Marina Gorbis's Blog, page 1488

Managing Designers on Two Different Tracks

Making creative expertise a lasting part of your company means more than just hiring a few designers. You also have to retain, direct, and eventually promote them — something that managers from other backgrounds can find daunting. Recommendations often fall into tired caricatures: creatives are temperamental, they demand constant stimulation, they should be indulged. Creative professionals do fare better when they’re given flexible schedules, meaningful work, and license to fail — but then, so do the rest of us.

Where they differ is in their long-term professional path. Or more correctly, their paths: in our experience at Ziba, we’ve seen two distinct career paths among creative professionals, each stemming from its own set of motivations, and demanding its own approach to management.

The Creative Director.  More than money or recognition, what drives many top-notch creatives is the promise of perpetual newness. Modern design schools increasingly encourage this, demanding that graduates be familiar not just with a traditional creative skillset, but with ethnography, finance, coding, and a host of other competencies.

The good news is that the curiosity-driven creatives who come out of these programs can make excellent leaders, well-suited to the kinds of collaborative teams that spur innovation. Because they understand both the creative process and broader business considerations, they act as go-betweens, communicating requirements and constraints to creative team members, and championing creative work to clients and co-workers. Getting someone to this point, however, can take guidance that seems counter-intuitive.

For one thing, workers who seek the Creative Director path are often drawn to tasks that they’re not explicitly qualified for. As their manager, you should encourage this. Look for signs of interest outside their job descriptions, and give them expanded responsibility in those arenas. Acknowledge the possibility that they could be good at tasks that aren’t “creative,”and push them to oversee multiple facets of a project without losing their core competency.

J. Crew president Jenna Lyons exemplifies this path, having worked her way up from designing rugby shirts in 1990, until she elevated a formerly staid clothing brand into a high-margin force of fashion. A recent profile of Lyons, and her relationship with CEO Millard Drexler, depicts her poking fingers into every aspect of the business, from marketing strategy and manufacturing control to ensuring that photographers get the right jewelry for a shoot. Yet she is still emphatically a designer at the core, and respectful of the creative expertise around her. It’s a win-win situation for the company, bringing innovation and vision into its heart; it happened because she was given license to pursue her curiosity, and access to the broader organization.

The Master Craftsman. There are other creative professionals, though, who reject such breadth, wanting nothing more than to master the tools of their trade and solve the problems no one else can. At first glance, it might be tempting to dismiss someone with such narrow focus — shouldn’t all creative professionals eventually become directors? — but that would be a mistake. As fun as it is to try and spot the “trick” that brands like Virgin, Apple, or Target use to dominate their categories, the reality is that they all have cultures of perfect execution. They sweat out the details, making sure that every part of their offering is just right, and this takes obsessive craftsmen who won’t take “almost good enough” for an answer.

Managing these creatives means ensuring they have a clear way to advance without getting pushed into management. In practice, it often means defining a new position. At Ziba they’re called Principal Designers, but regardless of name, the position should confer status and authority on par with a Creative Director, so it becomes a target for continued improvement. Establishing this role also announces clearly, to the entire organization, that mastery is respected as its own form of leadership.

Creating a Master Craftsman path also challenges managers to formally encourage mentorship and evangelism. Principal Designers often relish working with less experienced counterparts to hone their skills, especially if it’s done with the blessing and support of the organization. Even when they’re not interacting with clients, they should advocate for the value of their craft, teaching non-designers how to leverage it for better outcomes.

In Outliers, Malcolm Gladwell argues (and defends in the New Yorker) that cognitively complex tasks take extensive practice to master — the  well-known 10,000 Hour Rule. What sets Master Craftsmen apart is not innate talent, but fascination with that practice. Good managers value that fascination, and support it with professional tools, conferences, skill-sharing opportunities…and promotions. Craftsmen must know that as long as they keep improving, and helping others do the same, they’ll continue to advance.

When these two types of creative workers are combined, and supported equally through their career arc, companies are transformed. The tendency to seek out rockstar designers is gradually waning, but there’s a still a temptation to see lone genius as the source of innovation. Smart executives, on the other hand, know that creativity is nothing more — and nothing less — than consistent, highly skilled work. It should be managed that way.

The Fine Art of Tough Love

What does it take to achieve excellence? I’ve spent much of my career chronicling top executives as a business journalist. But I’ve spent much of the last year on a very different pursuit, coauthoring a book about education, focusing on a tough but ultimately revered public-school music teacher.

And here’s what I learned: When it comes to creating a culture of excellence, the CEO has an awful lot to learn from the schoolteacher.

The teacher at the heart of the book Strings Attached is on the face of it an unlikely corporate role model. My childhood music teacher Jerry Kupchynsky, who we called “Mr. K,” was strictly old school: A ferocious Ukrainian immigrant and World War II refugee, he was a tyrannical school orchestra conductor in suburban New Jersey. He would yell and stomp and scream when we screwed up, bellowing “Who eez DEAF in first violins?” His highest praise was “not bad.”  He rehearsed us until our fingers were raw.

