Marina Gorbis's Blog, page 1396
June 27, 2014
Win Over an Opponent by Asking for Advice
What do an inflated surgical bill, a fuming real-estate developer, and a dreaded performance appraisal have in common? All can be mitigated with one simple gesture: a request for advice.
We seek advice on a daily basis, on everything from who grills the best burger in town to how to handle a sticky situation with a coworker. However, many people don’t fully appreciate how powerful requesting guidance can be. Soliciting advice will arm you with information you didn’t have before, but there are other benefits you may not have considered:
1. Advisors will like you more: Arthur Helps sagely observed, “We all admire the wisdom of people who come to us for advice.” Being asked for advice is inherently flattering because it’s an implicit endorsement of our opinions, values, and expertise. Furthermore, it works equally well up and down the hierarchy — subordinates are delighted and empowered by requests for their insights, and superiors appreciate the deference to their authority and experience. James Pennebaker’s research shows that if you want your peers to like you, ask them questions and let them experience the “joy of talking.” This is especially important because research shows that increasing your likability will do more for your career than slightly increasing competence.
One of us (Katie) recently put this to the test while dealing with a real estate transaction. After several phone calls to indifferent or discouraging county officials, Katie visited the Planning and Zoning office in person. Rather than pester the official with what would and wouldn’t be permissible, Katie asked for her advice on how she would handle the constraints. The official provided a bounty of insider information and guidance that Katie never would’ve obtained on her own. When Katie thanked the official for her invaluable insights, the official confessed that she was burnt out by constantly impeding people’s aspirations and dreams with zoning roadblocks. Katie’s humble request for the official’s expertise was revitalizing, and she in turn helped Katie deftly navigate what otherwise would’ve been a very difficult situation.
2. Advisors are able to see things from your perspective. Think about the last time someone came to you for advice. Most likely, you engaged in an instinctive mental exercise: you tried to put yourself in the other person’s shoes and imagine the world through their eyes. Our research has identified the extensive benefits of perspective-taking — it facilitates understanding and increases the odds of finding creative agreements in negotiations.
In another study, we simulated a performance appraisal and found that underperforming employees who asked for advice were able turn their bosses into better perspective-takers. This shifted the tone of a hostile performance appraisal towards cooperation and nearly doubled their chances of being recommended for promotion (31% vs 58%)!
3. Advisors become a champion for your cause: A third benefit of soliciting adversaries for advice is that they become your champions. When someone offers you advice, it represents an investment of his time and energy. Your request empowers your advisor to make good on their recommendations and become an advocate for your cause.
One of our favorite illustrations of this comes from one of our MBA students, Clara, who received a shocking $18,000 bill for a surgery that was performed at an out-of-network surgical center (even though the surgeon himself was classified as in-network). Detailing her strategy for negotiating the bill, Clara wrote, “I called Fran (the nurse). Deep down, I really believed this was her fault. But instead of approaching it that way, I asked for her counsel and guidance with the mess. Knowing her personality (interested in having control over her domain and running the show), I enlisted her to help me with the personnel at the Surgery Center. This made her feel important and she took the ball from there.” Thanks to the championing efforts of the nurse, Clara was able to negotiate not just a reduction of her bill, but a complete waiver!
This approach captured all three benefits of seeking advice: First, the nurse was flattered to have her authority acknowledged, quickly transforming the conversation from an argument to be won to a problem to be solved. Second, she was able to see Clara’s perspective and became sympathetic to her predicament. Finally, she felt empowered and committed to facilitating a resolution.
This same approach works in job negotiations. When one of us — Adam — negotiated his first professorship, he asked for advice from one of the professors he’d met during the interview. The professor immediately shared vital information (the university’s reservation price on salary!) and worked back channels with the dean to give Adam more research resources. The professor become such an advocate that she even adjusted her own teaching schedule to accommodate Adam’s desired teaching schedule.
Whether it’s a high-stakes monetary negotiation or winning support for a proposal, the simple gesture of soliciting advice can make you more likeable, encourage your counterpart to see your perspective, and rally commitment. The beauty of this approach is that it costs so little. So as you plan your next negotiation, consider how a targeted request for advice could turn an adversary into an advocate.
Focus On: Negotiating

The Best Negotiators Plan to Think on Their Feet
Two Kinds of People You Should Never Negotiate With
Why Women Don’t Negotiate Their Job Offers
Negotiating Is Not the Same as Haggling



Does Corporate America Finally Get What Working Parents Need?
