Marina Gorbis's Blog, page 1401

Let’s Be Honest About Lying

If lying — or even just exaggerating a bit — would help your team win, would you do it? More provocatively: should you do it?

Consider the case study unfolding right now in Brazil at the World Cup. For many players, pretending they’ve been fouled is no big deal. Called “flopping” or “diving,” a player who has felt a minimal amount of contact will grimace in agony, fall to the ground, and, often enough, get a bit of sympathy from the referee, who will award his team possession of the ball. But the players on the U.S. and the U.K. teams, reports the New York Times, don’t like to fake fouls. Are they leaving goals — and wins — on the table?

Being honest and never dissembling is very consistent with the bland axioms of a “feel good” leadership discourse, but as in the case of sports, it is also remarkably inconsistent with what actually goes on in the real world. Truth is, some of the most successful and iconic leaders, including many CEOs, were (and are) consummate, accomplished prevaricators.

There’s Steve Jobs, 2005 Stanford commencement speaker and technology icon. The phrase “reality distortion field,” coined by the one of members of the original Macintosh team, refers to Jobs’s amazing ability to present what he would like to be true as if it were already reality.

There’s Larry Ellison, one of the richest men in the world and Oracle CEO and co-founder. Not only did Ellison and Oracle get into trouble in the early 1990s from misrepresenting the company’s actual sales in financial filings. As nicely described in David Kaplan’s book about the origins of the Silicon Valley, Ellison was great at telling customers that a product was available even if he was just thinking about designing it – possibly in response to the potential customer’s inquiry.

In a darker vein, there are the tobacco industry executives, testifying under oath in front of Congress that they had no idea cigarettes had adverse health effects. The CEOs of Lehman Brothers and Bear Stearns, among others, claiming their balance sheets were in great shape days before both firms collapsed. Former Senator Jon Kyle of Arizona maintaining, in 2011 as the federal government hurtled toward shut-down, that he could not support a continuing resolution that provided funding for Planned Parenthood because more than 90% of Planned Parenthood’s funds went to provide abortion services (the real number is more like three percent). Kyle’s statement, his office later claimed, was never intended to be factual – something that provided fodder for Jon Stewart’s Daily Show.

My takeaways? First of all, the amount of hypocrisy, in the world but particularly in the writing and speaking about leadership, is almost too vast to comprehend.

Second, all the moral “cluck-clucking” about how harmful this dishonesty is does nothing — or maybe even less than nothing — to change anything. Because people mistakenly believe that expressing disapproval is sufficient, they fail to follow through with initiatives that might actually compel people to be (more) honest.

Third, organizations — whether they are companies or soccer teams – exist in ecosystems and if you want to change individual behavior, you need to change the systems in which that behavior occurs. Or as a software company chairman once put it to me in conversation, “if everyone else is misrepresenting product availability, can we afford not to?” (This is where vaporware emanates from.)

Fourth, even as people express outrage over deception and misrepresentation, research shows that many, many people frequently engage in two processes that permit them to continue to do business with and support companies and leaders who have engaged in moral transgressions. One psychological process is moral rationalization — convincing themselves that the misbehavior wasn’t actually that serious. The other process is moral decoupling – arguing that the particular transgression is not relevant to the decision at hand — for instance, that sexual misbehavior is not probative of an athlete’s skills on the field.

Lying is incredibly common in everyday life in part because it helps to smooth over relationships. And the ability to convince people of something even if it is not quite the case, the art of salesmanship, is a quality actually both common to and useful in leaders. Note that even one of the early, iconic stories of truthfulness, George Washington admitting to his father than he cut down the cherry tree, is itself made up.

 

Strategy Isn’t What You Say, It’s What You Do

You sometimes hear managers complain that their organization has no strategy. This isn’t true. Every organization has a strategy: its strategy is what it does.  Think about it. Every organization competes in a particular place, in a particular way, and with a set of capabilities and management systems — all of which are the result of choices that people in the organization have made and are making every day.

When managers complain that their company’s strategy is ineffectual or non-existent, it’s often because they haven’t quite realized that their strategy is what they’re doing rather than what their bosses are saying. In nine cases out of ten, the company will have an ambitious “strategy statement” or mission of some kind: “We are going to be the best in the world in our industry and always lead innovation to the benefit of all of our customers.”