Yet ultimately he became beloved by students, many of whom went on to outsize professional success in fields from business to academics to law, and who decades later would gather to thank him.

My coauthor and I both expected pushback against Mr. K’s harsh methods, which we describe in unflinching detail. But instead, the overwhelming response from readers has been: “Amen! Bring on the tough love.”  And nowhere has that response been stronger than in the business world, among corporate executives.

Indeed, Wall Street Journal readers responded in force to an essay I wrote about the book and Mr. K’s methods. “Time to move beyond the ‘self-esteem’ culture and get tough. The world is an increasingly competitive and dangerous place,” as one reader wrote, echoing many others.  He added, “I have numerous advanced degrees, but the toughest and best education I ever had was from the Irish Christian brothers in high school. They did not take ‘no’ for an answer.”

Clearly, Mr. K’s demanding methods have tapped into a sea change that we’re just starting to detect in the culture, away from coddling of kids and the “trophies for everyone” mentality that has dominated parenting and education. It’s a shift that is equally evident in the workplace.  But trying to offer more honest feedback, and set higher standards, at work is tricky.  It’s especially difficult in the case of newer hires, those recent young college grads who were raised on a steady diet of praise and trophies and who never learned to accept criticism.

So, how best to put those “tough love” principles into action when it comes to inspiring excellence in the workplace?  Mr. K’s methods offer an intriguing roadmap:

1.  Banish empty praise.

Mr. K never gave us false praise, and never even used words like “talent.” When he uttered a “not bad” – his highest compliment — we’d dance down the street and then run home and practice twice as long.

It turns out he was on to something.  Harvard Business Review readers will recall the landmark 2007 article written by psychologist K. Anders Ericsson, “The Making of an Expert.”  That piece is most often cited for his pioneering work establishing that true expertise requires about 10,000 hours of practice.

But Ericsson also cited two other elements, both of which Mr. K seemed to know intuitively. One is “deliberate practice,” which requires pushing yourself beyond your comfort zone, as opposed to going through the motions.  The other, as Ericsson wrote, is this : True expertise “requires coaches who are capable of giving constructive, even painful, feedback.” And “real experts … deliberately picked unsentimental coaches who could challenge them and drive them to higher levels of performance.”

2.  Set expectations high. 

There’s a tendency to step in when a less experienced colleague is having trouble. Sometimes it seems it’s just easier to do the work yourself. Or to settle for less.

Not in Mr. K’s world.  His standards were uncompromising – and while at first we students found that intimidating, we ultimately understood it was a sign of his confidence in us.  He never wavered in his faith in his students to achieve more and better.  When he first began teaching me the viola, his most frequent admonition was “AGAIN!” most often marked in capital letters on my lesson assignments. But his students knew that he was hard on us not because we’d never learn, but because he was so absolutely certain that we would.

3. Articulate clear goals –and goal posts along the way.

Mr. K insisted that his students audition and perform constantly. He constantly kept us focused on the next challenge.  How would we prepare, and what would we do to improve the next time?  By articulating these intermediate goals, he encouraged us to continually stretch our abilities a bit further while reaching for objectives that were challenging, but ultimately achievable.

4.  Failure isn’t defeat.

Mr. K never penalized us for failure. Sometimes we succeeded at auditions; sometimes we failed. But Mr. K made it clear that that failure was simply part of the process – not an end point, but simply an opportunity for us to learn how to improve the next time. And he transferred responsibility for figuring out the solution to the student. His favorite saying wasn’t “Listen to me!” It was, instead, “Discipline yourself!”

Years later, his former students – now doctors, lawyers and business executives – would credit that approach for instilling self-motivation.  As one of his former students told me, “He taught us how to fail – and how to pick ourselves back up again.”

5.  Say thank you.

This is the one we often forget. My old teacher had witnessed unspeakable horrors as a child growing up in Ukraine amid bloodshed and destruction during World War II.  He didn’t reach the U.S. until after the war, as a 19-year-old who spoke no English and had never had the opportunity to learn to read music despite his passion for it.  He never lost his sense of gratitude to this country for the opportunities he had, despite a catalog of horrors in his own life, including the disappearance of one of his beloved daughters.  He passed that gratitude on to us, with a huge heart, empathy for the underdog, and a commitment to public service, taking us frequently to perform at hospitals and nursing homes and then insisting we stay to visit with the patients.

In the press of business, that sense of gratitude is often the first casualty. Recently I complimented a young journalist on a well-researched article, telling her, “You must have gotten great feedback.”  She looked embarrassed, then confessed she had heard nothing from her boss. Her news organization, like so many others, has been financially hobbled, with a handful of reporters doing the work that was once shared by several dozen.  Her supervisor is spread so thin that he is putting out proverbial fires all day.  “He has the time to tell us what we did wrong,” she said. “He doesn’t have time to tell us when we do something well.”