At this week’s White House Summit on Working Families, President Obama and others made a moral case for changing the way we work. “Family leave, childcare, workplace flexibility, a decent wage – these are not frills, they are basic needs. They shouldn’t be bonuses. They should be part of our bottom line as a society,” the president remarked.
Yet there was also a strong business case for change, with vociferous and impassioned representation from our nation’s private sector. Bob Moritz, PwC’s US Chairman and Senior Partner, called on his peers to make significant changes, saying that “CEOs need to make this happen.” He reported that when PwC increased their flex options they saw higher productivity in return. When they transitioned to unlimited sick leave, the actual number of days that employees took as sick days declined. PwC offers back-up childcare and other family-friendly benefits because they have found that when employees are worried about issues outside of work, they can’t effectively focus on client needs.
Alex Gorsky, CEO of Johnson & Johnson, Lloyd Blankfein, Chairman and CEO of Goldman Sachs, and Joe Echevarria, CEO of Deloitte (attending via video), all expounded on the importance for recruitment and retention of talent of not only implementing family-friendly policies, but for creating work cultures that encourage employees to live full lives. Makini Howell, Owner of Plum Restaurants, said, “Paid sick leave is pennies on the plate… The employee retention is priceless.” Blankfein described, as an example, Goldman Sachs’ “Returnship” program, which helps senior women re-enter the workforce after off-ramping. And he called out income inequality as a “destabilizing” force for companies and for society.
Raising the floor and addressing income inequality was also a major theme of the day, heard not only by labor representatives and progressive elected officials. Shake Shack’s CEO, Randy Garutti, reported that his employees deserve (and receive) $10/hour as a starting wage. Jennifer Piallat, CEO of Zazie, said, “Not only is it a moral decision to treat my workers well, but it’s also a financial decision.” Dane Atkinson, CEO of SumAll and serial tech start-up entrepreneur, asserted that there’s a business as well as a moral imperative in pay transparency and pay equity. In fact, as research from Zeynep Ton shows, investing in retail and service workers can benefit not only employees, but customers and the company as well.
It’s refreshing to hear leaders in the business world coming around on these issues because, at a 2000 Wharton Work/Life Roundtable, we made nearly identical recommendations, which have been repeated and reiterated in countless places.
What’s new, however, is that the ground is shifting. The Council of Economic Advisors released a report at the conference, noting:
Mothers are increasingly household breadwinners
Fathers are increasingly family caregivers
Women make up nearly 50% of the labor force
Women are increasingly our most skilled workers
Most children live in households where all parents are employed outside the home
Men as well as women are struggling to find a way to manage work and home responsibilities
As a result, and despite the downturn in the economy and high unemployment, employers are finding that in order to recruit and retain valued employees, they need to take non-work demands into account.
Men are also starting to speak up about family needs, and savvy employers are heeding the call. Enlightened entrepreneurs and CEOs are lauded while those with outmoded, Mad Men-era labor practices are vilified and losing business as a result. Work and life issues are increasingly and accurately understood as social and economic issues, not women’s issues, frills, or charity. As Mark Weinberger, Global Chairman and CEO of EY, smartly noted at the summit: “Women don’t want to be singled out and men don’t want to be left out.”
And while so much remains to be done, it’s heartening and inspiring to see so much executive attention to what has emerged as a national priority – making it possible for men and women to be free to choose the lives they truly want to lead.



Proven Ways to Earn Your Employees’ Trust
Trust is often talked about as the bedrock of a company’s success. Most people think about the issue in terms of customers: They have to believe in you and your products and services. But trust within the organization is just as important: Your employees must believe in each other. When they don’t, communication, teamwork and performance inevitably suffer. After New York Times publisher Arthur Sulzberger fired the newspaper’s editor, Jill Abramson, in May, he explained that he’d repeatedly warned her that she was losing the trust of the newsroom. But how do you build trust in the workplace?
What the Experts Say
Trust is an “evolving thing that ebbs and flows,” says David DeSteno, a professor of psychology at Northeastern University and the author of The Truth About Trust. And yet it’s essential to boosting employee engagement, motivation, and candor. Employees are more likely to follow through on goals set by a manager they trust and to be more forthcoming about the challenges they see on their level. “Managers will never learn the truth about a company unless they have employees’ trust,” explains Jim Dougherty, a senior lecturer at MIT Sloan School of Management and veteran software CEO. That’s why it’s so critical for managers to constantly reinforce their trustworthiness. Here’s how.
