Marina Gorbis's Blog, page 1394

Innovation Is Marketing’s Job, Too

When I took over as chief marketing officer at GE, the mandate from CEO Jeff Immelt was to make marketing a vital operating function that could drive organic growth. We realized early on that it wouldn’t be enough for marketers just to focus on advertising and external messaging. We were in a unique position to integrate ideas and teams across the company, and to draw insights from the outside world. So we signed up to fight in a bigger way for the market and GE’s place in it.

GE’s best path to organic growth is to continue the world-changing innovation it has always been known for. The ethos of restless invention has driven us since the days of Thomas Edison. In marketing, we resolved to fuel that innovation, and also to make our own efforts as creative and valuable as the products coming out of our R&D labs.

Now, after more than a decade of experimentation, I can share the formula we’ve developed. Tested and proven at GE, it might be similarly effective for other marketers looking to create value and drive innovation in their businesses.

Go to new places. GE’s marketers have to be explorers, seeking out new places and bettering our understanding of what people need in every corner of the globe. We’ve found this to be true across industries, but particularly in health care. It’s wonderful to be trusted to create sophisticated products for highly trained physicians at world-class medical centers. But if we also want to compete in the world’s fastest growing markets, we also need to see that, in many places, power supplies are intermittent and the medical professionals interacting with patients are mainly midwives and practitioners with limited training. Marketers can provide that kind of insight and fight for better outcomes for customers in the markets we serve.

Here’s an example of what can happen when we do: GE now sells ultrasound machines that are portable and durable enough to simply be trekked in to wherever they are needed. Using them is almost as simple as flicking the on/off switch; red and green lights serve as indicators. And therefore, pregnant women in remote locations are better served. For GE, the value doesn’t end there. When marketers are empowered to understand where the world is going, the fresh understanding they deliver of what customers value and how to deliver that value can be scaled across the company.

Shape the market early. The really good innovations – the ones that change the world – need to be explained before they’re accepted. Recently, for example, I’ve been posing this question to our markets: What happens when billions of machines come online and start communicating? As we enter the age of the Industrial Internet (GE’s term for that invisible web connecting all these brilliant machines), it’s up to marketers to define for regular people and business customers how this new reality will drive different outcomes. At the same time, our explanatory powers can push our own company to do its best thinking about the possibilities for connecting industrial technology, analytics, and user experiences.

Because this is the kind of breakthrough innovation that GE excels at, one of our mantras in marketing is “mindshare before market share.” We’ve had to achieve that with ecomagination and, more recently, with GE’s innovations in advanced manufacturing. It has meant becoming a content factory – telling stories across media and methods from data to videos to social media. Through good storytelling and by connecting with others who share interests in getting those stories out, we help shape the markets in which GE’s offerings will be able to deliver value. We anticipate what our customers – future and present – will need, and describe it. Long before customers are clamoring for specific solutions, marketing is setting the stage.

Incubate new businesses and models. Part of marketing’s mandate at GE is to find ways the company has not thought of before to promote ongoing innovation. That can be as simple as creating a “protected class” of ideas that are therefore given more time to prove their value. This kind of treatment gave rise to the Durathon battery, which provides backup power for cell towers in parts of Africa where the electricity supply is intermittent. The technology began life as a project to create a battery for a hybrid locomotive; only later was it adapted for other applications. Another boost to innovation via marketing has been FastWorks, a program designed to integrate startup culture into our DNA. It simplifies development and gets products to market faster.

Invite others in. At GE, we don’t want to solve every problem alone. Partnerships are the path to speed and scale. That’s why we’ve established connections with the data competition site Kaggle, the cloud-based engineering platform GrabCAD, and the invention factory Quirky. We’ve taken to market several creations that came to us through Quirky inventors, including the sleek Aros air conditioner. These opportunities evolved from marketing people asking simple questions: Are we open to creating meaningful new partnerships? Are we experimenting often and in new spaces? Demolishing the barriers between innovators at GE and makers outside the company has expanded our creative territory, and it’s just one more way we’re fighting for the market.

Back when Edison was alive, there were still a few mad scientists around trying to invent a perpetual motion machine. Of course, given the laws of physics, it isn’t possible. But when a marketing department helps to fuel the very innovations it promotes, it can feel like it is. Perpetual-motion marketing – marketing that connects the company’s offerings to markets, and in making those connections generates new energy around invention – is a minor miracle we can achieve. And for a company whose future depends on innovation, it might be the only way to go.

The New Marketing Organization

An HBR Insight Center




How We Transformed Marketing at Electrolux
Marketers Don’t Need to Be More Creative


CMOs and CEOs Can Work Better Together
How Sephora Reorganized to Become a More Digital Brand

The Hobby Lobby Decision: How Business Got Here

Monday’s Hobby Lobby decision by the United States Supreme Court marks the first time the government has recognized that some for-profit corporations have religious rights. The ruling is based not on the First Amendment of the Constitution, but on a 1993 statute. Usually, Supreme Court decisions clarify matters of law for the lower courts; but in this case, the mess of tea-leaves in the ruling has thrown commentators into a confused frenzy.

