 25%. However, those people with high emotional intelligence combined with at least one of the other two factors (experience or IQ) only failed in 3%-4% of the cases. In other words, emotional intelligence coupled with high IQ or very relevant experience was a very strong predictor of success. However, highly intelligent or experienced candidates who lacked emotional intelligence were more likely to flame out.

My colleagues soon replicated this analysis for many different geographies and highly diverse cultures, including Japan and Germany, and the results were similar everywhere. People are hired for IQ and experience and fired for failing to manage themselves and others well.

Since then, our firm has continued to use candidate assessment and performance data to develop our competency model, which guides us in our executive search and appraisal work across 69 offices. While some of the attributes and skills that have proven to be necessary for success at the top are indeed mainly cognitive, such as strategic orientation or market insight, most of them are based on emotional intelligence, including results orientation, customer impact, collaboration and influencing, developing organizational capability, team leadership, and change leadership. In my teaching at Harvard’s graduate program on talent management, I’ve met hundreds of leaders from successful corporations all over the world and, without exception, the vast majority of the competencies they use to select and develop leaders are also based on emotional intelligence.

I agree with Adam that EI is no panacea. Neither is IQ, or any other variable. As I explain in my most recent book, the right candidates need to be clever in the traditional IQ sense, but also have the right values, the right conditions for portability, and the right competency fit for the job.

Potential for growth is also critical, as I emphasized in this June 2014 HBR article. Interestingly, however, the hallmarks of potential — the right motivation, curiosity, insight, engagement, and determination — are also heavily based on emotional intelligence. To adapt to changing circumstances, you’ll require much more than just IQ.

In sum, you can choose to ignore EI — but make sure you understand the risks.

How to Choose the Right References

You aced the last round of interviews and now your prospective employer wants to check your references. Who should you ask? Which people can best vouch for you? Will they be able to describe all your relevant qualities and skills and explain why you’re a fit for the new job?

What the Experts Say

One of the biggest mistakes jobseekers make is failing to understand “how incredibly important references are,” to the hiring process, says Claudio Fernández-Aráoz, a senior adviser at global executive search firm Egon Zehnder and the author of It’s Not the How or the What but the Who:  Succeed by Surrounding Yourself with the Best. References provide “an accurate, third-party assessment of your strengths and weaknesses so managers can hire knowing full information,” he explains. “Given the option of either interviewing a candidate without checking references or checking references without interviewing, I would choose the latter.” As a job candidate, you must therefore be thoughtful and strategic about both whom you ask, and how you prepare them to speak on your behalf, according to Priscilla Claman, the president of Career Strategies, a Boston-based consulting firm and a contributor to the HBR Guide to Getting the Right Job. “You want your references to present a consistent story about who you are, what you are good at, and what it is you want to do” with your career, she says. Here are a few things you should consider.

Be prepared

Even before you start the job interview process, you should develop a mental list of past and current colleagues who could serve as references for you so that once you’re asked to provide them, you’re ready. Ideally, your list should include a mixture of former and current bosses, coworkers, and subordinates. “The best references are from people who have worked closely with you,” says Fernández-Aráoz. Never ask someone to be a reference if you don’t know for certain what he or she is going to say, adds Claman. “You should ask managers who have given you positive performance reviews. Ask coworkers who have thanked you for help on projects. And ask people who have successfully worked under you,” she says. “This is why you have to maintain those relationships.”

Understand your options

If the hiring manager asks to check your references at your current organization and you don’t want to divulge the fact that you’re considering leaving, you have two options. One, offer to provide references outside of your organization — consultants, advisors, lawyers, or clients — who can speak to the quality of your job performance. Or two, offer to provide references once the new company makes you a formal job offer. “It’s fairly common,” says Claman. “Most companies understand the position you’re being put in.” There are certain instances, however, where it is acceptable to tip your hand, says Fernández-Aráoz. Perhaps you’re not going to progress to the next level; you’re not interested in a promotion; or you need to leave your job for personal reasons. If you’ve decided to leave, use your best judgment in selectively sharing that information with colleagues. “But if you are otherwise happy where you are, wait until you’re at an advanced stage” before revealing your plans, says Fernández-Aráoz.

