Marina Gorbis's Blog, page 1574

Create a Crowd Competition That Works

It's no secret that people in business are turning to the crowd to solve their toughest challenges. Well-known sites like Kickstarter and Indiegogo allow people to raise money for new projects. Design platforms like Crowdspring and 99designs give people the tools needed to crowdsource graphic design ideas and feedback.

At the Hult Prize — a start-up accelerator that challenges Millennials to develop innovative social enterprises to solve our world's most pressing issues (and rewards the top team with $1,000,000 in start-up capital) — we've learned that the crowd can also offer an unorthodox solution in developing innovative and disruptive ideas, particularly ones focused on tackling complex, large-scale social issues.

But to effectively harness the power of the crowd, you have to engage it carefully. Over the past four years, we've developed a well-defined set of principles that guide our annual "challenge," (lauded by Bill Clinton in TIME magazine as one of the top five initiatives changing the world for the better) that produces original and actionable ideas to solve social issues.

Companies like Netflix, General Electric, and Proctor & Gamble have also started "challenging the crowd" and employing many of these principles to tackle their own business roadblocks. If you're looking to spark disruptive and powerful ideas that benefit your company, follow these guidelines to launch an engaging competition:

1. Define the boundaries. Open-ended challenges are rarely successful; participants aren't engaged, ideas often aren't actionable, and you'll waste time combing through too many responses to find the few good ideas. Instead, clearly define the types of solutions that you are seeking, and the success metrics. For our latest challenge — solving the global food crisis — we set the boundaries to urban areas, which ensured that solutions were targeted to places where they could have the greatest impact. Similarly, GE's recent Hospital Quest challenge focused participants on addressing operational issues, and intentionally excluded other pressing topics such as medical outcomes and patient comfort.

2. Identify a specific and bold stretch target. Frame the challenge in a quantifiable way. Making the target a stretch will inspire your participants to think big and ensure that solutions have a significant impact. When Netflix launched its Netflix Prize, it set an aggressive target, demanding that the winning solution present a 10% improvement over Netflix's current ability to predict whether a viewer would enjoy a recommended movie. These sorts of targets may seem unattainable at first, but we have found that every time we set the bar high several teams manage to reach or exceed it.



3. Insist on low barriers to entry. The point in the early phases of the competition is to encourage as many ideas from as many different people as possible. Proctor & Gamble, on the P&G Connect + Develop site, requires only a name, email, and physical address to submit an idea. If your application includes an endless list of questions, you should start over. And if your janitor catches wind of a business challenge you plan to present to your team and expresses interest, why not let him contribute? You may find he delivers the most innovative, disruptive idea.



4. Encourage teams and networks. The social problems the Hult Prize tackles are often large in scale, and highly complex. A lone individual rarely has the expertise to harness ideas from adjacent disciplines, design a solution, and build a robust implementation plan. Diverse teams, on the other hand, generate solutions that no single individual could develop. The winning Netflix team, for instance, was comprised of a combination of earlier teams that came together and shared their expertise and partial solutions to reach the stretch target. Similarly, one of the winning teams of the Northrup Grumman Lunar Lander X Prize at Armadillo Aerospace began as a venture between a game programmer and local rocketry enthusiasts in Texas.

In addition to encouraging team entries, you can go a step further and create networks of mentors, coaches, judges and enablers. These networks will help to refine, pressure test, and roll-out the great ideas generated through your initiative, encouraging not just breakthrough innovation, but long-term success.

5. Provide a toolkit. Once interested parties become participants in your challenge, provide tools to set them up for success. If you are working on a social problem, you can use IDEO's human-centered design toolkit. If you have a private-sector challenge, consider posting it on an existing innovation platform. As an organizer, you don't have to spend time recreating the wheel — use one of the many existing platforms and borrow materials from those willing to share.

Whether you're launching the next big social initiative or simply looking for creative ideas to help meet your business objectives, use these principles to get the most from the crowd. Have you tried tapping the crowd to find disruptive ideas for your business? If so, what principles would you add to this list?

There's No Formula for Fixing Detroit, and That's a Good Thing

The news of Detroit's bankruptcy has brought countless explanations of what went wrong, some of them pretty interesting. But the main point of a bankruptcy — especially this bankruptcy, which has been looming for decades — is to get a fresh start.

