Marina Gorbis's Blog, page 1556

IT Doesn't Matter (to CEOs)

In 2003 Nicholas Carr wrote a provocative article for HBR titled "IT Doesn't Matter," in which he stated:

"IT is best seen as the latest in a series of broadly adopted technologies that have reshaped industry over the past two centuries — from the steam engine and the railroad to the telegraph and the telephone to the electric generator and the internal combustion engine. For a brief period, as they were being built into the infrastructure of commerce, all these technologies opened opportunities for forward-looking companies to gain real advantages. But as their availability increased and their cost decreased — as they became ubiquitous — they became commodity inputs. From a strategic standpoint, they became invisible; they no longer mattered."

This argument was derided by IT supply-side executives such as Steve Ballmer, Carly Fiorina, and Scott McNealy, but CEOs quietly applauded it. They had suspected all along that IT really doesn't matter. Company leaders have quoted and lauded Carr whenever they've needed to justify their hesitation to create strong, progressive IT positions.

And they hesitate to create strong, progressive IT positions all the time. In fact, CEOs avoid IT like the plague. They resist getting their hands dirty alongside the CIO, even though many of them will readily get down into the mud of a balance sheet with the CFO or strategize the details of global brand issues with the CMO.

Because they distance themselves from IT, CEOs don't grasp its subtleties. Nor do they understand the CIO's role or, typically, the technologies that the company deploys. Consider the meager corporate progress over the past decades in easing two long-running headaches: enterprise-computing implementations and corporate security.

Even after more than 20 years of implementations, a study by Panorama shows that 53% of ERP projects still run over budget, 61% take longer to complete than anticipated, and more than 27% fail to produce the positive ROI expected.

And Panda Labs recently published data indicating that at a basic level, more than 27% of computers are infected with malware. Data breaches are on the rise, with a 44% increase in the number of records exposed from 2011 to 2012. There have been breaches at companies such as Global Payments (1.5 million records), Wyndham Hotels (600,000 credit cards), eHarmony (1.5 million passwords), LinkedIn (6.5 million passwords), Zappos (24 million records), Heartland (160 million credit card numbers), and even the Texas attorney general's office (3.5 million records).

Social media is now part of the security picture too: Between Q2 and Q4 in 2012 the number of Twitter accounts grew 40%, but the growth was accompanied by hacks such as those at The Associated Press, the FT, Human Rights Watch, France 24, the BBC, and Burger King. All of which reveal a deficit of security measures and a poor contextual understanding of the technology.

These and other IT-related problems aren't rooted in technology but in leadership failings. The people in the C-suite don't understand IT problems, don't provide adequate resources to solve them, and don't approach the issues as members of unified technology-literate teams.

To address these shortcomings, companies can take action in three areas:

Literacy. The senior leadership needs to become literate in technology. IT isn't somebody else's job, it's ultimately theirs. Boards should require that CEO candidates demonstrate not just knowledge of finance and marketing but also a technology aptitude.



Accountability. Boards should make CEOs accountable for technology failures and data breaches. The compensation committee should push for clearer links between pay and performance for IT-related activity (which ultimately is nearly everything most firms do). These links should be described clearly in the annual report so that analysts can scrutinize them.



Frequency. The senior leadership group mustn't just pay lip service to the CIO and his or her team. The CIO's group is at the core of the business; it runs the company's nervous system (ERP) and immune system (security) and connects all internal and external entities. Technology updates should be provided to the senior management team with the same frequency and rigor as financial statements and signed off on by the leadership team as part of the pay-for-performance framework.

It's true, in a sense, that enterprise computing is like a utility. Data flows through every company like water, gas, and electricity. But there's a difference. Computing's functionality undergoes constant, dramatic increases, and as it does so, it opens huge new opportunities and leaves the company vulnerable in unexpected ways. While technology can't give you a permanent competitive advantage, timely deployment of new IT products, processes, and systems can enable you to build a strong competitive position.

Corporations' technology strategies will remain ineffective until leaders acknowledge that, now as always, IT does matter.

Reinventing Corporate IT
An HBR Insight Center





IT Has to Deliver Great Tools — and Teach People to Use Them
IT on Steroids: The Benefits (and Risks) of Accelerating Technology
The Building Blocks of Successful IT
Move Beyond Enterprise IT to an API Strategy

The World's Most Useful Bazaar

Five years ago, as Facebook was establishing global dominance and Twitter was showing promise as The Next Big Thing, there was little doubt that both would become hugely profitable. Today, after years of awkwardly placed ads, Promoted Tweets, privacy concerns, and struggling stock values, the wisdom has started to swing the other way. Being popular and ubiquitous, we've learned, is not the same as having a long-term revenue model.

