Marina Gorbis's Blog, page 1383

Case Study: Should a Female Director “Tone It Down”?

Finally, Sarah thought.

J.P. Offutt, the CEO, had named a time when they could meet.

Sarah was a longtime director of the company that J.P. ran, a Florida-based shopping-center-development group, and she was devoted to both him and his firm.

But board meetings had been tense recently, and J.P. had grown distant.

In Sarah’s opinion, the problem was obvious: Sid Yerby, the CFO. Despite her repeated requests for comprehensive financial statements, he continued to come to board meetings with a mere two pages of analysis that lacked any explanation. How could she or any of the other directors provide fiscal oversight without access to details of the company’s operations or accounting? Increasingly, however, hers seemed to be the minority view, and she was starting to feel isolated.

Some months back, J.P. had told her privately that he appreciated her persistence with Sid. The young and inexperienced CEO confessed that he often felt uncomfortable asking tough questions of the CFO, an industry veteran who was 10 years his senior. It didn’t help that J.P.’s father, Bill Offutt, who had founded the company and remained its chairman, didn’t seem bothered by the lack of documentation.

Sarah, an experienced real estate consultant, had always been happy to help. But the clamor against her from Sid and the other board members was growing uncomfortably strong. In fact, one of her fellow directors had accused her of having a private agenda that included taking the CFO down a couple of pegs. Another said to her face that she talked too much, just like his teenage daughter. Outwardly Sarah balked at this, but inwardly she was intimidated, especially because she was the only woman on the board. Even Bill, who had recruited her as a director, praising her stick-to-itiveness and gumption, had commented that others considered her “pushy.” It was high time, she thought, that J.P. sprang to her defense.

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

 

The Previous Quarter

As Sid clicked through to a liquidity projection slide, Sarah allowed herself a small smile. It was a minor victory, but a victory nonetheless. Two weeks earlier, J.P. had pulled her aside and asked her to stop arguing with the CFO. Initially she was taken aback. Arguing? She was just asking questions. Besides, she’d been under the impression that J.P. wanted her to question and challenge Sid. Nevertheless, she decided to try a new approach: Before the board meeting she called Sid and suggested that his presentation include certain essential details, such as the liquidity projections.

Still, he had to know that the inclusion of a single additional slide wasn’t enough. After Sid finished, Sarah raised her hand. She could hear the sighs around the table. “Sid,” she said, “I want to commend you for the additional information you’ve provided. But as I mentioned when we spoke a few weeks ago, it would be helpful to have even more information. For example, how do our financial ratios compare with the rest of the industry’s? And what about best-, base-, and worst-case scenario projections?”

Everyone started talking at once. Sid turned to Bill with a shrug, as if to say, “You see what I have to deal with?” Bill quieted the room by tapping his pen on the table. “We simply can’t fight over every financial report. Everyone here is an experienced business leader,” he said, using the pen as a pointer. “Avery is the CEO of a trucking company, Louis runs a bank, et cetera. They’re very comfortable reading financial summaries, and they don’t want to waste their time getting into the weeds.”

“But it’s our fiduciary duty to get into the weeds,” Sarah said. “Even though we’ve had a steady rise in our stock price, we’ve been relying more and more on purchasing underperforming assets using floating-rate debt. We’re assuming that the assets will stabilize and we can refinance at lower rates, but that’s a big assumption, and the board deserves more detail about why that’s our strategy.”

Rather than address those issues, Bill ended the discussion and moved on. It burned Sarah up. Fine — she would be quiet for now, but that night she wrote J.P. a letter that pulled no punches, for the first time formally documenting her concerns about the company’s strategy and Sid’s reporting standards, which she felt were far too casual for a big real estate investment trust, or REIT. The letter also asked J.P. for a one-to-one meeting in the week after she came back from a vacation with her husband and their four children.

 

Sisterly Advice

Before leaving for vacation, Sarah had her monthly dinner with her sister Betsy, a biotech entrepreneur. Although they both juggled work and large families, they remained close and engaged in each other’s lives.

It was as Sarah waited for her sister at their favorite restaurant that she received the affirmative response from J.P. She was relieved he’d agreed to meet, but there was a nervous twinge in her gut that wouldn’t go away. The terseness of J.P.’s e-mail unsettled her.

As Sarah greeted Betsy, she tried but failed to wipe the worry off her face.  “What’s wrong?” Betsy asked immediately.

“It’s that board I’m on — the real estate company.” Sarah exhaled loudly. “Did you know we’re now the second-biggest REIT in the country? We own hundreds of properties, and we’re making tons of money. But the management team still wants the company to function like the small family business it was years ago. I can’t tolerate that. And I especially can’t tolerate our CFO Sid Yerby’s casual approach to the numbers.”

“I know. You’ve talked about him,” Betsy said.

“He’s like an overconfident card shark who bets high on a pair of deuces. Nobody calls him on it except me. By the way, many of the times when I’ve grilled Sid over his numbers, it’s been because J.P. asked me to. J.P. once told me he couldn’t run the company without me. But now it seems like he’s giving me the cold shoulder and giving Sid free rein.”

“What exactly is Sid doing wrong?” Betsy asked.

“Well, back in 2011, we made a few big acquisitions that gave us a lot of great properties but also stuck us with billions in debt, most of which had to be financed with short-term paper. The company is now highly leveraged — much more so than any of our competitors. Sid says property values have stabilized, the consumer is back in the saddle, and there’s nothing to worry about. But what if we hit another downturn? No one else seems to be concerned about this.”

