Marina Gorbis's Blog, page 1392

Get Your Brain Unstuck

It’s 10:20 pm — and you’re still at the office. Any moment now, the cleaning crew will arrive and the vacuuming will start and you’ll have to put on your headphones just to hear yourself think. Your wife calls, asking if she should wait up. “Leaving any minute,” you tell her, staring up at an empty screen. You haven’t produced anything substantive for hours. Yet for reasons you can’t understand, it’s been impossible to walk away. Even now, the answer seems so close.

If your work involves creative thinking, you are bound to encounter times like this — times you feel stuck. Perhaps you’re not sure how to start a project, respond to a client email, or structure an upcoming presentation. You’re trying to be productive, yet as you turn the problem over in your head again and again, you find yourself running into the same barriers.

When this happens, a common reaction is to redouble your efforts. Who doesn’t love a good persistence story? Most of us have been taught that the only thing standing between us and a successful outcome is hard work.

But the research tells us something different. While grit does have its role, when it comes to creative solutions, dogged persistence can actually backfire.

A funny thing happens when you’re thinking about a problem. The more time you spend deliberating, the more your focus narrows.

It’s an experience familiar to all of us. When you first encounter a problem, certain solutions immediately burst to the fore. Occasionally, none of them seem quite right, so you try to reexamine the issue, giving it a fresh look, and then another. Before you know it, something counterproductive happens. You lose sight of the big picture and become fixated on details. And the harder you try, the less likely it is that unexpected, novel ideas will enter your train of thought.

It’s at this point that you’ve reached a point of diminishing returns on your efforts.

So what should you do?

Research suggests that when you find yourself at an impasse, it’s often fruitful to use psychological distance as a tool. By temporarily directing your attention away from a problem, you allow your focus to dissipate, releasing its mental grip. It’s then that loose connections suddenly appear, making creative insights more likely.

While most of us intuitively know that a three-day weekend or an extended vacation can yield a renewed perspective, those options aren’t always available, especially when we’re facing a deadline.

But that doesn’t mean that we can’t reap the benefits of psychological distance in our day-to-day work. Here are three practices that can help.

1. Struggling for more than 15 minutes? Switch tasks.

In an earlier post, I described the perils of task switching. When we’re making good progress, allowing distractions to hijack our attention can derail our focus. But the moment we experience ourselves getting stuck, the rules shift. Here, a well-timed distraction can be a boon to creativity.

When we let go of a problem, our perspective expands. This explains why we discover so many solutions in odd places, like the shower, the commute back home, or the visit to the gym. Redirecting our attention to an unrelated task also provides room for incubation, a term psychologists use to describe nonconscious thinking. Studies show that following a brief distraction, people generate more creative solutions to a problem than those who spend the same period of time focusing on it intently.

The trick is to recognize when you are feeling stuck and resist the temptation to power through. In many cases, it is precisely when we are at our most discouraged that we can derive the greatest benefit from walking away.

2. For tasks requiring creative thinking, schedule multiple sessions over several days.

Often, the most productive way of resolving a difficult problem is to alternate between thinking about it very deeply and then strategically shifting your attention elsewhere. Instead of setting aside one continuous block of time to work on a creative project, schedule shorter, more frequent sessions. By planning multiple periods of deep thinking, you’re guaranteed a few transitions away from your task, ensuring that your focus expands.

3. Put mind-wandering periods to good use. 

Creative solutions rarely emerge when we’re in the office. Which is why it can be helpful to keep an ongoing list of “thinking problems” that you can access on the go. Glance at your list just before entering mind-wandering periods, like when you’re going out for a sandwich or traveling between meetings. A new context can lead to a fresh perspective.

Ultimately, the key to harnessing the power of psychological distance involves accepting that often, the best ideas don’t appear when we’re pushing ourselves to work harder. They prefer sneaking up on us, the moment we look away.

What You Need to Know About Segmentation

The marketers of Clearblue Advanced Pregnancy Test, a product that can tell you if you’re one-week, two-weeks, or three-plus weeks pregnant, asked a couple of D-list celebrities to tweet out their positive tests back in 2013. As Businessweek’s Jessica Grose reported, the maker of the test, Swiss Precision Diagnostics, has a 25% share of the at-home pregnancy-testing industry and is targeting its marketing efforts at Millennials. Grose quotes IbisWorld researcher Jocelyn Phillips as pointing to the high-tech aspects of Clearblue’s test, also noting that young women might be more willing to shell out more money for such technology — the digital version costs about $5 more than the boring old blue and pink line version.

There is nothing new about this kind of segmenting in the pregnancy test market, however. And it’s actually a really useful (if not slightly unsettling) example of how you might segment potential customers with very different needs and behaviors.

