Marina Gorbis's Blog, page 1575

Don't Neglect Your Power to Bring People Together

Out of the many ways that managers get things done, one of the most underused is what I call "convening authority": the ability to bring people together to share information, build alignment, or solve problems. To explain, let me share a quick example, in two acts:

In Act One, the manager of a corporate engineering group was tasked with reducing the cost of common materials used by a number of different product teams. To address the issue, she met with fellow engineers in each of the teams to understand their processes and how they utilized the materials. She also met with people from procurement and others in the supply chain organization to pull together a consolidated picture of the costs. Armed with this information, she then held one-on-one sessions with product-team managers to give them customized recommendations for reducing material usage and costs. Each meeting was cordial and the managers seemed to appreciate the input. Over the next few months, however, only a few of the recommendations were implemented, and there was little overall impact on material costs.

Now comes Act Two: Frustrated with the lack of progress, the manager decided to organize a working session for all of the product managers and their engineers, along with people from supply chain and finance. Although scheduling was a challenge, much to her surprise everyone invited agreed to attend. At the session, she shared the overall product cost data and the business requirement to make a substantial reduction. She then broke the group into cross-product and cross-functional teams to review the earlier recommendations, and lay out what it would take to make them happen. Within a couple of hours, the small groups had identified a number of common barriers to implementation, such as customer acceptance testing, renegotiating with suppliers, recalibrating equipment, and others. Working together, the group then developed a work plan for addressing these problems, eventually leading to a substantial reduction in material costs.

The question raised by this case of course is why our manager didn't start by convening all of the interested stakeholders in the first place. The easy answer perhaps is that she didn't think of it, or didn't realize that she had the authority. But the deeper reason, which is true for many managers, is the perception that convening people outside of your own hierarchy is risky and difficult. As a result, many managers unconsciously avoid taking this step.

The funny thing about this anxiety is that most managers don't hesitate at all to call meetings for their own direct staff and those who report to them. But bringing together subject matter experts, decision makers, and stakeholders from areas that don't report to you is much tougher: You have to make sure the issue is weighty enough to warrant people's time; you have to think through the potential participants, the sensitivities of leaving certain people out, and who gets along with whom; you have to collect data and materials so that the meeting will be productive; and you have to prepare an agenda that is compelling and has a high likelihood of leading to success. These factors alone can cause managers to hesitate.

Added to the difficulty of organizing the meeting is the fear that key participants will refuse to attend. We all know that people are busy enough doing their own jobs, so asking them to join in on something that is beyond the normal might easily be seen as an imposition. So rather than get turned down, it's easier to not call the meeting in the first place.

Finally, calling a meeting with multiple parties from across the organization also requires tremendous facilitation skill. Getting everyone together is hard enough, but making sure that the meeting is productive, that all parties are heard, and that real solutions emerge is daunting. And the truth is that many managers are not skilled at group facilitation. So for those managers, like the one in our case, it's easier to deal with everyone individually than try to tackle them as a group.

Given all of these fears and uncertainties, it's no wonder that many managers hesitate to utilize their convening authority. Unfortunately, bringing the right people together from across the organization (and even including suppliers and customers) is often the best way to get things done quickly. So if you want to step up to more effective leadership, you may need to conquer your fears and give convening a try.

Why Can't a CIO Be More Like a CFO?

Information governance is not IT's job. But it should be the CIO's job. It's time for CIOs to move beyond their roles as chief technology officers, and embrace the name with all of its implications: Chief Information Officer.



Why? Because no one is managing the store. The explosive growth of information is accelerating. According to the 2012 IDC/EMC report on the digital universe (PDF), it's doubling every two years. At the same time, technology budgets are static or contracting, and non-IT execs want more attention to cost-cutting.

We know this. We've heard it before. Yet we continue to ignore it. I'm fascinated by how deftly conversations about information growth turn immediately to hand-wringing over how to store and secure it, avoiding the issue of its creation. The time is ripe for CIOs to take a page from the CFOs' playbook to ensure both accountability and responsibility for information creation.

We all know that CFOs are accountable for the financial stewardship of the enterprise. They fulfill this role by delegating responsibility and establishing control systems such as budgets, directives, audits, and oversight to drive fiscal compliance. The day-to-day financial activity within the organization is then executed by management and staff, who shoulder the responsibility — delegated to them by the enterprise as part of their job — to account for funds, both incoming and outgoing. Incurring debt without approvals or other failures to comply with financial controls appropriately results in disciplinary action.

CIOs accountability, on the other hand, stops short of information stewardship and instead focuses only on technology stewardship, an intermediate step. CIO's are commonly accountable only for information in the middle of its lifecycle (storage, security, and availability), and their control systems reflect this. Unlike the world of the CFO, management and staff generally do what they like when it comes to creating and (not) disposing of information, creating a cavernous gap in accountability. There are no overarching frameworks, few controls, little guidance, no audits, and seldom consequences when staff create and hoard information. In financial terms, irresponsible creation and storage of information is like taking on unsecured, uncontrolled debt. It creates risk and encumbers the enterprise with additional costs to support the resulting digital landfill.

That landfill has been a money pit for corporations and a gold mine, in my experience, for plaintiffs' counsel and regulatory investigators, leading to average per case discovery costs ranging from $621,000 to more than $9 million. That's a lot of money for digging through old e-mail.

How did we get here?

