Marina Gorbis's Blog, page 1428

How Mental Biases Distort Perceptions of MBA Program Rankings

When considering MBA programs and colleges that move up in published rankings, people are most impressed when the movement crosses a round-number category, such as from number 11 to number 10, as opposed to moving from 10 to 9, say Mathew S. Isaac of Seattle University and Robert M. Schindler of Rutgers. This “top ten” effect shows that consumers mentally divide lengthy rankings into smaller sets of categories and exaggerate differences between numbers that cross category boundaries. Organizations that depend on their public rankings would do well to invest aggressively in improving their positions if doing so might push them into a higher round-number category, the research suggests.

4 Ways the Best Sales Teams Beat the Market

Customers today use an average of six channels during the buying process, and the number of channels available to them is only increasing. Competition for those customers has also increased as margins have tightened. Digital channels have upended the well-trod ruts of sales and marketing organizations — already, nearly a third of all B2B purchases are done digitally. All of this increased complexity means sales leaders must rethink how they source leads, manage pipelines, and sell more effectively.

Rather than being overwhelmed, the best sales leaders have figured out how to overcome this complexity to drive above-market growth. Our analysis of 73 B2B technology companies shows that across sectors, the top 25% of companies achieve more than twice as much return on sales investment compared to the bottom 25%.

What do they do right? Based on our experience and analysis, they maintain a clear focus on four things:

1. They measure sales ROI differently. The key to smart investing is having good data that highlights where the greatest sales ROI is. That starts by knowing what to measure. Many companies, however, measure sales efficiency in terms of sales cost versus revenue. That metric is misleading because it does not sufficiently reflect the margin differences between sales channels. A more meaningful sales ROI is to measure sales cost against gross margin or profit (EBIT), which helps leaders more effectively align the number of accounts per sales employee with actual and potential revenues. By analyzing the sales ROI potential of various segments, for example, sales leaders uncover different channel approaches for each. In one company, analysis revealed that sales ROI in indirect channels was 50% greater than in direct channels.

The best leaders also achieve such high sales ROI by reducing overall sales costs without giving away too much margin. Approaches include a strong “quality instead of quantity” focus on their highest-performing partners. They also tend to de-emphasize direct discounts, such as rebates and product offerings.

2. They keep sales costs low. While the old adage “it takes money to make money” is popular, it’s not true when it comes to the best sales leaders. The best of them keep their costs lower than their peers do. Some 72% of companies in the top quartile of sales ROI also have the lowest sales costs. Effectively controlling costs requires a clear and objective view of profitability and cost-to-sell by channel, product, and customer.

With this foundation, sales leaders can make better decisions, such as scaling back sales efforts for lower value orders. They also invest in processes and training that cut costs, such as installing technologies that reduce the number of order exceptions and cross-training people to have multiple skills. This level of efficiency not only reduces costs but also allows sales leaders to profitably pursue lower-margin business.

3. They free up their salespeople for selling. Top performing sales organizations have the same percentage of sales staff in sales management roles — around 8% — as lower-performing companies. However, they have about 30% more sales staff in support roles. While this may seem counterintuitive, this approach frees up sales reps from more administrative tasks, such as order management and developing sales collateral, to devote more of their time to customers. The result is that front lines sales reps are three times more productive than their peers.

One leading high-tech equipment business, for example, found that 28% of sales rep time was spent on low value activities like complaint handling. They then shifted about half of these transactional activities into a sales factory and freed up 13% of sales rep time for them to sell.

Sales executives also need to take a hard look at their sales support systems. Some activities can be automated or streamlined, some can be delegated and pooled into back-office sales factories, and others can be cut entirely. Implementing such operational and structural changes requires a clear understanding of just what constitutes low- versus high-value-add activities and what resources are currently devoted to each.

4. They use as many channels as they can. Companies that effectively sell across multiple channels (inside sales, outsourced agents, value-added resellers, third-party retail stores, distributors, or wholesalers) achieve more than 40% higher sales ROI than companies wedded to a single channel model (only key account management and/or field sales). Managing multiple channels calls for effectively addressing selling opportunities based on value versus on volume, and recognizing that not every channel is optimal for every product. For instance, inside sales reps can handle key accounts with low-complexity products, whereas more costly in-person support should be assigned exclusively to key accounts with high-complexity products.

