Marina Gorbis's Blog, page 1374
August 29, 2014
Spy Novel or Start-Up?
Fans of burner phones, secret credit cards, code names, and general espionage, look no further than your friendly neighborhood car-sharing start-up. According to The Verge, Uber (the company where you sit in the back seat) is waging an outlandish war on Lyft (the company where you sit in the front seat and parade about town with a giant pink mustache in full view). The gist is this: Contractors, known as "brand ambassadors" (these Uber advocates aren't actually company employees, but that’s a whole other matter), allegedly use their burners to summon Lyft rides. Relying on a playbook (a version of which The Verge published), they then, according to The Verge, try to lure drivers to Uber. A contractor can supposedly earn $750 for turning a driver. The program, in all of its glory, is known as SLOG.
Why would a company use such drastic tactics? Good question. In a blog post, Uber says, "We never use marketing tactics that prevent a driver from making their living — and that includes never intentionally canceling rides." The Verge's Casey Newton, who broke the story, suggests it comes down to which company consumers think of when they need a ride: Uber or Lyft. And perhaps it's just an escalation of existing competition: both Uber and Lyft offer bonuses to drivers who switch companies. But burner phones? How The Wire of you, Uber.
The Past Doesn't Seem So Far Away Women at Work Ramparts
Usually we only recommend shiny new stories here. But this Studs Terkel interview collection, originally published in 1974 and recently reprinted by the web site Longform (disclosure: I'm an editor there), is really worth looking back on because the issues women discuss are so incredibly relevant today. Terkel interviews four women — a domestic worker, a 24-year-old receptionist, a factory worker, and a poverty worker — who eloquently describe how they feel about their jobs. They worry about what we now call "work-life balance" — caring for their kids while working long hours, often at the whims of others — the fact that college didn't prepare them for work, the constant interruptions, the endless meetings, the division between management and labor, and, most of all, the desire to do meaningful work. "I don't know what I'd like to do, and that's what hurts the most," says Sharon Atkins, the receptionist, who cries every morning before going to her job. Lilith Reynolds, the poverty worker, adds: "People are intimidated and the system works to emphasize that. They get what they want out of people by threatening them economically. It makes people apple polishers and ass kissers."
"I used to hear people say, 'Work needs to be redefined.' I thought they were crazy. Now I know they're not."
All Sorts of Unfortunate Things What Happened to MotorolaChicago Magazine
Motorola, the telecom giant that introduced the world to Six Sigma, has had a rough decade. Its smart phones make up a mere 2% of the global market. It spun off its mobile phone division, largely at the hands of activist investor Carl Icahn. That division was sold to Google, which later sold it to Lenovo. Journalist Ted C. Fishman traces exactly how all of this happened, and chronicles some of the company's missteps as it went from industry leader to a company just trying to catch up.
Among them: a toxic culture that emerged as the public-safety division plugged along while the emergent handset group reveled in bonuses (my favorite anecdote here involves male models singing "We're in the Money" while painted green and wearing dollar signs); no real urgency in moving from analog to digital; creating dozens of different phones that needed to be adapted to each carrier; partnering with Apple for the Rokr phone (arguably, the experience taught Apple how to make phones, but did little for Motorola); and being late to the smart-phone game even though Motorola held patents for technologies specifically for smartphone functionality.
No Fighting, KidsDon’t Want Me to Recline My Airline Seat? You Can Pay MeThe Upshot
It was the "water-in-the-face" moment heard 'round the internet: Two United Airlines passengers were kicked off a plane over the weekend after one of them installed the Knee Defender, a device that prevents the person in front of you from reclining the seat. After a flight attendant asked him to remove it, an argument ensued that ended with the passenger affected by said Defender dousing the other with (what I hope was) a free beverage. Josh Barro, a writer for The Upshot and frequent flyer, argues that the Coase Theorem, an economic theory, could help figure out who's right here. Essentially, it states "that it doesn’t matter very much who is initially given a property right; so long as you clearly define it and transaction costs are low, people will trade the right so that it ends up in the hands of whoever values it most." In this case, the person who values the space most (Knee Defender guy) would pay the person who has the property right (water-throwing lady) to place her seat in an upright position.
Think BiggerThe Lovers, the Haters, and How They Helped Drive Innovation at Kraft Knowledge@Wharton
Sometimes a breakthrough innovation is staring you right in the face, disguised as an incremental product extension. Kraft Foods had been selling Crystal Light, a line of artificially sweetened water flavorings, in powder form for decades when it developed a liquid version. No big deal, right? At first, the company planned to market the stuff as just a new form of an existing offering. But the company was making a concerted effort to think big — really big — about innovations, so it tried launching the product as an entirely new category. It worked. “You walk into the store today, and there is a whole section of these liquid water enhancers,” says Kraft’s VP for breakthrough innovation, Barry Calpino. The business that was created by the product Mio is now an $800 million segment.
