Marina Gorbis's Blog, page 1355

We Don’t Have to Ditch Capitalism to Fight Climate Change

The risk of climate change is real, immediate, and very serious. If the vast majority of the doctors I consulted told me that consuming copious amounts of butter significantly increased my risk of a heart attack, I would take out a little “insurance” and cut back on my butter consumption. It is of course possible that the 95%+ of scientists who have explored the topic and the National Scientific Academies of every major nation are mistaken, and that the uncontrolled emissions of greenhouse gases pose no risk of destabilizing the climate. Personally, I hope so. But I don’t think it makes any sense to gamble that this is the case.

Our world and our economy need to face the risks of uncontrolled climate change — the sooner the better.

Yet, the publication of Naomi Klein’s new book This Changes Everything earlier this month and the claim by many of the marchers at this Saturday’s climate march that “Capitalism is the enemy” raises another risk: that in our struggle to address climate change we will turn on the wrong enemy. I’m in complete agreement with Ms. Klein that as a society we should be doing something about climate change, and doing it at scale. But the first step isn’t to dismantle capitalism.

In fact, we know how to address the problem of climate change, and it doesn’t require ditching the market economy. Instead, it relies on harnessing it. We need to stop acting as though dumping heat-trapping gases into the atmosphere is costless and set a price on carbon and other greenhouse gas emissions. We need to stop subsidizing fossil fuels; the world is currently spending about $500bn to subsidize oil, gas and coal. (That’s not much less than some current estimates of what it would cost us to build a carbon free economy.) And we need to subsidize research into new energy technologies so that entrepreneurs can one day bring them to market. We’re currently spending less than $2 billion a year on clean energy research – that’s less than 5% of what we’re spending on health related research, and less than 2% of what we’re spending on defense orientated work.

Nothing in human history has approached the power and flexibility of competitive markets to create economic prosperity, trigger innovation, and support political and individual freedom. Real capitalism – a capitalism in which inputs are properly priced, where information is widely shared, and where there are no favors for the few — is one of humanity’s greatest inventions. But when it comes to carbon we’re not looking at real capitalism or truly efficient markets. If we were, we would see an explosion of innovation that would expedite the transition away from fossil fuels. We’re already seeing corporations all over the world invest in carbon-free energy, in efficiency, and in business models that limit environmental impact. With the right kind of policy reform this trickle has the potential to become a flood.

Both the marchers and Ms. Klein have a point, of course – namely that even though we know what to do, we’re not doing it. She thinks it’s because we’re the victims of evil capitalists. It is certainly true that political action on climate change would benefit from reforms aimed at limiting the influence of incumbent industries. We need to make it clear that our commitment is to a capitalism in which it’s not ok for corporations – or wealthy individuals – to use their money to bend the rules of the game in their own favor.

But there is more to it than that. Climate change is particularly hard to tackle because we’re not very good at trading off current pleasure to reduce future pain. We’re a species that smokes, fails to go to the gym, and takes on credit card debt. In the same way, we’d prefer to believe that climate change isn’t happening and that if it is we can delay dealing with it.

Our failure to address climate change is thus ultimately a failure of democracy. We need to build a social movement that can insist that our leaders put in place the policies that will enable us to deal with the threat of climate change. And while we may struggle with longer-term priorities, we’re also a species that will do almost anything to ensure the welfare of our children. We need to rediscover the old idea that responsive, democratically controlled government has a central role to play in ensuring that the rules of the game are fair, and in dealing with problems like climate change: tough, long-term collective action problems that can only be addressed by the state.

But that doesn’t mean that we should abandon capitalism. With the right policies, capitalism properly understood is perfectly well equipped to prepare us to face the risk of large scale climate change. In fact, it’s the only thing that can.

How to Prioritize Your Innovation Budget

Here’s the scene: A problem has come up with one of your supply chain vendors, threatening to delay timely shipment of your product. At the same time, a potential opportunity appears that, with some exploration and investment, could lead to a new generation of products down the road. Which do you respond to first?

You probably reach for your firefighter’s hat to extinguish the short-term problem. And therein lies a bigger problem. Leaders and organizations are under more stress than ever to do two things simultaneously: deliver on today’s pressing commitments by troubleshooting and refining processes; and find and invest in innovation opportunities that will create tomorrow’s success. How your organization responds to this stress in allocating scarce resources is a crucial but often unaddressed issue. The natural bias is to respond immediately to what is in front of you (like answering endless emails as they come in, for instance). The problem is, this instinct crowds out longer term, innovative thinking.

