Marina Gorbis's Blog, page 1484

Big Data and the Role of Intuition

Many people have asked me over the years about whether intuition has a role in the analytics and data-driven organization. I have always reassured them that there are plenty of places where intuition is still relevant. For example, a hypothesis is an intuition about what’s going on in the data you have about the world. The difference with analytics, of course, is that you don’t stop with the intuition — you test the hypothesis to learn whether your intuition is correct.

Another place where intuition is found in analytical companies is in the choice of the business area where analytical initiatives are undertaken. Few companies undertake a rigorous analytical study of what areas need analytics the most! The choice of a target domain is typically based on the gut feelings of executives. For example, at Caesars Entertainment — an early and continuing user of analytics in its business — the initial focus was on analytics for customer loyalty and service. CEO Gary Loveman noted that he knew that Caesars (then Harrah’s) had low levels of customer loyalty across its nationwide network of casinos. He had also done work while at Harvard Business School on the “service profit chain” — a theory that companies that improve customer service can improve financial results. While the theory had been applied and tested in several industries, it hadn’t been applied to gaming firms. But Loveman’s intuition about the value of loyalty and service was enough to propel years of analytics projects in those areas.

Of course, as with hypotheses, it’s important to confirm that your intuitions about where to apply analytics are actually valid. Loveman insists on an ROI from each analytics project at Caesars. Intuition plays an important role at the early stages of analytics strategy, however. In short, intuition’s role may be more limited in a highly analytical company, but it’s hardly extinct.

But how about with big data? Surely intuition isn’t particularly useful when there are massive amounts of data available for analysis. The companies in the online business that were early adopters of big data — Google, Facebook, LinkedIn, and so forth — had so much clickstream data available that no one needed hunches any more, correct?

Well, no, as it turns out. Major big data projects to create new products and services are often driven by intuition as well. Google’s self-driving car, for example, is described by its leaders as a big data project. Sebastian Thrun, a Google Fellow and Stanford professor, leads the project. He had an intuition that self-driving cars were possible well before all the necessary data, maps, and infrastructure were available. Motivated in part by the death of a friend in a traffic accident, he said in an interview that he formed a team to address the problem at Stanford without knowing what he was doing.

At LinkedIn, one of the company’s most successful data products, the People You May Know (PYMK) feature, was developed by Jonathan Goldman (now at Intuit) based on an intuition that people would be interested in what their former classmates and colleagues are up to. As he put it in an interview with me, he was “playing with ideas about how to help people build their networks.” That certainly sounds like an intuitive process.

Pete Skomoroch, who became Principal Data Scientist at LinkedIn a few years after PYMK was developed, believes that creativity and intuition are critical to the successful development of data products. He told me in an interview this week that companies with the courage to get behind the intuition of data scientists — without a lot of evidence yet that their ideas will be successful — are the ones that will develop successful data products. As with traditional analytics, Skomoroch notes that you have to eventually test your creativity with data and analysis. But he says that it may take several years before you know if an idea will really pay off.

So whether you’re talking about big data or conventional analytics, intuition has an important role to play. One might even say that developing the right mix of intuition and data-driven analysis is the ultimate key to success with this movement. Neither an all-intuition nor an all-analytics approach will get you to the promised land.

To Use Technology Effectively, Ask the Tough Questions

Over the years I’ve talked with hundreds of managers about the reasons for complexity in their organizations — and in almost all cases they cite “technology” as one of the main culprits.  But in the next breath, they also acknowledge that technology has revolutionized the way they work, increased personal productivity, and given them a whole new world of capabilities.  It’s an odd dichotomy: the notion that technology is a blessing and curse, a driver of improvement, and a source of frustration.  This often leaves managers wondering what they can do to increase the benefits and minimize the pain, both for themselves and their organizations.

To tackle this question, we first need to understand what’s behind this perception of technology as a paradoxical phenomenon.  In my experience, there seem to be two main issues: the accelerating rate of technological change and the often-unrealistic expectations that technology creates.

The exponential increase in the speed of technological introduction and commercialization was first described by Alvin Toffler in his 1970 book Future Shock.  Although primarily considered as a harbinger of the virtual society, one of Toffler’s key insights was that the cycle time between technological discovery and widespread commercialization was continually shrinking, which would force people to deal with continuous, rather than episodic, change.

For example, after the invention of the telephone, it took more than 80 years for much of the world to be connected (and even more in rural and economically depressed areas).  In contrast, the cell phone was invented in 1973, became commercially available within a decade — and now, only 40 years later, there are more than five billion such phones being used around the world.  Moreover, mobile phones these days are not just used for making calls, but for a host of other applications — with new ideas and technology being introduced almost daily.

