Marina Gorbis's Blog, page 1406

Inclusiveness Means Giving Every Employee Personal Attention

Several years ago, a large, global company asked me to help improve their employee engagement. I suggested a strengths-based approach to the problem: a search for “hot spots” in the organization where people were highly engaged and performing well. By understanding what was working, we could harness and replicate these factors across the greater organization.

We surveyed thousands of employees from all over the world. Our findings were fascinating, but one key factor emerged: from the Netherlands to India to the United States, those who were most engaged had bosses who gave them personalized attention.

 I’ll never forget the story we heard from one very junior employee. An assertive, high-ranking (and potentially intimidating) leader of the business unit in which she worked sat with her and asked her to walk him through her perspective on an issue. Think about the kind of impact that interaction must have had on the young woman. A senior executive was genuinely curious about her point of view and her opinions. This strategy was integral to the way he led his team, and, as a result, the group was performing exceptionally well.

This is what “inclusive leadership” really looks like.  Too often the term is used as a buzzword, read through the lens of demographics. When someone says a leader is inclusive, we might assume that he’s a supporter of women and minorities. But inclusiveness is about more than gender, racial or cultural diversity. What matters most is a fundamental mindset that embraces every person as an individual and helps them bring who they are – both their backgrounds and their opinions – into the workplace.

To increase inclusiveness into your organization, encourage the following practices:

Be aware of biases. Social psychologists have found that even people who do not intend to discriminate are likely to hold implicit biases against certain people, perhaps those who are new or less senior, or who represent a certain function. Inclusive leaders actively fight against these tendencies. Make note of potential blind spots:  unconscious favoritism, conformity, or silence in certain situations. Proactively address those problems and be receptive to feedback from every employee.

Create a shared identity. Inclusive leaders also create a sense of shared identity and purpose within their teams. This doesn’t mean groupthink. Instead, our research found that the most effective leaders had frequent conversations with team members – both one-on-one and in group settings – about what was important to them. This practice advanced an explicitly held set of values and enabled people to learn about and connect with one another. It is in this context that inclusive behaviors emerge.

Be attentive to emotions. Inclusive leadership also requires an emotional skill-set:  the ability to recognize emotion, to understand what’s being felt and why, and to use emotion effectively. For example, a leader who can’t spot the emotional angst on an excluded employee’s face will not be able to chance her behavior to make him feel more included.

Organizations that want to boost employee engagement should start by cultivating more inclusive leaders. These executives will need to spend time looking not only at demographic breakdowns but also at the people in front them. Interest and attention help employees thrive.

That Persuasive Tweet Could Be from a Sneaky Bot

Although Twitter monitors tweet traffic to weed out “socialbots,” these automated accounts are hard to detect as they tweet their preprogrammed, synthetic messages. After a team led by Carlos Freitas of the Federal University of Minas Gerais in Brazil set 120 socialbots loose, they not only infiltrated social groups but became influential in them; 20% picked up 100 or more followers, while only 38 were suspended by Twitter. MIT Technology Review says the concern is that bots could be designed to influence opinions, such as about politics.

Universities Are Missing Out on an Explosive Growth Sector: Their Own

Education is on the brink of rapid change that will create a lot of value for innovators. But still sitting on the sidelines? Those who make the decisions and control the purse strings at legacy higher education institutions.

One representative example: April’s Education Innovation Summit, where more than 2,000 people energetically discussed how technology and markets are charting the future of education globally. The summit’s organizers claimed that 80 universities were in attendance, but a closer look at the attendee list revealed only a handful of high-level decision makers — and exactly one university endowment. Most of the attendees from post-secondary institutions were professors or deans of schools of education. Meanwhile, the halls were filled with hundreds of investors and hundreds more entrepreneurs.

I’ll admit that I’m not an entirely disinterested observer when I look upon the $450 billion currently sitting in university endowments in the U.S. I’m a partner at a venture capital firm, and venture capital has long been a key way for the top-performing endowments to deploy capital. But when I talk to general partners at venture capital funds that focus on education — Learn Capital, where I work, Rethink Education, and University Ventures — they report that university endowments have not been nearly as interested as other institutions in the work we’re doing.  One outside manager of many endowments I spoke to confirmed to me that there has been “no mandate” from clients to be investing in the future of higher education.  “I haven’t heard that at all,” was the quote. At the Education Innovation Summit the only university endowment in attendance was the University of Texas‘s UTIMCO.