We came to this place easily and methodically, by providing resources of quickly-evolving technology with no constraints. We came here by not establishing data stewardship, which is at the root of organizational confusion about information governance. We came here by allowing the "just keep everything" culture to take hold. Ironically, autonomy in corporate computing does not necessarily lead to greater productivity. In fact, our laissez faire approach to computer education — little guidance, hands-off, freedom to make decisions — leads to lower productivity absent a system for accountability. Without accountability, unproductive behaviors creep in: spending time on CYA, finger-pointing, waiting for guidance, ignoring problems, or waiting too long to act.

Given this failure to establish responsibility and accountability, it is also not surprising that most ECM projects fail, and a large percentage of IT projects generally fail to realize their potential or go well over budget. I believe the driving factor for these failures is that many projects are conceived and scoped only to address a symptom, rather than the disease of too much information.

Patchwork attempts to mitigate or repair our broken information management processes do not get to the core of the issue. It is ultimately up to each of us to make a difference. Of course, we are reminded during emergencies, like Hurricane Sandy, the "bet the company" lawsuit, or — dare I mention — the data security breach. (Can you spell S.N.O.W.D.E.N.?) But, when the crisis is over, we go back to the status quo.

There are those who still believe that technology alone solves all problems, thus policy-based governance is unnecessary and there is no downside to information growth. These proponents fail to account, however, for the three R's: Regulation, Risk, and Reward.



Regulatory requirements for information governance exist for every enterprise. They must be identified and addressed, and information management is a huge part of this.



At risk in most enterprises are databases, shared storage, and e-mail — and the latter two are almost exclusively controlled by end users, both in content and distribution. Risks stem from litigation exposure, privacy and data security breaches, and intellectual property theft, among others.

Reward can come from new insights for new initiatives gleaned from our "big data," but only if it is not "dark data" contaminated with the ROT (redundant, obsolete, and trivial) of 30 years of computing. In each of these, unmanaged volume and content is our enemy.

Back to the Future

CIO's must re-invigorate the vision of 1987, when the inaugural issue of CIO magazine stated that, "information is a corporate asset to be managed by a top-ranking executive." CIO's have never broadly achieved their destiny. They have remained, instead, CTO's. I submit they are — or should be — something different.



CIO's need to move beyond technology myopia to become information governance leaders and executive partners in policy direction and enforcement. Someone needs to take control, and CIO's are in an ideal position to mandate the structure, direction, resources, and accountability necessary to achieve coherent governance of information assets. If the prospect of tackling the legacy problem is daunting, consider another finance-inspired concept: zero-based budgeting. With "Zero-Based Information Governance" tied to bottom-up accountability, we have an opportunity to look forward first and stop the bleeding. We can cost cut by slowing the growth of information and applying a more critical eye to Band-Aid technology requests such as e-mail archives or yet more storage, and thereby also achieve better alignment with long-term business goals.

In my years of interviewing staff across a range of industries, the most common theme has been, "No one told me what to do, so I did nothing." Technology is intimidating, particularly to non-Millennials. Think like a parent. Create an environment where information is treated as a valued asset. Instruct, guide, and expect good stewardship. Be accountable.

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

The Right Way to Hire Your Customers

Suppose I told you that you have access to a resource that is more empathetic, more interesting, and more persuasive to potential buyers of your products and services than even your best sales or marketing people. A resource that can do a significant amount of the marketing work that you're spending lots of dollars on, and can do so for free. A resource that can get you to the leading edge of innovation in your industry much faster than internal product developers — and at the same time, can show you how to forego superfluous services or product features that you thought were essential but that in fact, no one would miss.

I'm talking, of course, about your customers. It's astonishing to see companies that lavish so much time and attention (and money) on selecting just the right employees, but show little discernment in selecting their customers beyond making sure their check will clear.

Companies that are pickier about their customers reap major rewards for doing so, particularly in today's economy where customers are not only better able to do the activities described above, but are very often willing to execute them on behalf of the companies they do business with.

So what traits and capabilities should you look for in the customers you want to hire?

They're profitable.

This is not always obvious. Enterprise software firms were famous for signing big contracts generating lots of revenue with customers who turned out to cost more — due to demanding big discounts or excessive service levels — than the revenues they generated. Firms that failed to track the profitability of customers would have no clue there was a problem, until rapid growth stalled and costs caught up with revenues. A supposedly thriving, fast growth firm would suddenly find itself in danger of bankruptcy. Know which of your customers are profitable. For those who aren't, figure out how to make them so, or drop them.

Once you have a handle on their profitability, then look for additional ways they can contribute to your marketing, sales, and innovation efforts, and even help improve your operations.

They derive exceptional value in return.

An excellent, objective way to determine this is to ask customers the Net Promoter question in customer surveys: how likely would they be to recommend you to a colleague or friend. Customers who are highly likely to do so are not only more likely to remain loyal, but also have a positive story to tell to their network. Remember, your buyers find customers more persuasive than any sales rep and you need to put this to work. Even companies with a relatively low Net Promoter Score will still have a core of 25%-30% of their customers identify themselves as promoters. Allowing such a resource to lie fallow is a waste. "Hire" your promoters and help them to advocate for you

They like to affiliate with other customers and buyers.

Companies that build businesses in markets where buyers like to affiliate — or would like to do so if someone made this easy — can develop a whole new set of valuable customer "hires." Book readers, for example, love to form discussion groups. When a couple of bright entrepreneurs launched a vibrant, online community in 2007 to allow book readers from around the world to connect and talk about their favorite books — called Goodreads — the result became an 18 million-member community in just six and a half years. Jeff Bezos "hired" those customers to the tune of hundreds of millions of dollars, according to estimates.

