Marina Gorbis's Blog, page 1370
August 27, 2014
The Power of the Odd Price Ending in Assuaging Buyers’ Guilt
When two equally functioning laptops — one visually attractive, the other less so — were priced at $600, research participants were pretty much evenly split over which to choose; but when the computers were priced at $599, 85% chose the attractive one, says a team led by Jungsil Choi of Cleveland State University in Ohio. The apparent reason is that a price ending in “99” conveys a discount image, which assuages buyers’ anticipated monetary guilt over making a purchase that would feel good as well as be useful.



Unpredictable Work Hours Are Stressing Too Many People Out
In the modern workforce, control over your time is a valuable form of currency: for many, it’s an equal aspiration to getting rich (if it’s any proof ,“control your time” has almost 200,000,000 more mentions on Google than “make more money”). And yet as jobs become ever more dependent on online connectivity and technology, more of us are losing control over our time.
Workers at the top and bottom of the economic spectrum feel the loss of control dearly, and technology is often the culprit. Whether it’s a buzzing smartphone or software that tracks our whereabouts, the more hard to predict our schedules become, the less real flexibility many of us have.
Researchers, company executives, and advocates fought for decades to increase workplace flexibility. I remember my own initial experience of it: my Blackberry and VPN didn’t yet feel like a yoke, but rather a truly empowering instrument that allowed me freedom to work on my terms. Now, the fight for flexibility feels like a red herring, masking the huge erosion of agency over our own time, whether at work or not. What if it’s not about flex, but about helping managers and workers set good boundaries, so that we all feel a reasonable level of control over our lives? What if the problem isn’t one of flexibility, but variability?
Today, workplace flexibility is the goal for many firms and its implementation is increasing across the board. But we can no longer kid ourselves that increased “flexibility” is enough to cope with increasing work variability. Here are two powerful examples, from opposite ends of the income spectrum.
Retail workers are often forced to work hours that may seem flexible but in truth are just highly variable. Software that helps retailers optimize staffing against levels of store traffic creates chaos for working families, as New York Times reporter Jodi Kantor so vividly illustrated in a recent story featuring days in the life of a Starbucks barista, Jannette Navarro. Kantor writes, “in interviews with current and recent workers at 17 Starbucks outlets around the country, only two said they received a week’s notice of their hours; some got as little as one day.”
From a corporate perspective, scheduling software takes a time-consuming task away from store supervisors and does it much more efficiently. Using analytics to schedule workers on an as-needed basis saves labor costs and also ensures adequate staffing during peak periods. But are the upsides enough to compensate for the havoc wreaked on workers’ lives? Starbucks quickly promised to revise its scheduling practices so that work hours must be posted at least one week in advance.
While the problem is vastly more challenging for those at the bottom of the economic ladder, those who work in well-paid, white collar jobs also feel the effects of variability. Employees at Boston Consulting Group, one of the most elite workplaces there is, suffered the stress created by lack of control over their work hours. Deborah Lovich, a BCG Partner who engaged Harvard Business School Professor Leslie Perlow, writes: “The big problem wasn’t so much the long hours and incessant travel. Our consultants expected that when they joined BCG. Rather, Perlow discovered, it was the complete lack of predictability or control they had over their daily lives.”
“When consultants woke up in the morning, they literally had no idea how many hours they would be putting in that day. When Perlow asked them in the morning how long they expected to work that day, they underestimated by up to 30 percent. For data-driven people like us, those numbers really hit us.” Lovich worked with Perlow to offer BCG employees predictable time off. Simple interventions, such giving team members more control over how they define their schedule, raised productivity and intent to stay with the company.
Whether we are low-paid hourly workers or highly-salaried professionals, we are witnessing a shift: What was originally a case for greater flexibility has morphed into a need to control increasing variability.
In the end, it’s control over your day that empowers people and gives satisfaction at work. We all must have control over our time in order to function and create solid families and normal lives. Jannette Navarro’s lack of control over her shift schedule helped cripple any sense of routine for her son, and made basic steps towards gaining a leg up, such as getting a driver’s license or finish her education, impossible. Leslie Perlow’s work with consultant teams found lack of control over one’s schedule drives dissatisfaction and turnover.
Those who have been influential in demanding workplaces with greater flexibility need to think holistically about what happens next. Leaders in work redesign not only have to make work more flexible, but make work hours more predictable.



