Marina Gorbis's Blog, page 1458

Transforming Rural India Through Agricultural Innovation

With a majority of its population living in villages, rural poverty is a major problem in India. The disparity between the urban and rural incomes is also on the rise. This leads to migration to urban areas resulting in urban blight as well. Therefore addressing the problem of rural poverty assumes urgency. On my last trip to India, I witnessed an innovation experiment, National Agro Foundation (NAF), that addresses this wicked problem.

Since its inception in 2000, NAF has been involved in a range of interventions—infusion of technology, soil enrichment, efficient farm and water management, improved cattle development, functional literacy, rural sanitation and public health, human resource development, establishment of self-help groups particularly among women, self-employment opportunities and facilitating institutional credit—to address the problem of farm productivity in India.  Founded by Mr. C Subramaniam on his 90th birthday as a parting gift to his country, the NAF focuses on the poor and marginal farmers, women, unemployed youth, and depressed communities. (Mr. Subramaniam is widely acclaimed as the Father of the Green Revolution in India, because in the mid-1960s, as the Minister for Food and Agriculture, he successfully handled a major food crisis).

NAF works in about 250 villages in Tamilnadu and has reached 30,000 rural families. A large part of NAF’s effort with farmers is to help break their initial emotional barriers to new technologies. This has provided the platform to launch into other initiatives. The success of these measures has had a demonstrative impact on the farmers’ willingness to adopt and internalize new technologies. This may be considered an attitudinal breakthrough.

Another initiative, the Center for rural development (CFRD), a training cum village knowledge center, has been established in Illedu Village of Kancheepuram district with classrooms, computer lab with internet facilities, input and product handling center, farm machinery workshop, model experimental farm, residential complex for trainees and an open air theatre to cater to the needs of various sections of rural community. NAF has also established a Research and Development Center in Chennai housing a comprehensive soil testing laboratory, food safety and standards laboratory and a plant tissue culture lab to provide agriculture support services.

Here are some highlights of the outcomes as a result of these NAF interventions:

Agriculture productivity improvements through resource conserving “Lean Farming”: Paddy (55%), Groundnut (113%), Vegetables (116%), Sugarcane (40%), and Corn (150%). Through successful lead farmers, technology transfer has been effected over an area of 10,000 acres with a “Lead Farmer—Lead Village” concept. Addressing the agriculture value chain—soil testing, facilitation of inputs and credit, market linkage, and field advisory services—is part and parcel of agriculture development initiatives. Promotion of climate resilient agriculture, resource conserving technologies and promotion of use of Information Communication Technology (ICT) in agriculture are being attempted too.
Watershed and natural resource management initiatives have resulted in increase in water table ranging from 3.5 meters to 5 meters in the project area of over 6,000 hectares. Cropping intensity has been doubled (two crop cultivation in a year instead of one crop) and about 20% additional area which had been left fallow has also been brought under cultivation. Soil erosion, nutrient loss, damage due to flooding during rainy seasons have reduced significantly.
Over 6,500 high yielding cross bred cattle with a milk yield improvement to the extent of 300% has also been achieved through NAF’s animal husbandry initiatives.
To sustain the benefits derived, the Social Development initiatives of NAF have helped village communities in establishing community-based institutions like Farmers Clubs (160), Self Help Groups and Joint Liability Groups (900), Farmers Producer Organizations (6), Watershed committees (25) etc for collective decision and action. Over 6,000 people have been made functionally literate through adult literacy program. Over 1,900 beneficiaries have established micro-enterprises for which microfinance has been facilitated. 30 children are passing through every year through its play school for the past six years. The children are provided nutritious food in order to ensure nutritional security to the underprivileged. Over 1,400 toilets have been built with people participation under sanitation initiatives.
Training is imparted on “technology-oriented” and “participation-oriented” modes to various stakeholders of agriculture and rural development like farmers, youth, women, socially excluded, functionaries of NGOs, water users, producer groups, input suppliers, bankers, students etc.   Over 50,000 people have benefited in the past decade.

Reducing income inequality is not just a matter of charity, it is a challenge for innovation. NAF is an interesting experiment. The problem is so large, will more corporations step forward to collaborate with organizations like NAF to tackle this challenge?

We Need Economic Forecasters Even Though We Can’t Trust Them

Walter Friedman, director of the Business History Initiative at Harvard Business School, on the pioneers of market prediction. For more, read his book, Fortune Tellers: The Story of America’s First Economic Forecasters.

