Marina Gorbis's Blog, page 1566

"Feminine" Values Can Give Tomorrow's Leaders an Edge

A Pew Center study released in May revealed that working mothers are the sole or primary provider in a record 40 percent of U.S. households. Only a few days before, hedge fund billionaire Paul Tudor-Jones created a stir by remarking at a conference that women will never rival men as traders because babies are a "focus killer".

Here we have the dynamics of a new economy colliding with the old establishment like tectonic plates. But as developed nations restructure from manufacturing to knowledge and services, my bet is on the moms, or more specifically, women — and men who can think like them. Survey data my colleague Michael D'Antonio and I gathered from 64,000 people in nationally representative samples in 13 countries — from the Americas and Europe to Asia — point to widespread dissatisfaction with typically "male" ways of doing business and a growing appreciation for the traits, skills and competencies that are perceived as more feminine.



The results, published in our new book The Athena Doctrine, reveal that 57% of people were dissatisfied with the conduct of men in their country, including 79% of Japanese and South Koreans and more than two-thirds of people in Indonesia, Mexico, U.K and the United States. This sentiment is amplified among the millennial generation (young men and women age 18-30) of whom nearly 80%are dissatisfied — most notably in highly masculine societies like Brazil, South Korea, Japan and India.

If people have grown cold on male-dominated structures and leadership, they offer a solution: Two-thirds of survey respondents felt that "The world would be a better place if men thought more like women", including 76% of the French and Brazilians and 70%of Germans. Those stats include majorities of men who equate masculine incumbency with income disparity, continuing high levels of unemployment and political gridlock.

Curious as to how leaders could "think more like women," we asked half our sample — 32,000 people around the world — to classify 125 different human characteristics as either masculine, feminine or neither, while the other half rated the same words (without gendering) on their importance to leadership, success, morality and happiness. Statistical modeling revealed strong consensus that what people felt was "feminine" they also deemed essential to leading in an increasingly social, interdependent and transparent world.

We next visited 18 countries, interviewing over 100 innovative women and men in medicine, politics, education, start-ups, NGOs and other sectors of the economy. Here are two of many examples we came across that show how anyone can lead with a more feminine ethos:

Empathy Is Innovation. While leaders spend considerable time and effort trying to envision markets and pushing out innovation, empathy can often generate simple, yet breakthrough ideas. In her years working as an advocate for charities in Britain and abroad, Anna Pearson noticed a pattern: there were many people who wanted to volunteer — but were too busy (or had schedules too varied) to commit to a cause. To bridge the gap between what volunteers could give and what people need, Anna re-imagined volunteering on a very small scale. Her London-based non-profit Spots of Time connects organizations with people who can give an hour or so at a time, and often at a moment's notice. The lesson? Anna trained her empathy not just on beneficiaries of charity but also on volunteers. That kindness and sensitivity to others was the catalyst for creativity.

Vulnerability Is Strength.You can't read a business article today without hearing about "learning from failure". (A Google search for the phrase yields 129 million results.) But maybe there'd be less failing if we were willing to admit what we don't know in the first place. In Berlin we met Dr. Ijad Madisch, a Harvard-trained virologist who kept "getting stuck" in his experiments. When he asked his colleagues for help, he was chastised. Big-time scientists were supposed to project an image of supreme competence. Madisch realized that science needed a global community where the work took precedence over egos. So he started ResearchGate, a social network for scientists, which now has some 3 million members across 200 countries. The lesson? By letting down his guard and showing candor and humility, Madisch not only helped himself but also inspired others to join his cause. This advanced research far more rapidly than the old approach of working in cubicles and meeting at conferences.

Today's work requires a new leadership paradigm. Look at the list of competencies above and — whether you're a man or a woman — start working on them.

Car Density on China's Roads Rivals That of Los Angeles

Every kilometer of road in China has an average of about 200 cars, as many as in Los Angeles, one of America's most congested cities, according to a Wall Street Journal report quoting UBS Securities. The average speed of car traffic in 14 Chinese cities is less than 20 kilometers per hour, and in Beijing it is significantly lower. Chinese cities are taking steps to restrict the number of cars on the road. Shanghai, for example, issues 9,000 to 10,000 license plates per month, auctioning each at an average price of 82,000 yuan ($13,400).

