Marina Gorbis's Blog, page 1538

Government Alone Can’t Solve Society’s Biggest Problems

Rising obesity. Human Trafficking. Re-skilling the workforce. A lack of quality education and safe water for the poor in the developing world. Whose job is it to solve these problems?

For decades, the answer to that question has been simple: government. Until relatively recently, governments provided for the public good, while the private sector largely stuck with Milton Friedman’s admonition that the social responsibility of business was to increase its profits. Thinking beyond the bottom line was considered unfocused or, even worse, a disservice to shareholders.

Today, the landscape has changed dramatically.

A new economy has emerged at the borderlands where traditional sectors overlap. This economy trades in social outcomes; its currencies include public data, reputation, and social impact. Previously untapped markets drive financial returns. The business models are unusual. The motivations range from moral obligation to new notions of public accountability, or even shareholder value. This “solution economy” represents not just an economic opportunity, but a new manner of solving entrenched societal problems.

New problem-solving innovators and investors power this solution economy. These “wavemakers” assume many forms, including edgy social enterprises with the mentality of a Silicon Valley start-up, megafoundations, and Fortune 500 companies that now deliver social good on the path to profit. They range from Ashoka, which deploys 3,000 citizen changemakers in 70 countries, to the global pharmaceutical giants that annually give away billions of dollars in medicine to low-income citizens.

Consider just a few data points. In 2009, private US philanthropy to developing countries exceeded official US government aid by almost $9 billion. In one survey of 184 global companies, the average company contributed about $22 million to philanthropy, with the group total exceeding $15 billion in just one year. Even institutional investors have directed funds to organizations that create public value. Socially responsible investing has grown into a $1 trillion industry.

The solutions designed by today’s wavemakers depend less on whether a problem is public or private, social or commercial, economic or political. Rather, designs consider the ability to reach the previously unreachable, raise funds from untapped sources, and leverage social networks — all conditions that fuel new markets for solving entrenched societal problems.

These multi-billion-dollar markets are forming around some of the world’s toughest problems — from fighting malaria to providing low-cost housing to educating the poorest of the poor. In these solution markets, businesses, social entrepreneurs, nonprofits, and multinational companies compete, coordinate, and collaborate to solve megaproblems. Instead of trying to patch a market failure, they create a market for the solution. Foundations, venture philanthropists, governments — and, often, private businesses themselves — act as funders, investors, and market makers.

Unlike most government-driven programs that check their ambition at political borders, these emerging solutions spread nimbly across the globe. In less than a decade, Unilever’s Project Shakti microloan program for women in rural Indian villages expanded from 17 saleswomen to 43,000, serving 3 million Indian households; it is now spreading to Sri Lanka and Bangladesh.

This all might inspire a touch of skepticism. You might be thinking something like this: We have markets in shoes, in homes, and in automobiles, but markets in societal outcomes? It seems illogical. Weren’t these big, wicked problems the very areas where we’ve experienced market failure in the first place — where government was forced to step in? Take something like human trafficking. It’s easy to see how there can be a market in engaging in this awful practice, but can a market be constructed to help stop it?

We assert that yes, you can create markets — or at least market mechanisms — around problems like environmental cleanup, transitioning from welfare to work, and even human trafficking. In fact, markets and economic ecosystems are developing around all manner of societal problems. The buyers in these markets purchase impacts or outcomes: healthier communities, kids who can read, reduced recidivism. The sellers provide outcomes: they design cheap, solar-powered lights; write the code that tracks salmonella outbreaks using government data; and build the cross-sector networks to fight scourges like human trafficking.

What about government? Its role has now shifted. Sometimes it is a funder; sometimes it integrates all the players; sometimes it’s the market maker; sometimes it’s just one of many contributors to the solution. Sometimes all it has to do is provide a space for these solution markets to work.

The Right Innovation Mindset Can Take You from Idea to Impact

Thomas Edison said it over a century ago: “Genius is 1 percent inspiration, 99 percent perspiration.” Unfortunately, when companies launch innovation initiatives, they tend to devote most of their time, energy and attention to that initial 1% – the thrilling hunt for the breakthrough idea. The real innovation challenge, however, lies beyond the idea, in a long, hard journey from idea to impact. Innovative companies sustain a track record of success by creating the right “climate” for employees to cultivate the innovation mindset — to think different, act different, and achieve extraordinary success.

Think Different

Opportunities

Not every idea is worth pursuing. The first step is to narrow down the ideas to worthwhile opportunities. Have a process to evaluate whether it is the right opportunity by asking: Do we want to pursue this–does it align with our purpose? Can we execute it–does it align with our core competencies? If it takes off in the best possible way, will the benefits be worth it? Are the risks such that the damage won’t be irrecoverable if things go wrong?

Dare to seize the opportunities that meet these criteria. Create mechanisms to seed fund and resource the right opportunities. Have a portfolio view of the opportunities, and ensure that there is a balance of opportunities that span current, adjacent and new space. Recognize that seizing the opportunity is but a tiny first step – like a little plant has sprouted. You have to nurture it patiently until it grows into a big tree with deep roots and a thick trunk.

