Marina Gorbis's Blog, page 1492

CEOs Appear to Have Little Faith in Their Companies’ Acquisitions

CEOs are 23.5% more likely to sell shares of their companies’ stock shortly after announcing acquisitions of other firms, a finding that suggests the executives have little faith in the value of the acquisitions, says a team led by Cynthia Devers of Michigan State University. “It wouldn’t make much sense” for CEOs to sell stock “if they truly felt that the company’s stock was going to appreciate,” Devers says of her research, which analyzed data involving more than 2,000 publicly traded firms over a 12-year period.

Our Dangerous Obsession with External Recognition

Rebecca, a tech entrepreneur, would love you to equate her company’s expansive press coverage with real value creation. “Yesterday, we got written up in TechCrunch and LA Magazine, and we all had dinner at Nobu to celebrate!” She will, however, conveniently forget to mention that her startup has yet to settle on a viable business model and has zero paying customers.

John, a middle manager at a Fortune 500, attended no less than 21 industry conferences this year in an effort to increase his overall visibility. “It’s all about optics,” he says, “and you need to be everywhere.” While John was schmoozing on the company’s dime, his team members were starved of the leadership and hands-on coaching they desperately needed.

Steven, a consulting partner, tweets about 40 times per day and has his own Facebook page with 50 fans. “I do it primarily because it makes me feel good.” He spends over 20 hours a week massaging his social media profiles and trawling online for new business, inevitably compromising the quality of work provided to current paying clients.

Although our fundamental desire to be noticed is not a new phenomenon, our unending use of social media has radically elevated the level of ego in our personal lives. Famed psychologist Jean Twenge recently showed that self-importance personality traits among 37,000 college students rose as quickly as obesity from the 1980s to present. Two Western Illinois University researchers found a high correlation between Narcissistic Personality Inventory scores and Facebook activity. Countless other study sample groups, from pop musicians to Millennials, prove that we are in the middle of a “narcissism epidemic.”

This obsession with external recognition is now entering our professional lives. Every day, even the most disciplined entrepreneurs, executives, and consultants are becoming addicted to the powerful endorphins associated with heightened visibility. They invest disproportionate time and effort into advancing their own personal fame bubbles at the expense of broader goals and potentially threaten their careers as a result. Teens posting selfies on Instagram is one thing. But when visibility trumps vision in the working world, there are several dangerous consequences that can arise.

First, we distance ourselves from the fundamental growth engine of our careers. In other words, we lose sight of what really matters. Admitted Rebecca: “It feels great to get press, but that’s not an indication of success at all. We haven’t figured that part out yet.” Our LinkedIn connections, speaking engagements, and press profiles should be seen as rewards for the value we create, not the actual process by which value is created. If you’re too focused on these “vanity metrics,” you risk painting an all-too optimistic picture of yourself without accurately identifying, measuring, and improving the underlying drivers of your performance. How can you improve what you don’t measure?

Second, we misallocate our time and attention. Going for visibility is not only exhausting, it’s distracting. Steve said, “It takes real effort [to manage my online profile]. But it’s also the additional time I spend thinking about it when I’m supposed to be doing other work.” Research shows how everyday social media multitasking reduces our cognitive depth. But take it a little further, and you might actually be destroying significant value. Lamented Steve: “Maybe if I reallocated the time it took me to gain 1,000 followers into mentoring a star analyst, she might still be at the firm.”

Third, we alienate critical nodes in our professional networks. If you let your quest for visibility drive your behaviors, your bosses, colleagues, partners, and investors may quickly scurry offside. Anita Vangelisti, a University of Texas psychologist, found that visibility-oriented individuals aim to keep conversations centered on themselves, putting off those around them. In true “taker“ fashion, they place their own needs before others and feel little remorse about the colleagues they hurt along the way. John reflected on his unfortunate conference showboating habit: “I get the sense people are waiting for me to slip up, and honestly, I’ve brought it on myself.”

As Albert Einstein once said, “Strive not be a success, but rather to be of value.” As the social media echo chamber descends on our professional lives, never before has this message been more relevant. Instead of measuring your progress using the yardstick of external recognition, optimize around achieving your unique vision. At the end of the day, people who tap into their deep intrinsic motivations are much more (PDF) likely to succeed on long-term projects and hit loftier goals than those who are powered by the praise of others. Focus on achieving your vision first, and you’ll be more visible than you can imagine.

