Marina Gorbis's Blog, page 1483

Leading by Letting Go

If you are running a large company anywhere in the world, you have almost certainly asked yourself some version of this question: “How can we get tens of thousands of employees to deliver memorable customer experiences that enhance our brand, all at a reasonable cost?”

The answer many have latched onto might best be called “Tightening the Grip.” This involves making it easier for employees to deliver in the same way every time by prescribing exactly what they should do in all circumstances. In a customer service center, for example, you would create scripts for every possible interaction. You’d ensure quality by listening to recordings and holding service representatives accountable for meeting detailed standards, such as using a customer’s name a certain number of times on each call. You would recognize high performers, and you would discipline reps who didn’t measure up. You would also monitor average call time closely for every representative. To keep costs under control, you’d set goals for reducing it every year.

Jim Bush had a different idea, which I have now come to call “Leading by Letting Go.” I’ve mentioned him before in my blog posts, but I haven’t really told the whole remarkable story.

Bush took over American Express’s far-flung service operations in 2005. He was suddenly responsible for many thousands of call-center employees. Even though American Express was well-known for its outstanding service, the company at the time regarded Bush’s organization purely as an expense, and it followed the conventional command-and-control model in its call centers. Leaders kept a tight rein on costs, with goals for reducing average call time, improving customer satisfaction levels, and driving more service volume to the Web. While customer satisfaction was at acceptable levels, competitors seemed to be catching up. Especially troubling to Bush, employee turnover was high, reflecting a long-standing decline in employee morale and imposing a huge burden on the organization.

Bush saw a way to change the game. Service at American Express, he argued, should not be treated as just a cost center; rather, it offered an opportunity to invest in building the sort of warm relationships between American Express and its customers that the venerable company’s brand had always been based on. Every interaction offered a chance to make people feel good about their relationship with the company. Every contact offered an opportunity to increase the likelihood that they would sing the company’s praises to friends. That kind of viral marketing would be invaluable in setting American Express apart from rivals and would power the company’s growth and profits.

The trouble was that the scripts, metrics, and rules were getting in the way. Heavily scripted representatives couldn’t form genuinely warm and empathic relationships. They sounded wooden and stilted. Real relationships are built on open, person-to-person communication, one caring human being to another.

So Bush decided to let go. He eliminated the scripts. He stopped focusing on call time and declared that from now on representatives would let customers set the pace, determining how much time they would spend on each call. He elevated the hiring process, seeking out people with the right personal qualities and values, often with experience in the retail or hospitality industries rather than in other call centers. (The centers’ high turnover helped him change things on this front pretty quickly.) He even changed the name of the job. He called the service reps customer care professionals and gave them business cards, along with higher pay and greater flexibility in scheduling their hours.

Then he created a system that enabled and encouraged these professionals to deliver outstanding service on their own, day in and day out. It depended upon four key elements:

A clear goal. American Express wanted warm, caring interactions with customers, unregulated by the clock or by scripts. The customer care professionals would see information about each caller on their screen, and they would get intensive training in the company’s products and policies. What they talked about was up to them — and to the customer. They would measure their success by the Net Promoter score — the percentage of customers who said, when asked, that they would recommend American Express to a friend.


Guardrails. People handling calls understood where they had latitude and where they didn’t. They knew they were accountable as teams for delivering the best possible service within the constraints of the company’s policies and in strict compliance with laws and regulations. Within those guardrails, however, they were free to exercise their judgment.


High-velocity feedback. The company began seeking feedback from a sample of customers after each transaction, asking them how likely they would be to recommend American Express to a friend and why. The resulting scores and verbatim comments flowed to frontline team leaders and customer care professionals every day, so they could see where they were succeeding, where they still had work to do, and what, specifically, the customers had pointed out.


Coaching and support. Supervisors and experienced customer care professionals were freed up from a number of other tasks so they could devote more time to coaching around the feedback. They helped new hires get up to speed. Trainers taught best practices and ways to improve. Teams shared with and learned from one another.

The results? Call-handling time edged up slightly at the very beginning, then dropped and kept falling. Likelihood-to-recommend scores doubled, indicating far more enthusiastic advocacy of American Express on the part of customers. Employee attrition was cut in half. Within just three years, the company saw a consistent 10% annual improvement in what Bush calls “service margins.” The company began to win the J.D. Power customer service award in credit cards year after year.

It is simply impossible for any leader to prescribe exactly what thousands of employees should do every day and in every circumstance. Even if it were possible, doing so would reduce their behavior to only what could be scripted and supervised. More importantly, the mere attempt to do so is dehumanizing and demoralizing. It drains the life and the initiative out of even the most highly motivated workers.

But when you set up a system that enables you to let go with confidence — to trust your employees to exercise their own judgment and learn from their experience — employees can become both self-directing and self-correcting. They become inspired, energetic, and enthusiastic. And the experience they deliver to customers is likely to be far better than anything you could ever control.

