Marina Gorbis's Blog, page 1345

Get Buy-in for Your Global Strategy with Local Partners

I never considered myself an “ugly American,” but my UK colleagues apparently thought otherwise.

Just before I moved to the UK to head up marketing for KFC International in Europe and Africa, Pepsico had bought out our joint venture partner in the UK. I was part of the new management team that was going to try to turn around a 60-year-old business that had been declining for 10 years.

Because most of the UK KFC system was franchised, it was important to win our franchisees over to a new brand strategy we had been planning before the acquisition took place. I put a lot of work into getting ready for my initial pitch to the UK franchisees, some of which had been involved in the business their entire career.

In my presentation, I did a quick review of the financial mess we were in, laid out three big strategic consumer initiatives needed to turn the business around and made a passionate plea for them to work with me to make this happen. They asked for some time to talk among themselves. I left the room. Finally, Keith, the head of the franchise group, came out to deliver their verdict.

He started with the good news. “Kip, we like you, and we like what you are recommending. You’ve got our support.” I breathed a big sign of relief. Then Keith continued, “But I want you to remember the people in that room have spent their life building this business. Even though it’s in trouble, we’re not stupid. And if you ever come here again and treat us like we are stupid, this relationship is officially over.”

That was a valuable lesson.

During my career, I’ve worked on adapting global brand strategies in 65 different countries, and I’ve learned three principles about how to do this well.

Show respect for your global partners in everything you do. You would think this would be stating the obvious, but I’m shocked at the number of ex-pats, unfortunately including way too many Americans, who totally blow their chances of success in the early days of a new international assignment by violating this principle. Stephen Covey’s advice to “seek first to understand, then be understood” absolutely applies to working with teams around the world to expand a brand from one market to another. For example, I created a “Helping Hand” award at KFC-International given each quarter to a country team that went “above and beyond” to help an emerging market team. This simple and free peer recognition was remarkably effective at fostering a spirit of mutual respect in all our markets.

Be clear about “negotiables” and “non-negotiables” for the brand. Some non-negotiables are crystal clear, such as your trademark, logo and core products (for KFC, that would include the Original Recipe). If you allow the local team to have flexibility about as many issues as possible, the more they will feel they own the finished product. For example, eBay allowed local market units to decide on the categories they wanted to focus on initially and how they wanted to promote them with buyers and sellers. With H&R Block India, we focused more on the Internet-based services and only built a nominal number of retail locations, the exact opposite of our U.S. strategy. By being collaborative and flexible in how you enter a new market, your odds of success go up dramatically.

Understanding the “why” is a lot more important than the “what” for a global brand strategy. When I came back to the United States to manage the global KFC brand, my new boss asked me to travel around the world and meet with the various teams to develop a global strategy and initiatives. When I returned after six weeks on the road, I told him we were in big trouble unless we figured out a better way to explain the importance and rationale for such strategies to everyone. That led to the creation of the KFC Global Marketing College, which brought in teams from around the world for exactly that purpose. While it took several years for this to have a significant business impact, once we had a critical mass of teams that believed in our global strategy, there was no stopping them. KFC International has since grown from a $2 billion to a $14 billion business.

The principles I’ve outlined can apply to any business with international expansion aspirations, whether you’re aiming for two countries or two hundred. If you treat your global business partners with the proper respect, give them the insight into your brand strategy they need, and let them implement it as they see fit, odds are that strategy will succeed.

Hovering Over a Touch-Screen Keyboard Has Its Consequences

Desktop-computer keyboards allow you to rest your hands on the keys as you type, but touch-screen keyboards, such as on many tablets, are less forgiving: They require you to keep your fingertips off the screen to avoid accidentally activating the keys. Thus the upper-back muscles that support your arms are more active when you type on a touch screen than when you use a standard keyboard, which could lead to chronic shoulder problems, according to research reported in the Wall Street Journal. The average typing speed on touch screens is also less than half that on desktop keyboards, the researchers found.

To Fight Ebola, Stop Pointing Fingers

The burgeoning Ebola crisis hit home for Americans the other week with the death of a Liberian man in Dallas. Blunders in the treatment of Thomas Eric Duncan put two well-intentioned nurses at risk and potentially exposed many others. These developments unraveled the projected confidence of leading physicians and officials of the Center for Disease Control that the disease was a low-risk threat to our country with its advanced medical systems.