Savvy firms such as SAS Institute working for government agencies have noticed the same thing. Conventional wisdom suggests it's impossible to get such customers to help in marketing and sales efforts due to legal restrictions against endorsing vendors. But government employees love to affiliate with each other, exchange ideas and contribute to the greater good that they collectively strive to represent. And the fact that they don't compete with each other removes a significant barrier to such sharing. So SAS and other companies help their best government customers do so by simply telling their story — "the good, the bad and the ugly" — to their colleagues in other government agencies. Such transparency often results in a more effective customer reference than you see in businesses who coach their references on what to say. That approach has allowed SAS institute over the past decade to win references from the US Departments of Treasury and Commerce, the Army, Navy, Air Force and Coast Guard, and dozens of other prominent state and local government agencies.

They're on the leading edge of their industry.

Business customers who are pushing boundaries, and perhaps disrupting, their own industries are highly attractive "hires." They'll push you to help keep them at the leading edge. And such customers are also more likely to let the world know what they're doing to stay on the leading edge — especially if they're striving for recognition against an entrenched competitor, which means they're more likely to talk about how you're helping them do so. Cisco, for example, was well known for doing this as it was building a position of dominance in the 1990s. Find such customers in your industry — and hire them.

Also look for individual customers who are on the leading edge and who, impatient for the functionality that they need from suppliers, are making their own modifications to your products. Most industries have such customers, and using straightforward networking tools they can fairly readily be found. Indeed, in today's connected world where an increasing number of products have software, it's even easier as hackers will get into the software to make modifications. Even Apple — notoriously closed to any independent vendors wanting to modify their platform — has embraced this trend by allowing apps on its devices today. (These now number in the hundreds of thousands. Try to imagine an iPhone without them.) In your industry, find such "lead user" customers who are making modifications, and hire them.

They want to perform services for your other customers.

Companies are unlocking tremendous new value from customers by, in effect, turning over the jobs they once assumed they had to do (and pay for) to their customers (who do them for free). This includes software firms whose more knowledgeable customers provide support services to other users, or technology firms whose "hacker" customers modify the products they buy, make them substantially better, and share their work with other customers and potential buyers.

This is an area of great creativity, as Frances Frei and Anne Morriss have shown. The "car sharing" firm, Zipcar, for example, is mounting an impressive challenge to the rental car industry. By having customers return cars to an agreed location, gassed up and clean, they eliminate the hassle of having to go to a car rental location, wait in line, and deal with hidden charges. All the next customer has to do is show up with his Zipcar card, swipe it across the windshield, and the door opens ready for him to drive it off.

These days, if all your customers are doing to build your business is paying you money, you're leaving a lot of value on the table.

How Story Platforms Help Global Brands Go Local

While the current turmoil in Cairo may obscure the post-revolutionary optimism that pervaded the city last winter, that mood was powerful at the time. Despite the chaos in the virtual absence of government, the metropolitan region of some 14 million was taken over in January by an Arabic pop music video urging people to "go crazy" by committing acts of kindness to spread happiness. The film, produced by Coca Cola, features street scenes of people being kind and happy in well-known Cairo locations. Locals say it perfectly reflected the hopefulness and optimism of Egypt's people as they embarked on the difficult path of building a new democracy.

This spring, when I spent 10 days working in Cairo, the catchy song was still on everyone's lips. Asked about the video, Egyptians uniformly identified it as a local production — a combination of an ad, a pop song, a documentary and an accurate social commentary on post-revolution Egypt. Despite the truth of most of these observations, "Go Crazy" is part of a global campaign originated for Coke by Ogilvy Brazil.

The Coke campaign is one example of what three prominent co-authors addressed in a March HBR post titled "Great Advertising is Both Local and Global." As they wrote:

"It's hard to create relevant and timely global advertising themes, positioning, and stories that reinforce the brand, appeal to consumers around the world, and can be creatively delivered through all touch points... One solution to this tension is to pursue what we call glocal advertising strategy — locally adapting a universally embraced core idea that will resonate in any market anywhere in the world."

Coke rolled out the "Go Crazy" campaign in numerous locales, including South America, Africa, the Middle East and the UK. In each place the central story was identical, but the executions were quite different in virtually every aspect — music, people, locations, focus.

When executed flawlessly, such global-local campaigns combine the power and efficiency of a single global brand with the targeted, culturally nuanced appeal of a localized execution. It's not easy to do, however. The key question for global brands is, "How can marketers pull it off consistently?"

The steep rise in digital media has meant that a logo and tagline are not nearly sufficient to provide consistent, relevant branding. What's needed, clearly, is a disciplined, repeatable process that enables a brand and its agencies to locate, define and craft consistent global narratives — truly compelling brand stories — that unite brand attributes and business goals with deep audience interests and passions.

Coca-Cola, following a well-defined global trend among savvy advertisers, declared in 2011 that it's marketing practice was going to shift to content creation. It has since become a leading example of how a global brand can clearly embody a single core narrative while telling many different stories. In Coke's case, the unitary narrative is about spreading and celebrating happiness and optimism. Coke can produce hundreds and thousands of local creative executions across the world precisely because it keeps telling stories based on one central narrative that unambiguously embodies the brand.

At my agency, Story Worldwide, we've been doing storytelling work with brands around the world for some 15 years. Our first effort at global storytelling began with Toyota's luxury division, Lexus, where the task was to create emotional connection for a very rational brand. In those days, merely defining what a "global story" should be involved a year-long debate. The clients entered that debate believing global content had to be delivered in exactly the same form everywhere in the world, not an unusual position for a company concerned with precision engineering. But the discussion continued until we had all agreed that a global story should be told differently in different countries and cultures because the real goal is to create the same impact and effect everywhere.

