Marina Gorbis's Blog, page 1393

The Right Way to Present Your Business Case

You’ve already put a great deal of work into preparing a solid business case for your project or idea. But when it comes to the critical presentation phase, how do you earn the support of decision makers in the room? How do you present your case so that it’s clear and straightforward while also persuasive?

What the Experts Say

Without a winning delivery, even the best-laid business plans are at a disadvantage. “The idea may be great, but if it’s not communicated well, it won’t get any traction,” says Nancy Duarte, the author of the HBR Guide to Persuasive Presentations and CEO of Duarte, Inc., a company specializing in presentations and corporate messaging workshops. A memorable presentation transforms “numbers on a page” into something more tangible, says Raymond Sheen, author of the HBR Guide to Building Your Business Case. “It becomes a business opportunity that we’re grasping, a problem we’re resolving, a step forward for the company.” Here’s how to create a persuasive pitch.

Craft an emotional story

You may be tempted to stick to facts and figures to do the persuading for you, but great presenters know that the best way to hook an audience is through a story. This ‘story’ can be as simple as outlining the need, impact, and solution; the key is to present what’s at stake through a clear arc. But the more you can inject an emotional appeal or human connection into your narrative, the stronger and more memorable your case will be. That could mean illustrating the effects of a proposed customer management system with testimonials from actual customers, or describing how the data-sharing project you want to expand helped keep employees connected during a major outage. “With a business case, odds are that you’re trying to insert change,” says Duarte. “The first reaction to that change is typically fear,” and the only real way to get your audience to overcome their reluctance is to “appeal to the heart and not the mind.”

Lead with the need

In order to grab the attention of your audience from the outset, immediately identify the business need you are trying to address. Begin by asking yourself, “What is the message that I’m trying to get across?” says Sheen. Is there a market opportunity the company is overlooking? Does the firm need a new IT system? Clearly articulate this need as soon as you begin, because no matter how well researched or innovative your solution, you won’t get support if the need isn’t apparent or convincing. “Make sure you also show how that the need aligns with corporate goals and strategies,” Sheen says. “Just because you see an opportunity doesn’t mean that the business will want to pursue it.”

Address your audience’s concerns

Addressing the individuals concerns of stakeholders in the room will go a long way toward winning you allies. “If the finance person frets about keeping expenses under control, discuss expense numbers,” says Sheen. “If you have someone who is interested in growth in Asia, show how your project helps the company grow in the region.” Research past presentations and the outcomes to make sure you have your bases covered. If there are “issues that other projects have had, you should have an answer for those,” says Sheen. You might also consider giving decision makers a preview of your presentation ahead of time, and asking for their input. You can then salt their recommendations into your presentation, which will increase their investment in your success. “When you let people feel like they co-created your content, then they’ll not only support you but then they’ll feel empowered as ambassadors,” says Duarte. “They’ll feel like they’re representing their own idea.”

Find the right medium for your message

Well-presented data can do wonders for persuading an audience. But overwhelming slides with needless detail or trotting out tired visuals will also quickly lose you favor. Think carefully about the message you want to convey. Does a bar graph, table, or pie chart more effectively present your position? Are you able to circulate documents ahead of time, which might affect the data you want to emphasize in the actual presentation? Or will a unique, more entertaining route be more persuasive? “You have to know the best medium for the information,” says Duarte.

Don’t forget to connect

But above all, make sure you avoid “relying so much on your slides that you forget to make that human connection,” says Duarte. It might also be worthwhile to use colorful metaphors, videos, or other multimedia to make your point stand out. But sometimes simpler can be better, says Duarte. One of her clients convinced his CEO to fund a multimillion project by relying on basic graphics he drew on a whiteboard. The real power of his presentation, she says, was in the strength of his narrative.

Have an elevator pitch ready

No matter how much time you’re allotted to present, you won’t know until you walk into the room whether you’ll actually have 5 minutes — or 50. It’s critical to have a short elevator pitch ready in the event your time is short. “Know which one or two slides you’re going to pull out, the ones that can tell the story,” says Sheen. By the same token, you may be asked to do a deeper dive into one facet of your case in the middle of the presentation. That’s when having some appendix slides can be helpful, so that you can expand on certain elements of your case. You don’t need to have every data point memorized, Sheen says, but if someone asks, ‘What happens if we expand into Eastern Europe?’ you need to know what the general effect might be. It’s critical to “plan for short,” says Sheen, “and be prepared to go long.”

Principles to Remember

Do:

• Tell a story — it will make your case more persuasive and memorable

• Spell out the business need — it gives the audience a reason to listen

• Have both a short and long version ready — you never know how much time you will have

Don’t:



• Overlook stakeholders’ pet concerns — address them directly to win allies in the room

• Overwhelm your audience with needless detail

• Read directly from your slides — no one wants to attend a boring read-along

Case study #1: Build buy-in ahead of time

Erik Mason, the marketing communications manager for an aesthetic skin laser company in the Northeast, felt the firm needed a new image. “Other companies with slicker marketing were gaining market share even though they had inferior technology,” Mason says.

Mason decided to pitch a total rebranding — a new logo, new tagline, and new copy and photography for ads and communications — to the new executive team brought in to prep the company for an IPO. The price tag? An 8-fold increase in the marketing budget. “Marketing was a bit of a nebulous concept for the executive team,” he says. “They knew they needed to do it,” but they weren’t sure why or what tangible effect a new marketing strategy might have.

To build support for his case, Mason approached executive team members individually to ask them what they thought competitors were doing right, and how that compared with their own company’s strategy. Those conversations “gave me a roadmap of sorts for how I needed to present the recommendations to them,” Mason says, “so it felt tailored to them based on their input.”

He crafted the presentation as a story of each of the company’s primary competitors, showcasing their branding and visuals side-by-side with their marketing spending and earnings. That analysis not only showed those with the most compelling brands and integrated marketing support had impressive revenues, but also the most positive performances on Wall Street, a helpful fact given the company’s IPO aspirations. “The cases showed how a marketing investment pays ahead, especially when it comes to shareholder value,” says Mason, now the head of his own marketing firm.

Not long after, the executive team approved a full funding of Mason’s initiative. And in short order, the company achieved consistent double-digit sales growth — and a successful IPO.