Many companies are understandably afraid to “tinker with” sales, the only part of the organization that actually brings in the revenue. We believe, however, that more aggressive action to match sales resources with sales ROI opportunities is critical if companies are looking to beat the market.

Social Physics Can Change Your Company (and the World)

Sandy Pentland, MIT professor, on how big data is revealing the science behind how we work together, based on his book Social Physics: How Good Ideas Spread.

Download this podcast

Presentation Tools That Go Beyond “Next Slide Please”

Data visualization luminary and Yale professor Edward Tufte famously suggested that PowerPoint would have been a presentation medium well-suited to a communist dictator. The program’s linear nature, its tendency to discourage interactivity, its inability to easily share the information it contains, and its potential to limit communication with the audience can sometimes obfuscate rather than clarify. Indeed, Microsoft’s recent web-enabled improvements to the longstanding business application suggest that change is coming to presentation tools in a business world increasingly shaped by online collaboration and increasingly powerful internet applications.

Today, users have unprecedented access to data at their fingertips and powerful applications to process them in real time. We use this data for everything from understanding how to set our home thermostats to monitoring NASA satellites in outer space, and we need ways to analyze, visualize, share, and explore data to improve our decision making and way of life. This new need is driving the development of communication and presentation tools, posing a fundamental challenge to the hegemony of PowerPoint.

The best presenters tend to show rather than tell, creating opportunities to engage and persuade. They feature fresh, exciting information. By soliciting feedback and helping listeners feel ownership of the ideas under discussion, they inspire audiences and ultimately create a bond with them.  Great presentation tools should have the necessary elements to support questions and intellectual digression, to allow as little or as much data to be presented per idea to communicate effectively, and should discourage the user from accidentally or intentionally “suffocating key data and conclusions” with what Tufte describes as “Chartjunk.”

From nonlinear story canvases to streaming in-presentation visualizations, new online presentation tools provide unique opportunities to do just about anything one can imagine an internet application doing. A new class of digital presentation tools are cropping up to answer these needs.

One of the more challenging aspects of engaging an audience is breaking away from the linearity imposed by past presentation tools. After all, a great presenter’s goal is to communicate and discuss a few key ideas rather than to present a story in its entirety. Traditional presentation tools presume a fixed order, and encourage presenters to move from one slide to the next, regardless of how the audience reacts. But that’s not the only way to structure a presentation. Prezi, a San Francisco based start-up, has created an exciting solution to this problem by creating a descriptive canvas that the speaker zooms into and out of as necessary to underscore the relevant points. This allows the presenter to adapt the storyline in real-time to the audience response, and encourages presenters to solicit audience feedback throughout the presentation. Its radical concept is well executed with beautiful graphics and animations that effectively use motion and slick transitions to keep listeners attentive and interested.

Not only can new presentation tools adjust the order of a presentation, they can also help it stay up to date in real time. Until recently, presentation tools have largely been static, creating an artificial boundary between the presentation and the outside world. With the ability to integrate internet applications into presentations, it is now possible for a presenters to bring the real world into their presentations with simple embed codes to explore current inventory levels, receive tweets, show video, or view real-time stock prices during the meeting. While most modern presentation software allows presenters to embed internet windows into their presentation for real-time browsing, some also allow users to directly embed live data from outside applications. Zoho Show, a component of Zoho Docs, has the ability to allow users to embed pictures, videos and data from 26 online sources, including Salesforce, Facebook, Google, and Yahoo, which update in real time.  And in the future, based on the code embed capabilities that start-ups like SlideCaptain are offering, one might one day soon expect the capability to incorporate functionality into presentations from any online source.

Standard presentation tools have even shaped the way we do Q&A, training us to spare presenters questions they cannot reasonably answer during their linear, one-sided presentations. This often happens in research meetings where team members present their findings to a group for constructive discussion of the analysis. With direct and real-time access to the data, as well as to analysis and graphing tools, audience members can discuss and replot datasets from the presentation during the meetings to test hypotheses and move the discussion from a theoretical to a hands-on interactive level. My own company, Plotly, has a platform that creates interactive, collaborative graphs that are attached to specific datasets behind them. Presenters can open the graph during the presentation and examine or replot the data to promote discussion. Plotly also has the added benefit of streaming data into the presentation such that the graphs are always up to date, and real-time data can be viewed or accessed.

