Marina Gorbis's Blog, page 1429

Think Beyond “Mobile” vs. “Desktop” Shoppers

We all know the story of mobility’s meteoric rise in the last several years. From flip-phones to smartphones to an expanding galaxy of different connected screens and devices, we can safely say that access to the world’s information on-demand will be part of our lives now, and for the foreseeable future. We’re at the end of the beginning.

At Google, I meet with companies of all sizes to discuss how connectivity has changed consumer behavior, and what this means for their business. At the core of this shift is customers’ control over their shopping experience. Connectivity gives your customers the ability to engage with your business any time, and the expectation that you’ll be there. Some businesses were ahead of this curve, and some were behind. Regardless of where your company falls, the challenge of getting constant connectivity right is forcing all businesses to rethink some of their most basic practices.

Companies must evolve, but they can’t lose focus of their core value propositions in the process. There are two basic lessons — welcoming your customers and measuring your success — that can help a business understand these new consumer behaviors on devices of all kinds.

Delivering a welcoming in-store experience used to be fairly straightforward. Whether a business had a single location, hundreds of franchises, or something in between, most customers would have a similar experience whenever they walked into a store: they’d be constrained by the same store hours, see the same products and prices, and walk through the same door(s) on the way in and out.

Connected devices have changed this profoundly. Now, many factors shape customers’ experiences with a business, including: location, device software, quality of its website or app, ability to price-compare anytime, and more. To make matters more complex, the ever-increasing variety of connected devices has made distinctions like “mobile” and “desktop” increasingly irrelevant.

Today, businesses can best welcome their customers when they tailor online experiences to their customers’ context — that combination of location, device capabilities, time (of day and of year), user preferences, and other signals that allow you to deliver a welcoming and relevant experience in that moment. This applies to websites and apps. Customers may choose to visit you via one or the other, but will be looking for a high-quality experience in either case. It also applies to sites or apps; certain customers may want to use one instead of another and your business’ understanding of context should be able to guide them toward their preference, or give them the option to choose.

As an example, suppose you own restaurants in a variety of locations. To create a great experience for your connected customers, in your ads, sites, and apps you could use devices’ location awareness to highlight restaurants near your customers, make it easy for customers to call you to place orders from their phones, create a loyalty points program for in-app orders, or provide special in-store offers (free appetizers!) when your best customers visit you frequently.

These opportunities allow you to welcome your customers in a new, useful, relevant way that’s simply not possible offline. Imagine rearranging your restaurant(s), changing your menus, and running different ads for every single one of your customers — it can’t be done, at scale. But online is built for this, and in many ways, is capable of providing an even more welcoming experience than customers already receive. With the right level of effort, technology can do this work so you can welcome each of your customers warmly.

So, connectivity has created new challenges and opportunities to welcome customers in their online context. The same can be said for the subsequent interactions people have with your business — when they click or view an ad, visit your website, download your app, visit a store, and make a purchase.

Evaluating the right business metrics around these interactions is one of the challenges this new world brings. Consumers’ paths to a purchase are more varied and complicated than they’ve ever been. The path of your customers could look something like this: they start with a Google search for your product during their morning commute, click an ad, visit your website, download a separate shopping app, continue their research from their tablet a few days later, and finally visit your physical store to buy. Measuring and understanding the effectiveness of your online ads and properties can seem a daunting task, given this winding path.

These zig-zagging consumer interactions are just beginning to be measurable. Connected device capabilities may also be causing businesses to overlook valuable interactions that are already measurable — online and offline. Phone calls are a good example: We see more than 40 million phone calls driven to businesses directly from Google ads every month. These interactions can be hugely valuable for businesses, but if they are not accounted for, or online properties are not optimized for them, they are silver in the mine.

Companies need to reevaluate their business metrics in terms of today’s consumer behavior and keep consistently learning how their customers get to a sale. Measurement tools need to be ready for a customer that will search for their products and services at a moment’s notice, and then jump from screen to screen, web to app, online to store as they move toward a purchase. Just as technology has enabled new consumer behavior, it is also needed to help businesses operate effectively. We remain at the tip of the iceberg, but new tools from many players (Google’s Estimated Total Conversions in AdWords is among them) are beginning to provide businesses with the opportunity to measure how they are delivering tailored, more useful experiences for their connected customers.

People now expect connectivity wherever they are and on whatever device they choose — this is the new norm. It’s time for businesses to catch up and understand their connected customer.

What Makes the Best Infographics So Convincing

A great infographic is an instant revelation. It can compress time and space. (Good gosh – Usain Bolt is that much faster than all the other 100-meter gold medalists who’ve ever competed?) It can illuminate patterns in massive amounts of data. (Sure, we’re spending much more on health care and education than our grandparents did. But look how much less on housing.) It can make the abstract convincingly concrete. (Which player was ESPN’s SportsCenter most discussed during the 2012 football season? Tim Tebow — and by a colossal margin. Seriously?)

