Marina Gorbis's Blog, page 1349

Research: More Than Half of Top Female Execs Were College Athletes

All managers want to hire people with discipline, determination, and drive. Women executives are no different.

And according to a newly-released study, women executives who once played competitive sports, in college or elsewhere, prefer to hire other people with athletics in their background.

The study by EY Women Athletes Business Network and espnW surveyed more than 400 female executives in five countries (20% were U.S. women). Half are C-Suite level executives, meaning that they serve as CEO, CFO, COO or the board of directors at a company. Of these top executives, over half (52%) played a sport at the college or university level. Only 3% did not participate in sports at any point in their lives.

Three out of four of the C-suite women executives said that candidates’ involvement in sport influences their hiring decisions, because they believe people who have played sports make good professionals. These executives attribute participation in athletics to qualities like a commitment to bringing projects to completion and greater abilities in motivating others. These intangible skills are hard to learn in a classroom, says Beth Brooke-Marciniak, EY’s Global Vice Chair for Public Policy. The executive women also put a premium on the discipline honed by sports, which they see translating to a person’s determination and work ethic.

But even more important are two other strengths: competitiveness and teamwork. Both are critical to success in today’s marketplace. Donna de Varona, Olympic Champion and adviser to EY’s Women Athletes Business Network, put it this way to me:

If you try out for a basketball team but quit in the middle of the first game, or if you choose not to pass the ball to your talented teammate because you don’t like her, or if you are unwilling to spend extra hours to work on a weakness, you aren’t going to get very far. Sports teaches fundamentals for success and that is why both men and women executives like to hire athletes. C-suite executives hire these women because they share a common bond and know when the pressure is on they will not be let down.

It’s been over 40 years since Title IX passed, compelling American high schools to spend on women’s sports in equal amounts to their spending on men’s. Its supporters dreamed of the day that participation levels would also be equal. We still have a ways to go. Betsey Stevenson’s analysis of national data shows that the median state has a 17 percentage point difference between the ratio of male athletes to male students and that ratio for girls. In fact, according to the Women’s Sports Foundation, the gap between male and female athletic participation at the high school level has grown in the past five years. When sportswomen become hiring executives, and favor candidates for the qualities that athletics engenders, they send a valuable signal that participation in sports is not only a right – it can offer many rewards.

The Freelance Economy Still Runs on Word of Mouth

We may well be entering a new age of work, in which tasks can be sliced into bite-sized chunks and allotted online to freelancers all over the planet. But we’re not quite there yet, according to a new survey conducted for MBO Partners, which provides back-office services to independent workers — which it dubs “solopreneurs.” Independent workers still get the vast majority of their assignments through the old-fashioned channel of word of mouth, and this is even more pronounced for the most successful among them:

When independent workers listed their top three sources of assignments, social media was mentioned by 18%, and online talent marketplaces for 10%. For those making more than $100,000 a year — 56% of whom are 50 or older — the numbers were 1% for social media and 6% for online marketplaces.

Overall, there are now an estimated 17.9 million “solopreneurs” — people working at least 15 hours a week outside of traditional jobs — and another 12.1 million “side-giggers” who do regular independent work but for less than 15 hours a week, according to the fourth annual “State of Independence in America” report from MBO Partners. The number of solopreneurs making more than $100,000 from their independent work was estimated to be 2.7 million.

The 17.9 million estimate, derived from an online poll of 2,017 people, is up from 17.7 million last year and 15.9 million in 2011, the first year of the survey. That 12.5% rise since 2011 contrasts with a 1.1% growth in the overall U.S. labor force over that period. But this year’s combined total of 30 million solopreneurs and side-giggers (this was the first time the survey included the second group) is a lot smaller than the total of 53 million freelancers announced just last month by the Freelancers Union and Elance-oDesk.

That difference is all about definitions, says Steve King, partner at Emergent Research, which designed the MBO Partners survey and has also done work with the Freelancers Union. I talked to King about that, and the enduring power of word of mouth for independent workers. What follows are edited excerpts of our conversation.

What are the things that make this number different from the Freelancers Union/Elance-oDesk number?

The big difference is that we’re focused on people that do this regularly, so we screen out anybody who says they don’t work as an independent worker in an average workweek. When you look at the Freelancers Union, their focus is to try to understand everybody who does anything that’s non-traditional. You could show up in their numbers if you fixed your neighbor’s computer for money, once in a year.

They’re both important questions, and I like what the Freelancers Union did. Their study, probably even more than our study, will spark quite a bit of debate about second jobs. They said 23.6 million people have multiple jobs, and the Bureau of Labor Statistics puts it at 6.7 million. That’s a big difference, and our work supports the Freelancers Union more than the BLS in this case. We’ve found that when you ask people if they have a second job, they tell you no. But when we ask them in interviews, “Do you have any other sources of income? Do you do anything else?” people who have told us they don’t have a second job will then tell us they have a second job. It’s the psychology of what is a job. And the BLS, on their multiple income questions in the household survey, they use the word “job” a lot.