Get a Better Return on Your Business Intelligence

There is a lot of hype and buzz around business intelligence. Companies are investing millions of dollars in business intelligence technology. However, unless this is accompanied by the simultaneous creation of a strong foundation for taking intelligent business actions, they are unlikely to reap a good return on that investment.

An analogy might help explain what we mean by this. Imagine a plane heading from Dallas to New York. If that flight’s trajectory were just a degree off, it would end up in the ocean instead. The fact is that planes are more than a degree off 95% of the time, yet most planes land where they are supposed to. In spite of all the storms, the changing wind conditions, turbulence, and all the volatility and uncertainty they encounter along the way, they manage to land at their intended destination. Similarly, we believe the primary purpose of an investment in business intelligence should be to help companies reach their intended destinations in spite of all the storms they are likely to encounter along the way. So by learning how pilots are successful, leaders can get a much better return on their business intelligence initiatives.

How is the pilot successful? By managing six critical variables effectively. These variables are the essential ingredients for business success:

1. Starting Point. The pilot knows clearly that he is starting in Dallas. There is nothing clouding his understanding of the current reality as it is, not as he would like it to be, not as it appears to be, not as his copilot describes it to be. Similarly, there should be a good, data-centered understanding of the reality as it is — with holistic data across the functional silos, that is available in a timely manner, and which describes the current status of the business accurately.

2. Destination. The pilot can’t just land in a random location and declare, “You have arrived.” He must make proactive choices to reach a predetermined destination. Similarly, business intelligence must be viewed against the backdrop of a clear vision, goals, and strategy, and used as a means to getting there, rather than viewed in isolation or as a technology initiative. This vision should then be cascaded down so each decision maker has a clear idea of the destination they are working toward, while at the same time, ensuring that all these will add up to the same common goal.

3. The Plan. The pilot doesn’t take off until he has a clear flight plan, and he can understand how it will take him from the starting point to the destination. Similarly, business intelligence must be leveraged to create a plan that charts a path from where the organization is today to where it should be in the future. A visual way of depicting the plan — one that connects the starting point and the destination, and takes into account all the nuances of a business (more sales in fourth quarter, a spike in sales at month end and quarter end, etc.), seasonality, trends, etc. — will help with understanding the next variable, variation. In our experience, this element is weak in most business intelligence initiatives.

4. Variation. The pilot knows that he is going to be off 95% of the time. He expects variation from the plan and deals with it. Similarly, leaders need to anticipate variation. They should neither freeze in surprise when there is variation, nor should they create so much noise that the signal gets drowned out. Just like the pilot makes a calm assessment and operates the right levers, leaders need to create a climate and culture where people can make a calm assessment and fine-tune the right set of drivers. Without this one simple prerequisite, we have seen many business intelligence initiatives fail.

5. Act Early. When you are a degree off and you correct it early, it may be a matter of no more than a mile. Leave it for a while and it can compound quickly to hundreds of miles off course. The pilot has a cockpit full of tools that tell him where he is relative to where he should be and provide the visual cues he needs to act early and course correct often. Similarly, business intelligence must provide the visual and data-centered cues that show people the widening nature of the gap. For example, a bar chart by time period, one of the most common visual tools used, may not show the widening gap. However, a cumulative line graph can visually highlight the widening nature of the gap in a powerful way. Further, sales variation can get widened much more when it comes to financial variation because of fixed costs. It is not uncommon for a 5% drop in revenue to result in a 30% drop in profitability. Along the same lines, a 5% drop in revenue can result in a 50% drop in market cap. Such gaps must be exposed clearly and visually so employees understand the true impact of making decisions early.

6. Act Often. The pilot is making dynamic course corrections, perhaps every minute or so. He is not waiting an hour before deciding what to do. Contrast that with a typical business. A whole month goes by. A couple of weeks later the books are closed. Only then do leaders know where the business was last month. In addition, at best, this gives 12 opportunities for course correction over a typical annual cycle. If a plane were to attempt that Dallas–New York flight with just 12 course corrections, based on where the plane was at the time of the previous course correction, it will most certainly end up in the ocean. As volatility increases and uncertainty builds, the need for more frequent course correction accentuates. If there is only one thing a business intelligence initiative can focus on, we would say, put all that energy and focus on more dynamic, forward-looking course correction.

Unless a strong, intelligent, action-based foundation is in place to address each of these six critical variables, organizations are likely to get swept away by the buzz of business intelligence, become distracted by pretty charts on mobile devices, and end up landing where the winds take them. And when the external forces take charge, there is no guarantee it will be a safe landing. Instead, leaders must guide their companies safely toward their intended destinations.