The reality is that most revenue on the internet comes from either advertising or selling a service, and both are perceived as intrusions in the conversational environment of social media. Facebook and Twitter, designed for communicating and sharing personal stories, naturally put people in a social mindset. And in that context, commerce will always feel inappropriate.

This helps explain the recent surge in attention for Pinterest. After a year of relative obscurity, the visual bookmarking site rose to prominence in late 2011, growing from 1M to 10M unique monthly visitors in under six months. That's still a fraction of Facebook's global base, but Pinterest's users are unusually engaged: ask nearly any of them and you'll hear, at some level, that they're hooked. Moreover, a large fraction also report having made a purchase specifically because they discovered the item on Pinterest.

The keys to this aren't just functional features. Yes, Pinterest does a good job of providing a seamless path between visual browsing and retail sites, but this wouldn't matter if people didn't adopt a purchasing mindset while browsing. The fact is that millions of them do, because Pinterest is designed from the ground up to create an online experience that triggers the same emotional high as real-life shopping.

To understand how, it's useful to employ a metaphor. When designers analyze a user experience to see how it works, or begin planning how to craft one for a client, metaphor is often our most powerful tool. Looking at Pinterest, one metaphor in particular explains why it's so good at driving engagement and commerce. It's essentially a bazaar.

With roots going back thousands of years, the sprawling bazaars of South Asia and the Middle East are icons of flourishing commerce. They seduce visitors with their abundance and intimacy, and imbue shopping with the excitement of discovery. The fact that a lot of goods change hands in them has as much to do with heady experience as household economics. The same can be said of Pinterest, which takes design cues from the bazaar to make browsing images and links a richer experience, and to set itself apart from other social networks or shopping sites.

Most visibly, Pinterest is endlessly explorable, presenting browsers with multiple avenues to venture down next. Clicking on a Pinterest "pin" gives you several options for related content revealed by an enlarged view: you might pursue other pins from the same board, other boards from the same user, items pinned by like-minded users, and so on. Like the bazaar, Pinterest has no dead ends, but reveals new pathways with every additional step.

Along the way, visitors can engage with the stocks of different kinds of curators. Pinterest affords access to two kinds of collection: content assembled by people a user knows, and content assembled by strangers with a shared interest. This is in contrast to networks like Facebook, which is only about the former, or special-interest sites that focus on the latter. Together, these modes allow users to sample personality and expertise to their liking, making forays beyond their circle of comfort and lowering resistance to novel offerings. This also mimics the duality of an active bazaar, which is both familiar and challenging, social and serious — a place where one forms relationships with reliable sellers, but also hopes to encounter the exotic.

Third, Pinterest values relevant stock over speedy transaction. In the bazaar, the most successful stalls aren't the ones with sellers hawking deals to maximize turnover, but those inviting browsers to step in, examine the goods, and develop a desire for them, even if it means coming back later to buy. Pinterest's version of this is allowing groups (of friends or strangers) to build collections together. Time-shifting the act of curation defuses the sense of urgency that permeates most social media — again, enabling a user to move into a purchasing mindset. Where Facebook pushes, Pinterest pulls.

The net effect is that Pinterest users do not react to commercial nudges with the resentment that they are being manipulated or abused. They feel in control, because the purpose of their visit is aligned with the experience of the site. They came to Pinterest with expectations similar to those they would have entering the bazaar. They didn't venture in to catch up with friends and then awkwardly find themselves looking at an ad — they arrived looking for things to collect, and open to the possibility that they might eventually want to buy.

Svpply.com, an eBay-owned social shopping site often considered Pinterest's main competition, offers a good counter-example. Its selection is curated by strangers and promoted by mass popularity; two of its three sorting options ("popular today" and "recently added") are entirely now-based; and while it can be searched and filtered, it lacks the social/expert duality that makes Pinterest so engrossing and relevant. Despite a six-month head start, it's struggled to attract even a fraction of the traffic.

Engaging with customers socially is simple necessity in the modern commercial landscape. And while Facebook and Twitter are excellent venues for building awareness, testing ideas, and gathering feedback, companies that attempt to convert those social communities into increased sales are often disappointed.

As Pinterest rolls out a widening array of tools for linking browsers with retailers, other companies can benefit by watching how they achieve what other networks still find challenging. In particular, they have crafted an online experience that gives customers a sense of control and multiple paths for discovery. They let their users discover and collect at their own pace, and co-curate with friends and like-minded strangers.

More generally, by choosing to build a bazaar instead of, say, a bar or boutique, they are seizing upon a precious design tool — an apt metaphor — and making it their own.

The New CTO: Chief Transformation Officer

We all know that if you put a frog in water and slowly heat it to the boiling point, the frog will stay put and die. But if you throw the frog into already boiling water, it will quickly jump out. Today's IT leaders have known about the exponential growth of processing power, storage, and bandwidth, but like the frog, they didn't notice the boiling point approaching because the change has happened over so many decades. These three change accelerators are what lie behind today's avalanche of business transformation, and they are directly affecting the roles of CIO and CTO.