August 26, 2014
The Best HR Departments Don’t Just Focus on People
Over the past decade or so, the talent paradigm has gained considerable momentum in the HR field. Think of all the books out there on the subject, all the talent management consulting practices that have proliferated, and all the talent-management functions now operating within HR departments—not to mention the HR departments that have renamed themselves to focus on talent.
The trouble is that “talent” focuses on optimizing individual contributions, and the more we emphasize individuals over the organizations, the more HR will lose the very impact it’s taken 25 years to build—as a strategic enabler of organizational performance.
Among the many brilliant insights in Adam Smith’s Wealth of Nations is that economic organizations come into existence because of their ability to coordinate labor to make the whole greater than the sum of individual laborers’ parts. The essence of organization is to coordinate and enhance the effectiveness and efficiency of individual efforts.
“Talent” focuses on ensuring that companies have the individual talent necessary to achieve their purposes. Certainly this is a critically important agenda for any organization. However, by focusing primarily on individual contributions, the talent movement, by definition, succeeds in making the organizational whole equal to the sum of the parts. This overlooks the central contribution of organization to make the whole greater than the sum of the parts. It is this integrating and leveraging function of organization that creates sustained competitive advantage.
Labor economists have long known that over time major competitors will have hired roughly the same raw talent. In your hiring processes, you will win some and you will lose some. The critical issue is not the individual talent that you have; the competitive advantage resides in what you do with the talent once you have it. And that is an organization issue. This is not to say that you can let up for one minute in striving to have the best talent. But if HR focuses primarily on talent, its ability to create competitive advantage is limited.
Obviously the tools, practices, and processes that create effective organization are substantially different from those that optimize talent. For example, If optimizing talent is the agenda, then an HR department will probably hire HR professionals with individual-oriented psychology backgrounds. If optimizing organization is the agenda, then a department is more likely to hire HR professionals with backgrounds in business and economics. The latter two disciplines are the ones that focus on making the organizational whole greater than the sum of the parts. To be truly effective, most HR departments need to balance the individual and organizational focuses.
Yes, HR must ensure that the foundation of talent is in place. That puts HR in the game. But the game is won by creating competitive organizations that can beat the competition. With this latter focus, HR then creates sustained competitive advantage.



Put the Company’s Interests Ahead of Your Unit’s
Imagine that you’re running retail banking for a large, diversified financial services firm. You are focused on and rewarded for building the retail business. You’re a tremendous success. The CEO makes you part of the senior executive team.
You’re still heading up retail, of course, and you have a few team members who are vital to making your numbers. But they might also help another division land some big accounts that will make a bigger difference to the enterprise as a whole over the long run. As the leader of the retail business, you are, naturally, reluctant to give away a resource. Would you consider handing off a member of your team, and allow your unit to fall short, to benefit the greater good?
If you would, you fit the definition of an “enterprise leader,” the rare boss who has the insight and discipline to make decisions not just in the interests of a function or business unit but in the interests of the organization as a whole—even when the greater good conflicts with your specific responsibilities as a unit or function head. Ten years ago I wrote an article for Sloan Management Review about these leaders, and found that they were as valuable as they were rare.
Since that time, I’ve had many conversations with business leaders around the world, and there is near-universal agreement that these people are hugely important to their organizations. But they remain in short supply.
Why is that, exactly? Recent research ICEDR has conducted with CEOs, HR executives, and enterprise leaders echo those conversations and sheds some light on the reasons for the shortage.
To begin with, it’s not because they’re not needed. If anything their value has become even more apparent. The reasons for this are no mystery: Greater pressure on margins means resources need to be shared more efficiently. The ever-faster pace of business means the right hand needs to know what the left hand is doing. Customers want not just products but often integrated solutions, so divisions need to work more seamlessly together. New competitors come out of nowhere, requiring executives to have a big-picture outlook on their markets and competitive landscape.
So it did not surprise us that in our survey of 67 top business executives from major international organizations, for instance, the vast majority said that developing these leaders is extremely important—and not a single one dismissed it as unimportant or even somewhat important:
Specifically, nearly 45% of our respondents expect between half to three-quarters of their managers to be enterprise leaders. And they want high-potential leaders to start exhibiting these behaviors from a young age. As one top executive at a major international consumer-goods company told us, leaders should be “thrown into the deep end” from the start: the company expects that kind of adaptability from the very lowest rungs all the way to the top.
But where will these people come from? Surprisingly, we found, most respondents reported putting less than 25% of their leadership development budgets—or managerial time and energy—into developing this kind of leadership.
