Marina Gorbis's Blog, page 1363

Oracle: The Worst-Governed, Best-Run Company Around

After 37 years in charge, Larry Ellison finally stepped down as Oracle’s CEO on Thursday. Except that he’s not really stepping down. The 70-year-old will stay on as the software giant’s executive chairman and also its chief technology officer — the latter title a formalization of a role he was already playing. And the new co-CEOs, Safra Catz and Mark Hurd, will continue to do the same things they did as co-presidents, the only difference being that they will now report to the board instead of just to Ellison. But Ellison is of course chairman of that board (long-time chairman Jeff Henley will stay on as vice chairman).

Basically, not much has changed at Oracle, except that the company’s governance structure has gotten more complicated. For this it will probably be subjected to criticism from watchdogs like ISS, Glass Lewis, and GMI Ratings. That won’t be anything new for Oracle, which has gotten used to being labeled a governance disaster.

Two years ago, for example, GMI Ratings gave the company a governance score of 9, “indicating higher accounting and governance risk than 91% of companies,” and an ESG (environmental, social, governance) grade of F. (I’ve asked GMI for up-to-date ratings, but haven’t gotten them yet.) Last fall, both ISS and Glass Lewis recommended that shareholders not only vote no on Oracle’s executive pay plan — which as has become customary showered Ellison with millions of new options to buy Oracle shares despite the fact that he already owns 25% of the company — but also reject the slate of directors nominated by the company. Shareholders did in fact say no on Ellison’s pay, with 57% voting against and Ellison himself accounting for most of the yes votes, but they didn’t throw out the directors.

Why not? Maybe, just maybe, because Oracle’s stock price has been rising for a decade, significantly outperforming the Nasdaq composite index and other tech giants over that stretch. On top of that, the company has a nice dividend payout, for a tech stock, of 1.2%. And while I’m certainly not the person to argue that short- or even medium-term shareholder returns are a perfect measure of corporate performance, I do think that what your stock does over 28 years has some meaning. And of the remarkable tech IPO class of 1986, which included Adobe, EMC, Microsoft, and Sun Microsystems, Oracle has been the best performer.

So, basically, Oracle is a horribly governed company, but it seems to be pretty well run. Which inevitably raises some questions about the true value of the standards and practices that go under the label of good governance. There are some who think all this stuff amounts to what Yale Law School’s Roberta Romano once called “quack governance” — a bunch of ideas peddled by “corporate governance entrepreneurs” (Romano’s phrase again) that don’t actually improve corporate performance. I wouldn’t go that far; I’m perfectly willing to believe that over the years the likes of ISS, Glass Lewis, and GMI have honed and improved their recommendations on the basis of real evidence on what drives performance and risk. But while corporations might on average be better off abiding by their governance recommendations, I actually think we should want some diversity in how companies are run. One size does not fit all.

Oracle, despite being a giant organization with 122,000 employees and a market value of $177 billion, remains very much the idiosyncratic creation of one man, Ellison. In that it’s pretty similar to the company co-founded and long run by Ellison’s best friend, the late Steve Jobs. Apple has also caught flak for shareholder-unfriendly governance practices and multiple other misdeeds. Jobs’s imperious behavior was often excused as the flipside of creative genius, and that’s one way to look at Ellison too.

Oracle’s products don’t inspire the sort of loving awe that even now greets Apple’s latest creations, but there is something about how Ellison runs his company that seems to work. Oracle attracts driven, talented people (some of whom head off to start their own very successful companies), it’s been pretty stable at and near the top for years, and it makes tons of money. It’s also worth noting that the company now has a female co-CEO and long had an African-American co-president (Charles Phillips, now the CEO of Infor) — not exactly customary in Silicon Valley.  Yes, Oracle has been a laggard in the switch to cloud computing, it doesn’t seem like the most pleasant place in the world to work, and its CEO-turned-executive-chairman presumably won’t be around forever. But it may be that Ellison’s seemingly ridiculous pay packages are keeping him involved and motivated (presumably by the chance to move up from No. 5 on the Forbes billionaires list), while his unconventional hiring practices (such as bringing in Hurd after he was ousted from HP amid a sexual-harassment scandal and plunking him in power-sharing arrangement with Catz that few thought would work) are actually helping the company prepare for the future.

It may be. I truly don’t know whether the optimistic or pessimistic view of Oracle is correct, and I feel really uncomfortable making even a sideways endorsement of those massive options grants Ellison gets. But it’s hard to get around the reality that, so far, the company’s frequent disdain of good-governance practices has gone hand in hand with spectacular, sustained success. It could be that Larry Ellison knows a few things that the governance watchdogs don’t.

Stop Searching for That Elusive Data Scientist

Based purely on the data, a really good data scientist will probably tell you the odds are poor that you’ll be able to find and hire really good data scientists. Surveys say there simply aren’t enough people with the unusual blend of software skills and statistical savvy to go around. Arguably even more important, high-impact data scientists bring collaborative temperaments and business acumen to data-driven initiatives. Unfortunately, there’s no shortage of individuals with just enough statistical and software knowledge to be data-dangerous. For many organizations, a mediocre data scientist may be worse than none at all.