In a recent article, I suggested that the role of the CIO needs to shift from Chief Information Officer to a Chief Innovation Officer, due to the massive, rapid, multiple technology-driven transformations that are occurring today. And, just as the CIO's role needs to change, so too does the CTO's—from Chief Technology Officer to Chief Transformation Officer. This fundamental shift is necessary to elevate the position's contribution and relevance.

While the CIO has historically been focused on the technology needed to run the company, the CTO has been responsible for the technology integral to products being sold to customers or clients. However, over the next five years every business process is going to undergo a major transformation. For example, IBM executives recently shared with me that over 40 percent of their profits are now coming from products and services that were impossible just a few short years ago. That reflects the transformative nature of business today as well as the speed of the transformation. This is just the beginning and someone has to lead that transformation.

CTOs must embrace the role of Chief Transformation Officer. No longer will this position's relevance be tied to how well he or she can oversee the development of technology. In the near future, the CTO will need to oversee the transformation of every business process, including how you sell, market, communicate, collaborate, and innovate. That means the CTO's role will shift from aligning technology to applying technology to accelerate business strategy, from communicating technology plans to the executive team to integrating a transformation imperative and applying the process to all executive-level planning. That's a huge shift.

This also means that the CTO and CIO need to collaborate more closely. Because so much of the CIO's traditional responsibilities are now virtualized with nearly everything as a service (XaaS), the CIO is free to focus on innovation. Game-changing product and service innovations can be more easily identified when transformation is a business imperative. With the CTO focused on identifying how to use technology to transform processes, products, and services, the CIO can then use these insights to implement innovation.

For example, the CTO of Amazon, with a role focused on identifying transformational tools, would see that 3D printing (additive manufacturing) has recently reached a turning point and is now being used to manufacture a wide range of products, from jet engine parts to human jaw bones. This turning point has already opened the door to a rapid revolution in customized and personalized manufacturing for companies of any size. The CTO would make sure the CIO sees that a transformative turning point has been reached, and working together, with the CIO's new focus on innovation, they could craft a major opportunity by offering on-demand 3D printing services for any individual or company.

Manufacturers of customized and personalized products would no longer have to own any manufacturing equipment thanks to Amazon. Instead, they would focus on designing a product and sending the CAD design to Amazon, who would manufacture it with one of their industrial strength 3D printers best suited for the design and then ship it directly to the customer.

The Amazon strategy I described above has not happened — yet. But we all know that Amazon's cloud services have proven to be both profitable and disruptive. It's not hard to see how this new cloud-based manufacturing service would take Amazon to a whole new level.

It's up to the Chief Transformation Officer to ensure that your company is the one that not only survives the inevitable transformation, but also thrives after it. Only then can you experience transformation not as disruption, but as ongoing opportunity that leads to lasting success.

Reinventing Corporate IT
An HBR Insight Center





IT Has to Deliver Great Tools — and Teach People to Use Them
IT on Steroids: The Benefits (and Risks) of Accelerating Technology
The Building Blocks of Successful IT
Move Beyond Enterprise IT to an API Strategy

A Formula for Fixing the Hardest Problems

For many years I have been asking friends and colleagues, "What frustrates you the most in modern society?" I've received many, varied answers but at their core, so often, was a common root — another question: "How can citizens and government accomplish what modern life requires of them to improve the world in which they coexist?"

As the three basic sectors of U.S. society — government, business, and nonprofit,each of which have their own culture, language, and mentality — attempt to solve our most-pressing challenges, we seem to be sinking into a bottomless black hole. Even simple problems elude solutions, and the ones that do exist — regulation in government, competition in business, and the work of nonprofits to fill gaps — frequently fall short.

How can we find some way out of this mess?

Let's start by considering one knotty problem: traffic in Manhattan.



Yes, as in many big cities, it does seem to get worse all the time. Private cars, taxis, buses, delivery vehicles, construction sites, double parkers, diplomats, garbage trucks, film crews, ubiquitous jay walkers are all scrambling for limited space in this dense, fast-paced city.

Just think what would happen at a four-way intersection if a (city) fire truck ran into a (private-sector) FedEx van, an ambulance from a (nonprofit) hospital, and a motorcycle driver (that is, a private citizen) without a helmet. All those vehicles (and their respective sectors) are going somewhere presumably important to them. But when these competing elements collide in a busy intersection, societal havoc is unloosed: insurance problems, pain and suffering, more traffic, litigation, and plenty of costs all around.That's a rat's nest of potential and real confusion and conflicts.

