Marina Gorbis's Blog, page 1426

Analysts’ Formerly Dim View of CSR Brightens Over Time

Back in the 1990s, stock analysts tended to produce pessimistic recommendations for companies with high expenditures on corporate social responsibility, but over the subsequent decade-plus, they came to view these firms optimistically, according to Ioannis Ioannou of London Business School and George Serafeim of Harvard Business School. Analysts formerly saw CSR as a detriment to profitability—something whose main purpose was to make executives feel good about themselves—but they came to view CSR as essential to corporate standing and to perceive that it may generate financial value in the long run, the authors say.

How We Built a New Company Culture

Too often, any thought of changing a culture, never mind rebuilding it, seems like a Sisyphean task; the weight of the status quo ultimately rolls back and crushes such efforts.

I learned this while leading a turnaround of NPS Pharmaceuticals, a biotechnology company that now specializes in creating treatments for rare diseases. To save the 20-year-old company, I had to get it operating like a start-up. In the process, I came up with six rules that could also help others change their cultures.

First, let me give you a little background. NPS had hit a rough patch in 2006. Our lead drug, upon which the future of the company then hinged, failed to get the U.S. Food and Drug Administration’s approval. With the company in jeopardy, a deep retrenchment followed, including cuts that reduced the workforce by 80%. Not surprising, those who remained were distressed and anxious.

I took over as CEO in 2008 and immediately realized that NPS had to become a different company. My first priority was to execute a new strategy that focused the company on rare diseases by repurposing assets in our pipeline. We could no longer afford to pursue remedies for prevalent big diseases. Accordingly, I transformed the business model − from that of a fully integrated pharmaceutical company into a company that retained key technical expertise (e.g., medical development experts, regulatory affairs and technical operations leadership, quality assurance/control); the project-management function; and contracted, or outsourced, all other operational activities.

The new NPS needed an entrepreneurial, creative, and cooperative culture. I  had to guarantee that people worked together with the utmost efficiency. Reflecting on my 25 years of experience at large pharmaceutical companies and private equity firms, I thought of the environments I had enjoyed and wrote down the basic values that were important to me and, I believed, would be crucial to turning around NPS: integrity, respect, excellence, personal ownership, teamwork, and fun.

These core values were instrumental in reviving the company. We’re now growing: We have an approved product (Gattex) for treating adults with short-bowel syndrome who are dependent on parenteral nutrition, a second product under FDA review, and are expanding internationally.

Of course, anyone can write down words, call them values, and incur no change. Something has to be done to turn them into an actual culture. I believe that these rules − which I applied at NPS − can work at other companies, too.

Define the values in simple, sixth-grade language. Words mean different things to different people. Therefore, it is important that the words used to define the values be simple, clear, and easily understood by the constituents and are not jargon. This leaves no room for creative (mis)interpretation of the values and avoids using words that have different meanings or can’t be translated in other languages.

Don’t post plaques on the wall declaring the values. Mounting your values on a wall can trivialize them and give the false impression that they have been already achieved by decree. Values have to be internalized and lived and cannot be an object on a wall. Building a culture with values that everyone embraces requires leading by example, interpersonal communication, and permanent attention.

Teach people what the values mean. This must come from the top. My senior executives and I made our values the language of leadership. They were embedded in how we worked and communicated at every level. Credibility is truly at the core of building a values-driven culture.

Recruit people who naturally are inclined to live your values. This does not mean recruiting clones! It simply means populating the workforce with individuals who naturally embrace the values and become role models. Cultural fit is as significant as technical ability. Again, a company’s culture is a choice, and different people find their fulfillment in different cultures. Just make sure you identify and retain those individuals who will flourish in yours. We integrate the assessment of candidates’ values in our interview process, check references accordingly, and rely significantly on referrals.

Make values a primary filter for performance evaluations. There is no stronger lever for promoting a culture than tying adherence to its values to individual compensation. At NPS, the values evaluation and rating has a direct and significant impact on salary increases and both short- and long-term incentives. While recruitment errors happen, the performance evaluation highlights those shortcomings and gives the manager and the employee a chance to correct the situation. If the improvement plan fails to generate results, swift separation from the company is necessary. Even individuals on NPS’s leadership team who didn’t embrace our values had to go.