The final big change in presentation tools incorporates the level of collaboration we’ve come to expect using document-sharing applications like Google Docs. Online presentation platforms are increasingly common in the business world, allowing multiple creators to build a presentation at the same time. This is a must-have for virtual companies with remote team members, but it is also generally a better way for collocated teammates to jointly author slides. Another feature originally developed for remote collaboration that is also a terrific tool for in-person working meetings is the ability to switch presentation computers on the fly, to allow users in the same room to seamlessly take control of the presentation to display their own screens. This allows impromptu semi-prepared visual input from any meeting participant and can help to democratize meetings and share ideas more effectively.

Many of these tools are early on in their development and so won’t fully replace PowerPoint right away. Microsoft is firmly entrenched and is responding to the emerging competition by incorporating some of these elements. But for top presenters looking to give presentations that are dynamic, collaborative, and real-time — and to incorporate data — the answer is to do more than just add another slide.

Persuading with Data

An HBR Insight Center




How to Have an Honest Data-Driven Debate
The Quick and Dirty on Data Visualization
To Tell Your Story, Take a Page from Kurt Vonnegut
Don’t Read Infographics When You’re Feeling Anxious

6 Tips for Reluctant Negotiators

I had been hired to do 1-on-1 speed-coaching sessions at the Summit Series at Powder Mountain, and I was confident I could help one person, in particular, to take his career to the next level. Once back in the office, I pinged him: “I would love to coach you. Any interest in exploring?” He responded enthusiastically. Yes! But when I began to talk terms, he demurred. I didn’t realize this would cost money. I thought you were doing this to be nice. I had been so excited. It wasn’t just about money, but I needed to put a value on my expertise.

After this recent exchange, I realized my negotiation skills needed a refresher course. Serendipitously, I had the opportunity to chat with Hannah Riley Bowles, a negotiation expert, who teaches the course Women and Career Negotiations at Harvard’s Kennedy School. Based on our conversation, here’s my updated crib sheet:

Signal that you are transacting. For most people in the corporate world, unless you are in “sales,” it’s a soft sell. The transaction is implicit as you interact with clients, but you may never have to actually ask for their business. When you are in business for yourself, however, you most definitely do — which means you need to give cues that you are talking business rather than engaging in a social nicety.Bowles advises, “One way to signal that you are talking business and not just acting “out of the goodness of your heart,” is to say things like, “This is the kind of advice that I give to my clients. Or, “Call me if you’d like to explore working together.” She also suggests, “Carry business cards and use them.” I didn’t have cards with me at Summit. Next time.

Sit on both sides of the table.  To be successful professionally, you need to command respect – and this involves the ability to negotiate effectively. However, negotiating for oneself makes both men and women less likable – but more so for women. While men who are no-nonsense negotiators are respected and rewarded for this skill, women may be labeled as a tough and unlikeable. (The alternative is being a likeable woman who doesn’t get ahead.) So it’s actually a good sign if women are nervous walking into a negotiation: “It means that you are correctly reading the social environment,” says Bowles.

One way to gain respect while lowering the social cost is to follow the model Sheryl Sandberg used when she negotiated her COO role at Facebook: “I said to Mark [Zuckerberg], ‘You realize you’re hiring me to run our deal teams, so you want me to be good at this.’” Effectively Sandberg told her would-be boss, ‘Don’t hate me because I’m good at negotiating.’ Her follow-up was equally important. “This is the last time I’ll be on the other side of the table.” Bowles dissects her strategy: “Sandberg first explained why negotiating was a legitimate course, and then signaled her concern for organizational relationships.” If you want to negotiate successfully, lay out the logic of what you are proposing within the context of your relationship. Sandberg was effective because she recognized and assuaged the concerns of the other party, and this applies equally for both men and women when negotiating. When it’s not about me, but we, you’re sitting on both sides of the table.

Power up. Overconfident negotiators risk becoming self-centered and oblivious to others’ needs. But underconfident negotiatiors have a different problem: appearing as a supplicant, not a peer. If you’re not yet feeling powerful? Do what Harvard professor Amy Cuddy advises: “Strike a power pose, adopting expansive, non-verbal postures that are strongly associated with power and dominance across the animal kingdom. Think Wonder Woman.” Priming the pump of power allows you to behave as if you expect the deal you are offering will work, which is more likely to result in an optimal agreement for all parties.

