Marina Gorbis's Blog, page 1409

5 Hidden Assumptions of Tech Privilege

Privilege has been in the news over the past few weeks. At Princeton, an undergraduate’s objections to being told by classmates to “check your privilege” were published as an op-ed in the school’s conservative paper, then reprinted in Time, and then discussed widely in major media outlets like The New York Times.

There are also stories coming from another sort of campus — the manicured lawns and bikeways of tech firms’ headquarters. Last week, Google released its HR statistics showing that, for technology-specific jobs, 94% of its workers are white or Asian, and just 17% are female. The company’s admitted lack of diversity underscores broader challenges in the sector, such as exclusion of women from male-dominated VC networks and homogeneity of thought among the young, white, hoodie-wearing crowd.

On a related note, Pew’s new survey report on the Internet of Things (IoT) and wearable computing, reveals growing concern about the technology sector’s cognitive privilege — a set of unrestrained assumptions, often based in power and influence, about how the world should operate.

Many of the Pew survey’s expert respondents argue that there’s considerable risk to societal well-being if these privilege-based assumptions from the tech sector were to guide the design and development of the Internet of Things over the next decade. If we’re going to ensure an appropriate balance between commercial and societal interests around the Internet of Things, the data suggest technologists will need to put at least five of these assumptions in check now, before it’s too late:

Ubiquitous consent. The assumption now is the Internet of Things is opt-out, not opt-in. With sensors everywhere, there will be an explosion of new opportunities to conduct Big Data experiments on how people behave and interact with other people and things. Those in the privileged “screen everything crowd,” as one respondent in the survey calls them, naturally assume that previous consent to being tracked suggests future consent, with enhanced tracking capabilities. 

Another respondent notes, “We will assume these people, brought to us by lenses and digital connections, are there for us. … This urge to watch is so compelling that we will adopt its logic — as we do with all our tools — and we will easily move from watching what we can see, to watching what we could see.”

Needless to say, such an approach is rife with privacy implications and untested areas of law. Assuming my data is available for others to profit creates a kind of digital imperialism.

Your behavior needs to be modified. There’s a privileged notion that the next generation of technology should become an unavoidable path to self-improvement — and that efficiency and errorlessness are always inherently good. As one respondent notes, “The Internet of Things will help more things go right and help more dumb things do smarter things. Anywhere there’s currently a human in the loop, there’s an opportunity for failure, as well as an opportunity for a device to make sure things go right.”

The problem with this is that those that don’t want to adhere to this world view may face new forms of economic discrimination. “Every part of our life will be quantifiable, and eternal, and we will answer to the community for our decisions. For example, skipping the gym will have your gym shoes auto tweet (equivalent) to the peer-to-peer health insurance network that will decide to degrade your premiums,” as another respondent cautions.

Those not buying into the system would need to create new forms of retreat from an everyday life characterized by these activities. Respondents note the emergent need for “Google Glass-free zones,” “personal anti video firewalls around our bodies,” and “technology shabbats” — a day of the week where we figure out a place that’s off the grid.

Perceptual insufficiency. Another assumption is that our natural experience of the world is (or soon will be) insufficient. The report mentions dozens of examples of new tools that will help us survive and thrive in the Internet of Things, where data-mediation and analytic decision-making become oxygen for everyday living. Augmented reality (AR) glasses will superimpose information to improve vision and decisions about health and nutrition as we buy groceries, for example; virtual reality (VR) headsets will create immersive connections to loved ones in other environments.

Respondents voiced many concerns about potential consequences of this assumption getting baked into the development of the IoT. Walking down the street will become risker as data is literally cast into your field of vision; life will feel more filtered and moral responsibilities more abstracted; meaning could decay in relationships that have long been based on direct physical interaction, such as in parenting and marriage. And when you do see others directly, you may feel a sense of “social exhaustion” as a result of perpetual feedback and “stimulation due to always-available computing.”

New gadgets are a precondition to human flourishing. As the circuitry of the Internet gets woven into the basics of life — into clothing, home heating systems, fields of corn, and car engines — there’s greater potential to use personal analytics tools to improve health and well-being. Want to gather detailed physiological data to share at your next doctor visit? Wear a health monitoring shirt. Want to figure out how to lower your utility bill? Install a Nest Thermostat, which will analyze your energy habits and use algorithms to reduce energy consumption.

