Marina Gorbis's Blog, page 1481

Why I Put My Company on a Year-Long Sabbatical

Last year, I placed my entire communications agency, Global Tolerance, on a year’s sabbatical. On the surface, it seemed like a crazy decision. I’d spent the past decade building the company from scratch, hiring a talented team, winning high-profile clients, from TED and The Gallup Organization to His Holiness the Dalai Lama and Gandhi’s grandson, and increasing revenues every year. Why would I put all that on hold?

The answer is simple:  So we could come back even better.

The very idea of a sabbatical, a rest from work, comes from the biblical sabbath, and a commandment to stop working the fields every seven years. This is so Mother Nature can renew the fields and help ensure the possibility of future harvests. Businesses have long reaped rewards from biomimicry, the imitation of natural systems to solve human problems. If the flight of pigeons can inspire the first aircraft; termites can provide lessons for energy-efficient buildings; and butterfly wings can influence next-generation phone displays, why shouldn’t we cultivate the idea of fallow fields for our office lives?

For many years, Global Tolerance had been enjoying a daily 60-second sabbatical through a simple daily ritual. Weekdays at 530pm, I would ask the team to share a minute of silence around a powerful question, such as “What does it really mean to grow?” or “What’s your favorite childhood memory?” We called it “the sound of silence,” and the results were extraordinary. The exercise left the team feeling deeply connected, to themselves and each other, and led to creative ideas for clients.

So how did I move from 60 seconds a day to a full year of everyone’s lives?

On a personal level, my frenetic work building the company was beginning to take a toll at home.  I was unwittingly neglecting my wife, my family, my friends, and myself as well. In October of 2010, I became sick, bed-ridden for two months. But still I ploughed on.

On an organizational level, even though we were growing, we seemed to be constantly juggling the increasing demands for client work and the commercial realities of cash flow. We needed a radical, reflective look at the mission and business of Global Tolerance, and this could only be done by taking some serious time out.

I also realized there was precedent. Glastonbury, one of the biggest music festivals in the world, regularly skips a year for the same reasons they did in biblical times. The English fields on which it’s held need time to be restored, and anticipation for the festival’s return is greater than ever. As Michael Eavis, the founder of the festival, says about the sabbatical: “It’s a rest for the countryside, for the kingfishers on the river, the owls in the oak trees. They too get a breather. And the fallow year was the best thing I ever did. It gives value to our integrity.” Stefan Sagmeister places his New York design agency one a one-year break every seven years as well. He’s designed space for rest and reflection into his business model, and the creative ideas that emerge from that year feed the next long period of work.

Suddenly, the relentless pursuit of revenue, profits and impact at the expense of personal health, wellbeing and relationships seemed to be the crazy approach. So I decided Global Tolerance should take the plunge.

Logistically, this wasn’t easy. Our HR people said there was no such thing as a company sabbatical. It had never been done before. People would need to resign, or sacked. I ignored HR and trusted in the integrity of my team and our shared ability to come up with a solution that worked for everyone. I made sure to start the conversation early. We had numerous discussions, individually and collectively, to work out what the sabbatical would look like, and what it would mean for each person. The conventional wisdom in this situation would be to ensure our clients wouldn’t be taken, but I decided to turn this on its head. In fact, for a couple of staff, I negotiated ways in which they could set up as freelancers and take our clients with them. The clients appreciated not being left in the lurch. The team members were happy as they got to earn more money working less hours, while also learning the leadership skills that come with running one’s own business.

We’re all trained to be ambitious. We want to grow, win, succeed–and it feels wrong to stop, even for a moment. But what does it really mean to grow? To win? To succeed? Global Tolerance might not be racking up profits this year, but as I sit here with my baby daughter giggling in the room next door, I can safely say this has been my greatest year of growth. Colleagues report similar experiences. Some are focusing on former passions; others are trying new experiences.

I realize that for most people, it’s simply not practical to take a sabbatical. But as we learned in our “sound of silence” exercise, even 60 seconds of quiet time can help. Better yet, take a day or a week. If you’re a manager, allow your employees to do so. And if you’re a corporate leader, consider institutionalizing a sabbatical system as a means of supporting your workers. When we do stop, and give ourselves time to listen to our bodies, and learn from the patient pace of nature, then our growth and success are imbued with new meaning.

Five New Year’s Resolutions Every Leader Should Make

Looking ahead to 2014, one of the most urgent issues will be a new war for talent: not yesteryear’s broad-based need for all top talent but an increasing demand for the right kind of talent. For leaders, this means a new urgency in targeting, nurturing, and advancing top talent in their organization. Leaders have long recognized that an inherently diverse workforce – one that’s inclusive of women, people of color, and gay individuals – confers a competitive edge in selling products and services to diverse end users. But recent research from the Center for Talent Innovation (PDF) shows that an inherently diverse workforce can be a potent source of innovation, as diverse individuals are better attuned to the unmet needs of consumers or clients like themselves. How can leaders leverage and develop diverse talent in 2014? CTI research spotlights five ways:

1. Be more inclusive. What does it take to consistently drive growth and innovation? The answer, according to CTI’s latest research, is a diverse workforce managed by leaders who cherish difference, embrace disruption, and foster a speak-up culture. Leaders have long recognized that an inherently diverse workforce “matches the market” and confers a competitive edge by recognizing the unmet needs of consumers and clients like themselves. But ideas from outliers too often are ignored or squelched because their originators don’t resemble the paradigms of corporate power — Caucasian, male, heterosexual, and from a similar educational and socioeconomic background.Leaders who promote a culture of diverse talent — whether in their team or throughout their organization — where everyone feels free to volunteer opinions or propose solutions that contradict convention unlock the full spectrum of innovative capacity.