Kraft has continued to invest in the product and the category year after year, because the company’s philosophy is that once you’ve got hold of a good idea, you have to stick with it and put resources into it. “The number-one consistent cause of failure is not investing in a good idea beyond just the launch period,” Calpino says. —Andy O’Connell
BONUS BITSCommon (and Often Terrible) Traps
The Procrastination Doom Loop — and How to Break It (The Atlantic)
The Abrasiveness Trap: High-Achieving Men and Women are Described Differently in Reviews (Fortune)
Break the 'Competency Curse' (The Wall Street Journal)
America’s New Labor Movement
Flip through issues of Harvard Business Review from the 1950s or 1960s, and you’ll see a steady drumbeat of articles on labor relations. But search Google today, and our top hit on unions is from 20 years ago — John Hoerr’s still-interesting “What Should Unions Do?“
America’s public sector has also found new issues to focus on – as Roger Martin has persuasively argued, Democrats now care about the interests of shareholders and investors, and Republicans about top-tier talent.
So I called up Lowell Turner, professor of International and Comparative Labor and Director of the Worker Institute at Cornell, to ask him how labor might adapt to regain its influence. What I learned was that the labor movement in the United States is already adapting — though those changes still fly below the national radar. Through strategic alliances and city- and state-level initiatives, America’s labor movement is already being reborn.
What follows is an edited version of our conversation.
First, a clarifying question. In America, we often treat “unions” and “the labor movement” as synonymous. Are they?
The labor movement is broader. Once upon a time, the labor movement was basically just unions, but today in addition to traditional unions – like the member unions of the AFL-CIO – there’s what people call the alt labor movement, which is things like the National Guestworker Alliance, the National Domestic Workers Alliance and Domestic Workers United, the fast food worker strikes, the Wal-mart workers groups, and hundreds of worker-centers around the country. Today, these parts of the labor movement are increasingly working together.
So is it fair to say, to paraphrase Mark Twain, that the death of the labor movement has been greatly exaggerated?
Yeah, if you’re using a word like “death.” But it has been a long decline for unions over the last thirty years. Unions have declined seriously in both membership and influence.
The primary reasons for the decline are weak labor laws and employer opposition. But I’m not trying to absolve unions from responsibility. Unions did not adapt as well as they could. They were afraid to innovate, and they got away from being a real labor movement to being business unions administering contracts. They held on to their ways too long. But increasingly unions today understand that and are innovating.
That said, there are still 15 million union members out there, and traditional unions are still influential in certain locations. So the labor movement might be weaker in a southern, right-to-work state, but it’s still very much alive in the state of New York, in California, and in some other big states that really matter to the economy.
A lot of the conversation about the decline of unions portrays it as inevitable: the result of globalization, digitization, and so on. If that were true, you’d think they would be on the decline throughout the world. Are they?
It is true that unions are under pressure everywhere. It is also true that employers are going global faster than unions can – although unions are increasingly global, too. But even in that context, Sweden still has 80 percent union density. Almost everyone joins one — it’s essentially automatic. And Sweden’s unions are powerful forces both in the economy and in society.
There are also larger countries where unions are still strong. Germany is an example. Their unions have declined in membership, but they are still a major influence. And Germany is even more integrated into the global economy than the U.S. is – they have higher exports per capita. So Germany also kills the argument that unions and high wages wreck competitiveness.
What is it about German unions that make them more powerful than American unions?
There are a number of factors. There are strong institutional supports in government that protect unions; unions use comprehensive collective bargaining – in other words, they negotiate for whole sectors, not at the firm level; and most importantly there is a system of codetermination anchored in law, which means that workers are represented on company boards and through works-councils. It’s an entrenched, legally supported partnership model.
Now, they do slug it out sometimes. There are occasionally strikes. It’s not a love-in. But when there is adversarial bargaining, they work it out fairly quickly.
It seems like part of the reason we don’t have that sort of system in America, though, is because relatively speaking, we are a center-right country. Is some sort of social change needed before the labor movement can really regain traction?
Think of it this way: who is going to push for that social change? We aren’t going to get fundamental social change without a revitalization of an innovative labor movement. Look at the minimum wage campaigns happening now at the state and city level. That’s not happening out of the blue. That’s being driven by an alliance of traditional unions and the alt labor movement and their community allies. And that’s what generates social change.