*  *  *  *  *

Tough love has fallen out of favor, and it can be a jolt especially for younger workers. But properly applied – with high expectations along with a sense of shared vision and gratitude for a job well done — it is the highest vote of confidence anyone can offer.  Mr. K’s old students ultimately figured that out too: At his memorial concert, 40 years’ worth of them – myself included, toting my old viola – gathered in my hometown, old instruments in tow, creating a symphony orchestra more than 100 members strong.

I asked many of those students why they had returned.  They listed the qualities he had taught them: Resilience. Perseverance.  Self-confidence. He didn’t just teach us in the classroom; he inspired us to strive for excellence in our own lives when he was no longer in the room with us.  And that’s the mark of a true mentor: a leader who creates a culture of excellence, and whose confidence in us makes us better than we ever dreamed we could be.

How an Auction Can Identify Your Best Talent

My children go to public school in New York City. As in many school systems across America, parents help raise vital funding each year to complement the often scarce resources provided by the public school system. In my community, the biggest fund-raising event of the year is the annual school auction featuring live and silent bidding. The silent auction part is simple:  Items donated by local businesses and generous individuals are displayed on a table next to a bidding sheet.  Bidders compete by writing their names, paddle number, and price on the sheet.  At the end of the night, the prize goes to the highest bidder.

Teachers like to contribute to this fund-raising event, too.  But instead of donating an item, teachers donate their time, offering a shared experience with a student at  places like the Museum of Natural History, Lincoln Center movie theater, or the Bronx Zoo.

I have attended the annual auction for years. While it’s always an enjoyable event, one particular aspect of the evening has always fascinated me — that teachers have essentially created an open marketplace with parents competing for their time in what is traditionally a closed system.  When the auction ends and the silent bidding sheets are filled, a pattern emerges that identifies the “good” teachers: Teachers in high demand have numerous entries on their bid sheets, as parents are willing to pay the premium price for a coveted afternoon with the best teachers. Conversely, the teachers in low demand go for lower prices – with some not even receiving a single bid (ouch). Year after year, the same teachers are in high demand, selling for big bucks. As a consumer of the teacher’s services — at least, my children are — I use this market data to decide which teacher’s class I want my child in the next year.  (In reality of course, I don’t get to select my children’s teachers. The school administration does. Nevertheless, I remain aware of which teachers continually get high marks in case I am ever given the choice.)

In reflecting on the teacher silent auction, I began to wonder why we don’t deliberately create markets within our corporations to set the conditions or incent the best service from corporate functions. We all know that options and competition in markets breed higher quality, lower cost, and greater innovation.  Our entire economic system (as imperfect as it is) is based on this concept.  However, there is one place where options and market forces tend to be absent — in the function departments of large corporations.

Let me explain. Typically, corporate departments operate as monopolies with no other options available to employees that use their services. Monopolies exist when a specific person or enterprise is the only supplier of a particular commodity or service, and are characterized by a lack of economic competition to produce the good or service and a lack of viable substitute goods. They are less efficient and innovative over time, becoming “complacent giants” because they have to be neither efficient nor innovative to compete in the marketplace.  While it’s not their only role, corporate departments do provide services (finance, legal, information services, market research, and so on) to employees. They are the only service provider. If the employee doesn’t like the service from HR or the IT help desk, he can’t go to another service provider. Employees are required to use the mandated corporate departments.

However, what if corporations set up their work environments so employees had choices about how they wanted to work and from where they received their support?  What if the corporate department had to compete for the business of the employee — every month, every week, every day or even on every project?  What would happen? For instance, if an employee had the option of management training from the corporate HR (training) department or from the sales department in the business unit, each training provider would have to continually innovate the content, delivery and cost  of their service in order to win customers (in this case, employees).  Otherwise they’d risk going out of business (being eliminated). Each department would also have to be externally focused to ensure their offering was comparable or superior to management training available in the market or else risk the same fate.

I have seen only two companies institute a program that follows this model. In these companies, the employees have options about which provider they want to use for the services they consume, thus turning the system upside down and creating departmental competition within the corporation.  In one of these organizations, two different teams offered similar services (market research, business analytics and secretarial support) – one team was in the corporate center and the other was part of a division that had brought the services in-house. Over time, employees began choosing the division provider, with its higher quality output, over the corporate center.  The result? While employees received better, faster and less expensive service, the corporate center faced hard times. Several employees were redeployed and retrained to focus on niche areas, while others were let go and their positions taken as a cost savings by the company. Additionally, where the corporate department had been successfully using vendors to provide the same service, the vendors were told they must meet the new internal service-levels, cost, turnaround time, and quality — otherwise they would lose the contract. Ultimately one vendor did lose the contract and quickly went out of business while another accepted the new conditions and figured out a way to deliver under the more challenging requirements.