These intriguing revelations come from a short trip around The Best American Infographics, 2013. Spend serious time poring over graphs, pie charts, bar charts, flow charts, timelines, interactive diagrams, maps, cut-away diagrams, and narrative illustrations, as Gareth Cook did to compile the collection, and you’ll come away with more than your share of these mind-bending moments – and a wide-ranging view of what infographics can do. A Pulitzer Prize–winning journalist, Cook is a regular contributor to and Scientific American Mind.

The most compelling infographics, he says, mine relationships among overlooked variables to tell you something unexpected and get you thinking. (Who knew it takes an annual income of $908,000 to break into the top 1% in Stamford, Connecticut, but only $609,000 in New York City — and just $558,000 in pricey San Francisco?) The least effective confuse you (the food pyramid), overwhelm you with data (nutrition labels), or are just plain boring. I recently asked Cook to share his thoughts about what makes an infographic particularly persuasive.

What’s special about the way infographics make their case?

Infographics have an emotional power because they can show you an idea — or a relationship, or how something works — very quickly. People respond to that. A persuasive infographic surprises the viewer. It moves them in some way and makes them want to keep looking at it or show it to other people.

Did you see commonalities in the ones you found most convincing?

First, I’d say, they all have a clear focus. The designer has gone in and removed all the extraneous details so you see just what you need to understand the message behind it. And yet the best ones also have a kind of openness – the person who’s done it is transparent about what data they’re using. That can be tricky because you need to give people a sense of all the data that’s out there, and enough context, without overwhelming them. In the best cases, viewers feel that they are the ones stepping in and making the connection because they can see the bigger pattern naturally emerging from what you’re showing them.

Can you give me an example?

Take a look at the first infographic of the collection. It’s very simple. It starts with a question: “Which Birth Dates Are Most Common?” And what we see is a chart that shows every day of the year in various shades of a single color. The darker the color, the more babies were born on that day in the U.S.

It’s effective because you can see all the data for the entire year, and yet the actual relationship emerges very strongly. You immediately see the dark band running through July, August, September, and into October. It’s very clear that more people are being born then.

Once you’ve seen the main relationship, you can look at other things, as well, which is very satisfying. You can see, for example, on July 4th and 5th there’s a sudden drop-off in people being born, presumably because it’s around the holidays — you can see the same thing around the Christmas holidays. But then if you look over at February 14th there’s a dark island where a lot of babies are being born. So you can see the main relationship, but then you can also do some exploring.

That’s an important part of its persuasiveness: You want to show someone something, but you also want to give them a sense that they’re free to move around and find their own relationships. When they do, they’ll have confidence that you really are giving them the whole story.

In his introduction to the book, David Bryne talks about the power of infographics to let us see the invisible. He’s thinking mainly of cutaway diagrams, as an explanatory tool, but I imagine that can be an effective tool of persuasion as well.

Sometimes people don’t believe you because they can’t relate to your argument or they can’t understand it. Infographics can make an abstract subject concrete – let viewers put their hands around it. One of the 10 interactive infographics in the book does this especially well. It shows carbon emissions in New York City in real time, representing each ton of carbon dioxide as a giant blue sphere.

In 2010, as we’re told in the introduction, New York City added the equivalent of 54 million metric tons of carbon dioxide to the atmosphere. That’s two tons every second. As you watch, the giant spheres emerge from the ground and start to float upward, two every second. You can see how much they build up over time. By the end of a day, the pile has reached the top of the Empire State Building. It’s amazing; you get a visceral sense for how much pollution that is.

Can you give me an example of an infographic that’s good at boiling down a mass of big data?

One is the Better Food Label, which Mark Bittman and a team of designers at the New York Times came up with. Look at the food label on your breakfast cereal in the morning and you see this overwhelming amount of data – vitamin A, vitamin C, calcium, all these percentages, two columns, with and without milk. It’s hard to make sense of it all. Imagine someone at the grocery store trying to decide between two products: Which is going to be better for me and my family? It’s just too hard to get the answer.

So they came up with a chart designed to address just a few basic questions that someone might want to know when trying to decide how good this food is. How healthy is it nutritionally? How free is it from possible contaminants? How safely was it produced, environmentally? And when you look at their label, you can take in all of that information in two or three seconds. (Click to see a larger version of the image below.)

This is something infographics are naturally designed to do – give you the gist of a really big data set. I think this is one of the reasons why we’re seeing infographics used in so many different realms right now.

I know you’re talking to a number of business groups while working on next year’s collection of infographics. What are some of the ways forward-thinking businesses are beginning to use them?

Certainly, businesspeople are working with designers to develop infographics that present ideas. But more broadly, they working with them to help solve problems. People adept at creating visual solutions bring a different basic set of questions to bear. In considering a data set, they may say “Oh, we can look at this unusual variable and see how that changes over time.” Or they may come up with a new way to explain something to a customer who just can’t seem to understand your current pitch.

I was not at all anticipating this when I set out to do this collection, but I’ve definitely heard from readers who use this as a source book. When they have a problem they flip through it and may notice something that gives them an idea they wouldn’t have thought of before.