For example, you could segment the market for early pregnancy tests based on demographics such as age and income, or you could segment the market based on consumers’ price sensitivity. But in this situation, it is useful to ask why: Why would a woman want to take a pregnancy test? And are these reasons the same for everyone? A little bit of thought would suggest that there are two groups of women: hopefuls, those who want to be pregnant, and fearfuls, those who are afraid that they might be pregnant.

How would you identify these two segments and market to them differently? Often companies offer multiple products that appeal to different market segments and let customers self-select. That is, the firm does not identify customers in various market segments; instead, the customers reveal their market segment identity by choosing different products. Quidol, a company based in San Diego, California, created two different products to appeal to two segments in the market for early pregnancy tests: the hopefuls and the fearfuls. The actual test products were almost identical, but the two products were given different names and package designs, were placed in different aisles of a drugstore, and were priced differently.

Segmenting, at its most basic, is the separation of a group of customers with different needs into subgroups of customers with similar needs and preferences. By doing this, a company can better tailor and target its products and services to meet each segment’s needs. This isn’t, as McKinsey’s John Forsyth says, simply for marketing or retail firms. “We see many, many companies saying, ‘I want to get more consumer-driven and customer-facing. But sometimes the organizations don’t know how to start. I’d say you really start with a basic understanding of your consumers or customers, right? And that’s segmentation.”

It sounds straightforward but often it isn’t. Here are a few pitfalls that many companies fall into when they start thinking about segmentation. One, companies rarely create a segment  — more often they uncover one. Two, segmentation and demographics are very different things. “You have two people, we know they’re the same age, we know they’re British citizens, and we know they’re of royal blood,” explains Forsyth. “One of them is Prince Charles. The other is Ozzy Osbourne, the Prince of Darkness. They’re in the same demographic segment, but I can’t imagine marketing to them the same way.”

And three: you have to ask yourself why you want to segment and what decisions you’ll make based on the information. “Many companies say, well, I think I just need a segmentation,” says Forsyth. “But before you even start the segmentation, you need to really understand why you’re doing it and what some of the actions are that you’re planning to take, based on what you think you might see. It helps you understand what’s actionable in terms of driving a company’s business.”

Once you’ve answered these questions, you have to decide whether you want to start segmenting by needs or behaviors. “If you’re doing something strategic and you’re trying to figure out if you have the right brands, the right value proposition, the right product line, then I would say you should start with needs or attitude segmentation,” explains Forsyth. This is basically trying to identify what needs your product or service is or could meet.

“But if you think you’ve got that pretty much under control,” he continues, “and you need to understand how to go to market or target your digital and TV spending, then I would start with behavior.” This involves trying to identify differences in customer groups based on their buying and lifestyle patterns, for example.

Regardless of your approach, a useful segmentation should include these six characteristics:

1) Identifiable. You should be able to identify customers in each segment and measure their characteristics, like demographics or usage behavior.

2) Substantial. It’s usually not cost-effective to target small segments — a segment, therefore, must be large enough to be potentially profitable.

3) Accessible. It sounds obvious, but your company should be able to reach its segments via communication and distribution channels. When it comes to young people, for example, your company should have access to Twitter and Tumblr and know how to use them authentically — or, as Clearblue smartly did, reach out to celebrities with active Twitter presences to do some of your marketing for you.

4) Stable. In order for a marketing effort to be successful, a segment should be stable enough for a long enough period of time to be marketed to strategically. For example, lifestyle is often used as a way to segment. But research has found that, internationally, lifestyle is dynamic and constantly evolving. Thus, segmenting based on that variable globally might not be wise.

5) Differentiable. The people (or organizations, in B2B marketing) in a segment should have similar needs that are clearly different from the needs of other people in other segments.

6) Actionable. You have to be able to provide products or services to your segments. One U.S. insurance company, for example, spent a lot of time and money identifying a segment, only to discover that it couldn’t find any customers for its insurance product in that segment, nor was the organization able to design any actions to target them.

Now you can start breaking down segments by who buys, what they buy, and why they buy (or use or view, etc.) it. The pregnancy test interactive above is a great example of how this works.

There are also prominent failures that companies should heed. One of the most infamous is when Bic decided to segment its young female consumers. The “Bic Cristal for Her” writing utensils were thinner, designed with more pastel colors, and priced higher than other pens. Women, in general, were offended, taking to Amazon to write some very creative reviews. The pen market, in other words, was not as heterogeneous along gender lines as Bic had thought.