“And” Thinking

The next challenge is to strike the right balance between getting the most out of these opportunities AND keeping your performance engine humming. What are the best structures to create so you neither disturb the rhythm of the performance engine nor drop the ball on opportunities? Many organizations embark on large-scale change management efforts to “make” their organizations more innovative; most fail. Our guiding principle is quite the opposite: Do no harm. The challenge is not just to make innovation happen, but to do so while simultaneously excelling in ongoing operations. Butter before Jam. Cake before icing. But butter AND jam. Cake AND icing. If the performance engine is humming along, it’s best not to impose an innovation challenge if it would disturb that rhythm. We would opt for minimal change on that front, and creating dedicated innovation teams that work in partnership with shared staff. Rather than major surgery, aim for precision surgery or micro surgery.

Act Different

Resourcefulness

Create a climate where resourcefulness is encouraged and rewarded. Pass down organizational stories, highlighting the obstacles that employees powered through to get results, through successive generations of leaders.

Achieve Extraordinary Success

Outcomes

Create a climate in which employees can focus on outcomes instead of getting caught in the activity trap. Create separate planning processes for innovation efforts that are big enough to require dedicated teams. Unlike the performance engine–where the planning process is focused on financial, customer, and market share performance–the innovation planning process needs to focus on learning, viewing innovation as a disciplined experiment. What gets measured gets done. In companies that consciously cultivate a climate of innovation, innovation is not about no accountability, but a different kind of accountability. Construct just enough structure to make sure you’re making progress in the right direction, and no more.

If a flight going from Dallas to New York were a degree off, it would end up in the sea instead. Most flights, in fact, are more than a degree off 95% of the time. Most flights, though, land where they are supposed to. How do they do it? One key reason: the pilot has a “rough” flight plan and engages in dynamic course correction.

This same notion of a “rough” plan coupled with dynamic course correction is what we recommend in innovation efforts. If the performance engine has monthly planning meetings, the innovation side should have weekly “course correction” meetings. If the performance engine is on a weekly rhythm, the innovation side has to step it up a notch and get on a daily course correction cycle.

Expand the Pie

When the business model has stabilized, have systems in place to encourage employees to “expand the pie” by developing new revenue streams, increasing reach, or converting non-consumers into consumers. For example, Apple expanded its pie by creating the App Store, where individuals and small development shops could stand on Apple’s shoulders and reach a market they never could otherwise. In turn, Apple’s reach increased because their customers got access to a much larger pool of software. They expanded the pie for themselves, their partners, and their customers.

Innovation execution is neither innovation nor execution but its own strange beast. When tamed, however, it can be a source of enormous strength, lasting differentiation, and sustained success.

Executing on Innovation

An HBR Insight Center




Lessons in IT Innovation From Silicon Valley
Research: Middle Managers Have an Outsized Impact on Innovation
What’s the Status of Your Relationship With Innovation?
Innovation Isn’t an Idea Problem

13 Years, 175 Million Users, Little Profit: What Pandora’s New CEO Needs to Do Next

After 13 years and 175 million users, Pandora has yet to turn a profit.

Brian McAndrews, Pandora’s new CEO, faces two challenges as he steps to the helm: reducing royalties from the 50-60% of sales currently paid, and increasing revenues per listener hour. The former represents the company’s central challenge, and is the subject of an ongoing war with rights-holders. But McAndrews can’t wait until that problem is solved to begin plotting Pandora’s future.

What Pandora Has Done Well

Aggressively pursued mobile revenue. In Q2 2013, mobile revenue per 1K listener hours was $34, up 50% from $22 in 2012. Desktop revenue has stabilized around $60, only growing 3.8% in the same period.

Limited mobile hours. Pandora recently capped free listeners at 40 hours per month (since 80% of listener hours are on smartphones) to stem losses until mobile advertising reaches similar margins to desktop.

Declared war on anti-competitive pricing from rights-holders. Both terrestrial and satellite radio pay much lower fees per hour of music than Pandora. And, according to Pandora’s assistant general council, at least 16 out of the top 20 Internet radio companies pay less than Pandora. Terrestrial radio pays a fixed fee (for 2012, BMI fee ranged from 0.3 – 1.7% of gross revenues), while satellite radio pays 9% of revenues (compared to Pandora’s roughly 60%). Pandora has responded with negotiating, litigating, lobbying and galvanizing its users – and has even bought a radio station to try and even the playing ground. So far to no avail.

But these incremental improvements are not enough. Although increasing mobile revenues are driving down royalty costs as a percent of revenues (52% in 2013 Q2, compared to 61% in FY2012), royalties have risen in each of the past three years, and these cost increases are slated to continue. While non-internet competitors pay as little as a few percent of revenues, Pandora’s prospects are grim.

What Pandora Should Do Next:  Pick Low-hanging Fruit, and Consider Transformation

Ultimately, Pandora will either need to pay similar amounts to other radio stations or abandon its current business model. But, in the meantime, McAndrews has options. Some are quick wins, and some verge on transforming Pandora’s business:

Better Ad Targeting

Use geolocation data for mobile ads. I often get mobile ads for businesses in NC — where I lived years ago. There’s no excuse for not using GPS and IP data to update my location and serve me appropriate ads.