Make a connection
One of the most effective trust-building strategies is to create a personal connection. That’s especially true for managers. “As a person’s power increases, their perceived trustworthiness goes down,” says DeSteno; they seem less reliant on others and therefore less trustworthy. Counteract this view by getting to know the people on your team, and letting them get to know you. This might involve chatting about how you share a hometown or like the same sports team. It could also include hosting regular brown-bag lunches or occasionally taking a few calls with the customer service team. “Do something that makes them believe that you are one of them,” says Dougherty. That signals that “even though you are the boss, in the end you’re all in this together.”
Be transparent and truthful
Share as much as you can about the current health and future goals of the company. Otherwise, you’ll find yourself constantly battling the rumor mill. “If there is a void of information, employees will fill it and they will always fill it with negative information,” says Dougherty. There may be some data that you cannot share, like compensation, but regularly distributing other information — like financial results, performance metrics, and notes from board meetings — shows that you trust your employees, which in turn helps them have greater faith in you. Part of being transparent also involves having the integrity to tell the truth, even if it means you have to be the bearer of bad news. “If you can’t tell people the hard stuff, they won’t trust you,” says DeSteno.
Encourage rather than command
Employees know the difference between being given orders and being offered encouragement. “You don’t succeed in the long run by telling people what to do,” says Dougherty. “You have to motivate them to do it.” When employees feel empowered to succeed and believe that the goals of the company are aligned with their own, they’ll work harder and smarter. For managers, that means delegating tasks and granting as much autonomy as possible, while also making it clear what your expectations are and how performance will be measured. “People will trust you if you trust them,” says Dougherty.
Take blame, but give credit
No one wants a boss who hogs all the glory, but dishes out harsh criticism when times get tough. “The best way to get people to behave well is to give credit,” says Dougherty. That reinforces the sense that people are working toward shared goals rather than simply for a boss’s personal agenda. Instead of casting blame for layoffs or poor profits, stress that it is the company — and your own leadership — that need to improve. This signals that you “don’t believe different rules apply to you than apply to others in the organization,” says DeSteno.
Don’t play favorites
If there is a surefire way to lose trust, it’s by playing favorites in the office. “Any time there is favoritism, people will see it,” says Dougherty. “If you treat some people better than others, you totally blow it.” If you always give certain employees information or assignments first, or if you only ever ask a few out to lunch or to the ballgame, everything else you do to build trust will be undermined. You also want to avoid badmouthing at all costs, because it sends the signal that your public and private personas diverge. “People need to know that they are dealing with the true you,” says DeSteno. If they catch you criticizing a colleague behind his or her back, “they’ll assume that, as soon as they leave the room, you aren’t treating them well either.”
Show competence
If you aren’t good at your job, you can forget about earning employees’ trust. “Even if everyone likes you, you have to be competent to be trusted,” says DeSteno. That means regularly updating your own skills and following through on commitments. You should also avoid trying to be an expert in all things; those in the know will spot faked knowledge immediately. If you have the humility to ask questions and express an eagerness to learn, you’ll work smarter — and so will your employees. After all, “we can accomplish a lot more working with other people and relying on their expertise than we could alone,” says DeSteno.
Principles to Remember
Do:
Emphasize what you have in common — it helps employees believe that their goals are aligned with yours
Share whatever information you can — when people feel trusted, they’ll trust you back
Admit mistakes and accept responsibility
Don’t:
Give orders — motivating employees to succeed on their own will earn you trust
Badmouth anyone — people will automatically assume you’ll also speak poorly of them when their backs are turned
Fake knowledge — employees need to see you are competent enough to admit what you don’t know
Case Study #1: Keep the door open
When Jane McIntyre became CEO of the United Way of the Central Carolinas in 2009, she stepped into a scandal. The nonprofit organization was reeling from accusations of gross mismanagement, and Jane’s predecessor had left abruptly amid a controversy over her generous salary and retirement package. The community was outraged, donations were in a tailspin, and employees were confused and angry. Then the economic crisis hit, which necessitated layoffs and budget cuts. “It was a mess,” Jane says.
