Monday, September 26, 2022

How Important Are Face-to-Face Interactions for Innovation?

Source: www.lifesize.com

Much has been written about the impact of remote work on collaboration and innovation in the workplace. Yet, few rigorous studies have attempted to document the actual impact on innovation. Now comes a fascinating new paper from David Atkin, M. Keith Chen & Anton Popov.  They used an enormous amount of smartphone geolocation data to track face-to-face interactions.   Their research sample includes over 51,000 employees in Silicon Valley in 2016 and 2017 (pre-pandemic).   Here's an excerpt from their paper:

Our rich data on interactions allow us to open the black box of knowledge spillovers and isolate a particular channel: face-to-face meetings. To do so, we first link worker interactions—measured by the probability that a worker from one establishment “meets” a worker of another establishment by being in the same place at the same time with patent citations between their employers, an observable proxy for knowledge flows. 

To calculate these meeting probabilities, we combine smartphone geolocation data with maps of building rooftops for all patenting firms in Silicon Valley, assigning workers to establishments based on where they spend a large fraction of their waking hours. To assign firm-level citations to establishments, we scrape citation data from recent patent applications and use the inventors’ hometowns coupled with the housing locations of workers to probabilistically assign citations across multi-establishment firms. The resulting dataset of establishment-to-establishment worker meetings and citations reveals a strong positive relationship between face-to-face interactions and knowledge flows, even after conditioning on rich controls for the physical distance between establishments.

Note the final sentence.  Face-to-face interactions enhanced knowledge flows. They documented a strong positive effect of face-to-face interactions on patent citations.  Here's more from the authors:

Implementing this approach, we find that face-to-face meetings significantly increase citations between establishments, with the strength of the effect twice the impact of physical distance on citations. Eliminating a quarter of face-to-face meetings in Silicon Valley would reduce the number of citations by approximately 8 percent..." 

Naturally, some will argue that we have learned how to collaborate remotely during the pandemic, and have we have mastered a batch of technologies that promote virtual collaboration.   Certainly, we have  become much more effective at communicating and collaborating with others spread across remote geographic locations.  Yet, remember that this study documents many informal, serendipitous face-to-face interactions among employees.   Those interactions are much harder to replicate virtually.   While many leaders are concerned about losing employees if they try to mandate a return to the office, they do have to consider this study's implications regarding remote work and innovation.  Hopefully, more researech will follow, enabling us to gain a deeper understanding of the value of face-to-face interaction in the new product and new process development process. 

Wednesday, September 21, 2022

How Employees Perceive Those Who Undercommunicate vs. Overcommunicate


Some leaders communicate early, often, and quite effectively.   Others overshare.  They send out a constant stream of messages, perhaps risking information overload for their organization members.  Finally, perhaps most often, we find that leaders undercommunicate.  They fail to offer transparency, and they fail to keep employees abreast of the latest developments at the firm.   Scholars Francis Flynn and Chelsea Lide conducted a great new study to examine the perceptions of employees in the cases of overcommunication vs. undercommunication.   They found that employees clearly prefer more communication to less, even if the risk of information overload exists.   Unsurprisingly, the scholars find that most leaders believe that they are communicating sufficiently, when in fact, they are not.  Here's more on the specific perceptions employees have and their implications for leaders, from Stanford Leadership Insights: 

Flynn and Lide’s research shows that employees’ preference for too many versus too few messages stems from the perception that even if an overcommunicating leader can’t communicate the ideal amount, at least they mean well. Overcommunicators “may be given the benefit of the doubt by their employees, who might view them as trying to meet their needs, even if they are not necessarily succeeding,” Lide says. Making an effort can give the impression of empathy, whereas undercommunicators are “not really seen as trying at all. Instead, they tend to be seen as really missing the mark in terms of meeting the needs of their employees.”

Flynn says that these results contrast with prior research that found that information overload hurts employee performance. “Overcommunication may be seen as annoying and a nuisance, but it’s not seen as a damning flaw for a leader, partly because a leader’s overcommunication is seen as an attempt to benefit you, even if it is misguided, as opposed to an attempt to undermine you or simply ignore you.”

Friday, September 02, 2022

Failing to Prepare for a CEO Succession

Source:  CNBC


Yesterday, Starbucks announced the hiring of a new CEO -  Laxman Narasimhan.  His former organization's stock (Reckitt Benckiser) dropped by 5% upon release of the news, suggesting investors believe its a significant loss for that firm.

As most readers know, former CEO Howard Schultz had to step in as interim leader of Starbucks several months ago, after the departure of Kevin Johnson.   The move represented Schultz's second return to the firm after his long tenure as CEO. On two occasions, Schultz had to step in when the firm was underperforming, and in both cases, it appeared that Starbucks did not have a successor ready to take over.  Why was Starbucks not prepared for these two transitions?  Moreover, given the problems Schultz has unearthed and encountered during his few months as interim CEO, one wonders if the Board didn't act quickly enough to move on from Kevin Johnson.  

These changes at Starbucks came to mind when I thought about a recent paper published by qresearchers David Larcker, Brian Tayan, and Edward Watts. They found that, "many companies are slow to terminate underperforming bosses, get caught flat-footed when a CEO suddenly departs, and often fail to appoint a viable or permanent successor."  Here's an excerpt from the Stanford Insights article profiling this research:

Succession planning is a taboo subject that tends to be neglected in many companies, Larcker says. One reason is that directors may feel awkward about broaching the subject with CEOs, as it suggests dissatisfaction with their performance. “It’s like coming home from school with a bad report card and explaining it to your parents,” Larcker says. “It’s not a fun thing to do.” And personal ties can make directors go easier on the CEO.

One of the most striking findings unearthed by the paper was that 4 out of 10 CEOs retain their jobs despite five years of worst-in-class performance based on return on assets.  Larcker puts this down to risk aversion. A CEO search can be time-consuming and expensive, and the stakes are high. One study estimates the cost of appointing the wrong leader at more than $100 billion. Bad picks can cause stock price drops along with stalled momentum, lost customer goodwill, and diminished trust within the organization. “There’s a reluctance to do it,” Larcker says.

Friday, August 26, 2022

The "Quiet Quitting" Debate

Source: The Street

Several weeks ago, Lindsay Ellis and Angela Wang wrote an article for the Wall Street Journal on the "quiet quitting" phenomenon in the workplace.   Here's an excerpt:

Zaid Khan, a 24-year-old engineer in New York, posted a quiet quitting video that has racked up three million views in two weeks. In his viral TikTok, Mr. Khan explained the concept this way: “You’re quitting the idea of going above and beyond. You’re no longer subscribing to the hustle-culture mentality that work has to be your life,” he said. Mr. Khan says he and many of his peers reject the idea that productivity trumps all; they don’t see the payoff.

