Transparency During the COVID-19 Crisis

Jonathan Davies recently posted a brief article summarizing new research conducted by O.C. Tanner. Here is an excerpt:

Organisations that have increased transparency with their employees since the start of the COVID-19 crisis have seen an 85 per cent increase in staff engagement. This is according to latest research by Global corporate culture specialist, O.C Tanner, which surveyed 1,715 employees across the U.K, U.S and Canada.

The survey found that leadership transparency is a critical factor right now with employees craving honesty, authenticity and regular communications. In transparent organisations, in which clarity and honesty are prioritised, trust in leaders has increased by 174 per cent, employee satisfaction is up by 72 per cent and employee burnout has reduced by 13 per cent.

For more on the importance of transparency as a means of building trust in your organization, check out this brief Kellogg School of Management video featuring Andrew Swinand, CEO of advertising agency Leo Burnett.  

While Many Firms Focus, Sony Doubles Down on Diversification

Source: Bloomberg

In recent years, many companies in highly developed economies have chosen to divest unrelated business units. Many break-ups of conglomerates have occurred, including at major firms such as GE, United Technologies, Fortune Brands, and Danaher. However, the Wall Street Journal reports today that Sony has chosen to move in the opposite direction. The newspaper states that, "Sony said it planned to buy the portion of its financial unit that it doesn’t own for about ¥400 billion ($3.7 billion), highlighting the electronics maker’s strategy of keeping a diverse portfolio of businesses."  That business unit includes life insurance, auto insurance, and banking products and services.   

Over the past few years, Sony has faced pressure from an activist investor, hedge fund Third Point LLC, that has argued for a breakup of the conglomerate.   Third Point has made the case that mixing video games and other electronics businesses with financial products and services does not make economic sense. Sony Chief Executive Kenichiro Yoshida has countered that owning the financial units enables Sony to diversify risk effectively, and that the financial units benefit from the trusted brand name and reputation for quality that Sony has established in various electronics businesses.   Interestingly, these types of arguments tend to be rejected by investors in the United States, but Sony's investors seemed enthusiastic about Yoshida's decision to double down on the finance businesses.  Sony's share price rose on the news that the firm had rejected Third Point's proposal and chosen to purchase the remainder of the finance unit that it did not already own. 

This decision strikes me as a powerful example of how unrelated diversification is viewed quite differently in various regions of the world.   Academic research has clearly shown that unrelated diversifiers may not make much sense in countries such as the UK, Canada, or the United States. However, HBS Professor Tarun Khanna and others have argued that markets are not as efficient, and key institutions that act as information intermediaries are not as well-established, in countries such as India and China.  In other words, the institutional context matters.  In an influential article for Harvard Business Review many years ago, Khanna and his colleague, Krishna Palepu, argued that Japan appears to a middle ground... not quite India or China in terms of institutional context, but not the same as the US and other western nations either.   They argued that unrelated diversifiers have many disadvantages in western nations and many advantages in countries such as India.  Japan appeared to be a case where conglomerates had some advantages, though not nearly as many as in emerging economies such as India and China.  It seems that investors believe that this situational assessment may still hold today, more than twenty years later.  That's one way, at least, to interpret the investor reaction to the Sony news this week.   Institutional context, it appears, may evolve very slowly amidst the otherwise rapid pace of change and globalization.  

What Do Employees THINK You Care About the Most?

Employees listen, interpret, and even dissect the words and actions of their leaders.    They talk to their peers, trying to make sense of key messages.   As they do so, employees look past what leaders say, and they focus on what leaders do.   Leaders may say that they care about x, y, and z, but do they really?  Employees will look at how leaders act and how they allocate resources. They will examine what efforts and accomplishments are recognized most often by senior leaders, and which are not.   What does the organization celebrate most visibly?   They will examine how leaders spend their time - what types of meetings do they attend most often, and what types of things don't receive their attention much.   In the end, the words don't matter much. The actions do.  Leaders have to mean what they say.  Employees will be looking to see if that is the case.  In so doing, employees will be interpreting and deducing what the leader's values and priorities are.   In the end, it doesn't really matter what the leader intends... it matters what the employees conclude and believe.  Perception is reality.   Leaders, then, must make a great effort to examine in an unvarnished way what people actually believe in the organization.   What is their sense of the priorities and values?   What do the employees actually think leaders care about the most?

Bob Iger's Lessons on Leadership

Source: The Walt Disney Company

Bob Iger stepped down as CEO of Disney just before the COVID-19 crisis escalated. He remains Chairman of the company. Naturally, the firm faces some serious challenges at the moment. Several months ago, I read Iger's book on leadership and his career at Disney/ABC. It was titled, "The Ride of a Lifetime: Lessons Learned from 15 Years as CEO of the Walt Disney Company."  I thought that it was one of the more insightful books I've read by a senior executive. Here are a few of my favorite leadership lessons from the book:

It’s not good to have power for too long. You don’t realize the way your voice seems to boom louder than every other voice in the room. You get used to people withholding their opinions until they hear what you have to say. People are afraid to bring ideas to you, afraid to dissent, afraid to engage. This can happen even to the most well-intentioned leaders. You have to work consciously and actively to fend off its corrosive effects.