So it's been dismaying to see how little attention has been paid in the past week's news coverage to the fact that central Detroit is already in the midst of fresh start, a revitalization that feels far more organic and durable than past top-down efforts like the construction of the Renaissance Center in the late 1970s and the arrival of casinos in the late 1990s (although the casinos do appear to pay the bulk of the city's bills at the moment). Decrepit buildings in downtown and midtown are being renovated and converted into loft apartments, hotels, restaurants, and offices. Compuware and Quicken Loans have moved their headquarters and thousands of employees from the suburbs to the city. There's an incipient venture-capital and startup scene, and lots of small creative businesses. The area's pro sports teams are almost all back downtown. Young, upwardly mobile people are actually moving to Detroit.

At the moment, this renaissance is almost completely disconnected from what's going on in the rest of the city. A small group of affluent, well-educated Creative Classers (and a larger number of occasional suburban visitors) has occupied an island in a sea of economic despair. One telling factoid: Detroit had been without a major chain supermarket since 2007. Now it has one in midtown, and it's a Whole Foods! (For non-U.S. readers, Whole Foods is a high-end natural foods chain long known by the nickname "Whole Paycheck.")

Outside of this rejuvenating core and a few residential neighborhoods that are still holding strong, Detroit is an underpopulated, crumbling mess. In 1950 the city had more than 1.8 million inhabitants; this year the population will probably slip below 700,000. Providing city services like police protection and garbage pickup across 139 ever-emptier square miles keeps getting more expensive and difficult (Detroit now has much lower population density than famously sprawling Los Angeles — although it's still denser than more recent boomtowns such as Houston and Phoenix). Just since 2000, the city has lost 26% of its people, with the white flight that began Detroit's decline in the 1950s long since overtaken by an exodus of middle-class African-Americans.

Those left behind are increasingly those who can't get out — with a per capita income of just $15,261 and 36.2% of the population below the poverty line, Detroit is now by most measures the poorest big city in the country.

It has also been uniquely dysfunctional. Cities live or die as economic entities, and Detroit's economy of course grew up around its automotive entrepreneurs. But over time the automakers evolved into change-averse business bureaucracies. Only General Motors remained based in Detroit, and while it certainly tried to help the city it's probably fair to say that its executives had little idea how. And while the Detroit area spawned new businesses — Compuware, Pulte Homes, Rock Financial (which took the name Quicken Loans during a brief stretch when it was owned by Intuit) — they were all creatures of the suburbs. To an extent unparalleled in any other major American metropolis, private economic activity in metro Detroit came to almost completely bypass the actual city. This was very much a racial divide; whites avoided the city, while blacks gravitated toward the government jobs that were the best things on offer within the city limits. The result was a city governing class clueless about and to a certain extent disdainful of economic reality and a regional economic elite with few ties and little loyalty to the region's main city.

Among America's ten biggest cities in 1950, two others — Cleveland and St. Louis — suffered population drops similar to Detroit's. They've also been troubled, and Cleveland even defaulted on some bank loans in the late 1970s. But on the whole the cities themselves weathered the demographic shock far better than Detroit. St. Louis even gained population last year (just 103 people, and that's just a Census Bureau estimate, but still, it's something). That's partly because they're older cities with smaller land areas to manage. But it's also because they remained central to regional economic life. Lots of businesses and other important economic institutions stayed in the cities, and the racial polarization between city and suburb was never as absolute as in Detroit.

So what do you do about that all that? Last fall, I paid a visit to the Creative Class island within depressed Detroit for the Techonomy Detroit conference at Wayne State University, and I can attest that people there are well aware that urban rebirth will take a lot more than a few downtown restaurant openings. I can also attest that they don't really know what it will take. I moderated a panel titled "Is Detroit the Next Berlin?" and the general consensus was that no, the huge inflow of federal money and artsy types from all over that converted the once-depressed German capital into a global hotspot was not going to be replicated in Detroit — although a few artsy types were already there and some federal money sure would be nice. So here are some other paths:

Immigration. New York Mayor Michael Bloomberg made headlines two years ago by arguing that Congress ought to "pass a law letting immigrants come in as long as they agree to go to Detroit and live there for five or 10 years, start businesses, take jobs, whatever." That apparently isn't going to happen, and recent immigration, while surely a positive for Detroit, hasn't been on the scale that has helped revitalize big cities nearer the coasts. In fact, the city has so far attracted far fewer immigrants than its suburbs — which does indicate that there's opportunity for improvement.