Naturally, the concept of quiet quitting has sparked a ferocious debate about work ethic, employee engagement, and organizational culture. Today, Kathryn Dill and Angela Wang wrote an article for the Wall Street Journal about the "backlash" against the quiet quitting movement. They present several people pushing back:
  • Arianna Huffington: “Quiet quitting isn’t just about quitting on a job, it’s a step toward quitting on life."
  • Kevin O'Leary: “You have to go beyond because you want to. That’s how you achieve success."
  • Amy Mosher: “It’s not about the quiet quitters. It’s about everybody else and the unfairness that occurs there."
For me, the discussion certainly creates a fair amount of concern.  I do worry about work ethic among a segment of the workforce.  I'm someone who loves my work and has always tried to go above and beyond for my students and my institution.  I would have a very hard time even contemplating quiet quitting.  However, I do understand why some employees have disengaged.  Moreover, I think the quiet quitting phenomenon should cause business leaders to seriously rethink four key issues.  They have to address these organizational weaknesses if they want to prevent people from disengaging in this manner:
  1.  Why are people disengaged? Is it really because they are overworked and trying to dial back their workload, or is it because you have not provided them meaningful, purposeful work and some voice in the organization?  Would they work much harder if they were passionate about a project or believed that their work could have a substantial impact on customers and other constituents of the organization?  The job here is to rethink the roles people have and the way that work gets done.  
  2. How are we measuring performance and providing feedback?  Is it possible for someone to coast unnoticed?  If so, that's deeply problematic.  Managers need to have a firm grasp on the way that work gets done, as well as how the workload is shared (equally or unequally) among their team members.  Providing feedback often is critical, but so is listening to hear people's concerns about their role and the organization's processes and systems.  
  3. Are we investing appropriately in developing our people?  How can we improve their skills and capabilities?  Workers will invest in their organizations if the leaders demonstrate a willingness to invest in them.  Yes, you might invest in their training and development and then they might leave.  The investment is worth the risk.   They will disengage or perhaps leave anyway if they are not growing and developing on the job.  
  4. Have our highest performers developed a perception of unfairness about how the workload is shared?   Perceptions of fairness have a substantial impact on organizational commitment and buy-in.  You will lose your best people if they think others are not carrying their fair share of the workload.  

Monday, August 22, 2022

Becoming Vigilant & Detecting Early Warning Signs

Source: Flaticon

Wharton decision-making experts George Day and Paul Schoemaker have identified four strategies for becoming vigilant leaders who can detect early warning signs effectively.  They recognize that the best companies overcome tunnel vision, avoid complacency, and scan the environment successfully to identify opportunities and threats.  Here are their four strategies:

1. Assemble a diverse team of independent thinkers: "One way to scope is by assembling a diverse team of independent thinkers from both inside and outside the company who can, as one of our clients phrased it, 'tap into the organization’s paranoia' and invite everyone to voice hunches, concerns, doubts, or intuitions that would otherwise remain dormant."

2.  Ask questions that acknowledge the limits of existing knowledge:  Effective leaders admit what they personally don't know and where key gaps exist in the organization's expertise.  Day and Schoemaker advocate asking three types of questions: learning from the past, interrogating the present, and anticipating the future.  They write, 

One method for learning from the past is to use past successes to create watching and listening outposts in other markets by asking, “Who there has a consistent record of seeing sooner and acting faster?” and “What is their secret?” Many companies interrogate the present by monitoring blogs, social media sites, and chat rooms for signs of brewing trouble with customers, with an eye toward timely remedial action. Vigilant organizations pay special attention to customers’ evolving behaviors and needs. One way to do this is by studying “edge cases” that could suggest opportunities or threats. (In engineering, the term edge is used to describe situations that purposefully push the limits.) To prepare for what’s ahead, leaders can develop different scenarios that reflect how today’s uncertainties might play out in years to come. To stimulate scenario planning, leaders should pose guiding questions about the future such as “What surprises could really hurt us (or help us)?” and “What might be some future surprises as big as those that we saw in recent decades?”

3.  Use active environmental scanning techniques:  By that, the scholars mean that you should develop hypotheses and then use scanning to try to test those hypotheses.

4.  Employ the wisdom of crowds to choose which signals to amplify and clarify:  Scanning can identify many opportunities and threats.  The challenge, then, is to determine which issues on which to focus attention more closely.  One way to choose is to employ the wisdom of crowds - let a broader group of people voice their opinions as to which issues warrant further scrutiny. 

Wednesday, August 17, 2022

Should Disney Divest ESPN?

Dan Loeb, (Source: CNBC)

News reports this week indicate that activist investor Dan Loeb has written a letter to Disney's leadership team, calling on the firm to make a series of strategic changes. Specifically, Loeb recommended a divestiture of ESPN. He also recommended that Disney accelerate the planned acquisition of Comcast's 33% stake in Hulu, and then for Disney to integrate Hulu into its Disney+ streaming service.  Disney's leadership has rebuffed Loeb's attempts to push for change.  

The ESPN recommendation certainly has triggered a lively debate.  Students will find this question an interesting one that goes directly to the heart of many core corporate strategy concepts. On the one hand, ESPN has been a cash cow for Disney for years. According to CNBC, "Disney is making more money from cable subscribers than any other company solely because of ESPN. ESPN and sister network ESPN2 charge nearly $10 per month combined, while Disney requires pay TV providers to include ESPN as part of their most popular cable packages."  Moreover, ESPN+ has become an important part of Disney's efforts to offering streaming options for customers.  ESPN+ has had limited content to date, but perhaps, Disney will eventually offer customers an opportunity to stream all Disney and ESPN content in a true over-the-top option for those wishing to cut the cord.   

Imagine having all Disney cable channel content, all ESPN cable channel content, and all Disney/Hulu streaming content available directly to customers who don't want to purchase cable.  Disney has been reluctant to make this type of aggressive move, in part because the firm continues to generate a ton of cash from fees secured through cable TV subscriptions.  Moreover, Disney would anger cable television partners greatly if it circumvented them completely and went directly to customers.  Still, as more and more people cut the cord, the calculus there may change, and Disney may pursue a complete over-the-top solution for customers.  