She sighed. “All the other directors hate it when I grill him. They think I have some private agenda. But I don’t, except the interests of the company.”

“In all your grilling, have you ever uncovered anything nefarious or illegal?” Betsy asked.

“No,” Sarah replied.

“Incompetent, boneheaded, sloppy? ”

“No, but — ”

“Misguided, rash, questionable?”

“Well, I do think many of his choices are questionable, especially around our leverage,” Sarah said.

“But he did get your company through the mortgage crisis and the recession in good shape, right?” Betsy countered.

“Yes.”

“Well, rightly or wrongly, that might be one reason why you don’t have a single ally on the board.”

 

In J.P.’s Office

Sarah and J.P. sat opposite each other on the short leather sofas in his office. He looked nervous.

“Sarah, you know my own capabilities are limited,” he began. “I don’t know everything there is to know about business, and I never will. And as I’ve said to you before, that’s why I can’t run this company without — ” he hesitated.

Sarah filled in the rest. “Without me. I know. And I appreciate that.”

“No — sorry. Without Sid.”

She stared at him, unsure what to say.

“Sarah, your intellect is very powerful,” he continued. “And your questioning, especially on financial matters, is very informed and insightful. What you have to say is always important.”

“But?”

“But Sid has expressed his frustration with the situation on the board, and in fact he’s prepared to tender his resignation.”

“Really?” This was exciting news, Sarah thought.

“He’ll stay if you, well, as he put it, ‘tone it down and back off.’”

Sarah was stunned. She had to exert considerable effort to bring herself back into the conversation. She realized then that J.P.’s expression showed more resolve than she was used to seeing in him. Was he truly giving her an ultimatum: Shut up or leave the board?

Question: How should Sarah respond to J.P.?

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

Ace the Group Interview

An interview with the board of directors is standard for the CEO, CFO, and nonprofit Executive Director hiring processes, but the group interview approach is becoming more common for many other positions. If you have a group interview in your future, it probably means that you are one of the top candidates for the job, but there are challenges that are specific to these sessions that can make them a tough hurdle to cross.

For one thing, group interviews are far less predictable than their individual counterparts. If you’re interviewing with one person, it’s relatively easy to develop a sense of comfort about what to expect from her; once you have many people in front of you it gets harder to know where they are all coming from and predict what they might ask. Furthermore, more people means that the session will feel more like an inquisition and less like an informal conversation. The dynamic between the interviewers can also present a challenge. There may be factions or disagreements among the interviewers that may play out in front of you. You should be prepared in case your interviewers compete for air time, interrupt each other–and you. Succeeding in this kind of dynamic setting requires preparation and some specific tactics during the session.

To prepare:

Do your own due diligence on the interviewers. If you’ve been working through a search firm, they will prepare you for the meeting, as will anyone who suggested you apply for the position. But do your own research as well: you will come up with actual personal information that you can use to help you break the ice or create affinity with individual interviewers. I’m the mother of twins, and you’d be surprised at the number of times I’ve used that fact to build rapport. If you have been referred to the role by someone in the group, find out from them what they dynamics of the group are: if there are different factions, and if so who is on each and what particularly volatile subjects might be.

Prepare a summary based on benefits. In individual interviews, you typically pick a specific interest area or two on which to focus for each interviewer. In a group interview, you need to round up all your important points and present them everyone at the same time. The best way to do this is to summarize the benefits you bring to the table. Make a list of the requirements that were expressed in the job description as well as any previous interviews you’ve had. Match those needs with your experience and attributes. Those are the benefits of hiring you. (Remember the sales training workshop you went to once that taught you to sell benefits, not features? Don’t just give them a quick history of your work life; those are your features.)

Once you are in the room:

Greet them individually. Don’t just sit right down in your chair and wait to be grilled. Walk around and introduce yourself to everyone individually and shake their hands. This helps to break up the inquisition dynamic. If your interviewers don’t have name cards, write down their names in the order in which they are sitting, so you can use their names when addressing them.

Build bridges. If you were referred for the position by a group member who represents a particular faction, don’t sit next to the person who referred you; instead, sit next to a leader of the opposition. Proximity always defuses conflict. Pay a lot of attention to her throughout the interview. It may be important to have a relationship with this person if you get the job. Start now.

Be friendly, but don’t be a wimp. The temptation in meetings like this one is to duck all controversy and make everyone happy at all times with your answers. This is more challenging the more people there are in the room, and moreover, it’s just not the right approach. Remember they are looking for a leader, so don’t hesitate to push back in your replies. You can always soften the pushback with a question, for example, “What do your clients say about your current marketing approach?” instead of, “It doesn’t look as if your current marketing approach is working.”

Manage the meeting. Think of yourself as the facilitator of the group. If one person can’t stop talking, it’s up to you to turn her off politely. If there is an interviewer who hasn’t had much to say, make a point of letting him into the conversation. Go around the room, if necessary, to make sure everyone has had a chance to be heard. They are likely looking for someone who will listen to everyone carefully and provide the structure for them all to move forward together, and this is your chance to show them you can do it.

Indeed, remember that you are evaluating whether you can be successful in this position if it is offered to you. The dynamic of this interview will continue to play itself out when you have the position and as such is an important indicator of whether you can get the organization aligned and moving in the same direction. On your way home, instead of focusing on how you did, think about how the group did and whether you feel that you can work well with them—that’s the key to your success.

