Marina Gorbis's Blog, page 1524

The Problem with Principles

As I write this, people around the country, and the world, are in stunned dismay at a small group of Congressmen that took the United States to the brink of default because the President and his party refused to repeal at least part of the Affordable Care Act (Obamacare). Had they succeeded (it now appears Congress will head off disaster at the last moment), it would have been the first time in our history that the nation defaulted, going back to Alexander Hamilton — and would have placed our economy at risk of another recession. Why did they do it? They’re standing on principles.

Meanwhile, European Union economic policymakers are leading the continent into its worst extended economic performance since governments began keeping national economic statistics. At the current rate, Europe’s recovery from the current slump, between 2007 and 2013, is behind its growth rate from 1929 to 1935 — of course, those were the years of the Great Depression. Why? Because they’re standing on principles.

As it turns out, both zealous Republicans and sober EU policymakers are standing on quite similar principles — balanced budgets, smaller government, lower taxes. As a life-long Republican (I served a political appointment in the Bush 41 administration), I’m disposed to agree with those concepts. But as a pragmatic businessman, I abhor their elevation to the status of “immutable principles.” I’m for those concepts only as long as they work to achieve the goals they’re intended to serve. 



The problem with tea party Republicans and EU policymakers is that they believe these concepts are immutable. They always work. They can’t be questioned. They’re the truth. They’re principles.

Men standing on principles gave us Communism and fascism, the great political and social scourges of the 20th century. They’re giving us radical Islam, the great scourge (so far) of the 21st century. No, I’m not comparing EU policymakers or tea party Republicans to Hitler, Stalin or Osama Bin Laden. Those men were evil. But the reality through history is that when men like these (and it is usually men, for what it’s worth) proclaim immutable principles, it attracts masses of misguided people who don’t want to think, who are uncomfortable with reality and all its complexity, who want absolute truths to guide them through the confusions of the real world — which does describe tea party Republicans and EU policy.

Here are some telltale signs of the problems with principles, whether in the form of political ideology, religious fundamentalism, or other rigid or extreme ideas.

You Know You’re Standing on Principles If…

People who stand rigidly on principle are never open to the possibility that they might be wrong, no matter how badly things are going on their watch. 



People who stand on principle don’t seek out varying opinions from intelligent people with different experiences than their own. They demonize those who disagree with them.

People who stand on principles stop learning. I once saw a House Republican leader interviewed, and the conversation turned to Ronald Reagan. This Republican leader idolizes Reagan, has studied his career, and regularly touts his own adherence to Reagan’s conservative principles of smaller government and lower taxes. When the interviewer pointed out that Reagan had raised taxes (see around 11:00), the Republican was dumbfounded, like a deer in headlights. He actually turned to his press person, who interrupted the interview. This was information contrary to his sacred principles. He’d filtered it completely out.

People who stand on principle don’t “check their assumptions” from time to time. They don’t feel the need. When they look for evidence, it’s not to test their assumptions, but to justify their entrenched position. If things aren’t working out, it’s the fault of something else, not their principles. On the other hand, if something good happens, it’s all due to adherence to their principles. Their principles are not “falsifiable,” as good scientists put it. They can’t be disproven, in the minds of those who stand on them.

Worst of all, people who stand on principle invariably run headlong into absurdities of unanticipated consequences. Abraham Lincoln understood this: “The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew, and act anew. We must disenthrall ourselves, and then we shall save our country.”

Did the Founding Fathers Give Us “Principles”?

Here in the US, many conservative Republicans place great emphasis on immutable principles supposedly laid down by the Founding Fathers. They insist that we must stay true to the Founders and that their principles must guide our actions. But guess what? The Founders laid down no immutable principles. They were sons of the Enlightenment,  and were the ultimate experimenters. The United States in their mind was one great experiment, and everything they gave us, even the Constitution, must be amendable to change.

This applies even to the core founding concepts: equality and the right to life, liberty and the pursuit of happiness. In his first draft of the Declaration of Independence, Thomas Jefferson wrote, “We hold these truths to be sacred and undeniable, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.” (emphasis mine)

The great scientist and experimenter, Benjamin Franklin, crossed out “sacred and undeniable” and replaced it with “self evident.” Jefferson, himself a superb, pragmatic thinker, immediately agreed, as did John Adams. Even our core founding concepts weren’t immutable. They weren’t unquestionable principles. The “truth” of even these core concepts — like everything else about the new republic — was subject to verification, testing against reality.

If you have to have a guiding principle, I’d suggest that last one, about testing principle against reality. It’s a great principle for business and the economy. And it would be a great principle for our political leaders.

Nice Managers Embrace Conflict, Too

Most people want to be liked: It’s one of the fundamental tenets of human behavior. Because of that motivation, many of us have an unconscious desire to avoid conflict. We prefer to “get along,” “not make waves,” and “act as a team player.” We all want to be known as a great person to work with.

The only problem with this mindset is that creative ideas and better ways of getting things done often stem from constructive conflict. Organizations need it to advance. And even in the day-to-day, workplace conflict is still inevitable because organizations are full of bright, ambitious people with different points of view, controversial ideas, and disparate values. There’s no way that we can get along with everyone all the time.

