Marina Gorbis's Blog, page 1584

QR Codes Aren't Dead Yet

My favorite mobile device isn't my phone, my iPad, or my car. It's my Canon digital SLR camera. What makes that camera different from all the others Canon makes is not its serial number, but a QR code like the one on the left, called a TalkTag. Canon didn't put the code there. I did. For both of us.

Think of the TalkTag as a cloth on the table I've set between Canon and myself — a table across which we can both share whatever we like. (What matters is not the QR code, but the table itself. There are many other possible tablecloths, all of which can also be TalkTags. More about the QR code choice below.) For example, I can share links to all the photos I've shot with the camera, or notes to service people saying, "Be sure to fix the fracture in the eyepiece lens." Canon can share and update the owner's manual and service records, provide links to firmware updates, make lens recommendations, or share whatever makes sense for both of us.

In addition to Canon, other parties sitting at the camera's table might include the retailer, the repair center, and anybody else I welcome — such as the person who finds the camera if I lose it. If that person scans the QR code on my camera today, they will see a public-facing message saying it's my camera, with instructions for reaching me. (In fact this has already happened once.) Messages back and forth are also private and can take many forms, including texts, instant messages, email, phone calls, or whatever.

The camera's table sits in a virtual cloud, running on an operating system called CloudOS, which is programmed with KRL, or Kinetic Rule Language. The OS and the language are open-source, and the brainchildren of Phil Windley and his team at Kynetx, a start-up in Utah. Phil is the former CIO of Utah and a veteran entrepreneur with a Ph.D. in computer science. His ambition with CloudOS is not modest. "I want the products I buy to be under my control and connected to the companies that made and sold them, so we can keep each other informed, work together, and learn from each other."

As Phil sees it, this does not require that every product have built-in smarts, but that they have their own clouds in virtual space — clouds accessible through TalkTags. These clouds can be as smart or as dumb as we need them to be. If manufacturers are also smart, they'll put a TalkTag QR code next to the serial number. That way they set the table for a two-way relationship with the customer — a table the customer will buy along with the product.

The manufacturer, in fact, can make that table an integral part of the experience of owning the product — especially if the company actually listens to the customer, and engages in respectful dialog with the customer.

Now, about QR codes. Most of us are familiar with them as marketing gimmicks: "robot barf" in the corners of ads. But those gimmicks are early experiments, like much of what we saw with domain names and URLs in 1995. In fact there is no limit to what QR codes can do. Denso Wave, which owns the patents on QR codes, chooses not to exercise them, and they are already an ISO standard. As a result, QR codes are free to generate boundless uses, such as the one I describe here.

What actually matters here is that products become platforms for relationships, rather than just a SKU deposited at the end of a distribution chain.

My camera's cloud is just one among many others in my personal cloud. Think of my personal cloud as "The Internet of Me and My Things," containing the clouds of everything I own. TalkTags on my things give me a table to talk across with the companies that made or sold me those things.

This makes the personal cloud a platform for VRM (Vendor Relationship Management). VRM lets customers scale many relationships with many companies, the same way a company can scale many relationships with many customers through its CRM (Customer Relationship Management) systems. When the two connect, CRM for the first time becomes a way for a company to truly relate, directly, with customers. That is, talk to them, two-way, as equals. This will prove far more useful than today's CRM techniques, which are conversational only in the scripted and controlling manner of call centers.

Once products themselves become platforms for relationships, companies will get much better market intelligence, in addition to genuine loyalty. And once personal clouds (and components such as TalkTags) become widespread and standardized, all CRM systems will have one simple way to relate to customers, rather than as many different ways as there are companies in the world. (Which today is another severe inconvenience for customers and companies alike.)

This will cause a profound shift in the marketplace: one in which relationships between demand and supply become both personal and real — also, live and mobile.

Cloudstore, Kynetx, Personal, Respect Network and other personal cloud developers are committed to making these clouds as open and interoperable as possible, so the network effects will be as vast and uncontained as what we got from the PC, the internet, and the smartphone, when each of those grew from niche to mass adoption.

And, just as the PC, the internet, and the smartphone led to more personal empowerment and freedom and opened vast new marketplaces, "The Internet of Me and My Things" will do the same. The difference this time is that every product can become a platform — for real relationships, rather than relationships in name only.