Get specific

When the hiring manager requests your references, “find out what specifically he or she is looking to check,” says Fernández-Aráoz. If the manager wants to learn more about your leadership style, then he should speak to your former and current direct reports. If he wants to check your ability to develop a strategy, bosses are the people to call. If he wants to learn about your ability to influence, he ought to talk to peers. “This helps the person do a more relevant reference check and get a more credible, accurate assessment,” he says. Remember: the quality of the references you offer is a reflection on you.

Offer context

Help your references offer the best possible endorsement by providing them with information about the role you are being considered for and why you want the job. “Give them a framework,” says Claman. “Tell them why you believe the company wants to hire you and how you are likely to be useful for that company so they can reinforce that.” Gently remind your references of your past achievements and approach. “Coach them on what you want them to say,” she suggests. Also ask different references to highlight different talents and strengths, she says. “One could talk about your ability to establish relationships with colleagues, another about your technical skills, and another about your project management abilities.”

Be resourceful

If you are being considered for a job in which you don’t have direct experience, it can be tricky to come up with an appropriate reference. In hiring circumstances like these, you need to take a different approach. Recount a time in your past where you picked up new professional responsibilities, spearheaded a cross-functional project, or took on a new geography, then think about colleagues with whom you worked closely then. You want “individuals who have seen you do something different,” says Fernández-Aráoz. “When a hiring manager hears that you’ve [taken on something new] under similar circumstances, he will infer competence.”

Find common ground

The best testimonials depend on the “openness” of the person providing the reference, according to Fernández-Aráoz. To “facilitate candor,” he suggests you try to identify commonalities between the person checking your references and the people providing them. Perhaps the hiring manager and your former boss share an alma mater. Or maybe the she once worked at the same company as one of your close colleagues. “People will place more weight on those references because of the familiarity effect,” says Fernández-Aráoz. Similarly, the referee will likely “be more open and candid” during the conversation.

Explain negativity

“You should know when to expect a negative reference,” says Fernández-Aráoz. It might come from a manager who fired you, from someone who gave you a poor performance review, or from a colleague who felt offended that you left the organization. If the hiring manager asks to call that particular person, be honest. “Say: ‘This person will likely give you a negative reference. Let me tell you why.’” Then suggest  other people in the same organization who “can offer relevant and objective” opinions, says Fernández-Aráoz. After all, the last thing you want is for the “hiring manager to be surprised by what he hears,” says Claman.

Do

Have a ready list of references that includes a mixture of bosses, colleagues, and direct reports who will provide strong testimonials on your behalf
Think creatively about others who might be a good reference; your list could also consist of consultants or customers who can speak about the quality of your performance
Remind your references of your past achievements and ask them to highlight specific skills and strengths

Don’t

Ask someone to be a reference unless you’re sure that person will say positive things about your work
Rule out using references from your current organization; consider your circumstances and decide whether it makes sense to tip your hand that you’re leaving
Be vague about your potential new opportunity; provide your references with information about the role you are being considered for and why you want the job

Case study #1: Be honest about your circumstances and provide relevant context

For five years, Michiko Gupta had a staff job she loved at a large Boston-based university. But earlier this year, her husband got a new job based in Chicago. “My first thought was: What’s going to happen to my career? My second thought was: I need to tell my manager I’m leaving.”

When Michiko broke the news, her manager was upset but understood that she needed to move for family reasons. “The conversation naturally turned to that fact that I was now looking for a new job,” Michiko recalls. “She volunteered to be my reference and then gave me some advice: it’s always best to look for a job while you still have one.”

Michiko’s boss allowed her to work remotely from Chicago for three months while she looked for a new position. Eventually, through another colleague in Boston, she learned of an opportunity at a school in her new city, and when her interviewers asked for references, she of course provided the name of her still-current manager. “We had such a close relationship that I just forwarded her the job description and gave her a heads up that someone would be reaching out to her,” Michiko says. “She knew my strengths.”