Yet, many respondents voiced concern that this logic could also lead to an even wider digital divide. What about those unable to buy the beneficial tools that interact with ubiquitous sensors? As one respondent opines, “just as students today are burdened if they don’t have home Internet … there will be an expectation that successful living as a human will require being equipped with pricey accoutrements. … Reflecting on this makes me concerned that as the digital divide widens, people left behind will be increasingly invisible and increasingly seen as less than full humans.”

Humans are things, too. A fifth assumption is rooted in the construction and interpretation of rhetoric. To some the phrase ‘The Internet of Things” implies that people, linked to ubiquitous cloud networks with tools like wearable technology, are “just another category of things.”

Rather than technology being at the service of people, the reverse takes hold: people become “nodes” constantly transmitting and receiving data. “Google Glass is already part of Google’s sensory network, with all images and sounds that the user obtains sent onto Google’s servers for storage and analysis,” observes one respondent.

Too often, these five assumptions reveal possibilities for technological invention decoupled from consumer needs: technology for technology’s sake. While the Internet of Things suggests something vast, creating economic and social value will require a lot of small scale experiments. These will give users a say in whether an application is truly solving a problem — or creating a new one based on a faulty assumption or an unconscious exercise of privilege.

To Negotiate Effectively, First Shake Hands

Negotiations − especially when they involve high stakes, complex issues, and multiple parties — require much thinking and preparation on each side of the bargaining table. Consider the recent negotiations over Iran’s nuclear program. Even before the contentious talks actually started, U.S. President Barack Obama and Iranian President Hassan Rouhani scheduled a meeting that took months to arrange. There was only one item on the agenda for the meeting: a handshake. At the last moment, however, Rouhani decided not to meet Obama, leading American pundits to call the incident the “historic non-handshake” that risked compromising the quality of the ensuing negotiations.

People make inferences about one another’s motives based on first impressions, which occur extremely quickly. We only need 100 milliseconds to form judgments of others on all sorts of dimensions, including likeability, trustworthiness, competence, and aggressiveness. Even more interesting, our first impressions of others are generally accurate and reliable. For instance, first impressions about a person’s competence have been shown to be good predictors of important outcomes such as who will win a political election.

Handshakes can create a positive first impression by conveying a sociable personality. In one study, a firm handshake was positively related to extraversion and emotional expressiveness and negatively related to shyness and neuroticism. Another study found that people who follow common prescriptions for shaking hands, such as using a firm grip and looking the other person in the eye, also receive higher ratings of employment suitability in job interviews. Witnessing people shaking hands in a business setting not only leads third-party observers to more positively evaluate the relationship, but it even increases activation in the nucleus accumbens in the observers’ brains — the area associated with reward sensitivity. That is, we feel rewarded simply by watching others shake hands!

In the context of a negotiation, a handshake’s message can go even further, my research finds. Consider that we all rely on subtle sources of information to determine whether to behave in cooperative or antagonistic ways during our negotiations. One such source of information is nonverbal behavior, including handshakes. Across many cultures, shaking hands at the beginning and end of a negotiating session conveys a willingness to cooperate and reach a deal that considers the interests of the parties at the table. By paying attention to this behavior, negotiators can communicate their motives and intentions, and better understand how the other side is approaching discussions.

In one study, colleagues at Harvard’s and the University of Chicago’s business schools and I asked pairs of executives to negotiate as the buyer and seller in a hypothetical real estate deal. The executives had to negotiate over one issue only: the price of the land. In the simulation, the seller believed that the property under consideration was zoned for residential use only, but the buyer knew that the zoning laws would change soon, allowing the buyer to develop the land for commercial use and thereby making it much more valuable. Clearly, the buyer had little interest in sharing this information with the seller. In fact, when asked by sellers whether they intended to use the land for commercial development, many buyers lied or dodged the question altogether.

We instructed half of the pairs to shake hands before negotiating. We did not give specific instructions to the other half about handshaking, our control condition. Most of them just jumped into the negotiation without shaking hands first, presumably because they were under time pressure. Pairs who had been asked to shake hands divided up the pie more evenly than did those in the control condition. In addition, buyers in the pairs who had been asked to shake hands were less misleading about the zoning change than were buyers in the control condition.

In follow-up studies, we tested whether these results held for integrative negotiations — those where parties could discuss multiple issues and potentially create value. In one experiment, for instance, we randomly assigned undergraduate students to the role of “hiring boss” or “job candidate” and gave them time to prepare individually for the negotiation to determine the latter’s salary, start date, and office location. The students in the role of job candidates knew they had the job if they wanted it, but they needed to negotiate the details with the hiring boss. Both parties were instructed to prefer the same location and have opposing starting positions on salary and start date. Because the candidate cared more about salary and the boss cared more about start date, the solution that maximized the joint outcomes was to allow the candidate the highest salary and the boss the earliest start date. We told the pairs that the participant who received the better score in the negotiation would earn a financial bonus (for real!).