The business models of universities are being challenged, and it looks like the universities are out to lunch. The transformation in education technology and markets is happening with the business leaders and money-men of higher education barely present. Not only will the spoils of this sea change largely go to private markets, with those spoils will go the prestige and legacy of those who invented the future. This is a tragic waste, given that universities are not only our greatest repositories of educational talent, but among our greatest repositories of investable capital as well.  Those who manage money for higher education, I propose, need to get much more interested in the market they are in.

The challenges to the traditional higher education model are well known.  This summer, a well-produced documentary, Ivory Tower, will likely sharpen the public discussion.  In a nutshell, the credit hour, the seat in the lecture hall, the tenured professor with a two or three course load, the four-year tuition, and the two-year professional degree will all be up for grabs in the next 20 years.  The more astute higher education administrators tell me they can see this happening now: Tuition discount rates are at record highs, and the summer scramble is on to hit admission targets as enrollments drop. Debt levels are unsustainable, for both students and many universities.   Meanwhile, every post-secondary institution in America is scrambling to bring more full-pay foreign students to their degree programs just to make the numbers work.

Many universities will figure out how to thrive under a new world order, but there are not-so-quiet alarm bells that suggest many will not. (See comments by Clayton Christensen and Mark Cuban). There are examples of universities forging ahead. Arizona State University, Southern New Hampshire University, and Abilene Christian University are names that sit alongside the usual MIT and Stanford.  Still, most colleges are lucky if they can afford even a small team charged with developing new lines of business and new business models. One senior administrator with bold ideas lamented to me that the intention and impetus exists at his well-known college, but there’s just no capital to try to experiment, and thus no room for failure. As a result, his university’s business model is in a holding pattern, and so is nearly everyone else’s.

Many universities manage billions in research funding, but there is usually no R&D budget for their own product, namely delivering education to willing buyers. Those administrators in the position to understand the imperative to innovate don’t actually have control over purse strings. Presidents and provosts will tell you: operating budgets are tight.  Institutions have been raising tuition just to keep the lights on.

Meanwhile, trustees control universities’ sometimes-giant endowments, and most often delegate this control to asset managers who treat the endowments as pools of money with the sole purpose of creating more money.  They’re quite good at it, on the whole.  The National Association of College and University Business Officers Study on Endowments reveals that endowments are performing enviably — with returns of near 12% in 2013. Their top-performing alternative strategy for the year was distressed debt (quite the irony, given all the distressed student and university debt out there).

There’s a systemic Catch 22, one outsourced endowment manager told me.  The trustee committees and endowment managers are fine with  making investment decisions about any old asset.  But when it comes to education, they feel like that’s too close to home, so they pass the buck or avoid the decision entirely.  But if you go to the operational side of the institution, they feel investing capital is the business of their money managers, so they in turn pass the buck or avoid the decision entirely.  It’s a game of responsibility hot potato.

Thus, the asset managers are more comfortable with hedge funds, real estate holdings, and trading strategies than in market opportunities in education. This is a mistake from a purely fiduciary perspective — the new market actors in education are making money in droves. More importantly, if the endowment is there to support the future of an institution that will need to reinvent itself, it should be investing in that reinvention.

There is a precedent for endowment managers to see capital as a tool to help the university thrive — investing in local real estate.  Universities have a vested interest in seeing their surrounding communities flourish as a way to attract students and faculty.  Harvard notoriously owns (and manages) much of Cambridge, Mass., but even my alma mater, Clark University, which has a small endowment by comparison, has actively bought up much of the real estate around it in order to make downtown Worcester, Mass., a better place to be.  This has generally been a successful strategy for universities in both financial and strategic terms. But these days the mantra is “more clicks, less bricks,”  and universities should be using their capital to manage their digital surroundings as well.

Instead, innovation in education is mostly happening outside of the university, with entrepreneurs leading the way.  Coursera and General Assembly (both in Learn Capital’s portfolio) have rapidly scaling businesses.  When the Minerva Project can get Larry Summers to chair its advisory board, when Coursera can recruit the former president of Yale as its CEO, and General Assembly can endow a scholarship fund with money from Microsoft and Google, you know that there’s been a real shift in the center of power.

As one university trustee said to me, “We need to get in the game. Right now, we’re road kill.”  It doesn’t need to be this way. There’s a scenario where everyone emerges a winner.  But it requires that we all have a seat at the table, and right now, we’re not even in the same rooms. For universities, joining the league of innovation may require casting aside the firewall between endowment money and innovation in education.