When thinking about how you segment, John Forsyth has several suggestions. For one, he notes, “focus groups are dead. If you’re still using focus groups, you’re using 30-year-old technology.” A much better way to understand customer needs and behaviors is to spend time with people in their homes, stores, or health clubs. “You watch them, you talk to them while they’re doing the kinds of things we want to be observing.”

This type of qualitative research is all the more important because it showcases real stories that are key to convincing stakeholders. “When we illustrate things with qualitative research, we get CEOs going, ‘Wow, you’re really telling me my marketing strategy is all wrong and I need to change it,’” says Forsyth. “It’s very powerful, and it’s really exploded in the last 10 years.”

Big Data and technology have changed how companies approach segmenting. “The old model, particularly in the market research world was, ‘I understand people’s needs and attitudes, and behaviors will come from that,’” Forsyth explains. “Today, in many situations, [marketers] have flipped it to say, ‘I’m going to do segmentation based on their behaviors, and then I’m going to try to understand the needs that drive behavioral differences.”

He warns, however, that this type of segmentation is “a lot harder to do than people think, and I don’t think we’re anywhere near being good at it yet.”

Forsyth’s also seeing a lot of movement in the area of segmenting emerging markets worldwide, which poses a number of challenges. For one, scales marketers use to measure needs or behaviors in one country may be way off in another due to different cultural norms.

He also notes that affordability is still a huge factor in developing countries, too, whereas it may not be elsewhere — as the $20 pack of digital pregnancy tests demonstrates nicely.

This post includes material adapted and reprinted from ​Core Reading: Segmentation and Targeting, HBP. No. 8219, by Sunil Gupta, which is part of Harvard Business Publishing’s Core Curriculum in Marketing. Copyright © 2014 by the Harvard Business School Publishing Corporation; all rights reserved.​  The segmentation characteristics are adapted from Philip Kotler and Kevin Lane Keller, Marketing Management, 14th ed. (Upper Saddle River, NJ: Prentice Hall, 2012). 

All Hail the Humble Solar-Powered Trash Bin

The solar-powered trash compactors that have appeared on the streets of Philadelphia and other cities can go 4 times as long as old-fashioned wire baskets before needing to be emptied, saving municipalities millions of dollars, according to CNN. Not only that, they send alerts when they’re full, making pickup much more efficient. Philadelphia was able to reduce the size of its trash-collection crews by 73% as a result.

Should Marketing or R&D Have More Power?

R&D and marketing typically come at product development from different angles, and R&D’s “things” approach is often at odds with marketing’s “people” focus. In companies where R&D is very powerful, marketers can sometimes be heard complaining about products that are hard to understand and use. Where marketing is more in charge, R&D’s complaints tend to be about a lack of imagination, of too many incremental innovations.

So when it comes to new-product development, which function should have greater influence with the senior management team, R&D or marketing?

Researchers have strong feelings about this. First, a comment from Ruth Maria Stock, a professor of marking, innovation, and HR at Technische Universität Darmstadt in Germany, and PhD candidate Ines Reiferscheid, also at Technische Universität Darmstadt. Their recent research on this subject got me thinking about it.

Ruth Maria Stock and Ines Reiferscheid

This is a crucial dilemma for many companies. In the ideal firm, R&D and marketing inform and counterbalance each other, with R&D providing brilliant technical solutions and marketers injecting equally brilliant creative ideas and customer insights into the new-product-development process. It’s sort of like the human brain—the left side and the right side are supposed to work together in perfect harmony.

But that doesn’t usually happen. Just as some people seem to be more left-brained and others more right-brained, certain companies favor the R&D lobe, some the marketing lobe of the corporate brain. And sometimes the power shifts back and forth.

Our research shows that especially in highly competitive industries, executives should resist making R&D too dominant in order to dazzle customers with a steady stream of new products and the latest technologies. Studies have shown that offering cutting-edge products isn’t enough to increase a firm’s performance. You need marketing’s input.

Microsoft discovered that after it eliminated the “Start” button in Windows 8. Consumers found the new technology so much more cumbersome that Microsoft restored the button in Windows 8.1.

Every company makes missteps like these. But our research shows that the problem of R&D dominance can sometimes go even deeper. Overly powerful and visible R&D units can have a chilling effect on marketers, marginalizing their inputs and demotivating them. The consequence: Firms’ newly developed products provide less value for their customers, and sales drop.

Our advice for senior corporate leaders: Beware of giving R&D too much power. Allow marketing to contribute—and contribute visibly—to your firm’s newly developed products.

Next, a very different point of view from Ram Mudambi, a professor and the Perelman Senior Research Fellow in Strategic Management at the Fox School of Business of Temple University, and Tim Swift, an associate professor in management at St. Joseph’s University. They’ve studied the role of strategic innovation in corporate performance.