In terms of the trajectory, the independent-worker, “solopreneur” category is growing faster than the overall labor force, but it’s not growing quite as fast as was expected back in the 2011 survey, where the projection was that it would be 20 million by now. Is that just mainly because the economy’s been so anemic?

The job market’s gotten stronger, and that has a tendency to take people out of independent work. I was actually thinking this year, given how unusually strong the job market’s been relative to past years, that we might see a decline in those numbers, and we didn’t. To me that’s an indication of the structural shift that’s going on, even in the face of a strong job recovery. It’s still growing, and it’s still growing at a pace faster than the overall workforce.

The thing that struck me — and I guess it shouldn’t be surprising, but it’s kind of interesting — is how dominant word of mouth is as a means of getting work.

We do a lot of surveys of different freelance groups, independent worker groups, and word of mouth just consistently comes out in that range. It doesn’t matter who we talk to. The network is incredibly important to independent workers. It just is overwhelmingly how they find work.

The electronic stuff, the Elance-oDesks, TaskRabbits, they’re growing very rapidly. They didn’t really blip much back in 2011, and they’re still not showing up high, but they’re clearly growing fast. We do see work moving more and more online, but it’s going to be a long time before that overtakes your personal network that you’ve built. And you’ve built that now not just face to face — a lot of that is now virtual — but it’s still word of mouth in the end.

We did a study earlier this year looking at a different definition of what we call successful freelancers, they were people that had been doing it for at least eight years and made at least $80,000 a year. They came in right about where the $100,000-plus group did in this survey in terms of word of mouth. What really hit me when we did that one, we asked them to rank the attributes that they felt were important to being successful as an independent worker. They ranked your professional skills and expertise first, your personal attributes — which mostly had to do with diligence and dealing with insecurity and so forth — as the second most important attribute, and third they ranked networking. They ranked sales and marketing sixth. When we interviewed people, what they told us was, “Well, networking is sales now. It used to be different, but …”

Even when you’re talking about moving to these online systems like Elance-oDesk, your reputation becomes so important, and your reputation is a function of your network. And I have to add when I started in tech, networks weren’t that important. If you had a good idea, you could get a hearing, and you could get funded, and you could build a business. Quite honestly today if you don’t have access to a network that gets you introduced, you can be brilliant and get nowhere.

Why would that be more so?

It’s just gotten so much bigger. There’s so much going on, and at this point there are key gatekeepers and key people that you need to get to. The industry used to be a lot smaller, and you could meet people at shows, or you could just cold call them and they’d answer the phone, and that stuff just doesn’t happen anymore.

You came into this from the tech industry?

Yeah, I was with Lotus Development for a long time, mostly overseas. Then I left them and went to work for Macromedia — Flash, Dreamweaver — I was their chief marketing officer for a few years in the late ‘90s, and then after that I started this firm. Initially I was doing tech advising and angel investing, but I got asked by Intuit to start studying small businesses and independent workers, and that kind of crowded out all of our other work.

I bet you got that gig by word of mouth.

I did get it by word of mouth.

Could Your Stroke Risk Have Something to Do with the Soil Beneath Your Feet?

Why are all 10 of the South Carolina counties with the highest rates of patients suffering from strokes located on the coastal plain, while all 10 of the state’s counties with the lowest stroke rates are in the Blue Ridge/Piedmont region? Researchers theorize that early-life exposure to the microbes in coastal soil affects the makeup of the bacteria and viruses living inside the area’s residents, with the result being an increased risk for cardiovascular problems, according to Agricultural Research. The Coastal Plain extends from Virginia through the Carolinas, Georgia, and the Florida panhandle, as well as into Alabama, Mississippi, Louisiana, and Kentucky — a region known to medical researchers as the “stroke belt” for its high incidence of stroke.

Case Study: Second Thoughts About a Strategy Shift

Augustín Rey, a celebrated European businessman and the new presidente of the century-old retailer Emilia, drove an SUV full of teenagers into the Spanish city of León to show them the revolution firsthand.

A few hours earlier he had been visiting close friends, Camilo and María Veiga, in their home near the provincial capital, and had animatedly explained his plan to revamp the chain’s merchandising strategy and redesign some of its dowdiest stores. The store in León, for example, was getting a complete makeover: An indoor central “plaza” would provide space for young people to listen to musicians or watch movies projected onto walls; stalls and pushcarts along radiating “streets” would offer merchandise selected to appeal to Spain’s youth culture.

The Veigas’ son and daughter had been intrigued. Emilia? they had asked. That old place? So Augustín had invited them and three of their friends for a sneak preview. María had decided to come along as well.

The group’s midmorning arrival at the store, which was in the final stages of its renovation, caused quite a stir. Awestruck employees lined up to shake Augustín’s hand as the teenagers fanned out among the piles and boxes of merchandise.

Nearly all the company’s stores in Spain, France, and Italy had already been renovated to at least some degree, Augustín told María. About 10% of them, including this one, were getting the full treatment, and most of those were already up and running. But that was just the first wave: Every Emilia store was to be redone over the next four years.

“They seem to love it,” María said, watching her kids and their friends cruise along the indoor streets, touching the skinny jeans and baby-doll dresses on display. “Usually they turn up their noses at Emilia — they say it’s a store for old ladies.”