Seven Tips for Shifting a Mindset in Your Organization

We're all fascinated by new ideas and how they can grab hold of us, influencing how we think and affecting how we take action. How does Atul Gawande (the checklist doctor) get inside my head, when others don't? Why does Gwyneth Paltrow make me adjust my behaviors, when others can't?

In business, especially, we're inundated with new ideas—so many we can hardly process or evaluate them.

If you have tried introducing a new idea into your organization or community—especially if it's an abstract idea like sustainability, diversity, or innovativeness—you know it's tough. People may ignore your idea, pooh-pooh it, or just steal it. You put your energy, your reputation, and maybe your future, on the line.

Still, when you have an idea you think is valuable and could change things for the better, some inexplicable force may compel you to "go public" with it. You want to change a prevailing mindset and you're willing to stick your neck out, at least a little, to do it.

The question is how, especially when you're not Gawande or Paltrow, to change an organization from the inside when you don't necessarily have a ton of formal authority on your side.

Take a look at what the "idea entrepreneur" does. This is the new type of cultural player—idea-driven people like Gawande and Paltrow, Michael Pollan (food), Cesar Millan (dogs), Blake Mycoskie (business = philanthropy), and many others—who reach large audiences and gain widespread influence.

These are independent operators. They're wealthy and famous. They publish books and appear on TV. But do their methods of idea-spreading apply to the office-dweller, the organizational citizen, the manager or executive? The answer is yes, with some modifications.

To illustrate, let me introduce Samantha Joseph, who works for Iron Mountain Incorporated, a leader in records storage and information management services. Sam is young, ambitious, and idea-driven: she believes that for-profit companies can drive significant business value when they take a strategic approach to social and environmental sustainability. After earning her MBA from MIT in 2009, Sam could not find a position in sustainability, so she joined Iron Mountain as a manager in strategy, knowing the company had no sustainability function and hoping to build it.

Sam saw opportunity. She plunged into the strategy job, but also began to work on bringing the idea of sustainability to Iron Mountain—an exciting if daunting task, considering the number of employees, locations, facilities, trucks, and other real assets involved.

Here are some of the things that big-time idea entrepreneurs do that Sam adapted for her quest:

Accumulate evidence. To gain influence for an idea, you need an awful lot of supporting material—data, references, cases, stories, and analysis—which can take decades to gather. Sam didn't have that long, but she did accumulate enough material to make her the "resident expert." It took her a year to develop her case—largely on her own time—before she started talking about sustainability in public. But she was talking privately with lots of people all the while: gathering opinions, refining the ideas and practices, making connections and gaining supporters.
Develop practices. An idea is an abstraction that won't produce change until you provide people with specific, practical ways to put it into everyday use. Cesar Millan's ideas get their teeth from his training methods of "calm assertiveness." Sam worked with colleagues from across Iron Mountain to develop a volunteer program, a solar energy pilot, and a strategic charitable partnership—which got people doing sustainability without having to pledge allegiance to a theory first.
Create a sacred expression. Practices without theory are nothing more than tips and techniques. You need to find your best form and use it to create a "sacred" expression—a talk, a video, a written piece, a visual—the most complete, authoritative, and compelling articulation of your idea that you can manage. Sam put together a short video that made the case, showed how Iron Mountain was involved with the community, and got people energized and emotionally engaged.
Encourage "respiration" around your idea. Sam did not expect to do a TED talk or appear on Colbert, but she needed to engage with the audiences who would be most affected by, and most able to implement, the sustainability idea. The only way to get an idea breathing on its own is to show up, in person. Sam put together a road-show and visited many of Iron Mountain's corporate departments and facilities, conversing and responding to questions. After she left, people kept talking. The idea started to come to life.
Include your personal narrative. Idea entrepreneurs always present their idea in the context of their own life story. Dr. Berry Brazelton, expert on babies, relates anecdotes about himself as a kid. Sam talked about how her fascination with sustainability arose from an early family relationship. She presented the business case first, but the personal story gave the idea personality.
Align with a metric. Influence cannot be definitively measured in financial terms, but people need some way to calculate its the value. People associate Malcolm Gladwell's idea of mastery through the "10,000 hours of practice" metric. As the sustainability practices took hold at Iron Mountain, Sam measured and reported on key performance indicators—particularly cost savings—along with non-financial measures, such as volunteer participation rates, that demonstrated its success.
Expect backlash. When you propose a new idea, expect an intense response—from useful debate to useless sniping. Sam didn't experience direct backlash, but she did come up against some challenges. She spent almost a year talking and debating, pushing and being pushed, before respiration began to take hold. She realized (as all idea entrepreneurs do) that an intense response—positive and negative—is a sign that people are taking the idea seriously. No challenges, no point.