Shrinkage. Not long after NBA Hall of Famer Dave Bing became Detroit's mayor in 2009, reports surfaced that he was thinking of bulldozing a quarter of the city. Reality has turned out to be less dramatic, but the city is definitely working to reduce its footprint — to abandon some neighborhoods in order to focus on making others thrive. That could help with cutting costs and improving services, but — groovy urban farms aside — it's not what you'd call an entirely positive development.

Policy innovation. The most thought-provoking thing I've read about Detroit in the past week was a blog post by The Century Foundation's Jacob Anbinder sketching out four possible government policy fixes: (1) let property owners (about half of whom aren't paying their taxes at the moment) choose what their taxes are spent on, (2) make city workers live in Detroit (less than half do, and this is something Mayor Bing has already been talking about), (3) let wealthier municipalities temporarily take over parts of Detroit for economic development purposes, which is allowed under Michigan law, and (4) do away with the region's ridiculous public transit divide in which the suburbs and the city run separate and disconnected bus systems. Are these the right prescriptions? I don't know. But bold experimentation certainly has to be part of the picture.

Bankruptcy. I'm guessing Chapter 9 has been inevitable for Detroit for a while, but the timing and specifics of it were forced on the city by Republican governor Rick Snyder, a former business executive (at Gateway Computers; remember them?) and venture capitalist. Snyder seems like a pragmatic guy who genuinely wants to enable an economic rebirth for Detroit, and his decision has been welcomed by the city's new entrepreneurs. Bankruptcy is, after all, a way to get out from under past commitments that they had nothing to do with. But a lot of those commitments were to municipal workers, who (the ones who actually live in the city, at least) make up much of the Detroit's remaining middle class. The most surprising elements of the city's bankruptcy filing have been the claims that Snyder-appointed Emergency Manager Kevyn Orr has made about the dire state of the city's pension funds; there's widespread suspicion that he's overstating the problem. That's got to be at least partly a negotiating tactic, but it's a dangerous game Orr is playing. It's not that city pensions should be untouchable — they definitely won't be, now that a bankruptcy judge is likely to be calling the shots. But the great tragedy of Detroit over the last half century has been an inability to share responsibility and opportunity across racial and municipal lines. If the bulk of Detroit's bankruptcy costs are borne by a bunch of (mostly black) city workers for the benefit of a bunch of (mostly white) entrepreneurs and corporate workers, what kind of restart will that be?

Money. In a much-debated New York Times op-ed a few days ago, Steven Rattner — who managed the Detroit automakers' successful bankruptcies in 2009 — argued that the only feasible way forward is for the state of Michigan (and to a lesser extent the federal government) to help Detroit out. Michigan has had a pretty awful decade, but it's still in much better shape than Detroit. And it seems like many of the state's leading businesspeople, and its governor, have come around to the idea that the state can't thrive again until its biggest city is on the comeback trail. There are limits to what money can do, and I imagine that anything that could be labeled a "bailout" would spell political suicide for Snyder. But hey, maybe he's itching to go back into the VC business so he can invest in Detroit.

Entrepreneurs. The downtown Detroit boomlet is to a remarkable extent the work of one wealthy risk-taker, Quicken Loans chairman and co-founder Dan Gilbert. According to the blog Detroit Unspun, Gilbert and his firm Rock Ventures now own or control more than 30 properties downtown, totaling 7.5 million square feet. That's a huge bet on a far from sure thing, and while sometimes I think entrepreneurship gets oversold as a cure for economic ills, it's hard to think of anything that would do more to get Detroit going than the presence of a couple more Dan Gilberts, and a few hundred or thousand mini-Dan Gilberts.

Does all this add up to a formula for fixing Detroit? No — and you may have noticed that I completed avoided the topic of fixing Detroit's schools, which is clearly crucial yet diabolically hard. But to a certain extent the lack of formula is the point. A fresh start for Detroit means entering uncharted territory — and that's exciting.

Can Crowdfunding Solve the Startup Capital Gap?

No matter what industry it's in or what product it's selling, the absolute best way for a startup to obtain the capital it needs to grow is to generate revenue and reinvest profits.

Of course, it's easy to say that and very hard to do it.

That's why many entrepreneurs turn to friends and family for funding. These types of investors do not bet on the business so much as they bet on the person. And more often than not, these bets do not pan out, leaving angry family members and broken friendships at their wake.

More recently, crowdfunding is being considered as a potential solution.

Made popular by KickStarter, crowdfunding primarily works on a 'donation' model, whereby the 'crowd' of investors funds projects, including causes like liberating Egypt. Typically, incentives include discounted early access to products, or the opportunity to be a part of something significant.