And realizing they need to be part of a broader push for social change, labor is looking for alliances with other groups. For example, on September 21 there will be a climate march in New York City to demand better policies, and 60 state and local unions have signed on to that. This is new. It’s become a main priority to build alliances with worker centers, immigrant rights groups, environmental groups, and so on. They’re taking a labor movement and turning it into a broader social movement.
Now it’s just beginning, and I can’t predict the future. But there are possibilities here.
It seems like part of the problem for labor is getting more working people to see themselves as potentially involved. You mentioned that Sweden’s workforce is 80% union – so obviously, it’s easy for workers there to see themselves as potential union members. Does America’s labor movement need to broaden its base of potential customers, essentially — convince people like me to join, say, a magazine editors’ union? Is it partly about broadening the focus to include higher skill, or higher wage workers?
Well, a lot of it is focused on lower wage, lower skill jobs because that’s so much of America’s work force. I mean, Wal-mart is our biggest employer. So a lot of the focus has to be pushing up the low end. But the other part of the focus has to be expanding the middle.
Would that help, do you think, with the resentment we so often see when there’s, say, a teachers’ strike, and the reaction is, “Why are they complaining? Their benefits are better than mine! They have job security! They’re better paid and they get more vacation!”
So many workers get less than they should – it’s unfortunately easy to play them off each other. But that’s where the labor movement has a responsibility to bring people together and say, “It’s not that teachers are getting too much – it’s that you’re not getting enough. So let’s get you more.”
Are there any historical parallels that might indicate what would really jumpstart a stronger labor movement? I think a lot of people were surprised that the 2008 financial crisis really didn’t seem to have much of an impact, the way the Great Depression did.
No one could have predicted what would happen in the 1930s – the rise of mass production and the spread of unionism to the point where we we had 35% of workers belonging to unions by the 1950s.
The circumstances are ripe for change right now. But [organizing] is more difficult than it was then. It’s a more fragmented labor market. You don’t have the big factories where organizers could come in and unionize the whole shop in one go. We’re not going to have another New Deal, and American employers have many tactics today to keep their workforces nonunion.
Then, after the crash of 2008, instead of galvanizing people, what it really did was scare people. So many people were thrown out of work or lost their houses, and even the people who didn’t felt insecure. A Wal-mart employee mentions the word “union” and he’s at risk of getting fired. So really the challenge is about mobilizing enough broad collective interest that it breaks down that fear, so that people can stand up and be counted.
Whatever Happened to Corporate Stewardship?
In November 1956, Time magazine explored a phenomenon that went by various names: “capitalism with a conscience,” “enlightened conservatism,” “people’s capitalism,” and, most popularly, “The New Conservatism.”
No matter which label one preferred, the basic concept was clear: Business leaders were demonstrating an ever increasing willingness, in the words of the story, to “shoulder a host of new responsibilities” and “judge their actions, not only from the standpoint of profit and loss” in their financial results “but of profit and loss to the community.”
I decided to dig out this piece and reread it after news broke this week that Burger King is buying the Canadian coffee-and-doughnut chain Tim Hortons for about $11 billion. Once the acquisition is complete, Burger King plans to move its headquarters north of the border, where the statutory tax rate is lower than in the United States, in a maneuver known as an inversion.
The company has denied that it would get much, if any, tax relief from the deal and insists that it is acquiring Tim Hortons for a legitimate strategic reason—namely, to accelerate expansion in a super-competitive industry.
In this case, the Home of the Whopper may well be telling the truth. Yet whatever Burger King’s actual motivation, it’s not surprising that some people have reacted strongly, condemning the company as a “traitor” and urging a boycott of its restaurants. What they’re really responding to, deep down, is a growing sense that most American corporations care (to use Time’s phrasing from 1956) only about the profit and loss on their income statement, but not about profit and loss to the community.
Back when Time published that essay, big companies prided themselves on taking care of a full range of constituents: their shareholders, yes, but also their customers, their suppliers and their workers. Indeed, most large employers, as well as many smaller ones, began in the 1950s to forge a social contract with their employees that would solidify over the next decade or two: rising wages, guaranteed pensions, good healthcare benefits and stable jobs.
Like their 21st century successors, top executives of the ’50s weren’t typically fans of Washington playing too large a role in the economy. Implicit in the corporate social contract, in fact, was the view that most working people would find the security they were looking for as participants in the private sector, not as wards of the public sector. Companies practicing what was once called “welfare capitalism”—not the welfare state—would meet the bulk of their needs.