Experts on religion and the workplace, too, are unsure what this means for businesses and the broader business climate. “We don’t know where this will take us,” admits Diana Eck, Professor of Comparative Religion at Harvard and Director of The Pluralism Project. “Time will tell,” says David Miller, Director of Princeton University’s Faith & Work Initiative.

But there are several larger trends that may indicate the lay of the land. One is the growing treatment of corporations as organisms that have rights and points of view. As Mark Tushnett of Harvard Law School said in an interview, “Corporations have a lot of constitutional rights as surrogates for individuals…Yes, [the Hobby Lobby decision] moves the line a little, but the line was already pretty far in the direction of corporate rights anyway.”

Another development that seems to have led, at least in part, to this moment is the bring-your-whole-self-to-work movement. These calls for authenticity have not explicitly focused on religion, but it is inevitable that if you are a religious person, your faith is closely tied to your sense of self. As Wharton ethics and legal studies professor Amy Sepinwall put it, “A state that takes seriously its obligations to respect religious free exercise has to understand that individuals are not going to want to leave their religious convictions at the corporate office door.”

A third major trend is the push for a more moral form of capitalism. Whether you call it creating shared value, conscious capitalism, the triple bottom line, social business, or something else, it has mostly focused on secular ethics. But it is easy to see that believers’ moral codes would be deeply informed by their faith. The question, as Eck put it to me, is: “At what point does an ethical purpose get to have an exemption from national laws?”

It seems likely that we’ll be wrestling with more of these questions in the future. I asked Eck if there had been a shift in how Americans conceive of religion that had helped lead to this moment.

“On the Christian right, the articulation of faith is much more public than ever before. But there are also other public advocacy groups — Christian, Jewish, Muslim and interfaith — concerned with a range of public affairs, from domestic poverty to international conflict. At the same time, for many younger people, faith is no longer primarily about ‘belonging,’ that is, belonging to a community that attends the same worship services or observes the same holidays. We also have seen the rise of a religiousness, a spirituality, of ‘seeking,’ that is much more individualistic.”

If that trend towards every-believer-for-himself continues, it may make it more difficult for courts to adjudicate similar cases — something the Hobby Lobby decision seems destined to produce. Says Princeton’s Miller, “Surely it will open the door to future requests by other companies who have a religious identity of some sort.” Wharton’s Sepinwall sees future courts trying to gauge the seriousness of a company owner’s religious beliefs, something the lawyers and justices in the Hobby Lobby case purposely steered clear of.  “You would want to look to various pieces of evidence that support the company’s asserted religious conviction…that the company’s stores are closed on Sundays, for example.”

That sounds like an awful lot of work for the lower courts – which may mean that regardless of who actually won Burwell vs. Hobby Lobby, the real victory will go to the lawyers.

How to Hire a CEO You Won’t Want to Fire

A lot of CEOs are being shown the door lately. In the apparel industry alone, we’ve just seen the end of American Apparel’s Dov Charney and the ouster of Lululemon Athletica founder Chip Wilson – plus the installation of interim CEOs at Target and JC Penney following their previous leaders’ firings. These companies are in trouble, and their boards must select new CEOs under highly charged circumstances.

At least some of them are bound to make the mistake we’ve seen so many times: pushing ahead with a sense of urgency around their new CEO selection, and allowing their deliberations to be overtaken by strong wills and unexamined emotions.

Here’s what they should do instead. First: take the time to arrive collectively at a short list, not of candidates but, first, of criteria. An open and rigorous debate over CEO criteria is the most important step a board can take with succession. Then: commit to a process by which the potential leaders they consider will be honestly, consistently assessed against those criteria and a winner will emerge.

Why is the early narrowing of criteria so important? From the outset, it reinforces the reality that no CEO candidate is perfect. All of the available options will have noticeable strengths and weaknesses. The board’s challenge is to decide what deficits it can live with (usually because they can be compensated for by the rest of the leadership team), and which two or three criteria are non-negotiable must-haves.

The alternative, and unfortunately the usual route, is to compile a laundry list of laudable qualities. While none of them is easy to argue against, collectively they have no power, because the list doesn’t allow the best candidates to emerge. Worse, a list that calls for everything gives every director something to point to as they lobby for their own favorite. Someone prevails and others, eager to wrap up this sensitive and time-consuming process, capitulate. From the outside the process might look like solid work, following best practice. But the board has essentially abdicated its most important responsibility.

Consider the case of a specialty retailer whose CEO was retiring after a long, successful run. The retiring leader advocated strongly for an executive he had groomed for the job, in his own image. But the board recognized that the company’s environment was changing dramatically, thanks to global expansion, greater online competition, and customers’ evolving expectations of their shopping experience. Diligently, the board drew up all the criteria it felt it should consider.

