Marina Gorbis's Blog, page 1589

How Advertisers Can Maximize Mobile Conversions

In the beginning, mobile advertising was all about conversions. Remember QR codes? Vouchers? What got people excited about mobile were the opportunities that didn't exist at all on desktop — to use location and behavioral cues to speak to the consumer on the path-to-purchase and become part of the in-store experience. It was about converting a potential customer into a buyer, right then and there.

Then rich media arrived on the scene, and over the past couple of years has evolved so quickly that Gartner has even predicted mobile display ad spending will grow and take over from mobile search by 2016. We think it will be much sooner than that, perhaps as early as 2014.

Smartphone adoption aside, a big reason rich media display ads have become so popular with advertisers is that they produce click-through and engagement rates that are significantly higher than PCs. Premium brand advertisers such as Samsung, Nordstrom, Coca-Cola, MasterCard, Kia and Home Depot have all had great success with highly creative and interactive mobile campaigns.

Campaigns such as Samsung's use click-through rate and engagement with an ad as their primary metrics. Samsung Mobile launched its new flagship device last year and to allow users to explore its key features, the company built an interactive ad experience. Users were invited to swipe up to reveal the ad and uncover the story of the new hybrid phone/tablet. The viewing speed — and the direction of the story itself — were controlled entirely by the user, who could pause, jump ahead or scroll back through the ad's content with a swipe. At the end, the ad displayed an interactive 360-degree view of the device, with detailed specifications and links to Samsung Mobile's social channels. Samsung is trying to build brand awareness and interest, increase customer satisfaction, and deepen loyalty and retention.

But for certain kinds of advertisers, those objectives don't matter at all, or matter far less than conversions. They include:

Financial services (i.e., credit cards)
Insurance (home, life, auto)
Education (online education)
Automotive (car quotes, loans)
Home services (security systems, maintenance)
Telecommunications (phone, Internet, cable TV)
Restaurants and hospitality (hotels, restaurants, nightlife)

These companies don't benefit if a user merely clicks on and interacts with an ad. They do benefit if that user fills out a form, calls to request an appointment, or gets directions. Qualified leads drive the business, not impressions.

Fortunately for them, as consumers grow accustomed to using their phones for transactions that previously occurred on their desktops, they are more open to intelligent, value-driven offers and opportunities that come to them on their mobile devices.

The stage is set. Here's how performance advertisers in these verticals can maximize their mobile conversions:

Forget about search

While the old-world (read: desktop Internet) model was to generate leads from SEO sites and paid search ads, in a post-PC world, mobile users are not using web browser-based search (mostly via Google) as their primary way to find what they need. Apps are dominating: according to app analytics firm Flurry, mobile users only spend 20% of their time in a browser and the remaining 80% in an app. The crisp and tailored user experience of mobile applications has become the primary channel for content. They're discovering advertising and offers in different, ways, and display ads within apps and on mobile websites is the most efficient way to reach them.

Keep your forms short

Mobile is inherently an on-the-go medium, and users do not have the time or patience to fill in multiple fields on a form. The drop-off rate on a long form would be so low that you'd need to dedicate a large spend just to generate enough volume to know where you're actually converting. So, keep your forms short and sweet. Need more information about a consumer before you can welcome them into your sales funnel? Many mobile marketing services offer to qualify the lead for you, using a call center service to follow up with the customer using the number they provided on the (very short) form.

Use the magical call feature

Surprise... people still use their phones to make actual phone calls. The click-to-call button is still one of the most powerful tools of mobile advertising, as it eliminates all that mucking about with forms and text messages. And since mobile campaigns are so agile, you can have your campaigns timed to match your call center or sales agent resources. Phones not ringing enough? Increase the volume of your campaign. Overwhelmed with too many calls? Tone it down to avoid frustrating potential customers with long wait times.

Increase relevance through targeting

The beauty of mobile is that it opens up a whole new world of targeting that doesn't exist on desktop. With online advertising, you can hone in on a single publisher, like the Wall Street Journal, and know exactly who their users are. Location is the obvious differentiator with mobile, layered with publisher-specific data, including, registration and account profiles. You can also use third-party data providers to target by behavior, intent, and a slew of other criteria. You can do that in mobile now, too. And in mobile, you can also glean insights on the user based on simple information such as what carrier they use and what type of device handset (and OS version) they have. Compare a user on a low-cost Android device from Boost Mobile to an iPhone user on Verizon; they are a very different demographic. For advertisers pursuing a specific demographic for something like an auto loan or online degree, this makes a big difference in performance.