The recent Congressional hearing was predictably all finger-pointing and demands for greater accountability of CDC Director Thomas Frieden. And after announcing the need for a more intense government response, President Obama named former White House staffer Ron Klain as his “Ebola Coordinator.”

Unfortunately, we need something different in a world increasingly threatened by cross-boundary, multi-dimensional threats. No single bureaucratic institution, such as the CDC, will be able to get ahead of this challenge, and mid-level administrative coordination won’t be enough either. Instead of institution-based siloes and command-and-control, Ebola demands the collective problem-solving and action of a virtual community — and the mobilization of an entire ecosystem of diverse players.

The struggle of the old management model is playing out before our very eyes. The public narrative is focusing on gaps, blame, and the assessment of this or that person’s incompetence. We shouldn’t be surprised. Hierarchical command-and-control is slow and operates less on incentives for solutions than on avoiding criticism or mistakes. Instead of the cross-silo collaborative learning needed, hierarchies count on “trickle-down knowledge.” The nurses treating Duncan lacked critical information, skills, and the necessary protective equipment. The bureaucratic response that “the right information was posted on a website” bespeaks how frail traditional management approaches can be in this kind of situation.

Containing this kind of disease is all the more difficult because many different institutions must be part of any solution. In addition to hospitals, an integrated systemic response will call on community health organizations, airlines and other public transportation companies, the TSA, and providers of other services patronized by those potentially infected. The media has to focus on public awareness and communication of evolving risks.

The requirements for creating and enforcing a universal, end-to-end response are tall: instilling a shared sense of urgency for a common approach; sharing knowledge and creating common protocols about what to do, aligning all players across the potentially infected (and infecting) ecosystem; and perhaps most difficult, managing actual front-line performance in accordance with protocols. Adding to the challenge, it all must be done with great speed and judgment at every step in the many chains of different players.

Techno-enthusiasts will reply what’s needed is a network-based approach, with better use of specialized and mass social media to rapidly share information among the institutions and individuals involved, to collect data about disease spread, and to surface new ideas and volunteers. Relying on the crowd and building more networks among those pulled into the Ebola crisis will add more flexibility and innovation to the existing bureaucratic response.

That’s important. But as I described in an earlier blog, networks struggle to build shared purpose among diverse players and to create shared accountability for real performance on the ground. For that, we need a community. Communities take networks to the next level by building on a common purpose to drive collaborative problem-solving. They instill a sense of joint responsibility without all the finger-pointing. It’s urgent that we move from the “thin we” of today’s current response to the “thicker we” of a community engaged for true cooperative action.

Creating such a cross-boundary community will call for a different kind of leadership than we have seen thus far. We don’t need a White House staffer to “coordinate” an ambiguous ecosystem over which he has little authority or expertise. And we definitely don’t need an Ebola “czar” to command and control various disconnected entities. We need a leader who, with strong professional experience and motivational skills, can mobilize many different institutions, constituents, and even volunteers – all potential players and contributors across many different networks. A mobilizer can create energy and a sense of common purpose – and accountability – to drive people to set aside their turf concerns and collaborate. They have vision to identify existing and new problems-to-be-solved; they support continuous learning, even through mistakes; and they instill a culture of trust, based on transparency and merit of solutions, not the prestige of someone’s title or position.

We’ve seen examples of these mobilizers in other times of crisis. Most notably, in the Chilean mining disaster in 2010, Chilean president Sebastian Pinera and onsite project leader Andre Sougarret brought together a massive international response to quickly solve an unprecedented problem – albeit one in a single location. Rather than special skill, it takes a leader who can draw in and direct outside help without becoming so controlling that the contributors drop out or push their own agenda.

Beyond the immediate risk of Ebola, we should strive to identify and promote this kind of mobilizing leadership for future crises. Our world is awash with cross-boundary multi-dimensional threats: terrorism, climate change, interdependent financial chaos, demographic dislocations. Institutions and even nations will never meet these challenges alone, and especially not with yesterday’s management approaches. We need the kind of problem-solving communities that only creative leaders can foster.

Can We Quantify the Value of Connected Devices?