Science Shows Why Marketers Are Right to Use Nostalgia

Nostalgia, by heightening feelings of connectedness, reduces people’s desire for money, says a team led by Jannine D. Lasaleta of the Grenoble School of Management in France. In one experiment, nostalgic feelings increased people’s willingness to pay for desired objects. In another, participants who were asked to draw pictures of coins drew them 10% smaller after writing about a nostalgic event. Inducing warm feelings about a cherished past could bring big benefits for those seeking to part consumers from their money, the researchers say.

What It Will Take to Fix HR

In the July/August issue of HBR, Ram Charan argues that the Chief Human Resources Officer (CHRO) role should be eliminated, with HR responsibilities funneled in two separate directions — administration, led by traditional HR-types, reporting to the CFO; and talent strategy, led by high-potential line managers, reporting to the corner office. While my colleague and I vehemently agree that HR’s status quo is an inhibitor to growth, it is with the same fervor that we disagree with Ram’s proposed solution.

Really? Break up a strategic function in response to underperformance in the wake of severe market disruptions? Put the most strategic pieces into the hands of up-and-comers passing through the leadership-development revolving door? What would the capital markets look like today if a similar tack had been taken when the CFO role was ripe for transformation?

CHROs are standing at essentially the same crossroads that CFOs were, beginning in the 1980’s. Back then, CFOs (inclusive of the role’s predecessor titles) were squarely focused on accounting, controls, and preparing financial and tax statements. Fast-forward to today and the corporate bean-counter of old has become the CEO’s closest partner in driving strategy — and increasingly a candidate for the top job. How did this happen and what can be gleaned from it to inform the transformation of the CHRO?

Let’s think about the realm of the CFO and how it’s changed. As growth became a competitive imperative, business leaders began seeing the firm as a system of investment rather than a system of production. Financial capital was recognized as the scarce resource and its shortage a significant constraint on growth. At the same time, alternative approaches to accessing capital and funding projects proliferated, forcing financial decision-making to become increasingly sophisticated. Those conditions elevated the work of the finance function to the point that, today, the CFO helps to set the course of business, advancing an organization’s growth and improving its competitive position by identifying and resolving key financial constraints. This transformation took time to play out and involved both displacements of incumbents operating in outdated modes and the emergence of new “feeder” roles for those aspiring to the C-suite. A glance backward reveals how radically firms’ expectations have shifted in regard to the CFO’s breadth of background and the caliber of talent the position attracts. Baseline financial skills are still essential, but international experience, industry knowledge, investor relations acumen, technology expertise, and strategic prowess are now just as much part of the package.

Now compare that to the context and condition of today’s CHRO role. These days, the scarcity impeding firms’ growth is not of capital — it’s of talent. Nearly 40 percent of the 312 CFOs and other executives participating in Deloitte’s 2013 Global Finance Talent Survey said they are either “barely able” or “unable” to meet the demand for the talent required to run their organizations. And HR’s credibility deficit doesn’t help the matter. A recent survey of CEOs reveals that HR is overwhelmingly viewed as the least agile function. In our own conversations with CFOs we consistently hear that their attempts to work strategically with HR are the most trying. Business leaders concur, with nearly 50 percent reporting that HR is not ready to lead. Even HR itself agrees. In a March 2014 global survey, HR and talent executives graded themselves a C-minus for overall performance, citing a large capability shortfall, with 77 percent of respondents ranking the need to re-skill the HR function among the top quartile of their priorities.

While we disagree with Charan’s solution, we think he’s on to something when he asserts that the best CHROs have line and/or operational business experience.

Lynanne Kunkel, VP-Global Talent Development and HR-Asia for Whirlpool, is a case in point. After earning a degree in chemical engineering and spending eleven years in production roles at Procter & Gamble, Lynanne was drawn to P&G HR where she spent the next ten years in various roles, before moving over to Whirlpool HR four years ago. What Kunkel is particularly known for is bringing a cross-functional perspective to talent strategy at the consumer products companies she serves. In addition, she believes that a few noted CHROs elsewhere are beginning to set the standard and emerge as top-notch leaders within their respective organizations. “There’s a flaw in the perception that the only thing HR is good for is administration. HR strategy is an expertise that takes years to fully develop.”

The cutting-edge HR leaders we’ve met, like Kunkel, are thinking more boldly and blurring the experience line with a fresh understanding of talent. Couple that with comprehensive functional expertise and soon we’ll have a generation of CHROs that consistently brings and activates strategic, holistic perspectives. What will it take to accelerate the shift within HR and recalibrate the role of the CHRO? We offer three pieces of advice.

Focus most on where strategic value is created. In the early 1980’s, sixty percent of corporate value creation emanated from the optimization of tangible assets. Today, we live in an era where eight-five percent of value creation stems from brand, intellectual property, and people — all intangible assets. Delivering HR-related operational, compliance, and administrative tasks with distinction is important, but let’s be clear that doing so is table stakes. The CHRO must step up to the implications of the new world of work.

Recalibrate and reskill HR to ensure its relevancy. Kunkel says that “while ‘good with people’ may have been the mantra for those attracted to the field in the past, the new mantra should center around the effective use of people to effect intended business outcomes.” Relatedly, organizations need to be deliberate in the design and implementation of development programs aimed at helping HR professionals acquire and hone an increasingly wide range of sophisticated skills, not only in talent areas but also in understanding the dynamics of how the business works, makes money, and competes.