Each path to influence, and each change of mindset, looks different. Within two years, Iron Mountain had reduced its carbon footprint, helped archive the blueprints of some of the world's most historic sites, and donated 65,000 volunteer hours to community efforts, among other initiatives. And today, corporate responsibility activities are started and driven by employees all over the country.

Sam most directly knows the idea has gained influence when someone says to her: I'm so proud of what we're doing. One-on-one validation is a powerful metric.

How Motivational Focus Drives Performance

Every person is motivated differently. Great managers know this and adjust their leadership style based on motivations. In her book Focus, Heidi Grant Halvorson identifies two types of motivational focus that drive behaviors. She groups people as:

Promotion-focused. People motivated by promotion want to advance and avoid missed opportunities. They see goals as a path for advancement. They are eager, comfortable taking chances, work quickly, dream big, think creatively, and play to win. Unfortunately, they can be prone to error, may not think things through, and can be unprepared if things go wrong.

Prevention-focused. These individuals see goals as responsibilities and concentrate on staying safe. They worry what might go wrong and play to not lose. They work slowly and meticulously, aren't the most creative, but often have excellent analytical and problem-solving skills.

By understanding your focus and that of others, leaders have the power to better motivate themselves and everyone around them.

In this interactive HBR webinar, Heidi Grant Halvorson explains how to identify a person's motivational focus, how to change this focus, and how to use it in the right way to get results.

Superman Was a Reporter. Now He Owns the Newspaper.

Clark Kent's Got His Work Cut Out for Him


Everyone has an opinion about Jeff Bezos’s purchase of The Washington Post. James Fallows has a lovely piece about why the moment is significant for journalism; Kara Swisher writes about what the Post didn't see coming and offers Bezos some excellent advice; and (on our own site) Bill Taylor and Justin Fox explore new leadership and investment models related to the acquisition. But one of the more interesting angles is one from Slate's Farhad Manjoo, who calls out a line in Bezos's letter to the staff: "I won’t be leading the Washington Post day-to-day." If anything, Manjoo argues, leading day-to-day is what Bezos should be prioritizing. Sure, a potential injection of cash is a huge boon. But what the publication really needs is the entrepreneur's ideas and presence, particularly given what he's really good at: "finding new ways to sell old things." He has three signature traits that feed this ability: He's "relentlessly focused on pleasing customers," "uncommonly patient," and "fascinated by novel business models." The latter, Manjoo stresses, is key, because journalism is at a point where figuring out a new way to construct a pay wall isn't good enough anymore. It needs a new business model that also allows it maintain its integrity.

No Hierarchy, No Management, No Nothing

How Medium is Building a New Kind of Company with No Managers First Round Capital

Medium isn't merely a digital publishing platform; it's also a fierce adopter of Holacracy, a style of management that is entirely management-free. Jason Stirman, one of Medium's founders, discusses its attributes in this meandering First Round Capital article. To start, he says, he never liked seeing people as resources you have to draw value out of. "When I think about resources, I think like natural gas or coal mines," he explains. "Thinking about a person's life that way just seemed really dehumanizing." So he started talking to people about their lives, not their work. Then he embarked on the motivational approach known as SCARF — status, certainty, autonomy, relatedness, fairness. To get a passionate workforce, he says, you have to identify which of these factors is most important for each employee. There's much more in this article, from how the Medium team built its strategy from the ground up to how it established key management tenets that revolve around what the company needs to accomplish in order to serve its core purpose. So does it work? Stirman says yes. But, of course, there's also this charming reaction.