2. Create pathways for sponsorship. What can help talented women, gays, and people of color spread their wings and succeed? The answer is sponsorship — a strategic workplace partnership between those with power and those with potential. Unlike mentors, who act as sympathetic sounding boards, sponsors are people in positions of power who work on their protégé’s behalf to clear obstacles, foster connections, assign higher-profile work to ease the move up the ranks, and provide aircover and support in case of stumbles. Sponsors have a significant impact on the career traction of their female and multicultural protégés: 68% of women with sponsors say they are satisfied with their rate of advancement, compared with 57% of those without sponsors; 53% of sponsored African-Americans and 55% of Asians are satisfied with their career progress, compared with, respectively, 35% and 30%. Those numbers add up to employees who are more committed, more engaged, and more likely to attract similar talent.

Why take on the responsibility — and risk — of becoming a sponsor? By building a dedicated team of talent, sponsors see a measurable benefit to their own careers: White leaders — both men and women — with a posse of protégés are 11% more satisfied with their own rate of advancement than those who haven’t invested in up-and-comers. Sponsors of color who have developed young talent are overall 30% more satisfied with their career progress than those who haven’t built that base of support.

3. Crack the code of executive presence. Performance, hard work, and sponsors get top talent recognized and promoted, but “leadership potential” isn’t enough to lever men and women into the executive suite.  Leadership roles are given to those who also look and act the part, who manifest “executive presence” (EP). According to CTI research, EP constitutes 26% of what senior leaders say it takes to get the next promotion. EP rests on three pillars: gravitas (the core characteristic, according to 67% of the 268 senior executives surveyed), communication skills (according to 28%), and appearance (the filter through which communication skills and gravitas become more apparent). Yet because senior leaders are overwhelmingly Caucasian and male, women and multicultural professionals find themselves at an immediate disadvantage in trying to look, sound, and act like a leader — and they’re not getting the guidance they need to acquire it.

Across the board, 56% of minority professionals feel they are held to a stricter code of EP than their Caucasian peers. Further, the research found that EP feedback is either absent, overly vague or contradictory: More than three-quarters (79%) of people of color surveyed say that when they get feedback, they are unclear how to act on it, with Asians (84%) and Hispanics (80%) particularly confused about how to course-correct. As a way to endow their protégés with even more power, leaders can resolve to give more — and clearer — feedback in 2014 to help their reports understand, acquire, and eventually ace EP.

4. Be a more active ally. Despite advances in workplace acceptance, 41% of American lesbian, gay, bisexual, and transgender (LGBT) workers remain closeted at the office in 2012.  Given the increased productivity and lower turnover rates of “out” workers , companies have a bottom-line incentive to create a workplace where LGBT workers feel accepted, valued, and comfortable being who they are. What makes work a place where LGBT talent can thrive? Allies — people who support or work as LGBT advocates — play a decisive role in creating an open community where individuals are comfortable being themselves. CTI research finds that 24% of LGBT workers attribute their decision to come out professionally to a strong network of allies. Although the ally phenomenon is widespread and growing (70% of men and 83% of women consider themselves allies), only 8% of men and 19% of women qualify as “active allies.”

Closeted LGBT employees are 73% more likely than their out peers to say they intend to jump ship within the next three years. However, with leaders who are active allies, that is, those who openly support LGBT colleagues at work, LGBT high-performers are far more likely to stay.

5. Be a more proactive protégé.  The dynamics — and the rewards — of the sponsor–protégé relationship don’t end with a big promotion; they last throughout a career. Think about it: CEOs need people they can rely on as the go-to person for high-profile trouble-shooting, as the perfect candidate to lead those massive projects that can make or break a company’s future, as the reliable source for innovative solutions. At the same time, sponsorship can never be taken for granted. In today’s uncertain economy, executive teams can get reshuffled without notice, leaving you without protection.

Resolve to tend that reciprocal relationship with your existing sponsors — and extend your network of new sponsors— in the new year. According to CTI research, the vast majority of white-collar employees in the United States work for companies that fail to realize their full innovative potential because their leadership lacks the inclusive behaviors needed to effectively “unlock” the innovative potential of an inherently diverse workforce. Leaders who resolve to inculcate behaviors and disseminate practices that endorse, encourage and empower women, people of color, and LGBTs are far more likely both to retain a broader spectrum of top talent as well as tap into an ever-replenishing well of innovation.

Talent and the New World of Hiring An HBR Insight Center




Make Sure Your Dream Company Can Find You
Never Say Goodbye to a Great Employee
What Boards Can Do About Brain Drain
How an Auction Can Identify Your Best Talent

Business Resilience Comes from Working with Nature

Hurricane Sandy, the superstorm that pummeled the U.S. northeast in October 2012, ranks as the second-costliest hurricane in American history, causing an estimated $68 billion in damages.  One year later, the most powerful storm ever recorded to hit land devastated the Philippines.