“Sure — it’s a great layout, and the clothes are beautiful,” Augustín said. “But what will really hook this generation over the long term is this little detail.” He held up a square black price tag bearing “€21” in large type and, in smaller letters, the word diario — “every day.”

“This is the revolution,” he said. “Realness.” He let the words sink in and then added, “These kids represent a chance for retail to start over and get real. They are young and idealistic and untainted by the money games that have been plaguing retail for too long — the ridiculous markups followed by sales and two-for-one deals and special promotions. The young, the old — all retail customers — want straight talk: hablar claro. And we’re going to give it to them.”

“Hablar claro” was the name of Augustín’s strategy for turning Emilia into the next Spanish retailing miracle, and it had initially thrilled investors. Results for the first full quarter of operation under the new strategy had been outstanding. But second-quarter performance was disappointing, and what Augustín didn’t tell María was that the most recent results would show further deterioration. Customer traffic was down significantly, and same-store revenue had dropped. When the results were made public, in a few days, the muted criticism that had begun a few months earlier might burst into demands that he change the strategy.

But you can’t chicken out in the middle of a revolution.

Editor’s note: This fictionalized case study will appear in a forthcoming issue of Harvard Business Review, along with commentary from experts and readers. If you’d like your comment to be considered for publication, please be sure to include your full name, company or university affiliation, and e-mail address.

 

A Great New Hope

Augustín’s first retailing success, years before, had been his reimagining of the showrooms of Hogar, a European home-design company. But it was his stint as head of retailing at the fast-fashion chain Xela that had made him a star. His initial focus had been operational efficiency; to drive that home, he had stripped the stores down to their essence, sometimes even exposing wires and ducts. His second focus had been cutting-edge style; to emphasize that, he’d created in-store teams of genios de moda — great minds of fashion — to provide style tips and listen to shoppers’ ideas. The teams were hailed as retailing’s first really new concept in decades.

So it was considered a great coup when Emilia’s board announced that Augustín had been recruited as the company’s next leader. His mandate was to radically reinvent an enterprise that seemed to have lost its way in the face of challenges from fast fashion, big-box stores, and e-commerce.

Emilia, named for the mother of the chain’s founder, had acquired a distinctly matronly air over the decades; it was where frugal middle-aged women shopped for sensible clothing for themselves, their husbands, and their school-age children. This didn’t exactly constitute a thriving market. Even worse, Emilia’s customers had become conditioned to buying only when prices had been slashed. No deal, no purchase. So for years Emilia had competed aggressively on price, offering more and more “door breaker,” holiday, and clearance sales and churning out circulars with coupons, just to get customers to visit the stores or go to the website.

“We have to break people from their addiction to discounts,” Augustín said to María as they sat on a bench outside the store. Then he asked, “Do you remember my aunties, Tía Marta and Tía Teresa?”

María smiled. She and her husband had known Augustín since school days in Galicia, and she well remembered the aunts, who had often taken him in when his parents were traveling for business.

“They would put on their matching hats and take the bus and spend the day going into one store after another, hunting for bargains,” Augustín said. “I still remember the junk they came home with. And why? Because some shop owner had made up a ‘full’ price for a fan or a pair of gloves and then, after much haggling, dramatically caved in and slashed the price to what it should have been in the first place! Whereupon my aunties would gladly pay the so-called bargain price and go running out of the store, crowing about their great victory.”

María laughed. “It was a harmless form of recreation for them.”

“Perhaps. But on a huge scale in today’s retail environment, it’s not harmless. It’s mutual victimization: We victimize the customers by deceiving them — we lure them with huge reductions from artificially inflated list prices and then try to get them to buy other things while they’re scooping up their discounts. Meanwhile, they victimize us by forcing us to cater to their irrational need to find bargains. Do you know that in the year before I was hired, Emilia spent more than €700 million to execute 590 different sales and promotions? And 72% of its revenue came from products sold at less than 50% of the list price. The average discount needed to get customers to buy has soared from 38% to 60%.”

“It’s all part of the game, Augustín.”

“Retail should not be a game. Hogar and Xela are the paradigms. They excel by being straight with customers. No gimmicks. No deception. That’s the ethos I’m going to bring to Emilia.”

“But Emilia has such different customers from Xela,” María said. “Won’t they be upset?”

“A few will be upset. To which I say, ‘Fine. Be upset.’ Others will be relieved.”

“Won’t you need new customers to replace those who defect?”

“Just look,” Augustín said. The last of the young people had come out of the store, chattering excitedly about what they had seen inside.

“Them?” María asked.

“Yes, them. As well as older teenagers and twenty-somethings. Emilia will truly become a store for the whole family, by appealing to different family members in different ways. Older customers will want to come here for value; young adults will want to come here to be with their friends. They’ll walk along those indoor streets, hear their music, see images of their idols wearing our hip new clothes. It will be a retail playground for them — while their mothers are upstairs trying on sensible shoes.”

“But this generation is so obsessed with the internet, I doubt they’ll ever set foot in stores again.”