Nevertheless, Time asserted, “the majority” of businessmen in the Eisenhower era had come to realize that government “welfare programs help store up purchasing power in the hands of the consumer.”
“Unemployment compensation is desirable,” the magazine quoted Gaylord A. Freeman Jr., vice president of the First National Bank of Chicago, as saying. “Social legislation can add to the totality of freedom, increase the dignity of the individual.”
Few if any businesses—then or now—would willingly shell out more to Uncle Sam. General Electric, for instance, crusaded 60 years ago against what its president, Ralph Cordiner, termed “excessively high taxes.” But the company, which famously touted trying to serve the “balanced best interests” of all its stakeholders, also made a point of paying what it owed “with no bargains asked,” as GE vice president Lemuel Boulware put it. This, he said, was part of being “a good corporate citizen.”
Make no mistake: GE, where Ronald Reagan shaped much of his Washington-is-the-problem ideology as a corporate pitchman for eight years beginning in 1954, wanted smaller government. Still, it wouldn’t have dreamed of not paying its share.
Today, by contrast, GE does all it can to escape taxation, in large part through “innovative accounting that enables it to concentrate its profits offshore,” as the New York Times characterized it. And it is hardly alone. The Senate Permanent Subcommittee on Investigations has exposed how Microsoft, Hewlett-Packard, Apple, and Caterpillar, among others, have all used various tax-avoidance strategies.
Of course, the social contract between employer and employee began to fray in the 1970s, and it has since been totally ripped apart. Myriad culprits are to blame, including rapidly advancing technology, heightened global competition, the weakening of unions and, perhaps more than anything, a horribly misplaced mindset that has elevated stockowners above all other groups.
“For some time now,” says David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, “the ‘shareholder uber alles’ mantra has been crowding out the old-fashioned stakeholder notion.”
What sometimes gets lost in the discussion, though, is that this shift hits employees and communities not only directly but indirectly. The very same forces that have shredded the corporate social contract—once a robust private safety net—have also driven companies to deploy every possible tax shelter, thereby cutting their contributions to the public safety net. In all, the Tax Policy Center cites estimates that “nearly $1 trillion is held by U.S. corporations abroad, accumulated over time from booking income in low-tax countries.”
It is easy to overly romanticize 1950s corporate America. People of color faced terrible workplace discrimination at that time, as did women. Late in the decade, many big companies hardened their stance against organized labor, hastening its steep decline. Business culture could be rigid and stifling—the world of The Organization Man. Fear of communism and socialism, as much as altruism, was often at the root of corporate generosity.
But for all the faults of that period, an ethos has been lost. The University of Michigan’s Mark Mizruchi, in his book The Fracturing of the American Corporate Elite, describes it as “concern for the well-being of the broader society.” Notably, Mizruchi points to the 1956 Time article as a good representative of the ideas that then “dominated in the corporate discourse.”
“The majority of Americans support private enterprise, not as a God-given right but as the best practical means of conducting business in a free society,” pulp and paper executive J. D. Zellerbach told the magazine. “They regard business management as a stewardship, and they expect it to operate the economy as a public trust for the benefit of all the people.”
I think Zellerbach’s observation about what the American people expect of business remains essentially true in 2014. What has changed is the way that so many companies have turned so far away from this philosophy. That change makes Time’s portrayal seem like it’s not just from another age but from another planet.
Let Your Employees Bring Their Interests to Work
Research repeatedly suggests that levels of employee engagement in the workplace are low and worsening. But what really perplexes executives when we talk to them is that their employees are often fully engaged in a host of other activities.
Among the growing perplexed population is Mark Barnes (not his real name), vice president of a marketing company. When we spoke with Mark he was becoming increasingly frustrated at the behavior of Jennifer Moline (also not her real name), his most talented employee. “She is intelligent, great at her job, and highly creative,” said Mark. But he was troubled by the feeling that Jennifer was not 100% engaged and, perhaps more so, by the fact that he didn’t understand why and didn’t know what he could do.
Like any manager keen to maximize the potential of a great employee, Mark went out of his way to learn more about Jennifer. He talked to her and her colleagues. He saw that she and her fellow workers merged their private and professional lives. Jennifer, he learned, was passionate about the role of women in the workplace and was active in one of Sheryl Sandberg’s Lean-in circles. If he had taken his research out of the office, Mark would have found that Jennifer felt very strongly about her local identity and bought her vegetables from a local organic cooperative; at the same time, she was concerned about global issues and invested her savings in Indiegogo, a global crowdfunding platform. Mark might also have noticed that Jennifer continuously received messages from numerous global and local LinkedIn groups, was a member of a local choir, and had recently started a book club with like-minded friends.