The Twelve Sales Metrics that Matter Most

Sales is both an art and a science. It is the skillful combination of emotion and logic, people and process, free-thinking and organization. I recently conducted an extensive research project involving more than one-hundred vice presidents of sales at top technology companies (software, cloud, computer hardware, and telecommunications) to better understand the art and science of managing a sales organization today.

While the study results provided detailed insights about sales organization trends, it also yielded a wide range of statistics that reflect the strategies sales leaders are employing to overcome their top challenges. Below, you will find twelve of these key sales metrics that benchmark sales organization performance, structure, and effectiveness.

1. Percent of Organization Achieving Quota

The overall average for percentage of salespeople that achieved one hundred percent of quota last year was sixty percent. However, the number of salespeople who achieved one hundred percent of quota varied greatly by sales organization. Twenty-six percent of sales leaders reported that seventy percent or more of their salespeople made quota. Fifty-four percent of sales leaders reported that between fifty to six­ty-nine percent of their salespeople made quota. Twenty percent of sales leaders report that less than half of their salespeople made quota.

2. Quota Attainment Average

The average percentage of salespeople that achieved one hundred percent of annual quota last year varied by type of industry:

Software                                 52%

Computer hardware                60%

Cloud/SaaS                             61%

Telecommunications             66%

3. Average Annual Quota for Field Salesperson

The overall average annual quota for an outside field salesperson was $2.7 million. Quota for computer hardware salespeople was the highest at $4.2 million. Telecommunications salespeople averaged $3.3 million and software was $3.2 million. Cloud/SaaS salespeople had the lowest quota at $1.6 million.

4. Average Annual Quota for Inside Salesperson

The overall average annual quota for an inside field salesperson was $985,000. Annual quota for computer hardware inside salespeople was $1.35 million, for computer software it was $1.22 million, for Cloud/SaaS inside salespeople the average was $795,000 and telecommunications was $730,000.

5. Average Annual On Target Earnings

The average annual on target earnings including salary, commission, and bonuses for field and inside salespeople at one hundred percent of quota are shown by industry below.

Outside salesperson                           Inside salesperson

on target earnings                               on target earnings

Software                                 $240,000                                 $120,000

Cloud/SaaS                             $210,000                                 $100,000

Computer hardware                $180,000                                   $80,000

Telecommunications              $150,000                                   $85,000

6. Average New Deal Size

The average new deal size reported for field sales was $166,000 and new deal size for inside sales was $19,000.

7. Sales Cycle Length

Seventy percent reported an average sales cycle length of sixty days or less for inside sales while fifty-four percent reported an average sales cycle length of ninety days or more for outside sales. Twenty-four percent of inside sales cycles and twenty-three percent of outside sales cycles were between sixty-one and ninety days in length.

8. Vertical Sales Adoption

Sixty-four percent of study participants have vertical sales specialists on their sales force (calling on verticals such as public sector, finance, healthcare, manufacturing, etc.). Seventeen percent are planning to add vertical sales specialists in the future while nineteen percent do not have any plans to do so.

9. SMB Specialization

Sixty-three percent responded that they have specialized inside salespeople that are dedicated to SMB (small to medium business) or mid-market sales. Twenty percent of these inside sales representatives are allowed to make field sales calls when necessary.

10. Field Sales Revenue Trends

Trends for 2013 and 2014 projected annual revenue attributed to field sales as opposed to inside sales varied by industry. The overall trend is for the number of companies that derive more than ninety percent of their revenues from field-related sales to decrease dramatically. For example, twenty-eight percent of software companies will derive more than ninety-percent of their revenues from field sales in 2013 and this number is expected to decrease to zero in 2015. The number of computer hardware, Cloud/SaaS and telecommunications companies with more than ninety percent of their revenues from field sales in 2013 is also projected to drop by half in 2015.

11. Inside Sales Roles

Sixty-two percent of participants reported their outside field salespeople are assigned an inside salesperson. Seventy percent of inside salespeople carry a quota and fifty-five percent indicated that the revenue generated by the inside salesperson is applied to outside salesperson’s quota. Forty percent of inside salespeople schedule meetings for the outside salesperson. Seventy percent of inside salespeople perform lead generation and telemarketing activities.

12. Sales Preparedness

Eighty-three percent of participants thought their outside field sales teams were equipped with the sales strategies, tools, and skills to exceed their numbers, compared to fifty-seven percent for inside sales and forty percent for channel sales.

America’s Economy Is Officially Inside-Out

This is the first generation of Americans in modern history expected to enjoy lower living standards than their forebears. It is the first generation in modern history whose life expectancy is dwindling. It is the first generation of modern Americans whose educational attainment is declining. It is the first generation of modern Americans who face less opportunity than their parents.