The pace of these changes presents challenges across industries. Not long ago, I was facilitating a customer advisory board meeting for one of my technology clients, and the main recommendation was to slow down the introduction of new features because their organizations could not absorb them fast enough.  In other words, from their perspective, the continual onslaught of new technology was making things more complex and harder to manage.

On the other side is an increasingly unrealistic set of expectations about what people can accomplish with technology. Yes, we have the capacity for instantaneous, global communication, search, and transaction processing. But does that mean that all business should be conducted at warp speed? Many managers seem to report that this is what their customers, partners, and senior executives seem to expect, which drives them to work longer hours and continue business processes (e.g. emails and texts) while traveling, being with family, or on vacation.  This leads to a lack of time to think, reflect, recharge, or step back, which not only creates more complexity but also doesn’t allow managers to get control over their time.

Managers who want to minimize the complexity caused by technology therefore may need to think about the following two sets of questions:

What technological innovations should we actually adopt in our business, and what could we defer or delay?  And if we do accept new technologies, how can we absorb them without creating confusion or complexity?  The key here is to make sure that new technologies — or even new features and functions of old technologies — actually produce business value.  All too often we adopt new stuff because it is “cool” or sounds good, but we don’t examine whether it will actually provide a return on the investment.  And sometimes we don’t stop to ask how well our existing structures can support these innovations.  Unfortunately, if it doesn’t drive business value, than the only thing it might produce is more complexity.
How can we create more realistic expectations with our customers, clients, partners, and each other about the pace of work?  Are there ground rules that we can institute or ways that we can at least make the expectations more transparent and understood? Questions like these can help make it possible to be more explicit about the differences between handling high priority work and everything else. One easy mistake to make in our world of instantaneous communication is  treating all activities as being of equal value. If you are clear on what types of projects or questions warrant a quick response, it will help the rest of your team prioritize.

Obviously answering these questions won’t immediately reduce technologically-driven complexity.  But they might be a good place to start.

A Winning Culture Keeps Score

People often think of corporate culture as “soft” because it involves squishy things like values and expectations. That’s true as far as it goes—but winning cultures have a hard, metrics-driven element as well. A culture that feels upbeat and positive but doesn’t contribute to profitable growth or beating the competition is destined for the dustbin.

In sports, everyone gets that and knows what winning looks like. It’s reflected in your score, plain and simple. Sure, you track other numbers—what you might think of as key performance indicators—such as on-base percentage. The Boston Red Sox, the 2013 world champs in baseball, are known for their sabermetrics. But nobody in the organization thinks those stats are more important than outscoring opponents.

In many businesses, however, people have no clue what winning would mean. More profits? A higher stock price? How can I affect those? Maybe “winning” just means making my KPIs—or not getting laid off. Employees can’t get excited about winning, because they never know whether they’re winning or not. They need a score to tell them.

That’s what they get when they work for companies that practice open-book management. The trick is to focus everyone’s attention on a single key number—the one number that, if improved by a significant margin, will leave the business healthier and stronger at the end of the year. If that number is headed in the right direction, you’re ahead. If you hit an agreed-on target, you win.

For a small company, the key number might be something as simple as net profit. More often, it’s an easily understood indicator that contributes directly to the bottom line, such as an engineering firm’s billable hours or a hotel’s occupancy rate.

Larger companies usually expect each unit or function to come up with its own key number. When jet fuel was going through the roof a few years ago, the pilots at Southwest Airlines identified fuel usage as a key number. They learned to monitor it closely, and they came up with ways to help lower it.

But if different units’ KPIs aren’t closely connected, they may come into conflict with one another. At one mining company Bill worked with, production crews were measured on tons produced while maintenance was measured on maintenance costs. Production naturally worked the equipment hard, leading to breakdowns. Maintenance crews were slow to make repairs, lowering their own costs but hurting production. Eventually the company took an open-book approach, changing everyone’s key number to production profit, or production revenue (tons multiplied by price per ton) minus maintenance costs. Employees in these units not only found they could work together; they also got fired up about the improved financial performance they could generate.

What makes a number “key”?

You can’t pick just any old metric and call it a key number. A good one meets three conditions:

It’s directly connected to the financials. Improve the key number, and you get better financial results.
It’s not imposed from on high. Open-book companies consult with managers, employee teams, and other stakeholders to develop their key numbers. They ask: What are the biggest challenges we’re facing this year? The biggest opportunities? How can your unit best measure its contribution?
It’s for now—not forever. Companies’ situations change. Sometimes revenue growth is the top priority, other times profitability or cash flow. When a company makes progress on one objective, it may want to set its sights on another the following year.

Most open-book companies link progress on the key number to a bonus or some other incentive. Now everyone has a stake in winning—in making that number move. At Boardman Inc., a specialty manufacturer based in Oklahoma, managers and employees agreed that the key number was job margin dollars, meaning shipment revenue minus direct labor and direct materials. (Shop-floor employees in open-book companies learn to understand and use terms like that.) Managers and employees together set a target for improvement. When the company blew away the target in 2012, workers received a bonus of 10 weeks’ pay and Boardman enjoyed its most profitable year ever. Things look even better for 2013.