Use mobile as your first platform in a cross-platform strategy

One of the hottest topics right now is a cross-platform strategy that utilizes the "companion" tablet or smartphone to complement the broadcast experience. But there are many ways in which mobile is a great first platform for lead generation, setting up an advertiser for higher conversion rates on the platforms that follow. For instance, one large company in the financial services space targeted young consumers by simply starting with mobile first. They ran a performance campaign to find customers and capture their mailing address, and then followed up with a direct mailer. As both highly targeted and permission-based, the campaign had far better results and therefore was a solid investment on the part of the company.

Mobile has become an important advertising medium for big brand companies seeking to broaden brand awareness and deepen engagement, especially among the ever-popular demographic of "young, tech-savvy" consumers. But it would be a mistake to limit mobile to brand-only goals, and to ignore its potential as a lead generation tool. Businesses that depend on performance advertising for growth should explore opportunities in mobile.

Innovations in Digital and Mobile Marketing
An HBR Insight Center





Quality vs. Frequency: What's Your Mobile Strategy?
Being Digital Demands You Be More Human
CMO's: Build Digital Relationships or Die
Measurement in a Constantly Connected World

How to Make Sense of Sales Force Turnover

Imagine a sales leader who's looking over data from exit interviews with salespeople who've left his company in the last year. Among the departing reps, 32% left primarily because of their relationship with their first line manager, 27% left primarily because of inadequate pay, and 21% left primarily because of the lack of promotion opportunities

The question: What should the sales leader do to fix this problem?

Is it time to upgrade the first line managers, enhance pay, revisit promotion opportunities--or some combination of the three?

There's more to the story than meets the eye here. Let's dig a bit deeper and try to understand who is leaving for what reason.

Consider the following additional facts:

60% of the people who left for reason #1 (relationship with manager) and 73% of the people who left for reason #2 (pay) were in the bottom half of performance rankings.
70% of people who left for reason #3 (promotion opportunities) were in the top half of performance rankings.

Most of the salespeople who left because of pay and first line managers were bottom-half performers. Companies often hope that low performers will find better opportunities elsewhere, so this turnover isn't necessarily a problem. Indeed, perhaps the current pay plan and managers are having exactly the desired effect.

Promotion opportunities, on the other hand, may need attention if the company hopes to hold on to more top-half performers.

Turnover statistics only become useful when they are linked to salespeople's current performance and future potential. Current performance is visible in most sales forces using metrics such as territory sales growth and quota attainment. Future potential is more opaque, but is usually assessed by managers through the performance management and review process. Salespeople who depart will fall into one of the following three performance segments. You'll want to implement different solutions, depending on which segments account for high levels of turnover.

1. Low performers with low potential: These are bad hires, plain and simple. If many sales force departures come from this group, you'll want to find ways to upgrade the applicant pool, and enhance your candidate selection and attraction process.

2. Low performers with significant future potential: The solution for reducing turnover among this segment lies in helping salespeople become successful through development and coaching and giving salespeople warm leads so that they can taste sales success, which is the ultimate motivator. We find that there is high turnover among new salespeople across many industries, primarily because they just can't get off the ground. Training and support that enable early success can work wonders.

3. Turnover among high performers: Autonomy, appreciation, recognition, pay, long-term incentives, inclusion on a company task force, and sometimes, even employment contracts with a non-compete clause can play a role in controlling turnover for this group.

First line sales managers are key in diagnosing sales force turnover problems and identifying and implementing solutions for reducing turnover among all three performance segments. Managers are the ones who have to figure out if a low performing salesperson has future potential or not. They are the ones who must coach and develop a salesperson to realize his/her potential. And they are the ones who can find the right motivators for holding on to high-performing salespeople.

The Mobile Shopping Life Cycle

Mobile is turning "path to purchase" on its head. One of the most time-honored marketing concepts, that notion that a customer takes a predictable journey toward a sales transaction (in its earliest definition, starting with attention to a product, then moving to interest in it, then desire for it, and finally, action), has long provided the framework for marketers to strategize how to communicate with customers and exert influence. While the steps have been debated and refined over time, and the path is often now depicted as a "sales funnel" (with a large initial audience having awareness, funneling down to successively smaller groups having familiarity, consideration, purchase, and loyalty), the basic idea has remained that a customer's commitment to a purchase intensifies at each step, and so should the marketer's investment in bringing the transaction to a successful close.