The bosses will have worked hard to come up with such a statement and it may very well be a praiseworthy one. But unless it is reflected in the actions of an organization, it is not the organization’s strategy. A company’s strategy is what the company’s people are actually doing, not the slogan their bosses intone.

The point is that everyone needs to connect the dots. If strategy is what people do rather than what bosses say, it is absolutely critical that each person in the organization knows what it means to take actions that are consistent with the intent of the strategy as asserted.

Strategic choice-making cascades down the entire organization, from top to bottom. This means that every person in the company has a key role to play in making strategy.  Performing that role well means thinking hard about four things:

1)    What is the strategic intent of the leaders of the level above mine?

2)    What are the key choices that I make in my jurisdiction?

3)    With what strategic logic can I align those choices with those above me?

4)    How can I communicate the logic of my strategy choices to those who report to me?

If you as a manager can do the first three of these four, then you will own your choices and own your strategy. If you do the fourth, you will set up your subordinates to repeat these four things and thereby own their choices and their strategy, and pass on the task to the next layer of the company. If each successive layer assumes this level of ownership, the organization can make its bosses’ statement a real strategy rather than an empty slogan.

And your bosses’ job? It’s to make sure to start the ball rolling by communicating their strategy choices well. Unless they do so, it won’t matter a whit how good their choices appear to be. They won’t be reflected in what you end up doing.

Two Kinds of People You Should Never Negotiate With

The first thing negotiation experts teach is to “separate the people from the problem.” The vast majority of the time, this is sound advice. But as a psychologist, I know that approximately 1% of the time, people are the problem.  And in such cases, normal negotiation strategies just don’t work. Here’s how to recognize that rare situation and what to do about it.

First, determine what sort of person or people you’re trying to negotiate with (i.e. your counterparty).

Here are two types of counterparties you should negotiate with, even when it seems difficult.

1. Emotional counterparties. Emotion in and of itself shouldn’t preclude you from reaching a successful agreement – it’s natural for people to feel strong emotion in a conflict situation. Once the conflict is identified and addressed, and parties are allowed to vent, emotion usually dissipates. Keep in mind that some people (and cultures) simply express more feelings than others. Also, some negotiators use emotion strategically to influence the other party. Recognize the emotion, but don’t let it stop you from negotiating.

2. Unreasonable counterparties. We often think people are being unreasonable when they don’t agree with our logic and evidence. But more often, people who disagree with us are simply seeing different problems, and even different sets of facts, than we are. Even if you think the other party is being unreasonable, it’s still possible to bridge the gap and close a deal.

But here are two types of counterparties you should never negotiate with:

1. A counterparty who alternates between conciliation and provocation. People are usually more provocative, or difficult to deal with, at the outset of a negotiation. Then they become more conciliatory as the outlines of a settlement develop. Beware the person who is conciliatory at first, then becomes provocative — and then when you’re about to walk away becomes conciliatory again, and then provocative again. This behavior suggests that he will never be satisfied, nor finished, with the negotiation. What he wants is not a negotiated settlement, but control — over the process and over you. The time and energy it will take to continue will eventually outweigh any potential gains you could achieve through negotiation.

2. A counterparty who persists in seeing people in terms of absolute good and evil. Negotiation is a method for resolving conflicts of interest, not for adjudicating who is at fault. Most people, once they understand this, are willing to exchange concessions in order to satisfy their underlying interests. Watch out for someone who describes people as absolutely good and blameless, or as absolutely evil and responsible. This behavior suggests that he or she lacks the mindset necessary for negotiation. What this person wants is for evil people to be held accountable and punished, and because you are in a conflict with her, you may fall into that category. Walking away would deprive her of the opportunity to punish you. Therefore, if you negotiate, you can expect the process to be painful. You can also expect not to receive meaningful concessions, because this type of person does not believe you deserve them.