Why Retail Clinics Failed to Transform Health Care

When retail clinics entered the U.S. health care market more than a decade ago, they were greeted with high expectations. The hope was their lower cost structure and focus on convenience and price transparency — two things sorely lacking in traditional health care — would engender radical changes. Retail clinics have demonstrated that they are a sustainable business model and clearly fit a patient need: Today, there are more than 1,600 clinics across the country, which have had a total of 20 million patient visits. Nonetheless, their performance has been disappointing: Their growth has been less than expected, they have not expanded care to underserved markets (namely, the poor), and their impact on health care spending — helping to lower it — remains unclear.

Understanding their disappointing performance is particularly important given that retail clinics are viewed as the prototypical example of how disruptive innovation can change the health care system for the better. The idea of disruptive innovation, a concept pioneered by the Harvard Business School’s Clayton Christensen and written about previously in HBR and in a book that one of us co-authored, is that industries are more commonly transformed by new entrants, rather than entrenched players. Disruptive companies get their start by offering affordability, convenience, and simplicity to previously neglected market segments that are too small and low margin for incumbents to pursue or aggressively defend.

Retail clinics fit this description to a tee. Because they employ nurse practitioners rather than physicians and offer care in locations such as pharmacies and grocery stores, retail clinics can provide services at a lower cost per encounter than traditional medical practices. In addition to lower cost, convenience has also been a key attraction, since patients are not required to make appointments and the clinics are often co-located with pharmacies. Most important, by focusing on a narrow set of simple medical conditions (10 conditions — including immunizations, strep throat, and ear infections — account for 90% of visits), retail clinics can deliver care that is equal in quality to that offered by incumbent providers.

Stalled Growth

Today, retail clinics nationwide receive roughly 6 million visits per year. However, the growth in the number of clinics has now plateaued, and they still account for less than 5% of the 100 million outpatient visits to physicians’ offices and emergency departments for simple acute conditions such as sinusitis and urinary tract infection, a number we might have expected to be higher by this point.

The disruptive-innovation model predicts that retail clinics would garner an initial following among “nonconsumers” — especially those without health insurance or who live in communities not adequately served by incumbent institutions. However, the convenience of retail clinics has been a selling point primarily in higher-income communities, where patients have health insurance and access to a physician. Although retail clinics are more affordable than physician practices, they have not been effective in attracting the largest population of nonconsumers: the poor, who paradoxically continue to rely on costlier sources of care such as emergency departments.

Reasons for the Limited Impact

The disappointing performance of retail clinics can be attributed to some perversities in regulations and reimbursement in the current health care system. First, the expectation based on the disruptive innovation model was that traditional providers would view the simple acute problems treated at retail clinics as low-margin services they would give up. However, due to a disconnect between reimbursement and actual costs of care, these incumbent providers view simple acute problems as high-margin work that offsets the losses from caring for more complex problems.

Second, these clinics are often staffed by nurse practitioners. But regulatory limitations on nursing scope of practice, which vary significantly from state to state, and regulation that fixes reimbursement to nurse practitioners at 85% of physician reimbursement for providing the same care, have impeded more rapid expansion of retail clinics.

Third, due to antiquated payment models, Medicaid plans that serve the poor have been reluctant to cover care in retail clinics and therefore shun the very market segment that may benefit the most from the convenience of retail clinics. Ultimately, as long as the U.S. health care system is driven by an administered payment schedule that bears little relation to the actual cost of care and allows some services to offset the costs of others, this system will always be prone to market irrationalities.

In summary, retail clinics exemplify both the potential of and challenges for disruptive innovators to improve value in health care. But clearly, the impact of such disruptive innovations will be limited unless the regulatory and reimbursement barriers are dismantled.

Shopping for Things Brings Emotional Benefits

Research participants who had viewed a movie clip of a sad scene (the death of a boy’s mentor in The Champ) registered a sadness decline of 2.28 points (on a 100-point scale) as a result of shopping for small quantities of office supplies such as ball-point pens, according to a study led by Scott Rick of the University of Michigan. The research underscores that making shopping choices helps to restore a sense of personal control over one’s environment and thus helps alleviate sadness, the researchers say.

Sell Your Product Before It Exists

There’s crowdfunding and then there’s crowdfunding. While most startups who set up pages on Kickstarter, Indiegogo or a host of other crowdfunding sites are looking to hit a specific goal and then get started making their project a reality, a new crop of businesses are using the platform for as a wholly different business model: selling their product before it exists.

It’s a model that isn’t entirely new — software companies have long used “vaporware” campaigns to get an injection of cash by selling software before it’s available. However, these new businesses are doing with tangible products what had only before been done with software. The most recent standout in the class of “vaporgoods” is Coin, which straddles the divide between software and hardware. If you haven’t seen the promos yet, Coin is a new device that aggregates all of your information from credit, debit, and even loyalty cards and can be swiped just like a regular credit card. Coin’s makers first launched a $50,000 crowdfunding campaign and, after hitting their goal inside of 40 minutes, are continuing to take pre-orders at half the future retail price. It’s unknown how many units of the device have now been pre-sold. However, the real success isn’t in the amount of cash Coin raises; it’s that the minds behind Coin have proven there’s a market demand for their product using the only research method that counts: the market itself.