Into this maelstrom stepped Mayor Bloomberg. Although he wouldn't think of himself in these terms, the mayor is a paragon "tri-sector athlete" to use Kennedy School professor Joseph Nye's term — a rare breed of leader, who owing to an unusual breadth of experience is able to build bridges and hurdle barriers between the business, non-profit, and government sectors to address some of society's thorniest problems.

As a first step, Bloomberg had city government officials study the problem. Looking at London, Paris, and other dense cities, they came up with the idea of deploying bike lanes, bike stations, and bikes. Citibank came up with the funds for the bikes and their stations in return for advertising rights. Finally, private citizens of all ages and stripes are making an effort to learn to ride again. Thus Citi Bike was born, out of a collaboration between the city government, private enterprise, and the public at large.

The program is still too young to know if it will fully succeed. If the high number of bikes in use is any indicator, things look promising. But traffic may need to get worse before it gets better, as it will take people time to adapt. Drivers, parkers, and pedestrians are already screaming about giving up space to bike lanes. Worse, many folks who have not been on a bike in decades are wobbling through New York's streets and endangering themselves and everyone around them.

Is there hope? Surely, yes, if tri-sector leaders and citizens at large get behind the joint effort to collaborate and change behavior.

This may seem improbable but in reality it is an old, old idea. Such efforts at collaborative governance, as John Donahue and Richard Zeckhauser explain in their seminal book of the same name, have roots that go as far back as George Washington and his efforts to create routes to the West by working with private enterprises to build canals. The Lewis & Clark expeditions, the Smithsonian Institution, the New York Public Library, and the Metropolitan Museum are all in various ways, combinations of government funding, and private ingenuity and enterprise.



A more recent example of successful collaborative governance at work is the renaissance of New York City's park system, when the non-profit Parks Conservancy and the City Parks department came together to develop a long-term collaborative plan to maintain, oversee, and improve the park.

Why aren't such collaborations more obvious today? Many such efforts have to take place behind the scenes for good political reasons, and so they remain invisible, failing to get the recognition they deserve.

I have been thinking about this subject for the past 10 years, and I have come to the conclusion that a better way to untangle intractable problems, like New York City's traffic, is by enabling genuine collaboration in the intersection of the three basic sectors — that is to create an "intersector" — a notional space where individuals like Mayor Bloomberg can work with the government, business, and non-profit sectors to make collaborative governance a reality again. That won't be easy or quick. But when people of good will accept and recognize a joint problem and goal, it can work.

If the visionaries who planned Citi Bike and enough other participants, for instance, give it a fair try, Manhattan traffic just might get better over time, as it has in other similar cities around the world. In fact, if all this comes together and works out, the end result would not look like that crash in a four-way intersection — where the hypothetical fire truck, FedEx van, ambulance, and motorcycle collided — but more like a roundabout where those elements can integrate smoothly and safely in an orderly and flowing way. Everyone will get where they need to go, avoiding havoc and benefitting all traffic and society at large.

All it will take is tri-sector leaders and ordinary citizens who want to cooperate, who understand and embrace the elements of collaborative governance and are willing to work through the intersector to give better balance to the three traditional, and quite insular, sectors. And, then, when Manhattan traffic gets better, don't worry; there will be lots more challenges ahead.

Tell Me Something I Don't Know About Women in the Workplace

The stats below offer a startling glimpse into what work and leadership is like for women around the world. Click or tap the refresh button for a new fact, and share them with your friends, family and colleagues. They're not all depressing. I promise.

Taking a more in-depth examination of women and leadership, our September issue focuses on some of the complicated ways gender manifests itself in our workplaces. We've gone beyond "leaning in," "having it all," and "opting out" to discuss the powerful and unseen barriers women encounter they're rising through the ranks, particularly a second-generation bias that few young men and women recognize. We talked to 24 current and former not-white-male CEOs, who spoke candidly about what they faced as they built their careers and how they developed inclusive organizations. And we've got advice about how to sell your ideas to women, in a world where there are growing numbers of women with P&L power.

We've also taken a dive into our archive, selecting the best on an array of topics:

Pay

Women don't get paid as much as men, and that includes at the CFO level: Even when women are initially paid more at hiring, their salaries trailed their male counterparts by 5% after two years. In meritocracies, research finds that bias often plays into who gets paid what — and that women often wind up with less money compared to men. And when it comes to the question of whether women just pick jobs in sectors that pay less, that's the case in some situations, but hardly in all of them.

Leadership Qualities

A recent study found that female leaders bested their male peers on traits like empathy, influence, and conflict management, and even have a slight edge when it comes to being self-aware. And 360 evaluations discovered that women are rated higher in fully 12 of the 16 competencies that go into outstanding leadership. On the downside, female leaders are less likely to be seen as demonstrating strategic vision and comfortable with risk-taking. There are also far more paradoxes faced by women on the road to be a leader compared to men. Then there's this sticky issue:

Likability

Currently, it seems, it's incredibly hard for women to be viewed as both competent and liked. While there are some findings that both men and women become less likable as they move up the ladder — and that women maintain a higher level of likability the higher they climb — there's ample evidence that women pay a likability penalty when they succeed.