Shorter, nastier, dumber, harder, bleaker. That’s the future for not only Americans, but for many in the world’s richest countries.

Let me be clear why this is so remarkable. It’s not that the great wheel of prosperity is merely decelerating. It is that it actually seems to be turning backwards. The great wheel of progress already ground to a halt—several decades ago, if measured in terms of average incomes. And the real danger now? That it may be beginning to spin—in reverse.

Perhaps it’s just a blip. Perhaps it’s a temporary malfunction. Perhaps I’m overreacting — after all, the economy’s growing, right?

Yes… it is. And that’s precisely the problem.

For that is what tells us we are in truly uncharted water. The economy is indeed “growing.” But the top 1 percent have taken 95 percent of the gains in this so-called “recovery.”  The plain fact is that the average household is poorer in the “recovery” than during the “recession.”

We cannot suggest that an economy is perfectly fine—nay, even healthy—just because a tiny number are growing richer while the lives of the vast majority are literally growing shorter, nastier, dumber, harder, and bleaker.

I can think of many other examples of progress slowing. Of prosperity decelerating. The great wheel’s motion is never even; there are bumps in the road of human progress — sometimes the great wheel spins furiously, sometimes, it hums along gently, and sometimes, it sputters and strains.

But.

I can think of almost no other example in the history of modern democracies of progress actually becoming regress. Short of war or cataclysm, it is literally unprecedented. And that’s not the half of it. It’s unprecedented…because it should be impossible. If the rich get richer, it should be precisely because they create goods of real value to people, which elevate their living standards. In a working economy, “growth” should reflect real prosperity multiplying.

But when growth rises and living standards fall? That begins to hint that there is something wrong—very wrong, perhaps terribly wrong—with the way things are.  It suggest that what is happening to this society is not merely a simple, passing, self-healing ailment; but a chronic, possibly permanent, definitely debilitating condition. Not a flu—but a cancer.

Economics has no language—no word—to describe this condition: one in which the economy is “growing” but human progress is reversing. It’s not a depression—for that’s a situation where growth flatlines. It’s not a recession—for that’s just a temporary setback in growth. A “dark age” would signify both a decline in growth and a decline in living standards.

We have no words for this condition because economics has no concepts with which to fully grapple with—let alone understand—it. And economics has no concepts with which to understand this condition because economics believes, more or less, that it simply isn’t possible. Progress cannot go backwards when an economy is “growing”; because growth, as I’ve noted, is believed by the acolytes of the cult of economics to be the alpha and omega of human prosperity.

What, then, do we call it?

For we must give it a name, this secret hidden in plain sight. The secret that, if it were to be mentioned, would—and should—instantly discredit our leaders. Would and should silently condemn our institutions.

Given that the growth rises even as life expectancy, mobility, and educational attainment fall — that GDP expands even as the lives of the vast majority contract from shrinking health, intelligence, income, wealth, relationships, stability, security, meaning, and purpose — I suggest we call it a Great Inversion.

In this post-recession twilight zone, our economy is upside-down and inside-out.

I won’t pretend to smile, pat you on the back, and offer you bullet-pointed “solutions.” Because to a phenomenon this great, this unprecedented, this historic? I don’t believe there are any.

But I do believe that maybe, just maybe, if we have the wisdom to think through the above, the empathy to feel the tremendous suffering the future already surely holds, and the courage to see what is right in front of us—well, then, maybe, just maybe we can reach another turning point.

Not one in which human progress goes into reverse. But in which it goes into overdrive. In which the great wheel hits the redline and we all surge forward.

That’s the real challenge of the 21st century. Not just more tired, piecemeal incrementalism; not more excuses for a broken status quo; not more apologists and yes-men for leaders barely worthy of the term; not more dead ideologies and empty dogmas—the very ones that led to a Great Inversion. But revolutions. Millions of them. In every mind; in every undreamt dream; in every skyward eye. In every life.

Dan Ariely on 23andMe and the Burden of Knowledge

News broke Friday that 23andMe, the provider of genetic testing services built around a $99 kit you can use at home, would cease providing health information to consumers while the product underwent a Food and Drug Administration approval process, because the FDA considers the test a medical device that requires regulatory review. While the FDA reviews the product, 23andMe will continue to provide customers ancestry data and raw data.