Coin’s pre-existence sales push the concept of minimum viable product (MVP) even further. When Eric Reis was popularizing the concept of an MVP, the guiding principle was to build and release a product with as few features as possible, and then use the market’s reaction to gauge how to refine the product. Coin has managed to test the market without ever actually releasing the physical product. It’s important to note that they undoubtedly developed and tested prototypes, but many customers made the decision to pre-order without ever holding a prototype. In addition to the benefits of an MVP strategy, Coin’s strategy allowed them to mitigate our internal bias against innovative new ideas. Often when a new product, creative work, or ideology is released, the initial reaction isn’t as strong as the creators hoped. Most studies show that 50% or more of all new product launches fail.

Research led by Jennifer Muller has shown that, at least subconsciously, humans have a hard time seeing past the newness of something to recognize its usefulness. Coming up short in the mind of the consumer is one reason for the overwhelming rate of failures in product launches. Needless to say, those product failures come at a loss of capital spent on everything from produce development, distribution costs, marketing, and even the cost of returning unsold goods. Especially when selling a device that stores sensitive information, this bias is a major hurdle to product adoption, and Coin went to great lengths to attempt to put consumers at ease (including a 75-question FAQ on their website). But even when potential customers see the product and opt to pass, or wait for the next iteration, Coin doesn’t lose nearly as much as if they’d pushed for the widespread distribution of a traditional retail launch.

Exactly what causes a new product’s success or failure in the market is still widely speculated. New product launches are always a gamble, and strategy isn’t about perfection. It’s about increasing your odds of winning. Until we find out how to guarantee market adoption ahead of time, Coin’s strategy of selling the product before it really exists looks like an effective way to stack the deck with minimum losses and maximize possible gains.

It may not be the right strategy for every industry. But if it’s possible, consider selling your new product before it exists.

The Ideas that Shaped Management in 2013

It’s always tempting at this time of year to try to make a definitive list of the best ideas from the past 12 months. But then we end up debating what counts as best — important? useful? original? all three? — and compiling extremely long lists, struggling to shorten them, and over-thinking it all, when the point really is just to gather some really good reading for you for any free time you happen to find over the holiday. So this year, instead, we thought about the pieces that most surprised us or provoked us to think differently about an intractable problem or perennial question in management, we reviewed the whole year of data to remind ourselves what our readers found most compelling, and we looked for patterns in the subjects our authors raised most frequently and independently of our editorial urging.  The result, I think, is a set of ideas that together are important, useful, and original, and that feel like quite an accurate account of the management concerns many of us shared in 2013.

Here’s the list.  See what you think:

1.  Leaning in will only get us so far.  If the workplace is going to work for women — and for families — men need to change, and so do our expectations of them.  Their tendency toward overconfidence is often mistaken for competence and rewarded with promotions, and their masculine identities require that they work too many hours and get too little sleep, putting extra pressure on women whose greater home- and kid-related responsibilities prevent them from competing on quantity.  The good news is that millennial men are changing the way they define leadership and demanding work that fits around their families.  And the seven policy changes Stew Friedman recommends would benefit all working Americans.  Note: the majority of the pieces below were written by men.

Why Do So Many Incompetent Men Become Leaders?

Why Men Work So Many Hours

It’s Not Women Who Should Lean In; It’s Men Who Should Step Back

Real Men Go to Sleep

Meet the New Face of Diversity: The “Slacker” Millennial Guy

7 Policy Changes America Needs So People Can Work and Have Kids

2.  If your knowledge-based industry hasn’t been disrupted yet, get ready. According to Clay Christensen and his coauthors Dina Wang and Derek van Bever, the strategy consulting industry is about to blow up the same way the legal world just did.  McKinsey may have been hired in 2013 by the Vatican, the Bank of England, and the owners of the Rangers and Knicks, but they’re also acting to stave off threats to their business model. Meanwhile, Michael Porter explains exactly how health care needs disrupting, professors from INSEAD and MIT debate the merits of the MOOCs that might upend higher education, and our own Sarah Green tells publishers to quit whining about disruption and start enjoying the innovation that goes along with it.

Consulting on the Cusp of Disruption

The Strategy That Will Fix Health Care

Stop Requiring College Degrees

Let Them Eat MOOCs

Publishers, Stop Crying Over Spilled Milk

3.  The right kind of project management — and project manager — really matters.  It’s impossible to get through another sentence, of course, without mentioning Healthcare.gov, though it sounds like project management was only one of that initiative’s many management problems. But to be fair to the U.S. government, excellent project management is extremely rare.  Its practitioners are the modernization of the much-maligned yet depended-upon middle manager.  Research and examples published in HBR this year — including an account of a much more effective government agency’s approach to solving problems — prove how critical they are to innovation.