“We are replicating the in-store experience online,” Augustín said. “But I think physical stores will continue to be very important to people. Buying clothing is a touch-and-feel experience. Young people will use social media to spread the word that Emilia is a fun place to meet and socialize.”

“OK, but what if they — or their mothers, if they have no money — refuse to pay for the cool stuff?”

“They won’t refuse,” he replied. “We’ll stay inexpensive. We offer ‘everyday low prices,’ as they say in the States.”

“I guess retailers are born optimists,” María replied.

 

The Reckoning

The most recent quarter’s results were every bit as bad as Augustín had expected. He studied the numbers during a visit from two board members at his Andalucían home overlooking a golf course and the distant Mediterranean. The loss had widened to €211 million. Same-store revenue was down by 19%, and customer traffic had dropped by 10%. The chances now seemed remote that this year’s holiday shopping season, which was right around the corner, would provide much of a lift.

“But it’s a four-year plan,” Augustín said as he closed the folder. “Not a one-year plan. We need time for the changes to play out — for all the stores to be renovated, for customers to understand our pricing strategy.”

“It can’t be a four-year plan if the company doesn’t survive for four years,” said the board chairman, Nicomedes Mallo.

Augustín was startled. Nico had recruited him and had always been his staunchest supporter. Quietly he said, “Survival is the whole reason for the four-year plan. We are extricating Emilia from the death spiral of a shrinking customer base, deal-obsessed customers, tired merchandise, and escalating price promotions.”

“But customers don’t like the new approach,” Nico said.

“They need to be educated,” Augustín replied. “If our new strategy has one weakness, it’s in marketing execution. In fact, I’d like to start a new campaign: Haz los cálculos — ‘Figure it out.’ It will be aimed at educating consumers about our competitive everyday prices. We have the data to back it up: A random bucket of items shows that although some items are slightly more expensive, overall Emilia is significantly cheaper than all its direct competitors. Plus we have a policy of matching any other store’s price.”

“If the straight-talk campaign isn’t working, what makes you think ‘Figure it out’ will fare any better?” Nico asked. “You haven’t done any research on this.” He reminded Augustín that the board had agreed to run hablar claro without testing it first, buying in to his argument that the company needed to get out in front of consumers rather than be led around by their misguided desires. The board didn’t want to make the same mistake again.

“Recent customer surveys show that people see Emilia as offering less value than competitors,” Nico added. “And to take advantage of the situation, our competitors are ramping up their sales. They’re offering them every weekend, issuing savings passes, and flooding the airwaves with advertising about new low prices. Customers are responding. That’s why our numbers are so bad.”

“We’re starting a realness revolution,” Augustín said. “We knew we’d have to take a few arrows in the back.”

Nico asked the other board member, Celso Peres, for the papers they had drawn up and spread them out on the glass coffee table. “We are proposing a modification of the new approach,” he said. “One that more closely addresses the expressed desires of our existing customers, whom we cannot abandon.”

“First,” he continued, “we give up the hablar claro idea. Customers seem to find it condescending. Second, we go back to our old policy of ‘best price weekends.’ Third, we show the list price for every item so that customers can compare it with the discounted price. Fourth, we reintroduce the words ‘sale’ and ‘clearance’ into our marketing communications. Fifth, we go back to printing circulars and coupons. This will make it simpler for customers to understand our stores. It will show that we are on their wavelength.”

Nico slid the papers across the table toward Augustín. “This isn’t a coup,” he said. “We still believe in you. We’re still behind your vision to cater to younger customers, to turn the stores into social hubs, and to be more transparent about pricing — to a degree. But we know those changes will take a while, and in the meantime we don’t want to alienate our existing customers.” He tapped the papers with his finger. “You don’t have to follow this plan to the letter,” he said. “But it’s the sense of the board that your new strategy is too extreme for our customers. They don’t know what to make of Emilia anymore.”

Augustín looked at the plan. It was nothing short of a return to business as usual. To him, it represented a colossal failure of nerve.

Question: Should Augustín abandon his bold strategy?

Please remember to include your full name, company or university affiliation, and e-mail address.

 

 

Why Some Women Negotiate Better Than Others

Women continue to make less money than men, and be less likely to hold top leadership positions. And whenever a grim new study is released, a news-making essay or book is published, or high-profile woman is criticized for being “too pushy,” it renews the debate over the underlying reasons behind this persistent inequality.

One explanation has to do with culturally prescribed gender roles, and the social price one pays — or expects to pay — for violating them. In possibly the best-known example, many women choose not to negotiate for higher salaries because they believe such assertive behavior will trigger a social backlash — a fear that negotiation researchers have determined to be well-founded. The backlash occurs when observers perceive, consciously or not, that a woman’s behavior clashes with her traditional feminine role. The consequences of social backlash can vary from clearly biased hiring and unequal pay allocation to more subtle reductions of social and professional opportunities at work.

At the same time, we can all point to exceptions: some professional women do manage to obtain equal positions of power and pay in male-dominated professions. Surprisingly, little research has attempted to investigate what these successful women may have in common. What distinguishes the women who have cleared these hurdles from other professional women who tried and failed?

