Merchandising, Choice, and Shopper Satisfaction

Wharton's Barbara Kahn explains her new research on how merchandising layouts affect buying behavior as well as shopper satisfaction.

The Benefits & Risks of International Experiences

A team of scholars has published an interesting new study in the Journal of Personality and Social Psychology regarding the impact that foreign experiences have on our behavior (Jackson Lu, Jordi Quoidbach, Francesca Gino, Alek Chakroff, William Maddux, and Adam Galinksy).  They built upon prior research that has demonstrated that foreign experiences bring certain important benefits to individuals.  Specifically, prior work has shown that foreign experiences foster cognitive flexibility and enhance creativity.   They also reduce intergroup bias.  

This new study shows that foreign experiences have negative impacts as well.  These scholars conducted eight studies using multiple research methodologies.  They found that foreign experiences enhance moral flexibility.   By that, they mean that foreign experiences increased moral relativism, and thereby enhanced immoral behavior on the part of individuals.  The findings held true even for people of different ages and cultures.  The study certainly does not mean that we should limit our international educational, travel, and work experiences.   However, it does sound a note of caution about the effects these experiences have on us.  The benefits can be substantial, but some important risks do arise.   

The Durability of First Impressions: Amazing Findings

Our parents often told us to work hard to make a positive first impression. They reminded us that first impressions matter a great deal, and that it's hard to recover from a bad start with someone. Well, it turns out that our parents were more right than we could have ever imagined. Let's take a look at some fascinating new research from Cornell Professor Vivian Zayas and her co-authors, Gul Gunaydin and Emre Selcuk.   Their study is titled, "Impressions Based on a Portrait Predict, 1-Month Later, Impressions Following a Live Interaction.” 

They asked 55 research subjects to examine photographs of a woman with whom they were not acquainted previously.    The scholars asked the individuals to record their impressions of the woman in the photograph.  The researchers asked if the subjects would like to be friends with the woman.  In addition, the research subjects rated the woman on personality attributes such as emotional stability, conscientiousness, extroversion, and openness to new experiences.   In some photos, the woman smiled. In others, she presented a neutral expression on her face.  Between one and six months later, these research subjects met the woman in person.   Only four people remembered seeing the woman in the photographs.  They were excluded from the study's subsequent analysis.   What about the other 51 research subjects?   Their initial impressions from those photographs shaped their impressions of the woman months later in the face-to-face interaction. Zayas told the Cornell Chronicle, "What is remarkable is that despite differences in impressions, participants were interacting with the same person, but came away with drastically different impressions of her even after a 20-minute face-to-face interaction."  

Rethinking How You Set Your Goals (and form New Year's Resolutions)

Duke's Dorie Clark has some good advice in her HBR blog post regarding goal setting strategies. Clark first cites some interesting research on the ineffectiveness of to-do lists:

Indeed, one indication of this is the pervasive use of to-do lists, which attempt to keep a handle on one’s responsibilities and are, according to one LinkedIn study, used by 63% of professionals. That would be great if we reliably accomplished what we set out to do. But the startup iDoneThis analyzed their users’ data and discovered that 41% of the to-do list tasks users inputted were never accomplished — little wonder in a world where the average professional has 150 tasks to be done at any given time, according to research by psychologist Ray Baumeister and John Tierney.

Clark then argues that individuals should make the same type of shift in planning and goal setting that corporations should make.    She makes the point that corporations need to move away from annual strategic planning rituals toward a shorter planning cycle that allows for nimble adaptation to changing competitive circumstances.  Similarly, Clark advocates moving away from the New Year's Resolutions technique toward a strategy of setting goals and revisiting them several times during the year.  Moreover, she argues for limiting the number of objectives that you establish at any given point in time.  Focus on the bigger goals rather than the lengthy to-do list.  Surely, you do have some routine tasks that you must accomplish.  However, Clark argues that we need to separate the mundane tasks from the bigger goals.  If not, we will always keep pushing aside the big meaningful task and focusing instead on trying to cross of  the minor items on the to-do list... so that we can at least feel some sense of progress on a daunting task list.  Clark summarizes her argument as follows:

The point of goals, of course, isn’t to successfully complete tasks we blindly set ourselves to years ago. Nor is it to maximize our accomplishment of small bore trivialities. Instead, what counts is our ability to master the right kind of big goals — the ones that can change your life, like positioning yourself for a promotion to the C-suite or writing a book or launching an entrepreneurial venture. You can only accomplish those kinds of goals when you’re willing to question assumptions regularly and re-evaluate as necessary, and when you give up the temporary dopamine hit of crossing easy tasks off your to-do list, in favor of making a dent in the handful of major projects that really matter.

Why Design Thinkers Need Grit

Lili Ermezei, Creative Strategy Director at Wonder Agency, makes the case in this terrific blog post that, "Being gritty is essential for successful design projects."   I agree wholeheartedly.  Some teams struggle during the design thinking process generate meaningful insights from their field research.   They settle for conclusions and interpretations that are superficial.  Others struggle because they converge too rapidly on a solution.  They fail to gather and accept sufficient user feedback, and they don't iterate effectively.   

Enlightened trial and error requires grit.  You have to be able to persist despite multiple failed prototypes and experiments.  You have to encounter numerous instances of negative feedback and persevere.  Many people become frustrated with the non-linear nature of the design thinking process. Grit certainly helps in this messy process.  

The Importance of Self-Reflection

Former Baxter International CEO Harry Kraemer recently described an important daily ritual to Kellogg Insights (Kraemer now teaches at Kellogg).  Kraemer has engaged in a nightly practice of self-reflection for nearly four decades.  He found this ritual highly useful throughout his career as a very successful business executive.  Kraemer argues that self-reflection has three important benefits:

1. It helps you set priorities and adjust them over time.   You can evaluate whether you are dedicating time, attention, and other resources in a way that is aligned with your priorities.  
2. It protects you against the possibility of a painful surprise.  Self-reflection enables you to anticipate what might go wrong and be better prepared for those contingencies.  
3. It helps you lead your team more effectively.  You can assess how the team is performing and what adjustments need to be made to enhance performance (including changes in the way you lead the team).  

The Link Between a Happy Spouse and a Healthy You

Scholars William Chopik and Ed O'Brien have conducted some fascinating research on the link between your spouse's happiness and your health.  According to the Booth Review, 

A number of previous studies have linked a person’s own happiness to health and longevity, but the researchers wondered if being around “happy others” might have a similar effect. To test the theory, Chopik and O’Brien assessed the health and happiness of nearly 2,000 couples, ages 50 to 94, over a period of six years. Both partners rated their individual happiness and life satisfaction, and answered questions about their personal physical health, including their activity level and any chronic health problems.  It turned out that the happiness of a person’s spouse was strongly linked to how healthy the individual was—in measures of overall health, physical impairment, and activity level. And this seemed to work for both partners. Even more, the effects of a partner’s happiness on a person’s health were independent of the individual’s own happiness level. “The current study demonstrates that happy partners seem to substitute as proxies for a happy self,” write Chopik and O’Brien.

The study left me wondering... What about happy co-workers, and even happy bosses?  Does your work context have a substantial impact on your health too?  It seems to me that it should.  Perhaps Chopik and O'Brien will examine that link next.  

Five Skills that Innovators Need

Lisa Kay Solomon and Emily Shepard shared some thoughts about innovation with a Stanford Business School class. They focused on five  skills that one must master to innovate successfully. Here's their list:

1. Observe:   Watch what others are doing, demonstrate empathy, and and record your observations of the world around you.   Keep a journal of your observations.
2. Question:  Be curious.  Ask good questions to get out the root of the problem you are trying to solve.
3. Associate:  Expose yourselves to environments where ideas from different domains come together.  Innovations often come from combining seemingly unrelated ideas.  
4. Experiment:  Sketching, drawing, and storyboarding can be simple ways to play with your ideas and to test out concepts.  
5. Network:  Don't just learn from other experts in your field.  Try to learn from people in other fields, far and wide. 