Strongly encourage Facebook integration. Encourage people to sync their accounts with Facebook Connect to benefit from more user data, and the ability to better target ads. Right now, the only thing Pandora knows about me is my music taste; most ads are poorly targeted.

Partner with geo-located promotions. Since most listening is mobile, take advantage of geographic data, Facebook user data, and predictive modeling to partner with companies like Foursquare, Yelp, Square, or daily deals sites to serve targeted promotions that translate into real-world purchases.

Invest in predictive modeling for ad targeting. Beyond simple geographic data, Pandora could focus on predictive modeling to optimize outcomes based on specific promotions, and use conversion data from partners to evaluate success. There’s a lot of advertising value on the table beyond simply making sure that listeners are in the same city as an advertiser, or has a vaguely related interest.

Build the Market for Audio Ads

Develop a simple audio ad production product. Begin to compete with the ease of Google and Facebook advertising by facilitating low-cost audio ad production. Allow companies to submit text that will be produced as a simple ad for location-based ads or promotions — allowing many more advertisers to air audio ads. (Listen to Radiolab’s listener-narrated advertisements as an example.)

Develop an audio ad marketplace. As internet radio competition intensifies with Microsoft and Apple’s entry, enlist the longer tail of customers cultivated in the simple audio ad production product by offering an ad marketplace that connects customers with listeners on other audio networks. Such a network could provide high-margin revenues and improve sales effectiveness. If the network were a platform to connect advertisers to independent ad producers, it might eventually capture some of the ad revenue destined for major competitors’ stations.

Build Better Products for Artists and Venues

Introduce a new license for independent artists. Emulate Soundcloud’s user agreement for independent artists and voluntarily pay rates in line with what artists receive per user-listen from terrestrial radio. Then rewrite playlist algorithms to select these artists’ tracks more, helping artists much more through increased exposure than through slightly higher micro-royalties.

Develop a promotional platform for music venues and artists. Let artists and music venues advertise specific events, and monetize part of the value created for the music industry by directing fans to concerts they would love.

Launch a music ticket product. The artist promotion platform could allow people to buy tickets with a single click. Initially, this might require a concierge service and small transaction fee to facilitate purchasing tickets from multiple ticketing platforms, but this approach would allow pay-for-conversion advertising and could eventually let Pandora compete directly with Ticketmaster/LiveNation by developing a more artist-friendly ticketing platform.

Become an artist platform. Pandora has created much more value for the music industry than it has ever been able to capture through ads. It could reposition itself as what music labels should be, using its unique resources and user data to identify, develop, and market new talent, relying on a more effective model to grow the music industry by channeling much more profit to artists.

Some of these suggestions are obvious — I should not be hearing ads about an auto parts shop 1,000 miles away, or for fast food I will never buy. Others are entirely new business models. Together they give McAndrews a menu of options to improve his strategic position while Pandora’s battle over royalties rages on.

For the company to prosper, it must eventually decrease royalty rates and increasing mobile revenues. But, with competition intensifying and major resources underutilized, Pandora should start building the next version of its business model today.

For more information on radio royalties, see @degusta’s analysis here. 

For an overview of Pandora’s current economics, see @knowledgwharton’s article here. 

A Better Way to Encourage Price Shopping for Health Care

Several studies show wide variation in prices for common health care services, even within local areas. For example, a recent report from Massachusetts found that there was at least a threefold difference between the maximum and minimum price for common hospital and professional services such as cesarean or vaginal delivery, MRIs, and office visits, and that for most, including office visits for psychotherapy or eye exams and hospitalizations for appendectomy or heart attacks, the difference was six- or sevenfold. These findings are also echoed in the recent release of Medicare data showing large variation in charges for hospitalizations across communities in the United States. Moreover, prior research has also shown that there is little correlation between price and quality of care for inpatient care and that higher-priced providers control a large share of the market. Not surprisingly, given these facts, most analyst agree that encouraging price shopping for health care represents an important opportunity for reducing health care costs without adversely affecting patient outcomes.

Clearly, existing efforts to encourage price shopping haven’t led to desired results. We need fresh thinking and new solutions to tackle this seemingly intractable problem. However, before we look at new ways to address this issue, we need to understand why Americans aren’t bargain hunters for health care, especially given the constant drumbeat about the high cost of health care in the United States.

One theory holds that Americans don’t price shop for health care because health care prices are opaque and it is difficult for consumers to know the price of health care services. In response, more than 40 states have launched price-transparency initiatives. These initiatives vary in how pricing information is provided to consumers: under Connecticut law, for example, information is provided to individual consumers on request, whereas in New Hampshire information is available on a public website. The laws also vary in what type of price information is reported: in California, for example, only charges, which do not reflect the price paid by insurers or insured patients, are reported, while in New Hampshire both charges and amounts paid by both insurer and patient are reported.  However, emerging evidence suggests that even the most comprehensive price-transparency initiatives, such as the one in New Hampshire, do little to reduce the variation in prices for health care services.