Many of the infographics in this collection are pretty funny. If you are in the serious business of trying to persuade people of something, do you see a role for humor?

I think it’s often the case that when people are designing something to persuade, they forget the importance of whimsy. Humor opens people up and makes them more willing to hear messages they might not otherwise reject out of hand. When you’re working really hard on designing something or making something clear, it’s very easy to lose that sense of fun yourself, and the work shows it. You want your audience to sense that at a certain level you are enjoying this. A lot of the pieces in this collection just make me smile.

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

Why I Tell My Employees to Bring Their Kids to Work

I am the CEO of a fast-growing high-tech company. I’m also a mother of three boys, ages 9, 7, and 4, and I pride myself on being very involved in their lives. I have had to juggle kids and career for the last 10 years, and I cannot separate work and home life, as I’ve found that creates too much stress and pressure. Instead, I integrate both, bringing kids to work and work to home as I need to. This has worked so well for me, and Palo Alto Software, that it has become part of our company culture.

No, we don’t bring our children into the office every single day, and by no means have we used this freedom as a daycare replacement. But, when the nanny needs an afternoon off, school is suddenly canceled, or someone’s child is not feeling great, we welcome and encourage them to spend the day in the office. We even have a room designed specifically for children who need to spend time in the office where they can watch TV, play games, work on art projects, read, or do homework.

My employees also aren’t burdened by strict working hours. Regardless of the reason, if parents need to be with their children during “normal” work hours, we understand and support them. We focus on results and achieving goals rather than hours worked in the office, and give employees the freedom to get their work done where and how they need to.

As companies compete for top talent, company benefits and culture are important. We’ve all heard about some of the ridiculous benefits at Silicon Valley firms, like barber shops, coffee carts, game rooms, and free dry cleaning on campus. New employees get the latest tech gadgets as signing bonuses. One COO of a fast-growing Silicon Valley company told me he never thought so much of his job was going focus on how to get the best burritos to the cafeteria to avoid losing employees to the next Internet darling.

But at the end of the day, these types of benefits are pretty superficial. Everyone knows those are focused on keeping you at the office for as long as possible — not about actually making you happy. Providing an environment where an employee can be loyal, work hard, and get rewarded for innovation will bring both better results and more talented people to your company. The best of the best are swayed less by a new iPad or free lattes than by having the opportunity to manage their own hours and focus on results, at a company that respects their home lives and their families.

Research has shown that a person can only be productive for a certain amount of hours each day. Beyond that, employees are just wasting time and producing meager results. Sometimes working too many hours actually produces a negative, not just a neutral or delayed, effect on results and productivity. So why encourage employees to stay at the office for 60, 70, and 80-hour weeks when you may, in fact, get less out of them or even lose them to other companies? The culture that I advocate for allows employees to work hard and gives them the opportunity to de-stress and refresh every night when they go home at 5:30 or 6pm.

Do my employees produce less? Has my company suffered financially for the work style and the benefits I afford my employees? Quite the contrary. We have never grown faster, nor been more financially successful. We have happy employees who love to work for us. Oh, and we also had an office baby boom — there have been 10 babies born in the past year. If that isn’t an indicator of happy, secure, well-paid employees, I don’t know what is!

We believe that to both recruit and retain the best people, we need to provide a culture that gives them room to be creative, take initiative, and excel in their careers. That’s why we recognize the importance of their personal lives — and why we give them flexibility in hours, as well as the flexibility to bring kids and babies to the office as necessary. So let’s forget about the “cheap” perks like foosball and free burritos, and instead provide a culture that respects people as human beings who want more than just work.

How Midsized Companies Can Avoid Fatal Acquisitions

Big-company corporate development departments dream of acquisitions that substantially boost revenue or bring assets that turbo-charge growth. CEOs of midsized companies I’ve come to know over the last 30 years share the same dream. But they are far more cautious, as they should be. Unlike a Fortune 500 company that can casually take a write-down, a midsized firm often can’t recover from a strategic acquisition that goes up in flames. And plenty do.

Acquisitions are more likely to go sour for midsize companies than for bigger firms for two reasons: a smaller financial cushion and fewer internal acquisition experts. The second reason is more important. Most midsize companies lack the breadth and depth of skilled corporate development professionals whose jobs are to source, make, and integrate acquisitions. General Electric’s corporate business development group (about a dozen professionals) is bigger than the entire executive team in many midsized companies.

