Marina Gorbis's Blog, page 1571

Good Companies Are Storytellers. Great Companies Are Storydoers

Discussions about story and storytelling are pretty fashionable in marketing circles. I have ambivalent feelings about this. On the one hand, as a lifelong advocate for the power of story in business, I find this very encouraging. For all companies, having a story and knowing that story are crucial steps to achieving success. On the other hand, I'm worried that too many marketers think that telling their story through advertising is enough. It's not.

In fact, those that think this way do so at their own risk because there is a new kind of company on the rise that uses story in a more powerful way — and they run more efficient and profitable businesses as a result.

In my new book, True Story: How to Combine Story and Action to Transform Your Business, I call these new companies storydoing companies because they advance their narrative through action, not communication. Storydoing companies — Red Bull, TOMS shoes, Warby Parker, and Tory Burch, for example — emphasize the creation of compelling and useful experiences — new products, new services, and new tools that advance their narrative by lighting up the medium of people. What I mean by this is that when people encounter a storydoing company they often want to tell all their friends about it. Storydoing companies create fierce loyalty and evangelism in their customers. Their stories are told primarily via word of mouth, and are amplified by social media tools.

So how do you know a storydoing company when you see one? These are the primary characteristics:

They have a story
The story is about a larger ambition to make the world or people's lives better
The story is understood and cared about by senior leadership outside of marketing
That story is being used to drive tangible action throughout the company: product development, HR policies, compensation, etc.
These actions add back up to a cohesive whole
Customers and partners are motivated to engage with the story and are actively using it to advance their own stories

Recently, my partners and I at co:collective initiated a project to determine whether there is hard statistical evidence that storydoing companies are achieving superior results. We also wanted to create a tool that allows CEOs and other senior leaders to apply these criteria to an analysis of their own company.

One of the difficulties we encountered is many of the best examples of storydoing are privately-held companies, so the data on their financial performance is not publicly available.

So we chose 42 publicly-traded companies. This list spans seven business categories: retail, entertainment, food and beverage, electronic payments, consumer electronics, airlines, and IT services/products. Since storytelling companies outnumber storydoing companies, in each of the seven categories we chose five storytelling companies and one storydoing company based on the criteria we described above. The storydoing companies are Target, Walt Disney, Starbucks, American Express, Apple, Jet Blue, and IBM. More detail on the full methodology can be found here.

The early results we are seeing are quite compelling. As we expected, storydoing companies are generating a substantially greater number of mentions in social media:

Those mentions are also more positive:

This ability to light up the medium of people in a positive way allows storydoing companies to spend substantially less money on paid media per dollar of revenue:

And they wring more value out of that spend in the number of mentions in social media per dollar spent:

As a result, storydoing companies are growing faster than their storytelling counterparts in revenue:

...and share price:

One interesting side note is that it seems like the market hasn't recognized the structural advantage that storydoing companies have over their storytelling counterparts. Their superior results are not yet reflected in P/E ratios:

This is only a start to our research, and we can only imagine that adding some of the privately owned companies for which we're missing financial data would yield even better results than those reported here. Whether that turns out to be true or not, time will tell. But based on the evidence we have to date, our conclusion is that storydoing companies are on to something very compelling. CEOs who seek to deliver better financial results to their shareholders would do well to take heed.

In the spirit of collaboration and improvement we would like to invite anyone to help advance this thinking, by challenging our results to date, making suggestions to improve the methodology, or adding to the data set with data of their own. We think that over time the data set itself can become a valuable public source of inspiration and evidence for agents of change to begin to apply the principles of storydoing inside their own companies.

Four Suggestions as You Face Your Industry's Steamroller

Remember the scene in the first Austin Powers film where Powers, attempting to escape in a steamroller, warns one of Dr. Evil's henchmen to move out of its path? Despite its comically slow speed — and a huge distance between them, the guard stays rooted to the spot, yelling Stop! ... until it's too late. (The scene dissolves to his Donna Reed-like wife getting the news and noting tragically: "People never think how things affect the family of a henchman.")

On the industrial stage, something like that scene plays out all too often. A company finds itself in the path of an unstoppable industry disruption, can hardly fail to see it, yet simply fails to act. Only, it's not at all funny.

Consider the pharmaceutical industry, the focus of a recent global survey my colleagues and I conducted. We asked nearly 200 life sciences executives about long-term trends that posed fundamental threats to their businesses and how management was dealing with them. Despite the fact that all were able to foresee developments unfolding over the coming decade with the power to irreparably damage their companies, 76 percent of the European respondents and 81 percent of the American ones said their companies had made no significant changes to strategy to counter those threats. (Executives representing Asia-Pacific life sciences companies were more sanguine, with 56 percent indicating their firms had prepared for an industry shock).

In the face of knowable threats, is your own company making more than a futile effort to cry Stop? If you fear not, here are the suggestions we're sharing with the industry leaders we serve:

Inject a steady flow of timely information and (sometimes harsh) outside perspectives into your strategic thinking. This means fresh information heard on the street, not just more searches on Google, and the use of outside experts to identify oncoming threats that they see and you don't. I've seen this work wonders for a number of companies that want neutral, unvarnished views of their competitive position. A large pharmaceutical firm, for example, was about to make a big bet on a new class of drugs. But a panel of outside experts that had been assembled to critique the strategy warned management about an emerging risk. Citing early warning signals that were not being emphasized by the scores of industry newsletters and Wall Street analysts, it saved the company from the move that a competitor subsequently took — to its detriment.