Even the best negotiators cannot reach a win-win outcome with people like this, as their underlying interests can’t be addressed with a settlement. The best negotiation advice and practice will not help you in these rare situations. Instead, here are four steps you should take:

Be realistic. This person is not going to change. There is no negotiation strategy you can use to make him or her change. Your goal should be to extricate yourself with the most gains (or least losses) possible. Let’s say you have a tenant behind on the rent. It’s worth negotiating with an emotional, even unreasonable tenant. Deep down, her primary interest is to keep the apartment. She can ultimately be trusted to act in her own interest. On the other hand, it’s not worth negotiating with an alternatively conciliatory, then provocative tenant who blames his neighbors and the property manager for his situation. Deep down, his primary interest is not the apartment; it’s his need to control the people around him.

Stop making concessions. The purpose of concessions is to reach an agreement, but since you’ll never do that (no matter how much you’re willing to give up!), don’t waste your time. That doesn’t mean you won’t incur significant losses. Your goal should be to minimize those losses. For example, if someone on your team fits the description of a no-win negotiator, you may already have made many concessions and picked up her share of the work, while she has yet to follow through on her promises to you. Enough! Do whatever is necessary to get the project finished, but stop making offers to her.

Reduce your interdependence. Take whatever steps you can to reduce your interdependence with this person. You don’t want to depend on him for anything, or owe him anything, going forward. This means, for example, that a lump sum payment for services is better than a payment plan. Working independently on separate pieces of a project is better than working together on the whole thing. If you must continue to work with this person, remember that even very immature children can still play nicely side-by-side if each is given his or her own set of toys.

Make it public, hold them accountable, and use a third party if you can. Avoid private discussions, if possible. Get everything out in the open and put everything in writing. Try to bump accountability to the next level, so someone higher up has to take action if the other party does not follow through on his or her obligations. If you can utilize a third party, like a mediator, arbitrator, or judge, then do so.

Remember, 99 times out of 100, your counterpart has rational underlying interests that you will eventually discover with patience and the right strategies. The secret to negotiating, after all, is to find out what the other party wants and how much it’s worth to him. In those rare cases when your counterparty wants to use the negotiation to control or punish you, however, it doesn’t matter how much it’s worth to him. It’s worth more to you to be free of him and able to get on with your business. Isn’t it?

Focus On: Negotiating




Negotiating Is Not the Same as Haggling
Negotiate from the Inside Out
To Negotiate Effectively, First Shake Hands
The Simplest Way to Build Trust

U.S. Government’s Pipeline of Young Workers Is Drying Up

A reputation for bureaucracy and hierarchy is helping to discourage young Americans from taking government jobs; in a poll of undergraduates, just 2.4% of engineering students and less than 1% of business students listed only government agencies as their ideal employers, according to the Wall Street Journal. Just 7% of the federal workforce was younger than 30 in 2013, compared with more than 20% in 1975, leaving the government without a pipeline of young workers in an increasingly digital age.

CEO Pay Is Rising, But So Is CEO Impact

It’s no secret that executive compensation has risen much faster in recent decades than wages, particularly in the years since the Great Recession. But a new report from the Economic Policy Institute points to another trend: CEO pay is rising even relative to compensation for the top 0.1% of U.S. earners.

Throughout the 1980’s and early 90’s, CEO pay was roughly three times as high as that of the top 0.1% of earners overall. That ratio spiked in the dotcom years, as CEO pay rose even faster than the stock market. But post-bubble, CEO pay seems to have settled into a “new normal” of 4.5 to 5 times that of top earners. In other words, CEO compensation has risen faster even than other “superstar” earners, a group composed mostly of lawyers, doctors, financiers, and other C-level executives.

The report suggests that, “The large discrepancy between the pay of CEOs and other very high wage earners also casts doubt on the claim that CEOs are being paid these extraordinary amounts because of their special skills.” That may be. The data does suggest that rising CEO pay can’t simply be explained by the broader increase in returns to highly skilled labor.

There’s no understanding CEO pay without noting the dramatic increase in stock options as a share of executive compensation; less clear is whether this explains the change relative to other top earners, or whether they are likewise are increasingly paid in stock. (The numbers from EPI include wages and realized income from stock options at the time they were exercised, but do not include unrealized stock options or other investment income; this may affect the numbers for financiers especially.)