Finding the right balance between the need to deal with conflict and the instinct to avoid it is one of the toughest challenges that most managers face. While most realize that allowing unbridled conflict can create a toxic atmosphere with low morale and high turnover, they often miss the fact that not enough conflict can be just as damaging. When people hesitate to speak up about poor practices or processes that don’t make sense, it creates a significant amount of unnecessary complexity and fosters a passive acceptance of the status quo. That’s why “stop being so nice” is one of the seven strategies for organizational simplification that we highlighted in a previous post.

Of course, overcoming the natural and often unconscious tendency to damp down conflict is tough to do – but if you’re willing to try, these four best practices can help:

Quote The Godfather. In order to foster more constructive conflict and feedback, remind your team and your colleagues about Don Corleone’s admonition that “it’s not personal, it’s business.” Doing this will reinforce the notion that we can disagree about ideas and strategies, but still respect and like each other — something that is often forgotten in the heat of battle. With this principle in mind, encourage team members to ask probing questions and challenge assumptions. Eventually asking, “Have you thought about this?” should feel like a productive conversation, rather than a personal attack.

Create challenge events. Rather than leave it to chance, schedule time with your team to question norms and change the way things are done. Make it clear to them that processes are expected to evolve over time (even the ones you created) and that it’s OK to push back on them. Doing this will create a “safe space” where they can assess whether routine tasks  are worth the effort, and modify them if necessary. It also allows people who might hesitate to raise issues by themselves feel more comfortable doing so in a group.

Recognize employees who question the status quo. When employees take the risk of creating a productive disruption, give them positive reinforcement. If someone pushes back or raises an uncomfortable question in a meeting, back them up rather than shut them down. If possible, use it as a teachable moment to encourage others to do the same.

Set ground rules for conflict. Since everyone struggles with conflict to some degree, develop a few standards for how your team can manage it constructively. For example in one company’s review sessions, participants need to begin with at least two positive comments before anyone is allowed to throw in a criticism. Although it feels a little awkward at times, this practice forces everyone to take a more balanced view of other people’s work, which reduces the tension and allows for more productive discussions. In another firm, every meeting ends with five minutes of what’s called a “plus/delta” critique of the meeting – with quick comments about what was good about it and what should be changed the next time. Again, this more structured practice makes it easy and acceptable to openly and constructively criticize.

In the short-term, it’s almost always easier to avoid conflict and come across as being a “nice” manager. But more often than not, being a little less nice might be the best thing for your people, your organization, and you.

An Obstacle to Patient-Centered Care: Poor Supply Systems

It is widely acknowledged that patients and their families should be deeply involved in the design of and decisions about the health care that the former receive — and that it is integral to achieving high quality and patient satisfaction. But delivering such “patient-centered care” has proven challenging. After hundreds of hours of observations in hospitals throughout the U.S. and Canada, I have come to the conclusion that health care professionals will continue to struggle to deliver it unless hospitals redesign their internal supply processes, structures, and measurement systems so that staff have the specific materials and equipment needed for patients’ individual care plans, when they are needed. The good news is that approaches in other industries offer possible models for hospitals and other care providers.

My research shows that problems with the supply of equipment and materials — which I call “operational failures” — disrupt care and waste up to 10% of nurses’ workdays. On one medical/surgical nursing unit I observed, there was a chronic shortage of functioning computers-on-wheels, which connect to the network and enable doctors and nurses to access patients’ medical information and to enter notes about care delivery. The shortage motivated some nurses to arrive 30 minutes before their shifts to secure computers for themselves. They did this by making the computer appear broken or by putting personal possessions on it to deter other nurses from using the device.

This is just one example, but clinical staff members in many hospitals are too often forced to leave patients’ bedsides to hunt for materials, delaying care and leaving patients unattended.  Given the lack of organizational attention given to ensuring that internal supply processes can reliably meet the needs of all patients, clinicians have little choice but to fend for their own patients. Hospitals rely on a workaround culture rather than on excellent processes to provide patient-centered care.

Through a series of observational and experimental studies, I uncovered several reasons for the occurrence of operational failures.

Organizational-design issues. Many of these failures arise at the boundary between nursing units that provide “supply-to-order” care (tailoring care to the individual needs of each patient) and support departments that “supply to stock” (supply materials in a predetermined quantity independent of patients’ actual needs). Under these conditions, supply departments may successfully execute their individual routines, but operational failures may arise because the work is not customized to meet current patients’ needs.

For example, I observed a nurse who searched multiple locations for a triple intravenous pump that her patient required before she eventually located a dirty one and cleaned it herself. Although it had been foreseeable that the abdominal surgery her patient underwent would require this device, the sterile-processing department, which was responsible for cleaning dirty pumps and supplying clean ones, did not have any insight into the current patient’s needs. Consequently, the types of clean pumps on the unit did not match patient requirements.

(See “Redefining the Patient Experience with Collaborative Care” for an example of how ThedaCare tried to address this issue by redesigning supply stations and processes.)

Insufficient knowledge translation across departments. In the example above, the sterile-processing department did not know it needed to supply a triple pump because the patient’s medication orders were not translated into an equipment request. Anticipation of the patient’s equipment needs and effective transfer of this information to sterile processing could have obviated the nurse’s workaround.