Innovations in Digital and Mobile Marketing
An HBR Insight Center





Don't Let Paper Paradigms Drive Your Digital Strategy
If Your Mobile Strategy Can Win Here, It Can Win Anywhere
When Personalized Ads Really Work
How Advertisers Can Maximize Mobile Conversions

Reverse Innovation in Tech Startups: The Story of Capillary Technologies

At its core, reverse innovation describes solutions adopted first in poorer, emerging nations that subsequently—and disruptively—find a market in richer, developed nations. But can reverse innovation be relevant in the world of high-technology? The very definition of "high-technology" hints at something typically reserved for the developed world. Furthermore, for the past half-century, technology solutions have inevitably come from developed nations and occasionally "trickled down" to the emerging markets.

However, the story of Capillary Technologies portends a global shift of technology "trickling up" in the opposite direction. In 2009, two bright, young entrepreneurs in India saw a key pain point with local retailers, who had no ability to engage with their existing customers. So they developed an "emerging market" technology solution centered on mobile phone text messaging and low-cost cloud server networks. This new solution enabled retailers to better understand their customers, track their behavior, and deliver personalized offers based on Capillary's predictive analytics capability. As an example, Raymonds, a famous clothing retailer in India, utilized Capillary's solution to create a sophisticated mobile loyalty program for 1.6 million customers without using any paper forms or plastic loyalty cards.

Capillary grew their business rapidly across India and other emerging nations, generating solid revenues. Capillary's connection to local retailers also helped them understand the deeper needs of their existing customers. This enabled them to build a full CRM (customer relationship management) solutions suite, specifically targeted towards retailers, that included associate applications, analytics, tablet/smartphone applications, and social components.

In 2011, Capillary began looking beyond emerging markets for further growth. They discovered that many of the retailers in developed nations had similar pain points as their existing retail customers. More interestingly, they realized that the retail software solutions available in developed markets were far too complex and expensive for most retailers' segments compared with Capillary's simpler, bottoms-up CRM based-solution.

They quickly found traction in developed nations. Retailers liked several aspects of Capillary's solution: it elegantly focused on their core pain points, was not cumbersome to deploy, and was available on an affordable pay-as-you-go monthly pricing model with no upfront licensing fees. These disruptive advantages were primarily feasible because Capillary had initially designed, built, and deployed a cutting-edge "Big Data" solution—typically associated with developed nations—in an emerging nation.

Capillary now powers more than 10,000 stores globally for over 140 brands servicing more than 50 million consumers across 16 countries. Clients include Marks & Spencer, Nokia, Brooke Bros, Courts, Puma, Neilson, and Pizza Hut. In fact, Pizza Hut leveraged Capillary's predictive intelligence technology to drive purchases via targeted, real-time CRM campaigns across 17,000 unique customer clusters.

Capillary's case study illustrates that focused high-tech solutions can now be designed, deployed, and fine-tuned cost-effectively in emerging market nations. These "tried and tested" solutions are ripe for disrupting various developed-nation market segments with shorter deployment times and lower cost structures. Capillary could very well be at the forefront of a reverse innovation trend in the high-tech startup sector.

Math Anxiety Affects Consumer Preferences for Discounts

People who suffer from math anxiety prefer easier-to-process dollar discounts ("$10 off the regular price of $50") over percentage discounts ("20% off") and sometimes make suboptimal decisions because of that preference, says a team led by Rajneesh Suri of Drexel University. The math-anxiety effect gets worse when consumers are more highly motivated to process information, such as when a reward is offered. Math anxiety is a condition in which people fear situations requiring the use of math skills and harbor worrisome thoughts about math.

Why LGBT Employees Need Workplace Allies

In 2011, Susan Wolford, a Los Angeles-based wealth advisor for Morgan Stanley, got an extraordinary referral. The beneficiary of a large estate wanted to meet with her to discuss managing her investments specifically because Wolford was accredited in domestic-partner tax and estate planning — and openly gay. The potential client made it very clear that "she wants someone who might deal with her and her partner in an all-encompassing way," the referring attorney told Wolford. Wolford's consultancy earns one percent on assets it manages, so the client's decision to go with her group amounted to a substantial sum — quite a testament to the power of being out in the workplace.