Bring on the quants. For the CFO, analytics is a native language. Beth Axelrod, CHRO for eBay and someone who pivoted from consulting on strategy (as a principal at McKinsey & Company) to running an HR function, acknowledges that HR leaders have traditionally set their agendas based on qualitative metrics and shied away from quantitative analytical tools. That needs to change. Google is probably the best-known case of a company that uses analytics to inform a slew of daily HR transactions and interactions. Its managers use data to determine everything from whom to hire and promote to how much to pay them and what benefits are most valued, all segmented by a variety of contextual attributes. According to Prasad Setty, Vice President of People Analytics at Google, their goal is to have all people decisions informed by data. “We want people, no algorithms, to make people decisions, but we want the decision-makers to make decisions informed by data and analytics.”  Using analytics to drive, design, defend, and activate a growth-oriented agenda will bring newfound credibility to HR leaders, and will be the hallmark of the great ones.

Rethink the division of labor. Bifurcating leadership between those who focus on what needs to get done and those who focus on how it gets done is an effective means for HR organizations to step up to the demands of  today’s talent marketplace and growth challenges. Instituting an HR chief operating officer (COO) role, charged with optimizing how HR services are delivered is an emerging trend. The COO has a clear mandate to drive the design, development and implementation of HR services—optimizing operations while ensuring compliance across HR disciplines. Not only does this role free up the CHRO to focus on strategy and the larger talent agenda, thereby eliminating growth constraints, but it also preserves the crucial cohesiveness of the HR functi0n overall.

* * * * * * *

So, kudos to Charan for starting the conversation.  The problem to which he is responding is real; indeed, as CEOs turn their thoughts to growth again, many will find the gap between the need for talent and the CHRO’s ability to deliver it greater than ever before. Success demands a far more diverse set of experiences and skills. But, as with CFOs before them, the solution resides in CHROs and the teams that support them.  Just as financial management became increasingly sophisticated, so can talent management. CHROs can step up to meet this challenge — and they must, or someone else will step in to do it for them.

The Cardinal Sins of Innovation Policy

It happens every time there’s a big announcement about a national or regional innovation policy that will lead us into the future: We are presented with schemes to strengthen intellectual property rights, enlarge the pool of risk financing, and upgrade the universities while pushing them to collaborate more with industry. If we are truly lucky, we are told about a new science park to be built just around the corner.

There is only one question that is never asked or answered: Why?

Why should a specific place — a region, a city, or even a country — want to have an innovation policy?

This is a nonsensical question, you might argue. It is perfectly clear why: Innovation is the main engine of sustained economic growth; therefore, if you want to ensure a vibrant economy you must excel in innovation.

This, sadly, misses the main difference between innovation policies and economic growth policies.

The aim of growth policies is to entice people or companies pursuing specific, well-developed activities to move to your locale or create businesses there. For example, when Singapore decided to bolster its economy by developing its information and communication industries, it created detailed plans aimed at products such as hard drives. Because the skills and capital equipment needed for these products were well understood, Singapore could strategically allocate resources to achieve its goals. Not only did Singapore achieve rapid economic development; it also was able to upgrade its economic infrastructure so that it could repeat the strategy in newer, more-sophisticated tech fields.

The aim of innovation policies, by contrast, is to foster the development of technologies that don’t yet exist and whose business models and markets are unknowable. Organizations capable of inventing these technologies must be attracted or built, and the result of their labors must be channeled into economic growth. That means we’re not talking about a process of long-term planning but one of continuous experimentation. Policy makers need to rapidly come up with new initiatives, kill those that don’t work, scale up those that do, and then, as a new industry grows, keep changing the incentives in a co-evolutionary process in order to keep pace with the industry’s dynamic needs and capabilities.

Israel is a case in point. In 1968, when Israel decided to build a science-based economy (the concept of high tech didn’t yet exist), there were only 886 R&D workers in Israel’s civilian sector and the country had an R&D intensity (the ratio of R&D investment to GDP) of 1%, the second-lowest in the OECD. Policy makers’ vision was not of specific industries but of an economy whose competitive advantage would be based on continuous invention of products to be sold around the world.

Over the course of more than 40 years of policy experimentation, the office of the chief scientist in the Ministry of Trade and Industry has aided in the creation and stimulation of companies capable of carrying out such invention. Officials identified bottlenecks as they arose and developed policies to relieve them. In the mid-1970s, for example, policy makers realized that entrepreneurs in a mostly poor, quasi-social-democratic society (as Israel was then) might not have the knowledge to develop, sell, and service products for the American market, so they created the Bi-national R&D foundation (BIRD) to finance the joint development of new products by American and Israeli companies, with the U.S. firms focusing on product definition, sales, and service, and the Israeli firms on R&D. Then, in the early 1990s, when Israel already had 4,000 companies with products and revenues but no financiers willing to invest in scaling them up, officials created the Yozma program to kick-start the Israeli VC industry by infusing it with foreign know-how and connections to NASDAQ.

No one in 1968’s Israel knew what technologies and innovations would allow Israeli companies to succeed in 2014. No one even dreamed that a new form of finance, called venture capital, which was taking it first steps in the United States, would prove crucial in changing the Israeli financial environment 30 years later. However, the creators of Israel’s innovation policies had a clear vision of the economy they wanted to develop, were very willing to tweak this vision and their actions to fit the evolving reality, and had a deep commitment to develop a thriving private industry, knowing that their own status and importance would diminish as the industry grew.

Over the past 40 years, each and every case of very successful economic growth based on rapid innovation has been rooted in policy makers’ clear vision of developing an innovation-based economy.