Now, because of smartphones and tablets, marketers need to fundamentally rethink things. Shopping is becoming an iterative rather than a serial process. Consumers no longer go shopping, they always are shopping.

To adapt to this transformation, marketers must begin by recognizing that, in this new world of mobile commerce, the traditional sales funnel is dead. It's being replaced by something more like a shopping life cycle, in which marketers have the opportunity to influence mobile consumer behavior and purchase decisions at various key moments.

Marketing efforts guided by the traditional sales funnel don't work in a selling environment populated by mobile devices because, for the always-on, mobile shopper, the entire shopping and buying process is both continuous and intermittent. In the old sales funnel, the shopper moved one step at a time toward the purchase and marketers targeted them as they moved closer to making the buy. With mobile, the process is not in such an organized sequence. The steps of the mobile buying process are all happening all the time. And most importantly, mobile shoppers (m-shoppers) can be influenced when they are using their mobile devices on the go.

I like to think of the mobile shopping life cycle in terms of six key states in which customers exist relative to purchases, each of which offers moments when they can be reached and influenced because they are using various aspects of mobile. (See the exhibit below.)

The Mobile Shopping Life Cycle:

At each of these six distinct moments of the Mobile Shopping Life Cycle, marketers have the potential to steer the mobile consumer toward their product and influence shopping behaviors.

The Set-Up: The Pre-Buy. This is the mobile research phase, as consumers use smartphones and tablets before they even consider going to the store. Mobile is a pull rather than a push medium. Marketers should position information and messages about their products to be pulled by the consumer according to that person's time frame, mind-set, and location.
The Move: In Transit. This phase occurs when the consumer is on the way to a store or running an errand. With new location-based capabilities, marketers can leverage information, such as smartphone location and speed, to send highly targeted and relevant messages to consumers who have opted in to receive valuable offers. Marketers will have to create value for consumers, to provide an incentive for them to leave their location "turned on" in any given app.
The Push: On Location. This occurs at a brick-and-mortar store. In the early days of the internet, brick & mortar was a detriment to business, since online-only retailers could sell directly to consumers with fewer associated costs. With mobile, brick & mortar becomes an asset. But while some retailers are leveraging the ability to interact, most are still missing the opportunity to identify and interact with mobile shoppers while they are in the store.
The Play: Selection Process. This is when customers are near the actual product they may be considering buying. With what is known as proximity marketing, marketers can use various technologies to interact in real time with customers, with the potential even to move to real-time pricing. For example, a number of customers walking by a particular product might receive a real-time offer such as a discount on it. Based on real-time awareness of inventory, the offer could be changed or discontinued before the next group walks by. Consumers already can scan barcodes on products and receive on-the-spot price comparisons with easy-to-use but sophisticated technologies.
The Wrap: Point of Purchase. Here is yet another chance to sway the buyer. As businesses adopt more mobile self-checkout options and mobile capabilities are embedded into point-of-sales systems, offers and counteroffers can be presented to consumers during the buying and checkout process.
The Takeaway: Post-Purchase. This occurs after the purchase, as consumers exchange photos, videos, and information of their recent purchase and share them via their mobile device with friends and colleagues, soliciting and receiving feedback. The challenge for marketers is to become part of the conversation at this stage.

Mobile activity in each of these six phases will continue to expand as smartphone and tablet penetration increases and more consumers join the ranks of mobile shoppers. By recognizing the mobile shopping life cycle as it emerges, brands and marketers will be in position to adapt along with its evolution, and to master the new art of mobile influence.

Innovations in Digital and Mobile Marketing
An HBR Insight Center





Quality vs. Frequency: What's Your Mobile Strategy?
Being Digital Demands You Be More Human
CMO's: Build Digital Relationships or Die
Measurement in a Constantly Connected World

Boosting Creativity Through Constraints

Conventional wisdom holds that the best way to boost a team's creativity is to unshackle them from constraints. The less they have to worry about, the more open they'll be with their ideas, the theory goes. Budget? Unlimited! Ideas from outside? Bring 'em on! Different business model? Consider it entertained! Unfortunately this approach can actually be counter-productive.