Leading Dispersed Teams

Eric McNulty, director of research at the National Preparedness Leadership Initiative, has written a blog post for Strategy + Business that addresses how to lead dispersed teams effectively. McNulty argues that teams should not be managed virtually the entire time that they are working together on a project. Instead, a geographically dispersed team should come together in person from time to time. He argues that in-person meetings offer several key benefits. Perhaps most importantly, McNulty argues that in-person meetings facilitate the formation of trust among team members. Higher levels of interpersonal trust increase a team's effectiveness for a number of reasons. Here's an excerpt: 

One of the primary reasons to get teams together has to do with the hardwiring of the human brain, says Valérie Berset-Price, founder and president of Professional Passport, a firm that coaches, trains, and troubleshoots with international and cross-cultural teams. The brain is always scanning for risk, according to Berset-Price, and among the things it uses to determine if someone is friend or foe are non-verbal cues. Those are absent in teleconferences and flattened in all but the best video conference systems.

“Building trust is a multisensory experience,” she says. “Only when people are physically present together can they use all of their senses” to establish that needed trust. Without a bond, conflict or disengagement can more easily arise and is more difficult to resolve. But when a group has the human connection that makes them a true team, “people can move sky and earth together,” Berset-Price adds... The multiplicity of cultural and linguistic challenges are more easily navigated when people work side-by-side to solve problems as well as share a meal, learn a bit about colleagues’ backgrounds, and swap stories about kids, sports, and other non-work issues. Team members are reminded of their colleagues’ humanity and learn to respect and better understand each other in ways that don’t materialize when they only engage remotely. A team becomes more productive and cohesive as a result.

Are You a "First-Principle" Thinker?

In last week’s New York Times Corner Office column, Adam Bryant interviewed Abe Ankumah, CEO and founder of the software company Nyansa. Ankumah discussed the importance of cultivating “first principle” thinkers in your organization. He wants people who don’t just to creating a solution without first understanding and defining the problem in a crystal-clear fashion. Here’s Ankumah explaining his “first principle” approach: 

I think start­ups kind of take on the value system of their founders. There are three of us who started the company, and we’re all first­-time entrepreneurs. We tend to be very “first principle” thinkers. What I mean by that is when you’re trying to solve a problem, you start by trying to understand the essence of the problem, rather than starting with what the answer should be and then working your way to justifying it. So it’s all about making sure that everyone understands the problem we’re trying to solve. And to do that, you have to maintain a broader perspective and listen very carefully to people.

The Cost of Not Speaking Up

David Maxfield has written a good article for Harvard Business Review titled, "How a Culture of Silence Eats Away at Your Company." He argues that people often say that they would speak up if they had a serious concern or dissenting opinion at work, but in an actual situation, they tend to be much more reluctant. Unsurprisingly, people say one thing and do another. My experience discussing this topic with many managers in a variety of industries confirms Maxfield's observation. Maxfield goes on to explain a simple experiment he conducted on this topic: 

At VitalSmarts, we’ve researched the propensity for people to stay silent before. In a previous study, we asked people what they would do if someone cut in front of them in line. Most people said they’d promptly and skillfully tell the person to head to the back of the line. But when we put their predictions to the test, we found something else. We went into a busy mall with confederates and a hidden camera to see what people really do when faced with a line-cutter. Here’s what we found: The line-cutting victims stand around looking frustrated yet never say a word. A few make dirty faces behind our confederates’ backs or complain to their neighbor. In our study, only one in 25 spoke up.

What's the downside of not speaking up? Naturally, the most crucial danger is that key risks will remain hidden in organizations. Bad news will not rise to the top. In the most extreme circumstances, a catastrophic failure could occur. Consider the costs of people not speaking up at GM with regard to the ignition switch scandal, or the similar dynamic that occurred at Volkswagen with regard to the emissions testing scandal. 

Maxfield argues, though, that there are other very real costs of a culture of silence. He makes the point that people don't simply remain silent. They waste a great deal of time and energy in their frustration over the issue. Here's an excerpt from his article:

Instead of speaking up in these situations, our subjects admitted to engaging in one or more resource-sapping behaviors including: complaining to others (78%), doing extra or unnecessary work (66%), ruminating about the problem (53%), or getting angry (50%). These behaviors aren’t just unhelpful; they’re costly. We found the average person wasted 7 days complaining, doing unnecessary work, ruminating about the problem, or getting angry — instead of speaking up. A shocking 40% of our respondents admitted to wasting two weeks or more.

An Effective Fix for Bored, Disengaged Employees

Chief Learning Officer magazine reported this week on a study by Udemy about boredom and disengagement in the workplace.  The study found that 43% of respondents were bored at work.  80% believed learning new skills would enhance their boredom.  Bored workers were twice as likely to leave the firm.  Females and millennials were more likely than men and baby boomers to report that they were bored at work.  

Why these feelings on the part of so many workers?   People get bored at work for several reasons. First, they are stuck performing the same routine day after day.   People value some variety in their work.   Second, they have no autonomy.   They simply must follow the directives of others, with no ability to suggest and implement better ways to accomplish the organizations's goals and objectives.  Third, they don't understand the big picture.  These workers do not comprehend how their work is contributing to important organizational goals.  The sense of mission is simply not there.   Finally, they are not being challenged.  They are not being asked to learn new skills, take on difficult challenges, and develop personally.  

What's the fix?  Give workers a clear sense of mission.  Show them the importance of their work, how it fits into the bigger picture.  Provide them the autonomy to recommend and execute better ways of getting the work done.  Instill some variety into each person's workweek, so that they are not stuck in a dull routine.  Finally, provide them opportunities for learning and development, through both new challenges on the job or off-line training and education.  

Innovative Environments: The Bell Labs Story

Zara: Can Competitors Match Its Fast Fashion Model?

Patricia Kowsmann wrote a terrific article about Zara today.  Zara, as many of you know, is a highly successful Spanish apparel retailer.  In the article Kowsmann explains how quickly Zara can bring a new design to the retail floor, ready for customer purchase.  Here's an excerpt:  

A black, high-collar women’s wrap coat, fastened with a metal ring, was hung out for sale one recent morning at Zara’s flagship store in New York.  “Customers asked for hardware this season,” the manager said, holding out the ring. That kind of feedback, he added, can inspire a new style that reaches his store within weeks.  This coat took 25 days.

Recall that I blogged about The Gap's troubles several days ago.   The Gap finds itself in trouble for several reasons.  One cause of the company's problems is its inability to cope with fast fashion competitors such as Zara.  Kowsmann's article points out that many competitors, including the Gap, have emulated Zara's strategy of bringing manufacturing closer to its retail stores.  This supply chain strategy enables Zara to move more quickly and to adapt more easily to changing customer preferences.  However, Kowsmann explains that simply matching the location strategy that Zara has employed for its manufacturing facilities won't provide the winning formula for many of these retailers. Why?  Here's Kowsmann:

But experts say it would be hard for competitors to replicate the Inditex model without a more thorough overhaul of the way they design, manufacture and distribute their products.  The Spanish retailer’s rivals might move production closer to home, but they “just don’t have an organization set up to react quickly to what is trending,” said Liz Dunn, founder of Talmage Advisors, a retail consulting firm.

In short, Zara's competitive advantage does not come simply from its sourcing strategy.  It entails an entire integrated system of activities.  The New Yorker's James Surowiecki once wrote about the company, and he explained this very point.  Zara has a whole package that is very hard to imitate.  Placing factories closer to stores may have some benefits, but that doesn't mean these rivals can match Zara's fast fashion success.