Download this podcast

What to Do When You Can’t Control Your Stress

Everyone can relate to a day at work that just starts off on the wrong foot.  Perhaps you have just had an argument with a spouse or loved one, or you’re late for an appointment even though you had a million reminders in your schedule, or your inbox contains e-mail after e-mail with what seem like impossible demands.  These days can feel really long, and before you know it, the smile is wiped off your face, and you dread your next customer or colleague-facing interaction.  In fact, you become filled with anxiety at the thought of your next appointment, and you realize that you have to get your act together.

At first glance, this seems easy.  Why not just refocus on positive things?  Or, even better, try to reframe.  “This day won’t last forever,” you think.  Didn’t somebody tell you recently that you do have control over your thoughts when you are anxious or expecting the worst?  Then how come this simply doesn’t feel easy when it is one of those days?

A recent study in Proceedings of the National Academy of Sciences by Raio and colleagues (September, 2013) explains why, when your stresses build up, it becomes more difficult to get your anxiety under control.  In a well-designed experiment, investigators found that people who had acquired a conditioned fear response (think Pavlov, or if that’s too obscure, think of “boss-panic” or “board meeting-freeze”) were able to suppress these associations and calm themselves down only if they did not enter the situation under stress.  If they were already under stress however, this threw the “fight or flight” system off, and controlling their thoughts was much more difficult.

When you’re having one of “those” days then, this stress can make it difficult to control your anxiety when you are dealing with your boss or board meeting.  No amount of “one step at a time” or “control only what you can” reminders actually work. This is because when you’re stressed by that argument at home or the inbox that makes your stomach turn, this stress interferes with your ability to control your automatic negative expectations.  Usually, this control relies on your prefrontal cortex (PFC), a brain region that is designed to manage your anxiety of anticipation without a problem.  However, when your emotions are already in a boil because you have just come out of a heated situation, your PFC cannot function normally, and it fails you.

So what?  Why is this study important?  Well, if you know that your day has started off on the wrong foot, then trying to control your PFC is probably not your go-to strategy.  Rather, managing your anxiety with methods that bypass the PFC or do not require it, would be the way to go.

These methods are much like mindfulness meditation, whereby instead of controlling your thoughts, you learn to let go of them.  This is also called emotional introspection, and is thought to quiet down the brain’s anxiety center directly without controlling thoughts. When your anxious thoughts come at you, rather than grappling with them, you let them just be.  Observe them.  Notice them.  And simply direct your attention to something other than your thoughts, such as your breath.  This may not be easy at first, but if you are having one of those days, it is likely to be much more successful before any meeting that provokes anxiety in anticipation of it.  Also, practice makes perfect.  If you practice this method often, you are likely to get better at it over time.

The moral of the story then is this:  If you are having a stressful day at work or come to work in an irritable frame of mind and have to enter a potentially anxiety provoking meeting, “reset the needle” on your brain’s anxiety center by closing your eyes for 5 minutes and trying out the breathing technique I described above.  It will likely be much more successful than trying to talk yourself out of your anticipatory anxiety or impending freak-out.

Gloominess About the US Economy is a Choice

All this talk about permanent unemployment in the United States is making people nervous. You can read about it in recent issues of The Economist, The New York Times, and in the book The Second Machine Age by Erik Brynjolfsson and Andrew McAfee of the Massachusetts Institute of Technology. The arguments are familiar. Advanced forms of automation now making their way into the workplace will put an end to America’s enviable record of job creation. Today’s sluggish job growth, the argument goes, is not an aftershock of the Great Recession, it is a window into the future. The United States will create jobs with all the dynamism of a parked car.

I just don’t buy it.

One of my guilty pleasures is collecting old magazines. As collectibles go, magazines are at the bottom of the list. They turn yellow as they age, they deteriorate, then they turn to dust and make you sneeze. Old magazines don’t appreciate much in value, and most of the content can be found on the web. Still, I like thumbing through them.

One magazine I particularly like is the July 19, 1963 issue of Life. It contains a story explaining how automation will kill jobs. It contains interviews with labor economists of that era and refers to a study on the subject commissioned by the Kennedy White House. On the cover of the magazine it says: Automation’s really here; jobs go scarce. And (much bigger, in full caps) Point of No Return for Everybody.

As we all know, the article was followed by about 50 years during which the United States created more good, high-paying jobs than any other advanced country. Who said economics was an exact science?