On the other hand, in corporate strategy, we typically argue that multiple businesses should only be owned and operated under one roof if they pass two tests:  the better-off test and the ownership test.  The better-off test asks whether significant economies of scope exist, such that ESPN has a stronger competitive advantage because it is owned by Disney.   Loeb argues that it is not obvious ESPN has a more powerful advantage because it is part of the Disney corporate family.  For example, in his letter, he writes, "“ESPN would have greater flexibility to pursue business initiatives that may be more difficult as part of Disney, such as sports betting."  Moreover, the synergies between ESPN and other parts of Disney do exist, but they are not nearly as substantial as, for example, the synergies between the theme parks and the movie studio.  

The ownership test asks whether the corporate parent needs to own a particular subsidiary to actually achieve key benefits of collaboration.  Could another organizational arrangement (ranging from market contracts through strategic alliances or joint ventures) be more efficient and effective than full ownership?  Here too Loeb argues that ESPN may not pass the ownership test.  He writes, "We believe that most arrangements between the two companies can be replicated contractually, in the way eBay spun PayPal while continuing to utilize the product to process payments.”  In other words, ESPN could still work with Disney and its portfolio of companies without being fully owned by the corporate parent.   This argument reminds me of one criticism back when Disney purchased ABC in the mid-1990s.  Some analysts pointed out that Disney already collaborated closely with ABC on events such as the Disney Sunday night movie of the week on ABC (which Michael Eisner would introduce).  The analysts then argued that Disney could pursue more of those types of partnerships and collaborations without having to spend billions to acquire ABC. 

The debate will be fascinating to watch.  The key point here is that Disney should not necessarily own ESPN simply because the subsidiary is profitable.  It also should not necessarily divest ESPN simply because cord-cutting is reducing subscribers at the sports network.  The longer strategic view should be driving this decision with a focus on these two critical corporate strategy tests.  


Tuesday, August 09, 2022

Rationalizing a Splurge: Not Just An Individual Decision-Making Error

Source: Tripadvisor

University of Chicago Professor Abigail Sussman has conducted some interesting research on how and why individuals tend to rationalize splurging.  She has studied this behavior in both the context of financial decisions and eating/dieting behavior.  Sussman finds that people tend to view decisions in isolation, and they view a particular consumption decision as a special one-time event.  Oh, it's a wedding, and it's a special celebration... so I can splurge on the giant piece of wedding cake.  Or, I have an event to attend, so it's ok to splurge on a nice new suit.  Examining events in isolation, as one-time events, enables us to deviate from disciplined decision making.  

People don't tend to look at categories of decisions.  For instance, there most likely are a series of opportunities to splurge on various delicious food and spoil our diet.  The wedding cake is not likely the only chance to splurge.  We have to stop looking at decisions in isolation, according to Sussman. 

The same logic holds for business decisions, in my view.  Company leaders sometimes can perceive opportunities or threats as one-time special events, and thereby justify an investment that might otherwise seem inadvisable.  For example, executives might convince themselves that this acquisition opportunity is unique, and that they simply can't let it pass them by.   They have to overpay, or they will never have a similar chance in the future.  Of course, the opportunity often is not that unique, and overpaying often leads to disaster.  Exercising some discipline and restraint is essential in these situations.  Ask yourself: Is this situation as unique as we are portraying it?

Wednesday, August 03, 2022

Not-so-Hidden Costs of Employee Turnover

Source:  Workstyle 

We all know that employee turnover can be very expensive.  Searching for, hiring, onboarding, and training new employees proves to be a costly endeavor for most firms.  If turnover increases, these costs can become quite burdensome.  A new study documents another significant cost of employee turnover - the decrease in product quality that can result from that loss of experienced and knowledgeable employees.  The paper is titled, "The Hidden Cost of Worker Turnover: Attributing Product Reliability to the Turnover of Factory Workers" by Ken Moon, Prashant Loyalka, Patrick Bergemann, and Joshua Cohen.  

The scholars studied the failure rates of 50 million cellphones produced by a major Chinese manufacturer and tracked the performance of those phones over four years of customer use.   Here's an excerpt from Knowledge@Wharton documenting the findings: 

  • Each percentage-point increase in the weekly turnover rate for workers increased product failure by 0.74% to 0.79%.
  • Failure was 10.2% more common for devices produced in the high-turnover weeks following payday, which was once a month, than for devices produced during the lowest-turnover weeks immediately before payday.
  • In other weeks, the assembly lines experiencing higher turnover produced an estimated 2% to 3% more field failures on average.
  • The associated costs amounted to hundreds of millions of dollars.

Thursday, July 28, 2022

JetBlue Acquires Spirit Airlines: Will Straddling Work?

Source: Getty Images

The bidding war for Spirit Airlines has ended.  JetBlue and Frontier both sought to acquire Spirit.  Today, we learn that JetBlue has completed the deal at a price of $3.8 billion.  Alison Sider of the Wall Street Journal reported on the deal, quoting JetBlue CEO Robin Hayes: 

Buying Spirit would supercharge JetBlue’s growth, accelerating its plans by years, Mr. Hayes has said. The combined airline will have 458 planes—up from JetBlue’s fleet of just over 280 jets now—and will have over 300 more on order. Spirit’s pilots are a big part of the allure as well, at a time when airlines are struggling to replace the thousands who retired during the pandemic and are facing a growing shortfall.

Will the deal create value in the long term for JetBlue?  It's a fascinating question.  Historically, firms in the airline industry has struggled to be consistently profitable.  Richard Branson once joked that the easiest way to become a millionaire is to start as a billionaire and then open an airline.  Airlines have had even more trouble being profitable when they have tried to straddle two contrasting business models.  For instance, when Delta launched Song to compete with the likes of Southwest, they struggled mightily.  The same goes for United with Ted, and British Airways with its Go! subsidiary - which aimed to compete with EasyJet and Ryanair in Europe.  In each case, the full-service legacy carrier tried to also run a low-cost subsidiary, and the two business models did not co-exist successfully in the same corporation.  

 
"The offer of $3.6 billion, or $33 per share, represented a premium of around 30% over the price Frontier had agreed. Clearly, JetBlue sees a value in the carrier, but why?  On the surface, they aren’t exactly a match made in heaven. Spirit is a true ULCC (ultra low cost carrier), lightweight, efficient and no-frills; JetBlue is very much a hybrid airline, offering better services at affordable price points, but not truly low-cost. At first glance, Frontier looks to be the better option, but how does that pan out when we consider routes, fleet, and what’s best for the passengers?"  