Ambiguous handoffs. Investigation showed that the process of supplying equipment to the nursing units often ran into a roadblock mid-process because each department thought the other was responsible for completing the next step.

Insufficient physical space. Failures also arose from the physical work environment. At one hospital, the electrical outlets for plugging in the computer-on-wheels were above the sinks, which resulted in computers blocking sinks used for hand washing. To wash their hands, care providers first had to push aside computers.

Violations of work-design principles. Principles from lean manufacturing can increase the effectiveness of individual work routines as well as coordination of work across departmental boundaries. Violations of these principles can result in operational failures. One hospital system’s story is told here.

Here’s a more detailed description of the sources of operational failures.

Why Do Operational Failures Persist?

Given that operational failures significantly disrupt care, why aren’t they addressed? One reason is they usually originate in supply departments but surface in nursing units and nurses do not have the authority to change supply processes to make sure they do not re-occur. While supply departments can change their processes, it’s not in their interests: They would bear the cost without reaping the benefit.

These dynamics suggest that resolving the problem will require senior managers to get involved in redesigning organizational structures, aligning incentives, and overseeing supply processes that flow across multiple departments. Undoubtedly a reason so many hospital executives have not made this issue a priority is they are unaware of its magnitude. That’s because clinicians and other frontline employees typically work around these failures by relying on redundant resources or extra effort. Since there is no crisis and the pecuniary cost of workarounds is relatively small (and, therefore, unlikely to cause a budget overrun), the issue remains hidden.

Solutions from Other Industries

Companies outside of health care that have had to contend with similar supply challenges can provide approaches that hospitals could adopt. One is Jaeger Automobile, a Norwegian service center, which has dramatically reduced the time it requires to repair vehicles by redesigning its processes and infrastructure.

Jaeger places skilled mechanics, rather than secretaries, at the start of the process. When customers call in to schedule service, the mechanics can diagnosis customers’ repair needs and order the required parts rather than waiting until customers bring in their cars. The firm also used historical repair data to identify repairs whose volume is large and predictable and created dedicated bays for this work. The remaining kinds of repairs are performed in flexible bays that can handle a wide range of issues. Finally, Jaeger’s parts supplier, Toyota, delivers parts daily; orders placed before 11 a.m. are delivered by 3 p.m.  In combination with the other changes mentioned above, daily parts delivery enabled Jaeger to redesign its processes to deliver same-day repair.

To implement a system like Jaeger’s, hospitals could assign a physician or highly skilled nurse to be responsible for determining — at the start of their hospital stay — the materials and equipment that patients will require, using their surgical procedure, diagnosis, and medical information.  In addition, standard-equipment order sets could be developed for high-volume and equipment-intensive surgical procedures, such as hip or knee replacement. Sharing anticipated requirements with supply departments in advance of the procedures would allow them to proactively prepare materials.

To implement the dedicated Jaeger’s dedicated service bay concept, hospitals can analyze historical data to discover which patient segments have a predictable demand large enough to warrant a dedicated system for supplying the equipment and materials needed for their care. For conditions whose patient volume is less predictable or low, hospitals can create flexible supply systems capable of servicing multiple patient types. These changes will better align supply departments’ work routines with patients’ actual needs.

Hospital-level measures of the supply department’s performance that incorporate internal customers’ perspectives are another change that can improve care delivery. This approach is in contrast to the more commonly used department-level measures, such as actual-to-budgeted labor expenses, which can cause managers to optimize department performance over hospital performance. To facilitate a hospital-level measurement of internal service quality, Newton-Wellesley Hospital in Newton, Massachusetts, created a software tool, SupportCard, to solicit and analyze frequent evaluations from internal customers (e.g., the nursing units) about the quality of internal service operations. For example, one of the questions is, “Were day-to-day operations able to run efficiently and effectively as a result of the support service?”  These measures, which are highly correlated with patient satisfaction scores, help identify opportunities for improvement and prompt cross-departmental discussions.

Hospitals could also borrow an idea for improving processes from the construction industry. It is often challenging to coordinate work across the multiple groups involved in construction projects and to communicate pertinent design changes. To address these issues, many construction companies now perform both design and build responsibilities. Coordination meetings — if held frequently and early in the project timeline — can surface problems in the design stage rather than during the construction stage.  (For an example, see the Harvard Business School case on Autodesk). Hospitals could similarly reorganize themselves so that the different supply functions are united to serve specific types of patients and the supply, medical, and nursing staffs can meet weekly to discuss things like equipment and materials needs to ensure that patient needs are being met.

Addressing operational failures, which at first glance appear to be small-scale issues that frontline employees should be able to handle on their own, actually requires substantial modifications to process design, organizational structures, and measurement systems. These changes must be supported by senior managers. The alternative is a continuation of the operational failures and workarounds that are obstacles to delivering high-quality, efficient, patient-centered care.

Follow the Leading Health Care Innovation insight center on Twitter @HBRhealth. E-mail us at healtheditors@hbr.org, and sign up to receive updates here.