Corporations and individuals are increasingly embracing lesbian, gay, bisexual and transgender (LGBT) status as an emerging career asset. The United States Congress is also moving to endorse the value of "out." This past April, bipartisan coalitions in the House and Senate introduced a new version of the Employment Non-Discrimination Act (ENDA) that would prohibit job discrimination based on sexual orientation and gender identity. The Senate is scheduled to begin discussions on the bill in early July.

Recent research from the Center for Talent Innovation, a New York-based think tank where I serve as president, details the benefits of an inclusive work environment. For lesbian, gay, bisexual and transgender (LGBT) employees, feeling comfortable about being out at work opens up access to business opportunities like Wolford's as well as platforms on which to exercise leadership. In addition, CTI survey results found that 15% of men and 10% of women believe they've expanded their networks thanks to their LGBT status. By joining internal employee resource groups or participating in LGBT fundraisers or philanthropic endeavors, they were able to mingle with senior leaders they might otherwise never have met and leverage those relationships.

Most important, out employees are better able to gain the attention and advocacy of their superiors. Sponsorship, as we've explained in HBR articles and blogs, lends enormous traction to any ambitious person's career. Among LGBT individuals, those without powerful backers, whether heterosexual or gay themselves, are far more likely to feel stalled in their careers, unrecognized for their talents, and lacking in career development opportunities. By contrast, those with sponsors are much more likely to report that they are being promoted quickly, are satisfied with their rate of promotion, and are moving up through the hierarchy of their industries.

LGBT employees aren't the only beneficiaries of an inclusive workplace; employers benefit, too. In 2012, LGBT adults in the U.S. represented $790 billion in total buying power, making them a market force companies can't afford to overlook. Inclusive companies find that publicizing their support of LGBT equality boosts their standing among consumers across the board: 71% of LGBT adults said they are likely to remain loyal to a brand they believe to be very friendly to the LGBT community even when less friendly companies may offer lower prices or be more convenient. Further, three-quarters of heterosexuals and 87% of LGBTs said they would consider choosing a brand known to provide equal workplace benefits.

Yet despite advances in workplace acceptance, over 40% of LGBT workers remain closeted at the office.

And even though LGBT employees, both in and out of the closet, are every bit as ambitious and motivated to succeed as their heterosexual peers, because closeted LBGT employees feel so much more dissatisfied with their career paths, they are much more likely to have one foot out the door. CTI research found that those who are unhappy with their rate of promotion or advancement are at least three times more likely than those who are satisfied to plan to leave their company within the next year. LGBTs who feel isolated at work — in other words, closeted LGBT employees burdened with the daily stress of keeping their private life secret from their colleagues — are 73% more likely than their out peers to say they intend to jump ship within the next three years.

What makes work a place where LGBT talent can thrive? Allies — people who support or work as LGBT advocates — play a decisive role in creating an open community where individuals are comfortable being themselves. In fact, 24% of LGBT workers surveyed attribute their decision to come out professionally to a strong network of allies. However, although the ally phenomenon is widespread and growing, few men and women qualify as "active allies," that is, those who openly support LGBT colleagues at work.

Increasing those percentages is directly tied to the growth of the out LGBT population and the war for talent. As more people come out, more of the heterosexuals who know them wish to lend their support. One of the driving forces for allies voicing their support is the realization that LGBT high-performers simply won't stay with a company that doesn't make them feel welcome.

"If we want to recruit and retain the best talent out there, we have a responsibility to make this a place where everyone feels comfortable," says Eric Jordan, an active ally at Goldman Sachs, whose CEO, Lloyd Blankfein, became Wall Street's highest-ranking ally when he created a video in support of same-sex marriage in early 2012. "Along with being the right thing to do, the business case for diversity is real and we want to be able to attract and keep the best people."

To Guide Difficult Conversations, Try Using Compassion

"Oh no, here comes another one of those conversations," you say to yourself.

You know what I'm talking about — we all have to face them from time to time, and they can be the bane of a leader's existence. Imagine that you're leading a project and one member of your group has been aggressive and counterproductive in team meetings recently. The first time you saw this behavior, you were stunned. It seemed so out of character that you let it pass. After all, even good people indulge in bad behavior now and then.

But the next week, the same thing happened. Now you've just experienced the third outburst, and you can see the rest of the team losing patience. If this behavior continues, you risk losing the esprit de corps that you've worked so hard to create. The very idea of confronting this aggressive person fills you with anxiety and dread, but the longer this goes on, the greater the damage. So how can you go about addressing this situation?