Treatment of Failures at Foundry X

Will Analytics Save the Gap? Not Without a Strategy Reboot!

Khadeeja Safdar reported in the Wall Street Journal this week about CEO Art Peck's efforts to turn around apparel retailer The Gap. According to the article, "The Gap Inc.'s market value has shrunk to about $10 billion, from roughly $40 billion at its 2000 peak. Revenue has stalled at about $16 billion—flat from a decade ago." The Gap owns several retail chains (including Banana Republic, Gap, and Old Navy). 

The article points out that, "The 61-year-old CEO is blunt in his criticism of the industry’s long fascination with creative executives who are given broad powers to set the overall image of a brand. 'We have cycled through so many, and each has been proclaimed as the next savior,' he said. In the end, they were 'false messiahs.'" Peck favors combining science with art. He hopes analytics can help drive better merchandising decisions, rather than relying on the intuition and foresight of powerful creative directors for each brand. 

I would argue that no amount of focus on analytics can save The Gap, particularly its namesake brand. The company has a strategy problem first and foremost. That problem has to do with the competitive positioning of the three brands. Each major brand does not have a distinctive competitive positioning. Moreover, the Gap brand is clearly stuck in the middle, trapped with an ambiguous strategy somewhere between the low cost position at Old Navy and the differentiated position at Banana Republic. That problem has existed for more than a decade. Until the company solves that problem, no amount of reforms in its merchandising process can save this once-iconic brand. 

Moreover, as the article notes, the Gap has failed to adapt to the fast fashion strategies of competitors such as Zara. The Spanish retailer has developed a completely different strategic positioning and unique value chain. Copying one or two elements of Zara's strategy will not suffice. Zara is successful because of the entire system of activities and choices that they have made. The Gap has made a vastly different set of choices, and they have undertaken quite different activities. Adapting the Gap's value chain to fit the new competitive environment will be very difficult.

Does Variety Make Us Happier?

We have all heard the expression, "Variety is the spice of life."  Is it true?  Do we value variety highly?  Does it make us happier?  Years ago, social psychologists Richard Hackman and Greg Oldham developed their now-famous job characteristics model.  They argued that five key characteristics affected outcomes such as job satisfaction, intrinsic motivation, and quality of work produced.  One of those job characteristics was skill variety.   If a job required employees to employ a variety of skills and capabilities, that had a positive effect on these key outcomes.   

New research by Jordan Etkin and Cassie Mogilner looks at variety in a slightly different context.  They conducted a series of experiments to explore whether engaging in a variety of activities increased happiness. They found that variety had a positive impact, but only if that variety did not occur in a very short period of time. Etkin explains in this article from Duke's Fuqua School of Business:

"It seems the pivot point is around a day," Etkin said. "We find that over longer periods of time — a day, a week or a month — spending time on more varied activities does lead people to feel happier afterwards. But over shorter time periods — an hour, 30 minutes or 15 minutes — people feel less happy after spending time on more varied things."

Etkin went on to explain why too much variety in a short period of time could have a negative effect on happiness:

"When people think about variety, they think it's exciting, stimulating and interesting. But we also derive a lot of happiness and satisfaction from feeling we accomplished something with our time. What we find is that shorter time periods really don't give people enough time to transition between varied activities and still feel productive."

Should States Stop the Strict Enforcement of Non-Compete Agreements?

Over the past few years, Massachusetts has witnessed a vibrant debate about whether the state should stop the strict enforcement of non-compete agreements that employers require many employees to sign.   Many entrepreneurs and venture capitalists have argued that Massachusetts is at a substantial disadvantage to California, a state that does not typically enforce non-compete agreements.  A new article from Yale Insights (a publication of Yale's School of Management) examines the research on this topic.  Scholars Olav Sorenson and Matthew Marx write about their work on this subject.  They argue that non-compete agreements inhibit entrepreneurship and slow economic growth.  Here's an excerpt:  

States that enforce non-compete agreements and those that enforce them more strictly have fewer startups. Entrepreneurs usually have prior experience in the industry they enter, or in a closely related one; non-compete agreements can thus prevent them from striking out on their own. Even if they can found their own firms, these agreements hamper their ability to hire early employees. As a result, a dollar of venture capital goes further—in terms of creating more jobs and more economic growth—in states that restrict the enforcement of non-compete agreements. Some of our research indicates that venture capital creates two to three times as much economic growth in regions that do not enforce these agreements as it does in regions that do.

States that enforce non-compete agreements also suffer from a brain drain, with sought-after employees leaving states like Massachusetts, which enforce non-competes strictly, for states like California, which do not. Many of the students we teach at MIT and Yale to move to California for this very reason. The enforcement of non-compete agreements therefore imposes an economic cost on all of us. We support these reforms not so much because they might help to right some of the wrongs associated with non-competes—though they should help to do that as well—but because they would promote economic growth.

Don't Eat Lunch at Your Desk: A Small Tip For Enhancing Creativity

Robin Camarote has a good article at Inc.com about a small change in our daily routine that can help boost our creativity and problem-solving effectiveness.   She argues against eating at your desk, and she notes that research supports her recommendation.  Here's an excerpt:  

Whether you run out and grab something from a restaurant or bring leftovers from home, about 40 percent of us eat lunch at our desks. Most of us do this because we believe we'll get more done. And if you're like me and often work from home, it might seem utterly ridiculous to sit down at the table to eat when there is no one to talk to and the computer and phone are just a couple feet away. I believe I'll get through more items on my to-do list if I multi-task.

But working through lunch only feels more productive. In fact, "...research shows that there are tremendous performance advantages to stepping away from your computer, and even more pluses if you can get outside. Taking a break from cognitively taxing work improves creative thinking," says Kimberly Elsbach, professor of management at the Graduate School of Management at the University of California at Davis, "and everybody's job has a creative component, such as problem-solving, managing teams or finding creative solutions." Not to mention taking a break from that steady stream of emails helps reduce stress and, in turn, helps keep you be healthier.

Who Drives for Uber and Why?

Jonathan Hall and Alan Krueger have published a new National Bureau of Economic Research working paper about Uber.  They explore the backgrounds and motivations of Uber drivers.   Many people have been critical of Uber, arguing that it is wrong for Uber not to treat their drivers as employees (they treat them as independent contractors).  Others have been debating the impact of the so-called "gig economy" - does it help or hurt the average worker?  For these and other reasons, the scholars found it interesting to explore survey data from 2014-2015 about Uber drivers.  The findings are fascinating.  Here are selected excerpts from the paper.  You can read more here.

Uber's driver-partners are highly educated. Nearly half of Uber's driver-partners (48 percent) have a college degree or higher, considerably greater than the corresponding percentage for taxi drivers and chauffeurs (18 percent), and above that for the workforce as a whole as well (41 percent).

In addition, most driver-partners do not appear to turn to Uber out of desperation or because they face an absence of other opportunities in the job market—only eight percent were unemployed just before they started working on the Uber platform—but rather because the nature of the work, the flexibility, and the compensation appeals to them compared with other available options.

Around 80 percent of driver-partners reported that they were working full- or part-time hours just before they started driving on the Uber platform. Only eight percent of driverpartners in 2014 (and 10 percent in 2015) said they were unemployed just prior to partnering with Uber. This low percentage is notable given that, for the economy overall, about 25 percent of new hires came from unemployment and 70 percent came from nonemployment in 2014 and 2015.13 The large share of drivers who partnered with Uber while they had another job suggests the role that Uber plays in supplementing individuals’ income from other sources.

In 2015, 52 percent of driver-partners worked full-time on another job, 14 percent of driver-partners had a part-time job apart from partnering with Uber, and 33 percent of driver-partners had no other job.

Nearly half of driver-partners view income earned on the Uber platform as a supplement to their income but not a significant source (48 percent).

Is One-Stop Shopping a Good Thing?