Currently in the United States, only the 'donation' model of crowdfunding is legal. In Europe, equity crowdfunding is also possible.

Of course, the entire industry is waiting for the JOBS Act to become legal, which will allow crowds of investors to not only donate money, but actually invest via traditional equity models. Earlier this month, the SEC approved a portion of the Act that allows startups to advertise for investors. And of course, peer-to-peer lending has been around for a while, and some of it has been trickling over to startup financing.

For the most part, the impact of crowdfunding on startup financing is still minimal.

There are, however, some significant opportunities that I see ahead:

First, Angels and VCs are only interested in businesses with a clear path toward an exit, and those focused on rather large market opportunities. This leaves 99% of the businesses outside the realm of their framework. These 'Other 99%' businesses are often excellent niche businesses. They can be profitable, cash-generating concerns, quite capable of paying dividends to their shareholders. However, the dividend model of investment is pretty much missing in the angel/VC industry. Crowdfunding could plug into this gap.

Second, today even angels (let alone VCs) are looking for validated businesses. However, if you need $50,000 to $100,000 to get to adequate validation to raise the follow-on $500,000 in seed money, there is a massive gap. So pre-seed, pre-incubation or incubation stage companies are areas investors participating in CrowdFunding could look into as well. One caveat: These deals are difficult to assess, and unless savvy experts screen and rate them, the likelihood of success will be low, and we will have a lot of angry investors. Too much of that will kill the industry altogether.

Finally, working capital financing is one of the key requirements of all small startups. Today, banks take notoriously long to approve minimal amounts of credit. If that pain can be addressed via crowdfunding, that would massively lubricate small businesses, unleashing tremendous amounts of growth.

One of the reasons crowdfunding is promising is that there are opportunities of bridging these capital gaps once it becomes possible for a larger number of investors to play in the early stage startup financing market with more flexible models.

Nonetheless, early stage investment is a very risky affair, and I will be the first to say that there is no guarantee that a certain investment will pan out.

That's why the real success of crowdfunding for startups will depend on the screening and rating infrastructure that comes together to tackle non-financial heuristics in determining fundability at scale.

Note, scale is the operating word here. Without that, like venture capital, crowdfunding will remain a cottage industry, addressing less than 1% of the small businesses out there.

This, then, brings us to the real gap: knowledge and expertise.

This gap exists on multiple fronts. Friends and family do not have the expertise to gauge the viability of a business they are about to fund. Rank and file investors don't either.

On the other side of the coin, first-time entrepreneurs also lack the knowledge and expertise to make the right business decisions.

As a result, capital often gets wasted. Limited amounts of cash, soon, dry up, adding to the infant mortality pool.

The margins for error are small. A few mistakes — often, common mistakes — smash an entrepreneurial dream to pieces.

Capitalism 2.0 will make its greatest mark if this knowledge gap can be bridged.

Family Business: How to Spot a Problem Patriarch

Sometimes it's the most successful leaders who sow the seeds for the downfall of a family business.

Carl was one of the most talented leaders of his generation. When he took over the family business, it was a struggling $10 million automotive parts distributor. Now after thirty years of being at the helm, Carl has developed a $2 billion company that is a leader in logistical services to hospitals in Europe, and also owns four other distribution businesses. At one point, Carl had 48 direct reports and had personally hired each one. At the same time, he cared deeply about his family and made sure that everyone was well taken care of.

But there was a darker side to Carl's success.

Although his first act was one of the best ever, he became a "problem patriarch," a very hard-driving alpha leader who hired superb talent within the family and the business — and then consistently undermined that talent.

He drove his sister out of the company by placing her in a succession of dead-end jobs. His uncle resigned from the board saying that he wouldn't be part of a "paper board," in which Carl effectively made all the key decisions. Carl responded by maneuvering to buy most of his uncle's shares. In the process, he created a leadership vacuum that threatened the very legacy he had worked so hard to build.

When he had a heart attack at 64, Carl's doctors cautioned him to slow down. Worried both about his health — and about the prospects for the company — family members strongly advised Carl to step aside. Not surprisingly, he selected a relatively inexperienced CEO he knew he could control. People in the organization had no doubt about where the buck really stopped.

Now Carl is 70, the company has not grown since the Great Recession, and the current CEO is leaving for another opportunity. There are no strong internal candidates for the position, and the board is divided about the strategy and future direction of the company.