Mark and Jennifer are not alone. Executives and their employees have raised these issues with us in classes and on consulting assignments throughout the world. We live in tribal times. What matters for people like Jennifer is peer recognition of one’s contribution to a common goal in a small community.
The choice for people like Mark is simple: think about tribes in your organization to engage your employees and maximize their potential – or risk losing your best talent as they continue to engage elsewhere.
How we identify with others
Tribes are defined as a group of people who feel emotionally connected, share a mutual interest, and organize different aspects of their personal and professional lives jointly, with the goal of fulfilling a common objective that is good for the community. Tribes used to be formed on sameness, whereas today’s tribes are more often based on common interest or a shared purpose. New tribes do not provide us a permanent shelter to guarantee our survival, only a temporary space in which to act with other individuals who share a common goal. Thanks to technology, people can now belong simultaneously to multiple tribes. The high interconnectivity makes it difficult to identify who belongs to what group, but it makes collaboration between tribes a more likely strategy than competition.
Adherence to tribes is highly individualized. Some strongly associate with their identities of origin, those given at birth – for example, being a woman or a Latino. Others feel weak ties to their identities of origin, but have very strong identities that can be labeled aspirational – being ecological activists, for example. Some, like Jennifer, feel equally strong ties to their identities of origin and those of aspiration – she feels very happy working in a women’s group as well as contributing to a new global community of LinkedIn. And while Jennifer would be pleased with any women’s initiative her company organizes, some of her female colleagues may not be as engaged, or might even reject them.
Faced with such challenges, what can companies do to tap into employees’ tribal senses of identity? And how can they use that to improve engagement? In the work on diversity and innovation we have conducted over recent years, we came to understand some of the keys of tribal thinking, and how some companies are successfully leveraging it.
Tribal thinking inside an organization
Thinking tribal means embracing community without renouncing universality. For executives like Mark Barnes and their organizations, successful engagement of employees in this new tribal reality will be defined by their capacity to understand the tribes emerging inside and outside their organizations. It will mean offering a flexible structure and blurring the line between the two – in other words, allowing employees to bring the external tribes, which they’re engaged in, into the company. Giving employees this freedom to explore and apply their multiple identities and interests at work can result in innovative ideas and profitable new initiatives or business opportunities. Our research suggests there are critical elements of the new tribal paradigm that organizations need to understand: primarily, allowing employee tribes to come together and accommodating a multiplicity of them within your company.
Allowing tribes to form and act on a shared purpose
An interesting example of a tribe coming together and demonstrating high engagement is the case of Dana, the women’s division of the Abu Dhabi Islamic Bank in the United Arab Emirates. Its female employees shared a purpose – wanting to help others. They became aware of a specific need among their clients, and it brought them together to build a product that could be used for their community – Banun. These women employees realized the need of their divorced clients to open accounts in the name of their children without the signature of their husbands as required by the law. Once the need was detected, the managers consulted with the Shari‘a division that also asked for advice to Shari‘a Board, and after some discussions, they agreed to create the Banun account.
The core elements in the cases of Dana are straightforward – being Muslim and women. However, core elements around a tribe are not always equally explicit. Sometimes the common thread is a passion. In these cases of “identities of aspiration,” companies can create the context of possibility, within which tribes can emerge, and then monitor the emergent tribes and react quickly to their needs.
Accommodating a multiplicity of tribes and their ideas
If organizations want to use the tribal force, new forms of management styles are required as the example of Everis illustrates. Everis, a multinational consultant company that offers consulting, IT, and professional services, shows how companies can use employee engagement as a constant fuel for company innovation. In the tribal era, employees’ ideas represent their passions, needs, desires, and even their identities. The company’s “Everis Initiatives,” lets employees come together to develop business ideas without having to leave the organization.
First, an initiative is presented to a team, consisting of 8 partners and 8 managers, for evaluation. If the idea is approved, the group behind it will be granted the necessary time to develop their business plan. The company will offer coaching sessions to help them in the development process and facilitate the capital needed to launch the project and sustain its financial needs for a period of five years.
In 2010, Everis Initiatives received the seventh annual Expansion and Employment Award for Innovation in Human Resources. Eight of its ideas have become stand-alone companies – among them Exerelia, a company specialized in the design, implementation, and management of integral and technological solutions in the field of energy efficiency.