"I Think I'll Move to Australia"

A Magical Land on the Bottom of the Earth Where You Can Get a Pay Raise Quartz

It's not just Alexander who might have a better go of it down under. Seems workers in Australia aren't just plugging along in the global workforce — they're actually thriving. While things have plateaued recently, the average household income jumped 49% between the mid-90s and today. Compare that to the U.S., where household incomes rose 4.5% over the past 20 years. What's the secret? The country's business model, which is hardly repeatable, is based on "digging stuff out of the ground and selling it to China." And, frankly, that model could cool relatively soon. But fear not, there's something else Australia does well: paying its fast-food employees. In Quartz's sister publication, Jordan Weissmann explores how and why McDonald's pays its employees $14.50 an hour or more. Part of the reason? It costs consumers between 6 and 70 cents extra to buy a Big Mac. So could the U.S. make this work? Maybe. But franchises would have to entirely rethink their profitable business model — and people would have to pay more for those terribly unhealthy and oh so delicious French fries.

You Don't Actually Watch Foreign Films

The Science Behind the Netflix Algorithms That Decide What You’ll Watch Next Wired

"Dark dramas featuring a strong female lead." Yeah, Netflix is pretty good at knowing what I'm going to like. And in this in-depth interview with Carlos Gomez-Uribe, the company's VP of product innovation and personalization algorithms, and Xavier Amatriain, its engineering director, we all get to find out how the cinematic sausage is made. Viewing behavior, for one, is much more important than what people say they like or want. "A lot of people tell us they often watch foreign movies or documentaries. But in practice, that doesn’t happen very much," says Gomez-Uribe. Surprisingly, there are limits to Netflix's algorithms, particularly when it comes to one film Gomez-Uribe enjoyed. "I watched Tell No One, the French thriller, over a year ago. I’ve been trying to find similar movies. The person on the content team who acquired it said it’s the only one like it in the world." And just how does all the tagging of content happen? Smart people do it, says Amatriain. "We have more than 40 people hand-tagging TV shows and movies for us," he explains. Yes, hand-tagging by people with entertainment-industry experience. Computers can't do everything.

To Share or Not to Share?

The Whistle-Blower’s Quandary New York Times

How do you know if one of your employees might blow the whistle on your company? Amidst the brouhaha over Edward Snowden, and regardless of whether you think his decision was the right one, the question of why people out their firm's private business is one that's important for bosses and employees alike (and it's just plain interesting, to boot). A trio of researchers — Adam Waytz from the Kellogg School of Management, along with doctoral candidate James Dungan and Liane Young of Boston College — have been researching why some people are more likely than others to blow the whistle. It turns out that the difference lies in whether someone's moral compass points to loyalty or fairness. People who are apt to blow the whistle lean more heavily toward the latter, while those who believe in loyalty probably won't give away secrets. But emphasizing one value or the other by having study subjects write essays about them can influence a potential whistleblower's behavior. So if you want to create a workplace that favors whistleblowing, your mission statement can emphasize fairness. But keep in mind: Either value can be changed by whatever narrative you apply to it. "Larger loyalty to the greater good" encourages whistleblowing too.

BONUS BITS:

Honk If You're Stuck in Traffic

Buying a Car Online: You Should Do It. Especially if You're a Woman (Double X)
Tesla Motors Stuns Wall Street … Again (Businessweek)
Online Car Giant Sues Company Behind Thousands of Bogus User Reviews (Skift)

Get the Most Out of Executive Coaching

Remember "light bulb" jokes? My favorite was, "How many shrinks does it take to change a light bulb? One, but the light bulb must want to change." It's true: Unless or until a person decides to commit to change wholeheartedly, no coach can help move him or her one-millimeter off the dime.

Worse yet is the fact that, unlike light bulbs that lack the capacity for self-deception, humans bamboozle themselves all the time. Whether it's a smoking cessation program or working with a coach to improve management skills, people claim they want to change or drop dysfunctional behaviors from their lives, but then fight like Ninja warriors to defend them. Worst of all, irrespective of how intelligent or professionally powerful a person is, it is a virtual certainty that after embarking on a change process, they will be partially or fully derailed by the feeling, "Better the devil I know than the devil I don't know."

The reason why backsliding on our ostensible commitments to change is so common is because most change is the result of compliance to a demand, incentive, or threat. "Lose weight or you'll suffer a heart attack" coming from an M.D. is a directive most folks won't ignore. Unfortunately, when incentivized to change in this manner falling off the wagon is common because our motivation wasn't to change, it was to avoid a premature death.