Your values must be non-negotiable. Over and over again, I have seen managers tolerate unacceptable behaviors because they believed the individuals’ technical expertise was vital. This shortsightedness is a recipe for disaster. One person’s expertise is not a good trade for negativity, loss of credibility, and the metastases of other unacceptable behaviors throughout the organization. The moment you make one exception, you’re doomed.

The 7 Stages of Business Travel Stress

How stressful is business travel? Very. Especially if you’re a female vice president. We know this because Michael Segalla and Dominique Rouziès of HEC Paris teamed up with Catalin Ciobanu and Vincent Lebunetel of Carlson Wagonlit Travel to survey thousands of business travelers about the stress they felt at every stage of a trip.

When mapped on the timeline of a standard business trip, the data offer a view into who’s stressed out by what. VPs hate expense reports. Senior executives have a surprisingly high fear of flying. And, yes, women are far more stressed by business travel than men.

Click here or on the image below to interact with their timeline and learn more about their travel stress findings.

How Innovation Ecosystems Turn Outsiders into Collaborators

Running a truly innovative company means constantly improving your innovation culture and process. Running a successful innovation ecosystem, however, demands more. Successful innovation ecosystems make people outside the company measurably smarter, richer, and more innovative. Biologically speaking, innovation ecosystems invest in symbiosis, not parasitism. Growth isn’t zero-sum.

Jeff Bezos knows. So do Larry Page and new Microsoft CEO Satya Nadella. Mark Zuckerberg, Reed Hastings, Marissa Mayer, and Haier CEO Zhang Ruimin similarly grasp the strategic, operational, and cultural distinction. They’re leaders and entrepreneurs who are publicly committed to creating better ecosystems, not just better products.

While successful innovators reap new profits from new products and services, successful innovation ecosystems cultivate profitability by encouraging others to create valuable new offerings. Their financial futures depend on how innovative they make their customers, clients, channels, and partners. Truly effective ecosystems manage to turn outsiders into de facto collaborators. Enabling external innovation becomes as important as improving one’s own. In fact, successful innovation ecosystems create virtuous cycles of external creativity, which drives internal adaptation. In turn, internal innovation enables and inspires external investment.

Ecosystem innovators like Bezos and Hastings are constantly asking, “Who are we making richer? Who are we making more innovative? Who’s on both those lists?” The answers say everything about the future they’re trying to create.

This is beautifully highlighted by Flipboard cofounder and CEO Mike McCue’s recent comment about how empowering users to create their own “virtual magazines” redefined the reader experience. “It was totally transformative,” he observed. “There are over 7 million magazines that people made in the nine or 10 months since we launched it. It’s awesome.” These customers are now creating virtual magazines, not just reading them. And Flipboard is learning and adapting thanks to their expressive ingenuity.

This is the real IP — not “Intellectual Property” but “Innovation Partnerships.” Look at Amazon Web Services, GitHub, Toyota and YouTube’s investments in suppliers, and Apple’s App Store. Or consider Netflix’s efforts to procure binge-able viewing: With Netflix’s new commissions of series like House of Cards and Orange Is the New Black, creative people are now producing for a Netflix audience the way they once did for syndication, cable, and HBO. The common denominator for all these companies isn’t simply an exchange of value, but offering new opportunities for collaboration. Success comes from exploring how to make one’s partners more valuable innovators.

Dramatically boosting an innovation ecosystem isn’t inherently expensive; a new API, a simulation tool, a training methodology, or slightly greater access to customer data are frequently all that’s necessary to seed mutual growth opportunities. But just as management isn’t leadership, innovation process improvement isn’t innovation ecosystem stewardship. Fostering an innovation ecosystem does require a culture and competence of stewardship — making the kinds of investments and improvements that aren’t just opportunistic, but reflect and respect the core values you want to endure.