Yet many midsized companies such as EORM (whose revenue has doubled since 2010, after its first acquisition), Pelican Products (whose revenue has more than quadrupled since 2005 to $360 million) and CRC Health Group (from zero to $450 million thanks to its acquisitions over the course of 20 years) have made excellent acquisitions that accelerated revenue and profit. Through research and my own consulting experience, I’ve found four practices that explain these companies’ mastery of the art of acquisition:

They only buy companies that fit their core strategy. Like a shopper in a flea market, it is quite easy for a CEO at a midsized company to get distracted by sexy deals. Midmarket investment bankers love to shop potential acquisitions to their CEO clients. In fact, a thriving association (the Association for Corporate Growth) exists to provide a venue for North American and European investment bankers and their clients (midsized companies and private equity firms), as well as other M&A service providers to regularly break bread and shop deals. But midsize companies such as EORM shop carefully, making sure the deal is in line with their core strategy. The San Jose, Calif.-based environmental consulting firm shunned acquisitions for its first 20 years, favoring organic growth. But in 2010 (at $13 million in revenue), management decided that to grow, the firm needed to buy other companies. They created explicit criteria. The companies EORM would pursue would have to provide similar consulting services; be small (10-20 employees); and be based in Southern California or the East Coast (two geographies the company knew and had a strong nucleus of potential clients). After a first deal fell through in late 2010, EORM acquired a Southern California firm in 2011. It has since doubled revenue to $26 million.


They have long-term, experienced M&A staff on board. These executives understand the firm’s culture and have working relationships with the key functional and line executives who are crucial to integrating the target company’s team smoothly. Having your own team is far better than relying on accounting and consulting firms, whose rented experts typically don’t get (or care about) the acquirer’s culture or have authority to make crucial acquisition integration decisions (such as who should report to whom). Building internal M&A skills has helped Pelican, a Torrance, Calif., company that makes flashlights and cases for industrial use (military, police,  firefighters, and so on), grow quickly over the last nine years. When Lyndon Faulkner joined as CEO in 2005, he felt the then-$80 million firm had to make  acquisitions to grow. But he was the only one in the company with M&A experience. So he taught his team planning and M&A skills. Then he got personally involved in the acquisition of a small Australian company. By 2009, his team’s M&A skills were strong enough to buy a competitor that was nearly as big as Pelican. Before the deal was done, Faulkner hired an experienced deal integrator to bring the acquisition (Hardigg Industries) into the fold.


They have strong due diligence skills. Some of the midsized companies best at M&A avoid acquisitions of companies under $5 million in revenue. The reason is that conducting due diligence will be costly and arduous because small companies often have poor reporting and accounting systems. The risk of costly surprises is high and the return on such a small acquisition is generally low. But a financial risk is not the only one, especially with larger acquisitions. The more employees the acquired company has, the greater the likelihood there will be people problems. What’s more, larger acquisitions come with greater complexity risk; the company often ends up serving many more customer segments. To get a better handle on these risks, the best midsize company acquirers do in-depth financial modeling, including worst-case scenarios. What if the new products under development strike out? What if the acquired company’s CEO or sales team walks out? How quickly would the acquisition’s revenue and profitability decline? The best acquirers have more than good guesses about those issues. And they are not afraid to walk away from a deal — even when they’re strategically sound — that is just too big to integrate properly.


They focus on integration. Their integration process – which is both the greatest value creator and value destroyer in an acquisition – begins long before the CEOs of two companies sign the merger agreement. And planning goes far beyond the acquirer’s corporate development team. Functional and product line managers who must work well with their counterparts at the acquired firm are brought into the discussions at an early stage. That helps them understand the acquisition’s strategic rationale and get used to the notion that they’ll have new counterparts. CRC Health Group, which by acquiring more than 30 companies since 1995 has become the biggest provider of chemical dependence and behavioral healthcare treatment services in the U.S. (2013 revenue of about $450 million), knows this well. “The likelihood of an acquisition’s failure goes up the less the operating people are involved during deal-making,” Barry Karlin, CRC’s co-founder and former CEO, told me. Getting the operating team into the M&A process early on helps them build good relationships with their counterparts. It also helps the integration team to more accurately size up the target company’s capabilities and systems.

Midsized companies that excel at these practices aren’t flummoxed by smaller deals, and can make some very lucrative big deals — even acquiring firms that are bigger than they are.

Forget the Strategy PowerPoint

I have for decades watched CEOs and other executives try to explain a corporate strategy to a small group of senior managers or to a much larger group of staff. For the most part, it has not been a pretty sight. In the case of senior managers, I usually hear 3 or 4 different interpretations of what the boss said, or disagreements about what they thought he or she said. In either case, no alignment at the top. In the case of a larger group of staff, often many people look on blankly during the presentation. They may appreciate a CEO’s willingness to share crucial plans. But because they don’t have the context or experience, they can’t even begin to understand what is being thrown at them in a thick PowerPoint deck. And what they do see certainly doesn’t make them want to get up in the morning and come to work.

I have watched CEOs have better success communicating a good vision. It is much shorter, easier to see (literally), at best emotionally compelling. It is the place that a strategy is trying to drive the enterprise. But better success communicating the vision only goes so far. To truly help an enterprise succeed, this needs to be tightly connected to the actual strategy, and often is not. Worse, the vision can come out sounding as if it has no real content, or antiseptic or foggy.

My colleagues and I have found an alternative that is easier to communicate, more effectively aligns people, and generates and sustains energy better and for longer. We call it “The Big Opportunity” and I devote an entire chapter to it in my new book Accelerate. We have been using this in all our field work with different kinds of companies and organizations.  I have been impressed with the power of this simple, clear concept.