Develop scenarios of how the world might look five or ten years from now. No one can predict the future, but by combining known trends in various ways it is possible to anticipate multiple possibilities — likely story lines about shapes the market could take — for good or ill. The few companies that have mastered this discipline have benefited mightily. A decade ago Oracle developed a series of scenarios that anticipated massive industry consolidation. Instead of waiting to be steamrolled, the company acted on this intelligence and went on a ten-year acquisition binge, acquiring over 90 companies from 2003 to the present at a pace surpassed only by Google. The result: Oracle became one of the most successful companies in back office database products and tools and has now moved onto advancing in the next market, the cloud.



Experience threats through war games. There is no substitute for feeling and "touching" the disruption before it arrives. War games translate arguments and assumptions about the future into a tangible setting, allowing rival contestants to play out roles and experience risks. A successful war game can anticipate the moves of market players with an uncanny degree of accuracy. Multinationals have used war games to align strategy in global markets, where regulations and competitors differ. In a number of instances, I have seen war games acknowledge the threat from changing government regulation, informing the company that it must proactively work with authorities to help moderate new regulations, which in turn softened or averted the disruption altogether.

Set trip wires for action. War games and scenarios should provide you with threads that you can track in order to determine which future world is emerging. You can spot these signals far enough in advance to change strategic direction — but you must regard them as imperatives to make timely decisions and to act on them.

Preparing for a future industry shock and anticipating its direction is all about honest, steady collection of intelligence and the readiness to alter your plans based on what you have learned. Plenty of executives lose sleep over approaching disruptions; a few vocally oppose them. Neither response will move you out of a steamroller's path. To survive, you'll need to watch, reexamine your position, make tough decisions, and take timely action.

You, Too, Can Move Your Company Into the Cloud

On April 1 of this year, the Department of Defense announced that the US Navy would embark on a strategy to migrate its services to the cloud. While there have been numerous cases of big and small companies making this leap over the past few months, this one struck a particular chord with me because of its sheer scope. The US Navy is an organization utilizing 1,400 systems and 7,000 applications to serve more than 500,000 employees. My company, which is approximately .017%, .019% and .00028% the size of the USN in relative scope, made the transition years ago and it was no small effort taking almost 3 years to fully make the transition.

While the USN is relatively mum about its specific strategies, there are references to the fact that they intend to cut their systems in half within 36 months, reducing some overhead cost and modernizing. This is similar to the approach that the CIA has undertaken in moving much of its infrastructure to Amazon Web Services. These transitions, even when scaled down to a company of 140 like mine, require a substantial amount of planning, commitment, resources and time with little room for error. So it comes as no surprise that whenever I spend time with industry peers who have yet to move to the cloud, there is a palpable sense of fear and overwhelming anxiety about how to even think about the process.

When I'm asked to advise people on how they might craft strategies to get to the cloud, I give a four-point overview based on my own experience. It will get you to the starting line, but beyond that each and every strategy will be different depending on a myriad of circumstances in your corporation.

Move only what you have to and start fresh wherever possible

The first thing is to dispatch with the idea that you are going to "move" all of your current resources into the cloud. That is just not possible, especially if you have invested heavily in distributed enterprise class systems and the infrastructure to support them. While it is certainly likely that a good portion of your environment can be virtualized and moved into a Platform as a Service (PaaS)/Infrastructure as a Service (IaaS) environment like Amazon Web Services, the move to the cloud should be viewed as an opportunity to leave systems behind and replace them with systems that are lighter, faster and less expensive.

Tear down and rebuild your security model

If your Microsoft SysAdmin has convinced you that Active Directory is a viable solution for the cloud, or that because you use Active Directory you can only get into the cloud by sticking with solutions that support Active Director (AD)/Windows Azure Active Directory (WAAD), you need to get a second opinion. When moving to the cloud you have to consider that many solutions do not allow for authentication off of Active Directory and instead rely on more common security protocols such as SAML1, SAML2, OID and OAuth. Identity Access Management (IAM) vendors have been forced to consider brokering authentication for Active Directory because companies feel like they must stay on it as an internal authentication platform. Nothing could be further from the truth and if you do your research, you will discover that there is a wealth of options out there. To get into the cloud you need the most robust and extensible authentication model you can possibly build and by doing so your options for solutions will increase exponentially.

Cost savings are a benefit, not a driver

If you think that you need to get into the cloud to save money, you need to think again. Yes, you will ultimately save money by migrating to the cloud, lots of money in fact, but it takes time to get there and there is the chance that you will actually spend more money upfront. When making your pitch to senior management, talk about the benefits of reduced infrastructure, resources, better uptime, business continuity enhancements, mobility and access ubiquity. If asked about cost savings, be ready to deliver your pitch on how you intend to reduce or eliminate capex spending, reduce personnel resources, move services to a pay by month model eliminating long term contracts and ultimately reduce your annual budget by a modest percentage year over year over a 3-5 year period of time. Do not get caught in the trap of making cost savings one of your drivers for going into the cloud. You will bring a level of scrutiny over your claims, on which you will most likely be unable to deliver.