Talent & Teams

There's also evidence that women are gaining speed globally where the race for talent is tight. We know that strategic alliances can make or break female leaders. There's also one of my favorite research findings: adding at least one woman to a team raises its collective intelligence. And on a more individual level, there are couple of proactive things women should consider: these research-based ways to network more effectively and break out of the girls' club. And some good news for women: when top-performing men switch companies, their performance tends to drop, but when star women transfer to a new firm, their performance remains high.

Work/Parenting Balance

Everything seems up in the air when it comes to how couples and single mothers both parent and work. We know that men are more inclined to believe that working outside the home and raising a family should be an equal endeavor among couples, while women are a little more cynical about this utopia given their life experience. Globally, women who leave work after having a child in countries like Germany, the U.S., and Japan tend to off-ramp far longer than women in India, and have less success in finding a job when they're ready to go back to work. Post-recession, fewer mothers are leaving the paid workforce, but those who did leave are having an even tougher time getting back in. While bias against working mothers is generally more extreme than bias against working fathers, men are more likely than women to face penalties if they take parental leave or flex-time benefits. And while the parenting question is important for the actual parents, it's also highly relevant for the women who are left behind when their coworkers and mentors leave the workforce.

We'll be adding to this collection of research and analysis over the next two weeks and, quite frankly, forever. But go here for now and keep an eye out.

Women in Leadership
An HBR Insight Center





A Fairer Way to Make Hiring and Promotion Decisions
"Feminine" Values Can Give Tomorrow's Leaders an Edge
Millennial Women Aren't Opting Out; They're Doubling Down
For Women Leaders, Likeability and Success Hardly Go Hand-in-Hand

In Recessions, Women Seek to Become More Attractive

Women who had read a vivid article describing growing unemployment and increasing scarcity showed a stronger desire (6.19 on a 7-point scale) to purchase lipstick, form-fitting jeans, and form-fitting black dresses, in comparison with women who had read a neutral article (4.97 on the same scale), says a team led by Sarah E. Hill of Texas Christian University. In tough economic times, women appear to increase their attractiveness as a way of finding mates with financial resources. Recession fears prompted no such desire among men to enhance their attractiveness, the researchers say.

Google's CIO on How to Make Your IT Department Great

Running an IT department is hard enough under any circumstances, but imagine doing it at one of the world's preeminent technology companies. Your customers aren't haplessly trying to set up their voicemail; they're experts in technology and expect it to work.

In that sense, you might think Ben Fried, Google's CIO, has one of the toughest jobs in existence. On the other hand, few CIOs can boast a company culture as supportive of technology.

As part of our series on the future of corporate IT, I gave Fried a call and asked him about his job, and where he thinks the industry is going. An edited version of our conversation is below.

Tell me about your role at Google, and what your purview as CIO includes.

I'm responsible for the technology that people who work at Google get as part of doing their job. That also includes the major line of business systems that power the back office and related functions of the company, as well as the front line support and operations elements for all of that.

So what do you do at Google that is different than most IT departments?

One initiative is an area where IT has a harder time understanding its role traditionally: workplace technology. It's all the productivity tools and technology you use to get work done, that aren't part of a line of business; it's a large portfolio, but any company that has a company directory or something it thinks of as "the intranet" can relate. In a lot of workplaces, these technologies don't get thought of in strategic terms, but those are actually most of the touchpoints people have with IT. I see a lot of CIOs spending a lot of time — which is very important to do — on major business initiatives. But I often see an inadequate amount of time spent where the day-to-day, most frequent touchpoints are, which is with all the other ways the people in the company are their users. One of the big changes that has come with the mass consumerization of technology is that IT needs to flip that around a little and spend more time focusing on the overall employee experience.

When the people you deliver technology to are technology experts — and it's not just at Google where that's the case, but any workforce that has people born within the last 30 years — it's really important that you make sure that that daily impression, that first impression they get of IT, is a good impression.

To do this you have to have IT people who are more knowledgeable about the technology and the best ways to use it than the average employee. In the future, that kind of thinking is going to differentiate great IT departments from good IT departments.

If that's the case, why isn't everyone doing it that way already?

If you've got a problem with your laptop, the person you bring it to should be an expert who knows more than you do. I can't tell you how many shops I've been to where the first person you bring your problem to is someone who is being paid, or whose employer is being paid, on a per incident or a per ticket basis. The standard approach is to apply tough cost control. That generally means that front line, in many cases, are the lowest cost of labor, who are generally working off a well-scripted common recipe of how to provide tech support. The sad thing is, a savvy knowledge worker can tell you're dealing with someone who's not really an expert. We take great pride in the fact that the people we hire to be that first touchpoint, they're our employees. And most of the time — over 90% of the time — they'll solve your problem themselves.

