Five Essential Questions

My colleague Peter Nigro (finance professor here at Bryant University) gave me a little book to read this week:  "What, What?" by James Ryan, Dean of the Harvard Graduate School of Education.  What a fantastic read!  I laughed, cried, and learned a great deal.   Ryan offers five essential questions that we should all ask ourselves (not just once, but throughout our daily lives).   Here are the five questions:

1.  Wait, what?   In other words, ask people for clarification.  Ask them to elaborate. Seek to understand them more clearly before jumping to conclusions.

2.  I wonder... Two types of "I wonder" questions actually: I wonder why and I wonder if.  I wonder why demonstrates intellectual curiosity.  You are trying to understand what's really going on.  Then, you can ask, "I wonder if..."  In other words, what might be possible?  How might we improve things?  You open up your mind to new opportunities for growth, development, and change.

3.  Couldn't we at least...?   Sometimes we disagree vehemently with others.  This question seeks to find some common ground.  It looks for some small first steps that can bring people together.  It propels us to take some action, rather than waiting for the perfect grandiose solution.  It invites us to find small wins.

4.  How can I help?  With this question, we reach out to others, but we don't simply offer our solutions to what we perceive to be their problems.  We let them drive the conversation.  What do they need from us?  How can we contribute most effectively?

5.  What truly matters to me?  This question pertains both to specific meetings, projects, and decisions as well as to your life overall.  For particular tasks, asking this question enables you to get to the heart of the issue.  Where should we really focus our attention?  What are the key issues, and what are the things that distract us?  At a broader level, this question enables us to consider our values and our priorities in life.

The video below provides a brief introduction to these ideas.  I highly recommend reading the entire book.  It's a quick read (just over 100 pages).  I promise that it will be thought-provoking.

How Do We Deal (Dysfunctionally) with a Heavy Workload?

Diwas S. KC, Maryam Kouchaki, Bradley R. Staats, and Francesca Gino have written an HBS Working Paper titled "Task Selection and Workload: A Focus on Completing Easy Tasks Hurts Long-Term Performance." These scholars found that individuals choose to work on easier tasks when they experience heavy workloads. Why? People enjoy a positive feeling when they are able to complete a series of tasks in fairly short order. Thus, individuals choose to satisfy themselves by choosing to work on easier tasks when they have a ton of work to do. In the short run, that's a very productive strategy. They cross quite a few items off of their to-do list. However, the researchers find that this task selection strategy may have negative long term performance consequences. 

The study took place in the emergency department of a hospital. They studied over 90,000 patient visits to the emergency room over a two-year period. They found that doctors choose to work on easier patient cases when the ER is very busy. Naturally, they see more patients as a result of this bias toward selecting easier cases. In other words, short term productivity increases. However, the doctors may not capitalize on as many powerful learning opportunities if they always choose the easier cases. The doctors may not be as effective at tackling complicated cases if they work with those patients much less frequently. Indeed, the scholars found a negative long term effect on productivity if doctors exhibit this bias toward selecting easier cases when the workloads are high. 

What's the implication for all of us? Be careful before you simply choose the short-term satisfaction of crossing many easy items off of your to-do list. Think carefully about the long term benefits of tackling tougher tasks. It's a balancing act, of course. You probably should go after some of the low-hanging fruit. You just have to be careful that you don't spend an inordinate amount of your time there, and thus miss key opportunities for learning and improvement that come with more challenging work.

Unilever: Algorithms Replace Humans in Hiring Process

Kelsey Gee wrote about Unilever's "radical hiring experiment" in this morning's Wall Street Journal. Gee explained that, "To diversify its candidate pool for early-career roles that are a fast track to management, Unilever has ditched resumes and traditional campus recruiting. Its new process relies on algorithms to sort applicants and targets young potential hires where they spend much of their time: their smartphones."  