Dana and Everis, represent very different cases of tribal understanding that can provide some useful insights for Mark Barnes in the initial example. First of all, we recommend Mark should see in Jennifer the potential of her individuality but also of her multiple identities. Mark should talk with her to learn about her multiple identities. Then he can explore how her multiple groups can be brought inside the company, or how the company can collaborate with some of her outside affiliations. These could take many forms. He could ask her womens groups how the company’s services can be more adapted to women’s needs. Perhaps he could have her local ecological groups collaborate in some aspects of the company’s services. Through an open continuous dialogue, Jennifer would be more inclined to bring her rich outside world into her work – and this would keep her engaged in the office.
An employee who feels engaged and integrated in a company is not only a brain; she or he represents multiple groups that can help design new products and services, distribute them, and consume them at the end of the day. Moreover, some of the employees’ tribes can collaborate in different aspects of the business and offer ways for the company to collaborate in other businesses. In the emerging collaborative economy, thinking tribal is mandatory.
To Feel Greater Power, Add Some Decibels to the Bass
Research participants who listened to a generic piece of music with the bass turned up 15 decibels reported greater feelings of power than those who heard the same music but with the bass turned down 15 decibels (an average of 6.06 versus 5.15 on a 7-point dominant-feelings scale), says a team led by Dennis Y. Hsu of Northwestern University. Moreover, the feelings lasted after the music had stopped. Listening to heavy bass tones and other kinds of powerful music may be an effective and convenient way for people to activate their personal sense of power, the researchers say.
5 Tips for Off-the-Cuff Speaking
If it’s true that many people fear public speaking more than death, it’s equally true that businesspeople are condemned to a thousand small deaths in client pitches, in boardrooms, and on stage. And that death can turn slow and torturous when you are asked to speak unexpectedly with little or no time to prepare. One of the key demands of business is the ability to speak extemporaneously. Whether giving an unexpected “elevator pitch” to a potential investor or being asked at the last minute to offer remarks to a sales team over dinner, the demands for a business person to speak with limited preparation are diverse, endless, and — to many — terrifying.
I became more comfortable with these situations through one of my primary activities in college, competitive public speaking called “forensics” (from the Latin “forensis,” which means “in an open court, public”). In forensics, one of my favorite categories was “limited preparation” in which we were given between 1 and 30 minutes to prepare a 5–7 minute speech. The lessons learned in those limited preparation events have paid huge dividends to my work in business. They carried me through my first consulting case interviews right out of college. They’ve helped me address complex questions from bosses and board members. And they’ve helped me when I’ve been put on the spot to address college classes and new analyst training sessions.
No matter their position, they can also be useful to you. Here are a few of the tips I picked up along the way:
Define a structure: The pressure of extemporaneous remarks comes from their ambiguity. What do I say? What do I not say? The worst and most stressful business speeches are those that ramble without purpose. In forensics we’d tackle this issue by quickly drafting a structure on a notecard to support our main point — often an introduction, two or three supporting points, and a conclusion. With these on paper, it was easy to fill in the details with stories, examples, and statistics. Now, when I’m asked to offer unexpected remarks over dinner or at a board meeting, I grab a napkin, notebook, or the back of a PowerPoint deck and jot down my main argument and some key supporting points. Then I fill out the examples and data I need to make those points — usually in 20 words or less. Any ambiguity or tendency to ramble evaporates.
Put the punchline first: When I worked in consulting, one of the cardinal rules of communication was “punchline first.” Any presentation should have a clear thesis stated up front so that listeners can easily follow and interpret the comments that follow. I can’t tell you how many times I’ve seen business presenters ramble through a speech with the audience wondering to the very end about the point of the comments. Giving a good business speech is not like telling a good joke. Don’t save the punchline for the end.
Remember your audience: All it takes is a few lines to make an audience feel acknowledged and a speech feel fresh. Tie the city in which you are speaking into your introduction. Draw parallels between the organization you’re addressing and one of the stories you tell. Mention someone by name, connecting them to the comments you’re offering. These are small gestures, but they make your remarks more tailored and relevant.
Memorize what to say, not how to say it: How many times have you practiced exactly how to say something in your head then frozen up or completely forgotten in the moment? In forensics speeches, we’d often have 5–10 citations to remember, 3–4 examples with names and places, and 3–4 supporting statistics. That’s a lot to research and remember in 30 minutes or less. The trick was this: We’d focus on memorizing key stories and statistics, rather than practicing our delivery. If you spend your time on how to say something perfectly, you’ll stumble through those phrasings, and you’ll forget all the details that can make them come alive. Or worse, you’ll slavishly read from a PowerPoint or vertical document rather than hitting the high points fluidly with your audience. If you know your topic, the words will come.