Coincidentally, right when the news was posted, I was speaking with celebrated behavioral economist Dan Ariely about 23andMe. Ariely saw an ad for the kit and his curiosity prompted him to take the test. When he got the results, he knew he wanted to direct a researcher’s lens on it, because “this was standard, classic, even an exaggerated case of information overload. I wanted to analyze it from the point of view of what we can do with this information, and what should we do. I also had the thought, maybe we could use it for our research on decision making.” So Ariely got kits for all of the researchers on his staff. He spoke to me about the results of that experiment, and how he hopes products like 23andMe could improve based on behavioral science.

What was it about the results that made you think that the 23andMe service warranted more attention?

So I got all these results about my future health and illness, and didn’t know how to digest them. It was overwhelming, and not necessarily useful information. I was also anxious about it. I found myself wondering how my kids were doing. So I also got kits for my family. And then I also got the kits for everyone in my lab.

What was the reaction to the kits in the lab?

One person did not take the test, because she didn’t want to know. Most of the other researchers reacted negatively to the information they received. And in particular they didn’t like that the system did not help you separate things you could do something about from those you couldn’t. If, for example, I know that I might have a chance of high cholesterol, maybe there’s something I can do about it. On the other hand, if I’m likely to have colon cancer, I don’t know what I can do about that. After the initial trial, as far as I know, no one from my research lab went back to the website to get more information. Curiosity drove the initial use, but there wasn’t much interest afterward.

So it was dissatisfaction with the presentation of results.

It was more than that. People were sort of frightened, and we’re a lab of people who work on decision making. On the other hand, they highly valued the family finder aspect — where do you fall on the family tree and what’s your ancestry and who you’re related to. For me it was great to realize my kids were 99.7% mine [LAUGHS].

You said people were sort of frightened. Do you think 23andMe is scaring people to sell their product?

No. But I do think it relates to what psychologists call the burden of choice. If a doctor tells you that you have to make a decision about what to do about a very sick child, that choice becomes a burden in itself regardless of the results. You wake up every day wondering if you did the right thing. If the doctor says “here’s what I think you should do,” the doctor takes on the burden. In the 23andMe case, I think there’s similar thing happening but it’s a burden of knowledge. If you know even possible future illnesses based on genetics, are you already paying a price just by having that knowledge?

I’ll give you a personal example of the burden of knowledge. When I was 25, doctors found out I had Hepatitis C. One of my doctors told me that my life expectancy was 30 years.  Later, I found out that wasn’t true and since then I’ve been treated with Interferon and I haven’t had the disease for many years now. But that number, 30 years, stayed with me. It never went away. I have that burden of knowledge. In this case with 23andMe, the test service is creating a burden right now, and not helping to reduce it.

Does 23andMe have an obligation to be better with the information.

I think that they want to get better at it. It’s their mission to get people to make better decisions. In the realm of information that is frightening and worrisome, that’s not an easy thing to do. I met people in 23andMe and they are interested in the well-being of their users. When we did the tests with the people in my research  lab I sent a report to them with our thoughts. My sense is that their heart is in the right place. From my perspective, doing the right thing and profiting form it is perfectly fine. It’s a simple starting point they began with: just give people the information and they’ll be better off with it. Now 23andMe need to refine their use of data. They have to have behaviorists on their staff and use them to make the information more useful. If you think you can just give people information and expect good response, no way. It’s way too much information and it is too expensive emotionally.

So how can they start to get better?

If I were their advisor I would make decisions for people. If the test reveals that you have a relatively high chance of colon cancer, but you can’t do anything about it, maybe we don’t even tell you that, but for sure not lead with this news front and center. But, if results suggest that you have a moderate chance of diabetes that you can control by changing behavior, I would emphasize that. I would lead with the family history and genetic mapping. It’s popular and less controversial. Next I would offer information and general suggestions for how you could improve life expectancy and quality of life, based on results that are actionable. Then, I would create another layer that would cost more to access and in that layer I would give all of the detailed information, including information about things that are largely out of your control. I would make that layer cost more because I want people to make an active choice to get that level of information. I basically want to make sure that people who go for that level of information want to invest in the burden of knowing. Even with all of this, I still think that the information communicated has to be better.

We know from research that most people are innumerate when it comes to risk. It’s not easy for us to understand what it means that you have a one in a thousand chance of something happening to you. How can you communicate risks like the chances you’ll get breast cancer in a way that doesn’t frighten people?

This is a really complex issue. If it says you’re likely to get Alzheimer’s–what does likely mean? And at what age? And how severely? There’s also something called focalism. Even if it’s an outcome that’s far away, by reporting it, you make a person focus on it and then they will exaggerate its likelihood or importance. Are you making people miserable, worried and upset for nothing? That was a big missing link for me in the results.

