Marina Gorbis's Blog, page 1404

Are Apple’s Patent Wars a Marketing Strategy?

The latest battle in the three-year long Apple-Samsung patent saga concluded few weeks ago. In contrast to previous litigation between the two tech-giants—which revolved on the overall look of the phones—this case focused around autocomplete, tap-from-search and slide-to-unlock software. Despite the technical nature of these innovations, there are a few broad managerial lessons that have emerged from this prominent patent case.

Often, managers think about patent litigation as a “narrow” strategy to protect a particular technology against a specific infringer. Plenty of management books describe patent litigation in such a narrow way: you file a suit to recover damages from someone who is copying you. The Apple-Samsung battle shows that patent litigation can be a much broader and powerful strategy. In particular, there are two features of the case which are worth pointing out.

The first one is the marketing effect of IP litigation.  “Apple says Samsung copied iPhone” was the typical news headline during the first weeks of litigation. The case was not only mentioned on specialized business press; it was front page news material for major newspapers around the globe. International news channels devoted several minutes of their prime time to the patent case. The opening statements by Apple’s lawyer, Harold McElhinny, alleging that “Samsung copied the iPhone” and that “Samsung went far beyond the world of competitive intelligence and crossed into the dark side” were translated in a multitude of languages and displayed next to pictures of Steve Jobs, one of the most charismatic CEOs of all time. How much would it cost to have similar media coverage through a traditional advertising campaign? Probably way more than Apple’s lawyer bills. And this is particularly interesting given the aggressive marketing strategy implemented by Samsung in the past few years. AdvertisingAge reports that in 2012, Samsung increased its U.S. advertising budget more (percentage-wise) than any other high tech company. For the same year, Samsung global ads expenditure was $4.3 billion; that is more than four times the expenditure of Apple. At this point it seems reasonable to add patent litigation to Apple’s history of non-traditional marketing strategies.

A second lesson from the case is that IP litigation with one competitor may strongly affect the patent strategy of other competitors. The most interesting aspect of the Apple-Samsung patent battle is that the actual technology war is not between Apple and Samsung. The real enemy of Apple is Google, whose Android operating system runs on Samsung’s phones.  So why has Apple not sued Google?  The answer is Google’s business model. Android is an open-source system, and hardware companies do not pay for it. Google profits are generated indirectly from ad revenues derived from Android device use. Instead, Samsung makes a lot of money selling phones that use Android. It is much easier to persuade a jury to force Samsung to give up some of its phone revenue than it is to persuade a jury to convict a company that gives away software for free.

But taking Samsung to court affects Google, too. First, it makes other hardware makers more reluctant to use Android after seeing Apple litigating with Samsung, the leader among Android device makers.  Second, it shows Google the value of Apple’s patents. Unsurprisingly, Google and Apple called a truce on their litigation on Google’s Motorola unit patents only a few days after the Apple-Samsung court decision. Firms need to learn the value of each other’s patents to settle disputes, and court decisions are a powerful way to learn.

In a research article recently published in the Journal of Economics and Management Strategy, I study a number of patent litigation cases which took place in the semiconductor industry between 1985 and 2005. I show that very often, a suing and counter-suing pattern, as the one observed in the Apple-Samsung battle, ends with a grand settlement in which firms enter a broad cross-licensing agreement. This is particularly likely for capital intensive firms that invest heavily in manufacturing facilities. The study suggests patent litigation plays a key role in convincing companies of the value of each other’s patent portfolios. It is not uncommon for top managers to overestimate the value of their technologies, and the damages awarded in the Apple-Samsung case confirm such overconfidence (Apple obtained less than 6 percent of the $2.2 billion requested). Court assessments help create more reasonable expectations and facilitate future technology exchange. This perspective can also explain why the settlement agreement between Apple and Google is not as broad as other cross-licensing deals observed in high-tech industries. This is because a broad cross-license agreement between Google and Apple would require much more information than the subset indirectly released from the Apple-Samsung court decision.

The Apple-Samsung patent war illustrates how patent litigation has impacts that go far beyond stopping a specific firm from copying a particular technology. This narrow view overlooks the effect it has on brands, and on other competitors not named in the suits. In considering their own IP strategy and in responding to litigation, managers can benefit from thinking more broadly about patent wars and recognizing their multiple effects.

The Neurochemistry of Positive Conversations

Why do negative comments and conversations stick with us so much longer than positive ones?

A critique from a boss, a disagreement with a colleague, a fight with a friend – the sting from any of these can make you forget a month’s worth of praise or accord. If you’ve been called lazy, careless, or a disappointment, you’re likely to remember and internalize it. It’s somehow easier to forget, or discount, all the times people have said you’re talented or conscientious or that you make them proud.

Chemistry plays a big role in this phenomenon. When we face criticism, rejection or fear, when we feel marginalized or minimized, our bodies produce higher levels of cortisol, a hormone that shuts down the thinking center of our brains and activates conflict aversion and protection behaviors. We become more reactive and sensitive. We often perceive even greater judgment and negativity than actually exists. And these effects can last for 26 hours or more, imprinting the interaction on our memories and magnifying the impact it has on our future behavior. Cortisol functions like a sustained-release tablet – the more we ruminate about our fear, the longer the impact.

Positive comments and conversations produce a chemical reaction too. They spur the production of oxytocin, a feel-good hormone that elevates our ability to communicate, collaborate and trust others by activating networks in our prefrontal cortex. But oxytocin metabolizes more quickly than cortisol, so its effects are less dramatic and long-lasting.

This “chemistry of conversations” is why it’s so critical for all of us –especially managers – to be more mindful about our interactions. Behaviors that increase cortisol levels reduce what I call “Conversational Intelligence” or “C-IQ,” or a person’s ability to connect and think innovatively, empathetically, creatively and strategically with others. Behaviors that spark oxytocin, by contrast, raise C-IQ.