In the years that followed the magazine article, the United States created millions of service jobs. Today, there are 116 million people employed in the service sector, according to the Bureau of Labor Statistics. True, some of these are low-paying, burger-flipper jobs. But an awful lot of these jobs command very high-wages in law, finance, accounting, consulting, advertising, engineering, design, software, healthcare, scientific research, architecture, entertainment, hospitality, and many other areas. Many of these jobs – those dealing with computers, for example – could not have been foreseen in 1963, since computers were still primitive and rare. Yet, according to the Bureau of Labor Statistics, around 4 million people earned their living working with computers in 2010. The same is true for healthcare, which employs around 14 million people, according to the BLS, with around 1 million of them doing some type of research, a lot of it in fields that didn’t exist in 1963.

Why bring up an article in a dusty old magazine? Because the future can’t really be known until it arrives. That means gloominess is a matter of choice – one I’m not going to make.

Right now, the seeds are being sown for growth based on America’s formidable creativity and technical ability. Yes, we have competitors eager to – how do they always put it? – eat our lunch. But I don’t think that’s going to happen.

True, emerging market countries are getting better at what they do, and even Europe is on the upswing. But are our competitors really eating our lunch? While the Chinese struggle to fix a lethal software glitch in their ailing lunar rover – something we accomplished about 40 years ago, but with people onboard – we have an SUV-sized rover, packed with lab equipment, frolicking autonomously on Mars. That rover, Curiosity, is looking for signs of early life, while another one of our rovers checks the chemistry of rocks. We’ve been putting stuff on Mars for decades.  I am not gloating over China’s problems on the moon or bragging about ours on Mars. (If it were up to me, I’d put more resources into space exploration.) It’s not inconceivable that in the not-too-distant future, China will catch up with us in space. Right now, however, the United States is decisively ahead. With companies like SpaceX, Orbital Sciences, United Launch Alliance, and others, there are few signs America’s creativity is on the wane.

The same is true in the broader economy. Whereas we’ve been growing our manufacturing sector since the ’60s in terms of product volumes and dollar output, manufacturing employment hasn’t grown at all. Today, about 14 million Americans go to work making things, according to the BLS. But our 14 million workers, thanks to the machines they operate and the smart, disciplined way in which they work, produce about the same amount of stuff, measured in dollar terms, as China’s 100-plus million factory workers, according to a 2009 study by the BLS. That means each American factory worker produces the same, in dollar terms, as 7.1 Chinese factory workers. Those are pre-Great Recession numbers. Since then, America’s productivity lead has been growing sharply, not falling behind. So who exactly is eating whose lunch?

What each country makes is different, too. What China makes is generally low-priced, with razor-thin profit margins, is available from almost any emerging market supplier, and contains little distinctive or proprietary intellectual capital. This may all change as China innovates and grows. But for now, China’s manufacturers make textiles, garments, shoes, inexpensive electronic goods, like phones, vehicles, and heavy machinery.

We can and do make all of that (although not very many phones and hardly any clothing or shoes). But we also make super-sophisticated products like jet engines, airplanes, satellites, radar, advanced medical devices, pharmaceuticals, all kinds of chemicals, the world’s most sophisticated robots, military goods, and the world’s most advanced computer chips and computers.

What we make is high-priced and highly profitable, contains lots of proprietary and protected intellectual capital, and is often only available from a handful of American firms, sometimes only one. (Say what you will about the world’s militaries and defense contractors, but if want to buy the world’s most advanced jet fighter, the F-35, you can only get it from Lockheed).

The reason I raise these issues is to dispel the notion that the United States is destined for permanent unemployment, and to suggest that today’s sluggish job growth is a Great Recession aftershock, not a California-sized quake. Our economy is evolving, just as it evolved in the period after 1963, when it changed from a highly unionized economy to become the world’s most creative services economy, with little unionization, attached to a manufacturing economy with soaring rates of productivity growth and negligible employment growth. Just as little fishies evolved out of the oceans, grew feet, and went to work on Wall Street, our economy is evolving now and we are creatively adding new capabilities.

Hardly anyone can foresee how an economy is changing, even as those changes are underway, as my old copy of Life magazine proves. That generation’s sophisticates – and not only the ones who wrote for Life — argued that the end of jobs was nigh, just as our cognoscenti are arguing now.

Our economy is shifting, as it has done many times before, with sectors like energy, biotech, medical devices, healthcare, advanced robotics, automation, and supply/value chain management growing quickly. As that continues, vigorous rates of job growth will resume. The fact is, the end is not nigh. Far from it. The trouble is, it’s very difficult to imagine those jobs being created if all you look for is the gloom.

Banks’ New Competitors: Starbucks, Google, and Alibaba

It took computer company Apple only five years to become America’s largest music retailer, and just seven to become the world’s largest. In 18 short months, search engine Google erased 85 percent of the market cap of the top GPS companies after launching its mobile maps app. Alibaba, China’s equivalent to Amazon, became a $16 billion lender in less than three years, and China’s largest seller of money market funds in only seven months.