Create a long-term flexible strategy

The last bit of wisdom is to develop the most thorough 1-, 3- and 5-year cloud strategy that you can put down. My 1-year strategy is very specific; my 3-year is slightly less specific because I find that even 3 years down the road is very hard to see. It's impossible to see five years in the future, but if you work backwards from 5 years you can, even at a very amorphous level, describe how you would want your environment to look at that point. These should be rolling strategies that are flexible enough to consider the dynamics of the industries you will operate in. Today's Identity Access Management vendor will be tomorrow's Mobile Device Management (MDM) vendor and a week from now, could be bought by a company in some entirely different vertical. By creating a flexible strategy, you can constantly adapt to these changing conditions in the industry over which you have almost no control.

In considering these four concepts, keep in mind that they are applicable to any size organization and any cloud scope transformation. The more I have considered them, the more I have realized that they are applicable anywhere. It's no small task, but you can move your company into the cloud if you approach things with a new mind and put aside the technologies of the past.

One last thing to note...in the next five years, new employees coming into your company won't know (or care) how to use Outlook or mapped drives. They won't care for your PC laptop offering or why your firewall blocks Dropbox. They will have established methods for doing work and they will all involve the cloud. Seventy-five out of the top 100 universities in the latest US News and World Report college rankings use Google Apps as their primary backbone. Seven of the 8 Ivies are in the same boat. Do you really want to be the last one at the starting line?

Reinventing Corporate IT
An HBR Insight Center





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A Call to Boycott U.S. Tech Platforms Over the NSA's PRISM Surveillance

I want to make one thing perfectly clear: this blog post is not an attack on the U.S., and my message is not anti-American. I have lived in the U.S. on and off for almost 12 years. I went to college in Boston (Berklee), my kids are both U.S. citizens as well as German citizens, and we have deep admiration for many American customs, traits, people and places.

But ever since 9/11, the U.S. government seems to have gone down a (until recently) secret path towards some kind of 'digital totalitarianism', with increasing disregard for other countries' mindsets and cultures.

The latest developments around PRISM and the NSA dragnet operations uncovered by Edward Snowden, in my view, severely damage the fragile fabric of the new global ecosystem, which we so sorely rely on in order to collectively tackle truly urgent global issues such as energy, pollution, food, climate change, (cyber-)terrorism and inequality.

Yes, of course, as more details about the NSA's mass surveillance activities are coming to light, it is also becoming clear that at least the other intelligence tribe members of UKUSA — i.e. the '5 Eyes' group (the U.S., the U.K., New Zealand, Australia, Canada) are pretty much doing the same thing, with Germany and France not far behind. But still: at the heart of this global collusion to hoover up every bit of information about hundreds of millions of citizens under the pretense of fighting crime and terrorism sits the U.S. government, so let me start there.

The past few weeks have been game-changing for the U.S./Europe relationship, with the EU Commission already hinting at moving cloud computing centers to Europe, many parliamentarians proposing to review international trade agreements and data exchange practices, and German chancellor Merkel heading towards a pre-election show-down on these very issues. It is not actually the fact that surveillance is real that scares Europeans, it is that now, everyone apparently is a legitimate target — yes we scan, because we can!

Little is being done by the U.S. government to address Europe's concerns, and most Americans seem to consider this whole affair a non-issue. (Granted, this sentiment may be softening a bit.) See the charts below:

But, it is a big deal. And more people need to understand just how big.

For context, let's go back to 1788 and take a look at the words of James Madison, fourth president of the United States:

"There are more instances of the abridgment of the freedom of the people by gradual and silent encroachments of those in power than by violent and sudden usurpations."

The utter disrespect with which U.S. law enforcement agencies have violated the most basic international agreements on data security, basic citizens' rights and even diplomatic immunity is very worrisome, and will soon force people around the globe to rethink our relationship with 'all things USA' — whether it's President Obama and the U.S. government, or U.S.-based telecoms, technology companies and internet platforms such as Google, Apple, Microsoft, Facebook, Amazon, Yahoo and even Dropbox.

Meanwhile, President Obama seems happy to preside over this Orwellian affair with a newfound disregard for the basic privacy rights of citizens, which he previously expressed with great vigor back in 2005 and 2007, when he was still just a senator (watch these NYT videos). This is incredible — life is indeed stranger than fiction!

Let's be clear about this: for Europeans, in particular, the American shift towards state-sanctioned 'data totalitarianism' will have significant impact on whether we will do business with U.S.-based companies that are in technology, media, cloud computing, social networking, telecommunications, e-commerce or 'big data', for they seemingly cannot do anything else than comply with the laws — and their extreme interpretations — as they are now (i.e. the Patriot Act, FISA courts, etc).

Therefore, some 50-75% of the worlds' largest digital communications and technology enterprises are now facing a seriously wicked dilemma: do they comply with FISA orders or do they protect their users (half of which are not even U.S. citizens)?