Clearly it was time for a CEO who could handle omni-channel complexity, but on the board’s wish list, that was just one item among many. Among the others was merchandising experience, which the heir apparent, like his mentor, had in spades. Reluctant to oppose a leader who had dramatically increased shareholder value, the board folded under pressure and ratified the CEO’s pick. The result was disastrous, as the company suffered numerous missteps in rolling out new channel strategies and overhauling back-end systems.

When a board never engages in open debate over which attributes matter most, not only does it fail to connect succession to what the company most needs; it neglects to give the incoming CEO guidance about where to focus his or her own efforts and in what areas it might be best to delegate.

Boards, and companies’ governance processes, are idiosyncratic; exactly how to focus on what’s really needed in the next CEO will depend on the firm. But, at a high level, it is a three-part process:  Start with an exploration of likely scenarios for the company in the next several years. Get input from executives, high-potentials, and outside stakeholders on how those conditions will most challenge and create opportunities for the company. Then develop a profile limited to a few must-haves. This process is usually enhanced with the departing CEO’s involvement, as long as the board shows leadership.

Greater focus brings better results. A global energy company was struggling and seemed unlikely to survive the industry’s looming consolidation. With its CEO preparing to retire with a mixed legacy, the board at first generated a list of fifteen things at which the new leader should excel, ranging from expanding into new markets, to driving a Six Sigma-based culture of operational excellence, to getting a major facility project back on track. Rather than work from this list, however, the urgency of the company’s situation drove the board and CEO to debate which goals were most important. They narrowed the list to three: defining a visionary strategy to survive consolidation, driving a culture of accountability so the company could deliver on promises to investors, and developing a strong bench of executive talent. They consciously left out operational goals, because most directors agreed the CEO could rely on the existing business unit heads, and a capable COO could also be hired from outside.

That effectively ruled out the heir apparent, despite the fact that some directors had felt he was “owed” the job. While his strengths were significant, it was undeniable that the three key areas of need were weaknesses for him. The board hired an external candidate, who over the next few years made some transformational acquisitions, kept the company independent, and greatly boosted the stock price.

There Are Risks in Having the CEO’s Pals on the Board

Ties of friendship between corporate directors and CEOs can compromise firms’ integrity, but public disclosure of the ties can make the problem worse, according to research in the American Accounting Association’s Accounting Review. In a study of 56 board members, 46% of those who were asked to imagine being directors of a fictitious firm whose CEO was a friend said they’d be willing to substantially cut R&D if it meant triggering a hefty bonus for the chief executive (compared with 6% of those who were asked to imagine that the CEO wasn’t a friend). Those who imagined disclosing the friendship were willing to cut 66% more than those who imagined keeping the friendship secret—apparently because disclosing the friendship gave directors the feeling they had a moral license to reward the CEO, the researchers say.

How to Delegate Your Email to an Assistant

In the early days of the internet, email natives loved to trade tales of executives who asked their assistants to print out emails so they could read and respond to them on paper. Now we all use email, and assistants are a seemingly rare commodity. But they can still play a useful role in managing your messages.

That kind of support is no longer limited to the lucky few who have administrative help on staff, either. Thanks to the emergence of the collaborative economy, in which people can access services on a pay-for-use model, there are more and more options for getting administrative support, whether it be using a virtual personal assistant service like Zirtual, hiring a part-time assistant through Craigslist, or having more traditional access to administrative support through your company.

An assistant can reduce the burden of email management in ways automated systems can’t, be they third-party plugins or rules and filters that you set up within your inbox. They can function as your email triage system, conduct your daily inbox reviews, or even reply to individual messages. The most effective setup combines human support a smart set of email rules and filters—so that you’re not wasting your assistant’s time on the routine job of deleting junk mail or filing missives that you don’t need. Considering how much of your workload likely involves reviewing incoming messages, replying to calendar requests and ensuring your top-priority emails get answered promptly, asking for assistance with email triage is in fact one of the best uses of administrative support.

The decision to delegate

If the idea of delegating email management fills you with alarm, know that you don’t need to give someone full access to your email in order to get meaningful help managing your inbox (more on this in the setup section below). How much of your email you delegate depends not only on how much support you have available, but also on your working style, your relationship with your assistant, and your office culture. Here are few questions to ask yourself before deciding how much email management you can delegate, and whom you want to hire for that support:

How much skill and discretion can you expect? In the most ideal situation, you’d get daily support from a highly trusted assistant who has direct access to your inbox and outbox, so they could work through calendar invitations, billing or financial admin, or other routine requests. But trusting someone with your outbox is only advisable if you trust that person’s judgment about your work and priorities, and know that their grammar and spelling is at least as good as your own. And trusting someone with direct access to the whole of your primary inbox is only advisable if you can expect that person to exercise as much discretion as you’d get from a priest or therapist. If you’re working with part-time or virtual support, you’ll need to scale back these expectations; it will be your job to decide which emails your assistant sees and addresses, rather than vice versa.