On her first day, Jane knew she had to do something meaningful to show the beleaguered staff that she was worthy of their trust. As the staff assembled to welcome her, someone asked her what her first priority was going to be. “There was this glass door that had been installed between the lobby and the executive offices,” McIntyre says. “The door was always shut. So I said, you see that door? It’s never going to close. And the staff burst into applause.”
Though Jane had to make difficult cuts in the months to come, she made sure that every decision was delivered with candor and honesty. She created compulsory all-staff meetings because she felt she “had to communicate face to face” with employees, especially when it came to delivering difficult news. She streamlined departments to create more connections among employees. And she reinstated the ability to send all-staff emails, a feature that had been disabled under her predecessor, to better share information across the entire company.
She also showed she was not above making cuts at the top. She made it known that her own salary was less than half of her predecessor’s. The board of directors, which had been accused of rubber-stamping excessive executive benefits, was cut from 67 members to 24. And she made accessibility her hallmark. “It helps so much if people know they have access to you,” she says. “It slows you down a bit, but it helps so much.”
Today, the organization is exceeding its fundraising goals and increasing grants to local charitable agencies. But Jane sees the progress she’s made in earning employees’ trust most clearly in the tenor of the all-staff meetings. “When I started, it was like you were in a graveyard,” she says. “There were no questions, no expressions. Now people laugh, they cut up, they have fun. There is camaraderie.”
Case Study #2: Meet bad news head on
Several years ago, Mike Volpe’s team was growing so rapidly, he could barely keep everyone’s names straight. In the span of nine months, the chief marketing officer for software company Hubspot saw his group grow from 20 to nearly 50 people. “I remember looking out at our team meeting and seeing so many new faces,” he says “It was a challenging time.”
In order to earn the trust of so many new people at once, Mike adopted a few key strategies. He reinforced the company’s policy of radical transparency, sharing data, goals, missteps, and milestones with everyone, at every level. “There’s no reason to keep a lot of things away from employees,” he says. “If you do, you are saying you don’t trust them.” He also gave his marketing team a high level of autonomy. “When you manage 15 or 20 people, you can be that person who approves things before they go out,” he says. “But once we started to grow quickly, I became a giant bottleneck. I knew I needed to trust the team to get things out. And we found the employees do a better job when you give them that authority and responsibility.”
He also regularly collected anonymous feedback via a tool called TinyPulse, which surveys employees on how they are feeling about their jobs. It was in those surveys that, several months ago, Mike started to see signs of a dip in trust. It was just after “three or four people who weren’t a good fit anymore” were let go around the same time, he says. “It wasn’t on purpose. It was just how the timing worked out.” But he could see from the anonymous surveys that people were now afraid for their jobs.
He immediately addressed the issue, both through the anonymous response feature on TinyPulse and in public “Ask Mike Anything” meetings. “I laid things on the table and took hard questions and didn’t give them sugarcoated answers,” he says. “I tried to take it head on and explained why it wasn’t indicative of a larger trend.” That honesty “really went a long way.” In surveys since, happiness metrics have fully recovered and even gone higher than they were in the period before the layoffs.
“I feel really good about how we navigated those waters,” he says. “It could have spiraled out of control, but because we had a system to track people’s happiness and a process to have honest conversations, we hit a pothole instead of falling into a crater.”



Is Your Company Ready for the Looming Talent Drought?
Even if your firm has a healthy employee base and a strong balance sheet, chances are good that it’s about to face a significant shortage of qualified managers. I reached that conclusion in 2007, after working with Nitin Nohria, the current dean of Harvard Business School, and colleagues at the executive search firm Egon Zehnder to gauge the effects of three factors – globalization, demographics, and leadership pipelines – on competition for senior talent in large organizations. We studied 47 companies, spanning all major sectors and geographies. The results were dire: Only 15% of the firms in the Americas and Asia, and less than a third of those in Europe, had enough people primed to lead them into the future. New survey and research data we have compiled show that the situation has grown even worse.
Globalization compels companies to reach beyond their home markets to do business and recruit and retain the people who can help them in that endeavor. The companies we studied in 2007 expected to increase their developing market revenues by 88% through 2012, and that trend has intensified. Ernst & Young, for example, currently predicts that 70% of the world’s growth in the next two years will come from emerging regions. Meanwhile firms based in those areas, most notably in China and India, are themselves expanding — and vying for talent — around the world.