We’ve talked to many organizations in this bind. One of them told us, “We’re playing non-stop ‘Whac-A-Mole’ here.” At another, the unfortunate mantra was, “The urgent drives out the important.” But we’ve found that many leading organizations are able to overcome this bias, diverting significant resources away from today’s requirements to fund the innovations that will deliver tomorrow’s value. To find out how they do this, we focused on the two key questions underlying the challenge: How much is your organization spending on innovation? And how much do you think it should be spending?

This seems basic, but often people just don’t know the precise answer or haven’t thought in these simple terms. When we recently put these questions to a CEO, he said he guessed his organization was currently allocating 5% of their spending to innovation (new products and services), but added that they really should be investing 10-15%. He went on to say that the insatiable demands of today’s operational turbulence were robbing him and his organization of ability to invest in the future.

We reflected on this, and on the broader context we’ve seen in our work, and created four high-level buckets into which resources and money can be poured:

Daily Operations. This is purely about executing within an existing and stable operating model.
Incremental Improvement. This includes most of the myriad Lean and Six Sigma continuous improvement projects that drive improved efficiency and effectiveness within an existing management and organizational structure.
Sustaining Innovation. Here, a breakthrough change is achieved by modifying the operating model or crossing internal boundaries. It requires an extraordinary management structure such as a program office, value stream manager, or process owner to drive this type of investment, but it uses the current value network to reach current customers.
Disruptive Innovation. This significant breakthrough in the organization’s operating model and value network facilitates the achievement of growth in a new market, disrupting the entrenched players. This usually requires incubation and protection of a new venture in an autonomous unit.

Looked at this way, spending creates distinct impacts and benefits that can be balanced and adjusted across the today/tomorrow spectrum.

We asked managers from a variety of industries at a recent conference (and in an online survey) the same question, but asked them to specify how they were allocating resources between these four categories.  Here, on average, is what they estimated they were currently spending:

85% of their resources on day-to-day operations
5% on incremental improvements that produced faster, cheaper, better sameness
5% on small sustaining innovations
5% on big, disruptive innovations

When we asked the managers what a better proportion might be, their answers were:

75% on day-to-day operations
5% on incremental improvements
10% on sustaining innovations
10% on big, disruptive innovations.

What our rough diagnostic confirms – not so surprising, perhaps – is that the battle between today and tomorrow rages on, and that tomorrow is losing. But the exercise also reveals that organizations instinctively feel they should be spending more on innovation. Easier said than done – but it can be done, and done well. Any organization attempting to shift the weight of its spending toward investments in creating future value must do three things:

Segregate funds for improvement and innovation. You need to measure spending across the four categories, and then be disciplined about segregating funds for improvement and innovation. In the absence of this clear segregation, the turbulence of day-to-day operations will devour the lion’s share of resources. Go ahead and do the math on your current allocation; you’ll likely find that more than 90% of your resources are devoted to keeping the lights on. Many leading IT organizations have recognized this problem and manage their budgets in three buckets: operations, maintenance, and innovation. They aggressively attempt to drive down the portion of their spending on operations and maintenance from 90% to 60%.

Tame the turbulence. This means identifying the root causes of the day-to-day operational turbulence and addressing them in a systematic, sustainable manner. The rules for smoothing the turbulence of day-to-day operations are few but powerful:

Do less. Much less. Initiate fewer projects. Track fewer measures. Get better at ending “zombie” projects, those efforts that have failed but no one wants to declare dead. At Sloan Valve, CIO Tom Coleman told us that they only launch a few major programs each year because that allows them to staff and integrate these initiatives with much higher quality.
Allow the important to triumph over the urgent. Prioritize resources carefully. Create clear policies about who can launch new projects and rigorously hold sponsors accountable for outcomes. Too often, organizations behave as if resources are free and capacity is infinite. Neither is true.
Take time before you reach for that fireman’s helmet. More time spent early on to find the root cause of a problem can save money in symptom management later. One leader explained this approach as “slow trigger, fast bullet.” Why is your vendor always having problems that become yours? Maybe you need a new vendor.

Create new organizations and controls for innovation. You need to develop organizational structures and controls that are appropriate for both sustaining and disruptive innovations. Today’s operations and incremental improvements can be managed within the traditional management structure, a command-and-control hierarchy, but tomorrow’s sustaining innovations and big, disruptive innovations need new organizational structures and controls. It’s too easy for revenue-producing parts of the business to poach resources from innovation projects and teams that are not (yet) contributing to the top line. They need to be protected – made autonomous, with their own dedicated budgets, resources, and leadership – until they are. And innovations need measures and controls which reflect their experimental approach to learning as they chart new territory with unpredictable outcomes. Performance should be measured by market momentum (such as new targeted customers or partners, deal size, and PR buzz).

