Marina Gorbis's Blog, page 1448

Why Bitcoin Entrepreneurs Are Begging for More Regulation

The IRS took a stand yesterday on Bitcoin, declaring that it would treat the digital currency as property, not currency, for tax purposes. “The Internal Revenue Service may have just taken some of the fun out of Bitcoin,” declared The New York Times. Yet, in the minds of many Bitcoin proponents, not only is the fun still ahead, but the guidance from the federal government is welcomed. In fact, they’d like more of it.

Over the last three weeks I’ve spoken with entrepreneurs, lawyers, VCs, consultants, and bankers about Bitcoin, and through those conversations a clear theme emerged: lack of regulatory certainty is a major factor holding the Bitcoin ecosystem back. Despite the libertarian ideology often associated with the cryptocurrency, those doing business in the space are both realistic about the need for regulation and eager to have more of it sooner rather than later.

Such eagerness toward regulation is not common among entrepreneurs, but in Bitcoin’s case there is a recognition that a new form of digital money will need to somehow fit into existing financial rules. Exactly how that will work is still being sorted out, with regulators at the Fed as well as federal and state agencies working behind the scenes to incorporate the cryptocurrency into their regulatory frameworks.

As Bitcoin entrepreneur and Circle founder Jeremy Allaire — whose company this morning announced another $17 million in venture capital financing — explained at a panel I moderated Monday at Harvard Business School, there is an appropriate role for regulators to play in ensuring consumer protection. When companies like Mt. Gox go under, customers lose their investment and the ecosystem suffers.

The hunger for regulation is also driven by a desire to see more banks get involved. Right now, finding a banking relationship can be quite difficult if you’re starting a company that deals with Bitcoin.

“Many of the major banks and financial institutions are looking at Bitcoin and trying to figure out their take on it,” said Jacob Farber, senior counsel at the law firm Perkins Coie. But concern over compliance with anti-money laundering and anti-terrorism laws have to date largely discouraged their participation.

Clarity is coming, and with it, likely, greater involvement from banks. In March of 2013, the department of the U.S. Treasury tasked with combating money laundering issued guidance on Bitcoin, defining it as a “decentralized” class of “virtual currency” that, though not equivalent to legal tender, “acts as a substitute for real money”. Despite this subtle distinction, the guidance extended existing money transmitter laws to include companies facilitating the exchange of Bitcoin.

Though the IRS chose to designate Bitcoin as property rather than currency, it accepted Treasury’s definition of a decentralized virtual currency, thereby beginning “to crystallize that framework of what Bitcoin is and how to think about it,” according to Farber.

Despite gradual recognition at the federal level, clarity from state regulators remains a roadblock for participation by U.S. banks. Here again, Bitcoin entrepreneurs would welcome guidance, and are particularly interested in New York’s consideration of the matter.

The IRS decision adds a layer of complexity to Bitcoin transactions, but for entrepreneurs in the space there is an upside. “Facilitating adherence to these guidelines provides an opportunity for innovation,” said Tiffany Wan, an innovation fellow at Deloitte’s GovLab. “Just as Bitcoin companies have popped up to provide wallet or payment processing services, the same could occur for tracking and maintaining records for tax purposes.”

Regulatory clarity will bring costs with it. Much of the business excitement around Bitcoin has centered on its possibility to offer transactions with dramatically lower fees than credit cards. Yet the cost of regulatory compliance by the companies running Bitcoin exchanges or managing Bitcoin wallets will have to be passed on to the consumer somehow, likely in the form of fees.

Moreover, a fundamental tension remains between regulators and Bitcoin’s champions. As Allaire said Monday, the vision for Bitcoin is as a global currency, something that will inherently have an uneasy relationship with regulators at every level. For now, regulatory acceptance is a necessary step toward more mainstream adoption. But the idealistic notion of a transnational digital currency remains very much alive.

What Makes Big Data Projects Succeed

In conversations with executives, many of the same misconceptions about big data projects — and what makes them successful — keep coming up.  To help clear the air and foster a better understanding of what makes big data initiatives succeed, here are some of the key things I’ve learned from companies that are realizing substantial business value with their big data initiatives.