Eight years ago, we began calling these defining core brand narratives "Story Platforms" and we've created dozens of them for some of the world's biggest brands. We've created and honed a detailed process that discovers the core narrative of a brand and charts a clear path for turning the Story Platform into advertising executions in any culture on any media channel.

The process is built around research and collaborative workshop exercises and results in a final report that sets out the core story and shows how to build communications on the platform.

To understand why these platforms are so useful and powerful, it's first important to understand what they are not. A Story Platform is not a tagline; not a campaign strategy; not a piece of ad copy; not usually a consumer-facing line at all. Instead, it is the simplest expression of a core story that narrates the most powerful relationship between a brand and its audiences.

The power of a brand's Story Platform is that it is singular (there is never more than one), unchanging over long periods of time (outliving any campaign by orders of magnitude), differentiating (focused on what makes the brand unique for its audiences) and contains the authentic truth of the brand. It also defines what subject areas a brand can credibly create content around — the brand's "authority to publish." Using a Story Platform properly, brands and their agencies can build a huge variety of brand stories over a long period of time and every story will ladder up to the brand's core proposition.

Finding and building such a global narrative core begins with the kind of careful research that should be very familiar to branding agencies. The so-called ABCs of the brand — audience, brand and category (or competition) — have to be thoroughly probed and evaluated with the energy and bluntness of a team of investigative journalists and social scientists.

The research must establish a baseline of facts for a workshop that is designed to bring out the clients' unique narrative and emotional knowledge about the brand. The exercises used in the workshop are probably unfamiliar to traditional advertising practitioners because this is where narrative approaches — storytelling techniques — begin to take over. A metaphor exercise teases out a wide range of potential emotional connections to the brand. A session on customer journeys frames the ways in which audiences encounter the brand and its messages. The clients are asked to debate and select the brand's archetype so the brand as character and personality can begin to emerge. And so on. From the research and the output of these workshop exercises, we then create the Story Platform.

The number of workshop attendees must be limited to no more than 15 people. This is enough to create 3 to 4 breakout groups on any given question, but small enough to allow the entire group to hold meaningful conversations and debates. Just as important, the participants must not all come from marketing. They need to represent every part of the company that touches the brand — sales, operations, distribution, customer service and so on. Getting input from everyone not only improves the outcome, it also builds backing for the outcome across the enterprise. The workshop is not just a marketing exercise; it is also a political exercise, in the best sense of that word, building consensus around the brand story. That sort of enterprise-wide buy-in is absolutely crucial for success because a brand's story must be something that connects with internal as well as external audiences.

The marketing guru Seth Godin recently announced that content marketing "is all the marketing that's left." In a world of exploding channels and increasing consumer control over media, Godin is probably right. The definition of advertising is under enormous pressure to change and it is swinging to brand-owned content that tells a consistent brand story and fosters long-term relationships with audiences. In this new media world, locating a brand's global story and telling it in its most powerful local form is becoming the central mission of all marketers. Disciplined processes and storytelling techniques will help brands do this critical job successfully.

The Problem with Price Gouging Laws

When I meet people at parties, I'm often asked, "What do you do for a living?" After sharing that I help companies improve their pricing strategies, many smirk and flippantly retort, "Oh, ripping off the consumer." Sometimes, when I'm not in the mood to share my more benevolent philosophy of offering consumers a selection of pricing options, I simply reply, "As long as the product is not an absolute necessity, everyone always has the right to say 'no.'" This response seems to neutralize criticism and most people nod in agreement.

But what if products are absolute necessities, such as critical supplies after a natural disaster?

Many states have anti-gouging laws that curb price increases during disasters. In California, for instance, the maximum that retailers can raise prices after an emergency is 10%. Since this minimal upcharge won't effectively temper demand, limited supplies end up being rationed on a first-come, first-serve basis. While many view this policy as "fair," gouging laws have two key drawbacks:

Encourages Hoarding: Those lucky enough to be at the front of the line tend to buy more than they really need. These "just-in-case" purchases — an extra loaf of bread or perhaps filling up both cars with gas — exacerbate a shortage. In contrast, doubling the price will make customers think twice about buying another gallon of milk, for example, thus leaving supply for those who didn't arrive at dawn.

Discourages Businesses from Boosting Supplies: If prices are capped, there's little incentive for businesses to hustle to increase supplies. It's costly to find and transport extra products in hazardous conditions. If these extra costs eat up the profit associated with a fixed retail price, Adam Smith's invisible hand won't work; there's no financial carrot. As a society, we want incentives, for instance, that divert gas tanker trucks from neighboring unaffected states to disaster areas where fuel is in short supply.

A well-known gouging case involves the invisible hand actions of John Shepperson. After the Hurricane Katrina disaster, John bought 19 generators, rented a U-Haul truck, and drove 600 miles from Kentucky to Mississippi. In return for his efforts and risk, he hoped to sell the generators at double his purchase price. Instead, he was arrested for price gouging, spent 4 days in jail, and the generators were confiscated. It's a tricky issue: while Mr. Shepperson's morality can be debated, his initiative would have unequivocally added supply and made some people better off. We all are charitable, of course, but how many of you would have rented a truck and driven twelve hundred miles round trip to sell generators for the price you purchased them?

To be clear, I did not come up with the above points (hoarding, discourages boosting supplies) — economists commonly use them in price gouging discussions. In fact, I paraphrased these arguments from papers written by two economists associated with the Federal Trade Commission (a government agency whose mission includes preventing business practices that are unfair to consumers), David Meyer and Michael Salinger. It's interesting to note that a past FTC Chair, Deborah Majoras, is on record as being against Federal gouging laws.