What kind of relationship do you have with this person? If you rely on a certain amount of professional distance to make your working relationship successful, it may feel awkward for your assistant to come across personal email from friends or family. If your assistant is paid by your company, rather than you personally, take care to avoid exposing your assistant to messages that could create any conflicts of interest (for example, correspondence about a possible job change).  And if you share your assistant with others, think carefully about whether managing your email is feasible in the context of your assistant’s overall workload.

What’s normal in your office? If your peers get help managing their email, or there’s a common practice of delegating certain kinds of email management (like calendaring), then don’t hesitate to do the same. If you would be the first person at your level to get email triage assistance, talk with your manager, HR team, or IT department (to ensure you’re complying with email security guidelines) before asking your assistant to help. And if you’re thinking of hiring an outside assistant on your own nickel, make sure that you only forward or share email in a way that complies with your company’s email policies.

Setting up delegation

Once you have determined who will provide you with email support and to what degree you will rely on them, you need to set up a system that will allow you to manage your inbox collaboratively. That system includes both the technical set-up that will let you share email, and establishing clear expectations about how you and your assistant will work together. I recommend:

Using delegation services: Since sharing your password is a risky proposition, it’s a good idea to share access to your email by using a delegation service like those provided by Gmail or Outlook. Delegation allows someone else to access your email using their own password; you can revoke that access at any time. Outlook even allows you to customize your delegation setup to limit which items your assistant can view.

Creating a second email address: If you’re concerned about providing an assistant with direct access to your email, creating a second email address can be a useful strategy. This can work in one of two ways, depending on how much of your email you want your assistant to handle. If you’d like your assistant to see virtually all your email, provide her with access to your primary inbox, and create a separate email address that you share with people who need to be able to communicate with you on a confidential basis. (You can also use that second email address when you’re on vacation: ask your assistant to forward only those emails you must see, and enjoy the peace of ignoring your main email address.) If, on the other hand, you want your assistant to only handle selected correspondence, set up an address you can forward incoming mail to (possibly via mail rules) and give your assistant access to that address instead.

Specifying your reply protocol: Agree on whether your assistant will reply to emails as you, or by forwarding your emails to an account in his own name, and replying from there (“Sarah forwarded your email, and asked me to find a time for you to meet”).

Drafting sample replies: Particularly if you have a new assistant, or are trying to delegate email for the first time, write a few sample replies your assistant can use as the basis for her own messages. This is especially important if you are authorizing your assistant to send messages as you. While you’re at it, create a few standard replies that you can use yourself whenever you’re forwarding an email to your assistant (“My assistant Jim Smith, cc’ed on this email, can get back to you with a meeting time.”).

Making the most of delegation

Once you have your delegation system in place, there are a few practices and tools that facilitate collaborative email management:

Timing: Agree on when and how often your assistant will review your inbox. If you have access to daily support, your assistant can review your messages first thing, and perhaps at a couple of other agreed-upon times during the day; you’ll look at your inbox after your assistant has moved all extraneous messages into a folder (or folders) that he will work through himself. If your assistant is only providing a few hours of support each week, forward him the messages you’d like him to handle, or put them in a designated folder — just be sure to also reply to your correspondents, letting them know you or your assistant will get back to them in a few days.

Flags and tags: If your assistant has direct access to your inbox, ask her to flag every email in your inbox that you should personally read or address, or conversely, tell her that you will flag any email you want her to handle. This will work best if you are using a system of mail folders, labels or tags to file emails of different types: set up a category or label (“Assistant”) that you can apply to any message your assistant should address, and one (“ReadThis”) for any message you need to read yourself, and make sure you each apply those labels as needed when either of you go through the inbox.

Forwarding: Set up mail rules that forward specific kinds of messages to your assistant, such as meeting requests or invoices. You can also set up a rule that forwards any flagged/starred message, or any message with a specific label; that way you can quickly tag any message you want forwarded, without having to manually forward each one.

Filter-proofing:  If you’ve been reluctant to set up rules that move messages out of your inbox before you see them, an assistant can provide a safety net in case things go astray. Just ask your assistant to regularly review all your unread mail (for example, by looking in Gmail’s “all mail” folder, or doing an Outlook search for all unread mail) so that if an important message gets caught by your mail filters, he can move it back into your inbox.

While I came up with most of these tactics at a time when I had a wonderful full-time assistant, they are still useful to me even though now I have only occasional, part-time help. When I hire or task someone to help me on a major project, I often include email support as part of their mandate — and use tactics like selectively forwarding email, or delegating my helper to reply on my behalf.

The biggest challenge in getting email support is making the mental shift away from thinking of email as an area of responsibility that is yours and yours alone. Email is an enormous part of the workload for most professionals. Get help with this area of responsibility, and you’ll not only find it easier to stay on top of email — you’ll find it easier to stay on top of all your work.

The Content Marketing Revolution

We are, at present, in the midst of a historic transformation for brands and companies everywhere — and it centers on content.