Special Forces Innovation: How DARPA Attacks Problems

What Sets Effective Middle Management Apart

What Manufacturing Taught Me About Knowledge Work

The Hidden Indicators of a Failing Project

4.  The rest of us still have a lot to learn from Silicon Valley.  American tech entrepreneurs earned some bad press this year, but in HBR, they proved why more established firms should not stop watching them closely.  In “Why the Lean Start Up Changes Everything,” Steve Blank outlines how big companies including GE are adopting the minimal, iterative approach to nearly every aspect of launching new enterprises and how, if adopted more widely, lean start up methods could lead to a more entrepreneurial economy overall.  And the applicable lessons aren’t just about innovation — many of the best new ideas in people management, from hiring practices to leadership development, are emerging from places like LinkedIn, Google, and Netflix.

Why the Lean Start Up Changes Everything

Tours of Duty: The New Employer-Employee Compact

How Google Sold Its Engineers on Management

How Netflix Reinvented HR

The Danger of Turning Cynical about Silicon Valley

5.  Technology offers real hope for Africa’s economic future.  In a column in the March issue, Richard D’Aveni predicts that 3-D printing will precipitate China’s fall from manufacturing grace, sending economic power back to the West. Ed Bernstein and Tim Farrington from the Industrial Research Institute imagine the global realignment differently; they see Africa, with its valuable natural resources and a young and increasingly educated population, building an immense black market for 3-D printed goods and coming to dominate the global economy.  We also found seven other reasons Africa’s economy might leapfrog the economies of more developed nations.

3-D Printing Will Change the World

Imagine a Future Where Africa Leapfrogs Developed Economies

Seven Reasons Why Africa’s Time Is Now

6.  Being nice makes you a better leader and your company more profitable – new research proves it.  Amy Cuddy, Matthew Kohut, and John Neffinger answered Machiavelli’s question:  is it better to be loved or feared?  The best way to influence and lead others, they say, is to begin with warmth.  And that’s not all:  Generous behavior is associated with higher unit profitability, productivity, efficiency, and customer satisfaction, along with lower costs and turnover rates.  The best leaders favor oxytocin and its effects over adrenaline and dopamine.  And rudeness in the workplace hurts the bottom line. Luckily, Susan David and Christina Congleton explain how you can learn to do a better job of managing your thoughts and emotions in Emotional Agility.

Connect Then Lead

Break Your Addiction to Being Right

In the Company of Givers and Takers

The Price of Incivility

Emotional Agility

7.  It’s possible to make more time in the day after all.  It took three years for Julian Birkinshaw and Jordan Cohen to figure out how to free up 20% of your work day.  And a group of researchers in the UK found that organizations can dramatically reduce the amount of time their employees spend on email, if they can convince executives to stop emailing so much.  Finally, there’s one more thing you can do to save time:  stop complaining so much about how busy you are.  Meredith Fineman’s rant on the subject struck many of our nerves — it was one of the most popular posts of the year.

Make Time for the Work That Matters

To Reduce Email, Get Execs to Send Fewer Messages

Please Stop Complaining About How Busy You Are

Accelerate Your Start-Up with Fortune 500 Allies

Meet Phil. He’s just graduated from college and wants to spend more time rock climbing, so he decides to sell burritos to pay the rent. Where to start? He heads to his local Costco and buys $200 in bulk bags of rice, beans, and tortillas. He cooks up a few batches of burritos and begins selling to small convenience stores, heading back to Costco whenever he needs to restock his ingredients. Soon Phil is trucking along and realizes there might be a business in these burritos. But to grow outside of his town, he needs to land a major store account.

Enter Whole Foods. The local Whole Foods buyers like Phil, and they like his product. They decide to give it a chance. Soon, Phil’s line of burritos—now known as EVOL—is on shelves across the country. And they’ve just announced that they’ve sold the company for $48 million dollars.

In the world of early-stage food startups, two heroes have emerged: There’s Costco, which gives small entrepreneurs the power of bulk buying. And there’s Whole Foods, which connects entrepreneurs with customers. Both of these big businesses empower small start-ups. Phil’s story fits into a pattern I heard over and over again as I interviewed successful food entrepreneurs for my book, Cooking Up a Business, and is indicative of a larger startup tactic: identifying empowerment players on both ends of your supply chain. Here’s what you can learn, and how it applies to any young business:

1. Harness the power of collective bulk buying

In start-up world, every penny matters, and getting more for less is a win.

Costco offers food entrepreneurs a way to buy like the big guys: when you have limited resources of money, buying power, and manpower, you can come to one place and use the power of Costco to get many of the benefits of a bulk buy without the need to truly buy in bulk or negotiate with supply chain vendors. While you walk out with just what you need, in theory you’re joining together with hundreds of other entrepreneurs. Phil was so successful with this strategy that he used Costco for the first three years of his business—so much so that one day he got a call from Costco: he was actually the #1 buyer in Colorado for the previous 52 weeks!