But another explanation is that the value of good CEOs appears to have increased over time, according to recent research.

Less is known about why CEOs seem to matter more — it’s even possible markets just mistakenly think they do. But in any case, the impact of CEOs on companies’ performance has never been higher.

A final point of interest from the report concerns the distribution of pay between the top-paid CEOs and the rest. Contrary to all the talk of “superstar” effects and a winner-take-all labor market, between 2012 and 2013 it was the least-well-paid CEOs who saw the greatest increase in compensation.

Rightly or wrongly, shareholders believe that CEOs matter more than ever, and they’re willing to pay their top executive accordingly.

Don’t Do What You Love; Do What You Do

Last April, just two weeks or so before I graduated from Harvard College, I decided I would get a PhD in English (my dissertation might be something about Faulkner and medieval notions of genre). Or perhaps I would get an MFA in creative writing. Just two weeks after I had my diploma in hand, I decided it would be a better idea for me to become an acupuncturist.

Now, almost one year later, I haven’t made any progress with graduate school applications or with my acupuncture career. Instead, I’ve become, somewhat suddenly, a freelance writer who works for a diverse set of companies and organizations, spanning a foundation investing in new digital initiatives for change, a juice cleanse company based in Shanghai, and Cosmopolitan magazine – among others.

To my chagrin, I feel almost like a parodic example of what Forbes has called “Millennial multicareerism.” According to a 2011 survey by DeVry University and Harris Interactive, nearly three-quarters of Millennials expect to work for more than three employers during their careers. I’ve already exceeded three employers in less than one year spent in the workforce. My situation corroborates most – if not all – of the data found in MTV’s recent “No Collar Workers” study: 89% of Millennials reported the need to be “constantly learning” while on the job.  Check. 93% of Millennials indicated their desire for a job where they can be themselves. Considering that I can produce good writing from the comfort of my bedroom, I’d say I am definitely myself – perhaps too much myself – “on the job.” Check again. Not only do I work from (my parents’) home, but I also create my own schedule. (Side note: over one-third of Millennials depend on their parents or other family members for financial assistance, according to a Pew Research Survey. Check once more).

And like many, I wonder if I am “following my passion.” Doing “what I love.” I do love writing — but I’m not necessarily passionate about describing the benefits of adding chia seeds to green juice. But after my yearlong search of trying to find that one thing that I was emotionally and intellectually invested in – be it poetry or treating liver stagnation with ancient Chinese principles – I realized that there might be something valuable in letting go of the assumption that “my career” and my passions would be one and the same.

My passions can go on existing fully, growing and changing – and I can “do” whatever it is I do to pay the bills with attention and care, learning new skills and things about myself regardless of whether or not it fills me passion and pleasure. So roughly one year after my college graduation, I stumbled upon a satisfying mantra for my work-life: Do What You Do. It’s an approach based in mindfulness rather than passion.

Miya Tokumitsu has  Do What You Love (DWYL), the “unofficial work mantra of our time,” as elitist and untenable, “a worldview that disguises its elitism as noble self-betterment” and “distracts us from the working conditions of others while validating our own choices.” Tokumitsu’s overarching argument is, well, relatively inarguable: the idea that we should all embrace the notion of DWYL makes the false assumption that getting a “lovable” job is always a matter of choice. (The DWYL framework ignores those who work low-skill, low-wage jobs – housekeepers, migrant workers, janitors. These individuals are not simply failing to acquire gratifying work that they “love.”)  The idea of DWYL, as Tokumitsu points out, privileges the privileged, those who are in the socioeconomic position to perpetuate this “mantra” as a way to rationalize their professional success and most likely, also their workaholism.

To explore these ideas further I talked with Sharon Salzberg, author of a new book entitled Real Happiness at Work, in which she describes a myriad set of actionable ways to find “real happiness at work” – even at “jobs we don’t like.” By practicing techniques of concentration, mindfulness, and compassion, Salzberg argues that that work is “a place where we can learn and grow and come to be much happier.” When we practice the art of mindfulness, we can tap into what is an opportunity for learning and growth on the job. “We can be purposefully helpful and attentive in conventionally trivial jobs,” says Salzberg, but warns we can also be “blasé ineffectual in potentially world-changing positions.” Or, as my colleague Joanne Heyman put it, “Do one thing at a time. When you are writing, turn off your phone. Really.” This is simple but essential advice that taps into the art of mindfulness.