Briefly, here is the idea: a Big Opportunity articulates in language that is analytically accurate and emotionally compelling an opportunity that will move an organization forward in a substantial way. It is that exciting possibility which, if you can capitalize on it, will place you into a prosperous, winning future. It is related to vision and strategy in a very straightforward way: a strategy shows you what you need to get to a vision; a vision shows you what you will be doing if you get to, and are able to capitalize on, a big opportunity.

A written statement of a Big Opportunity can be a very useful tool. It is short, like a vision statement, and unlike a strategy description which is often much longer. “Short” usually means about half a page long. The crisp clarity of it is one of its advantages. Another is its tone. Both strategies and visions can sound like: OK, this is what top management has decided and now you will go do it. Effective Big Opportunity statements direct attention to an inspiring rainbow outside; they don’t feel like a finger pointing out what the managerial and employee children should be doing inside the organization.

Big Opportunity statements, as we have used them, have real rational content (like any good strategy) and are emotionally compelling (like any good vision). Here are the basic characteristics of an effective Big Opportunity statement:

Short. Written on less than a page, often just a quarter of a page. Short length makes it easier to share with others and to create a sense of urgency among large groups of people.

Rational. It makes sense in light of real happenings inside and outside an organization. A good statement concisely addresses issues of what, why, why us, why now, and why bother.

Compelling. It is not all head. There is heart in it. And it speaks to the emotions of all relevant audiences — not just to select people and groups, excluding others.

Positive. Because it is about an opportunity, it has a positive tone. It is less like a statement about a “burning platform,” which seeks to scare us out of our complacency, and more like a statement of a “burning desire.”

Authentic. It feels real. It is not just “good messaging” to motivate the troops. The senior leadership team that puts it together, or at least signs off on it, must genuinely believe in it and feel excited about it.

Clear. You can create a statement that is short, rational, emotionally compelling… but still unclear. A great statement makes people rush off in the same direction — not different directions.

Aligned. The statement is aligned with any important existing statements of strategy in the group or organization. Or at the least, it is aware of any non-alignment and the stresses and strains that will create, so leaders are prepared for it.

In our experience, we have found that that you can get 75% of a large employee population to understand, believe in, and be energized by a good Big Opportunity statement in a way that just doesn’t happen with a larger description of a business strategy or a vision. In an increasingly fast-moving world, this achievement can can be hugely helpful in dealing with rapid-fire strategic challenges.

If You’re Thinking of Soliciting Donations in Bulgaria…

People living in cultures that are more accepting of inequality in power or wealth are less likely to donate money to charitable causes or help the needy, according to research by Karen Page Winterich of Pennsylvania State University and Yinlong Zhang of the University of Texas at San Antonio. The finding may help explain why the most generous countries—Australia, Canada, Ireland, New Zealand, and the United States—have relatively low scores on a measure of inequality acceptance, while the least generous—Bulgaria, China, India, Russia, and Serbia—score higher. Acceptance of inequality may reduce people’s perceived responsibility to aid others, the researchers say.

The One Thing Every Business Dies Without

George Carlin always called people on their BS. He once railed against the idea of “saving the earth,” pointing out that the Earth will be fine with or without us. “The planet isn’t going anywhere. We are! … The planet’ll shake us off like a bad case of fleas.” All that would be left of us, he said, was maybe some Styrofoam.

The idea that the earth needs humans to thank it and care for it is kind of funny. So Earth Day is kind of a quaint idea. And also strange to think that we might only value the spinning ball we’re totally reliant on for a single day each year. Imagine if you only appreciated your mother on Mother’s Day, or your significant other on Valentine’s Day. It would not bode well for your relationships.

As many pundits will point out every year at this time, we need to value Earth every day. And that’s even more so for the business community.  But we shouldn’t thank the version of “Earth” used for show, pictured on glossy corporate citizenship reports, or the theoretical one that many people seem to think only exists in national parks we go visit. No, business needs to value the Earth like it does its balance sheet. The planet provides the collective assets on the balance sheets of our global economy: that is, it’s quite literally the giver of everything required for our economy and society. It’s almost absurd to have to say this, but without a planet, there is no business.

While this appreciation should infuse all our days, it is useful to take this one day and focus our thinking. It’s a good time to stop and analyze specifically what underpins your business. You’re likely doing something like this regularly anyway – one of those retreats with executives, facilitators, and sticky notes to think through business strategy, think “outside the box,” co-create, or whatever is hot in brainstorming that year.

So take a day this week to think hard about how the planet underpins the business, and how your company and sector should deal with that reality. Consider three steps. First, ask some leading questions: What do climate change and extreme weather mean for your business, your customers, and your supply chain? How do growing resource constraints like water shortages, or rising commodity prices, affect your value chain and your margins?

Then paint some pictures and scenarios of sectors under pressure already: Consider what food and agribusiness businesses are going through dealing with ongoing drought in California. Or think about the choice forced on apparel makers and retailers by a 300% rise in cotton prices over one recent 2-year period: either pass along higher costs and reduce sales, or take a hit to margins. Then ask yourself what could happen to your sector to shake things up this much.