This long-simmering "hold vs. raise prices" debate is polarizing. I've found that no amount of persuasive argument can change one's views. As a society, we are at stalemate on this issue. The good news is there is another option which bridges these two opposing points of views.

Consider the following hybrid policy. During states of emergency, price gouging laws go into effect. However, federal and state governments provide subsidizes to retailers on essential products such as gasoline, primary food stuffs, and relevant construction materials. This combination of price controls and subsidies yields a best of both worlds scenario during emergencies. Prices are kept in-check and just as importantly, there are financial incentives for retailers to entrepreneurially boost stocks.

How could this be implemented? Many states have tax holidays where certain products are not taxed. The same process/technology that identifies products sold at retailers which fit the tax holiday guidelines — and then reports it to governments so they aren't taxed — can be used to identify essential products sold during emergencies. This reporting will trigger subsidy payments.

Most politicians favor price gouging laws during a disaster over allowing market clearing prices — it's a safe and seemingly fairer pricing choice. As a consequence, shortages and the accompanying personal miseries/health risks are inevitable. While I am rarely a fan of government subsidies, in this case — when used in conjunction with price controls — they provide both a political and economic remedy to a life-affecting pricing dilemma.

One Microsoft. Four Ways to Integrate Fiefdoms.

One Ford. One Apple. Now one Microsoft. Last week, Microsoft CEO Steve Ballmer unveiled a restructuring designed to unite the organization behind a single strategy and create high-value experiences for their customers.

Many more organizational structure changes are likely to come. Why? Because digitization has passed power to the consumer, pressing companies to pull together their old decentralized profit and loss fiefdoms to produce experiences consumers find compelling. As Ballmer wrote in his memo to Microsoft employees, "We will see our product line holistically, not as a set of islands."



But changes in organizational structure get you only part way there. Ballmer acknowledged as much when he went on to say, "The final piece of the puzzle is how we work together."

Achieving speed and customer centricity depends on a crucial ingredient that's often missing: integration. It's the job of a leader to create it.

Integration has two parts to it. The first is to get various functional silos and P&L centers sharply aligned with the specifics of customer requirements. The second applies to the multiple channels a consumer might use as part of that experience — for example, for a bank these would include a website, an ATM, and the lobby of the local branch. The person in charge of online banking might want a different offering than the person leading the branch offices, just as an engineering head might want a different set of product features than a manufacturing VP. Integration means taking into account all of those points of view and making the right trade-offs to give consumers a total end-to-end experience better than the competition.

Structure divides; leaders integrate. Transforming an organization into a synchronized high speed decision-making body is no picnic. In my experience, only a few leaders, such as Ford's Alan Mulally and Apple's Steve Jobs, have succeeded in making this crucial transformation.

Leaders who want to adapt should consider the following lessons:

1. Understand that 2% of the people in your organization have tremendous impact on the other 98%. I call this the rule of 98/2. Silos have nurtured people with narrow expertise and perspective; so, in many companies, the 2% is ill-equipped for integration. Make sure the 2% have the distinctive skills and personality constructs required. These include the attitude and drive to deliver a winning customer proposition and the ability to synchronize different viewpoints and make the right trade-offs. Pay particular attention to the values of the decision makers. Collaboration must be in their blood. This is a difficult if not impossible shift for those who have been running their own show.

2. Design "integration mechanisms" and operate them with rigor. You as a leader must be hands-on in creating a rhythm for integration. In creating One Ford, Mulally brought his top team together every Thursday. Attendance was mandatory. Most of the team he inherited is intact, yet the divisiveness of fiefdoms that originated with Henry Ford has now disappeared. The weekly discussions have kept the team on the same page strategically and operationally. COO Mark Fields now runs this mechanism. Apple's consumer-friendly innovation and Wal-Mart's quick inventory and price adjustments were the result of similar mechanisms masterfully run by Steve Jobs and Sam Walton respectively.

3. Be sure key performance indicators and incentives reinforce synchronization and integration. Basing a portion of compensation on common goals fosters collaboration.



4. Cultures change when leaders repeatedly and consistently intervene to correct deviant behaviors. It requires discipline and skill to continually demonstrate the behaviors and values conducive to integration and to promptly resolve any underlying conflicts. Through joint work, attitudes get reshaped and energy gets created. Those who cannot adapt begin to opt out.

Companies that lack speed and fail to deliver the right consumer experience on a timely basis can go over the cliff very quickly, as some have already done. It is essential to build the new core capability of integration, starting from the CEO throughout the organization.

Free Coal in China's North Contributes to Lower Life Expectancy

Heavy reliance on coal for heating and manufacturing in China's north has contributed to a 55% higher level of disease-causing airborne particulates there than in the south, says The New York Times. The 184-micrograms-per-cubic-meter differential has health consequences: Life expectancy in the north drops 3 years for every additional 100 micrograms per cubic meter above the south's average. The Chinese government has for years maintained a policy of free coal for heating in the north.

Innovation Isn't an Idea Problem

When most organizations try to increase their innovation efforts, they always seem to start from the same assumption: "we need more ideas." They'll start talking about the need to "think outside the box" or "blue sky" thinking in order to find a few ideas that can turn into viable new products or systems. However, in most organizations, innovation isn't hampered by a lack of ideas, but rather a lack of noticing the good ideas already there.

It's not an idea problem; it's a recognition problem.

Consider some well-known examples from history. Kodak's research laboratory invented the first digital camera in 1975 but didn't pursue it. Instead they paid virtually no attention as Sony developed a different prototype and stole the future of digital photography out from underneath them. Xerox developed the first personal computer, but didn't invest enough in the technology and allowed Steve Jobs and Apple to snatch the opportunity away. The US Navy rejected 13 submissions from William S. Sims regarding an innovative new firing method. It wasn't until Sims appealed to President Theodore Roosevelt that his improved method was recognized.