Companies are venturing into other industries for growth with increasing regularity. In an Accenture survey released at Davos this year, 60 percent of executives said their company intends to make these types of moves over the next five years based on alliances, joint ventures and acquisitions.

This represents a major challenge to the banking sector where, in developed markets, growth and profitability are still at about half of pre-crisis levels. As banks recover from the downturn, non-banks are taking advantage by proceeding aggressively with digital innovations and capturing more and more of the banking value chain. Accenture estimates that competition from non-banks could erode one-third of traditional bank revenues by 2020.

Payments, a source of up to one-quarter of traditional bank revenues, is one of the most contested areas. PayPal is now the number one online payment method in some countries, and start-up companies like Square and Stripe are earning multi-billion dollar valuations. Retailers are also moving in as well: nearly one-third of domestic Starbucks revenues are paid through its own loyalty cards.

Non-banks are also edging into other core areas like checking and savings as well. Google recently introduced a plastic debit card for its Google Wallet. T-Mobile launched a new checking service with a smartphone app and ATM card. Walmart teamed up with American Express to launch a prepaid card that functions like a debit account; it captured more than a million customers in less than a year.

Technology giants, telcos, and retailers have a long way to go to compete against banks product-for-product and service-for-service, and many believe that regulatory barriers will dampen disruption. But new entrants already pose a threat to banks by raising service expectations and creating distance between banks and their customers.

The risk for banks is that new competitors will consign them to a limited role as back-office utilities, while non-banks become the new face of their customers’ financial lives. The rise of private-label banks, like The Bancorp, which power the new offerings — not only by upstarts like Simple and Moven but by major players like T-Mobile and Google — shows how regulatory barriers are lower than they seem.

Banks cannot respond to these threats simply by “being more digital,”— i.e., closing down branches and rolling out better mobile and online banking services. If they want to defend their turf against the Googles and PayPals of the world, they themselves must move further into the commercial lives of their customers. They must learn to play a greater role not just at the moment of financial transactions but before and afterwards as well. 

Banks possess inherent competitive advantages in the digital world. They have large customer bases; vast amounts of customer and transaction data; and capabilities to enable payments, security, and financing – all of which are tough to replicate.

Instead of simply enabling customers to save money and pay for things, banks have the potential to combine their vast transaction data with new digital tools to help customers make decisions on what to buy, and where and when to buy it – whether it’s dinner and a movie or a new home. A number of smart institutions around the globe are already on this path:

Garanti, one of Turkey’s largest banks, offers a free mobile app that gives customers personalized offers and advice based on their location and past spending. It uses GPS and Foursquare to tell them if they are close to a store with a special offer, provides saving suggestions, and estimates how much customers will have in their account for the rest of the month based on past spending.
Bank of America analyzes transaction data to give customers cash back on transactions at frequently used merchants. Customers click a button below a previous transaction on their online statement to accept an offer. The next time they shop at that merchant, cash is automatically added to their bank account. The bank has given $17 million in cash back to customers using Cardlytics technology.
Commonwealth Bank of Australia offers a mobile app that uses “augmented reality” technology to help with home-buying. House hunters simply point their smartphone camera at a residence to bring up extensive property detail, alongside monthly payment estimates on mortgages and insurance. The app covers 95 percent of all residential properties in Australia and generates 20,000 property searches per week.
BBVA has long made available to its US customers information on the actual selling price of cars (as opposed to list prices) based on TrueCar data to give them an advantage in their car negotiations, while promoting their auto loans and insurance. The bank’s innovation lab has envisioned even going a step further in other countries and providing auto specialists armed with such data to negotiate directly with car sellers on their customers’ behalf.

As the lines between industry sectors blur all around, financial services will take on new meaning in the minds of consumers – and perhaps very quickly. To be a profitable sector, banks cannot simply rely on providing accounts and access to funds. The future of the sector will depend on its ability to provide services that help customers save and better manage money in their everyday lives.

How to Thrive While Leading a Family Business

We’ve seen both sides of the spectrum: family executives hating their jobs, their businesses, their families, feeling underappreciated for their efforts, exhausted by all the “craziness,” wanting nothing more than to “sell the damn thing.”  And we’ve seen family executives thrive with rewards that are richer and more profound than a leader of a publically traded company could possibly derive.  The company flourishes, the family has a collective purpose that brings them together, and the kids prosper.

So, naturally, we wonder, “Why do some executives thrive while others wilt?”