One potential reason these initiatives have little bite is that most insured consumers pay only a fraction of the true cost of health care and thus have little incentive to shop for lower-cost care. Therefore, some have argued that high-deductible or consumer-driven health plans in which consumers have more skin in the game should encourage price shopping. However, a recent study shows that is not the case.  Examining prices paid by employees of 63 large companies for nine common outpatient services (such as office visits, chest x-rays, and colonoscopies), researchers found that patients with high deductibles paid roughly the same amount as their traditionally insured counterparts for eight of the nine services.  The only exception was office visits, where the researchers found that patients with high deductibles paid about 2% less. They also found that within high-deductible health plans, prices did not change depending on whether the service was bought before or after the employee reached the deductible.

So why are these consumers, in increasingly popular high-deductible health plans, leaving money on the table? There are several potential explanations. First, despite the proliferation of state-level price transparency initiatives, health care prices may still be opaque to consumers. In response, several private companies now offer more tailored and consumer friendly pricing information. Although these new initiatives show promise, whether they will solve the price-shopping conundrum remains to be seen. Second, consumers may use price as a signal of quality of care, since information on quality is notoriously hard to find; even the new private-sector initiatives provide scant information on quality. The notion that higher prices indicate better quality may discourage consumers from bargain hunting. And third, patients may be reluctant to question the advice of their doctors on where to get a particular service.

This last explanation also provides a way to solve the price-shopping conundrum: encourage doctors or their medical groups to price shop for their patients. Doctors can influence their patients’ health care decisions, including where to get services such as radiology and laboratory services. They are also likely to be more informed about the quality of services offered by various providers. Indeed, experience from the alternative quality contract shows that medical groups, given the right incentives, can be effective shoppers for their patients.  Medical groups facing global budgets (which set an annual budget for caring for a specified population) and that had not previously faced risk reduced spending by about 6% in the first year, and much of the savings was due to referrals to lower-price providers and settings.

Moving forward, we need to harmonize patient-oriented and provider-oriented strategies for encouraging price shopping. Patients need easily accessible information about price that is tailored to their individual needs. This information should include not only the out-of-pocket price of the service (e.g., a doctor visit) but also more holistic information on downstream costs for the entire episode of care and data on the quality of care. We do not, for example, want patients to choose doctors who charge a low price for the initial visit but provide poor-quality care or have higher episode costs. Such holistic information must reflect the patient’s insurance coverage so that it captures plan features designed to bolster patient price sensitivity through innovative insurance design, in which patients pay higher out-of-pocket costs for seeking care from higher-priced providers. Benefit designs should be harmonized so that patient incentives and provider incentives are more closely aligned in situations where provider groups have reason to consider price and total episode costs when discussing health care decisions with their patients. Perhaps accountable care organizations or other provider groups that accept accountability for patient spending and outcomes should have greater influence on benefit design. These efforts can lead patients to shop more effectively for doctors and can lead doctors to be better stewards of their patients’ health and dollars.

Such a multipronged approach to encouraging price shopping has generally not been attempted, partly because of lack of data and partly because of institutional barriers.  However, the confluence of recent trends in health care offers a unique opportunity for such strategies to gain a foothold. Insurers, both public and private, are increasingly willing to abandon fee-for-service payment models and to create incentives for doctors and other providers to make value-based decisions. The big-data initiative of the Department of Health and Human Services and widespread adoption of electronic health records will unleash a new wave of information on health care delivery, a necessary component of the better quality measurement that is needed to support value-based decisions.  Moving forward, policy should encourage such price shopping by providers and patients by facilitating the dissemination of information on price and quality and by strengthening antitrust enforcement to deter collusion or price fixing by providers.

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

From the Editors of Harvard Business Review and the New England Journal of Medicine




Leading Health Care Innovation: Editor’s Welcome
Why Health Care Is Stuck — And How to Fix It
Getting Real About Health Care Value
Understanding the Drivers of Patient Experience

Consumers Go Out of Their Way to Pay in Round Numbers

56% of purchases at a self-service gasoline pump in upstate New York ended in .00, well above what would be expected by chance, and an additional 7% ended in .01, likely reflecting failed attempts to stop the pump at whole-dollar amounts, says a team led by Michael Lynn of Cornell. The findings, along with data on tipping and a pay-what-you-want online scheme, show a pronounced consumer preference for round-number payment amounts, the researchers say.

Collaborate with a Loved One Without Ruining Your Relationship

One of the most frequent questions we get about our book, The Progress Principle, isn’t about the content of the book or the research behind it. Rather, it goes something like this: “You guys wrote a book together, and you’re still married?!” Well, yes, we did, and yes, we are — for 23 years. Inevitably, that leads to questions about what it was like to work so closely together and how we managed it without ruining our marriage. Our glib answer is that it was “the best of times and the worst of times.” The best: sharing the excitement of discovery, developing new ideas, and realizing that it was all coming together (sometimes celebrated by a running-leap high five between 5’2” Teresa and 5’11” Steve). The worst: agonizing over our disparate interpretations of the data during long dinner-table discussions until our daughter begged, “Can we please talk about something else now?”