How does your organization invite innovation partnerships? How do you recognize and reward innovation partners? (Of course, your answers matter less than their answers.) Similarly, how is your innovation ecosystem making participatory innovation possible?

It’s tempting, often irresistibly so, for stewards of innovation ecosystems to want to compete against customers, channels, and suppliers when lush new savannas of profitability and growth materialize. The strategic challenge becomes resisting the urge to gobble up that opportunity, and instead identifying the partnerships that would expand it even more. Indeed, innovation ecosystems triumph over innovative companies if and when the benefits of mutual value creation outweigh the costs. That, in no small part, is why Google acquired Nest and why its ecosystem is broader and deeper than Microsoft’s or Yahoo’s. In other words, if you’re not making your innovation partners richer in some measurable way, you’re simply running an innovation factory, not an ecosystem.

Again, the Googles, the Amazons, the Toyotas, and the LinkedIns know this. But does your organization mind and measure who it’s making richer and more innovative? If it doesn’t, it may not be your innovation ecosystem for long.

Data Alone Won’t Get You a Standing Ovation

A few years ago, Dr. Brené Brown delivered a presentation on “The power of vulnerability” at TEDx Houston. As a professor at the University of Houston, Brown studies vulnerability, courage, authenticity, and shame. It’s a pretty big subject area to squeeze into 18 minutes, yet Brown did it so well that her presentation has been viewed 15 million times and has turned Brown into a New York Times bestselling author.

She began her presentation with a short anecdote:  A couple of years ago, an event planner called me because I was going to do a speaking event. She said, “I’m really struggling with how to write about you on the little flier.” And I thought, “Well, what’s the struggle?” And she said, “Well, I saw you speak, and I’m going to call you a researcher but I’m afraid if I call you a researcher, no one will come because they’ll think you’re boring and irrelevant.” And I was like, “Okay.” And she said, “But the thing I liked about your talk is you’re a storyteller. So I think what I’ll do is just call you a storyteller.”

Brown said the “insecure” part of her was hesitant to adopt the title because she was a serious academic researcher. However, she eventually warmed to the idea. “I thought, you know, I am a storyteller. I’m a qualitative researcher. I collect stories; that’s what I do. Maybe stories are just data with a soul. And maybe I’m just a storyteller.”

As Brown suggests, we’re all storytellers. In a business presentation, you’re telling the story behind your campaign, company, or product. In a job interview, you’re telling the story behind your personal brand. In a marketing pitch, you’re telling the story about your idea.

In my work as a communication coach for executives at the world’s leading brands I’m often faced with a mountain of data that the speaker wants to get across. My job is to help the person tell the story behind the data—to reveal the soul behind the numbers. Drawing on this experience, as well as my recent research into the most succcessful TED talks and the neuroscience behind audience response, I’ve concluded that that data has the most impact when it’s wrapped in a story.

Consider the following examples:

In December 2010, Facebook COO Sheryl Sandberg took to the TED stage to talk about “Why we have too few women leaders.” Just before the presentation, she told a friend about an incident she’d had with her daughter as she was leaving for the conference. The little girl was pulling at her leg and crying, “Mommy don’t go!” The friend suggested she share that story with her audience too. Sandberg’s plan had been to give a talk “chock full of data and no personal stories” but she agreed to change course. She described the encounter with her daughter, and told other personal stories about how difficult it was for her to raise a family and have a career, as well as offering statistics. The data reinforced Sandberg’s theme, but it was her stories that launched the Lean In movement.

At TED 2013, U2 front man Bono delivered a presentation on global efforts to reduce childhood mortality. “For kids under five, child mortality is down by 2.85 million deaths a year. That’s a rate of 7,256 children’s lives saved each day,” Bono said. Most presenters would have stopped there. But the rock star went one step further, adding soul to the data by putting a face to the numbers. He told the story of Michael and Benedicta, who “are alive today, thanks in large part to their nurse, Dr. Patricia Asamoah, and the Global Fund”, and showed two slides: the first, a close-up picture of the two smiling children; the second, a photo of Dr. Asamoah conducting her work in a small African village. Data proved Bono’s point; stories brought it home.

