Marina Gorbis's Blog, page 1559

A Question That Can Change Your Life

For years I've exercised every day — doing weights, cardio, yoga — but despite my continuous effort, I haven't seen much change.

Until a few months ago.

Recently, my body has changed. My muscles are stronger, more defined, and I've lost five pounds along with a visible layer of fat. So what did I do differently?

Let's start with what I didn't do: Spend more time exercising. In fact, I've spent less. What I did change is how I use the time I spend working out.

Instead of doing the same old workout, day after day, I'm mixing it up with new routines. I'm focusing my effort more wisely — confusing my muscles with different exercises, adding balance challenges, power moves, and intervals.

The rapid results I achieved by changing my exercise routine made something very clear to me: We habitually squander time and effort on behaviors that do little to move us toward the outcomes we're seeking. Spending an hour on a treadmill watching TV had no visible impact on my fitness. But when I used that hour differently, I saw improvement.

It's not that we're lazy. We put effort into what we do. I ran on the treadmill every day. But, like my daily run, our efforts often don't translate into optimum results.

The basic principle is simple: We're already spending a certain amount of time doing things — in meetings, managing businesses, writing emails, making decisions. If we could just make a higher impact during that time, it's all upside with no cost.

So here's the question I'd like to propose you ask yourself throughout your day: What can I do, right now, that would be the most powerful use of this moment?

What can I say? What action can I take? What question can I ask? What issue can I bring up? What decision can I make that would have the greatest impact?

Asking these questions — and answering them honestly — is the path to choosing new actions that could bring better outcomes. The hard part is following through on the answers and taking the risks to reap the full benefits of each moment. That takes courage. But it's also what brings the payoff.

I was once sitting in a meeting with the CEO of a large bank and his head of HR. Right before the meeting, the CEO had told me that he had lost confidence in his HR chief after he had made a number of blunders without accepting any responsibility. "He really needs to go," the CEO told me.

Then, during the meeting, the head of HR asked the CEO for feedback. He's opened the door, I thought to myself. But the CEO said nothing. That led to more dysfunction as the head of HR stayed on, continuing to disappoint the CEO, but without getting straight feedback.

It's easy to judge the CEO. And he certainly should have been bolder. But how many of us miss similar opportunities out of fear or nervousness or even simply concern for hurting other people's feelings?

While the CEO's missed opportunity was a glaring omission with painful consequences, it is, unfortunately, not unusual.

There's some good reason for that: Sometimes the bold move can backfire. I know a similar situation to the one above, where a VP level person asked her employee for feedback, but when the employee answered honestly, he was shunned and treated poorly afterwards.

Rejection, failure, even ridicule — those are the risks of making the most powerful use of a moment. But in my experience, boldness, combined with skilled communication, almost always pays off because it moves the energy of a situation and creates new possibilities in otherwise old ruts.

Having the courage to take the kind of bold action that creates new opportunities is, possibly, the most critical skill a leader can have. It's why leadership development should involve experiences that hone emotional courage, and the communication abilities necessary to use it productively.

I recently saw a short video that perfectly illustrates the risk-reward payoff of courageously using a moment well. Billy Joel was speaking at Vanderbilt University when a young student, Michael Pollack, raised his hand. When Joel called on him, Michael asked if he could play the piano to accompany the musician for a song. A silence followed. Michael had taken a big risk just by asking and you could feel the tension and suspense in the room. After a pause, Joel said "OK" and the video of their astounding spontaneous collaboration has now been viewed over 2.5 million times.

How often have you been in a similar situation, at one time or another, wanting to say something or do something, yet letting the moment pass by? Next time you're in that situation, pay attention to it. Notice the feelings that come along with it. Observe the physical sensations in your body. Can you feel your heart beating? Can you connect with the conflicting urges to act and not to? Getting in touch with those feelings is the first step to acting in the face of them.

Woody Allen famously said that 80% of success is showing up. Maybe that's true. But, if it is, then I'd say the other 20% is the most important. Simply showing up and watching TV on a treadmill — that's not enough. Your greatest opportunity is to use your time in a way that will garner the most productive return. To take risks that will shake things up.