And this was so even though respondents were well aware of the challenge of becoming an enterprise leader. When we asked them what’s preventing people from behaving as enterprise leaders, respondents most often cited conflicting incentives and “not seeing it as a priority.”
In short, top executives value and expect an enterprise mind-set of their people, but they aren’t investing in developing it in them, they aren’t creating the incentives, and they clearly aren’t communicating the need for enterprise leadership to their teams.
Siloed managers aren’t incompetent. Far from it. They are smart, capable, and they deliver results within their own units. But until there is a clear set of incentives and priorities—and a development effort to back them up—they aren’t going to change. And the greater interest of the organization suffers.



Who Pays Corporate Taxes? Possibly You
Who pays corporate income taxes? Just one thing’s for sure: it’s not corporations.
This is because, as Mitt Romney famously put it, “corporations are people, my friend.” They also sell to people, buy from people, and are owned by people. Yes, sometimes you have to dig through layers of other corporations, pension funds, foundations, and the like to get to these people. But they’re there somewhere, trying to avoid getting smacked by corporate taxes.
In econospeak, where the burden lands is called tax incidence. “The cardinal rule of incidence analysis,” UC Berkeley economist Alan Auerbach once said, “is you do not talk about incidence analysis.” Actually, no, he didn’t say that — although this does seem to be the rule that most journalists, politicians, corporate executives, and even economists writing for mainstream audiences follow. What Auerbach did write in 2005 was that “the cardinal rule of incidence analysis” is “that only individuals can bear the burden of taxation and that all tax burdens should be traced back to individuals.”
In the case of the corporate income tax, as the Harvard Business School’s Mihir Desai put it in an interview I recently did with him and his HBS colleague Bill George, “that tax is going to be borne by shareholders, workers, or customers.”
For a long time it was thought the owners paid the tax. That belief can be traced largely to a classic 1962 theoretical analysis by economist Arnold Harberger, who concluded that owners of capital — not just a corporation’s shareholders but anybody who owned some bonds, a house, whatever — bore almost all the burden of corporate income taxes in the U.S.
Harberger saw this as a bad thing. By taking money away from capital owners, the corporate income tax was depressing investment and distorting the economy. But for those more concerned with the distributional effects of taxation, Harberger’s model at least showed the burden landing on people who were wealthier than average.
His theoretical model, however, assumed a closed economy, one in which capital couldn’t flee to other countries and consumers couldn’t buy foreign products. As the world’s economies became more intertwined in recent decades, economists — Harberger among them — began constructing open-economy models that showed workers bearing a larger share of the burden.
This makes intuitive sense. If a country allows free capital flows and free trade and has a corporate tax rate much higher than that of its neighbors, investors can choose to buy shares in companies elsewhere that face a lower tax, and corporate management can choose to move operations abroad. Consumers, meanwhile, can buy from foreign suppliers. By comparison, workers are pretty immobile. It’s hard for them to switch employers, let alone countries. So the tax lands on them, in the form of lower wages and/or skimpier benefits. And as those at the top of today’s corporate hierarchies seem to have done a pretty great job of keeping their paychecks from being adversely affected, the impact is presumably greatest on those farther down in the organization.
That’s the theory, at least. These models are, as Jennifer Gravelle of the Congressional Budget Office pointed out in a 2010 summary of recent theoretical work, extremely sensitive to how open an economy is and how sensitive people are to incentives. Tweak the assumptions just a little, and you can get a very different result.
So in the past few years there’s been a determined attempt to answer the question empirically, with a flurry of new regression studies that dig through data across countries, states, or even 13,000 German communities to suss out where businesses’ tax burden lands. Gravelle has a 2011 summary of this work, and her chief conclusions are that the results are all over the place and the most dramatic ones just aren’t credible. But most of these studies do show some significant chunk of the corporate tax burden landing on workers, which is perhaps not yet conclusive but is really interesting.
Most public discussions of corporate taxes in the U.S., however, still ignore the possibility that workers might actually be the ones bearing the burden. Perhaps this is because other public figures really want to avoid sounding like Mitt Romney. Perhaps tax incidence is just too difficult a concept for non-economists to get their heads around (although I’m not an economist and it seems pretty straightforward to me). Perhaps it’s that the evidence is still so mixed (although that hasn’t stopped economic arguments with far less empirical and theoretical backup from gaining currency in the political arena). Perhaps it’s that the corporate executives who lobby for lower tax rates don’t quite have the chutzpah to argue that this could result in higher wages. Or perhaps it’s just that, if corporations pay lower taxes, individuals have to pick up the slack. And even if you understand tax incidence perfectly well, a direct tax is still more noticeable than an indirect one.