Several years ago, I faced a similar scenario that was especially tricky because the person who was disrupting my project was senior to me in the organization. I couldn't let him continue to undermine my group's work, but this was a powerful person, and inflaming him further would be dangerous. So I dug deep into my experience and thought of something unexpected that just might work: compassion.

As a student of meditation, I've researched many traditions and have always been intrigued by the Tibetan Buddhist practice of compassion, which is based on the recognition that everyone suffers and has a desire to relieve that suffering.

Regarding my colleague, I thought: He wouldn't be acting like this if he weren't suffering in some way. He must be threatened, worried, or offended. If I can confront his behavior with compassion rather than confronting him, we just might be able to have a productive conversation.

So off I went to his office. "This project seems to have struck a nerve with you, and you've made your discomfort very clear," I said. "Your support has always meant so much to me personally and professionally. I'm sorry if I've done something to upset you. Can we talk about what is bothering you and try to find a solution?"

To my surprise, he began a 20-minute rant about how angry he was with one of his superiors, who had undermined his ability to get traction on a project that he was leading. As we discussed his situation, it became clear to both of us that his acting out in my meetings was really due to his anger with this other individual. As I started to take some deep breaths to relieve the tension from this intense conversation, my senior colleague thanked me for listening and helping him to see that he needed to confront his senior colleague's behavior. At the very next meeting of my project team, he was back to his collaborative, witty self, and he has contributed productively ever since.

Will practicing compassion guarantee this result? Likely not. But cultivating an intention to reduce a colleague's suffering and to address the offending behavior as the symptom of a larger problem can create a graceful, non-confrontational way to begin a dialogue that may well result in a workable solution. By contrast, when you accuse your colleague (or friend or family member) of some nefarious intent, you put that person on the defensive, which will likely perpetuate the negative behaviors.

Here's an action plan:

When someone in the workplace (or anyone in your life, for that matter) is acting in a counterproductive manner, take a step back and ask yourself what might be motivating that behavior.

Recognize that if the person is acting that way, he or she may be suffering somehow.

Take the time to think about what might be causing this negativity.

Approach the other person with a genuine desire to help reduce the suffering and to find common, constructive ground to move forward.

The word compassion has the word compass embedded in it. Even though, etymologically speaking, there is no linguistic significance to the similarity, I still think it's wise to use compassion as your guide when dealing with others. What better compass is there to help you navigate your team through the storm of bad behavior and stay on course to reach your destination?

Compassion is also a great equalizer. When you approach others with genuine concern for their well-being, your standing in the organizational hierarchy is less of a barrier to a productive conversation.

Kindness, in other words, is rarely inappropriate.

Mobile Shopping's Data Goldmine

Mobile shopping is here to stay whether retailers like it or not. Some 44% of shoppers use their smartphones while they're shopping; more than a third of them are comparing prices. The impact of mobile research can be profound, affecting the buying behavior of nearly 90% of mobile shoppers, according to our research.

But retailers shouldn't despair when shoppers whip out their smartphones among the product displays. Smartphones could be a retailer's best friend not just because they can open up new buying opportunities. We believe that the smartphones' greatest benefit for retailers is that they provide a treasure trove of insights into customers' in-store behavior.

Stores need to create incentives for shoppers to go mobile — by offering value, convenience, or, ideally, both while protecting privacy — so that shoppers will share their info.

Despite the well-publicized fears of companies abusing personal information, we've found that some 35% of online buyers are willing to share personal information in return for targeted offers, such as promotional coupons. And these people tend to be from the wealthiest group online.

We see three areas where mobile shopping can provide the richest insights for brick and mortar retailers:



Optimizing in-store shopping

We know that 36% of shoppers who go online in stores are actually visiting the retailer's own app or mobile site (it's the single most common in-store use of smartphones). But what do shoppers do when they're in your store? Qualitative primary research has helped answer those questions, but smartphones can provide another level of insight, through in-store data. Smartphone WiFi signals can be tracked to determine how long and where in the store customers shop. Wal-Mart, for example, has an app that senses when customers enter a store and suggests switching their phone to "store mode." In this mode, shoppers can interact with special QR signage located throughout stores to access useful product information. Wal-Mart, in turn, is able to track their in-store behavior. If sales of a certain item are slow, tracking can show whether customers are skipping the aisle entirely or looking at the product but not buying it so that store owners can make product placement or other adjustments.