Sure, some of us are lucky enough to have an idea of what we love to do – and then find an opportunity to get paid to do what it is that we love on the job.  But instead of trying to find complete congruence between our passions and our livelihoods, it is perhaps more productive simply to believe in the possibility of finding opportunities for growth and satisfaction at work, even in the midst of difficulties – a controlling boss, demanding clients, competition with your colleagues, insufficient boundaries between your work life and personal life. Recognizing difficulties, and choosing to learn and to grow from them, does not negate their existence or potency, but establishes them as of a distinct facet of one’s life.

So try out the mantra “Do What You Do” (DWYD) – and maybe love will emerge from different places, professional or personal, at different times.

What’s Different About All These Mergers

Corporate marriage brokers are again fully employed. Every day a new deal is announced, often in reaction to yesterday’s deal. As a consequence, the business landscape is changing.

Take pharmaceuticals. In the last couple of months, Novartis and GlaxoSmithKline joined in a series of deals (valued at about $25 billion) and Bayer followed soon after with the purchase of a division of Merck (for about $14 billion). Pfizer’s pursuit of Astra-Zeneca has been called off for now, but don’t be surprised if it comes back, or if the companies find other ways to recombine their assets. Valeant’s bid to acquire Allergan is the most controversial. Companies in other industries, too, are following such combination strategies. And they too are watching their backs—as Andy Grove said, “only the paranoid survive.” Chief rivals in an industry often seek to match each other’s capabilities, lest they fall behind. For example, AT&T and DirecTV were prompted to conclude their merger deal after Comcast and Time Warner announced theirs; the long-discussed merger between Sprint and T-Mobile may not be far behind.

Many of the deals we’re seeing today are not “merger-as-usual”—they are more nuanced ways to remix business assets than what we have seen before. All these types of deals combine the assets of different players to create new value. For example, as blockbuster drug patents expire, the pharmaceutical companies are looking for more nuanced ways to build competitive advantage by focusing on specialties or building scale in over-the-counter medicines

Take the Novartis-GSK deals. This is not a slap-them-together merger of pharma giants. Novartis will slice off its vaccines business and sell it to GSK. GSK in turn will slice off its cancer business, and sell it to Novartis. The two companies will transfer their consumer healthcare businesses into a new joint venture that will be owned two-thirds by GSK and one-third by Novartis. It is enough to make your head spin.

To succeed, Novartis and GSK will need to manage carefully the separation of each business from its home-base, the grafting of the business onto its new base, and heal the wounds left from the procedure. Good thing that they are already adept at genetic engineering—this looks like a careful re-engineering of the DNA of each company.

Furthermore, Novartis and GSK will now be tied at the hip in more ways than one. The consumer-healthcare joint venture is an obvious linkage. Beyond that, the asset sales include ongoing royalties and payments that are contingent on milestones or on the results of future trials. In other words, these deals will be far from done when they are signed—their payoff will depend critically on how well the post-deal processes are managed. If you have successful experience managing a partnership, polish your resume. It has become invaluable.

Deal-making was always a hot profession, attracting top consultants and lawyers; all the while, deal-managing usually took a back seat. This is changing. In the last decade or so, many firms have built up capabilities in alliance management—this has become a profession, with its own methods, training needs, and career paths. Pharmaceutical companies have been in the forefront of this trend; they compete openly on being a “partner of choice.”

Mastering partnership skills often demands taking on a new perspective. For too long, you have been told to take care of your own—stick to your knitting, stay true to your “company DNA,” and so on. Today, a firm holding on to its DNA when the world around it is changing will end up like the extinct Dodo bird.

Take a cue from the deals you see daily now: Look outside your business for new sources of competitive advantage. The Not-Invented-Here syndrome is so 20th century. The future strength of your business is as likely to come from resources you don’t own outright—or own yet—as it is from assets you already own.