Ram Mudambi and Tim Swift

The answer to the question depends on where a company is in its cycle of exploitation and exploration. When a company’s products are fresh to the marketplace, a dominant marketing department can help the company exploit them, boosting sales and building up the brand. But over the long term, marketing doesn’t drive company performance—breakthrough innovation does. If your existing products are mature, the returns on them and on incremental innovations to those products will inevitably fall and margins will shrink, no matter how good your marketing. At some point, you’re going to need radical innovation to get your company back in the game.

Our research shows that certain companies have a knack for knowing when to stop exploiting their existing products and start refocusing on exploring for new ideas, either through ramped-up R&D or a quest for entirely new business models. Those that make this switch increase their performance after the transition.

But because searching for new ideas requires a significant investment, and thus a diversion of resources from lucrative short-term revenue sources, corporate leaders are often thwarted by powerful forces in their attempts to shift into exploration mode. Marketing, even in forward-looking companies, is often one of those powerful forces.

That’s because marketing is all about reinforcing and extending the existing brand. No disrespect to marketers, but they’re unable to imagine, much less measure, consumer responses to breakthrough products and business models that don’t yet exist. If marketing continues to dominate even when products are mature, you’ll get relentless pressure for incremental innovations that are ultimately pointless, and too little support for the hunt for radical ideas.

Companies often need what we call “boundary spanners” to bridge the gap between R&D and the managers who are focused on short-term returns.

A number of corporate leaders excel at overcoming corporate inertia and adopting radical ideas. John Chambers is one. In his early years as CEO of Cisco, the company dominated the market for low-cost internet routers, but once that business became commoditized, it switched to home network solutions. That’s a commodity business now too, and—surprise—Cisco isn’t in it anymore. The company is now into multimedia web conferencing, which represents at least its third major episode of exploration. In fact, if you look at the company’s R&D spending, you can see three distinct peaks, each apparently corresponding to a period of intense exploration. Cisco also appears to be very good at acquiring small companies that are developing radical ideas: It has acquired about one company a month over the past decade. Integrating acquisitions is one of its core competencies.

Sometimes Cisco has been punished on Wall Street for poor earnings performance. Indeed, it’s probably not a coincidence that companies with good track records of making timely transitions from exploitation to exploration tend not to have stellar stock performance. They’re not the media darlings.

But in the long run, they develop new visions for the future—a role that is far beyond the abilities of marketing. These new visions lead to innovations that support superior performance. Such firms are still churning out profits long after their media-darling competitors are gone.

The New Marketing Organization

An HBR Insight Center




Why Technology Won’t End the Marketing Hierarchy


A Method for Better Marketing Decisions
Innovation Is Marketing’s Job, Too


Don’t Propose Marriage to a Customer Who Wants a Fling​

Use Small Wins to Build Trust Between Partner Companies

Douro Boys is a group of five independent wineries in the Douro River Valley in Portugal that built an alliance network after realizing that they could not compete on their own. The partners act almost as a single firm, sharing knowledge about wine making and markets. Their wines, such as “Quinta do Vallado” or “Niepoort” now routinely get over 90 points by the Wine Spectator and sales have doubled over the last ten years.

But as Joao Ribeiro, CEO of a partner winery, likes to repeat, Portuguese business people tend to be staunchly independent. So it was very difficult to get five companies to work towards the same long-term goals. The partners had to make small steps to establish trust.

They achieved this through an unusual exercise: the CEOs of the five companies decided to pool a small amount of their best wine to make 500 bottles of a one-off premium wine they called the “Douro Boys Cuvee”. They auctioned the bottles off at Christie’s at an average price of 300 euros, a price that put the Portuguese wine on par with high-end Bordeaux. The success of this small joint project instilled a strong sense of collective achievement among the member companies, which helped them to work on other projects much more effectively.

Douro Boys solved the problem of trust building among alliance partners by achieving a small win, an initiative (or a small number of initiatives) that partners can accomplish within a maximum of twelve (or even six) months after starting collaboration. We are not talking about conquering a new geographical market or investing millions of dollars in joint R&D. A small win can be as simple as winning a new client together or modifying an existing product to serve a small new customer segment.

When I started working on my book Network Advantage: How to Unlock Value from Your Alliances and Partnerships, I was often struck by how little attention alliance partners pay to the importance of small wins.  They tend to focus instead on mobilizing their stakeholders around big, audacious goals.

Setting such goals is important, of course, but you first need to develop trust. Otherwise, a partner will not share their knowledge or resources with you. And the small win is the shortest way towards developing trust: it helps partners to learn about one another and develop informal rules of collaboration. This leads to familiarity, familiarity leads to trust, and trust leads to improved information and/or resource sharing.