What can you do, right now, that would be the most powerful use of this moment?

Emerging-Market Engineers Power Global Innovation

Recently, Thomson-Reuters published its latest list of the Top 100 Global Innovators honoring the leading organizations and companies most responsible for sizeable, influential patents worldwide. A quick scan of the list indicates that all 100 organizations are located in developed countries. The United States has 47 entries, Japan 25, Western Europe 21, and South Korea 7.

From this list, some readers may infer that innovation is largely the realm of engineers and scientists working in developed countries for large companies, assuming that innovators from countries such as India and China don't matter after all. While we believe that Thomson-Reuters' methodology is meticulous and logical, we warn against this faulty assumption. Here are three main reasons why.

Captive R&D Centers

First, many of the Top Innovators employ engineers in emerging countries such as India and China. The Lullaby Baby Warmer engineered and built by GE Healthcare engineers sells well in Europe—but engineers in India designed the device. Working at Google's India labs, Lalitesh Katragadda and Manik Gupta conceived of and designed Map Maker, a popular online application that enables users to correct and enhance maps. (Even before the US government released photos of the site of Osama Bin Laden's final hideout, users worldwide pinpointed the location using Map Maker.) We estimate that tens of thousands of engineers and scientists working for top innovators are actually located in their offshore technical centers in the BRIC countries (Brazil, Russia, India, and China); these are often called "captive" R&D centers or offshore R&D locations. And this estimate does not count legions of foreign-born and foreign-educated techies who populate R&D centers in hotspots such as Silicon Valley. Over the next decade such engineers from emerging countries will play an increasing role in global innovation. Some will continue to work for their current Western employers, while others may lead startups or help catapult Chinese and Indian companies to higher positions in the innovation value chain.

The Top 100 Innovators also benefit from combining the power of their brands with the patents and engineering skills of third parties. Until the early 1980s, most innovation was performed inside the four walls of large corporate central labs; AT&T's Bell Labs in New Jersey, 3M's Innovation Center in Minnesota, and the Skunk Works of Lockheed Martin are among the legends of innovative horsepower of large corporations. Our next two insights examine ways in which this lab-centric innovation model has changed.

Offshore Outsourced Product Development

Let's examine one specific aspect of Otis Elevator, a unit of the Top 100 innovator United Technologies Corp. The 161-year-old Connecticut company is the world's largest designer and builder of vertical transportation systems such as escalators and elevators. Its Gen2 "machine-room-less" product replaced woven ropes with flat polyurethane-coated steel belts for savings in noise, energy consumption, and space, eliminating the traditional rooftop "machine room." (One critical element of high-capacity belt elevators is the load bearing termination assembly, which must withstand starting and stopping loads of up to six times the stated weight capacity of the device.) Six of the eight inventors of this Otis patent are Indian. In fact, these six Indian engineers were not employees of Otis at all, but rather on the payroll of an outsourced product development company headquartered in Andhra Pradesh, India. We are not saying that Otis' American engineers are not innovative—the bulk of the breakthroughs of next-generation products originated inside the company—but forward-looking leaders at United Technologies recognize that engineers in faraway places and some who may work for third parties can also contribute brilliance to Otis' product line.

We are suggesting that companies like Otis who embrace such external brilliance will have a compelling competitive advantage over those innovators who continue to look exclusively inward. Offshore outsourced product development gets less press than outsourced IT and call centers, but it has the ability to create additional revenues for nimble innovators. According to a Booz study, such external R&D in India alone will exceed $37 billion annually by 2020.

Original Design Manufacturers

Finally, much of the innovation currently marketed by the big brands originates in relatively quiet and often unnamed Original Design Manufacturers (ODMs). For example, many notebook computers are designed and built by Compal Electronics of Taiwan. The company's clients include Top 100 Innovators such as Hewlett Packard, Fujitsu, Siemens, Sony, and Toshiba. Another Taiwanese ODM, Quanta Computer, serves innovators such as Apple.