Over the past 30 years, I’ve helped leaders at companies including Boehringer Ingelheim, Clairol, Donna Karen, Exide Technologies, Burberry, and Coach learn to boost performance with better C-IQ. Recently, my consultancy, The CreatingWE Institute, also partnered with Ryan Smith, CEO of Qualtrics, the world’s largest online survey software company, to analyze the frequency of negative (cortisol-producing) versus positive (oxytocin-producing) interactions in today’s workplaces. We asked managers how often they engaged in several behaviors — some positive, and others negative — on a scale of 0 through 5, in which 0 was “never” and 5 was “always.”

The good news is that managers appear to be using positive, oxytocin and C-IQ elevating behaviors more often than negative behaviors. Survey respondents said that they exhibited all five positive behaviors, such as “showing concern for others” more frequently than all five negative ones, such as “pretending to be listening.” However, most respondents – approximately 85% — also admitted to “sometimes” acting in ways that could derail not only specific interactions but also future relationships. And, unfortunately, when leaders exhibit both types of behaviors it creates dissonance or uncertainty in followers’ brains, spurring cortisol production and reducing CI-Q.

Consider Rob, a senior executive from Verizon. He thought of himself as a “best practices” leader who told people what to do, set clear goals, and challenged his team to produce high quality results. But when one of his direct reports had a minor heart attack, and three others asked HR to move to be transferred off his team, he realized there was a problem.

Observing Rob’s conversational patterns for a few weeks, I saw clearly that the negative (cortisol-producing) behaviors easily outweighed the positive (oxytocin-producing) behaviors. Instead of asking questions to stimulate discussion, showing concern for others, and painting a compelling picture of shared success, his tendency was to tell and sell his ideas, entering most discussions with a fixed opinion, determined to convince others he was right. He was not open to others’ influence; he failed to listen to connect.

When I explained this to Rob, and told him about the chemical impact his behavior was having on his employees, he vowed to change, and it worked. A few weeks later, a member of his team even asked me: “What did you give my boss to drink?”

I’m not suggesting that you can’t ever demand results or deliver difficult feedback. But it’s important to do so in a way that is perceived as inclusive and supportive, thereby limiting cortisol production and hopefully stimulating oxytocin instead. Be mindful of the behaviors that open us up, and those that close us down, in our relationships. Harness the chemistry of conversations.

Don’t Offer Employees Big Rewards for Innovation

It stands to reason that if you want your employees to come up with high-powered ideas, you need to offer high-powered rewards. That’s why Google created its Founders Awards to provide stock worth up to several million dollars as an incentive to innovation.

But our research shows that high-powered rewards are no better than low-powered incentives at producing radical innovations. They may generate excitement and high hopes, but they result in few breakthrough concepts.

High-powered incentives do produce a flood of ideas, but that’s not necessarily a good thing—a flood can be overwhelming, leaving companies unable to act on many of the ideas. You’re better off implementing low-powered rewards, which are much cheaper and yield a more manageable stream of ideas.

The basic question that motivated our research—Should firms reward their employees for innovative ideas?—is far from settled, even after years of research. Various management scholars, for instance, have argued that rewards are hard to administer and may corrupt employees’ motivation and creativity. Nevertheless, many firms continue to reward good ideas: 3M and Google allow employees to spend 15% to 20% of their time on projects of their own choosing, and other companies actively solicit suggestions or stage .

To study the effectiveness of rewards, we used a simulation model—an unconventional but powerful tool. A simulation model provides a virtual “laboratory” in which researchers can manipulate every variable of interest (the reward level, say) while eliminating noise such as inappropriate management intervention. Simulated people are programmed to act like real individuals.

Our goal was not to mimic the innovation process at any specific firm, but to develop a model that was as simple as possible without oversimplifying. The virtual organizations we designed consisted only of employees that could search for ideas and a top management that selected the best ideas and shared a part of their value with the inventor. Low-powered rewards typically shared 5% to 10%; high-powered shared roughly 30% or more.

The model’s underlying assumptions are based on past empirical findings—for example, that employees respond positively to incentives but become discouraged by low odds of securing a reward or by being overlooked. We also made sure our model reproduces what we already know about the innovation performance of real companies.

The beauty of a simulation is that once you’ve set it up, you can let it run, much like a Sim City game, and then puzzle out its results, some of which may be surprising. Our model provided valuable insights about incremental innovation in large firms. As our simulated employees responded to their firms’ offer to share a large amount of an idea’s value with them, they put more effort into the search for innovations, and ideas poured forth. The companies were quickly hampered by what we dubbed the “congested project pipeline” effect: Because taking action would have required investing resources such as management attention, the firms were unable to act on most of the ideas that were generated. (This effect doesn’t apply to small firms, where the pipeline rarely becomes congested.)

As employees competed for space in our simulations’ increasingly crowded idea pipelines, more and more came away empty-handed and gave up trying further. This demotivation reduced their effort and prevented them from putting in the time and energy needed to come up with breakthrough ideas.

Could this have been why Google cut back its Founders Awards in 2007, switching to smaller rewards instead? Google hasn’t revealed the reason, but we wouldn’t be surprised.

We found in our model that low-powered rewards such as 10% of the idea’s value produced a healthy number of ideas (the vast majority of them, course, being incremental ideas) without clogging the pipeline or crushing employees’ hopes. Corporate practice seems to bear this out: A recent comparison of the idea-management systems at 105 German firms between 1980 and 2011, for example, suggests that rewards for valuable innovations often range between 5% and 15%. A 2005 survey of 306 German companies showed that ideas yielding a return worth 1.4 billion euros had been rewarded by incentives totaling 159 million euros, or about 11% of the ideas’ value.

Some companies take a tiered approach to incentives. Volkswagen, for example, shares up to 50% of the value of small ideas, but only up to 10% for high-value ideas. That makes sense, because a company can easily act on a lot of small ideas, such as “If we change the position of these two machines, the production process is shortened by one second,” but can implement only a small number of big ideas.