The impact of demographics on hiring pools is also clear. The sweet spot for rising senior executives is the 35-to-44-year-old age bracket, but the percentage of people in that range is shrinking dramatically. In 2007 we projected that a 30% decline in the ranks of young leaders, combined with anticipated business growth, would cut in half the pool of senior leader candidates in that critical age range. A decade ago the shortage of rising leaders affected mostly the United States and Europe; however, experts say that by 2020 many other large economies, including Russia, Canada, South Korea, and China, will have more people at retirement age than entering the workforce.
The third phenomenon is related but much less well known: Companies are not properly developing their pipelines of future leaders. The failings we noted in our earlier study persist. In a 2014 PricewaterhouseCoopers survey of CEOs in 68 countries, 63% were concerned about the future availability of key skills at all levels. In recent interviews with 823 executives, Egon Zehnder found that only 22% view their pipelines as promising and only 19% consider it easy to attract the best talent.
Last month I asked 1,173 participants in an HBR webinar to evaluate how each of these three factors was likely to contribute to talent scarcity in their organizations, on a scale from irrelevant to crucial. Globalization was at least a substantial concern for 62%, demographics for 75%, and pipelines for a whopping 84%.
Each factor independently would create pressing demand for the right talent in the right place over the coming decade. Together they add up to a war for talent that means unprecedented challenges for most organizations. But they also present a huge opportunity for leaders determined to surround themselves with the best and to equip their organizations with the right hiring, retention, and development strategies (ensuring a strong focus on potential). The question is how your company stacks up against your competitors and what you can do to ensure that your talent practices are best in class.
Use this assessment to gauge your progress and obtain feedback on 15 specific practices that will help you succeed.



4 Ways to Decrease Conflict Within Global Teams
Working on a team scattered across the globe can be challenging. Differences in time zones, language, and cultural differences make it hard to get to know and trust team members. You can’t see what coworkers are doing or walk down the hall to resolve issues before they escalate. Sometimes, without the subtle cues you get working face-to-face, you don’t even know a conflict is brewing until it blows up. But it doesn’t have to be that way.
And yet in my research, I’ve seen plenty of highly functional global teams that don’t succumb to these pressures. They act as a unit, give one another the benefit of the doubt when things go wrong, and resolve issues promptly and constructively. There are four key things that characterize these distinct teams.
First, team members aren’t competing for their jobs. Every single team I’ve ever studied, in which people at one location felt threatened, was riddled with conflict. Members worried about losing their jobs and couldn’t bring themselves to build strong relationships with team members from across the ocean. In one U.S.-India team that Catherine Cramton and I studied, the U.S. team members were terrified that the work, and thus their jobs, would be transferred to India. As a consequence, they resisted collaborating with their Indian coworkers. Even during a face-to-face visit at the U.S. site, the Americans kept the Indians at arms length. Under these circumstances, it’s tough to build the rapport and trust that prevents conflict. Making sure that everyone on the team has a clear role and understands others’ distinctive contributions helps. Sometimes though, jobs are going away. In those cases, conflict may be inevitable, but can be mitigated somewhat by being forthright about the transition plan and timeline. In the face of a concrete plan, there’s less of a reason to compete with distant team members.
Second, harmonious teams have a shared identity. They feel like they’re “all in it together” and have a common vision not only for what they can achieve, but the important role each location plays in their success. In a study of global R&D teams, Mark Mortensen and I found that a shared identity significantly reduced conflict. One of the leaders described a team that had an enormous amount of tension until the manager created what he called a “ring fence” or boundary around the team that insulated it from external pressures, differentiating them from other teams, and creating a strong sense of the team and their mission. Another team from Catherine Cramton’s and my study held extended working sessions over video between the U.S. and Germany, creating the sense of being side by side as a unified team. These teams occasionally had conflict, but gave one another the benefit of the doubt and resolved conflict swiftly.
Third, these teams share a similar context or at least an understanding of their contextual differences. Mark Mortensen and I asked team members the extent to which their work tools or processes were incompatible, priorities were different, and information about what others were doing was incomplete. When differences were high and information incomplete, conflict soared. This effect was stronger when the team was more distributed.
The challenge on global teams is that the contexts are different — that’s unavoidable. But we found that as long as team members understand what is different, they’re less likely to blame each other for incompatibilities. One way to foster that understanding is to encourage and support team members (not just managers) to visit other locations and, importantly, not only headquarters. Catherine Cramton and I found that site visits were a powerful way to understand how processes and practices varied and build rapport that endured long after the travelers returned home.