Some have suggested the style one chooses to adopt makes all the difference. Take, for example, Sallie Krawcheck. She is one of the most influential women on Wall Street and is renowned for a management style that draws on both gender roles. And one of the most successful women in Silicon Valley, Facebook’s Sheryl Sandberg, endorses findings by Mary Sue Coleman that the women who get ahead are “relentlessly pleasant” and advises, for example, asking for pay raises with a smile.

But here’s another explanation based on a line of research into what is known as identity integration: Women who succeed in challenging careers have a personality trait by which they regard their two “selves”— their professional identity and their gender identity — not as in conflict but as fundamentally compatible.

My work with colleagues Pranjal Mehta, Ilona Fridman, and Michael W. Morris has focused on assessing people’s varying degrees of identity integration, and then finding correlations between that and aspects of their professional performance. We determined levels of gender/professional identity integration using a questionnaire that asked participants to indicate their level of agreement with eight statements, including: “I do not feel any tension between my goals as a woman/man and my goals as a businessperson” and “I keep everything about being a woman/man separate from being a business person.” Two weeks later, we placed participants in negotiating situations.

First, we found that, although women and men both vary in the extent to which they perceive their gender identity to be compatible with their professional identity, these variances seem to have performance consequences only for women.

Across five experiments, we found that women who perceive their gender roles and professional roles as highly compatible are more effective than other women in competitive bargaining situations. Women with high degrees of identity integration were more likely to bargain on their own behalf, because they were less concerned about a social backlash. Those women also achieved better outcomes than those who didn’t ask for more — and they didn’t incur a social backlash as a result of their assertive behavior. These results held both for businesswomen and for women in engineering and computer science.

Furthermore, when our women subjects were “primed” to tend more toward identity integration before entering a salary negotiating session (we asked subjects to recall a time when their gender and professional identities felt particularly compatible to them), they were more likely to ask for higher pay and less likely to expect social backlash for asking. This suggests a possible strategy for women hoping to negotiate more effectively on their own behalf: it might be valuable to spend time reflecting on how being a woman is compatible with being an excellent professional, as opposed to dwelling on perceived incompatibilities.

Changing male-dominated corporate cultures will require more, of course, than women who are personally unconflicted about their gender and professionalism. But knowing that identity integration matters to outcomes could yield a better understanding of the factors that are derailing women’s success, and clarify which they themselves can change.

Turn the Pressures of Technology into Potential

Digital technology is full of paradox, yet we often tend to under-emphasize or even ignore the paradoxes — often looking at either technology’s problems or its promises, rarely examining both at the same time. But it’s only when we explore both that we gain new insight into what will truly help us harness technology’s economic value.

Let’s start with the core strategic paradox created by digital technology: it represents both a source of mounting performance pressure and a dramatic opportunity for value creation.

Where does the pressure come from? First, digital technology infrastructures systematically, significantly, and globally drive down barriers to entry. In other words, they intensify competitive pressure. But that’s just the beginning. There’s a second form of pressure — the accelerating pace of change made possible by digital connectivity compresses product life cycles and forces us to move faster than ever before. And it doesn’t stop there. The connectivity of digital infrastructures makes it possible for very small events in remote parts of the world to rapidly cascade into larger and larger, highly disruptive events.

So three different forms of pressure catalyzed by digital infrastructures are converging to make our lives ever more challenging both at an individual level and an institutional level. This is the dark side of digital technology for many businesses, especially large, established corporations.

But, of course, what makes this a paradox is that this same technology is also a source of ever expanding opportunity. We can do things today in terms of creating things, connecting with others, and building businesses that would have been unthinkable a few decades ago. And it’s not just an opportunity that’s restricted to the privileged elites— for instance, farmers in some of the most remote and poverty stricken areas of the world are now using mobile phones to bypass middlemen and find the markets that will pay the most for their products at a given point in time.

So, that’s one paradox: mounting strategic pressure and expanding opportunity caused by the same technology. Let’s look at another.

Digital technology infrastructures connect us in much richer ways than was possible with the technologies they’ve supplanted, like the telegraph and telephone. We can now connect instantaneously with people anywhere in the world, seeing them on a screen and sharing documents and data in real-time, regardless of whether we’re connecting one-on-one with a friend halfway across the world, or as part of a dispersed team of colleagues who may never even meet “in real life.”

Yet, at the same time, as many of us have increasingly discovered, this same technology can also have the opposite effect — it can isolate us and lead to ever more superficial relationships. Many have written about the “filter bubble” effect of digital technology — it makes it easier and easier for us to selectively connect with only those who share our beliefs and values, isolating us from the diversity that might challenge our thinking and help us to get to that next creative insight that comes from productive friction. We also can connect with so many people that many of us find ourselves spread way too thinly in terms of our relationships — we interact with lots of people but rarely have the time to build deep relationships with any of them. And studies have shown that social networks can make us miserable: by inducing us to compare ourselves to others, we walk away feeling less satisfied with our own lives.