It's important for family members and owners to recognize that problem patriarchs don't rule by fiat so much as use a combination of other strategies to attain and maintain control over the current and next generation. You know you have encountered a Carl when you find yourself entangled with someone who:

Divides and conquers by playing one group of siblings or one branch against another
Buys off the majority by providing benefits (such as dividends) in exchange for obedience
Infantilizes the next generation by denying access to information about the business or relevant experiences
Creates a cult of personality around the patriarch/matriarch that makes it difficult to imagine anyone else leading

In many business families, we see these dominant leaders use these strategies in such a way that gravely endangers the transition of power to the next generation. One family patriarch, for example, doled out "allowances" to his children even into their 50s, keeping them so dependent that they never learned to make decisions autonomously.

Another client patriarch deliberately set out detailed rules for his descendants to follow, trying to lead them even from the grave. These rules were well-intentioned, but they hamstrung the ability of the family business to adjust to things that could not be predicted — even by someone so smart as the patriarch.

Yet another client appointed a son-in-law to run a failing $20 million business when the task at hand was to grow a $2 billion company into a $4 billion company. She was setting up the next generation to fail.

Often the reason given by such leaders for their vise grip on power is that the next generation is not good enough to provide the same quality of leadership that they have. Such thinking has an element of self-fulfilling prophecy to it. Those who are beat down rather than built up are far less likely to be successful.

What's more, it is often a mistake to assume that the business needs the same kind of leader going forward to succeed. The traits and skills required to get a business off the ground, or to drive it to great heights, are quite different from those needed to build on that success and meet the next set of challenges.

Those who are left to take over from such powerful, mythic patriarchs, must realize the ways in which people's development has been stymied (even if with the best of intentions). Awareness is the first step towards action.



It is also important to understand that while things may be better once the controlling patriarch is no long on center stage, the organization will still embody some negative aspects of his legacy. Reorienting and rebuilding the family business will take time. Without new, collective leadership, the transition process is likely to be extremely challenging — or unsuccessful.

At this point, family business owners have a choice: they can try to find another benevolent patriarch, or they can let multiple leaders bloom. We call these the "one-for-one" versus "one-for-many" strategies. One-for-one happens when families try to find a replacement for Carl, another patriarch who can do it all. By contrast, one-for-many strategies come into play when the family realizes that what worked before cannot be replicated going forward.

The best patriarchs recognize that different people, different styles of leadership, probably multiple leaders, are needed to fill the vacuum left by his passing or stepping down.

The choice between a sole, benevolent patriarch and multiple leaders in the organization is not either/or, and the best patriarchs realize this. We have one client patriarch, who developed talent up, down, and across the family and the organization.

This patriarch was empowering in that he put his people in leadership roles; he also cultivated and celebrated their talent. Knowing that time was approaching to transition power to the next generation, the patriarch appointed and created a heavy-hitting board that included two of his daughters. He prepared and gradually transferred responsibility to his son.

This patriarch did an outstanding job of developing talent. That's no small feat. Setting the stage for a great second act is what real leadership is all about.

Is Your Organization Ready for Total Digitization?

What do the following items have in common: credit cards and streaming or recorded music, robots for production, CAD systems, telephone networks, digital games, computers in products like cars and vacuum cleaners, sensors, and video consoles used in remote mining? Answer: They are all digital and connectable.

This is the world of total digitization: a multitude of digital devices and sensors creating streams of data, as well as any number of digital services and products for both internal and external use, distributed throughout the enterprise, and sometimes, but not always, connected. As the drive toward increased digitization continues, enterprises have to get a handle on this total digitization — and corporate CIOs have to step up to the challenge.

Three Approaches to Managing Total Digitization

How are enterprises managing the spread and scope of total digitization? We at MIT CISR have found that enterprises are using one or more of three approaches to managing total digitization: convergence, coordination, or a separate digital innovation stacks approach. Each approach has very different objectives and measures of success.

Convergence. This approach brings all digitization investments together and places them under a single executive. At Boeing, all enterprise technology (including digital) investments are managed by the CTO, which enables significant synergies. For Commonwealth Bank of Australia, convergence involved bringing together operations and IT into a new unit, Enterprise Services (ES), headed by the CIO. ES helped CBA achieve its goal of both reducing costs and becoming number one in customer experience. Convergence usually requires the introduction of new organizational structures to create efficiencies and synergies and to increase reuse of resources. Enterprises using a convergence approach will, wherever possible, organizationally consolidate the key assets of people, data, infrastructure, skills, and management processes.