Some constraints are realities that must to be dealt with — laws of physics, or perhaps a budget. Other constraints may seem immovable but upon inspection are actually assumptions based on the past — your business model, or which customers and needs you serve, for example.

Constraints have a Goldilocks quality: too many and you will indeed suffocate in stale thinking, too few and you risk a rambling vision quest. The key to spurring creativity isn't the removal of all constraints. Ideally you should impose only those constraints (beyond the truly non-negotiable ones) that move you toward clarity of purpose.

If a constraint enhances your understanding of the problem scope and why you're doing what you're doing, leave it in. Insights into user needs, for example, are great because they provide focus and rationale. If the constraint confuses or overly narrows scope without good reason, remove or replace it. Don't be afraid to experiment with different combinations of constraints; it's not always easy to tell ahead of time what the right mix will be for a particular project or circumstance.

Beautiful, brutal clarity is your goal.

There are no hard and fast rules about finding that "just right" mix to achieve this, but here are some examples of how clarity and creativity can be enhanced.

Focus on the Vitals

In Silicon Valley start-ups a common philosophy these days is "mobile first": create the mobile app or mobile version of the web site before you do the "full" version. Partly this is driven by the fact that many of these start-ups' customers will be accessing the new service primarily through a mobile device, and may never look at the web site on a desktop browser. But a side benefit is that a phone's small screen forces discipline about what's really critical to communicate to the customer, and which functionality customers will really need.

You can apply this simplicity-oriented mindset even if you're not making a mobile app. What is the one thing you want your customers to know or do at any given point of interacting with your business? If you could only communicate with them via a 3.5" screen, or a business card, or a 6 second Vine movie — what would you say, what would you ask of them, and what would you want them to feel afterward? Once you've found that, you may be surprised that all the other stuff that once seemed important now seems superfluous.

Change Your Habits

We tend to get set in our ways, both as individuals and organizations. These habits are often shaped by the constraints we impose on ourselves or are imposed on us. Changing the constraints can shake you out of your habits so that you see the world and opportunities with fresh eyes.

I'm an avid photographer, and I recently purchased a camera that has a fixed lens (I can't swap a different lens onto it) which doesn't even zoom. Why would I pay over $1000 for a camera with this inconvenience when much cheaper SLRs with their panoply of lenses can do so much more?

There are many benefits to the fixed-lens camera. Taking pictures is faster because there are fewer things to adjust than on a complex SLR, and the constrained view of the lens means my mind's-eye becomes trained at anticipating what the lens will see. I can react more fluidly to rapidly changing scenes, like when shooting on a busy street. I'm also forced to physically engage with my surroundings — I can't stand in one spot and lazily twist the zoom in and out. I've got to move myself around, and this opens up points of view I would have missed if I'd stuck to my initial position.

Get Uncomfortable

Breaking habits is hard, and sometimes it takes a new stimulus to provoke change. In the workshops I occasionally run with companies, many activities focus on getting teams to challenge their habitual assumptions and apply a different set of constraints to how they think about the problems they face. In this way they often come up with solutions that surprise them. A service company may think about what would happen if they created a physical product to meet customer needs, for instance, or started offering the service the way a well-known brand in a very different industry would.

In the documentary It Might Get Loud, guitarist Jack White argues that technology makes us lazy (like the zoom lens on my SLR), and laziness is the enemy of creativity. He purposefully uses low-quality instruments that he has to fight with to get the sound and attitude he wants. "If it takes me three steps to get to the organ, then I'll put it four steps away. I'll have to run faster, I'll have to push myself harder to get to it." You may think you're making your team's life easier by removing constraints, but forcing a little hustle is good for creativity.

Creativity needs some grit, in both senses of the word: an irritant to get the ball rolling (like a grain of sand births an oyster pearl), and persistence to push through to completion.

So don't be afraid of constraints. They can be your friend, your muse even. Thinking outside the box is all well and good, but if the box is the right size and shape it might help, not hinder, your creativity.

Why Successful Companies Stop Growing

We've all seen examples of unstoppable companies that suddenly hit the wall. Growth slows down, stock prices start to decline, shareholders get nervous, and the press starts to speculate that something is wrong. In some cases, like P&G and Starbucks, the board brings back a former CEO who can presumably return the firm to its previous glory. In other cases, like with Apple, GE, or Cisco, the board holds its breath and hopes that things will change.