Finally, there’s a third paradox. Digital technology gives us the tools to shape our environments in very powerful ways. It is easier for reformers to connect with one another, and possible followers – new technology infrastructures amplify human actions in ways that would have been unimaginable decades ago. Small moves, smartly made, can indeed set very big things in motion.

Yet, at the same time, these infrastructures expand the array of people and things competing for our attention. As we try to keep up with all these attention-sinks, we have a natural tendency to fall into a reactive mode, desperately trying to sense and respond to the latest events, and losing any sense of focus. As we spread ourselves more and more thinly, our ability to have impact diminishes at an accelerating rate.

So, how do we resolve these paradoxes?

We can resolve these paradoxes by shifting our focus from the technology to ourselves. How are we managing this technology? If we pursue the practices of the pre-digital technology era, we are likely to get one set of outcomes (the downside of each paradox). On the other hand, if we understand the true capabilities of this new generation of technology, we’re likely to adopt new approaches that will lead to a very different set of outcomes (the upside of each paradox).

Let’s start with the level of the individual. Each of us was to some degree trained to pursue work for a paycheck. But if that’s our approach, we’re likely to fall prey to the dark side of the technology – we’ll experience stress that comes from mounting performance pressure. We’ll find that our relationships are becoming increasingly superficial and, in response to growing stress, we’ll seek out others like us to reassure us that we’re doing the right things. As we scramble to try to respond to the expanding array of inputs generated by an ever more powerful digital technology infrastructure, we’ll find ourselves spread more and more thinly and feel our power slipping away.

A very different outcome occurs if we commit to integrate passion with our profession. If we cultivate the passion of the explorer, we’ll find that we’re driven to explore technology’s expanding capabilities and cultivate new practices to harness its potential. We’ll connect with an increasingly diverse set of people and form deep, trust-based relationships as we work together on the opportunities created by digital technology. Our passion will define our focus and motivate us to concentrate on making a difference in our chosen domains. It will help us to avoid the growing distractions of digital life so that we can harness the power to shape our environments.

At the company level, the conventional approach of scalable efficiency creates an increasing disconnect between what’s happening inside the firm and what’s going on in the rapidly evolving outside world. Sure, firms pursuing scalable efficiency deploy digital technology, but only to squeeze more cost out of the system – a game of diminishing returns. In the face of mounting performance pressure, these companies are strongly tempted to double down on the approaches that led them to success in the past. The growing chasm between their approach and the exponentially expanding digital opportunity outside their institutional walls will lead to more stress and more dysfunctional behaviors over time.

On the other hand, companies that begin to unlearn the practices of the past and explore ways to use digital technology to drive growth, rather than using it only to cut costs, will have a very different experience. Rather than facing the diminishing returns, these companies will start to see ways to build learning networks, to grow those networks beyond their walls, and to use those networks to drive increasing returns: the more participants they enlist in their growing ecosystems, the more value they will create for their markets. The connections they establish with other participants will become richer and deeper as they build trust through learning and working together. Rather than spreading themselves too thinly across an expanding array of “bets,” these companies will begin to focus on initiatives to shape markets and industries in ways that were just not feasible in more stable environments.

The bottom line is that it’s up to us— as leaders and managers — to transform pressure into potential. Exponentially improving digital technology infrastructures are a given. The critics of digital technology and the evangelists for digital technology may both be right in painting their very different pictures of potential outcomes. What choices will we make and what actions will we take in this rapidly changing environment? The future depends on us.

 

This post is part of a series leading up to the annual Global Drucker Forum, taking place November 13-14 2014 in Vienna, Austria. Read the rest of the series here.

A Refresher on Storytelling 101

At bedtime, I tell stories to my godchildren, Anna and Noah, when their parents invite me to care for them. Their capacity for stories amazes me. They beg for “just one more” and then “just one more.” It seems we are wired to enjoy a well-told story.

And as we grow up, we do not lose our thirst for stories. I work with future leaders at Stanford to help them develop compelling stories that achieve their management goals — and I’ve developed a seven-part formula for storytelling success in presentations and business meetings.

Parachute in, don’t preamble. The best storytellers draw us immediately into the action. They capture our attention and set the tone for a unique audience experience. Avoid opening with “I’d like to tell you a story about a time when I learned…” Instead, drop us into the action and draw the lesson out later.

Choose first and final words carefully. We never get a second chance to make a good first impression. One needn’t memorize the story, but great leaders know the first and final words cold … and can deliver them without hesitation. Take advantage of the impact of a powerful opening and conclusion.

Follow the “Goldilocks” theory of details. Give us “just the right amount.” If you give too many details, we get lost, or worse, bored. If you don’t give us enough detail, we may lack the context to grasp the story fully or to see ourselves inside your tale. If possible, test out your story with a few friends who have a similar background to your audience; let them help you discern the right level of detail.

Focus your delivery on “one person with one thought.” When speaking to a group, focus on one person at a time, for four to seven seconds. As you tell your story, try to connect with each individual if possible. Don’t wash your eye contact over the crowd like a lighthouse, but actually connect with individuals. Consider even “casting” a member of the audience as a character in your story as you tell it.