But because breakthrough ideas are so rare, a simple reward system is unlikely to generate many of them. To get more breakthroughs, the best approach is to focus on increasing the variety of ideas that are generated. Past research suggests you might need a culture or organizational structure that encourages play, serendipity, and random interaction. A few companies are experimenting, counterintuitively, with switching the focus from success to failure, rewarding employees who dare to stick their necks out: At Google’s lab X and at WPP’s advertising firm Grey Group in New York, employees can be rewarded for brilliant failures that provide some sort of insight, even if they turn out not to work. Similarly, at the Tata Group’s regional and global innovation contests, a rubric named “Dare to Try” provides rewards for failures that are informative.

Programs such as these help people get over the fear of failure and stimulate employees to stretch themselves—to go far beyond the “acceptable” innovations that they think management wants to hear.

When Innovation Is Strategy

An HBR Insight Center




Customer Complaints Are a Lousy Source of Start-Up Ideas


Disarming Landmines Through Strategic Innovation
The Innovation Strategy Big Companies Should Pursue
The Industries Apple Could Disrupt Next

Business Wisdom from the Commencement Speakers of 2014

Commencement speakers face an impossible challenge: to inspire, advise, and entertain, without overstaying their welcome. In the age of YouTube, there’s the added pressure to craft a speech that could go viral, and perhaps even inspire a book. And this year, those invited to take the podium were no doubt aware of the student protests that forced some speakers to cancel.

It’s understandable then that speakers fall back on a similar set of themes: graduates should dream big, failure is part of the path to success, this generation comes to the rescue of a world in need of saving. Nonetheless, several of this year’s speakers put their own unique spin on these and other themes, like Janet Yellen’s inspiring description of her predecessor Ben Bernanke, or Sal Khan putting the profit motive in historical perspective. Others found a fresh angle through their own stories, like Chobani founder Hamdi Ulukaya speaking of the unusual first order he gave as CEO.

What follows is a short recap of some of the best bits from this year’s commencements, as related to business and career success.

Sometimes the hardest part is just getting started

Sheryl Sandberg, COO of Facebook, speaking at City Colleges of Chicago

Sometimes big dreams can be overwhelming. It feels like you can’t get from point A to point C. Well the good news is you don’t have to. You just have to get from point A to point B, then from B to C, and so on and so forth. Breaking really big dreams into small steps is the best way to get there… Start by figuring out where you want to go, and aiming high, then take the first step in that direction.

Hamdi Ulukaya, founder and CEO of Chobani, speaking at University at Albany

My first board meeting…they’re looking at me as if I have the magic answers. And one of them, Mike, he says “What now?” I said we’re going to go to the Ace store and we’re going to buy some white paint and we’re going to paint the outside. He said, “Those walls haven’t been painted for the last 15 years, don’t you have anything else to worry about?” I said, But they don’t look good, we need to do something about it. He said, “Do you have any other plan other than painting the walls?” I said, No. But, my friends, one of the best things I’ve done, in summer of 2005, was start painting the wall. I didn’t have a lot of answers… but that summer we painted those walls… Along the way I came up with more ideas… This poet who lived in Turkey Rumi says, “If you start walking the way, the way appears.” And the word that I said, without that much wisdom, that let’s start to paint, was the first very step of Chobani.

(Read HBR’s interview with Ulukaya.)

So don’t focus too much on making plans that you’ll just have to revise anyway

Susan Wojcicki, CEO of YouTube, speaking at Johns Hopkins University

So maybe one thing more to try to remember is plans are made to be broken. You need to be prepared to explore a bit, to make decisions, on what you find, enjoy, discover. I never would have experienced any of that — I never would have discovered that technology could be creative, I never would have started my career in tech, joined Google, led Youtube — if I had tried to stick to a specific plan that I had made when I was your age. The Internet as we know it didn’t exist yet when I graduated. We need to think of our plans as written in pencil, not pen.

After all, the world is changing too quickly

Steve Blank, consulting associate professor at Stanford University, speaking at ESADE

I’d like to start with a request. Everyone, hold your phone up in the air like this. Now look around. In this sea of phones do you see any Blackberries? How about any Nokia phones?… Think about this; 7 years ago Nokia owned 50% of the handset market. Apple owned 0%.  In fact, it was only 7 years ago that Apple shipped its first iPhone and Google introduced its Android operating system. Fast-forward to today—Apple is the most profitable Smartphone company in the world and in Spain Android commands a market share of more than 90%.  And Nokia?  Its worldwide market share of Smartphones has dwindled to 5%. You’re witnessing creative destruction and disruptive innovation at work. It’s the paradox of progress in a capitalist economy. So congratulations graduates – as you move forward in your careers, you’ll be face to face with innovation that’s relentless.

Everyone faces challenges, the difference is in how we respond to them

Jill Abramson, former executive editor of The New York Times, speaking at Wake Forest University

Graduating from Wake Forest means all of you have experienced success already and some of you — and now I’m talking to anyone who’s been dumped, not gotten the job you really wanted, or received those horrible rejections from grad school — you know the sting of losing, or not getting the thing you badly want. When that happens, show what you are made of.

Janet Yellen, Chair of the Federal Reserve, speaking at NYU

There is an unfortunate myth that success is mainly determined by something called “ability.” But research indicates that our best measures of these qualities are unreliable predictors of performance in academics or employment. Psychologist Angela Lee Duckworth says that what really matters is a quality she calls “grit”–an abiding commitment to work hard toward long-range goals and to persevere through the setbacks that come along the way.

One aspect of grit that I think is particularly important is the willingness to take a stand when circumstances demand it. Such circumstances may not be all that frequent, but in every life, there will be crucial moments when having the courage to stand up for what you believe will be immensely important.

My predecessor at the Fed, Chairman Ben Bernanke, demonstrated such courage, especially in his response to the threat of the financial crisis. To stabilize the financial system and restore economic growth, he took courageous actions that were unprecedented in ambition and scope. He faced relentless criticism, personal threats, and the certainty that history would judge him harshly if he was wrong. But he stood up for what he believed was right and necessary. Ben Bernanke’s intelligence and knowledge served him well as Chairman. But his grit and willingness to take a stand were just as important. I hope you never are confronted by challenges this great, but you too will face moments in life when standing up for what you believe can make all the difference.