Technology: The most popular misconception many organizations have is that big data projects are all about technologies that are specific to big data—Hadoop, Python, Pig, Hive, etc. It is certainly true that those tools are important and useful to big data projects. But unless your company is a start-up, you probably have some legacy technologies and skills that can come in handy as well. In a recent study I did on big data projects involving “data discovery” platforms from companies like Teradata Aster, I found that companies can program big data applications with existing languages like SQL. I also learned that companies with existing data warehouse environments tend to create value faster with big data projects than those without them. Your existing analytical tools—SAS, SPSS, R—will also still be useful with big data.

People: Just as you can hold onto some of your legacy technologies, you also don’t need to bring in entirely new people. The large companies I interviewed about big data projects said they were not hiring Ph.D. level data scientists on a large scale. Instead they were forming teams of people with quantitative, computational, or business expertise backgrounds. They felt the need to educate some of the project team members on big data technologies such as Hadoop and scripting languages. But they were not in desperate straits from a big data talent perspective.

Good change management:  Change management is key to the success of projects. While one might think that technical challenges would outweigh human ones in big data work, it’s not necessarily so. Many big data projects involve “prescriptive analytics”—algorithms or automated systems that tell workers at the front lines of organizations how to do their jobs. In talking with companies that are using big data for these purposes—UPS’s Project ORION for real-time routing of delivery vehicles, or Schneider National’s analysis of fuel tank sensor and GPS data to designate fuel stop locations to drivers—the project managers emphasized how important change management is. Both applications involve substantial changes in how drivers do their work, and the recommendations they make have to be accurate and trustworthy or they may be ignored.

A clear business objective: Popular wisdom suggests that big data projects are primarily about sifting through a big pile of data to find promising relationships. That is an essential task, but it will be an unproductive fishing expedition unless a company has a business problem in mind. For example, telecom companies including T-Mobile and Vodafone are using big data technologies to churn through customer and network data records. It would be an overwhelming project without a business objective in mind: preventing customer churn. With that goal in mind, Vodafone Australia was able to find and fix some network problems that were causing churn in just a few weeks.

Good project management:  Does it help to have executive sponsorship? Absolutely. Should the manager of the project communicate effectively with stakeholders? You betcha. These are hardly surprising, although the technical complexities of big data (and the technical focus of its practitioners) may make it somewhat more difficult to recruit sponsors and engage stakeholders.

Of course, in addition to good project management, and the other factors above, you need some good fortune. Big data projects involve new technology and new development approaches, and are inherently risky. And if you’re doing significant data exploration or discovery with big data, you will occasionally fail—which is not really a problem if you learn from the failures. Big data projects are still more like R&D than production applications. But those organizations that combine conventional project management wisdom with some of the big data wrinkles I’ve described will have a leg up on success.

Find the Right Mentor During a Career Transition

As you take the next steps in your career, do you have the right mentor? You may think a mentor is a person within your organization who has more experience than you do, who coaches you and looks out for you as you move up the ranks. You can rely on these mentors for advice because of their more senior perspective. While this definition is technically accurate, it only takes into account one type of mentor. This type of mentor is great support to have, but can an in-company mentor provide the same level of support when you want to look beyond your current organization? They may be able to start you off with advice or leads, but their area of influence is usually within a single organization.

Just at the moment that you really need professional advice from someone senior and more experienced, you are on your own. But don’t despair! There are mentors you can cultivate to help you during your transition.

Instead of leaning solely on those within your organization, broaden your search. Consider industry- and profession-focused mentors. These mentors have a reputation for broad knowledge of more than one company or industry and can be found in many different places: a professional association, a recruiting firm, a law firm that specializes in an industry, etc. One profession-focused mentor I know is a recruiter who freely shares his knowledge with human resources professionals in transition. He has a reputation for knowing everyone and happily meets with people who need a coach. Alternatively, an industry-focused mentor I know has been an executive in startup biotech firms. He is always ready to talk to people looking into biotech because he is always on the lookout for talent. Many consultants and vendors are also industry- or profession-focused mentors, as they have a perspective that crosses many organizations and know where openings are likely to occur.

Industry- and profession-focused mentors provide you with advice about how you should present yourself, which employers you should target, and how your resume could be improved. They can even suggest contacts or make connections. But you will need to ask for that advice, and once you’ve asked, you have to follow it. That means, don’t ask what they think of your resume unless you are prepared to change it. If they recommend you do some digging to prepare for an interview, do it. These mentors know they have a reputation for helping, and they don’t want to waste their time. If you don’t follow through on their suggestions, they will drop you and move on to someone else.

