Thursday, June 22, 2017
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.
Tuesday, June 20, 2017
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."
Friday, June 16, 2017
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).|
Monday, June 12, 2017
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.
Wednesday, June 07, 2017
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.
Tuesday, June 06, 2017
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.
Monday, June 05, 2017
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.
Friday, June 02, 2017
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.
Thursday, June 01, 2017
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.