Psychologists who have studied intrinsic and extrinsic motivation since the 1970s — most notably, Professor Edward L. Deci — demonstrate that when a person acts in response to extrinsic motivators — the promise of money; the threat of punishment — commitment to a behavior is short-lived. This is why when the cat's away, mice will play. Mice don't want to change their behavior, i.e. playing games, but they do when cats are present. However, since change (the cessation of play) was instigated by an extrinsic force — Tabby — if Tabby isn't monitoring the mice, thse rodents instantly revert to form.

What, then, should you do if you think you want to change and, like so many of your peers, put your faith (and a huge financial commitment) in a coach? Is it possible to develop an authentic commitment to executive coaching through sheer willpower alone? No. But what you can do is develop a mindset — i.e. new "automatic" cognitive messages — that will help you counter your own resistance to change.

What follows are the exercises I use most often to help new clients initiate coaching with the best mindset possible. If, prior to the onset of coaching you experience the attitude adjustments they are designed to foster, the change process should be profoundly less anxiety- and resistance-provoking for you than it is for those who dive in unprepared.

1. Ask yourself, "Cui bono?"

Recall a golf lesson or the clumsiness you suffered during an introductory yoga class. Now recall how you responded when the club pro or yogacharya gave you critical feedback. No big deal, right? Well if you've never been to an executive coach, I guarantee that the first critique you receive will not be a NBD experience. Why? Golf or yoga are peripheral to an executive's definition of self. Being a stellar manager is central, so when someone pokes that realm of your self-concept the usual reaction is "ouch!"

The best way to reduce the possibility of being stung by an executive coach's constructive critical feedback is to remind yourself that it is (a) not ad hominem and as such, (b) comparable to the club pro's efforts to correct your slice. To do this with ease, learn to employ the Latin phrase "Cui bono?" — literally, "as a benefit to whom?" — after each critique you receive. The rational portion of your brain knows that no competent coach would gratuitously put you down. Now you need to train the more primitive, more reactionary parts of your brain to think that way too. By making "Cui bono?" the mantra you bring to assessment sessions with your coach, you can learn to accept that any and all feedback from him or her is intended to be helpful, not hurtful.

2. Be sure you wouldn't rather hire a cheerleader than a coach.

Many consultants and coaches know that they can build lucrative client bases by treating protégés the way Little League coaches deal with their pre-teen charges: Everything the kid does evokes a "good job" or "atta boy!"

The problem with an automatic "good job" reaction is that it is useless and often — even by pre-teens — seen for what it is: Balm for under-developed egos. An 11-year-old with burgeoning self-esteem would much rather hear "keep your eye on the ball" after striking out than "good job," but if you want to hear cheering regardless of how you perform, caveat emptor. An ethical coach doesn't bring pom-poms to meetings with clients, so hire to your needs.



3. Learn the difference between participation and commitment.

Having spent 30 years as a psychotherapist and coach, I can assure you that acting the role of a "participant in a change process" is not nearly the same as being committed to actually changing yourself. Many people claim to be involved in a change process when, in fact, they are holding their true selves in abeyance. Years ago, many gay men married women because they held the deluded belief that the process of being part of an intimate heterosexual dyad would change who they were. In time, virtually all discovered that suppression doesn't work and that role-playing without conviction has no chance of effecting change.

Coaching cannot change you one iota unless or until you're really committed — until you have skin in the game. Before I work with a client who needs to make major changes, I share the aphorism my baseball coach once told me to drive home the distinction between authentic commitment vs. going through the motions: "There's a huge difference between participating in baseball and being committed to it; it's like a bacon and egg breakfast. The chicken participates in the breakfast. The pig, on the other hand, was fully committed."

Since you won't change unless you really want to, and nothing — not the highest-priced coach or public declarations about your intention to change (which, presumably, will humiliate you if you fail) — will help you to succeed, it behooves you to learn how to thwart your worst tendencies in advance of tackling change. This is what cartoonist/philosopher Walt Kelly, in his possum persona, Pogo, was referring to when he said, "We have met the enemy and he is us." If you accept this fact of life, coaching — and every other change process you initiate — will become surprisingly simple.