Keep it short: Blaise Pascal once famously commented, “I have only made this letter rather long because I have not had time to make it shorter.” While it seems like the challenge of speaking with limited preparation would be finding enough to say, the opposite is often true. When at a loss for words, many of us underestimate the time we need — cramming in so many stories and points that we run well over our time and dilute our message. No one will appreciate your economy of words more than your listeners, so when in doubt, say less.
There’s no substitute for practice in offering impromptu remarks, and there are many things to consider when preparing for a great talk. But mastering a few basics, like those above, can make these public comments less stressful to prepare and easier for audiences to hear.
August 28, 2014
What the Lending Club IPO Means for Business
Lending Club, a San Francisco-based peer-to-peer lending start-up, filed for an IPO yesterday, hoping to raise half a billion dollars at a $5 billion valuation. The company’s original focus was personal lending – individuals borrowing a few thousand dollars here and there to pay off credit card bills or fund a home improvement project.
But as of earlier this year, the company has expanded into the world of commercial loans, specifically for small businesses. To understand why, one need only look at the state of America’s community banks:
Former SBA administrator and HBS professor Karen Mills wrote about this for HBR earlier this month, arguing that the decline of community banks has threatened small business lending in the U.S. That’s the opportunity that Lending Club and others are hoping to exploit.
Lending Club matches lenders and borrowers, and charges both for the service. It also assesses risk, so that lenders don’t have to. Prospective borrowers are evaluated based not just on credit score, but also factors like debt-to-income ratio, and what the borrower plans to spend the loan on. In this way, the loan process is streamlined and automated, cutting down substantially on transaction costs.
The peer-to-peer lending industry has attracted significant venture capital, led by the nearly $400 million that Lending Club has raised. As of earlier this year, peer-to-peer lending platforms had raised three times as much VC as had crowdfunding platforms like Kickstarter and Indiegogo.
And, as The Wall Street Journal reports, the Lending Club IPO will likely be followed by public offerings by similar lenders, some even more focused on the small business credit market.
But the “peer-to-peer” moniker is misleading – this isn’t crowdfunding. According to Mills’ research, “most [peer-to-peer lenders] are large institutional investors such as hedge funds and investment banks.”
That’s not necessarily a bad thing. Individuals picking specific companies of any kind to invest in are a recipe for disaster; just look at day traders, almost all of whom lose money. And institutions are typically better suited than individuals to take on risky investments in small businesses.
Wall Street’s involvement is more impressive once you consider that larger financial institutions have traditionally been hesitant to back small businesses because each deal requires costly due diligence and individually offers only a small return.
Lending Club and its competitors aren’t creating a wholly new marketplace where neighbors fund each other. Their value is in convincing deep-pocketed financial institutions that small business loans aren’t a waste of time.
Smart Watches: Ravishing, and Creepier than Google Glass
Samsung’s new Gear S smart watch, introduced yesterday, is ravishing. The sexy, curved screen, the fact it’s a 3G phone, the 4GB of storage. It may well inspire that techlust that periodically sends hipsters and Valley bros into a tizzy, like the iPhone, or Google Glass.
The initial lust for Glass, though, has given way to skepticism, even rage. We’ve marked “Glassholes” as a kind of tech bully for whom consent to be evaluated and recorded and published is a priori. Some people are so uncomfortable with Glass that they’ve created devices to jam its wi-fi when it’s nearby.
As creepy as Glass can be, a smart watch is far more insidious, because it creates the same asymmetric power dynamic as Glass–I control the space around me and choose what data is captured and distributed–but in a far less conspicuous way. Wearing Glass is still unnatural and easily identifiable. Wearing a watch isn’t. As devices sink into our our clothes and our selves, the privacy implications of their capabilities become more pressing to talk about, and control.
So be prepared for stories about diners who don’t like their service surreptitiously recording interactions with waitstaff and posting to Facebook. Expect stories of disgruntled employees capturing the behavior of colleagues and using it as whistle blower fodder. Corporate spies must be salivating over these things.
At this point, those same hipsters and Valley bros have likely lined up their counter arguments to privacy advocates’ concerns. Let’s take them on one-by-one.
Anything you can do with a smart watch you can already do with a phone. This is true, and also not a justification to plow forward unthinkingly. The conversation about moral and legal boundaries of device usage should also apply to phones (which are also becoming ‘invisible’ to us) as much as any other device that allows for non-consensual data gathering.
People will get used to it and adapt, just like they did with smart phones. Probably true, but why can’t adaptation include conversations about appropriate and legal use to ensure privacy, especially as technologies like smart watches push the boundaries of invasiveness combined with anonymity or invisibleness.