Finally, ask some heretical questions. Could we operate without fossil fuels and only renewable energy, or without using water? (Companies like Apple and IKEA are already well on their way to 100% renewables.) What if we tried to build a circular economy and took back everything we sold at the end of the product’s life? How could we fundamentally change how our business operates to navigate and profit from the pressures we’re facing?

Understanding these scenarios and realities, and preparing for them, is now a critical skill for business success. But how many companies use Earth Day (or any day) that way? Very, very few. For most of the last 44 years, most companies have spent Earth Day – if they acknowledge it at all – planting some trees or announcing some nice (but small) initiatives that protect some land or support environmental causes. Those are lovely philanthropic choices. And to be fair, companies are increasingly announcing much larger moves, like IKEA’s recent purchase of a wind farm to supply 165% of the electricity needed by its U.S. operations.

But most companies clearly miss the point of what “Earth” really means to business.  The planet – with all the metals, fiber, food, air, water, and stable climate it provides – is required for our existence. So ensuring that this stream of support continues, or that the asset base stays healthy, needs to be the first priority for society and business.  As the founder of the UK’s Forum for the Future, Jonathan Porritt, has written, “Not only is the pursuit of biophysical sustainability nonnegotiable, it’s preconditional.”  I love the startling, brutal simplicity of that word preconditional. In other words, if we don’t protect the assets on the balance sheet of the world, we go bankrupt and stop functioning.

So today let’s not call it Earth Day. How about “Fundamental Underpinnings of Our Business’s Existence and Success Day.” It’s not as catchy, but it is more accurate.

To Create Change, Leadership Is More Important Than Authority

Aspiring junior executives dream of climbing the ladder to gain more authority.  Then they can make things happen and create the change that they believe in.  Senior executives, on the other hand, are often frustrated by how little power they actually have.

The problem is that, while authority can compel action, it does little to inspire belief.  It’s not enough to get people to do what you want, they also have to want what you want — or any change is bound to be short lived.

That’s why change management efforts commonly fail.  All too often, they are designed to carry out initiatives that come from the top.  When you get right down to it, that’s really the just same thing as telling people to do what you want, albeit in slightly more artful way.  To make change really happen, it doesn’t need to be managed, but empowered. That’s the difference between authority and leadership.

In the 1850’s, Ignaz Semmelweis was the head physician at the obstetric ward of a small hospital in Pest, Hungary.  Having done extensive research into how sanitary conditions could limit infections, he instituted a strict regime of hand washing and virtually eliminated the childbed fever that was endemic at the time.

In 2005, John Antioco was the eminently successful CEO of Blockbuster, the 800-pound gorilla of the video rental industry.  Yet, despite the firm’s dominance, he saw a mortal threat coming in the form of online streaming video and nimble competitors like Netflix.  He initiated an aggressive program to cancel late fees and invest in an online platform.

Things ended poorly for both men.  Semmelweis was castigated by the medical community and died in an insane asylum, ironically of an infection he contracted while under medical care.  Antioco was fired by his company’s board and his successor reversed his reforms.  Blockbuster filed for bankruptcy in 2010.

While today the insights of Semmelweis and Antioco seem obvious, they did not at the time.  In the former case, it was believed that illness was caused by an imbalance of humors and in the latter, the threat of online video seemed too distant to justify forsaking short-term profits.  Even given their positions of authority, neither was able to overcome the majority view.

We tend to overestimate the power of influence.  It always seems that if we had a little bit more authority or had more data to back us up or were able to make our case more forcefully, we could drive our ideas forward.  Yet Semmelweis and Antioco had not only authority, but also had the facts on their side and were willing to risk their careers.  They failed nonetheless.

In the 1950’s, the eminent psychologist Solomon Asch performed a series of famous experiments that help explain why.  He showed the chart below to a group of people and asked which line on the right matched the line on the left.

It seems like a fairly simple task and it should be, but Asch, renowned for his ingenuity, added a twist.  All of the people in the room, except one, were confederates who gave the wrong answer.  By the time he got to the last person who was the true subject, almost everyone who participated conformed to the majority view, even though it was obviously wrong.

While we like to think of ourselves as independent and freethinking, the truth is that we are greatly affected by the views of those around us.  If you are in an office where people watch silly cat videos, you’ll find yourself doing the same and laughing along. Yet often you’ll find that they’re not nearly as funny when viewed in different company.

Yet conformity is never absolute.  Even in Asch’s experiments, there were some who held out, much like Semmelweis and Antioco.  We all have our points of conviction on which we are unlikely to be swayed, other areas in which we need more convincing and still others that we really don’t care enough about to form much of an opinion at all.

That essentially is what the threshold model of collective behavior predicts: Ideas take hold in small local majorities; many stop there and never go any further, but some saturate those local clusters and move on to more reluctant groups through weak ties.  Eventually, a cascading effect ensues.