Algorithms have analyzed 275,400 job applications to date and chosen 1/2 of those candidates to advance to the next round of evaluation.  At that point, applicants "play a set of 12 short online games designed to assess skills like concentration under pressure and short-term memory."  Roughly 33% of those candidates move on to the next round of evaluation:  a video interview analyzed through artificial intelligence tools.  Finally, the top 300 candidates or so traveled to Unilever for in-person interviews.   The company claims that they saw top notch applicants in this final round, and they hired many of the candidates. 

What are the benefits and risks of this approach?  For Unilever, it enabled them to branch out beyond the usual small number of college campuses from which they recruited.   More and more companies are realizing that they are missing out on top notch talent by relying only on a few "prestigious" schools for recruiting.  This approach also tries to mitigate some of the bias effects from in-person interviewing.  Much has been written lately about the biases and other problems with usual job interviews.  What's the downside?  Perhaps certain types of candidates don't do well with techniques such as video interviews.   What about those online games?  Are you measuring the right types of skills?  What about "soft" skills that are harder to measure?   Companies will have to monitor such efforts to be sure that they aren't filtering out certain types of talented individuals because of the methods chosen.   

Please Consider Supporting My Run For the Troops

During my sabbatical year from Bryant, I'm training to run the Minneapolis Marathon on October 1st. I'm running to support Homes for our Troops (HFOT). This organization builds and donates specially adapted custom homes nationwide for severely injured Post-9/11 veterans, to enable them to rebuild their lives. I'm honored to be running to support these men and women who have sacrificed so much to defend our nation and protect our freedom. 

Most of these veterans have sustained injuries including multiple limb amputations, partial or full paralysis, and/or severe traumatic brain injury (TBI). These homes restore some of the freedom and independence our veterans sacrificed while defending our country, and enable them to focus on their family, recovery, and rebuilding their lives. 

Homes for our Troops is a privately funded 501(c)(3) nonprofit organization rated four out of four stars by Charity Navigator. Since its inception in 2004, nearly 90 cents of every dollar donated to Homes for Our Troops has gone directly to their program services for veterans. Charity Navigator has given the charity a perfect 100 score for accountability and transparency. Your money will be going directly to help veterans rebuild their homes and their lives. 

Please join me in my efforts to support this wonderful organization! You can donate here. Thank you very much!

Why Your Cellphone Bill is Decreasing

In an article by Ryan Knutson, the Wall Street Journal reports this morning that, "The cost of U.S. cellular service is rapidly plunging, reversing years of increases that have squeezed consumers’ budgets and generated huge profits for wireless companies." We are in the midst of a massive price war among the key players: AT&T, Verizon, Sprint, and T-Mobile. Knutson reports that prices have declined sharply in recent months: "The consumer-price index for wireless phone service, an indicator of current offers from cellphone service providers, dropped 12.5% in May from a year ago, according to the Labor Department. The index earlier fell 13% in April, the largest decline in the history of the category..." 

Why is the price of cellphone service dropping sharply? Why are we experiencing a price war among the major players? First and foremost, we have an industry with incredibly high fixed costs and relatively low variable costs. The cost of the infrastructure and the technology is astronomical. The marginal cost for you to speak one additional minute or send one additional text is virtually zero. Thus, the service providers have an incentive to cut price in an effort to cover their high fixed costs. The same dynamic exists in the airline industry. The airlines have an incentive to cut price so as to fill every available seat, since the marginal costs of an additional passenger are very low. Moreover, the growth in the market has slowed. Since most Americans now have a cellphone, the service providers have very few new customers to grab. Instead, they find themselves fighting over each other's customers and trying to steal them from one another. These dynamics have sparked the price war. As customers, we benefit.