IT on Steroids: The Benefits (and Risks) of Accelerating Technology

In 1998, RIM launched the BlackBerry. A year later, the second version got a full keyboard. Apparently, that was the feature users had been waiting for. Demand for the BlackBerry 850 soared. By 2004, RIM had acquired 1 million subscribers and only three years later surpassed the 10 million mark. In 2007, RIM celebrated its 12 millionth subscriber and generated $1.67 billion in revenues. The same year, Apple launched its iPhone, featuring a touch screen and better web browsing. In 2008, RIM tried to match the new competitor. However, the new handset, its software, and the available applications all failed to excite critics and customers.

When it comes to innovation in industries with strategically narrow windows of opportunities, speed is everything. RIM is just the latest company to learn this lesson. Before it, Motorola and Palm suffered similar fates.

This quickening pace — what academics and journalists have called innovation on steroids — is beginning to reach IT departments.

The first big change in the speed of IT delivery was the proliferation of "as a service" offerings. To date, the trend has been associated with fairly standard products, such as customer relationship management software, web servers, or SQL databases, but the theory of the innovator's dilemma suggests that it will most likely move up the stack in the future. Disruptive innovations begin at the low-margin, high commodity end of the stack and move upward over time, and IT is most likely not going to be an exception.

Most CIOs will benefit from this trend through increased competition, better prices, and quicker provisioning. At the same time, the trend also heightens the expectations of CIOs' internal customers to deliver better solutions at greater speed.

A second accelerant of IT delivery is the iterative software development philosophy known as "agile development." While the definition of agile is still very broad, at the core are values of flexibility, individual interaction, focus on outputs, and collaboration over more rigid planning-driven approaches. While not as old and not yet as mature as cloud systems, it warrants a closer look. Agile projects have focused on standard, non-critical systems. The crucial question is whether the method can be successfully scaled. To the extent that agile becomes the default method to build large-scale IT projects, demands to speed up the delivery of IT projects will increase. In turn, the corporate IT project portfolio needs to adapt.

These pressures to speed up IT delivery come not a moment too soon. Research has shown that the longer an IT project, the higher the risk of cost overruns and further schedule delays. It showed that the longer the project, the higher the requirements volatility and in turn the higher the project risk. One implication is that any project management method that is based on the assumption that requirements can be frozen has set itself up for failure — another good reason why agile might be here to stay.

Our own research has further looked at the problem. The preliminary results of a survey of nearly 4,300 IT projects revealed that long project schedules increase risks across all project types, not only in software development projects. Furthermore, we found that the longer a project, the higher the risk of the project turning into a Black Swan. A Black Swan is a project that runs out of control and incurs massive cost overruns and schedule delays. Every year of additional project duration increases the odds of a project turning into a Black Swan by 27%.

The speed of IT project delivery is increasing, and it should improve project performance and reduce risks. Yet, the trend is not free from potential downsides as the case of a large multinational telecommunications company illustrates. The newly minted CIO implemented a simple policy to curb the ever-growing cost overruns and schedule delays that plagued the company's IT project portfolio: no projects longer than 12 months. Other decision-makers have gone even further: the state government of South Australia recently declared it would only start IT projects estimated to take less than 90 days.

This simple tactic is seemingly backed up by the research. However, the policy, in the telecom's case, had unintended consequences. The announcement that only short projects would be approved led to a preference for small, piecemeal innovations. Most focused on cutting IT costs. Unintentionally, this selection bias added complexity to an already complex IT architecture. After four years, systems had been tinkered with so much that new product launches became not only prohibitively expensive but also needed a very long time to market. Innovations were virtually prevented by stifling complexity. It took another very large IT project with all the risks that come with it to clean up the IT architecture, reduce complexities, and regain the capabilities needed to compete in the future.

The case shows that a successful strategy requires a CIO to know when the IT organization can and ought to go fast to reduce risks and when the organization needs to go slow, even if that implies higher risks.

One might argue that viewing IT projects solely as budget items on a calendar is too much of an abstraction to capture the intricacies of decision-making and delivering IT projects. Yet, we observed that IT projects are planned and supervised with very scant information. Basic budget and scheduling data are important signposts to steer the IT project organization. A CIO must know when the IT organization can and ought to go fast and when it is better to push back against the powerful forces that demand IT to deliver faster and faster. In short, strategic IT leadership in a high-speed world is about mixing fast and slow.