Disentangle negotiation from updates. One of the ways you establish your worth is by apprising your counterparts of recent developments. Because reluctant negotiators can be so uncomfortable with touting themselves, even an update can feel self-aggrandizing. The problem is that if you don’t sock away political capital into the bank of your boss’s opinion, you’ll enter a high stakes negotiation at a disadvantage. The question is no longer — how can you be rewarded, but did you achieve?  We further disadvantage ourselves if we store up all of our accomplishments until that one big moment, and then, much like children, fling our arms open, saying, “Look what I’ve done! Reward me.” This seems to be especially common with women. And there’s a certain logic to it; women do need to rack up more accomplishments to prove that they are just as qualified as their male peers. However, saving up all those achievements for one big reveal comes across as neediness, not negotiation. Whether you’re inside a corporation or independent, “establish a monthly check-in with your boss or your clients: here’s what we’re doing, where we’re going,” says Bowles. This signals momentum, and people will pay a premium for momentum.Once you’ve already established your worth, you won’t need to toot your horn at the negotiating table.

Excise emotion. When I want something too much, my emotions can take over. Early in her career, Liz O’Donnell, author of Mogul, Mom and Maid, was advised to try this exercise to prevent that from happening: “Point at the conference room table, and say ‘This is a table.’ The statement was neutral and non-controversial. It was almost impossible to attach any feeling to it. After repeating the phrases several times, the coach had her say what she needed to say to her boss, devoid of emotion.” Intense negative or positive feelings can be instrumental in attaining concessions, but in my case, it means I’m the one giving up ground. I have needed a “just the facts, ma’am” approach, as well.

Look to the horizon. “The most important thing as you negotiate is to look at where you want to go,” says Bowles. On some level, I know this, but I haven’t really applied it to my negotiating technique. I’m discovery-driven, I aver. It’s also a little scary to think too far into the future; that requires a long game and the confidence that you actually can navigate to that future. But understanding where you want to end up is critical, because it gives you power to own your career and to be seen as a strong visionary who knows what she wants and how to get it.

Nothing will improve your bottom line, professionally, personally, and emotionally more consistently than being able to effectively negotiate. It’s something you do every single day of your life and involves essential life skills: defining who you are and what you need in your business and personal relationships; learning to give clear signals about what you want (and being able to read those signals from others); understanding the effective use of “no” and “yes”; and knowing how to enrich your life and the lives of those around you. Some of us are good at the “get,” others at the “give,” but a one-sided approach to negotiation leads to fractured and poisoned relationships. Learn to do both and you can begin to build a career (and relationships) that last a lifetime.

The Right Colors Make Data Easier To Read

What is the color of money? Of love? Of the ocean? In the United States, most people respond that money is green, love is red and the ocean is blue. Many concepts evoke related colors — whether due to physical appearance, common metaphors, or cultural conventions. When colors are paired with the concepts that evoke them, we call these “semantically resonant color choices.”

Artists and designers regularly use semantically resonant colors in their work. And in the research we conducted with Julie Fortuna, Chinmay Kulkarni, and Maureen Stone, we found they can be remarkably important to data visualization.

Consider these charts of (fictional) fruit sales:

The only difference between the charts is the color assignment. The left-hand chart uses colors from a default palette. The right-hand chart has been assigned semantically resonant colors. (In this case, the assignment was computed automatically using an algorithm that analyzes the colors in relevant images retrieved from Google Image Search using queries for each data category name.)

Now, try answering some questions about the data in each of these charts. Which fruit had higher sales: blueberries or tangerines? How about peaches versus apples? Which chart do you find easier to read?

If you answered the chart on the right, you’re not alone. To determine the impact of semantically resonant colors on graph analysis, we ran experiments to measure how quickly people can complete data-comparison tasks on bar charts using either default colors or semantically resonant colors. On average, people took a full second less to complete a single comparison task when they were looking at semantically resonant colors (whether chosen by our algorithm or by an expert designer). That may not sound like a lot but it’s about 10% of the total task time. These time savings can add up, particularly for data analysts making untold numbers of such comparisons throughout their work day.