With these once extraordinary events becoming more ordinary, it’s becoming clearer that businesses in vulnerable regions need to prepare. But how should companies go about building resilient enterprises that are ready to face extreme weather and other effects of climate change? One powerful, underleveraged option is to use nature to protect our coasts and physical assets — that is, to invest in so-called “green infrastructure” a term meant to differentiate projects from more typical “gray” or man-made infrastructure solutions (such as dams, levees, and water treatment systems) that we build to cool and purify water or defend our buildings and assets against the elements.

Our natural world already provides immensely valuable services to make our economy and society possible. Most obviously, we get all our food, minerals, and metals from the ground, and forests provide wood and oxygen. But there are more subtle benefits: forests also clean our water and coastal wetlands and reefs provide natural defense from storms and floods. They can help us manage rainwater and wastewater.  These services, which are not currently valued in the marketplace, protect both people and commercial and residential assets.

So a city or company looking to safeguard its water supply, for example, could invest in protecting or restoring lands instead of building a new water treatment plant (which is exactly what the New York City did when it bought land in the Catskill Mountains in 1997 — this initiative avoided up to $8 billion in costs for a new filtration facility
and saved $200-$300 million in ongoing operation and maintenance costs).

But is this kind of green infrastructure approach generally as effective?  Is it cost competitive?  A recent paper by Shell, Dow, Swiss Re, Unilever and The Nature Conservancy concludes that frequently, it is.

Using standard cost-benefit analysis, the study compared some natural solutions to more traditional infrastructure investments. In all of the completed corporate projects, the green option won out toe-to-toe on capital expenditures and operational expenditures

Here’s one of the more compelling examples highlighted in the paper:

One of Shell’s joint ventures, Petroleum Development Oman LLC (PDO), uses constructed wetlands to treat produced water from oilfields.  PDO’s extraction activities produce a lot of oily water as a by-product.  After investigating alternative, low cost solutions to treat and dispose of the water, PDO built a natural wetland system that uses sunlight, reeds, and gravity (to flow water down in steps) in place of extensive water treatment and injection operations. The latter, gray option would have required significant electric power and produced high greenhouse gas emissions… and it would’ve cost a lot more.

On every important measure — capital expenditure, operational expenditure, and performance — the constructed wetland outperformed the traditional approach. Power consumption and CO2 emissions were reduced by 98%, which lowered operating expenses dramatically. And as a bonus, the wetland provides habitat for fish and hundreds of species of migratory birds.

In this particular case, PDO only needed the natural option, but the study concluded that hybrid solutions – combinations of green and gray infrastructure — may often provide the best mix of benefits. Together, green and gray solutions combine some of the resilience inherent in natural systems with the way an engineered solution can solve a specific challenge.

Shell isn’t the only company that discovered the savings from green infrastructure.  The report includes case studies for Dow, which also utilized a constructed wetland at one of its facilities, reducing capex expense by a factor of 10. Today, Dow is exploring additional applications of green infrastructure and is engaged in a multi-year collaboration with The Nature Conservancy on valuing ecosystem services, which includes evaluating the viability of natural infrastructure at its largest production site.  

Companies with common challenges can identify savvy, shared investments in green solutions for wastewater treatment, desalination, or coastal defense (using, say, wetland and reef restoration) and potentially collaborate on new green infrastructure opportunities at co-located assets.

Collectively, the companies in the report concluded that green infrastructure solutions should become a major part of the modern engineer’s standard toolkit: “Incorporating nature into man-made infrastructure can improve business resilience —and bring additional economic, environmental and socio-political benefits.”  The report also provides an emerging set of performance metrics that managers can use to assess and compare green and grey infrastructure options.

As the damages from (and costs of) extreme weather and other disruptions soar, investing in resilience becomes a better deal. And nature can provide many of the solutions we need to both save money and protect our assets. So run the numbers on green infrastructure solutions. The calculations are likely to show that green options are the best investments.

10 Extraordinary People and Their Lessons for Success

From presidents to hip-hop producers to poets, the last page of every issue of Harvard Business Review is always an interview with someone who has succeeded outside the traditional corporate world. Here, some of our favorite lessons from the class of 2013:

Justice Sandra Day O’Connor on having long-term colleagues: “Treat people well. Don’t mislead them. Don’t be prickly. Don’t say things that are aggravating. Try to be as agreeable as you can be. Try to be helpful rather than harmful. Try to cooperate.”

Cartoonist Scott Adams on using his MBA: ”When the comic strip first came out, it showed Dilbert in a variety of settings—not just the office. I didn’t really know what was working, because I had no direct contact with readers… So way back at the dawn of the internet, I started putting my e-mail address in the margin of the strip… I found out that there was a common theme: People loved it when Dilbert was in the office, and they liked it a lot less when he was at home or just hanging around. So Dilbert became an office-based comic, and that change made it all work.”

Chef Nobu Matsuhisa on starting as an apprentice: “I was 18 and didn’t know anything about fish. My mentor taught me the basics. For the first three years, I didn’t make sushi; I washed dishes and cleaned the fish. But if I asked questions, he always answered. I learned a lot of patience.”

Saturday Night Live producer Lorne Michaels on hiring: “I wouldn’t choose anyone whose side I didn’t want to be on. It isn’t like we hire 12 and figure six will work. We don’t bring in anybody we’re not rooting for. Sometimes they succeed in week five, but for most people it’s two, three, four years before they become who they’re going to be. You have to allow for that growth.”