Family businesses are inherently messy.  Work and life are almost inextricably intertwined.  With so many things going on concurrently, family executives either get swept up in a virtuous cycle or a vicious cycle with very little in between.  Leaders who thrive in this environment embrace and use this messiness.  They can be all sorts of people – introverts, extroverts, operations-oriented folks, great sales people, men, or women.  But what we see in common in thriving family business leaders is that they get four things right:

Four separate rooms

Life in a family, business can really be a pressure cooker because the business discussions continue around the dinner table and in the bedroom.  There sometimes is no separation between work and family, home and the office.  The CEO leaves a meeting at the office with the CFO, his daughter, and he goes home to her mother, his wife and joint owner of the business.  This entanglement of relations runs so deep that the only leaders who thrive are those who have learned to explicitly separate their lives into four separate rooms: one for the business managers, another for the board of directors, yet another for the owners, and a separate one for the family members.

Consider your own home:  You have different discussions in the kitchen, the bathroom, the bedroom, and the living room.  Of course there’s some overlap: Nothing is hermetically sealed.  There are doors and windows that open, but there are rules – spoken and unspoken – regarding what can be discussed where.  And things must be discussed.  Owners, for example, need to talk about ownership issues away from board directors, family members, and employees.  The thriving leaders we see know how to get their own houses in order.  They build discussion rooms – not silos – and teach others to work within the spaces that they’ve created.

The crocodile brain

Thriving family business leaders know how to manage what neuroscientists have named the “crocodile” brain, so-called because it is controlled by gut emotions; thought processes are limited, and impulse control is nonexistent.  The crocodile brain is the reason that people are not rational actors; it explains why decisions should never be made without trying to help people process their feelings, their passions, their rivalries, and their egos.

After placing people in the right room, thriving leaders deal explicitly with the irrational side of decision-making.  Think about it:  in a family business, owners can never decide to buy or sell a business based entirely – or even primarily – on the basis of money.  When they are on the surface deciding whether or not to acquire a company, thriving leaders in a family business are really thinking about that acquisition’s impact on the identities, roles, relationships, and personal finances of others.

Thriving leaders don’t ignore the crocodile brain and are not afraid of the crocs’ behavior.  We see these leaders putting the croc issues on the table for careful conversation.  “Gosh, it hit me, this acquisition could really change your role in the business.  Let’s talk that through,” is the type of leadership behavior we see them exhibit.  They make the emotional side of business safe.

A place to land

Thriving leaders in family businesses help to create places to land when their gig is over.  They build for themselves and others a number of attractive paths forward after the day-to-day spark goes out of life in the C-Suite.  Often in corporate businesses, you’re either in that executive suite, or you’re out – you go to work at another company.  By contrast, in the best family businesses, the aging executive doesn’t just move over to the curb.  He or she stays around as a board member or shareholder or special advisor, or on special projects.  Thriving leaders embrace the reality that they can add real value after life as a business executive.  Their identity is not all tied up with living and working in the C-Suite.

This is the other side of succession.  Thriving executives don’t just say, “Who is going to be our next CEO,” but also, “What can I do next?”  Think of the four rooms we talked about earlier.  Once they depart the C-Suite, thriving executives still use their wisdom and experience to make valuable contributions in the other three rooms.  They can go up to the board. They can go up to the shareholders’ council.  Or over to a family leadership role.  They may also decide to take up a philanthropic role in the family foundation.  Thriving leaders appreciate that all of these roles are vital and necessary in family businesses.

Passion and wisdom to develop the next generation

Thriving leaders’ greatest joy is to see their children succeed in their business and as owners.  They get it that their own role, while central, is temporary.  For example, in a recent cross-generational ownership meeting with a client, a 26-year old, introverted next generation member surprised the eight owners in the meeting with a fundamental insight into the future of their business.  You could feel the leadership baton starting to be passed.  The current generation, three seasoned business executives in their late fifties, beamed with pride.

Developing the next generation is really tricky.  These thriving leaders have great wisdom in how they do it:  They don’t coddle, they challenge.  They know their kids will lead differently than they did and accept that fact.  They provide real jobs with real challenges.  They let their kids fail and then help them up.

As you can see, we are talking about a very different leadership task than in corporate environments.  The rewards are different and deeper.  These thriving leaders find meaning, money, and mentoring in ways not available outside family businesses.

Are you a thriving leader?  Do you know of others who are? As a test, ask yourself, “How many of these four leadership behaviors are shown by you and others in your family business?”