Bailey concludes that Frontier seemed a better fit as you consider competitive positioning, fleet configuration, and route network.  She explained, "The Frontier-Spirit tie-up would have created the largest ULCC in the country, with a fleet of almost 500 aircraft targeted by 2026."  

Perhaps, though, JetBlue doesn't plan on operating two contrasting business models moving forward.  A quote from CEO Robin Hayes in the Wall Street Journal today seems to suggest a shift away from the ULCC strategy at Spirit:

“This is about creating a larger JetBlue,” Mr. Hayes said Thursday. JetBlue has said it plans to retrofit Spirit’s distinctive bright yellow planes to match its own fleet, including tearing seats out of Spirit’s more crowded cabins. The combined airline would be based in New York, with Mr. Hayes at the helm, the airlines said Thursday.

Ok, so perhaps we won't see an attempt to straddle.  This quote though suggests a different question: If JetBlue plans on transforming Spirit to match the existing JetBlue strategic positioning, then what's the rationale for the merger?  Why acquire the airline rather than just contining to add planes and routes to the existing JetBlue network?  It will be interesting to hear and see why acquisition might create more value than organic growth in this case.  Many people have their doubts about this deal... understandably.  

Monday, July 25, 2022

Rules for Living a Happy Life

Image source: Forbes

Harvard Business School Professor Arthur Brooks writes a terrific column for The Atlantic about achieving happiness in life. He also teaches a course on this subject to MBA students, as described in this recent Wall Street Journal article. To celebrate his 100th column this weekend, Brooks highlighted his "three biggest happiness rules."

Maxim 1: Mother Nature doesn’t care if you are happy.

Brooks argues that we are wired to desire and pursue worldly rewards such as power and wealth. However, these materialist pursuits rarely lead to enduring happiness.

Maxim 2: Lasting happiness comes from habits, not hacks.

Books, social media, and television all love to proclaim the value of various "hacks" for increasing our happiness.  While these may provide a short-term boost for us, they also don't tend to lead to substantial and enduring increases in our happiness.  Instead, Brooks argues we should focus on cultivating good habits, rather than chasing the latest popular hacks.  

Maxim 3:  Happiness is love.

Brooks writes, "Research on people who wind up happy (and healthy) as they grow old shows that the most important part of life to cultivate is a series of stable, long-term love relationships...Here’s a handy formula to go by: Happy people love people and use things; unhappy people use people and love things."

Thursday, July 21, 2022

What Driving a New Car Teaches Us About Managing Enterprise Risk


If you have purchased a new car in the past few years, you probably have many new technological features to "assist" your driving:  forward collision warning, lane departure warnings, lane keeping assist, back-up camera, adaptive cruise control, blind spot monitoring, etc.   Hopefully, these features make us safer.  Theoretically, they should help reduce human error.  However, four countervailing forces emerge when you install such an array of safety features in a vehicle.  

1.  Drivers develop a false sense of security, and therefore, they take more risk.  Perhaps they drive faster, or they are more apt to text behind the wheel.  

2.  Drivers become overly dependent on the technology.  Over time, their skills erode as the car makes more and more decisions for them.   Consider a scenario where suddenly your back-up camera and parking assist features go away.  Can you parallel park as effectively as you did ten years ago?  

3.  Drivers develop alarm fatigue.  All the warnings and signals become annoying, and drivers simply start ignoring some of them (or turning them off).   

4.  The additional complexity of the vehicle becomes problematic and adds to the risk of a major failure.  For instance, consider renting a vehicle from a different manufacturer than the car you own.  Will the different systems befuddle you a bit? Could the confusion lead to errors?  Similarly, could the added complexity mean that the car is more prone to break down and be costly to repair, given all the technology embedded in the vehicle?

These four concerns all apply to your enterprise as well.  As you add systems to "assist" decision makers, you face these countervailing forces.  Redundant systems may provide crucial back-up to protect against human error, but they add complexity and they create these offsetting risks because of human nature.  We should all be aware of these other risks as we embrace the use of fail-safe, back-up, and decision support systems in our organizations.  

Monday, July 18, 2022

Ingredients of a Career "Hot Streak"

Director Peter Jackson
Source: Indiewire

Under what conditions do people experience a burst of unprecdented success in their careers? Scholars have been studying the ingredients of career "hot streaks" for some time. At first, scholars thought that such unusual periods of success occurred randomly. However, new research methods have capitalized on artificial intelligence to advance our understanding of such hot streaks. Scholars Lu Liu, Nima Dehmamy, Jillian Chown, C. Lee Giles, and Dashun Wang developed an AI system to study the work of 2,128 artists, 4,337 directors, and 20,040 scientists.  They found that hot streaks emerged when these artists, directors, and scientists first engaged in a period of broad exploration of creative options and then shifted to an exploitation phase in which they focused intensely in a particular domain.  Kellogg Insight summarized their findings:

The results make clear the “recipe” for a hot streak: exploration of creative options followed by exploitation of a specific “lane” of work ultimately leading to greater success. This held true across all three domains studied.  For example, director Peter Jackson made films that fell into horror, comedy, drama, and other genres (reflecting a period of exploration) before hitting it much bigger with the Lord of the Rings fantasy franchise. Analysis of painter Jackson Pollock’s work, similarly, showed exploration of a wide range of styles before the focused “drip period” (1946–1950) that elevated him to global fame.

The research found, further, that exploration or exploitation by itself is not enough for a hot streak. That is, only the specific exploration-exploitation sequence led to the highest increase in likelihood of a hot streak: hot streaks following that sequence were 20.5 percent, 13.8 percent, and 19.2 percent more likely for artists, directors, and scientists, respectively, versus after a random point in a given career. Exploration and exploitation alone were associated with no such increase.

“If you just do one or the other, you don’t get the full impact,” Chown says. “It has to be the combination of exploration followed by exploitation: experimenting in different areas, learning different domains and approaches, then really hunkering down and developing that body of high-impact work.”  Wang agrees: “Our work shows that people experiment and likely gain new skills from work in different subfields, and then help find the best one to exploit, which seem crucial for hot streak.”

As I read this study, I was reminded of a terrific book I read several years ago by David Epstein.  In that book, Range: Why Generalists Triumph in a Specialized World, Epstein argues that we should not specialize early and narrowly in our lives.  Instead, we should explore and develop competence in multiple areas.  He argues that these generalists ultimately create more innovation than people who specalize narrowly.   This AI-driven study of scientists, directors, and artists takes Epstein's argument one step further.  It confirms the value of being a generalist, though it emphasizes the benefits of a shift from broad competence to specific expertise over time.  Either way, both Epstein's book and this study provide a compelling argument for not restricting yourself too early in your career.  Unfortunately, in many professions, the pressure to specialize can be very powerful.  Take my profession, for instance.  In management academia, the path to early career success seems to emphasize mastery of a narrow domain - and too often, that entails a quite esoteric focus.  Broadening the mind has many benefits, and we should not forget that as we coach and mentor young people in their careers.  