Thus the importance of the “why” question. You need to understand where you are, and where you want to be, in order to know which best practices to apply, where you need to experiment, and when you need to change policy as the industry evolves. If you don’t have a goal, and you are not sure where you are, then you will get nowhere in particular. Applying all the best practices approved by the world’s most prestigious consultancies to reach goals such as patent numbers and R&D intensity doesn’t show that you are an innovation leader. It shows only that yours is a risk-averse society enjoying too much capital.

Innovation needs risk taking and grand visions. The willingness to face multiple failures and undertake repeated experimentation to reach a vision is what separates those who succeed from those who do not.

It is a cardinal sin of innovation policy not to have a vision. It is a second cardinal sin not to be flexible and experimental in turning this vision into reality.

Promoting the Non-Obvious Candidate

Conventional talent-management systems emphasize the need to give high performers appropriate experiences to help them ascend to more senior levels of management. Companies define career paths accordingly and carefully map, often in a linear fashion, the various roles one has to fill to reach higher management ranks.

However, in addition to grooming obvious high performers who are accomplished in a particular domain, talent-management systems should also deliberately look at non-obvious candidates. They are high performers in other domains who do not automatically fit the bill. This may be because they do not have the expertise or experience typically viewed as relevant for the job. But they do have, say, strong leadership skills or a different set of experiences that may be useful in a wider context.

Roles and contexts increasingly call for improvisation as opposed to experience, or resourcefulness as opposed to resources. So bringing in someone who will have a tendency to look at things differently makes great sense.

Placed in leadership positions, such candidates can redefine outcomes for the better. The benefits are often unexpected and interesting.  Here are some examples that we’ve seen at GE:

An exceptionally talented financial controller was moved to head IT and in just a year was able to re-energize the organization. Her strength as a leader helped her to refresh talent, refocus the function’s purpose, and allow IT to reinvent itself as a major strategic partner for the company.
The legal counsel of a business was made a business leader with a substantive commercial focus. His negotiation skills, ability to prioritize, and ability to drive much-needed change allowed the business to recover strongly from a tough patch.
A commercial leader in financial services moved over to a health care business, bringing with her the ability to structure deals and work closely with C-suite executives. Her multi-dimensional perspective and consultative, solution-based approach were extremely well received by the health care business’ customers.

Success in identifying such non-obvious candidates requires HR to focus on strong leadership competencies such as mobilizing change, decisiveness, building teams, vision, and communicating in a compelling fashion.

For the individual, the stretch is radical, not incremental. At GE we believe that most growth happens when an employee shifts into an unfamiliar role and has to exercise all his or her faculties to figure out the new equation and drive change and growth.

Our challenge is to apply this principle across a range of contexts; constant experimentation ensures a vibrant talent pool. Taking bets on non-obvious talent is an art and comes with some risks. For instance, in critical situations, it is not sufficient to consider the non-obvious candidate without first making sure others on the team possess the necessary expertise to provide balance. In addition, pairing the candidate with a manager who is a strong mentor and coach capable of providing air cover as well as guidance is important. Finally, some extra preparation via a bridge role can help candidates more readily transition to their longer-term assignments.

At GE, we have used “integration leader” (of an acquisition) and Six Sigma Black Belt roles to broaden individuals at the mid-management level so they can better adapt to future opportunities. For instance, someone overseeing the integration of a newly acquired company can only be successful if he or she can influence others, empathize with people at the acquired company, and take a broad view of the business, and has strong project-management skills. The HR system for developing a pipeline of talent should be carefully constructed to put individuals in roles like these to broaden their leadership competencies.

When companies bemoan the talent shortage, they often do so because they have not thought about talent in a broader, more holistic way. We need leaders who can face different contexts and situations and handle different roles. By creating a variety of opportunities for leaders to grow, companies will be better able to prepare their talent for the challenges of a fast-moving world.

Why No One Gets Away with Trash Talk Anymore

This summer, a milestone crept up on me—I realized it’s been twenty-five years since I began my career as a professor.  So naturally, I’ve spent some time reflecting on how my choice of profession has worked out.  I spend most of my classroom time with executives who are there because they are unhappy with where they are – or they at least understand they won’t be satisfied for long.  Their hope is that whatever we do together in class will help them find something they’ll find more fulfilling.  How thankful I am that I’ve never had to wrestle with that.

And how grateful I should be to an early mentor whose advice, I would say, led to my good fortune.  I began my career at Louisiana State University in August of 1989.  The department chair had worked hard to hire a cohort of five young faculty members that could help shore up a department that had suffered from attrition.  As newly minted Ph.D.s, what we lacked in wisdom we compounded with inexperience.  The chairman had his hands full.

At some point during that first fall, I was walking across campus with him for lunch and I recall sharing a frustration.  I don’t recall the precise source of it, but I know it led me to want to call someone out for what I felt was a grievous offense of one sort or another.  Though I can’t remember the foul, I do remember his advice.  He told me, “You need to remember that this is a small field and you are going to have a long career.”   There hasn’t been a month across the twenty-five years since in which that simple piece of advice hasn’t helped me frame the way I should respond to a colleague, a student, or an administrator.

When my mentor made his observation, he was speaking quite particularly about the profession he and I shared. Ours was a small field – there are only so many business schools and only so many professors – and, because it is a good gig, very few people are in any rush to leave.  Make an enemy, and you will keep encountering that enemy for a long time.  Soil your reputation, and you will find it next to impossible to make a fresh start.