The effort is clearly paying off: on average, customers who use the Wal-Mart app make two additional visits to the store each month and spend 40% more than their app-free counterparts.

Using coupons to link Internet behavior with in-store shopping lets retailers figure out which ad slogans or online product promotions work best, how long someone waits between searching and shopping, and even what offers a shopper will respond to or ignore. Mobile couponing, in fact, is a fairly simple way to get into mobile analytics.

Powering frontline sales



Enter almost any store and you immediately notice an imbalance of power: customers are outfitted with the latest mobile devices, while sales staff have no electronic equipment beyond the register. But the most innovative retailers are increasingly putting the power of mobile technology in the hands of sales associates. With smartphones and tablets, they can demonstrate how products work or immerse customers in interactive mobile environments.

The approach can be as simple as training staff to guide customers through existing tools. The Furnish app, for example, allows users to see how furniture would look in their homes. Salespeople can help users order products that are out of stock, which also helps to educate customers on how to use the store's mobile site. Some 20% of Burberry's total sales are on iPads, and half of these are from staff iPads in store. By engaging in activities like these, salespeople shift into the role of helping customers rather than simply selling to them.

This digital empowerment shouldn't stop at the sale. Salespeople can also use these devices to fill in short surveys about customers, such as what their interests are, recommendations for products, and new ideas to improve the retail experience. One hotel chain with a reputation for great customer service has staff fill in a brief survey after interactions with guests.

Lifeline for future sales

Smartphones have created an important lifeline that tethers the shopper to the store even after he or she has left. Retailers need to use this lifeline to pull shoppers back into the store. Walgreens has an app, for example, that provides reminders to shoppers to take their medications, as well as options to refill their prescriptions by scanning the bar code with their phones. Retailers need to go further, however, to integrate mobile behavior into customer lifecycle management programs. Segment analysis of shoppers who return because of a reminder or a coupon will reveal which customers are loyal and spend the most versus those who are opportunistic or who don't spend much. Next-product-to-buy analysis is also critical for getting "local" right. A random blast of coupons at someone walking by a store won't be effective. But tailored offerings based on predictions of most likely next purchases will provide a much higher win rate. A recent development called "geo-conquesting" means that retailers can provide this kind of triggered service near competitors' stores as well. Early pilots indicate an increase in foot traffic to the conquestors' stores.

In return for a useful service that adds value, shoppers are willing to share their mobile information with a brand they trust. That should be music to retailers' ears.

Innovations in Digital and Mobile Marketing
An HBR Insight Center





Don't Let Paper Paradigms Drive Your Digital Strategy
If Your Mobile Strategy Can Win Here, It Can Win Anywhere
When Personalized Ads Really Work
How Advertisers Can Maximize Mobile Conversions

Use Tension and Conflict to Create Breakthrough Products

I've written before about the science that helps explain why and how constraints and limits, often in the form of intelligent, well-set stretch goals, result in more creative solutions.

Too often, though, managers set what appears to be a good stretch goal, only to discover that it did not produce the hoped-for innovative thinking. One common reason for this is that the goal was in fact not "stretch" enough. When I ask executives what they consider "stretch," I commonly hear about 5% to 10% increments in improvement.

That's not stretch enough, because a 5%-10% improvement often translates to people working harder and longer. A 25% improvement, though, while audacious and arduous, can rarely be met simply by sweating more. It demands innovative thinking.

Many executives are afraid to set such a high bar, however, for fear that some other area of the business will be compromised. That's a very real danger. But there's a technique that prevents compromise: intentional goal conflict.

To illustrate how intentional goal conflict can product breakthroughs, consider these

two examples of innovation — one product, one process — drawn from the annals of innovation at Toyota:

1. Product Innovation: The Lexus

When Toyota's Ichiro Suzuki, chief engineer for the secret project that would become the first Lexus, issued the challenge to produce a luxury performance sedan that would beat the best luxury sedans — BMW 735i and Mercedes 420SEL — across the board in comfort, styling, performance, handling, cabin noise, aerodynamics, weight, fuel efficiency, and cost, the reaction from 1,400 engineers and 3,700 designers was unanimous: Impossible!