What to do? My immediate advice: Give up. Stop hunting for that data science unicorn and/or silver bullet. Chances are slim that your organization would even be able take full advantage of their talent. But the opportunities for data-science-enabled efficiencies and innovation are too important to defer or deny. Big organizations can afford — or think they can afford — to throw money at the problem by hiring laid-off Wall Street quants or hiring big-budget analytics boutiques. More frugal and prudent enterprises seem to be taking alternate approaches.

The smartest thing I’ve seen organizations start doing is seed-fund and empower small cross-functional data-oriented teams explicitly charged with delivering tangible and measurable data-driven benefits in relatively short periods of time. The accent is on the word team; the emphasis is on building greater data capability than better digital infrastructures. The goal is to make all of the organization — not just the geeks and quants — more conversant in how to align probability, statistics, technology and business value creation. No black boxes or centers of analytic excellence here; they want data science to be a cultural value, not just a functional expertise.

What I’ve typically observed are small teams not addressing big problems or grand challenges but an imperative to generate insights that could get the organization doing something interestingly valuable really fast. One team, for example, did something as simple as comparing a certain class of tweets from their best customers with their competitor’s customer’s tweets. The overlaps and differences immediately suggested ways to better target and take-away rivals’ customers beyond social media.

An industrial products company started monitoring blogs, boards, and other social media platforms around maintenance and service complaints and then mapping that data to internal client maintenance data. The resulting insights completely changed the internal dialogues between sales, customer support, maintenance engineering.

These were extensive, but not exhaustive, exercises in simple data science and analytics. The tools were crude and, frankly, the individual technical and statistical expertise of the teams was limited. Crudely put, the typical team was collectively less skilled and competent than a typical data scientist. But that collective team learned from each other and sent a message to the rest of the organization that even baby steps in analytics could yield large strides in outcome. Limited ambition did a better job attracting credibility and support than BHAGs.

Without exception, every team I ran across or worked with hired outside expertise. They knew when a technical challenge and/or statistical technique was beyond the capability. But, unsurprisingly, the outside advisors — in one case, an academic, in others, quants from digital consultancies — were better able to collaborate with teams that had really tried to get their minds around a design challenge. The relationship was less of an RFP box-ticking exercise than a shared space for experimental design.

For me, the big takeaway was the way existing software and databases were re-purposed and how cloud and analytics as a service offerings were brought in to address the issues. These teams had minimal experience in putting the disparate pieces together. That said, there was no shortage of vendors, advisors, and service providers who wanted to sell their capabilities into the enterprise.

So are these teams ultimately a short-term fix rather than a more sustainable solution to the data scientist shortage? Yes. But in the same way that the rise of mobile devices has changed how organizations communicate and collaborate internally and externally, the concurrent rise in Big Data and analytic opportunities means that smart organizations would be foolish to outsource this away from the very people who need to be more data-driven. You want to cultivate internal capability, not just hire it.

People don’t need to become data scientists, but they do need to understand and appreciate key principles and practices of data science. In other words, the temporary fix of data science teaming doesn’t solve the problem, but it creates the cultural and organizational context for the necessary hires to follow. Sometimes the data show that “buying time” the right way can be a terrific investment.

Coaching an Employee Who Doesn’t Want Help

Is there someone on your team who you’d like to coach, but resists your help? A high-performer who could reach further? A hard-worker who could grow faster?  The best managers know to coach their employees, but what if someone doesn’t want your help? How can you convince a hesitant employee that your advice is worthwhile?

What the Experts Say

“Resistance to coaching takes many forms,” says Amy Jen Su, managing partner of Isis Associates, an executive coaching and leadership development firm and coauthor of Own the Room: Discover Your Signature Voice to Master Your Leadership Presence. The resistant employee may be passive, putting off your meetings or acting as if he’s open to coaching but never actually changing his behavior. Or she might be direct, making it clear she doesn’t want your help. While this may be frustrating, Ed Batista, an executive coach and contributor to the HBR Guide to Coaching Your Employees, says that you shouldn’t assume the employee is to blame. Often the manager is at least part of the problem. Here’s how to get to the bottom of what’s going on, so that you can help even the people least willing to be coached.

Know when coaching works — and when it doesn’t

First consider whether coaching is the right approach. “Good coaching is a fluid process that incorporates asking questions, challenging assumptions, reflecting back what’s heard, and, at times, providing a direct opinion or feedback,” says Batista. Does the employee or situation call for that investment? “Sometimes you really do need people to perform a task in a specific way,” Batista says, and in those cases, you’re better off giving directions. Or you may not want to dedicate the time and energy to helping a chronic underperformer. But if you feel coaching is warranted, and the employee isn’t accepting your help, the next step is to understand why.

Understand the resistance

It’s easy to assume the resistor is simply irrational or difficult. But “there is typically a logical, perfectly reasonable explanation for how the person is behaving,” says Batista. Perhaps, he doesn’t trust you well enough or feels like you don’t appreciate him. “Often coaching can take on a tone of ‘you’re not good enough,’” Su says. It could also be that the employee hasn’t had a good experience with coaching in the past. “She may be thinking: ‘Why bother? I still didn’t get a promotion after trying last time.’ Or ‘it’s never really stopped me before. I’m going to get promoted anyway,’” says Su. You might also see resistance if the person hasn’t bought into the process: “You have to agree on what the blind spot or development opportunity is,” says Su. Batista suggests you ask yourself: Could my actions be contributing to the problem?