Case study #2: Impress with unique visuals

When the 2008 financial crisis necessitated painful cuts at a Silicon Valley insurance company, chief information officer Jag Randhawa knew he needed a creative solution to boost morale and keep employees engaged. He decided to try to launch a bottom-up innovation program, which would allow IT employees to submit ideas to improve customer service, business processes, and products. But first, he needed the approval of management.

Randhawa didn’t yet have data to illustrate how the program might work, only anecdotal evidence from companies in other industries. He knew that if he wanted to persuade management, he would have to make an emotional appeal.

When it came time to present, Randhawa began by asking his audience to do a selective attention exercise, also known as the “invisible gorilla” exercise. The task involves watching a video and counting how many basketball passes are made between players wearing white jerseys. Most viewers are so focused on counting the passes that they completely overlook the man dressed as a gorilla who walks through the frame. Randhawa’s audience was no different.

Not only did the video lighten the mood, “it was also very relevant to my core message,” says Randhawa. “It demonstrated the need to have extra sets of eyes on a problem and the importance of diverse perspectives that employees can offer.” As the management team asked questions about how the program might work, it was clear that Randhawa’s hook had worked. There was already a “clear sense of collective ownership,” he says. In the end, he received an overwhelming “yes” to implement the program.

For more on how to build a business case from scratch, see the HBR Guide to Building a Business Case Ebook + Tools.

A Better Way to Bridge the Skills Gap

For a long time now, business leaders have been saying that the American workforce lacks sufficient skills to fill 21st century jobs. Those of us at the frontlines of social services — doing the work of preparing low-income young people — share these concerns and hear you loud and clear. The education gap is holding back not just workers but businesses and our whole economy.

That’s why I was quite interested to hear about the innovative new educational credential called the “nanodegree,” announced last month with great heraldry by AT&T and Udacity, an online education company founded by a Stanford professor and former Google executive. For $200 a month and in less than a year, students can receive online training that prepares them for immediate entry into technology jobs.

Making it cheaper and simpler to become qualified to get a well-paying job is, of course, a good idea. But for students in poverty, it is not good enough. As Eduardo Porter noted  in The New York Times, students most likely to pursue the nanodegree (and other degrees like it) are the ones who are already well educated, simply looking to switch their specialties.

Like Mr. Porter, I believe that education needs to be tied to real-life work experiences — especially if it is going to give low-income students a leg up. And companies, not colleges, are better at that. This itself is not news: Experts have been calling for more apprenticeships, more on-the-job learning, for some time. (See this Harvard Business Review article. The latest plea comes from the Hamilton Project’s new report on ending poverty, which notes that the U.S. offers about one-tenth the apprenticeships of other industrialized nations.)  Despite these repeated affirmations, the teen and young adult employment rate has plummeted over the last dozen years.

But if businesses are really serious about securing a stable pool of future employees, they are going to have to invest in young people more comprehensively and earlier. Research shows that successful employment programs provide not just technical training and job opportunities but also mentoring and real-life skills. Young people do best when they receive behavioral coaching, training in workplace communication and time management, and counseling and stipends to reward good performance. Corporations and schools are not terribly good at this kind of holistic training.

But we in the social services and youth development fields are experts at it.

What I propose is this: a new partnership, between industry and organizations like ours, The Child Center of NY. If you give our kids a chance by offering them meaningful internships and apprenticeships, we in the nonprofit sector can, in return, give these interns and apprentices the support they need to succeed. In effect, we can help to insure your investment in them.

Each day The Child Center of NY and other nonprofits like us work with thousands of low-income young people who have talent and ambition but face enormous barriers to success. Poverty is a barrier, yes, but so too is access to opportunities. Many have never even met anyone who has gone to college.

At our afterschool programs, counseling sites, and community centers, we provide tutoring, academic enrichment, and opportunities to learn the teamwork, good work habits, and problem-solving skills that are so essential to the workplace. Our mentors help youth discover what they are good at and want to do, and then help them build the confidence, discipline, and social-emotional skills they need to do it. As early as middle school, we take students on college trips and to visit companies where they can dream of working one day.

But what we cannot do is offer our young people high tech jobs. For this, we need businesses. Most companies invest their training dollars in management or specialized workers, but some new research is showing that ROI for investing in entry-level workers is more than respectable. A report by Corporate Voices for Working Families, “Why Companies Invest in ‘Grow Your Own’ Talent Development Models” found a range from first-year loss of 10 percent to a net gain of at least 179 percent.

Online learning schemes such as the nanodegree, with its pocket-sized appeal, may indeed funnel more qualified workers into the economy. But millions of at-risk young people will be unable to take advantage of such opportunities. Can we really afford to overlook this enormous untapped pool of human capital? Our future workforce needs a way to connect to that world. They need experience, training, and a chance to get, and keep, a job. For these kids, for the big picture, the nanodegree is just too small.

 

What Writing a Book Taught This Consultant

Thrilling, terrifying, altogether great. Nine months after publishing my first book, that’s my assessment of the author experience. Now that I’m back in the swing of strategy consulting, I’m finding some of what I learned from the writing process to be useful in client work. I thought I’d share what I’ve learned so far.

I’m hopeful there’s useful perspective here for consultants, accountants, PR professionals – anyone who gives counsel for a living. For brevity’s sake, I’ll refer to all of us as consultants.

Tell a story. Successful writing requires commitment to storytelling and to enlightening. Business writing leans towards the latter. I think it should lean much more towards the former – storytelling is a skill more consultants need. The best young people at any consulting firm bring a lot of analytical and research skills to the job, but it’s remarkably difficult for that great talent to learn to tell stories. I don’t mean small anecdotes, though those are good too; I mean weaving the facts into a cohesive narrative that feels relevant to the audience.

One of the best consulting experiences I’ve had was with the corporate identity experts Phil Durbrow and Ken Pasternak (see their work at Marshall Strategy). A watershed moment in Phil and Ken’s work is when they sit with the client organization and weave a story for them of who they really are. Phil and Ken synthesize months of interviews into a very few impressions, a contrast or two, and a narrative. “Usually,” says Phil “the client’s response is ‘you know us better than we know ourselves.’” Phil and Ken’s stories resonate with the client because they’re not only informed by data, they ride above the data. Its magical to watch when done well. If this doesn’t come naturally, writing is a great exercise. It drives you to a clearer, cleaner, more resonant narrative.