The bottom line is that currently all non-U.S. citizens seem to have no real protection, no recourse, no oversight... no power, and no rights. This is totally and utterly unacceptable and cannot be swept under the rug as 'business as usual'.

Sure, variations of the same plots are happening in China and in Russia, but who would have thought that the formerly alleged bastion of liberty and freedom, the United States of America, would resort to these sorts of global dragnet activities? This is wrong and that's all there is to it.

I believe that if this situation is not resolved very soon, non-U.S. internet users will be left with pretty much one option: some kind of a boycott or 'strike' — i.e. the explicit non-participation in those platforms and services that are subject to the totalitarian application of laws such as the U.S. Patriot Act.

The future of U.S.-based technology companies is at stake here, as is the future of U.S./EU relationships.

To remedy the situation, the leading U.S. internet and technology companies, led by Apple, Microsoft, Google, Yahoo and Facebook need to:

Unequivocally side with their real stakeholders — i.e. their users — and specifically assure us Europeans that they will act on our behalf, and seek to protect us against the abuse that has surfaced in the past few weeks.
Mount a strong campaign to urge President Obama and the U.S. Congress to stop these global mass surveillance activities, immediately, and put appropriate approval, remedy and redress mechanisms in place that are more in line with EU provisions, i.e. requiring actual cause for data surveillance activities, needing individual warrants, and informing the public on what the procedure is.
Urge the government to agree to a public trial of Edward Snowden that could take place in a neutral location such as at the International Court of Justice in the Hague.

The U.S. government needs to:

Acknowledge the mistakes and rights violations that have occurred as far as the mass surveillance of global citizens are concerned, and uncover all additional instances. Dismissing the Director of National Intelligence (James Clapper) seems like another plausible step towards resolution, as well, given the fact that he pretty much lied to Congress.
Immediately discontinue the practice of spying on global citizens without individual warrants, and only in strict congruence with international laws and regulations.
Agree to a fair, public and open trial of Edward Snowden (see above).

If no action along these lines is taken, I think that the international community and hereto faithful users of American technologies and internet platforms will have no choice but to consider taking serious and possibly quite dramatic action to safeguard against this 'totalitarian surveillance creep'.

Some such actions for the international community may include:

Temporarily halting the EU-US data exchange programs for travelers (PNR and TFTP), which could potentially lead to a significant disruption of commercial air traffic between the U.S. and Europe (the review was already scheduled before the Snowden affair and is already in progress at the Commission).
Cut or significantly reduce ties with U.S.-based internet portals and service providers and shift business to providers based in other countries that are subject to international laws and explicit supervision (i.e. that can guarantee that appropriate processes and safeguards are in place). By extension, this would also concern the rest of the "5 Eyes" group, i.e. the UK, Canada, Australia and New Zealand.
Pause or even halt the current Trans-Atlantic Free Trade Agreement discussions until these demands, above, are met. Yes, I know, this could be quite painful for some EU countries but ... would they rather be 'collateral damage' now or take collective action to address potential long-term issues?
Open or expand cloud computing facilities in Europe (Luxembourg and Switzerland seem like good locations) and around the world. Until now, the U.S.-based providers have dominated the global cloud business because of faster innovation and much larger investments in this sector — Europe needs to catch up urgently.
As global consumers, we just may need to stop using all U.S.-based services that won't voluntarily comply with international standards of data protection.
Offer a United Nations-supervised trial location and some kind of asylum to Edward Snowden, perhaps in the EU.

This is a game-changing moment, and it's time for global citizens to act. America: we love you, but enough is enough!

Joining Boards: It's Not Just Who You Know That Matters

For many, a corporate directorship is a career capstone. But attaining one is far from easy. No one can say for sure how to get on a corporate board, but many people point to two routes: the first is to break into the "right" network and the second is to seek a progression of board seats that begins with, for example, a seat on a not-for-profit or community board and eventually results in appointment to a corporate board.

Both paths are problematic — neither is particularly transparent or relies on objective measures and given that many boards are stubborn bastions of white masculinity, pursuing the "right" network can be fraught, especially for women and other diverse candidates. Indeed, our research reinforces that concern: many boards still rely on their own (mostly white, mostly male) networks to fill seats.

There's a different way — one that is more measurable, controllable and offers greater transparency. It starts with a focus on skills. Although many boards continue to select new members from their own networks, our research suggests that more are beginning to implement objective processes to select members based on the skills and attributes that boards need to be effective. Our 2012 survey, in partnership with WomenCorporateDirectors and Heidrick & Struggles, of more than 1,000 corporate directors across the globe, found that only 48% of the boards had a formal process of determining the combination of skills and attributes required for their board and, therefore, for new directors

We know this approach can work because we've seen it: We studied a large corporation that was being split into two public companies for which two new boards had to be created. The chairman wanted to create two balanced boards, with the mix of skills, knowledge, and experience each company needed. He appointed a special team to create an objective, transparent method for selecting the directors. After reviewing the roles and responsibilities of each board and the natures of the new businesses, the team derived lists of the skills each board needed. Then it created a model containing the dimensions critical to a high-performing board, from functional and industry expertise to behavioral attributes. This approach led both companies to recruit board members that were diverse in needed strategic skills. Both boards are on to a good start — demonstrating that when a firm builds a board using a rigorous assessment of the qualities it needs to carry out its governance task, rather than personal networks, the board is better equipped to execute its functions.