Half of the pairs were accompanied to the table where they would negotiate and told, “It is customary for people to shake hands prior to starting a negotiation.” The other half of the pairs was seated immediately and thus had no opportunity to shake hands. Pairs then negotiated for no more than 10 minutes. Two research assistants who were blind to the hypotheses of the study coded videotapes of the negotiations on a variety of criteria, including our main measure of interest: the parties’ openness in discussing their individual priorities throughout the negotiation. The result: Shaking hands induced greater openness about negotiators’ preferences on contentious issues and improved joint outcomes.

When I was little, I often got into conflicts with my brother and sister over toys or books. As in many other families across the globe, my parents used to tell us to “shake hands and make up.” Their words conveyed the belief that the simple gesture would induce cooperation and goodwill. As my research and others’ shows, the simple act of shaking hands is indeed a powerful gesture in negotiation.

Focus On: Negotiating




Make Your Emotions Work for You in Negotiations
The One-Minute Trick to Negotiating Like a Boss
How to Negotiate Your Next Salary
Should You Eat While You Negotiate?

A Benefit of the Mechanization of War: Savings on Veterans’ Benefits

The most overt costs of war, including military spending and the destruction of capital, are of relatively short duration, but the costs borne by combatants, caretakers, and society last for many years. Thus, committing troops to a war zone has lasting implications for fiscal policy: Depending on the scope of the conflict, the government’s obligation to pay veterans’ benefits can run as high as 50% of the nation’s prewar GDP, according to a study of U.S. wars by Ryan D. Edwards of the City University of New York. Even an expensive mechanized war, with the loss of large amounts of costly equipment, may be not only far preferable in terms of reduced loss of life and limb but may be far cheaper in the long run if it conserves future veterans’ benefits, Edwards suggests in the Journal of Public Economics.

The Rebirth of U.S. Manufacturing: Myth or Reality?

The media has been full of reports lately about a renaissance in U.S. manufacturing. The cheerleaders cite an array of heartening examples, including a $4 billion investment by Dow Chemical to boost its ethylene and propylene capacity on the U.S. Gulf Coast, an announcement by Flextronics of plans to create a $32 million product innovation center in Silicon Valley, and a decision by Airbus to build a $600 million assembly line in Alabama for its jetliners. These stories have prompted much talk about the “reshoring” of manufacturing jobs to the U.S. from China and elsewhere. Indeed, President Obama recently hailed “a manufacturing sector that’s adding jobs for the first time since the 1990s.”

But is this revival for real? Forbes has derided the notion of a U.S. manufacturing comeback as “a cruel political hoax.” And the New York Times recently ran an editorial by Steven Rattner entitled “The Myth of Industrial Rebound.”

A lack of detailed data has made it hard to assess what’s really going on within the U.S. manufacturing sector. To help remedy this, L.E.K. Consulting conducted a study of decision makers in 10 U.S. manufacturing industries, including aerospace and defense equipment, chemicals, industrial components, automotive equipment, and electronics. The study, which focused on large companies with more than $500 million in revenues, also involved in-depth interviews with high-level executives about the factors driving their decisions on where to locate their manufacturing.

The picture that emerges from this research is less black and white than either the cheerleaders or the naysayers would suggest. Overall, we see a modest improvement in U.S. manufacturing but not a wave of reshoring. More companies are investing in the U.S. or considering it as a location for new manufacturing facilities. But this is essentially a rebalancing after many years in which manufacturing shifted overwhelmingly to lower-cost nations such as China.

Intriguingly, the study also indicates that cost factors are no longer the key consideration for many companies deciding where to locate their manufacturing. The leading factors driving companies to manufacture in the U.S. include a growing desire to locate their manufacturing near their customers so they can respond quickly and efficiently to customer needs and drive growth, while simultaneously de-risking the supply-chain. A corporate strategist for one manufacturer told us: “It’s tough to get the same quality level and cycle time to serve your customers if your supplier networks are far away.” At the same time, these companies are continuing to invest in manufacturing outside the U.S., particularly in emerging markets, for many of the same reasons. So the picture is truly nuanced.