What’s going on here? We see a number of ways in which semantically resonant colors could be helping improve graph-reading performance. First, semantically resonant colors can enable you to take advantage of familiar existing relationships, thus requiring you to use less conscious thought and speeding recall. Non-resonant colors, on the other hand, can cause semantic interference: the colors and concepts interfere with each other (as anyone familiar with the famous Stroop test from psychology knows – the one in which you’re asked to name the text colors of color names printed in conflicting colors: green, red, and so on). Second, because your recall of the concept-color relationship is improved when looking at semantically resonant data, you may not need to repeatedly look at the legend to remember which column is which, and so can focus more on the data itself.

To make effective visualization color choices, you need to take a number of factors into consideration. To name just two: All the colors need to be suitably different from one another, for instance, so that readers can tell them apart – what’s called “discriminability.” You also need to consider what the colors look like to the color blind — roughly 8% of the U.S. male population! Could the colors be distinguished from one another if they were reprinted in black and white?

One easy way to assign semantically resonant colors is to use colors from an existing color palette that has been carefully designed for visualization applications (ColorBrewer offers some options) but assign the colors to data values in a way that best matches concept color associations. This is the basis of our own algorithm, which acquires images for each concept and then analyzes them to learn concept color associations. However, keep in mind that color associations may vary across cultures. For example, in the United States and many western cultures, luck is often associated with green (four-leaf clovers), while red can be considered a color of danger. However, in China, luck is traditionally symbolized with the color red.

There are a few other factors to consider when using semantically resonant colors:

Type of data: So far, we have only discussed data that represent discrete categories. Other data may be numerical or rank-ordered (“poor,” “fair,” “good” for example). In these cases, a diverging or sequential color scheme may be preferred, in which a single color becomes darker or lighter depending on the relative order of the values.

Similar color associations: Some concepts map to very similar colors. For example, “magazine” and “newspaper” might both map to gray. We could consider assigning two different shades of gray to both concepts, but then it may be more difficult to remember which shade of gray maps to which one in the visualization. In this case, we might prefer less-resonant colors that ensure discriminability.

Concept-color association strength: Some concepts are simply more colorable than others. For example, people generally agree on the colors of asset categories such as “gold,” “silver,” “cash.” However, what is the color of “social security,” “national defense,” or “income security”? Overall, we found that using semantically resonant colors for categories that were more colorable unsurprisingly tends to provide greater performance improvements.

Semantically resonant colors can reinforce perception of a wide range of data categories. We believe similar gains would likely be seen for other forms of visualizations like maps, scatterplots, and line charts. So when designing visualizations for presentation or analysis, consider color choice and ask yourself how well the colors resonate with the underlying data.

Persuading with Data

An HBR Insight Center




How to Have an Honest Data-Driven Debate
The Quick and Dirty on Data Visualization
To Tell Your Story, Take a Page from Kurt Vonnegut
Don’t Read Infographics When You’re Feeling Anxious

Facebook’s Unbundling Strategy Makes Perfect Sense

Can a company built on the ideas of scale and network effects unbundle its offering into multiple brands and still thrive? Facebook is about to find out.

Unbundling has a compelling strategic and competitive rationale for Facebook. It has implications that extend far beyond the company’s stated goal to design single-purpose apps that fit mobile usage and the bottleneck of screen mobile device real estate. “Facebook is not one thing,” Mark Zuckerberg said in his recent interview in the New York Times. And clearly, the more meaningful things Facebook becomes to its customers, the less chance it has of being felled by a single savvy competitor or by the obsolescence of a single monolithic social network. But what will unbundling do to its sources of competitive advantage?

Observers have quickly labeled the strategy outlined by Zuckerberg, “The Great Unbundling.”  And that captures part of the strategy: standalone, dedicated single-purpose apps will populate Facebook’s stable. They may or may not carry the Facebook brand. But unbundling is only part of the story. More interesting is what the strategy says about Facebook’s understanding of its future competitive advantage.

Today Facebook enjoys three advantages over rivals: technological capabilities, economies of scale in its infrastructure, and most importantly, network effects. Network effects favor Facebook because for those who want to socially network, it makes sense to congregate on Facebook where everybody else is hanging out. There is only one square in the global village, and it is run by Facebook. Being on a different square from everyone else doesn’t get you anywhere — you just miss the party. This makes Facebook’s competitive lead, with over a billion users, a self-reinforcing advantage: the more people that are on Facebook, the less reason newcomers have to not be on Facebook. So what effect does unbundling have on Facebook’s competitive advantage?