Be curious

It’s not enough to contemplate the reasons. You should also ask your employee why she’s hesitant. “Start asking questions,” says Batista. But not yes-or-no ones — they don’t advance the dialogue. Instead start your inquiries with “how” or “what.” For example, you might ask, “How can we solve this problem together?” or “What do you feel is holding you back at this moment?”  You can mention the resistant behavior you’re observing so long as it’s in a non-critical way that sparks candid discussion. For example, you could say: “I noticed that you rescheduled our meeting several times. I’d really like to work with you on this so what can I do to help you make this a priority or make you more comfortable tackling this issue?”

Be transparent about your intentions

If you haven’t explained why you’re offering coaching, be explicit. Acknowledge what you’re trying to do and why. “I’m focusing on your performance because I want to help you meet your goals this year.” Or “I’d like to give you coaching about how to run meetings so that others see you as an effective leader.” This is  especially important if you’re coaching someone for the first time. “If you’ve been a more directive manager, and all of a sudden you’re asking, ‘Well, what do you think?’ it may freak your employees out a bit. You need to make explicit why you’re changing your behavior and what your intentions are or you’ll create a lot of unnecessary anxiety,” says Batista.

Show appreciation and build trust

To accept coaching is to make oneself vulnerable, so you need to show your employee that you’re worthy of trust. First acknowledge the person’s contributions. Coaching can feel like a punishment, especially for solid performers who think they’ve got it figured out, so state specifically what you value about her work and why. Emphasize confidentiality and keep your word. “If the employee finds out that you were talking about her performance in another setting, she’ll question the relationship,” says Su. And make sure you stay committed throughout the coaching process. “Don’t get all fired up about how you’re going to help and then get distracted.”  Another way to build trust is to show employees that you’ll accept reasonable mistakes. “Allow people to analyze setbacks and failures in a dispassionate way and learn from them,” Batista says.

Don’t force it

“When people are compelled into coaching, it’s not a recipe for success,” says Batista. Instead of improving the person’s performance, you may strain your relationship. So, if the employee continues to resist, don’t strong arm him. “Put the coaching on pause and address the issue at a later date,” Su says. But if the performance issue is critical or time-sensitive, you might consider bringing in an external consultant or someone from HR to help.

Principles to Remember

Do:

Ask open-ended questions about why the employee is resistant
Show that you appreciate the employee’s contributions
Accept that the employee will make mistakes — tolerance encourages risk-taking

Don’t:

Put all of the blame on the employee — it’s likely that she’s being resistant for a reason
Hide your reasons for trying to coach the person — be explicit about why and how you want to help
Force the employee into accepting your help — coercion doesn’t build trust

Case study#1: Own your part of the problem

Carla Torres* hired Susan*, a new HR manager as her direct report.  But, because Susan had more experience in the field, she rarely sought her new boss’s help and was resistant to feedback and coaching. “She saw me as her peer, not as someone who could teach her anything,” Carla explains. Things came to a head six months into Susan’s tenure during her first performance review. “Carla pointed out Susan’s failure to build relationships within the rest of the HR team, an important part of the job. “But it was a disaster for both of us. She ended up in tears and I felt terrible about the whole thing,” Carla says.

She realized that Susan would want to avoid her so decided to head off the problem. “I scheduled a follow-up meeting and we talked through the feedback,” Carla says. She apologized for her part in the problem: “I had moved too quickly to the coaching points without taking sufficient time to acknowledge her strong performance in the role. I reminded her that I was excited to have her on the team and that I fully supported her continued career growth and development. As such, I owed it to her to provide the feedback.”

Carla says this was a turning point for the relationship and Susan’s willingness to be coached. “We needed that human moment of connection and she needed to know that I would look out for her,” she says.

Case Study #2: Understand why

Russell Mathews* was in a bind. He was trying to transition into a new role and needed to train his colleague, Sam*, on how to take over some of his current job responsibilities, but Sam was unresponsive.

Russell thought he understood why. There weren’t many opportunities to move up in the small mortgage operations company office where they worked, and Sam, stuck in the same job for two years, was probably feeling stuck and discouraged. He started exercising with Sam to see if he would open up. “We would take breaks and walk up and down the stairs,” he says. Between sets, “he began chatting about his dissatisfaction with the company and I would just listen.”

At one point, Russell asked Sam, “Why are you here?” There were hundreds of similar firms, so why had he stayed at theirs? It’s a question Russell had used in other situations before. “When I identify their motives, I can find ways to coach them. Sam’s response was: “I love the culture, I’m just upset about the lack of opportunity.”

The conversation was a breakthrough because Russell had earned Sam’s trust. Eventually, he started coaching his junior colleague on ways to improve and advance as well as training him in the skills he would need to take over Russell ’s role. Sam was much more receptive and engaged. “It took some time, lots of stairs, and many small coaching sessions but he’s a great employee now and has completely turned his attitude around,” Russell says.