Hip-hop mogul Russell Simmons on meditating twice a day: “Every creative idea, every second of happiness, is from stillness…. But the way you move around the world has nothing to do with the stillness in your heart. Moving meditation—that’s what we have to practice. It doesn’t mean you have to move slow; you just have to see the world in slow motion.”

Golfer Arnold Palmer on learning humility: “One time at Augusta, I was going into the last hole with a one-shot lead to win the Masters, and a friend from the gallery hollered at me, so I walked over and accepted congratulations. And then I proceeded to make six on the hole and lose. My father had warned me about that. I was told all my life not to accept congratulations until it’s over.”

Poet Maya Angelou on courage: “One isn’t born with courage. One develops it by doing small courageous things—in the way that if one sets out to pick up a 100-pound bag of rice, one would be advised to start with a five-pound bag, then 10 pounds, then 20 pounds, and so forth, until one builds up enough muscle to lift the 100-pound bag. It’s the same way with courage. You do small courageous things that require some mental and spiritual exertion.”

Designer Philippe Starck on persuading clients: “I’m very good at explaining. I don’t work like a diva. I don’t say, “Oh my God, that must be pink,” and refuse to discuss it… I am cuckoo, yes. I am the king of intuition. But I am also a serious guy. I explain in a clear way. And then, even if it’s something that looks completely different than expected, something completely against mainstream thinking, clients understand. I explain that it might look strange but why, given the two to five years it will take for development, it will for so many reasons be exactly the right thing to do… And then the clients agree, always, 100%.”

President Mary Robinson on being frank: “At every stage, it’s [a] passion for human rights that has prompted me to speak truth to power, to stand up to bullies, to be prepared to criticize even the United States after 9/11. People told me it wouldn’t help my career as high commissioner, but it seemed much more important to do the job than to try to keep the job.”

Historian David McCullough on hard work: “When the founders wrote about life, liberty, and the pursuit of happiness, they didn’t mean longer vacations and more comfortable hammocks. They meant the pursuit of learning. The love of learning. The pursuit of improvement and excellence. I keep telling students, ‘Find work you love. Don’t concern yourself overly about how much money is involved or whether you’re ever going to be famous.’ …In hard work is happiness.”

The Flow of U.S. Manufacturing Jobs Now Goes Both Ways

Over the past four years, companies have created more than 80,000 manufacturing jobs in the U.S. by moving production to America from abroad, according to a Wall Street Journal report that cites figures from the nonprofit Reshoring Initiative. The U.S. continues to lose manufacturing jobs to offshore plants, but those losses are now being offset by inflows. An example is Whirlpool, which is moving some of its washing-machine production to a plant in Clyde, Ohio, from one in Monterrey, Mexico, mainly to take advantage of lower energy and product-transportation costs.

Why Talking About Employee Poverty Makes Us Uncomfortable

Earlier this month, I asked a simple question about an apparent change in the social contract at work: Do employers care if their employees are paid so little that they require government assistance to get enough to eat?

The response was overwhelming — close to 600 comments on the HBR website, and the discussion was picked up by The Huffington Post, MSNBC, and other outlets.

What can we learn from those comments about the answer to that question?

We might expect that the readers of HBR are interested in and sympathetic to the problems facing businesses that directly affect the average person. Given that, it may be surprising that a majority of the comments thought that employers were wrong to pay poverty-level wages. But there were also many who did not believe that such low wages were a moral dilemma for companies paying them, and their arguments fell into three general categories.

One camp simply denied that low-wage workers and their families are truly in need, typically based on heroic assumptions about how little it actually costs to live. Whether or not we personally believe these workers are poor enough to merit attention, however, the U.S. government has determined that the roughly 10 million working poor are paid too little to make it without government help.

A similar assertion was that the working poor are there by choice.  It is certainly true that individual responsibility has a profound influence in determining one’s life circumstances, but the idea that poor workers could solve their financial needs themselves by moving up to better jobs represents a fallacy of composition: Yes, a low-wage worker who really applies themselves can probably move up to a better job, but there are nowhere near enough of those better jobs for every low-wage worker to get one. The commentators who feel that they pulled themselves up by their own bootstraps should be the most aware of how difficult that was to do, and if they are honest, they also know that different circumstances could have stymied them as well.

The third theme was to assert that employers do not have any moral responsibility for what their employees are paid.  A crude version of this argument is that employees are just like any other commodity and that squeezing down their costs was a perfectly acceptable thing to do. As someone who has studied human resources for decades, I have never met an employer who actually held this view. Employers want their employees to look after the interests of the business, and it is almost impossible to secure that behavior with an approach that says, “We have no responsibility to you.” As my colleague Christopher Kulp notes, even if one believes that business has no responsibility to employees, employers are people, too, who are also citizens, parents, and community members. In those roles, it would be surprising if they did not care about poverty, whatever the cause.

Clearly, these three assertions do not hold up to careful scrutiny, and it is tempting (and concerning) to see them as efforts to rationalize away uncomfortable facts.

The last argument in particular does not deny that low wages are a problem, but asserts that in practice, there is nothing that employers can do about that because low-wages are simply the result of the market, and tampering with the market will cause worse problems: Higher wages will lead to layoffs, inflation, and businesses failing.