Leading Health Care Innovation

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The Trouble with Gender Targets

“There is nothing more absurd than having a target of 49.1% women in management,” exclaimed a manager in a big consumer goods company (which, in disclosure, is a client of mine) in Sao Paolo last week. There are few things in business less popular than targets for a fixed percentage of women in management. Men don’t like them, and women don’t much like them either. They offend everyone’s sense of meritocracy.

But there are targets for almost every other objective in business, and no one seems to find those problematic. Why, then, the frustration over targets for gender? Most managers just don’t see it as a business issue. A company’s degree of frustration over gender targets usually correlates with how poorly the company has sold the “why” of balance.

When people actually believe that balance benefits their business, resistance to targets diminishes. Whether it’s about leadership and talent, or customers and innovation, identifying and communicating an inclusive aspirational vision – to both men and women – is key. Leaders too often have skipped over the why, assuming that their employees already get it, and insist they just need a bit of help on the how.

But a generation of leaders who have worked hard and contributed to some of the world’s best corporate success stories have a lot of trouble envisioning what a quota of women will add to their bottom lines. Especially as they are absolutely convinced that they and their firms are gender neutral, and only promote people based on competence. Targets are like a red flag to a bull for these men and women. They experience it as an affront to their deeply held meritocratic principles. It doesn’t help that targets are usually framed as all about ‘women’ rather than about rebalancing the organization to reflect today’s talent and markets, or about flexible gender-neutral ratios. For example, “40% minimum of both genders, at all levels.’”

Targets are simply a way of measuring progress. But in the world of gender balancing, they too often become a (little understood) end in themselves. It is faster (and cross-culturally simpler) to communicate a target than it is to share – and sell – a vision. So expediency plays over efficacy. And even if these companies reach their targets, they often realize that they have not necessarily shifted the culture to be more global, more customer-centric, or less hierarchical.

Targets don’t teach people about the unconscious masculine realities that underlie today’s corporate cultures or how unattractive they are to most women (and a fair number of men). Nor do they help the dominant majority to question – and experiment – with other ways of leading and being.

Earlier theories of “critical mass” suggested once you had at least 30% of any group, they would no longer be perceived as a minority or subordinate. What we are now starting to see is that you can have critical mass, but this does not necessarily shift the dominant ethos, mindsets, and leadership styles that continue unperturbed to define the tone and the rules of the game.

So I have seen organizations become gender balanced, like the one I was with last week, yet both men and women in the organization remain convinced that sexism persists. After years of pushing on targets, the men are convinced that the system favors women, while the women remain wary of a culture that seems not entirely convinced of their contribution.

This is partly a result of how they achieved the targets: very often by promoting men internally, and accelerating the recruitment of senior women from the outside (who then don’t have the depth of networks and knowledge that the insider males do). Men and women end up thinking that the other sex is getting promoted for the ‘wrong reasons.’ They have no shared vision or history of complementary perspectives and experiences, but rather a competitive positioning of who is getting the plum jobs. Interestingly, I have seen these reactions in companies or divisions run by both men and women.

This creates a mutually defensive – and acrimonious – culture. Which often has more to do with insider/ outsider status and cultural alignment than it does with gender, but everyone is too worked up to fine-tune the analysis. Men think women are overly sensitive and ignoring the evidence (senior leaders are gender balanced, and recent hires have been selected to fill a target). Women think men are being unsupportive and non-inclusive (which they often are, not appreciating outsiders parachuted in over their heads).

Both men and women begin to put the blame for process and cultural dysfunctions onto gender, and become convinced that the other gender is missing competence and skills. Interestingly, both sides anchor their arguments in meritocratic principles.

This may also illuminate what seems to have happened at Harvard Business School, which has pushed for years to balance its MBA class, and managed to get to roughly 40% female/ 60% male. Yet it discovered, and shared in a New York Times article, that this hadn’t had the impact they expected. The culture was, if anything, even more masculine, competitive, and class-conscious than before.

The reality is that successful gender balancing requires more than a simple statistical push. It means real organizational change. Unless companies adapt their leadership cultures, management mindsets, and policies to the consequences of a more gender balanced talent pool, women who out-performed earlier fall prey to environments that haven’t adapted to their strengths and differences and are soon perceived to be under-performing.

So while many organizations focus initially on targets, they usually wake up at some point to the fact that targets need to be integrated into a more strategic story. Gender balancing for its own sake doesn’t make sense to most managers. If you don’t take the time to make sense of the push for balance, you can create a backlash.

At HBS, it was after they’d reached 40% women on the MBA track that they realized that numbers alone would not shift the culture. That would take leadership: a new President and a committed group of deans aligned to shift the message. They did some things right. From my experience bringing the same kind of change to organizations, there are a few things they could also have improved on.

What worked:

Strategic framing: The more HBS framed their change initiative as a culture change for effective leadership and business performance, not as ‘diversity’ or a ‘women’s’ initiative,’ the more effective they were.
Holistic approach : The deans looked at a range of cultural and systemic issues – including the balance of MBAs, faculty, and governance. Harvard is the only top business school with a gender balanced board. The differentiator is combining those numbers with a complete overhaul of behaviors and styles. This is very rare.
Leadership from the top: The HBS change initiative was pushed by the President and the deans. This contrasts with the approach of some companies, where the leaders think the targets speak for themselves and that they don’t have to consistently repeat the why of balance.