Entrepreneurs Need a Better Way to Cash Out

The most successful, visionary entrepreneurs dream not of millions of dollars, but of a world where their products change culture. But in technology startups, particularly venture-backed technology startups, the current investment climate does not always support that vision. Conventional wisdom suggests that there are only two ways to exit a company: either it grows such that it can hold an initial public offering, or it gets acquired by or merges with a strategic partner. For as long as it has been an industry, these have been the only two ways for a venture capital-backed company to succeed. There has to be a better way.

It is incredibly hard to hold an IPO. The conventional wisdom on Wall Street for the last 20 years, with notable exception of the technology bubble at the turn of the century, is that to do so, a company needs around $100 million of annualized revenue and a couple of consecutive profitable quarters. Lately, some companies have been able to sneak by with lower valuations, because of sufficiently impressive growth. But analysts are judging EBITDA, P/E ratios, quarterly growth, and cashflows – which don’t always correlate with long-term value creation. And, too often, our obsession with these short-term metrics has the opposite effect. This can lead to bad outcomes for entrepreneurs who hope to create lasting value.

Meanwhile, strategic acquisitions sometime work well, but often don’t. Big acquirers cash out founders, management teams get folded into big organizations, cashflows disappoint, and visions flounder.

We need to find a better way to support small and mid-sized businesses, a key element of our economic infrastructure. With a structure that returns the agency to the founder, that focuses on the true, fully realized vision of the business, rather than short-term profit optimization, one might imagine a different class of company could be created.

There are a nascent but growing community of financial backers, both institutional and individual, who have taken the long view: whose investments look more like mezzanine debt, in the stable case, or like common equity, in the growth case. In either case, a dividend allows an investor to see a return without a traditional “exit” on the part of the company.

Debt capital, from family offices to institutions, provides an alternative route, and an increasingly attractive pathway for companies. If a company has enough cash flow to service it, debt capital offers an opportunity for them to borrow from investors, in a form of venture debt that allows them to continue to grow while staying independent. Patient capital sources have taken note of the increased access to information about private businesses, which has been a primary barrier preventing them from investing directly. As a result, these investors have taken to bypassing fund-of-funds and other financial middle men who trade on information asymmetries. This means that pension money, endowment money, and foundation money is increasingly going straight into startup companies. Most of the capital tends toward the lending platforms today, because they are providing returns at a time when U.S. Treasury yields are barely at 3%. And as the shift away from the industrial economy continues, a wider percentage of this institutional capital will go towards innovation startups through a rise in speculative investing, which has been predicted by a number of Silicon Valley venture capitalists.

Ultimately, high-risk venture capital investors need to be rewarded, ideally with high returns, for an ecosystem of innovation to be sustainable. But venture capitalists have focused on specific markets and business models, because of the constraints of the exit, which is how investors have made their returns to-date. By creating a different type of liquidity opportunity at later stages of a company’s life, with an orientation towards the long-term, perhaps the market of companies worth investing in will evolve, and grow.

Some of the most important social and cultural infrastructure — including schools, networks of the Red Cross, churches, mosques and temples — in our society today has taken a very long time to achieve meaningful scale, and thus, required patient, purposeful supporters. We need to be more ambitious about our innovative businesses: not only that they create millions of dollars in the short and medium term, but that they last in the long term. And the “exit,” at least in its current incarnation, is the best place to start brainstorming solutions.

Yes, You Can Make Meetings More Productive

High human capital productivity — one key to great financial results — requires hiring the right people, teaming them effectively, and eliminating organizational barriers to high performance. It also requires paying close attention to how people in the organization interact. At many companies, they’re spending way too much time answering emails and attending unproductive meetings.

Why should this be? Blame Metcalfe’s Law.

Robert Metcalfe’s famous dictum states that the value of a network increases geometrically with the number of connected devices. One fax machine is worthless; a million fax machines create a valuable network. But the law has a dark side: as the cost of one-to-one and one-to-many interactions declines, the number of these interactions increases dramatically. And people are interacting more than ever. They are sending scores of emails every day. They are copying many of their colleagues, whether or not those individuals really need to see the message.