The best-known example of the threshold model at work is the diffusion of innovations model developed by Everett Rogers, in which a small group of innovators gets hold of an idea and indoctrinates a somewhat more reluctant group of early adopters to form local majorities.  The reticent denizens of those clusters find themselves outnumbered and begin to conform, just as in Asch’s study.  Before long, the new converts find themselves passing the idea on to other social groups they belong to. The process continues until the idea has grown far beyond its original niche.  Eventually, even the most skeptical laggards join in.

Now we can see the failure of Semmelweis and Antioco – and the folly of so many aspiring executives — for what it is.  Rather than seeking to lead a passionate band of willing innovators and build a movement, they leaned on their authority to create wholesale change by forcing the unconvinced against their will.  Instead of painstakingly building local majorities, they attempted to compel entire populations.

Control is an illusion and always has been an illusion.  It is a Hobbesian paradox that we cannot enforce change unless change has already occurred.  Higher status—or even a persuasive presentation full of facts—is of limited utility. The lunatics run the asylum, the best we can do as leaders is empower them to run it right.

And that’s why change always requires leadership rather than authority.  Respectable people always prefer incumbency to disruption.  Only misfits are threatened by the status quo.  So if you want to create real change, it is not power and influence that you need, but those who seek to overthrow them.

Why You Have to Generate Your Own Data

This is it. You’ve aligned calendars and will have all the right decision-makers in the room. It’s the moment when they either decide to give you resources to begin to turn your innovative idea into reality, or send you back to the drawing board. How will you make your most persuasive case?

Inside most companies, the natural tendency is to marshal as much data as possible. Get the analyst reports that show market trends. Build a detailed spreadsheet promising a juicy return on corporate investment. Create a dense PowerPoint document demonstrating that you really have done your homework.

Assembling and interpreting data is fine. Please do it. But it’s hard to make a purely analytical case for a highly innovative idea because data only shows what has happened, not what might happen.

If you really want to make the case for an innovative idea, then you need to go one step further. Don’t just gather data. Generate your own. Strengthen your case and bolster your own confidence – or expose flaws before you even make a major resource request – by running an experiment that investigates one or a handful of the key uncertainties that would need to be resolved for your idea to succeed.

That may sound daunting if you haven’t tried it. And, you may well ask, how do you do it when you lack a dedicated team and budget?  Fortunately, there’s a fairly systematic way to go about it.

Start by focusing your attention on resolving the biggest question on the minds of the people who will decide to give you those resources. That might be whether a customer will really be willing to use – and purchase – your proposed offering. Or perhaps whether the idea is technologically feasible. Or maybe there’s concern that some operational detail could stand in the way of success.

Once you’ve identified the most important potentially “deal-killing” issue, the next step is to find a cheap and quick way to investigate it. The key here is to find some low-cost way to simulate the conditions you’re trying to test.

For example, for several years Turner Broadcasting System (a division of Time Warner) had been playing with the idea of tying the first advertisement in a commercial break to the last scene in a television program or movie. Imagine a scene of a child landing in a mud puddle followed by a commercial for laundry detergent. Academic research showed this contextual connection had real impact, raising the possibility that Turner could charge a highly profitable premium to match the right advertiser to the right commercial slot. But would the system it used to match its content to advertisers’ offerings be too expensive to make the service profitable? And what if there just weren’t enough scenes in Turner’s library of movies and TV programs that could serve as effective contexts for its advertisers? How could the project team find out?

Instead of speculating, Turner locked a team of summer interns in a room for a few weeks, had them watch movies and television shows, and asked them to count the number of points of context in a select group of categories. Then Turner brought the results to a handful of advertisers, who enthusiastically supported the idea.

Imagine how these experiments changed the meeting. Without them, the team would have presented a conceptual plan full of glaring unknowns. But with these data in hand, they could offer evidence that the idea was feasible and that potential advertisers were interested. Perhaps not surprisingly, Turner ended up launching the idea, named TVinContext in 2008 to significant industry acclaim.

Working out how to generate data to test out an idea at its earliest stages requires some creativity. A mobile device company we were advising was considering a new service that would serve up customized content to consumers based on their mood and location. Would anyone want that? Would they pay for it?

To find out, we had to find a low-cost way to simulate the offering and some way to test people’s interest in something that didn’t actually yet exist. First we worked with third-party designers we contacted through eLance.com to develop mockups of what the interface might look like and worked up a two-minute animated video describing how the service would work. Here’s a screenshot from the video:

How could we tell whether the idea resonated with customers? Of course we could show them the mockups and videos and ask them if they liked or didn’t like the idea. But that really wouldn’t tell us whether they liked it enough to use it, let alone pay for it. So we asked customers at the end of the presentation if they wanted to be the first to participate in a beta test of the idea. All they had to do was give us their credit card number, and we’d charge them $5 once the test started. We didn’t actually plan to charge the consumers. Instead, we wanted to know how many were interested enough in the service to part with sensitive data in the hopes that they’d be first in line to access it when commercial trials began. When a significant number of customers were willing to give us credit card details, we knew we were going in the right direction.

One of the most valuable things these kinds of experiments can do is provide dramatically convincing evidence of serious flaws in your idea before you make the mistake of investing serious resources in it. The results from one concrete demonstration is worth reams and reams of historical market data.