Part of the power of open-book management lies in its simplicity—deciding on and tracking that one key number. The process generates buy-in, because you’re asking people their views about what’s most important right now. And it helps them understand their own connections to the company’s financial results. Employees begin to think and behave like businesspeople with a vested interest in success—not like hired hands.

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

How Marketers Can Avoid Big Data Blind Spots

If you were looking for a theme song that captures marketing today, you could do worse than pick Queen’s anthem “Under Pressure.” Marketing is under pressure to show results, cut costs, and drive growth. Marketers should welcome it. That’s because marketing has a big opportunity to drive above-market growth and demonstrate its value to the C-suite and the boardroom. In our experience, marketing can increase marketing ROI (MROI) by 15 – 20 percent. That kind of value can turn plenty of heads in the C-suite.

How? The explosion of data about consumers and the analytics techniques now available have made marketing a much more precise science.

All this wonderful Big Data created by the digital revolution, however, has created a serious problem for marketers. Just because the data and analytical techniques are available doesn’t mean they provide complete insights. This is very much what Albert Einstein meant when he said, “Not everything that can be counted counts.”

Blind spots

Consumer decisions are driven also by many stimuli outside the digital realm (e.g. TV ads). This results in a number of issues, not the least of which is misattribution of cause and effect based on a tendency to measure what is easy to measure, ie. giving credit where credit isn’t necessarily due.

One energy company, for example, observed that their customer losses were closely correlated to the intensity of customers’ Google searches for an energy supplier. They built a customer churn econometric model in which search was responsible for 65% of churn. However, in-depth analytics revealed that customers’ decisions to switch energy providers were driven by their and competitors’ prices, advertising and company’s position in in social media, TV, print and other mass media. When all these additional explanatory factors were included in the customer churn model, search was not the cause of customer churn since people had already made up their minds by the time they were searching.

Most recently we’ve seen a lot of companies with claims about the ability of their analytical tools to provide a silver bullet set of answers to any marketing question. In our experience, those claims are hard to back up in the real world. What we see that’s most effective is having the right combination of tools and capabilities with as clear a sense of what they cannot do as what they can.

Overcoming “short-term-ism”

One major blind spot for marketers to be aware of is “short-term-ism” that most analytics engender. The reality is that the majority of marketing activities have both a short- and long-term impact on sales. The short-term impact is typically responsible for 10-30 percent of total sales while the long-term impact (called also the “base” or brand-building impact) is 1-3 times greater than the short-term effect. Big data-based analytical approaches, however, such as econometric and digital attribution modeling, for example, can detect only the short-term impact of marketing. What this means in practice is that the majority of data and analytics provide marketers with a short-term picture and can lead to short-term decisions that are detrimental to the long-term sales performance.

Given this reality, marketers need to overlay their Big Data models with analysis of the longer-term brand equity effect responsible for the remaining “base” of 70-90 percent of sales. Without ongoing investment in the brand, the value of this base erodes over time and creates a stiff head wind for future sales.

To understand long-term effects, companies first need to create a baseline by estimating the potential decline in base sales if all marketing activities would be stopped. Reviewing marketing investments and brand performance of multinational companies across regions is a good place to start since that data often yields a useful set of measurements of the impact of “brand leakage” (ie. how much base sales is lost and at what rate). That estimate then needs to be tested and adjusted systematically based on the unique situation of the company using the experience and judgment of marketing and sales managers, as well as other internal data (e.g. customer surveys).

These estimates can then help determine the Net Present Value (NPV) of the long term effect of marketing in terms of future sales. This NPV provides marketers with a reasonable understanding of the long-term implications of marketing in addition to the short term impact measured by Big Data and help make necessary trade-offs when it comes to making spend decisions. Although this is not a perfect science, we think it’s better to be “roughly right” than “precisely wrong.”

One consumer food brand almost fell into this short-term trap. It launched a campaign using Facebook advertising, contests, sponsored blogs, photo-sharing incentives, and shared shopping list apps. The approach paid off, delivering sales results similar to those generated by more traditional marketing (which included heavy TV advertising and significant print), at a fraction of the cost.

Given the overwhelming success of this effort, the brand considered shifting significant spend from TV and print advertising to digital and social media channels. When the long-term effects were included in the calculations, however, the proportion of impact of digital dropped by half because most of digital activities (search, display, etc.) typically are short-term calls to action and contribute little to building the brand and consumer loyalty. Significant cuts to TV spend as suggested by traditional econometric modeling would have reduced the net present value of the brand’s profit.