If business success is that sensitive to wages, then employers have been getting quite a break in recent decades, because the minimum wage has declined about 40 percent in real terms since its peak value in 1969. Earnings for the hourly paid in general have also declined since their peak in 1972, about the point when wage increases stopped keeping up with productivity increases.  On the other hand, wages have been rising sharply for executives and managers, and commentators have not complained that these increases would kick off inflation, cause layoffs, or force companies out of business.

Nevertheless, it is certainly true that there is no free lunch and that higher wages — no matter who gets them — have to be paid for in some way.  It is also true, though, that there are benefits to individual employers who pay higher wages.  Paying more gets better workers with lower turnover and better job performance, which offset some or perhaps even all the costs of higher wages.  Given this, it is surprising how few employers seem to ask themselves whether they would be better off paying their low-wage workers more.

If all employers raised their wages for low-paid jobs, many of the benefits of being a better employer would go away. But so too would the potential problem of having higher costs than competitors — after all, most low-wage jobs are in retail, hospitality, and food service, where there is no foreign competition. And when it comes to the argument that higher wages would lead to layoffs en masse, my read of the evidence on changes in minimum wages, which raise the floor for all employers, is that any effects are small: a 10 percent increase in the minimum wage reduces jobs for low-paid workers by maybe one percent.

In the end, we are left to ponder why so many successful companies set pay so low that their employees need government assistance to eat. At least part of the cause has to be decisions made inside companies. What changed in the companies over time to make this happen? Perhaps this is a question that does not get asked because the answers are uncomfortable.

Out with the Old (but Really Great Business Stories), in with the New

Patch WoesThe Story Behind Why AOL CEO Tim Armstrong Fired an Employee in Front Of 1,000 CoworkersBusiness Insider

For a few days last August, it was one of the most talked-about business stories in America: Tim Armstrong, the CEO of AOL, fired someone abruptly during a meeting. A recording of the incident went viral. What made the typically affable Armstrong snap? In this massive piece, Nicholas Carlson analyzes Armstrong's rise from his days as the owner of a strawberry business, uncovering a leadership trajectory that culminated in a proxy war with an activist investor and a final realization that his baby — local-news and listings provider Patch — needed to be trimmed, or else.

Armstrong told his board he could make Patch profitable within a year, but it didn’t happen. Last August, feeling awful, he knew he had to face the consequences and make unpopular choices. "For so long, it was a price he had never had to pay," writes Carlson, and offers ample evidence that the exec was more comfortable in the role of the golden boy than of the guy who had to make tough decisions. Eventually, Armstrong became so emotional about doing the latter that it didn’t take much to provoke him. And we all know what happened next. (October 2013)

The Dark Side of Generic Drugs Dirty Medicine Fortune

Generic drugs can be inexpensive and effective alternatives to their branded counterparts. But according to this devastating Fortune investigation, they can also be useless on a good day and deadly on a bad one — that is, if they were manufactured by Ranbaxy, an Indian drug maker. In this epic piece, Katherine Eban uncovers downright fraud in how generics were tested (or, rather, weren't) and exposes a corporate culture so steeped in greed and dysfunction that fistfights were known to break out during executive meetings. Although concerned employees tried to alert the FDA and other regulatory agencies to the company's behavior, progress in stopping the distribution of potentially dangerous medications crawled along at a turtle's pace. Sure, the company was eventually both punished and sold (it’s now one of the fastest-growing pharmaceutical businesses in the U.S.). But when FDA inspectors were asked whether they would be comfortable taking a Ranbaxy-made drug, such as a generic cholesterol medication, "like eight out of eight" said no. (May 2013)

Lunchables Are All About PowerThe Extraordinary Science of Addictive Junk FoodNew York Times Magazine

The success of Lunchables derives from a combo of a high-fat food and a message that is "about kids being able to put together what they want to eat, anytime, anywhere." Oh, and: the optimal crunching pressure of a potato chip for is four pounds per square inch. This New York Times Magazine piece by Michael Moss is packed with such details, which I found just as addictive as a bag of Lays. In it, he traces the intersection of science and marketing that's made junk food so delicious, so profitable, and so very bad for you. The story starts at a secret meeting among the CEOs of America's largest food companies in 1999, at which some execs tried to veer the industry along a healthier path (using the dreaded comparison of Big Tobacco), only to be shut down by the head of General Mills. What comes next is a detailed look at how brands like Dr Pepper, Oscar Mayer, and Frito-Lay hired sought-after experts to make their food taste just so, combining the taste perfection with psychologically effective marketing. (February 2013)

By the People, Not For the PeopleMaximizing Shareholder Value: The Goal That Changed Corporate America The Washington Post

In 1963, IBM CEO Thomas J. Watson published A Business and Its Beliefs: The Ideas That Helped Build IBM. The text listed the company's values in the following order: respect for the employee; a commitment to customer service; and achieving excellence. By 1994, when Louis V. Gerstner Jr. headed the company, he orchestrated an epic turnaround, putting shareholder value and customer satisfaction at the top of the list. Employees and community were at the bottom. The most recent two CEOs placed investor returns at the top of their priority lists.