Women Surpass Men as Kickstarter Fundraisers
Women may be heavily underrepresented in the start-up world, but they’re doing well on Kickstarter. In one study, two-thirds of technology ventures led by women reached their fundraising goals on the crowdfunding site, compared with 30% of those led by men, according to the Wall Street Journal. Female-founded start-ups attract support from women who are activists and want to help other women, the researchers say.



Embargoes Work – Just Not the Way We’d Hope
In 1986, Mikhail Gorbachev became the only Soviet leader to grace the pages of Harvard Business Review when a speech he made to members of the U.S.–U.S.S.R. Trade and Economic Council was reprinted under the unassuming title, “Remarks on US-USSR Trade.”
It had been 14 years since President Nixon’s historic trip to Moscow marked the beginnings of détente between the two superpowers. And yet Gorbachev was still able to say, “The volume of U.S. imports to the U.S.S.R. is roughly equal to what your country imports from the Republic of the Ivory Coast.”
Such was the remarkable power of the trade embargo the U.S. had imposed 37 years earlier.
Perhaps no embargo has received greater scrutiny than the 1949 Export Control Act, which was imposed by the U.S. on the Soviet bloc at the dawn of the Cold War. As the U.S. and EU lob economic sanctions back and forth with Russia today, what do we know about the effect they may have? We took a look through our archive to find out how that first one went.
Go back to the start, and the first lesson we find is that, given sufficient political will, unilateral trade embargoes do stop trade, at least bilaterally.
Just as President Obama has done now, the Soviet embargo was actually imposed in stages. In effect it had already begun in 1948, when the federal government started rejecting license applications for shipments of goods to Eastern Europe in a systematic way. The act extended the requirement for export licenses to practically everything shipped behind the Iron Curtain, which the federal government could simply fail to grant. The idea was to bring about a virtual cessation of all trade between East and West.
How did that work out? Three years later, when Nicolus Spulber, an associate professor at MIT’s Center for Strategic Studies, published a detailed analysis in a 1952 HBR article, he finds it working perfectly, and just as the American public thought it was – at least between the U.S. and the Soviets. From 1948 through 1951, the amount the U.S. imported from the Eastern European countries dropped 95%, from $120.8 million to a mere $2.6 million. And the U.S.’s relative importance to the Soviets as a major trading partner plunged to zero.
But it may not surprise modern readers to learn that unilateral action by the U.S. didn’t have much effect on the rest of the world. Spulber finds that Western Europe imported slightly more in 1951 than it had in 1948, despite a U.S. threat to withhold post-war aid to any non-cooperative ally. Undeterred, Spulber finds Western Europe (particularly neighboring Scandinavia) continuing to import iron, steel, copper, lead, zinc, and tin from the Eastern Bloc, and to export heavy machinery, railway vehicles, motor vehicles, and even ships to it. And that was just the legal trade. Predictably, contraband flourished, just as it did during Prohibition. When the U.S. extended its embargo to China, Spulber finds the effort entirely futile, since trade was simply rerouted from Western Europe through Macao and Hong Kong.
The second lesson is that, as a tool of isolation, embargoes are frighteningly effective, isolating embargoer as much as the embargoee. This is what Harvard Law professor Harold Berman found when he examined the continuing effects of the embargo in a 1964 article entitled “A Reappraisal of U.S.–U.S.S.R. Trade Policy.” Fifteen years on, the embargo was still in place (if not quite so firmly, as the federal government was beginning to grant more licenses). But feelings toward it were becoming distinctly ambivalent.
In the previous year, the Soviets had purchased $500 million worth of grain from Canada, in the largest wheat sale in history. They’d offered to purchase $250 million worth from the U.S., as well – an amount, Berman says, that would have gone no small way toward addressing the country’s troubling balance of payments deficit.
Dithering on the U.S. side cut the actual deal in half, and the sale touched off a nationwide debate over whether the U.S. should be trading with the East at all.
“The springboard for the debate,” Berman says, “is the realization that our allies are in fact trading rather vigorously with the East, and there is virtually nothing we can do about it.” — a shocking measure of how well the embargo served to isolate not the Soviets, but the U.S., from the world economy. U.S. trade with the U.S.S.R. in 1962 amounted to $30 million out of a total import-export trade of $36 billion. “Thus it appears that our friends in Europe and Japan – including many subsidiaries of U.S. companies – are deriving considerable economic advantages from trade with Communist countries while we are biting our fingernails,” Berman concludes in exasperation.