But the reality behind many of these cases is that periodic slowdowns are inevitable, even if the company is fundamentally solid. That doesn't mean that CEOs (old or new), and other managers, can't do anything to slow the decline or reverse it more quickly. Taking action, however, requires an understanding of the three forces that always drag high-flying companies back to earth.

The first is the law of large numbers. As a company gets bigger, each percentage of incremental revenue suddenly represents a fundamentally larger number. As the base grows, the amount of new business needed to make a material difference in earnings also rises, increasing the pressure on sales to find new markets, new categories, and new geographies. In other words, the larger a company becomes, the more the entire engine has to work harder.

A company's growth is also inhibited by market maturity. Over time, markets follow more predictable patterns as buyers become familiar with and loyal to particular brands. Eventually, as the market becomes more crowded, prices tend to stabilize, reducing the ability to grow through price increases. Finally, some markets reach a saturation point either because of limited demographic growth or commoditization of products. Taken together, these product and market life cycle forces all put pressure on the typical sources of growth for marketing and sales.

The third reason that growth slows down is psychological self-protection. As a company gets larger, there is more pressure to preserve the base business and less willingness to cannibalize it through innovative new offerings. As a result, at the very moment when the company needs new sources of growth, there is a tendency to play it safe and focus more on adapting existing products and services, rather than breakthrough opportunities. This not only opens the door to potentially disruptive competitors, but constrains moves into whatever is perceived as "risky" territory.

Taken together, these natural forces almost always damp down growth, which is why we shouldn't be surprised when successful companies hit periodic speed bumps. The challenge of course is what to do about it. Here are two suggestions that managers at all levels can consider:

Regularly re-examine your business model. In the face of the forces described above, most business models eventually get stale and need to be either abandoned or refreshed. So periodically take a look at what you do, and how you do it — and ask yourself if it still makes sense. Could someone else provide this product or service differently? Do our customers have other choices or have their needs changed? In other words don't limit your innovation and research to the development of new products and services, but also focus on the possibility of new business models.

Think about getting smaller in order to get bigger. A second way to cope is to periodically do some pruning. Like trees that get too spindly, organizations also grow unnecessary branches that reduce the health of the overall enterprise. These need to be cut back in order to allow new shoots to have the resources to flourish. To do so, ask yourself whether some of your products or services may not be producing sufficient returns; or whether you would be better off without some of your customers. These are tough questions that often provoke strong emotional responses. But taking action on them can liberate you and your resources to focus on new opportunities and will lead to more growth in the long term.

There is no such thing as a company that grows forever without eventually hitting the wall, or at least slowing down to go over a speed bump. Through judicious pruning and the exploration of new business models however, managers can minimize the slow downs and give their organizations a better chance at long-term growth.

How Managers Should Use Data

Thomas H. Davenport, coauthor of Keeping Up with the Quants , describes the three major stages of analytical thinking.

What Kind of Innovative Does Apple Have to Be?

Who's the target audience for the new iTunes Radio? Me. My family and I have a bunch of Apple devices, a WiFi network built around an Apple Time Machine, and not enough technological savvy (or time) to figure out workarounds. I signed up for Spotify a while ago, and like it. But I can't figure out how to get it to play on the multiple speakers hooked up to my WiFi network, so I imagine that when Apple's alternative is rolled out this fall I'll immediately start using it instead. I might even pay extra for the ad-free version.

So is iTunes Radio an innovation? Of course not: It's a Rhapsody/Pandora/Spotify copycat. But it's an improvement that will keep lots of affluent customers who don't want to hassle with technical stuff but do want to stream music on iTunes wrapped in Apple's cold yet comforting embrace.

Other new features announced at Apple's World Wide Developers Conference Monday, such as the iOS 7 and Mavericks operating systems, had a bit more actual newness to them. Waxing incomprehensibly poetic about iOS 7, John Gruber described it as "three dimensional not just visually but logically. It uses translucency not to show off, but to provide you with a sense of place." Sounds great, I guess, and probably even innovative.