The more nuanced answer is that, while there certainly are difficulties and risks in writing a book with someone you care deeply about, there are also advantages and unique rewards. In fact, if you look into what it takes to work closely with a loved one on a project like this, there are lessons for any creative collaboration between people who care about each other.

Take the brothers Tom and David Kelley, who recently completed the terrific book Creative Confidence: Unleashing the Creative Potential within Us All. David founded both IDEO (one of the world’s top innovation and design firms) and the d.School at Stanford. Tom, an IDEO partner, joined the firm nine years after its founding. Although they have worked together at IDEO for 26 years and Tom has published previous books, this was the first time they attempted collaboration on a writing project. When we talked with Tom not long ago, he said, “The Creative Confidence book was our biggest collaboration ever, so of course, it had its ups and downs.” The stories he told us revealed much about their recipe for success.

First, start with a strong foundation and agree to protect it; maximize cooperation, minimize competition. “I love my brother,” Tom told us, “and it helps a lot that we have found our own paths through life, never competing against each other.” As children, they shared a bedroom and worked on many projects together. They never felt competitive toward one another, partly because of their four-year age difference and partly because they followed very different paths post-college — David in engineering and design, Tom in business and writing. When, in the early years of their time together at IDEO, they had their “one big fight” over IDEO’s strategy, David insisted that they resolve the conflict, saying, “I’ll do whatever it takes to fix this. Even if it means shutting down the firm.”

We, too, love each other. At the outset of our own project, we made a pact: If we ever felt that tensions over the book threatened our personal relationship, we would end the collaboration.

Second, at the outset, explicitly discuss similarities and differences in your cognitive and work styles; figure out a process that leverages your complementarities. Tom told us that “David is great at ‘bold strokes’ — big, inspiring ideas. I’m good at ‘long marches’ — crafting and re-crafting thousands of words on paper.” Having a great many stories in mind, accumulated over the brothers’ years of experience with creativity, Tom wanted to get right down to writing. Tom’s itch to dive in created the collaboration’s “most stressful moment,” because David was adamant about first developing a structure for the book. So they compromised. Tom spent a cathartic three months writing out every story, returning with a 100,000-word document that they could use as raw material for discerning the book’s main topics. This solution was just right for them because, in contrast to Tom, David, although a brilliant oral storyteller, “never wrote anything down.”

The process the Kelleys developed took advantage of each of their talents. Along with collaborator Corina Yen, whose engineering/journalism background was a bridge between David’s and Tom’s, they created each chapter’s skeleton by choosing one main topic, putting it at the center of a whiteboard, and then building a mind map around it. After a couple of hours, David would leave Tom and Corina to flesh out six or seven main themes. They would place each theme at the top of a piece of foam core, and then fill in the theme with various ideas from the whiteboard. Later in the week, David would come back in to help edit and rearrange the ideas, adding some new ones. Pieces of Tom’s early document got pasted under these themes, too. Eventually, Tom sat down and turned these boards into a coherent draft.

Finally, respect each other’s contributions. Although we used quite a different (and less ingenious) process than the Kelleys’, ours also involved contributions that couldn’t easily be equated. More like David, Steve is a big-ideas person; more like Tom, Teresa immerses herself in the data — the stories of our research participants — looking for patterns. Steve developed a loosely sketched first draft for most of our chapters; Teresa, the more fluent writer, added the flesh and wordsmithed the stories. It would have been easy for Tom and Teresa to become resentful that their partner wasn’t doing more of the actual writing, or for David and Steve to get frustrated with their partner’s focus on the details. But they didn’t, partly because of the love they shared with their partner, manifest in their up-front commitments to the relationship — but also because each member of the pair respects the other’s strengths.

Ultimately, collaborating successfully with a loved one comes down to following this basic rule for any people who want to both work effectively together and maintain a strong relationship: From the very beginning, figure out a process for leveraging each other’s strengths, compensating for each other’s weaknesses, and cooperating in a spirit of respectful kindness.

Four Ways to Cultivate a Culture of Curiosity

HopeLab is a curious place.

The California-based nonprofit researches and designs video games and other technology products for kids. But they don’t create ones that involve sitting on a couch, staring at a screen, zapping warriors or aliens. Instead, HopeLab’s games help motivate players to take on healthy habits, to be more physically active (Zamzee) and even help fight cancer (Re-Mission 2).

The organization, a client of The Bridgespan Group, encourages the same sort of exploratory attitude in its employees. So it operates a bit differently than most. There are fun internal tools designed to prompt conversation and reflection. Meetings are positioned as problem-solving opportunities. People always take responsibility for their own actions and mistakes. And employees are given financial and moral support to pursue any kind of learning, from a cooking class to a photography cruise.

“We look at our culture as a product, just like Re-Mission and Zamzee are products,” says Pat Christen, president and CEO of HopeLab. “And we believe a culture of curiosity is key to innovation.”