Three Lessons from the Uber Mess

Yesterday, we learned that venture capital investors forced the resignation of Uber CEO Travis Kalanick.  The company has undergone a tumultuous year, including a massive sexual harassment scandal as well as accusations about stolen files from Google.  What can we learn from the challenges that the company has faced?  There are many lessons; here are three big ones:

1.  We have to be very, very cautious about situations in which investors place seemingly blind faith in a charismatic, successful CEO who is succeeding by challenging conventional wisdom and "breaking all the rules."  Where was the Board when clear warning signs had emerged about improper behavior quite some time ago?

2.  Startups cannot simply ignore human resources rules, policies, and procedures.  They matter.  You have to have guidelines for employee conduct.  There's a point where you stifle people with too much bureaucracy.  However, Uber seems to have gone too far in the other direction.

3.  Culture eats strategy for breakfast, lunch, and dinner.  Uber might have an amazing strategy that has catapulted it to remarkable success in a short period of time.  However, a rotten culture has taken down its CEO and many other top executives, caused lost market share to Lyft, and could be the downfall of the firm.  You have get culture right.   Values matter more than strategy.

Sabbatical Life

Creating Great Ideas: Combining Open Innovators and Extroverted Peers on a Team

Sharique Hasan and Rembrand Koning have conducted research on idea generation in teams, using a unique field experiment design.  These scholars conducted their field experiment within the opening week of an entrepreneurship academy in India during the summer of 2014.  The scholars begin by noting that prior research suggests that, "Individuals with higher openness are more creative because they seek out diverse information and experiences, but also recombine these more effectively into novel ideas."  However, they explore how creativity may be enhanced when we combine these open innovators with extroverted peers.  Why does the combination of individuals enhance creativity within a team?  They argue that extroverted peers provide new, unique, interesting, and diverse information to the open innovators,   In short, those conversations with extroverted peers provide fuel for the open innovators.  Here's a summary of their conclusions:

Contrary to prior research, we find that being open to experience alone does not lead individuals to generate better ideas (e.g. McCrae, 1987; Feist, 1998). Our findings suggest that this individual capability depends on the types of peers with whom a focal innovator converses. When open innovators are exposed to extroverted peers, they are more likely to develop higher quality ideas–ones that are evaluated higher, are more detailed, and have more distinct word usage compared to other ideas. Conversely, more open innovators whose peers are not extroverted appear to produce mostly average ideas. In terms of magnitude, while this effect alone will not make the lowest-quality ideas the best ones, it can shift ideas at the margins of “good” to “very good” or “very good” to “great.” This is equivalent of moving an idea from being at the 80th percentile of quality to being in the top decile. Overall, our findings highlight the importance for considering the specific nature of social inputs in to the production of good ideas. Moreover, this insight—about the value of a dyadic interaction for information acquisition and ideation—can fruitfully be used to design teams that have a preponderance of those individuals who can help develop high-quality ideas within teams.

You Don't Always Want To Focus

Dr. Srini Pillay, an author and executive coach who teaches part-time at Harvard Medical School, has written an intriguing HBR post about the value of "focus" in our work. Pillay argues that focus can enable us to perform outstanding work, but certain negative consequences may emerge if we are "too focused." Pillay argues, "The brain operates optimally when it toggles between focus and unfocus, allowing you to develop resilience, enhance creativity, and make better decisions too." 

What's an example of the value of "unfocus" in our work? Pillay points to a study by Denis Dumas and Kevin Dunbar in which the scholars found that one can solve creative problems more effectively by pretending to be someone else.  Assuming a different identity, or pretending to stand in someone else's shoes, can help people achieve better results at creative problem-solving tasks.  Specifically, Dumas and Dunbar invoked two stereotypes for their research subjects:  the "rigid librarian" and the "eccentric poet."   They asked subjects to either imagine themselves as the librarian or the poet, and of course, they had a control group in their study as well.  The students who imagined themselves as eccentric poets exhibited more divergent thinking than either the librarian group or the control group.  They conclude that, "divergent thinking... is a highly malleable rather than a fixed trait."  