It’s also your responsibility to keep the connection going. Follow up, not just with a thank-you note or email, but by taking their suggestions, even if you don’t really think they will do you any good. Being referred by Mr. Biotech is great for your reputation, even if you never want to work for that big pharma company he referred you to. After your big pharma meeting, thank Mr. Biotech as well as the person you met with. Ask your mentor follow-up questions via email or in face-to-face meetings to keep the relationship open. Repeat this process with any suggestion your mentor has made. Stay in touch regularly with updates on your search.

How do you find industry- or profession-focused mentors? The easy way is to join a professional or industry association. Go to their meetings or local conventions. Is there a name that crops up over and over, either as a speaker or as a sponsor? Whom does the organization give awards to? Or, just ask around: “I’m very interested in this field. Is there someone you know who could give me an overview?” The same names will come up again and again.

Read the conference programs for the names of consultants and vendors who sell to members of the association, as well. Since they are most likely also at the conference, you can just walk over, explain that you are in transition, and ask them whom they recommend. Remember, you are looking for an experienced, senior person who is known for helping others. Keep asking, and you will come up with a mentor for this transition sooner than you think.

If you are lucky, you may meet a senior person while you are searching who takes a real interest in you and your career. They could be people that you are directly introduced to through your mentor or even someone you meet in passing at a conference or networking event. These people, who I call “surprise” mentors, often enjoy taking someone under their wing and helping them, in spite of how busy they are. Pay attention to those experienced people you meet with whom you have a special connection. Give them special attention and follow up. Take advantage of the opportunity before it disappears.

For example, a friend of mine went through an agonizingly long hiring process for a position in Washington D.C. During it, she hit it off with one particular interviewer. When she didn’t get the job, she had the presence of mind to write a nice note thanking this person for making her feel so comfortable during the interview process. To her amazement, she got a return email offering all kinds of help and connections. She continued the relationship and got an even better job thanks to her surprise mentor. In cases like these, all you need to do is be grateful and stay in touch with regular updates on your progress.

All mentors place a high personal value on helping others, whether for the good of the profession or industry, or simply because they like you. So, if you want to really pay back a mentor who helped you during your transition, think about “paying it forward” — become a mentor yourself. Volunteer for a professional association or for a conference. Offer to talk about your industry at a local college. Let your mentor know you are giving back.

Finally, when you find your new job, write a thank-you note to all the people who helped you, give them your contact information, and tell them you would be happy to help anyone in transition the way they helped you. They’ll see the fruits of their labor, and they may just stay on as your mentor, even as you’re settling into your new position.

This is the third post in a blog series on using mentorship to advance your career. Priscilla Claman is a contributor to the HBR Guide to Getting the Mentoring You Need.

Read the other posts here:

Post #1: Three Questions to Advance Your Career

Post #2: Engage a Mentor with a Short-Term Project

Why Do App Developers Still Live with Their Moms?

With the virtual disappearance of major white-collar employers like Eastman Kodak and Westinghouse — once fairly reliable career on-ramps — young talent is focusing on entrepreneurship as a path forward. Some kids are skipping college entirely and heading straight into business, pointing to the success of dropouts like Bill Gates, Steve Jobs, and Mark Zuckerberg. But unschooled entrepreneurship is unlikely to end happily for most.

A recent story in the New York Times highlighted a pair of high school students who had experienced considerable success as app developers. Their product, a program designed to combat procrastination, quickly became the best-selling productivity app on iTunes. They received acclaim and took meetings with heavyweights at industry conferences. The money was not exactly life-changing, though: after Apple’s cut, they split $30,000, some of which went to business expenses. Not bad, but hardly Zuckerbergian.

Unfortunately, app development came at the expense of schoolwork, resulting in a sharp decline in one developer’s grades as the pair headed into the college application season. As a fallback, he’s applying for a Thiel Fellowship, which pays 20 lucky winners $100,000 to skip college and start a business instead.