For instance, an education company had what at first looked like a really promising idea to improve the quality and efficiency of teacher recruiting. Schools and applicants have long complained that paper résumés aren’t very good indicators of teaching ability and interpersonal skills. What if, the company wondered, we created a service that allowed schools to review short video clips created by prospective teachers showing them in action? Both teachers and schools loved the concept — on paper.

But then the education company tried to get real teachers to create real videos. It advertised the service in a handful of teacher-training colleges and put posts on on-line forums about the service. No interest. The company even began offering $100 for people to sign up. Still no interest.

It turned out that once the opportunity shifted from abstract to real, prospective teachers clammed up. They loved the concept of selling themselves through video, but in reality worried about how they would come across.

Notice how all of these examples involved some kind of prototype. As online tools improve and 3D printing becomes increasingly affordable and accessible, it’s becoming easier and easier to bring an idea to life without substantial investment. For example, a company that manufactures insulin pumps for people who suffer from Type 1 diabetes knew that customers didn’t love the physical designs of current pumps. The company was curious to find out how patients would react to pumps of different sizes and shapes. It worked with a small design shop in Rhode Island to develop a series of physical prototypes that brought the look, feel, and weight of the imagined devices to life. It had insulin pump customers pick up and play with the prototypes and compare them side-by-side with current offerings. The approach allowed the company to get critical feedback before it invested millions in more comprehensive design work.

None of the experiments described above required hundreds of thousands of dollars or hundreds of man hours. And yet they all quickly generated critical data that helped innovators to strengthen – or, in the case of the education company, discard – ideas. When it comes to making your case persuasive, one well-thought out experiment is worth a thousand pages of historical data. Certainly that’s well worth a little extra effort.

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

Even Good Employees Hoard Great Ideas

One of the most heated debates involving innovation revolves around how to best incentivize people to develop and implement new ideas. Research on this issue offers a wide range of conclusions. For example, one recent research report suggested that offering financial incentives only raised the number of mediocre ideas and had little impact on breakthrough innovation. On the other hand, an MIT study concluded that group incentives and long-term rewards do have a positive impact on innovation. And still another survey of 20 companies from different industries found that 90% of the respondents thought that incentivizing and rewarding innovation was “something we should be doing better.”

Driving this debate is the fear that employees will not develop and bring forward creative ways to improve the business unless they are given something “extra,” like time, resources, ownership, or money. For example, one manager recently told me about an employee who refused to share her innovative solution with anyone in the firm unless they would sign a non-disclosure agreement to prevent colleagues from running off with “her idea.” An executive in a different company described a situation where the owner of a particular database would not allow it to be used by another business unit unless his team was given a portion of the revenue.

Creating financial incentives for innovation does not necessarily prevent these kinds of issues. In fact, focusing too much on “cash for ideas” may open a Pandora’s Box of unintended consequences — people innovating for their own benefit instead of the company’s, competition arising between individuals or units, employees losing focus on current business, and so on.

This is not to say that there is no place for financial incentives for innovation, but it usually takes a lot of hard work to get them right.

What most companies should focus on first is creating an environment, or a culture, that fosters innovation. For example, in the case of the employee wanting an NDA before sharing her idea, the underlying issue may not have been money, but rather commitment and trust. For some reason, this employee didn’t feel that part of her job was to help the company come up with new ways of working, and she wasn’t excited about helping the company improve; she was only innovating because it was good for her. At the same time, she didn’t trust her manager or colleagues to explore or implement her idea, because she was afraid that she wouldn’t be recognized for her contribution. Paying her for the idea likely wouldn’t resolve these issues; rather, it might reinforce them.

Similarly, in the example involving database ownership, the manager seemed to feel that the database belonged to him (and his business unit) and not to the company. He felt that his team should therefore be compensated for its use by another unit. Giving in to this demand with a monetary reward could confirm this belief and further constrain sharing and collaboration in the future.

Unfortunately, while it’s easy to talk about creating an innovation-friendly culture, it’s hard to do. But here are three ways to get started:

First, educate your people about what innovation means for your business. Particularly in companies that have experienced years of efficiency management, innovation can be seen as just another way to reduce costs and get rid of people – which can exacerbate the defensive “me-first” behavior that is antithetical to real innovation. So take time to talk about the importance of finding new solutions for customers, competing with start-up competitors, ramping up internal growth, or whatever other rationale makes sense for your company.

Second, build innovation into your goal-setting and performance management process, with as much specificity as possible. If you want employees and managers to innovate, then make it clear what that means, how it’s measured, and how it needs to be part of their jobs — not something “extra” to be done in their spare time.

Finally, find some early examples of innovation, where people did the right things, and either got good results or quickly learned from their failures. Publicize and communicate these situations, give the people involved recognition, and make it clear that this is the kind of behavior that’s needed and wanted.

Turning a traditional company into an innovation machine won’t happen overnight. But if you focus on culture rather than just cash, you’ll probably have a better chance of success.