In the battle between today and tomorrow, today will win every time unless the organization consciously, strategically decides to extend a helping hand to tomorrow. The first step is to measure spending against the four choices above. Do you like what you see? Are you willing to do something about it if you don’t? Remember, you’re making a crucial choice about your company’s future.

4 Ways to Retain Gen Xers

The economy’s slow but steady improvement should be good news. But employers may find a cloud lurking behind the sunny forecast: They are at risk of losing some of their most valuable talent — and they may not even realize it.

These aren’t the usual suspects. Instead of the 50-something Baby Boomers and the Millennials in their late 20s and early 30s, I’m talking about Generation X, demography’s long-neglected “middle child.” Numbering just 46 million in the United States, Gen X is small compared to the 78 million Boomers and 70 million Millennials. Yet proportionate to their size, Generation X may be the cohort with the most clout.

Now in their late 30s and 40s, Xers make up the bench strength for management. They are the skill bearers and knowledge experts corporations will rely on to gain competitive advantage in the coming decades. Approaching or already in the prime of their lives and careers, they are prepared and poised for leadership.

Yet their career progress has been blocked by Boomers who are postponing retirement and threatened by impatient Millennials eager to leapfrog them. They’re frustrated – and, having played it safe during the years of economic uncertainty, are now facing what may be their last chance to grab for the golden ring.

A 2011 survey from the Center for Talent Innovation (CTI) showed that 37% of Gen Xers have “one foot out the door” and were looking to leave their current employers within three years. Ding, ding, ding. The clock is ticking. The U.S. Labor Department’s August Job Openings and Labor Turnover Survey, popularly known as “the quit rate” because it measures the number of people voluntarily leaving their jobs, is the highest since June 2008, when the economy was in recession.

What can employers do to retain their talented Gen Xers? Here are four options:

Give Xers the chance to be in charge. CTI research found that nearly three-quarters of Gen Xers (70%) prefer to work independently. Among those who like being their own boss, over 80% say the reason is that they value having control over their work. Highly self-reliant, Xers are individual players who “work well in situations where conditions are not well defined, or are constantly changing,” according to a generational report from the Society of Human Resource Management. Placing Xers in charge of high-visibility projects is a way to spotlight their abilities.
Show them the route to the top. Mentoring and sponsorship programs that match mid-level managers with senior-level executives not only provides opportunities to enrich Xers’ career experience; such relationships help pave the path to top leadership positions.
Encourage entrepreneurial instincts. Following in the footsteps of generation-mates like Dell computer founder Michael Dell, chief Googlers Larry Page and Sergey Brin, and Sara Blakeley, who created the multimillion-dollar Spanx empire, nearly 39% of Gen X men and 28% of Gen X women aspire to be an entrepreneur. Why not let them test their wings with a company-sponsored venture than risk having them fly the coop?
Offer flexibility. Extreme jobs — characterized by workweeks of 60-plus hours, unpredictable workloads, tight deadlines, and 24/7 availability — are the norm for Gen X, with nearly a third (31%) of Xers making over $75,000 a year slogging through schedules that never stop. Flexible work arrangements, including reduced schedules, are checked off as “very important” for 66% of Gen X women and, significantly, 55% of Gen X men. Even childless employees yearn for better work-life balance to pursue their own interests.

Generation X may feel they’re the “wrong place, wrong time” generation, caught in a chronological squeeze between the Boomers and the Millennials. For smart employers, though, Gen X is in exactly the right place at the right time — seasoned skill bearers and experienced knowledge experts endowed with a work ethic that gives wings to their soaring ambition.

Employers can retain restless Xers by responding directly to their concerns: offering them a chance to test their leadership potential through work-sponsored entrepreneurial opportunities, a safety valve to alleviate the pressures of their extreme lives, and a way to celebrate the varied passions and commitments that make this talented cohort so valuable.

Collect Your Employees’ Data Without Invading Their Privacy

Research shows that businesses using data-driven decision-making, predictive analytics, and big data are more competitive and have higher returns than businesses that don’t. Because of this, the most ambitious companies are engaged in an arms race of sorts to obtain more data, from both customers and their own employees. But gathering information from the latter group in particular can be tricky. So how should companies collect valuable data about time use, activities, and relationships at work, while also respecting their employees’ boundaries and personal information?