Finally, informal, unplanned communication dramatically reduces conflict. When team members pick up the phone, chat or text one another outside of scheduled meetings, and share information on what’s going on — that helps to convey information about processes and how they might be changing, build rapport, and reinforce a shared identity. The teams that had at least one person initiating contact with distant team members on a regular basis had a more casual, fluid interaction and could deal with issues that arose without conflict spinning out of control. Again, this effect was stronger — interpersonal conflict went down — when the teams were distributed across more work sites.
Some argue that conflict is good, especially conflict that is focused on the task, not the people.That’s still under debate, but evidence shows that conflict is particularly destructive for global teams. It is too hard to detect, too hard to resolve, and too hard to recover from. These four approaches help eliminate conflict before it derails the team.



It Pays to Put Your Team in a Good Mood
Three-member teams on which at least 1 person was in a good mood were more than twice as likely to collectively solve a murder-mystery puzzle as teams on which all members were in neutral moods, according to an experiment by Kyle J. Emich of Fordham University. That’s because people in good moods are more likely to seek information from others and to share their own knowledge. So if you start a meeting with a funny story or do something else to put people in a good mood, you may get better exchange of information and better decision making, Emich suggests.



How Africa Is Challenging Marketing
For the first time, Western stereotypes associating Africa with death, disease, poverty, and war are being replaced by the reality of demanding, brand-conscious consumers who happen to live in a challenging environment. For too long, “Africa” has been considered a homogenous mass rather than a multicultural continent of diverse citizens. The media-generated image of passive beneficiaries of international charity and financial aid is now giving way to one of active customers voicing their opinions on product performance, service quality, and advertising.
After all, the emerging affluent African consumer is as connected as the rest of the world, smartphone always in hand. As this untapped market captures global attention, it also offers marketers a chance to leapfrog the legacy of mass marketing and reinvent the field from the ground up. The insights that marketers currently rely on, such as what consumers value in a product price and how to best reach them, drawn from decades of consumer research and studies on buyer behavior, don’t necessarily apply to the fragmented African markets.
Take a look at what’s happening in Africa now: Kenyans on Twitter (#KOT) are among the most voluble and outspoken, directly asking CEOs why their customer service is not up to par and pressing for change during CNN’s coverage of their elections. The Mo Ibrahim Foundation’s statistics say 68% of Africans on Twitter rely on it for daily news – not surprising considering that the news of Malawi’s recent presidential shenanigans first broke as a tweet. And Ethiopian news reports the rise of Facebook as an increasingly important medium for everything from filling job vacancies to selling traditional dresses. African voices are clamoring to be heard, and now social media offers them control over their narratives.
This shift will play out most obviously in marketing communications and advertising. Television, the industrialized world’s traditional driver of mass-market brand awareness, has been trumped by mobile-driven word of mouth. But in Africa, a phone in every pocket has only scaled the way hyper-local and regionally fragmented markets were already communicating – through trusted referrals from family and friends, eyewitness stories, and first-hand experience.
However, a lack of formal retail distribution infrastructure and marketing support services, among other factors, means that conventional solutions for market analysis will not work effectively. Everything from estimating purchasing power of a market segment to the impact of conventional value propositions will have to be questioned and redeveloped from scratch. And as Ghanaian entrepreneur Bright Simons has pointed out, much of this new African middle class is emerging from the informal trade and services sectors, while university-educated youth still search for white-collar jobs. Understanding the values of this new emerging consumer class is crucial for developing successful marketing strategies. African market research consultant Vusi Vuma mentioned the challenge faced by Coca Cola when attempting to account for as much as 40% of their sales volumes in terms of final retail channels. How does one estimate the size and value of an opportunity when both the target audience and retail outlets are outside the documented formal economy?
More than 90% of retail transactions tend to be in cash, and this impacts everything from purchasing patterns and buyer behavior to retail inventory. It implies longer lead times for purchase decisions and seasonal variations in consumer demand and choice of payment plans.
Data shows that 96% of Africa’s rapidly growing mobile phone customer base is on prepaid or “pay as you go” payment plans. This does not reflect income level. Lower denomination airtime vouchers account for as much as 80% of sales in the mass market. Vuma says some subscribers in South Africa spend as much as USD $30 a month on airtime credit, but they purchase overtime in 50-cent increments.