True leadership isn’t about giving orders…

Jim Whitehurst, CEO of Red Hat, speaking at Campbell University Law School

I see too many leaders who take the short cut – they simply say “go do this because I said so.” That is the simplest way to disenfranchise those with whom you work. You, by virtue of your degree and title, will have positional authority. But I implore you to use that position sparingly. Work to engage those around you. You will be personally more effective, but also gratified by the results you inspire in others.

…it’s about listening to others

Ellen Kullman, CEO of DuPont, speaking at MIT

The hardest thing I had to learn in my career is that I am not always right. I had to develop the discipline to listen. Listening doesn’t always mean agreement. You may continue to disagree, but if you take the time to listen, it will be disagreement for a reason and that tension can lead to understanding and more importantly, to new ideas… This is a particularly important skill for the scientist and engineer to develop, because it can often address our biggest blind spot. Sometimes the science we find so elegant or the technology we feel is so promising doesn’t look that way to others who view the world through a very different lens.

The purpose of business is not just to make profit

Tory Burch, founder of Tory Burch, speaking at Babson College

From the beginning, one of the reasons I wanted to start a company was to start a foundation. Social responsibility was always part of the business plan. This was not always viewed as a positive—some people told me never to mention the word social responsibility and business in the same sentence. That only made me more determined.

In 2009 we launched our foundation to support the economic empowerment of women entrepreneurs and their families. It has been incredibly meaningful not only to me personally, but to our customer, our employees and our business partners, all of whom care about giving back and helping women.

Sal Khan, founder of Khan Academy, speaking at Harvard Business School

Think of the firm not as a tool to maximize profit, but profit as a byproduct of maximizing global well-being, money not as a superficial scoreboard of success, but a command over resources to make the world a better place… Remind yourselves that you are in the eye of the hurricane, in one of the most important times in human history. Imagine living in Athens in the fifth century BCE and only being concerned about your crop yield. Imagine living in 15th or 16th century Florence and only worrying about the next transaction. Imagine living in Philadelphia in 1776 and only caring about your profit. In a thousand years people will romanticize about the time that we live in right now. The time when humanity went from being a fragmented, provincial, unconnected, sometimes petty proto-civilization to being a multi-planetary connected sentient one. The time when the human species awakened. Your grandchildren — and based on what is likely to happen in medicine your great-great grandchildren as well — will ask you what it was like to be alive at the dawn of the awakening of our civilization and what you did to catalyze it.

(Read HBR’s interview with Khan.)

And it’s up to a new generation of more diverse leaders to change the world

Mary Barra, CEO of GM, speaking at the University of Michigan

I noted earlier how the Millennial generation is the largest and richest and most technical, logical generation in American history. What I didn’t say is you’re also the most inclusive and the most optimistic. Use these traits, along with the unprecedented access to information and global communications that we have today, to challenge convention. More than any other generation in history, you have the power to expose and  correct injustice, to rethink outdated assumptions, to truly make a difference. And remember while there certainly a lot wrong in this world today, there’s also a lot that’s right. Not everything needs changing. Some things need protecting. And that can be just as important, challenging, and rewarding as changing the world.

Sean Combs, entrepreneur, rapper, and record producer, speaking at Howard University

Your generation is empowered to change the world in ways we can’t even imagine. See right now we are in an epic turning point, a changing of the guard. Our politicians are younger, our entrepreneurs are younger, our faith leaders are younger. The leaders of this generation are more diverse and connected. Your generation crosses cultural lines and breaks gender barriers. I don’t want you to be the next Oprah, I don’t want you to be the next Obama, I don’t even want you to be the next me. I want you to be you.

Being Treated as Invisible is More Harmful than Harassment

Although surveys show that people consider it more psychologically harmful to be harassed than ignored, workplace ostracism turns out to have a bigger impact than harassment, doing greater harm to employees’ well-being and causing greater job turnover, says a team led by Jane O’Reilly of the University of Ottawa. Ostracism is also more common: Of more than 1,000 university staff members, 91% reported such experiences as being ignored, avoided, shut out of conversations, or treated as invisible over the past year, whereas 45% reported being harassed, such as by being teased, belittled, or embarrassed.

What to Do When Success Feels Empty

Why do career “wins” often leave people feeling empty and dissatisfied? And — more important — how can you avoid that problem? We recently asked HBR readers to share their thoughts, and several of the responses call to mind Douglas T. Hall’s classic model of psychological success.

Hall’s model suggests a number of reasons that a success might feel like a failure:

Trade-offs between career and personal goals. This can be as dramatic as going against your deeply held beliefs in order to thrive politically at work or as simple as enduring a punishing work schedule that allows no time for relationships and self-care. Consider this (lightly edited) response to our earlier post, from Jess, who earned a degree in education while running her own business and juggling the demands of her family:

“During this time, my major motivator was the thought that when I was finished, I would have my degree and be more accomplished and successful. However, when I graduated, I felt rather empty. I had divided myself so much during my time in school that I felt I had cheated my family of being present, and though the degree gives me some bragging rights, the close relationships with my children and family are much more noteworthy.”

Lack of ownership. If you don’t believe you are responsible for your win (perhaps you attribute it to luck or other external factors), you won’t feel satisfied by it. It’s not enough to get the big promotion, Hall’s research has shown. You have to believe you’ve earned it.

Lack of validation by others. Others also have to believe you’ve earned your success. This is why many young managers, struggling to move past an “eager novice” image in the companies where they started their careers, end up pursuing growth and advancement elsewhere.

No time to learn. Once you’ve landed the account, gotten the promotion, or made partner, do you have a chance to reflect on what you’ve learned and how to approach your new responsibilities? Or do you start putting out fires right away? Whether your organization sets a manic pace or you do (or both), it’s common to tackle one big challenge after another without taking time for growth in between.