Additional tactics they should have used:

Get men to lead more visibly: HBS could have gotten more men to visibly lead the charge. It seems to have been at least perceived as driven by “unapolagetic” women. Most companies have women heading up the push for balance, which often results in an antagonistic ‘men vs women’ perception.
Explain the “why” to the  majority: HBS’s lack of transparency around why they were pushing for change was perceived as ‘social engineering.’ Many companies run into backlash issues if they don’t engage their majority male managers in debating why change is necessary and relevant to the business – and then making them accountable for delivering balance. Without this intellectual context, the targets – even if achieved – ring hollow and unmeritocratic.
Teach it as a management skill: Given the gender shift in global talent and consumers, learning to lead across genders is a 21st century skill. Targets without skill are a recipe for balance without benefit: where none of the complementarities are understood or leveraged, and where lack of transparency about the rules of the game are experienced as unfair and biased. Building and nurturing inclusive, high performance cultures is a key skill for the 21st century. There won’t be any shortcuts to developing them.

Before you spend years rebalancing your numbers, sell the why of balance to your majority. Build the management skills and cultures to profit from balance before you set targets, and have the initiative led by members of your majority, so it is not perceived as unfair lobbying from a competitor group. In today’s world, no question seems more pressing: how do you align people around a communal vision of a shared future? One thing now seems sure: numbers alone won’t deliver.

Why You Should Crowd-Source Your Toughest Investment Decisions

Only three or four out of every ten movies made in America breaks even or earns a profit. Yet the decision to green-light a project is usually based solely on “expert opinions” — in other words, executives’ intuition supplemented by standard regression analysis. There’s got to be a better way.

We think we’ve found one. In a recent study, two of us (Dan and Carmina) used a technique called “similarity based forecasting” to predict box office revenues for 19 wide-release movies. Here’s how it worked. Non-expert movie-goers were asked via online surveys to judge how similar each movie was to other, previously released movies, on the basis of a brief summary of the plot, stars, and other salient features. We then forecast the revenues for the new movies by taking similarity-based weighted averages of the previously released movies’ revenues. On average, those predictions were twice as accurate as ones driven by expert opinion and standard regression forecasting. They were particularly good at identifying small revenue-earning movies. This type of case-based decision analysis is a great way to tap into crowd wisdom.

It’s impossible to eliminate risk from strategic decision making, of course. But it is possible to significantly improve your odds by understanding which decision-support tools work best for which decisions. Most companies – including the movie studios in Hollywood – over-rely on basic tools like discounted cash flow and net present value. These tools are great if you’re working in a stable environment, with a business model you understand. But if you’re on unfamiliar ground – if you’re in a fast-changing industry, launching a new product, or shifting to a new business model – they can be downright dangerous.

In highly uncertain contexts, the best tool is often “case based decision making” — developing a set of analogous situations (like the previously released movies), determining the results achieved in those cases, and then assessing how similar each case is to the decision at hand. Sometimes it’s useful to ask non-experts what they think, as we did with the movie comparisons, and sometimes it’s best to aggregate experts’ opinions. What’s most important, though, is to use a structured, rigorous approach to choosing the comparison cases, since it’s natural to fixate on the analogies that best support the action you want to take, or suspect you should take.

Our November 2013 HBR article, “Deciding How to Decide,”  describes a model for matching decision-support tools to the decision being made, and describes some rich alternatives to the analytic tools we typically teach in business school.

High Stakes Decision Making An HBR Insight Center




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No One’s Talking About the Key to Greece’s Recovery

As Europe struggles through an anaemic recovery, its structurally challenged South is trying to mend itself. It is a fascinating, and still undecided turnaround story, best illustrated by the Eurozone’s former bête noire: Greece. Exacerbating the problem, the media often do a poor job of helping explain both the current situation and its prospects, as a panel in London’s Southbank Centre will discuss on October 19.

On the economic front, the government is trying its best to play up Greece’s “success story”: its return to stability, the achievement of a primary surplus, and the increasing interest of global investors such as John Paulson. The opposition is pointing out the human suffering and roaring unemployment (over 60% for youth).

In this rather fruitless exchange of propaganda, some important structural transformations are overlooked. Among them is a growing culture of entrepreneurial development. Entrepreneurial meeting points, such as Open Coffee, which started with a handful of people, now fill auditoriums of over 2,000 people. Successful Greek ventures such as TaxiBeat have inspired budding entrepreneurs. Initiatives of expats wishing to support entrepreneurship, such as ReloadGreece or Greek efforts such as TEDxAcademy’s RisingStars, have been added to offshoots of international organizations like Endeavor. Funding support has also emerged: the Hellenic Initiative, based in New York, has pledged $100 million to support new ventures.

If Greece is to recover, these green shoots need to grow and flourish. To do so, they need to find a way of interacting with the Greek state, which is notorious for slowing down businesses, imposing a mountain of regulation and protecting incumbents by discouraging innovators. So Greece needs to help reform its own administration, to make it more effective and user friendly.