Conventional pricing methods cannot be transposed without questioning the underlying assumptions (revenue generation or flexibility of the payment plan instead of utility value) from the established markets where they were first developed. For example, “The price is not the problem” was the most common refrain during an ethnographic study in Kenya of household energy consumption behavior for a solar product manufacturer (the now defunct Tough Stuff). And small business owners were more interested in the revenue generation potential of a high-tech mesh Wi-Fi router when surveyed for a pricing study.
Forward-looking marketers have the opportunity to build and experiment with new methods and means to create demand, reach their target audience, and develop offers that resonate. African consumer markets can provide the perfect laboratory for new solutions to the global disruption of traditional marketing.
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



June 26, 2014
Yang Yuanqing: The HBR Interview
Lenovo’s CEO on how the PC leader is poised to win in the “PC plus” world. For more, read the July–August 2014 issue of HBR.



The Hidden Costs of Cash
Cash – by which I mean paper currency and coins — has many benefits. It’s safe from hackers. It doesn’t require any special hardware or software. There is no fee charged to retailers who use it and no exorbitant interest rates lying in wait for consumers. It’s accepted almost everywhere and it offers anonymity.
While it has been steadily displaced by a variety of competitors, such as credit and debit cards, mobile payments, and cryptocurrencies, there are many good reasons paper money has stuck around. There’s an assumption that cash is best when money is tight – best for the poor, and best for small businesses running on tight margins.
And yet cash does carry costs. My colleague Benjamin Mazzotta and I have been studying the costs of cash across a wide range of countries: U.S., Mexico, Egypt and India. With the exception of the U.S., these other countries represent economies primarily conducted in cash. The U.S. offers an interesting case study in what happens when only about a third of all transactions are conducted using cash payments.
The use of cash involves several social costs to individuals — especially the poor — as well as business and the government.
For individuals, cash usage imposes a regressive tax with the highest impact on the unbanked. By FDIC estimates, 8.2% of U.S. households are unbanked and 20.1% of U.S. households are underbanked. The unbanked pay four times more in fees to access their money than those with bank accounts, and they pay $4 higher fees per month for cash access on average than those with formal financial services. Examples of such fees are those charged for payday lending, buy-here-pay-here auto loans, and check cashing. The unbanked have a five times higher risk of paying cash access fees on payroll and EBT cards. Poorer consumers have to spend far more time getting cash. On average, Americans spend twenty-eight minutes a month travelling to get cash, but that time isn’t evenly distributed. People who don’t use a bank spend about five minutes longer getting to the place where they can get cash, and unemployed people spent nearly nine minutes more.
For businesses, paper money has to be managed: it must be stored, guarded, and accounted for. It can be difficult to transport and is inherently insecure. U.S. retail businesses lose about $40 billion annually because of the theft of cash alone. This cost is also disproportionately borne by mom-and-pops, many of which operate in poor neighborhoods and rural areas. These cash-dependent small businesses cannot afford sophisticated security and cash transportation services.
For the government, the annual value of under-reported taxes in the United States is $400 billion to $600 billion. According to the national taxpayer advocate’s estimates, 52% of this gap is because of under-reporting by self-employed taxpayers. If even half of this under-reporting is directly enabled by a cash economy, the U.S. Treasury loses at least $100 billion annually because of cash. The implications for a shortfall in tax revenues are quite direct in terms of their impact on the poor (even after accounting for the fact that many of those who under-report are themselves poor). About 12% of the federal budget in 2012 supported programs that provide aid (other than health insurance or Social Security benefits) to poor families. Such government safety net programs kept some 25 million people out of poverty in 2010. The existence of the tax gap puts pressure on the government to cut back on safety net programs, because they are the ones that are among the first to get cut.
What about the costs of cash in developing economies, where cash use is much more prevalent? We have been analyzing cash usage behavior in emerging markets on different continents and experiencing different socio-political and economic challenges through our research in Egypt, India, and Mexico. While all of these countries have their own idiosyncratic challenges, all have an overwhelming reliance on cash and a very low penetration of alternative payment systems. In Egypt, only 10% of adults have a bank account and less than 2% have a credit card; therefore, it is not surprising that 94% of financial transactions are conducted in cash. With the political instability in Egypt, financial institutions themselves face questions about their own future, a factor that will further deter consumers from embracing their services in the near-term. India, where about 60% of adults are unbanked according to McKinsey, is also a cash-heavy economy for transactions and high in its use of gold as a store of value. Not only is cash prevalent, its use as a percentage of GDP has been increasing by about 2% over the past two decades, possibly because of concerns about inflation. In Mexico, 53% of the value of consumer payments are cashless, according to studies done by MasterCard Advisors. However, this proportion is not growing; it has remained relatively static over the period 2005-2011, even as Mexico’s economy has grown. How can this be? Well, a sizable proportion of the transactions remain unrecorded because of the prevalence of the drug cartels in the country.