Another ODM, Jabil Circuit, headquartered in Florida, is not exactly a household name. But the $16 billion company operates in 60 countries, including Shenzhen, China, and Pune, India, employing a large number of engineers. Jabil and its peers often simplify the work of design, engineering, and innovation for their clients by creating "reference designs" that can be tailored by the big brands. One such example is a rack-mounted storage server system for the "cloud computing" market. Known as Sandy Creek, the design combined the Intel Xeon enterprise chip with current storage technologies, and was intended to be sold by Jabil's clients and not by Jabil itself. In another example, as illumination powered by light-emitting diodes (LEDs) has become mainstream, Jabil's materials engineers created a novel heat sink made from conductive plastic to keep the LEDs from overheating. In both examples, Jabil created a new product capability.

Utilizing the ODMs has enabled many well-known innovative companies to magnify their power in the marketplace and conserve their own engineering talent for their most crucial projects that cannot be outsourced.

The number of patents awarded to an organization is seldom the sole measure of its home country's level of innovation. American innovation is often powered by the willingness of many corporate and technical leaders to embrace good ideas from anywhere in the world. Whether good ideas originated inside a company or country, the ability to convert these ideas to market-shaping products in a globally competitive environment ultimately determines long term success. Innovators from emerging countries will increasingly play a larger role in all our lives.

The Building Blocks of Successful Corporate IT

The job of Chief Information Officer has never exactly been easy. But massive disruptions in business models, technology, and the work force have been throwing up massive new challenges for CIOs and other technology leaders.

Their organizations face disruption from both traditional and non-traditional competitors, and constant change. If they work for a product company, it may be looking to services revenue for growth. If they work for a service firm, it's probably seeking new revenue from information-based differentiation. Meanwhile, information-based businesses — which used to sell, you know, information — now sell outcomes and peace of mind. We are in the midst of a digital business transformation in all industries.

On the technology front, the CIO's once-tight hold on the devices and software employees use has evaporated (except perhaps in the financial world, where regulation keeps legacy systems in place) as markedly better and more adaptable consumer tools have conquered the workplace.

Meanwhile, CIOs must cope with five generations of workers — digital natives, digital immigrants, digital vagabonds, digital voyeurs, and analog holdouts — must work side by side. These workers bring different values on how to work, where to work, what to work on, when to work, and even why they work.

Consequently, CIOs and business leaders with a technology focus face more cacophony and challenge than ever before. On the plus side, though, they can play an increasingly key role in orchestrating and driving overall organizational success. Despite outward differences by industry, organizational size, and geography, we've seen certain commonalities in those who successfully lead corporate IT amid rapid change. The persona of the next-generation CIO is evolving from Chief Infrastructure Officer through Chief Integration Officer and Chief Intelligence Officer to Chief Innovation Officer. Skill sets are changing and IT leaders must adapt or die (or at least go into another line of work).

Understand the three organizational building blocks

Many CIOs are of course already well aware of all this. Others in their organizations, however, are often less so. In our research and CXO panels, CIOs tell us there is a high correlation between organizational alignment and successful corporate IT. For a CIO or other technology leader to make the move successfully from infrastructure to innovation, three key building blocks must be in place.

Organizational DNA. Market leaders and fast followers seek transformational change; cautious adopters and laggards dip their toe into incremental change. Market leaders and cautious adopters proactively seek change; fast followers and laggards take a reactive approach. (See accompanying chart.) CIOs in market leader and fast-follower organizations can move quickly and push for a great amount of change. In cautious adopters, the politics are trickier — but not impossible. And if you work for a laggard, good luck!
Reporting structure. CIOs who belong to the executive management team can play the strategic role that's key to success. As a member of executive management, a CIO can serve as both a utility and a strategic adviser to the business. Unfortunately, there's a trend afoot to have CIOs report to the CFO, which relegates the position to a purely cost-centric, tactical role.
Budget. At most corporations, infrastructure consumes anywhere from two-thirds to three quarters of the technology budget, leaving little over for integration, intelligence and innovation. Corporate IT success requires a reduction of infrastructure to 50% of the budget in order to fund the other, more forward-looking areas.