Embrace risk. When you publish a book, you are sharing your work with a much larger public than you reach in consulting, on a much broader topic, and with less real-time feedback. More than once while I was writing, terror set in about whether I was being precise, correct, and clear.

Repeated waves of terror later, I concluded those attributes were important but ultimately not the measure of success. Success would be achieved if I sparked new thinking. At one point, I recognized I was going to write that U.S. companies had become risk-averse relative to their competitors worldwide. That shook me up. I shared it with a couple U.S. CEOs. They didn’t like it one bit, and more than once, it sparked really open, heated discussion. There’s no part of the book I am happier to have written.

That lesson is supremely valuable in consulting. A slam-dunk is not a meeting in which you stun the client into silence with your brilliance. It’s one in which you spur the right conversation and debate. The contrary finding is one of the most important ideas you will bring to a client. They may not agree with you, but they will think anew with you.

Listen better. Most consulting relies on questions and interviews as the basis for the insights we build our advice on. Yet most consultants I know approach stakeholder interviews as a rote matter, or worse, a burden. Set your questions on paper, record the answers, and get through it.

There are reasonable drivers for that approach. We have very specific questions for which we need to build a set of responses. We often have a lot of interviews to do. The result can be a wealth of data and a paucity of insight. Long-form writing can lead you out of that trap.

For my book, I wanted to know the person I was interviewing, what drives her, why she made certain decisions, and how she views the world. This required intense listening and an active willingness to wander. I routinely encouraged the people I interviewed to stray from my questions and just talk. If I picked the right people, they would navigate to the real insight better than I would.

I also listened not just to what was said, but how it was said – the language used and the style of the individual as he said it. That brought life to my writing, but I also found application for it in my consulting. If I am present enough to notice that someone is stressed when he describes an event or interaction, I will follow up to find out why. Each person who sees that level of conscious engagement appreciates it. It transforms the interview into a discussion, and sometimes a relationship. The best thing is, it’s cost-free — it takes no more time to pay attention to these elements than to ignore them.

Allow emotion. While writing, I was more emotional than when consulting. That may surprise those who work with me, since my personal investment in consulting work is observable. However, when consulting, I’m not mercurial. I don’t indulge in rage, break down, or laugh at nothing, all of which occurred more than once while I wrote the book.

Having those emotions nearby helped me research and write with some pathos. Now, my book is not particularly pathos-laden. It’s a business book. But I aspired to understand my subjects as well as I could, and that meant understanding myself and keeping my emotional life a little closer to the surface than usual.

Coming back to consulting, I find that sharing emotion, or rather passion, is not all bad. The most compelling business leaders are quite human. If there’s not a place to let that show with clients, are you really bringing your best to the work?

Don’t make it all about you. When writing, you spend a lot of time alone. In the push to complete the first draft of my manuscript, I spent about a month alone in a mountain cabin. The snow and a modest reduction in personal hygiene led to a shocking transformation only my family got to see via Skype. I was a little less office, a little more The Shining.

Consulting is about others – the client, your partners, and your teammates. Your advancement is closely tied to your ability to understand and deliver for others. Can you diagnose the client’s core issue and help solve it? Can you bring the best out of the best people? Can you help those around you fulfill their potential? If you can do these things, you’re probably a pretty good consultant.

As a writer you are encouraged into what Salman Rushdie called breathtaking narcissism (actually, he used that term to describe his wife, not himself). At the urging of my publisher, I spent an entire autumn morning in contemplation of my name for the book jacket. Jonathan E. Berman? Jonathan Eli Berman? Surely only assassins need three names. Maybe just Jonathan Berman. Reinforcing the narcissism is the non-stop promotion expected of an author. In book talks, on TV, and on radio, if an author doesn’t talk about himself, he’ll be asked to.

If you’re being paid for advice, you really have no excuse to focus on yourself. So, my last reflection on writing and consulting is a caution. Be aware that writing turns you inward. For your consulting, don’t forget to turn back outward!

Most Marketers Flop at Real-Time Customer Interactions

If you’ve ever tried to learn an intricate physical skill as an adult, you know what it’s like to be a marketer today.

When adults set out to acquire a skill like golf or snowboarding or the tango, they usually break it down so they can be sure to learn each of its movements before making fools of themselves on the links or the hill or the parquet. They practice stepping, bending, and turning until they’re good at each component—and then they go out and make fools of themselves anyway, because putting together a series of movements in real time is an order of magnitude harder than doing them in isolation.

Over the past decades, marketers have gotten pretty good at collecting and crunching customer data and using it to figure out what various customer segments want. Many companies have even managed to break down silos to the extent that customer data is now under the purview of the marketing department, which I prefer to call—and which should be called—the customer department.

But customer departments now face the challenge of putting those skills together in a seamless response to consumers in real time, and in many cases marketers look a lot like novice tangoers, tripping over their own feet. In fact, many companies have made things worse, setting up their real-time customer systems (phone menus, for example) in ways that make the customer experience more painful and difficult than it was before.

At the University of Maryland, we’ve created a master’s program in marketing analytics so that we can train people to do the rapid, fluent data analysis that’s needed for personalizing fast and effective service to the customer. But until a new generation of customer-data analysts moves into the corporate world, companies will no doubt continue to struggle. The challenges are numerous, and most of them are way beyond people with traditional training in marketing: A good deal of customer data is unstructured; in many cases marketers’ analysis of tweets and emails is still rudimentary; and few marketing people have expertise in fast, automated data-analytic techniques such as machine learning.

A number of companies have availed themselves of the services of expert data-analytics firms, a move that makes good sense, given the complexity of the field. But when you outsource customer analysis, you inevitably lose a step in the race to keep up with customer sentiment in the moment, because outsourcing takes time.

Real-time customer response isn’t a new phenomenon, by the way. B2B companies have been doing it for years. The best B2B firms are very responsive to customers. For example, if Walmart calls one of its suppliers, you can bet that the supplier drops everything and gives its important customer total attention.

But compared with consumer companies, B2B firms have relatively few customers. Keeping tabs on how your key accounts are feeling and what they want is more manageable if they number in the dozens, rather than the millions.