Creating competition in the work place can be a controversial practice. But if you think about it, we already have competition.  We are so used to it being a regular part of corporate life that we typically don’t perceive it as competition. In fact, though, we compete for resources during the budgeting process, for a fixed bonus or merit increase pool, for promotions or new positions.

Market forces might not work inside every organization — but they just might work in yours. Wouldn’t you want to know whether your corporate functions are the star teachers or the duds?

Talent and the New World of Hiring

An HBR Insight Center




The American Way of Hiring Is Making Long-Term Unemployment Worse
We Can Now Automate Hiring. Is that Good?
Learn How to Spot Portable Talent
Why Japan’s Talent Wars Now Hinge on Women

Even Small Companies Can Tap Big Data If They Know Where to Look

Small and medium-size businesses are often intimidated by the cost and complexity of handling large amounts of digital information. A recent study of 541 such firms in the UK showed that none were beginning to take advantage of big data.

None.

That means these firms and a lot of others are at a serious disadvantage relative to competitors with the resources and expertise to mine data on customer behaviors and market trends. What these data-poor companies don’t know is that it’s possible to get a lot of value from big data without breaking the budget. I discovered this while researching my book Too Big to Ignore: The Business Case for Big Data. In fact, the above UK study notwithstanding, I found that plenty of small and midsized companies are doing interesting things with data, and they aren’t spending millions on it.

True that in the past, companies seeking to tap into big data needed to purchase expensive hardware and software, hire consultants, and invest huge amounts of time in analytics. But trends such as cloud computing, open-source software, and software as a service have changed all that. New, inexpensive ways to learn from data are emerging all the time.

Take Kaggle, for instance. Founded in 2010 by Anthony Goldbloom and Jeremy Howard, the company seeks to make data science a sport, and an affordable one at that. Kaggle is equal parts funding platform (like Kickstarter and Indiegogo), crowdsourcing company, social network, wiki, and job board (like Monster or Dice). Best of all, it’s incredibly useful for small and midsized businesses lacking tech- and data-savvy employees.

Anyone can post a data project by selecting an industry, type (public or private), participatory level (team or individual), reward amount, and timetable. Kaggle lets you easily put data scientists to work for you, and renting is much less expensive than buying them.

Online automobile dealer Carvana, a start-up with about 50 employees, used Kaggle to offer prizes ranging from $1,000 to $5,000 to data modelers who could come up with ways for Carvana to figure out the likelihood that particular cars found at auctions would turn out to be lemons. For the cost of the prize money (a total of $10,000), Carvana got “a hundred smart people modeling our data,” says cofounder Ryan Keeton, and a model that the company was able to host easily and inexpensively.

Even a lack of data isn’t an insurmountable obstacle to harnessing analytics. Data brokers such as Acxiom and DataLogix can provide companies with extremely valuable data at reasonable prices. As Lois Beckett writes, “There’s a thriving public market for data on individual Americans—especially data about the things we buy and might want to buy.” For example, a marketing-services unit of credit reporting giant Experian sells frequently updated lists of names of expectant parents and families with newborns.

A number of start-ups are jumping into this space—open-database firm Factual recently closed $25 million in series A financing, led by Andreessen Horowitz and Index Ventures. The company is building datasets around health care, education, entertainment, and government.

Do Kaggle, Factual, and their ilk represent the classic business disruption that will turn the data industry upside-down and make consumer and market information available to every company, large and small? No—they don’t portend the imminent demise of corporations’ in-house data analysis or of high-priced analytics firms. But they’re providing attractive alternatives for companies that can’t afford to—or simply don’t want to—hire their own data scientists.

From Data to Action An HBR Insight Center




Executives Ignore Valuable Employee Actions that They Can’t Measure
Big Data’s Biggest Challenge? Convincing People NOT to Trust Their Judgment
Small Businesses Need Big Data, Too
How to Get More Value Out of Your Data Analysts

Overcoming Feedback Phobia: Take the First Step

Situation 1: Asking for it

You’re sitting at your desk when an e-mail pops up from your boss that cryptically states, “Please come to my office; we need to talk.” What’s the first thing you think?

For most people it’s, “Oh no – what did I do now!” or “Good gosh, what went wrong!” Of course it is possible that your boss wants to praise you, ask your opinion on something, or just discuss an issue, but the vast majority of people will assume they’re being called in to be called on the carpet for something or another. This assumption causes many people to avoid feedback all together — and not just those whose bosses actually do criticize them a lot or those who are  insecure about their performance. Generalized “feedback phobia” is widespread.

This is a pity, as research clearly shows the advantage of receiving feedback on an ongoing basis. In our data, collected for more than a decade, we consistently find that leaders who ask for feedback are substantially more effective than leaders who don’t.  In a recent study of 51,896 executives, for example, those who ranked at the bottom 10% in asking for feedback (that is to say, they asked for feedback less often than fully 90% of their peers) were rated at the 15th percentile in overall leadership effectiveness. On the other hand, leaders who ranked at the top 10% in asking for feedback were rated, on average, at the 86th percentile in overall leadership effectiveness.