In the 1990s, Procter & Gamble’s Product Supply Organization kicked off a major Reliability Engineering program, much like the efficiency initiatives of companies such as Toyota. They institutionalized the use of data collection systems in their manufacturing facilities to understand how products and machines would “behave” and could be optimized. By collecting machine failure data via manual sources as well as PLCs (programmable logic controllers), they were able to plot statistical distribution curves that predicted the failure rates of machines, along with the specific causes. More impressively, by linking all the machines together, they were able to predict — and subsequently improve — overall process reliability and product quality. This was all done through physical, smart, connected devices and sensors, which monitored, controlled, and optimized the units with increasing autonomy via continuous learning.

Sound familiar?

The Internet of Things may already feel like an overused buzzword, but the value is real. A seminal article in this month’s issue of HBR by Michael Porter and James Heppelmann starts off with a definition of what the “Internet of Things” (or “IoT”) really is – a collection of smart, connected devices or products that, when pieced together well, can yield new functionality, reliability, utilization, and capabilities that were previously not deemed possible.

Organizations are salivating at the prospect of more and more data being fed into an IoT infrastructure and transforming industries globally. However, there’s skepticism that the results will live up to the hype. The Wall Street Journal ran a major story questioning how all the data collected can be commercialized and valued.

How can companies get beyond the hype to measure the value? The answer lies in recognizing that we’ve been here before. Early examples of connected devices offer lessons in estimating the value of the data they generate.

P&G didn’t go into its early connected device initiatives with a “let’s try this out and see what it gets us” mindset. Yes, they experimented in the labs and ran pilots to hone the methodologies and models, but they eventually rolled out the program with stated improvement targets which set overall process reliability numbers, and resulted in reductions in TDC (“Total Delivered Cost”). And this addresses the commercial value creation question – P&G’s mindset was to create operational efficiencies that would contribute to healthy EBITDA margins.

Another useful example comes not from connected devices but earlier data businesses.

A key challenge in quantifying the value of IoT is in valuing the data assets it creates. In many companies, these types of data assets are currently assigned rough valuations and classified as “intangible” or “goodwill” on the balance sheet. Part of the reason may be that although considered high potential, insufficient emphasis has been placed to understand their monetization as an ongoing business proposition.

Information companies such as Thomson Reuters and Bloomberg are examples of companies that have historically understood the value of data assets. Over the years, they have excelled at collecting, producing, and processing raw data to create valuable analytics and insights, which are subsequently distributed and commercialized. While not historically dedicated to connected devices, these companies are good case studies for the commercialization and valuation of their data assets.

These companies’ valuation of their data assets begins with a commercial business case. In this case the typical questions are: what’s the data, how do customers use that data, and therefore how can it be sold? On the revenue side, what’s the business model (for example, subscription or licensing)? On the cost side, what’s the sourcing cost, the production cost, and the distribution cost? Which of these are ongoing, and which are one-off? Combining these creates a P&L and a projection, which through a discounted cash flow analysis yields an NPV, which can be used to assess valuation. The process also includes a determination of how much of the activities are classified as capital expenditures versus ongoing operating expenses. This method is not perfect, but it is a good start.

The concepts of utilizing smart, connected devices and commercializing vast datasets are not altogether new, and that some organizations have been doing this already for a number of years on a limited basis. What’s different now is the volume of the data, the availability of efficient sensor technologies, and the prospect of application in every walk of life. The task may seem daunting, but it needn’t be, if one considers this to be the next logical step of an already existing trend, rather than a brand new phenomenon.

Watch: Mastering the Five Skills of Disruptive Innovators

Have you mastered the five skills that distinguish innovative entrepreneurs and executives from ordinary managers?

In The Innovator’s DNA, co-authors Jeffrey Dyer, Hal Gregersen, and Clayton Christensen (The Innovator’s Dilemma, The Innovator’s Solution) built on what is known about disruptive innovation to show how individuals can develop the skills necessary to move from idea to impact.

Through their research on the world’s best innovators—including leaders at Amazon, Apple, Google, Skype, and Virgin Group—these authors have identified five key skills that differentiate great innovators.

In this interactive Harvard Business Review webinar, Dyer describes these five key skills and explains how managers can develop them. He discusses how to generate innovative new ideas, collaborate with colleagues to implement them, and build innovation throughout the organization. He also details the behavior changes necessary to drive innovation and improve creative impact.