HopeLab’s methods are replicable. Just consider these few principles:

Encourage Inquiry

HopeLab’s products are rooted in scientific inquiry and research, iteration and experimentation. People are told to explore new paths and to challenge their assumptions and themselves. To that end, the company has created tools including a deck of cards called “Questions for Curious Leaders” with 12 categories, including “beauty”, “candor”, “emotions” and “100% responsibility.” Cards can be found around the office, in conference rooms and at desks; people use them on their own and in meetings.  One “emotions” question reads:  “Am I fully acknowledging and experiencing my emotions, then letting them go?” Another in the “beauty” category is:  “Am I enduring, allowing or perpetuating, mediocrity, inelegance or ugliness?”

It can be hard to find time for reflection and conversation. But these tools help. Plus, “work is more rewarding when curiosity and discovery are embedded in it,” Christen says.

Write Agendas as Questions

Employees are more likely to engage in meetings when they know they can affect the outcome. So HopeLab’s agendas are always in the form of questions. For example, “How should we prioritize these projects?” or  “What models of engagement might we pursue? Why?”

“Everyone at the meeting is invited into the conversation to help us make sense of an issue, solve a problem or imagine a new area of opportunity,” Christen explains. “We expect people to speak up — to ask questions, share ideas and contribute.” As a result, HopeLab is known for productive, energizing, get-togethers. In fact, visitors from other organizations often ask for how-tos after experiencing a HopeLab meeting.

Avoid Blame

When an early prototype for the 2.0 version of Re-Mission, HopeLab’s free game to motivate kids with cancer to stick with their treatment regimen, strayed from the feedback provided by young patients, it could have been an opportunity for blame. The organization had already spent hundreds of thousands of dollars on development.  But instead of fault-finding, Christen assembled the team, took full responsibility and asked for ideas to save the project.

“There can be a ‘villain, victim, hero’ dynamic,” she explains. “But when you recognize you’re in that game, playing one of those roles, you have the choice to step off the triangle,” and instead focus on moving forward. The solution for Re-Mission 2 turned out to be shifting from one big computer game to several online mini-games and an app for mobile phones and tablets — an expensive fix, but far less costly to the mission than a flop.

Avoiding blame doesn’t mean avoiding consequences, however. When Christen found herself in a meeting on a very complicated personnel matter with the VP for staff development, she decided, perhaps not surprisingly, to ask the employee a question: What did he think should be done? “And the person went much farther than I was envisioning,” she says. Having taken accountability, he has since returned to being a highly productive and valuable member of the team.

Assume All Learning Is Good

Employees choose their paths in professional development (PD), too. At first, folks felt compelled to rationalize their requests for  PD resources by making them explicitly work-related.  But Christen told them, “I don’t need a rationale. Just keep learning things.” Now people feel free to request support for any kind of class they want, and the openness has paid off. The woman who requested funds to pay for a portion of her photography cruise is now the company’s de facto in-house photographer. “She discovered a new interest and genuine talent, and we saved tens of thousands of dollars on outside photographers by supporting that learning opportunity,” says Richard Tate, her boss and HopeLab’s VP of communications and marketing. “If you’re practicing curiosity, no matter what you’re learning, I believe it will benefit the organization.” Other employees have simply come to work more engaged and with more and better ideas.

Christen credits her board, which includes Pam Omidyar, HopeLab’s founder, for encouraging this culture of radical curiosity at the organization. “They recognize that how we show up to do the work we do is a manifestation of the values and the impact we hope to inspire in the world.”

Go Ahead: Ask Your Employees If They’re Happy

When was the last time you made the effort to see, really see, what the people you work with are thinking and how they’re feeling about their jobs? With Gallup’s latest State of the American Workplace survey showing that 70% of U.S. employees are not engaged at work, it seems that the majority of managers would greet that question with a blank stare. Those managers are missing key information needed to attract and retain talented staff — not to mention keep them actively engaged in turning out a superior product.

Despite the dismal statistics on workplace engagement, there are many enlightened leaders who do one simple thing: They ask their employees how they feel. When they do so, they receive priceless information that helps them retain their best employees and optimize their productivity.

Daniel Parent, director of field human resources at video game retailer GameStop, is one of those leaders.  He knows the power of checking in with his team. He has a recurring appointment on his schedule that says, “Ask employees how happy they are at work and what can I do to make them happier.” Daniel has learned over the years that simply asking those two questions indicates to his group that they have his support. Furthermore, he learns what their real issues are so he can provide them with meaningful direction.

By knowing what motivates his team, he can help boost their performance and their satisfaction on the job. His questioning also serves as an early warning system, allowing him to head off issues before they become intractable problems. Take Jennifer, for example. She so desperately wanted to be a good employee that she struggled in her new role as a working mother. Daniel recalled his conversation with her shortly after she returned to work from her maternity leave as one of the most poignant he’d ever had. When he asked Jennifer how happy she was at work, she confessed that trying to juggle both roles left her feeling like she wasn’t a good person.

Getting permission from her boss to spend time with her new baby was what made the difference for Jennifer. She and Daniel worked out an arrangement that met both of their needs. By communicating regularly, Daniel was able to reassure Jennifer that she was meeting all of his expectations and then some. That allowed her to turn her full attention to her child outside of work and really enjoy their time together. “I would never have known this was bothering her if I didn’t ask,” he says.