For a second reference, Michiko chose her manager’s counterpart in another department but, since she and the person hadn’t worked together as closely, she took a different approach. “I called her to talk about the job I applied for, and I told her which areas the hiring manager would be focused on. I also reminded her of my responsibilities on an assignment we did together and asked if she could talk about project management skills and my teamwork capabilities. I wanted her recommendation to complement the one from my manager.”

Michiko got the job. And while she misses her old boss and team, she is thriving in her new role.

Case study #2: Think deliberately and strategically about whom to ask

Scott Merritt — a public relations executive in Atlanta — had gone through several rounds of job interviews at a company when he was asked for references. He knew it was a critical decision: “In job interviews, I am confident that I know my stuff and I am up on the latest methods and trends, but I also know — having hired a number of people myself — that a lot comes down to who the hiring manager speaks to and what they learn,” he explains.

But, deeply unhappy at his current company, he wasn’t about to ask his boss to be a reference. Fortunately for him, “in the PR business, there are a lot different kinds of references you can use.”

Scott asked three people. The first was a former business partner he still spoke to at least once a week by phone and whom he considered a “professional sounding board.” The second was a client he currently worked for who had been complimentary. “I knew he would provide a very solid reference, and it wouldn’t be a problem that he knew I wanted to leave my job,” Scott explains. And his third reference was a journalist. “If I wanted to be taken seriously as a PR that has strong relationships with reporters and gets a lot of media placements, I knew I had to prove it. In the job I was up for, I would be working on a lot of technology accounts,so I asked a technology writer who works for a number of tier one newspapers and magazines. I knew that a recommendation from him would enhance my value proposition.”

All three references delivered. Scott got the job and, 18 months into his new gig, he is much happier at his new company.

More on job hunting: 

How to Write a Cover Letter

How to Keep a Job Search Discreet

Reference-Check Your Future Boss

Before You Respond to that Email, Pause

Someone sends you an email message or a text, and you’re unsure how to respond.  It’s about a complex negotiation, or a politically sensitive situation. Or maybe it’s just from a person who unnerves you.

For a moment, you pause. But for most of us, most of the time, that pause doesn’t last long. Instead we react, feeling the need to immediately craft a response. And often we then hit “send” without fully thinking. The result: an awkward or incomplete message that causes the recipient to pause, then react, often starting or continuing a cycle of miscommunication and misunderstanding.

Yes, people today expect and want an instantaneous reply to any message. We often accommodate them because delay feels like a violation of modern-day social norms.

But there are many times when we should not immediately reply.  And the truth is, we usually know them when they come. That’s what that initial pause is about. The key is to heed it.

There is a simple two-step method to making the pause work for you. First, buy yourself some time to think. Second, follow the four simple C’s of effective communication that help determine how best to respond in terms of the context, content, channel, and contact.

Buying Time

There are a few practical ways to buy some time when you get a message where your gut tells you not to respond or where you are not sure how to respond.

The non-response response – “Got your message.”  This is meant to serve as an acknowledgement but really is only filler. It may aggravate someone in the midst of a negotiation or other serious exchange.
The expectation-setter – “Got it.  Lot on the plate today, I’ll get back to you tomorrow afternoon.”  This is often a good middle ground.  It provides an immediate response of acknowledgment and resets the timetable.
The confident pause – Don’t respond. Really. Just don’t. Pausing for at least 24 hours is a pretty good rule of thumb. Not responding is its own kind of response, which can often work to your advantage.

Once you’ve bought yourself some time, you soak in the information from the message and think of what the best response might be. There are four C’s that have served as a useful checklist for me to use during that pause time before I respond to a difficult message: context, content, contact, and channel.