The subject of whether Apple is still innovative has become an extremely touchy one over the past year. Partisans of rival mobile operating system Android, along with skeptical Wall Streeters, have been raising questions about the company's ability to keep innovating in the post Steve Jobs era. Apple fans of course bristle at these suggestions. So do Apple executives. "Can't innovate anymore, my ass," senior VP of product marketing Phil Schiller declared Monday after unveiling Apple's new Mac Pro.

The cylindrical black desktop is very cool-looking. But it's the latest iteration of a high-end niche product that Apple has been selling for years. It is a textbook example of what Clayton Christensen dubs a sustaining innovation, a product aimed at existing customers that improves on what went before it and is able to demand a premium price. Except for a few dark years in the mid-1990s, Apple has always been very good at sustaining innovation. The key to its phenomenal success over the past decade, though, has been — to use Christensen's terminology again — disruptive innovation. The iPod/iTunes combo, the iPhone, and the iPad all disrupted and redefined markets, and in the case of the iPhone and iPad created entire new ones.

The sustaining/disruptive dichotomy doesn't describe everything important about innovation. It's probably overused and certainly gets misused a lot. But it so perfectly fits the debate over Apple's innovation quandary that it's a little strange it doesn't come up more often in this context. As it is, Apple's critics and partisans mostly talk past each other. The former are bemoaning the lack of disruptive innovations; the latter are celebrating the steady flow of sustaining ones. To quote one Apple fan, Mike Elgan, writing on Cult of Mac:

In the two year period after the iPod, iPhone, iPad or whatever ships, everyone says Apple is innovative. In the years of iteratively perfecting the vision, everybody says Apple is not innovative. Then Apple comes out with the next market-creating product, and then they're innovative again.

But it's the "or whatever" that everybody's wondering about. It's been three years since the iPad was unveiled. Speculation about where Apple's next big move will be have centered around watches and TVs. It's hard to imagine either having the impact of the iPhone or iPad — but then most people had trouble envisioning at first how successful the iPhone or iPad would be. In 2007, Christensen called the iPhone "a sustaining innovation relative to Nokia" and predicted that it would flop.

Until Apple comes out with its next big new disruptive thing, and it succeeds, the "Apple can't innovate anymore" meme will live on, whatever Phil Schiller's ass thinks. The harder question to answer is whether Apple can remain successful and keep growing without another disruptive innovation. Obviously, if some other company disrupts it, it won't. The big threat at the moment is clearly Google's Android operating system, which undercuts Apple in price and seems to fit in with another Christensen framework that says that technology products inevitably evolve from integrated and closed to modular and open.

But while Android has rocketed past the iPhone in smartphone market share, its progress seems to have stalled recently while the iPhone marches on. We may not have reached the point yet where modular trumps integrated in smartphones and tablets; sustaining innovations may sustain Apple's fortunes for quite a few years more. They won't create new fortunes, though. It takes a different kind of innovation to do that.

The One-Minute Trick to Negotiating Like a Boss

Life is full of negotiations, big and small. We negotiate for raises, we negotiate with clients and providers over prices, and we negotiate for more staff, the best projects, and flex time. (Then we go home and negotiate with our kids about how old you have to be to get your own smartphone.)

To be successful, you really need to know how to negotiate well. But the truth is, this particular skill doesn't come naturally to many people. This is because a negotiation is an experience that is rife with conflicting motivations. When you haggle with another party over price, you need to somehow reconcile your desire to pay (or be paid) your target amount with your fear that if you push too hard, the negotiation may break down. You might end up empty-handed, humiliated, or out of a job. Negotiations are always gambles, and there is always risk.

Who Keeps Their Eyes on The Prize?

One quality that great negotiators possess is the ability to stay focused on their ideal target, despite the risks they are facing. As research conducted by Columbia's Adam Galinsky and his collegues shows, those most able to do it have what's called a promotion focus.

Promotion-focused people think about their goals as opportunities to gain — to advance or achieve, to end up better off than they are now. Whenever we think about our goals in terms of potential gains, we automatically (often without realizing it) become more comfortable with risk and less sensitive to concerns about what could go wrong. Prevention-focused people, on the other hand, think about their goals in terms of what they could lose if they don't succeed — they want to stay safe and keep things running smoothly. Consequently, when we are prevention-focused, we become much more conservative and risk-averse.

As Tory Higgins and I describe in Focus and in our recent HBR article, these different ways of looking at the same goal impact everything about us — our strengths and weaknesses, the strategies we use, and what motivates us. When the goal in question is to pay the lowest price or to get the biggest raise, our focus has profound effects on the way we negotiate.