Having the right building blocks in place is essential to a CIO's — and organization's — success. Corporate boards should take note. It's not just CIOs who need to evolve. Organizations need to change as well to ensure that their technology investments lead to successful corporate IT.

Reinventing Corporate IT
An HBR Insight Center





Move Beyond Enterprise IT to an API Strategy
It's C-Suite Problem
Avoiding the Schizophrenic IT Organization
Platforms Are the New Foundation of Corporate IT

Does Your Company Need an Instagram Storefront?

As the internet continues to make it easier to connect with potential customers, some entrepreneurs have decided that Instagram isn't just for "selfies," but for marketing. Blogger Jason Kottke reported last month on Kuwait's "booming Instagram economy," where anyone with an Instagram account is simply putting a price tag on an item, taking a photograph, and selling it via the photo sharing online social network.

Everything from Manga to make-up, and more is being sold in this very simple and direct platform, leveraging additional free technology like WhatsApp (customer service), PayPal, and Square (transactions) to make the business infrastructure as simple as possible.

Not unlike eBay and the power-sellers it spawned, Instagram has the scale, stability, and user trust to create a viable marketplace. Once upon a time, if you wanted to sell online you needed a sturdy e-commerce site with analytics, a robust hosting facility, and a web team to create, design, merchandise, market, and more. Today, you need a couple of free accounts on some of the major online channels along with the persistence to keep at it. Is this the digital equivalent of a garage sale, or the next generation of business?

The answer is likely somewhere in between. It's doubtful that those in the upper echelons of the massive consumer packaged goods companies are going to care about this, or that Sephora and Walmart see this as a competitive threat, but the barriers to entry for someone to start and market a new business continue to be lowered.

These Instagram businesses may not be the next big thing, but they could well be the nascent stages of what is the next big, small thing in business today. On April 23rd and 24th of this year, the American University of Kuwait hosted a two day conference, featuring case studies, how-to's and networking for those wondering what it takes to build a business on Instagram. The Insta Business Expo, featured a slew of new entrepreneurs who built and grew their respective businesses through Instagram.

While this may seem inconsequential in the grander scheme of global economics and business, consider the global reach of Instagram, the burgeoning ability to use 3-D printing to create or augment existing products, and the desire from consumers for more unique products and services. There is also potential here for more traditional brands to try moments of commerce; an Instagram storefront could help validate a new product line or market ancillary products.

Instagram should not be underrated as an engine of marketing, considering the engagement beautiful images can generate. Today's Instagram entrepreneurs have uncovered an easy way for brands to quickly share new inventory, and a very simple way to conduct business from a smartphone. If your brand has the goods, you might want try out an Instagram store of your own.

How Quirky Startup Names Became an Internet Aesthetic

There are 102 startups whose names end in "ify," many of them probably in imitation of Spotify, says the Wall Street Journal, quoting branding consultant Christopher Johnson. Newcomer businesses include notifications system Xtify, as well as Stackify, an information-technology service provider. Quirky names for startups surfaced about 20 years ago in Silicon Valley, with the birth of search engines such as Yahoo, �which originally stood for Yet Another Hierarchical Officious Oracle. The mania for odd names was fueled by a lack of available short, punchy URLs, but it soon developed into an internet aesthetic.

How a Virtuous Housing Circle Turned Vicious

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As we near the fifth anniversary of the 2008 financial crisis, we should now have the critical distance to distinguish the real causes from the stereotypical villains, namely, Wall Street greed and unfettered competition. The latter culprits are officially blamed in the 2010 Dodd-Frank Act putatively designed to prevent another crisis: it's called the Wall Street Reform and Consumer Protection Act. The act is unequivocal: Wall Street caused the problem, consumers were harmed, and the federal government is here to help.