Zuckerberg appears to recognize that the Facebook brand as a single monolithic entry point cannot be everything social to all people. Users have different needs, and those needs will be served with separately branded products to deliver different experiences and attract and retain varied customer segments. Each brand, whether it is Facebook, Messenger, WhatsApp, or Instagram marks distinct territory in the social space. The strategic bet here is that a single customer interface is not necessary to maintain or even strengthen Facebook’s technological lead and infrastructure scale. You can have several customer brands and interfaces and still enjoy these back-end advantages. But what of network effects?

Could unbundling dismantle the network effects at the heart of Facebook? Not necessarily. First, brands that Facebook currently operates, Facebook, Messenger, WhatsApp and Instagram, have hundreds of millions of users, and each of them enjoys greater network effects than all but the largest potential rivals. Secondly, Facebook may believe it is worth sacrificing some network effects in order to build distinct brands and pre-emptively occupy social space. For example, more cohesive groups may have stronger inter-relationships, and so members may be less likely to leave to try other social networks. Finally, Facebook’s strategy suggests that it is well on its way to becoming a conglomerate that is in the business of managing businesses that have network effects at their core. Lessons learned from one network effects business translate to other network effects businesses — a benefit few of its rivals possess.

Above all, the new direction is a smart, competitive strategy even if it has been seen more as product and brand strategy. By having multiple brands in the marketplace, by preemptively building or acquiring new types of social space, by serving and defining multiple segments or “use cases,” and by experimenting with products and features such as Paper and Graph Search, the company both hedges competitive risk and stays ahead of customer needs. Get ready for the many faces of Facebook.

Think Differently About Protecting Your Brand

Licensing can generate big business for brands. The top 150 global licensors accounted in total for almost $230 billion, according to License! Global. Disney alone reported $39.3 billion in retail sales of licensed merchandise worldwide in 2012, fueled by the popularity of its Marvel Comics properties.

Brands in categories from apparel to automotive to sporting goods to spirits are licensed.  Even celebrities license their brands – Usher Cologne, anyone?

Licensing’s popularity makes sense. It can boost brand exposure and expansion without significant investment, helping companies enter international markets or play in new product categories without having to incur the usual product development costs and risks. Licensing can also be used to expand a brand’s footprint into adjacencies, as demonstrated by iPad cases, keyboards, and other accessories.

But the benefits of brand exposure and growth through licensing don’t come without risks. Counterfeiting and brand piracy have kept pace with the uptick in licensing. Legitimate companies aren’t the only ones who have benefitted from increasingly borderless commerce and improvements in the quality of manufacturing and materials in emerging markets. According to the Department of Homeland Security, 500 million counterfeit handbags, belts and wallets worth $1 billion were confiscated just last year.

The prevalence of licensed products combined with the sophistication of knock-offs make it more difficult to tell the difference between what’s real and what’s fake.  It’s also easier for branded goods to get into the wrong hands. Anyone can set up shop online and pose as an authorized dealer.  And even offline, the once-underground black market has become quite visible. Inauthentic goods are now sold through unauthorized channels unabashedly, as the discovery of over 20 copycat Apple stores in Kunming, China, a couple of years ago revealed.

Another risk is old-fashioned over-exposure. When products with Nike logos or trademark Burberry plaid can be found everywhere, the exclusive appeal of those brands takes a hit. Market saturation of branded goods, genuine or fake, can lead to brand burnout – or even brand backlash. When Angela Ahrendts took over at Burberry, the brand had become so ubiquitous and watered down, with 23 licensees around the world each making their own versions of everything from dog leashes to polo shirts, that the company faced problems besides declining profits.  Far from being a luxury brand, its famous plaid had become associated with football hooligans and was even banned from some pubs.

However, when managed appropriately, even these downsides can actually benefit brand owners. Authorized or not, brand awareness in a new market is usually a good thing. And increased brand exposure can lead to a migration from counterfeit to original goods when the economic climate of that market improves or discretionary spending increases. Brand piracy can also be considered an indication of a brand’s health; only compelling brands are victims of counterfeiting. On a recent trip to Shanghai, Italian designer Giorgio Armani purchased a fake Armani watch and explained, “It was an identical copy of an Emporio Armani watch…it’s flattering to be copied. If you are copied, you are doing the right thing.”