So how did the company go from extolling and supporting employees to slashing jobs in order to make money for its shareholders? Jia Lynn Yang explores this trajectory, focusing on the 1970s explosion of free-market scholarly thought that has become the baseline for running a company in the twenty-first century. This, of course, has led to the implicit notion that CEOs work for the short-term benefit of their investors, not their employees, and will be rewarded with piles of cash and stock options in the process. But is it actually working? Many people, it seems, are concerned that we've adopted a mantra as fact without considering its long-term consequences for the health of the American workforce. (August 2013)

When a Website Literally CrashesThe Strava Files Bicycling Magazine

What responsibility does the maker of a fitness social network have for the safety of its users — and the general public? This lengthy investigation by David Darlington takes a close look at Strava, one of biking's most successful sites and apps, which does exactly what a good social tool should: It allows you to track your athletic progress and compare it with others’, all the while tapping into curiosity, self-interest, and social competition — three of the brain's chief dopamine drivers. But after two people died in connection with the site — a cyclist was killed while attempting to reclaim what's known as King of the Mountain [KOM] status as the fastest rider for a given route, and a pedestrian was struck and killed by a speeding biker two years later — the cycling, start-up, and legal communities were forced to take a close look at whether Strava was creating and reinforcing competition at society’s peril. I won't give away the end of the piece, which involves a potential legal nightmare for any company that asks users to hit an "Agree" button after reading terms and conditions. But the Strava case is prescient as we continue to develop digital technologies that influence the emotions and impulses that make us so darned human. (October 2013)

Nice Try, Though You Didn’t Make the Harlem Shake Go Viral — Corporations Did Quartz

Remember the Harlem Shake? It doesn't have much to do with Harlem, according to real people who actually live there, and it doesn't have much to do with the power of crowdsourced virality either. In this smart takedown of the meme, Kevin Ashton recreates the timeline of the dance's popularity to reveal exactly how, in the wake of Oreo's Super Bowl "win," corporations pounced on the video's potential to make money. The Harlem Shake itself, writes Ashton, "originated with a drunken man named Albert Boyce dancing at Harlem’s Rucker Park basketball court in 1981." It then inspired an unsuccessful song, until a student named George Miller used it in a video. A few people copied him, and a version found its way onto Reddit, which prompted someone at Maker Studios to recognize its "pre-viral" potential. So began its "rapid replication," which "was driven by media and marketing professionals, led and orchestrated by three companies: Maker Studios, Mad Decent, and IAC." And as more people clicked, money flowed from Google's ad structure, "where more searches and more views mean more dollars." (March 2013)

You'll Never Buy Anything the Same Way AgainThe Secrets of Bezos: How Amazon Became the Everything Store Businessweek

Ever wondered what it's like to work at Amazon? Or to be one of its competitors or potential acquisitions? Or even to be related to founder Jeff Bezos? Look no further than this lengthy piece by Brad Stone. On my first question, Bezos isn't a particularly nice boss. Amazon's culture is "notoriously confrontational," with Bezos regularly embarking on what employees call "nutters," which largely consist of him shooting off phrases like "Are you lazy or incompetent?" "I'm sorry, did I take my stupid pills today?" and "If I hear that idea again, I'm gonna have to kill myself." And yet many people who work there thrive in this environment and generally find that Bezos is right on target when he flippantly dismisses an idea or prioritizes a customer complaint over being civil to his underlings. As for my second and third questions, you're going to have to read the article. In particular, what happens when Stone tracks down Bezos's biological father is astonishing. (October 2013)

BONUS BITSDon't Fret! Here are Some Brand New Stories, Too

The Corporate "Free Speech" Racket (Washington Monthly)
Jesse Willms, the Dark Lord of the Internet (The Atlantic)
The Shape of Things to Come (Foreign Affairs)

To Optimize Talent Management, Question Everything

Should you hire as if your workforce will stay a month, a year, or their entire career?  The answer makes a big difference in the qualifications you set, how well candidates must “fit” with the job, the team or the organizational culture, and the “deal” you offer.  A traditional employment model may work for some, while a model based on short-term employment may work for others.  At the extreme, it may be best never to “hire” your workers at all, or to “fire” and “hire” them several times.  Leaders need solid principles to build talent strategies that fit the situation, with an optimization approach.  Too often the necessary principles for optimization are lost in the chorus of divergent views and pithy examples.  This chorus can also obscure the need to question long-held assumptions.  Letting go of those assumptions may be the key to seeing new options that make optimization possible.

To see examples of the dilemma, you need look no further than this website and its Insight Center on Talent and the New World of Hiring.  The website features a blog by Wharton labor economist Peter Cappelli, suggesting that U.S. companies return to the “Organization Man” model, right next an article by Reid Hoffman (cofounder of LinkedIn), Ben Casnocha and Chris Yeh, three entrepreneurs who say that the 20th century compact is gone, and instead recommend short-term “tours of duty.”

Cappelli states, “Is it time to bring back the Organization Man? In that model, which drove the US economy for most of the last century, employers made longer-term commitments to employees, where they invested in development to fill jobs, and where employees responded with commitments of their own in terms of performance. Jobs were filled internally with people prepared to do them, skill shortages were unknown, and employees were engaged with the needs of their employer,” and concludes, “what won’t work is pursuing this model half way, giving some employees some development opportunities but then still filling more senior vacancies from the outside. Why would someone wait around if it looks as though opportunity will not come?”

Hoffman and colleagues argue just as passionately that employment contracts should carry a short and defined endpoint (two to four years), “An employee who is networking energetically, keeping her LinkedIn profile up to date, and thinking about other opportunities is not a liability. In fact, such entrepreneurial, outward-oriented, forward-looking people are probably just what your company needs more of.”  They imply that contracts could have different features for different employees and that encouraging employees to leave and return may be preferable to having them waiting around.