Consider the power of poetry. Use fewer words to carry more meaning. My high school English teacher, Mr. Wessling, used the analogy of the “magic grain truck” to educate us about poetry. He said “imagine if a magic truck allowed a farmer to haul seven times the amount of grain that a normal truck usually holds?” (Can you tell I grew up in Kansas?) We developed a long list of benefits such a truck would provide: fewer trips, less fuel, more free time, etc. Then he concluded: “Well boys that’s what poetry is. Using just a few carefully chosen and arranged words to carry much more meaning than their usual weight.” That imagery from over three decades ago reminds me of the power of poetry.

Use silence for impact and emphasis. When a composer writes the score for a symphony she places a rest in the music when silence is called for. That rest is as much a part of the music as the notes. Silence is a powerful and underutilized storytelling tool. Matt May elaborates on this point in his recent HBR post. Intentional silence draws emphasis to what was just said or what is about to come – and allows others to contribute their own interpretations.

Know your AIM. Who is your Audience, what is your Intent, and what is your Message? Using this simple framework from Mary Munter and Lynn Russell’s book Guide to Presentations assures that the message is clear, captures the audience, and motivates your desired action.

A leader who deploys these seven strategies will deliver a more artful and meaningful story.

Here are two examples. Recently the noted author Jeffrey Kluger appeared on Late Night with Seth Meyers to plug his new book on narcissism. He effectively uses these seven principles to deliver two concise stories in less than five minutes. One story is about his interaction with astronaut Jim Lovell while writing Apollo 13, and his second story is about meeting President Clinton in the oval office. In both short examples he provides just enough detail for us to grasp the setting. While many of us have never been in the oval office, Jeff makes it easy for us to imagine what it felt like and see why the President’s actions had such an impact on him.

For an example of storytelling within a presentation, I’d suggest looking at Mark Bezos’s 2011 TED Talk: A life lesson from a volunteer firefighter. Bezos tells a powerful story, complete with props, in three minutes. In particular his choice of final words, “Save the shoes” serves as a concise and poetic summary of his message. He also chose very deliberately which details of the fire to share, and what to ignore. We know the homeowner is outside, under an umbrella and barefoot; but we don’t know the street name or style of home that is ablaze. Bezos provides only what we need for the story’s point to be made.

Stories can be compelling and entertaining. Stories can teach and influence. Stories make our messages memorable. Use these seven strategies to hone and polish your storytelling skills, and achieve the results you seek as a leader and communicator.

Let Data Ask Questions, Not Just Answer Them

The bigger the data, the more profitable and productive predictive analytics can be. But that’s conventional wisdom. Innovators more intent on inventing the future than predicting it should look hard at how cutting-edge scientists now computationally massage their big data. “AI” — artificial intelligence — is giving way to “AH” — automated hypothesis. AH, not AI, will increasingly inspire tomorrow’s breakthrough innovation.

As The Economist recently observed: “More than 90 groups of scientists are now developing hypothesis-generation software. They hope to use it not on recipe books but on the vast corpus of scientific literature (by one tally at least 50m scientific papers) that has piled up in public databases.” In other words, data-driven scientists worldwide recognize that petabytes and exabytes can make computation as creative and imaginative as imagination for hypothesis generation. They’re investing accordingly.

The ingenuity is compelling: instead of using data to solve problems, AH technologies generate portfolios of provocative problems to solve. Or, more accurately, hypotheses worth testing. Global enterprises and entrepreneurs alike will be able to use big datasets to generate business hypotheses around innovation and new value creation. Instead of recommendation engines that suggest what book to read or TV series to watch, AH engines will propose new titles and concepts for media consumption. Does anyone doubt that Amazon and Netflix want to use their exabytes of data to craft new products and services for customers and partners?

Similarly, you can be sure that many — if not most — highly-secretive quantitative hedge funds have highly proprietary AH engines relentlessly recommending trading strategies and investment themes that lend themselves to review and refinement. Yes, high-frequency “algorithmic” trading of Flash Boys fame is impressive, but its investment victories are executional. The global interoperability of big datasets guarantees that successfully managing a portfolio of investment hypotheses has become an essential precursor to successfully managing an investment portfolio.

Designing systems that ask the right questions can prove more valuable to aspiring innovators than those simply giving the right answers. The key insight from my recent book The Innovator’s Hypothesis: How Cheap Experiments Are Worth More Than Good Ideas is that the ability to run fast, frugal, and scalable experiments based on high-value business hypotheses is becoming a new core competence for innovation success. As companies gather more data about their customers, channels, usage, complaints, social media, etc., we won’t just see people analyzing data with optimization in mind; we’ll be seeing machines generating “innovation hypotheses” recommending new configurations, bundles, features, pricing schemes, and business models to test. The breakthrough innovator’s hypothesis doesn’t have to come from a human. The odds are, it won’t.

High-impact innovators will increasingly rely upon AH-aided epiphanies and insights to trigger their creativity and innovation prowess. Instead of scouring the data for interesting patterns, the innovation challenge will be determining what hypotheses are worth the most immediate and innovative experiments that can scale into a valuable new product, new service, new process, or new UX. The innovation collaboration between AH harvesters and real-world experimenters will increasingly shape corporate culture.