The controversy was still raging two years later, as Wellesley economics professor Marshall Goldman recounts in a 1966 article, when the Rumanians approached several U.S. companies with an offer to buy a $10 million catalytic petroleum-cracking plant and a $50 million synthetic rubber factory. These would have been the first large postwar commercial contacts between the U.S. and Rumania. The Department of Defense, which had originally opposed the deal, reversed course when it finally occurred to government officials that if we did not sell the Rumanians this technology, others in Western Europe would. The Rumanians awarded the contract to Firestone.
It is a measure of the state of U.S. public opinion that Goodyear then claimed it had been offered the contract but had turned it down because, it said, “even to a dedicated profit-making organization, some things are more important than dollars.” The conservative Young Americans for Freedom picketed Firestone stores and threatened a massive public demonstration against the Rumanian venture. That was enough to prompt Firestone to withdraw. (Universal Oil Products did ultimately build a $22.5 million petroleum refinery factory in Rumania, perhaps aided by the fact that the company didn’t sell products to the general public.)
Contrast this with the European view of the time, which Berman recounts. “Virtually all Western countries except the United States believe in trade – except in military goods – with the Communist countries [emphasis in the original]. They believe it is ultimately to their own, and Western, political advantage,” he says. It’s important, they argued, as avenue of mutual communication. It makes Communist countries more dependent on the West. It contributes to a higher standard of living in the East, which is good politically since (and here he quotes British Prime Minister Alec Douglas-Home) “a fat Communist is a less aggressive Communist.” And “the stability of international relations requires, as a matter of principle, that countries refrain from waging economic warfare with other countries with which they are at peace.”
That’s the flip side of the argument Gorbachev makes 20 years later when he addresses the U.S.-U.S.S.R. trade council, three weeks after his fateful summit with President Regan in Geneva. If the Europeans were arguing that they wouldn’t engage in a trade war with a country with which they were at peace, Gorbachev is arguing for an end to embargoes and the normalization of economic relations between the U.S. and the U.S.S.R. as a path toward peace.
“Many U.S. businessmen are known for their well-developed spirit of enterprise, a knack for innovation, and an ability to identify untapped growth opportunities,” he says ingratiatingly. “I am convinced that today the best, genuinely promising possibilities of that kind are to be found not in the pursuit of destruction and death but in the quest for peace and in a joint effort for the sake of all countries and peoples.”
Ever since the spectacular success of the Marshall Plan in using mutual trade pacts to end more than two millennia of war between France and Germany, business and governments have put their faith in international trade as a stabilizing force. That view, argues former Clinton White House pollster Nicolas Checa and colleagues in the 2003 article, “The New World Disorder,” is based on two assumptions – “first, that a healthy economy and sound financial system make for political stability, and second, that countries in business together do not fight each other….As people liked to say, no two countries with McDonald’s had ever gone to war with each other.”
That of course is the ultimate irony of embargoes — they’re a tactic aimed at avoiding a fight by not doing business together. Certainly a trade war is better than a nuclear war. But in resorting to a trade war, we give up the only tool that’s ever been known to put an enduring end to actual war (and in this context, the shuttering of three Moscow McDonald’s – including the first one to open in 1990, at the end of the Cold War – is disturbingly symbolic).
Ultimately, the problem with embargos isn’t that they don’t work — as many assume today — but that they do, all too well. Back in 1986, 40 years after the end of World War II, Gorbachev described the U.S. and the U.S.S.R. as “economic giants fully able to live and develop without any trade with each other whatsoever.”
“I regard this as no economic tragedy at all,” he added sardonically. “Both of us will survive without each other, particularly since there is no lack of trade partners in the world today. But is it normal from a political standpoint?”
In hindsight, perhaps he may have had a different answer. But here’s what he said at the time:
“My answer is definitely and emphatically no. In our dangerous world, we simply cannot afford to neglect — nor have we the right to do so — such stabilizing factors in relations as trade and economic, scientific, and technological ties. If we are to have genuinely stable and enduring relationships capable of ensuring a lasting peace, they should be based, among other things, on well-developed business relations.”



August 25, 2014
What Can a Robot Bellhop Do That a Human Can’t?
Years ago, I worked briefly as a hotel bellhop, greeting guests, bringing luggage up to their rooms, and helping them haul it back down again when they checked out. It was social and dexterous work — hoisting skis, snowboards, bags of all sizes; navigating narrow hallways; making small talk and angling for a tip. In other words, the kind of thing that is supposedly hard to automate.