Daniel also recounts another instance in which an employee put what she perceived to be the needs of the company above her personal well-being. Heading into a meeting, she told him that she had a dentist appointment and would have to leave promptly at 4 when the meeting ended. At 4:10, the meeting was still in high gear with no sign of ending soon. Daniel leaned over to his colleague and whispered that she’d better leave in order to make her appointment.  With a grateful smile, she slipped out and took care of her teeth.

Daniel points out that people don’t work for a company, they work for their boss. He has had employees tell him that they stay at GameStop because of him. “These are talented people who could easily get another, better-paying job elsewhere.” The small investment of time he makes in asking his employees how happy they are has paid off many times over when he considers what it would cost to replace any member of his team.

Assuming your team is made up of high-performing, highly motivated individuals whom you want to retain, here’s an action plan for monitoring and improving their engagement:

Put a recurring appointment — monthly or quarterly — on your calendar and ask your employees whether they are happy at work and what you can do to make them happier.  Don’t wait for the annual review to have this conversation.
Maintain open lines of communication so that you can offer support and address issues before they become full-blown problems.
Help all team members manage their professional obligations so they can meet their personal needs, allowing them to be present and focused on their work when they are in the office.
Keep on questioning. Don’t assume that you have all the information you need if you’ve asked people once whether they’re happy. Circumstances inside and outside of the workplace change over time, and feelings can evolve accordingly.

Remember, relationships are built on a series of little moments that create big impact over time. Sending someone gratefully off to the dentist is not an earth-shattering event on its own. But it is an affirmation that someone’s personal needs are important and to be honored. Taken as a whole, many small actions can strengthen someone’s foundation or they can tear them down. The Gallup survey suggests that there is more erosion than building of the human spirit happening in the American workplace. Be someone who builds others up rather than tears them down.  Little things matter in a big way.

As Daniel says, checking in with his employees like this is all about retention. By communicating regularly with his employees, he knows what motivates them and the challenges they need to overcome in order to do their best work.  This knowledge helps him reward his most talented team members in ways that are meaningful to them, which can change over time, depending on what is happening in both their personal and professional lives. Daniel’s efforts have been rewarded in the form of a highly engaged, productive and, yes, happy team of employees.

Revenge of the HourlyNerds

Last week’s news that Dallas Mavericks owner Mark Cuban put $450K into the $750K seed round of consulting startup HourlyNerd should make traditional consultants nervous. Founded only last year by a team of current MBA students, HourlyNerd is a prime example of the disruption in consulting that my co-authors and I discuss in our new article, “Consulting on the Cusp of Disruption” in HBR.

HourlyNerd is an online marketplace that allows MBA students from the top 20 U.S. business schools and select international schools to bid on consulting projects that have been posted by prospective clients, mostly small business owners. The students charge as little as $10 per hour though participants with the loftiest consulting pedigrees can command upward of $100 per hour. HourlyNerd profits by taking a cut of the fees from both the client business and the student providing the service. Think of it as eLance for consultants instead of programmers, writers and designers, or as eBay for consulting problems.

HourlyNerd represents one of the newest business models in consulting, the facilitated network business, which is structured to enable the exchange of services between clients and freelance consultants. These businesses have powerful disruptive potential because they can provide consulting at a fraction of the cost of traditional models, largely because they do not need to carry expensive fixed costs like recruiting, training, consultant “beach” time, and expensive real estate. HourlyNerd, by encouraging students to bid against each other, likely drives down the hourly cost of projects even more.

Like so many disruptive businesses (think of the classic example of the steel minimills), HourlyNerd is entering at the basement door of the consulting industry by targeting small companies. These are clients for whom HourlyNerd is a godsend, because they want the consulting help but can’t afford hefty consulting fees of traditional firms. Even if they could afford the fees of say, a BCG or Bain, these small businesses are unlikely to garner the attention of consulting partners at these top firms. Those partners, incentivized to focus on the biggest clients, are more than happy to yield the small business segment to someone else. As such, HourlyNerd is essentially competing against non-consumption.  Even if MBA student-consultants can’t provide the same breadth and depth of analyses and counseling that a traditional, highly resourced consulting team might, it doesn’t matter because what HourlyNerd consultants are doing is “good enough” for a client whose alternative is often not getting the work done at all due to a lack of talent, time or combination of both. And you could argue that in some ways, HourlyNerd actually fits the job that those small business clients need done better than a traditional firm because of their flexibility and the easy-to-use online platform that demystifies and democratizes the process of hiring a consultant.

While HourlyNerd is making a lot of headlines today, it’s not necessarily a new idea. Eden McCallum, for example, is a U.K. based consulting firm started by a pair of McKinsey alumni. Their business assembles lean project teams consisting of pre-vetted freelance consultants (all alumni of top consulting firms) on an as-needed basis to serve large corporate clients. Business Talent Group is a similar business based in the U.S. that also incorporates former operating executives regularly in its project teams. Both firms have been very successful and are competing more and more with the incumbent consulting firms; Eden McCallum boasts a client list that includes the likes of Tesco, GSK and Lloyd’s.  Yet, when Eden McCallum was founded in 2000, it targeted start-ups and small business client just like HourlyNerd.