Marketing analytics is far from a monolithic approach. It’s actually a collection of approaches and techniques that, when systematically applied across a specific set of issues, delivers useful insights for making marketing investments that pay off. The latest wave of data combined with the right models can illuminate a lot. But smart marketers will spend just as much time looking for their data’s blind spots.

Parents May Be Your Secret Weapon For Recruiting and Retaining Millennials

A recruiter at a well-known Fortune 10 company told me this story: She was getting ready for a phone interview with a new college graduate. But when she dialed into the conference number at the scheduled time, instead of the candidate, there was an older woman on the line.

The female caller identified herself as the applicant’s mother and said, “I know you were expecting a call with John (not his real name), but he’s tied up in another interview at the moment. Fortunately, I know him so well that I can do the interview for him. Do you mind?”

The recruiter understandably replied that she did mind and asked John’s mom to have her son call when he was available.

If you suspect this conversation is an anomaly (and a shocking one at that!), think again. I speak with large groups of HR executives several times a month and when I ask the question, “How many of you have had a parent get involved in the hiring process?” at least half raise their hands, sometimes, two thirds.

I often follow up by asking how many have had a parent intervene in the performance review process. About a third raise their hands to this question. Rather than being surprised by all the hands in the air, the executives seem comforted knowing that others are in the same boat when it comes to recruiting and retaining Millennials.

This is a new reality: Parents are increasingly involved in their Millennials’ decisions. According to one study, more than a third of Millenials with a mentor say a parent fills that role. In another study, when asked to list the most influential people in their lives, 61% named their parents ahead of political leaders, news media, teachers, coaches, faith leaders, and celebrities. Pew Research reports that 36% of Millennials still live with their parents.

In a sense, knowing that a single group yields so much influence with Millennials makes your job designing strategies for attracting and retaining them easier. Parents may very well be your secret weapon in convincing Millennials to join or stay at your organization.

Here are five ideas for integrating parents into your talent strategy:

Invite parents in. College recruitment has long included parental visits and open houses the first week of school. Some Indian companies, recognizing the importance of family, are doing the same: welcoming parents to new employee orientation (a few have even taken it a step further and offer benefits to dependent parents, strengthening the employee bond). Why not invite parents to your employee orientation or onboarding program? You might let them visit during an open house or join a conference call to ask questions about benefits, understand the employee value proposition, and link them emotionally to your brand.
Offer free training for parents.  Since mentoring is the number one way Millennials choose to learn, and the parent is frequently chosen as a mentor, consider preparing mom and dad for the role. Give them mentoring skills as well as training on problem solving, interpersonal skills, communication, leadership, or even the performance review process. The idea is that if you give parents these skills, they will hopefully transfer what they learn to their child — your employee.
Hold a “Take Your Parents to Work” day.  LinkedIn held their first Bring in Your Parents Day this past November. It was “designed to help bridge the gap between parents and their professional children.” According to their research: 35% of the parents they surveyed are not completely familiar with what their child does for a living; 59% of parents want to know more about what their child does for work; and 50% of parents say they could be of benefit to their offspring by having a better understanding of their careers.
Use parents to recruit.  Again, universities are already doing this, so it’s not new but consider interviewing parents and including their stories on your Facebook recruiting site (you do have one, don’t you?). Or put them on your open house agenda and ask them to share their stories as an employee parent.
Include parents in your communication strategy.  Allow parents to subscribe to your newsletter or other communications that engage them in the company culture. All new Qualcomm employees are automatically registered to receive an online story each week for their first year. The stories start with the founding of the company and go all the way to present day, describing the history of the company’s technology successes and failures, as well as the rationale behind key decisions, all while memorably conveying the company’s culture. Parents might enjoy reading this as much as — or even more than — their children, and again they might use it while mentoring or advising their children.

None of these strategies are expensive and yet they can go a long way in attracting and retaining Millennials. Simply acknowledging the importance of moms and dads in their lives will help you stand out from other companies. Instead of shaking your head at this trend of increasing parent involvement in your employees’ work lives, embrace it.

Talent and the New World of Hiring

An HBR Insight Center




Never Say Goodbye to a Great Employee
How an Auction Can Identify Your Best Talent
The American Way of Hiring Is Making Long-Term Unemployment Worse
We Can Now Automate Hiring. Is that Good?

What Would an Economist Give to Be Published?

Having heard an economist lament that he would give his “right arm” to be published in the prestigious American Economic Review, a team led by Arthur E. Attema of Erasmus University Rotterdam in The Netherlands set out to discover whether his colleagues would indeed sacrifice a limb for publication. The team asked, essentially, by how many years the economists would be willing to shorten their lifetimes in exchange for publication in the journal, then compared that with the participants’ answers to how many additional years they would accept in exchange for losing the thumb of their writing hand. Results from the 85 respondents imply that they would sacrifice more than half a thumb for an AER publication. At least one economist refused to answer on the grounds that the questions were ridiculous.