But it occurs to me that what was true of our world a quarter century ago is true much more generally today. Technology has now made his advice relevant to virtually every person beginning a career.  Now, no matter what your profession is and no matter where you practice it, you work in what is essentially a small field.

Certainly, those of us participating in social media are proactively making our reputation knowable to a much wider audience than ever before – with implications we might not anticipate.  But even if we personally aren’t contributing, others are on our behalf. Faculty, as an example, are subject to ratemyprofessor.com (where rating criteria include student evaluations even of a professor’s “hotness”). All sorts of other professions deal with similarly candid and arbitrary reviews on sites like yelp.com.

We all know that this explosion of information is a genie that is not going back in its bottle.  So, for those of you just embarking on your careers, look around you: the people around you will be your companions on a long journey. Manage your interactions with them accordingly.

And for those of you who are already well down the road and perhaps, along the way, have burned bridges, raised hackles, made enemies – well, do what you can to get those relationships on a better, more professional footing. Odds are that the person you’ve alienated will still be part of your field many years from now. And you’re in for a long career.

5 Things Digital CMOs Do Better

If you’re a mid- or late-career marketer, chances are your job today is mostly unrecognizable from what you signed on for. Perhaps no other business function has changed as dramatically over the past decade.

Why? Following a silent coup, the coronation is complete: the customer is king. With an abundance of information and choice, customers now guide their own self-directed decision journey as they traverse connected experiences that blur the lines between physical and virtual and scramble marketers’ signals for targeting.

Many marketers are left behind, simply tuned in to the wrong frequencies. In response, capturing the right data has become the key capability in finding and engaging audiences. But data, alone, isn’t enough; search and social marketing, for example, are content hungry disciplines. Marketers must also become publishers.

For marketing leaders, this has forced some serious soul searching on how to meet these challenges. Last April, I wrote “The Rise of the Digital CMO” to lend some perspective to this exercise. Subsequently, Gartner turned this into an ongoing research series designed to identify the patterns and exemplars behind the chief marketing officer (CMO) transformation — in effect, what digital CMOs do differently and what they look like incarnate. We found that digital CMOs do the following things better than their peers.

1. Shift from finding customers to getting found

The best digital CMOs don’t just shout from the hilltops, demanding attention on their terms. They orchestrate content marketing tactics that situate their brands at the moments that matter to their audiences. They do this by publishing brand-aligned, but audience-centric content that inspires, delights and, most importantly, engages customers on a self-directed decision journey where earned and owned often trump paid.

Hubspot CMO Mike Volpe is an exemplar of this pattern. He and his team publish a daily diet of blog posts, ebooks, infographics, videos and other content that lend insight to the digital marketing discipline. In doing so, Hubspot has become a go-to destination for insight on this topic. American Express does this, too, with its Open Forum site, which publishes editorial-style content for managers and operators of small and mid-sized businesses. Both of these are examples of brands that look and act like publishers, not carnival barkers.

But, as Hubspot’s Volpe says, it’s rarely just one thing alone that works well — it’s the right blend of activities. Inbound is about grassroots experimentation. Without proper measurement, these varied activities can turn into a fragmented mess.

Today, customers are inundated by pleas for their attention. As a marketer, the onus is on you to meet these customers on their terms with something of extraordinary value. That’s how your brand gets found.

2. Shelve the commercial pitch in favor of authentic storytelling

Digital CMOs have moved well beyond better-faster-cheaper; problem-solution-impact; features, feeds and speeds; and other self-referential brand-forward conceits, which are now rejected by audiences like a foreign body in the bloodstream. Instead, they tell stories — and, most importantly, they find others to tell stories for them.

These stories often follow the traditional narrative arc of exposition, rising action, climax, falling action and resolution. These stories are told with images, video and data. They inspire. They enlighten. They amuse.

Tami Cannizzaro is a brand storyteller. As IBM’s VP of marketing for social business, Tami leads a team that uses IBM’s celebrated “Smarter Planet” theme as the baseline for selling software. She says, “We’re not selling software, we’re building a smarter planet.” Nike marketing doesn’t sell footwear so much as it sells an aspirational point of view. Nike tells stories that ask audiences to reach for their personal best. National Football League franchise Atlanta Falcons’ CMO Jim Smith asks fans to “Rise Up”—and they do. To sell carbonated beverages, Coca-Cola tells stories designed to inspire nostalgia and happiness. More importantly, they ask consumers to tell their story on their behalf by cultivating user-generated content.

According to IBM’s Cannizzaro, today, people’s perceptions of the IBM brand are more likely to be formed by their community, not the message coming from IBM. The best digital CMOs now get this intuitively.

3. Break through silos to erase sea ms between channels and experiences

Digital CMOs recognize that customers are channel-blind. Channels, after all, are an artificial construct designed, first, to support corporate goals and organizational structures; and, second, to support the needs of customers. Today, customers expect the inverse: brand interactions that hide the seams between channels, where stories, experiences and services serve their needs first and the brand’s second.

Sharon Osen, SVP of global marketing at Swiss luxury beauty brand La Prairie starts with the customer, developing customer archetypes and personas that guide the design of multichannel experience that deliver on real customer needs. This begins with a deep understanding of customer habits and preferences, and how La Prairie can add value in their daily lives. Beauty retailer Sephora blends in-store and mobile channels to create ensemble experiences that make shopping easier and more engaging.

But La Prairie’s Osen makes it clear that the goal isn’t transformation for its own sake. She says it’s about enhancing brand experiences customers have come to expect with new digital extensions.