The first response when you talk to people who are marinated in the old ways of doing things is 'That's gotta be way too expensive.' It's actually a lower-cost approach, because it's faster for a more tech-savvy person to resolve the problem. Secondly, you can do more with a smaller support workforce as a result. Third, you get better people when you take this approach, because you get people who are attracted to solving hard problems. It turns out that this approach produces what I think is a virtuous cycle that brings costs down and customer satisfaction up.

Tell me a bit about how IT has changed since you came to Google, and how you see it evolving going forward.

One of the reasons why I really wanted the Google CIO job was I'd had these very early indicators when I was an IT leader at an investment bank that the demographics among the users of technology had changed. I was starting to see the effects of having a deeply technology-savvy workforce across the company, and not just in IT. And I saw that that led to big change.

The changing demographics of the workforce are one thing that every CIO has to wrestle with. That is a workforce that is much more opinionated, much more rightly so, comes to work already knowing how to work, already having made a choice about how it wants to work. And that's the thing that CIOs face right now.

The other tidal force that CIOs face is this aspect of economies of scale, and economies created by vertical integration that really, really large cloud companies like Google have. Google has economies of scale that I don't believe any other organization in the world — and I'm including governments when I say that — have. And that's a tidal force that will change the role of the CIO, because the cloud is going to become the better delivery mechanism.

There's only so long enterprises can hold out against that. One of the things I'd learned working for a number of CIOs was that IT is most commonly viewed as the largest cost center in the enterprise. One of the reasons I wanted to come to Google was to have some small role in helping to shape the direction of a product suite for enterprises. I thought, 'Listen, I can be on the outside and have this done to me, or I can be on the inside.'

Reinventing Corporate IT
An HBR Insight Center





IT Has to Deliver Great Tools — and Teach People to Use Them
IT on Steroids: The Benefits (and Risks) of Accelerating Technology
The Building Blocks of Successful IT
Move Beyond Enterprise IT to an API Strategy

New Books from HBR Press for August

Check out these new or forthcoming books from HBR Press:

Conquering the Chaos: Win in India, Win Everywhere

by Ravi Venkatesan

India is on the minds of business leaders everywhere. Within a few decades, India will be the world's most populous nation and one of its largest economies. But it is also a complex market, with a reputation for corruption, uncertainty, and bureaucracy. Ravi Venkatesan, the former Chairman of Microsoft India, offers inside advice on how your firm can overcome the unique challenges of the Indian market. If you can win in India, you can win everywhere.

Keeping Up with the Quants: Your Guide to Understanding and Using Analytics

by Thomas H. Davenport and Jinho Kim

Welcome to the age of data. No matter your interests (sports, movies, politics), your industry (finance, marketing, technology, manufacturing), or the type of organization you work for (big company, nonprofit, small start-up) — your world is awash with data. As a successful manager today, you must be able to make sense of all this information. You need to be conversant with analytical terminology and methods and able to work with quantitative information. This book promises to become your "quantitative literacy" guide — helping you develop the analytical skills you need right now in order to summarize data, find the meaning in it, and extract its value

The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business

by Rita Gunther McGrath and Alex Gourlay

Are you at risk of being trapped in an uncompetitive business? Chances are the strategies that worked well for you even a few years ago no longer deliver the results you need. Dramatic changes in business have unearthed a major gap between traditional approaches to strategy and the way the real world works now. In short, strategy is stuck. Most leaders are using frameworks that were designed for a different era of business and based on a single dominant idea — that the purpose of strategy is to achieve a sustainable competitive advantage. This book serves as a new playbook for strategy, one based on updated assumptions about how the world works, and shows how some of the world's most successful companies use this method to compete and win today.

How CEOs Can Fix Capitalism

Edited by Raymond Gilmartin and Steven E. Prokesch

The financial crisis of 2008 and the Great Recession caused a crisis of public confidence in business and American-style capitalism, with its focus on maximizing shareholder value. Corporate leaders understood that reform was needed and that they needed to commit themselves to the dual goal of producing benefits for society and their firms' bottom lines — to creating "shared value." But the specific actions they could take to bring about this change were less clear. This HBR Single offers some of the freshest thinking today on practical measures that businesses can implement to create shared value.