The Four C’s of Effective Communication

Context – Having the right situational context is key. Who are the relevant parties to the conversation or discussion thread? Are there relationships and inter-dependencies and previous conversations that I’m not aware of?  Do I fully understand what is at stake?  In the multi-party transactions in which we often get involved in venture capital, sending out a quick response to even a simple query can backfire if the timing is wrong or the information out of date. Sometimes you can even answer a specific question in a technically correct manner, but be practically incorrect because you’ve failed to appreciate the bigger picture.
Content – The message needs to be delivered in clear manner with the right tone and style for the occasion. Having the right content means checking facts and being consistent with past discussion threads. If there is one thing that I have seen kill a negotiation or productive progress in a discussion, it is inconsistency of message, which both confuses others and diminishes your credibility. Get the facts and your message points straight in your head, then focus on delivering them in the clearest, most understandable, most consistent manner possible.
Contact – Are you even the right person to respond? It happens often: we are asked something and fail to realize that we might not be the best person to respond. Consider if someone else might be more knowledgeable or better suited in style to respond, especially in a crisis (where it is usually best to have only a single point of contact). There is a reason why terrorist and hostage negotiations are not conducted over Google Docs. And even in an open and collaborative everyday work culture, there are many times when deferring to someone else is the right answer.  Also, consider if the person on the other side who is asking a question or provoking a discussion is the right contact person as well. And always — always! — be wary of “reply all” and judicious with the cc function.
Channel – Just because someone contacts you by email or text does not mean you have to respond by that channel. Email and text lend themselves to misinterpretation and misunderstanding. They are often likelier to prolong or inflame a debate than to resolve it. As I’ve written before, sometimes it’s much more effective and efficient just to pick up the phone or meet up in person. Email is great for transmitting factual information — a spreadsheet of a business model, for example, or a summary of a prior discussion. But when there are issues to resolve, talking usually works better.

As the pressure grows to respond quickly, the value of pausing and thinking is growing too. We all should work toward developing better, saner norms of communication amid the explosion of channels available to us. But that will take time and thought to get right.  In the interim, we just need to stop being so damned trigger-happy with that send button.

Why ESPN Won’t Pull an HBO

When HBO and CBS announced they’d offer paid apps that would allow viewers to completely bypass TV and stream their content directly to their preferred device, it was hard not to see the moment as dominos starting to fall. Everyone from disruptive innovation theorists to cheapskate AppleTV-streaming hipsters has been salivating over the unbundling of cable for years. Aereo’s lost legal battle? A bump in the road on the inevitable way to a la carte TV.

It’s widely accepted that live sports is one of the major things keeping cable’s profitable bundle intact. But might that begin to change? I spoke with James Andrew Miller (@JimMiller), author of Those Guys Have All the Fun: Inside the World of ESPN. What follows is an edited version of our conversation.

HBR: I think the first thing to establish is whether ESPN is, like HBO, a generator of premium, exclusive content, or whether they’re just a middleman who brokers sports between the leagues and the fans.

Miller: They really started creating a lot of original content in the 1990s, when they developed Pardon the Interruption, Around the Horn, documentaries, series, movies, stuff like Playmakers. There was a lot of attention and money paid to that. Then when John Skipper became head of content he decided it was all about live sporting rights. He went on one of the great shopping sprees for television rights of all time. He went after a lot, and also engineered longer contract terms than was usual — eight, 10, sometimes 12 years. They’ve invested a lot of money — for instance, their last deal with the NFL was over $15 billion. Their recent deals for college football total over $20 billion.

And what’s been the impact of that on the competitive landscape?

They think it’s essential. It builds a big moat around ESPN in terms of competition. When FOX Sports 1 went on the air, everyone was talking about how they’d be a formidable competitor for ESPN, but I didn’t believe they could go toe-to-toe with them because there’s just not a lot of inventory left out there. ESPN has so many deals lined up, and they’re lined up for quite some time. So how are you going to compete with ESPN when they have such a head start in terms of inventory?

What’s interesting to me about the recent changes in the TV landscape is that you have distributors like Netflix turning into content providers and you have content providers like HBO trying to become distributors. It just seems like if you can have both a direct relationship with consumers and exclusive, premium content, that’s the best of both worlds. So why wouldn’t ESPN want to pull away from cable and strike out on its own?