Recently, I prepared the executives of a large flash memory company for their annual presentation to investors. Analysts are a tough audience. They want technical information and growth forecasts; few, if any, will tell you they want to hear stories. Yet that’s exactly resonates with them. One senior vice-president wanted to start his talk with some statistics that weren’t entirely new to the roomful of analysts:  high-capacity storage card sales growth. We decided to instead kick off on a more emotional note:  He explained that he’s a digital photography enthusiast, with a collection of 80,000 digital photos; then he showed pictures of his high-school-age girls playing sports and said that he wouldn’t trust those memories to anything but the cards his company manufactures. By their very nature, financial presentations must include charts, graphs, and tables, but that doesn’t mean you can’t grab your audience’s attention with a story before you present your data.

Remember:  Data won’t get you standing ovation; stories will. Stories inform, illuminate, and inspire. Tell more of them.

Persuading with Data

An HBR Insight Center




Data Goes Best With a Good Story (and Vice Versa)
Presentation Tools That Go Beyond “Next Slide Please”
The Right Colors Make Data Easier To Read
Why You Have to Generate Your Own Data

Become a Company That Questions Everything

Imagine you’re a bright, inquisitive person working for a company with long-established policies and work processes in place (or maybe you don’t have to). Now let’s say you’ve noticed one of those processes is not as efficient or effective as it might be, which leads you to reasonably ask: Why are we doing it this way? Is there a better approach?

What happens next in this scenario could be a good indicator of whether your company has a culture of inquiry or one of acceptance and conformity. If it’s the former, that question you raised will be carefully considered and may trigger ongoing discussion — and possibly action — by the company’s managers and leaders. You might be praised and even rewarded, just for asking it.

If, on the other hand, yours is a company that doesn’t value or appreciate questioning, you might hear something like: “This is the way we’ve been doing things for 20 years — who are you to second-guess us?” Or the always-popular, “Around here, we expect people to bring us answers, not questions.”

In my research on business and questioning, I found that many more companies seem to fall into the second camp. And it’s easy to understand why. The consultant Dev Patnaik of Jump Associates points out that many of today’s larger, well-established companies “were designed on a military model” with a hierarchical structure and top-down management. Within that structure, questioning by employees can be perceived as a challenge to authority.

Questioning is also seen by many business leaders as “inefficient,” according to the author and Harvard Business School professor Clayton Christensen. As Christensen notes, these leaders are often so anxious to “get things done” they have little patience for questions that may slow down meetings, challenge accepted practices, and force managers to spend time explaining and defending their approaches.

So why open the floodgates? For companies seeking to innovate, adapt to change, and maintain an edge in fast-moving, competitive markets, a questioning culture can help ensure that creativity and adaptive thinking flows throughout the organization. “One of the ways successful companies consistently create separation from the competitive pack is by critically examining and improving the business model from end to end,” says Chris Shimojima, the CEO of Provide Commerce. “This requires a leadership team and work force that is always trying to ask the questions that can light up the big honking issues.”

How can a company create an environment where people are more inclined to question? And is it possible to encourage the “right kind” of questions — the ones most likely to lead to productive results? Based on studying a number of companies that have done seem to be doing a good job at creating a culture of inquiry, here are four key observations:

A culture of inquiry starts at the top — with leaders who question. Today’s business leaders should take on the role of “being ‘chief question-asker’ for their organization,” says Patnaik. That’s not easy because, as Patnaik notes, many business executives rose through the ranks because “they were good at giving answers, not at formulating questions.” A leader who questions well won’t just ask highly-practical, interrogative queries (How much is it going to cost us? Who’s responsible for this problem?), but will also ask more open, exploratory questions — the kind that can help anticipate what’s coming and where new opportunities lie, enabling the company to move in new directions.