What Apple Should Do with Its Massive Piles of Money

An Open Letter to Tim Cook, CEO of Apple

Dear Mr. Cook,

In a recent article posted on this website, I criticized Carl Icahn’s call for your company to intensify its stock buybacks. In this letter, I’d like to explain more fully why I view the $51 billion already spent by Apple on open market (including accelerated) share repurchases under your leadership as a major misallocation of resources for both the company and the U.S. economy.

Unlike Mr. Icahn, I do not write to you as an Apple shareholder (I hold no Apple shares). Nor do I write as the satisfied Apple customer that I am. Rather, I am an academic economist who, through in-depth studies of high-tech companies and industries, has come to the conclusion that stock buybacks are eroding the foundations of economic prosperity in the United States.

There is mounting evidence that buybacks bear substantial blame for the extreme concentration of income at the very top and the disappearance of middle-class jobs in the United States over the past quarter century — a topic I discussed in a recent Harvard Business Review article.

As shown in a study, “Apple’s Changing Business Model,” that I coauthored a year ago, the previous time Apple repurchased shares in significant quantities, things ended badly. From 1986 through 1993, during the Sculley era, Apple spent $1.8 billion on buybacks (67% of net income) along with $328 million on dividends (12% of net income). In 1993, Apple distributed $273 million in buybacks and $56 million in dividends, even as profits plunged from $530 million to $87 million, compelling the company to do a $297 million long-term bond issue in 1994. The next year Microsoft released Windows 95, eliminating the Mac’s longstanding GUI advantage. With losses at $816 million in 1996, Apple was forced to issue $646 million in junk bonds, supplemented in 1997 by a $150 million private issue of preference shares to Microsoft.

Fortunately for Apple, Steve Jobs returned to the company in 1997. He did not entirely eschew buybacks: The company announced a $500 million repurchase program in 1999, of which $217 million were actually completed, mostly in 1999 and 2000. But as Apple’s profits multiplied from 2004 through 2011, it was clear that, as you now call it, “” to shareholders was not a pressing priority for Mr. Jobs.

You clearly have a different point of view on distributions to shareholders. Let me ask you one simple question: How can Apple “return” capital to shareholders if those shareholders never supplied Apple with capital in the first place? As I pointed out in my earlier post, the only funds that Apple ever raised on the public stock market was $97 million (about $274 million in today’s dollars) at its IPO in 1980.

I know that finance professors at business schools throughout the nation teach MBAs and executives that, for the sake of economic efficiency, a company should “maximize shareholder value.” I disagree with this priority. MSV is based on the false assumption that, of all participants in the public corporation, only public shareholders run the risk of receiving no return on their contributions to the firm and therefore only they are entitled to profits if and when they materialize. However, there are two other important groups of people who invest in the corporation without a guaranteed return:

Taxpayers, through a wide variety of government agencies charged with spending on physical infrastructure and the nation’s knowledge base, regularly provide productive resources to companies without a guaranteed return. Through the tax system, business interests that gain from these investments return funds to the government. But tax regulations are subject to change, and hence the returns to taxpayers on their investments are by no means guaranteed.

Workers regularly make productive contributions to the companies for which they work through the exercise of skill and effort beyond those levels required to collect their current pay, and they do so without guaranteed returns. I doubt that I have to convince you, Mr. Cook, of the profound productivity difference between employees who just punch the clock to get their daily pay and those who engage in learning to make productive contributions through which they can build their careers and thereby reap future returns in work and in retirement. Yet these careers and the returns that they can generate are not guaranteed.

The irony of MSV is that the vast majority of public shareholders typically never invest in the value-creating capabilities of the company. Apple is a case in point, and it represents the rule, not the exception. Public shareholders, including Carl Icahn, do not invest in Apple’s productive capabilities. Rather, they trade in outstanding shares in the hope that their market price will increase. And, legitimized by MSV, a prime way in which corporate executives fuel this hope is by doing massive stock buybacks.

In your testimony to Congress on May 21, 2013, when you explained Apple’s tax practices, you said: “You can tell the story of Apple’s success in just one word: innovation.” I agree and ask you to consider what public shareholders and stock buybacks have to do with innovation at Apple.