With so much tension between the professional and the personal, how can any of us hope to achieve real satisfaction? One way is what psychologists call generativity: passing along what you’ve learned over the years to help people in the next generation achieve their goals and dreams. As another HBR reader, P.G. Subramanian, put it, “You really succeed when the team succeeds.”

That mind-set is a strong undercurrent in our article “Manage Your Work, Manage Your Life.” Though our research sample of senior executives was diverse in many ways — we synthesized the insights of almost 4,000 men and women from a range of industries, job functions, and nationalities — the leaders in our data set had one important thing in common: They all took time from their busy lives to share what they’d learned with the MBA students who conducted the interviews.

The concept of generativity was first defined by Erik Erikson, who saw it primarily as a midlife concern: Do we succumb to thoughtless routines and selfish pursuits?  Or do we make lasting contributions by teaching, mentoring, participating in social systems, raising children, or creating things that will outlast us and benefit future generations?

Though the midlife years are indeed ripe territory for questions like these, even kindergarteners (some more than others) derive great enjoyment from helping and teaching. Highly generative people often note that as children, they became aware of the problems of others and felt moved to take action. Generativity encompasses both social concern and the competence and confidence to act on it. Dan P. McAdams, a major researcher in this field, suggests in his book The Redemptive Self  that generative adults are authoritative (not authoritarian), involved parents; that they are likely to be involved in the political process, organized religion, community and civic affairs; and that they have broad friendship and social-support networks. Unsurprisingly, generative people tend to report high levels of subjective well-being.

How generative are you? Take this assessment to see where you stand.

Navigating an Office Without Formal Processes

You just changed jobs from a highly structured, corporate company to a much more casual environment. You may be finding that adjustment difficult. Maybe you’re wondering: Where is the meeting software, and do I really have to use this nap room? The Silicon Valley office with its pool tables, free-flowing beer, and hoodie-clad CEO is a cultural cliché, but many offices are becoming more casual – not only more relaxed socially, but also in their policies and processes. Zappos is getting rid of traditional management structures and even job titles. Netflix has done away with vacation and expense reporting policies. Adobe axed formal performance appraisals. If you’re entering such a company from a more rules-driven company, do you have to change – and how much?

What the Experts Say

Adaptation is the name of the game, says Amy Jen Su, a managing partner and co-founder of Isis Associates and coauthor of Own the Room.  “Part of performance success is understanding the culture you work in and being able to appropriately adapt to it,” she explains. “Working with the culture will affect whether you succeed at your job so it’s important to get it right.”

At the same time, your new office values your skills—that’s why they hired you. The trick is to adapt without losing your confidence or what has made you a successful in the past, says Dr. Karie Willyerd, a senior vice president at Success Factors. You have to learn what works best in the new environment.

Here are four principles to follow when navigating a new, less structured company culture.

Observe three key aspects of corporate culture

Since corporate norms might not be obvious at a more casual workplace, when you’re starting a new job, step one is to go into high observation mode.  Start by simply looking at when people are working. “Look at work time-frames—when people come and go, what times certain colleagues are in or not in,” says Jen Su. Then take note of how communication flows—is it virtual or face-to-face? Who are the pockets of people in these conversations? Finally, observe tactics of persuasion: how people get buy-in and how key decisions are made.

Identify effective coworkers

If you can’t figure out the flow of the office and you’re not getting the right players to collaborate on projects you need to accomplish, Jen Su suggests taking a particularly effective or long-tenured coworker out to lunch. Say something like, “I love how you got the whole team to buy into X. I’d love to hear about how that works here. Any suggestions or tips for me?”

Don’t underestimate the importance of office socializing

In an office with minimal formal policies and procedures, informal influence can take on outsized importance. “Relationships matter because they help bridge the lack of process,” Willyerd says. Skipping happy hours or holding back about your personal life not only make you seem out of step; they also reduce your persuasive power.

If you’re an older worker or a parent, going out for drinks may not be realistic – or appealing. But there are workarounds. Willyerd suggests lunch events, because it’s the socializing that matters, not the after-hours margaritas. “Figure out alternative ways to get to know people personally and build relationships,” she says.

If the idea of emoting with colleagues makes you want to run for the door, stick to safer personal topics. “Kids and family are an easy one,” says Jen Su. She described a former client who would talk to other parents at the office about trying to find a pre-school for her three-year-old. If that still seems too personal, just having conversation about how you spent your weekend can be a way to connect without over-sharing, and allow you to be authentic without feeling vulnerable, says Jen Su.

“In a casual business environment, relationships matter and help to bridge the lack of process,” Willyerd says. “Trust and authenticity are key when decisions are made quickly without the time to socialize everyone involved.”

Introduce structure when it adds value

Adapting to a more casual office doesn’t mean giving in to inefficiency, however. You can introduce more formalized process improvements if they really help. Perhaps at your old office, meetings were always scheduled with Outlook. At the new office, a preference for informal discussions is causing endless email strings or constant interruptions, and you’d like to suggest implementing some kind of meeting software. Willyerd says the way to go about it is to show how your idea will benefit your new organization. . “In a casual environment, you would not introduce a new process or tool simply for consistency’s sake, to make you more comfortable,” she explains.  “So explain the value the new tool or process brings to everyone. With a good story this week, you could be on Outlook next week.”

Jen Su points to risk management as an area where your new organization might welcome more formal processes. “If you notice that the casualness means there could be a risk to governance, or ethics — for example, the online security systems aren’t as good as the ones at your old workplace — it’s a great opportunity to suggest changes,” she says.

Be extremely mindful of the language you use, however. A constant refrain of “when I was at Company X, we used to…” will undoubtedly prompt eye-rolling among your new colleagues, Willyerd says.

Principles to Remember

Do:

Spend your first weeks in deep observation mode
Take an effective coworker out to lunch and ask her for advice
Be authentic without oversharing

Don’t:

Use your old company as a benchmark of how things ought to get done
Bring in practices from your previous employer just to make yourself more comfortable – only introduce them if they’re in the best interest of your new company
Lose your confidence – they hired you for a reason

Case Study #1: Be selective with the changes you’re advocating

Margo Schlossberg is a marketing manager for a chain of auto repair shops – an environment she prefers to the Fortune 500 company where she previously worked.