Costco is the obvious choice for food start-ups — in other sectors, there are other bulk wholesalers which are also accessible and consumer-facing like Amazon Web Service for cloud computing power, Paper Source for paper and printing goods, and Joann’s for fabric. Look at your supply chain, whether it’s goods, services, software, cloud space. If there’s not an existing bulk provider, can you create a loose amalgamation of start-ups that can come together to harness the power of a bulk buy?

2. Harness the power of the local or startup-friendly re-seller

Now that you’ve secured your supplies, it’s time to look upstream for customers. In food startups, that means selling to a grocery store chain.  And over the last few years, Whole Foods has emerged as the go-to spot for the startup entrepreneur. Why? Because Whole Foods strives to source 25% of its products at the local level, so buying from regional, often small and new companies, is actively encouraged.

This means that companies like Phil’s can walk in and know they have a better-than-average chance of getting on the shelves at their area store. And if their product sells well locally, then they’ll be able to talk about moving into other districts.

But what if you’re not selling food (or beauty, which has a similar Whole Foods effect)? Early on, identify a handful of buyers who make it part of their mission and protocol to work with and buy from early-stage companies. For example, later-stage and well-funded start-ups often make it a point to buy from other start-ups, whether that’s services, software, or consumer goods like food, clothes, electronics, furniture, or more. At an early stage, your own version of Whole Foods can offer an accessible path to larger growth.

At the end of the day, Costco has become a massive, but relatively unknown, supplier to Whole Foods. It may be counterintuitive, but the two behemoths often anchor opposite ends of the supply chain for early stage food startups. An entrepreneur can buy from family-size, warehousey, no-frills Costco, and a few weeks later the product of those raw ingredients (with the magic of packaging, branding, and a stellar pitch) can literally be on shelves in Whole Foods, where they’re dressed up with great lighting, storytelling, and a feel-good atmosphere. (And while food companies obviously sell at Costco, they’re usually much larger and more established by the time they reach that stage and have their own supply chains in place—they’re no longer buying at Costco! For example, Phil’s company EVOL is now doing millions of dollars worth of sales at Costco each year.)

Putting this supply chain strategy into action in your start-up requires identifying your sector’s key empowerment players—and being strategic about who can help most in the early stages of your growth. As a food company grows, it will outgrow Costco as an ingredient source and the local Whole Foods will be just one data point of thousands. But in the beginning, knowing and using your empowerment players is priceless.

Building a Feedback-Rich Culture

As an executive coach and an experiential educator, I’m a passionate believer in the value of interpersonal feedback. To become more effective and fulfilled at work, people need a keen understanding of their impact on others and the extent to which they’re achieving their goals in their working relationships. Direct feedback is the most efficient way for them to gather this information and learn from it.

But the form that most interpersonal feedback takes — a conversation between two people — can trick us into seeing it as a product of the relationship when it’s equally (if not more so) a product of the surrounding culture. Even people who aren’t interested in or skilled at giving or receiving feedback will participate in the process (and improve) when they’re working in a feedback-rich environment. And the most ardent and capable feedback champions will give up if the organizational or team culture doesn’t support their efforts.

So as leaders, how do we build a feedback-rich culture? What does it take to cultivate an ongoing commitment to interpersonal feedback? Here are four essential elements:

1. Safety and Trust

To give and receive truly candid feedback, people must feel a sense of safety and trust. Neurologist and educator Judy Willis emphasizes the relationship between positive emotion and performance, and as leaders we need to foster it to ensure that colleagues learn from feedback. Note that this does not mean avoiding confrontation or offering only support and comfort. It does mean being highly attuned to people’s readiness for a challenge and their emotional state in a given interaction.

To create safety and trust:

Get to know each other. Make an effort to understand colleagues as individuals. This doesn’t require a great deal of time or deep, personal disclosures — just taking a moment to ask about someone’s weekend and occasionally sharing stories of your own.
Talk about emotions. The ability to discuss emotions is a critical feature in any group that aspires to share effective feedback, not only because feelings are at the heart of most difficult feedback, but also because feedback inevitably generates difficult feelings. When we can talk about our embarrassment, disappointment, frustration, and even anger, the culture is sufficiently safe — and robust — to handle real feedback.
Make it OK to say no. A risk in feedback-rich cultures is that people feel obligated to say “Of course,” when asked, “Can I give you some feedback?” The freedom to postpone such conversations when we’re not ready to have them ensures that when they do take place all participants are willing parties.

2. Balance

We often think that good feedback is honest criticism, but that’s just half the story. The other half is truly meaningful positive feedback, which is all too often absent in organizations. You can’t have one without the other, but so many obstacles prevent us from offering and accepting positive feedback. We worry it will sound insincere. We worry it is insincere. We worry it will make us look like suck-ups. We worry it will make us seem weak. And since we don’t do it very often, we’re not very good at it. But recent research at Ghent University in Belgium indicates that positive feedback promotes self-development. Further, as University of Washington psychologist John Gottman has noted in his study of long-term relationships, in the most successful ones the ratio of positive to negative interactions is 5:1 even in the midst of a conflict. Strong relationships depend on heartfelt positive feedback — so we need to practice.