Suzuki's goals included a top speed of 155 miles per hour (735i and 420SEL topped out at under 140), 22.5 miles per gallon (735i and 420SEL got less than 20), a cabin noise level of 58 decibels at 60 mph (735i and 420SEL were over 60), and an aerodynamic drag of 0.29 or less (735i and 420SEL were over 0.32), all in a vehicle weighing 80 pounds less than the 3,880-pound 735i.

Not only were the goals impossibly high; they all conflicted. For example, greater speed and acceleration conflicts directly with fuel efficiency, noise, and weight, because higher speed and acceleration require a more powerful engine. A more powerful engine is a bigger and heavier engine, and so it makes more noise and consumes more fuel.

But Ichiro Suzuki's war cry was naukatsu, Japanese for "never compromise."

The project demanded rethinking the entire concept of what automotive luxury performance meant. And one by one, the innovations came. Many mechanical components were completely redesigned. For example, the propeller shaft, originally in two parts connected by an angled knuckle, was replaced by a perfectly straight one, enabling a nearly silent cabin.

Contradictions began to be reframed as complementary. For example, aesthetics and aerodynamics could complement each other, by fitting window glass and door handles into the metal itself, producing a cleaner look and better airflow.

When the Lexus LS400 made its debut in 1989, it trumped the BMW 735i and Mercedes 420SEL in every category rated by Car and Driver. And for $30,000 less.

2. Process Innovation: Supply Chain

Toyota's North American Parts Organization, an auto parts distribution division serving 1,200 retailers, accomplished a similarly impossible mission not long ago in their supply chain processes.

A newly-appointed general manager set a three-part stretch goal for the $2 billion dollar unit: reduce operating costs by $100 million, remove $100 million of inventory from the supply chain, and achieve a 50% improvement in customer service. She stunned her eighty or so senior managers by telling them she wanted these goals met in three years.

Again, cries of "Impossible!" rang out.

And again, no compromise. Putting their heads together, the managers arrived at ten key objectives that needed to be met in order to accomplish the mission:

Reduce inventory by 50%
Decrease backorders by 50%
Reduce packaging expense by 50%
Reduce damage by 50%.
Increase throughput by 25%
Improve safety/decrease errors by 50%
Increase space utilization by 25%
Decrease landfill usage by 25%
Reduce freight costs by 25%
Decrease lead time by 40%

These targets were audacious, to say the least. Such a high bar had never been attempted in the division. But the more aggressive targets actually engaged people's brains in new ways and forced them to rethink and redesign processes.

The real secret, though, lies in a hidden dimension to how the goals were set. The ultimate mission of the initiative was to optimize the entire supply chain, but there are inherent conflicts existing between and among the various natural functions of any supply chain. The real art of the strategy was in recognizing those tensions, calling attention to them, and capitalizing on them to power new thinking and drive collaboration.

At first glance, the list of ten objectives seems like a simple master wish list. But take a second look. See if you can spot the tension points.

Here's a hint. Take a look at the first two targets, inventory and backorders. In most supply chains, they're opposite sides of the same coin. Increase inventory, and backorders drop. Decrease it, and backorders generally rise. So management brilliantly, yet counterintuitively, paired the two, pitting one against the other in order to generate creative tension.

If you look back at the list above, you'll see that the ten targets are really five pairs of two conflicting goals. This simple graphic helps visualize the pairings:

Not all of the stretch goals were met, but the organization came close enough: $100 million in cost savings, $90 million taken out of inventory, and nearly 40% improvement in customer service.

These two examples illustrate why you want your team to believe that their reach can and should exceed their grasp. "Impossible" and "out of your mind" can signal impending breakthrough. Innovative thinkers thrive on seemingly impossible targets. They hold the tension between conflicting goals, and use it as creative fuel.

After all, breakthroughs demand something to break through.

Research: Your Firm Probably Isn't an Equal Opportunity Employer

Anyone who has hiring responsibilities in 2013 would like to think that the U.S. is tackling diversity head-on. But how far have American companies really come? We have been examining what has happened to equal opportunity in the private sector since the Civil Rights Act of 1964. Our data show that progress has stalled, many firms are showing signs of increased gender and racial employment segregation, and few firms monitor equal employment opportunity progress.