In our survey, we also asked about specific skills. We wanted to know which were the strongest skills represented on boards and which were missing. Directors named industry knowledge, strategy, and financial-audit expertise as their strongest skill sets.

And 43% cited technology expertise, HR-talent management, international-global expertise, and succession planning as the skills missing most on their boards.

We also looked at results by industry and region. The industry with the greatest skills gap was IT & telecommunications, whose boards are in serious need of international-global expertise and HR-talent management.

The region with the greatest board-level skills gap is Asia, where risk management and M&A adeptness are sorely needed.

Based on our research and experience with boards, we believe that the future of director selection is becoming increasingly objective and skill-focused process. Networks aren't going away, but aspiring directors may want to approach their search by asking not only, "what skills do I need to get on a board?," but also by looking at what skills boards already possess and what skills boards need. One strategy might be investing in your own human capital to become the board member corporations need.

Methodology

We surveyed more than 1,000 board members in 59 countries. (U.S. boards made up 37% of the sample while 62% of boards represented were from outside of the U.S.) We analyzed the data along several dimensions including geography and industry. Specifically, we did a geographical breakout by eight major world regions: Asia; Africa; Australia and New Zealand; Eastern Europe & Russia; Latin America; the Middle East; North America; and Western Europe (due to low sample size or domination by one or few countries in a region we have excluded three regions, Africa, Latin America and the Middle East, from our findings).

The industry breakout was done using eight major sectors (similar to those in the Global Industry Classification Standard system): Consumer Discretionary (e.g., consumer durables & apparel, retailing, education, media, hotels, restaurants & leisure); Consumer Staples (e.g., food, beverage & tobacco, household and personal products); Energy & Utilities (e.g., oil, gas & consumable fuels, electric, gas and water utilities); Financials (e.g., banking & financial services, insurance, real estate); Health Care (e.g., pharmaceuticals, biotechnology & life sciences, health care equipment and services); Industrials (e.g., aerospace & defense, construction & engineering, industrial conglomerates, professional services, textiles); IT & Telecommunications (e.g., computers & peripherals, electronic equipment & components, semiconductors, wireless telecommunication services); and Materials (e.g., chemicals, metals & mining, paper & forest products).

The following multiple choice list of 14 skills was used in the survey: Compensation; Evaluation-Assessment; Financial-audit; HR-Talent management; Industry knowledge; International-Global; M&A; Operations; Regulatory, legal and compliance knowledge; Risk management; Sales & Marketing; Strategy; Succession Planning; and Technology. Participants were asked to choose one (or a write-in option of "other") for the strongest skill set or area of expertise that they brought to the board. They could choose as many as applied for skill sets or areas of expertise missing from the board (including a write-in option of "other").

Empowered Teams Get a Slow Start, But Soon Zoom Ahead

In a war-game simulation, newly formed teams whose leaders encouraged collaborative decisions were at first quickly surpassed by groups with "directive" leaders. But the "empowered" teams learned more rapidly, and by the end of the simulation, they had bested the other teams by about 20% of total points scored, says a research group led by Natalia M. Lorinkova of Wayne State University. Why do empowered teams get off to a slow start? At first, members go through a period of role identification, creating what may be inevitable early performance delays, the researchers suggest.

The Coming Branded-Currency Revolution

Coupons. Gift cards. Loyalty points. These tried-and-true tools of the retail trade might not be as sexy as other forms of marketing. But together they account for more than $165 billion in purchasing power ($110 billion in gift cards purchased, $48 billion in loyalty points earned, and more than $5 billion in product coupons redeemed). That's almost as much as total e-commerce sales.



These instruments share a common objective: to influence purchase decisions by equipping consumers with incremental spending power for specific brands and retailers. But consumers use them independently and individually (combining their value, when possible, takes a lot of manual effort), and store them in different places — often in drawers or folders where they lay forgotten and unused.



This is changing as coupons, gift cards, and loyalty points all become digital — and, more important, mobile. Mobile enables all of this purchasing power to converge in one place, and potentially be used interchangeably and collectively, always within easy reach for consumers.



What does this mean for retailers and brands? The mistake would be to think that they can keep doing what they have always done, but just add a little digital to it. Instead, retailers need to think about coupons, gift cards, and loyalty points not only as three separate tools, but as different forms of Branded Currency.



Economists define currency as a store of value and a medium of exchange. All of these instruments are stores of value, and by going digital and mobile, they become far more effective mediums of exchange.



The first wave of this convergence has made it easier for consumers to use their coupons or points for payment. Card-linked offers enable consumers to load coupons to their credit cards or loyalty accounts in advance of purchase. Valid offers are automatically applied as a credit when consumers' cards are scanned at the point of sale. Consumers like it because they don't need to remember or present individual coupons. Another approach is Shop-with-Points. As an example, Amazon enables consumers to use their credit card loyalty points as a way to pay for purchases on the site. Shoppers can see their balance and apply their points as easily as using a gift card or credit card.