So I was intrigued to read last week about a robotic “butler” being tested at Starwood Hotels’ Aloft line, at its Cupertino location. The “Botlr” can deliver toothbrushes, razors, and similar items to guests’ rooms, replacing the need for human staff to do so.
I reached out to Aloft, and spoke with Brian McGuinness, Aloft’s global brand leader, to hear about the motivation behind the pilot. I expected the usual reasons for automation — cost-savings or increased precision or reliability. Instead, he told me that Aloft is betting that its customers would rather interface with a robot than a person, and that they’ll value proximity to the next big technology. And, of course, that it will free up staff to do more “human” work.
An edited transcript of our conversation is below.
Tell me about the origin of the idea to use a robot in the hotel.
Something like five years ago we created the Aloft brand to appeal to the tech-savvy, the early adopters, the next-generation traveler — the people who wait in line for the next smartphone to be released.
One of our key locations is Cupertino, so, essentially on the Apple campus. And part of our facility there is testing next-generation technology [like] Apple TV in guest rooms [and] keyless entry–the ability to use your smartphone to enter your room without having to go to the front desk to pick up the plastic key.
And Savioke, which is a robotics company, was reading about us and our push for technology around what the future of hotels looks like. They contacted us, and said, “We’re working on a robot, would you be interested?” And we said, “Absolutely.”
We’re starting a formal pilot this week. Over the last four to five months, we’ve worked [with] them on the design of the robot, the functionality of the robot, and really what the overall purpose was. And for us, it was really just to augment the team that’s there and our talent. So, if you call down and you need a razor or some toothpaste or some shaving cream, or a charger for your phone, how could we seamlessly get that up to the customer in an expeditious way, that we hadn’t been able to do in the past?
What will the Botlr be doing — and how will it know where its going?
With our help, [Savioke has] mapped the hotel. The robot is essentially going from the front desk, navigating through the lobby, onto the elevator — it actually has a two-way communication with the elevator system. So, calling the elevator, the elevator is telling it [that] it has arrived and the door is open. The Botlr is boarding the car, going up to let’s say, the fourth floor. The elevator says, “You are now on the fourth floor, the doors are now open,” the Botlr exits, goes to the room. Because of the mapping technology, it calls the guest room and says, “I’m out here, I have your delivery.” [The] customer opens the door, there’s a steel container or compartment, the lid pops open, the customer retrieves their item. The lid actually closes on its own, they get finished, thank you very much, and the Botlr returns and navigates back to the front desk. So, that’s where we are today. It has done many runs to guest rooms from the front desk and back.
What’s been the reaction from the staff?
It’s a relief. This isn’t going to replace associates or our talent. We don’t have doormen or bellhops. Just the front desk agent. Essentially, this is doing the tasks that they would have to leave the front desk and run upstairs [for]. Sending the Botlr on that journey simply means that they’re at the front desk serving a customer in a better way. You all have seen those clocks in windows or at the desks that says I’ll be back in five minutes. We’re essentially negating the issue.
And quite frankly, it’s better work. They’re working more closely with our customers from a personalization perspective of the guests’ stay.
What do you get out of it, in terms of cost or reliability, or what do customers get out of it?
A child’s wonder, I guess. You know, from R2D2 to Wall-E, to Rosie from the Jetsons. It’s just cool. And it’s really neat, and as we look at our associates and our talent and our guests in our hotel when they see it go by, it simply brings a big smile to everybody’s face.
I can imagine at any point when I check into a hotel, a way in which a robot or computer system could be the way that I interface with the hotel. Why this piece rather than the check-in process, or the checkout process, or something like that?
We’re looking at all processes. So, if we talk about keyless — which we have rolling out to our hotels now — which is your ability to make your reservation as normal, land in a city, get a text for your room number, and get a digital key to your smartphone that’s going to unlock your door. So you’re essentially not going to have to check-in. That to me is an amazing opportunity for our customers to experience.
That being said, that doesn’t mean the talent goes away. It means that the talent’s working on making certain that I have a non-smoking king-size high floor away from the elevator. And then I need dinner reservations. So the ability for technology to augment the experience at the hotel and to provide a guest experience that’s differentiated is huge for us.
Tell me what success looks like for Botlr. What would make you think, “This really worked, let’s see if we can bring this robot to some of our other hotels?”