A couple of decades ago it would have been unthinkable for consumer companies to try to monitor and respond to their customers—the cost of collecting, storing, and processing the data would have been prohibitive. But today, those costs have come down dramatically, and a number of firms have taken advantage of that change and developed the capability to keep tabs on and respond to customers very quickly. For example, many financial services companies can anticipate, on the basis of past behavior, what products a customer might need next. That college student who just took out an education loan may soon need car financing, or eventually a home loan. The company can proactively suggest these things.

Ideally, what consumer companies need is an adaptive personalization system that can analyze the customer base and figure out not only which products are trending and why but what would be the best personalized product (often an information service) for each customer. What’s more, they need to personalize the product without bothering the customer or requiring the customer to make a decision about it. In my research I find that such “automatic” personalization works better than having the customer self-customize. In media businesses, for example, companies can already observe what customers are reading or listening to, collect information about what they like and don’t like, and accordingly adjust what’s offered next (Pandora’s radio channels are an early and flawed example of this).

One of the biggest challenges companies will face as they enter this new world is distinguishing important waves in consumer sentiment from unimportant ripples, because what really matters is business outcomes. A trend is only important if it affects your business—if it moves the dial. When the media picks up a trend, the Twitterverse typically picks up the media reports, the media then reports on the Twitter reaction, and it all gets amped up in a vast echo chamber. But many trends that look impressive turn out to have no staying power. It’s easy to see in hindsight that certain trends fizzle out, but perceiving that in real time is very difficult.

Businesses are now used to thinking about customer lifetime value as well as customer equity, which is the sum of the customer lifetime values across the customer base. What they are just now getting their heads around is how the super-amplified word-of-mouth machine that is Twitter, Facebook, and other forms of social media speeds everything up and has an almost instant impact on customer equity. The value of the company, which is directly related to customer equity, can now go up or down very quickly. The result is that the average lifespan of an S&P 500 company is now only 18 years. These dinosaurs had better learn to scurry faster and smarter, or those little rodents under their feet will take over.

The New Marketing Organization

An HBR Insight Center




The Future of Marketing, as Seen at Cannes Lions
Why Marketing Needs to Hire a Corporate Folklorist
What Makes a CMO Powerful


Strategies to Attract Superpower Marketing Talent

The Case for Listening to the Maniacs

Off the Bell CurvePay Attention to Your “Extreme Consumers”Working Knowledge

Marketers worry too much about the average consumer and don’t spend enough time thinking about “extreme” customers — those quasi-maniacs who passionately love or hate a brand. Because extreme consumers share other consumers’ thoughts but amplify them to the nth degree, they can lead marketers toward breakthroughs, say Jill J. Avery and Michael I. Norton of Harvard Business School. “Lovers or haters of a product can be the canary in the coal mine — an early warning system that can alert managers to problems,” says Avery, who by the way has a great piece on consumer relationships in the current issue of HBR.



Studying extreme consumers can help companies look at products in new ways. For example, in interviewing people who detest video games, one set of researchers came up with the insight that a lot of games are too complicated and controllers are too hard to maneuver; the result was the Wii. —Andy O’Connell

Still Spinning How Amusement Parks Hijack Your BrainThe Boston Globe

Because it's summer, and because I have a deep and abiding love of fried dough, here's a fun little piece from the Globe on how theme parks are (kind of brilliantly) designed. Aside from all the bright colors and other elements of sensory overload, Leon Neyfakh explains that "the modern amusement park is, beneath the flash and chaos, a carefully tuned psychological machine…pushing buttons you didn't even know you had." For example, games are designed on the "appeal of almost, but not quite winning" and rides like the Giant Drop “tap into the strange mechanism in your brain that allows you to enjoy the rush of a simulated near-death experience." And long lines? It’s all in the way you think about them: "A 2010 study published in the Journal of Marketing Research found that amusement park guests who focused on the number of people behind them in line expressed more excitement about the ride they were going on, and were more likely to enjoy it, than those who focused on the number of people in front of them."

Tormented SoulsSympathy for the Comcast Rep from HellThe Awl

No doubt you've already heard the call: 8 painful minutes between a Comcast customer service representative and a reasonable man who simply wants to cancel his service, no questions asked. Except, of course, the rep has a lot of questions — why he's canceling, why he doesn't want the fastest service in all the land, why the reasonable man won't just give him any kind of concrete answer. Most of the internet was outraged upon hearing this, and for good reason — but The Awl's John Herrman does an excellent job of taking a step back and recognizing the obvious: "If you understand this call as a desperate interaction between two people, rather than a transaction between a customer and a company, the pain is mutual."



The problem is that "the customer service rep is trapped in an impossible position, in which any cancellation, even one he can't control, will reflect poorly on his performance" — especially if he can't get a reason out of the caller. In other words, Hermann concludes, "Comcast, the organization, is tormenting them both."

Born That WayLady Gaga Is Still Schooling MarketersForbes

One thing they don’t teach you in summer rock ’n’ roll camp is that in order to be a great pop star, you need a great thesis. The Rolling Stones’ was something like: A middle-class life isn’t worth living. Drake’s is: You only live once. Lady Gaga’s might be summed up as: It’s cool to be different. But not only does Lady Gaga have a great and sticky thesis, she’s endowed with a sharp mind for branding. Like all powerful brands, hers offers newness and diversity, a good lesson for all consumer companies, writes Denise Lee Yohn. Ms. Gaga also knows how to connect with customers: When fans throw clothing, she puts it on and poses for pictures. And she’s a relentless storyteller, using the time between songs to tell personal yarns that expand on her ideas about the value of differences. She defends her thesis, in other words. Maybe every brand needs a great thesis too. —Andy O’Connell

Keeping Them GuessingA Push to Give Steadier Shifts to Part-TimersThe New York Times

There are 27.4 million Americans who work part-time; the number of those who wish to work full-time has doubled since 2007, to 7.5 million. And 47% of younger, part-time hourly workers get their schedules a week or less in advance. These stats, reported by Steven Greenhouse, are a major pain point between workers and managers who, armed with data on when customers shop and eat, constantly adjust schedules to maximize efficiency and profits. Part-time workers are already struggling to make ends meet. Sporadic, unpredictable schedules add to their burdens by making it harder for them to find child care, and sometimes they arrive at work only to find their shifts canceled.