In one of Galinsky's studies, MBA students performed the role of a job recruiter, whose goal was to hire a desired candidate (played by another MBA student) while paying the lowest possible signing bonus. Before beginning the negotiation, the recruiters completed an assessment of their dominant focus. (Want to try it? You can here.) The researchers found that the more promotion-focused a recruiter was, the less money they ended up doling out in the final agreement. Promotion focus and money paid were correlated an impressive -0.40.

Why were they so successful? Galinsky found that more promotion-focused a recruiter was, the more likely they were to report having kept their target price in mind throughout the negotiation. A prevention focus, on the other hand, leads to too much worrying about a negotiation failure or impasse, leaving the recruiter more susceptible to less advantageous agreements.

The Bold Opener

A second essential in negotiation is a strong opening bid, since that bid is the jumping off point as well as the frame of reference for the negotiation that follows. You are never going to end up paying less than your initial offer when purchasing a car or making a bigger salary than you asked for when starting your new job. But a strong opening bid takes a certain amount of confidence — and promotion focus helps us achieve this.

In a second study, Galinksy and his colleagues divided 54 MBA students into pairs and asked them to take part in a mock negotiation involving the sale of a pharmaceutical plant. Both the "seller" and "buyer" were given detailed information about the circumstances of the sale, including the fact that the "bargaining zone" would range from $17-25 million dollars.

The researchers then manipulated the focus of the buyers to be either promotion or prevention (I'll explain how you do that later). The negotiation then began with an opening bid from the buyer. Promotion-focused buyers opened with a bid an average of nearly $4 million dollars less than prevention-focused buyers. They were willing to take the greater risk and bid aggressively low, which ultimately paid off in a big way. In the end, promotion buyers purchased the plant for an average of $21.24 million, while prevention buyers paid $24.07 million.

This is one of those things that is worth taking a moment to think about — two negotiators, each armed with identical information, facing similar opponents, and yet one overpays by nearly $4 million dollars. The only difference was that one negotiator was thinking about all that he could gain, while the other focused too much on what he had to lose.

Making The Pie Bigger For Everyone

Promotion focus helps you get a bigger piece of the pie than your opponent. But of course, not every negotiation has to have a winner and a loser. In multiple issue negotiations, there is the possibility of outcomes that are beneficial to both parties, because each party may not prioritize every issue the same way. By yielding on lower priority issues, both parties can reach compromises that get them what they want most - a solution that, as Galinsky and colleagues put it "expands the pie."

Who is most likely to find these optimally beneficial solutions? It probably won't surprise you to learn that when the researchers placed both parties in a multiple issue negotiation in a promotion focus, they reached the maximally efficient outcome 79% of the time (compared to only 65% of the time when they were prevention-focused).

How You Can Become More Promotion-Focused

Even if you are naturally prevention-focused or if you tend to become prevention-focused when faced with the uncertainties of negotiation, you can become promotion-focused when you need to be. All you need to do is take a minute or two to focus only on what you have to gain and what you hope to achieve and banish all thoughts of what you might lose.

For example, to put his buyers in a promotion focus, Galinsky simply asked them the following :

Please take a couple of minutes to think about the aspirations you have in a negotiation. What are the negotiation behaviors and outcomes you hope to achieve during a negotiation? How you could promote these behaviors and outcomes?

It's really as simple as that. When you are preparing for your next negotiation, take a moment to list everything you hope to accomplish, and all the ways in which you will benefit if you are successful. Re-read this list just before the negotiation begins. And most importantly, shut out any thoughts about what could go wrong — just refuse to give them your attention.

With practice, this focus-training will become easier and eventually more or less automatic. Negotiating can become second nature to you if you think about your goals in the right way.

Who Owns Hackathon Inventions?

I recently served as a mentor at a hackathon and came away shaking my head. In hackathons, teams compete intensively, typically for just a day or two, to create software (and sometimes hardware) solutions. What struck me was that most of the participants — young, tech-savvy programmers, engineers, and others — seemed largely uninformed or unconcerned about intellectual property. Participants tend to come from many different organizations, and often view hackathons as recreational social events, so perhaps they can be forgiven for not focusing on IP. But the companies they come from need to pay attention — or risk losing valuable IP.