To establish balance:

Offer some positive feedback…and stop there. Too often we use positive feedback to cushion the blow before delivering criticism, but that practice inevitably degrades the value of our praise and renders it hollow.
Start small. We miss opportunities to provide positive feedback every day because we have this idea that only big wins merit discussion. When we see any behavior we want to encourage, we should acknowledge it and express some appreciation.
Praise effort, not ability. Research by Stanford psychologist Carol Dweck suggests that praising persistent efforts, even in failed attempts, helps build resilience and determination, while praising talent and ability results in risk-aversion and heightened sensitivity to setbacks.

3. Normalcy

Trainings and workshops can create space for people to be open to new ideas and experiment with new ways of communicating, but the next day everyone goes back to the real world. You have to integrate the behaviors you want into your team’s daily routines in order to normalize those behaviors within the organization’s culture. If feedback is something that happens only at unusual times (such as a performance review or when something’s gone wrong), it’ll never really be an organic part of the organizational culture. It has to show up in everyday life — on a walk down the hallway, at the end of a meeting, over a cup of coffee.

To make feedback normal:

Don’t wait for a special occasion. A mentor of mine, Vince Stehle, once told me, “Don’t build a castle; put up a thousand tents,” and that certainly applies to feedback. Don’t turn it into a complex, cumbersome process; just take a few minutes (or even a moment) and make it happen.
Work in public. Certain conversations are best held one-on-one, but too often we treat all feedback as a potentially embarrassing or even shameful process to be conducted under cover of darkness. When sufficient safety and balance exist, even critical feedback can be provided in larger groups. This not only allows everyone present to learn from the issues under discussion but also allows people to see how to give and receive feedback more effectively.

4. Personal Accountability

As leaders who want to promote a feedback-rich culture, we have to walk the talk every day. Research by Harvard Business School’s Lynn Paine and colleagues makes clear that employees are more sensitive than leaders to gaps between companies’ espoused values and actual practices. Our teams will take their cues from us as to what’s acceptable, and if we don’t take some risks in this area, they won’t either. Why should they? This doesn’t mean we’re going to get it right all the time. If we’re taking some meaningful risks, then of course we’ll make some mistakes. The key is to fail forward and view those mistakes as essential learning opportunities. Let those around us know that we’re trying to get better at giving and receiving feedback, too, and ask for their input on how we’re doing.

To walk the talk:

Be transparent. Everyone around us – colleagues, superiors, direct reports – should know that improving at giving and receiving feedback is an ongoing goal of ours.
Ask. We can’t just sit back and wait for feedback to be offered, particularly when we’re in a leadership role. If we want feedback to take root in the culture, we need to explicitly ask for it.


Culture That Drives Performance

An HBR Insight Center




The Defining Elements of a Winning Culture
There’s No Such Thing as a Culture Turnaround
The Three Pillars of a Teaming Culture
Three Steps to a High-Performance Culture

So Long, Giant Check Ceremony: The New World of Charitable Giving

Say goodbye to the glory of the “giant check” ceremony, the requisite Toys for Tots drop box, and the depressing ASPCA commercials: The ways corporations, marketers, and individual donors are approaching charitable giving is starting to change dramatically — for the better and worse.

Michael Norton, an associate professor at Harvard Business School and the co-author of Happy Money: The Science of Smarter Spending, studies the relationship between business, charity, and a person’s motivation to give. An edited version of our recent conversation is below.

How are companies are thinking about making donations this time of year?

Some companies now allow employees to set aside money at the beginning of the year, from which they use to make a donation each month. This provides employees with an initial happiness boost from giving, and then an additional boost each month when they decide where to give. Even better, because they’ve already committed the money, it’s not as painful to donate. It is an interesting way to help people commit to giving that also maximizes the happiness we get from giving.

PwC is working with a non-profit called Givkwik to similarly innovate in this space. For many years, companies have offered matching donations: if you give, the company will match it. PwC and Givkwik are now just giving employees money to give to charity.

Imagine getting an email from your employer that says, “Here is some cash, feel free to give it wherever you want,” then going to a website where you can give to one of several charities that the company is supporting. It’s a kind of “prosocial” bonus in addition to the more traditional bonus many companies give their employees.

Does this fit in with how companies traditionally think about doing good around this time of year?  Is it usually the case that a company picks one big cause and tries to get everyone to rally around it?

It is still often the case that a company decides on one charity to support, and, equally often, the CEO decides on the charity. It’s extremely idiosyncratic, because the cause is whatever the CEO happens to pick. It’s sometimes the case that the cause ends up being one that the company’s employees do not care about, or that the company’s customers do not care about.