The reality is that while your company may manage diversity, it probably doesn't hold anyone accountable for whether your applicants and employees are treated fairly and without regard to gender, race, and ethnicity in hiring and promotion decisions.

Before 1964, employment segregation and discrimination were legal in U.S. workplaces. Black and white workers almost never worked in the same jobs in the same workplaces, and women of all races tended to be clustered in low status, low pay jobs. White males held almost all managerial and professional jobs, as well as most high-skill production jobs.

When Congress passed the Civil Rights Act in 1964, it also created the U.S. Equal Employment Opportunity Commission (EEOC) to monitor progress and authorized the EEOC to collect annual data on race, gender, and the occupational composition of medium and large private sector workplaces. These are the data we analyzed.

What we found is that nearly all of the progress in private sector equal opportunity — in both federal contracting firms (those subject to affirmative action) and non-contracting firms — was made before 1980. CEO-backed affirmative action in particular provided significant benefits for blacks and women prior to 1980, stalled in the 1980s, and many indicators of employment integration into good jobs for blacks and women have worsened since the 1990s. Although workplaces continue to become less white and less male than they once were, desegregation — employment in the same jobs in the same workplaces with white men — has stalled, and minority and female access to managerial and high skilled production jobs have plateaued as well.

So why did equal employment progress stop? We see two primary reasons. The first is tied to national efforts to pressure firms to regulate equal opportunity. The second is related to what is currently happening (or not happening) in your workplace.

Starting in the late 1970s, there was growing white resentment in the courts regarding affirmative action and "reverse discrimination" in employment and education (see McDonald v. Santa Fe Transport and Regents of the University of California v. Bakke). And after the 1980 presidential election, the Reagan administration rolled out a deregulation agenda that included reducing the organizational capacity of the EEOC and the Department of Labor's Office of Federal Contract Compliance to monitor and enforce equal employment opportunity legislation. Thus, federal court appointments began to interpret discrimination law more narrowly.

These shifts in the political and legal environments removed the political pressure on politicians and CEOs to address discrimination and practice affirmative action. And as political pressure for equal employment opportunity waned, so did private sector vigilance and progress. Indeed, many human resource managers who had hung their professional hats on affirmative action in the 1960s and 1970s rebranded their focus as "Diversity Management." What we show in our book, and others have shown in recent research, is that diversity management alone does not promote racial and gender integration or equal employment opportunity gains.

Today only about 1 in 6 firms hold their managers accountable for the progress of women or minorities in their workplaces. Instead, most firms rely on symbolic public commitments to equal opportunity, occasional diversity training, and defensive legal responses to discrimination complaints as their core diversity practices.

What's wrong with these approaches?

Diversity training often produces as much or more backlash as understanding and may increase discrimination claims and lawsuits. Defending discrimination lawsuits teaches your firm how to discriminate without consequence, in addition to producing little change. What would you find if you checked the employment statistics for departments in your firm that were involved in a discrimination lawsuit five years ago? The odds are that diversity is no better, and probably worse, than before you were sued.

Altogether, most firms are in the business of "managing" diversity, not promoting equal opportunity. Companies now celebrate the promotion of the occasional minority into senior management, but ignore hiring patterns or the turnover of talented people at lower levels. Resegregation is occurring because firms are failing to monitor progress toward equal opportunity.

But it's not as if companies don't know how to do this. How does your company innovate and achieve revenue or productivity gains? The odds are quite good that you set benchmarks and hold people accountable. The odds are also good that your firm's equal opportunity policy doesn't do either.

Despite the absence of regulatory pressure from the federal government or from social movements, many firms continue to embrace the idea of equal opportunity because they value both diversity and fairness. Diversity can lead to a wider range of ideas and problem solving strategies. Importantly for your firm, the U.S. is increasingly becoming a majority-minority country, and you probably will need to deal with real, rather than symbolic, equal opportunity sooner or later. As any good manager knows, embracing an idea is not the same as setting a goal.

Your company no doubt has a strong equal opportunity commitment in your employee handbook and on the company website. You may be thinking, "My firm truly values diversity, certainly my company can't be getting worse." How does your company measure equal employment opportunity? What does diversity progress look like? What benchmarks do you have in place? Without asking these questions, companies are unlikely to truly create equal opportunity environments — environments that are well worth embracing.