*Not their real names

Designing the Commute of the Future

By Testing. And Testing Again. How San Francisco Is Designing Its Metro Train of the FutureCityLab

The first San Francisco Bay Area Rapid Transit (commonly known as BART) trains first appeared more than 40 years ago to great fanfare. They haven't really changed since. But as Nate Berg reports, the system is on the cusp of change, with between 775 and 1,000 new cars scheduled to begin service in 2017, at a cost of up to $3.3 billion. So how, exactly, do you go about such a massive redesign, which will have profound implications for commuters throughout the city? For one, collect data and survey riders. Over and over again. You test designs and materials, from the "big picture of the car itself to the minutiae of floor patterning and handrail grips," and consider how people behave, so that you can "subtly control rush-hour crowds and all those bicycles."



The details of the story are as interesting as the details of the new cars, which will include “more social, more lounge-like” spaces for commuters. So read the whole thing, keeping in mind a particularly memorable quote from Aaron Weinstein, BART's chief marketing officer: "We're planning on ordering up to a thousand of these cars. We can't really afford to be wrong."

Let Us Now Praise…Tim Cook Interview: The iPhone 6, the Apple Watch, and Remaking a Company's CultureBusinessweek

It's just about a week after the big Apple event, which means it's time for an exclusive with the company CEO. Businessweek's Brad Stone and Adam Satariano do a heck of a job exploring how Tim Cook, essentially assigned the role of filling Steve Jobs's impossibly big (and perfectly designed) shoes, fundamentally changed Apple’s inner workings. Without the changes, many of the iPhone 6 and Apple Watch features wouldn't have been possible. Among Cook’s actions: firing one of Jobs's "most trusted lieutenants" in order to "break down walls" between hardware, software, and services.



To be sure, some say Apple doesn't have the same allure, and others chafe at Cook's discipline when it comes to finances and supply chains. But his management of the company – from organizational structure to smart acquisitions – has earned him praise. He's "the hallmark of a modern-day CEO," says IBM chief Ginni Rometty, whose company partners with Apple to sell iPhones and iPads to corporations. "It's all about the clarity of vision and knowing what to do and what not to do."

A Question for Our Time Does Not Checking Your Buddy’s Facebook Updates Make You a Bad Friend?Pacific Standard

True, social media gives us new ways to be friends, but it also continually creates new ways for us to make social blunders. Writer Paul Bisceglio discovered this when he was hiking with a friend he hadn’t seen for months and the friend complimented him on a few recent stories. “I began to panic,” Bisceglio says, because he hadn’t been following the friend’s posts or tweets.



As a reality check, Bisceglio asks a recent high-school graduate about the etiquette of following friends. The reply isn’t reassuring: Updates are intended to keep close acquaintances in the loop, so “it can almost be kind of an insult when a friend that you haven’t seen in a while doesn’t know what’s going on in your life because they aren’t looking at your profile or feed.” But is it Bisceglio’s duty to read his buddies’ social-media output? Maybe the expectation of being followed is the new boorish. Maybe “the person who insists you favorite their post about morning traffic or like an Instagram photo of their lunch is actually the one being a bad friend.” —Andy O'Connell

The Story of an Air Conditioner What Happens When Crowdsourcing Stops Being Polite and Starts Getting RealFast Company

Thanks to my very persistent significant other, I'm the proud owner of an Aros air conditioner. Invented by an IT consultant, shepherded by a start-up called Quirky, and manufactured and sold by GE, it is both nice to look at and incredibly efficient. But it turns out the magical story of my magical air conditioner isn't quite what I thought it was. While Quirky boasts a fairly democratic process that prioritizes crowdsourcing, there's a bit of controversy: Because of GE's production and sales needs, the air conditioner was pushed to market without group consensus. This has caused ire among Quirky's loyal community, and one member claims he came up with the invention first but was ignored. This all raises a question, says writer J.J. McCorvey: "Is there a point at which a helpful crowd gets in the way of success?"

ProbablyWill Portland Always Be a Retirement Community for the Young?New York Times Magazine

American cities are trying hard to lure college-educated young people, offering such amenities as tax breaks and cheap housing. But few communities can match the appeal of Portland, Oregon, which has been able to attract and retain that crowd at the second-highest rate in the nation, behind only Louisville, Kentucky. OK, but so what? Those smart young people aren’t exactly putting the Portland economy into overdrive.



Because there are so many of them, and because there isn’t much industry in Portland, a good number of the city’s young citizens aren’t working, and wages are relatively low. Those who are employed make 84 cents for every dollar earned in other cities. People seem willing to accept the lousy job market as the price of a beautiful coastline, mild winters, trendy restaurants, clean air, and urban planning so breathtakingly intelligent it makes the “heart sing.” But will this labor glut hang around now that the economy is heating up elsewhere? It remains to be seen whether Portland’s young and restless will move on to less-cool places where jobs are more plentiful and the pay is better. —Andy O'Connell

BONUS BITSHealth and Well-Being

Remember the CEO Who Quit to Be a Dad? He's Loving It. (The Wall Street Journal)
Professional Networking Can Make You Feel Physically Dirty (The Washington Post)
When You Can't Afford Sleep (The Atlantic)

Will Oracle’s Co-CEO Setup Work?