Worst of all, they are calling meetings. In the past, organizing a meeting of executives was time-consuming and therefore expensive; assistants had to spend hours on the phone finding times that worked for attendees. Now all they need to do is check Outlook or a similar program and send a quick email. As a result, most executives are spending 20 hours or more every week in meetings. And one meeting usually spawns many more. For example, my colleagues and I found that a single weekly executive committee meeting at a large company generated about 300,000 hours of preparation time each year (the equivalent of nearly 150 full-time-equivalent employees).

But meetings don’t have to get the best of you. You can manage them as closely as you manage every investment. There are four keys:

Don’t hold a meeting for the sake of holding a meeting. Meetings are great for some tasks, like gathering input and coming to a group decision. They aren’t so good for other tasks, such as drafting a strategy document. Before calling a meeting, decide whether it’s really the best way to get the job done.


Manage the invite list. In many companies it’s bad form not to invite lots of people to a meeting. What people don’t realize is that every additional attendee adds cost. Unnecessary attendees also get in the way. Remember the Rule of 7, which states that every attendee over seven reduces the likelihood of making a good, quick, executable decision by 10%. Once you hit 16 or 17, your decision effectiveness is close to zero.


Change the default time on meetings. Not too long ago, most companies called 30-minute meetings. Now the typical default time has grown to 60 minutes, even though every additional minute generates more cost. As my colleagues and I recently noted in HBR, one company established a rule: if a meeting was to last more than 90 minutes, it required approval by an executive two layers up from the convener. This rule quickly cut meeting time.


Improve the effectiveness of every meeting minute. You can boost meeting effectiveness through some simple disciplines. Clarify the purpose of every meeting. Spell out people’s roles in decisions. Create a decision log that captures every decision made in a meeting. (If the log is blank, you’ll find that people begin questioning why the meeting was held at all.)

Recently, my colleagues and I heard a story about a U.S. undersecretary of defense who was managing procurement. She came to her first meeting with contractors and saw some 60 people in the room. So she said, “Let’s first create a big circle. We’ll go around the room, and everyone can say who they are and why they’re here.” Participants rolled their eyes  — did they really have to do something this gimmicky? — but did as she asked.

After the first two had identified themselves, the undersecretary said, “Thanks for your interest, but we won’t need you here. You can excuse yourself.” Others met a similar fate. By the time she got to the 10th person in the circle, people all over the room were getting up to leave, knowing they had no real reason to be there. Eventually the group got down to around 12 members — and the human capital productivity of that meeting rose about fivefold.

So Metcalfe’s Law cuts both ways. Capitalize on its value, by all means, but watch out for the costs hidden in its dark side.

High Returns Prove Elusive for Hedge Funds

A composite index of more than 2,000 hedge funds returned 72% over the past decade while charging substantial fees—the 25 highest-paid hedge-fund managers made $21 billion last year, according to the Wall Street Journal. Meanwhile, for comparison, an index fund composed of 60% stocks and 40% bonds had a return of about 100% over the same period while charging low fees. With pension funds increasingly turning to these firms for higher yields, hedge funds, which bet on and against stocks and invest in equity derivatives, now manage more than $2.4 trillion, up from $865 billion a decade ago.

A Plan to Revitalize Greece

Greece is finally showing signs of recovering from its 2008 crash. However, as much as macroeconomic reforms are needed, the future of the Greek economy will be determined by its competitiveness, which concerns costs, but is also measured by innovation.

In that regard, Greece finds itself at a crossroads. It can improve its competitiveness by reducing costs in its traditional sectors, such as tourism, agriculture, and trade. Or it can aim higher – by laying the groundwork for higher value-added goods production.

The key to such a change is developing an innovation-oriented industrial structure and a well-functioning innovation system. This is going to be a considerable challenge.

Currently, the annual expenditures for research and development (R&D) amount to 0.67% of Greece’s GDP. Other Eurozone economies invest four times as much in relative terms, around 2.5% to 3% of their GDP.

In the “Innovation Performance Index,” prepared by the European Commission, Greece ranks far lower than any other Eurozone country. This is unsurprising given that the traditional sectors of the Greek economy are far less dependent on R&D. To get ahead, Greece’s business environment has to change and become much more open to innovation.

According to the 2014 edition of the World Bank’s “ease of doing business indicator,” Greece ranks 72nd out of 189 countries. Despite some improvement, Greece still has an overregulated legal framework that puts substantial burdens on entrepreneurs. Requirements for licenses, permits, and reporting remain excessive. Key agenda items – such as investor protection, the enforcement of contracts, and an efficient insolvency regime – remain unfinished. And the OECD’s most recent report on Greece identified 555 regulatory restrictions that, if lifted, would create major incentives to re-dynamize the Greek economy.