The best leaders appear to ask more people for feedback and they ask for feedback more often.  Rather than being fearful of feedback, they are comfortable receiving information about their behavior from their bosses, their colleagues, and their subordinates.

Situation 2:  Dishing it out

It’s 8:45 am, and you are sitting at your desk. Right on time an Outlook reminder pops up announcing “Performance discussion with Darcy Pearson, 9:00 am.” You groan out loud and then think to yourself, Darcy’s performance has been terrible. Her attitude is bad, she has no energy, and her output is substandard. You feel dread in your stomach. Your anxiety is high. Your blood pressure is rising. Inwardly you say, They don’t pay me enough to do this job.

You’re thinking that no matter what you say or how you say it, the meeting will go badly. Your only thought about a possible solution is, The sooner I start this, the sooner it will be done. Sound familiar?

Most people can come up with several traumatic stories from their pasts in which they have given or received unconstructive, negative feedback. These terrible experiences embed themselves into our psyche and become a source of anxiety.

On the other hand, most people can also remember a time when someone gave them helpful feedback that contributed to a marked improvement in their effectiveness and influenced their success.

The ability to give honest feedback in a helpful way is closely aligned with employee engagement. In another recent study of 22,719 leaders, we found that those who ranked at the bottom 10% in their ability to give honest feedback to direct reports received engagement scores from their subordinates that averaged in the 25th percentile. Their subordinates disliked their jobs, their commitment was low, and they frequently thought about quitting.  In contrast, those leaders who were judged better than 90% of their peers at giving honest feedback had subordinates who ranked at the 77th percentile in engagement (clearly feedback, while important, isn’t everything.)

How Good Are You at Getting and Giving Feedback? Assess Yourself

Knowing that it’s important to give and receive feedback is one thing. Knowing whether you do it well is another.

As a start, we have developed a self-assessment, which you can click on here that can measure your desire for giving and receiving positive and negative feedback. It also measures your overall feelings of self-confidence, since that trait correlates strongly with the desire to give and receive feedback.

This being a self-assessment, most people will not surprised by the results. Still, it will likely make the impressions you have about yourself very clear, and a clear view will often motivate people to improve. We invite you not only to take the self-assessment, but to share the results and insights you gain in the comment section below.

It’s Not OK That Your Employees Can’t Afford to Eat

It wasn’t that long ago that in most companies, especially large ones, a fair amount of time was spent worrying about whether the company’s practices towards employees were fair. One of the functions of human resource departments was to advocate for the interests of employees.

The motivation wasn’t entirely altruistic. Since WWI, employers figured they could keep unions out by giving employees virtually all of the wage and benefits they would have gotten from joining unions. Even without that concern, though, the leadership of the company considered it part of their job to strike a balance between the other demands on the business and the needs of employees.  They were one of the important stakeholders in the business, along with customers, shareholders, and the community around them.

There is no doubt that shareholder activism as well as court cases sympathetic to shareholder interests pushed publicly-held companies to pay more attention to maximizing stock prices. But when exactly did the shift in corporate attention in the direction of shareholder concerns lead to virtually ignoring the needs of employees?

Let’s be clear about the wage levels that are associated with not having enough to eat. A family of four with one breadwinner is eligible for food stamps if they earn less than $2500 per month. That is the equivalent of a $15 per hour job and a 40 hour work week.  The government has determined that full-time workers earning less than that do not have enough money to feed their families on their own. If that breadwinner earns less than $16 per hour, they are also eligible for Medicaid assistance to provide healthcare. Depending on where they live, that breadwinner is also eligible for subsidies to help pay for housing.

Jobs paying $15 per hour are not the concern, though. Those are routinely seen as good jobs now. The concern is those jobs paying at or around the minimum wage, $7.25 per hour or only $1160 per month for a full-time job. About 1.6 million workers in the U.S. are paid at that level, and a surprising 2 million are actually paid less than that under various exemptions. If you are an employer paying the minimum wage or close to it, the Government has determined that your employees need help to pay for food, housing, and healthcare even if they have no family and no one to look after but themselves.  As we’ve been reminded this season, many of those workers also need help from families and coworkers to get by.

No doubt the reason low-wage companies continue to pay low wages is because there are plenty of workers willing to take jobs at those wages, and the need to pay more to avoid the risk of being unionized is largely gone. But “can” and “ought” are not the same thing.  Nothing about the minimum wage implies that it is morally ok as long as you pay at least that much. It simply says that the government will prosecute you if try to pay less than that level.

A longstanding principle in all developed countries including the U.S. is that labor is not like a commodity where taking advantage of the market to squeeze down prices is a fact of life. Employees have human rights that do not disappear when they enter the workplace. Even in business law, principles like the “mechanic’s lien” say that employees should be paid before other creditors because they are more vulnerable than businesses and do not get profits to compensate them for risks.