But in a free market — fettered by a reliable rule of law but little political micromanaging — would you expect "NINJA" loans to exist? These notorious loans were available to some borrowers with "no income, no job or assets" as late as 2007. Even if we assume that lenders are fueled by avarice, is it likely they would give out loans that they have little reason to believe will be repaid? Surely not. Something clearly had scrambled the normal market incentives in the mortgage bazaar. That something was a wide range of mandated "affordable housing goals," enacted over a couple of decades across many government departments, all designed to increase homeownership among lower income Americans.

The whole story is a long one, but the basic facts are simple. Thanks to the work of Edward Pinto and Peter Wallison of the American Enterprise Institute, and later to the SEC, we now know that as a result of these efforts to expand homeownership, by 2008 about 27 million mortgages were "nontraditional" and relatively risky loans. That was half the mortgages in the United States.

The numbers alone suggest Washington's visible hand. The government-sponsored (and now government-owned) enterprises Fannie Mae and Freddie Mac held 12 million of those loans — which they bought on the secondary market under stiff federal quota requirements. FHA and other federal agencies (such as the Veterans Administration and Federal Home Loan Banks) held 5 million, and Community Reinvestment Act and HUD programs had another 2.2 million. That's a total of 19.2 million risky loans held by entities controlled by or within the federal government, leaving 7.8 million for Countrywide, Wall Street, and so forth.

Let that fact sink in, because this is the one that shatters the mythology surrounding the financial crisis. Two-thirds of all risky loans in the system, we've since learned, "were held by the government or entities acting under government control," and they existed largely because of aggressive government housing policy.

The large-scale effect — a meltdown in the financial sectors involved in mortgages and mortgage securities — is known to all. The effect on private financial virtues has been largely ignored.

All things being equal, homeownership correlates with many good things. On average, people who own rather than rent their homes commit less crime, perform better in their jobs, vote, take more interest in their community, and keep up better with house maintenance. Homeownership is also a perennial element in the American Dream. So it's easy to understand why legislators and presidents would want to encourage homeownership among lower-income earners. But beneficial government policy attends not merely to good intentions but to tangible consequences. That requires careful economic reasoning. Affordable housing policies failed that test.

In housing policy, politicians left, right, and center made the classic mistake of confusing correlation with causation. There's a difference between merely having property you've gotten easily and disciplining yourself so that you can acquire and keep it, just as there's a difference between earning a million dollars from hard work and winning a million dollars in the lottery.

Since homeownership had correlated with fiscally virtuous behavior, policymakers imagined that they could boost such behavior by boosting homeownership. But mere ownership doesn't magically make people financially wise, capable, or virtuous. Instead, in a country with property and other basic rights, wise and virtuous behavior makes it possible for people to accumulate enough capital and credibility to be able to get a home loan. This incentive has spurred a virtuous circle among countless American immigrants. The dream of buying a house encouraged good financial practices, hard work, and thrift. Once people owned their homes, they valued them all the more because of what they'd had to do to get them in the first place. The equity they put into the loan spurred them to stay on the straight and narrow.

In a healthy housing market, people get a mortgage loan because of what they have already done — they've worked hard, kept their jobs, paid their debts, delayed gratification, and saved for a down payment. In this virtuous circle, wise behavior makes it possible to acquire a home, and acquisition of a home reinforces wise behavior.

When government short-circuited that loop of incentives, a vicious circle of bad financial decisions was the result. A meltdown was inevitable.

Why Weight Watchers Can't Ignore the Call to Go "Free"

"Free" product competition strikes again and the latest casualty is Weight Watchers, whose CEO recently left the company in the midst of the onslaught of free weight loss and fitness applications. Finding a killer strategy under these circumstances can be an elusive quest, as Weight Watchers has clearly discovered. In response, most companies hunker down and do more of the same — throw in a price cut, tweak a product feature, launch more advertising — and hope for the best. Yet, they often ignore the one obvious strategy that could give them a serious break: Meeting "free" with "free."

Using "free" as a first response to free product competition makes sense because it immediately creates a direct rival to the free entrants' products. This pushes back the assault and, with the right customer targeting, can protect the more valuable segments of the business. At the very least, it can buy time while management sorts out the right comprehensive response. And it just may permanently stall the new entrant.