Work Smarter with LinkedIn

by Alexandra Samuel

If you think LinkedIn is just for job hunting, you're missing out on the many ways you can take advantage of this social network to build the professional relationships you need to advance in your career. LinkedIn can help you initiate, strengthen, and use the very real human connections that make you effective on the job — and help you get ahead. This short, practical book shows you how. In Work Smarter with LinkedIn, social media expert Alexandra Samuel demonstrates the most effective ways to actively build and use your network

True Story: How to Combine Story and Action to Transform Your Business

by Ty Montague

Is your company a storyteller — or a storydoer? The old way to market a business was storytelling. But in today's world, simply communicating your brand's story in the hope that customers will listen is no longer enough. Instead, your authentic brand must be evident in every action the organization undertakes. Today's most successful businesses are storydoers. These companies create products and services that, from the very beginning, are manifestations of an authentic and meaningful story — one told primarily through action, not advertising. In True Story creative executive Ty Montague argues that any business, regardless of size or industry, can embrace the principles of storydoing. The book is filled with examples of how forward-thinking organizations — including Red Bull, Shaklee, Grind, TOMS Shoes, and News Corporation — are effectively using storydoing to transform their organizations.

Worthless, Impossible, and Stupid: How Contrarian Entrepreneurs Create and Capture Extraordinary Value

by Daniel Isenberg

Are you a member of the new class of global entrepreneurs? If not, beware — this book may inspire you to become one. It's a rallying call for those whose ideas were ever called worthless, impossible, or even stupid. In this fascinating read, global entrepreneurship expert Daniel Isenberg illustrates the new rules of starting and growing a business. No longer bound by a western "Silicon Valley" approach to entrepreneurship, a new group of enterprising doers has created a global and diverse mix of organizations that could be tomorrow's leading firms. What can you learn — and what will you be inspired to do? Let Worthless, Impossible & Stupid be your new manual for making change.

Primal Leadership, With a New Preface by the Authors: Unleashing the Power of Emotional Intelligence

by Daniel Goleman, Richard Boyatzis, and Annie McKee

This is the book that established "emotional intelligence" in the business lexicon — and made it a necessary skill for leaders. Managers and professionals across the globe have embraced Primal Leadership. This refreshed edition, with a new preface by the authors, vividly illustrates the power and the necessity of leadership that is self-aware, empathic, motivating, and collaborative in a world that is ever more economically volatile and technologically complex.

A Better Way to Tackle All That Data

The single biggest challenge any organization faces in a world awash in data is the time it takes to make a decision. We can amass all of the data in the world, but if it doesn't help to save a life, allocate resources better, fund the organization, or avoid a crisis, what good is it? Hampered by a shortage of qualified data scientists to perform the work of analysis, big data's rise is outstripping our ability to perform analysis and reach conclusions fast enough.

At the root of this problem is our concept of what constitutes data. Existing boundaries of what we can digitize and analyze are moving outward every day. Taking Gartner's prediction that the Internet of Things (essentially, sensors that share data with the Internet) will add 50 billion machine voices to today's 2 billion connected users, we have to believe that the ability for humans to manage the process of amassing the right data and performing the right analysis is headed for trouble.

The measure of how long it takes analytics to reach a conclusion is often called "time to decision." If we accept that big data's holy grail is, as Randy Bean says in Information Week, better, faster decisions, we have to believe that as data continue to grow in volume, velocity, and variety, making management more complex and potentially slowing time to decision, something has to give.

This is a problem crying out for a solution that has long been in development but only recently has begun to become effective and economically feasible enough for widespread adoption — machine learning. As the term suggests, machine learning is a branch of computer science where algorithms learn from and react to data just as humans do. Machine-learning software identifies hidden patterns in data and uses those patterns both to group similar data and to make predictions. Each time new data are added and analyzed, the software gains a clearer view of data patterns and gets closer to making the optimal prediction or reaching a meaningful understanding.

It does this by turning the conventional data-mining practice on its head. Rather than scientists beginning with a (possibly biased) hypothesis that they then seek to confirm or disprove in a body of data, the machine starts with a definition of an ideal outcome which it uses to decide what data matter and how they should factor into solving problems. The idea is that if we know the optimal way for something to operate, we can figure out exactly what to change in a suboptimal situation.

Thus, for example, a complex system like commuter train service has targets for the on time, safe delivery of passengers that present an optimization problem in real time based on a variety of fluctuating variables, ranging from the weather, to load size, to even the availability and cost of energy. Machine-learning software onboard the trains themselves can take all of these factors into account, running hundreds of calculations a second to direct an engineer to operate at the proper speed.

The Nest thermostat is a well-known example of machine learning applied to very local data. As people turn the dial on the Nest thermostat, it learns their temperature preferences and begins to manage the heating and cooling automatically, regardless of time of day and day of week. The system never stops learning, allowing people to continuously define the optimum.

The application of machine learning in health care is essential to achieving the goal of personalized medicine (the concept that every patient is subtly different and should be treated uniquely). Nowhere is this more easily seen than in cancer treatment, where genomic medicine is enabling highly customized therapy based on an individual's type of tumor and myriad other factors. Here machine-learning algorithms help sort the various treatments available to oncologists, classifying them by cost, efficacy, toxicity, and so forth. As patients are treated, these systems grow in intelligence, learning from outcomes and additional evidence-based guidelines. This leaves the oncologists free to focus on optimizing treatment plans and sharing information with their patients.