One of the things that I find surprising is how many companies that pay poverty-level wages or thereabouts to their employees spend a good deal of effort to be good corporate citizens in other areas. They try to make their operations “green,” lessening their impact on the environment, some even sponsor anti-poverty programs in Africa, and so forth. They just don’t seem very interested in the poverty among their own workforces.

Board of directors are responsible for making the trade-offs among stakeholders of businesses. If you are a member of the board of directors of a company that pays its workers so little that they need government subsidies to survive, isn’t that a little embarrassing? Most of these companies want to refer to themselves and their employees as a kind of family, but what kind of family allows its members to go hungry? And what prevents you from doing something about it?

Why We Hate to Give the Same Gift to Multiple People

In an experiment, a majority of people with two gift options gave each of two recipients different gifts, even though one of the presents was clearly less appealing than the other and the giftees had no way of comparing them. People persist in giving different gifts to different recipients in an attempt to be thoughtful by treating each person as a unique individual, write Mary Steffel of the University of Cincinnati and Robyn A. LeBoeuf of the University of Florida. The effect was attenuated when givers were encouraged to focus more on what the recipients would really like.

What Smart Boards Do When Investors Knock

Bulls in a china shop—or catalysts for change?  The divides created when activist investors muscle their way onto boards as varied as those of Hewlett-Packard, J. C. Penny, and Yahoo can run as deep as those on Capitol Hill. Has Ralph Whitworth of Relational Investors restored shareholder value at HP?  Did William A. Ackman of Pershing Square Capital Management destroy value at J.C. Penney?  Has Daniel Loeb of Third Point rebuilt value at Yahoo?

And what about private-equity partners and sovereign-wealth managers who come on boards of large publicly-traded firms—not as activists but in the wake of taking a stake?  Consider TPG, the American-based PE firm that acquired a significant fraction of China’s Lenovo after its 2005 purchase of IBM’s personal-computer division.  TPG took a seat on the board, and by all accounts its principal played a strategic role in helping Lenovo grow to become the world’s largest PC producer.  Elsewhere, at Chrysler by way of one well known counter-example, private equity has had a less sure impact on value creation.

Whether major investors on a board add or subtract value has become a contentious debate of the era, fueled by a sharp rise in activist campaigns.  Law firm Wachtell Lipton identified 27 activist-investor initiatives in 2000, but more than 200 in 2013.  The firm also estimated that more than a hundred hedge funds have now migrated into the activist camp.  Even Microsoft is soon to have a hedge-fund activist, ValueAct Capital Management’s president G. Mason Morfit.

We believe this is a good moment to reframe the question from whether an activist adds value to how directors and executives can draw the best from active investors on the board:  What can board leaders do to prepare new activists for their governance role?  How should directors best work with the activists in guiding company strategy and taking major decisions?

This reframing has become especially important because the primary function of boards at many large publicly-traded companies has expanded over the past decade from monitoring management to partnering with management.  In many boardrooms, directors now engage more actively with company executives in setting the tone, defining the strategy, and building talent at the top.  It is no longer enough just to keep executive feet to the stockholder fire.

As companies’ inner sanctums have been so reconfigured, boards function less as a passive aggregation of a dozen shareholder-hawks—and more as a forcefully led team of business contributors.  As we report in Boards That Lead, the role of the non-executive chair or lead director has morphed from titular to orchestrator, from one of formal stature to that of team leader.  Board leaders at many firms meet with incoming directors to inform and prepare them for their governing duties, and this can be particularly important for investor activists given their penchant for short-term value extraction.

When activists move from outside critic and cajoler to inside fiduciary and counselor, it is now up to the board leader to mold the more diverse boardroom players into a productive team.  Still rivals, yes, but nonetheless a working group that can partner with management to drive value.

For the board leader, no rocket science is required, just active listening and a readiness to take charge, focusing the board on strategy and performance instead of personal conflicts, of working with the executive team rather than allowing anybody to attack or micro-manage it.  If any director, activist or otherwise, still edges toward dystopia, it is the business of the board leader to isolate the dysfunction.  In one case, a new activist began to place daily calls to the chief executive—until the lead director intervened.  A board that defers to a bull in the boardroom is a board that has failed in its emergent mission of leading the company, not just monitoring it.

Activist investors are sometimes ready to embrace the new calling.  Seasoned directors have reported to us that activists freshly on their board have occasionally confessed that they were genuinely surprised and impressed with the substance of boardroom deliberations.  Directors were actually bringing more strategic thinking to the table than the activists had appreciated before coming in from the cold, and that was exactly what the activists wanted more of.