Leaders should use questioning to solicit input from people throughout the company, using surveys and other tools to ask employees, “‘We’re thinking of doing this — what do you think we should do?,’” suggests Dave Goldberg, CEO of SurveyMonkey. At the same time, leadership should be willing to answer tough questions — from all levels and departments. Google offers a good example with its wide-open (and sometimes chaotic) weekly “TGIF” sessions: all employees are invited to submit questions to the company’s top executives, and the ones voted up by the rest of the company — often the toughest, most controversial questions — are then fielded on the spot by the bosses. It sets the tone that anyone can ask anything of anyone else.

Questioning should be rewarded (or at least, not punished). To encourage company-wide questioning, The Lean Startup’s Eric Ries says, “It’s not about slogans or putting up posters on the wall — it’s about the systems and the incentives you create to promote the behavior.” Ries points out that at most companies, “the resources flow to the person with the most confident, best plan. Or the person with no failures on their record.” He says companies should direct more budgetary resources to those who are exploring unanswered questions, conducting promising experiments, and taking intelligent risks.

It’s also critical for company leaders to be on the lookout for ways in which questioning gets punished — perhaps unintentionally. The business writer Dale Dauten has described a common situation in which people who inquire about a problem at their workplace — involving, say, something the company is not doing as well as it might — are then told, “You found the problem; now it’s your job to fix it.” That’s a surefire way to get people to stop finding problems and asking questions, because most are not seeking to add to their workload (and besides, the question they’ve identified may be too big for them to answer on their own). The better approach is to ask the problem-finder if and how much they’d want to be involved in working on that issue — with the understanding that they’ll be given time and support as needed, and that, even if they never find an answer to the question, they’ve earned credit just by asking it.

Give people the time and space to question deeply. People may need to “step back” from day-to-day tasks in order to tackle deeper questions and problems. The various, well-publicized personal time policies adopted at companies such as Google, 3M, and W.L. Gore, allowing people to devote 10-20% of their time to “passion projects,” have yielded innovative, marketable ideas — but to get to those breakthroughs, people need room to pursue ambitious questions that may not be part of their everyday work. They may also need freedom to allow their curiosity to wander outside the corporate bubble, via field trips, time spent on customer frontlines, and other excursions. IDEO’s chief executive Tim Brown points out that a lot of breakthrough questioning happens as people “venture out into the world to observe and listen.” On-the-ground insights can spark the “why“ and “what if“ questions that eventually lead to innovation.

Provide the tools to question well. Questioning is a skill and a way of thinking; it is our ability to “organize our thinking around what we don’t know,” according to the Right Question Institute, a nonprofit foundation that studies and teaches questioning. To sharpen this skill, companies can employ group exercises, such as those developed by RQI, that allow participants to practice question formulation and teach them how to analyze and improve their own questions. There are other questioning techniques that can be taught, ranging from the “5 Whys” to the “How might we” group-questioning approach employed by Google, IDEO, and other innovation-driven companies.

For those managers worried about being flooded with “stupid questions,” the solution is to guide employees — through training and exercises — toward more informed, potentially productive questions. Steelcase’s former CEO Jim Hackett points out that the goal should be to encourage the formulation of questions rooted in deep critical thinking about the particular challenges and issues of the company, its customers, its industry.

But even while trying to encourage smarter questions, companies should be careful about discouraging fundamental, seemingly naïve questions — which can be a valuable tool for challenging the most basic assumptions about why and how your company does what it does.

What Violence and War Do to Global Output

Creating violence of various kinds and then attempting to contain and quell it cost the world $9.46 trillion in 2012, according to research by the Institute for Economics and Peace. That’s 11% of gross world product. By contrast, the recent financial crisis cost just 0.5% of 2009 global output, Talia Hagerty writes on Pacific Standard. The IEP has posited eight “pillars” that support peace: a well functioning government, equitable distribution of resources, free flow of information, a sound business environment, a high level of human capital from factors such as education and health, acceptance of the rights of others, low levels of corruption, and good relations with neighbors.