There are certainly some high-profile entrepreneurial success stories out there. Facebook’s recent purchase of WhatsApp for $19 billion instantly created fantastic wealth for many of its 55 employees. Kids might understandably dream of retiring rich before they reach drinking age. Yet like most apps, WhatsApp is hardly unique as a product: Line, Kik Messenger, Viber, WeChat, and others do much the same thing.

This is not uncommon. The Apple Store lists more than one million apps and claims that there are 275,000 registered app developers in the U.S. A fair number of apps are indistinguishable from one another, and the vast majority will not yield riches, or even a reasonable income. It is hard to dominate a product category where a pair of self-taught high school kids can create a bestseller; success in this situation is more a matter of luck than of merit.

The reward system for app developers follows a familiar “winner take all” pattern described by Cornell economist Robert Frank, where a few outstanding successes capture huge returns while those not lucky enough to reach the top see very little. In this way, the industry parallels drug dealing. Hear me out.

In a chapter of their best-selling book Freakonomics, “Why Do Drug Dealers Still Live with Their Moms?,” Steven Levitt and Stephen Dubner note that most street-level drug dealers earn modest wages at best — they may neglect their schoolwork, and some take straight jobs in addition to make ends meet. But a few drug dealers become fantastically wealthy, and the chance to play this lottery keeps many lower-level dealers in the game.

The Thiel Foundation president points out that “the safe career track is totally broken.” Lawyers can be laid off; janitors have PhDs. This is true. But encouraging kids to blow off schoolwork to write apps, or skip college to become entrepreneurs, is like advising them to take their college money and invest it in PowerBall. A few may win big; many or most will end up living with their moms.

There is a possible consolation prize: perhaps these kids can parlay their programming skill into jobs at Facebook or Google. Unfortunately, the odds there are only slightly better. Facebook had 2,400 employees in 2011; 3,500 in 2012; 4,900 in 2013; and 6,300 today. With about 1,400 net hires per year, getting a job at Facebook is only slightly more likely than getting drafted into the NFL. Twitter has 2,700 employees; Dropbox has 550; Snapchat has 21. The combined global workforces of Groupon, Facebook, LinkedIn, Zynga, Yelp, Pandora, and Zillow is smaller than the number that Circuit City fired in January 2009 when it was liquidated. (Hey, it could be worse: the computer and electronics hardware industry has shed 750,000 jobs since the turn of the 21st century.)

I’ve looked up every company that did an IPO in the U.S. since 2000. Even the best-known employers of knowledge workers often have fewer people than a local car dealer or Walmart store. For instance, real estate site Zillow has 812 employees, and travel site Kayak has only 205.

The message for aspiring entrepreneurs? Stay in school, and resist the lure of quick success. In introductory economics courses in college, kids learn about “opportunity costs” and the “time value of money.” Though $15,000 seems like a lot to a high school senior, it’s hardly a great choice for entrepreneurs or anyone else if it comes at the expense of an education that yields a far higher lifetime income, a more agile mind, and a more rewarding life.

Make the Right Decisions About Your Company’s Sustainability Efforts

It’s vital that companies manage their impact on the planet, and most are willing to invest at some level in sustainability initiatives. But with myriad choices for how to do so, and long lists of stakeholders to please, managers struggle with a basic question: How do we decide which projects to green-light?

At UPS, management has developed what it calls a “materiality matrix” to help focus discussion and guide decisions. As described in the HBR article “Sustainability a CFO Can Love,” by the company’s chief financial officer Kurt Kuehn and Lynnette McIntire, it is used to display proposed initiatives in terms of their relevance internally to the company’s strategy and externally to outside parties. When a sustainability proposal lands in the matrix’s sweet spot, appealing highly to both external stakeholders and internal managers, it’s a safe bet that it will gain momentum quickly and yield the most positive impact.

 

Using the materiality matrix is one of five steps Kuehn and McIntire suggest for making sound sustainability investments. For the other four, read the full article.

Founding a Hardware Start-Up Is Getting Easier

Only 3% of U.S. venture-capital investment was for hardware start-ups last year, but that represents a big increase from 1992–2011, when the figure was less than 1%, says the Wall Street Journal. Investors have long shied away from start-ups making gadgets such as wearable electronics, because of the challenges posed by manufacturing, distribution, inventory, and technical support. But help has arrived: Today’s contract manufacturers, such as PCH International, will not only make your product for you, they’ll also provide engineers and project managers in China; as a consequence, U.S. venture capitalists are taking a rosier view of hardware start-ups.