When many firms pursue diversification strategies, they argue that they can provide one-stop shopping for clients.  This logic implies that one-stop shopping adds value for the customer, and that the multiple business units inside the corporation are more valuable together than apart.  For many firms, cross-selling becomes a key initiative, to try to provide that one-stop shopping experience (Wells Fargo, anyone?).   Does one-stop shopping make sense though?  Do customers actually want to purchase a series of related services from one supplier?   Would you like to have all your financial relationships with one firm, or would you prefer to purchase your insurance at one firm, secure a mortgage at another, and invest in bonds at yet another company?

Olivier Chatain and Denisa Mindruta have written a paper on this topic. The paper is titled, “Estimating Value Creation From Revealed Preferences: Application to Value-based Strategies."  The authors presumed initially that one-stop shopping created value for clients.  After all, the firm provided customers more convenience, and it could apply learning from one aspect of a customer relationship to the provision of other products and services.   Synergies seemed readily available.  The research, however, demonstrated that significant drawbacks may exist to a one-stop shopping strategy.   I'm not shocked; I've always been skeptical of such strategies.   I think firms overvalue synergies routinely.   Moreover, I'm not sure customers actually want to put all their eggs in one basket.   They also get annoyed at times when firms are constantly engaging in cross-selling tactics.  

Chatain and Mindruta studied law firms in this research.   Chatain explains the findings:

What we think is that — especially for the law firms we were looking into — … even though you may know a client well, each time [you provide a new service to him], it’s almost like [starting] a different subject. You really have to start over and learn a lot about the client.

An alternative explanation [for our results] is that some clients are very worried about having one supplier of service serving multiple areas. So even though you might be the best expert for me, if you’re already my best expert for two or three other subjects in law, I may want to deal with someone else because I might be afraid if I get all the information from the same supplier, I might be missing out on some important themes.

I might have a preference of diversity in terms of input, which was something that is apparently more important than the savings you can realize by bundling all these products together.

Partnering to Get Younger

Many firms struggle at times with an aging customer base.  We have seen firms such as Harley Davidson and Talbot's face this challenge in recent years.   Neiman Marcus provides another example of a firm that has had difficulty attracting younger shoppers.  According to Fortune, the average age of a Neiman Marcus shopper is 51 years old.  What is Neiman Marcus doing to attract younger shoppers?  They have come up with an interesting and creative strategy.  They are partnering with Rent the Runway, a firm whose focus is millennials.  Their average age is 29 years old.   Rent the Runway will open small boutiques in select Neiman Marcus stores.   Rent the Renway appears to seek access to shoppers who want the touch and feel available in a physical location - something that their online business model does not provide.   

Mutually beneficial partnerships, such as this one, might be an effective strategy for firms who face an aging customer demographic.  What's the risk?  Certainly, one worry is cannibalization.  Will they take sales away from one another?  A more interesting question, though, is whether those young consumers, the millennials, will convert to purchasers at Neiman Marcus.  Can these folks afford the premium-priced goods at Neiman Marcus?  A key strategic risk emerges if Neiman Marcus begins to offer lower-priced goods to cater to these young shoppers. That move might compromise their premium, differentiated competitive positioning and their reputation for high quality.   Moreover, what if they cause a decline in satisfaction among their core customers by carrying more of the types of clothes that attract millennial shoppers?  Older women may not like the fashions that millennials seek.  Getting younger is a challenging proposition for any firm; it's not as simple as it may seem.  

Design Your Way to a Better Life

Dave Evans and Bill Burnett have written a terrific new book titled, Designing Your Life: How to Build a Well-Lived, Joyful Life.  Evans and Burnett discuss how people are often encouraged to find their passion and pursue that vocation in their life.  They point out that it can be very difficult to discover one's passion simply by sitting in a dorm room or apartment dreaming up potential visions of the future.  Introspection and reflection alone do not allow for this discovery to occur.  

What's the alternative mechanism for discovering what you want to do in your life?  They argue that individuals should apply the principles of design thinking.  They should prototype and experiment early and often.  They should try a variety of things, expose themselves to different domains, pursuits, and professions.  Then they should reflect on these experiences and consider what makes them happy, what motivates and inspires them, and what they consider rewarding.   Moreover, individuals should consider the circumstances in which they feel intellectually challenged and highly engaged.  

How does one experiment and prototype?  They take internships in different industries or companies, shadow someone in a particular profession, work on course projects in different domains, network with people in various roles, volunteer in various organizations, etc.   In short, they design different ways to test whether they, in fact, are passionate about a particular job, role, industry, etc.  

Doubts about "Choice Overload"

Edmund Andrews has written a good article about the research of Stanford Professor Itamar Simonson and colleagues.   Andrews discusses how Simonson's latest work challenges the commonly held view about "choice overload" that has become popular in recent years.  Andrews writes:

For well over a decade, researchers in consumer behavior have debated whether the ever-expanding array of goods creates “choice overload” that can actually discourage people from buying. Barry Schwartz, a psychologist, wrote a famous 2004 book on what he called the “paradox of choice.”  But many other scholars — not to mention marketing executives — have been doubtful. Customers may groan at the bewildering choices they face when ordering something as simple as coffee, but they still seem to want them. And companies keep offering them. In fact, a 2010 survey of more than 50 separate experiments on choice overload found that the results of bigger selections were essentially a wash. Big assortments discouraged consumers in some studies but encouraged them in others. On average across the studies, the impact of a big selection was about zero.

What has Simonson found in his research?  He conducted a series of experiments, and he has found that the way choices are presented matters. In the experiments, he examined the situation in which a person begins by considering whether to make a purchase at all, and then tries to determine which particular item to buy.   In contrast, he looked at the situation in which someone tries to select among a broad assortment and then determines whether to buy.   Simonson found that "choice overload" does not exist if someone begins by thinking about whether to buy at all.   In that case, having lots of choices appears to be a very good thing, and people are more likely to buy if presented with many choices. Andrews writes, "If, however, a person begins by picking a favorite from an assortment of options, and only then deciding whether to buy, a large selection makes the task harder and lowers the likelihood of buying."

Disrupt Your Routine to Ignite Creativity

Blythe Harris, Stella and Dot's cofounder and chief creative officer, shared a few tips for stimulating creativity with Fast Company's Elizabeth Segran. For instance, Harris suggested that people should purposefully disrupt their usual routine on occasion.   They need to seek inspiration by learning and seeing new things, meeting different types of people, and exploring domains where they have little expertise.  Here is an excerpt: 

"Harris believes strongly in taking inspiration trips. She was just in Chile, learning about local artisans. She's created entire collections after particularly inspiring trips to India and France. To this end, Stella & Dot invests heavily in sending Harris and other designers to foreign countries.  But you don't have to spend a lot of money to see things you wouldn't ordinarily see. An important part of this process is learning new things. So Harris also encourages her team to take classes in new fields. For instance, architecture has been particularly helpful to members of the design team. "If you don't have the budget to travel, you can disrupt your routine by going to work a different way, go to a new restaurant, or find ways to meet new people," Harris says. "When you disrupt your thinking like that, it actually slows down time, and you start to be able to take in all your creative inputs differently."

I concur wholeheartedly with Harris' recommendation. In fact, neuroscience supports this suggestion. Research shows that "pure novelty spurs the brain." Specifically, the substantia nigra/ventral tegmental area of the brain has a substantial impact on learning. According to Science Daily, "Researchers Nico Bunzeck and Emrah Düzel report studies with humans showing that the substantia nigra/ventral tegmental area of the brain does respond to novelty as such, and this novelty motivates the brain to explore, seeking a reward."

Should Disney Sell ESPN?