Tuesday, July 12, 2022

Announcing the Release of Case Companion!

Over the past 8 months, I've been working on an exciting new project in collaboration with Harvard Business Publishing & Torrance Learning. We are now proud to announce the release of Case Companion - an engaging and interactive multi-media introduction to case study analysis that is ideal for undergraduates or any student new to learning with cases. 

Thank you to our amazing team including Jenna Fleming, Jordan McKenzie, John Lafkas, Carla Torgerson, Allison Mitton, Anthony Reisinger, Nicole Harris, Anne Spencer, Dave Di Iulio, and Elie Honein.  What a pleasure to work with all of you!  I hope that faculty members and students will benefit from this new multi-media experience that teaches us how to analyze a case study.  

Employee Retention: The First 90 Days

Source: Small Biz Daily


Chip Cutter of the Wall Street Journal reports today on the work being conducted at several firms to reduce new employee turnover, particularly among hourly workers.  Cutter writes:

Hold on to an employee for three months, executives and human-resources specialists say, and that person is more likely to remain employed longer-term, which they define as anywhere from a year on in today’s high-turnover environment. That has led manufacturing companies, restaurants, hotel operators and others to roll out special bonuses, stepped-up training and new programs to prevent new hires from quitting in their first three months on the job.

Cutter reports that many firms have retooled their onboarding, training, and feedback processes to focus on reducing "quick quits" - i.e., employee departures during those first ninety days.  Employers have come to understand that it takes roughly three months for new employees to build a comfortable, steady work routine.  Employers are working hard to set clear expectations, as well as to establish short-term goals for each employee.   Then, they are keeping in close touch with those employees to measure progress, listen to concerns, and provide feedback.   Firms are also providing their front-line supervisors with critical tips for how to help smooth that transition for new employees, often based on extensive research on employee retention at the companies.  The payoff is clear for these firms: employee turnover is extremely costly, particularly in this era of worker shortages.  

Of course, I'm quite sure firms need to tread carefully with these efforts.  Sometimes, a new employee is simply not a good fit.   Trying desperately to hold onto that person might, in fact, be a case of the sunk cost effect (throwing good money and effort after bad).  Determining how to let certain people walk away because they aren't likely to be engaged, satisfied, and productive team members is a key capability that firms must develop as well.  

Friday, July 08, 2022

Effective Leaders Share the Spotlight

Source: whodoyoulead.com

Some leaders love to bask in the spotlight, taking credit for all that goes well in their organizations.  They spend a great deal of time polishing their image and trying to make sure others recognize their successes. Others work hard to share the credit.  They are not afraid to ask for help, and then they express gratitude publicly to those who helped them achieve key goals.  We would like to believe that the latter type of leader is more effective in the long run.   A recent study, thankfully, confirms that conventional wisdom.  Research by Harvard Business School scholars Yuan Zou and Ethan Rouen demonstrates that leaders thrive when they engage and include their team members, and their firms benefit as well.  The study is particularly interesting because of its methodology.  They used earnings conference calls to evaluate CEO behavior.  Here is an excerpt from an HBS Working Knowledge profile regarding this research

Using transcripts from earnings conference calls held by Standard & Poor’s 1500 companies, the researchers looked for managers who turned to colleagues for input. Conference calls, the researchers say, are likely to offer insights into interactions between managers and team members that might be difficult to gauge any other way.  Combing through data that included 10,673 managers and 2,316 firms from 2010 to 2019, the researchers examined the characteristics of managers who include others, how their behavior shaped their career trajectories and team cohesion, and how promoting these managers affected companies.

Managers calling on other team members during earnings calls over the span of a year were 4.9 percent more likely to be promoted than managers who didn’t call on other team members in that same timeframe. Managers who called on multiple colleagues in a year were 11 percent more likely to be promoted than those who made no calls.  “We found that if a manager is more inclusive, that person is more likely to be promoted to CEO within the next year, and twice as likely to be promoted than the average manager in our sample,” says Zou.  Including others also boosted retention, according to the research. Employees working with a CEO willing to share credit were significantly less likely to leave the firm the following year.  The team found that female managers were 4.9 percent more likely and older managers were 0.6 percent more likely to call on colleagues than were male and younger managers.

The willingness to engage colleagues in the boardroom appears to also pay dividends in the stock market. Firms with CEOs who made a habit of calling on colleagues had higher three-day market-adjusted returns than firms with less inclusive leaders, the researchers say, providing “economically meaningful evidence that investors value inclusive CEOs.”  When a company exchanged a less inclusive CEO for one who brings others into conversations, the firm’s value increased the year after. Naming an inclusive CEO increased a company’s average three-day return by 0.8 percent. This is likely because these managers retain staff, which may result in increased operating efficiency and innovation, Zou says, and markets seem to quickly reward these trends.

Wednesday, July 06, 2022

The Wrong Way to Interview Customers

Source: Kaizenco

Consultant Katelyn Bourgoin recently posted an insightful Twitter thread highlighting the five key mistakes that market researchers make when interviewing customers.  Here are her five common errors to avoid:

1. Asking people what they want:  Don't ask them what product or service they desire.  They typically won't be able to invent a new product for you.   Ask them instead about the pain points they are experiencing with existing products and services.  Dig deep to understand their frustrations and any workarounds they may currently employ.  Then build on that to develop a solution to the customers' problems.

2.  Asking people about future behavior:  Customers often cannot predict their future actions accurately.  Therefore, avoid asking them what they might do in the future. Focus on what they are doing currently.  

3. Relying too much on opinions:  Focus on actual behaviors rather than viewpoints.  Remember that people often don't do what they say they do.  They say one thing and do another in many instances.

4.  Talking to the wrong people:  You often get more valuable information from actual consumers rather than people who you think may use your product or service in the future.   Be careful about the conclusions you draw from people in your desired target market who may have not ever purchased your product or service (or even a competitor's product or service). 

5.  Talking to people at the wrong time:  Talking to people who may have purchased your product several years ago may be problematic.  Memories fade over time.  The best timing occurs when you interview people who have recently purchased from you or a rival, or perhaps even better, are currently in the midst of their research/purchasing/usage journey.  