Thriving at the Top

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Helping the Passive-Aggressive Executive

Robert wondered why he was always so stressed out when he was dealing with Lucas, the latest addition to his team. On the face of it, the new hire seemed very agreeable and supportive, but whatever interactions he had had with him left him wondering about his true intentions. Lucas made lots of promises but never really seemed to deliver on them.

What troubled him especially was that Lucas didn’t respect deadlines. Whenever he pointed this out, Lucas always had a good excuse: the instructions hadn’t been clear, perhaps, or he had misunderstood, or that he had been relying on someone else for some key task and that person hadn’t come through. To make matters even worse (according to some colleagues), Lucas also had the habit of constantly complaining about Robert behind his back.

Business schools prepare us to become better at strategizing, inspiring, mentoring, team building, delegating, and so on. But do they prepare us for dealing with executives who are resistant to motivating, influencing, and coaching interventions? Actually, whether that difficult subject is even broached at business schools remains a question mark, even though such executives find a home in many organizations.

Lucas’s behavior is passive-aggressive: continuously expressing negative feelings, resentment, and aggression in an unassertive, passive manner. All the while, people like Lucas show all the signs of agreeable compliance, which makes them difficult to pin down and hold to account.

Where does this behavior come from? Typically, it originates in families with highly controlling parents who didn’t allow their children to express their anger directly. As children they weren’t able to protest or to express their own wishes. In many instances — if you listen to the stories of passive-aggressives — authority figures are described as overbearing, even hostile. Pseudo-compliance becomes the child’s way of expressing his or her independence.

The problem, of course, is that working in organizations (where hierarchy is par for the course) reminds passive-aggressives of the childhood experience, inviting similar adaptive strategies. Consequently, passive-aggressives will behave with respect to others like they once did vis-à-vis the intolerant adults from their younger years but will try to subvert authority in disguised ways.

Robert, who was a former student of mine, realized that Lucas’s behavior was classic passive aggression, and came to me for help.

The key to coaching passive-aggressives is to make them better at expressing their negative feelings openly. It’s an exhausting process for the coach, who has to serve as a lighting rod for anger but cannot make the mistake of taking it personally. I usually begin (in addition to teaching at a business school, I am also a psychiatrist and executive coach) by getting them to see that they have a problem, as this provokes insight into the link to their personal experience. I got Robert to instigate a 360-degree leadership feedback program. As we had expected, this provided irrefutable evidence that Lucas’ behavior had a toxic influence on the team, which gave me ammunition for my sessions with him, allowing me a way into a discussion about the causes of his behavior.

Once we were able to talk about his problems with anger, I worked on encouraging Lucas to make open displays of anger. For example, when he told me that it had been impossible to finish the assignment that I had given him in the allotted time, I gave him an email where he confirmed to finish the task within that specific time frame. I told him that I realized that he wasn’t given much time. But I also asked him why he didn’t object when he was handed the task, given the difficulties he foresaw. Perhaps, next time he could be more direct; in fact, I would appreciate him doing so.

Once I had gotten him to express a negative feeling openly, I would congratulate him on his honesty.  The idea was to make sure that he could express disagreement directly, so that it could be dealt with, rather than passively.  I would also give him assignments to practice direct confrontation with Robert and other colleagues, and we would then discuss what had happened.

It was a slow, often wearing, but sometimes amusing process. If you can step back from an assignment like this, the behavioral contortions of the coachee can be quite funny, even to themselves. In fact, making them aware of how ridiculous the behavior is can be a helpful tactic. In Lucas’s case, I told him that because he never questioned an assignment I was tempted to make them increasingly unrealistic so that I could find out what his next excuse for failure would be. It was only after this that he started to protest that my demands were unreasonable.

Why would you want to go through such a rigmarole to keep a passive-aggressive on track?  The answer is that these people are often highly expert at what they do, despite being poor at teamwork. In an effort to carve out an identity for themselves, they often make themselves highly expert in a narrow field in which their parents have little authority and can’t challenge them. That’s obviously fine until they get a job with people who do have relevant expertise and can challenge them.

The good news is that coaching and therapy do work. Once Lucas recognized his issues and saw that confrontation was actually a good thing, he was able to modify his behavior enough that it was no longer a problem for colleagues — or for himself.

Research: Serial Entrepreneurs Aren’t Any More Likely to Succeed

The label of “serial entrepreneur” is a point of pride in the start-up world, an indication that this is not your first rodeo. In a survey asking about factors that contributed to their success, entrepreneurs ranked past successes and past failures above everything but prior work experience. Yet new research from from the Centre for European Economic Research casts doubt on that belief. In a recent paper, researchers used survey data to examine the success or failure of 8,400 entrepreneurial ventures in Germany, and whether the founder’s previous experience predicted the outcome. They concluded previously successful entrepreneurs were no more likely to succeed in their next venture, and that previously failed founders were more likely to fail than novice entrepreneurs. These results held even after accounting for education and industry experience.