To Compete with E-Commerce, Retailers Need to Leverage Mobile

More and more shoppers are finding that online shopping offers greater convenience, lower prices, more information, and a more personalized user experience that makes buying online preferable to going to a store. And as free shipping becomes more common, one of the last remaining barriers to e-commerce is falling. The shift was reflected in this year’s Black Friday weekend numbers. Although sales were essentially flat overall, online sales grew as a share of total sales by 28 percent from the previous year.  

In the physical world, retailers have become quite adept at following the relatively faint tracks shoppers leave in their stores, primarily through their participation in loyalty schemes. However, in most cases this data is leveraged only after shoppers have paid at the register. Retailers can’t tell what shoppers looked at but didn’t buy, or whether they forgot something that they likely needed. Digital engagement gives e-commerce sites a huge advantage. Shoppers leave digital footprints across websites, mobile apps, and social media. Innovative sites also leverage analytics to optimize the experience.

But mobile shopping also represents a rapidly growing share of e-commerce, accounting for more than 20 percent of e-commerce sales this holiday season. And mobile provides a unique opportunity to help physical retailers compete.

Shoppers already use their phones to access online product information such as reviews or to cash in digital coupons. And now, some retailers are using mobile to connect with shoppers even before they walk into the store. For example, some offer apps that help consumers find where they can buy a product, check that it is in stock, and  locate it in the store itself. Walmart’s mobile app not only provides pre-store support via shopping lists, mobile ordering with site-to-store shipping and other features, but also allows consumers to switch into ‘shopping mode’ once they are in-store to access an array of tools including store maps. ‘Shopping mode’ also aids Walmart employees by enabling them to adjust the offers that shoppers are served at a store level.

While some shoppers do use their phones inside the store to order from a rival — think of a shopper who finds a book at a local bookstore but orders a discounted version on their Amazon app — some retailers are taking advantage of mobile to offer shoppers the ability to order from a broader assortment of their own products.  Home Depot’s mobile app provides consumers with access to an ‘endless aisle’ of more than 400,000 products – a small selection of which is carried in its physical stores at any time.

Retailers can also upgrade their traditional loyalty programs using mobile technology. For example, Walgreens’ one-stop-shop app creates an integrated experience for health and wellness across consumer needs. Consumers can use the Walgreens app for prescription refills via barcode scanning, medication reminders, photographic orders and loyalty card point tracking. Solutions are personalized via activity and triggers captured through the app, driving high consumer stickiness. Mobile refills now represent 50-plus percent of all online orders, an increase from 10 percent in 2010. Highly engaged Walgreens customers spend six times more online, in-store, and mobile combined.

For physical retailers, tapping into the mobile opportunity requires focusing on new capabilities for analytics, content development, and social media management. But the key to capturing share and surfing the digital wave — rather than getting walloped by it — is keeping the focus on people, not technology. Designing and building human-centered digital experiences can help physical stores survive — and thrive.  Mobile provides an opportunity to connect the product and services provided more closely to the pre-store experience and to enrich the experience during the store.

How to Lead During a Data Breach

In 2007, I wrote a case study for Harvard Business Review, “Boss, I Think Someone Stole our Customer Data.” Now six years later, an actual event has occurred that is eerily similar to that fictional scenario: a trusted retailer’s point-of-sale system security was breached and a large amount of customer data may be compromised.

In the current situation, the retailer is much larger as is the number of accounts affected. The New York Times reported that as many as 40 million customers may be affected by the data breach at Target. This makes it the third largest in history. The breach is reported to have started just before Thanksgiving and continued until December 15 – right in the heart of the most important selling season of the year. Full disclosure: Target executives have attended the executive education program where I am Director of Research. I worked with Visa on its Data Security Summit in 2007. I also hold a card that may have been compromised.

The investigation by law enforcement officials will determine who is to blame. Executives in any business, however, can learn valuable lessons in crisis leadership:

One critical concept that we share with the participants in the National Preparedness Leadership Initiative (NPLI) at Harvard is that every crisis includes many situations, each with different contingencies and considerations. In this case, they include security, legal, law enforcement, customer relations, media, shareholder, employee, the board, card issuers and providers, regulatory, and more. While there can be overlap, each of these situations has a distinct (and sometimes conflicting) set of stakeholders, power structures, priorities, perspectives, interests, requirements, and values. For example, Communications may want to be immediately open and transparent while Legal may want to wait to more fully assess the liability exposure that such a stance could create. They each have a legitimate case. Navigating this complex web of interdependent relationships is daunting in routine times. In a crisis of this magnitude, the added pressure and higher stakes can make it overwhelming. How can an executive successfully lead through such a complex morass?