Technology-oriented firms face further obstacles, which have inhibited the country’s potential innovators since long before the current crisis, often forcing researchers to retract into fundamental research or academia instead of becoming entrepreneurs. Some companies, such as MobileFX, Velti, Globo, InternetQ, and Lykos, remain based in Greece but have chosen to develop their innovations abroad.

If there were ever a time to shed all that superfluous, bureaucratic baggage, that time is clearly now. Making this decision is a matter of national self-interest. The Greek minister of development, for his part, has started the reform process, but he needs strong political support to complete it.

The good news is that there are some hidden assets in Greece, on which the country may build a modern innovation system. The first are the research centers of excellence, such as the Demokritos Center in Athens, FORTH in Crete, and CERTH in Thessaloniki.

A second hidden asset is the huge number of top Greek researchers working outside the country. Greece is the only Eurozone economy “exporting” more scientists to other European countries and the United States than it is able to keep at home.

The third asset is the considerable number of small but innovative companies all over Greece that have developed new ideas. Though many leave the country, some firms have remained despite the adverse innovation environment. For instance, Raycap has developed solutions that protect telecommunications, power, and transportation networks. Systems Sunlight produces complex battery systems. And Tropical SA is focused on hydrogen and fuel cell technologies. Greece simply needs more of these businesses.

Greece’s fourth asset is its attractive climate and the overall quality of life. In an increasingly global race for the best talents, the quality of life outside the lab has turned into a crucial success factor, which should enable Greece to become a global attractor for talent.

Given the country’s strengths and weaknesses identified above, one point is paramount: The political arena needs to create a vision of innovation for the country. A coherent innovation policy, designed to unlock Greece’s hidden assets, will require five key steps:

Strengthening efforts to cut red tape. Reducing administrative hurdles to entrepreneurial activities is very doable in principle. Greece should aim to realize permanent business registration within one day. And it ought to focus on becoming one of the top 25 economies in the World Bank indicator when it comes to “Ease of Doing Business.”

Investing in applied research centers of excellence (along the lines of Boston, California, Oxford, EPFL, or Fraunhofer), and reorganizing research institutes and universities into clusters. New institutes should help to consolidate the existing web of applied research and universities, which when organized into geographic clusters, create greater efficiencies as well as research cross-fertilization. This needs to be done in those sectors where Greece shows a tendency for specialization, specifically in the areas of quality of life, information and society, and sustainable energy. Building scientifically competitive research campuses will help close the gaps in the innovation chain and attract talent, both of Greek and non-Greek origin.

Developing networks between research and business, and engaging all partners to cooperate in the innovation chain. High-quality science needs to align with technology-based entrepreneurship.

Developing politically independent research organizations by providing research grants based only on merit and research quality. To unlock Greece’s hidden assets, universities and research institutes must become independent from any political influence. This requires that they are able to autonomously decide on their budgets.

Extending that network to the Greek business and research diaspora. The Greek diaspora, although very strong, is currently not treated as a potential economic asset. Most measures aiming to close the gaps in the innovation chain can be supported with a target-oriented diaspora policy. For instance, dual academic appointments in Greece and abroad can stop the current brain drain and allow the circulation of ideas between countries.

Whether or not the transformation of Greece into a real innovation hub becomes reality will take more than investments into R&D and into research centers. Vested interests must be overcome, and Greek society must embrace change for a better future. That requires a new openness, not just regarding the independence of research activities, but also regarding a constant exchange between the worlds of research and entrepreneurship in all kinds of directions.

In that sense, the Greek innovation task is just one version of the country’s biggest challenge: using this profound crisis to reinvent itself and to cast the unproductive practices of the past overboard.

Customer Complaints Are a Lousy Source of Start-Up Ideas

Consider this situation. A good friend of yours calls you one day to pick your brain about an innovative business idea. He’ll only consider pursuing this opportunity if you give him a positive review. This particular friend is unemployed at the moment, and he plans to invest most of his savings in the venture. So there’s a lot at stake for him.

On what grounds would you base your opinion? Would you trust your gut? Your past business experience? Look for examples of similar ideas you’d seen elsewhere or that have worked in the past? Try to find parallels from other industries that might also work in this case? Maybe you’d start by digging into a ton of data to confirm or refute your true opinion about the venture.