Mash-ups of automated hypotheses and predictive analytics will be inevitable. Automating hypotheses that will excite marketers and financiers as well as engineers and designers will be as much a computational art as a software science. It’s like having a microscope, telescope, or MRI that can say, “This looks interesting. What if we tried this…?”

Of course, things get even more interesting and innovative when we start mashing up AH with “ML” — machine learning. But that’s just a business hypothesis.

An Attachment to Cars Gets Out of Hand

During his five decades running a Chevrolet dealership in Nebraska, Ray Lambrecht held onto his customers’ trade-ins and quite a few new models too, amassing a collection of more than 500 cars, which he parked on a nearby farm. An auction of his collection drew 25,000 people, was filmed for the History channel, and raised $2.8 million; a 1958 Cameo pickup truck with 1.3 miles on the odometer brought $140,000, according to The New York Times. Lambrecht died recently at age 96.

Stop Believing That You Have to Be Perfect

The value of failure has become a mantra in Silicon Valley, with the rise of events like FailCon, a conference “for startup founders to study their own and others’ failures and prepare for success.” Failure, the thinking goes, is an intense form of hands-on education that — when done right — enables you to learn quickly and grow.

Despite the startup world’s enthusiasm, however, there’s often a lingering stigma: it’s less that you’ve tried and failed, and more that you are “a failure.” On a recent book tour supporting the French translation of my book, I met dozens of professionals who bemoaned what they viewed as their country’s particularly acute “one strike and you’re out” attitude toward failure. Of course, it’s not just in Europe; failure is still generally taboo almost everywhere in the world.

But the truth is that failure isn’t a rarity experienced by the unlucky few; if we’re honest, it’s a constant — albeit rarely lethal — state of affairs. In fact, it’s likely that you’ve already failed, or will soon (perhaps you launched a product that didn’t sell, were passed over for a promotion, flubbed a presentation, or any of a million other varieties). Here’s how to leverage that setback into even greater success.

Recognize that innovation requires failure. In a world where competitive advantage is increasingly short-lived, as Columbia Business School professor Rita Gunther McGrath has described, successful companies have to bake innovation into their standard processes. But innovation of any sort entails risk and trying new things — and that mandates failure.  A 100% success rate implies you’re not doing anything new at all. The goal, says Eric Ries of The Lean Startup fame, is to create a minimum viable product that you’ll fully expect to iterate over time. In some ways, it’s a reframing: it’s not so much that you’re creating something (such as a product or service) that failed; it’s that you’re steadily improving a series of drafts.

Own your failure narrative. When I wrote an article a while back about someone involved in the U.S. financial markets and mentioned his indictment — and subsequent exoneration — during the crisis, I received an angry note from his wife: why did you have to include that? Of course, since he’d written about the experience in his own book (providing the most thoughtful and gripping part of the narrative), it hadn’t occurred to me they’d still be trying to keep it quiet. But habits, including the need to appear perfect, are hard to break.

That’s why talking about failure commands so much attention — it’s still shocking in a world that expects a triumphalist narrative. Blogger James Altucher has built a passionate following by writing in almost gory detail about his failures in business and life, including making millions and then losing it all, twice. In his book, The Education of a Value Investor, money manager Guy Spier tells his story of accepting a job soon out of business school at what turns out to be an ethically-challenged investment bank that soon goes down. Even though he didn’t participate in the malfeasance, he was humiliated by the stain on his resume, and grapples with his own naiveté. People might judge him and Altucher for their mistakes. But because they’re the ones telling the story, we’re able to see the world through their eyes, and grasp the full force of their redemption. (Altucher is now more successful than ever as a writer, and since 1997, Spier has run his own investment fund based on cautious, Warren Buffett-inspired principles.)

Understand that failure is an ongoing process. It’s important to recognize that failure is not a “one and done” phenomenon, where you climb the mountain and stay on top. Rather, it’s an ongoing process. On the same day this spring, I was turned down for two different fellowships I had applied for. That doesn’t mean I’m not successful; by other metrics — writing books, speaking, consulting, and teaching for business schools — I’m doing fine. But stretch goals are just that: things outside your wheelhouse that may work out, or not. The goal, as research shows, should be to make “new and different mistakes.” And if we want to make it safer for others to try, we have to be willing to talk about failure in the present tense — not just something that happened to us once, long ago.

We all love irresistible, come-from-behind success stories about “failed” entrepreneurs like Kevin Systrom, who folded his unsuccessful check-in app Burbn and pivoted it into the billion-dollar Instagram, or Ben Silbermann of Pinterest, which began life as a struggling mobile shopping site called Tote. Failure makes success possible, but not because of the eventual possibility for lucrative exits. Rather, failure opens the dialogue to show that we don’t have to be perfect; in fact, we can’t be. We need to speak honestly and openly — to let ourselves be known, so that failure and mistakes are put in their proper context. We can’t be afraid to acknowledge that, if we’re growing, failure isn’t an anomaly. It happens every day.