Success to me would be the engagement of the customer and the traveler in our hotel and whether they see a value in it, whether they understand the fun nature of it, and if it’s helping with quicker service. And I think that’s about it. As long as the Botlr is moving around the hotel freely, it’s bringing smiles to customers’ faces, then I consider that a success.



You Can’t Do Strategy Without Input from Sales
One of the best books ever written about selling is David Dorsey’s The Force. Dorsey turns a year in a Xerox sales district in Cleveland into a riveting drama about people, accounts, the operatic highs and lows of the sales cycle, and the triumph of making quota. Dorsey focuses on Fred Thomas and his sales team and the sometimes strange but effective motivational techniques of his district manager, Frank Pacetta. It’s a great ethnographic study of B2B selling for capital goods.
But even as Thomas and Pacetta make their sales, Xerox is missing the larger strategic point, although the facts are staring at them in every office where Thomas and his team make sales calls: more and more copies are being handled by printers linked to personal computers, not by copiers. Thomas is doing his best to maintain Xerox’s share in copiers. But the disconnect between sales and strategy (in this case, a lack of strategy to deal with a technology that is redefining the market and customer behavior) is the hidden subtext of the book.
Even Dorsey, as great an observer as he is, misses it. Instead, he explains that by the mid-1990s Xerox competed with Canon, Kodak, Minolta, Ricoh, Savin, and other copier manufacturers, without mentioning HP, Brother, and other makers of computer printers that were eating Xerox’s lunch. It makes Dorsey’s summation of his story a non sequitur: “A once-thriving American business loses share to the Pacific Rim, gets scared, adopts TQM practices, raises productivity, and begins to win back business. The way the Cleveland district sells copiers illustrates . . . this comeback.” No. How could it be when selling, however clever and creative, is divorced from the main strategic reality facing the firm?
Twenty years later, the real lesson of the Xerox story may seem obvious. But this disconnect between strategy and sales is costly, dangerous – and pervasive. Selling is, by far, the most expensive part of implementation for most firms. Yet, relatively few strategies—some studies indicate less than 10%–carry through to successful execution and, on average, companies deliver only 50-60% of the financial performance that their strategies and sales forecasts promise. That’s a lot of wasted effort and money. Similarly, a recent survey of more than 1,800 executives across industries found that their biggest challenges are ensuring that day-to-day decisions are in line with strategy and allocating resources in a way that supports strategy.
What’s the problem? One big problem is that in business schools, daily practice, and strategic planning, sales and strategy are treated, as in Dorsey’s book, as separate worlds. In academia, there is remarkably little written about how to link strategy with the nitty-gritty of field execution. Few of the many, many books and articles on strategy formulation have much, if anything, to say about the role(s) of a company’s sales channels in executing strategy. In fact, sales advice, if it’s even discussed, usually revolves around a combination of “reorganizing” and “incentives.” But there’s no one best way to organize, and sales reorganizations are always costly and risky because they disrupt established call patterns and client relationships. And appropriate incentives are a necessary but not sufficient cause of getting field behaviors to align with company goals. You ultimately can’t substitute money for management.
What does exist in practice is a vast trade lore (most of it anecdotal but some grounded in good research), mainly from consultants and trainers who believe in a particular selling approach. But they also treat selling in isolation from strategy, and so the focus of much sales training can have a perverse effect: people work harder but not necessarily smarter.
Finally, the planning process in firms generates a disconnect. About two-thirds of companies treat strategic planning as a periodic event, typically as part of the annual capital-budgeting process. Companies tend to do plans by P&L unit, even when Sales (for good reasons) sells across those units. The average corporate planning process takes 4-5 months per year. While this is going on, the market is doing what the market will do, and sales must respond issue by issue and account by account. In other words, even if the output of planning is a great strategy (a big if), the process itself often makes it irrelevant to sales, which is responsible for executing strategy where it counts most: in daily interactions with customers.
Linking sales efforts with strategy is vital for profitable growth and must be a two-way street. In any business, value is created or destroyed in the market with customers, not in planning sessions or training seminars. Without credible sales input, any strategy runs the risk of dealing with yesterday’s market realities, not today’s. Conversely, daily selling efforts—successful or unsuccessful, smart or stupid—constrain and redirect strategies in often unintended ways. Selling in your firm can’t generate sustained returns if it’s not linked to your strategy.