Where the first wave made possible convertibility, the second wave introduces much greater convenience. Mobile wallets, like Apple's Passbook, bring coupons, gift cards, and loyalty cards together in one place without the constraints of a physical wallet. This innovation is good, but it's a bit of a horseless carriage, still tied to the mental model of a wallet. Consumers still need to manually figure out which instruments can be combined and which cannot, prioritize them based on expirations, calculate the math on their own, and then present them at point-of-sale one at a time.



The third wave will be the mobile portfolio manager, the automobile to the mobile wallet's horseless carriage, which marries the convertibility of the first wave with the convenience of the second. When you treat coupons, cards, and points as convertible instruments, fully leverage the power of digital and mobile technology, and add intelligence into the system, you get an entirely new possibility: calculating and comparing purchasing power, converting currencies, prioritizing usage, and dynamically creating scannable barcodes or other methods for combined payment. Soon consumers will be managing their Branded Currency the way they use Mint to manage their bank, credit, investment, and other financial accounts.

There is a lot of talk these days about brands as publishers. But the successive waves of Branded Currency suggest that retailers will also need to think like bankers who mint their own currencies. Market leaders will be those who best help consumers manage and spend Branded Currency from their portfolios, offer the best exchange rates, create the most liquidity, and make the most efficient markets. Retailers who adopt and execute smart Branded Currency strategies will gain relative share of wallet and have deeper, more enduring relationships with consumers.

Starbucks is perhaps the most advanced retailer in the area of Branded Currency. Most retailers treat their gift card program as an afterthought. Starbucks, on the other hand, has turned it into a hub for competitive advantage. In fact, CEO Howard Schultz considered the combination of mobile payments and social networking as central to the company's "blueprint for growth."



In 2011, Starbucks launched Android and iPhone apps that enabled customers to mobilize and easily reload their plastic cards or purchase new digital gift cards. Most Starbucks customers use the gift card not as a present for others, but as an easy way to pay for purchases, redeem offers, and earn rewards. In effect, they transformed their gift card into a mobile payment/loyalty card and their mobile app into a wallet for their Branded Currency. Over 7 million people now use Starbucks' mobile app to make 4.5 million payments a week, accounting for at least 10% of Starbucks total U.S. revenue. Over 10 million Starbucks eGifts, the digital version of a gift card, have been sent just since 2012.



The strength of Starbucks strategy is not in any single program or promotion. It is the way that the entire Branded Currency system works together to provide an integrated and seamless experience for the customer. They knit together a variety of technologies and platforms from Apple, American Express, CashStar, Facebook, Square, and daily deal providers to promote and execute their deals, offers, and payments across digital, mobile, and social channels. But most importantly, by having its own Branded Currency system, Starbucks maintains control over the customer experience, relationships, and data.



Many technology companies including Apple, Google, eBay and Square are hoping brands will rely on their platforms to integrate and manage coupons, offers, gift cards, payments, and rewards.



Apple has been quietly creating a platform for managing branded currency in the form of its Passbook app and a newly filed patent. If brands aren't careful, they will be as beholden to Apple for digital and mobile coupons, payments, and loyalty as record companies are for digital music, book publishers are to Amazon for digital books, and social game publishers are to Facebook.



As the market for Branded Currency converges and grows, brands will fall into three categories.



(1) Losers: Some brands will continue to operate their coupons, deals, offers, gift cards and loyalty programs the way they always have, as separate standalone programs, and will adopt mobile technology reluctantly. These brands will steadily lose their competitive edge and share of consumer spending.

(2) Laggards: Some brands will play catch up, adopting best practices after they are widely accepted, and rely on the platforms developed by technology and financial services companies. They will stay in the game, but will be in the middle of the pack, either unable to control the customer experience, lacking full access to their data, and losing margin to the platform provider.

(3) Leaders: A few brands will set the pace by creating an integrated approach to using Branded Currency as a vehicle for customer engagement. They will aggregate deals, offers, payments, and loyalty; unify online and offline; and put mobile at the center. They will work with other third-party platforms and wallets, but not be beholden to them. As a result, they will use their data to create value for their customers and bring a unique brand experience to every touchpoint. They will enjoy increased frequency and spend, forge stickier relationships, and greater and more sustainable profitability.

Will you be a loser, laggard, or leader? History, current trends, and the billions of dollars at stake would suggest it's time to start building your Branded Currency strategy and system now.

Should Barnes & Noble Turn into a Mini-Mall?

I feel genuinely badly for Barnes & Noble and its recently resigned CEO William Lynch. It has done by far the best job of anybody in the industry as traditionally constructed — and that is just not good enough. I don't think B&N can be accused of blindness. When it built out its vast network of stores, there really wasn't a meaningful threat from online sales or digital books. People bought books in bookstores, and B&N built the best chain of bookstores, bar none.