In helping our customers adopt people analytics at their own companies, we’ve worked directly with legal teams from large companies around the world, including over a dozen in the Fortune 500. We’ve seen a wide range of cultures, processes, and attitudes about employee privacy, and learned that in every case there are seven key points that need to be addressed for any internal predictive analytics initiative to be successful:

Find a sponsor. The team that’s proposing the data analysis needs to have real power and motivation to change the business based on the findings. Most need a sponsor in a senior-level position for this kind of institutional support. First, this person can help balance opportunistic quick wins with a long view of how predictive analytics fits into strategic plans. He or she should also explain why the data collection and analysis is so important to employees across the organization, and can serve as the person ultimately accountable for ensuring that the data stays private. In many cases, if a company’s legal team doesn’t see strong sponsorship and support, they are likely to de-prioritize approval of the initiative — to the point where it may be forgotten entirely.

Have a hypothesis. Before you start collecting data, decide why it’s needed in the first place. For one, legal departments can’t often approve a project without an objective. But in addition, the team proposing the project needs to be clear and transparent about what they’re trying to accomplish. This includes having a tangible plan for what data is being sought, what changes will be made based on the findings, how the results of these changes will be measured, and the return on investment that justifies the time and energy put into the project.

The hypothesis can be as specific as “underperforming customer accounts are not getting as much time investment as high-performing accounts,” or as general as “correlations will be found between people analytics metrics and business outcome x,” but the outcome needs to matter. Projects without a purpose confuse people and incite skepticism, setting a bad precedent for future analytics efforts.

Default to anonymity and aggregation. There is more to be learned by examining the relationship between sales and marketing as a whole than there is by examining the relationship between James in sales and Elliott in marketing. Analytics initiatives are not the place for satisfying personal curiosity. In our work, we use metadata only, usually beginning with email and calendar. By default, we anonymize the sender and recipients’ email addresses to their departments. To further protect anonymity, we aggregate reporting to a minimum grouping size so that it’s not possible to drill down to a single person’s data and try to guess who they are. This removes the possibility of even innocent snooping.

If you can’t let employees be anonymous, let them choose how you use their data. In a few cases, business objectives can’t be met with anonymous data. Some of our customers, for example, conduct social network analyses to identify the people who make important connections happen across disparate departments or geographies. After identifying these key “nodes” in the social graph, managers will interview them and then help them influence others. In a case like this, the best approach is to ask permission before gathering the data in one of two ways:

Using an opt-out mechanism is the simplest. Employees are sent one or more email notifications that they will be included in a study, with details on the study plan and scope. They have to take an action (usually clicking a link) to be excluded from the study.
Opt-in earns a bit lower participation, because recipients have to take the action in order to be included in the study. More sensitive legal teams may require an opt-in.

Whether it’s opt-out or opt-in, the worker should know what’s in it for them. We find that the most relevant reward is access to data — after all, most people are curious how they compare with their peers across various dimensions. We provide people with personal, confidential reports that compare their own data to organizational benchmarks, and this helps give them an incentive to participate. Real, personalized data also helps to make the message about the study interesting, cutting through the inbox noise so the opt-in gets attention. And if you don’t have the ability to give people back their own personal data, you can promise future access to some form of aggregated study results to reward them for participating.

Screen for confidential information. Then screen again. Certain teams, such as legal, HR, or mergers and acquisitions, will be dealing with more sensitive matters than normal, and their data may need greater protection. Whether data will be gathered from humans, electronic sources, or both, sensitive information should be screened out in two ways:

Don’t gather it in the first place by configuring the instrument to exclude keywords, characteristics, or participants that would indicate sensitivity.
Re-validate and remove any data that wasn’t screened by the initial configuration, because both people and software can miss the meaning of textual information. Perform a second validation before sharing the data with the final audience.

Don’t dig for personal information. Every person experiences interruptions in their workdays for personal reason — dentist appointments, children’s activities, etc. At the same time, by policy, some companies protect their employees’ privileges to use company systems for personal reasons. Regardless of policy, there really isn’t much business value in looking analytically or programmatically at data about peoples’ personal lives, and we automatically exclude it from our dataset. The bottom line is that employees have a human right to personal privacy, as well as significant legal rights that vary in different countries. Personal matters should be handled by managers, not by analytics initiatives.

For additional protection, consider using a third party. It is common in some applications for a third-party vendor to perform the data cleansing, anonymization and aggregation, so that the risk of privacy violations by employees of the enterprise is removed. This work can be performed by third parties even within the firm’s firewall, if desired. But there’s an important caveat: Companies that handle sensitive data should follow security practices, like background checks for their employees who have access to the data, and should not, in general, use subcontractors to perform their work.