Because her new firm’s project management processes felt disorganized, relative to ones she’d previously used, she tried to introduce her new marketing colleagues to a system called Basecamp. She sent out invitations to join, but they were ignored, so she backed off.

“It’s a work in process, and it may happen some day in the future as the organization looks to expand,” she explains.

She did succeed in getting her boss to use Google Docs, “which was a win”, and hopes to convert more people to that sharing tool.  She’s also keeping her eye out for situations in which she can explain the benefits of more formal project management tools. “I can only try to point out in a logical manner the opportunity cost of not using systems to be more organized,” she says.

Case Study #2: Use a new process to build trust

When Austin Melton went from an old-school media company where he wore a suit and tie to a creative agency run by young executives called liquidfish, where jeans and sneakers were the norm, it was a bit of a shock, says the Oklahoma City-based digital marketing manager. “There’s a full bar and a keg at my office now. If I were in my previous job having drinks at work, I would be called into HR.”.

But the biggest adjustment was getting used to how his new employer prepares profit and loss statements. “I was used to working closely with P&Ls at my previous job so I could stay on top of the department’s revenue and profitability goals,” Melton explains. At his new company, his boss simply keyed figures for the whole company into accounting software without breaking P&L down by department or forecasting for the next quarter.

Melton felt he had to create his own P&L to track his team’s revenue allocations, expenses and profitability, and set forecasts in order to make effective decisions.  At first, “the owner was a bit taken back,” he says. But ultimately his boss has been pleased with how smoothly his department was running. Department-specific P&L forecasting has not yet been implemented for other directors, but it’s been an essential tool for Melton because of the work his particular department does.

By taking the initiative to institute more formal processes, “I was able to keep my part of the company running smoothly and build trust with my boss,” Melton says.

A Small Firm’s Response to Higher Health Care Costs

There are many reasons I love May – the flowers and leaves emerge, including those on the tree right outside my office window in downtown Boston; it’s light enough to play golf until 8PM;  and we banish our heavy wools to make room for light-weight clothes.  However, here’s what I hate about May – my company’s health insurance plan comes up for renewal.

I cower when I see the email from our health insurance broker, cheerfully writing to schedule our annual plan review and a discussion of the increase for the coming year.  I say increase because we have never seen a decrease in the 10 years of such meetings. Having heard in the media recently that health insurance plans were seeing dramatic price jumps, I didn’t even ask our agent, Bob, what the increase was in advance, because I didn’t want to extend my inevitable agony.

Since our financial services firm’s inception in 2005, we have had a PPO (Preferred Provider Organization) plan fully funded by the partnership.  Some of us had prior nightmarish experiences with HMOs and we wanted to avoid the gatekeeper process for referrals.  Despite switching a couple of times among the few insurers in Massachusetts, we have stayed at the high end of the spectrum; this past year, across our 29 covered lives, that plan cost us $1546 a month per family and $581 per individual.

When Bob came to the office to meet with three of us who serve as the unofficial “health insurance committee,” the first words out of his mouth were, “This isn’t good.” He then proceeded to tell us the news: a 34.9% price increase!  Bob can be a master of understatement.  I was expecting bad, but this was insane.  All I could say was, “You’re kidding, right?”

He wasn’t.  He explained that for decades, the financial services industry has enjoyed a relatively low cost of insurance compared with other Massachusetts industries (could have fooled me), since their members and families use far less medical care than some other industries, such as construction and manufacturing, whose premiums were historically greater, reflecting their higher per-capita use.  Unbelievably, it turns out that our $18,552 per family per year was really a bargain compared to a moving company!  And  also under the Affordable Care Act, insurers can no longer discriminate by sector, and companies with less than 50 employees, such as ours, cannot band together to negotiate lower rates.

We asked Bob what we could do. He mentioned a very similar plan offered by another carrier that would “only” cost 11% more than our current plan.  (What’s the inflation rate again?)

While this option seemed the clear winner if we wanted to continue to fully underwrite the best package, I wondered if perhaps it was time to rethink our strategy of fully funding employees’ PPO plans.  Do employees really value this benefit, and if not, should we consider alternative approaches? Maybe we should start only covering a portion of the plan (as many other employers do) or offering a stipend that could be applied to a few different insurance plans.

To explore where employees rate their health insurance benefits among other job benefits, I surveyed over 50 people and asked them to simply list the top five aspects of their job in order of preference, without offering any choices so I would not “lead the witness.” Because I assumed higher-level executives would be less likely to describe health benefits as a top-five attribute, I surveyed a wide ranging group of workers within different organizational structures, but all were white-collar office workers.

Not one person listed health insurance within their top five. Intellectual challenge was the most cited first choice, with colleagues and salary tied for second place.  Several people mentioned the length of their commute or their offices.

I then asked if people liked their health insurance and what percent their employer paid.  Everyone said they were pleased with their plan, even though several did not know what percent their company paid. Those who did reported that their companies contributed 75-80% of the premium.  Despite the relatively small sample size, it seemed clear that a fully funded health plan was not top-of-mind for people considering their favorite elements of their jobs.

What, then, were the options I could offer my colleagues?  We could keep the existing plan but not cover the price hike.  We could keep it and pay a portion of the increase, requiring employees to contribute the remainder. Or we could switch to another, similar plan and either absorb or share the increase.  Discussions with my partners on the subject contained a certain friction, as people are always anxious and suspicious about issues that involve change, money, and trust. I also worried about seeming uncaring and motivated by other concerns than the welfare of our staff.

We recalled that two years ago, facing an increase in the 20% range, we moved to a plan just below the most expensive offering. The plan we chose then had a $500 deductible for the first surgical procedure.  Since the switch would save us many thousands in premiums, we told our staff that the company would cover the deductible for the first surgery within any family.  Since then, we have saved close to $30,000 in premiums, while only spending $2,000 in reimbursing deductibles for four surgeries.