Turn Your Next Interruption into an Opportunity

Modern life, particularly work life, has become increasingly hectic. There are relentless demands from meetings, emails, text messages, questions to answer, problems to solve, fires to put out. It can begin to feel like there is never any time to get “real work” done.   If you feel overwhelmed by endless interruptions at work, you are not alone.

One of the most powerful lessons I have learned in my over thirty five years of leadership experience is that these thousands of little interruptions aren’t keeping you from the work, they are the work. When you look at it this way, a whole world of opportunities opens up. Think about it. Every single interaction is rife with the potential to become the high point or the low point in someone’s day. Every “interruption” offers an opportunity to lead impactfully, to set expectations, bring clarity to an issue, or infuse a problem with energy and insight. To reframe these moments in an empowering way, I call them “touchpoints.”  If we choose with purpose to see these moments not as distractions from our work, but as the work, then we can begin to lead more meaningfully in each and every moment.

So, how do we do this? How do we begin to change our approach towards these interruptions? Where do we start? If we’re to treat each interaction as spring-loaded with possibilities, then we must prepare to engage within these moments in the most effective way possible. One way to train ourselves to do this is to identify the key components in each exchange. It is helpful to consider the three variables of every touchpoint.

Is the issue itself something important, such as a question, a problem, or decision that affects the performance of individuals, teams, or the whole organization? Remember, importance is in the eyes of the beholder, so it is critical that one be alert to the perspectives of everyone in the interaction. This could be how to address an employee complaint, replace a key team member, or how to make a project come to fruition in the face of budget cuts. In each interaction it is necessary to assess if the issue is “yours,” “theirs,” or “ours.”

David, a former plant manager for P&G, has a visceral appreciation for the importance of this component. During his tenure, he made it a habit to walk through his plant every single day with the goal of addressing 10 of his own to-dos. David would carry his list of 10 pressing issues on a slip of paper as he roamed throughout the plant. They could range from getting an update on a safety issue to spreading the news about an award the company had won. Although he would embark on his walk with just these 10 items in mind, something wonderful happened again and again. David was interrupted. People would notice him walking the premises and take the opportunity to raise their own ideas, problems, and questions. Rather than avoiding these interactions, David would embrace each and every one. He would listen carefully to swiftly assess who owned the issue, consider all the other people who might be involved, and help to bring clarity and energy to resolve each new concern he encountered. All while simultaneously moving through his own to-do list. Pretty efficient. With this approach, he achieved infinitely more in a single minute than he could sitting isolated at his desk, sending emails for an hour.

Whatever you say or do in a touchpoint may be quickly transmitted exponentially throughout the other people involved – and then relayed again and again. Remember, organizations are living systems in which people are connecting all the time: individuals who report to you directly, colleagues, and anyone with whom you have a straight or dotted reporting line. Consider that every single person with whom you interact is embedded in complex webs of relationships. It is crucial to think about all of the people who will be affected by your words and actions, even those who are not present in a particular interaction.

Who is the leader in the interaction? Who is bringing clarity and focus to the issue? It doesn’t have to be the person with the most seniority or the most impressive title; behavior dictates leadership. You are the leader in the touchpoint if you listen intently, help frame the issue, and spread infectious positive energy exponentially throughout the organization.

To see how these come together and take it a step further, consider the example of George, head of a 500 person R&D department. He was involved in a tense meeting with senior executives. A very specific and narrow point was being heatedly debated. After listening intently, George realized the issue was being framed too narrowly. Although he was not the most senior person in the room, he felt he needed to speak up. In this case, he knew he might have to disrupt the flow of the meeting to make a productive point. He chimed in, initiating a touchpoint. George boldly articulated a broader strategic view that allowed his R&D team more decision making power. It was a lonely view, but he advocated it passionately. Later that day, he ran into a colleague from the legal department who had heard about his argument. He was surprised. How did she know about it? It turns out his team members were proud he had taken a strong stand, felt energized by his advocacy, and had spread the word throughout the organization. His message had spread exponentially and invigorated his people! What if he had stayed silent? An opportunity would have been lost. The role of the leader extends beyond embracing interruptions as opportunities for touchpoints. It also involves initiating touchpoints when your instincts and experience signal to you that a re-framing of the issue is necessary to advance the agenda. When executed correctly, word gets out. This is the power of embodying the role of the Leader in any particular touchpoint.