These are just two examples.  They are widely divergent views, each punctuated by compelling examples, and each potentially optimal, but only for some situations.  Of course, organizations need future skills and workers may desire predictability in their development.  But fast-changing global product and labor markets can make it prohibitively risky for any organization or individual to try to see that far ahead.  What will drive a more “optimal” decision framework?

It will require emancipation from fundamental assumptions, such as “employment” and “organization.”

“Employment” will not be the only way organizations engage people. You can already see this in internet-based labor brokers such as oDesk, which deconstruct projects into small components and match each component to a contractor who will never be employed by the organization.  Crowdsourcing routinely gets work done by people who never even get paid, let alone become employees.  Even when people do become “employees,” trends suggest shorter tenure, lower loyalty and employment “deals” designed to last just a few years.  Once you rethink the idea of employment as the engagement model, the options for optimal hiring expand immensely.

The “organization” or “corporation” will not be the only collaboration model.  Alumni networks allow rehiring former employees after they gain valuable experience in other organizations.  In Transformative HR, we described Khazanah Nasional, a Malaysian Government investment body, which brokers well-structured “trades” of future leaders among companies, to build more well-rounded future leaders as a national resource.  Also, the concept of an “organization” hardly applies to the community of video gamer volunteers that solved a riddle about the structure of the AIDS virus, which had eluded organizational R&D scientists.

We need a useful and lively debate about the future of hiring, and the future of work that it represents.  No doubt optimal solutions will be as diverse as the Organization Man and Tours of Duty.  Yet, the answer to optimized talent management requires more, including questioning assumptions.  Savvy leaders will avoid being too quick to jump from one pithy example to another, and instead question assumptions to find the solutions that will optimize their choices.

Talent and the New World of Hiring

An HBR Insight Center




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The Secret to Delighting Customers

What motivates employees to go above and beyond the call of duty to provide a great customer experience? Disney tells a story about a little girl visiting a theme park who dropped her favorite doll over a fence. When staff retrieved the doll, she was covered in mud, so they made her a new outfit, gave her a bath and a hairdo, and even took photos of her with other Disney dolls before reuniting her with her owner that evening. The girl’s mother described the doll’s return as “pure magic.”

The theme park team didn’t consult a script or seek advice from managers. They did what they did because going the extra mile comes naturally at Disney. Such devotion to customer service pays dividends. Emotionally engaged customers are typically three times more likely to recommend a product and to repurchase. With an eye to these benefits, many companies are making customer experience a strategic priority. Yet they are struggling to gain traction with their efforts.

Why is customer experience so difficult to get right? The main hurdle is translating boardroom vision into action at the front line. That’s even more important in an era when optimizing individual customer touchpoints is no longer enough —when you have to focus on holistic customer journeys, instead.

There’s only one way to create emotional connections with customers: by ensuring every interaction is geared to delighting them. That takes more than great products and services — it takes motivated, empowered frontline employees. Creating great customer experience comes down to having great people and treating them well. They will feel more engaged with the company and more committed to its goals.

The best companies make four activities habitual:

Listen to employees. Want your employees to take great care of your customer? Start by taking great care of them. Treat them respectfully and fairly, of course, but also get involved in tackling their issues and needs. Establish mechanisms to listen to concerns, then address them.

When Disney first opened its Hong Kong resort, employees had to pick up their uniforms from attendants before every shift. With up to 3,000 people arriving at once, waiting in line could create frustration and delay. So leaders responded by pioneering a new approach using self-service kiosks. Employees pick up a uniform, scan the tag and their ID at a kiosk, check the screen display, and walk away. Result: a smoother start to the day that frees frontline staff to focus all their energies on customers. The new approach was so effective that Disney rolled it out across all of its parks and cruise ships.

Hire for attitude, not aptitude — and then reinforce attitude. To get friendly service, hire friendly people. Airline JetBlue has embedded this philosophy in its hiring process. To recruit frontline staff with a natural service bent, it uses group interviews. Watching how the applicants interact with one another enables hiring managers to assess their communication and people skills to an extent that wouldn’t be possible in a one-to-one setting.

Having hired people with the right attitudes, leaders need to ensure they reinforce the behaviors they want to see. Although Disney hires janitors to keep its parks clean, everyone else in the organization knows that they share the responsibility for maintaining a clean and pleasant environment. Asked why he was picking up paper in the restroom, one leader replied, “I can’t afford not to.” Leaders’ actions are visible to all. Or as Disney puts it, “Every leader is telling a story about what they value.”

Give people purpose, not rules. Rules have their place, but they go only so far. To motivate employees and give meaning to their work, leading companies define their “common purpose”: a succinct explanation of the intended customer experience that resonates at an emotional level. When people are set clear expectations and trusted to do their jobs, they feel valued and empowered. They choose to go that extra mile through passion, not compliance.

For Chilean bank BCI, common purpose is about developing trust-based customer relationships that last a lifetime. Leaders at the bank tell a story about a lottery winner who was deciding who to entrust with his prize money. Asked why he chose BCI, he said advisors didn’t just sell him products, but tried to satisfy his needs. Some of them traveled regularly on the bus he drove, and he thought they seemed just as genuine in their free time as they were in the branch.