Larry Ellison announced yesterday that he was stepping down as CEO of Oracle, the company he co-founded in 1977. In his place, Oracle presidents Mark Hurd and Safra Catz will share the CEO role. Ellison will remain chairman of the board and will still serve as chief technology officer. Cue the Ellison retrospectives. But what about the company’s future? Can co-CEOs work?

While research has found that the market seems to like the co-CEO arrangement, there isn’t a clear-cut answer on its effectiveness. But a paper published earlier this month at least presents evidence on how to do it badly: the least successful co-CEO arrangements are those where the two executives are actually equally in control.

The paper, published this month in the Strategic Management Journal, looked at 71 public companies in the U.S. and collected data on executives’ salaries, tenure at the firm, stock ownership, and position on the board. Using a weighted average of these four metrics, they created a proxy for the power balance between co-CEOs — the bigger the gap in pay, tenure, stock, and board positions, the greater the imbalance between co-CEOs. They then compared firm performance, using return on equity, to that balance of power.

It turns out that the larger the power imbalance, the better the firm’s performance, even after accounting for several other variables like the company’s level of debt, number of employees, and the number of years that the two CEOs had worked together previously. While this analysis can’t technically speak to how co-CEO arrangements compare to just a single CEO, it isn’t encouraging for those sharing the role. Two equals running a company does not appear to be a strategy for success.

There is a caveat. Although the most successful firms in the sample had a significant power imbalance between co-CEOs, the relationship was curvilinear, meaning that firm performance dipped a bit at the very highest level of power imbalance. So while co-CEOs as equals seems like a bad strategy, an extremely large power imbalance between co-CEOs isn’t great either.

Last year we published a post on shared leadership by David Heenan, a Georgetown professor who wrote a book on the topic called Co-Leaders. As he put it:

What is evident is that sharing the role causes some confusion and inefficiency… The most productive relationships between No. 1 and No. 2 executives, we believe, are those of a leader and a chief ally. They may seem like buddies, even peers — but they remain committed to the principle of one-voice or single command. There has perhaps been no better example of this than the nearly five-decade partnership between Berkshire Hathaway’s legendary chairman Warren Buffett and his trusted sidekick, vice chairman Charlie Munger.

Perhaps the dip in performance for the very most unequal co-CEOs in the paper’s sample violated this principle, with the imbalance causing acrimony and undermining the executives’ relationship. It’s not hard to see how that could happen. Intentionally installing two CEOs with one more in control than the other — but not too much more in control — is a difficult needle to thread. All of which may make you wonder why Oracle went this way in the first place.

The elephant in the room here is Ellison’s ongoing role as chairman and CEO. Given those roles and his status as co-founder, it seems possible that there will be three top executives in the mix — it may even be Ellison who has the power imbalance over his new co-CEOs. If that’s the case, it might work after all.

To Change Employee or Customer Behavior, Start Small

Across industries, organizations can greatly benefit from making tiny changes in their processes to take into account how employees and customers really behave — including not liking being told what to do. Our research and that of others has discovered that even some small tweaks can have a big impact.

For example, consider what Google does in its cafeterias to encourage employees to adopt healthier eating habits. When “Googlers” reach for a plate, they encounter a sign informing them that people with bigger plates are inclined to eat more than those with smaller plates. The sign doesn’t tell them what to do, but it does guide them to move in a healthier direction. The result: Small-plate usage has doubled, to 32% of all plate traffic.

Google also switched the way dessert is offered to employees. Instead of having Googlers transfer dessert from the serving platter to a plate on their own, Google prepares plates with three-bite desserts. Those who want more dessert have to return to the line for a second plate, a structure that makes people think twice before over-indulging.

As Cass Sunstein and Richard Thaler write in their book Nudge: Improving Decisions about Health, Wealth, and Happiness, there are many opportunities to “nudge” people’s behavior by making subtle adjustments to the decision-making context. This approach to improving outcomes is a central theme of behavioral economics, the discipline that combines lessons from the fields of psychology, judgment and decision making, and economics to generate insights into human behavior that are more accurate and robust than any one of those fields could provide on its own.

Behavioral economics teaches us that people, despite their best intentions, do not always make rational decisions, even when it is in their interest to do so because the circuitry that the human brain engages to reach decisions is hard wired and difficult to alter. While the suggestion to change an organizational process often evokes fears of a costly, drawn-out campaign requiring a deep level of support from a lot of different internal and external constituencies, it turns out that very simple interventions can produce powerful changes for individuals and organizations.

Consider the research that one of us (Francesca) conducted with her colleagues Dan Cable of the London Business School and Brad Staats of the University of North Carolina’s Kenan-Flagler Business School on onboarding, integrating new hires into the organization. At many enterprises, new employees are told on the first day or week of work how members of the organization are expected to act and receive a lecture on the company’s history. Then, they typically learn about their particular jobs and are taught their scripts — the prescribed processes and behaviors they need to master to be successful on the job.

While this one-way, didactic approach encourages newcomers to be productive and controls what they will do in the short term,  Francesca’s and her colleagues’ research shows that it does not produce the most productive, innovative work environment in the long run. A better approach starts by asking newcomers a simple question: “Who are you when you are at your very best?” Behind this question lies a different philosophy of employment, one based on a psychological insight: People have a built-in drive to do what they do best naturally and to be recognized for it. This type of self-expression makes us feel authentic and alive. It also leads us to be more engaged at work, more productive, and more committed to the organization.