The first step is to ensure certainty about the values that will drive decision making. In this case, trust should be the “true north” for Target in its dealings with its many stakeholders. The breach itself and the fact that the source of the disclosure was a blogger, not the company, were both hits to Target’s perceived trustworthiness. Company executives should recall the key lesson from the famous Johnson & Johnson response to the Tylenol scare in 1982: CEO James Burke saw that the most important objective was to restore the confidence of customers and other critical stakeholders, and moved aggressively to do that. If there is a short-term financial hit, take it and move forward. Clearly shared values among leaders in the business can help prevent or resolve conflicts as operational options and objectives are weighed.

The second step is to map the constellation of situations and their stakeholders. This can be done on a white board or sheet of paper. It doesn’t require a lot of detail; the purpose is to fix in your mind the awareness that you are dealing with a complex, dynamic problem. The angle you overlook in the crisis may be the one that causes the greatest damage in the end. Always remember that the original event – here, the data breach – is one crisis but the response may ignite a series of secondary crises if not handled well. (Remember Katrina.) This is particularly true in crises where the media takes an interest. Media stories will help shape the perceptions of many stakeholders and this, in turn, will set attitudes and interactions going forward. Many of these factors are beyond your control, but they are rarely outside of your sphere of influence.

With that situation map drawn, look for gaps in your crisis response: something not planned for or a need not met in the heat of action. After all, no action plan gets everything just right. It is critical to perceive the weak spots or holes in your efforts and take mitigating steps. Figure out who has something to give to close a gap – from tangible assets to moral and reputational support –and who needs to get something to do the same. Playing problem-solution matchmaker between “gives” and “gets” helps you to leverage and optimize resources in dealing with the many crisis situations.

The crisis will evolve over time and so must your perception of it. Target likely took action and had a disclosure plan prior to yesterday’s revelations in the media. However, an influential security blogger’s post followed by national and international media attention changed everything. The challenge for company leaders was then to re-orient the response to an increased pace with altered dynamics; control of messaging shifted from the company to news outlets. Embracing the patterns of this new reality, a leader must anticipate what is likely to happen next. Only then can he or she take the right steps. This is a continuous loop of adaptive thinking — perceiving, orienting, and predicting – and acting – deciding, operationalizing, and communicating.

The final lesson from this incident is “never say never.” Target is a company that takes security and customer trust seriously. The payment card industry has a rigorous set of standards, procedures, and protocols, and penalties for non-compliance, that are in use with virtually all major merchants in the United States. Yet breaches still occur. The United States is a particularly rich target because our credit and debit cards rely on magnetic strips rather than chips for validation; it is an old technology – though when paired with new fraud monitoring technologies it has kept actual fraud at bay. But these cards are easier for criminals to duplicate than chip cards, which makes them a more tempting target.

Your business or industry likely has corresponding vulnerabilities. In an increasingly complex and turbulent world, any day could be the one that your career or even your company depends upon your skill leading through a crisis. Are you ready?

The Organization of Your Dreams

We have known for about 150 years that people who enjoy their work are more productive.  That is to say high satisfaction is correlated with high performance. And yet many organizations seem to go out of their way to make work alienating, frustrating, and unpleasant.  This is evidenced in the depressingly low rates of employee engagement around the world.  According to a recent AON Hewitt survey, four in 10 workers on average report being disengaged worldwide (three out of 10 in Latin America, four in ten in the U.S., and five in 10 Europe).

This finding resonates with our latest research.  For more than four years now, we have been asking people what an “authentic” organization would be like – that is, one in which they could be their best selves. While individual answers vary, of course, we consistently find that they fall into six broad imperatives, which describe what we call  “The organization of your DREAMS,” a handy mnemonic, whose components are:

Difference – “I want to work in a place where I can be myself.”
Radical honesty – “I want to know what’s really going on.”
Extra value – “I want to work in an organization that makes me more valuable.”
Authenticity – “I want to work in an organization that truly stands for something.”
Meaning – “I want my day-to-day work to be meaningful.”
Simple rules – “I do not want to be hindered by stupid rules.”

This may seem obvious.  Who would want to work in the opposite kind of place — an organization where conformity is enforced, where employees are the last to know the truth, where people feel exploited rather than enriched, where values change with the seasons, where work is alienating and stressful, and where a miasma of bureaucratic rules limits human creativity and effectiveness? That’s the organization of your nightmares, not your dreams!

And yet we find that few organizations fulfill all the elements of this dream workplace.

Why?  Our research indicates that many tackle these issues (and it’s not like they’re not trying to) far too superficially. They apply sticking plaster or Band-Aids to problems when they arise and seem unprepared to tackle fundamental underlying issues. What issues are these?