The Right Way to Measure Executive Diversity

Having spent the last five years of my career working hand in hand with many of the world’s most well-known companies on efforts to advance women and diverse professionals into leadership roles, I read with interest the recent study and blog post by my esteemed colleague Avivah Wittenberg-Cox. Avivah has undertaken an ambitious scorecard to measure the progress of women into corporate leadership around the world. Unfortunately, her approach, which has become typical of approaches to measuring progress on diversity, misses meaningful and important dimensions of the path to progress. As important as it is to track progress in terms of numbers, it’s equally important to recognize other measurable, but subtler, ways diversity is making an impact on a company and its business. We should be looking at culture, climate, and especially commitment to diversity and inclusiveness of leadership, regardless of who sits at the table.

In a majority of the world’s companies, the idea that diversity is important, especially at senior levels, has become widely accepted. Nearly every major company has taken on efforts to attract, retain, and advance women and diverse employees. Along with these efforts, a huge and growing array of award granters, raters, and scorecard vendors has emerged to help companies benchmark, track progress, and measure success. From Working Mother to DiversityInc to the Catalyst Awards, many organizations are trying to spur action by calling out those who’ve done it best.

Avivah Wittenberg-Cox likely hopes her scorecard (PDF) will also spur companies to faster action by highlighting their failure to get sufficient numbers of women into key roles. In her recent study, she examined the representation of women in leadership at 300 of the world’s biggest companies across the U.S., Europe, and Asia. She then classified companies on a scale of “asleep” to “balanced.” In these ratings, companies including Siemens, Google, Costco, Deutsche Bank, and ArcelorMittal were classified as “asleep” because they have exclusively male executive teams.

The problem with this classification, and some others like it, is that simple numbers can’t capture the context or content of company diversity efforts. In fact, many of the companies that are rated “asleep” have serious leadership commitments to diversity and have poured vast resources into supporting the advancement of women and diverse professionals over the years. Siemens, for instance, does not currently have any women on the managing board. However, until very recently, there were two. In Germany, Siemens faced intense scrutiny about this. The change reflects not a lack of commitment to diversity by Siemens, but a substantial effort by their new CEO to restructure the company and prepare it for the future. In the process, some extraordinary women, including Janina Kugel, have been promoted to highly visible roles internally, and it’s likely a matter of time before women are again on the Board.

Google and Deutsche Bank also have a massive, global focus on diversity with enormous commitment at all levels of the organization. Branding any of these companies as “asleep” discounts the valuable work in progress and the real investment these companies are making every day. I’m not arguing that they shouldn’t prove their commitment by ensuring executive-level diversity, but there are a thousand complex factors that play out in senior leadership diversity, which can’t be fully captured or understood with representation numbers alone.

A large and growing body of evidence, including a recent study on the subject authored by Bersin by Deloitte, shows that beyond just the numbers of diverse individuals in key roles, the behavior and attitudes of all leaders, white men included, matter as much as the numbers of diverse individuals in leadership. This idea — now often referred to as “inclusiveness” — is essential not just to reaping the full rewards of diversity, but to creating a meaningful role for everyone in the diversity journey. No matter who you are, leading inclusively reaps rewards in terms of employee engagement, retention, and even marketplace success. Inclusive leaders build better businesses and market impact because they leverage all the perspectives and people around them — inevitably benefiting those employees and the company bottom line. It’s so important that MBA programs, including the Columbia Business School with the guidance of Dr. Katherine Philips, are incorporating it into the curriculum.

More holistic and meaningful diversity scorecards should consider inclusiveness as well as representation; they are both equally important. By showing not just who’s in a particular job but what kind of commitment a company has to fully embracing their people, we recognize and encourage a fairer, more comprehensive view of diversity progress. We should be asking whether employees across gender, generation, culture, sexual orientation, and seniority feel that top leadership in their company is seriously committed to progress on diversity. Do they feel they are valued by the company and by the people they report to? Do they believe they are fully contributing their unique perspectives and skills, and that their differences are respected and embraced? Can they advance equally as majority colleagues? And are their ideas are heard and recognized?