Clearly, there are many ways to evaluate an innovative business opportunity. But at the end of the day, whichever way they do it, people considering a new business idea usually try to fit it into one of these three broad categories.

1. “Good idea! Nobody does that.”

2. “Go for it! Customers are complaining all the time that no company’s product or service is good enough at this.”

3. “The idea might be good, but there are very powerful competitors in his industry doing a terrific job.”

Before you continue reading, ask yourself which of the three options you’d want your friend’s idea to fall into. That is, which one would seem to represent the most-promising alternative? It turns out that disruptive innovation researchers have empirically measured the odds of success in each of these situations, and their findings may not be what you expect. Here’s what they’ve found, and how they explain their results when they look at them through the lens of disruptive innovation theory.

“Good idea because nobody does it”: Innovations that do things that have never been done before create new markets (thus the term “new-market disruption”) and so are necessarily aimed at people not currently in that market – that is at “nonconsumers.” Quicken software, the Sony Walkman, eBay, the University of Phoenix, and Rent the Runway are a few examples. Studies on disruption indicate that, when done right (that is when an innovator fulfills an important customer need with a profitable business model), new-market disruptions have a whopping 60% chance of being successful in the marketplace. That becomes less surprising when you consider that they face no competition; that initially the market is often too small to tempt incumbents; and that their business models are often more modern, using better technologies to fulfill customer needs in a much better way than currently available substitutes.

“Go for it! Customers are complaining all the time that no company’s product or service is good enough at this.” Common sense would tell us that a customer complaint is an opportunity to start something new that will finally meet the demands of frustrated consumers. But disruptive innovation theory tells us otherwise about these “underserved consumers” — these customers who want better products and are willing to pay for them. The type of disruptive business that is built around an underserved consumer is a “high-end disruption,” and it is very hard to pull off since such opportunities are very attractive to incumbents.

Generally speaking, an innovator needs to come to market with an entirely new, incompatible business model that uses a different distribution channel for the barriers to emulation to be high enough to keep deep-pocketed competitors at bay. When high-end disruptions do take off, they win big. You can see that in such examples as Whole Foods Market, Tesla, and Geox. But disruption studies indicate that only 4% of high-end disruptions succeed. A customer complaint might be an opportunity, but 96 times out of 100 it’s an opportunity for established firms.

“The idea might be good, but there are very powerful competitors in his industry doing a terrific job.” Surprisingly enough, one of the cruelest fates an established company can meet arises from doing a terrific job. When established firms perform well, and improve year after year for a number of years, they eventually improve so much that they end up creating “overserved consumers.” That is, they focus their resources on improvements that consumers do not want and will not pay for. Overserved consumers represent fertile ground for the classic low-end disruptor. These are upstarts that can come to market with a radically lower-priced offering by eliminating some expensive features that consumers undervalue and substituting other, less costly features that consumers value highly but incumbents have overlooked (or are not interested in pursuing since these features generally produce lower margins). The three most often overlooked features are related to making the product simpler, more affordable, and easier to use. When done right, low-end disruptions have a 40% chance of success. Netflix, Curves, Dell, Xiameter, and Glasses Direct are examples of low-end disruptions.

Research indicates that the new-venture failure rate today is above 80%. Disruptive innovation, applied strategically, can significantly lower these numbers. So the next time your friend comes to you with a new venture idea (or you’re thinking of launching one of your own), ask yourself how you will evaluate that opportunity. Will you trust your gut? Or will you look at the chances of three clearly identified patterns of success?

When Innovation Is Strategy

An HBR Insight Center




The Industries Apple Could Disrupt Next
Start with a Theory, Not a Strategy
The Case for Corporate Disobedience
Google’s Strategy vs. Glass’s Potential

A Little Perspective on Amazon’s Book Business

The contract battle between behemoth Amazon and Goliath Hachette has become a full-on Thing, with pundits pontificating on anti-trust, bemoaning the future of books, and even trotting out a corporate anti-bullying law from the 1930s as a remedy.

Amazon may be losing the PR battle right now (scorn Stephen Colbert and “Robert Galbraith” at your own risk), but Hachette is laying off staff and reports suggest that the standoff is damaging its business.

Boycotts may hurt Amazon, but how much? To put the stakes in perspective, we’ve visualized a worse-than-worst-case scenario for the Seattle company. What would happen to Amazon’s annual revenue if its U.S. book business disappeared entirely tomorrow?