The opportunity in data and predictive analytics, particularly people analytics, is huge, which makes it especially important that companies take a responsible and proactive approach to privacy. By collecting and using data in a way that respects and rewards employees, leaders remove friction points in the adoption of increasingly valuable analytical capabilities. The seven practices outlined will help clear the path for pioneering programs and build an organizational culture that prizes and rewards analytical thinking at all levels.

Money Matters More for Well-Being in Rich Countries than in Poor

Contrary to popular belief, people’s level of satisfaction with money and the material aspects of life has a stronger impact on their subjective well-being in wealthier countries than it does in poorer nations, according to Gallup surveys of adults in 158 countries. In developed societies, money is crucial for comfortable living, whereas in poor, rural areas, shelter and food can sometimes be obtained without money, via barter or subsistence agriculture, say Weiting Ng of SIM University in Singapore and Ed Diener of the University of Illinois at Urbana-Champaign and the Gallup Organization.

What a Changing UK Can Learn from Multinationals

Following Scotland’s rejection of independence in the September 18 referendum, David Cameron, the British Prime Minister, has enlarged the scope of Britain’s constitutional debate. It is no longer a dialogue about increased powers for the Scottish Parliament, but a discussion about the relationships between the UK as a union of four nations and each of those four nations (England, Wales, and Northern Ireland, as well as Scotland).

The newest element of that wider dialogue is the idea that consideration is needed about the position of England. Previously, there has been a presumption that there was no need for a disaggregation of the interests of the UK as a whole and England, on the grounds that it contains 85% of the UK population.

The change in perception reveals a paradox. The Scottish referendum reflected a perception on the part of a substantial minority that the UK, dominated by England, had too much influence over Scotland, both direct and indirect. The view now held by many in England is that it is wrong that all members of the UK Parliament can vote on legislation applying only in England when the existence of separate parliaments in the other three nations precludes any reciprocal power of influence for politicians elected from England (the famous West Lothian Question).

These issues are not new to leaders of burgeoning multinational companies, in particular when they originate from the U.S.; for many of these, in fact, the domestic market still accounts for the majority of sales. Indeed, there is a parallel between these tensions in a governmental setting and those observable in multinational companies with geographical divisions for markets outside the home market but no separate division for the home market.

Tensions arose typically in three stages as a company internationalized. First, U.S. companies first started with establishing an international division, not so different from the Scottish office and Minister in the British government. Yet, and particularly before globalization made international experience a must for high potential executives, it was sometimes difficult for “international” to gain a voice at corporate against the preponderance of domestic concerns. So despite the establishment of the international division, internationalization languished.  This is not dissimilar from the growing concern in Scotland since the 1980s that the British government was not sensitive to the specific needs of Scotland, and that its policies were perhaps better suited to England.

Devolution, the transfer of legislative and executive powers to a Scottish government and parliament, in 1999, was meant to address this concern. The corporate parallel was the regional headquarters that many multinational corporations created in the second stage of internationalization, each with its own regional CEO, who had a voice at corporate headquarters. With enough autonomy each region could adjust to specific local market needs.

Yet the broader problem of home market dominance did not disappear because not everything could be handled autonomously and the “share of voice” of the regions in the important decisions that still had to be made centrally remained small. What’s more, channeling regional interests via a single executive at corporate headquarters created a bottleneck, as one person could not provide representation for the region on all issues.  Companies soon realized that centralization or regionalization was not a black and white choice; many key strategic and operational decisions had to be made in a dialogue. To structure the dialogue, many started using “decision grids” specifying the roles of different managers for specific decision classes on a continuum from inputting information to making the decision.

But even with this grid, regional managers often became bottlenecks and decisions continued to favor domestic concerns, throttling the internationalization process. Choices in strategy, labor relations, product specification, and advertising were often poorly suited to other regions around the world. And by remaining excessively home centric the multinational often deprived itself of access to unique skills and learning opportunities at the periphery.

To resolve this problem, many multinational corporations have restructured still further in a third stage through the creation of a “Home Region,” which puts domestic operations on the same organizational footing as the various regions in key decision-making.  This solution is akin to what Cameron is now contemplating in the UK with the possible creation of an English Parliament and government, distinct from those of the United Kingdom, and similar in role and power to the Scottish institutions.

As multinationals have found, such a restructuring will involve greater ambiguity in the allocation of decision-making power and a deeper dialogue around decisions affecting both jurisdictions. As Cameron and his parliamentary colleagues embark on this debate, they would do well to consider the experience from those corporate restructurings.