In a project conducted at Wipro, the business-process-outsourcing firm, Francesca and her colleagues designed a change to the onboarding process based on this psychological insight. They asked some of the newly-hired service representatives to reflect on their strengths, their uniqueness, and how they could bring those out in their new jobs. Rather than feeling alienated and anxious in their new work environment, new employees who engaged in this process felt they could be themselves at work. This difference led not only to lower employee turnover but also to higher performance as measured by customer satisfaction.

A large retail company wanted employees who were taking medications for chronic conditions to switch from picking up prescriptions at retail pharmacies to having prescriptions delivered to their homes by mail. Home delivery saves money for the company and for employees; it is more convenient; it offers superior safety; and it encourages high medication adherence.

When financial incentives for adopting home delivery caused only about 5% of these employees to switch, the company tried a different tack. People lead hectic lives, so they may not get around to taking up a program like home delivery even when the program is in their best interest. To combat this inertia, the company told employees that they had to make an “active choice”: They could choose to adopt home delivery or could choose to stick with retail pick-up, but they could not take advantage of the prescription benefit plan unless they actively indicated (over the phone, over the web, or by mail) which option they wanted. The result: About 40% of employees opted for home delivery, generating millions of dollars in savings per year, which were split roughly equally between the employees and the firm.

As these examples show, instead of trying to change the way people think, we should change the environment in which they are making decisions. These changes need not involve a lot of time and effort to implement; in fact, very simple adjustments can produce powerful benefits for individuals and organizations.

How Philosophy Makes You a Better Leader

The goal of most executive coaching and leadership development is behavior change—help the individual identify and change the behaviors that are getting in the way of, and reinforce the behaviors associated with, effective leadership.  But what about the beliefs and values that drive behavior?

The benefits of introspection and reflection on one’s own character and beliefs receive less attention in a typical coaching session than the benefits of behavior change. Perhaps this is not surprising in our fast-paced and technology-driven business world, where there is little time to stop and think, and where people want (and are paying for) immediate outcomes.  Despite growing recognition of the benefits of “mindfulness” activities (such as yoga and meditation) and an introverted style, self-reflection on philosophical issues—such as values, character virtues, and wisdom—is relatively neglected.  Executive coaching and leadership development programs rarely include much, if anything, about the power of clarifying one’s philosophical world-view. But there is mounting evidence that they should.

Neuroscience research on self-reflection supports this notion. A recent study reported in BMC Neuroscience revealed that a critical brain region—the anterior cingulate cortex (ACC) —was activated during self-reflection tasks. The ACC is essential because, as the researchers noted, it can “detect discrepancies between the actual and the desired state,” “mediate integration and evaluation of emotional, motivational, and cognitive information,” and “modulate attention.” Activating the ACC via self-reflection, in other words, can promote business success by helping leaders to identify their values and strategic goals, synthesize information to attain those goals, and implement strong action plans.

Clearly, most self-reflection doesn’t occur in laboratory settings—it must be adapted to the C-suite and other work situations. An exciting way to do this in a focused and intensive manner is via “philosophical counseling.” A growing international movement, philosophical counseling has been called “therapy for the sane” because it helps rational, mentally healthy individuals to clarify their world-views and goals in the face of challenges and transitions. Philosophical counselors and their clients engage in structured conversations that incorporate self-reflection on values and goals. Drawing on ancient philosophers of Eastern and Western traditions (from Socrates to Confucius), as well as contemporary philosophers, it supports people’s development of their own personal philosophies and empowers them to reach their highest human aspirations and ideals.

Consider a CEO who demeans his colleagues by rolling his eyes at them, interrupting them, and otherwise devaluing their roles. He now faces a thorny ethical challenge for the company, one that could damage its financial position and reputation. The CEO has nowhere to turn to discuss the dilemma, because he has alienated his executive team. Philosophical counseling could help him to curtail his obnoxious behaviors and improve his “positivity ratio” by facilitating self-reflection on his character and values. A CEO client in this situation found that contemplating the writings of an ancient philosopher (Socrates) and a 20th century philosopher (Habermas) empowered him to implement an enhanced process of dialogue, consensus building, and “communicative rationality” with his leadership team. Philosophical reasoning, coupled with positive behavior changes, positioned him to lead the firm through a treacherous time.

Philosophical self-reflection is essential at inflection points in one’s career, when a leader faces a serious challenge, dilemma, or crisis. How can leaders benefit from this kind of self-reflection without necessarily entering into a formal engagement with a philosophical counselor? They first need to pause and contemplate their core values. The works of a range of philosophers, (female and male, from many cultural traditions) can help. As an example, I often suggest my “SANE” mnemonic, drawing on key questions posed by preeminent Western philosophers: Socrates, Aristotle, Nietzsche, and the Existentialists.

Socrates: What is the most challenging question someone could ask me about my current approach?

Aristotle: What character virtues are most important to me and how will I express them?