Measures of entrepreneurship are notoriously difficult to construct — samples like this include entrepreneurs forced to start businesses out of necessity alongside those looking to create growth ventures. So the researchers re-examined the relationship for multiple subsets of the data, including for high-tech ventures, a closer proxy for what we mean when we talk about start-ups. Here again, past success did not significantly predict future success, and past failure did predict a higher rate of bankruptcy.

Could it really be the case that past entrepreneurial success doesn’t increase one’s likelihood of future start-up success? One limitation of the study was that it looked only at venture survival, rather than growth. So it can’t speak to the founder characteristics that predict, say, the odds of a company reaching a billion dollar valuation or going public. And as for the idea of failure as a sort of entrepreneurial right of passage — the crucible that gives rise to eventual success — this is not the only study to call that notion into question. A 2011 article in HBR reported on a survey of entrepreneurs in the UK and concluded that serial entrepreneurs often avoid learning from past failures, to cushion the psychological blow.

The authors did find one variable that predicted entrepreneurial success: education, which they see as evidence of “the importance of ability over experience.” (A 2013 paper also used the higher educational level of serial entrepreneurs, among other things, to argue for the importance of ability over experience.) Many founders will likely bristle at the implication that education is a measure of entrepreneurial ability, but that view isn’t necessarily at odds with these findings. Education may be a questionable measure of entrepreneurial ability, but that only further emphasizes the fact that such ability is opaque in practice. Hence investors’ interest in using past success as a gauge. In other words, the value of past entrepreneurial success may be less about ensuring that a founder has gained necessary learning, and more a way for investors to guess at that founder’s ability.

That view helps explain a 2009 Harvard Business School study of venture-backed start-ups that did find previously successful entrepreneurs to be more likely to succeed in a subsequent venture. (That paper found failed entrepreneurs about as likely to succeed as novices.) Yet the conclusion of the researchers in that case was that the higher success rate of previously successful entrepreneurs could be attributed in significant part to skill, or at least to the perception of skill. Here again, the idea is less that past experience is valuable in-and-of itself, and more that past experience can be a measure of ability.

That’s one way to look at VC firms’ embrace of young founders in the post-Zuckerberg era. (The average age of a founder backed by start-up accelerator YCombinator is 26.)  Rather than a bet that younger is better, such investments may reflect the belief that ability trumps experience. Whether or not that’s how YCombinator views its process, it’s certainly the case that founder talent is one of the most important things VCs look for when considering an investment. Past success just happens to be only one way of measuring it.

Is Facebook Paying Too Much for WhatsApp?

With $19 billion, Facebook could have purchased Sony or Gap or four aircraft carriers.  Instead, it bought WhatsApp, a tiny startup that so far had accumulated barely $60 million in funding, mostly from Sequoia.  This is nuts, you might say; although the world of mobile messaging is upon us, that is an awful lot of money.

But think about what exactly Facebook is buying:

Young users.  WhatsApp acquired about 450 million monthly active users in 5 years, 70% of whom are active each day, which is about three times as many as Facebook had after 5 years and almost 10 times more than Twitter or Skype had.  To be sure, these numbers translate into minuscule revenues and most of the users are probably on Facebook anyway.  On the other hand, they are just the people Facebook is most worried about losing.

A new business model. Unlike Facebook and most other Internet giants of that generation, WhatsApp employs a subscription-based revenue model, charging its users $0.99 a year after the first year of use. Further, in a decidedly different approach from Facebook, there is a commitment to no advertising and presumably no commercial exploitation of user data. The acquisition could help Facebook understand how to successfully execute on a business model that could replace its own.

Enhancements to the existing business model. The daily messaging volume of WhatsApp approaches the SMS volume of the entire global telecom industry, and while Facebook has become the medium for big announcements of life events, daily connections are better captured by metadata from messaging apps. Undoubtedly this data could much enhance Facebook’s ability to pick out people’s most important relationships from among their acquaintances, which would presumably lead to better-targeted advertising.

Internationalization. Facebook Messenger is big in the USA but not in other countries.  In key markets like India and South America WhatsApp is MUCH more popular than Facebook Messenger.  And this is where, we think, the majority of the immediate real value is: the global turn to mobile is quite evident and Facebook wants to be a part of it as soon as it can.