Here’s another example. N2build is a startup that wants to disrupt the construction industry by using new composite materials. For example, some of the innovative fuselage material in a Boeing Dreamliner could also be used to make wall panels or roofs for houses. The new composites have higher insulation properties, are more resistant to the elements and, after substantial R&D, can cost much less to manufacture than conventional building materials.

N2Build has a large network of R&D alliances: it collaborates with researchers at the Fraunhofer Institute in Germany, Massachusetts Institute of Technology, and INEGI (National Institute of Mechanical Engineering and Industrial Management), the eminent Portuguese research institute.

But researchers are often not the best collaborators: they tend to prefer to work on solving problems within their academic disciplines without engaging in cross-department collaboration. What’s more, institutions like these are accustomed to working with multinational corporations or space agencies rather than startups. INEGI in particular was skeptical of N2build’s ambitious goals.

The small, yet decisive win for N2Build was to organize seminars within INEGI that brought together scientists from INEGI’s different departments to discuss the idea of how composite materials can disrupt the construction industry. The researchers later commented that it was extremely unusual — as a matter of fact, a first in INEGI’s 25 years history — to have people from all around the institute together in the same room brainstorming towards a common goal. The event was a turning point for INEGI.  It is now an integral part of N2build’s R&D activities and has opened doors to other scientific collaborations.

Correos, the Spanish postal service operator, uses the same strategy to build partnerships in the e-commerce domain. It collaborated with Luis Krug, a Spanish Internet entrepreneur and now the CEO of Pixmania, to build an e-commerce platform Comandia.com. The goal is to become one of the largest online marketplaces in Spain to connect companies of any kind, including small or very large retailers, to their customers. But before the two companies joined forces to work on Comandia, they started with a small win: collaboration over the Oooferton.com website. This was a discount webshop started by Luis Krug in 2009 on which Correos worked as a logistics partner and had to adapt its logistics chain in order to handle a wide variety of products. The two partners learned a lot about each other and developed trust, which then lead to Comandia, a much more ambitious project in terms of the number of potential sellers and customers.

If your company is planning a strategic alliance, aim for a small win first — this strategy works just as well with customers, suppliers, and competitors.

Why Technology Won’t End the Marketing Hierarchy

A few years ago one of the most vexing questions for marketing executives was whether big corporations were going to have to do what Bharti Airtel had done.

In 2004, Bharti Airtel, the Indian telecomm company, had outsourced its vast network and IT operations—a move that Ranjay Gulati saw as indicating “more progressive and forward-looking” thinking than was evident in many Western corporations. He argued that the traditional closed, hierarchical, and efficiency-oriented model was living on borrowed time.

Airtel’s move left many executives stunned. Through its outsourcing agreements, Airtel had shrunk to its core. Virtually everything except customer management and building the brand was left to partners. Airtel’s move quickly transformed the mobile-phone market in India as other telecomms followed suit.

This change was reverberating through the corporate community in 2008 when the American Marketing Association undertook a scenario-learning study to try to help marketers see what the future might bring. The learning comes from considering several plausible alternative futures. In light of what seemed to be the compelling logic of shrinking to the core, one of the big questions was: What’s going to happen to the traditional corporate organization? Looking ahead to 2015, marketers were wondering whether there would still be a role for hierarchy in marketing. We could easily envision a landscape of lean, open, networked firms that managed their customers and their brands themselves but outsourced everything else to partners. An unsettling prospect, to say the least.

So now that 2015 is almost here, has that come to pass?

The hierarchy is still in place. It has proved to be remarkably resilient.

Now, by “hierarchy” I don’t mean a stifling bureaucracy. I’m talking about a self-contained structure of multiple skills and responsibilities organized within clear lines of authority, one that allows the organization to do a lot of marketing tasks on its own. Hierarchies have long been under attack because of their supposed inability to adjust quickly to new developments in markets and consumer interests, because of their supposed high cost, and because silos slow the flow of ideas and information. All these problems are compounded when there are many layers.

But hierarchies have their advantages.

For one thing, they keep critical functions in house, out of competitors’ view. If you can do your analytics within your own walls, you don’t have to expose your talents, capabilities, algorithms, and resource-allocation decisions to prying eyes.

For another, it can be difficult to find good external partners. True, there are many companies offering services such as data analytics, help with creating viral campaigns, social-media mining, and search-engine optimization. But the number of really good firms in these fields is limited, and many of them have already been snapped up by the biggest companies.

Then there’s the perennial difficulty of managing partnerships. The rate of disappointment in alliances and joint ventures is around 50%, partly because partners’ objectives inevitably diverge as circumstances change.