Alas, the EU Task Force has done a poor job so far, having neither the mandate nor the skill for the massive change management project required to allow the administration’s more progressive and capable civil servants to push aside the antiquated mentalities that still define Greek public service.

There are some glimmers of hope. The current Redesign Minister seems more determined to shake the status quo. He is supporting a bottom-up initiative, RedesignGreece, to help this change process by way of a set of prizes for Greek civil servants with innovative ideas on how to change the administration for the better. It will take more determination and consistent effort (and more effective reporting and media pressure) to ensure that the public sector helps Greece transform itself.

The second thing needed for the green shoots to grow is money. The contraction in the Greek banking system, brought about by the crisis, the restructuring of Greek banks, and the imposition of Basel III regulations, has been aggravated by a warrant scheme aimed to support investing in banks rather than the creation of aggregate credit.

Also, Greek banks, which had made generous loans to large Greek corporates, will, in today’s market environment, never be paid back at par. Yet they hesitate to restructure, hoping that rolling debt over will allow them to restrict their write-offs. They want to avoid the painful choices of dealing with the turnaround and the ousting of previous managers and owners who have led to this mess. So, potentially healthy parts of the Greek economy are turning into zombies, losing productivity, and locking up scarce banking funds in an exercise of blind hope.

For all the creation of schemes to support liquidity, improvement on the ground is limited. Precedents, such as Spain’s creation of corporate bonds tailored to SME’s, exist, and should be urgently prioritized.  Yet they get little media (and government) attention.

Greece isn’t only suffering from the results of its past fiscal profligacy. It’s suffering as a result of its gradual loss of competitiveness, and of the structural inefficiencies built up both in the private and in the public sector. What Greece, and Southern Europe in general, need, is to find a way to help the healthy, export-driven and competitive part of the economy to grow and replace the declining, introvert side of the economy that is dwindling. It’s time for us all to think how we — business, the government, and the media — can identify and encourage the green shoots to take hold, and cut back the decaying, parasitic vegetation that is still choking them.

What Your Boss Really Wants from You

It’s 1958, and Patricia Bays Haroski, a State Farm Insurance Company employee, wants people to formally recognize their boss on October 16th. Her goal? Improve the relationship between bosses and their direct reports. That date? She apparently picked it because it was her father’s birthday, and she thought he was a good boss.

Fast-forward exactly 55 years, and today people from the U.S. to Australia, India, South Africa, and six other countries are honoring their bosses (or are at least pretending to). Hallmark currently offers more than 50 National Boss’s Day cards in its outlets.

I would bet, though, that instead of fawning over their bosses, many employees would rather ask them this question: What do you really expect from me?

Even in these times of feverish attention to performance metrics, it’s not always clear what the boss wants or expects. Why? Maybe there’s a presumption that those expectations are already clear and they’re not. Or, maybe the employee is placing pressure on him- or herself to do better (“I am a strong performer, but maybe that’s not enough.”). There’s a joint responsibility to ensure that expectations are well-articulated and understood. But that kind of effective give-and-take doesn’t happen with the frequency or the quality we wish it did.

Do not despair. I’m pretty sure that I can tell you what your boss’s expectations are. I am fortunate enough to work with these people all the time across a span of industries and professions: finance, health care, education, energy, technology. And from my vantage point, the messages are clear and constant. Let me offer what I believe are your boss’s essential expectations. Take a look at them, and see what you think — where you think you’re hitting them perfectly, where you need to ask more, and where you need to do more.

Your boss wants you to be:

Relentlessly focused on making your numbers and completing projects or initiatives in a timely, responsible fashion. And if things are regrettably falling short, your boss is expecting some sort of early-warning heads-up.
Well aware of the particular numbers or initiatives that are of critical importance to him or her. Are you fluent in those numbers, and do you keep your boss apprised of where they are trending? You should be. Also, if these numbers or projects are veering off course, your boss wants you to come to him or her with the problem early on (and armed with a few well-thought-out possible solutions).
On top of the pulse of your organization, and of your customer and client base. You should know where the stress points are and what’s being done about them.
Clear on where the business is going in the broader sense and in the longer term. You should have a respectable point of view on where the company should be going and why.
Knowledgeable about your people and their people — their strengths, weaknesses, and potential. How do their jobs help the company meet its goals? How are their jobs tied to your organization’s strategy?
Building a following of competent people who trust you, trust each other, keep you in the loop, and feel as if you are there to help and guide without getting in the way. Think of the last five direct reports who came into your office. What did they want? What does that tell you about the relationship you have with them?
Capable of identifying problems on the horizon, analyzing them, and problem-solving effectively — either alone or in collaboration with colleagues — on a timely basis.
Able to play well with others consistently. That is, confident enough to say what you think and also confident enough to hear, respect, and possibly integrate others’ views into your own perspective.

You can use this list in two ways. The first, and most obvious, is to ensure that from your boss’s perspective, you’re hitting on each of those eight cylinders. The second is to think of each of the people reporting to you. Are these the kinds of things you expect from them? Do they know? How do you know they know? Can you make sure?