The CEO of a manufacturer in the automotive industry added: “We hesitate to put a component or product that requires high, stringent control in many developing countries.” In fact, American companies often have a competitive advantage when it comes to producing technologically advanced, differentiated goods that require precision manufacturing and a high level of quality control. As a corporate strategist at one U.S. manufacturer put it: “Overall, the harder the skill required, the closer to home we keep it.”

Costs are just one component of a more complex equation, but they clearly remain a significant factor. Thanks to the boom in U.S. oil and gas, the country now possesses an abundance of inexpensive energy. As a result, the U.S. is an increasingly attractive location for manufacturers that are energy intensive or that can use natural gas as a primary input. Clear winners are chemicals and petrochemicals (e.g., plastics), and also sectors that serve those industries. An executive at an energy equipment manufacturer told us: “For industries like chemical processing or metals manufacturing, energy costs are a much bigger deal than for machined and electronic goods and could certainly cause companies to relocate.” By contrast, energy costs are less important in industries like furniture and textiles; so manufacturers in these areas are less likely to reshore to the U.S.

In the past, a key driver for companies to move their manufacturing out of the U.S. was to save money on labor. The difference in labor costs is still significant, but it has narrowed as wages have risen elsewhere. The strengthening of China’s currency has further eroded this cost advantage, and U.S. manufacturers have also closed the gap somewhat by enhancing their productivity and their use of automation. According to the global business director at a welding-equipment manufacturer, fierce overseas competition “has forced the evolution of the industrial base in the U.S., where many industrial manufacturers have become lean [and] automated to survive.” So our study suggests that labor costs are no longer the dominant factor in determining where companies base their manufacturing.

In the future, many commoditized products will continue to be made offshore. In the U.S., we expect a growing emphasis on more sophisticated manufacturing, including the use of 3-D printing to accelerate product development. This cutting-edge technology holds particular promise for the type of complex, low-volume products developed in industries such as aerospace and defense.

What could deter manufacturers from investing in U.S.-based manufacturing? Our survey respondents suggest that high corporate taxes and regulatory uncertainty are the two biggest factors hindering U.S. manufacturing from growing faster. Manufacturers in lower-cost countries such as China are also raising their game, not least by improving their own use of automation.

In general, we don’t expect many companies to close their existing facilities in China and to reshore them in the U.S. But we do expect many companies to locate new manufacturing facilities in the U.S., particularly in sectors such as aerospace and defense, industrial manufacturing, oil and gas, and the automotive industry. The bottom line is that companies will locate close to where their growth is originating. This doesn’t amount to a renaissance or a new dawn. But after decades of decline, it’s a welcome advance.

Disrupting the Gaming Industry with the Same Old Playbook

With a market size of $8 billion in 2013 Massive Multiplayer Online Gaming (MMOG) is becoming big business.  It’s not just about the players, either: people are going online just to watch the games being played, a global viewership estimated at about 71.5 million as of 2013.

Welcome to the brave new world of e-Sports. Some MMOG professional teams players can command six figure salaries, thanks to the finance provided by corporate sponsorships and advertising. Recently the USA recognized professional e-gamers as pro athletes eligible for P-1A visas.

The MMOG that epitomizes the birth of this new industry is perhaps League of Legends (LoL). LoL’s core gaming business is built around by the Free to Play model in which community building and social engagement are the main objectives. The model is in part monetized through micro-transactions in which virtual goods used in the game are purchased with real currency. The game has been popular since its release in the 2009 and has an active unique monthly user base of 67 million, generating $625 million in annual revenue.

But the real revenue driver is viewership. Online broadcasting channels are filling up the distribution space just as television did in conventional sports. Twitch.tv — one of the leading on-line game streaming channels — has partnered with game publishers and game console makers to add features that allow gamers to stream their game play live or recorded over the channel. Revenue flows primarily from the online ads targeting the soaring viewership.

And what a viewership! LoL’s 2013 World Championship garnered online viewership of 32 million on Twitch.tv alone, significantly more than Game 7 of the 2013 NBA Finals, which had a peak viewership of about 26 million over various media formats.  The event itself in the Los Angeles Staples Centre was a sell-out. Sponsors included big names like Coca Cola, Intel, and Amex, all looking to reconnect to the lucrative demographics (18-35) LoL caters to.

This all sounds splendidly disruptive: new technology-enabled social media redefining what we think of as sport. Yet the hype tends to obscure just how familiar the story actually is and just how much of the success is the result of canny business folk applying a well-used playbook.