It sounds like this maybe shouldn’t be a consumer product yet?

I’m a big believer in technology and I think if it’s done right 23andME is a great product. I worry a lot that people don’t think about the future enough, and the lack of thinking about the future is a big part of my research. I think the ability to get people to look at the future in a meaningful way and help them shape it, could be very powerful. The promise is tremendous, the execution right now is not my favorite. I don’t’ want people to have the burden of information. I don’t want to frighten people. I don’t want to make them unnecessarily worried. And I suspect that simply giving people all the information will get them to act in all kinds of ways that aren’t optimal.

You said you were surprised by the one researcher who never used the kit. That seems to me to be, maybe not an optimal choice, but a very human one.

This person was thinking that there’s not much she would be able to do about most of what she would learn so the test would just reduce her enjoyment of living. That’s perfectly valid. We know many people get tested for dire diseases all the time and never pick up their results. It is a human response. We researched this general topic once. We asked people on a hot summer day at a local pool, what are the odds that someone had peed in that pool at some point earlier in the day, and the results came back where most people say something close a 100 percent, it was virtually certain that some kid peed in the pool. But people still used the pool. Then we asked them to imagine someone peeing in that pool right there while they were there watching, and asked how they would feel about going in after? You can figure out what they said. Sometimes a little ambiguity makes life much more bearable.

Why Japan’s Talent Wars Now Hinge on Women

“The majority — 65 percent — of our new recruits are women,” said the head of a foreign multinational I was working with in Japan last week. “We’re just going for the best, and the women are better educated and more mature.” Many foreign multinationals operating in Japan are beginning to understand that gender balancing historically male dominated workforces is proving an effective way to leverage both halves of the university educated talent pool – while shaking up traditional cultures with new, more ‘performance-oriented’ influences.

Still, how do you start to get older men to accept young female bosses in Japan? The HR Director explained how she focused on simply accelerating the already shifting ethos from tenure-based hierarchies to more performance and leadership-based priorities. Women served as leverage to make it happen, and then prove the benefits.

Foreign firms have recently figured out that proactive gender strategies offer a significant competitive edge. Especially as most smart, ambitious Japanese women would now rather work for a foreign company than be asked to serve tea in the seemingly-unchanging corporate cultures of Japanese firms.  And most smart, ambitious men would still prefer the high-status boost of a big local brand.

In fact, Japanese companies seem to drive women away, in contrast to many countries where the gender balance is slowly but surely improving. According to data tracked by the OECD, Japanese women are among the least equal of women in any developed country. The WEF ranks Japan’s gender parity between Cambodia’s and Nigeria’s. But it’s not just kids and care-giving keeping them out of the workforce. A recent survey said the ladies are pointing at unsupportive managers and work environments that offer only dead-end part-time jobs. That has resulted in Japan having the developed world’s record (battling it out with South Korea) for the lowest number of women in management, around 10%.

A majority (68%) of Japanese women who identified themselves as career-minded or ambitious said they believed foreign companies are more woman-friendly than Japanese firms.

Too few Japanese companies are pushing for change, and even then usually at the behest of a foreign CEO. NISSAN is a good example, with Carlos Ghosn declaring he is “glad to be the poster boy of women’s empowerment… It’s not only about women but about men. I think there is a lot of wasted talent that the world cannot afford to waste.” The company’s hottest-selling car in Japan, the Nissan Note hatchback, is the result of a team led by a woman.

Even so, Nissan’s goals are somewhat modest: they aim to increase their ratio of female managers from 7 to 10 percent by 2017. That puts them well ahead of countrymen and competitors Toyota and Honda, for whom only 1% of managers are female. But it puts them very much behind US automakers, whose managerial ranks are 33% female, despite having no subsidized childcare or guaranteed maternity leave as Japanese women do.

Now the government is getting in the game, and the gender issue has become a part of Abenomics, the Prime Minister’s push to revitalize the Japanese economy. In a recent speech to Wall Street, he declared that  “If these women rise up, I believe Japan can achieve strong growth”.

The Ministry of Economy, Trade and Industry is also recognizing the increasing power of women, reporting that “three out of every four big-ticket purchasing decisions are made by women alone or jointly with their husbands.”

Abe’s economic plan includes financial incentives for companies to promote women, expanded maternity leave, and increased day-care funding in an effort to get more women, especially mothers, back into the Japanese work force.

He’s even working on social norms by pushing dads to deliver at home too. If Abe’s plan works, Japan could add as many as 8 million workers to its slowly declining workforce.