How to Make Fossil Fuel Divestment Really Matter

The Rockefellers’ announcement that the family’s philanthropic trust would begin divesting from fossil fuels was a highly symbolic moment in the campaign against climate change. The nation’s most iconic oil family will no longer be profiting from the fuel sources responsible for overheating the planet.

But do such gestures actually help slow global warming? Divestment has its critics, and some analysts believe its direct effects will be limited. But the Rockefellers’ move may have more impact, for a key reason: their stated commitment to transition the divested funds to clean energy investments. The $50 billion to be divested is a drop the fossil fuel market’s bucket, but to the much smaller clean tech market it’s a tidal wave. And early-stage clean tech is particularly in need of an influx of capital.

Last year, venture capital investments in clean tech totaled a mere $2.8 billion, according to Dow Jones. That marked a 50% decrease from its peak of $5.3 billion in 2011, despite the fact that venture capital funding overall has been increasing.

Some time shortly after the recession, venture capitalists decided clean tech wasn’t all it was cracked up to be, and started making bets elsewhere — mostly in internet start-ups. If the divestment movement can reallocate capital toward clean technology companies, that could have a far greater impact on mitigating climate change than divestment alone.

Later stage clean energy investments — like projects to deploy wind and solar — have remained somewhat more popular than early-stage start-ups, but are nonetheless down in recent years. Global clean energy investment also peaked in 2011, at $317 billion, and was down 20% from that peak in 2013. Cheaper natural gas prices have only made it harder for the still-nascent sector to attract investment.

The role for funds like the Rockefellers’ is to take the long view, investing in clean energy while others are distracted by the fracking boom or Snapchat’s valuation. Divesting from fossil fuels is just one small step — the giant leap is channeling that money into clean energy.

To Build Influence, Master How You Enter a Room

An airline industry executive has been promoted regularly for more than two decades because he’s good in a crisis.  He’s cool, competent, and authoritative when the rest of the team is panicking.  But now he finds himself in charge of a huge swath of the company — and a large number of employees.  And the board is asking for something different from him:  he needs to motivate people.  For that, he has to emote — to show people he cares — something he’s hidden for over twenty years. Where to start? How can you wield influence while being empathic? It begins with how you enter a room.

Be aware of your unconscious cues. When you stand, are you taking up all of your space, or do you shrink into corners?  When you move, do you move confidently, or do you slink? When you’re sitting alone, do you slouch or sit straight? When I began working with that airline executive, I noted that his tendency was to walk into a room as invisibly as possible.  His shoulders were slumped, his eyes were down.  In discussion, it turned out he had been bullied as a young teen for about five years.  His body had borne the trace of that misery ever since.  And he wasn’t even aware of the price paid in his posture — and in his day-to-day work.  He couldn’t connect with others because he was afraid.  In a crisis, however, he put aside his fears and focused on the job at hand.

There are two essential points here.  The first is that you’re always signaling about your intentions and feelings, and so is everyone else.  The second point is that most of the time you don’t pay conscious attention to all those signals — either the ones you’re putting out or the ones others are sending to you.  Your unconscious mind handles all that. It determines an extraordinary amount of the relationships you have with other people and your influence upon them. Thus it’s essential to get a handle on these unconscious cues.  Once you’ve formed a picture of yourself and have either embraced what you see or resolved to improve it, then you’re ready for the next step.

Focus on a key emotion. Think about the charisma of an actor like Kevin Spacey. How does he achieve it?  Most people think of charisma as something you’re born with, but in fact we all have our charismatic moments.  Think of a time when you’ve walked into a meeting, or come home to your significant other, and been asked without preamble, “What happened?”  You’ve been brimming over with some news  —  either good or bad.  You’re excited, or in despair, or triumphant, or whatever the case is. That’s charisma. It’s really about focus.

You need to focus your emotions before any meeting, conversation, or presentation.  Most of us go through our days with lots on our minds — what Buddhists call “monkey mind” — and we think of one thing and then another like the random movements of a pinball in one of those old fashioned machines. That’s not charismatic.  It’s just a to-do list.  And it doesn’t compel attention.  But the people who are able to free their minds of the usual daily detritus and focus on one emotion find that they compel attention. We are hard-wired to notice strong emotions in others.  We have mirror neurons that fire (without us being conscious of them) when we see someone else in a state of great excitement, or anger, or delight.  They leak their emotions to us; we are infected with them.  That’s how they take over a room.