Municipalities and even the federal government are starting to address these issues. Corporate groups, of course, aren't happy about the "bureaucratic environment" they say will result. But as Fair Workweek Initiative director Carrie Gleason says, "It's gotten to the point where workers, especially women workers, are saying, 'We need a voice in how much and when we work.'"

BONUS BITSGetting Paid

Mind the Gap: How One Employer Tackled Pay Equity (The Wall Street Journal)
When the Boss Says, 'Don't Tell Your Coworkers How Much You Get Paid' (The Atlantic)
Coke Pays Employees to Breathe China's Air (Bloomberg View)

How 6 Countries Compare on Executive Gender Balance

All countries are not equal – in gender as in much else. Our Annual Country Scorecards show how national culture and legislation impacts companies’ progress on gender balance. Where many European and North American companies have been on a slow but steady gender-balancing journey, big business in much of Asia is (at best) only just waking up to the issue. Here is a short travelogue of corporate gender balancing across a few key countries, based on data from the top 20 Fortune Global 500 companies in each one. You’ll find the more detailed reports here.

France: Pushing quotas and operational roles

Last year, following France’s introduction of quotas imposing a minimum of 40% of women on corporate boards, there was a significant improvement of the gender balance on boards. In 2014, are we witnessing a trickle-down effect? There has been a subsequent improvement from 11% to 15% of female Executive Committee members, and 70% of companies in the top 20 now have at least one woman on their senior executive teams – up from 60% last year.

France is one of the rare countries to have so many of their most senior women in operational roles, rather than the staff and support function jobs that has been the initial answer of so many companies trying to balance their teams. Forty nine percent of female ExCo members in France are in operational roles, the highest percentage among our country surveys.

But out of 20 companies, just four are responsible for well over half of all the female executives, and three companies account for 12 of the 17 with line responsibilities. So let’s applaud SNCF, France Telecom, Group BPCE, and CNP Assurances for “getting it.” Their progress hides a pretty mediocre showing among the rest.

UK: Essentially staying the same

The UK top 20 has so far failed to act on the buzz created by the Davies Report, which urges more balance on corporate boards. If UK business is changing, it’s not obvious among their top companies. The number and percentage of women in senior executive roles in the top 20 are almost identical to a year ago – 15% then, 16% now. Likewise, the number in line or operational roles is essentially static.

The only notable movement comes from a turnover in companies that make it to the top 20. We can report that half the companies in this year’s list have two or more female faces at the executive table – though they share that table with anywhere from 7 to 14 men. And three companies still have men-only executive committees. Yet we’re told the pipeline is getting stronger.

Germany: Still tough for a working gal

Last year, Germany had a slight increase in the number of female executives among its top companies, which are fiercely resisting the fast-spreading EU quota legislation (from 6% to 9%). That obviously didn’t go down so well, as this year, Germany has dropped back down to 7%. Now, there are only 10 women out of 135 executive committee members in the country’s top companies. Over half still don’t have a single woman in their top teams – and many of those that did are losing them. Since last year, Continental, Deutsche Telekom, E.ON and Siemens all lost women – Siemens lost two (N.B. as we go to print, we hear they are headhunting a woman to head their energy business). Lufthansa is the only company in the group to have two women on its five-person ExCom, making it Germany’s only gender balanced leadership team.

For a country led by Angela Merkel, whose cabinet is 35% female, it’s startling to see so little progress on gender in the private sector. It’s time for German business to recognize the world has changed.

China: Half the sky falling?

Some reports say Chinese business is among the most gender balanced in the world, and Mao famously said that women hold up half the sky. Among international companies, China’s country operations are routinely more gender balanced in management than many of their Western counterparts. Yet looking at China’s top companies, it’s hard to believe that the country is making women a significant part of its future.

Of the 203 executive committee members on the executive teams of the country’s top companies, there are eight women – 4% of the total. Two have line roles, the rest are in staff jobs. The number of companies with a female senior executive has gone down since last year. According to a recent survey from Nanyang Technological University, only 12% of publicly listed companies in China have at least one woman senior executive – so we could applaud the fact that 35% of the top 20 do, but it’s hardly comforting.

Let’s draw hope from Alibaba (still privately owned and therefore not on our list), where five of the 14 members of its executive team are women. Let’s hope that this is the new face of Chinese business leadership. In the meantime, we acknowledge the Bank of China as the only Chinese company in the top 20 to have two women (25%) on its top team.

Chinese capitalism is, at least, ahead of Chinese communism – the Politburo remains 100% male.

Japan: Where Womenomics goes to die

Japanese Premier Shinzo Abe thinks he has the answer to Japan’s steadily aging workforce – acceleration of the engagement of women in the economy. “Active participation of women is at the core of [Abe’s] growth strategy,” said a government spokeswoman after a speech in April last year, in which he called for women to fill 30% of senior positions by 2020.

But, he has a long way to go. In our survey of Japan’s top 20 companies, just two women appear in the list of 230 Executive Committee members – both in support roles. The vast majority of Japan’s largest corporations has not a single female senior executive. From where does Prime Minister Abe think another 60 women executives will miraculously appear in the next six years, to help him reach his pie-in-the-sky target? His own party has a pitifully low female representation – around 10%. Japan is 124th in global ranking of women in national parliaments – well behind China or Saudi Arabia.

Abe has said he will improve childcare provisions and encourage training for women returning to work. A bit of training for Japanese men to help them adapt might also be a good idea, given the traditionalist attitudes of many in his own party and in society at large.

When I visit Japan I see highly educated and energetic young Japanese women dashing to and from work with all the determination and drive of their male colleagues. Many of them refuse to marry in order to preserve their jobs and independence in a stiflingly traditional culture. Too bad the country, the economy, and the future are still losing out on their potential.

USA: Nicer – but nice enough?

First, some praise. Progress is progress. A fifth of top executive posts are now held by women – up from 18% last year. Most companies (70%) now have two or more women on their executive committees. Only three have none. Since last year’s report, five more companies have appointed a woman to the top team. A third of companies have achieved what we call ‘Critical Mass,’ where there is at least a 25% representation of both genders on top teams. 40% of these senior executive women have operational responsibilities. And three (HP, IBM, and General Motors) have women chief executives – the only female CEOs in our country reports. All three of those companies (and women) are under intense scrutiny right now, amid problems of poor performance, or product recalls – in IBM and GM’s case – pre-dating Ginni Rometty and Mary Barra’s arrival.