What LoL is doing in MMOGs is pretty much repeating what shoe manufacturer Vans did for skateboarding. A fad for 20 years up to the 1990s, skateboarding was haphazard and disorganized: it lacked adult supervision, provided few external rewards and was widely seen as solitary activity for misfits. No sponsors or advertisers invested in it. At certain moments, only the enthusiasm of skateboarders kept the sport alive.

Until Vans made its move.  The company institutionalized the sport creating a world championship as a way to recognize player excellence and found a mass audience by selling rights to ESPN and similar channels. It invested in organized and parent-friendly skateboard parks; produced a Sundance festival winner documentary on the history of skateboard (Dogtown and Z-boys); and sponsored the Warped Tour, a series of concerts in various cities showcasing trendy, cool music in line with the skateboarding lifestyle.

In other words, just as LoL is doing today, Vans created a sports ecosystem. Its festivals, skateboard parks, and world championships represented new business lines, most of them profitable in the first half of 2000s. But the real benefit for Vans was that its strategy made the sport mainstream and opened it up to the masses, which ultimately had huge benefits for its core shoes and clothing businesses.

Stories like LoL and Vans illustrate a profound truth about strategy and business. Industries are reinvented and new ones are born all the time. But this does not mean that the strategies by which they are redefined or created also change. If anything, the stories of LoL and Vans illustrates just how enduring strategy actually is.  Disruption doesn’t change the rules for good strategic moves — rather, it gives new players more opportunities to apply them.

Share Your Financials to Engage Employees

If you’re searching for ways to improve employee engagement, you’ll find lots of laundry lists. Fourteen tips. Seven steps. The “Ten C’s.” Most of these sources contain good-but-basic advice, like providing mentoring, encouraging two-way communication, and recognizing people when they do great work.

But the statistics suggest that following such advice, like staying on a diet, is harder than it looks—some 70% of U.S. workers say they don’t feel engaged on the job, a number that hasn’t changed much in recent years. If time-starved owners or managers don’t naturally abide by all those nostrums, are they likely to start now?

We have a different way of thinking about engagement, because we have a different idea of what it is.

Our approach begins with a question: Who do you think is more engaged in the business, the farmer or the hired hand? The building contractor or the guy pounding nails? The store owner or the clerk behind the counter? The answers are obvious, but they raise an equally obvious objection. Not everyone can be an owner. And as a National Bureau of Economic Research study shows, even employees who hold an ownership stake in their employer aren’t necessarily more engaged or motivated than their nonshareholding peers.

But the objection misses the essence of ownership. It isn’t just that owners are in charge. It’s that they’re players. They’re in the game. They know the rules. They act, and they watch the numbers to find out whether their actions were on track or misguided. If they win the game, they know there’ll be a payoff. Most people think of engagement in individual terms—feeling fulfilled by the task at hand, wanting to do a good job. We see engagement as being part of a team that’s competing to win.

It’s surprisingly easy to generate this kind of engagement among employees when you make the economics of the business come alive by sharing some key financial numbers. It’s an open-book approach: people begin to watch these indicators. Then they figure out how to move them in the right direction.

A while ago, for instance, a global travel-management company picked three representative U.S. branches to pilot open-book methods of building engagement and improving performance. The company’s team identified a critical financial number—site revenue minus direct site costs, known as direct profitability. Branch employees then began meeting every week to review these financial results, brainstorm ideas for improvement, and forecast future results.

In the past, the company’s front-line travel counselors had behaved pretty much like employees everywhere. They did a competent job, but they didn’t worry about the financial implications of a changed itinerary or a new hotel pricing policy. Now—engaged in the business of improving their branch’s numbers—they began spotting opportunities an owner might think of. A customer-relations rep in St. Louis, for instance, contacted vendors to recover money lost due to hotel no-shows and canceled flights. Over the first few months she collected $189,093—a significant savings for the company.

Each pilot branch generated several such ideas, which they then shared with the other two. At the end of the pilot period, the experimental branches had exceeded their profit budgets by 10%, 17%, and 20%, resulting in more than $1.7 million in incremental earnings. None of the other U.S. branches hit budget that year.

We’ve witnessed similar results at many other companies that follow the open-book path to engagement. A designer at a D.C.–area design/build firm says she notices “everyone caring more and being more accountable and taking responsibility.” The CEO of a midsized manufacturing company told us, “I don’t have employees in my plant anymore. I have entrepreneurs who are looking to find ways to make more money.” At one company, employees even organized small betting pools around the accuracy of each month’s profit forecast. (Now that’s engagement.)