Nine out of ten organizations are now marketing with content – that is, going beyond the traditional sales pitches and instead enhancing brands by publishing (or passing along) relevant information, ideas, and entertainment that customers will value. The success of content marketing has radicalized the way companies communicate. For innovative brands, an award-winning Tumblr now carries serious clout; hashtag campaigns have become as compelling as taglines; and the Digiday Awards are as coveted as the Stevies. The content marketing revolution signals more than a mere marketing fad. It marks an important new chapter in the history of business communications: the era of corporate enlightenment.

The phenomenon of content marketing and brand publishing has unfolded rapidly because it responds to consumer preference. According to the Content Marketing Institute, 70% of people would rather learn about a company via an article than an ad. Even The New York Times admits that native advertisements can perform as well as the paper’s own news content. Brand publishing allows companies to react in real time, provide increased transparency, and create a strong brand identity at a fraction of the price of traditional marketing tactics, and in less time.

Yet where brand publishing has had the most profound impact is in empowering organizations to create, facilitate, and leverage the ownership of ideas. That’s largely because great sponsored content is born from a company’s exchange of proprietary knowledge.

When it’s done right, brand publishing encourages companies to mine internal resources and expertise in order to become intellectual agents. Today, large corporations are becoming their own media companies, news bureaus, research universities, and social networks.

The rise of in-house broadcast further illustrates this. Big brands are poaching top-talent journalists in droves and implementing the most successful aspects of the traditional media house. Former journalist Hamish McKenzie is now lead writer at Tesla, USA Today’s Michelle Kessler is now Editor-in-Chief at Qualcomm Spark, and Andreessen Horowitz lured Michael Copeland from Wired. Why? Because trained journalists and writers are in the best position to synthesize information, capture a reader’s attention, and uphold a critical editorial standard. That means establishing an organizational complex that pairs great writers with better editors and incorporates a discerning chain of command, with a managing editor at the helm.

Yet, it would be misguided to assume that corporations are simply transplanting the traditional newsroom. Branded content is a brave new world and a brand’s editorial team, regardless of how it’s organized, must learn to live and breathe a company’s bottom line while also being mindful of the kinds of stories that appeal to readers. The editorial organization within a corporation has to be independent enough to form unique perspectives, but embedded enough to access exclusive information.

This kind of commitment to storytelling and editorial integrity, albeit shaped by sponsorship, is undoubtedly how content marketing has begun to encroach on the whole of marketing. Content, it seems, has miraculously given brands a greater purpose.

Brands are no longer merely peddling products; they’re producing, unearthing, and distributing information. And because they do, the corporation becomes not just economically important to society, but intellectually essential as well.

One of our most innovative clients, General Electric, is a pioneer in content marketing because the company is unafraid to transform internal knowledge about various subjects, from aircraft mechanics to wind turbines, into headline-worthy articles, viral GIFs, corporate microsites, and Tumblr followers. The result marks an evolution for the brand from a company that makes things to a company that produces ideas. Through content, GE establishes itself as a brand in possession of constant newsworthy knowledge.

Red Bull is proof of the extraordinary results great brand publishing can bring. The company’s top-notch content resulted in the creation of an in-house content production arm, Red Bull Media House. Red Bull crafts content that isn’t just compelling, but lucrative in its own right, launching an entirely new ideas-based business for the beverage company.

Unexpected brands like Equinox and Shutterstock use exclusive insight to give audiences useful and actionable content. Equinox’s Q taps into the luxury gym’s network for nutritional recipes, hotel room workouts, and fitness tips from personal trainers—no membership required. Shutterstock’s website presents a tour de force of art, graphic design, and technology that is in parts entertaining, educational, informative, and cultured. That it’s sponsored is an important afterthought—audiences will return to their site for the information, whether they buy stock images or not. Herein is the opportunity: via content, companies can evolve beyond the sum of their products.

Content, when it aligns with exemplary brand publishers of our time, gives companies a new opportunity that didn’t necessarily exist in the last century. Conventional wisdom told brands to keep knowledge quiet, to put “trade secrets” under indefinite embargo and to let exclusive information gather dust in corporate archives. But with the advent of the Internet, social media, and the dispersal of knowledge in every direction, corporations are in the unique position to distribute the information they’ve gathered in exchange for audiences, readership, and brand loyalty.

The Age of Reason in the 17th century was defined by the promotion of ideas and intellect. Considered a revolution of human thought, the Enlightenment bore world-changing advances in the form of ideas, discovery, and invention. Like the philosophers and scientists who populated the salons of that era, corporations today can and should participate in the dynamic exchange of innovative ideas, unique knowledge, and expertise.

Of course, not all brands can—or should—be expected to cover scientific breakthroughs or economic theory, but every brand can do better than a contrived content marketing strategy. Ninety percent of B2C marketers use content in their strategy, but few brands recognize the real opportunity in doing so.

Content can be the means by which a brand shapes and impacts business and consumer landscapes; it can be a thoughtful investment in a company’s legacy. Armed with quality content, corporations can become thought leaders, change agents, and experts. They can, in fact, become enlightened.