Design Thinking: Observation Tips

When conducting field research as part of the design thinking process, we should keep in mind some of the key do's and don'ts of observational research.  Here are some key tips:

Source:  M. Roberto, Know What You Don't Know (2009). 

Will Immelt's Retirement Lead to the Break-up of GE?

Stunning news from General Electric headquarters this morning;  Jeffrey Immelt will step down as CEO, and John Flannery will succeed him.  Many people wonder what's next for GE given the leadership change.   Immelt has transformed GE in many ways, but some big strategic questions remain.  While he divested a number of businesses during his tenure, the company remains a conglomerate with some seemingly unrelated businesses.   As the stock has languished in recent years, many analysts and observers have asked:  Should GE break up? Is the whole not worth the sum of the parts?   After all, one has to wonder how powerful the scope economies (synergies) are when combining a healthcare company and a jet engine manufacturer under one corporate parent.   Flannery's background and initial comments suggest that a broad strategic review will take place, and nothing is off the table.  

Conglomerate strategies may have made sense many decades ago, but focused firms and related diversifiers have outperformed unrelated diversification strategies in recent years.  In GE's case, it often has been viewed as an exception to the rule when it comes to unrelated diversification.   While many such conglomerates have faltered and broken up in recent decades, GE prospered.  Recent performance has not been as good though.  GE does not seem to have powerful economies of scope (typical synergies), but in the past, it has exhibited strong governance economies. In other words, it used common management systems and methods (the GE way) across the range of businesses, adding value as a result.  Moreover, it had a strong talent management system that moved people across the business and enabled highly effective management of a diverse array of businesses.  Are those governance economies still as strong as they used to be?  Is that enough to justify keeping some unrelated business units together.   John Flannery will have to answer those questions.  

One final note:  John Flannery is a fair bit older than Jack Welch and Jeff Immelt were when they became CEO.  He is 55 years old.  Welch and Immelt were each ten years younger when they became CEO in 1981 and 2001 respectively.   One might conclude, therefore, that the Board does not expect Flannery to serve for as long as his predecessors.  Could that mean Flannery will have more urgency to conduct a strategic review and make substantial changes in the near future?   I think so.  

Innovating Around the Box

Knowledge@Wharton reports on a new book by Wharton Professor David Robertson. (The Power of Little Ideas).   In the author interview, Robertson describes his focus on innovation associated with complementary products and services.  In short, he's not focused on simple incremental innovations to existing products.  However, he's also not focused on breakthrough innovations or products in entire new categories.  Instead, Robertson looks at how companies can drive profitable growth through the development of complementary products and services.  In pursuing such innovation, companies can not only drive growth, but deepen their competitive advantage.  Many companies see slowing growth in their core market and look for the next big thing.  Many of these firms should focus on complementary growth first, but they miss those opportunities.  LEGO is a good example of a firm that looked for the next big thing, and nearly went bankrupt.  They recovered by thinking about how to grow "around the brick" and "around the box" as he explains:  

My previous book was about Lego, and that was a story about a company that figured out that you didn’t want to innovate inside the box — that wasn’t going to get them anywhere — and you didn’t want to innovate outside the box because that almost put them out of business, but rather, around the box. Complementary innovations around a core product — the brick for Lego — was what really led them to their recent success.

I got my house painted a couple of summers ago, and the contractor I hired put together a proposal. He helped me choose colors and helped me decide what kind of paint, what things needed painting the most, and how I’d manage on a limited budget. He put together a proposal, and he picked Sherwin Williams paint.

I looked at my favorite consumer ratings magazine, and Sherwin-Williams paint is good, but it’s twice as expensive as another paint that’s equally good. So I talked to him, and I said, “Can’t we use this other paint?” And he said, “Well, yes, we could, but it’s going to raise your price.” I said, “I don’t understand, the other paint is half the price.” And he said, “Yeah, but paint is only about 15% of the total cost of your project. I have to think about all the supplies; I’ve got to line up the labor; there’s the overhead of running a company, etc..”