The Wall Street Journal reported this morning on Disney's quarterly earnings announcement, noting that the news disappointed investors.  "Declining income at ESPN continued to overshadow quarterly results at Walt Disney Co., with the sports powerhouse posting lower advertising and subscription revenue that dragged company earnings below Wall Street expectations."  These results continue a multi-year slide in subscriber numbers at ESPN, as many American consumers "cut the cord" - ending their cable television subscriptions.   Some people estimate that ESPN has lost more than 10 million subscribers in the past several years.  

This news raises a key question for me:  Should Disney sell ESPN?   That question may shock some people, as ESPN has been a substantial contributor to Disney's total net income since it was acquired as part of the Disney acquisition of Capital Cities/ABC two decades ago.   However, Disney's corporate strategy has evolved considerably since that time.   During the second half of Michael Eisner's tenure as CEO, Disney diversified well beyond the businesses that leveraged the animation studio as a central asset (acquiring ABC, owning baseball and hockey teams, etc).  However, during Bob Iger's tenure, characters have become the driving force of the corporate strategy once again.   The three major acquisitions during Iger's tenure have focused on expanding the character portfolio, so that Disney can leverage those characters across multiple platforms (i.e. Pixar, Marvel, and Lucas Films).  In many ways, Iger has returned Disney to its roots.   Below you will see famous chart created by Walt Disney himself to describe synergies at the company.   One has to ask:  How does ESPN fit into this chart?   Absent major synergies, and facing a long term disruption to ESPN's business model, might Disney be better off divesting the business unit?   Alternatively, Disney has to take a hard look at reinventing the business model at ESPN, rather than tweaking the strategy.   A reinvention seems necessary given the long term trends regarding cord cutters.   

What Will Our Rivals Do?

Do you want to spark creative thinking in a team meeting? David Burkus recommends asking how competitors might overtake, surprise, and/or outflank you. Here's an excerpt from his latest column for Inc.com:

Instead of thinking up what you should do, think about how your rivals are working to counteract what you're already doing? How would you drive yourself out of the market? Research suggests that we're able to think of more creative solutions when our frame of reference is someone else, rather than ourselves. In addition, if you think of what you're competitors would do to steal your customers, you can think of ways to turn that around and gain more customers yourself.

I recommend taking it one step further. Ask some members of your team to role play the competition. Have them devise strategies to destroy your business, or responses to your next proposed strategic move. That type of role play can open some eyes and help you reframe a situation to spark creative thinking.

How We React To Disconfirming Feedback

Francesco Gino has conducted research into how people react to critical feedback.  Unsurprisingly, she finds that we do not deal well with feedback.   Well, perhaps there is some surprise here. After all, I seem to read often these days that millennials love feedback.  I've always wondered about the veracity of that statement.  It seems that it has become conventional wisdom without much data to support the conclusion.   Gino's research shows that we do not like disconfirming feedback - i.e. critiques that are more negative than our own self-evaluations.  Moreover, we try to distance ourselves from those that offer us disconfirming feedback and seek out others to add to our network that will affirm our positive self-evaluations.   Here's an excerpt from Gino's HBR article about this research:

We found that in the year following feedback, an employee was more likely to eliminate someone from his or her network who offered “disconfirming” feedback (i.e., feedback that is more negative than one’s own self-evaluation) than a reviewer who provided “confirming” feedback. More specifically, when a colleague’s review was one point lower on a seven-point scale than one’s own self-review, the employee was 44% more likely to drop the relationship with that colleague.

We also found that when receiving negative feedback from fellow colleagues with whom they must retain a working relationship, employees tried to create a more hospitable network by seeking new colleagues who were relatively disconnected from their current circle.

In follow-up laboratory studies, we found that people engage in such behaviors because disconfirming feedback threatens their own views of their skills and accomplishments.

How EOS Overtook Chapstick and Blistex

Lip balm... It doesn't seem like a market ripe for innovation, does it?  However, EOS (maker of those pastel-colored, spherical-shaped lip balm products) has overtaken industry leaders such as Chapstick and Blistex in a few short years.   Fast Company recently spoke to the founders about the strategy that has led to so much success.   Elizabeth Segran writes, 

The lip balm category struck them as a prime candidate for innovation, since the vast majority of products on the market "were indistinguishable" from their 100-year-old predecessor, Teller says. Many brands appeared to be driven primarily by cutting costs and competing on price, he points out. "It appeared to us that everybody in this category was being lazy. That was an opportunity."

EOS chose their target market carefully.  They focused on millennial women, rather than trying to be all things to all people (generally, the existing products approached all customers uniformly).  Specifically, they targeted "millennial women between the ages of 25 and 35 who were style conscious."  Why?  Their research showed that these women tended to be heavy users of lip balm, yet they did not find the application of lip balm to be enjoyable at all. Co-founder Sanjiv Mehra notes, "The products that women depend on every day should deliver moments of delight that elevate these daily routines." They made a series of other choices that fit with this target market. They tried to "engage all five senses, from soft round packaging that felt good in the hands to the colors of the orbs, to the smells, to the way the flavors tasted, and even to the clicking sound the sphere makes when it closes." Segran writes that the founders tried to build an emotional connection with the customer. They weren't just selling a utilitarian product. They wanted their product to be fun, even delightful.

What a terrific story!  The EOS entry into this "tired" market offers several important lessons.  First, if many existing incumbents are trying to be all things to all people, then a strategy with a laser focus on a specific target market might be quite successful.  Second, empathy with the users can deliver innovative design concepts.  Understanding these millennial women delivered key insights that led to an innovative product tailored to their needs.   Third, customer needs go beyond the obvious service that is provided.  Yes, people don't want chapped lips.  However, these millennial women cared about more than the quality of the balm itself.   EOS' focus on the five senses demonstrates one can delight the customer by paying careful attention to many details about the customer experience.  Ultimately, EOS is selling more than lip balm, just as Starbucks is selling more than coffee.  

Reverse Network Effects

Network effects exist when the value per user rises as the number of users for a particular product or service increase.  Classic examples of firms with network effects include eBay, Uber, Google, and Netflix.  Sangeet Paul Choudary has written extensively about network effects in the past few years.  His recent post examines the concept of reverse network effects.  Is there some point where adding more users decreases value per user?     He explains in this excerpt:  

Reverse Network Effects may sometimes set in with scale i.e. online networks may become less useful as they scale. I do not imply that all online platforms lose value as they grow. However, in the absence of robust curation, online platforms may lose value as they grow.  Under what conditions do online platforms lose value as they scale?  Since the participants on an online platform create value, an online platform loses value with scale when the participants it allows in OR the information/value that they create are not curated appropriately. Poor curation leads to greater noise which makes the platform less useful.

He goes on to give some examples of the ways in which increased noise can become a problem.  For example, he points out that less sophisticated participants may began to use the platform, and that might reduce value per user.   He cites Quora as one platform in which this danger may arise.  Quora worked very well in the beginning as experts answered interesting and challenging questions.   As people with less expertise use the system, however, may create a problem.  As their answers offer less value, some experts may leave the platform.  As experts leave, that can create a downward spiral of value loss and further expert attrition.   His work in this area is interesting, because it stresses the fact that more is not always better in the realm of network effects.  A reverse mechanism can begin to take hold on certain platforms.  

What are the Signs that Employees are Considering Quitting Their Job?

Timothy Gardner and Peter Hom have conducted some useful research about the signs that might emerge before an employee quits his or her job.  They describe these cues as "pre-quitting behaviors."  These include things such as acting less like a team player than usual, or becoming less enthusiastic about the organization's mission.  They also might become less committed to long-term schedules and deadlines, and they may become less interested in working with customers.  In this piece for Harvard Business Review, Gardner and Hom explain one of the most interesting aspects of their research:

The most interesting take-away from this second phase of our research were the behaviors that did not survive our screening process. Note that the 13 key behaviors do not include “wearing dressier clothes to work,” “leaving a resume on the printer,” or “missing work for doctors’ appointments more frequently than usual.” These and many similar behaviors, which have entered into managers’ folklore of key signs of impending departure, were rarely observed or did not statistically hang together with the core behaviors representing a general predilection to quit. Such behaviors may predict future turnover, but not as consistently as the 13 core pre-quitting behaviors across a wide range of jobs, industries, and geographies.