Here are a few suggestions about how Apple can use its profits to support the innovation process and contribute to sustainable prosperity in the U.S. economy.

Employee education. Deepen Apple’s commitment to support the educational attainment of the company’s labor force, including those bright young people who serve in Apple Stores. I know that Apple already provides $5,000 per year to cover tuition costs for “eligible” employees. That’s nice, but it’s not enough given the current costs of higher education (a single course can cost $5,000). If Apple were to quadruple the amount per eligible employee to $20,000 (perhaps covering both tuition reimbursement and, if money is left over, an incentive subsidy to the employee for pursuing further education), I am guessing that the extra annual expense would be $600 million. That’s just 2.1% of Apple’s buybacks reported thus far for fiscal 2014. An increase in the tuition-assistance program would be a great investment in the future of Apple and the careers of its valued employees. Get rid of the buybacks, and there will be lots of money for other constructive programs to reward employees for their commitment to the company.

Employee incentives. Let performance pay do its job of incentivizing employees to invest their skills and efforts in the innovation process. Apple says that it does buybacks to offset dilution from the exercise of employee stock options or the vesting of stock awards. But what is the economic logic for this use of buybacks? Stock-based compensation is meant to motivate employees to work harder and better now to generate the competitive products that will result in higher returns for the company in the future. Therefore, rather than using corporate cash to boost Apple’s earnings per share (EPS) immediately, executives should be willing to wait for the stock-based incentives to generate higher earnings through innovation. Employees could then exercise their options or receive their vested awards at higher stock prices, and the company could allocate the increased earnings to investment in the next round of innovation. In this virtuous circle, buybacks have no role.

Social investment. When you defended Apple’s tax practices before Congress, you said: “We pay all the taxes we owe, every single dollar.” The issue for the nation is, however, whether our governments — federal, state, and local — have enough tax dollars to fund all of the public investments in infrastructure and knowledge that a prosperous nation needs. Over the past decade, our largest companies have wasted about $4 trillion on buybacks while much of America’s need for infrastructure and knowledge either went unmet or put us deeper in debt. We need CEOs like you to take the lead as responsible citizens in articulating a vision of the social investments required for the next generation. In doing so, CEOs could recognize how much their companies have gained from social investments made in the past.

Social innovation. If innovation is the story of Apple’s success, we need the widest possible diffusion of that innovation for our society to benefit. Even for the richest nation on earth, the problems of climate change, disability, discrimination, disease, pollution, poverty, and violence pose formidable challenges. To begin to solve these daunting problems, the nation needs not only Apple’s money but also Apple’s expertise — along with the organizational creativity, technological capability, and financial might of the nation’s other major business enterprises. Yes, Apple already has some sustainability initiatives in its supply chain and other areas. But it can do much more. It’s a travesty for Apple to throw away tens of billions of dollars on buybacks when it has the knowledge and power to contribute to the solution of a plethora of social ills.

I think you will agree that these suggestions are not alien to Apple’s innovative business model. But they stand in opposition to Mr. Icahn’s determination to tear that model apart. In his open letter to you he states: “Our valuation analysis tells us that Apple should trade at $203 per share today, and we believe the disconnect between that price and today’s price reflects an undervaluation anomaly that will soon disappear.”

Mr. Cook, I hope that you realize that Icahn’s valuation can be achieved only if those whose sole business is to extract value from the economy are allowed to prevail.

You and your board are in the position to decide whether that happens or not. The decisions you make will have ramifications far beyond Apple. Leading by example, you can play an important role in determining whether corporate America continues its stock-market-obsessed slide to the bottom or whether the nation can turn profits into prosperity, sustaining an innovative and inclusive race to the top.

Sincerely,

William Lazonick

Stop People from Wasting Your Time

We’re all too busy, spending our days in back-to-back meetings and our nights feverishly responding to emails. (Adam Grant, a famously responsive Wharton professor, told me that on an “average day” he’ll spend 3-4 hours answering messages.) That’s why people who waste our time have become the scourge of modern business life, hampering our productivity and annoying us in the process.

Sometimes it’s hard to escape, especially when the time-waster is your boss (one friend recalls a supervisor who “called meetings just to tell long, rambling stories about her college years” and would “chastise anyone who tried to leave and actually perform work”). But in many other situations, you can take steps to regain control of your time and your schedule. Here’s how.