Is Anyone Really Responsible for Your Company's Data Security?

Protecting a company's critical information is a value proposition. Trade secrets, confidential business plans, and operational security depend on it. Losing that kind of information can mean a plunge in stock price and market share. So who's responsible for information security in your company?

To find out, I like to ask questions. But when I put the question to top management, well, they're busy — not their problem, that's for sure — and they refer me to the chief information office or the chief technology officer. So I knock on their doors and put the same question to them. Our job, they say, is making stuff work. If the stuff doesn't work, that's our fault. But security? They refer me to the chief information security officer, but she works for the CIO, who doesn't much like to hear what's wrong with the system he built. Besides, she says, I have nothing to do with who gets access to the system. I don't write the rules. And (she looks around nervously: you won't quote me on this, will you?) my budget is a joke.

So I walk down the hall and knock on the general counsel's door. Cyber security my problem? he says. No, no, he laughs; I write the contracts that lay off the liability for cyber security on our contractors. And insofar as some of that liability stays here, it's a technical problem.

Who's left? I walk down the hall and visit the HR director, who is trying hard to conceal her opinion that, for asking her whether she has any responsibility for any kind of security, I must be the stupidest guy on Earth. Nevertheless I persist. You control the HR manual, don't you? She does. And the manual contains lots of access rules, doesn't it? She concedes the point. And weren't you the chief opponent of the CISO's plan to require a click-through log-on banner stating that information on the company's IT system belongs to the company and can be monitored? Suddenly she remembers her next appointment.

Try the experiment in your company. If you get answers like this, it means that nobody in your company is responsible for information security. The truth is, unless all these people understand they own a piece of the problem and can be brought to deal with it together, you cannot manage information security.

Verizon's newest data breach investigations report for 2013 tells us — yet again — that cyber security depends on people as much as technology. Breaches are nearly always caused by multiple factors, and people are nearly always one of them. In this latest report, based on a larger-than-ever sample, 29% of breaches involved social tactics like getting employees to click on fake emails (phishing). And gullible employees aren't the only problem. Year after year Verizon has been reporting that most intrusions — 78% this year — are "low difficulty" and could have been prevented by simple or mid-level security measures. Failure to implement patches for weeks and months on end is a common problem. This is a management failure, not a technological problem.

When intruders get in to corporate systems, they tend to stay in. We still see smash-and-grab hacks, mostly after personal information, but they are becoming less common, especially when the goal is stealing corporate information. Most breaches take time to discover — usually months rather than weeks, and sometimes longer. In a major release early this year, the forensic firm Mandiant reported solid massive Chinese hacking of private sector clients — and showed that the median period of the intrusion was nearly a year. Often such breaches are discovered only by third parties — like the FBI or the media. Not a pleasant experience.

So why do so many companies treat cyber security as merely a technical problem that can be pushed down into the IT department?

Cyber security involves legal issues, human resources practices and policies, operational configurations, and technical expertise. But while each of these silo chieftains — the general counsel, the HR director, the chief operations officer, and the IT director — owns a piece of the problem, some of them don't know it, and none of them owns the whole thing. This makes information security a risk management and governance challenge, because unless these people attack the challenge together under a C-suite mandate, it can't be managed effectively. Unfortunately this rarely happens.

Information security cannot involve not locking down information that must move quickly. It does involve figuring out where information must move, and where it must not move. And above all, it means making rules that don't stifle creativity in the business. Protecting critical information protects corporate value and is a core responsibility of the board and executive management. Best-in class companies view information security as a value proposition — not merely as a deduction from the bottom line.

Data Under Siege
An HBR Insight Center





The Public/Private Cooperation We Need on Cyber Security
Embrace the Complexity of Cyber Defense
Why Businesses Should Share Intelligence About Cyber Attacks
Why Your CEO Is a Security Risk

How TV Depolarized Politics in Mid-Century America

The middle-of-the-road, "mainstream" content of early television in mid-twentieth century America contributed to a dampening of citizens' extreme political views, say Filipe R. Campante and Daniel A. Hojman of Harvard. By studying Congressional elections as TV spread unevenly from 1946 to 1960, the researchers determined that television helped cause, rather than merely accompanied, the remarkable decrease in party polarization during that period. They estimate that TV induced approximately a 1-standard-deviation decrease in polarization per decade.