But given the size of the challenge at hand, my bet is that Japan will be talking gender quotas in the coming decade. (Seem extreme? No one thought that Germany would get there either, and yet this is now a major negotiating point in Merkel’s new government formation.)

Japan needs more women working and more babies (yes, these two are mutually reinforcing) to counter an aging workforce and a flaccid economy. Japan may be the only OECD nation where the number of pets (25 million) exceeds the number of children (18 million under the age of 15). Facing this type of talent shortage, employers can play a key role in getting more women into every office. Will foreign companies show them the way? Or simply hire the best women, and leave Japanese firms in their male dominated status quo?

Talent and the New World of Hiring

An HBR Insight Center




Research: Recession Grads May Wind Up Happier in the Long Run
Ten Essential Tips for Hiring Your Next CEO
Hiring and Big Data: Those Who Could Be Left Behind
How to Use Psychometric Testing in Hiring

Capitol Hill’s Productivity Problem

“This Congress Going Down as Least Productive,” blared the headline on the front page of Wednesday’s Boston Globe.  As a productivity expert, my take on this is that it’s primarily a result of procrastination — one of the worst enemies of productivity.

Like most people, Senators and Representatives tend to procrastinate when confronted with difficult decisions such as raising the debt ceiling and passing the federal budget.  Because Democrats and Republicans have such conflicting positions on these issues, they tend to make decisions only when coming up against a deadline.

Congress is now facing a series of deadlines over the next several months.  Some of these are beyond Congress’s ability to control, notably the debt ceiling, which we will hit when we hit it.  Others, Congress itself created, in particular the December target for agreeing this year’s budget. Indeed, Congress has often met a deadline by creating another one in the near future — ”kicking the can down the road.”

Missing deadlines is always bad, but not always catastrophic.  If Congress is late on passing the federal budget, for instance, most of the federal government closes down for a few days or weeks.  This result is bad, but not disastrous, for the American economy.  By contrast, if Congress does not raise the debt ceiling on time, the result would be catastrophic. Such a “default”, even if temporary, would undermine global faith in US Treasury bonds for years to come. So Senators and Representatives should be careful not to procrastinate too long on really critical issues.

Unfortunately legislative inertia gives a tremendous advantage to the political party that benefits most when Congress does nothing, which only encourages procrastination.  At the end of 2012, for instance, if Congress did nothing, all the Bush tax cuts would have automatically expired.  Most Republicans were appalled by this possible outcome, although it was not so disturbing to most Democrats.   As a result, Republicans were forced to cave into many demands of Democrats, who would have been relatively better off if Congress had done nothing on the Bush tax cuts.

We should expect, therefore, that Congress will continue to set deadlines, and wait until the last minute to meet them, as long as there is such a wide ideological gulf between Democrats and Republicans.

Sadly, this divide is likely to persist.  Most House seats are “safe” for one party because Congressional districts have been gerrymandered by state legislatures. In the 2014 election, for example, there are only 36 “competitive” seats out of a total of 435 House races. So most Representatives have no political incentive to take moderate positions or compromise on legislation.

Much the same is true for Senators.  Candidates are usually chosen in separate statewide primaries, where party faithful dominate the voting.  Party faithful tend to represent the wings of each part: the right wing for Republicans and the left wing for Democrats. For example, Senator Robert Bennett, a staunch conservative but pragmatic legislator, lost the Utah Republican primary by a few votes in a low turnout primary to a Tea Party candidate.

In short, the low productivity of Congress is the result of significant structural flaws with our political system. If we want more productivity and less procrastination in Congress, we will have to change the redistricting process and primary system in most States.

Five Ways to Learn Nothing from Your Customers’ Feedback

I have studied a lot of customer feedback systems in the 25 years I’ve spent working with companies on customer strategy. Many of them leave me sad and befuddled. So many companies make the same mistakes over and over.

The leaders of these companies seem to want to hear from their customers — that’s why they spend so much money on elaborate “voice of the customer” and other feedback systems. But the approach many of these companies take to implementing such systems seems almost as if it were designed to ensure nobody in the organization will actually learn anything from what they hear. And if employees don’t learn anything, how can they take action to make things better?