Yet after decades of both gender and diversity work, is 20% of top executive posts enough to be considered balance? Should we celebrate a country where the key message of one of its top female executives in 2013 was for other women to ‘lean in’ and try harder?

Hopefully, these improvements are the result of companies and their leaders trying harder. I look forward to next year’s numbers, to see if the U.S. really is getting closer to “critical mass.”

End Abusive Behavior on Your Team

Managers aim their abuse at those who are least likely to defend themselves. That is the finding of a disturbing new study by Pedro Neves (published in the Journal of Occupational and Organizational Psychology), which looked at 193 supervisor/employee pairings in a variety of different industries.

I found the results troubling, but sadly they resonated based on my experience as an executive team advisor in dozens of organizations.

Here is a summary of Neves’ findings.

Employees with poor core-self evaluations (an aggregate measure related to self-esteem and sense of control) and poor coworker support were more likely to experience aggressive behavior from their supervisor (belittling, blaming, etc.). That is, the weakest employees receive the brunt of a bad manager’s abuse.

The propensity to target aggression at the people least likely to retaliate was exacerbated when the supervisor was in a stressful or threatening situation (in this case post-downsizing). Supervisors under stress did not become universally more aggressive, just more aggressive toward the weakest members of their teams.

Employees with low core self-evaluations did not respond to the abuse directly. Instead, they decreased their effort on their job duties and reduced their discretionary effort on other tasks that support the team or the organization.

In these findings, I immediately recognized a pattern of team dysfunction that I described in my book You First and that I wrote about in a previous post for HBR. This toxic dynamic is created and worsened by three distinct roles: the wicked manager who is preying upon the weak, the wounded victim who fails to defend him- or herself, and the witnesses who do nothing to interrupt the unhealthy interaction. Anyone playing any of these roles can change the team by changing their behavior.

If You Are the Manager

First, if you are a manager, hold up a mirror and ask yourself whether you play into this destructive dynamic. If you are honest with yourself, do you take out your frustrations on the person on your team who is least likely to fight back? Is there someone on your team caught in a vicious cycle where his victim mentality has become a self-fulfilling prophecy?

Just making yourself aware of this will start to change it for the better. Then, decide what to do. Is there is a constructive way to address the things that are frustrating you so that you don’t pass your emotion on to the team? Even being aware that your frustrations come from outside your team will help. If you have angst that comes from uncertainty about your own situation, don’t take it out on your subordinates, try to address it directly by asking for clarity from your manager. If you’re angry about a decision from above, find an appropriate outlet to express your concerns so they don’t get projected onto the team.

Next, make a decision about the weak team member. There is no point having a helpless person on your team. If it’s not worth the investment to turn his behavior around, find another home for him or exit him from the organization. If the person has a unique skillset or important relationships with customers, it might be worth the investment to help them succeed. Invest in building the person’s confidence and increasing his credibility with his teammates.

Your negative words and body language toward the weak team member have demonstrated to his coworkers that they don’t need to respect or support him. If you pay attention to your own behavior, you’ll probably notice that you don’t make much eye contact with him and that your body is usually aimed away. Start shifting those subtle cues while you also focus on being inviting and open in how you interact with him.

If You Are the Victim

If you’re the victim of the abusive manager, stand up for yourself. Your attempts to grin and bear it without pushing back are inviting more aggression. First, you need to realize that your boss’ behavior is likely being triggered by stress she is under (i.e., it’s about something other than you). When you present an easy target, she gets a chance to let off some steam at your expense.

Let your manager know that you will not be a punching bag anymore. Say something strong and respectful such as “I think we can resolve this without raising voices,” or “My report had each of the pieces that we discussed when we met on Tuesday.” Where it makes sense, enlist the support of your coworkers “Brad, could you weigh in on this, we talked through this approach.”

Finally, don’t get even by reducing your efforts on the job. It may feel unfair and you may feel disengaged, but the last thing you want to do is give your manager a valid basis for her treatment of you. Every time you feel the desire to switch off your computer a little early, channel that into a productive conversation or an important project.

If You Are the Witness

If you observe this kind of destructive relationship between your boss and one of your teammates, get off the sidelines and do something. Watching silently as a coworker is abused is no better than standing idle as a kid is bullied on a playground. Remember, the research showed that the supervisor abuse was much more likely to be targeted at people who didn’t have the support of their coworkers.

Reach out to your teammate and provide support, advice, and coaching. If there are things you believe she can do to come across as more confident, pass along your ideas. In meetings, if you see abusive behavior, try to defuse it. For example, if someone continually interrupts her, ask that people hear her out. You might try something like: “I’d like to hear what Sally has to say.” If the boss criticizes her, be vocal when you disagree. Lending some of your confidence and credibility might be the boost she needs to reclaim some respect from the team and the boss.

Any one person can disrupt an unhealthy dynamic by behaving in a new way. It takes the willingness to see and acknowledge the bad behavior and the courage to do something differently. It’s worth it.

How Comcast Sets Its Customer Service Reps Up to Fail

You’ve probably heard the audio by now — eight excruciating minutes of back-and-forth between a Comcast customer who wants to cancel his service without giving a reason, and the customer service rep who digs for one nonstop. If not, take a listen:

 

Curious about what might be going on, management-wise, behind the interaction, I spoke with Frances Frei, a professor and senior associate dean at the Harvard Business School and the co-author of Uncommon Service: How to Win by Putting Customers at the Core of Your Business. An edited version of our conversation is below.

Aside from the general reaction from the internet – that the service rep is a jerk – I’m wondering what you make of this call. 

Sure. The public has it wrong, by the way.

How?

Imagine if I told you that I am the leader of a company and am telling people that customer retention is the future, that it’s the salvation of our organization. I fire up the troops and say, “We are the best and no one should rationally want to leave us. The only thing you have to do is to help people understand we are the best. You have all the facts at your disposal, we are going to give you incentives. I know you can do it – you can turn anyone.”