With the rise of off-the-shelf software, such as LIONsolver, the winner of a recent crowdsourcing contest to find better ways to recognize Parkinson's disease, machine learning is at last entering the mainstream, available to a wider variety of businesses than the likes of Yahoo, Google, and Facebook that first made big data headlines. More and more businesses may now see it as a viable alternative to addressing the rapid proliferation of data with increasing numbers of data scientists spending more and more time analyzing data. Expect to see machine learning used to train supply chain systems, predict weather, spot fraud, and especially in customer experience management, to help decide what variables and context matter for customer response to marketing.

The Missing Half of the Education Debate

As employers, as citizens, and as parents, executives the world over are increasingly becoming concerned about the education systems, especially post-high school, that are supposed to prepare young people for work and life. The crescendo of concern is shaping public discourse, policy debate, and private experimentation through commitments such as the $472 million made to higher education by the Gates Foundation since 2006.

So far, I fear, the discussion is only half a conversation

Take, for example, US President Barack Obama's recent "middle out" speech at Knox College. His promise to "lay out an aggressive strategy to shake up the [tertiary educational] system, tackle rising costs, and improve value for middle-class students and their families" went over well. No surprise there; when a president says "it is critical to make sure that college is affordable for every single American who is willing to work for it," heads will nod. Who would argue about making college more affordable and more accessible?

The problem is that such talk leaves much unsaid. The underlying assumption is that because college pretty much does the right things — and does them well — the real challenge society faces is to make sure that all who desire a college education have fair and affordable access to it. I do not question the importance or the difficulty of the challenge; I question the basic assumption.

Most often, that assumption doesn't even get discussed. When it is, what we hear is the emphatic argument that college works because it does pay, which is supported by data like that gathered by the OECD's most recent compendium of education-related data, Education at a Glance 2013, which covers the period through 2011. The data show a modest rise to 4.8% in the unemployment rate among graduates in the OECD countries, but that's far lower than the 12.6% for individuals of comparable age but without college education. In the US, the corresponding gap is larger: 4.9% vs. 16.2% .

Moreover, over a working lifetime, four-year college graduates in the US will earn 84% more than those who just complete high school. This represents a great benefit to people individually as well as to society, which stands to gain from the taxes they will pay and the unemployment and other forms of support they will not need.

What's missing from this happy conversation is an equal level of attention to how few students make it through college, how little they actually learn, and how poorly many of them do in finding the well-paying work for which their education prepares them. In the US, for example, although more than two-thirds of those in the appropriate age cohort begin programs at four-year colleges, a third do not finish. Add in the experience of two-year colleges — and the graduation rate falls to a little over 50%. Equally disturbing, graduation rates among economically advantaged groups are much higher than among those lower down on the economic pyramid, and the gap between them is growing

Every bit as troubling is the performance of colleges in developing the critical thinking skills and capabilities so important to life and work. In Academically Adrift, Richard Arum and Josipa Roska use the Collegiate Learning Assessment tool — a statistical instrument being used by the OECD for its 17-country Assessment of Higher Education Learning Outcomes (AHELO) Project, which is assessing student knowledge and abilities in higher education — to draw a clear line in the sand. After surveying 2,300 college students, Arum and Roska found that at least 45% of them showed absolutely no statistically significant improvement in their critical thinking skills after their first two years in college.

Reports from other countries show a consistent, and growing, disconnect between the fast-rising number of students graduated and the shrinking percentage that find work. A survey of recent graduates from China's famed Tsinghua University revealed that some two-thirds were working for entry-level wages lower than those paid to migrant workers. Across China, these individuals and their peers from other schools huddle together in crowded urban apartments, and are spoken of dismissively as the "ant tribe."

The point is simple: Conversations about college must address more than just cost and access. They must also question assumptions of quality, performance, and relevance. This is uncomfortable and unwelcome ground. But for many students in many places, college is no longer doing well what it was designed to do — and what it was designed to do may no longer be what students most need or what societies most need of them. We need to talk about that too.

Executives need to do more about these issues than just talk or exert influence as alumni or school trustees. They know well that only what gets effectively measured gets properly managed. They should, therefore, follow the imaginative lead of companies such as Boeing, which provides data to colleges on how education has helped its new hires develop the skills and capabilities their jobs require.

After all, colleges need access to tangible, ground-level information showing the correlation between the curriculum and learning experiences they provide and real-world outcomes in terms of usable skills and capabilities. Colleges can't fix things if they, too, have access only to half a conversation. Business can, and must, supply the other half.