Some companies now involve employees and customers in the selection process, empowering their stakeholders to determine what — and whom — the company supports.

On the one hand, it gets people more excited about giving, with a high return on investment for both the employees and the companies. On the other it seems like this would disperse where the money is going. Are the charities themselves benefitting from this change?

Essentially, companies are trading off the benefits of supporting one cause against having employees feel that their company helped them to support a cause they are passionate about. The hope is that employees will say, “this is the kind of place I like to work.”

Charities aren’t always excited about these innovations, because if you had a relationship with a company for many years, you are accustomed to getting a regular lump sum. New approaches really open up the door for employees to give to many different causes, complicating matters for non-profits.

Many companies try to balance these issues with a hybrid model. The CEO doesn’t just pick one cause, but allows the employees to select, say, five charities. Employees still feel empowered to give where they want, but those five charities still receive a significant lump sum that they can count on.

And what about the emotional connection to actual people who need help? Are these new giving models making that connection more or less important?

There are two kinds of impact: actual and perceived impact. Both are important, but for different reasons. Actual impact is important for charities because they want to show they are getting things done with the money they receive. Websites like Charity Navigator allow donors to assess the efficiency of different charities in order to turn money into actual impact.

But we’ve found in that, for givers, perceived impact is extremely important. This is the feeling that you’ve had an impact on a specific person, and it’s crucial to making you feel good about the giving process. Very often, actual impact and perceived impact align. If I give to a specific child, for example, I can see that I’m having a specific impact on that person.

Is it a problem that the person giving may feel emotional benefits, but not necessarily the person supposedly receiving the gift? 

We have conducted a great deal of research on exactly this point, and there are some organizations that get it right. I work with the non-profit DonorsChoose, which allows people to donate directly to public school classrooms. You can search for your hometown or a keyword like “novels,” and give a specific thing to a specific classroom.

The teacher and kids write you back saying, “thanks, here is how we used your gift.” DonorsChoose has gotten impact exactly right. Not only can I give where and what I want, but I have evidence that I had impact on specific people.

Switching gears a bit, what are you seeing when it comes to retailers who ask you to, say, donate $2.00 to some organization at the cash register or online checkout? And are companies starting to think differently about giving when it comes to customers?

Marketers are responding to countless surveys purporting to show that Millennials really, really care about saving the world, much more so than previous generations. Millennials feel, “I want to do good at the same time that I’m buying the things that I want.” Many companies are responding by showing that, not only are they not doing harm, but that buying their product has positive externalities.

At Warby Parker, the hipster eyeglass retailer, for every pair you buy, one pair goes to a person who needs glasses.  Consumers still get the cool product, but they also get the feeling that they are helping somebody else.

Are people inclined to give without that sort of product tie-in, something that’s in it for them?

Katherine White at the University of British Columbia and her colleagues have a new paper on “slactivism.” They show that when people click the “Like” button on Facebook for a cause, they feel like they’ve done something good — and therefore don’t need to actually give money to the cause or volunteer.

It’s very subtle. People want to feel and look like they are doing good, but it’s not clear that they actually need to follow through in order to accomplish those goals.

Are there any campaigns that are innovating in the realm that don’t involve a product quid pro quo?

One of the most ridiculous but successful innovations in charitable giving is men growing their facial hair in November to raise money and awareness for men’s health issues.  It makes no sense on one level — why can’t you just give money to charity, as opposed to grow a beard and then give money to charity?

But the campaign is extremely effective for a number of reasons. For one, it allows you to show everyone that you engaged in a charitable action. Often our charitable actions are hidden — we write a check and nobody sees it. Second, campaigns like this make charity fun. Charity is often a downer.

Like the  absurdly heart-wrenching ASCPA commercials .

There’s nothing wrong with those, but there are many consumers who respond more to doing something positive, and maybe even having fun while they are doing it.

There is a general move toward creativity in giving as opposed to simply saying: here are some sad people and you should give. Companies are trying to make charity a more interesting and engaging experience.

Are there other innovations in giving you want to note?

Yes. There’s a non-profit called TisBest that has a program called DiscoverGiving. They have a classroom activity for teachers where teachers give young students a “charity gift card” worth $1.00. The classroom plan encourages very young children to think about how money can be used not just for yourself, but to benefit others. So that’s another innovation: starting early.

Christmas Trees, If Kept Alive, Become Carbon Absorbers

In a temperate climate, conifers such as firs and spruces absorb little carbon dioxide in their early years, but their rate of absorption picks up at around age 20 and increases until 40 or 50 years, after which the growth rate of carbon accumulation slows until virtually stopping after 150 years. Because Christmas trees are usually harvested at a young age, they haven’t absorbed enough to compensate for the carbon emitted in their growth and harvesting stages, according to Chemistry & Industry. Thus, from a carbon standpoint, the best option is a potted tree that can be reused year after year.