Let’s begin with Difference.  For many organizations, accommodating differences translates into a concern with diversity, usually defined according to the traditional categories of gender, race, age, religion, and so on.  These are, of course, of tremendous importance, but the executives in our research were after something subtler and harder to achieve – an organization that can accommodate differences in perspective, habits of mind, core assumptions, and worldviews.  Indeed, these executives have actually become resistant to the conventional diversity agenda.  We were recently in an organization that had produced a 142-page booklet called “Managing Diversity.”  (We wonder how many people will actually read it.)  And yet in all those pages, the crucial argument that creativity (a key index of performance) increases with diversity and declines with conformity is never really made.

What about Radical Honesty?  Organizations are increasingly recognizing the importance of communications – both internally and to wider stakeholders.  One key indication of this is that we are now finding communications professionals at or near the summit of organizations.  This is a step in the right direction, for we have all learned that reputational capital is becoming more and more important for high performance — and at the same time increasingly fragile.  Think of Arthur Andersen, arguably the greatest professional services organization in the world, which ceased to exist within a month after the Enron scandal. Still, the growth of the communications profession is actually more evidence that companies are taking a superficial approach to the dissemination of critical information – the kind high performers need to do their jobs. The mind-set of so many communications professionals remains stubbornly connected to an old world in which information is power and spin is their key skill.  Surely information is power, but companies need to acknowledge that they no longer have control of it. In a world of WikiLeaks, whistle blowing, and freedom of information their imperative should be to tell the truth before someone else does.

How can organizations create Extra Value?  Elite organizations and professions —  the McKinseys, Johns Hopkins Hospitals, and PwCs of this world – have been in the business of making great people even better for a long time now.  Part of their pact with employees is “Join us and we will develop you.”  But they deal with only a tiny proportion of the workforce. What about the rest of us?  Our research shows that high performance arises when individuals all over the organization feel they can grow through their work — adding value as the organization adds value to them.  And that means the administrative assistants and cashiers, as well as the executives and the shift managers. This is not impossible – if a company like McDonald’s U.K. finds it profitable to train the equivalent of six full classes of students every week to attain formal qualifications in math and English, surely other companies can do more.

What does it mean for an organization to be Authentic?  This is a big question.  We have developed three markers of authenticity.  First, a company’s identity is consistently rooted in its history. Second, employees demonstrate the values the company espouses. And third, company leaders are themselves authentic. This is clearly not simple to achieve. Sadly, rather than rise to the challenge, in many organizations the task of building authenticity has collapsed into the industry of mission-statement writing. People we’ve interviewed despair as they tell us of mission statements rewritten for the fourth time in three years!  Not surprisingly, this produces not high performance but deep-rooted cynicism.

The search for Meaning in work is not new.  There are libraries full of research on how jobs may produce a sense of meaning – and how they can be redesigned in ways that produce “engagement.”  But meaning in work is derived from a wider set of issues than those narrowly related to individual occupations. It also emerges from what we have called the three C’s – connections, community, and cause.  Employees need to know how their work connects to others’ work (and here, too often, silos get in the way). They need a workplace that promotes a sense of belonging (which is increasingly difficult in a mobile world). And they need to know how their work contributes to a longer term goal (problematic, when shareholders demand quarterly reporting).  If these issues are not addressed, engagement efforts will have only fleeting effects.

Finally, the organization of your dreams has Simple — and agreed upon — Rules.  Many organizations display a form of rule accretion, where one set of bureaucratic instructions begets another, which seeks to address the problems created by the first set.  In response to this, organizations have attempted a kind of radical delayering. This has at least addressed the problem of losing ideas and initiatives in a byzantine hierarchical structure.  But that, too, is only a superficial fix. The company of our dreams is not a company without rules – it is a company with clear rules that make sense to the people who follow them, a much larger challenge, with a far greater payoff.

We used to think that high-performance organizations had “strong” cultures within which individuals did or did not fit.  But the paradigm has flipped.  In the new world, organizations must increasingly adapt to the individuals they wish to engage.  This is at the core of the organization of your dreams.  Sustained high performance requires nothing less than a reinvention of the habitual patterns and processes of organizations.

Culture That Drives Performance

An HBR Insight Center




There’s No Such Thing as a Culture Turnaround
The Three Pillars of a Teaming Culture
Three Steps to a High-Performance Culture
If You’re Going to Change Your Culture, Do It Quickly

Guess Who Got Rejected from Top B-Schools?

A Bunch of Seemingly Smart PeopleLook Who Harvard and Stanford B-Schools Just RejectedFortune

It's not especially surprising that there's steep competition to get into these two top business schools. But rejections of accomplished candidates without even an interview can be perplexing — especially for the rejectees. John A. Byrne of Poets and Quants, a web site focused on business education, asked Sandy Kreisberg, an MBA admissions consultant, to analyze why three particular people were left hanging. The first is an Indian-American who graduated from Wharton with a 3.45 GPA, worked at L.E.K. and Barclays, scored a 740 on the GMAT, and climbed Mount Everest. The verdict? He's a solid silver with a lowish GPA and experience at second-tier consultancies. "No surprise here," says Kreisberg. The second is a woman with two start-ups under her belt and a 3.5 undergrad GPA. "I believe you were rejected because of your lowish grades," speculates Kreisberg. Also, "schools are suspicious of start-ups because any moron can do one and many have."