He said, “What Sherwin-Williams does is help me though the entire process of working with you, from helping you choose your colors — there’s a Sherwin-Williams color consultant — to figuring out how much paint is needed for the primer, and for the paint itself, brushes, tarps, all the other supplies. Then, during the project, it is keeping me supplied — I can return extra primer if I don’t need it. If I run out of something, that Sherwin-Williams rep will be over at the site, delivering what I need. Then, at the end, he helps me put together that next proposal. Because there’s always a next proposal, as any homeowner knows.

I looked, and it turns out within a five or 10-minute drive of my house, there are more Sherwin-Williams stores than there are Starbucks, and that’s because they realized who their customer is. It’s not me. I’m the end consumer, of course, and I’m the one that has Sherwin-Williams paint on the house. But it’s that small business, the painting contractor, [that they focus on]. Sherwin-Williams, like Lego, realized it’s not so much about the product — their product is a can of paint — it’s about their innovations around the product that make that product more valuable.

Leaders as the Rim vs. the Hub

In Adam Bryant's New York Times Corner Office column, he interviewed Edison International CEO Pedro Pizarro recently.   Pizarro offers this very insightful description of how he thinks about the role of a leader in an organization: 

I see a lot of leaders who want to be the hub, with their people as the spokes, bringing them information. My visual for leadership is that if the team is a wheel, I’m actually the rim. I’m not the center. My job is to keep the spokes together, keep the team together and really help that team perform because they, collectively, are going to have a lot more insights than I will. It also means that when you have to go through mud, the rim goes in first. But that’s the way it should be. 

How awesome is that?!  I love the notion of the rim holding the team together.  In addition, he describes the rim as going through the mud first.   Imagine those situations where the leader can take the flak for his or her team, or perhaps serve as a buffer between the team and outside forces that may get in the way of the work being done.  A leader does not simply direct his or her team.  An effective leader also shields his or her team at times and takes responsibility when things go wrong... rather than throwing the team under the bus.  

Making People Feel That They Count

Andrea Illy, CEO of Illy Coffee, talks in this short video about how important it is for people to feel that they "count" in an organization.

Do Reusable Grocery Bags Lead to Unhealthy Eating?

Scholars Uma Karmarkar and Bryan Bollinger have conducted fascinating new research regarding reusable grocery bags.  Through both empirical data from the field and experimental studies, Karmarkar and Bollinger discovered how shopping with reusable grocery bags influenced consumer behavior.  Not surprisingly, they found that people tend to buy more organic foods when they shop with reusable bags.  However, they discovered that these same consumers indulge more as well. While they might buy more organics, they also buy more ice cream, cookies, and the like.  

Could reusable bags really affect people's behavior in this manner?  Think about what might be going through our brains as we shop.   It's almost as if we decide that we deserve a reward for helping the environment.  We've done something good for the planet, so why not splurge and have a bowl of ice cream when I get home.  Of course, that bowl of ice cream might not be very good for our health.  Yet, we are not necessarily thinking about that damaging effect in the moment. Instead, we are looking to indulge as a reward for "good" behavior.   

To me, the research reinforces the age-old law of unintended consequences.  We might not ever imagine such a negative impact of shopping with reusable bags when we begin shopping with them.  Yet, this unintended consequence emerges.  Humans foil even the most well-intentioned schemes and systems.  We behave in ways that are sometimes hard to predict in advance.  We always have to remember the law of unintended consequences when we try to reshape human behavior.  

Panera Bread, Technology, and Wait Times: The Value of Prototyping

Popularity can be a blessing and a curse for fast casual and fast food restaurants.   Naturally, these chains want as many customers as possible to frequent their locations.  However, customers will become disenchanted very quickly if the wait times become lengthy.   The easy way to solve these issues is to open more locations.   You can't continue to do that forever though.  You have to be able to drive same-store sales, and you must address wait times in order to maintain the customer satisfaction necessary to achieve that revenue growth.  