And finally, have something interesting to say.  If you’re going to wield influence, you need to know what you want to be influential about.  And you’d better have done your homework because once all eyes are upon you, everyone will expect you to have something worthwhile for them.

That’s how you build influence. Take inventory of how you habitually position yourself in front of the world and repair if necessary.  Then, focus on a key emotion for any important meeting. And third, the place where most leaders mistakenly start, be prepared with something interesting and relevant to say.  Leaders often start with content because it’s the natural job of the conscious mind.  But connection, or its lack, begins in the unconscious mind.

Customers Are Better Strategists Than Managers

I was once appointed CEO of a company in need of a turnaround. We made trusses and frames for houses, and one morning, after I’d been on the job about three months, I found myself staring out my window, watching the trucks and forklifts below. I thought: What am I doing here? Can I, on the fingers of one hand, list the ingredients of success in this industry?

In the weeks and months that followed, the senior management team and I made a number of major decisions about the company’s future.  As a team, I observed, we were busy doing things and making changes, all of which made sense to us as managers.  But as time progressed, I returned to these questions, over and over: How well do we know what our customers want? How well do we know what our suppliers and employees expect? What would it take to meet those needs better than our competitors could?

In short, I’d begun to think in a way that I’d now call “strategic.” Up until that point, most of my focus had been on saving the company from ruin, which had led largely to “operational” thinking — worrying about the proper staffing numbers, the ratio of overhead costs to direct costs, the prices we were paying for supplies, how machinery was utilized in the plant, the overstocking and obsolescence of products used in manufacturing, the cash flow for the business, that sort of thing.

It was after I left that job and started working as a consultant that the penny finally dropped: I realized I’d been looking at the business from the inside out. From that perspective, all I could see was the activity that consumed my day. I also realized that customers and other stakeholders have the opposite perspective. Their view is outside-in, and that’s what makes them good strategists.

Think about it: As a customer, how often do you ask yourself, “Why don’t they…?”  When you go to a department store, do you note which products should be added or removed?  If you could have your way with the store’s presentation, would you change the layout, the lighting, and perhaps the color scheme? How about the service? No shortage of suggestions there, right? So it goes with airlines, telephone companies, banks, every organization you deal with — you’re continually redesigning strategic factors such as product range, presentation, and customer service. We all do it.

Now try doing that for own your organization. Suddenly it’s much harder, because it requires an outside-in view.  Here are my suggestions for making it easier:

Tap your stakeholders. If your company’s two-day offsite involves a group of senior executives getting together to develop a strategic plan, and they do so right there and then, my guess is it’s not a strategic plan at all. It’s an operational plan. Your management team is most likely looking inside-out, and it surely doesn’t have all the answers. It probably hasn’t even asked the right questions.

Effective leaders listen. They observe. And they translate what they learn into strategy. Hubris has no place in outside-in thinking and effective strategy development. You have customers and other stakeholders who are dying to share their ideas about how you should change your company in ways that will make them even greater supporters. So empower them to do that.

Conduct interviews to understand your stakeholders’ needs.  You want to hear, for example, how customers decided to buy from you or from the competition.  You want to hear how employees committed to join your organization or decided to leave to work somewhere else, how suppliers agreed to enter into contracts to provide you with goods or services when they had a choice, how partners signed up to sponsor your events when there were plenty of others options on offer. You’re looking for insight into their “journey” with the organization, to put this in marketing terms.  On the criteria that emerge from their stories, you want to know how your organization performs — and what suggestions people have for improving your competitiveness.

Each interview should take place soon after the customer’s shopping trip, the supplier’s experience with your company, and so on.  Wait too long, and people will forget important details and convey only vague impressions.

Go beyond your current customers. Interview potential stakeholders, too. That includes customers and others who are currently dealing with your competitors — but also those who interact with neither you nor your rivals.  In the wine industry, you would talk to people who don’t drink wine — beer and cocktail consumers, for example — in order to appreciate why they prefer these other beverages, understand fully any objections they might have to wine, develop ways to eliminate any barriers to purchase, and figure out how to appeal to them in order to disrupt their pattern of choice. This is how you glean insights into new areas of competitive advantage (also known as blue ocean opportunities).

Listening is important, but you also have to determine who to listen to — that is, work out who your key stakeholders are. That will help you adjust your company’s positions on the factors that matter.

To Innovate in a Big Company, Don’t Think “Us Against Them”

“This seems like pie-in-the-sky wishful thinking. Have you actually seen this done?”