Too often, established companies fail to marshal their many advantages to mount effective responses of this type. Advantages typically include an established customer base, brand equity, market knowledge, and financial resources. Nevertheless, our look at the reactions of 34 incumbent firms to "free" entrants across 26 product markets showed that launching a "free" strategy is too often a last resort, if undertaken at all (See my article, "Competing Against Free," with co-authors Jeff Dyer and Nile Hatch, in the June 2011 issue of Harvard Business Review).

Think about a classic case. Digital encyclopedias such as Microsoft's Encarta and later, Wikipedia, virtually destroyed the market for the venerable print edition of the Encyclopedia Britannica. Had the owners of those assets reacted immediately with a free or deeply discounted version of their encyclopedia (in digital form) to the segments adopting the digital versions, they may have been able to buy time for a successful transition to a new business model. Instead, the company was finally sold at a deep discount under financial distress. One of the first acts of the new owner was to finally launch free digital versions of the encyclopedia.

Or consider another recent battle, the one that free Internet radio company Pandora waged against satellite radio company SiriusXM's online and mobile offerings. While Pandora's user base soared to nearly 100 million users, SiriusXM posted only a tepid, quasi-free response (a 30-day free Internet trial). But if in reaction to Pandora, SiriusXM would instead have launched a free, advertising-supported version of their content for online and mobile, they might have permanently delayed Pandora's IPO by denying them the ability to grow users. Pandora's future success is anything but assured, but they've managed to carve out significant share in a space that SiriusXM should have owned.

The story is the same with Weight Watchers. Facing competition from free smartphone applications such as MyFitnessPal and activity trackers like Fitbit, Weight Watchers might have launched a similar set of free offerings, making them accessible on-line and through smartphone apps, and used the presumed growth in the user base to drive more volume toward key revenue products and services. Instead, MyFitnessPal's user base has climbed to over 30 million users and Weight Watchers is scrambling.

Meanwhile, Quicken did the right thing when they bought Mint.com, a free threat to their personal finance software. They neutralized the threat and entered the market with "free" all in one move.

A big obstacle to launching a free product, of course, is the worry that it will hurt revenues at best, and possibly destroy the business at worst. Yet, entrants are making "free" work in the same markets that incumbents are in by up-selling, cross-selling, bundling, or advertising to earn revenue. If it's working for one company, it can work for another. By launching "free," established companies create a perimeter that can protect core revenue products from the onslaught of a free product competitor. Is it the right move for every company dealing with the threat? Of course not. But for many companies, and for Weight Watchers too, it may be the best chance to stake a claim on the unfolding future of their market.

To Move Ahead You Have to Know What to Leave Behind

Decisions are the most fundamental building blocks of successful change in our organizations, our teams, and our careers. The faster and more strategically we stack those blocks, the faster and more successfully we achieve change. Yet, change efforts often stall precisely because those decisions don't happen.

The question is why?



Avoid Changing By Addition. The Latin root of the word "decide" is caidere which means "to kill or to cut." (Think homicide, suicide, genocide.) Technically, deciding to do something new without killing something old is not a decision at all. It is merely an addition.

When an executive announces that her business will change to become a luxury service provider, technically it is not a decision until she also states that they will not provide low cost services to price-sensitive customers anymore.

When a sales manager declares that his strategy this quarter will require his salespeople to spend more time strengthening existing customer relationships, he has only made an addition until he also declares that they should spend less time on something else like hunting for new prospects.

Your palms might be sweating at the mere thought of telling your team to ignore some group of paying customers or to not spend time hunting for new business, even if you really want to see the change happen. Research has shown that making tradeoffs is so mentally exhausting that most people try to avoid them whenever possible. That's why a manager who is no stranger to long hours and hard work will escape the discomfort simply by piling on new change objectives without killing any of the current priorities.

But this change-by-addition approach can be a death blow.