So companies must balance brand exposure with brand protection.  Your attorneys may advise vigilant trademark monitoring and enforcement — but chasing down unauthorized products and dealers can be time-consuming and expensive — and ultimately, counterproductive. Starbucks seemed to understand this when it refrained from lambasting the comedian who recently set up a “Dumb Starbucks” store in Los Angeles. The city’s Health Department ended up shutting down the store after just a few days, sparing Starbucks the expense and negative press it might have incurred.

Instead, take a different approach to protecting your brand — one that optimizes factors that are directly under your control vs. trying to manage those that aren’t.  Ensure that you set, communicate, and deliver on your brand standards clearly and consistently in everything you do. Even, and especially, licensed products should appropriately reflect your brand promise and shine brightly in the constellation of your brand offerings.

Consistently excellent brand execution will ensure that purchasers of counterfeit products know they are fakes and therefore won’t expect the same performance from it.  If the quality of your brand is so well-known, knock-offs may be compelling but they will never be mistaken for the real thing. Those who know real Rolex watches, for example, can point to at least 10 telltale signs of fake ones, including a magnifying bubble that doesn’t magnify all that well. Fans of the Tiffany & Co. brand know that a Tiffany product for sale anywhere other than in a Tiffany-branded outlet is not real, thanks to the brand’s tightly controlled distribution.

And since your authorized product may not be the only representation of your brand out there, monitor the totality of your brand presence. You may need to temporarily scale back your own licensing or promotional efforts if a market is being flooded by unauthorized product. That’s what Ahrendts did at Burberry by centralizing their product line – even though in this case, the licensees weren’t doing anything illegal. To reassert Burberry as a luxury brand, she decreed that all clothing would be made in Britain; all designs would go through one “Brand Czar;” and that the company would pull back from offering so many types of products to focus on outerwear. It worked.

The best way to enhance and protect your brand at the same time is to extend your brand value beyond the product. When your brand is comprised of a complete customer experience — including service, environment, communications, shopping experience, personality, and values — it is inimitable and far more valuable. A pirated product may mimic your brand but it doesn’t replace it.  It simply whets consumer’s appetites for more of your brand.

Trademarks are some of companies’ most valuable assets and legal actions are sometimes necessary to defend them. But when it comes to brand protection, the adage “the best defense is a good offense” applies — and the best offense is a clear, well-cultivated brand identity.

How GE Applies Lean Startup Practices

We are all lean now — or soon will be. As the world becomes more digitized, generating more information surrounding products and services and speeding up processes, large and small companies in every industry, even manufacturing, are starting to compete more like the software industry, with short product lifecycles and rapid decision-making.

GE has responded to this drive for speed and need to align more closely with customers’ needs by using a new technique called “FastWorks.” It’s a framework for entrepreneurs, building on “The Lean Startup” by Eric Ries. The Lean Startup is an approach to developing new products that came out of “Agile” software development, with “sprints” (quick deliverables) and fast learning. It’s now being tried in manufacturing since GE and others believe that rapid learning cycles with customers will reduce the risk that you build something you can’t sell.

There is a lot at stake here for GE’s operations strategy. As I wrote in a previous post, GE Appliances is on a journey to prove that it can bring manufacturing back to the U.S. and compete successfully. In 2008, GE corporate decided to invest $1 billion in the $5.6 billion manufacturer of kitchen, laundry, and home appliances, and transform everything — launching 11 new product platforms, building or revamping 6 plants, and hiring 3,000 new workers.

GE Appliance’s first attempt to apply FastWorks has been to create a refrigerator with French doors (doors that open from the middle) for their high end “Monogram” line. In January 2013, Chip Blankenship, CEO of GE Appliances issued a challenge to the newly formed team: “You’re going to change every part the customer sees. You won’t have a lot of money. There will be a very small team. There will be a working product in 3 months. And you will have a production product in 11 or 12 months.”

The cross-functional team was thrown into a room together. They became a tight group as they went down to the factory floor and built products together and looked at market research together.