Coordination. This approach doesn't change the organizational structure but adds mechanisms (such as committees or gates) onto a business case process, to increase the coordination of big digital investments across groups such as engineering, operations, or product owners. Leaving the organization structure "as is" reduces disruption while the mechanisms help facilitate working together across the units. A typical structure consists of separate organizational units supported by a shared infrastructure at the base and connected by customer-facing coordination mechanisms at the top.

For example, BMW set up two committees focused on digitization to deliver on its enterprise goals, including the design and delivery of a custom car within six days. These committees at BMW ensure the creation and smooth handoff of information. In a coordination approach, the mechanisms all work together to achieve a specific outcome. This approach works well when there are one or two enterprise-wide goals. But be aware, when there are numerous enterprise goals spanning multiple geographies and business units, the coordination approach can lead to a spaghetti-like set of governance committees and processes. But with just one or two overarching enterprise goals, the coordination approach helps to create a consistent customer experience or, in some companies, ensures regulatory compliance.

Separate Digital Innovation Stacks. Enterprises with this structure and approach believe the key to their success is innovation via local management. Each of the separate stacks — such as the different product groups, business units, or geographies — is left alone to maximize its own local value without any coordination overhead. Taking this approach (e.g. News Corp) commits a firm to local innovation, often organized by products or stand-alone businesses. These enterprises have decentralized management and diversified businesses. Capabilities are often duplicated with slight differences in each stack, and there is local accountability for profit and loss. Typically, though, some global risk management is necessary. As digitization increases and customers (and regulators) expect a more integrated multi-product experience, we expect to see far fewer business units pursuing a separate digital innovation stacks strategy. Diversified enterprises, however, may still find it a useful approach.

Identifying your enterprise's core strategic drivers is the key to deciding which approach is best to follow. Convergence is about reducing cost, reducing risk, and achieving synergies. Coordination is the right choice for enterprises that are trying to achieve a few enterprise-wide goals such as improving customer experience or asset utilization. Finally, the separate digital innovation stacks approach is right for enterprises that believe autonomy helps improve innovation and local customer responsiveness.

We believe that managing total digitization is one of the biggest opportunities and challenges facing enterprises — and their CIOs — today. We are already seeing companies in which the total digitization spend is over 25% of the operating budget and expect this will become commonplace. In our ever-more-fully digitized world, you need to strategically manage total digitization or you run the risk of digital anarchy in your enterprise.

Reinventing Corporate IT
An HBR Insight Center





Exploit IT for Strategic Benefit
IT Cannot Be Only the CIO's Responsibility
CIOs Must Lead Outside of IT
You, Too, Can Move Your Company Into the Cloud

CEOs Are to Blame for Short CMO Tenures

About once a week it seems, we are reminded that CMO tenure is unusually short. I have heard figures ranging from 23 months to 45 months. Both of these numbers are astonishingly low compared to other execs in the C-Suite: eight years for CEOs and ten years for CFOs. So why is CMO tenure so short? Experts have pointed to a host of reasons: the explosion of social media, the rise of big data, general complexity and chaos, incompetence...

But what I haven't seen is a serious discussion of the person directly responsible for the length of employment of the CMO: the CEO.

As I argue in my new book, the best-run and most successful companies convey one clear, understandable story through every action that they take, not solely through their marketing. And these companies tell their story through the products that they make, the services they provide, even in the way they incentivize and reward employees. And the only person who can manage this story is the CEO.

Yet the majority of CEOs pass this responsibility to others — the CMO, usually. This needs to change, and shareholders and other stakeholders need to start holding CEOs' feet to the fire. Because there is a growing evidence that the most successful businesses today are run by CEOs who embrace story, and who think of themselves as Chief Story Officers.

There are a handful of enlightened CEOs, of course, who've embraced story for years. Nike founder and former CEO Phil Knight and current CEO Mark Parker take a personal interest in the Nike narrative. From shoes and shirts to digital platforms to physical retail spaces to ads — they make sure that everything Nike makes advances its story. David Neeleman, founder and former CEO of Jetblue, hated advertising, and preferred to convey JetBlue's story through innovation and customer experience. And Steve Jobs, of course, would spend two hours a week with his marketing partners looking at ad concepts in development. He didn't do this because he was a particular fan of advertising; he did this because he considered everything that Apple made to be a vital part of Apple's story, and therefore worthy of his personal attention.