Get Over Your Fear of Conflict

Most of us have some resistance to conflict. Instead of addressing issues directly, we try to be “nice” and end up spending an inordinate amount of time talking to ourselves or others — complaining, feeling frustrated, ruminating on something that already happened, or anticipating something that might happen. These conversations usually sound something like this:

“My colleague interrupted me again. We’re supposed to be leading this effort together and this is his way of showing he’s the boss. He just makes me look bad in front of the team. I’ve been replaying it in my mind over and over again.”

“Someone has to tell my direct report that his bad attitude is affecting the rest of the team, but I’m dreading it. I’ve been thinking about it all day and haven’t been able to get anything done.”

“I know what they’re going to say — that we can’t have more resources due to budget constraints. I’ll probably just give up on this.”

Sound familiar? These are just three recent examples that I heard in coaching sessions with clients.

Here’s the trouble: These efforts to be “nice” can have pretty significant costs. You create relationships that are neither authentic nor constructive. Your health and self-esteem may suffer and you signal that you’re a victim. And your organization loses out as you make compromises with the loudest person in the room, lose the diversity of thinking that’s critical for innovation, or stop producing the best solutions.

Below are five tips I’ve offered clients when they find themselves avoiding conflict:

Recognize that being nice is an outdated strategy. At some point in your life or career, you probably got burned by conflict, and felt shamed or criticized. When that happens, we often decide to be accommodating rather than ever feeling that way again. We choose safety, peace, and harmony over speaking up.

When I ask clients why they don’t want to have difficult conversations, it usually comes down to fear of experiencing those emotions again. Many have an “a-ha” moment when they realize they’re no longer that younger version of themselves; they’re now a more seasoned, experienced person with new skills and know-how.  As one client recently put it, “I’m still behaving as if I’m that second-year associate who got shouted-down by the senior partner for pushing back. But I’m now the general counsel of this organization.”

Focus on the business needs. When you avoid conflict, you’re actually putting the focus squarely on yourself. In all three cases above, the clients felt backed into a corner, concerned about how others might perceive them. But it’s not about you.

When I ask clients, “What would the CEO, customers, or shareholders of your organization say about this situation, and what does the business need?” they’re suddenly much more objective and clear:

“The business needs me and my peer to be a united front.”

“This direct report has a lot of potential and if I could coach him to use a more positive style, he could make a great contribution.”

“We need to discuss the vision of what we’re trying to achieve and the resources it will take to make that possible.”

Take the focus off you and your fear and concentrate on what the business needs.

Speak objectively and make requests. Use observations, not labels. For example, in the case of the direct report, he’s likely to be defensive if you say, “I need to talk to you about how negatively you come off in staff meetings.” Instead, talk about what you observed: “I noticed in the last two staff meetings that when the COO got to the topic of the change initiatives, your body language changed and you reacted quite strongly. I’d love to discuss how you could share your concerns in the most productive way possible.”

Include a request for the behavior that would support the shared business goal. In the case of the interrupting colleague, you might say, “In the last team meeting, I noticed that we were interacting with each other in a way that may be throwing the team off. To keep the team on track, it’s important that we appear as a united front. Can we determine what role we’ll play in the meetings in advance or agree on some non-verbal signals when it’s time to pass the baton?”

Keep a calm demeanor. People who shy away from conflict often assume that it has to look aggressive, overbearing, or disrespectful. It doesn’t. You can — and should — be yourself and remain approachable, non-judgmental, and calm in these situations by being clear, focusing on the business needs, and making a request to ensure the business goal is achieved.

Start with baby steps. Like any muscle you build, it takes practice and repetition before you can ratchet up your abilities. Start with easier situations first and address the conflict retrospectively (it can be hard to do it in the moment at first). But institute a statute of limitations whereby you cannot ruminate, fume, or carry on unproductively beyond 48 hours. During that 48 hours, focus on being more conscious and self-aware. Ask yourself:  What are my triggers?  What caused my anxiety and why does this feel personal? What does the business need from me in this situation? What request am I not making? Then, take action.

Gradually, each of these new experiences will help you reframe conflict from something you dread, to something that — when properly embraced — can help move the business forward.

Focus On: Conflict




When an Inability to Make Decisions Is Actually a Fear of Conflict
The Best Teams Hold Themselves Accountable
Win at Workplace Conflict
Managing a Negative, Out-of-Touch Boss