State your preferred method of communication. For years, millennials have famously eschewed phone calls — but almost everyone has a communication preference of some sort. Regina Walton, a social media and community manager, told me that she, too, hates talking on the phone, a habit she developed after years of living abroad; email is almost always better for her, as “I can respond when I have time and usually am very fast to reply.” You can often limit aggravation (and harassment via multiple channels) by proactively informing colleagues about the best way to reach you, whether it’s via phone calls, texts, emails, or even tweets.

Require an agenda for meetings. Pointless or rambling meetings account for a disproportionate share of workplace time leakage. Here’s a solution: insist on seeing an agenda before you commit to attending any meeting, “to ensure I can contribute fully.” You can model the practice by writing an agenda for any meetings you chair, and offering to share the template with others. In fact, you could push to establish company norms that include best practices such as eliminating generic “updates” (which can usually be emailed in advance) and clearly indicating the decisions that need to be made as a result of the meeting. “Discuss expansion strategy” would be a murky and perhaps unproductive agenda item; “Decide whether to open a Tampa office” can guide the conversation much more clearly.

Police guest lists. Meetings are also dangerous when their list of invitees has been wantonly constructed, filled with irrelevant people and lacking decisionmakers with the authority to get things moving. If you’ve been invited, ask two critical questions. First, do I need to be there? Looking at the agenda (which you’ve insisted they provide), you can gauge whether your input would be valuable or if you can just find out details afterwards. Second, will the (other) right people be there? If you’re theoretically deciding on the Tampa expansion strategy and the executive in charge of Southeast operations isn’t in the room, it’s likely you’ll have to repeat the whole process again for her benefit. Make sure you understand who the real decisionmakers are, and don’t waste your time (or other people’s) until they can be present and participate.

Force others to prepare. We all hope and expect that others will prepare for meetings with us. Surprisingly often, they don’t. Even when they’re requesting the meeting, they may have done very little research and waste our time with extremely basic questions they could have Googled. Instead, we need to force others to prepare in advance. “Force” is a harsh word, and that’s intentional ­— because it’s not burdensome for people who would have prepared anyway, yet it effectively weeds out the uncommitted. Debbie Horovitch, a specialist in Google+ Hangouts, has long offered complimentary initial strategy sessions, but realized that some people were taking advantage with irrelevant discussions.

She’s adopted a new policy: “Everyone who wants a call/chat with me must fill in an application” with specific questions about what will be discussed. “Now that I’ve set my boundaries and expectations of the people I work with, it’s much easier to identify the time wasters.” Similarly, when people request informational interviews with me, I’ve begun sending them a document with links to articles I’ve written about their area of interest (becoming a consultant or speaker, reinventing their careers, etc.) and asking them to get back in touch after they’ve read them to see what questions they still have. Most never get back to me, which is just as well ­— I only want to speak with people who are interested and committed.

Will you face blow-back by toughening up and putting clear boundaries around your time? Inevitably. But you may also find that people start to respect you ­—and your time ­— a lot more. Most of us wish we could control our schedules better. If you’re willing to step up and argue for smarter policies (like requiring all meetings to have agendas), that benefits everyone. The key is to frame your advocacy not as purely self-interested (“I don’t have time for this nonsense”), but instead as a manifestation of your commitment to the company and your shared mission. “I want to make sure we’re all as productive as possible,” you could say, “and that’s why I think it’s important to make sure we’re respecting each other’s time.” In the end, that’s a hard message to resist.

It’s Your Job to Tell the Hard Truths

Rashid,* the CEO of a high-tech company and a client of mine for nearly a decade, called to tell me we had a major issue with some of the newer members of his leadership team.

What comes to mind when you think of what might constitute a “major issue” with some senior leaders? Maybe they’re in a fight? Maybe they’re making poor strategic decisions? Perhaps they’re not following through on commitments they made about the business? Maybe they’re being abusive to their employees? Maybe they’re stealing?

I’ve seen all of those problems in the past at various companies. But none of that was happening at Rashid’s firm. The major issue he was talking about was far more subtle — and in most places even acceptable.