Try Temptation Bundling to Make The Tough Choices

We have all faced certain choices in which we know the right thing to do, but we don't choose the best path.   We should eat the lower calorie item on the menu, yet we opt for the delicious pasta dish.  We should work out daily, but we skip the gym and grab a beer after work with some friends.  We should save for retirement, but we opt to splurge on a vacation instead.  We should work on that term paper due next week, but we head to the party at our friend's apartment instead.   How can we improve our ability to make these tough decisions?  Wharton Professor Katherine Milkman has conducted some fascinating research on this issue.   She describes a self-control technique called temptation bundling.   In short, you bundle together a "want" and a "should" so as to make better overall choices.  This excerpt from a profile of Milkman by Princeton's alumni newsletter explains her findings:  

In 2014, Milkman published a study of a self-control strategy she calls “temptation bundling.” The idea is to link a want (in the study, listening to audio versions of page-turners such as the Hunger Games books) with a popular should (working out at the campus fitness center). If getting on a treadmill were the only way to hear the next chapter in the novel, would you be more likely to get off the couch and go to the gym?   The results were promising: Participants who had access to the audiobooks only at the gym made 51 percent more gym visits than those in the control group. (Another cohort that was encouraged, but not required, to restrict their listening to workout times had 29 percent more visits than the control group.)

What's the Rationale for the AT&T Acquisition of Time Warner?

This week AT&T announced the acquisition of Time Warner in an $85 billion cash-and-stock deal.  Investors did not exactly dance in the streets.  Why the concern from investors about this acquisition, and what's the possible rationale for this deal?  The proposed deal is an example of vertical integration, marrying a content creator (Time Warner) with a distribution system (AT&T).   When we hear about vertical integration, we should ask:  Why will these two entities create value by working together, AND why must they merge to achieve this value creation?  In other words, why can they not achieve certain synergistic benefits through other types of organizational arrangements (e.g., contracts, licensing, strategic alliance)?   AT&T CEO Randall Stephenson certainly understands why investors and analysts will ask if a merger was necessary to capture certain benefits of cooperation between the two entities.  Here is an excerpt from yesterday's Wall Street Journal:

AT&T’s Mr. Stephenson said owning content would make it easier for the carrier to adapt to various platforms quickly in a way that is time-consuming and difficult when it has to negotiate contracts with content partners. “It’s slow, it’s painful, just the contracting itself takes a lot of time whereas when it’s completely owned, you just move a lot faster,” he said Monday.

He might be right, but has he captured the whole story?   Stephenson essentially is arguing that the transaction costs of using market mechanisms (such as contracts) to work with content partners are very high.  He believes that the costs of such coordination are lower if the two entities are part of the same corporation.  Simply put, he believes you can accomplish coordination more easily and more quickly through managerial mechanisms than through market mechanisms.   Is that right?  Well, anyone with experience managing a large vertically integrated firm will tell you that coordination between business units owned by the same parent company is not always so easy or fast.  Bureaucracy, transfer pricing disputes, silo rivalry, and other problems can make life pretty difficult. Moreover, vertical integration reduces flexibility at times to work with desirable outside partners or to change business models, and it puts you in the awkward position of competing with your own customers.   The regulatory landscape also complicates the deal.  As the Wall Street Journal explains, "Analysts note that many of the attractive aspects of owning content—such as keeping it out of the hands of other distributors or giving it free distribution—would be barred by regulators."

In addition to examining AT&T's rationale, I've been considering the perspective of Time Warner in this deal. Time Warner CEO Jeff Bewkes has spent the past decade dismantling a prior failed attempt at vertical integration at his firm. He broke apart the AOL-Time Warner combination, and he divested Time Warner's cable operations. Why then sell yourself to a distribution company now? (ok, the hefty takeover premium is the obvious financial reason!). In particular, it seems odd given that Time Warner has begun to sell its premium content directly to consumers, bypassing the traditional cable operators (e.g., HBO Now). I understand that the content creators have been worried about millennials cutting the cord. Witness ESPN's shrinking subscriber base - clearly a concern at Disney these days. Time Warner surely faces such concerns with some of its content, though perhaps not with a premium network such as HBO. I'm not sure, though, that selling to AT&T solves this fundamental problem. Do we think that innovative new entertainment industry business models will emerge from such a large complex entity, or is it more likely to occur from newer, more nimble players in the industry?

Whom Do We Follow? Choosing Our Leaders Wisely

Stanford Graduate School of Business organizational behavior professor Lindred Greer has conducted some excellent research on team dynamics. In this article on the Stanford website, Luke Stangel describes one interesting class exercise that Greer has conducted. The exercise reveals that we do not always choose our leaders wisely.  Here's an excerpt from that article:

In top-down team structures, the leader holds more influence than others over the eventual decision. That’s dangerous when the team’s leader knows less about the subject than his or her team, Greer says.

She described a class exercise where Stanford undergraduates were asked to choose the smartest person in the room to lead them out of a theoretical desert. Researchers found roughly 50% of students were persuaded to choose a leader based on the person’s attractiveness, height, vocal intonation, facial features, gender and other arbitrary factors.

Students who chose their leader based on relevant knowledge “survived” the exercise; those who chose their leader based on arbitrary factors didn’t.

“When you’re in a meeting and everybody’s speaking up, it’s critical to make sure you’re listening to the right person,” Greer says. “That may not always be the tallest person or the person with the most seniority. It’s the person who knows most about this particular situation. That’s the challenge of teamwork: It’s going to change moment to moment, based on the discussion.”

Combining Intuition and Analysis

We live in an age of big data.  People have become enamored with the use of analytics to solve complex problems and to make better decisions.  I'm a big believer in analytics, but I hope we don't forget that intuition does play an important role in decision-making processes.   In the video below, I explain briefly what intuition is and how it works.  

How can we combine intuition and analysis to help us make better choices?  Here are four ways that the two modes of thinking can complement one another.  

1. Use analysis to check your intuition, but not simply to justify decisions that have already been made 
2. Use intuition to validate and test the assumptions that underlie your analysis 
3. Use analysis to explore and evaluate intuitive doubts that emerge as your prepare to make a decision 
4. Use the intuition of outside experts to probe the validity of your analysis

Lands' End CEO Pushed Out: Culture Eats Strategy For Lunch

The Wall Street Journal reported last week that Federica Marchionni was forced out as CEO of Lands’ End Inc. after only 19 months on the job.   The news did not surprise me given the faltering performance at the firm and the controversy surrounding her leadership.   Six months ago, I wrote a blog post about her effort to turn around Lands' End.   In that post, I referred to some comments by Columbia Professor Rita McGrath, who questioned whether the Lands' End scenario would unfold much like the situation at J.C. Penney when Ron Johnson tried unsuccessfully to engineer a turnaround.  I was particularly taken aback at the time by Marchionni's choice to work out of an office in New York, while only spending one week per month at the firm's headquarters in Wisconsin. At that time, the Wall Street Journal reported, "As part of her contract, the Lands’ End board agreed to let Ms. Marchionni work primarily from an office in New York’s garment district—an arrangement that rubbed some in Dodgeville the wrong way, according to former employees. Her employment agreement says she must be in Wisconsin for holiday parties and other social events that the Lands’ End CEO “historically has attended.” 