These aren't just fun examples of smart people and established companies being hilariously wrong, they actually reflect a bias we all share — a bias against new and creative ideas when we're faced with even small amounts of uncertainty. That's the implications of a study published last year by a team of researchers led by Wharton's Jennifer Mueller. The research team divided participants into two groups and created a small level of uncertainty in one group by telling them they would be eligible for additional payment based on a random lottery of participants. The researchers didn't give many specifics around how their chance for additional payment would work, just that they would find out once the study was completed. It was hardly an earth-shattering proposition, but it was still enough to yield some feelings of uncertainty within the group.

The participants were then given two tests. The first test was designed to gauge their implicit perceptions about creativity and practicality. Participants were shown two sets of word pairs and asked to select their preferred phrase. The pairings were created by combining words that reflected creativity (novel, inventive, original) or words that reflected practicality (functional, useful, constructive) with words that conveyed a positive (good, sunshine, peace) or a negative (ugly, bad, rotten). So in each round, participants would chose their preference from phrases like "good original" or "bad practical." The second test was designed to explicitly survey their feelings toward new, creative ideas. In this test, participants were simply asked to rate their feelings toward creativity and practicality on a scale from 1 to 7.

The researchers found that those exposed to a small amount of uncertainty said they valued creativity, but actually favored the practical word pairings over the creative pairings. In a follow-up experiment published in the same paper, participants in the uncertainty condition were even presented a prototype for an innovative new running shoe and rated it as significantly less viable than the control group.

If such a negative bias against creativity is present in times of uncertainty, it might explain why so many notable innovations were initially rejected. The implications for today are particularly relevant, as few executives would claim that they're not working in an uncertain industry. The same uncertainty that triggers the need for companies to innovate may also be triggering executives to be rejecting the discoveries that could help them gain a competitive advantage. The ideas that could keep company alive are being killed too quickly.

One possible solution to this "idea killing" problem is to change the structure ideas have to move through. Instead of using the traditional hierarchy to find and approve ideas, the approval process could be spread across the whole organization. That's the approach Rhode Island-based Rite-Solutions has taken for almost a decade. Rite-Solutions has set up an "idea market" on their internal website where anyone can post an idea and list it as a "stock" on the market, called "Mutual Fun." Every employee is also given $10,000 in virtual currency to "invest" in ideas. In addition to the investment, employees also volunteer to work on project ideas they support. If an idea gathers enough support, the project is approved and everyone who supported it is given a share of the profits from the project. In just a few years, the program has already produced huge gains for the company, from small incremental changes to products in whole new industries. In its first year alone, the Mutual Fun accounted for 50 percent of the company's new business growth. More important than the immediate revenue, the idea market has created a culture where new ideas are recognized and developed throughout the entire company, a democratization of recognition.

In addition, it's a system based on the assumption that everyone in the company already has great ideas and the market just makes them better at finding those ideas. It's not an idea-solution; it's a recognition-solution.

Case Study: It's My Turn

It seemed as if there was never a good time for Susie Gordon and Antonio Barile to talk. The couple — co-owners of a Milan-based manufacturing company, Bottoni, and the parents of two girls, aged three and five — had their hands full.

"It's my turn to stir!" screamed Camilla, their youngest, after her sister, Lucia, grabbed the spoon from her hand. Antonio was helping the girls make pancakes with the mix their grandmother had brought during her last visit from the United States. He took the spoon and returned it to Camilla. Lucia immediately fell onto the floor in tears.

(Editor's Note: This fictionalized case study will appear in a forthcoming issue of Harvard Business Review, along with commentary from experts and readers. If you'd like your comment to be considered for publication, please be sure to include your full name, company or university affiliation, and email address.)

Antonio tried to ignore her. "So you said there was something you wanted to discuss?" he said to Susie, who was pouring a cup of coffee.

"Yes, but maybe we should wait until later, when it's quiet," Susie said over the girl's wails.



"That could be a month from now," Antonio said, smiling.

He grabbed a second wooden spoon from the drawer and handed it to Lucia, while Susie divided the batter into two bowls, so each girl could stir.

"So much for teaching them to share," she said. She paused, then launched into the speech she'd been mulling over for months and had finally perfected in the shower that morning. "I guess I'll just come right out and say it. I'm ready to go back to work. I'm feeling disconnected from the business, from our employees. I miss being in the thick of it. But it's not just about me. I really do think the company's at a stage where it could benefit from having an operations person running it. You've done a great job of hiring new managers, keeping our existing customers, and signing up new ones, but now we need to streamline our production and improve quality to meet their expectations. And the girls are at a good stage, too, much more self-reliant and active than they were even six months ago. It's a perfect time for their dad to take over."

"What are you saying?" Antonio said.

"I want to trade — like we planned," Susie answered.

"When?" he said, turning his attention to the pans on the stove.

"I was thinking October 1," she said.

Antonio spun around. "That's less than two weeks away!"

"Right, that seems like it would be enough transition time. I'm not a complete stranger to the business. Honestly, Antonio, why do you sound so surprised? This is the deal we made. I'd do some time home with the kids and then you would. And it's been five years."

"I'm five!" Lucia shouted.

"Yes, sweetie," Antonio said. Indeed, he and Susie had planned this all out over a long dinner just a few months before Lucia was born. Two years prior, they had left their respective jobs at Siemens and taken ownership of Bottoni, a family-run maker of buttons, snaps, zippers, and fasteners that supplied Italian clothing companies. They had bought the company with their own savings and some bank debt, but no investors, just them.