Over time will HourlyNerd, like many other disruptors across industries, want to move up-market to bigger and bigger clients, attracted by the greater profits those relationships promise? Will they have an extendable core that allows their disruptive business model to scale without replicating the cost structure of more traditional competitors?  Will they need to expand the schools they recruit MBA consultants from to keep up with growth and possibly dilute their brand and value proposition as a result? These are all important questions for the founders of HourlyNerd to consider, but for now, they probably want to celebrate their successful first round of financing (not to mention, get ready for the start of their second year at business school).

The Future Is Scary. Creative Thinking Can Help.

Thinking creatively about the future requires sensitivity to the complex, fast-moving world in front of you, the ability to anticipate unexpected disruptions, and a willingness to constantly reevaluate your most basic beliefs and assumptions. Done well, we believe thinking creatively about the future of organizations requires doing three things:

First, understand how people think.

The brain’s hard-wiring could be leading you and your colleagues to hold on to tired assumptions and misperceptions about your organization. People have a natural bias toward ideas and concepts that confirm, as opposed to contradict, ideas they already believe. Such biases can sabotage their capacity for fresh thinking.

A classic example: Henry Ford famously insisted that the all-black Model T would always remain desirable to consumers. Even as other automakers created new car models and colors, even when his colleagues urged him to consider pursuing new directions, Ford refused to budge. After years of fantastic innovations that helped bring the automobile to the masses, Ford fell prey to the “anchoring” bias that leads people to make (or fail to make) new decisions by referencing their prior experiences.

Free your mind to generate new ideas by noticing how these and other cognitive patterns may be shaping your key assumptions and holding you back from thinking in more creative ways.

When thinking about the future of your organization, you and your colleagues must feel encouraged to doubt whether “the way we do things here at X Corp.” is necessarily still relevant. Insist upon a culture that allows people to constantly challenge the most fundamental beliefs, hypotheses, and assumptions that they have about your organization, the industry in which it does business, and the world in which it operates.

Second, think creatively by developing new mental models; audit — and then question — your organization’s fundamental beliefs and assumptions.

To think creatively is to change the way you look at something, to update one or more of your mental models. To get started, drill down on some of the most important mental models that you and your colleagues are currently using. Consider conducting a “beliefs audit.” By interviewing or surveying your colleagues, you can probe their thoughts about your organization’s current situation:

What are some key assumptions inherent in your day-to-day activities? The established “rules” under which you or your organization generally operates? What core values are “given”?
What are some of your own personal beliefs about your organization and what makes it perform effectively at present? In what areas does your organization devote too much — or too little — time and resources?
What is your organization’s competitive space, and are there ways it might be redefined?
If you or your organization didn’t exist, what difference would it make to the world? What would be missing?

These are only sample questions — you should develop others based on the current needs of your organization.

Questioning your current situation can open up paths to creative thinking. For instance, Google’s original aspiration was to build the best search engine ever; arguably the organization achieved that. But in order to enter a new era of growth, Google leaders needed to perceive their company differently. Only when they challenged their long-held assumption that “We are a search engine company” could they then come up with the “We want to know everything” notion which sparked projects such as Google Earth, Google Book Search, and Google Labs, along with further improvements to their fabled search engine.

Third, think creatively about the future by using “prospective thinking” to consider key trends and disruptions.

Take an expansive, long-term view, open to all possibilities and fully aware of what’s happening both within and outside of your organization or your immediate environment.

Megatrends, large social, economic, political, environmental or technological changes likely to have major impact across a wide range of areas, can be a very useful tool to help spark new possibilities. Examples include the rise of alternative energy sources, rapidly-developing markets like Brazil and China, and increasing mobile connectivity. Megatrends will affect your company, your customers, your competition, as well as your family and community.

Develop a list of issues you believe will likely: play out over a relatively long period of time (five to ten years, say, though different industries could have longer or shorter timeframes); have a strong and wide-reaching impact; and open up a range of strategic responses on your part. Then, refine your list by asking: Which trends will be the key vectors for shaping my organization’s future? What are some of the seemingly irrelevant trends that could end up being surprisingly critical?

Ponder the many ways you could exploit these megatrends to create new opportunities for your organization. Stretch your thinking by considering which of these trends your organization would be the least ready to deal with. Are there trends right in front of you that you haven’t yet addressed?

Ask yourself how these potential trends could influence the new ideas you want to generate for the future. For example, a client we worked with several years ago, a major European department store chain, stated emphatically that its future was in China, based on trends outlining the increased purchasing power of the rising middle class there. But not a single person on the leadership team had heard of TaoBao, the closest Chinese analogy to Amazon.com, which was growing at double-digit rates, building new distribution centers across the country, and focusing on customer relationships and loyalty.

Thinking creatively about the future is not only about gathering the trend data but maintaining the atmosphere of doubt cultivated in the first step. This will enable you to look at data — whether trends, customer research, or competitive intelligence — in fresh ways, to be better prepared for an uncertain future. Indeed, thinking creatively about the future means embracing the uncertainty, rather than the more predictable response of trying to remove it.