To me, the scenario at Lands' End reminded me of the old saying:  Culture eats strategy for lunch.  You can have a bold vision, but you will not succeed as a leader if you can't build buy-in and commitment from people throughout the organization.   How could working from an office halfway across the country have sounded like a sensible way to build support for her turnaround?   There's a bigger issue here though.  Like the J.C. Penney scenario with Ron Johnson, Marchionni did not spend sufficient time understanding the culture, building a coalition of supporters, and making people feel a sense of involvement and ownership with regard to the turnaround plan.   The best turnarounds involve people throughout the organization believing that it's their plan, not simply the CEO's plan.  Sometimes, the CEO has to set the organization on a new course.  Still, the CEO can consult with employees to determine the best way to make that shift, to execute those plans, and to achieve key goals and objectives.   You can tell them what to do differently, but still ask for their input as to how to implement that strategic shift.   

Great Teams: An Interview with Don Yaeger

I had the opportunity recently to interview Don Yaeger, the former Associate Editor of Sports Illustrated and author of twenty-five books, nine of which have become New York Times best-sellers. His newest book is titled, Great Teams: 16 Things High Performing Organizations Do Differently.  Here are his responses to my questions.  As a Patriots fan, I especially loved his answer to my final question! 

1.  You focus in the book on the notion that great sports teams build a strong high-performance culture. You say that matters more than having the right offensive or defensive schemes and strategies. Can you describe the most important elements of a high-performance culture?

Don Yaeger: Culture is a buzzword that is all over the business publications these days, so I think it’s important to define it. In considering how the word specifically applies to a team setting, I came up with two possible definitions: 1) the conditions within the organization that promote either growth or failure and 2) the shared understanding of what to do in adverse situations. The effort to achieve that culture can be broken down to four essential pillars that I believe set a truly Great Team apart from one that simply performs well.

• Targeting Purpose— The team is connected to a greater purpose. Members understand whom they are serving and why that matters.

• Effective Management— The team is able to think creatively and act dynamically in order to stay fresh, effective, and relevant. 

• Activating Efficiency— Each member of the team brings a unique set of talents, experiences, perspectives, work ethic, personality traits, and know- how that melds with and complements those of the other team members. 

• Mutual Direction— There is a strong sense of understanding, appreciation, shared responsibility, and trust that unites and motivates the team to work together.

After studying the subject carefully and discussing it with truly great leaders, I found sixteen defining characteristics that special teams— the ones that are in a class by themselves, that accomplish more than just a winning season or a successful fiscal year, that pack extra punch and bring a degree of excitement to what they do— all share. These traits can be worked on independently by individual team members, but the truly outstanding teams use them to build on one another. Organizations that exhibit real greatness combine talent, relationships, and innovation in a variety of ways for the sake of achieving a shared goal. 

Great Advice For Writing Cover Letters

You are applying for that job you would really love to nab.  You have created a strong resume. Now comes the cover letter. What should it say?  How should you communicate your skills and experiences in a way that the reader will find compelling?  At Fast Company this week, Sara McCord has written an unbelievably good article about the mistakes that people often make when drafting cover letters.  She offers some great tips for how to strengthen your letter, grab a recruiter's attention, and make yourself stand out from the crowd.   

First, McCord argues that you have to get the basics write.  Make sure you proofread carefully.  Typos, spelling errors, and grammatical mistakes are all disqualifying immediately.  Address your letter to a specific person by name.  Don't address it, "Dear Sir or Madam."   Don't just thank the recruiter for considering you; make the case that you are the perfect fit given the requirements of the position and the culture of the company.   

Second, come up with a killer opening sentence that grabs the reader.  Don't start with, "I'm interested in applying for the marketing analyst position at your firm."  Instead, she suggests writing an opening sentence that makes the reader to want to know more about you.  She offers three examples:

• I’ve wanted to work in education ever since my third-grade teacher, Mrs. Dorchester, helped me discover a love of reading.
• My approach to management is simple: I strive to be the kind of leader I’d want to work for.
• In my three years at [prior company], I increased our average quarterly sales by [percentage].

Finally, she argues against compiling a laundry list of your skills in the cover letter.  Instead, focus on what distinguishes you from other applicants.  Don't just talk about skills.  Provide anecdotes, examples, and descriptions of experiences that illustrate the talents and capabilities you would bring to the position.  

McCord's article is a must-read for anyone applying for a job.  I would add one important piece of advice to her suggestions. You must know your audience!  Take some time to learn about the culture of the company.   That research will help you understand the approach you should take.  Can you be light-hearted or humorous?  The answer is simple: it depends.  Doing your homework on the company culture will help you find the right tone and format for that cover letter.  

Etsy Engineers Share Their Failures in Company-Wide Memos

Many organizations exhibit of culture of blame and shame when it comes to failures.  In a case study that I co-wrote with Amy Edmondson years ago, a doctor described the "ABCs of medicine" - in the past, he said, health care practitioners and administrators tended to Accuse, Blame, and Criticize when it came to medical accidents and mistakes.  Yesterday, I read a fascinating article about one firm's attempt to transform its attitude toward failure.  Etsy has tried to create a culture that encourages people to acknowledge, discuss, and learn from failures.   Here is an excerpt from the  article posted on Quartz: 

In a conversation yesterday (Sept. 17) with Quartz editor-in-chief Kevin Delaney, Etsy CEO Chad Dickerson revealed that people at the company are encouraged to document their mistakes and how they happened, in public emails.  “It’s called a PSA and people will send out an email to the company or a list of people saying I made this mistake, here’s how I made that mistake, don’t you make this mistake,” Dickerson said. “So that’s proactive and I think really demonstrates that the culture is self perpetuating.”  He was referring to the company’s efforts at practicing a “just culture,” based on the idea that blamelessness makes people more accountable, and more willing to admit mistakes.As described by Etsy CTO John Allspaw in an Etsy blog post, engineers (and now others at the company) who mess up are given the opportunity to give a detailed account of what they did, the effects they had, their expectations and assumptions, and what they think happened. And, crucially, they can give that account without any fear of punishment or retribution, in what’s called “a blameless post-mortem.”

I love this technique!   Etsy has done something quite remarkable here.  They are not simply demonstrating tolerance for failure.  They are not simply avoiding the tendency to point fingers when failures occur.  Etsy has gone one step further with this practice.  They are encouraging serious self-reflection on the part of their people.   The employees do  more than admit a mistake in these PSA e-mails.  They describe what happened and they analyze why events did not transpire as they had hoped or expected.  The review and analysis provides the opportunity for improvement, not only for themselves, but for others throughout the organization who read these PSAs.   

Love 'Em or Hate 'Em, Icebreakers Have Value!

Cari Room has written an article this week for New York magazine titled, "Icebreakers Are Terrible. They Also, Unfortunately, Work Really Well." She interviews former Rice University Anton Villado in the article. Villado argues that icebreakers accomplish three important things for a group: 

1. They calm people's nerves about being in an unfamiliar or novel situation.
2. They also provide an opportunity for the facilitator to model the behavior that people should expect throughout the session, and/or the behavior he or she would like to encourage. Team members also can model behavior, providing that all-important first impression about themselves. 
3. Most importantly, they provide an opportunity for self-disclosure. People grow closer to one another when they share about themselves.   Research shows that self-disclosure proves more effective at building relationships than simple small talk.  

Penn State Professor Susan Mohammed explains in the article that icebreakers can begin to build psychological safety within a group. Room writes, 

And even when the bonds it creates are superficial and temporary, both Villado and Mohammed say that an icebreaker can help to foster a sense of “psychological safety,” or an atmosphere in which people feel free to speak up — to question, criticize, say something out-there — without fear of being ostracized. “Having people do weird and crazy stuff, or step out and do something wild — having people feel kind of uncomfortable, basically — would begin to help foster that,” Mohammed says. You may hate every second of it, but you’re not the only one undergoing humiliation. If everyone in the room has to tell their life story in a silly voice, or mime their favorite thing to do on weekends, at least you all look stupid together.