Hierarchies’ longevity, however, is due to more than these factors. In today’s forward-thinking companies, hierarchies are proving to be highly versatile. Rather than being destroyed by digital technology, they’re strengthened by it. Technologies have allowed the marketing organization to become more efficient and effective.

For example, the boundaries with other functional disciplines are blurring. Instead of siloed specialists there are cross-functional teams that are coordinated with shared information. Most food companies have a single team managing mega-accounts like Walmart or Whole Foods, made up of professionals who were previously in sales, marketing, IT, or supply-chain management.

Within marketing the silos are collapsing. These more integrated organizations look more like a hub with spokes than the familiar horizontal-boxes-and-arrows model. The CMO may now be called the chief engagement officer or chief customer officer to signal a shift in priorities. Roles akin to product manager, customer insights manager, PR manager, and advertising director are the spokes and rim of the wheel around the CMO, who is the hub and coordinator.

This emerging model of marketing organization is also flatter and more open. We’re finding an amalgam of agencies and other partners that give access to expertise in areas like social media and customer analytics that is hard to find.

So those who speculated about the end of the hierarchy were premature. They didn’t take into account the hierarchy’s ability to adapt with the aid of information technology. It is a flatter, more relaxed hierarchy—but still a hierarchy!

The New Marketing Organization

An HBR Insight Center




A Method for Better Marketing Decisions
Innovation Is Marketing’s Job, Too


Don’t Propose Marriage to a Customer Who Wants a Fling​
The Content Marketing Revolution

Make Sure Your Employees’ Emotional Needs Are Met

In the early 1940s, Abraham Maslow started asking questions about human motivation— questions I study, too. In 1943, he published his first article on a theory he called the Hierarchy of Needs.

Today, the theory is usually depicted as a pyramid, although Maslow didn’t use one in his original writings; it’s a textbook creation. At the bottom are physiological needs: food and water. The next levels represent safety needs, then love needs, then esteem needs. Self-actualization (personal growth and fulfillment) is at the pinnacle, suggesting that it can only be reached when the other four needs are met.

People latched onto this pyramid structure immediately. But, in doing so, they forgot Maslow’s many notes about the dynamic messiness of human motivation, which we usually experience in one conscious stream rather than small parts. “We have spoken so far as if this hierarchy were a fixed order but actually it is not nearly as rigid as we may have implied,” Maslow wrote. He would probably be appalled at how we use his theory today.

Case in point: In my work as a psychologist and organizational consultant, I recently sat in on a strategy session at a global company. The managers were discussing how to better engage their employees. One senior executive suggested they focus on cash-based incentives. Why? She cited Abraham Maslow’s Hierarchy of Needs, explaining that salaries and benefits would provide people with food and shelter – physiological needs. Employees could then move up the pyramid to achieve career success and, eventually, a higher purpose – the feeling that their work bettered society. She felt that the organization had to get compensation right first.

It wasn’t the first time I’d heard Maslow’s name in a meeting of managers. The hierarchy has become something of an unquestioned “fact”.  It’s cited in HR manuals, business class syllabi, and leadership presentations. People use it to push the idea that the basics – like a fair salary or a safe work environment – are the employee engagement tools that matter most. But here’s the problem:  the pyramid version of Maslow’s theory doesn’t usually apply to the world of professional work.

In today’s developed-world workplace, physiological and safety needs are, for the most part, already met. Salary and benefits can enhance motivation, but organizations shouldn’t focus on them disproportionately because emotional experiences can matter equally, if not more.

In a recent study of outstandingly engaged business units, I asked people what drove their high engagement scores. Only 4% of respondents mentioned pay. Instead, they highlighted feeling autonomous and empowered, and a sense of belonging on their teams.  We all know people who trade high salaries and even safety for love, esteem,and self-actualization at work – the accountants who become high school teachers, or the journalists who move to war zones with pennies in their pockets.

The reality is that human needs can’t be neatly arranged into a pyramid. Motivation isn’t simple, and it’s certainly not linear. Different people are motivated by different things. Even Maslow began to worry about the uses of his theory at the end of his life, arguing that the most important way to achieve personal satisfaction was to face one’s inner demons. He entered psychoanalysis himself at age 61 to deal with long-repressed anger.

I understand why we’ve latched onto the hierarchy of needs. A motivation checklist would be nice. But we’re not working with a fixed or universal process. There are many factors that contribute to engagement, including teams, autonomy, interesting work, recognition, and individual development.  So don’t let the basics of compensation and benefits drive your people strategy or the way you lead. Your employees deserve much more than a pyramid.