4. Use data to target precisely and measure relentlessly

Digital CMOs have learned to “close the loop,” turning their marketing efforts into a data-centric, performance-driven discipline. Here, the goal is to trace the thread from investments to outcomes, directly attributing marketing dollars with business outcomes. These CMOs use first- and third-party data to target contextually relevant offers and experiences guided by predictive analytics and algorithms that learn and adapt as customers traverse a meandering purchase path. These marketers then close the loop by combining this data-driven targeting with a process for continuous measurement. The result is a performance-driven discipline where marketing investments can be optimized to highest yield.

eBay’s CMO Richelle Parham is an example of a performance marketer. Her company collects more than 50 petabytes of data a day that it can use to target offers and experiences. For example, products that were browsed but not purchased become an opportunity for remarketing and the insight for collaborative filters in the form of recommendations that aid — and guide — customers’ decision making.

But, Parham warns, if this sort of personalization is handled clumsily, it can be intrusive. She’s right. Personalization can cross the line to creepy. Her advice is to balance head and heart: “In the end, we’re selling to human beings. To drive behavior change, we need to understand who the customers are and what they care about.”

5. Experiment aggressively, and challenge business model assumptions

Digital CMOs are agile marketers who embrace the mantra “test and fail to learn and scale.” Gartner finds that, today, 83% of enterprise marketing organizations have an innovation budget that reflects, on average, 9.4% of marketing spend. What do they use this for? Exploration. Experimentation. Learning by doing in recognition of the fact that sustainable competitive advantage is a quaint vestige of another time. These CMOs seek to create pipelines of innovations that they test and validate in rapid succession.

Delta Airlines, for example, has applied this technique to its websites, kiosks, in-flight Wi-Fi and entertainment, resulting in what it describes as a holistic set of touchpoints that inform the customers’ opinion about the brand. Here, a series of continuous experiments guide innovations that improve customer experience. The results? A 20-second reduction in kiosk check-in times, a substantial increase in check-ins via digital channels and improvements in overall customer satisfaction and brand sentiment.

But digital CMOs can’t go it alone. Digital CMOs need to hire the right people to lead and execute. As my colleague Laura McLellan and Scott Brinker wrote in their July-August 2014 Harvard Business Review article “The Rise of the Chief Marketing Technologist,” Gartner finds that 81% of enterprises have a chief marketing officer in place today, up from 70% last year. Seventy-seven percent have a chief customer officer as the primary advocate for the customer and final arbiter on customer experience. Forty-eight percent of the time, this role reports into the CMO, which supports yet another finding: the CMO is on the rise in strategic importance.

Other roles to watch: data architects, corporate journalists, data storytellers and chief content officers. They are all emerging to fill the gaps that stand between marketing from a decade ago and marketing for today.

A year later, digital CMOs are still on the rise. Only now, their secrets are coming into focus.

Why It’s Fair to Save a Parking Spot – For a Price

Tech start-up Haystack has developed an innovative – and controversial — solution to the stressful challenge of finding an open parking meter in congested areas. This smartphone app allows those leaving a parking space to alert other Haystack users in the area of their “about-to-be” open spot. To secure this meter (i.e., have the parked car driver wait until they arrive), users pay a fee of $3 (75 cents goes to Haystack while the incumbent “parker” pockets $2.25). Not surprisingly, Haystack has stirred up controversy amongst city officials, particularly in Boston, as well as drivers.

We explored these and other questions with pricing strategy author and consultant Rafi Mohammed. An edited version of our conversation is below.

First off: From a pricing perspective, is Haystack a good idea?

Absolutely! Haystack provides a solution to a key market failure in popular parking areas: meter prices are too cheap, which results in excess demand.

Start-ups like Uber and Haystack seem to be profiting by capitalizing on pricing inefficiencies like the one you just mentioned. Is this an emerging trend?

A great point that’s spot on. It just doesn’t make sense, for instance, to charge the same price for taxi cabs all of the time. Uber is brilliant in charging higher prices during peak periods (which incentivizes more drivers to provide service, thus increasing supply) as well as lowering prices during slack periods to generate more demand. Technology allows Uber to strategically flex prices and just as importantly, inform its customers of the current price. Customers are better served by this innovative pricing.

Parking meters are notoriously underpriced. A private for-profit garage in downtown Boston, for example, charges $12 for the first hour and then scales rates up to $32 for 24 hours. Meanwhile, public parking meters located directly in front of this garage run $1.25 an hour. As a result, drivers seeking a meter circle around (…and around) until they “luck out” by getting a below-market priced parking spot. Haystack is simply providing an arbitrage solution to a market failure created by poor city regulation.

But is this fair?

Is it ok, for a fee of $2.25, to “save” a parking space that you’ve paid for? What about saving a space for a family member or friend at no charge? These answers to these questions are really subjective. I will point out, however, that it’s axiomatic for a secondary resale market to emerge for any product that is priced below-market. Examples of this are in-demand sporting or music events that are routinely resold at higher prices through the scalper market.

The bigger question is whether meter rates should be so low that it incentivizes people to drive into the center of town (instead of taking public transportation) and then incur the time, frustration, and extra gas to find a cheap parking spot. Don’t even get me started on the wasteful pollution generated throughout this process!

In other words, though, is it a right of all citizens to have access, albeit inefficient access, to rock-bottom priced parking? I don’t think so – I vote for jacking up meter prices and investing in public transportation improvements.