Imagine how much you would value your direct reports coming through on all eight points. Imagine how valuable it would be to the bosses all around your company if people throughout the organization delivered on those expectations. It might just make their day.

Media Coverage of Terrorist Attacks Creates Its Own Adverse Effects

Watching 1 to 3 hours of TV coverage per day in the week after the 9/11 terrorist attacks predicted a 20% increase in reports of physician-diagnosed physical ailments such as asthma and hypertension 2 to 3 years later, says a team led by Roxane Cohen Silver of the University of California, Irvine. This and other findings from their survey data on more than 1,700 people strongly suggest that widespread media coverage of terrorism can have negative mental- and physical-health consequences over time, even for people not directly exposed to attacks.

You Don’t Have to Be in Silicon Valley to Build the Next Great Internet Company

“There’s no question that there are two Americas,” Steve Case, AOL founder turned VC and entrepreneurship advocate, told me in an interview last week. “There’s the America where entrepreneurship is celebrated and supported. Places like Silicon Valley and Boston. And there’s the rest of the country where the culture tends to be kind of risk averse.”

While Silicon Valley continues to dwarf other regions around the world in terms of venture capital investments and successful exits, Case is placing his bets across the rest of America, on what he calls “the rise of the rest.” I asked Case about this strategy, about his investment interests with his firm Revolution, and about his role as perhaps America’s most prominent advocate for startups in Washington. An edited version of our conversation is below.

Tell me more about your mission to support entrepreneurship and why you think it’s so important.

The American economy was built in large part based on entrepreneurs over the last 250 years that helped pioneer companies — first an agricultural revolution, then industrial revolution, and more recently the information revolution. And that’s resulted in a strong economy. If we want to continue to have a strong nation, we need to have a strong economy. If we want to have a strong economy, we need to make sure we’re tilting the playing field in favor of entrepreneurs that are trying to challenge the status quo, innovate, create new products and services, disrupt existing industry, usher in a new way. Because if we don’t do that, somebody else will.

It can get a little tricky defining entrepreneurship versus small business versus start-ups.  How do you define the kind of entrepreneurship you’re talking about?

I view business, as having three sectors: big business (Fortune 500); small business (Main Street: restaurants and dry cleaners); and high growth start‑ups. Big business is important, obviously. But in aggregate, they’re not net job creators. Some rise, some fall. Similarly, small businesses in aggregate are an important part of the economy, they account for a lot of jobs. But as a class they don’t account for many net jobs. A restaurant might start. It’s usually taking over from a restaurant that failed. And so there’s a churning. The place where the innovation happens and the economic growth happens and the job creation happens is in this high-growth entrepreneurial sector. So to me, that’s the key sector to focus on. And the difference is, they usually do start as an idea with a small number of people, but aspirations to grow to become a significant company.

What do you say to someone who’s sort of cynical about the social benefits of that kind of entrepreneurship? Say, toward venture capitalists pouring money into the next photo sharing app.

First of all, venture capitalists tend to focus in a few places, in a few sectors. And the American entrepreneurial economy is much broader than that. While the headlines may go to Facebook or now Twitter because they’re going public, some of the great success stories over the last decade are Chobani yogurt — upstate New York, billion dollar sales, 3,000 employees; eight years ago was a failed factory in upstate New York. Or Chipotle, $12 billion market value right now based in Denver. Under Armour, athletic-wear company based in Baltimore. Groupon in the social commerce space, based in Chicago.

I think venture capitalists do play a role. If you look at the last 20 years or so, venture capitalists did help make the Internet possible, did help make biotechnology possible, are driving a lot of investment in energy technologies and transportation technologies and government services and educational services and healthcare and so forth. They are fueling innovation and growth. But part of the opportunity is to move beyond just the traditional sources and fairly limited sources of capital, to have more capital available, more entrepreneurs, and more places focused on building more kinds of companies all across our economy.

You talked about access to capital. What are some of the other most common barriers that you see to these kinds of companies being formed?

Talent, which is why immigration policy is critically important. We’re still doing a pretty good job of attracting people to come to the Harvard’s and MIT’s of the world. In fact the majority of people now who are getting Ph.D.s and Master’s are from other countries. But then we kick them out. And sometimes they have an idea that they want to build here or they’re part of a team that’s building something. They aren’t allowed to do that.

So what sectors or trends are you most excited about?

One theme is what’s called the second Internet revolution. By now people understand the importance of Internet, are connected across multiple devices, multiple networks, mobile, so forth. So that first Internet revolution we’ve largely accomplished. The second Internet revolution is not necessarily building more Internet companies, although there will always be opportunities to do that, but using the Internet to transform other aspects of our lives that really matter, things like our health and wellness, things like learning, things like transportation services, using the Internet as that disruptive change agent.

How is the second Internet revolution going to be different from the first?

We believe D.C. is going to become much more important in the second Internet revolution than it was in the first Internet revolution. And the reason for that is government is both the principal regulator and also the principal customer of things like healthcare, things like education. And so I think the center of gravity will shift. Understanding how to interact with government is going to be more important, because you want to revolutionize, say, education, kind of follow the money. So you have to have sort of constructive engagement with government if you’re trying to revolutionize industry where the government is regulator and the government is far and away the largest customer.