Using this structure to reflect on the variables in each touchpoint, you can begin to unlock the full potential of each interaction. I encourage you to treat every interruption as a golden opportunity to contribute meaningfully. You’ll become more fully present in your leadership. Each moment will become a chance to inspire a sense of possibilities and stimulate the desire for betterment throughout the entire organization.

 

Know What Kind of Careerist You Are

Executives who combine work and family emphasize the importance of defining success for themselves. In our last blog post, we talked about objective versus subjective success — the difference between your quantifiable, Wikipediable list of accomplishments and your day-to-day emotional and intellectual pursuits. Like everyone else on the planet, you have only 168 hours per week to spend. So it’s important to strategically allocate your time to the objective goals that will bring you the most subjective satisfaction.

But what brings satisfaction? It’s different for different people — even at the same workplace, even in the same role. If you’re trying to answer that question about yourself or your employees, here’s a helpful framework from Managing the New Careerists, by former BYU management professor C. Brooklyn Derr. Though the careerists aren’t so new anymore (the book came out more than 25 years ago), Derr offers an interesting historical perspective on the rapidly changing world of work — and keen insights about human nature, which evolves much more slowly. He outlines five “career orientations,” which tend to shift over time, depending on life circumstances:

Getting ahead. People who are motivated by upward mobility focus on promotions, raises, making partner, and increasing their authority. They’re competitive and willing to put in long hours and negotiate office politics to win those rewards. This is the default career model in the U.S., which means that it’s easy for those who want to get ahead to explain themselves to bosses, colleagues, and family. Also, almost everyone who is just starting out in a career has this priority. It’s usually around age 30, give or take a few years, that people begin to explore other orientations.

Getting secure.  Those who seek regularity and predictability in their work environment are motivated to fit in with others and uphold group norms. They avoid risk and are less concerned with advancement than with career control. If this description has you rolling your eyes, you’re not alone. It’s difficult for people to admit they want this kind of security, because it sounds like the life of a corporate drone, which no one wants to be. That’s especially true today, given the rise of the free agent in all industries. But people motivated by security are loyal and willing to put in extra effort when the situation requires it — not just when it will bring them glory.

Getting free. Derr describes people with this orientation as “hard to work with, impossible to work for, slippery as eels to supervise and manage, and infinitely resourceful in getting their own way.” People who value getting free want autonomy and self-direction. They have less tolerance for regulations, status reports, and other forms of bureaucracy than those in the “getting secure” camp. Like getting ahead, the desire to get free is widely understood and even admired, at least in the U.S. However, people who are motivated by freedom must pay their dues before they can have autonomy. Even if getting ahead isn’t your primary orientation early on, when you’re still building your reputation, some argue that it makes sense to act as if it is. Once you’re established, you can shift gears and strive for deeper rewards.

Getting high. These are people who care deeply about deploying their expertise, solving problems, creating new things, and feeling engaged. They are ambitious and sometimes idiosyncratic. Unlike professionals intent on getting ahead (who might take on boring but important assignments in order to win favor with clients or managers), those motivated mainly by getting high will gravitate toward work that provides greater stimulation, even if it’s low-profile or high-risk. They’ll also trade a certain amount of autonomy for an exciting or meaningful job — they might join the military, for instance—which a person with a “getting free” orientation probably wouldn’t do.

Getting balanced. Have you been nodding along, thinking that there’s a bit of truth and desirability in each orientation? That means you’re motivated by balance. People with this orientation want to enjoy objective career success, personal development, and close relationships, and they’ll strive to achieve all these goals over time. They are unwilling to sacrifice a personal life to career demands, but they’re also unlikely to coast in a job for which they are overqualified to free up their time at home. They want challenge, and fulfillment, both on and off the job.

Derr says that getting balanced is the most common orientation but points out that only some people seem genuinely motivated it. Others have balance thrust upon them, as it were, and simply know that they have to make career sacrifices for the sake of their families, or postpone relationship or personal goals until certain job priorities are met.