Most open-book companies tie incentive compensation to improvement in the key financial numbers, so employees see a payoff as well. But the real engagement comes from thinking and acting like owners.

Work-Life Balance Through Interval Training

At a ThirdPath Institute conference a few weeks ago, a great discussion arose around the fact that workloads tend to ebb and flow, and it’s important to know how to alternate between periods of peak effort and recovery. Before long, someone noted the analogy to high performance in sports, and used a phrase that piqued my curiosity: Corporate Athlete. I loved the term so much I jotted it down, thinking I might make something of it in my writing and consulting. Then I Googled it.

Oops. Apparently, Jim Loehr and Tony Schwartz have already made quite a lot of the term corporate athlete, having coined it way back in a 2001 HBR article (I was only 13 years late to the party!) and explored it in a series of best-selling books about engagement, energy, and business success. So much for my plan to unleash it on the world.

But I was all the more glad to find so much work already done on corporate athleticism, because it has a lot to offer my field: the challenges faced by working parents.

Loehr and Schwartz look at how the winners in the world of sports prepare for competition and then apply these techniques to managerial work. They urge executives “to train in the same systematic, multilevel way that world-class athletes do.” No, CEOs are not forced to run wind sprints (although some do). Rather, they are coached in a holistic program designed to help them attain – and sustain– the highest performance at their craft.

What strikes me most in the writing Loehr and Schwartz have done is their frequent use of the word “balance.” In particular, they see great athletes and corporate athletes achieving the right balance across three critical dimensions:

1. Mind and Body

2. Performance and Development

3. Exertion and Recovery

Of course, people trying to succeed both at work and at home are constantly thinking in terms of balance. But perhaps Loehr and Schwartz have given us a more nuanced way of thinking about what needs to be balanced. Using their dimensions, how might someone go about becoming a superstar Work-Life Athlete?

First, let’s think about that mind–body balance. For athletes, the classic mistake to avoid is focusing only on preparing one’s body for the game. Great coaches equip their players to win the mental game as well the physical one. Executives, by contrast, are too likely to grind away at intellectual tasks and overlook that their bodies must be healthy if they are to have the energy to perform well on the job. As Loehr and Schwartz put it, a successful approach to sustained high performance “must pull together [many] elements and consider the person as a whole.” It must address the body, the emotions, the mind, and the spirit.

For work-life athletes, mind-body balance suggests that we should get enough sleep, eat reasonably well, engage in some exercise – and make room in our lives for social interaction, “me time,” and perspective-seeking through reflection and meditation or prayer. You don’t have to be in perfect shape to be good at your job or effective as a parent. But if we neglect our bodies, or spirits, we may not have enough sustained energy for effectiveness in either work or family, let alone both.

The performance–development balance also has a particular relevance to the work-life realm. Athletes know that the vast majority of their effort is spent on development, preparing for the performance they must put in during actual competition. In business, it feels like the proportions are inverted: every day executives must perform, and only a tiny fraction of their time is set aside for “professional development.” But actually, the athlete’s understanding of the balance would make more sense for business people, too. Athletes in their development days focus on individual elements of their game and build their capacity in the fundamentals; on competition days, they pull all the pieces together and push performance to the maximum. Likewise in business, there are those high-stakes occasions when managers can only pull off what they are trying to accomplish by drawing on every competence they have; but between “big game” days, many assignments could be focused on honing particular fundamentals.

Now consider that working parents also have moments when their capabilities as work-life athletes are seriously put to the test and their performance has the greatest consequences. In those moments, they too need to pull together all their resources and abilities to make the right moves. And ideally, they would have prepared for those moments by deliberately developing individual elements in situations where the stakes were not so high.

Anyone who wants to sustain a performance edge needs to figure out how to keep developing new capabilities, and not just keep drawing on existing ones. If this can’t be accomplished through daily tasks, then it requires regularly scheduled time to be set aside. Whether it’s protecting 30 minutes every other day to read up on industry developments, listening to a language-instruction course during the morning commute, or trying a new recipe every week, turning off the performance pressure creates more openness to new approaches and heightens performance in the long run.

This brings us, finally, to the exertion–recovery balance that Loehr and Schwartz see great athletes managing so well. “In the living laboratory of sports,” they write, “we learn that the real enemy of high performance is not stress, which, paradoxical as it may seem, is actually the stimulus for growth. Rather, the problem is the absence of disciplined, intermittent recovery.” For example, in weight lifting, one stresses muscles to the point where their fibers literally start to break down. However, after an adequate recovery period, the muscle not only heals, it grows stronger. Without rest, one ends up with be acute and chronic damage.