It was the realization of a dream they'd had ever since their days together at Insead: to find an entrepreneurial opportunity that would let them move back to Italy, closer to Antonio's family, and live a quieter life. And when they learned Susie was pregnant, they decided it would make perfect sense for Antonio to take the lead at Bottoni while Susie stayed home with their baby. He was a native speaker, understood the Italian work culture better, and had a background in sales. He could build the business, and Susie could lend her engineering expertise when needed. Then, when Susie was ready — or when the business needed her — she would step in and take over as CEO. Antonio had liked the idea of taking some time off to be a stay-at-home dad. They were all smiles and laughter over dinner that night.

Now, standing in their kitchen, Antonio looked shell-shocked and Susie seemed annoyed. "Is there a problem?" she asked, starting to raise her voice.

"Honey," Antonio said, "I'm not saying that I won't do it. I just need to think it through. I know we've talked about it off and on, but it didn't feel real until now. It would be such a big adjustment — for me, you, the girls, the employees —"

Antonio was interrupted by another scream. Camilla had stuck her spoon in Lucia's bowl, and Lucia had retaliated by smearing batter in Camilla's hair.

"Lucia Barile!" Susie said sternly. "Time out."

"Let's talk about this later?" Antonio said, scooping Camilla off the floor.

"OK," Susie said, "but soon."

It Wouldn't Work

A half hour later, Antonio was showered, dressed, and driving in his Fiat minivan to the Bottoni offices. He was relieved to be out of tantrum range and to have some quiet time to think.

Susie was right. They had an agreement. And he understood why she wanted him to honor it. She was a great manager, a great leader. He had loved watching her at Siemens — four promotions in four years. That's one of the many reasons he'd wanted to marry her, to buy a business with her. And there was no question Bottoni could benefit from having her take a more hands-on role, especially now with the customer base it had developed. The business was on stable footing.

But could he really follow through on their deal? Step down as CEO to become a stay-at-home dad?

He was already such an involved parent, far more so than his father had been or any of his friends were. He was always home by 5 PM, did all the grocery shopping and cooking, and made a point of never traveling on weekends.

And he was knocking it out of the park at work. He and Dante, the company's sales manager, had secured several huge accounts in the past year. They were an amazing team, and although Dante genuinely liked and respected Susie, he'd made it clear that he regarded Antonio as his only boss. He knew that most of the staff felt the same way.

Maybe they could split the workweek so they could both be home some days and at the office the others? Or find child care until the girls were in school?

He thought about his father, who had owned a business similar to Bottoni and warned him many times about making promises to his wife that he couldn't keep. At the time, Antonio thought his father was being a chauvinist and kept trying to explain that he was a different kind of Barile, one who actually wanted to be home with his kids. But his dad was right. He hadn't thought through how trading with Susie would actually feel when the time came.

Not the Easiest Job

Susie was relieved to have a moment to herself. The girls were playing in the yard, peacefully for the time being. She sat down at the kitchen table and opened her laptop. Alessandra, Bottoni's head of operations, had sent her some revised process sheets. They'd been talking about revamping the production line for the K1 fasteners. As she was looking over the details, she couldn't help feeling that this was what she'd gotten an MBA to do. She certainly hadn't gotten it so she could mediate between two squabbling children and wash piles of dishes. She felt like a cliché for being disillusioned with the life of a stay-at-home mom, but her work was important to her, and she didn't want to squeeze it into these stolen moments.

Bottoni needed her now, too. Alessandra, her closest confidant at work, told her so frequently. Antonio had done a fantastic job of transitioning the business from the former owner, bringing in new managers, growing the customer base, increasing prices, and paying down debt. But it was time for the technical and detail-oriented leader to step in. She was ready to up their quality and efficiency game. There was no way that Antonio could do that.

And besides, they had made an agreement. They'd shaken on it — as business partners, not spouses. How could Antonio even think of reneging?

Of course, she understood Lucia and Camilla could be tough. Who wouldn't find it easier to be at the office, drinking coffee, talking with other adults, being productive, getting positive feedback? But Antonio was a great dad, much more energetic and easygoing than she was. And they'd agreed that the girls could benefit from real day-to-day quality time with both parents before they went off to school to be shaped by teachers and friends.



Camilla came running in, claiming that she was starving. Of course it had only been an hour since breakfast, but Susie gave her an apple and sent her back outside. What was it her mother had said when she told her about the deal with Antonio? "Men can't plan for next week — never mind years from now." She'd urged Susie to stay at work, act like his equal from day one. But it was important to Susie to spend those early years with the girls; she wasn't second-guessing that decision. Yet maybe she was naive to think that it would be easy to step back into the company — and that Antonio wouldn't have any problem stepping out.

What's Fair Is Fair

Later that day, Antonio arrived at Varese Park, near the family's home. He heard Lucia's and Camilla's cries of "Papa! Papa!" before he saw them on the swing set. They both jumped off and ran to give him a hug. He found Susie on a nearby bench and was relieved to see her smiling.

"Now might be a better time to talk," he said, as the girls ran back to the swings.

"I don't know what there is to talk about," Susie said, her smile disappearing. "I've been thinking about it all day, and we had an agreement. This trade is something we both wanted."

"I've been thinking about it, too, and I'm not sure anymore. I'm not sure I'm ready."

"Of course, it seems scary. I get that. But so did moving to Italy, buying Bottoni, having kids. You always need me to nudge you into big decisions. So, here's your push."

"We have other options, though," he said. He'd talked about it with Dante earlier, and they had come up with the idea that he and Susie would share the position, be co-CEOs.