If you list all these reasons for the deal, and throw in some competitive pressure from the likes of Google, the $19 billion number might not look so silly after all. Time will tell.  But regardless of how this deal turns out, the one unambiguous loser, in our opinion, is the telecom industry, which currently enjoys about $100 billion year in revenues from SMS services globally.

Moral of the story: If you don’t create an alternative yourself, others will disrupt your business model for you.

Buying Gold in the Olympics and in the Global War for Talent

Entire nations are going head to head in the global war for talent — and using citizenship to buy it. Countries eager to make a splash in the Olympic Games offer “plastic passports” to promising athletes from other regions. The Pew Research Center estimates that at least 4% of the athletes competing in this year’s Games are representing countries other than their birth nations. This practice isn’t new, but it’s been on the rise in recent years. In In 2012, the New York Times published a round-table debate about it. Writers discussed reforms, but no one questioned the premise that, in the 21st century, talent is and will remain mobile.

As University of Toronto professor Ayelet Shachar explained in a Yale Law Journal article: “Countries seeking to attract Nobel Prize contenders, gifted technology wizards, acclaimed artists, promising Olympians, and other high-demand migrants have come to realize the attractive power of citizenship. This represents a significant shift in the conception of citizenship — turning an institution steeped with notions of collective identity, belonging, loyalty, and perhaps even sacrifice into a recruitment tool for bolstering a nation’s standing relative to its competitors.”

Loyalty to a company may be an artifact of yesteryear, but loyalty to one’s country is generally considered an important part of a person’s identity. But some Olympians change citizenship when their nationality hampers their ability to practice their sport at the highest level. They become less loyal to their country than to their profession or industry.

Consider one of the brightest stars in the 2014 winter games, short-track skater Viktor Ahn, who won a gold medal for Russia last week — and three gold medals for South Korea in the 2006 Olympics. After a falling-out with Korean sports authorities, Ahn looked at both the U.S. and Russia as potential new homes, deciding ultimately to emigrate to Russia, where there were fewer Olympic-level skaters to share resources with. Russia, he felt, could invest more in his success.

Ahn’s story upends conventional wisdom about national character. An athlete from a non-individualist country emigrates in order to maximize his potential — but he doesn’t move to the U.S., so often the home of choice for top performers dissatisfied in their native countries. Ahn changed his first name to “Viktor,” for victory and also in honor of a Russian rock star of Korean descent, and he studied Russian. After his win, he draped himself in the Russian flag and wept. The phrase “mobile talent” implies rootlessness, but the ability to commit to one’s new environment — broadly and deeply, as Ahn did — is crucial to succeeding in it.

South Koreans have reacted to the story of Viktor Ahn — but their anger is not, in general, directed at Ahn. In November, 61% of a sample polled by Gallup Korea said that they understood his decision to migrate. After his 2014 gold medal win, the KSU — the Korean skating union — endured heavy criticism from fans and the media, with even the president launching an investigation into what went wrong. Rather than characterizing Ahn as a traitor or a mercenary, Koreans were angry at their own institutions for treating such a valuable asset so carelessly.

South Korea may make changes in the wake of Ahn’s emigration, and other nations should learn from his example. They can no longer treat quitters like traitors. As Ayelet Shachar pointed out, governments now view emigrants as “immensely important remittance providers, generous supporters in times of crisis in the home country, foreign investors (through specialized bonds, for example), builders of transnational knowledge networks, and ambassadors of good will.” All this, of course, holds equally true in the business world: Performers who leave your company today may appear tomorrow as clients, suppliers, or consultants.

So both sending and receiving nations — or organizations — can benefit when talent migrates. The thing is, mobile talent isn’t always portable. Even top performers need a platform from which to succeed. They require infrastructure, training, and commitment.

In business, many people are discovering this the hard way. Long after the demise of corporate loyalty and the emergence of “Brand You” and “Free Agent Nation” ideology, managers and executives still, far too often, approach job changes in a reactive, nonstrategic fashion. They make moves based on short-term gains — more money, a chance to escape a disliked boss —  instead of long-term growth and development. (For background on other 21st century challenges of managing your career, see our article “Manage Your Work, Manage Your Life“ in the March issue of Harvard Business Review.)

Companies, as well, assume risk when they hire star performers. Organizations often poach top talent from competitors in order to rapidly and dramatically increase their capabilities. Having scooped up top talent, however, it can be tempting to fall prey to the “plug and play” fantasy and assume that the new hires will automatically succeed in their new environment.

Like countries that woo high-performing athletes such as Ahn, fast-tracking them to citizenship and Olympic glory, companies must provide their new stars with the training, coaching, and continuing investment that will allow them to soar — and make them want to stick around.