Overcompensating Someone After an Accident Can Backfire

Research participants who were overcompensated with a payment of €100 for a €10 textbook that had been damaged by spilled Coke were 63% less likely to attribute the gesture to true moral obligation than were participants who were compensated for the exact cost of the book, says a team led by Tessa Haesevoets of Ghent University in Belgium. Because of guilt and suspicions about the payer’s motives, recipients of overcompensation tend to be less satisfied than people whose payment better matches the level of damage, the researchers say.

4 Ways Leaders Can Create a Candid Culture

When leaders want to create an open culture where people are willing to speak up and challenge one another, they often start by listening. This is a good instinct. But listening with your ears will only take you so far. You also need to demonstrate with words that you truly want people to raise risky issues.

Take the former president of a major defense company, whom I will call Phil. No one at the 13,000-employee firm believed Phil when he announced that he was going to create a culture of candor and openness. And why should they? He already had three strikes against him: his workforce, his past performance, and his manner.

First, Phil’s workforce had successfully repelled every attempt at culture change in previous decades. Well-intended change efforts had continually failed. Why would this time be different? Second, his own leadership history was not exactly one of give-and-take. He had a command and control style and the closest he got to dialogue was one-way “management briefings” he held monthly with his “chain of command.” And finally, he was imposingly large, his face was one of studied expressionlessness, and his voice had an involuntary imperiousness even when asking you to pass the salt.

And yet, Phil needed to dramatically improve quality and costs at the 60-year-old tactical aircraft designer and manufacturer — and he knew that the stifling culture was suppressing the very ideas he needed. Once he set out to better engage his employees, however, within a matter of months he succeeded at transforming the company culture.

Like many leaders, Phil’s first attempt at fostering candor was by using his ears. And it immediately fell flat. At the end of a highly scripted management briefing he announced, “I will now take questions. You may ask anything you wish.” He scanned the audience for raised hands. None. Thirty painful seconds later he would have been happy for even a twitch to indicate engagement. Crickets.

While some executives would have blamed the audience for its timidity, Phil understood the problem was a lack of safety. He reasoned that the behavior he was trying to encourage was so counter-cultural that any rational person would be terrified to try it.

With the studied intensity of a good engineer, he decided to demonstrate that this defense company was a safe place to talk about anything. Employees had decades of data from their own painful experiences that told them taking a risk to raise controversial questions was quickly punished. Phil and his senior team needed to produce enough disconfirming data to call these fears into question.

Phil did four things that went beyond listening:

Praise publicly. He created a safe forum for people to raise questions—then spoke publicly about those who asked them in laudatory ways. It may sound like small potatoes, but simply adding a column called “Ask the President” to the weekly internal newsletter was a daring move. He instructed his communication team to forward him the most universally asked and highly sensitive questions. He personally penned every response. He was careful to sympathize with the questioners and to validate their concerns. The workforce took note—seeing evidence that disagreement would no longer be treated as insubordination. Questions could be asked anonymously or not, and over time more and more of the questioners identified themselves — which gave Phil a chance to commend them in the newsletter for their candor. Public praise is more about influencing those who hear it than those who receive it.


Prime the pump. Phil began meeting regularly with groups of opinion leaders from throughout the organization — encouraging them to bring their toughest questions. One topic that never came up was criticism of a major reorganization Phil imposed two years previously. So he primed the pump. In one of these sessions he said, “How are you feeling about the IPT/Team structure we started two years ago? I’m sure there are frustrations with this one. What barriers are you facing? What isn’t working?” When people don’t feel safe speaking up, leaders can show that it is safe by saying the hard things themselves. By saying the unsayable, and doing so with a tone of voice that suggested respect for this view, Phil created a little more safety. And the dam burst. For the next 90 minutes the group poured out their views on the inadequacies of the new structure. Phil acknowledged their concerns and invited them to discuss modifications to the model. Most importantly, this influential group began spreading the word that Phil was sincere about being open to criticism.


Lead by teaching. Phil went beyond encouraging openness to teaching it. He and his senior team taught hour-long sessions on how to have what my colleagues and I call “crucial conversations” — how to diffuse strong emotions, how to speak candidly without provoking resistance, how to quickly build rapport, and so on. As people acquired these new skills, their confidence in speaking up increased. The fact that Phil personally taught the skills showed how invested he was in having open conversations.


Sacrifice ego. On one memorable occasion Phil said in front of a group of middle managers: “I’ve been told I am unapproachable. I don’t know what that means. I would appreciate any specific feedback any of you would be willing to offer me.” The rest of the group looked on in awe as one brave soul, a manager named Terry, raised his hand. “I would be happy to, Phil.” Terry met later with Phil and gave a couple of suggestions – which Phil then shared publicly. Phil sacrificed his ego to show how much he valued candor and openness and that people were safe with him.