Tuesday, June 28, 2022

Innovators Think Like Global Travelers

I'm here this week at Oxford University in the UK with 2 colleagues and 22 Bryant University students.  As we move about the school and the city, I'm reminded of how valuable international travel can be for us.  We benefit not simply because of the cultural competence we build, but because thinking like a traveler is an essential habit of an innovative thinker.  Tom Kelley of IDEO talked about this critical habit/skill in a talk some years ago at Stanford University.  I think you will enjoy this short video clip: 

Thursday, June 23, 2022

Are You Feeling Uncomfortable? It May Be a Sign of Learning & Progress

Source: Three Teachers Talk

My dissertation adviser and mentor, David Garvin, used to love to quote Dr. Peter Carruthers of the Los Alamos National Laboratory.   Carruthers once said, 

“There’s a special tension to people who are constantly in the position of making new knowledge.  You’re always out of equilibrium.  When I was young, I was deeply troubled by this.  Finally, I realized that if I understood too clearly what I was doing, where I was going, then I probably wasn’t working on anything very interesting.”   

The quote came to mind when I read about a new set of studies by Kaitlin Woolley and Ayelet Fishbach.  Kasandra Brabaw recently wrote about the research for the University of Chicago's Booth Review.  The scholars examined whether discomfort could be a motivating force for people or an impediment to learning and performance.  The authors conducted a series of experiments (both in the field and online).  They encouraged some of the research subjects to "seek out discomfort and take it as a measure of progress toward their goal."  Their findings demonstrated that being encouraged to seek discomfort increased motivation to take on emotionally challenging tasks.  Why?  People tended to reappraise discomfort as a positive cue, as a sign that they were making progress and learning something valuable.  In some of their experiments, the scholars showed that you don't have to even tell people that discomfort should be seen as a sign of progress; they tend to come to that conclusion on their own in certain circumstances.  

At the end of the feature about this research, Brabaw summarizes the key lessons, with a word of caution as well.  She writes, 

"Woolley and Fishbach make sure to point out the danger of taking it too far. Just like sharp and unexpected pain can be a cue to stop exercising, emotional pain can be a signal to take care with your mental health, they write. But taken cautiously, adopting a “no pain, no gain” mentality when you know something will make you feel awkward, sad, scared, or uncomfortable can boost your motivation to stick with it."

Thursday, June 16, 2022

Power Can Be Dirty, But It Doesn't Have To Be


"Power Can Be Dirty, But It Doesn't Have To Be." - That's the title of Chapter 2 in Julie Battilana and Tiziana Casciaro's new book:  Power, For All.  The book offers an in-depth examination of how individuals wield power in organizations.  The authors argue that we all have to understand how power works and how we can use our power in constructive ways to achieve important objectives.  In Chapter 2, they argue, "Power is neither inherently moral nor inherently immoral.  History shows us that power can be used for virtuous purposes as well as dishonorable ones.  Whether it becomes dirty in our hands depends on how we gain and keep it and the purpose for which we use it."  

How should think about the power we may possess (or lack)?  In this interview, Casciaro explains:

Power comes from control over valued resources. You have power if you have something that the other person or group needs or wants and if they have few alternatives to you to get it, such that you control their access to that valued resource. So in any power relationship, you want to ask: “What is it that people want?” Because if you understand that, you are well equipped to try to deliver it. And “Who controls access to it?” Because if you figure that out, you can create some dependency so that people need you to get a desired resource.

Every power relationship, no matter with whom or in what context, can be read and understood based on the four elements that result: Do you have what the other party wants? How many alternatives to you do they have to get it? But you’re not done. Because whether you have power over them is conditional on whether they have power over you. So you also need to know: Do they have something that you want? Do you have alternatives to them for getting it?

These four elements are always playing with each other in a power relationship, and they give us four strategies to rebalance power with somebody: get them interested in the resources you’ve got, become less substitutable as a source of those things, make yourself less interested in what they’ve got, and increase the number of your alternatives to get what they’ve got.

Of course, power can be intoxicating, as the authors acknowledge and explain.   To protect against the corrosive effects of power, they argue that we must cultivate humility and empathy in our leaders at all levels of an organization.  Empathy, of course, has become a much-discussed concept lately, particularly during the pandemic.  Leaders need to work hard on developing empathy with their employees as well as their customers.  That takes a concerted effort to avoid the isolating nature of top leadership positions.  I also believe fervently that leaders need to make sure that they are retaining some level of normalcy in their lives.  It is certainly more efficient for top executives to have someone else grab your dry cleaning, order your groceries delivered, and hire landscapers to take care of your lawn.  However, engaging in some of these activities yourself, rather than outsourcing them, will keep you connected with how many of your employees and customers live on a daily basis.  It keeps you grounded.  No amount of leadership workshops can replace the empathy-building that occurs from engaging in these simple tasks of daily life.  If you want to be empathetic and humble, think about how you live your life, not just how you conduct yourself at work.  

Tuesday, June 14, 2022

Knowing Who You Are, and Who You Are Not

Some companies try to be all things to all people, and they often achieve mediocre performance (or much worse).  Others have a clearly defined target market and make sound decisions about how they will stand our from the competition.  They make tradeoffs - determining precisely what they will not do (that others in the market typically do).  A few companies go so far as to clearly articulate the tradeoffs they are making, even in their marketing materials.  Recently, we received a brochure in the mail from Viking.  The pamphlet described their various cruise offerings.  My wife and I have never been on a cruise, and we didn't have any prior knowledge about Viking.  I was struck by one page in particular in the brochure though.  It proclaimed, "What Viking Is Not: We do not try to be all things to all people. Instead, we focus on delivering meaningful experiences to you."  As you can see below, the company then explained specifically what it did not provide or offer (making for a stark contrast with many other cruise companies). 


Gene Sloan, who has written about cruising for more than 25 years, recently published a lengthy article about Viking.   Sloan wrote (underlining is mine for emphasis),

There are some cruise lines that try to be all things to all people. Viking isn’t one of them. The upscale cruise brand has carved out a niche since its founding in 1997, catering specifically to a certain type of thoughtful, inquisitive, generally older traveler who is looking to explore the world and learn a thing or two along the way.

Most Viking customers are approaching their retirement years — or are already there — and they’re eager to finally see all the places they didn’t have time to visit when they were raising kids and establishing careers in their younger years. For this subset of travelers, Viking offers a wide range of both ocean and river cruise itineraries that have a heavy focus on the destinations visited. These aren’t cruises where it’s all about the ship.