Reinventing Corporate IT
An HBR Insight Center





The Building Blocks of Successful IT
Move Beyond Enterprise IT to an API Strategy
It's C-Suite Problem
Avoiding the Schizophrenic IT Organization

Smart Leaders Have Protégés

Just how important protégés are to a powerful person was made clear to me by this question, told to me by a Fortune 100 CEO. When choosing his direct reports, he asks: "How many blazing talents have you developed over the years and put in top positions across the company, so that if I asked you to pull off a deal that involved liaising across seven geographies and five functions, you'd have the bench strength — the people who 'owe you one' — to get it done?"

In earlier research, CTI measured the "sponsor effect," the quantifiable boost to pay, promotion, career satisfaction, and retention that sponsorship endows on protégés. It turns out that there's also a "protégé effect" leveraging career traction for leaders. White male leaders with a posse of protégés are 11 percent more satisfied with their own rate of advancement than leaders who haven't invested in up-and-comers. Leaders of color who have developed young talent are overall 24% more satisfied with their career progress than those who haven't built that base of support.

Although the role of sponsors and mentors are often conflated, the fact is, sponsors do much more. According to the Center for Talent Innovation, whose intensive study of sponsorship has appeared in research reports, HBR articles and blogs, and will be published in my upcoming book,
Forget a Mentor, Find a Sponsor, sponsorship isn't just a nice thing to do; it's also a smart career move.

Think of a sponsor as a talent scout. He'll get his protégé in front of directors to audition for a key role. He'll nudge them to choose her. He'll coach her on her performance so that she proves to other what an excellent choice he made. He'll train a spotlight on his protégé so that other directors take note of her abilities and he'll make introductions afterward so that she can follow up with them to bring her talent to a wider audience. Should she stumble, or should any of those other directors turn hostile, the sponsor will come to her aid - because now that your brands are linked, it's in the sponsor's best interests to ensure his protégé succeeds.

In short, sponsorship is about taking calculated risks. Why do it? Because the payoff is priceless.

In today's complex organizational matrix, no one person can maintain both breadth and depth of knowledge across fields and functions. But she can put together a posse whose expertise is a quick IM away. Some sponsees add value through their technical expertise or social media savvy. Others contribute fluency in another language or culture. Still others may help you advance the organization's goals through their ability to build teams from scratch and coach raw talent. Building a loyal cadre of effective performers can extend your reach, realize your vision, build your legacy, and burnish your reputation.

But protégés do more than enhance your brand and extend your influence; they protect you. As leaders move up the ladder, they're increasingly removed from the action on the front lines of the organization. They need loyal lieutenants to bridge the distance and deliver a clear, unbiased and timely report of what's going on.

One protégée described herself as "the eyes and ears on the ground" for her sponsor. "I'd tell her that there was someone on her team who wasn't performing the way they should. It wasn't in an insidious, tattle-tale vein but from the vantage point of what would be helpful for the department. If we're to deliver against certain strategic objectives and someone is displaying behaviors that aren't helpful, then you're serving the organization as well as your sponsor by informing about that behavior."

And let's not forget, too, that the higher you climb, the more exposed you will be. The more protégés you have, the stronger and wider your safety net will be. In today's rapidly changing business environment, protégés who prospered under your sponsorship and moved on and up can thank you by doing for you exactly what you once did for them.

Don't Blame Corporations; Blame Their Disappearance

The Occupy protesters blamed corporations for income inequality, decreased upward mobility, and increased economic insecurity, but in fact it's the collapse of the traditional public corporation that's largely to blame for those ills, says Jerry Davis of the University of Michigan. The number of companies listed on U.S. stock exchanges dropped from nearly 9,000 in 1997 to about 4,100 in 2012. Under pressure from shareholders and low-cost competitors, many of those remaining find it's too expensive to provide long-term employment, health benefits, or retirement security.

Why Retirement Risks Are Best Shared

It's been a tough few years for the Dutch pension system, long praised as the best in the world. Most Dutch pensioners have seen their payouts trail the rate of inflation since 2008. Earlier this year, 66 pension funds (out of 415 total) had to cut benefits outright. The average reduction was 1.7%, but at a few funds it topped 7%.