Each of these countries pays a price for the heavy usage of cash. Much like the U.S., the lion’s share of this cost is borne by society at large because of the lost tax revenues due to the under-reporting of earnings and transactions.
While the overall costs of cash usage in all these markets are daunting, the U.S. pays a price as well of a different kind. In cash-dependent emerging markets, people and businesses at every level face the same challenges. But because in the U.S. it’s primarily the poor who use cash, they are the ones who disproportionately bear the burden of its costs. This observation should be a call to action for decision-makers who care about social justice and inclusive policy. It is time we acknowledged the cash paradox: while cash may be considered the poor man’s best friend, it also places a disproportionate burden on the poor.



When to Schedule Your Most Important Work
If you work with a team, chances are your inbox is often flooded with invitations. Internal meetings, client conference calls, the occasional lunch request. Assuming you have some control over your calendar, how you respond to these offers generally depends on two factors: the value of attending the meeting and your availability.
Rarely, however, do most consider a third factor in our decision-making criteria: the time of day when you are at your most productive.
By now, you’ve probably noticed that the person you are midway through the afternoon is not the same person who arrived first thing in the morning. Research shows our cognitive functioning fluctuates throughout the day. If you’re like most people, you’ll find that you can get a lot done between 9:00am and 11:00am. Not so at 2:30pm. Later in the day, it often feels like we’re moving at a fraction of our morning pace.
That’s not an illusion. Recent studies have found that on average, people are considerably worse at absorbing new information, planning ahead and resisting distractions as the day progresses.
The reason this happens is not merely motivational. It’s biological. Our bodies run on a circadian rhythm that affects our hormone production, brain wave activities, and body temperature. Each of these variations tinker with our energy level, impacting our alertness and productivity.
Importantly, we don’t all follow identical patterns. While most people do their best work in the morning (and our preference for mornings tends to increase with age), others are night owls who are more productive later in the day. Research suggests that our fondness for morning or evenings isn’t simply a personal preference—it’s directly tied to the time of day when our physical and cognitive abilities peak. And one new study has even found that morning people are more ethical in the morning – and night owls, more ethical later in the day.
To get the most out of every day, you need to guard the hours when you are at your most productive. Think back to yesterday and the day before. At which points of your day did you feel at your most energetic? (If you’re not sure, tools like RescueTime can help.) Chances are, these are times with the highest productivity potential.
Once you’ve identified high-potential hours, consider treating them differently—for example, by blocking them off on your calendar. This discourages colleagues with access to your availabilities from suggesting these times for meetings. An additional advantage of having high-potential hours blocked off is that it prompts you to think twice before suggesting your own non-essential meetings at that time.
Proactively setting aside your best hours to get work done saves you from having to scramble later on to compensate. Use these hours for working on high-priority projects, making decisions you’ve been avoiding, or initiating a difficult conversation.
And, if you’re the owner of a dull, 10 a.m. staff meeting, do your team a favor and reschedule it for after lunch. The afternoon is when most people’s energy levels naturally dip. Lower energy levels can be disastrous for work that requires deep focus, but is considerably less detrimental in the context of other people. Having others around also naturally increases our alertness levels, helping counteract the slump in energy.
Fatigue, it’s worth noting, is not all bad. In fact, the findings of a 2011 study suggest that when our minds are tired, we are more distractible and less adept at filtering out seemingly irrelevant ideas. The free association that ensues makes “off-peak” hours an ideal time for finding novel solutions.
Ultimately, the best way to schedule is to take our natural energy fluctuations into account. You can maximize your productivity by calibrating activities to the right time of day. If a task requires willpower and complex thinking, plan to do it when you are at your most alert. In contrast, if what you’re after is a fresh perspective, use fatigue to your advantage by looking for solutions when your energy drops.
In either case, protect your best hours. If you don’t do it, who will?



Marina Gorbis's Blog
- Marina Gorbis's profile
- 3 followers