So last month, we decided to pursue a similar approach.  We switched to the alternate plan – the one with the 11% increase per capita — and we will provide $500 per person toward the $1,000 cumulative family deductible for surgeries, diagnostic tests, or in-patient stays.  Next year, depending on the level of price increase, we my look into offering a few options with some employee responsibility, but this market is changing so fast, it’s hard to even imagine the landscape 12 months from now.

By then, there may be some valuable data from the experience of the Affordable Care Act to help enterprises struggling with these decisions.  In the meantime, I will be curious to see if anyone at our company notices that they have an incremental increase of $500 per family deductible.

Keep Learning Once You Hit the C-Suite

What skills do companies prize in C-level executives ? To answer these questions, we surveyed 32 senior search consultants at a top global executive-placement firm. Experienced search consultants typically interview hundreds and even thousands of senior executives; they assess those executives’ skills, track them over time, and in some cases place the same executive in a series of jobs. They also observe how executives negotiate, what matters most to them in hiring contracts, and how they decide whether to change companies. (See my posts on “The Seven Skills You Need to Thrive in the C-Suite” and “Headhunters Reveal What Candidates Want”)

Many consultants emphasized that executives need a first-rate core of technical and soft skills. These skills will vary by industry and function, but up-to-date financial, technical, managerial, and leadership skills are of universal value. The terms “flexible,” “adaptable,” and “curious” came up frequently. One consultant described a typical in-demand executive as “a sponge,” primed to “take in new skills” and “learn from the people around them.” Another endorsed “willingness to learn and adapt to changing environments,” and a third urged “adaptability, the ability to operate in multi-cultural environments and the openness to learn.” One consultant virtually spelled out a formal specification: “Executives should not only have a high level of intellectual curiosity (staying current on market trends and changing dynamics in business), but also a personal sense of flexibility and adaptability.” Several consultants urged executives to build on their personal strengths, or, in the words of one respondent, to “stay very focused and honest on where their core strengths lie.”

Several consultants urged executives to refresh their technical skills constantly. “It is always important to keep oneself up to date with what is happening in the industry,” one said. “Updating one’s IT skills and getting acquainted with the new ways of communicating and interacting (social media) are obviously also very important.” Another urged executives to “continue to educate themselves commercially, financially, and operationally.”

Some argued that merely keeping pace with industry and market changes is inadequate; an executive must anticipate change. The costs of not doing so—not continuously changing and evolving—are likely to be high. Those who neglect to keep up, one respondent said, “will be left behind in a rapidly changing market.”

Finally, team-building skills are both highly prized and shifting rapidly: executives are apt to find themselves managing co-located teams, cross-functional teams, global teams, and virtual teams. Accordingly, they are increasingly expected to apply an analytical lens to team management and to be familiar with best practices (as opposed to managing by gut).

Where should executives turn for advice on skills they need to acquire and upgrade? According to the search consultants, executives might also want to seek out these four sources of insight:

Self–assessment. Many consultants stressed astringent self-reflection, urging honest self-scrutiny about one’s shortcomings and developmental needs before turning to peers, colleagues, mentors, coaches, or courses. “Be extremely critical of yourself,” one counseled. Another urged “listening, adapting, and being cognizant about your own strengths and weaknesses.” The risks of complacency and arrogance arose repeatedly. As antidotes, some recommended flexibility, openness, and willingness to listen. “[Leaders] need to be constantly testing how people are responding to them,” one consultant said, “and open to adjusting their style—both in how they communicate with different groups of people and how they change their leadership approach to suit the situation.”

Peer and subordinate feedback. “External awareness”— which one consultant described as “the ability to seek information outside the executive’s classic sphere”—was viewed as just as important as self-awareness. Several respondents advocated a “strong and diverse network” and openness to 360-degree feedback—that is, not just feedback from supervisors. One even declared that executives “should always be asking their team, peers, and boss how they can be better.”

The same relationships that can fortify executives’ self-knowledge can also keep them abreast of the market and the industry. One consultant urged executives to “seek advice at all levels, and leverage the experts they have in their businesses—this helps build trusted relationships as well as provide them with valuable information.” Another noted one hazard of failing to do so: “Too often I see good executives focused only on their role, and not interested in spending time building a good network of peers. The consequence is that they miss the weak signals of the market.”

Mentoring. Many respondents recommended a mentor—one whose career trajectory the executive hopes to emulate—as a source of information and advice. “Analyze the success of others in their company,” one consultant suggested, “and don’t be afraid to seek out a mentor.” Others extolled the benefits of taking a more junior colleague as a mentor, or “reverse mentoring.” “In a few cases we have been successful in implementing a ‘reverse’ mentoring program, i.e., giving an under-30-year-old mentor to an executive of 54 years of age or older,” one consultant said. “They have been helpful in changing some old habits and ways of thinking.” The junior partners tend to be front-line managers and professionals with up-to-the-minute knowledge of customers, competitors, products, technologies, and trends.

Formal education and developmental assignments. Some consultants praised external educational offerings, including formal executive-education courses, for the access they offer to new research and practices, examples of companies facing relevant challenges, and sometimes a global network of contacts.

Others advocated seeking out varied and off-track job assignments, or what one consultant called “opportunities that take one out of one’s comfort zone.” Developmental assignments outside one’s areas of expertise can often provide exposure to new practices, new markets, and disruptive technologies.

Professional coaches were also cited as a source of reliable but confidential feedback about oneself and one’s managerial skills. “Having a coach or peer group to bounce ideas off is important as execs review their own performance critically,” said one consultant. “An impartial outsider is often required.” Coaches can help executives correct their blind spots and weaknesses, and offer valuable negative feedback that subordinates might withhold.