It is even hard to say that when Amazon came along, B&N should have followed suit immediately and committed to an on-line model. It is not at all clear to me that B&N had any of the skills, capabilities, talent, or experience to become a successful on-line bookseller. Yes, it could have done an Amazon me-too, but as a legacy player, they would have never been given the ultra-cheap capital that Amazon has always had. And shareholders would have excoriated B&N for not making the earnings on its retail network that their high expectations dictated.



So I suspect that B&N was largely fated to be sideswiped by a fundamental paradigm shift in its industry and, while better than Borders, heading smartly in the same direction.



What would I do if I were running B&N today? Good question. I probably would take a close look at what Indigo, the B&N of Canada, is trying to do. It is attempting to become a lifestyle shopping destination in categories in which books play a consequential part but extending far past books. Categories like house and home, cooking, kids, babies, paper and self-help are tied to big book categories. Indigo can have a legitimate hope of creating a shopping experience across the category that integrates books-and-beyond in a compelling enough way to get enough traction with customers to fill up the store.



It is probably a long shot and B&N probably has a lot more locations than this approach could support. But it is a way of utilizing the book heritage to provide a shopping experience that no one, including Amazon, would be able to match.



And if I were to do it, I would use the approach that Harrod's employs. Most people do not realize that while Harrod's looks like a store, it is actually a mini-mall with each merchandise area leased out to an independent seller — an extension of the model that department stores use with their cosmetics/skin care floor.



I would turn each B&N into a mini-mall in which each individual category is run by a lessee who is expert in that particular category. B&N would act as the systems integrator, putting together a multi-category offering that attracts sufficient customers into the mini-mall. It would also use its book-buying experience and power to stock each lessee with the book inventory required for their category assortment.



Would I bet my own money on this approach? I probably would not. But it may be superior to the other legitimate alternative, which is to liquidate B&N now and return to capital-holders whatever net proceeds can be accumulated (if any can). But wait. There is always private equity. Maybe they should call Bill Ackman and see whether he wants to give the category another go.

Disengaged Employees? Do Something About It

New data on employee engagement is in, and it's downright discouraging. As this post by HBR's Gretchen Gavett noted, Gallup's research shows that engagement among US workers is holding steady at a scant 30%. This means seven out of ten people are either "checked out", or actively hostile toward their employers. Seven out of ten.

Study after study shows that employee engagement, an index of bringing one's best and full self to work, is not just an organizational nicety. It is a business imperative, linked to a number of performance outcomes, including profitability, customer satisfaction and turnover. A 2012 report on human capital from McKinsey added to the evidence, noting that organizations with top scores in employee motivation are about 60% more likely to be in the top quartile for overall business health. Companies I work with in my consulting practice who have done their own internal research have found similar linkages.

Of course, engagement is an emotional and deeply personal experience; it's not simple or straightforward to address. But leaders must do so, for the sake of not only their employees but also their companies. Here are pointers to help you to make real inroads in this area:

Understand the basics of positive psychology and engagement research. At the end of her post, Gavett refers to an HBR classic on employee motivation, in which the famed management psychologist Frederick Herzberg argued that workers respond positively to more responsibility and authority in their daily tasks. This finding is resonant with self-determination theory, a well-established research program in psychology that has identified the universal human need for autonomy. In other words, people generally do well when they are empowered to make choices and decisions for themselves. Plenty more research has been done on work engagement, showing that factors such as social support and feedback can drive positive experience. Managers and HR professionals need to understand these and other robust psychological theories to more effectively shape their engagement efforts. A wealth of information is out there, ready to be put to good use.

Find out what engages your employees, not someone else's. While broad research is a valuable resource, it can only take an organization so far. No theory or model is useful in the abstract. What matters is your business and your people. Ironically, most organizations use engagement results punitively; they focus on what is going wrong, and on why people aren't as engaged as they could be. A better approach is to figure out what's already working in your business, and find ways to replicate it. Go to the most engaged individuals, teams and business units, and help others model what they do. I've used this approach to help businesses identify a unique "engagement signature" suited to their culture and context.

Encourage grassroots engagement. Engagement cannot be mandated, but it can be ignited. Once you understand what matters to your employees, you can support its expression and replication far and wide. Empower your people, particularly the most engaged employees, to share stories, exchange ideas and disseminate best practices across the business. A well-designed piece of media, such as a video "starring" members of a thriving business unit, can gain traction and become a source of encouragement for others. With the rise of social media and digital workplace technologies, it's easier than ever to connect employees and make engagement contagious.

Recognize engagement as a moving target, and check back often. While certain elements of employee engagement will surely hold over time, it's not something that can be assessed and addressed just once. Research shows that engagement fluctuates daily, and with changing circumstances. What engages people during a surge in business may be very different from what helps them bring their best selves to work in a recession. To keep your organization engaged, you must remain engaged, curious, and connected yourself.



The next time Gallup or McKinsey do their polls, I'd like to see those engagement scores rise. What would it take to engage half, three quarters or 100% of the workforce? Imagine what it would mean to business success, employee happiness and productivity.



What are you doing about employee engagement, and what can you share with others? Let's begin the conversation today.