Avoid Trickle-Down Tradeoffs. When team leaders fail to decide which old directions are going to be sacrificed in service of the new direction, the tradeoff doesn't magically disappear. It simply slides down the ladder. Instead of the team leader leaning into the discomfort and deciding once that the team is going to spend this quarter strengthening existing customer relationships, and not actively hunting for new prospects, each team member now has to decide for themselves whether to call on an existing customer or go find a new one every time they pick up the phone, open their email, or hop in the car.

Trickle-down tradeoffs create two major problems for change efforts. First, they undermine team alignment toward the change. It is highly unlikely that each team member will independently arrive at the same conclusion about what to do and what not to do. Part of the team will choose to move in one direction while the other part moves in another direction — the very definition of misaligned.

Second, psychologists have shown that making tradeoffs depletes our overall mental capacity and causes us to make poorer judgments in completely unrelated situations. This phenomenon is why otherwise healthy eaters end a long afternoon at the mall of choosing between stylish shoes and comfortable shoes by feasting on a hearty dinner of French fries and Cinnabons. They have no mental energy left to make good dieting decisions.

Similarly, when your team has to spend a long morning making tradeoffs it leads to long afternoons of either staring at the wall and web-surfing, or making poor choices for their customers, their workloads, and their budgets.

To Lead Is To Decide. Making change decisions is a cognitively and emotionally taxing activity that the average person will go to great lengths to avoid. While I have discovered some techniques for increasing the consistency and reliability of our decisions, there is no proven way of completely eliminating the discomfort of making tradeoffs. That might be a key element of what makes great leaders great. Great leaders and change agents have come in all shapes, sizes, colors, genders, and personality types.

But the one thing they all seem to have in common — the one thing that distinguishes them from ordinary people — is their willingness to decide when others could not.

Strategic Humor: Cartoons from the September 2013 Issue

Enjoy these cartoons from the September issue of HBR, and test your management wit in the HBR Cartoon Caption Contest at the bottom of this post. If we choose your caption as the winner, you will be featured in next month's magazine and win a free Harvard Business Review Press book.

"Ann, you can see by the number of books behind me that I know what I'm talking about."

P.C. Vey

Aaron Bacall

"Although our quarterly earnings dropped by twenty five percent, I feel compelled to point out that our Facebook likes have doubled."
Crowden Satz

"The kazoo isn't the only instrument I play."
P.C. Vey

"Smithers, your input is vital here — it's what we make fun of."

Teresa Burns Parkhurst

And congratulations to our July-August caption contest winner, Gretchen Newby of Chevy Chase, Maryland. Here's her winning caption:

"Owing to recent cutbacks, I can offer you only 2 1/3 wishes."

Cartoonist: Susan Camilleri Konar

NEW CAPTION CONTEST

Enter your own caption for this cartoon in the comments field below — you could be featured in next month's magazine and win a free book. To be considered for the prize, please submit your caption by Monday, August 12, 2013.

Cartoonist: Paula Pratt

If Your Leader Departs, Preserve the Company's Story First

We've all heard some version of this story: a brash and charismatic leader creates a runaway business success. The press can't get enough of him. And people can't seem to buy the products fast enough. The board and shareholders, enjoying the dizzying ride, are happy to look the other way if some of his antics sometimes seem... unconventional.

And then disaster strikes.

The leader dies, or gets ousted, or just gets bored, or gets old and decides to step back. After the initial shock, the company resolves to soldier on. A professional manager with an impressive resume is brought in. And the mantra is "our success is due to more than one person. This is a team effort."

And things actually go okay at first.

But as time passes, it becomes clear that something is wrong. You can feel the momentum waning. Key talent gets poached, and new products don't seem to have that old snap. The whispers begin that the company has lost its way. The press piles on. The share price plummets. The company stumbles, and is either gobbled up by a competitor or it just slowly drifts off to sleep and eventually disappears. I'm sure you have several recent examples of companies that are somewhere along this trajectory in your head right now.

If this scenario is really as common as it seems, why don't we know more about how to prevent it? After all, given the potential value to shareholders of solving a problem like this, you would think that corporate boards would think of almost nothing else.