The New Marketing Organization

An HBR Insight Center




How Sephora Reorganized to Become a More Digital Brand
CMOs and CEOs Can Work Better Together


Marketers Need to Think More Like Publishers
Brands Aren’t Dead, But Traditional Branding Tools Are Dying

Leadership Is About to Get More Uncomfortable

Employees used to know just your name, your face, your business reputation.

Now they know your salary, your hometown, your connections on LinkedIn, how much your house is worth. They know more than ever, and you’re under pressure to share more than ever, too – 76% of global executives think it’s a good idea for their CEO to be on social media.

And along with this increased transparency, you’re held accountable for areas you know less about: new technologies, new markets, new cultures and geographies representing new stakeholders. It’s no wonder .

Good leaders have always stepped out of their comfort zones, but converging global megatrends are putting more pressure on those at the top to navigate a faster, more complex, more integrated, and more transparent business world.

In our recent book, “Leadership 2030: The six megatrends you need to understand to lead your company into the future,” we examined the repercussions of the convergence of major forces like globalization, climate change, increased individualism, and accelerating digitization.

Among our findings is that leadership in the future will involve increased personal and business-level discomfort. Leaders will have to cope with the blurring of private and public life – and they will have to forge new relationships with competitors and employees. This requires new skills and mindsets. Ego is on its way out.

Technology alone offers several sources of discomfort. Leaders will increasingly be called to evaluate and implement new technologies they don’t always understand and can’t control, from the cost-benefits of data automation to balancing consumer concerns with data mining opportunities to gauging the commercial value of bitcoin and other new concepts. As connectivity-enabling technology and virtual workplaces change how people interact, leaders must engage employees across cultures and business roles through new mediums. Leaders must acquire digital wisdom, even if they lack digital knowledge.

The combination of digitization with globalization and consumer demands for personalized products will complicate the usual processes and relationships. Competitors will be recast as allies, as rival companies will have to work together to achieve more complex technical innovations. Such “co-opetition” will require leaders to maintain a difficult dual perspective – rivals must be simultaneously seen as both vital partners and market threats.

But possibly the biggest adjustment for leaders of today is a power shift that is requiring major changes to how they think and work. Many are accustomed to command-and-control, to fear over love, and to “lead, follow, or get out of the way.” But hierarchies are flattening as power moves away from top internal management and toward employees and a proliferation of external stakeholders. Companies must now appeal to a plethora of global consumer markets, each with distinctive attitudes and desires.

Leaders motivated by power over others will not thrive in this new world.We will see more “altrocentric” leaders, who understand that leadership is a relationship and will therefore primarily focus on others rather than themselves. Adept at engaging rather than commanding, they see themselves as just one integral part of the whole. Altrocentric leaders will be capable of long-term vision encompassing both global and local perspectives.

David McClelland points out that both emotionally intelligent leaders and their egocentric counterparts tend to be motivated by power; they enjoy having an impact on others.The difference is in the type of power driving them: Egocentric leaders tend to be concerned only with personalized power – power that gets them ahead. Altrocentric leaders, on the other hand, derive power from motivating, not controlling, others.

The altrocentric leader who is intrinsically motivated by socialized power, and who draws strength and satisfaction from teaching, teambuilding, and empowering others, will be able to handle the increased pressure of tomorrow’s business environment. They understand that they need not “have all the answers” themselves, and this mindset and willingness to turn to others for help [accurate? Like competitors and employees?] better equips them to handle the stress of the uneasy chair.

All leaders will see life become more chaotic and overwhelming, and their struggles and management will be more visible than ever. Egocentric leaders will have a difficult time evolving, if they even can, and will be unable to thrive in such discomfort. Organizations need to develop leaders who are motivated by altrocentric leadership. They will be better prepared to succeed in 2030 and beyond.

Leading Across Borders Takes More than a Multicultural Background

I recently had a phone conversation with Cosimo Turroturro, who runs a speakers’ association based in London. Simply on the basis of his name, my assumption before the call was that he was Italian. But as soon as he spoke, starting sentences with the German “ja”, it was clear from his accent that he was not.

Turroturro explained, “My mother was Serbian, my father was Italian, I was born in Italy and raised largely in Germany, although I have spent most of my adult life in the UK. So you see, these cultural differences that you talk about, I don’t need to speak to anyone else in order to experience them. I have all of these challenges right inside myself.”

I laughed, imagining Turroturro having breakfast alone and saying to himself in Italian, “Why do you have to be so blunt?” and responding to himself in German, “Why do you have to be so emotional?” But then I got to thinking about what it would be like to work for Turroturro in a multicultural team.

It seems rather obvious that any global organization would be lucky to have a lot of Cosimos wandering their corridors. And there has been a spate of research in the last few years detailing the upside to the Cosimo profile.

My colleague, Professor Will Maddux, has demonstrated in a number of correlational and experimental studies that managers who are bi-cultural or who have lived in more than one country score higher on creativity tests than those who have lived in only one culture.   That’s good news for any global innovation project that has just hired a Cosimo.