Viking voyages bring a lot of extended stays in ports where passengers get more time to explore historical sites and experience the local culture than is typical on cruises. The line offers included-in-the-fare tours in every port, allowing every passenger on board to get a guided experience during stops without having to pay extra. (In general, Viking voyages are highly inclusive, in keeping with its “no nickel-and-diming” philosophy.) On board, Viking’s programming revolves heavily around what the line calls “cultural enrichment” — lectures by experts on topics related to the places its ships visit as well as cultural and culinary offerings that often have a local tie-in.

What Viking ships don’t offer is a lot of onboard amusements aimed at families and younger travelers. In fact, the line doesn’t even allow children under the age of 18 on its ships. It’s one of the only major cruise brands in the world with such a rule. Viking ships also don’t cater to the party crowd. If it’s a floating celebration that you’re looking for in a vacation, this isn’t the line for you. As Viking founder Torstein Hagen likes to say, a Viking cruise is the “thinking person’s cruise,” not the “drinking person’s cruise.”

Michael Porter wrote about the importance of making strategic tradeoffs many years ago.  Many companies falter on this issue though.  They want to have it all, and they are obsessed with top line growth.  Moreover, they are afraid to so loudly and clearly proclaim to potential customers who they are AND who they are not.  However, the lesson here is critically important.  Exclaiming clearly who you are not will make you all the more attractive to the target market on which you have set your sights.  

Thursday, June 09, 2022

From Technical Expert to Leader: From Certainty to Vulnerability

Recently, Matt Abrahams conducted a podcast interview with Dr. Lloyd Minor, Dean of Stanford Medical School (pictured to the left).  Minor described the transition from practicing medicine, and in particular surgery, to becoming a complex institution's leader.  He explained that clinical practice often involves situations in which there is a clear correct answer...and a clear wrong answer.  Leading an organization often means finding yourself in much more ambiguous situations.  Effective leaders recognize that the "right" answer may not be obvious in many circumstances, acknowledge what they don't know about the issue at hand, and invite input from others to help them sort through an ambiguous situation.  Here's an excerpt from this terrific interview:

There is a clear right and wrong with most things in my clinical field. Sure. You know, leadership is very, very different from that. I rarely find myself do I get it right the first time. And I depend upon the feedback of others. And the thing is if, unless this is, you know, a critically important time sensitive decision, and we were faced with many of those during COVID, in those cases, you do the best you can and, and you recalibrate very quickly. In cases that are not as acute as they have been during COVID, you can put up a straw person, you can float an idea, you can express your opinion in your belief about this is the way we think we should go. And some of that will be embraced, some of it won’t, but if you take the feedback. It’s not gonna affect your credibility as a leader.

 It’s very different than a surgical procedure. You wouldn’t want to tell a patient before you do a surgical procedure. You know, I think I’m gonna do it this way today, but that may not work. And so, you know, we’ll then do something different tomorrow or next week. I mean, no one wants to hear that. And for me, that was a recalibration as a leader. And I feel really fortunate to have had both sides represented. And I think it’s made me able to act definitively when the circumstance requires it. And when people around me expect me to act definitively and also to be more graduated and incremental when the situation justifies that approach.

Wednesday, June 01, 2022

Lessons from the House of Gucci


I just finished reading Sara Gay Forden's terrific book: House of Gucci: A Sensational Story of Murder, Madness, Glamour, and Greed.   Forden wrote the book two decades ago, but it has recently received a great deal of renewed attention due to the release of the movie starring Lady Gaga.  The book is filled with family intrigue, squabbles, and of course, a murder plot.  However, the book also provides a compelling examination of the rise, fall, and rebirth of the Gucci enterprise over the years.   As such, it offers a number of important management lessons.  
For me, one intriguing lesson centers on the attempt by Maurizio Gucci to restore and enhance the Gucci brand when he tooks over from the prior generation.  His instincts were solid in that he was quite worried about the dilution of the brand that had occurred over the years.  The desire to drive top line growth had led the company to develop and sell less expensive products for the masses.  The problem, of course, is that such efforts often make it much more difficult to remain highly attractive to the luxury consumer willing to pay top dollar for a quality product, but only as long as it retains a high degree of exclusivity.  This growth trap ensnares many companies pursuing niche differentiation strategies. 

Recapturing the premium positioning after a brand has been diluted can be very difficult.  The reason is that it takes time to change consumers' minds about a brand.  Moreover, trimming the product portfolio can be challenging to execute.  The company has to essentially retrench to restore the brand, but that can be very painful to do.   Maurizio tried to execute a "cold turkey" approach to restoring the brand.  His efforts to quickly eliminate lower-priced, lower-quality products led to a precipitous drop in revenues.  At that point, he had not yet done the groundwork required to transition the product line.  He failed on the execution of what is admittedly a tricky repositioning exercise.  Over time, new professional management managed to implement the repositioning very successfully, restoring the brand's luxury image.  In the end, strategy and vision are important, but execution often proves to be the difference between success and failure for a brand repositioning effort.  

Tuesday, May 24, 2022

Changing Culture: Speaking Up at Boeing

Source: Wikipedia

Julie Johnsson wrote a story for Bloomberg this week about the attempted cultural transformation at Boeing.   The company has faced an uphill struggle trying to address safety deficiencies in the aftermath of the 737 MAX crashes and productio
n troubles with its best-selling Dreamliner. As many have documented (including in my case study about the 737 MAX), Boeing seemed to be characterized by an enviroment of low psychological safety in which engineers were reluctant to speak up about safety concerns. The article focuses on efforts led by Chief Aerospace Safety Officer Michael Delaney to transform the culture and improve problem detection in the manufacturing and engineering operations at the firm. Here's an excerpt from Johnsson's story:

Delaney, who took over the newly created position last year, is trying to instill a more open and transparent culture where employees speak up without fear of retaliation. That’s one facet of a larger framework he’s putting in place, known as a safety management system, that uses data and other tools to address risks before they flare into broader issues.  His deputy, Al Madar, pointed to one counterintuitive sign the approach is starting to take root: Boeing saw a record number of safety reports filed by employees in March and April.  “That data tells me what we’re doing is working,” said Madar, who oversaw American Airlines Group Inc.’s operational safety program before joining Boeing.