Panera Bread faced this issue in recent years.  They tackled the problem head-on with a number of initiatives, including the use of technology.  The Wall Street Journal discusses their strategy in an article today titled, "How Panera Solved Its Mosh Pit Problem."   Mobile ordering became a key part of Panera's strategy.   They have done an amazing job with the Panera app, and the mobile ordering system put in place along with that app.  As a frequent customer, I find the mobile ordering system simple, easy-to-use, and very convenient.  I often will order on my phone when I leave my office or home, and I can simply walk in and pick up the order from a shelf near the entrance as soon as I arrive at Panera. Payment is already taken care of via the app.  

How did Panera develop such an effective system?   They prototyped, and they iterated many times.  They used a prototype store in Braintree, Massachusetts as their testing ground.  Even the top two executives spent a great deal of time watching how workers and customers interacted in this location.   They didn't settle quickly on one solution, devised in a boardroom somewhere. They listened to feedback, and they adapted based on that feedback.   What a great innovation story! The article describes the approach, led by CEO Ronald Shaich and President Blaine Hurst:

The chain opened a prototype Panera in Braintree, Mass., to test all elements of “Panera 2.0”: self-order kiosks, delivery, digital ordering and a new practice of bringing food to customers’ tables.  Messrs. Shaich and Hurst spent about 100 hours a week in that Braintree cafe observing what would work.  Easing the ordering bottleneck by taking orders online, instead of at the counter, wasn’t enough: The kitchen had to be able to handle the volume. Allowing customers to place orders themselves led to more customization, but also more staff mistakes. The company revamped the way employees process orders in an effort to minimize errors by simplifying the kitchen display systems.  “It was literally hundreds of these little things that we did,” said Mr. Hurst, who became company president last year after holding several other executive positions with Panera.

Elmer's Glue: The Slime Craze

In 1947, Borden introduced Elmer's Glue packaged in a glass bottle. Over the years, it became a key item for elementary school classrooms throughout the country. Seventy years later, Elmer's Glue (owned by Newell Rubbermaid now)  has experienced an interesting phenomenon, fueled by social media.   Product sales have skyrocketed over the past year, as young people throughout the country enjoy the "slime" craze.  They've all learned how to make slime using Borax and Elmer's Glue.   In March, Money magazine reported on the remarkable profit-making venture launched by Theresa Nguyen, a 13-year old from Texas.  She earns $3,000 per month selling her slime creations.  Her Instagram account has 665,000 followers.   Her most recent post already has 149,000 views.  Unbelievable! 

Newell has ramped up production of its glue to meet skyrocketing demand.  Meanwhile, the company has also set up an extensive website with its own videos, recipes, and the like.  It all sounds like a terrific story.  Why should Newell be careful though?   Kids are fickle.  Fads come and go.  Will the slime craze be sustainable, or will kids move on next month or next year?   Newell will have to be careful as it ramps up production.  The company will want to be cautious about making large investments to extend capacity.  Moreover, it will have to careful as it manages inventory.   It should strive to meet rising demand while the craze is ongoing... after all, you have to take advantage of the fad while it's ongoing.  However, you don't want to get caught with huge amounts of excess inventory if the fad suddenly stalls out.  In addition, you have to think carefully about how to extend the surge in demand. How can you take steps to insure that it's not just a passing fad? How can you come up with new recipes or ideas that build upon what kids are already doing?   How do you create activities that art teachers and others can use that enable sales to continue to grow?  Finally, and perhaps most importantly, you don't want to damage the authenticity of this craze.  You don't want kids and parents to begin to perceive Elmer's as pushing sales in an inauthentic way.    You want kids such as Theresa to spread the word more so than the corporate social media managers.   Authenticity should be a key priority as the company takes steps to market its product.