Another of my colleagues, Professor Linda Brimm, calls people like Cosimo “global cosmopolitans.” She shows these multicultural types quickly assess and integrate into new cultures and are therefore highly valuable assets in any international organization. In addition, “global cosmopolitans” are usually multilingual, which makes it easier to build relationships and connect with clients and employees around the world.

That sounds like even better news for Cosimo, especially if he has a German, an Italian, a Serb, and a Brit on his new team. In fact, who better to lead the team? With his experience of living in a variety of countries and a multi-cultural family, he can help his team to decode their cultural differences, coach them to be more cross-culturally flexible, and offer strategies to improve their effectiveness — all in their own languages too.

Well, maybe not. Don’t assume, just because Cosimo speaks three languages at the breakfast table, that he is the best person to lead your global interactions.

First of all, Cosimos are often so culturally flexible themselves, having been adapting from one culture to another since they were infants without giving it a thought, that they don’t understand why working across cultures would pose challenges for the rest of us. They may have never thought much about cultural differences, and although they switch cultural contexts as easily as some people change clothes, they might barely realize they are doing it.

As a result, people like Cosimo sometimes lack empathy for those who are caught in a trap of cross-cultural inefficiency or frustration. Time and again, I have had someone like Cosimo attend my classes, only to annoy everyone else in the room with a comment like: “Working across cultures is easy! Why can’t my team just get over it?!” That is definitely not the type of coaching a global team needs when differences in cultural values are hindering collaboration.

My next example concerns an American, Tim Shen. Tim has Chinese parents and was born in Dubuque, Iowa, where he spent his childhood before going to the University of Chicago. Tim looks Chinese and speaks Mandarin fluently. He’s had a terrific career as an executive so far in the US, so a lot of American companies would naturally turn to someone like Tim when they need a leader for their Chinese operations.

Tim also thinks this shouldn’t be much harder than leading Americans, because he thinks of himself as Chinese… Chinese and American, that is. But when Tim arrives in Wuhan, China, it doesn’t take long for him to learn that he is not a Chinese businessman. He thinks and leads and communicates like an American, albeit in perfect Mandarin. And he is not a cultural bridge, able to move back and forth between the Chinese way of working and the American way of working. How can he be when he has never worked in China?

This is very confusing to everyone, not least Tim’s Chinese staff, who don’t cut him a lot of slack: after all, he sounds Chinese and therefore should know better. They complain bitterly of his lack of leadership skills and inability to understand and address the implicit needs of the clients and workforce. Tim comes to realize this would probably be a lot easier if he did not look Chinese, and he wishes he had an American accent when speaking Mandarin. At least then people would understand why he doesn’t lead like a Chinese person. They would stop to explain the cultural norms to him and help him understand all the cultural nuances that are passing completely underneath his radar.

Cosimo and Tim very well may be the best people you can find to run your global operations. But don’t assume, just because they are multicultural, that they will have the know-how to coach your global teams on cultural differences, or that they will become cross-cultural mentors for your global organization. If your company needs a globetrotting executive who will be in Shanghai on Tuesday and Bogota on Thursday, a Cosimo or a Tim will probably be a good bet. But if you are selecting someone to run a global team or organization, look for successful experience in leading a multicultural group, rather than going straight for the most multicultural person you can find.

Elon Musk’s Patent Decision Reflects Three Strategic Truths

In a June 12th blog post that made instant waves, Elon Musk, founder and CEO of electric vehicle (EV) manufacturer Tesla Motors, declared: “Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.” The words stood in stark contrast to most of the other recent news about patents – the headlines of wars being fought in the courts by, for example, Apple, Samsung, and Google Android.

The Internet’s response was to ask a collective “Why?” Why would the leading company in EVs voluntarily open up its technology to competitors? Analysts and pundits offered a number of theories – none of them mutually exclusive, but all suggesting different motivations:

Elon Musk’s personal impassioned desire to see the entire category grow at the expense of gasoline cars. This is the most explicit rationale he offered in his blog. “Our true competition is not the small trickle of non-Tesla electric cars being produced,” he remarked, “but rather the enormous flood of gasoline cars pouring out of the world’s factories every day.”
A long-term view towards driving down costs from electric vehicle parts suppliers, spurring the development of more widespread EV infrastructure, and thereby making EVs more appealing and affordable – all of which would ultimately benefit Tesla.
A strategy of enticing other automakers to adopt Tesla’s standards in order for Tesla to become the supplier of choice for other automakers when it comes to batteries and specialty parts for EVs.
A hope for patent reform – using Tesla’s visibility as a way of provoking a better conversation that might ultimately change the system.
A mere bid for publicity, considering that Tesla hasn’t, in any formal way, cut off the possibility of future lawsuits or opened up any of its proprietary secrets. (Patents are already in the public record).

One way or another, the announcement looks like a canny move. In the five days following the blog post, Tesla’s shares were up 10%, and, as the Financial Times reported, major automakers like Nissan and BMW are already lining up to talk with Tesla about collaborating on charging networks and standards.