We are all impatient for greater progress on diversity. Numbers and measures matter enormously. But we should be looking at more complete measures that truly capture the full scope of the issue. Where progress is being made, even if slower than we’d like to see, we should applaud it. These are hard and complex challenges, and every piece of progress has to be appreciated for the context, complexity, and value it has. The path and the measurements of the progress on diversity will never be as simple as just the number of women at the executive table.

This Weekly Meeting Took Up 300,000 Hours a Year

How much time does your organization squander? My colleagues and I gathered data about time use at one large company and found that people there spent 300,000 hours a year just supporting the weekly executive committee meeting. Click the arrow below to find out where all those hours went:

Some of that time was productive, no doubt. But organizations in general are remarkably cavalier about how they invest their scarcest resource, the time of their people. In this month’s HBR, we analyze why companies waste so much time and what they can do to conserve it.

How companies can use time effectively is just one piece of a larger and ultimately more important puzzle: how to increase the productivity of their people. Boosting human capital productivity (HCP), we have found, is a powerful and often-neglected pathway to better performance.

Our research quantifies what’s at stake. Using a decade’s worth of data for the S&P 500, we looked at revenue per employee, a crude but useful measure of HCP. Then we compared those figures with each company’s financial performance. Since revenue per employee varies widely among industries, we confined our comparisons to companies in the same business.

The results jumped out at us. The best companies — those in the top quartile of revenue per employee — did 30% better than their peers in return on invested capital, 40% better in operating margin, and 80% better in revenue growth. Those differences contributed to a whopping 180% differential in total shareholder return over the 10-year period.

Predictably, the differences were larger in people-intensive businesses, like software development, and smaller in capital-intensive industries such as semiconductor manufacturing. But the leaders in HCP outperformed the laggards in every industry. The difference in profitability, of course, makes a lot of sense — if you get more revenue per employee, chances are your costs are going to be lower than rivals and your profits higher. But higher HCP also goes hand in hand with significantly higher growth rates, a correlation easy to overlook.

Many business leaders intuitively understand the connection between HCP and performance, so companies around the globe have been trying for years to improve productivity. The most common approach is to cut head count and hope you can generate the same or more revenue with fewer people. But how often does that work? Many executives we talk to have led repeated restructurings, streamlinings, and right-sizings in the years since the financial crisis, without much to show for it. At some point, most realize that they can no longer increase HCP by reducing the denominator of the revenue-per-employee calculation. Instead they have to focus on increasing the numerator: the output they get from each employee.

So how can companies increase the numerator? In our experience, the key is to look closely at five potential obstacles and assess where they stand on each one:

A company’s people may not be up to the job — the basic stock of human capital may lack the necessary skills to deliver great performance.
The company may have good talent, but it deploys those people in ways that limit their effectiveness and output.
The company may have great people and potentially effective teams, but its organizational structure interferes with high performance.
The way people interact and communicate may require too much time for the level of output generated. (That’s where managing your scarcest resource comes in.)
Finally, none of those may be the real issue — rather, it’s that your people aren’t sufficiently engaged or inspired to deliver their best work.

Take a look around you. Is anybody wasting your — or your organization’s — time?

 

Data Doesn’t Speak for Itself

I trained as a statistician and first joined Bell Labs in the network performance group. A year or two after I started, it was time for my first big presentation at AT&T Headquarters. I completed my prep well in advance and rehearsed carefully. Then I was off to the big meeting.

It could not have gone worse. The only impressions I left were bad ones. Young hothead that I was, I blamed everyone but myself, including the audience: “The average manager up here can’t even understand a pie chart!”

An established veteran of many such presentations looked me square in the eye and said, “Of course not, Tom. It’s your job to make it so they don’t have to.”

That was my first lesson in data presentation. As a data presenter, you face a tall order in getting others to comprehend and believe data. You have to think through your audience’s background and present data in ways that advance their understanding. The best way to do so is to make your plots and the accompanying explanations easy to understand. As Edward Tufte advises, label the axes, don’t distort the data, and keep chart-junk to a minimum.