In some parts of the startup world there isn’t too much excitement around public policy. The sense is that government is slow moving, and so better to just work on getting things done in your company. What convinced you to take such an active role advocating for entrepreneurship in Washington?

I’d say in fairness it evolved over time. In my 20s I was just focusing on building our start-up, which happened to be AOL. In my 30s the Internet kind of came of age and AOL was the leading company in the Internet at the time. I naturally got involved in policy, working with President Clinton and his White House because we were trying to figure out, what are the rules for the Internet? And then when I was in my 40s and now in my 50s, I think my worldview probably broadened. And it wasn’t just about my particular company, AOL, or my particular industry, but more broadly about making sure we remained the most innovative, entrepreneurial nation. And I am pretty passionate about the idea that, in order to do that, we have to double down on entrepreneurship.

A lot of companies we work with either are so busy with their start-up or so cynical about role of government that they don’t really want to kind of engage. But I think they have to. I think it is time for entrepreneurs, irrespective of where they are or what they’re doing, to make sure their voices are heard.

Set Your Innovation Teams on the Right Path

One of the most critical challenges facing growth-seeking executives in large companies is deciding what constraints they should be placing on their organizations’ innovation efforts. Unconstrained efforts of the “let 1,000 flowers bloom” variety feel good, but often lead to diffused progress. On the other hand, incorrectly constrained innovation efforts carry well-documented risks. Companies that set the wrong boundaries leave themselves vulnerable to disruptive, game-changing start-ups. What kinds of constraints spur innovation and which ones kill it? Generally, we suggest that companies impose two key constraints. First, identify a handful  of  promising markets (that is, no more than five) where some change in technology or consumer behavior now makes it possible to bring to bear a unique corporate capability to address some previously unaddressed need. That sounds challenging, and it is. High-potential markets tend not to be obvious. Relying on historical market data to discover them won’t work, since that tells you about yesterday’s markets, not tomorrow’s.  So preparing that short list can require an investment in detailed ethnographic research, field visits to early-stage start-up companies or emerging markets, and numerous working sessions where a small team debates the implications of the research findings and formulates hypotheses about how to move forward. Second, define the financial parameters to which ideas must adhere. Companies typically spend a lot of time developing financial forecasts of proposed innovations and debating the implications of their analysis. That can be a big waste of time. Forecasts are nothing but the mathematical relationships between made-up numbers. Instead, give your innovators general financial goals. What sort of revenue does an idea need to generate when it is mature? How much money is the company prepared to lose before the opportunity is realized, and for how long? What kind of margins does the offering have to provide? Set these guidelines carefully. New growth businesses generally take longer to mature than even the most optimistic projections. Focusing too single-mindedly on gross margins can blind companies to potentially lucrative innovations that make money in different ways from their mainstream business. Consider focusing on net margins instead of gross margins, allowing the team the freedom to introduce different business models. Or explicitly allow the team to accept lower gross margins in a deliberate effort to pursue disruptive innovation. Setting clear financial guidelines avoids wasting time on ideas that are sure to get killed when they don’t meet them. And pushing innovation teams to clarify what has to happen in order to reach those targets helps them identify critical assumptions that must be validated before making significant investments Companies may also want to consider a host of other constructive constraints, such as focusing on specific geographies, considering only ideas that can be built organically rather than through large acquisitions, or zeroing in on a specific set of the company’s portfolio of products or brands. These might limit your options, but they too may also spur creative thinking, and save your team from wasting time pursuing an option that management will in any event never accept. That said, there are three specific options a company should not take off the table, no matter how much executives might want to (and precisely because executives so often do want to). The first is the possibility of competing against what a company currently sells. The very word cannibalization is treated as an expletive in many corporate halls. Certainly, all things being equal, you would prefer to take someone else’s business away than your own. But the process of creative destruction inevitably involves at least some cannibalization. And like it or not, if you can dream up something that will cannibalize your business, competitors will eventually, too. The second is refusing to consider anything that performs less effectively than what you currently sell. Companies often dismiss a disruptive alternative as inferior. Remember how Western Union famously dismissed Bell’s telephone as an “electrical toy” because it could only send voice signals over a few miles? Or how Sony scoffed at portable music players with inferior sound quality? Disruptive solutions actually aren’t worse. They are just different. A disruptor successfully trades off pure performance for some other advantage of convenience, simplicity, or affordability. Market demands can change quickly, and companies that shut themselves off from competing on those bases are often left behind. Finally, avoid constraining anything that involves building or using a different channel to market. It’s natural, for instance, for consumer goods companies to think in terms of existing retailers or for companies that sell to large enterprises to want to tap their large direct sales forces. But disruptive ideas hardly ever come to market through current channels. Newspaper companies that tried to use their existing advertising sales force to sell digital advertising, for example, encountered immense challenges. Despite resource advantages, large companies often struggle to keep up with start-ups that don’t have to worry about many of these constraints. Improper attention to constraints leads teams to waste time on ideas that are destined to be shut down anyway and avoid disruptive ideas that have the greatest chance of creating long-lasting impact. But applied wisely, constraints up the chances of corporate success.