Personally, we don’t presume to know Elon Musk’s mind. But here’s the insight we do take away from the episode. The fact that any of these theories could be true – and based on the share price movement, all of them are being applauded – says three important things about the nature of industries and competition today:

Industries are increasingly irrelevant; it’s now the ecosystem that matters.

Traditional automakers define themselves by their role within the automotive industry. They are adept at selling cars through dealership networks, and know how to drive down costs with suppliers. Their position within the industry defines their business strategy. We’ve plotted changes in the auto industry in the US, Germany, and Japan over the last 100 years; while strategies have certainly changed over time, the differences between eras essentially boil down to varying degrees of vertical integration and the ever-shifting balance of power between automakers and suppliers.

By contrast, disruptors like Tesla (or, for that matter, Google) gain a new advantage by understanding, leveraging, and ultimately staking a claim in the broader ecosystem, drawing heavily on innovation from outside traditional industry boundaries. They can – and will – do things differently. Witness, for example, the way Tesla is selling their Model S directly to consumers as opposed to replicating the traditional dealership model. Is Tesla even an automotive company? Not exactly – despite the product it markets and sells to consumers. In reality, according to analysts, Tesla is at its essence a fuel cell company: “In our view, Tesla has always essentially been in the cell business.”

Successful companies don’t play a role; they excel at an activity.

What’s the difference between a role and an activity? A role is defined by contractual and business relationships within an industry – being an aftermarket parts manufacturer, for example – whereas an activity is an essential and indispensible function within the broader ecosystem based around a set of specialized capabilities. (Michael Porter has written about “activity-based strategy” to mean the set of internal firm-wide activities that make up the value chain of a company. By contrast, here we are referring to the market-wide activities the company performs in its broader ecosystem.)

Having studied many different industries and ecosystems (as part of the research that yielded the recent book Big Bang Disruption), we’ve concluded there are only four essential market activities that matter today – and that the best bet for a company to make itself disruption-proof is to excel as one of these:

Inventors originate breakthrough components for use in an assortment of products.
Producers manufacture those components at scale.
Assemblers construct and distribute a final market-ready product.
Designers innovate new ways to bring together existing components in a unique fashion.

By adopting an “open source” position with regard to its intellectual property, Tesla is hoping to secure its position as the indispensible Inventor within the broader electrical storage and battery ecosystem, especially as the inventing relates to automotive applications.

Why did Tesla specifically choose to specialize around the Inventor activity? Because it recognizes that established Assemblers and Producers (automakers and their OEM suppliers) already dwarf it in size, and will most likely continue to do so. And, as Musk’s announcement makes clear, the company is prepared to accept other automakers as Designers in the electric vehicle space to grow the market. What Tesla wants more than anything is to cement its original innovations in the center of the broader ecosystem, especially when it comes to battery storage and charging – a positioning that would enable further growth into an array of other traditionally distinct industries that will increasingly be drawn into the battery and storage ecosystem.

“Activity focus” is the new strategic focus.

Orienting around a market activity isn’t just for disruptive new entrants. It’s a path that’s available to incumbents, as well, although the changeover is often far from easy. Consider an example from a different industry: semiconductor chip maker Intel. The company’s industry role as a leading component innovator and manufacturer was threatened with the decline of the PC market. To lessen its reliance on the fortunes of the PC industry, Intel took a gamble on the broader ecosystem. In 2010, the company began to experiment with a new “foundry” business model, entering into contracts that granted other chip companies – even some who were associated with competitors – access to Intel’s underutilized manufacturing facilities.

Some analysts pointed out the apparent folly of pursuing a market that, they estimated, was capped at $7 billion – an amount which, they argued, “just isn’t all that much to a company like Intel.” But by looking just at the market potential, these analysts missed the longer-term implications of Intel’s ecosystem play. In starting its foundry business, Intel did not just open up a new revenue stream; it repositioned itself as an indispensible Producer within the broader chip ecosystem.

Tesla Motors and Intel Corporation have placed what we call “Big Bang Bets” around focused market activities – often to the consternation and confusion of industry analysts. Time will tell how these bets pay out. The lesson for incumbents of all kinds is not so uncertain: They should think carefully about their more rigid industry strategies, and how those leave them prone to the sudden irrelevance that is the reality of big-bang disruption.

 

The Magical Power of Touched Objects Really Works, If You Believe

Research participants with intuitive thinking styles demonstrated higher creativity after handling papers supposedly touched by creative people and lower creativity after handling papers said to have been touched by less-creative people, say Thomas Kramer of the University of South Carolina and Lauren G. Block of the City University of New York. Those who believed the papers had been touched by creative people came up with about 67% more ways to use a paperclip than those who thought the papers had been touched by people with low creativity (there was no such effect among participants with highly rational thinking styles). The findings suggest that intuitive-minded employees may perform better on assigned tasks when using pens or computers previously used by creative or intelligent people, the researchers say.