Craft a Sustainable Career

Imagine crafting a sustainable career for yourself. Year after year, you perform work that makes full use of your skills and challenges you to develop new ones. Your work not only interests you, it gives you a sense of meaning. You enjoy opportunities for learning and development. You work with people who energize you. You are confident that your skills and competencies make you valuable and marketable and that you can access opportunities through your network. You are able to fit your work together with the other things in your life that are important to you, like family, friends, and leisure.

This is a rosy picture, to be sure; some would even call it unattainable. For a taste of what is usually associated with the word career, check out the Urban Dictionary's definition, which characterizes a career as "an affliction whose symptoms are loss of life & liberty, general purpose misery, and resentment towards those who are unaffected" and "a euphemism for 'professional labor camp.'"

The entry is facetious, yet it does point to an undeniable truth: many employees spend the better part of their waking hours engaged in work that gives them nothing more than pay. "The mass of men lead lives of quiet desperation," wrote Henry David Thoreau in Walden in 1854. Today, over two-thirds of employees are disengaged at work, according to a recent Gallup survey of 150,000 workers. Economic stagnation and unequal access to opportunity keep a sustainable career out of reach of many. Even among the socioeconomically privileged, investment in education, hard work, and commitment to a company is no guarantee of career success and fulfillment.

However, there are steps you can take to maximize your chances of enjoying sustainable career success over the long term. Consider the example of Dan, who worked as sales engineer in the late 1990s for a company that developed voice recognition technology — a perfect fit for his background in and passion for linguistics and computer science. A few years later, the firm merged with its chief competitor. While Dan's job title remained unchanged, his responsibilities shifted in an unfavorable direction. Instead of the more creative work of synthesizing customer needs into technical solutions, at which he excelled, he was tasked primarily with developing proposals and statements of work. Not only did this work fail to capitalize on his strengths, it frustrated him and required skills he lacked. Thus, Dan found himself in a common catch-22: wanting to move into a position that would better fit his skills profile and enable him to recapture his outstanding job performance; he faced diminished prospects of mobility within the firm because he was underperforming at his new responsibilities. Furthermore, given the recent merger, this low point occurred at a time when he needed to demonstrate his value to managers from the acquiring company who weren't familiar with his track record.

To craft his career, Dan explored options for performing interesting work that exploited his talents and offered room for career growth while also increasing the value he provided to his company. He scoured the internet for information about other firms in the industry and found that many competitors employed solution architects, a position that didn't exist in his company at the time. Having gained broad experience with the development and deployment of voice recognition solutions in various contexts over the years with his employer, he realized that the solution architect role would both suit his existing skill profile and work preferences while also increasing his impact in the firm and opening up paths for increased learning. In addition, his research suggested that the role would support the company's strategic objective to take a dominant market position in the rapidly-growing market for voice recognition technology in mobile devices.

Using his respected industry knowledge, market insight, and professional network, he developed a proposal to create a solution architect. He explained how the new position could also enhance retention of high-value employees by providing an alternate career path for other sales engineers who were seeking opportunities for growth within the company. He used evidence from performance appraisals and multi-source feedback to demonstrate that his qualifications matched the position's requirements.

Management accepted his proposal and appointed him to the newly created position, an opportunity that kept him learning, engaged, and performing at his peak, which in turn ultimately led to a promotion a few years later. As expected, the role proved valuable for the company, which in turn hired additional solution architects from outside and promoted other employees into the position.

If you'd like to craft your own career, try out these strategies, which I recommend in my career management courses and workshops:



Embrace the fact that you are the pilot of your career. No one else has direct access to your ambitions, interests, and values, and no one is going to take you by the hand and help you create a fulfilling career. The more you practice career crafting, the better you get at it.

Develop a discipline of identifying and documenting the ways in which you add value to your employer. Spend a few minutes at the end of each week to record what you've learned and accomplished as well as to record feedback received. Just 5-10 minutes of systematic effort weekly will soon yield a rich archive of material that you can use to deepen your self-awareness, hone your career goals, and document your value.

Link your accomplishments to your career goals. Discuss your goals with your manager periodically, even if this process is not formalized. Maintain positive, productive relationships with people who can help you to access opportunities.

Pay close attention to developments in your industry and to the strategic direction of your firm. Understand your firm's core competencies — the parts of its operation that drive its competitiveness in the marketplace — and make sure that you play a contributing role. Look for ways to get involved in growth areas.

Seek opportunities to work with people who energize you. Many of my executive students recount that their biggest career boosts have come from working alongside smart, energetic, connected people who have taken an interest in them. These productive opportunities are much more likely to occur when you actively seek them out.

A sustainable career is dynamic and flexible; it features continuous learning, periodic renewal, the security that comes from employability, and a harmonious fit with your skills, interests, and values. The keys to crafting a sustainable career are knowing yourself — what interests you, what you do best and not so well, what energizes you — and being acutely attuned to the fields and companies you're interested in, so that you can identify places where you can add value. The "follow your passion" self-help industry tends to under-emphasize this key point: all of the self-awareness in the world is of little use if you can't pitch your passion to a buyer. A sustainable career is built upon the ability to show that you can fill a need that someone is willing to pay for. This holds not only when you're starting a business or looking for a new job; it's also an important springboard for refining your current job and your career trajectory to make it more ideal.