Your Company Is Not a Family

When CEOs describe their company as being “like family,” we think they mean well. They’re searching for a model that represents the kind of relationships they want to have with their employees—a lifetime relationship with a sense of belonging. But using the term family makes it easy for misunderstandings to arise.

In a real family, parents can’t fire their children. Try to imagine disowning your child for poor performance: “We’re sorry Susie, but your mom and I have decided you’re just not a good fit. Your table-setting effort has been deteriorating for the past 6 months, and your obsession with ponies just isn’t adding any value. We’re going to have to let you go. But don’t take it the wrong way; it’s just family.”

Unthinkable, right? But that’s essentially what happens when a CEO describes the company as a family, then institutes layoffs. Regardless of what the law says about at-will employment, those employees will feel hurt and betrayed—with real justification.

Consider another metaphor—one that Reed Hastings, the CEO of Netflix, introduced in a famous presentation on his company’s culture. Hastings stated, “We’re a team, not a family.” He went on to advise managers to ask themselves, “Which of my people, if they told me they were leaving for a similar job at a peer company, would I fight hard to keep at Netflix? The other people should get a generous severance now so we can open a slot to try to find a star for that role.”

In contrast to a family, a professional sports team has a specific mission (to win games and championships), and its members come together to accomplish that mission. The composition of the team changes over time, either because a team member chooses to go to another team, or because the team’s management decides to cut or trade a team member. In this sense, a business is far more like a sports team than a family.

Consider what we can learn from the example of America’s winningest professional sports teams. In the National Football League, the New England Patriots have won three Superbowls since the turn of the century. Over the same time period, the San Antonio Spurs of the National Basketball Association have won three NBA championships (and a fourth in 1999), and the Boston Red Sox have won the World Series three times as well.

Each of these winning franchises has been able to build a consistent identity and a long-term relationship with its players—even though many of those players change from year to year.

An NFL team has 53 players on its roster. The only member of the current New England Patriots team that played on their first championship team is quarterback Tom Brady.

A Major League Baseball team has 25 players on its roster. The only member of the current Boston Red Sox team that played on the 2004 World Series champions is designated hitter David Ortiz.

The Spurs stand out for the stability and longevity of their player relationships, yet even their current 13-man roster only includes one player from their first championship in 1999: power forward Tim Duncan.

The reason these teams have been able to remain consistent winners despite high personnel turnover is that they have been able to combine a realistic view of the often-temporary nature of the employment relationship with a focus on shared goals and long-term personal relationships.

While a professional sports team doesn’t guarantee lifetime employment for its players—far from it–the employer-employee relationship still benefits when it follows the principles of trust, mutual investment, and mutual benefit. Teams win when their individual members trust each other enough to prioritize team success over individual glory. It is no coincidence that these teams are known for “The Patriot Way” or “The Spurs Way,” and that television broadcasters often praise them for “unselfish” play.

And paradoxically, winning as a team is the best way for individual team members to achieve success. The members of a winning team are highly sought after by other teams, both for the skills they demonstrate and for their ability to help a new team develop a winning culture. Both the Patriots and Spurs have supplied numerous other teams with veteran leaders and coaches. For example, five of the other 29 NBA teams have a former Spurs assistant as their head coach. Meanwhile, the New York Yankees’ habit of signing former Red Sox as free agents is so well known that it is now a common punchline among baseball writers.

Great sports teams also find ways to maintain their relationships with former players, even long after their departure or retirement. For example, Spurs alumni who are now working as television broadcasters still regularly have dinner with the team and its coaches, even though they might not have played with the team for over a decade. Do you think that current players, seeing that kind of loyalty, might want to play for the Spurs?

Of course, a professional sports team isn’t a perfect analog to your business. It’s doubtful, for example, that you obtain the bulk of your employees by taking turns with your competitors as part of an organized talent draft. But a great sports franchise consistently brings together a disparate team to achieve a common goal despite the reality of staff turnover. That’s something all businesses should strive for.

4 Design Mistakes Corporations Should Avoid

Organizations worldwide are increasingly using design to drive growth and innovation. For the most part, this is good news: the influence of design has made products, services, software, and environments better, both for the customer and the bottom line. But there are still plenty of  companies that are getting design completely wrong, or at best, only partially right when it comes to making it an integrated business function. Here are four of the biggest, most common mistakes I’ve seen that sabotage efforts to integrate design into the corporation.