Tap into the creativity of your front line. Giving frontline employees responsibility and autonomy inspires them to do whatever they can to improve the customer experience. When they see a problem, they fix it without waiting to be asked. Frontline staff are also a rich source of customer insights. They can help leaders understand what customers want without the time and expense of market research.

Take Wawa, a US convenience-store chain. One enterprising manager decided his customers would like a coffee bar and a bigger choice of fresh food. When customer traffic and profits soared, head office noticed and dispatched a team to find out why. With facts in hand, the company quickly developed a plan to replicate the innovation across its network.

Technological advances have made it much easier for companies to understand customers on an individual basis. Even so, engaging with customers is still undertaken largely through personal contact. Building a relationship of trust happens at the front line, one interaction at a time. So to create an emotional bond with your customers, start with your employees. 

Why Small Businesses Aren’t Hiring… and How to Change That

Despite the economic progress driven by business performance since the recession, the country has not recovered jobs at the same pace. Job growth, while improving, is slow by post-recession standards: The New York Times reported last year that percentage change in payroll, from business cycle trough to business cycle peak, averaged from all previous recessions, is 15%. For the current recovery it is 2%. By contrast, in an average recovery, corporate profits rise 38 percent from trough to peak. In this recovery, they have risen 45 percent. We have better than average profitability and much, much lower than average job growth.

For their part, small businesses are growing revenues faster than larger businesses. D&B Credibility Corp. proprietary data shows that the smallest businesses have been growing revenues the fastest: In 2013 alone, micro business revenue on average grew by 2.14% while small business revenue grew by 1.18%. Yet medium business revenue stayed relatively flat, losing 0.2% overall. The large businesses on average in our data decreased revenue by 1.56%. (Microbusinesses are defined as those earning less than $500,000 in annual revenue, small businesses earn less than $5 million, medium-sized businesses earn between $5 million and $100 million, and large businesses earn over $100 million.)

While the smallest businesses are growing revenues the most quickly, they are adding jobs the most slowly: From January to November 2013, micro businesses experienced 1.86% growth per employee, small businesses 0.75%, medium businesses -1.14%, and large businesses -6.72%. Strong sales and greater productivity, without employment growth, yields a jobless recovery.

Why aren’t successful small businesses adding more jobs?

We tend to equate job growth with business success but the reality is far more nuanced than that. Adding jobs is a capital investment, not a cash flow issue. In other words, crude as it may sound, additional employees are hired for future growth, similarly to the way business owners purchase computers, software, and other capital goods. For large businesses, the cost of employment is relatively low, so this point becomes largely academic. As revenues and profits rise, the largest businesses simply dip into their capital reserves to hire more people and grow their businesses. But small businesses do not have reserves significant enough to support new employment growth. It is a far bigger investment for a small business to hire an additional employee than for a larger business to do so.

Today, access to capital for small businesses is a significant problem. The largest businesses are able to secure financing with relative ease and on strong terms, including historically low interest rates. But as business size gets smaller, access to capital shrinks dramatically. For example, a recent Pepperdine University study showed a large discrepancy in bank loan approval rates: 75% of medium-sized businesses that sought a bank loan were successful, compared with 34% of small businesses and only 19% of microbusinesses.

Without capital, small businesses are not in a position to increase employment. This explains why even though small businesses have increasing revenues and remain optimistic, they are still not adding jobs.

This is alarming because small businesses drive economic recoveries. They not only employ almost half of the private sector, but they are also responsible for the lion’s share of new jobs created. In the past 20 years, about two-thirds of all net new jobs were created by small businesses. SBA data show that small businesses (those with 500 or less employees) amount to 99.7% of all businesses and employ 49.1% of private sector employment. Clearly, small business job growth is critical after a recession.

It’s not that the banks aren’t lending. Banks actually increased large business loans (defined by the FDIC as loans over $1 million) by 23% from 2007 (pre-recession) to 2012 (post-recession). Unfortunately they decreased small business loans (defined by the FDIC as loans $1 million and under) by 14% during the same time period.

In 2011, Vice President Biden and former U.S. Small Business Administration (SBA) Administrator Karen Mills announced that 13 of the nation’s largest banks would increase small business lending by $20 billion over three years. In September, the SBA announced that the banks had already increased their small business lending by $17 billion, putting them on track to meet their goal by the end of 2014. This is great news, but there is a caveat. The banks were allowed to form their own definition of “small business.” And many of the banks consider a small business as having up to $20 million in revenues. And there is incentive for banks to lend towards the higher end of the scale.

In general, the larger the business, the less likely it is to default. Hence, banks tend to focus on lending to larger businesses. The government has tried to stem this trend with positive results by providing backstops through the Small Business Administration. (The SBA currently guarantees 85% of the value of loans up to $150,000 and 75% of the value of loans of more than $150,000.) While this has had a positive effect on small business lending, there may be greater benefit in having that distinction be focused, not on loan size, but on business size. For example, the SBA could guarantee 85% of the loan value for microbusinesses, 75% for small businesses, 50% for medium-sized businesses, and zero for larger companies. This would effectively tier the risk for banks and incentivize them to lend to the smallest businesses.

Businesses at every stage, whether start-ups or the largest companies, need access to capital to grow, but the risks of lending that capital vary widely. If the SBA were used to level the playing field, more small companies could get the access to capital they need to add jobs.

For more about this topic, see my testimony given before the House of Representatives Committee on Small Business on December 5, 2013.