Mohammed stresses, however, that one should set the appropriate expectations for icebreakers. They can begin to build psychological safety, but much more work needs to be done to create a climate where people truly feel comfortable speaking up, asking questions, admitting mistakes, and expressing dissent. I agree wholeheartedly. Ultimately, psychological safety will be shaped by how people begin to engage with one another as they work to solve real problems. Moreover, if the team has a leader, that person will have a substantial impact on the climate of psychological safety. Icebreakers can be helpful, but you have to build upon that "risk-taking" atmosphere with concrete actions that make people comfortable speaking up on real issues.

Design Thinking Builds Strong Teams

The Nielsen Norman Group has a drafted a terrific blog post titled, "Design Thinking Builds Strong Teams."  They argue that design thinking accelerates the process of building common ground for a team, and thereby enhances team effectiveness.   Here is an excerpt:

Teams are the foundation of a successful workplace. But working in teams can have a fairly large cost: members must spend time building common ground — that is, a body of common knowledge, assumptions, vocabulary, and cultural practices. In strong teams, the common ground has already been established and the overhead of communication is outweighed by the benefits of collaboration. As a result, these teams are able to be not only efficient, but also produce high-quality, fruitful outputs.

How does design thinking create common ground?  They argue that it provides team members with a  shared vocabulary.  Second, the design thinking process produces what they call "tangible artifacts" that facilitate shared understanding and productive conversation - artifacts such as storyboards, wireframes, and prototypes.  Finally, design thinking creates trust within a team because it values everyone's contribution, minimizes the traditional emphasis on hierarchy and status, and encourages all to speak up and express dissenting views.  

  

WD-40: Building a Culture of Learning Maniacs

Bill Taylor has written a terrific article for Harvard Business Review about what he learned from studying WD-40 and its CEO, Garry Ridge.  Taylor explains that many managers at established firms struggle with the "paradox of expertise."  By that, he means that the more experienced and knowledgeable you are in a particular field or industry, the more challenging it can be to see emerging trends, opportunities, and developments in that domain.  You become trapped by conventional wisdom, well-established rules of thumb, and implicit assumptions.   How do you overcome the paradox of expertise?  Taylor argues that you must become an insatiable learner.  As an example, he turns to Ridge and the culture he has created at WD-40.   The company has a long track record of success with an iconic brand.  One could easily see how such a firm could become complacent.  Ridge knew that the paradox of expertise could become his organization's undoing.  He set out to create a powerful learning culture.  Taylor explains:

Indeed, Ridge is so serious about the commitment to learning that he insists everyone at the company takes the “WD-40 Maniac Pledge,” a solemn vow to become, in his words, a “learning maniac”:

I am responsible for taking action, asking questions, getting answers, and making decisions. I won’t wait for someone to tell me. If I need to know, I’m responsible for asking. I have no right to be offended that I didn’t “get this sooner.” If I’m doing something others should know about, I’m responsible for telling them.

Ridge even sends a subtle message to employees with each email that he writes. According to Taylor, his electronic signature contains a phrase often attributed to the great Italian artist and sculptor, Michelangelo: "Ancora imparo." In English, that means, "I am still learning." People used the phrase in the 16th century to describe how one could and should continue to learn in old age just as he or she did as a child.

How to Network Effectively

We all know that having tons of LinkedIn connections does not make you an effective networker.  The quantity of connections does not serve as the primary driver of networking efficacy.  The nature of those connections matters.  Researchers have compared two types of networkers for years.  First, there are those that engage intensely in a closed network.  They connect with others who share similar knowledge, expertise, and experience.  In short, they stick to their silo.  They aim to deepen their expertise in a particular field.  Second, there are the brokers.  These people are good at bridging among pools of people with different expertise.  They help connect people in different closed networks.   Brokers are incredibly important.  

Who is the more effective networker - the person who builds connections with others to deepen their expertise in a particular area or the broker who bridges multiple silos?  Ronald S. Burt and Jennifer Merluzzi have discovered that "network oscillation" actually proves to be the most effective networking strategy.  They studied 350 investment bankers at one particular financial services firm, and they tracked them over four years.  Here's an excerpt from a University of Chicago story about their research:  

The short answer: the most-successful people take advantage of both systems—sometimes they broker, and other times they dive into closed networks. In fact, without this movement back and forth, their networks give them no advantage at all... Analyzing salary and bonus packages as well as year-end performance surveys proved revealing for Burt and Merluzzi. Bankers who were able to move between brokering and working in closed networks during the year reaped the greatest rewards. These individuals formed ties across the organization, gaining access to new projects and opportunities. But once they found an opportunity, they quit brokering and engaged deeply in their new project. When that project ended, they once again tapped into their broad network of contacts at the firm to find the next interesting project. Swinging between working intensely on a project and networking more widely did have a cost: these bankers sometimes saw their reputations suffer while they were on the bench. But the hit was temporary. And the compensation data show that these oscillating bankers made the most money over time.

Why People Leave Their Jobs

Bravetta Hassell of Chief Learning Officer magazine has a good article this month titled, "Employees Really Do Leave Managers.  Use L&D to Change That."  Here is an excerpt:

When it comes down to it, having free snacks in the employee break room, for example, isn’t as important as having a manager who appreciates his employees.  According to the report, “The Human Touch for Tech Talent: Employee Retention Could Be as Simple as ‘Thank You’,” employee responses to questions about what attracted them to a company and what kept them there say as much. The survey showed that 60 percent of employees said when analyzing a job offer, knowing whether staff feel appreciated by managers matters. Variables like how fast a person could move up in the company or how they’d be evaluated for raises were of lesser concern. Other highlights from the survey included:

• 33 percent of respondents want to know their manager always has their back compared to 22 percent of people who valued having a clearly defined career path, and 17 percent of respondents who found it important to receive regular performance feedback.
• 32 percent of respondents who looked back at ‘worst boss’ experiences said that person never gave credit where it was due.
• 28 percent of respondents to the same questions said that person rarely gave verbal praise or support.

What can learning and development professionals do about these findings?   According to Hassell, they can rethink the types of capabilities that they focus on during professional development  programs and initiatives.  These findings suggest a renewed emphasis on how to delegate effectively, how to recognize employees for their work, how to celebrate team successes, and how to maintain an open and ongoing dialogue with subordinates.  

The Path to Becoming a CEO: The Long and Winding Road

The New York Times published the findings of a fascinating new study by LinkedIn regarding the path to becoming a CEO.   They examined 459,000 people who had worked as management consultants at one point in their career.  They tried to discern some patterns regarding how and why some people reached the position of CEO of a company during their careers.  Here is how Neil Irwin described the findings in his article in today's New York Times:

To get a job as a top executive, new evidence shows, it helps greatly to have experience in as many of a business’s functional areas as possible. A person who burrows down for years in, say, the finance department stands less of a chance of reaching a top executive job than a corporate finance specialist who has also spent time in, say, marketing. Or engineering. Or both of those, plus others. However, there is still such a thing as too much variety: Switching industries has a negative correlation with corporate success, which may speak to the importance of building relationships and experience within an industry. Switching between companies within an industry neither helps nor hurts in making it to a top job. These are some of the big findings in a new study of 459,000 onetime management consultants by the social network LinkedIn. Experience in one additional functional area improved a person’s odds of becoming a senior executive as much as three years of extra experience. And working in four different functions had nearly the same impact as getting an M.B.A. from a top­ five program.

The results do not surprise me.  You need to master a diverse range of skills to become an effective CEO.  You have to understand the different functions and disciplines within a firm.  Therefore, accumulating a range of experiences tends to be helpful if you wish to become a chief executive.  It also speaks to the importance of being a successful lifelong learner.  You can't just build upon the expertise you have.  You must take risks and venture into domains about which you are not an expert, and be willing to learn quickly.