Career orientations often draw people to certain lines of work, but it’s not as simple as saying that programmers are motivated by one thing, salespeople by another. People can be attracted to the same industry or job for many different reasons, and those reasons may change over time. Even the most ambitious careerist, in the midst of a health or family crisis, might find balance and security more important than promotions or intellectual thrills.

Try using Derr’s framework as a tool for career planning — and for management. Learning what truly motivates your employees can help you assign people to the right projects, develop them appropriately, and retain them.

An MBA Holds its Perceived Value, Even in Lean Times

Just as the Great Recession sent investors retreating to value positions in the stock market, it also heightened questions for anyone investing in higher education. In general, concerns with high tuitions, student debt loads, and student outcomes are fueling debates about whether the returns are attractive. The value of a higher degree can seem even more dubious when the timing of it lands a graduating student directly into a tight labor market.

Such markets, the thinking goes, suppress wages for new hires and favor those with more work experience – suggesting that new graduates might have been better off to skip graduate school and spend that time instead establishing more of a toehold in the world of work. For students graduating in recessionary times, even those lucky enough to find jobs start behind in salary and consequently never enjoy as much value from their degrees as those graduating in more flush times.

We were surprised, therefore, when our survey of people holding MBAs (or other graduate degrees in business and management) found no such regrets amongst the cohorts who graduated in recessionary years.

Responding to GMAC’s 2014 Alumni Perspectives Survey were nearly 21,000 business school alumni around the world. Focusing on the majority of them (19,456) who earned their degrees since 1980, we find that graduates during recession years (1980-82, 1990-91, 2001, or 2008-09) are just as likely today to value their degrees highly as those graduating in other years. For these alumni, the retreat to value went through, not around, the classroom.

The “value meter” holds steady for alumni in every form of return we asked about: financial, personal, and professional. As they rate the value of their graduate business degrees, there simply aren’t meaningful differences between those alumni who graduated in recessions and those who didn’t:

95 percent of recession-era graduates rate the value of their MBA or master’s degree in business as good to outstanding, compared with 94 percent of those graduating in other years.
95 percent of business school recession-era graduates agree that the degree was personally rewarding, compared with 94 percent of those graduating in other years. Findings are similar when alumni consider whether their degree was professionally rewarding (91% of graduates in a recessionary period compared with 90% of others).
Knowing what they know now, 96 percent of both groups of business school alumni would still pursue the degree.

Indeed, when it comes to financial indicators, business school alumni who graduated in recessions are slightly more likely to rate the value of their degree highly. For example, of business school alumni who graduated during a recession:

79 percent rate their degree financially rewarding, compared with 75 percent of business school graduates during non-recessionary years.
69 percent agreed that their job adequately compensated them, compared with 67 percent of graduates outside of recession years.
84 percent said their degree was essential to their employment, compared with 83 percent of the other graduates.

We should note that alumni across the years consider the value of their degree through their own prisms of experience. Those who graduated into a more challenging job market are considering the value of the degree as compared with other options they had — pursuing a different degree (or no degree) — as opposed to considering the value of their degree compared to those earning graduate business degrees in other years.

These results echo findings of another survey we conduct annually of Corporate Recruiters. It asks employers — the proving ground for the professional and financial value of a degree — what their company goals are and what they look for in new hires. Whether they are hiring in a recession or not, these employers value the skills that new hires from graduate business schools bring to their companies.

Perhaps no one wants to graduate into a recession — but for those who got their graduate business degrees during recessions, our findings suggest that regrets are not in order. Holders of MBA and other graduate business degrees overwhelmingly feel they are better off having earned the degree. The skills, experience, and networks gained during business school yield returns regardless of the job market at graduation and may be even more valuable in a tight job market.

Another finding from our alumni survey suggests that the payback on an MBA degree accrues over the long term. Analyzing responses from graduates as far back as the class of 1959, we find that earlier graduates are more likely to rate the value of the degree highly than recent graduates, consistent with findings from previous years. Our interpretation of the result? The knowledge, networks, and experience gained in graduate business programs yield rewards – financial, professional, and personal – over the course of careers, come good times or bad.

Nike’s Forum Shows the Promise and Peril of Community

A New Year’s Eve tweet announced the launch of the Nike Community Forum. You could be forgiven for not noticing. Today, promotion of the forum has been removed from the site’s navigation bar, and social media conversations regarding the forum are next to none. Yet the Nike Community Forum is one of Nike’s greatest opportunities — a way to bring its Nike+ mobile users to their website (an e-commerce conversion opportunity) and create a truly active and engaging ecosystem of athletes.

