Monday, January 29, 2024

The Kyte Baby CEO Apologizes: Could the Apology Do More Harm Than Good?

CNN's Ramishah Maruf reported this week about the severe backlash that occurred recently for a children's clothing brand with a cult-like following.   Kyte Baby is one of several popular brands of bamboo fiber clothing for kids.  These brands market their clothing as better for children's skin.  According to Kyte Baby's website, "Bamboo is, simply, the Goldilocks of fabrics—not too hot, not too cold. It’s temperature-regulating, and while we’re pretty confident it’s the softest fabric you’ll ever feel, it’s also super stretchy to grow with baby and fit longer. Perfect for crying babies, busy toddlers, and tired parents alike."

However, consumers revolted recently when news emerged about Kyte Baby's response to an employee's request to work remotely.  The employee had given birth, and their new child was being cared for in a hospital's neonatal intensive care unit.  Kyte Baby denied the employee's request.  Consumers decried the decision on various social media platforms.  Kyte Baby's CEO and founder Ying Liu issued an apology via TikTok.  Apparently, many customers considered the apology insincere and highly scripted.  Liu returned to TikTok to apologize for the poor apology!  The question, of course, is whether the damage has already been done, and whether the brand can now bounce back. 

This episode caused me to turn to the scholarly research on corporate apologies. I found an interesting study by Tessa Basford, Lynn Offermann and Tara Behrend in the Journal of Business Ethics.  In their studies, these scholars found that, "Whereas sincere apologies generated the most favorable follower reactions, insincere apologies often appeared worse than non-apologies... apparently, Chesterton was right - insincere apologies may add insult to injury."  They found that leaders who issue sincere apologies tend to viewed as more humble, and they tend to be perceived as transformational leaders.  

The lesson is clear - take a deep breath and don't rush that apology after making a significant error.  Don't over-script your apology.  Speak from the heart, and empathize with those who have been harmed.  Often, people obsess over the precise wording of an apology.  However, keep in mind that HOW you deliver the words may matter as much, if not more, than WHAT words you use.  

Tuesday, January 23, 2024

Stanley's Having a Moment: Should They Be Worried?


Everyone seems to want a Stanley water bottle these days.  The 40 ounce bottle has become a social media sensation, and it has skyrocketed in popularity with young people.  According to Fortune, the recent introduction of a Target-exclusive Valentine's Day product line created quite a stir: " People are camping outside Target stores, and there have been reports (and social media videos) of physical alterations as people try to get the special edition of the cup that has become something of a multi-generational craze."  

Interestingly, the company has been around for more than 100 years (founded in 1913). The brand enjoyed popularity with construction workers and outdoor enthusiasts for its rugged, utilitarian products. I remember my dad owning an all-steel thermos bottle, as did many other of his fellow factory workers. Trendy it was not.  

In 2016 the company launched the "Quencher" - a very large water bottle (40 ounces) with a handle and a straw whose narrow bottom fit into a car's cupholder. The product did not enjoy market success until a 40-something blogger named Ashlee LeSueur started touting the product online.  She even advised the company to market the product to women, rather than to the men the firm typically targeted.  She encouraged them to create a line of Quenchers in many bright colors.  The company's executives resisted for some time.  Then they shifted gears, and they began to adapt the product and the marketing.  The product has become immensely popular.  Great news, right?  Well, perhaps executives should still be worried.  

When a brand explodes like in this case, executives need to ask themselves:  Is this surge in popularity likely to generate a permanent lift in revenue, or are we experiencing a temporary spurt of growth that may subside?  Could the bubble burst quickly, as other companies introduce copycat products, or as consumes move on to the next big thing?  Given these questions, leaders need to think about how to mitigate the risks associated with scaling up quickly to meet this surge in demand, only to be left facing challenging circumstances if the popularity wanes quickly in the near future.  Think Peloton, who did not mitigate these risks effectively.   Here are a few thoughts about managing the potential downsides at Stanley: 

1.  Don't forget the traditional core customer, and certainly don't neglect their needs.  Sometimes, firms take their eye off the ball in pursuit of new customers, and then capable rivals emerge to attack their core.  What do the construction workers and outdoor enthusiasts need?  How should we continue to innovate for them?  Invest some of the new profits back in the core.  

2.  Scale up with caution.  Don't over-hire in pursuit of the growth.  Cutting workers later will be mighty painful.  

3. Get comfortable with some product scarcity.  That may even enhance the product's popularity.  It may be better to stock out then to be stuck with a ton of excess inventory if the product suddenly loses its "cool" among these new customers.  Moreover, too much product out there in too many places can actually contribute to a sudden turn in popularity, as people begin to complain that "everyone" has what they once considered a more exclusive product.  

4.  Be cautious about extending the brand further into new product categories.  Investing some of the new profits in innovation makes good sense (rather than simply pocketing all the cash), but you have to ask yourself:  Will we have a competitive advantage in this new category or market segment? If so, what precisely is our advantage?  Don't just pursue growth without understanding the nature of the the firm's competitive advantage.  

5.  Watch product quality like a hawk.  As production scales up rapidly, many firms encounter quality problems that quickly become a brand's downfall.  Put in place strong measures to insure that product defects remain very low. 