The plot below is a typical result of a well-conceived and -executed data quality program. But it features too many unfamiliar terms such as “accuracy rate” and “fraction perfect records.” Without additional explanation, the audience may find themselves lost.

Start by explaining how to interpret the chart at its most basic level: “Here is a time-series plot of the results of our data quality program. I know most of you are familiar with such plots, but let’s make sure we’re all on the same page here. As you can see, we focused on the quality of customer data. The x-axis is time, and here I’m showing one point every month. The y-axis is the fraction of data records that were created perfectly each month. That’s how we’re measuring accuracy. It is a tall standard, and I’ll have more to say about that in a minute.” Then, explain to your audience how to read the data presented within the chart: “The green line displays our actual results. The blue line shows the target we set for ourselves, and the red lines are control limits. These are a bit technical. I’ll explain later. Now before I dig in, are there any questions about how to read the chart?”

Note that you’ve told your audience where you’ll be expanding, but you’re focusing on the basics of reading the chart first. This lets them fully comprehend the visual, so they can then put their full attention toward listening to your explanation of the data to come.

Now tell the story of the data in a powerful, animated fashion. In this case, there is much to tell, including how and why the program started; the joys and challenges surrounding the documentation of customer requirements; measurements against those requirements, including the logic of the choice of metric on the y-axis; improvement projects; and how you established control — essentially the implications of those red lines. Point out the impact of each out on the plot as you proceed.

Different audiences will have different needs, and you should tell the story in the simplest and most direct way you can for each. For example, a technical community may wish to understand the details in your choice of metric and the software used to draw the plots. A senior leader may wish to understand the significance of the story for extending data quality across the organization. While the main story will be the same for each, the emphases should be very different.

Be aware that many people are skeptical about analytics, big data, data mining, and statistics (perhaps recalling the famous observation, “There are three kinds of lies. Lies, damned lies, and statistics.”). Whether this skepticism is justified or not, it does enormous damage by slowing, or even stopping, the penetration of good ideas into organizations. As a data presenter, you have a sacred trust to build support for data among your audience. You must:

Present the facts in the most straightforward, accurate way you can. This is especially true when the results aren’t favorable. Further, if your results are counter to established wisdom, simply state that this is the case.
Present a comprehensive picture. Leaving out a key fact is the worst kind of lie.
Provide proper context, including where the data originate and what you’ve done to ensure they are of high-quality. (If you’ve done little, you must explicitly state, “The data are of unknown quality. This could impact results.”)
Summarize your analysis, including shortcomings and alternative explanations for the results you see.

It is fine (and often appropriate) to state your opinion, but you must clearly separate your opinion from the facts. Even the best analysis goes only so far; then intuition takes over. Make the dividing line clear.

Now take your concern for the audience a step further. Successful oral presentations live on as people pass on PowerPoint decks or links to them. People reading a slide deck alone will not have the benefit of your oral explanations, so you must think of their needs as well. As I heard in my early days at Bell Labs, “People spend an average of 15 seconds looking at a chart. Don’t make them spend 13 of those seconds figuring out how to read the chart. Build in explanations in wherever possible. Even better, make the graphic tell the story.”

With this in mind, take two steps. First, provide your explanation of how to read the chart in the notes page of your PowerPoint or slide deck program. Second, annotate the graphic, as below. While annotations do not replace a well-told story, they do give the reader some inkling of what’s involved.

To most audiences, an ounce of insight is worth a ton of analysis. Thus, one outstanding graphic that cuts to the heart of the issue at hand and guides next steps is worth more than hundreds of mediocre ones. Seek that graphic. Presented this way, data are power.

None of what I’ve proposed here is particularly difficult in practice, once you have an important insight or result to share. Leaders — even skeptics — hunger for ways to improve their departments and companies. Your job as a data presenter is to tap into and satisfy that hunger in the simplest, most transparent way that you can.

Persuading with Data

An HBR Insight Center




Data Goes Best With a Good Story (and Vice Versa)
Presentation Tools That Go Beyond “Next Slide Please”
The Right Colors Make Data Easier To Read
Why You Have to Generate Your Own Data