Tug of war management. When companies decide to add to their design headcount, particularly in management positions, there’s often an unintended consequence: A battle between the new hires and the non-designers who have gotten used to making de facto design decisions. This is particularly common in brand, supply chain, and R&D departments in large consumer packaged goods companies. This tug-of-war within the ranks is because the former decision-makers are reluctant to cede control — intentionally or because of deep-rooted norms and processes — undermining the point of hiring and involving designers in the first place. Corporate culture and design integrity, as well as brand equity, are often compromised in the process.

A notable example I witnessed was when a VP of R&D was bent on using a new machine technology that made ingredients inside a package look twisted like a chocolate and vanilla soft serve ice cream. Even though a design executive said the look was “wrong, wrong, wrong” for the beauty care brand equity she was trying to drive, her opinion was overridden and the product went to market anyway — no doubt at enormous expense.  The product subsequently underperformed and was taken off the shelf.

Leaving an empty seat at the table.  Some companies, like Microsoft, have hundreds of talented designers who have little influence over the company’s strategic direction for two major reasons: They are either incorrectly positioned in the organizational structure, or they are performing functions that don’t add the most value. In Microsoft’s case, design has never been at parity with other important business functions such as engineering and marketing. Consequently, the voice and influence of its designers has been muffled, leaving its business stakeholders as well as its customers scratching their heads why such a well-resourced and “smart” company can make such frustrating and unintuitive software, missing market windows time after time.

For design to be most effective in complex corporate environments, having a seat at the executive decision making table is critical. Strategic direction and its implications must be able to be discussed directly, and in real time, with the design leader who is responsible for bringing that direction to life. Sure, there is always a great deal of tactical design execution work in any large business, but keeping designers solely in the trenches as a service function erodes much of the value they can bring to a company.

The “toe in the water” phenomenon.  Some companies stop at second base when it comes to design. GE, for example, is making progress through greater investments in design. But its efforts have primarily focused on consumer-facing divisions such as health care and appliances, rather than fully embracing design as key business function across the entire firm. Most of the time equipment, control panels, and software in their industrial B2B divisions are still designed by engineers.

As user expectations for simple, intuitive interfaces are increasingly set by savvy consumer companies like Google and Apple, the view that design matters in some places but not in others isn’t going to cut it. By now, all types of customers have come to expect thoughtful design wherever they turn, and companies that don’t recognize this new reality are going to lose big time. Dr. Ralf Speth, CEO of Jaguar, captures the implication perfectly in his recent quote, “If you think good design is expensive, you should look at the cost of bad design.”

Yo-yo commitment. Becoming a design-centric company requires constant attention to driving a culture and environment that will support design, team building, and processes to accommodate design content. Due to design’s creative nature and special functional requirements, this takes time. A design executive I know who is reengineering his company’s design capability told his board recently he was embarking on “a marathon, not a sprint,” setting expectations that excellence in design does not happen overnight.

One of the worst things I’ve seen happen is that, for whatever reason, senior management gets excited about design and then suddenly reneges on its commitment, eliminating resources, killing momentum, scattering difficult-to-assemble talent and know-how in the process. HP, for example, drove a concerted effort at design capabilities development under ex-CEO Carly Fiorino, hiring design leadership, reengineering development processes, driving new brand standards, and developing tailored performance metrics. These efforts were decimated after several subsequent CEOs pulled the plug.

You can’t be a good design leader if you have to start from scratch every few years. Further, once a company has established a reputation for yo-yo commitment to design, it becomes increasingly difficult to hire talent who don’t want to chance having their efforts squandered, no matter how much they’re paid.

My prediction is that it will soon become clear to everyone, including Wall Street, that companies must have a grip on design to compete successfully. Imagine if, during a call, an analyst surprised your CEO by asking, “And what are you doing about design?” Your company can’t afford to have that question met with silence.

Why Would Amazon Want to Sell a Mobile Phone?