Both ESPN and [parent company] Disney are addicted to the huge increases coming in from subscriber fees. ESPN does not want the cable universe to go away. They’ll bring in over $6.5, $7 billion dollars in revenue from subscriber fees this year and that’s a lot of money, for them and for Disney as well. They’ve spent a lot of money since the 1980s lobbying to make sure no one got rid of the cable package and create this a la cart universe, because they did feel like that was a threat.

Look, my mother spends more than $6 a month for ESPN and she’s never turned the channel on. That’s true of probably 90% of people who have cable. We think of ESPN as this behemoth, but in terms of people who watch it day in day out, that’s probably not a huge percentage of the cable viewing universe. They don’t want to go to an a la carte system.

What if they have no choice? What if the cable industry falls apart and they have to fly solo?

Let’s say Congress passed some law and there was no cable bundle. ESPN would be able to go out and charge a monthly fee that would probably be pretty high, because they have so much inventory.

Or what if, when those broadcast rights do expire, a major partner like the NFL decided they could make more money going direct-to-consumer? It seems like ESPN’s original programming wouldn’t be enough to keep people; it’s really just filler around the games.

I don’t think the NFL is going to not want a broadcast and a cable partner. At least for quite some time. The idea that Google might compete for rights next time they’re up, that’s possible, but the NFL is ESPN’s crack cocaine. It’s not just about 16 weeks or a wildcard. It’s about taking those rights and creating shoulder programming throughout the year — like the NFL draft, the countdown to the pre-season, the coverage during the pre-season. ESPN monetizes the NFL 365 days a year. They’re not about to let them go. They’re paying now $2 billion a season for the NFL, and they have it for many years to come. The NBA deal is also a long one. There’s just no way that ESPN is going to allow itself to be out of the running. The leagues don’t want that to happen either. They want to be in business with ESPN, particularly when it comes to college football and college basketball — the coaches love ESPN as a recruiting tool. Now, ESPN lost out on the World Cup, so those things may happen, but by and large they have a ton of baseball, the basketball, soccer, football. They’re going to be as aggressive as they need to be.

So where do you see change starting to happen?

The deal ESPN just struck with the NBA is really fascinating in terms of the future. Read between the lines of that deal, there are a multitude of possibilities for ESPN to create a new universe with certain rights and possibilities. You could possibly spend a couple bucks to go on demand and buy a specific came you want; there are all sorts of options. I think it shows that ESPN is building for the future.

We are straddling two worlds right now. Consumers are definitely in a multi-screen universe. But the architecture of the pricing and the way it’s all going to work hasn’t been fully realized. Those things will shake out in the next couple of years. And in the end there will be more customization, more choice, more flexibility for the consumer, depending on what a particular consumer’s appetite is.

One thing that has always bugged me as a Red Sox fan is that I can’t go out and buy, say, Pedro Martinez’s 10 best regular-season starts. Is that the kind of thing you’re talking about?

Yes. I mean if all of a sudden I wake up this morning and I have an old Beatles or Led Zeppelin song in my head, I can buy that song on iTunes. If I’m getting psyched up about the World Series, though, and I want to watch the last time the Kansas City Royals were in it, there is no mechanism to pay and watch that game. But there will be.

What if you get some Aereo-type, low-cost disruptor coming in? Is that a viable threat to a company like ESPN?

I just think in the world of televised sports, “low-cost competitor” is an oxymoron.

Here’s what ESPN knows. Five years from now, we don’t know if The Good Wife is still going to be a popular show, we don’t know whether there’s going to be contract problems with Julianna Marguiles or if the writers are going to stay. But we do know that there is going to be an incredible amount of interest for the Rose Bowl. We know that the NBA finals are going to be popular. Depending on who the teams are, they may be up or down 5% but there is a built-in constituency. And that’s the genius of live sports programming. People want to see these games, and see them right away.