These cuts are extremely controversial in Holland. They're a core issue for a new "50PLUS" party targeted at older voters that won its first seats in Parliament last year. The much-larger Freedom and Socialist parties have been vocal critics of the cutbacks as well.

Yet from outside the country's borders, the Dutch system still looks pretty spectacular. Its average ratio of assets to liabilities is 104%, more than 90% of the workforce belongs to a pension plan, benefits are generous by global standards, and costs are low. The Netherlands did slip behind nearby Denmark in the latest Melbourne Mercer Global Pension Index ranking of the world's pension schemes, but only barely.

Here in the U.S., which came in ninth of the 18 countries ranked in the Melbourne Mercer survey, things look a bit different. State and city pensions are in deep trouble — with Detroit's currently tied up in bankruptcy court and The New York Times reporting this week that Chicago's much-bigger system might be next in line for a funding crisis. Corporate pensions, once a major pillar of the retirement system, are disappearing, and their replacement, the 401(k), is turning out to be a woefully inadequate source of retirement income for most workers. Social Security, despite its much-discussed long-run funding shortfall, may actually be the strongest pillar in the system.

And remember, the U.S. is in the middle of the global pension pack. Most of the countries that scored lower than it on the Melbourne Mercer Index (France, Germany, and Japan among them), did so because they've set aside far too little to cover the big pension promises they've made.

So what distinguishes good pension systems from bad ones? It mainly has to do with how they allot the risks inherent in providing income for retirement. I can suss out two basic principles behind the pension systems that work:

1. Pension risk ultimately has to be borne by pension recipients. Attempts to transfer that risk to others — shareholders in the case of corporate pensions, taxpayers for all the rest — are generally destined to end in tears.

2. That risk should be shared across a lot of pension recipients. Having every worker shoulder the risk individually is not just, well, risky — it's really expensive, too.

This first principal is now widely understood, although it remains political dynamite in many countries, as well as U.S. states and cities. The Dutch system of private, mostly industry-wide pension funds quietly made the shift during the past decade from a classic defined-benefit system, in which pension funds guaranteed a specific level of income, to what's been variously called "collective defined-contribution" or "hybrid DB-DC." Now, if the Dutch central bank deems a pension to be underfunded, cutbacks of some kind usually result. Most Dutch pensioners weren't fully aware of this change, which is why the recent cuts have been so controversial. But they also mean the (in some cases smaller) pension checks will keep coming, and there's no funding crisis or taxpayer-funded bailout looming.

The 401(k) shares the characteristic that poor investment returns don't result in funding crises or taxpayer bailouts. That's a good thing. But beyond that, it's been a pretty disastrous failure in generating retirement income. To start, most workers haven't put aside nearly enough money. That's partly because of a myopia inherent to humans, which psychologists and behavorial economists have learned tons about in recent decades and even come up with tools to counteract. But it's also that wages have been stagnant and too many employers stingy with matching contributions. Then there's the sad reality that 401(k) accounts are characterized by higher fees and worse investment performance than old-line pensions — professionals really are better at this than amateurs (well, mostly). And finally, it takes much less money per person to guarantee an adequate retirement income when that guarantee is spread across a bunch of people.

This last one deserves extra emphasis. If you're 65, and don't know if you'll live to 75 or 105, you need a huge stash of money to ensure that you won't run out. Guaranteeing retirement income for 10,000 65-year-olds costs a lot less per person, because you can be sure that most of them won't make it to 105. Traditional pensions work on the latter principal; 401(k)s the former. There has been a push in recent years to get people to replicate the pension experience by putting 401(k) money into life annuities when they retire, but the process can be complicated. There is also the problem, when you give people the choice of whether to buy an annuity or not, of adverse selection — those with good reason to think they'll live to 100 will buy annuities and those with health problems won't, thus driving up prices.

The choice of a pension structure is a classic case of the alternatives countries face in choosing an economic path within the wide bounds of a global capitalist system. The Dutch pension alternative is markedly more free-market-oriented than the French one, which consists mostly of (underfunded) government-run plans. It is also markedly less free-market-oriented (or, to put it another way, more collectivist) than the American 401(k) system. And it is markedly better than both.