Nike is often praised for their innovative brand campaigns and grassroots community development via running clubs. However, like many brands, Nike is struggling to translate their aspirations into a thriving online community, as embodied in their forum. Their efforts form a cautionary case study for other brands looking to jump into the “community” game.

Nike’s forum ought to be a cornerstone of Nike’s transition from sticker-shock endorsement deals to community-driven brand-building given the upside.  Although we’d all prefer to be as fit as our favorite athlete, it’s not our full-time job; it takes small steps over a long period of time to obtain our training goals. That’s when learning and encouragement from peers becomes valuable, not just to Nike’s customers but also to Nike itself. With the support of friends, the occasional jogger becomes a regular runner, and eventually, a more frequent and lucrative Nike customer. Further, the forum ought to be an opportunity for Nike to gather the customer feedback that fosters product improvements, shorter product development cycles, improved marketing strategies, and new distribution channels.

Despite all this potential, however, the community features Nike offers have fallen short. Yes, Nike+ is more than a mileage tracking app and FuelBand is more than a fancy pedometer; both, like the forum, are gateways into their “community.”  And yet slapping the label “community” on a userbase doesn’t make it one. Nike trumpets the accomplishments of its users — 1.4 million half-marathons in 2013, and 57.3 million Nikefuel goals reached. But a community’s accomplishments are only valuable as a metric  if the accomplishments are a result of the community’s engagement with one another. To truly bring its community to life, Nike needs enable runners to engage with each other in a meaningful way and measure results accordingly. Its forum, with the purpose to “inspire, educate and achieve our goals together,” is the perfect environment in which to make this happen — if well executed.

First, Nike needs to get clear on what type of forum they want. Generally speaking, there are two types of forums: informational and conversational. Informational forums include StackExchange, Yahoo Answers and GetSatisfaction; content is meant to be useful and searchable over a long period of time. Conversational forums include Reddit and Facebook groups; content here is fleeting as the conversations come and go. Nike’s forum, however, lacks this kind of clarity of use; is this forum meant to be informational or conversational? Lasting or ephemeral? All of the above, as it’s currently designed. High-value, informational content such as users discussing  treatments for strained IT bands is right next to fleeting comments such as “ran 5 miles today! whoo!” The latter type of content is distracting and simply not as valuable as the former; if they want to keep it, however, it belongs elsewhere within Nike’s platform.

Additionally, forum content should be organized according to general topics of utility. Currently, posts are categorized by topics such as “motivation,” “achievements,” and “training,” and subforums of achievements such as “run 10k,” or “earn more NikeFuel.” While certainly Nike’s intent here is to inspire action, this content organization isn’t useful because it doesn’t map clearly to users’ needs. Informational content relevant to the “run 10k” subform could be just as relevant to the “earn more NikeFuel.” Rather than duplicating content, it would make more sense for searchability purposes to organize subforums by more user-focused athletic topics such as “long-distance running,” “weight training,” and more specific tags such as “speed,” “marathon,” or “beginner.” This reorganization would better capitalize on the forum’s potential with informational content that has longevity, is more searchable and discoverable, and most importantly, has more clear expectations for engagement between members.

Finally, Nike should consider how their forum connects to their app. What if runners could access the best forum content on the go (for the part of the forum that is informational)? Or, if members could submit their completed runs from the app to browser-based activity feed on forum for digital high-fives (for the part that is conversational)? While most brands considering forums and other community-driven digital initiatives are concerned about negative brand backlash and the use of community properties to vent customer frustrations, Nike’s example shows what is much more likely: that instead of an angry mob, your forum will remain desolate without clear purpose and scope, thoughtful organization and proper promotion.

A forum such as Nike’s has the potential to be a valuable long-term resource to the community and set the bar for other branded forums. By narrowing the scope of the forum, reorganizing the content categories, and connecting its in-app, online and offline community efforts, Nike’s forum will have a better chance of vitality. If well executed, Nike has the opportunity to not only to build generation of athletes that inspire each other, but also to increase brand affinity and create a long tail of lifetime high-value customers.