I often hear this question when I visit companies and speak about how to make an innovative idea less terrifying to high level executives. The skepticism is warranted. There are plenty of pundits arguing that big companies need to innovate, and pointing out that it is difficult to do so. Far less often do we hear how it really comes together, especially inside a large organization.

But it does happen. Take the case of Janssen, the pharmaceuticals arm of Johnson & Johnson, which created a breakthrough innovative program called Immersion.

The idea started with two Janssen employees, Annick Daems and Enrique Esteban, who were spearheading an initiative to increase the company’s diversity of thought and experience. As part of this effort, they discovered that the majority of employees who were advising Janssen on emerging markets had never set foot in those countries. They also identified another problem common within large organizations: employees working in silos. Both of these problems seemed like great opportunities for their initiative. But that would require an ambitious new project.

They approached Adrian Thomas, head of Global Market Access and Global Public Health, about providing employees with in-country experiences working alongside colleagues from other silos within Janssen. Their proposal would solve a diversity and inclusion problem, but the impact on the company’s bottom line wasn’t clear. However, Thomas, a physician by training, realized that what Daems and Esteban were proposing could be a mechanism for finding scalable solutions to global health problems.

Under Thomas’ leadership, with critical support from senior leadership within the organization, including chairman of pharmaceutical global strategy Jaak Peeters, Immersion has become a global health program with a simple mandate: identify specific problems in specific locations, like Hepatitis C in Romania or aging in Poland. Then assemble small, cross-silo teams and get them in-country to find ways to better deliver healthcare access in that emerging market.

Three years in, Immersion’s projects are quietly gaining traction.

Daems and Esteban initiated what some would say is impossible: As individuals, they were able to innovate within a huge corporation. What were the secrets to the success of the Immersion project?

1. They overcame short-term thinking. A majority of public companies pledge allegiance to short-term profit over long-term vision. Call it an organization’s survival instinct. Managers, whose annual reviews hinge on quarterly gains, see no return on investing in what appear to be their employees’ pipe dream projects.

And yet management sponsorship is crucial for any ambitious initiative. Even highly motivated employees such as Daems and Esteban could not have overcome the drag of short-term thinking and made Immersion a reality without their advocates, Thomas and Peeters, in upper management.   They were willing and had the authority to test the project, and they could persuade their peers to forego near-term profit for a potential long-term payoff.

2. They let go of conventional planning and productivity measures and embraced a discovery-driven process. In a large enterprise, the more checklists an enterprise can adhere to and the more codified its processes, the greater the productivity and the higher the margins. When implementing an innovative idea, this modus operandi must be abandoned in favor of a discovery-driven or emergent process. This often means each project will have its own trajectory. Some will start slowly, quietly building momentum, while others skyrocket, then crash.

With Immersion, an early obstacle for participants was the idea of starting from scratch: there were no templates and no assignments. If you were interested in a project, you could decide for yourself how you would tackle it. In some cases, even the projects themselves were amorphous at first. This freedom to explore ideas and try new things without pressure to produce immediate financial results was critical to creating projects that could yield long-term results. Such as a biomarker initiative, the development of a traceable substance that detects a specific disease, which is now underway. Not every project has been so successful, but Janssen understands that this doesn’t throw the validity of the whole initiative into question.

3. They cultivated a “we are them” mentality. Literature on innovation tends to frame the relationship between spry innovators and the staid status quo as a David versus Goliath battle, but the challenge for large organizations is to acknowledge that David and Goliath must work together rather than fight each other. Janssen knows that Immersion must cross silos (departments, regions, countries, and more), temporarily pulling people from one P&L to work on a project whose success may accrue to another P&L. Creating a spirit of internal cooperation and cohesion has been crucial.

Cultivating a “we are them” mentality is equally important in building external alliances. As Guy Nuyts launched an Immersion project to treat hepatitis C in Romania, he realized that achieving their goal of treating 80,000 people by the year 2020 would require the participation of a much larger group of stakeholders. The focus needed to shift away from selling medication to raising awareness, increasing screening, and treating patients. Says Nuyts: “The best part of Immersion is solving problems in a holistic way: there is no doubt that this is the future of healthcare.” In Romania, as Janssen has focused on long-term results rather than on short-term sales, they received an invitation from the Romanian Minister of Health to work together to eradicate Hepatitis C in Romania. Again, holistic thinking and a “we” mentality are paving the way for innovation.

Implementing innovative ideas is an exacting endeavor. But the payoffs can be huge in terms of creating value for the company and personal fulfillment for the employee. For many at Janssen, Immersion has become the best part of their work. The long view is tough by definition — because it’s long. But the question is not should you take the long view, but rather – how can you afford not to?