This point about the data is very important for any organization on a journey to improve quality and detect problems or errors more effectively.  Remember that improving pscyhological safety is often a key element of a program aimed at improving product/service quality.   In the early stages of a successful effort to enhance psychological safety, reports will (and often should) show MORE reports of incidents or problems, not fewer.   At first, these data may seem alarming. Could quality or safety actually be getting worse?    Actually, the rise in reported incidents typically means people are becoming more comfortable speaking up and sharing their concerns.  A failure to see a rise in reported incidents would be concerning, as it would indicate that perhaps people are still reluctant to come forward with bad news.   Naturally, you need to examine other metrics to be sure that the rise in reported incidents does not represent a serious deterioration in your operations.  Hopefully, some additional research will reveal that incident reporting is being driven by higher levels of psychological safety. 

Wednesday, May 18, 2022

Quitting Your Job the Right Way

 
Image source: https://uvaro.com/blog/the-great-resignation


Over the last few years, I have heard alumni from my university (Bryant University in Smithfield, Rhode Island) repeatedly stress the importance of "leaving well" when resigning from a company.   Many young people may not recognize the benefits of quitting your job the "right" way, but it is very important.  You never know when you may encounter some of those colleagues again in a future role.  Moreover, your reputation will spread in what are often small circles and dense networks.   Take great care to protect your personal brand when quitting a job.  

What does it mean to quit the right way?  For starters, it means giving more than the usual two weeks notice if possible.  Help make the transition smoother for the individual taking over for you.   Set them up to thrive, rather than simply "mailing it in" during your final weeks.  That individual will be incredibly grateful, and others at the firm, including your managers, will take notice.  Don't bad mouth your boss or the company either.  When asked why you are leaving, focus on the exciting new opportunity ahead of you, rather than the challenges and problems at your current employer.  Your frustrations may be very real, but expressing them publicly does little good in most cases.  Perhaps most importantly, reach out to those people who have mentored you, provided you assistance, taught you a new skill, or given you a key opportunity at your current employer.  Express your gratitude to them for these contributions to your personal development.  Finally, spend some time with any individuals you have mentored during your time at this employer.  Make sure they know that you are still available to act as a sounding board, and express your interest in their continued development.  If you take these actions, you will feel much better about your departure, and you will have build lasting goodwill that may benefit you in the future.  

Monday, May 16, 2022

Don't Eliminate the Small Talk

https://www.jeffnobbs.com/posts/small-talk

Like so many people, you might be tired of endless meetings.  Your calendar seems filled with a vast array of meetings, leaving you little time to do your own work.   You might be tempted to make meetings more efficient by just "getting down to business" and eliminating the "small talk" at the start.  I might suggest that you rethink that strategy. Small talk serves a useful function.  It helps us build relationships, create empathy and trust, and encourages us to seek to understand one another.  Dan Bullock and Raul Sanchez recently summarized a key finding regarding the science of small talk in an article for Fast Company.

Still, small talk has the power to make or break a job prospect, a networking encounter, and an intercultural relationship. Going beyond utility conventions and intentionally noticing the semantics of a conversation can land a new business deal or networking opportunity. In the business world, expertly crafted small talk can be used as the icebreaker that leads to the next business pitch, a fail-safe to get relationships back on track, or even simply as agency for building rapport with partners before a negotiation.

You may wonder why you sometimes feel like you’ve known a person after only exchanging a few words. The familiarity has its roots in interpersonal synchronization, where speech rhythms, walking patterns, and even breathing match with those of others simply from our shared perceptions that we notice as we acquaint ourselves with each other.

Findings from Princeton University in the act of human communication and storytelling revealed a powerful phenomenon called “neural coupling,” where our brains essentially get in sync during the act of storytelling. Researchers monitored audience members and storytellers via MRI machines and found that their brain waves synchronize during a powerful story, revealing that stories are one of our most powerful transcultural ingredients for communication. Just think of a networking situation where you jump-start a conversation with phrases like “Have you ever . . .,”; “What if . . .”; and “Did you know that . . .”

Stories can be lightning rods that supercharge our conversations, actively “syncing up” our minds so that we’re not just sharing meaning with each other, but human experience itself.

Sunday, May 08, 2022

Publix & Wegman's: Engaged Employees, Happy Customers

 Last month, Beth Kowitt penned a good article for Fortune about the unique organizational culture and work practices at Publix and Wegman's.  She tries to explain why the companies are highly popular with customers and well-known as good places to work.  She points out that employee turnover is usually very high in the supermarket industry, and it has only gotten worse during the pandemic:

Most striking about the Publix and Wegmans streak is that supermarket jobs, already notoriously low paying, have become even more grueling over the past two years as workers put their lives at risk by showing up every day in the middle of a pandemic. Layer on the stress of dealing with disgruntled customers, and it’s clear why so many workers have reached a breaking point. In December 2021 some 786,000 retail employees quit—a record in an industry already plagued by high turnover. The sector has become the melting pot of all the big labor market issues of our time: minimum wage, the Great Resignation, a desire for remote work and flexibility, the childcare crisis.

Kowitt explains some of the things that Publix does differently.  She stresses that Publix has not responded to the Great Resignation by trying to replace humans with technology. Publix is privately held and still partially owned by the founding family, providing some protection from the usual pressures faced by publicly traded companies. The chain invests heavily in worker training so that the employees know the products and can converse with customers about those items.  The firm has a "promote from within" culture. Kowitt writes that, "Store managers have an average of 24 years at Publix, and 90% of them started out working on the floor." She also explains that don't tend to hire meatcutters from other chains. Instead, they bring on entry-level employees into the meat department and train them how to become meatcutters.  Finally, the employee equity plan provides real skin in the game for everyone and creates an incentive for people to build their career for the long term at the company.  Kowitt explains:

"With 230,000 employees, Publix is by far the largest worker-owned company in the U.S., and that has a lot to do with why people stick around. Employees who work at Publix for a year and at least 1,000 hours receive shares that can only be traded with the company. Just like at a startup where workers are given equity, the model entices people to stay. It’s money on top of their salaries (last year, Publix employees who qualified got the equivalent of 8% of their earnings). But Jones says Publix benefits, too. By having skin in the game, workers are invested in the company’s success. It’s an ownership structure that has turned many Publix associates into millionaires—the kind of lore that gets passed down."

As I read about Publix, I thought about one other key benefit of largely developing their managers from within the company, rather than hiring from the outside.  The managers have a much easier time empathizing with the front-line employees. Why?  They have been there!  They have worked at the checkout counters, bagged groceries, unloaded trucks, and stocked shelves.  Having done that work creates a genuine understanding of the obstacles and challenges front-line workers experience every day.  As companies think about the benefits of developing their talent in-house rather than constantly going outside to attract managers, they might consider the power of empathy and the inherent advantage of building empathy by having people promoted from the front lines to managerial positions.