A new generation of enlightened CEO's are taking the power of story even further, and by conveying their story almost exclusively through action, not communication, they are reducing costs in the process. These companies are almost all do and no tell. Dietrich Mateschitz at Redbull, Jeff Bezos at Amazon, Blake Myckoskie at TOMS shoes and many more are creating huge successes with ad budgets approaching zero. They are doing this by first understanding the narrative they wish to advance in the world, and then by making sure that their products and customer experiences advance that narrative coherently and convincingly. In these companies, story and product are two sides of the same coin.

These leaders are a cause for optimism, but they're still exceptions to the rule.

The vast majority of CEOs aren't taking the time to understand their story and how it relates to their products. Instead, they are continuing to separate product from story, and pushing responsibility for story down to the marketing department. By doing this, they are giving their CMOs an impossible job — marshall a story that is unfolding across the entire enterprise — product development and customer service — areas that most CMO's don't touch or can't control. Yet they are still holding the CMO responsible for results. No wonder the qualities sought in a CMO these days might be mistaken for those of a bullfighter or a test pilot. CEOs who stick with this model will struggle to keep the best marketing talent over the coming years, as more enlightened competitors poach the most ambitious marketing stars and empower them to quarterback the story across the whole organization.

If you are a CEO or an aspiring CEO, the evidence is clear: becoming a student of the underlying narrative of your business, and learning how to manage and tell that story through coordinated action, not merely through communication, can be a powerful competitive advantage. Make understanding and telling your company's story both a shared responsibility across the whole organization and a core value of the company. If you do this, you (and more importantly, your shareholders) will reap the rewards.

You might find that your CMO lasts longer as well.

How to Fix the Bad Employee Syndrome

We've all wanted to please the boss. And if that sometimes means that we do something we think is stupid or misguided so be it — is it worth spending our social or political capital on making a fuss about just one small thing? Better to shrug and accept it and maybe build up some goodwill for when you really need it.

The problem with this attitude is that it becomes harder to take initiatives and employees never actually do take their bosses on. Of course, they suffer at least as much as the boss from the consequences of this. If the boss does make a fool of himself he's going to wonder why nobody told him. That leaves the employees looking either stupid (for not realizing there was a problem) or bad (for not telling him). If he gets into trouble himself then he's going to want to share out the blame ... and the whole cycle starts again

I call this the Bad Employee Syndrome. Part of the problem, of course, is rooted in a lack of self-confidence on the part of employees; not all bosses are monsters. But whatever the share of responsibility, it is a problem that really is best fixed by the boss, who after all has the greatest control over whether or not the workplace is a safe environment in which to make a positive contribution.

That was the conclusion that I drew when, as a young boss in my family company, I realized that nearly all employees were simply agreeing with what my father and I said all the time. I realized that if that was the way people were behaving then there must be something about the way we were managing that made them behave that way. Unless we did something to change what had come to be our company culture, we would miss out on the potentially important insights people on the front lines, who could tell us most about what our customers were looking for, and about what our competitors were up to.

So I set up an "Encouraging Initiative" Task Force, which included key managers and an outside coach. Its explicit brief was to change the people's perception that performance meant following their superiors' instructions to the letter by finding ways to reward employees for the quality and usefulness of the ideas and suggestions they brought to their superiors.

Among the incentives and processes that the task force came up with were holding regular idea brainstorming meetings and a prize for best idea of the month. A template for presenting new ideas was developed and a formal process for submitting them to superiors was established. The team also recommended a change in hiring criteria, and we started looking less for people that would fit in and more for people ready to take the risk of expressing their insights and ideas openly.

It proved harder than I expected to change what had come to be our culture, partly because many of our best employees were too deeply imbued with it to change. But the real problem was with our managers. Many struggled to accept the notion that the contributions of their subordinates could be as valuable as their own, a problem I have frequently encountered. The coach and I worked hard with the managers to get them to:

Think through and articulate carefully the gains and the risks each decision entailed for the company, themselves, and the employees involved in the decision, and of how best to mitigate the associated risks.
Show that they took their employees seriously by encouraging their open and candid inputs and getting them them to share their experience, knowledge and skills.

Most finally succeeded in making the adjustment. The few that that could not we eventually had to let go. Eventually we succeeded in transforming our closed and sterile management culture to one of dynamic openness. The fresh input now coming in from the front line opened us up to all sorts of new products, policies and practices, which quickly translated into improved revenues and profits.

I draw two lessons from this story. First, the Bad Employee Syndrome is very expensive for companies. I dread to think how many billions are wasted every year in every country because employees are discouraged from contributing the insights they gained from their experience. Second, it doesn't take a great deal to cure companies of the syndrome: but it takes persistence. My own experience shows that a few procedural changes and some coaching, accompanied by a genuine commitment to respecting employee ideas on the part of bosses are all it takes...