Tuesday, January 16, 2024

Stuck in a Rut


Alicea Lieberman, On Amir and Ziv Carmon have published an interesting new paper titled, "The entrenchment effect: Why people persist with less-preferred behaviors."   The scholars conducted a series of experiments to examine why people become stuck in "behavioral ruts."  We can all relate, of course. At times, we find ourselves continuing to engage in undesirable activities even though we could rather easily switch to a more enjoyable or beneficial course of action.   The scholars note that many explanations exist for this suboptimal behavior, including the sunk cost trap.  However, they explore another potential explanation for behavioral ruts.  They describe this causal mechanism as entrenchment, defined as "the increased accessibility of a task set which strengthens with repetition and continuity and makes constructing an alternative task set feel difficult, leading people to forgo opportunities to make beneficial changes."  

In their first set of experiments, the scholars show that people can get stuck in behavioral ruts rather easily.  Then, they demonstrate that the more we have engaged in a suboptimal activity, the harder it can be to envision an alternative course of action.   In their language, the alternative becomes less accessible to individuals.   Therefore, people tend not to switch to a more desirable activity.   This entrenchment occurs even when switching is actually not difficult at all, and the other course of action is clearly more desirable.  

However, the scholars find that the continuous repetition of a mundane task leads to more entrenchment than when individuals have the opportunity to intermittently perform other task.  The interruption of the less desirable activity reduces entrenchment and enhances the likelihood of switching to a preferred course of action moving forward.  

The authors argue that the research has important implications for how we structure work for our employees.  Sometimes, requiring employees to take a break, or adding some variety to their work flow, will increase the likelihood that they will seek out and adopt better ways of working rather than staying entrenched in a less productive course of action.  Breaking up the mundane has some really important benefits, as it could stimulate the search for, and adoption of, more efficient ways of working.  

Thursday, January 11, 2024

Lesson from the Closing of the Belichick Era in New England


Source: ESPN

Simple, but powerful, lesson from the Belichick era's closing chapter in New England: Open up your inner circle as you grow older, invite new voices inside, and keep questioning whether the formula for past success continues to apply in a changing environment. 

Tuesday, January 09, 2024

Changing Behavior by Making a Process MORE Difficult Rather than Less

Holly Dykstra, Shibeal O'Flaherty, and Ashley Whillans have written a fascinating new Harvard Business School working paper titled, "The Buy-In Effect: When Increasing Initial Effort Motivates Behavioral Follow-Through."   They begin by noting that many behavioral scientists advocate the removal of friction as a mechanism for stimulating people to adopt a new behavior (or to change their existing behavior).   In other words, make a new course of action easier for people to adopt, and you are more likely to get people to engage in that desired conduct.  However, these scholars posit that sometimes it might make sense to actually ADD friction - in short, make it MORE difficult to pursue a new course of action, and you might actually induce behavioral change.    They argue that adding some friction can increase a sense of ownership and buy-in toward a new course of action.  

To test their hypothesis, they conducted a field experiment with Oregon Department of Transportation.  Several years ago, the department migrated to a new carpool platform for residents of the state.  The scholars noted that there were many inactive users on the old platform (87% of all accounts).  In other words, they had established accounts, but they were not actually using the carpool services.  

The scholars examined whether a slightly different procedure for migrating inactive users to the new platform might have an impact on sign-ups and usage.   Some users were provided information regarding a low-effort method for moving to the new platform.  Others received information regarding a sign-up process that involved more effort.   Here's what the scholars found:

"More Effort group took more trips overall, despite there being fewer participants who signed up to the platform: while 694 signed up from the Less Effort group, only 511 signed up from the More Effort group. During our 122-day study period, we observed 9,147 total trips; out of these, the More Effort group took 5,106 trips, while the Less Effort group took 4,311, meaning that More Effort group took 795 more trips overall than our Less Effort group."

Why did adding friction actually increase usage of the carpool platform?  The scholars don't have a way of actually determining the psychological mechanism underlying individual behavior in this case.  However, they offer some possible explanations.  For example, they suggest that people may "feel a greater sense of psychological ownership over the action and value it to a greater extent, which would increase their likelihood of following through."  They also note that the sunk cost effect may be at play here.  If you are invested some time and effort into a process, you may continue down that path because you don't want to "waste" the initial investment you have made.  

Tuesday, January 02, 2024

Some Great Reads from 2023

 Here are some of my favorite books that I read in the past year:

  • The Devils Will Get No Rest, by James Conroy
  • Outsmart Your Brain, by Daniel Willingham
  • Hero of Two Worlds, by Mike Duncan
  • Unscripted, by James Stewart and Rachel Abrams
  • Right Kind of Wrong, by Amy Edmondson
  • The Revolutionary Samuel Adams, by Stacy Schiff
  • The League, by John Eisenberg
  • The Restless Republic, by Anna Keay
  • The Power of Regret, by Daniel Pink
  • It's Not TV, by Felix Gillette and John Koblin
  • Elon Musk, by Walter Isaacson
  • Our Man in Tokyo, by Steve Kemper