Rashid had heard, through the grapevine, that two new team members were quietly questioning whether they should be honest about the gaps they saw in the business.

Is that really such a big deal? How many of us would prefer to keep the peace and avoid being the naysayer? Or prioritize being seen as a team player over identifying problems that may lie in someone else’s department? Or downplay an issue of our own team, hoping we’ll be able to fix it before anyone notices?

The truth is that it’s hard to speak up about potentially sensitive issues. But Rashid’s company’s fast growth and strong results were based, more than anything, on one underlying requirement for anyone in a leadership role: courage.

Courage underlies all smart risk taking. And no company can grow without leaders who are willing to take risks. If we don’t speak the truth about what we see and what we think, then it’s unlikely that we’ll take the smart risks necessary to lead.

So, yes, it’s a major issue if direct reports to the CEO aren’t willing to say what they really think. In fact, I’d say that there’s little value to having senior leaders in an organization who don’t speak their minds.

It’s worth asking if Rashid is creating a safe enough environment for people to speak up. That’s a good thing to consider and, in part, it’s my job to help him do that.

It’s also worth asking if the leaders have the skills to talk about sensitive topics with care and competence. This is important because it does take tremendous skill to raise hard-to-talk-about issues in a way that convinces others to address them. But, I would argue, at this point in their careers, they should have that ability. And, if they don’t, it’s easily trainable.

Ultimately, those are not the most important questions. Rashid is not running a training program or a kindergarten. He’s running a company with highly compensated leaders who are running large and complicated businesses of their own, and it’s fair for him to expect them to be brave enough to tell him what they are thinking.

How could people who have been so successful in their careers not be courageous about communicating the problems they see in a business for which they are responsible? I think that the bar for leadership in most organizations is too low. We allow politics to supersede performance. And it’s hurting good organizations.

The biggest challenge we face as leaders is rarely about discovering the perfect strategy or developing a smarter product or figuring out the gaps in the business. It’s about being courageous enough and willing to take the risks necessary to talk about the difficult, sometimes scary truth and do something about it.

That’s been the secret to Rashid’s company’s growth and the success of his leadership team. Good leaders almost always know what needs to be done. Great leaders actually do it.

So, Rashid asked, what should I do?

You have to talk to them, I said. Be direct about how you believe they’re hurting the business. Lead by example — it’s the only way.

*I’ve changed his name to protect his privacy.

What If Companies Don’t Own All That Data They’re Collecting?

Big data and the “internet of things” — in which everyday objects can send and receive data — promise revolutionary change to management and society. But their success rests on an assumption: that all the data being generated by internet companies and devices scattered across the planet belongs to the organizations collecting it. What if it doesn’t?

Alex “Sandy” Pentland, the Toshiba Professor of Media Arts and Sciences at MIT, suggests that companies don’t own the data, and that without rules defining who does, consumers will revolt, regulators will swoop down, and the internet of things will fail to reach its potential. To avoid this, Pentland has proposed a set of principles and practices to define the ownership of data and control its flow. He calls it the New Deal on Data. It’s no less ambitious than it sounds. In the November issues of HBR, Pentland discusses how the New Deal is being received and how it’s already working in a little town in the Italian Alps.

Pentland also spoke with me about these issues in a recent Google Hangout. If you missed it, you can view a recording of our conversation below:

The Real Revolution in Online Education Isn’t MOOCs

Data is confirming what we already know: recruiting is an imprecise activity, and degrees don’t communicate much about a candidate’s potential and fit. Employers need to know what a student knows and can do.

Something is clearly wrong when only 11% of business leaders — compared to 96% of chief academic officers — believe that graduates have the requisite skills for the workforce. It’s therefore unlikely that business leaders are following closely what’s going on in higher education. Even the latest hoopla around massive open online courses (MOOCs) amounts to more of the same: academics designing courses that correspond with their own interests rather than the needs of the workforce, but now doing it online.

But there is a new wave of online competency-based learning providers that has absolutely nothing to do with offering free, massive, or open courses. In fact, they’re not even building courses per se, but creating a whole new architecture of learning that has serious implications for businesses and organizations around the world.

It’s called online competency-based education, and it’s going to revolutionize the workforce.