This results in everyone thinking they are better at their jobs when they turn a customer.

When I listen to this thing, I hear a guy really trying to please his bosses. I find it reprehensible — there is no way he just made up that this was the right way to behave. He is clearly doing what was asked of him in a vague way: remind people that we are the best, and if you can just get them to talk about why they are leaving, you can remind them why we are the best.

Now, was he the most emotionally intelligent person?  No, but I would love to know: Where are they sourcing their employees from, and do they have any business to expect people to be both driven and emotionally sensitive?

The employee was not set up for success.

So what would it look like if he was set up for success?

There are some customers who want to leave because they don’t know any better. With that subset, a company would want to do everything it could to keep them.  Now, there is another subset that is leaving for idiosyncratic reasons — or no reason at all. I want them to be ambassadors, so I would recommend being as gracious as possible. You can educate the customers who are wrong about an issue, but there is no way this rep received that nuanced message.

Do you have a sense of whether the internal tracking mechanisms, having to fill out reasons why people are leaving or that sort of thing, played into what happened at Comcast?

I think this guy’s performance was measured not on whether the customer was going to be an ambassador afterwards, but whether or not he got to ring the bell that he converted somebody who wanted to leave. There is a pretty clear performance measure going on behind the scenes.

What would a better incentive system look like?

They could have easily done it differently, and I am not even sure I would measure on conversions.  I would measure on the question, are these customers likely to be ambassadors for our organization at the end of the phone call? That would be the only measure.  I am sure it would get more retention than their current system does.

How would you measure that? It seems like a harder thing to gauge.  

Actually, many companies have systems where, for example, they call or email people back and you ask them how they are doing. It’s a very well-understood thing.

So when it comes to Comcast – and people tend to hate cable companies more than other businesses –

Because of stuff like this.

Exactly, and we’ve all had similar experiences. So why wouldn’t they just change the way they handle customer service?

In industries like cable, when the customer dissatisfaction is so great, it is because you feel like you are banging your head against the wall.  That’s why we often blame the person on the other end of the phone, but I have been in enough of the organizations to know it is not the employee’s fault.

But, really, how seriously does the average person really consider an alternative to cable, even if they hate cable? That’s because the cable industry has a long history of no competition, so I think a lot of its profits and customers have been guaranteed. But the industry needs competition like nobody’s business, because in competitive environments, you wouldn’t get away with this.

It’s like the old days of the post office before FedEx came along: Because cable has been protected from competition, and it makes them profitable. It makes us have to suffer.

It almost seems like the restrictions being placed on customer service reps and others on the front lines are becoming more and more absurd — and aren’t actually helping customers or companies. For example, employees at car dealerships who say they need a 10 on a satisfaction survey or else they’ll be considered to be a failure.

It makes me so crazy. It’s run amok.

Auto dealers are the most notorious, that if you give us a 5 it’s a pass, if you give us a 4, it is a fail.  I had a man from a pest control company that had a guy leave a survey and say, “You might not notice, but I don’t get my bonus unless you check a 10.”

Now, first of all, that must mean that the way in which they are doing the survey is the laziest way in the world — and they probably are using them in a really dopey way, too.  And the employees are finally the ones who are surfacing it.  That is a shameful act on the part of the organizations.

In addition, you are not going to get honest feedback. It’s based on perverse incentives, and they’re causing a lot of problems. It’s a caricature. It’s a Saturday Night Live skit.

Just stop the madness. Just stop it right now.

It sounds like the employees are basically the only way that we understand these major systemic problems with companies — and often at the employees’ peril.

Yes, because the experience gets delivered through the employees, we often blame the employees. And if you have a good service experience, you think the employee must have gone to heroic efforts to overcome the system.

That variation doesn’t make any sense, and it goes back to job design. Again, these companies are not systematically setting employees up for success. And then they worry about customers complaining on social media – well, they give us no other outlet.

Taking a step back, are there any companies that do a really good job when it comes to customer service calls?

Oh yes. Just call Zappos. At Zappos, the employees, no matter what your problems are, they will all do a good job. They are not judged by how quickly you get off the phone; they are judged by how good of an experience you have.

So why is it that we have call centers that give you the perverse incentive to get off of the phone as quickly as possible, or the perverse incentive of making sure a customer stays, no matter why they’re leaving?

Why not be judged for whether customer is deeply satisfied at the end of the call?

The Industrial Revolution That Never Was

Every schoolchild learns that the industrial revolution began in England. Forests have been felled to demonstrate why England, and only England, had the culture and institutions to be the birthplace of modern industrial capitalism in the late 1700s. Yet the creation of large-scale factories nearly began not in England, but in Great Britain’s American colonies, 250 years ago. The American version failed miserably, because culture and institutions were not enough to kindle an economic revolution.

It was in June of 1764 that a merchant named Peter Hasenclever landed in New York with plans to build a network of factories unlike any the world had seen. Hasenclever, then 48, had been an international businessman almost since birth. He had grown up in northwestern Germany, where his father owned mills that heated small amounts of charcoal and iron together to make steel that could be hammered and sharpened into knife blades. He had lived and traded in Belgium, France, Portugal, and Spain. His acquaintances included Frederick the Great, king of Prussia, who wanted Hasenclever’s advice about encouraging a textile industry.

Hasenclever moved to London in 1763. A few bribes persuaded Parliament to grant him British citizenship, and with it the right to invest in Great Britain’s American colonies. Wealthy from his years in Spain, Hasenclever sank £8,000 into a partnership with two English traders. None of the three had been to America, but all sniffed opportunity in making iron.

Parliament normally opposed manufacturing in America in order to protect jobs at home. But the desire to protect British industry had foundered on a dangerous reality: exhausted mines and depleted forests could no longer meet the Royal Navy’s endless demand for iron. Much of the Navy’s cannon and plate was made from iron bars imported from Sweden. Worried about the security risk should Sweden cut off supplies, Parliament opened the door to iron imports from the colonies.

Hasenclever and his partners reckoned they could earn an annual return of 20 to 30 percent by making iron in America and trading it across the Atlantic. To smooth their way, they made the acquaintance of some gentlemen who could influence the government’s purchases of iron, such as Major General David Graeme, private secretary to Queen Charlotte, and George Jackson, soon to be named deputy secretary of the Admiralty. These aristocrats and their friends put up £40,000 to form the American Company. Hasenclever would run the company’s business in America, and the partnership of Hasenclever, Seton, and Crofts would transport its products and sell them in Britain.