Hackathons have tremendous potential to create disruptive technologies, attract young talent, and identify leaders. Twitter and GroupMe both originated in hackathons. A savvy, forward-thinking business might therefore run its own hackathons internally. Whatever inventions come out of an internal hackathon are clearly owned by the firm and go into its win column.

But suppose those same creative, talented employees like to relax by participating in public, external hackathons. They are going to form teams with people they may have never met before, brainstorm together, generate at least a proof-of-concept prototype product, and then publically disclose it, all in the course of one weekend. The disclosure may torpedo any chance of patenting, at least outside the US, whatever they invent. Short of that, it may be unclear who contributed what, and who has proper claim to the invention.

So in addition to, or in lieu of, running internal hackathons, a savvy business will take a proactive approach to its employees' participation in external hackathons.

One option is simply to prohibit employees from participating in external hackathons. This approach probably makes the most sense for certain types of businesses, such as those concerned with software development. But for many businesses the danger of such a strict policy is that it can alienate talented employees interested in participating in hackathons on their own time.

An alternative is to be proactive and reasonably liberal about employees' participation in external hackthons while still managing potential IP risks and opportunities of the business. For example:

Prior to participation



Review employment agreements to be sure they include confidentiality and post-employment non-compete provisions that would extend to hackathon participation, as well as an obligation to assign inventions to the firm;

Make clear that the firm has a right to know or be informed in advance of participation in any external hackathon, including identities of the organizer and sponsor of the hackathon, and its official rules;

Offer or require training by IP counsel concerning the IP risks associated with public disclosure. For example, IP counsel can advise participants regarding the absolute novelty requirement for patentability outside the US, whereby certain types of public disclosure made prior to filing for patent protection preclude entitlement to patent protection in those countries;

Determine whether the hackathon's focus is likely to be related, possibly related, or unrelated to the firm's business interests, and limit participation to hackathons in the "likely to be unrelated" category; and

Determine if the hackathon organizer and/or sponsor has expressly disavowed any claim to ownership of, and any compulsory license to, inventions made in the course of the hackathon. If not, consider barring participation.

Following participation



Review whether the new technology is in fact related, possibly related, or unrelated to business interests;

For new technology that is deemed to be related or possibly related to the firm's business interests, IP counsel should record the date, mode, and content of any public disclosure, as well as the identities, affiliations, and intellectual contributions of each of the team members. This may be very difficult to accomplish if the participant was not trained and engaged to gather this information; and

Consider further development and/or filing for patent protection; or consider making formal release to the participant of any IP interests the firm may have in the invention. This is the point at which issues of ownership and control of new IP get really interesting, for example when co-inventors have different affiliations and obligations. Firms will have to approach further development and IP protection strategically. The firm may not want to disclose its interest in the technology to another party; it may then seek to design around or improve upon the initial invention so that it can take full or effective control of the IP. Alternatively, it may be necessary to investigate inventorship and obligations of co-inventors outside the firm. Such investigation will likely signal to outside co-inventors, and the firms to which they may be obligated to assign their inventions, that the firm views the technology as valuable. There may be paths forward to collaborate, such as a cross-licensing agreement or joint research/development agreement, or a real party in interest (outside co-inventor or assignee) may choose to let another such party take the lead in investment of energy and resources. In yet another scenario, a real party in interest may be unwilling or unable to cooperate, thereby complicating protection of IP. A formal release of interest by the firm to the participant may seem distasteful, but it may be beneficial to the firm-participant relationship, and such release will, of course, be subject to employment agreement provisions alluded to above.

Internal hackathons may be one way to focus and exploit, in a highly productive way, the phenomenon of "stealth innovation" — in which employees develop solutions to problems outside of formal channels. See the HBR blogs "The Case for Stealth Innovation" and "Stealth Innovation Is Not a Solution." This approach is attractive and rewarding for both the organization and its innovator employees. The message of internal hackathons is: We're interested in what you are thinking and we value your creative drive.

The challenge is to maintain such goodwill when it comes to managing participation in external hackathons. Whereas internal hackathons may generate a credit in goodwill for employees who are forbidden to participate in outside hackathons, if internal hackathons are not feasible, then a well-thought-out and well-communicated hackathon policy is crucial to managing corporate intellectual property interests and employee relations.

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