We all want to believe we’re indispensable. You have to be self-aware enough that you don’t cling to the notion that you are the only person who can do this job. At its essence, good leadership isn’t about being indispensable; it’s about helping others be prepared to step into your shoes—giving them access to your own decision-making, identifying the skills they need to develop and helping them improve, and sometimes being honest with them about why they’re not ready for the next step up.

You have to convey your priorities clearly and repeatedly. If you don’t articulate your priorities clearly, then the people around you don’t know what their own should be. Time and energy and capital get wasted.

Hold on to your awareness of yourself, even as the world tells you how important and powerful you are. The moment you start to believe it all too much, the moment you look at yourself in the mirror and see a title emblazoned on your forehead, you’ve lost your way.

Designing the New Customer Experience

https://medium.com/pragma-partners/

In the weeks and months ahead, consumers will engage in a very different shopping experience.  That "new normal" is likely to persist for quite some time.  As we have seen in grocery stores during quarantine, that experience will include social distancing, required masks, strict queueing procedures, contactless payment, limits on the number of people in the store at any given time, one-way aisle traffic, and a variety of other measures designed to protect our health and safety.

Which retailers will thrive the most in this new world of shopping? It won't simply be the ones with the best safety precautions, though naturally, that will matter a great deal.  I would argue that it will be those who design the best NEW customer shopping experience given these constraints and rules.  Applying design thinking can help stores not only provide appropriate protections for workers and customers, but also provide a positive experience.  It will be different, of course, than the old shopping experience.  Using design thinking will mean starting with a concerted effort to empathize with the consumer.  What are they thinking and feeling in this new shopping environment?   What are their pain points and frustrations?  What work-arounds are the consumers and/or the store employees adopting to deal with the situation?  From there, retailers can develop insights that can help them craft an experience that alleviates these pain points and enhances customer satisfaction.  Of course, they won't get it right the first time.  Retailers will have to conduct experiments and test new ideas, and then adapt them based on customer feedback.  

In sum, customer experience still matters a great deal.  It just won't be the old customer experience.  It will be an entirely new one, designed from the bottom up based on a deep understanding of the consumer's needs, pain points, frustrations, and desires.  

What Should We NOT be doing?

Source:  Flickr

During the current COVID-19 crisis, many organizations have had to be very clear about their priorities.  With tremendous pressure on the business, and limited resources, companies often have moved quite nimbly to focus time, attention, and money on only the most important initiatives and activities.  Leaders have been able to push less important or urgent issues aside.   The crisis has really made organizations focus on what is truly most critical to achieving the mission, maintaining viability, and serving customers effectively.   

When the crisis subsides, companies should not forget the lessons learned during these trying times.   It will be only natural as some semblance of normalcy returns for initiatives and activities which did not receive attention or resources to return to the agenda post-crisis.  However, leaders should proceed with caution in that regard.  Every organization should continue to ask at that moment:  What should we NOT be doing?  In other words, are some activities simply not value-adding or do they not deserve to return to the agenda?   Being disciplined about priority-setting post-crisis will be essential to recovery and success.  It's easy to lose that discipline when the urgency of a crisis subsides.  The best organizations will not lose that sense of focus around resource allocation moving forward.  

Happiness = Haves Divided by Wants

Yesterday, on the last day of class with my seniors, I shared with them the key points from this excerpt of Arthur Brooks' terrific essay in The Atlantic titled, "The Three Equations for a Happy Life, Even During a Pandemic."

EQUATION 3: SATISFACTION = WHAT YOU HAVE ÷ WHAT YOU WANT

Many great spiritual leaders have made this point, of course. In his book The Art of Happiness (written with the psychiatrist Howard Cutler), the Dalai Lama stated, “We need to learn how to want what we have not to have what we want in order to get steady and stable Happiness.” The Spanish Catholic saint Josemaría Escrivá made the same point in a slightly different way: “Don’t forget it: he has most who needs least. Don’t create needs for yourself.”

This is not just a gauzy spiritual nostrum, however—it is an intensely practical formula for living. Many of us go about our lives desperately trying to increase the numerator of Equation 3; we try to achieve higher levels of satisfaction by increasing what we have—by working, spending, working, spending, and on and on. But the hedonic treadmill makes this pure futility. Satisfaction will always escape our grasp.

The secret to satisfaction is to focus on the denominator of Equation 3. Don’t obsess about your haves; manage your wants, instead. Don’t count your possessions (or your money, power, prestige, romantic partners, or fame) and try to figure out how to increase them; make an inventory of your worldly desires and try to decrease them. Make a bucket list—but not of exotic vacations and expensive stuff. Make a list of the attachments in your life you need to discard. Then, make a plan to do just that. The fewer wants there are screaming inside your brain and dividing your attention, the more peace and satisfaction will be left for what you already have.

Perhaps decreasing the denominator of Equation 3 is a little easier for you than normal during your isolation, because your expectations have diminished along with your physical ability to meet them. Can you find a way to continue this after the material world begins to beckon again in a few weeks or months?