Nietzsche: How will I direct my “will to power,” manage my self-interest, and act in accordance with my chosen values?

Existentialists (e.g., Sartre): How will I take full responsibility for my choices and the outcomes to which they lead?

This is no academic exercise, but should have “cash value” in the real world. By reflecting seriously on these questions, the CEO discovered a structured format to handle the financial and ethical dilemma facing the firm. He realized that he viewed “respect for others” and “modesty” as among his core values and desired virtues, prompting him to curtail his demeaning behaviors and hold productive discussions with his team about next steps. This ultimately yielded a consensus and reasoned decision-making. By taking responsibility for reflecting on his values and choices for how to collaborate, the CEO completely transformed the situation and solidified his leadership role.

Like “mindfulness” activities, self-reflection requires time and effort. But it doesn’t call for an intentional shutting down of thought. Instead, it requires the leader to think rigorously about profound philosophical issues like value and purpose. The reward of self-reflection is what Aristotle called phronēsis (“practical wisdom”). Contemplating timeless philosophical values can fuel timely behavior changes in the service of growth and lasting success.

Finding Entrepreneurs Before They’ve Founded Anything

Venture capital is slowly but surely becoming a more data-driven business. Although data on private companies can sometimes be scarce, an increasing number of firms are relying on quantitative analysis to help determine which start-ups to back. But Bloomberg’s venture capital arm, Bloomberg Beta, is going one step further: it’s using an algorithm to try to select would-be entrepreneurs before they’ve even decided to start a company.

I asked Roy Bahat, head of the fund, to tell me a little more about it, and just how good an algorithm can be at picking out entrepreneurs.

HBR: Tell me a little bit about the fund.

Bahat: Our fund is backed by Bloomberg LP, the financial data and news company. We were created a little bit more than a year ago because Bloomberg recognized that there was something special happening in the world with start-ups. And really the only way to have a productive relationship with what I call a “day zero start-up” is to invest in them, because many of them are too early to take on big corporate partnerships, or they’re still figuring out what they’re doing. And what’s unique about start-ups now is that in past decades, you could wait a while and watch a start-up develop before you decided how important it was. Today, in a blink of an eye something can go from two people nobody ever heard of to a significant force affecting business; hence, you have to get involved earlier. The fund invests for financial return not for quote-unquote “strategic value.”

Tell me about the program with Mattermark.

We started to think, was there a way to get to know people even earlier? And we’d seen what companies were doing with predictive analytics to predict and select their customers using data. And so we just wondered: before a founder explicitly became a founder, could we predict that and develop a relationship with them? And so together with Mattermark, we built this model based on data from past and present venture-backed founders and we used it to try and predict, from a pool of 1.5 million people, the top 350 people in Silicon Valley and New York, which is where we’re focused, who had not yet started a venture-backed company but we believed would do so. And so that’s what we did and we reached out to them.

What factors are you drawing on that you believe are predictive?

It’s drawn from a variety of public sources. It’s mostly people’s professional background. So the factors are things like: Did you work for venture-backed company? What role were you in that company? Educational background definitely plays a role.

But what’s interesting about what it predicted is the predictions absolutely were not the caricature of a typical start-up founder. For one, the groups skewed older than the caricature of the typical start-up founder. For example, we found that being in the same job for a long time — even a decade or more in the same company — was not a disqualifier.

Second, it was an incredibly diverse group. Even though we collected zero demographic data, the output of the model was an incredibly diverse group and when we held the first event in San Francisco, it was one of the more diverse rooms that I had ever been in at an event in the technology industry. And that was just really gratifying.

And then the last thing I’d say is it was actually less engineering concentrated, less technical than we expected. We expected it to be virtually everybody having CS degrees and that kind of thing. And while many people worked at technology companies, the proportion of people who were business people was actually quite high. Having a business background actually turned out to be highly correlated with starting a venture-backed start-up.

Once you had this model, what did you do next?

We held a kick-off event in San Francisco and another in New York. The funny thing was a bunch of people who received our email saying, “You’ve been selected as a future founder” thought it was a scam. And so a bunch of people just simply didn’t believe it, but then eventually they started to realize that actually we were completely serious.

We realized in those first few conversations that the most valuable thing in the program is the relationship they can form with each other and with actual start-up founders. And so we started hosting lunch once every other week with a small group of these future founders and some of our portfolio companies and friends in the industry and it’s been great. The response has been terrific.

Our goal with them is to simply support them in achieving what they want to achieve in their careers because whether or not they end up starting a company, these people all have enormously high potential and some of them might end up being executives who we partner with at other companies. Some of them end up being recruits for our portfolio companies. Or some of them might end up inspiring us with ideas and being friends.

Is there a tension between looking for existing patterns of founder success using data and looking beyond the traditional paths? You don’t want to just reflect back whatever biases might already exist in the data.

Yeah. That was one of our huge worries. Of course, you can’t be exclusively data-driven. This is a business of creativity and invention. One of our worries about this future founder group was that if you use the data from past founders to predict future founders, they’re all going to look exactly the same. They’re going to have the same background. They’re going to be identical. And it just turned out not to be true. It’s interesting. When you look at the backgrounds of those founders and applied the model to new people, you ended up with a surprisingly diverse group because the data doesn’t discriminate.