As one executive offered advice for the long haul: “Do not spread yourself too thinly, and focus on the objectives you have been given. Ensure you have a happy and healthy support system outside of work, and make this a priority.” Some cautioned, too, that flexibility ought not to displace long-term objectives. The goal, one consultant said, is to “stay open-minded but remain on purpose.” Another warned against embracing fads and “every whimsical management book that comes to the market.” Another observed, “The problem is not the sources of information. It is about the analytical and reflective capacity to sort through all that information and pick what is specific to their needs.”

Today, the most pressing question is,“How can you keep your skills current?” It’s really a question of career survival.

About the Research

We talked to the 32 consultants in 2010, but the findings are consistent with everything we hear today. As a group, the senior search consultants we spoke to were 57% male and 43% female. They represented a wide range of industries, including industrial (28%), financial (19%), consumer (13%), technology (11%), corporate (6%), functional practice (6%), education/social enterprise (4%), and life sciences (4%). These senior search consultants worked in 19 different countries from every region of the world, including North American (34%), Europe (28%), Asia/India (26%), Australia/New Zealand (6%), Africa (4%) and South America (2%).

Don’t Hide When Your Boss Is Mad at You

Years ago, as the editor of prestigious trade magazine, I remember losing my cool with one of the top reporters. We were sharing a late-night cab home from the office, both having put in a long day, and when I pressed her on when I’d finally see the very late article she’d been laboring over, she told me she wasn’t sure she’d make the deadline, or any deadline that would allow the article to be printed in the next issue of the magazine.  Caught by surprise, I lost it and started yelling at her. All the things I’d have to do to fix the problem were running through my mind. I was angrier than I’d ever been in my professional career and when I got out of the cab, I slammed the door as hard as I could. She avoided me the whole next day at work and the tension between us festered for a few days until I came up with a new piece to fill the hole in the magazine. Only then was I able to rationally discuss her article with her – and when it was finally finished, it was a great piece.

It was not my finest moment as a manager, but I can imagine it was even worse for her. Nobody wants to be on their boss’s bad side. After all, study after study shows how critical the relationship with your manager to your happiness at work. Not to mention that your boss controls many aspects of your working life, from assignments and raises to vacation requests.

In hindsight, I wished I’d handled the matter differently. As the boss, I should’ve discussed the problem with her calmly in the morning, when we were both rested and I’d had time to rationally think through the implications of her missing the deadline. But bosses, like everyone, aren’t perfect, and sometimes it’s up to the employee to make amends. It’s hard to step up, especially given the difference in power, but if you want to recover from making your boss angry, it’s important to not be timid and take the lead. Here’s how.

Don’t retreat to the shadows. Don’t be tempted to hide from your boss or sweep the conflict under the rug. That can cause the tension to fester and lead to future blow-ups, perhaps disproportional to the original offense. It’s critical that you attend to the working relationship if it’s been damaged, says Jeff Weiss, partner in Vantage Partners, a consultancy that specializes in negotiations and relationship management. Don’t wait for your boss to take the initiative to smooth things over. When you’re feeling calm and rational, go see your boss to clear the air.

Get input. Resist the urge to gossip about what happened with your colleagues. You can inflame a tense situation quickly if everyone is talking about it and word gets back to your manager. But it can be helpful to talk over the situation with one trusted friend or colleague to get perspective and to air your own thinking. You may rehearse what you want to say and your friend might, for instance, point out where you sound defensive or insincere.

Remember that your boss has more going on than just your battle. Your boss has normal reactions to stress and disappointment just like anybody else. She may be reacting disproportionately for reasons you can’t see in the moment. When I yelled at the reporter it was because I saw even longer days and nights of stress ahead of me until I came up with another article for the issue. But she probably didn’t realize that. Try to see the issue from your boss’s perspective.

Own the mistake. If you’ve done something to trigger your boss’s ire, take the high road. If you make a mistake, ‘’own it,’’ advises communication expert Holly Weeks, author of Failure to Communicate: How Conversations Go Wrong and What You Can Do to Right Them. Even if it’s not entirely your fault, your boss will appreciate you taking responsibility. My reporter was working on a very tricky piece. It wasn’t entirely unreasonable to be late and I’d pushed her to finish sooner than she wanted to. Still, a sincere apology like, ‘’I’m sorry I let you down,’’ would’ve gone a long way.

Offer a solution. If you can help solve the problem, do so. You may not have a ready-made solution at the time, so consider taking a break in the conversation, reflecting on what happened and how you make it better, and then come back to it with fresh eyes, Weiss advises.  “Some conflicts take multiple iterations to resolve,’’ he says. “Success may come in small increments.’’

Re-align with your boss. Make a point of getting on the same page with your boss. Tell her you’d like to avoid disappointing her again and ask her to discuss her priorities with you. If making a deadline is a top priority, you’ll know to communicate with her long before that’s in jeopardy. If not being surprised by bad news matters most, knowing so will let you avoid finding yourself in a similar predicament to my reporter.

It might not be you. If you have no idea what you did to trigger your boss’s ire – and you think maybe you aren’t at fault – still make a point of checking in with her. Your boss will appreciate that you’re making the effort to get on the same wavelength. In that conversation, your boss may let her guard down and explain the stress that she’s under, helping you better understand her challenges. But be careful to listen, rather than complain about her anger. Your goal is to open the doors to candid conversation. Either way, your boss will respect your having the courage to talk with her about how to make things better. On the other hand, your boss’s anger may not be justified. It’s not unusual for a manager to blow up at the last person in a chain of bad news. You can’t always know what caused your boss to lose her cool. It’s possible there wasn’t a good reason she lost her temper and she doesn’t have much to say about it — you were just the unlucky recipient. If that’s the case, try to put it behind you. If you keep the incident in perspective, it won’t color an otherwise good relationship.

Fortunately for both of us, I ended up repairing my relationship with the reporter, enough to convince her to join the next magazine I went to. And eventually, we were able to laugh about the incident. Like me, your boss may be embarrassed by the way she handled the situation. And like me, your boss would appreciate your working a little bit harder the next day to set things right. “Conflict is inevitable and conflict is not bad,’’ Weiss says. “We need to manage differences every day. Sometimes the best we can do is build understanding.’’