If I were writing a “how-not-to” manual for customer feedback — a manual that would guarantee your feedback system taught your employees nothing about how to delight customers and earn their loyalty — here are the five rules it might include:

1. Aggregate the feedback into scores, percentages, and averages — and stop there. This common mistake completely obscures any individual customer’s voice and prevents employees from linking the feedback to a particular event, behavior, or action they can remember. Yet there’s something irresistibly seductive about numbers that seem so rigorously mathematical. “Congratulations! Customer satisfaction increased 0.431% this quarter! Great job!” Of course, most companies try to figure out what drove the improvements by breaking down each summary score into dozens of “drivers,” but the typical result is that employees get lost in a sea of analysis and numbers. In fact, this becomes much worse when scores decline. That’s when the analysis really gets overwhelming.

2. Hold the feedback. Many companies distribute summaries of what they hear from customers six, eight, or even 12 weeks later. This is a byproduct of the first rule because turning customer feedback into statistics usually requires aggregating it for several weeks in order to collect enough observations. All that analysis and reporting takes time to assemble, too. How well do you remember each of the many conversations and interactions you had six weeks ago? Chances are your employees don’t either — which makes it awfully tough for them to remember what they did that might have contributed to variations in their customers’ feedback.

3. Eliminate the human voice. How often have you taken a company’s survey because you wanted to register your annoyance (or delight) with the company’s actions, only to discover that none of the questions seemed like they really addressed the issue on your mind? Too many companies ask customers to rate their performance on a predetermined list of factors — typically offering many prompts covering every conceivable element of the company’s product or service. Multiple-choice questions are convenient for your company to process and analyze, but they impose a burden on your customers. More importantly, they don’t give customers a chance to share their feedback in their own words. Do you know better than your customers exactly what issues they face and how they should describe them?

4. Ensure that there’s a lot at stake. If you want your employees to focus maniacally on customers, what better way than to put money at stake, right? But tying people’s compensation and promotion prospects to changes in your customer-satisfaction metric doesn’t focus them on customers; it focuses them on a number. And, as I’ve discussed before, that can lead to a lot of behaviors that might be maniacal but are not customer-focused. More often than not it leads to begging customers for higher scores or discouraging angry customers from providing feedback. It’s also likely to prompt debate about the basis for the score every time employees or departments are off-track for meeting their goals.

5. Never close the loop with customers. Historically, the vast majority of customer feedback was anonymous. It was collected in a “market research mode,” which meant no one could follow up with individual customers to address their issues directly. The flawed logic behind this was built on a belief that customers would not share honest feedback unless their identity was kept secret. That might be true in some circumstances, but in my experience, it’s rare. Anonymity in customer feedback is, frankly, overrated. People want to be heard. They want their feedback to be acknowledged. They want to know that the time they invested sharing feedback meant something and was acted on. Closing the loop is essential to building lasting customer relationships, and it is an invaluable opportunity to dig more deeply into the details of what delighted or enraged them. It offers an opportunity to begin digging into the root causes of customer satisfaction or dissatisfaction to uncover policy problems, issues with product design, or other pesky issues that require cross-functional collaboration.

Of course, no company intentionally follows this “how-not-to” rulebook. And yet, like me, I bet you have seen at least one company that follows all five of these rules, and maybe more.

The truth is, creating an organization that really listens to its customers — what many call a customer-centric culture — is difficult. That’s why so many companies have moved from traditional customer satisfaction approaches rooted in a “market research mode” to customer feedback systems deeply integrated into daily operations. Real-time feedback from “voice of the customer,” the Net Promoter SystemSM, or other feedback mechanisms can deliver customer responses directly to the employees who need to hear them, soon after they took the actions that generated them. This sort of closed-loop feedback makes it easier to learn from experience. I dare say that a good deal of what accounts for the popularity of these approaches is the frustration many leaders feel about how little their employees have been learning from customers.

If you want employees to learn from customers, don’t follow the traditional approach to customer satisfaction measurement. Make feedback a part of your daily operations. Deliver the feedback directly to the employees who need to hear it. Focus your company’s customer listening efforts not on measuring more precisely, but on learning more effectively.

How to Fund Indian Start-Ups

Even though interest in entrepreneurship is at its highest in India, the country has a nominal seed capital infrastructure. India has numerous small retailers and service providers who are shining examples of scrappy entrepreneurship at its best, but the information technology startups that are my primary interest typically require outside funding.

With that in mind, how do we find new ways to fund India’s tech startups and build global businesses?

India has done well in the last twenty odd years to build its technology industry through services. Today we’re seeing a maturing of the industry, and entrepreneurs now want to build products as well. Or they want to build online businesses: e-commerce, mobile apps, so forth. Sometimes they want to build hybrid businesses–both online and physical. Or they want to combine products and services.