If you believe the rumors, Amazon.com is going to enter the mobile phone business this week, with most pundits guessing that a mysterious video suggest that it will release a phone with novel 3-D viewing capabilities.

There are obvious reasons for Amazon to be eying the category. The mobile phone industry is massive, with close to 2 billion devices shipped annually and total spending on wireless-related services of more than $1.6 trillion across the world. As mobile devices increasingly serve as the center of the consumer’s world, their importance to a range of companies is increasing.

What should you watch for on Wednesday’s launch to see if Amazon is moving in the right direction? It is natural to start with the set of features that Amazon includes on its phone.

One of the basic principles behind Clayton Christensen’s famous conception of disruptive innovation is that the fundamental things people try to do in their lives actually change relatively slowly. The world advances not because our needs, hopes, and desires change, but because innovators come up with different and better ways to help us do what we were always trying to get done.

Take the big shifts in the music business. People have enjoyed listening to music for all of recorded history. But the biggest industry transformations came when innovators made it simpler and easier for people to listen to the music they want, where they want, and when they want. Thomas Edison’s phonograph was the first big democratization of music, allowing individuals to listen to music without having to hire a live performer, train to be a musician, or go to a concert. Sending sound through the airwaves, received in a radio, furthered this trend, enabling people to hear live sound remotely, or hear a wider variety of pre-recorded music.

Floor-standing radios were relatively expensive and consumed a lot of power. So it was hard for individuals to listen to what they wanted where they wanted until Sony popularized the highly portable transistor radio in the 1960s. The fidelity was low, but teenagers eager to listen to rock music out of earshot of disapproving parents or to baseball games late at night flocked to the device.

It’s difficult to enjoy music if everyone is blaring transistor radios on the subway, so Sony again made it simpler and easier for people to listen to what they wanted, when they wanted, when it introduced the Walkman in 1979. The device, and its offspring the Discman, had one obvious limitation — when people were away from home they couldn’t easily access their music collection. People compensated for this by making mix tapes or lugging around cases with dozens of CDs.

MP3 players, most notably Apple’s iPod, made it simpler and easier to listen to the precise music you wanted when and where you wanted. The first commercials for the iPod highlighted the value of having “1,000 songs in your pocket.” Finally, streaming music services like Spotify removed even the need to build a music collection.

Mobile phones follow a similar pattern. The first wave of growth came as devices from Motorola and Nokia made it easy and steadily more affordable for people to make phone calls and send short messages when they were on the go. Blackberry’s rise came from releasing office workers from their desks by making remote e-mail easy. The next wave of growth came as Apple and Android-based smart phones put productivity and entertainment applications from computers in the palm of your hand.

Leaving aside the hype of 3-D technologies, the big question about Amazon as it enters into this seemingly crowded arena will be whether its offering makes it easier or more affordable for people to do something they’ve historically cared about. Pundits are skeptical, with some calling the potential idea “silly.” But one job a 3-D phone might do better than existing alternatives is enable shoppers to see something before they buy it. People like finding and obtaining new goods, and replicating the in-store experience anywhere in the world could allow more people to shop more conveniently.

Of perhaps even more interest is Amazon’s business model. Market disruptions typically combine a simplifying technology with a business model that runs counter to the industry norm. The prevailing mobile phone model involves service carriers subsidizing the devices in return for locking consumers into two-year phone service contracts and charging them based on usage.

If Amazon were primarily interested in driving more retail purchasing it might come up with completely different pricing and usage models, subsidizing both the hardware and the phone service, perhaps in conjunction with a more disruptively oriented mobile carrier such as T-Mobile, and reaping its profits by taking a cut of transactions enabled by its 3-D platform.

Finally, remember that the true impact of an innovation isn’t always fully apparent when it launches. When Apple launched the iPod in 2001 it was interesting, but when it added the iTunes music store in 2003 an industry changed. Similarly, Google’s super-fast search technology caught people’s attention in the late 1990s, but the development of its AdWords business model a few years later is what made the company what it is.

So on Wednesday look to see if Amazon has found a way to make the complicated simple or the expensive affordable, pay particular attention to the business model it plans to follow, and, most critically, once the dust settles from the pundit reactions, watch what the company next has up its sleeves.