In business, demanding projects, with tight deadlines and stretch goals, can be great – but can’t be unremitting. Occasional overwork is a necessity, at work and in the rest of our lives, but chronic overwork robs us of our resilience. This reduces our performance over time, and causes damage in our work and personal lives. Similarly, too many working parents go full-tilt, non-stop to tackle all they have to do without allowing themselves the recovery time needed for sustainable effectiveness. “Recovery” for the work-life athlete might not come when they jump from the demands of one front to the demands of another. It might require taking breaks from the jumping itself. A good start might be to arrange for some standing “no/limited contact” time slots with managers and coworkers (e.g., specifying that no one should expect a response to an email between 6:30 and 9:30 pm). For that matter, why not set “no screen” hours at home, when everyone stays off their phones, tablets, and other devices and is available to each other?

From a management standpoint, we need to rethink the notion that non-performance time is wasted time. Instead, we need to see that recovery is a key component of sustained high performance. This means we must resist continually increasing the time demands we put on our employees and expecting our employees to be constantly “on call” even after hours. We need to encourage our employees to take lunch breaks, relax on weekends, and actually take their vacation days, unplugged (and also do these things ourselves). By helping to strike the right balances, we can build the work-life athleticism we need when the stakes are highest.

Start with a Theory, Not a Strategy

Well-crafted strategies are road maps to places that yield competitive advantage and generate value for the firm. But once you’ve arrived, they don’t take you anyplace else. That’s a problem for companies under continual pressure from investors to find new sources of competitive advantage.

I recently had lunch with the CEO of a large privately held corporation that illustrated this dilemma. After two decades of strong growth, he recognized that that his strategy had run its course. In the minds of his investors, his success was baked into his company’s current value and they wanted to know where he was going to find more.

He presented to me three broad options for growth: diversify into a rather distant, weakly-related industry; develop and sell new services desired by their somewhat narrow set of existing customers; or expand globally into the same services they provide domestically. He asked which I thought made the most sense.

Of course, I did not give him a straight answer. Instead, I suggested that what he needed was a theory about strategy: a mental model about how his company could create value that would help him assess his three options.

In science, a good theory reveals compelling hypotheses that subsequent experiments will validate. A good corporate theory similarly reveals likely hypotheses about how the firm can create most value. It has three components:

Foresight into the future evolution of their industry,
Insight into what is distinctive and uniquely valuable in the composition of assets and capabilities the company possesses; and
Cross-sight into how combinations of internal and external assets and opportunities can create value.

For a company that has a good corporate theory, selecting the right next strategy should not be a problem; the fact that this CEO and I were having such a conversation about such divergent options revealed the absence of a good theory about what strategies were right for his firm.

I’m not going to pretend that it’s easy to come up with a good corporate theory. And, if anything, companies that have comfortable market positions will find the exercise more challenging than most. Microsoft is a case in point. Although it attained a remarkable position almost decades ago, the company has struggled to find new sources of value creation.

In the long run, firms compete not on their strategies, but on the basis of their corporate theories. For the past several years I have asked students ranging from executives to undergraduates the simple question: If you were given $10,000 to invest in Google, Apple, Facebook, or Amazon, where would you invest?

While the pattern of responses varies, most students quickly recognize that their answers have less to do with assessments of current market positions, and more to do with assessments of each firm’s corporate theory.

Each firm is entrenched in a market position quite distant from the others. Apple makes consumer electronics unrivaled in their ease of use. Google offers a search engine unparalleled in its speed and breadth. Facebook supports a social network unmatched in its reach. Amazon features a web store without equal in scope. But each is guided by a very different corporate theory, distinctly crafted as a reflection of the beliefs and current assets of their firm, which informs how they will move beyond their established and fully valued positions.

These theories (ideally) provide a sense of coherence to the growth initiatives that have pushed these firms into quite disparate and increasingly overlapping market space. Indeed, their theories seem to suggest no limit to the potential for strategic collision. Future results of strategic actions will ultimately determine the worth and accuracy of each firm’s theory.

Bottom line, unlike a strategy, a well-crafted corporate theory can take you beyond the one position or advantage. This is not to say that your theory will necessarily be the best one, but at least it will not be dead on arrival.