In January 1764, Hasenclever’s cousin traveled to Germany, where he secretly recruited miners, masons, ironmakers, and forgemen in the face of a ban on emigration of skilled workers. Meanwhile, Hasenclever set sail for New York.

Soon after landing, he purchased 10,000 acres of rocky, inaccessible land in the Ramapo Mountains, a range of low but extremely rugged hills barely 30 miles northwest of the city. The property included several ancient mines and ironworks. The proprietors of New Jersey colony approved his plans to make iron after its investigators reported, “In our opinion the land is entirely unfit for any purpose but that Mr. H proposed to employ it in.” As the first of 535 German workers and family members arrived in late summer, abandoned mines were reopened and old hearths relit. By November 1764, the American Company was making iron.

New Jersey was littered with tiny ironworks in the 1760s. Most were bloomeries, glorified blacksmith shops in which an ironmaker – often a slave unable to refuse a dangerous job – would heat a lump of ore over charcoal in a hearth. Standing inches from the hot coals, the ironmaker would reach in with a bar to push aside dirt and rock and lift the glowing mass of metal, called a bloom, on to an anvil where he could hammer out more impurities. A day of heavy labor might produce a few bars of iron, 14 feet long and two inches on a side.

Bloomeries were crude, but they were much cheaper to build than the main alternative, blast furnaces. A blast furnace was an egg-shaped stone oven 20 feet high designed to sustain very high temperatures for months on end. Coal or charcoal fueled a fire made white hot by blasts from a leather bellows. Ore would be fed in, and the ironmaker would cook it along with a flux, such as limestone, at temperatures far hotter than a bloomery could achieve. Eventually, the iron would separate from the mass, and molten iron would trickle down into molds, known as pigs. Pig iron was brittle, but the cast pigs could be hauled to a forge, reheated, and beaten into wrought iron bars.

This was by any measure a primitive industry. Ore was extracted a few pounds at a time with picks and shovels. Bloomeries and blast furnaces produced tiny quantities of metal each day. Their biggest customers were blacksmiths who hammered a few inches of heated iron bar into a horseshoe or a hinge. Some pigs were processed by workers pounding small pieces of charcoal into molten iron until the carbon in the wood diffused into the metal, arduously producing enough carbon steel to hammer out a few knives or axe heads.

Hasenclever’s strategy was far grander. The American Company was to be a transatlantic enterprise that would produce large amounts of high-quality iron and, eventually, steel. He, his partners, and the American Company’s investors would control every stage of the operation, from mining on remote New Jersey mountainsides to selling metal bars in London.

To realize this vision, the company acquired yet more land, until it owned 34 square miles of forest around Ringwood, New Jersey, and 53 mines. German stonemasons erected three blast furnaces, two stamping mills, seven forges, and 10 coalhouses to turn trees into charcoal. To furnish ore, limestone, and timber, 214 company-owned oxen pulled carts over miles of company-owned road hacked out of the wilderness. New dams impounded four reservoirs, including the body now known as Tuxedo Lake in New York State. Four water-powered sawmills cut lumber to shore up mines and frame buildings.

Peter Hasenclever’s ironworks may have been the most ambitious industrial enterprise of its day. But while Hasenclever took a long-term view of the colonies’ promise as a home for industry, his investors tired of his endless expansion plans. They wanted dividends, and on that score the American Company was doing poorly. Storms destroyed millraces and waterwheels, requiring outlays for reconstruction. The mills could produce iron only until winter made the roads impassible and brought the waterwheels to a halt; for three or four months a year, there was nothing to sell. To the frustration of those titled gentlemen back in London, the American Company did not make much of a profit.

Technology was part of the problem. Machinery that would let a large mill turn out iron bar more cheaply than a small one was not to be had. The more charcoal the blast furnaces consumed, the further Hasenclever’s timber cutters needed to range for trees, driving up costs. Ore, pigs, and bars all were transported one wagonload at a time, with no cost saving as volume increased. Scale was of no benefit, so expansion consumed ever more cash without bringing higher returns.

But even more troublesome than the lack of technology were the cultural underpinnings of eighteenth-century British capitalism. The American Company was not a corporation in a modern sense, but part of an assemblage of partnerships. In 1766, one of Hasenclever’s London partners was declared bankrupt, dragging the other two partners with him. With Hasenclever’s financial status now clouded, his partners in the American Company grew nervous. They looked more closely into his affairs, alleging he had spent £54,000 of their money expanding the business, far more than the £40,000 they had agreed to put up.

The investors sent a series of managers to take over the operation in New Jersey. Hasenclever ignored them, and turned to William Franklin, the colonial governor of New Jersey, for support. Franklin’s investigators reported in July 1768 that “Mr. Hasenclever has accomplished a great deal” and concluded that none of his expenditures were unnecessary. Nonetheless, he was summoned to London to face charges of mismanaging company funds. Now, class differences came into play, as the aristocratic investors pursued court action against the self-made capitalist. The legal outcome was never in doubt. The ironworks were closed down. Peter Hasenclever never returned to America.

So it was that, a quarter of a millennium ago, the industrial revolution in New Jersey came up short. For the next half century, inventive entrepreneurs would apply their efforts to textile mills in the English Midlands, not to forges in the American wilds. Through many changes of hands, the American Company’s furnaces and forges would make iron on and off until after the Civil War. When new technology reshaped steelmaking a few years later, though, Hasenclever’s mills in the Ramapo Mountains were too antiquated to take part in the revolution.

 

Your Company Can Benefit If a Top Politician Is Your Friend

The stock of companies whose top executives or major shareholders were friends of Nicolas Sarkozy outperformed other firms’ stock by 3% after Sarkozy’s election as president of France in 2007, according to Renaud Coulomb of the Paris School of Economics and Marc Sangnier of Aix-Marseille University. For comparison, past researchers have estimated the returns to being connected to powerful officials at 5% in Italy and Turkey and 8% in China. Sarkozy, who served until 2012, was recently put under official investigation in France and charged with corruption and influence peddling.