How will you gauge whether this works?

It’s already worked. We’re getting to know wonderful, unusual people with a wide range of backgrounds. They’ll go places.

Is UPS Making Big Money on All Those Amazon Packages? Not Quite

Amazon’s sales volume and its dependence on UPS have grown so great that packages from the e-commerce giant account for as much as one-third of the delivery company’s residential loads, says the Wall Street Journal. But don’t assume that UPS is getting rich on all this business: To provide free shipping to Prime members, Amazon has driven hard bargains with deliverers, and UPS’s average revenue on each internet-related package is dropping. One former industry executive doubts UPS’s margins are as high as 5%, the Journal says.

Mobile Money Is Driving Africa’s Cashless Future

The evolution of African markets faces significant barriers: cost, distance, and a lack of infrastructure. Less than 30% of the population have bank accounts, and even fewer have credit cards. Informal retail and cash purchases are the norm, and that has its risks and costs. The amount of cash in one’s pocket at any given moment drives purchasing decisions. With no means to track sales, little data is available, and channels are too fragmented for companies to forecast production and distribution with any degree of accuracy.

Many companies are taking advantage of this opportunity to steer emerging African economies toward a mobile-driven, cashless (or cash lite) future by introducing a plethora of new products, services, and business models. Financial services in Africa are experiencing a moment of exciting change. While U.S. consumers are just being introduced to Apple Pay, mobile money services like MPesa and MTN Money have been flourishing in African markets. More people have mobile money accounts than bank accounts in at least nine African countries, up from four in 2012. And the continent as a whole leads the world in the adoption of financial services on the mobile platform.

In Rwanda, Uganda, and Ghana, mobile service provider MTN has taken the lead by launching ATMs where customers can withdraw cash from their MTN Money accounts without a bank card (they send a message, then receive a one-time-use PIN on their phone). Other mobile service operators are also vying to release innovations to help customers pay for things without cash, receive money from abroad, and obtain micro loans and insurance products. With barely any legacy infrastructure or status quo to be overcome, the existing commercial landscape feels ready for disruption.

Three distinct factors are driving this transformation. First and foremost is the desire for financial inclusion. Africa’s unbanked majority needs access to affordable tools for savings, loans, and credit. The second is the need to lower the costs and risk of retail and trade based primarily on cash transactions. The third is the introduction of cashless policies from regulators in countries like Nigeria, Kenya, and Ghana. Low consumer confidence in traditional financial institutions also makes this an opportune moment for new players to enter the solution space. And cellular technology is leading the way.

Bankelele, an award-winning Kenyan blogger on all things banking, shared some pragmatic insights from Nairobi, the heart of Africa’s mobile money revolution: “People seem to trust the mobile operators more than they do banks,” he said. “Transparency and consistency in transaction costs have a lot to do with this. If they have 400 shillings in their mPesa account, they know that it will still be there six months or even a year later, but bank accounts seem to eat away their comparatively meagre savings with all manner of fees and charges.”

This has been driving ever closer relationships between banks and mobile operators. One of the best known is Equity Bank of Kenya launching an MVNO (mobile virtual network operator) through Airtel Africa’s mobile infrastructure to provide an entirely new distribution channel for all their banking products. They rolled out their own SIM card to give their extensive customer base (8.7 million at last count) secure mobile banking, and they also distributed 300,000 smartphones to the retail trade. So now, Equity Bank account holders can pay for purchases with a swipe of their phone and access a wide range of financial products much faster and cheaper.

Steep transaction costs for receiving money from relatives abroad has also led to more experimental startups like BitPesa, which is testing a service to transfer money from the UK to Kenya. They convert bitcoins, purchased through their website, into Kenyan shillings, and then send those to any Kenyan mobile money wallet. Econet Wireless is another mobile operator laying the foundation for an entire suite of such services and paving the way for a cashless future for their customers in Zimbabwe.

These trends are not limited to customers. Numerous solutions are popping up to help small traders and merchants convert to this emerging cashless future. KopoKopo, a Kenyan startup, provides software solutions that facilitate and incentivize merchants to go cashless. They set up a digital payment network and mechanism for a merchant to accept digital payment, and then they offer Business OS tools to manage everything from analytics to credit to marketing to supplier payments. And South African start-up Nomanini has developed a small portable PoS terminal specifically designed for the micropayments – such as to buy a bus ticket – prevalent in the informal economy.

Adoption of these services is still unevenly distributed, as people resist switching from the familiar and flexible interpersonal transactions to electronic ones. But the possibilities for ecommerce and consumer marketing are enormous. Nigeria’s ecommerce market alone generates $2 million worth of transactions per week, and online transactions are expected to cross $6 billion by the end of 2014. Interestingly, the fears regarding Ebola and Boko Haram are driving more people to shop online (and stay at home). E-tail could help consumer goods companies leapfrog the need for extensive distribution infrastructure, something consumer product companies are already exploring.

Still, as Bankelele cautions, consumer confidence and trust must be built through transparency and honesty, and interoperability and seamless transactions between banking institutions are still a ways off. There is time for the African consumer markets to come into their own, offering consumer-facing companies breathing room to consider the impact of these changes on their market entry strategies.