When Innovation Is Strategy

An HBR Insight Center




How Boards Can Innovate
When to Pass on a Great Business Opportunity
How Samsung Gets Innovations to Market
Is It Better to Be Strategic or Opportunistic?

Online Reviews Could Help Fix Medicine

A basic principle of health care is that everyone strongly favors transparency – for everyone but themselves. “Sunshine is the strongest disinfectant” is the oft-used expression that supports putting information out in the open for all to see. That said, every stakeholder in health care gets a bit nervous about exposing their own data. They are quick to cite the potential downsides – that patients will not be able to understand the limitations of the information, that risk adjustment will be inadequate to explain why their performance looks below average, that they may actually be below average.

No one gets as nervous about public reporting as my health care provider colleagues. We worry that everyone else may game the system, cherry-pick patients, or that we might lose patients if the data look less than perfect. It’s safe to say that number of physicians who hate the idea of public reporting is greater than the number who support it.

All of which makes it that much more fascinating that some provider organizations have recently begun putting all their patient experience data – including every patient comment about every doctor – on their Find-A-Doctor web sites. “Every” actually does mean every – the good, bad, and ugly (after removal of those that might violate patient confidentiality). And they are tied directly to the physician who delivered their care.

Why would they do this? The initial response from some commentators was that they were trying to “out-Yelp Yelp” – that is, control the information that was appearing about them on the Web. In truth, the initial idea was less about controlling information than providing more of it. Rather than living with on-line comments generated by a small subset of patients motivated by who-knows-what to write in, organizations like the University of Utah decided that they would survey all patients electronically, and post all their comments. And they would take the chance that more data would provide a better sense of the truth.

The University of Utah health care system was the first in the country to go down this road, and they were rewarded for their creativity and courage with a very pleasant surprise. The result over the last few years has been astounding improvement in their patients’ experience with their physicians. In 2009, only 4% of their physicians were in the top 10 percentile of Press Ganey’s national database for overall patient ratings. By 2013, it was nearly half – 46%.

University of Utah leaders realized that putting their patient information on the Web wasn’t mere marketing – it was creating a powerful motivation for physicians to give every patient the best, most empathic care. Financial incentives to improve patient experience could never have produced this kind of change. What mattered was physicians’ awareness that every patient visit is a high stakes encounter – the biggest event of the patient’s day or even month. As one orthopedist put it, “It forces me to be on top of my game for every single patient.”

Which is, of course, a good thing. And it’s the reason why other providers are going down this road. Piedmont Health in Georgia went live last month, and Wake Health in North Carolina went live last week. Other organizations, some very prominent, are actively planning to follow suit – including some outside the U.S.

To their immense credit, the quality leaders at the University of Utah are helping other providers follow their lead. Some of my more suspicious colleagues have asked, “Why are they doing that? Why don’t they try to preserve the advantage that they have built?” The answer seems to be that they believe their mission requires them to do the right thing. Plus, like all academics, they relish the pride that goes with sharing a patient-centric best practice.

The Utah game plan is simple, graduated, but not glacial in pace. Over four years, they first expanded the amount of data that were being collected. They moved to e-surveying and started sending surveys to every patient after every hospitalization or visit. Armed with more (and more timely) data, they moved to internal transparency, allowing anyone within the Utah system to see anyone else’s data. After physicians got used to the idea of others seeing their data, and realized the vast majority of comments were actually warm and even effusive, Utah went public in late 2012.

The impact on performance at each step was dramatic, and the secret is now out. Other organizations are aware of what Utah, Piedmont, and Wake Forest are doing, and saying, “We have to do that, too.”

As they do, they will be disseminating priceless marketing information about their care – most patient comments are incredibly warm, grateful, granular, and believable. But, more important, they will be helping their physicians live up to their own aspirations about the kinds of doctors they want to be. And patient care will be better for it.

To join the conversation, register for my June 5 webinar with Cleveland Clinic CEO Dr. Toby Cosgrove “Engaging Doctors in the Health Care Revolution.”

New Thinking Leads to a Decrease in Homelessness

Despite a housing-foreclosure crisis and the Great Recession, homelessness in America has declined 17% since 2005 because of a radical change in how states address the problem, according to the Christian Science Monitor. Officials have reversed the old logic of focusing on homeless people’s social problems first and housing needs second; once people are housed, some of their other problems turn out to be easier to resolve. The “housing-first” approach works only if there’s adequate affordable housing, however, so cities like Boston, where the rental market is tight, have seen increases in homelessness.