Instead of the traditional approach in which salespeople give design requirements and then leave, customers would be involved throughout. Having the team hear customer feedback firsthand was a big change, especially for the engineers. At their training center in Louisville, they bounced ideas and product prototypes off of retail salespeople who came to learn about GE’s products. They also went to Monogram design centers in New York and Chicago to test products with designers who were visiting to get specifications and information about products for their clients.

The feedback was hard for the engineers to hear, but it made a huge impact on them. In January 2013 the team came out with a “minimum viable product.” They put it out in front of customers, and … the customers didn’t like it. The first feedback they got was that the stainless steel was too dark. So they made it a lighter shade of silver. Then the lighting tested poorly. They revised it and tested it again. They cycled through several product iterations. By August they had version 5, and customers started to like it. They built 75 of version 6 in January 2014 and response so far has been positive. They’re now working on version 8, which they will produce in October, and version 10, with better lighting, and there is a design projected for 2015. They intend to launch new products every year.

Historically, GE revised products every five years, and they would have kept their new products under wraps. But as Kevin Nolan, vice president of technology, said, “With FastWorks we’re learning that speed is our competitive advantage. How do we become much more open and collaborative with the customer base? You can’t do that if you want to be secretive.”

To make FastWorks work, changes have been made in several areas, including supplier relations, finance, and roles and responsibilities:

Supplier relations. The new product team knew they needed to engage their suppliers sooner in the product development process, and also in a more continuously ongoing way. At the end of January 2013, they went to the factory to explain what they were trying to do, and their suppliers were in the room. The suppliers, not surprisingly, were grateful to be asked to be involved, and have provided more flexibility in the development process.

Finance. Vic Roos, Lead Purchasing Program Manager, explained, “We let a finance guy in the room. He helped us challenge the big company mentality. At times we moved much faster than the company would normally allow. At times it drove the materials manager crazy.” David Schofield, Design Manager — Refrigeration, said, “Typically we needed to have a one- or two-year payback. That model doesn’t work when you’re moving fast and when you don’t know what the customer will like. And it’s hard to put a dollar value on that learning. When we first put up our financial numbers, they looked bad. For this year, we’re not going to worry about the product and program costs in calculating the payback. It took a lot of pressure off the team so they could focus on execution and not on cost.” Traditional financial systems are risk mitigation tools, and there is typically no weighting on speed. These systems often don’t calculate how much money is wasted because you don’t get products in front of customers soon enough, or the risk of going out of business.

Leadership roles and responsibilities. Vic Roos explained, “You need to invert the pyramid. There were times when we were moving so fast that people outside our team were concerned. There was a group that was having trouble moving as fast as we wanted. The CEO came to a meeting, and that wall was knocked down. I always felt that we were not put out on an island, the organization worked around and supported us.” Dave Schofield, “The leaders also gave us more autonomy. Normally we would have had to get approval for pivots. They gave us the autonomy to make those decisions ourselves.”

The results GE Appliance has achieved so far are striking: half the program cost, twice the program speed, and currently selling over two times the normal sales rate.

Todd Waterman, GE’s corporate Lean leader, is leveraging GE Appliance’s insights with other GE units. For example, they recently hosted 70-80 young GE high potentials at GE Appliances. And GE appears to be placing a big bet on FastWorks. According to their 2013 Year-in-Review, in the first year, Ries trained 80 coaches exclusively dedicated to FastWorks. Together they introduced almost 1,000 GE executives to Lean Startup principles. GE also launched more than 100 FastWorks projects globally. They range from building disruptive healthcare solutions to designing new gas turbines; they also extend to non-manufacturing disciplines across the business. GE plans to expand the program to 5,000 executives and launch hundreds of new projects this year. “GE is an ideal laboratory for applying Lean practices because of its scale,” Ries says. “This is undoubtedly the largest deployment of Lean Startup ideas in the world.”

To Enhance Your Learning, Take a Few Minutes to Think About What You’ve Learned

Research participants who did an arithmetic brain-teaser and then reflected on their strategies for solving it went on to do 18% better in a second round than their peers who hadn’t set aside time to reflect, according to Giada Di Stefano of HEC Paris, Francesca Gino and Gary Pisano of Harvard Business School, and Bradley Staats of the University of North Carolina. The unconscious learning that happens when you tackle a challenging task can become more effective if you deliberately couple it with controlled, conscious attempts to learn by thinking, the research suggests.