Some activists are less likely to seek a seat in the first place if they know that a board leader is indeed leading the board, and that the board is no longer a passive player or pawn of management.  For that, regular personal contact between outside activists and the board leader can help, though that is still a work in progress.  Too few boardrooms have even one or two directors who are “camera-ready,” in the estimation of Abe M. Friedman, formerly head of corporate governance at BlackRock and now an advisor to companies on investor strategies.  Still, more directors are likely to become better informed about their firm’s strategy and more able to articulate it to the activists who increasingly want to hear personally from directors about the inner workings of their boardrooms.

Investor activists on the board are likely here to stay and more can be expected—not in large numbers but certainly in some numbers—and even at the bluest of the blue chips, not just struggling players.  They have already knocked at the door of Apple, Dupont and Kraft, and if not this year at a given company, then maybe next.

Directors and investors, in our view, can make the most of an activist presence if they see the boardroom as a place of mutually assured construction rather of destruction—and if they then commit to making the board a working partner of management and not just a monitor of it.

How to Reinvent Yourself After 50

I was manning a booth at the Harvard Club of New York’s authors’ night when an older woman approached and picked up a copy of my book, Reinventing You. She paged through it for a moment, then put it down. “Too late for me,” she said abruptly, and walked away.

Over the past six months of my book tour, it’s a question I’ve heard often. Isn’t professional reinvention just for young people? What if I’m too old? How can I spend years training for something new, when I’m already near retirement? It’s true: reinvention is different later in your career. But that doesn’t mean it’s impossible.

In fact, it’s increasingly essential for any professional who aspires to remain in the workforce for any length of time. Steven Rice, Executive VP of Human Resources for Juniper Networks, told me he specifically asks job applicants, “How are you adapting, and approaching your next reinvention curve?” The reasons, he says, is that, “People have to reinvent themselves to fit into the new context of work.” After speaking with hundreds of Baby Boomers (and beyond) who want to reinvent themselves but fear it’s too late, I’ve identified several key points for older workers who hope to make a transition.

Understand you do have enough time. Some people think it’s not worth it to undertake any major changes later in life. Others disagree — such as my mother, who decided to get braces in her 50s, because she could be “either two years older, or two years older with straight teeth.” If money isn’t a concern, there’s no reason you can’t explore wildly new areas. (One friend’s father recently received his PhD at age 66.) If you’re still earning for retirement, you can absolutely pursue reinvention, but may want to consider more subtle shifts, such as taking classes on the side to expand your skills, rather than taking several years off to get a doctorate.

Of course you’re overqualified — own it. I’ve heard from many over-50 “reinventers” who have been turned down for jobs in new areas because they’re overqualified. Frankly, you can see why. Once someone has been a powerful executive, it’s flummoxing to understand why they’d settle for anything remotely less prestigious (short of true economic desperation). Wouldn’t they be resentful all the time? Instead of ducking the issue, I advise older professionals to lead with it. “You might wonder how I’d respond to being managed by someone younger than me, when I used to manage a large staff,” you could say. “That’s exactly why I want this job and part of the value I bring. Having been a manager, I understand the pressures and frustrations they face, so I can be an even better employee. And I’m eager to learn about this new area from someone with real expertise in it.”

Get with the times. Why should you be active on social media? Because — for better or worse — it is no longer optional. It’s even more critical for executives over 50 to have a social presence because it’s increasingly viewed as a proxy for staying current professionally. If your digital footprint is lacking and you don’t have a presence on basic sites like LinkedIn or Twitter, you’re likely to be dismissed as a Luddite. Indeed, even the basic notion of writing a resume is becoming antiquated; your “shadow resume” is Google.

Connect with your past. We all know professional opportunities are likely to come from our existing network of contacts. But many don’t realize some of the most valuable information and opportunities come from “dormant ties,” or people we’ve lost touch with from the past. As Wharton professor Adam Grant writes, “Just like weak ties, dormant ties offer novel information: in the years since you last communicated, they’ve connected with new people and gathered new knowledge. But unlike weak ties…the history and shared experience makes it faster and more comfortable to reconnect, and you can count on them to care more about you than your acquaintances do.” It may be time to reach out and reintroduce yourself.

Surprise people. On the other hand, your strong ties – the people you currently work with closely – may have developed fixed ideas about who you are and what you’re capable of, especially if you’ve been working in the same company or industry for a long time. If you want to reinvent yourself, you need to upend those assumptions, and hopefully do it in a dramatic way, so they’re sure to notice. Make a point of taking on an unexpected leadership role, taking a class in a new subject like computer programming, or explicitly requesting an assignment that intrigues you (your boss and colleagues may have grown to feel over the years that they “know what you’re interested in,” so it’s time to prove them wrong). Make them stop and question their assumptions about you.

Reinvention after 50 is more than possible; it’s critical to keeping your skills fresh and your work fulfilling. Between staying current with social media, owning your history, reconnecting with old contacts, and shaking up the ossified view that current colleagues may have of you, you’ll soon be ready for the next chapter in your professional life.

The Growing Business of Marijuana

Sandal-clad hippies in tie-dye shirts. Stoners so high they can barely put a sentence together. Foreign drug runners, gun-toting gangsters, and hardcore criminals.