Good luck!

Birth Rates Fall for U.S. Younger Women but Rise for Older Women

The U.S. birth rate continues to decline overall, except in the case of women in their late thirties and early forties. The increase is most dramatic for women ages 40 to 44: In that group, the rate rose 1% from 2010 to 2011, hitting 10.3 births per 1,000 women, says Pew Research. (That's not a record: The rate for women in their early forties stood at 10.6 in 1967, when the country's overall birth rate was higher than it is today.) The birth rate dropped 8% from 2010 to 2011 among teenagers and 5% among women ages 20 to 24, hitting historic lows in both age groups.

Working from Home: A Work in Progress

It's now been about six weeks since all Yahoo! employees had to start showing up at the Internet giant's offices every day. The company-confidential but widely circulated memo that banned telecommuting stressed the importance of physical proximity for preserving the creative culture that new CEO Marissa Mayer had been trying to build. Many commentators criticized Mayer for limiting her employees' autonomy and signaling that she didn't trust them. Whatever the intention — and ultimate effects — of Mayer's new rule, it sparked fiery debates about the merits and drawbacks of the upward trend in working from home. New data that we recently collected add fuel to the flames.

For several weeks earlier this year, we collected daily electronic diaries from the employees of the HR department in a New York bank. Although we weren't looking for it, one particularly interesting pattern popped out of the data: strongly positive comments from employees on the occasional days that they worked from home. Again and again, we saw people writing about how refreshing it was to be freed from office distractions and to have the opportunity to catch up on work. On our end-of-study survey, we asked directly how they felt about working from home. The response was overwhelmingly positive. Of particular interest to us, participants felt that they made more progress when they worked from home. The reasons they cited included increased focus, greater creativity, saved time that would otherwise have been spent commuting, and feeling relaxed and comfortable. During the study, we also collected daily self-report ratings from each person on several emotion measures. Ratings for most of these items were the same for days at the office and days at home, except for frustration. Our participants consistently rated their frustration with the work lower when they worked from home.

Our past research found that, of all the events that can keep people happily engaged on the job, the single most important is making progress in meaningful work. So, if working remotely leads people to feel more positive and make more progress, that's a pretty powerful endorsement. Other research fits with our findings. It seems that, in general, people like working from home. They appreciate the ability to schedule their lives around their work rather than the other way around - and some may even value this flexibility more than career advancement. Moreover, being alone helps some people avoid the frustrations and annoyances of office life. A study by Stanford researchers revealed significant differences between call center employees in a Chinese company who were randomly assigned to work from home for nine months and those who were not. Not only were the work-from-homers more productive than their non-remote peers, but they were also more satisfied with their job and less likely to leave. Brand new research similarly points to the importance of flexible work arrangements for attracting and retaining the most talented employees. In a survey of over 700 MBA grads, Catalyst discovered that those whose firms had flexible work arrangements were more likely to aspire to senior positions at their companies than those working at less flexible firms.

Of course, there's a catch. The participants in our study, like those in the Chinese call center study, were doing work of an inherently independent nature, and much of it was rather repetitive; there was little need for collaboration and little room for creativity.
Forcing employees into the office could be very important if the success of your company is largely dependent on the frequent exchange of novel ideas between workers. A recent
Gallup report showed that remote workers were more engaged than on-site workers, but emphasized that working remotely was best in moderation. Only the remote workers who spent less than 20% of their time working from home were more engaged; remote workers who spent almost all of their time working from home had the same level of engagement as on-site workers. Keep in mind that the people we studied in that New York bank worked from home only occasionally; for the vast majority, it was fewer than eight days spread out over eight weeks. Also keep in mind that working at home can have its own distractions. In one survey by Citrix (a Florida company that designs technology for employees to work remotely), a quarter of employees even admitted to having an alcoholic beverage while working from home.

The bottom line is that working at home makes a lot of sense for some people and some kinds of work. Although our research and other studies suggest that employees and employers alike can benefit from telecommuting, Marissa Mayer's report-to-work order may still prove appropriate for Yahoo's employees because of the creative, collaborative nature of the work they do.

Many thanks to Katrina Flanagan for her help writing and revising this post.

Slingshot Your Career

Carrie Householder, senior manager of Buying and Product Management at Amazon, explains how a less-than-perfect job can propel your career forward.