As far as I am concerned, all those permutations and combinations are fine. However, in today’s India, building capital-intensive businesses is difficult. Even more difficult is to build a business that requires capital out of the gate.

If you can bootstrap your way to validation and revenue, ideally, to profitability, then there is plenty of capital available. However, if you need capital to validate, you are operating in a zone that will be full of very dark hours.

All risk capital in India is in effect growth capital. You will need to absorb the risks yourself, and present a growth opportunity to angels and VCs. If you can bootstrap your way to, say, $1 million in revenue, there is enough capital out there to give you $5 million or $10 million to get to the next level.

But if you need funding in the seed stages, before validation, there is very little capital in the system.

My friend Sharad Sharma, an active angel investor, sums up the situation well:

“The US does more seed deals by 11am in a single day than India does in a year. I haven’t dug up the 2012 numbers. But in 2011, $30 billion was invested by angels and $24 billion by Series A venture capitalists. If one assumes each angel deal was $300,000 per deal, then about 100,000 deals were done in 2011. That is about 500 deals per working day. In India, Indian Angel Networks did 13 deals last year, Mumbai Angels about a similar number, Harvard Angels did three, Chennai Angels did six, etc. The optimistic number for the number of angel deals would be 100. Even the most optimistic observer who’d count every informal deal would not put it past 200. So the Indian seed stage ecosystem is really small. This is not what the media makes it out to be.”

More recently, there is an over active incubator network that has taken hold. The Indian government is offering money for people to set up incubators, which has led to a lot of clueless people setting up incubators. They promise seed funding to naïve entrepreneurs who, more often than not, are entirely unfundable. They lack the experience or skills to mentor entrepreneurs and teach them what needs to be taught. Several VCs, who for obvious reasons do not want to be quoted, have complained to me that “incubators” and “advisors” in India are dishing out bad advice to unsuspecting entrepreneurs. Some even run scams like asking for 5-10% equity to “introduce” founders to angel investors. And most claim to “graduate” entrepreneurs from their programs in 3-6 months with nothing to show.

Given this rather messy environment, entrepreneurs have a few pragmatic choices on how to navigate the seed stage bottleneck:

Bootstrap with Services: Many Indian IT entrepreneurs come from the services industry background. Using IT services to generate cash and develop customer intimacy, it is entirely possible to build products. We have numerous case studies of this being a tried and true procedure, and recommend it strongly.

Bootstrap with a Paycheck: Many aspiring Indian entrepreneurs are currently sitting on the sidelines, not yet ready to play. I suggest you hold on to your paycheck, and start validating your idea. Learn what it takes to build a business. There are concrete, defined ways in which you can do so. Especially if you are building online businesses, this is an excellent strategy. Quit your job only AFTER your fledgling business achieves a certain level of validation.

Friends and Family: Historically, in India and elsewhere, entrepreneurs have built businesses with the backing of their friends and family. The biggest difference between professional investors and friends and family is that the latter cares about YOU.

The Indian market is a slow adopter of new technologies. As such, you cannot expect to be able to get to a product-market fit in three months. It may be 18-36 months before your venture really starts to find its stride.

Until then, you are better off sticking to one of the three above principles of bridging your capital gap.

In summary, there is a miniscule pool of seed money in action in India currently. Most of this money will go to validated businesses, not to concepts, and not to entrepreneurs experimenting with concepts.

Stop wasting time chasing capital unless you have reached sufficient maturity.

In India, by and large, the definition of seed capital is misunderstood by naïve entrepreneurs. They think entrepreneurship is sexy, and investors are sitting around, waiting to write checks for them to start their businesses.

This expectation needs to change.

As angel investor Nandini Mansinghka puts it, “Seed capital needs to return to its old-fashioned definition of people who know you putting in money in your venture, because they believe in you rather than your core idea. The only difference as we mature as an ecosystem, is these known people will not just be family, but the extended network built both personally and digitally.”

And if you don’t have such friends and family to help you get off the ground, then focus on the other two options: bootstrap with services, or bootstrap with a paycheck.

In India as it exists today, those are your options.

Pilferage from Mail Remains Significant Problem in Emerging Countries

One of the developmental barriers faced by emerging economies is the unreliability of local mail. For example, a team led by Marco Castillo of George Mason University discovered that more than 18% of envelopes sent from the United States to households in Lima, Peru, didn’t arrive at their destinations, and envelopes containing money were 50% more likely to be “lost” than others. “Clearly, those who handle the mail are looking for clues that might suggest that an envelope holds something of value,” the researchers say.