But they are focused on the wrong thing. When looking for a replacement for a charismatic leader, they look for someone with an impressive résumé instead of someone who understands the power of story. You can survive losing a leader. But if the underlying story the leader was living gets lost, you are in deep trouble.

Charismatic leaders are charismatic because they are the living embodiment of an inspiring and universal human narrative. Branson and Kelleher are mavericks thumbing their noses at convention. Dorsey and Page are the boy geniuses inventing the future. The companies these innovators run make useful products and services to be sure. But they also make something even more important for their customers — they make meaning. These companies embody a story that everyday people can find inspiration in for their own daily lives. It is this deeper narrative that creates real loyalty and authentic evangelism. Preserving this narrative shouldn't be an afterthought; it should be a company's first priority.

Some companies succeed at this, some don't. And some, like Ford Motor Company, have managed to do both.

When Henry Ford developed the assembly line, he ushered in the era in which middle-class Americans, not just the wealthy, could buy an automobile. In an instant, Ford's narrative and America's — freedom, ingenuity, self-reliance and optimism — were bound tightly together. And this powerful narrative didn't die with Henry. In fact, it flourished under a series of leaders who understood the story and kept it alive with successive waves of innovation and improvement.

But starting in the 1990s, and through much of the 2000s, Ford strayed from its core narrative. The professional managers in charge weren't students of story. They were students of spreadsheets, and short-term profitability. This resulted in a series of distracting acquisitions, and products that were drab, uninspiring, and poorly made. For those with a desire to dig deeper, this book chapter is particularly illuminating.

Blame was placed on a number of things: high pension costs, changing tastes, and a weak economy, to name a few. But the last statistic in this article from the early 90s hints at a different story: American car buyers, embarrassed and disgusted at the state of Ford and other American car companies, were turning in droves to imported cars, particularly from Japan — cars built and sold by companies that were acting more American than American car companies. Ford worked to address the quality issues but this takes time, and time was ticking away. As the crisis deepened, Ford began to hemorrhage money, posting astonishing losses by the mid-00's. Some began to whisper about what had once seemed unthinkable: the end of the road for Ford.

It wasn't until 2006 that Bill Ford (Henry's great grandson) and the board of directors found a leader that understood the Ford narrative and knew how to act Ford-like again. Alan Mullaly, an aviation engineer from Boeing was a guy with the right stuff. He and his team set about building higher quality products (a baseline necessity), and, notably, taking public responsibility for missteps.

But the breakthrough moment came when Mulally and his team opted not to take any of the auto-bailout money that the U.S. government was offering. This excellent video summarizes the whole story. Ford under Mulally started to feel American again. Suddenly, the company was recognizable again to American consumers. It was like an old friend emerging from a coma. You could feel confidence in the company returning. And the revenue followed.

Mulally, undoubtedly a talented leader and manager, was the instrument of Ford's resurgence, for sure, but Ford's success is really about something deeper — a return to that central narrative that is so inspiring to millions of Americans: "Americans innovate. Americans take responsibility for their actions. Americans don't take handouts." It's not the person that inspires us, it's the narrative.

This core narrative is what allows us to apply that meaning to our own lives. It makes us proud (or embarrassed) to drive a Ford. That narrative doesn't have to be lost when the leader is gone, so long as the narrative is well understood, codified and preserved, and made actionable by people at every level of a company.

This codification takes focus and discipline. This is not about creating a mission statement by committee and carving it in a wall somewhere. It is about unearthing the authentic narrative that drove the company to its current success, and will also motivate the company's actions moving forward. And it is about working with people throughout the enterprise to apply the story to their area of specialization: product development, HR, sales, and, yes, marketing.

Companies that anticipate the need for a successor to a charismatic founder or leader should take the time to do this work in advance. Take the time to understand the narrative that the leader is living — what they really symbolize. Codify the narrative and share it with prospective candidates. Work with them to explore ways that the company can act upon the narrative in the future. Build a map of iconic first actions that the incoming leader will undertake that support and extend this narrative. By recruiting a leader who is truly committed to understanding and advancing this core narrative, companies will set themselves up for an easier transition and greater future success than those that do not.