Susie shook her head. "That might look good on paper," she said, "but it would never work in reality. It would be too confusing. The staff would always be wondering who to go to, or even worse, they would just go to whoever they could get a better answer from. And where would the kids be in that scenario?"

"What about that day care where Adalina's kids go?" he suggested cautiously.

"No, no. That's not fair. You don't get to outsource parenting when it's your responsibility," she said. "We moved here and bought our own business so we could have a slower life, never have to work a 60-hour week again, and could take time off to be with our kids without any career repercussions for either of us. You're going to love being with the girls."

"You obviously don't." Antonio regretted the words as soon as they came out of his mouth.

"That cuts deep," Susie snapped. "Of course I do, but I also love working."

"So do I," Antonio fired back.

They sat there for a moment, both stewing.

"So what do we do?" he said. "It's clear we can't both get what we want. Why don't we ask the staff what they think? Or the girls?"

Susie knew better than to lay into him. Instead, she paused and took his hand in hers.

"Honey," she said, "this is up to us. And it's my turn."

Question: Should Susie and Antonio trade roles as they'd planned?

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Do Commodities Speculators Make Things Cost More?

Commodities trading, Adam Smith wrote in 1776, was a boon to efficiency and a foe to famine. It was also extremely unpopular, especially in years when harvests were poor (he was writing specifically of trading in corn).

The popular odium ... which attends it in years of scarcity, the only years in which it can be very profitable, renders people of character and fortune averse to enter into it; and millers, bakers, mealmen, and meal factors, together with a number of wretched hucksters, are almost the only middle people that ... come between the grower and the consumer.

Since then, trading in corn and other commodities has gained in respectability — thanks in part to arguments and evidence mustered by economists following in Smith's footsteps. But the suspicion that commodities trading is dominated by wretched hucksters or worse (I don't know what "mealmen" are, but they sure sound bad) has never gone away, with David Kocieniewski's epic examination in Sunday's New York Times of an aluminum storage business owned by Goldman Sachs offering the latest bit of evidence. Kocieniewski describes forklift drivers moving aluminum from warehouse to warehouse in Detroit to profit from rules set by an overseas metals exchange, while delivery times to actual users of aluminum have stretched to 16 months and aluminum prices have been pushed up by the equivalent of a tenth of a U.S. cent per aluminum can.

The article is less clear about what brought this on. Is it bad rules set by the London Metal Exchange? The involvement of banks such as Goldman and J.P. Morgan in the metals trade? Or is the problem simply that speculators have taken over the market for a crucial commodity?

It is certainly true that investors, dismayed at the prospect of low returns for stocks and bonds for years to come, have poured money into commodities over the past decade. Markets that existed mainly for the convenience of industry have become dominated by exchange-traded funds, hedge funds, and investment banks.

By Adam Smith's reasoning, this shouldn't be a bad thing — people of character, or at least fortune, are getting into the trade. And the consensus among economists has for decades been that commodity speculation clearly serves a useful purpose — so more of it can't hurt, right?

The evidence on this is, frustratingly, not nearly as conclusive as one might hope. The most famous studies have had to do with trading in onion futures, which the Chicago Mercantile Exchange launched in the 1940s and Congress banned in 1958 after a precipitous boom and bust. Agricultural economist Holbrook Working proposed at the time that this presented the opportunity for a natural experiment: if onion prices were more volatile in the absence of futures trading, then the trading probably served a useful economic purpose. If not, then maybe it didn't. The first post-ban study, published in 1963, did indeed find such an effect, and has since been cited widely by economists and editorialists. A 1973 followup, however, was inconclusive.

When economist David S. Jacks of Simon Fraser University reviewed this evidence a few years ago along with before-and-after data from when futures trading in various commodities started, he still concluded that "futures markets are systematically associated with lower levels of commodity price volatility." So, on balance, having a futures market appears better than not having a futures market.

What this doesn't tell us, however, is whether certain kinds of commodity futures and spot markets are better than others, or certain kinds of traders are better than others. There's at least some evidence from the great commodities boom of the past decade that the new dominance of financial investors has made a difference, and not necessarily for the better. Three recent research findings:



Marco J. Lombardi of the European Central Bank and Ine van Robays of Ghent University found that "financial investors did cause oil prices to significantly diverge from the level justified by oil supply and demand at specific points in time."

Lucia Juvenal and Ivan Petrella of the St. Louis Fed found that speculative forces began to drive oil prices in 2004, "which is when significant investment started to flow into commodity markets."

Ke Tang of Renmin University of China and Wei Xiong of Princeton University found that prices in non-energy commodities have begun to move in tandem with oil prices, and have become more volatile.

None of these studies blamed speculation for causing all or even most of the price movements. It seems pretty clear that the big rise in oil prices since 2003 has been driven by fundamental forces of supply and demand. But the new commodities market participants may have made things worse, as Kocieniewski's aluminum findings seem to show.

So what's the solution? I'm guessing it has something to do with adjusting the rules of the game. Commodities-trading rules and customs that date back to the pre-financial era may not fit the more aggressive tactics of hedge funds and investment banks. The London Metals Exchange is already in the midst of changing its warehousing rules, with hard-to-foresee consequences. The Commodity Futures Trading Commission has started using new powers granted it under the Dodd-Frank Act to go after traders whose behavior it deems abusive. And in general, we're in the early stages of a long struggle to put the financial sector back in the position of servant of the economy rather than its master.

Speculation is, on balance, a good thing. But more of it isn't necessarily always better — and it's too important to leave entirely in the hands of the wretched hucksters.