You can’t stop technological progress. The progress crutch is as facile as it gets. The fact that we can introduce a new or improved technology doesn’t provide de facto license to do with it whatever we want. To understand why, just apply that logic to drones, cloning, or guns.
You have no privacy. Get over it. Along with its companion proposition, “If you have nothing to hide, why do you care?” this is one of the most common, and most vapid, anti-privacy arguments, because it’s based on a mistaken notion of what privacy is. Privacy is not a tallying of what information is kept hidden versus what’s out there. Privacy is an individual’s right to selectively decide what is revealed. A company can have ensured my privacy and also have a map of my genetic material, if they’ve given me the choice to divulge that to them first.
Smart watches are coming. They’re beautiful. They may rapidly pass Google Glass in deployment. If Glass haters are serious about their resistance to the technology, they should reserve some of their social disdain, and innovative counter measures, for a technology just as powerful, but far less conspicuous.
Privacy’s Shrinking Future
Scott Berinato, senior editor at Harvard Business Review, on how companies benefit from transparency about customer data. For more, read “Pushing the Limits of Personalization” in the September 2014 issue of HBR.
In America, Labor Is Friendless
I imagine that labor is feeling quite wistful about Labor Day 2014. It has been a while since labor, especially organized labor, has had much to celebrate. And the prospects going forward aren’t particularly bright.
Real wages for production and non-supervisory workers have declined since the mid-1970s. The share of jobs that are unionized has plummeted back almost to the level it was before 1935 when the National Labor Relations Act (NLRA) facilitated a huge increase in unionization. High unemployment has persisted in the jobless recovery. For those fortunate enough to have full time employment, job security is down, and pension and health benefits are shrinking. No trend for labor is positive.
Worse still, it is arguable that its longtime friend in Washington has abandoned traditional labor. Throughout most of the 20th century, labor could count on having the Democratic party squarely in its corner. President Roosevelt rode to the rescue of labor in 1935 with the NLRA to fight back against the corporations who were subjecting labor to hostile, dangerous, insecure and low-paying workplaces. Throughout most of the rest of the 20th century, a Democratic presidential hopeful could not dream of winning the party’s nomination without gaining the endorsement of the President of the AFL-CIO – who always had a key speaking role at the Democratic Convention.
Meanwhile, the Republican Party battled on behalf of capital, supporting right-to-work states, deregulating industries, and lowering tax rates. That was the 20th century alignment.
It began to change at the end of the 20th century. A key marker occurred in 1992 when President Bill Clinton signed into law a tax change that allowed only the first $1 million in CEO compensation to be deducted for corporate income tax purposes. It was supposed to discourage corporations from paying their CEOs more than what was then thought to be an excessive $1 million (imagine that!) – and failed spectacularly as they were given stock options instead, which made them wealthier than ever before.
But in whose favor was this measure intended? Labor? Hardly. There was no obvious benefit to them. Capital? Yes indeed. Shareholders were complaining about CEOs demanding ever-higher compensation – and the Democrats responded to help capital reign in CEO talent. Arguably the attention to the needs of capital has continued in the Obama administration. This administration featured enthusiastic embrace of the TARP bailouts of banks that protected their shareholders first and foremost and the continued low interest policies that favor capital owners. Of course, the argument can be made that these policies help labor too, by avoiding a recession/depression. But the careful attention to capital first is a relatively new behavior for the Democrats.
Meanwhile, the Republican Party has increasingly shifted its allegiance to high-end talent, a tiny offshoot of labor that began to emerge around 1960. During the Reagan era, for instance, they cut the top marginal income tax rate from 70% in 1980 to 50% just two years later. By 1988 it was 28%. In seven years, an executive earning a million-dollar salary went from keeping $340,000 after federal taxes to keeping $725,000. That’s quite a raise. (The marginal rate for labor — median-income families — fell only about 10% over the same time-span.)
Republicans have also defended private equity investment managers in maintaining the favorable capital gains treatment that their carried interest fees are accorded by the tax system. While hedge fund managers and the like are often seen as representatives of capital, in fact they ought to be considered high-end talent: their investor-customers are in fact the representatives of capital. The GOP even went as far as putting forward a card-carrying member of the high-end talent class, ex-strategy consultant and private equity manager Mitt Romney, as its Presidential candidate in 2012.
So in the modern economy, capital has the Democratic Party as its friend and high-end talent has the Republican Party as its new BFF. But who wakes up in the morning thinking first of labor, even Monday morning on Labor Day? Arguably it is no one. Labor is on its own politically in America in the 21st century – and that can’t feel too comforting.
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