The last candidate, a 26-year-old man with a 3.15 GPA and biomedical experience at Abbott Labs, is more of a puzzle for Kreisberg. While the candidate suspects his low GPA is the problem, the consultant points out that his 790 GMAT is strong and that Abbott Labs is "something, well, I have heard of." She suspects it's the small stuff that got him rejected — maybe the total package makes him seem like "a brainiac with limited social skills."

Epic Fails at the Worst TimeFrom Weight Loss to Fundraising, “Ironic Effects” Can Sabotage Our Best-Laid PlansThe Guardian

You’re in a meeting, making a mental note not to mention some politically sensitive topic, when you suddenly find yourself blurting it out. The “ironic effect,” as psychologists call it, is a very specific kind of mistake in which you fail not despite your best efforts but precisely because of them. Trying hard not to mess up doesn’t make you more vigilant. It increases your anxiety, which decreases your self-control. One particularly insidious form of the effect, called “motivated forgetting,” can make awareness campaigns backfire, according to new research forthcoming from the Journal of Consumer Research. In the study, students who had been made aware of their university’s poor performance were less likely to remember an ad for a discount at the campus bookstore. The anxiety induced by the negative message about the school’s reputation prompted the students to find a way to forget everything having to do with the school in order to retain their sense of self-control. This dynamic can undermine any campaign that focuses on the dangers of failing to take some course of action — such as, say, getting a flu shot or a cancer test. —Andrea Ovans 

Everyone’s an EditorThe Ability To Edit Tweets Would Have Huge Implications For How Brands Use TwitterBusiness Insider

Dash off 140 characters on the spur of the moment and they live forever in cyberspace, perhaps endlessly retweeted. But what if you made a mistake, or circumstances change, or you said something you regret? Help may be on the way. Twitter is reportedly working on a feature that will let you edit a tweet after it’s published and instantly apply the edits to all the retweets. Maybe to limit the amount of revisionist history, Twitter will limit the time period in which you can change your tweet, and you’ll be allowed to edit it only once (so you’d better be more careful about those second thoughts than you were about the first ones). This is expected to be a boon to marketers (and drunken actors) wanting to correct a tweet that’s causing a PR disaster and to journalists needing to amend misleading breaking-news reports. But mindful of possible abuse, Twitter is also working on an algorithm to prevent enterprising businesses from recasting tweets of theirs that have gone viral into advertisements. —Andrea Ovans 

Controlling the Beast An Emotional Approach to Strategy Execution Insead

Emotions tend to be taboo in the business world, but researchers at Insead are talking about them and learning how they affect strategy and operations. One of the more interesting strands of research is on "collective emotions" -- the combined feelings of a group, such as a unit or an entire workforce. If not well managed, a cluster of people who have nasty things to say about their company's direction can expand to become "a vast coalition of individuals sharing negative emotions about the strategy." Tides of emotions like this can prompt middle managers to sabotage the implementation of a strategy even if their personal interests aren't directly threatened. One way to stem the flow of negativity is to encourage people to talk about how they’re feeling, and why, in a climate of psychological safety, writes Quy Huy, an associate professor. Dealing with collective emotions requires an investment in “emotional capital” — an ability to read others' emotions and regulate one's own. —Andy O'Connell 

No Sympathy for the Devil You Never Give Me Your MoneyNewsweek

Meet Allen Klein, an accountant who, according to an excerpt from a new book by John McMillian, is responsible for the following: negotiating a blockbuster contract for the Rolling Stones; using this contract to try to pressure the Beatles into signing with him; tricking the Stones into giving him rights to all of their songs recorded before 1971; and loudly proclaiming for all to hear that he would one day manage the Beatles. He eventually did (sort of) -- but only after exploiting a growing rift between John Lennon and Paul McCartney. Klein proved ruthless in how he got Lennon on his side, reflecting on their similarly lower class upbringing, lavishing praise and false promises on Yoko Ono, and eventually winning over George and Ringo. "When John, George, and Ringo outvoted him three to one in favor of Klein, [McCartney stated that] it was 'the first time in the history of the Beatles that a possible irreconcilable difference had appeared between us.'"

So can you say that management, persuasion, and tough-as-nails negotiation broke up the Beatles? Not exactly — that would be a little too simplistic. But what a (sometimes disturbing) window into the business of rock 'n’ roll. 

BONUS BITSFirst Impressions

The Science of Meeting People (Wired)
Should Your Credit Score Matter on Job Interviews? (Forbes)
Take the Bagel and Run (The Toast)