Recruiting Data Scientists to Do Social Good
We know that data scientists are a hot commodity. Businesses can’t get enough of them. That’s great for tech companies that attract talent with stock and benefits, but less so for social initiatives and non-governmental organizations (NGOs) who could use their talent too. Short of asking nonprofits to drain their coffers to make expensive hires, can we find a way to staff their projects? I think so, if we can create a better mechanism to connect people to opportunities.
The going rate for data scientists has obviously soared. It’s a far cry from the labor market in place when I first got hooked on data some 20 years ago. When I arrived in Boulder Colorado as a 21-year old computer science exchange student from East Germany, I had one overstuffed suitcase to my name and a place on the dorm room waiting list. Email was virtually unheard of, and I certainly didn’t envision the day I’d be able to Skype with my family back home. My enrollment in a course on “artificial neuronal networks” (taught by a man who would later become Amazon’s first Chief Scientist, as well as my good friend and mentor) made me a particularly strange kind of geek.
The dramatic change in compensation since then is not the only reason that social organizations struggle to get good data scientists. To attract them and keep them engaged, a workplace also has to offer several less tangible things: a community of data scientists to work with and bounce ideas off; an adequate computing environment; ready access to data (without red tape); and access to the details of how the data was collected. Unfortunately, few NGOs can provide any, never mind all, of these things.
Where does this leave social organizations? For the most part, high and dry. Yet we also know that data scientists, like the smartest people in every field, want a sense of purpose. Many hope to apply their minds beyond financial modeling, product recommendations, ad placement, or even disease analysis to do more to make the world a better place. Most are in this game for the fun and challenge. They love hard puzzles and massive data sets – and there is no shortage of these in the social realm. And thus we’re seeing a grassroots movement of data scientists volunteering, after their day jobs, to work on projects in the public interest.
How do they connect with these projects? Occasionally it’s through their for-profit employers. For example, SumAll, a business analytics software vendor, has established its own nonprofit arm so it can “translate the company’s philosophy into tangible social impact.” Sometimes connections are made by other parties. Rayid Ghani, since being involved with the Obama campaign, has run a Fellowship on Data Science for Social Good that brings dozens of data scientists to the University of Chicago to work on analytics projects with nonprofits, local governments, and federal agencies.
Often the connections are made through “challenges” such as the KDD Cup, an annual competition hosted by SIGKDD. (Created by the Association for Computing Machinery, the acronym stands for “Special Interest Group on Knowledge Discovery and Data Mining.”) This year’s KDD challenge was to help the NYC-based DonorsChoose.org, which connects teachers who need specific classroom materials with willing donors. The nonprofit wanted a data-based way to discover what makes teachers’ proposals likeliest to attract funding. The top three solutions, to be announced this week, will win nominal prize money ($2,000 each, and typically donated to charity) – and the satisfaction of being the best of nearly 500 teams competing from around the world. The same motivations drive entrants to UN Global Pulse challenges, always designed to bring data-driven evidence to address problems affecting developing nations.
Hackathons are another format for setting data scientists loose on data problems brought to the table by social organizations. Along these lines, DataKind hosts what it calls “DataDives” – weekend events where pro bono data scientists work collaboratively with organizations to understand and solve problems they can’t meet with their own limited data science resources.
Finally, conferences themselves help make connections, as they always have. This year in particular, the flagship conference KDD 2014 has the theme of “Data Mining for Social Good.” With help from Bloomberg’s philanthropic department, it features speakers from nonprofits taking the stage to describe tough problems they face and invite ideas from the floor. It also extends a matching service traditionally provided to corporate sponsors (identifying data scientists with sought-after skills and providing space to interview them) free to NGOs. The hope is to make rich connections among the NGOs and the 2,000+ data scientists attending from both academia and industry.
Valuable and inspiring work is being done as a result of all these activities. They’re a great start. But to be honest, they target only a tiny fraction of interesting problems, and collectively deploy nowhere near the full capacity of the data science community to do good.
So this is the big question: How can we start connecting socially-minded data experts to important data problems at scale?
I’d suggest that what we really need is a year-round virtual marketplace (perhaps modeled after DonorsChoose) where data scientists can find NGOs whose needs are well-matched to the skills and time they can donate. In fact, some colleagues and I are already working with NYC-based Data Scientists LLC to test such a system.
Will it see the light of day? Will the time come when any data scientist with time to spare can immediately find a socially-valuable way to spend it, and when important social initiatives, focused on anything from local schools to global climate change, can draw easily on a reservoir of expert talent? It might sound far-fetched. But if you came of age, as I did, in an era before email, you’ve long since concluded that such amazing things are possible.



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