Say a newly minted graduate with a degree in history realizes that in order to attain her dream job at Facebook, she needs some experience with social media marketing. Going back to school is not a desirable option, and many schools don’t even offer relevant courses in social media. Where is the affordable, accessible, targeted, and high-quality program that she needs to skill-up?

Online competency-based education is the key to filling in the skills gaps in the workforce. Broadly speaking, competency-based education identifies explicit learning outcomes when it comes to knowledge and the application of that knowledge. They include measurable learning objectives that empower students: this person can apply financial principles to solve business problems; this person can write memos by evaluating seemingly unrelated pieces of information; or this person can create and explain big data results using data mining skills and advanced modeling techniques.

Competencies themselves are nothing new. There are schools that have been delivering competency-based education offline for decades, but without a technological enabler, offline programs haven’t been able to take full advantage of what competencies have to offer.

A small but growing number of educational institutions such as College for America (CfA), Brandman, Capella, University of Wisconsin, Northern Arizona, and Western Governors are implementing online competency-based programs. Although many are still in nascent stages today, it is becoming clear that online competencies have the potential to create high-quality learning pathways that are affordable, scalable, and tailored to a wide variety of industries. It is likely they will only gain traction and proliferate over time.

But this isn’t vocational or career technical training nor is it the University of Phoenix. Nor is this merely about STEM-related knowledge. In fact, many of these competency-based programs have majors or a substantive core devoted to the liberal arts. And they go beyond bubble tests and machine-graded exercises. Final projects often include complex written assignments and oral presentations that demand feedback from instructors.

The key distinction is the modularization of learning. Nowhere else but in an online competency-based curriculum will you find this novel and flexible architecture. By breaking free of the constraints of the “course” as the educational unit, online competency-based providers can easily and cost-effectively stack together modules for various and emergent disciplines.

Here’s why business leaders should care: the resulting stackable credential reveals identifiable skillsets and dispositions that mean something to an employer. As opposed to the black box of the diploma, competencies lead to a more transparent system that highlights student-learning outcomes.

College transcripts reveal very little about what a student knows and can do. An employer never fully knows what it means if a student got a B+ in Social Anthropology or a C- in Geology. Most colleges measure learning in credit hours, meaning that they’re very good at telling you how long a student sat in a particular class — not what the student actually learned.

Competency-based learning flips this on its head and centers on mastery of a subject regardless of the time it takes to get there. A student cannot move on until demonstrating fluency in each competency. As a result, an employer can rest assured that when a student can use mathematical formulas to make financial decisions; the student has mastered that competency. Learning is fixed, and time is variable.

What’s more, many of these education providers are consulting with industry councils to understand better what employers are seeking. Businesses and organizations of all sizes can help build series of brief modules to skill up their existing workforce. The bundle of modules doesn’t even necessarily need to culminate in a credential or a degree because the company itself validates the learning process. Major companies like The Gap, Partners Healthcare, McDonald’s, FedEx, ConAgra Foods, Delta Dental, Kawasaki, Oakley, American Hyundai, and Blizzard are just a few of the growing number of companies diving into competencies by partnering with institutions such as Brandman, CfA, and Patten. By having built that specific learning pathway in collaboration with the education provider, the employer knows that the pipeline of students will most certainly have the requisite skills for the work ahead.

For working adults who are looking to skill-up, the advantages are obvious. These programs are already priced comparable to, or lower than, community colleges, and most offer simple subscription models so students can pay a flat rate and complete as many competencies as they wish in a set time period. Instead of having to sit for 16 weeks in a single course, a student could potentially accelerate through a year’s worth of learning in that same time. In fact, a student who was working full-time and enrolled at College for America earned an entire associate’s degree in less than 100 days. That means fewer opportunity costs and dramatic cost savings. For some, that entire degree can be covered by an employer’s tuition reimbursement program—a degree for less than $5,000. It is vital to underscore, however, that competency-based education is about mastery foremost—not speed. These pathways importantly assess and certify what a student knows and can do.

Over time, employers will be able to observe firsthand and validate whether the quality of work or outputs of their employees are markedly different with these new programs in place. Online competency-based education has the potential to provide learning experiences that drive down costs, accelerate degree completion, and produce a variety of convenient, customizable, and targeted programs for the emergent needs of our labor market.

A new world of learning lies ahead. Time to pay attention.