And when you think about it, Haystack represents an incredible value to parking spot seekers. A $3 fee secures, for instance, $1.25 an hour parking in Boston instead of paying $12 at a garage. And then, if a driver uses Haystack to “re-sell” their space, they’ll reap $2.25. Thus, a net price of 75 cents enables drivers to save a bundle – seems like a bargain to me. Perhaps Haystack should boost its prices!

So what should local governments do about Haystack?

Officials, for instance those in Boston, need to stop being so status quo and allow technology to better serve their residents. Haystack exists because city officials have done a poor job of pricing parking spaces. Instead of needlessly obsessing on Haystack, cities should start dynamically pricing parking meters based on demand: increase rates during peak times and conversely, discount during periods of low demand.

San Francisco, for instance, is currently dynamically pricing parking spots. Meter rates in pilot neighborhood blocks are being varied based on demand with the goal of at least one space always being available. That’s a much better solution than complaining about a start-up that actually solves a major problem.

Don’t Try to Read Your Employees’ Minds

Albert Einstein once observed, “A little knowledge is a dangerous thing.” I think of this quote often when observing executives with a “little knowledge” of emotional intelligence (also called “EQ”).

Don’t get me wrong; the beneficial insights and managerial advances derived from research on emotional intelligence have been game changing. But appreciating a powerful concept is not the same as understanding it well enough to use it productively. Sometimes, “a little knowledge” about EQ abets the delusion that you know people better than you actually do.

Consider the case of Vernon (not his real name), whose modus operandi was to find a fault in a subordinate and then turn it into a clinical diagnosis. Detail-oriented people were labeled “OCD” while those whose attention wandered in dull meetings had “ADHD.” His “corrective feedback” thus rarely focused on behaviors, but instead came across as a personal attack, and his employees felt bullied – hence his referral to work with me.

While we were working together, one member of his group, James, missed several deadlines – and was often seen scooting out of the office at 4:45. Yet when asked to explain the missed deadlines, James explained that it was teammates who hadn’t held up their end of the bargain, causing his own work to be delayed.

Vernon, who considers himself an excellent judge of character, looked at this available evidence and vented to me that James had a “corner-cutting personality,” was “lazy” and “didn’t take responsibility.”

The problem? It’s not that Vernon isn’t a perceptive person with an intuitive understanding of people; indeed, he’s typically very insightful, and when he wants to be, he can be extremely charming. The problem is that he simply has no way to evaluate whether his analysis about James is accurate. All he can observe is James’s behaviors, not his intentions. (For instance, maybe James was leaving early to care for a sick relative; maybe he was signing on late at night, finishing his work remotely; maybe his coworkers really did torpedo his best efforts.)

Psychologists have long discussed a phenomenon known as “behavior engulfing the field” which describes how we infer that others’ actions reflect that person’s true “inner self,” belief system, and personality. Eg, when someone loses an important document, we say they’re disorganized. When they show up late, it’s because they’re inconsiderate. (Importantly, we give ourselves exceptions to this all the time – when we’re late, it’s because we got stuck in traffic.) Psychologist E. E. Jones did a series of studies in the 1960s to prove how robust this phenomenon is. In one study, a group of students read essays opposing the Fidel Castro and another group read essays endorsing him, and were asked to evaluate the opinions of the writers. Even when the researchers told the readers that the essay-writers had been assigned to take a pro or anti view, the readers still believed the students who wrote pro-Castro essays actually supported him.

So, knowing that we are all subject to such biases, how should Vernon respond to James? By embracing (and applying) one of psychoanalyst Carl G. Jung’s guiding principles: “Through pride we are ever deceiving ourselves. But deep down below the surface of the average conscience a still, small voice says to us, something is out of tune.”

If you feel that something is amiss in someone else’s actions, purge yourself of biases toward him or her prior to expressing what you think. Then, when giving your feedback, follow these two bits of advice to avoid letting a little knowledge of EQ cause you to do more harm than good:

Keep it simple. Leadership legend Winston Churchill observed, “Broadly speaking, the short words are the best, and the old words best of all.” My suggestion to Vernon was to say, simply, “I’m perplexed by what looks to be a pattern of cutting corners – missed deadlines, and leaving early. Is there something else going on?” After that, listen to James’ commentary. If plausible, give James a Mulligan; if not, put him on notice.
Show empathy. Consider the case of Bill Clinton; sure, he’s seen by many as having more than his fair share of psychological “issues.” Never, however, was he accused of failing to charm, ingratiate, and exploit every possible bit of EQ at his disposal to win over a person or a crowd. His secret is empathy. Remember “I feel your pain…”? Who cares if, given how diversified the audience he said it to was, absurd. Expressing empathy in a self-effacing way is the key to mastering EQ. If you tell someone, “You know, you got an issue that calls for an attitude adjustment,” you’ll never connect with them. Even if you are correct, the other person will dislike you for being insensitive. Say, “I sense you have been out of sorts for some time,” and that person will embrace you.

And to really insure that you never use your little knowledge about EQ in a maladaptive way, take a page from comedian Dennis Miller’s book, Rants. In it, Miller tears apart everyone and everything that irks him, making his targets look like minced onions at a hamburger bar. Yet at the close of each rant Miller says, “Of course that is just my opinion…I could be wrong!”

With one simple phrase Miller captures a key to evincing EQ vis-à-vis others: Vulnerability. Recognizing the limits of your knowledge is a much safer strategy than letting the little you know lead you into danger.