These are the images many outsiders have of the medical marijuana industry.

I should know: Many of my former colleagues, friends, and family members mentioned these stereotypes in 2011 when I accepted a job helping launch a new publication covering the business aspects of this emerging sector. In all honesty, I shared some of these concerns as well. As a long-time business journalist in the mainstream media, my professional and personal reputation was on the line. Moving from a daily metro newspaper to a “pot” publication caused some head-scratching among many acquaintances – even though I was entering a  $1 billion-plus industry at the time.

To be sure, I certainly did run into some people who fit this description in the early days of our publication. And I still do now.

But here’s what is most surprising to many about the marijuana industry: It’s filled with straight-laced people who built careers – and started successful companies – in other fields. And more are joining every day.

Professionals from the banking, finance, investing, and accounting worlds. Interior design specialists, journalists, and healthcare veterans. Technology, marketing, retail, HVAC, construction, and manufacturing pros. The list goes on.

In the past few weeks, a cannabis-focused private equity firm hired a former DEA agent and a publicly traded marijuana company brought on a former executive at Yahoo and Microsoft as its president. A former Congressman is also bidding for three dispensary business licenses in Massachusetts.

The reason for the mainstream interest is simple: This is a legitimate business with many attractive opportunities, and it’s now one of the fastest-growing industries in the country.

U.S. medical marijuana sales hit an estimated $1.5 billion in 2013 – up about 15% from the year before, according to our 2013 Marijuana Business Factbook.

Impressive, but that’s only the start. Overall marijuana sales in states where cannabis is legal could double in 2014 to hit $3 billion, according to our estimates, as Colorado and Washington begin selling cannabis to adults 21 and over.

Earlier this year, we projected that sales will hit $6 billion by 2018. However, the outlook has improved drastically since then (in large part because the federal government said it will take a hands-off approach to states that legalize marijuana for adults). Marijuana legalization could spread like wildfire, and industry sales might therefore end up being much higher.

What’s more, these figures are just for marijuana transactions. Hundreds of millions of additional dollars are being spent on professional services, ancillary products and other offerings. Like any industry, the medical cannabis sector needs everything from lawyers and accountants to human resources professionals, insurance specialists, and consultants. There are hundreds of other companies making packaging, equipment to extract cannabis oils from the plant, inventory software, you name it.

Here are some other reasons why many are bullish on the industry’s potential:

Efforts are underway in a handful of other states – including heavyweight California – to legalize marijuana for general adult use, while several others (such as New York) are pursuing medical marijuana legalization. The dominoes are falling. Currently, 21 states and the District of Columbia have passed laws allowing the use of medical cannabis. In the coming years, more than half the country will have legalized medical or recreational marijuana.


Poll after poll shows that the overwhelming majority of Americans feel that medical marijuana should be legal. Earlier this fall, a Gallup survey found that 58% also support the legalization of cannabis for adult use – the first time a clear majority of the population has favored legal marijuana. In 1969, when Gallup first asked the question, just 12% of respondents backed the idea.


Companies are beginning to expand beyond their home markets and into other states. The founders of California-based Harborside Health Center – the most successful dispensary in the US with sales of more than $20 million – are hoping to branch out into new states as soon as possible. Dixie Elixirs, which makes marijuana-infused sodas, ice cream, and other products,  and dozens of other businesses are expanding nationally as well.


This could become an international industry in the near future, boosting business opportunities for U.S. firms. Uruguay recently became the first country to legalize marijuana possession, use and sales, while Canada has opened up its medical cannabis business to the free market. Other countries also are weighing marijuana legalization or relaxing cannabis laws.

That’s not to say everything is rosy.

Don’t forget: Marijuana is still illegal at the federal level. The risks in the business are huge. Executives could face criminal prosecution, and investors could lose everything overnight if the federal government or local officials crack down. That’s why average interest rates on loans to medical marijuana businesses hover between 20% and 30%.

Banking and payment processing are significant issues, and many businesses that handle marijuana directly have to operate as all-cash businesses.

Additionally, marijuana is one of the most volatile industries in the corporate world. State and local regulations change constantly. Cities can enact bans on MMJ businesses without much warning. And the costs of doing business in a heavily regulated industry can be prohibitive.

But the potential is so immense that many are flocking to cannabis. One day, I have no doubt we will see household brands develop. There will be retail marijuana chain stores a la Starbucks and cannabis-infused beverage brands like Coke. Major players in other industries – possibly Big Pharma and Big Tobacco – will most certainly enter the industry down the road. Marijuana companies will trade on the major stock exchanges, and they’ll have global businesses.

Soon enough, the industry will grow up and get buttoned-down. But for the professionals who can stomach the risks, the time to get in is now. They’ll get in on the ground floor of a brand new industry, and help determine its shape . You don’t have to be smoking something to see that as the chance of a lifetime.