For two years my colleagues and I measured the frequency of people raising risky issues with peers, subordinates, as well as with senior managers at this defense company. Within the first few months of Phil’s campaign, these measures shot up by double digits, and continued to increase during the rest of this period. For example, employees were 15% more likely to report that they were comfortable sharing bad news up the chain of command—a remarkable change from the past.

Listening matters. But sometimes you’ve got to open your mouth too and make positive statements to generate the safety people need.

Does Cheap Online Video Trump Text?

TED’s clever Chris Anderson came to speak with the Skoll Foundation board and pointed out that it would take an individual an entire year to give 500 speeches to live audiences of 100 people each in order to reach an audience across the country of 50,000. With TED, though, a good talk can reach that audience in 6 hours.

That got me thinking about the dominant technology for influence or persuasion throughout history. Until about 500 years ago the dominant technology was oration — and arguably a particular form of it: compelling storytelling. But it was a distribution-challenged technology. The person with both a desire to persuade and a persuasive idea had to be physically present with the audience and there was no amplification. So the audience was small, limiting the effectiveness of the technology of the day in persuading large numbers of people.

The most powerful adaptation of that technology was to have a sufficiently persuasive story that someone would be willing to invest in the labor required to hand-transcribe your words and then use those transcribed words to propagate your story orally to small groups. The most successful such app in the world was the Bible.

Gutenberg changed all of that. In the middle of the 15th century, he created a breakthrough technology for the distribution of persuasion: the printing press. That produced a cost-effective way of capturing a persuasive argument in print, making many copies of it and distributing it far and wide. Books became the dominant form of persuasive technology and sister products like newspapers and magazines used the same fundamental persuasion technology: formulate your argument in prose, typeset it, print numerous copies inexpensively, and distribute them broadly.

Arguably that remained the dominant persuasive technology for half a millennium. And because it was so dominant, the general way to think about it (including the way I thought about it until I listened to Chris Anderson) is that it is simply a superior technology. Hamlet on stage at Stratford is great but in influence it simply pales in comparison to the Penguin version of Hamlet distributed across the globe.

But with sober second thought, I now see that the Penguin version was not so awesomely superior. It was superior in exactly one respect: it was an inexpensive way to distribute the content far more broadly.

It was disadvantaged in two important ways. First, it just isn’t as persuasive as the audiovisual version. For a given individual, Hamlet, the book, just doesn’t match Hamlet at Stratford. Why? We humans only have been exposed to persuasion by prose for 500 years. Evolutionarily, print argumentation is still a very new technology and our brains seem to like the old technology better.

Second, the printed book is pretty darn inflexible. Once the book is written, it takes a lot of effort to change it — and the existing book or magazine article or newspaper column never changes. You can do a new edition but that takes a long time. If you want to change an oral persuasion, just change the words and fire away.

So Gutenberg offered the world a gigantic tradeoff: sacrifice persuasion effectiveness and flexibility, and I will give you distribution. The world accepted the bargain and lived happily for 500 years.

Then in the early 20th century came the movies, which were very primitive, but oh how people loved them – even without any words in their first manifestation. The visuals were compelling. Then words came, and then color, and patrons flocked to the medium. In the Heat of the Night and Guess Who’s Coming to Dinner persuaded powerfully.

Movies’ distribution economics were an improvement: unlike plays, they could be distributed broadly without the actors present. But the infrastructure was pretty onerous. You had to have a movie theater and fixed times resulting in a non-trivial penalty in time, inconvenience, and out-of-pocket cost to the audience you hoped to persuade. Still the medium grew like crazy and produced many great fortunes and beloved stars.

That was merely the opening salvo in the takeover of a new technology. When the Internet enabled cheap, ubiquitous, and utterly flexible distribution, the world got YouTube and TED Talks. Persuasion attained virtually infinite reach, costless to the recipient — not only in out-of-pocket costs but also in convenience of time and place.

But best of all — by far — the Internet uses the evolutionarily preferred medium: audiovisual expression.

TED Talks and YouTube are not new persuasion technologies. They are a new distribution system for a very old technology: visual oration. We now have an age-old winning persuasion technology combined with an unbeatable new distribution methodology.

As someone who has dedicated untold hours to persuasion via the written word, this is a pretty unsettling storyline for me. Am I truly in the buggy-whip business? Maybe. But I will rationalize and assert that persuasion still requires compelling argumentation. The capability that I have been working on throughout my career — generating a compelling argument — remains important and substantially unchanged. But I may have to come to terms with the possibility that the book, the article, and even the blog post may all be persuasion technologies heading toward obsolescence.